$CRS · CARPENTER TECHNOLOGY CORP
Carpenter Technology filed its 10-Q for Q1 FY2027 (ended September 30, 2026), reporting net sales of $798.2M (+8.8% YoY), net income of $162.5M (+32.7% YoY), and diluted EPS of $3.25 vs $2.43 a year ago. The Specialty Alloys Operations (SAO) segment drove the beat with 11% revenue growth and a 29.6% operating margin (37.7% adjusted excluding surcharge). Cash and equivalents fell sharply to $159.5M from $393.3M at June 30, 2026, reflecting $133.9M in share repurchases and $77.7M in capex.
- Net income rose 32.7% YoY to $162.5M ($3.25 diluted EPS) vs $122.5M ($2.43) in Q1 FY2026.
- Net sales grew 8.8% to $798.2M, driven by SAO segment up 11% to $730.4M; PEP segment declined 3% to $91.1M.
- SAO adjusted operating margin excluding surcharge revenue expanded to 37.7% from 32.0% a year ago.
- Cash and equivalents dropped $233.8M to $159.5M, driven by $133.9M in treasury stock repurchases and $77.7M in capex.
- Gross margin improved to 32.1% from 29.5% YoY; operating margin reached 24.6% vs 20.9%.
Stock closed regular session at $292.26, down 20.62% on the day, but extended-hours last trade at $294.00 shows a +0.60% recovery vs the regular close. The after-hours uptick suggests the Q1 beat is providing some stabilization after a sharp selloff.
A 33% earnings surge and 37.7% SAO adjusted margin confirm exceptional execution, but the $233.8M cash drawdown in one quarter raises sustainability questions.
Carpenter's SAO segment — supplying aerospace, defense, and medical end markets — continues to benefit from strong specialty alloy demand. The 37.7% adjusted operating margin in SAO underscores pricing power in a supply-constrained niche.
Cash burn is notable: cash fell from $393.3M to $159.5M in one quarter, with $133.9M spent on buybacks and $77.7M on capex. Inventories built $61.6M, and accrued liabilities dropped $88.5M, tightening liquidity. The PEP segment continues to weaken, down 3% YoY.
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