PHILADELPHIA, Pa. – That whoosh sound you heard coming from New York was the sound of Carpenter Technology stock price rising over 22% after reporting its fiscal 2026 first results. This brought the price to within $8.00 of its 52-week high.
The specialty materials company, which maintains large manufacturing facilities in Berks County, said it once again delivered record operating profits that easily exceeded Wall Street estimates. More important to the surge in its stock price, perhaps, is that Carpenter told analysts bookings for its Aerospace and Defense end-use market increased substantially and it has completed negotiations on several long-term agreements with aerospace customers.
Management Observation
“The first quarter of fiscal year 2026 was another earnings record, generating $153.3 million of operating income,” said Tony R. Thene, Chairman and CEO of Carpenter Technology in a statement. “This was an increase of 31.0 % over the previous first fiscal quarter and surpassed our fourth quarter of fiscal year 2025, which at that time was a record.”
Notably, Thene said, the Specialty Alloys Operations (SAO) segment expanded its adjusted operating margin to 32.0 % up from 26.3 % in the first quarter a year ago, representing the fifteenth consecutive quarterly margin increase. As a result, the SAO segment realized $170.7 million in operating income.
“We saw demand in our Aerospace and Defense end-use market pick up as the supply chain increases activity with the ramping build rates,” Thene reported. As a result, Carpenter saw bookings for the Aerospace and Defense end-use market accelerate, increasing 23% sequentially. He reported the company also completed negotiations on several long-term agreements with aerospace customers, realizing significant value.
“Our ability to secure such high value contracts reflects our strong market position in an improving demand environment,” Thene claimed.
“Looking ahead,” he noted, “our fiscal year 2026 operating income outlook represents a 26 % to 33 % increase over fiscal year 2025. Further, we have opportunities to realize the high end of the range from increased profitability through higher volume, pricing actions and productivity.”
In addition, Thene claimed, Carpenter expects to generate $240 million to $280 million in adjusted free cash flow in fiscal year 2026. With a strong balance sheet and meaningful adjusted free cash flow, the company will continue to take a balanced approach to capital allocation: sustaining its current asset base to achieve its targets and investing in high value growth initiatives like the recently announced brownfield capacity expansion while returning cash to shareholders.
According to Thene, “Looking over the long term, we expect that the same dynamics that are driving our current performance will only get stronger into the future. The markets that we serve, in particular Aerospace and Defense, Medical and Power Generation, have a strong, multi-year outlook. And we are investing to accelerate our growth with our recently announced brownfield expansion which will add primary and secondary melt capacity. Altogether, we believe Carpenter Technology is well positioned to achieve and exceed our goals and continue to grow over the long-term.”
Fiscal 2026 First Quarter Results
Carpenter reported net sales for the first quarter of fiscal year 2026 were $733.7 million, compared with $717.6 million in the first quarter of fiscal year 2025, an increase of $16.1 million or 2%. Net sales excluding surcharge were $603.1 million for the current quarter, an increase of $25.7 million from the same period a year ago.
Operating income for the first quarter, the company said, was $153.3 million compared to operating income of $113.6 million in the prior year period. Adjusted operating income in the prior year period, excluding a special item for restructuring and asset impairment, was $117.2 million.
Earnings for the first quarter of fiscal year 2026 were $2.43 per diluted share compared to earnings of $1.67 per diluted share in the prior year first quarter. Excluding the special item, adjusted earnings per diluted share in the first quarter of fiscal year 2025 was $1.73. According to Carpenter these results primarily reflect an ongoing improvement in product mix with a shift in capacity to more complex, higher value materials as well as expanding operating efficiencies compared to the prior year period.
The company reported cash provided from operating activities in the first quarter was $39.2 million, compared to $40.2 million in the same quarter last year. Adjusted free cash flow in the first quarter of fiscal year 2026 was negative $3.4 million, compared to $13.3 million in the same quarter last year. The decrease in adjusted free cash flow in the first quarter of fiscal year 2026 reflects higher capital expenditures compared to the prior year period, namely from the brownfield expansion.
Capital expenditure was $42.6 million in the first quarter of fiscal year 2026 compared to $26.9 million in the same quarter last year, Carpenter said. Under the company’s authorized share repurchase program of up to $400.0 million, the company purchased 200,000 shares of its common stock on the open market for an aggregate of $49.1 million during the quarter ended September 30, 2025.
Total liquidity, including cash and available revolver balance, was $556.9 million at the end of the first quarter of fiscal year 2026. This consisted of $208.0 million cash and $348.9 million of available borrowings under the company’s credit facility.
Outlook
For the second quarter of fiscal year 2026, the company said it anticipates between $152 million to $156 million in operating income. For fiscal year 2026, operating income is predicted to be in the range of $660 million to $700 million, representing a 26% to 33% increase over fiscal year 2025. The high end of the range, the company said, would be achieved by increased volume, pricing actions and improved productivity.
Carpenter also committed to fiscal year 2027 target of $765 million to $800 million in operating income with opportunities to exceed.