Carpenter Technology (CRS) Q4 2025 earnings summary

Executive summary

• Achieved record quarterly and annual profitability in Q4 and FY2025, with Q4 adjusted operating income of $151.4M (up 21% YoY, 10% sequentially) and FY2025 adjusted operating income of $525.4M (up 48% YoY), exceeding prior targets by two years.

• SAO segment delivered its fourteenth consecutive quarter of margin expansion, reaching 30.5% in Q4 FY2025.

• Generated $201.3M in adjusted free cash flow in Q4 and $287.5M for FY2025, supporting $101.9M in share repurchases and $40.3M in dividends.

• Set new multi-year growth targets, projecting $660M–$700M in adjusted operating income for FY2026 and $765M–$800M for FY2027.

• Announced $400M brownfield capacity expansion to address high demand and supply constraints, expected to be accretive in FY2028.

Financial highlights

• Q4 FY2025 adjusted operating income: $151.4M, up from $125.2M in Q4 FY2024; adjusted operating margin rose to 24.3%.

• Q4 EPS: $2.21 per diluted share; FY2025 adjusted EPS: $7.48, up from $4.74 in FY2024.

• Q4 adjusted free cash flow: $201.3M; FY2025: $287.5M, with over 80% FCF conversion rate.

• Total liquidity at year-end was $664.4M, including $315.5M in cash and $348.9M in available credit.

• FY2025 net income was $376.0M.

Outlook and guidance

• FY2026 adjusted operating income guidance: $660M–$700M, a 26%–33% increase over FY2025; Q1 FY2026 operating income projected at $148M–$152M.

• FY2026 adjusted free cash flow guidance: $240M–$280M, net of $175M–$185M in brownfield CapEx.

• FY2026 CapEx expected at $300M–$315M, including $175M–$185M for brownfield expansion.

• FY2027 adjusted operating income target: $765M–$800M.

• FY2026 effective tax rate expected to normalize to 21%–23%.