CRS earnings analysis
What we found in CRS's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Carpenter Technology delivered record fiscal 2026 results, with revenue up 9% to $3.12 billion, diluted EPS up to $10.52, operating margin expanding to 22.5%, and adjusted free cash flow reaching $362.3 million. Growth and profitability were concentrated in SAO and aerospace, while PEP, Medical and Transportation declined. The outlook is strategically positive, supported by pricing, productivity, premium specialty-alloy positioning and the Athens expansion, but execution risk is rising as fiscal 2027 capital spending is expected to reach $355.0 million to $375.0 million and the CEO transition follows Brian Malloy's July 2026 death.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Record profitability and earnings growth
- Fiscal 2026 was described as the Company's most profitable year in history: net sales increased 9% to $3,124.2 million, operating income rose to $702.0 million, and diluted EPS increased to $10.52 from $7.42 in fiscal 2025 and $3.70 in fiscal 2024.
- Significant margin expansion
- Gross margin expanded to 30.6% from 26.7% in fiscal 2025 and 21.2% in fiscal 2024; excluding surcharge revenue, adjusted gross margin reached 37.8% versus 32.8% and 27.0%, respectively.
- SAO drives operating leverage
- SAO was the primary earnings engine, with operating income rising to $782.9 million and operating margin reaching 27.7%, versus $588.6 million and 23.0% in fiscal 2025. Management attributed the improvement to productivity gains, pricing realization, and a shift toward more complex, higher-value materials.
- Aerospace-led end-market momentum
- Aerospace and Defense sales increased 15% to $2,035.2 million, while Energy sales increased 15% to $230.6 million. Aerospace and Defense represented 65% of total fiscal 2026 sales, supported by higher aerospace build rates, aging-fleet replacement, and defense missile applications.
- Cash flow funds growth and returns
- Cash generation strengthened materially: operating cash flow rose to $605.0 million from $440.4 million, and adjusted free cash flow increased to $362.3 million from $287.5 million. The Company invested $242.7 million in property, plant, equipment and software, primarily for the Athens brownfield expansion.
- Specialty-alloy positioning and reach
- Management positions Carpenter as a recognized leader in high-performance specialty alloys, differentiated by premium materials, process capabilities, and its own worldwide service and distribution network. The Company operates service centers in the United States, Canada, Mexico, Europe and Asia and is evaluating strategic acquisitions, collaborations and dispositions.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Execution risk on major expansion
- The Athens brownfield expansion is increasing capital intensity: fiscal 2026 capital expenditures were $242.7 million, up from $154.3 million, and fiscal 2027 spending is expected at $355.0 million to $375.0 million. Management cautions that major capital projects could miss expected costs, schedules, capacity additions, productivity improvements or returns on investment.
- PEP decline offsets SAO strength
- PEP remains a weak point: fiscal 2026 segment sales declined 6% to $383.0 million and operating income fell to $30.1 million from $37.0 million, while operating margin declined to 7.9% from 9.1%. The decline reflected lower Medical and Distribution sales despite 3% higher PEP shipment volume.
- Firm-price and commodity exposure
- Raw-material and firm-price exposure remains material: approximately 43% of fiscal 2026 net sales were under firm-price arrangements, and raw-material purchase commitments totaled $314.7 million as of June 30, 2026, including $278.4 million due in fiscal 2027. Customer volume shortfalls could leave the Company exposed to losses on related commodity forward contracts.
- Evolving cybersecurity threat
- Cybersecurity is an increasingly explicit operational risk, including ransomware, malicious AI usage, operational-technology disruption, data breaches and third-party service-provider failures. Although the Company reported that it was not aware of any cyber risks that had materially affected it as of the filing date, a severe incident could trigger business interruption, regulatory reporting, financial impact or reputational harm.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $10.52
- Gross margin
- 30.6%
- Operating margin
- 22.5%
- Segment
- Specialty Alloys Operations: $2,826.8 million net sales, up 10%; $782.9 million operating income and 27.7% operating margin.
- Segment
- Performance Engineered Products: $383.0 million net sales, down 6%; $30.1 million operating income and 7.9% operating margin.
What they said about what is next.
No annual revenue or EPS guidance was provided. The 10-K does quantify fiscal 2027 capital expenditures, including the Athens, Alabama brownfield expansion, at $355.0 million to $375.0 million.
The filing reads better than the one before it.
What came before.
- 10-Q · April 29, 2026
- Carpenter Technology Corp reported strong Q3 results with revenues of $811.5 million, a 12% increase year-over-year. Diluted EPS rose to $2.77, reflecting a 47% increase compared to the prior year, driven by…
- 10-K · August 12, 2025
- Carpenter reported a strong FY2025 with net sales of $2,877.1 million, gross profit of $768.6 million and diluted EPS of $7.42, driven by margin expansion and higher operating income of $521.8 million. Free cash flow…
- 10-Q · April 24, 2025
- Carpenter Technology reported a strong quarter: revenue of $727.0 million (up 6% YoY) and GAAP net income of $95.4 million, or $1.88 per diluted share, driven by higher prices, improved product mix and productivity.…
- 10-Q · January 30, 2025
- Carpenter reported a strong quarter ended December 31, 2024 with net sales of $676.9 million and GAAP diluted EPS of $1.66, driven by improved product mix, pricing and productivity. Gross margin expanded to 26.2% and…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
Read the next one first.
We read every filing CRS makes the day it lands, and put it next to what the options market did about it. Members get both, and an alert when a filing arrives.
Cancel anytime · Month to month · Switch tiers whenever