Companies

Carpenter Lifts Buyback After Record First-Quarter Profit

The Tip Desk · October 22, 2026 · 3 min read

Operating income reached a record $196.4 million as Aerospace and Defense demand accelerated and Specialty Alloys margins held near the prior quarter's peak.

Carpenter Technology Corporation (CRS), a maker of high-performance specialty alloys, reported record first-quarter fiscal 2027 operating income of $196.4 million, up 28% from $153.3 million a year earlier, after a sequential dip from the prior quarter’s record $206.9 million.

Net sales were $798.2 million. Excluding raw-material surcharge, net sales were $634.8 million. Adjusted operating margin excluding surcharge expanded to 30.9%, up 5.5 percentage points from 25.4% a year earlier. Earnings were $3.25 a share.

The company said the quarter reflected elevated preventive maintenance that reduced available effective capacity uptime. Demand and pricing, it said, remained strong, with Aerospace and Defense the largest end-use market.

Specialty Alloys Operations, the larger of the two reportable segments, posted operating income of $216.3 million, up 27% from $170.7 million a year earlier. SAO net sales excluding surcharge were $573.5 million. The segment’s adjusted operating margin excluding surcharge was 37.7%, essentially unchanged from the prior quarter’s record 37.8%. Carpenter said SAO results reflected higher productivity, mix management and realized pricing, and that sequential comparisons were affected by planned maintenance.

Aerospace and Defense net sales excluding surcharge were $425.4 million, or 67% of the mix, up 10% year-over-year. The company said Aerospace demand was growing on supply-chain confidence in higher production rates and elevated MRO activity, with bookings in Aerospace structural and distribution sub-markets up 23% sequentially and 49% year-over-year. Medical net sales excluding surcharge were $51.7 million, Energy $32.9 million, Transportation $19.8 million and Industrial & Consumer $83.2 million. Carpenter said it was negotiating multiple long-term agreements with significant pricing upside.

Powder Engineering Products, the smaller segment, reported operating income of $7.3 million, down $2.1 million from $9.4 million a year earlier. PEP net sales excluding surcharge were $83.0 million. The company said PEP operating income was in line with expectations, with lower Titanium sales particularly in Medical offset by strength in Additive. PEP’s adjusted operating margin excluding surcharge was 8.8%.

Cash from operating activities was $52.8 million. Free cash flow was negative $24.8 million. Capital expenditures were $77.7 million, including a brownfield capacity expansion that Carpenter said remains on schedule and on budget and is expected to come online in early fiscal 2028. Liquidity was $658.6 million, including $159.5 million of cash and $499.1 million of available borrowings; net debt to EBITDA was 0.6 times.

The company repurchased $133.9 million of stock, or 241,924 shares, completed a prior $400.0 million authorization and authorized a new $1.0 billion share repurchase program. It funded a quarterly cash dividend of $0.20 a share, or $9.9 million.

For the second quarter of fiscal 2027, Carpenter expects SAO operating income of $214 million to $218 million and PEP operating income similar to the first quarter. It said demand conditions are expected to further accelerate while operating results remain impacted by available effective capacity uptime due to holidays.

The company reiterated a fiscal 2027 operating income outlook of $850 million to $880 million, a 21% to 25% increase over record fiscal 2026 operating income of $702 million, and fiscal 2027 free cash flow of $400 million to $430 million. It restated a fiscal 2029 operating income target of $1.2 billion to $1.3 billion, which it described as a three-year compound annual growth rate of 20% to 23%, and said fiscal 2029 is not the peak, with market dynamics continuing to strengthen.

More on CRS

September 28, 2026 QBook Stronger demand supports expansion as pricing diverges

CARPENTER TECHNOLOGY CORP — all coverage and financials