PHILADELPHIA, PA — Carpenter Technology Corporation (NYSE: CRS) reported a 28% increase in operating income for its fiscal first quarter as accelerating commercial aerospace demand, higher pricing and manufacturing improvements lifted profitability, prompting the specialty metals producer to reaffirm its forecast for double-digit earnings growth this year.
The company generated record first-quarter operating income of $196.4 million for the three months ended September 30, up from $153.3 million a year earlier. Earnings rose to $3.25 per diluted share from $2.43.
Revenue increased 9% to $798.2 million from $733.7 million. Excluding surcharge revenue, sales climbed 5% to $634.8 million.
Carpenter maintained its fiscal 2027 operating income forecast of $850 million to $880 million, representing growth of 21% to 25% over fiscal 2026.
The company also reaffirmed its fiscal 2029 operating income target of $1.2 billion to $1.3 billion, supported by anticipated aerospace demand, pricing improvements and additional manufacturing capacity.
Commercial aerospace emerged as a principal growth driver during the quarter. Bookings in the aerospace structural and distribution markets increased 23% from the preceding quarter and 49% from a year earlier.
Chief Executive Officer Tony R. Thene said demand was strengthening across the aerospace supply chain as aircraft manufacturers and suppliers increased production activity.
“Customers in the aerospace structural and distribution sub-markets have increasing confidence in the industry’s ability to ramp and our engine customers are increasing activity to support new builds and elevated MRO activity,” Thene said, referring to maintenance, repair and overhaul.
The increase in bookings indicates stronger demand for specialized materials used in aircraft structures and engines, providing additional support for Carpenter’s longer-term production outlook.
The company’s Specialty Alloys Operations segment generated $216.3 million in operating income, a 27% increase from the prior-year quarter.
Its adjusted operating margin expanded to 37.7% from 32% a year earlier, reflecting improvements in manufacturing productivity, product mix and pricing.
Sequentially, however, total operating income declined 5%, while Specialty Alloys Operations income fell 6%.
Carpenter attributed the quarterly declines partly to planned preventive maintenance downtime, which offset some of the benefits from stronger pricing and operational improvements.
The company expects operating income of $192 million to $197 million in the fiscal second quarter, broadly consistent with the first quarter’s performance.
Carpenter’s longer-term growth plans include a brownfield manufacturing expansion intended to increase capacity within its existing operations.
That investment is contributing to higher capital expenditures and weaker free cash flow despite improved earnings.
Cash provided by operating activities increased to $52.8 million from $39.2 million a year earlier, reflecting higher profitability partially offset by working capital requirements, particularly inventory.
Free cash flow deteriorated to negative $24.8 million from negative $3.4 million in the comparable period.
Capital expenditures rose to $77.7 million from $42.6 million, with the increase primarily associated with the brownfield expansion project.
The figures illustrate the company’s increased investment requirements as it prepares to meet anticipated demand from aerospace and other end markets.
Carpenter also continued returning capital to shareholders, repurchasing 241,924 common shares for $133.9 million during the quarter.
The company authorized an additional $1 billion share repurchase program in August 2026. As of September 30, approximately $985 million remained available under that authorization.
Carpenter ended the quarter with $658.6 million in total liquidity, consisting of $159.5 million in cash and $499.1 million in available borrowing capacity under its credit facility.
Management said it is evaluating additional operational initiatives that could lift profitability beyond its existing fiscal 2027 and 2029 targets.
The company’s near-term outlook remains tied to continued aerospace production growth, stronger pricing and the ability to expand manufacturing capacity while sustaining operating margins.
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