Carpenter Technology Q4 Earnings Call Highlights

Carpenter Technology reported fiscal Q4 operating income of $206.9 million, up 37% year over year, while Specialty Alloys Operations achieved a record 37.8% adjusted operating margin. Aerospace and defense sales rose 17% year over year, and the company forecasts fiscal 2027 operating income of $850 million to $880 million, up approximately 21% to 25% from fiscal 2026. Tony Thene was reappointed CEO indefinitely following Brian Malloy’s death. Carpenter said its Brownfield expansion remains on schedule for fiscal 2028 completion and could add roughly $150 million in annual operating income by fiscal 2030. Carpenter Technology NYSE: CRS reported record fourth-quarter and full-year profitability for fiscal 2026, citing stronger demand across aerospace, defense and other high-value markets, continued margin expansion and disciplined operational execution. The company also announced that Chairman, President and Chief Executive Officer Tony Thene had been reappointed as CEO following the sudden death of Brian Malloy, who had assumed the role on July 1. Thene said his appointment was not interim and that the board was not conducting an external search. The plan is for me to remain as the CEO for an indefinite period of time, Thene said, while offering condolences to Malloy’s family and describing him as a respected leader who had helped advance Carpenter’s strategic priorities since joining the company in 2015. Record quarterly earnings and SAO margin For the fiscal fourth quarter ended June 30, Carpenter reported operating income of $206.9 million, up 37% from the prior-year period and 11% sequentially. The result surpassed the company’s prior quarterly record, set in the third quarter. Sales excluding surcharge increased 9% year over year on 22% higher volume, and rose 4% sequentially on 11% higher volume, according to Chief Financial Officer Tim Lain. Gross profit reached $268.9 million, up 26% from a year earlier, while SG&A expense was roughly flat year over year at $62 million. Diluted earnings per share were $3.23, while the effective tax rate was 20.7%. Lain said the tax rate was lower than anticipated because of discrete tax benefits associated with certain equity awards. The company’s Specialty Alloys Operations, or SAO, segment generated $607.4 million in sales excluding surcharge and $229.7 million in operating income, both reflecting strong volume and profitability. SAO’s adjusted operating margin rose to a record 37.8%, compared with 35.6% in the preceding quarter and 30.5% a year earlier. Lain said the segment’s lower average reported base price per pound reflected a higher mix of lower-priced products rather than declining prices. Those products can carry comparable margins, he said, and the segment’s margin expansion reflected productivity gains, production scheduling, cost management and planned maintenance execution. The Performance Engineered Products, or PEP, segment reported fourth-quarter sales excluding surcharge of $98.2 million, up 1% year over year and 8% sequentially. Operating income was $7.1 million, compared with $11.7 million a year earlier and $6.7 million in the third quarter. Demand trends across end markets Aerospace and defense sales increased 3% sequentially and 17% year over year in the fourth quarter. Thene said aircraft manufacturers continue pursuing higher production rates against a backlog of about 16,000 aircraft, while engine manufacturers remain focused on securing supply for both production an.