Carpenter Technology (CRS) investor relations material

Executive summary

• Achieved record quarterly operating income of $186.5 million, up 20% sequentially and 35% year-over-year, driven by strong Aerospace and Defense demand and operational execution.

• Net income for the quarter was $139.6 million ($2.77 per diluted share), up from $95.4 million ($1.88 per diluted share) in the prior year.

• Generated $193.5 million in cash from operating activities and $124.8 million in adjusted free cash flow for the quarter; year-to-date cash from operating activities totaled $364.9 million.

• Demand in Aerospace and Defense is accelerating, with robust order intake, OEMs ramping production, and long-term agreements supporting growth.

• Pricing remains a tailwind, with ongoing negotiations for long-term agreements to secure supply and attractive economics.

Financial highlights

• Net sales for Q3 FY2026 were $811.5 million, up 12% year-over-year; sales excluding surcharge rose 10% year-over-year and 11% sequentially.

• Gross profit reached $251.8 million, up 25% year-over-year and 15% sequentially; gross profit margin for Q3 2026 was 31.0% (38.4% excluding surcharge revenue).

• Adjusted operating margin reached 23.0%, up from 19.0% a year ago; adjusted margin excluding surcharge revenue was 28.4%.

• Earnings per diluted share were $2.77 for the quarter.

• Year-to-date adjusted free cash flow was $207.3 million, up from $86.1 million in the prior year.

Outlook and guidance

• FY2026 operating income guidance raised to $700–$705 million, at least 33% above FY2025; Q4 FY2026 operating income expected between $205 million and $210 million.

• Adjusted free cash flow for FY2026 projected at approximately $350 million.

• Capital expenditures for FY2026 expected at $260 million.

• Updated FY2027 guidance to be provided next quarter, with expectations to exceed previous targets.

• Well-positioned for continued growth in FY2027 and beyond, driven by strong market demand and productivity gains.