CARPENTER TECHNOLOGY CORP (CRS): Results of Operations and Financial Condition
CARPENTER TECHNOLOGY CORP (CRS) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 CARPENTER TECHNOLOGY REPORTS FOURTH QUARTER AND FISCAL YEAR 2026 RESULTS Delivered Another Record Operating Income in Fourth Quarter Drove Adjusted Quarterly Operating Margins in Specialty Alloys Operations Segment to Record 37.8 Percent Fiscal Year 2026 Most Profita
How this was made
The 30-second read
Why it matters
Traders can update models using the reported Q4 and FY2026 operating income, EPS, cash generation, and the company’s explicit FY2027 operating income and adjusted free cash flow ranges, plus a medium-term FY2029 operating income target.
Market read
A fresh earnings and guidance package with quantified operating income, cash flow, and margin metrics is typically a high-impact catalyst for industrials valuation and positioning.
What to watch
Cash from operations declined in Q4 vs prior year despite higher operating income, so traders may scrutinize working-capital dynamics and the durability of adjusted free cash flow conversion.
Delivered Another Record Operating Income in Fourth Quarter; Fiscal Year 2026 Most Profitable Year in Company History
Fourth-quarter operating income reached a record $206.9 million, up 11 percent sequentially and 37 percent year-over-year, while fiscal year 2026 adjusted operating income rose 34 percent to $702.0 million. The Company issued fiscal year 2027 operating income guidance of $850 million to $880 million and adjusted free cash flow guidance of $400 million to $430 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, Q4 FY2026GAAP | $851.0 million | – | 13 percent |
| Net sales excluding surcharge, Q4 FY2026non-GAAP | $679.7 million | – | 9 percent |
| Operating income, Q4 FY2026GAAP | $206.9 million | 11 percent | 37 percent |
| Adjusted operating income excluding special items, Q4 FY2026non-GAAP | $206.9 million | – | – |
| Net income, Q4 FY2026GAAP | $162.4 million | – | – |
| Earnings per diluted share, Q4 FY2026GAAP | $3.23 | – | – |
| Adjusted earnings per diluted share, Q4 FY2026non-GAAP | $3.23 | – | – |
| Net cash provided from operating activities, Q4 FY2026GAAP | $240.1 million | – | – |
| Adjusted free cash flow, Q4 FY2026non-GAAP | $155.0 million | – | – |
| Capital expenditures, Q4 FY2026other | $85.1 million | – | – |
| SAO segment operating income, Q4 FY2026other | $229.7 million | 10 percent | 38 percent |
| SAO segment adjusted operating margin, Q4 FY2026non-GAAP | 37.8 percent | – | – |
| Net sales, FY2026GAAP | $3,124.2 million | – | – |
| Net sales excluding surcharge, FY2026non-GAAP | $2,527.5 million | – | – |
| Operating income, FY2026GAAP | $702.0 million | – | – |
| Adjusted operating income excluding special items, FY2026non-GAAP | $702.0 million | – | 34 percent |
| Net income, FY2026GAAP | $529.8 million | – | – |
| Earnings per diluted share, FY2026GAAP | $10.52 | – | – |
| Adjusted earnings per diluted share, FY2026non-GAAP | $10.76 | – | – |
| Net cash provided from operating activities, FY2026GAAP | $605.0 million | – | – |
| Adjusted free cash flow, FY2026non-GAAP | $362.3 million | – | – |
| Aerospace and Defense net sales excluding surcharge, FY2026non-GAAP | 15% year-over-year increase | – | 15% |
| Shipment volume, Q4 FY2026other | 22 percent higher | – | 22 percent |
fiscal year 2027 outlook
- NoteOperating income of $850 million to $880 million
- NoteAdjusted free cash flow of $400 million to $430 million
- NoteFirst quarter of fiscal year 2027 operating income of $195 million to $200 million
- NoteFiscal year 2029 operating income target of $1.2 billion to $1.3 billion
Capital returns
- Purchased 100,000 shares of its common stock on the open market for an aggregate of $45.2 million during the quarter ended June 30, 2026.
- Executed $179.1 million of stock repurchases in fiscal year 2026 against $400.0 million share repurchase program.
- As of June 30, 2026, $119.0 million remains available for future purchases.
What drove it
- Fourth-quarter net sales increased on 22 percent higher shipment volume.
- The Company cited ongoing improvement in product mix, higher realized prices, and expanded operating efficiencies for the year-over-year improvement in fourth-quarter results.
- SAO margin expansion was driven by continued productivity gains, pricing realization across both long-term and transactional business, and improved product mix.
- Net sales excluding surcharge increased 15% year-over-year in the Aerospace and Defense end-use market.
- Fiscal year 2027 outlook reflects the strength of the demand environment, execution, productivity improvements, product mix optimization, and favorable pricing actions.
- The fiscal year 2029 target reflects underlying demand strength and the contribution from the brownfield capacity expansion project.
Concerns
- Fourth-quarter operating cash flow and adjusted free cash flow declined from the prior-year quarter despite higher earnings, reflecting working capital needs and increased capital expenditures.
- Increased capital expenditures were primarily due to the brownfield expansion compared to the prior-year period.
- No revenue, gross margin, operating expense, or tax-rate guidance was provided.
What to watch
- First-quarter fiscal year 2027 operating income outlook of $195 million to $200 million.
- Fiscal year 2027 operating income outlook of $850 million to $880 million.
- Fiscal year 2027 adjusted free cash flow outlook of $400 million to $430 million.
- Progress of the brownfield capacity expansion project.
- SAO adjusted operating margin following the record 37.8 percent fourth-quarter result.
- Use of the $119.0 million remaining under the share repurchase authorization.
