Q2 2026 Carpenter Technology Corp Earnings Call Transcript
Key Points
- Carpenter Technology Corp (CRS) reported record earnings with $155 million in operating income, a 31% increase over the same quarter last year.
- The SAO segment achieved an all-time high adjusted operating margin of 33.1%, marking the 16th consecutive quarter of margin expansion.
- Strengthening market demand, particularly in the aerospace and defense sectors, with commercial aerospace bookings up 23% sequentially.
- Successful completion of three additional long-term agreements with aerospace customers, resulting in significant price increases.
- Strong cash generation with $132.2 million from operating activities and an expected adjusted free cash flow of at least $280 million for fiscal year 2026.
- Sales in the medical end-use market were down 7% sequentially and 22% year over year, primarily due to decreased demand for certain titanium products.
- Defense sub-market orders were materially down in the quarter due to the government's shutdown and uncertainty in the defense budget.
- Sequential sales were down 2% despite a 4% increase in volume, influenced by planned maintenance and holiday schedules.
- The PEP segment saw a decline in operating income, primarily driven by lower demand from specific medical customers.
- Concerns about the supply/demand imbalance for nickel-based super alloys, with no significant increases in supply since 2019, potentially impacting future pricing and availability.
Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the Carpenter Technology's second-quarter fiscal year earnings call. (Operator Instructions) I would now like to turn the conference over to John Huyette. You may begin.
Thank you, operator. Good morning, everyone, and welcome to the Carpenter Technology earnings conference call for the fiscal 2026 second quarter ended December 31, 2025. This call is also being broadcast over the Internet along with presentation slides. For those of you listening by phone, you may experience a time delay in slide movement.
Speakers on the call today are Tony Thene, Chairman and Chief Executive Officer; and Tim Lain, Senior Vice President and Chief Financial Officer.
Statements made by management during this earnings presentation that are forward-looking statements are based on current expectations. Risk factors that could
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