CRS · Carpenter Technology Corporation

Carpenter Technology delivered a record fiscal third quarter, with operating income of $186.5 million, up 20% sequentially and 35% year-over-year, driven by robust demand in Aerospace & Defense and Energy end-use markets. The Specialty Alloys Operations (SAO) segment posted record operating income of $208.0 million and an adjusted operating margin of 35.6%, marking the 17th consecutive quarter of margin expansion. Management attributed the performance to higher productivity, effective mix management, and favorable pricing actions. Aerospace & Defense sales increased 13% sequentially and 17% year-over-year, with accelerating structural bookings signaling growing confidence in build rate ramp. Energy sales surged 32% sequentially and 44% year-over-year, driven by new builds of industrial gas turbines. The Performance Engineered Products (PEP) segment saw a year-over-year decline in operating income due to lower Medical end-use market sales, partially offset by improving profitability in Additive. The company raised its fiscal year 2026 operating income guidance to $700-$705 million, representing over 33% growth from the record fiscal 2025. Adjusted free cash flow outlook was increased to approximately $350 million, with $207.3 million generated year-to-date. Capital allocation remains balanced, with $133.9 million in share repurchases year-to-date and ongoing investment in brownfield capacity expansion. The balance sheet remains strong with liquidity of $793.8 million and net debt/EBITDA of negative 0.5x.