Carpenter Technology (CRS) Q1 2026 earnings summary

Executive summary

• Achieved record quarterly operating income of $153.3 million, up 31%–35% year-over-year, driven by strong Aerospace and Defense demand, improved product mix, and pricing actions, with SAO segment marking its fifteenth consecutive quarter of margin expansion.

• Net income increased to $122.5 million ($2.43 per diluted share), up from $84.8 million ($1.67 per diluted share) in the prior year quarter, reflecting ongoing operational improvements and cost discipline.

• Aerospace and Defense bookings accelerated, up 23% sequentially, with several high-value long-term agreements completed at significant price increases.

• Five large long-term agreements (LTAs) were negotiated with aerospace customers, all with significant price increases.

Financial highlights

• Net sales for Q1 FY2026 were $733.7 million, up 2% year-over-year; excluding surcharge revenue, sales rose 4%.

• Gross profit increased to $216.4 million (29.5% margin), up 23% year-over-year; adjusted gross margin excluding surcharge revenue was 35.9%.

• Adjusted operating income reached $153.3 million (20.9% margin), up 31% year-over-year; adjusted operating margin excluding surcharge revenue was 25.4%.

• Net income was $122.5 million, up 44% year-over-year; earnings per diluted share reached $2.43.

• Cash from operating activities was $39.2 million; adjusted free cash flow was negative $3.4 million due to higher capital expenditures.

Outlook and guidance

• FY2026 operating income guidance is $660–$700 million, a 26%–33% increase over FY2025, with line of sight to the high end.

• FY2027 operating income target reaffirmed at $765–$800 million, representing ~50% growth over FY2025.

• Q2 FY2026 operating income expected between $152 million and $156 million; SAO segment operating income expected at $168–$172 million.

• FY2026 adjusted free cash flow projected at $240–$280 million, net of $175–$185 million in brownfield expansion spending.

• FY2026 capital expenditures are projected at $280 million–$300 million, including brownfield expansion.