Balance sheet and cash flow
- Cash provided from operating activities was $240.1 million in the fourth quarter of fiscal year 2026, compared to $258.0 million in the same quarter last year.
- Adjusted free cash flow was $155.0 million in the fourth quarter of fiscal year 2026, compared to $201.3 million in the same quarter last year.
- Cash provided from operating activities was $605.0 million for fiscal year 2026, compared to $440.4 million for fiscal year 2025.
- Adjusted free cash flow was $362.3 million for fiscal year 2026, compared to $287.5 million for fiscal year 2025.
- Capital expenditures were $85.1 million in the fourth quarter of fiscal year 2026 compared to $58.0 million in the same quarter last year.
- Total liquidity, including cash and available revolver balance, was $892.4 million at the end of the fourth quarter of fiscal year 2026.
- Liquidity consisted of $393.3 million of cash and $499.1 million of available borrowings under the Company’s Credit Facility.
Analysis
Carpenter Technology closed fiscal year 2026 with record fourth-quarter operating income of $206.9 million, up 11 percent sequentially and 37 percent year-over-year. Fourth-quarter net sales were $851.0 million, up 13 percent from $755.6 million, with shipment volume 22 percent higher. Net sales excluding surcharge were $679.7 million, up 9 percent. Net income was $162.4 million and earnings per diluted share were $3.23.
SAO was the central earnings contributor. Segment operating income reached $229.7 million, up 10 percent sequentially and 38 percent year-over-year, while adjusted operating margin reached a record 37.8 percent, compared with 35.6 percent in the previous quarter and 30.5 percent a year ago. The Company attributed the margin expansion to productivity gains, pricing realization across long-term and transactional business, and improved product mix. It also cited mix, realized prices, and operating efficiencies as contributors to consolidated fourth-quarter improvement.
For fiscal year 2026, operating income was $702.0 million and adjusted operating income excluding special items was also $702.0 million, compared with $521.8 million and $525.4 million, respectively, in fiscal year 2025. Fiscal-year net sales were $3,124.2 million and net sales excluding surcharge were $2,527.5 million. The Company highlighted a 15% year-over-year increase in net sales excluding surcharge in Aerospace and Defense.
Cash generation remained substantial for the full year, with $605.0 million of cash provided from operating activities and $362.3 million of adjusted free cash flow. Quarterly cash conversion was lower than the prior-year period: operating cash flow was $240.1 million versus $258.0 million, and adjusted free cash flow was $155.0 million versus $201.3 million. The Company attributed the declines to working capital needs and higher capital expenditures, which were $85.1 million versus $58.0 million and were primarily related to the brownfield expansion.
Capital allocation included $45.2 million of repurchases in the quarter and $179.1 million in fiscal year 2026, with $119.0 million remaining under the $400.0 million authorization. Fiscal year 2027 guidance calls for $850 million to $880 million of operating income, $400 million to $430 million of adjusted free cash flow, and first-quarter operating income of $195 million to $200 million. The Company also established a fiscal year 2029 operating income target of $1.2 billion to $1.3 billion, tied to demand, operating execution, mix and pricing actions, and the brownfield capacity expansion.
Management, verbatim
Carpenter Technology delivered another record quarter, generating $206.9 million of operating income in the fourth quarter of fiscal year 2026.
Tony R. Thene, Chairman, President and CEO of Carpenter Technology
The SAO segment drove the results, exceeding expectations with $229.7 million of operating income in the quarter and reaching adjusted operating margins of 37.8 percent, both significant increases over the previous quarter.
Tony R. Thene, Chairman, President and CEO of Carpenter Technology
With the record fiscal year 2026 now complete, we are establishing the fiscal year 2027 operating income outlook to be in the range of $850 million to $880 million, which represents a 21 percent to 25 percent increase over fiscal year 2026 results.
Tony R. Thene, Chairman, President and CEO of Carpenter Technology
Not in the filing
stated, not guessed- Prior outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Segment revenue by reportable segment was not provided in the supplied filing text.
- Consolidated gross profit, gross margin, operating expenses, tax rate, debt balance, and dividends were not provided in the supplied filing text.
- Prior-quarter amounts for consolidated net sales, net income, earnings per diluted share, operating cash flow, adjusted free cash flow, and capital expenditures were not provided.
- Revenue, gross margin, operating expense, and tax-rate guidance were not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC 8-K (Item 2.02) with Exhibit 99.1 reporting Carpenter Technology’s fiscal fourth quarter and full-year results ended June 30, 2026.
Ticker impact
Carpenter Technology reported FY2026 results and issued FY2027 operating income guidance of $850M to $880M, plus $400M to $430M adjusted free cash flow.
Likely positive near-term bias as guidance and margin/cash generation details support higher expectations, though the magnitude depends on how the market compares to consensus.
The filing includes specific operating income, EPS, cash from operations, adjusted free cash flow, and explicit FY2027 and FY2029 targets, giving traders concrete inputs for valuation and positioning.
Market effects
Specialty alloys and aerospace and defense end-use demand read-through may improve sentiment for materials suppliers with similar pricing and margin levers.
Limited direct regional spillover; primary impact is company-specific for US-listed industrials.
Global aerospace and defense and industrial demand expectations could be marginally reinforced, but the disclosure is mainly company-specific.
Counterpoint
Guidance strength may already be priced in; investors may focus on sustainability of pricing realization and productivity gains rather than the headline targets.
Key entities
- public_companyCarpenter Technology Corporation
NYSE-listed specialty alloys producer reporting Q4 and FY2026 results and providing FY2027 outlook and FY2029 operating income target.
- business_segmentSpecialty Alloys Operations (SAO) segment
Segment highlighted for record operating income and 37.8% adjusted operating margin in Q4.
- executiveTony R. Thene
Chairman, President and CEO quoted on record profitability and outlook.
