CARPENTER TECHNOLOGY CORP
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Aug 12, 2026
CRS$278.31-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-06-30; filed 2025-08-12.
0000017843-25-000021
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking StatementsCurrent report: 10-K
Period ended 2026-06-30; filed 2026-08-12.
0000017843-26-000034
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking StatementsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 203 previous paragraphs and 198 current paragraphs.
125 unchanged; 56 reworded; 12 added; 15 removed; 7 previous and 5 current paragraphs rearranged.
Tables are not compared: 26 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Carpenter Technology completed fiscal year 2026 as the most profitable year in the Company’s history, realizing $702.0 million in operating income. This represents an increase in adjusted operating income of $176.6 million, or 34 percent, from fiscal year 2025 when excluding the $3.6 million of restructuring charges discussed below. The SAO segment drove results, exceeding expectations with $782.9 million of operating income and an operating margin of 27.7 percent of net sales (34.7 percent of net sales excluding surcharge revenue) compared to operating income of $588.6 million, or 23.0 percent of net sales (28.6 percent of net sales excluding surcharge revenue), for fiscal year 2025. Margin expansion in fiscal year 2026 was driven by a combination of continued productivity gains and pricing realization across both long-term and transactional business. These factors enabled SAO to deliver its strongest operating performance to date.
Current report
Over the last several years, Carpenter Technology has fundamentally transformed itself, becoming stronger, more focused and more profitable. We remain confident in our strategy, which has driven our transformation and positions us well to capture even greater opportunities ahead. We are focused on serving attractive, high-value end-use markets with applications where performance matters and failure is simply not an option. The combination of our current performance, visible growth opportunities, and long-term strategic positioning creates a compelling value creation story. We delivered record results in fiscal year 2026, we have a clear path to significant earnings growth over the next several years, and we are positioned to create substantial long-term value for our shareholders. Most importantly, we believe our greatest opportunities remain ahead of us.
Current report
During fiscal year 2026, we recorded debt extinguishment losses of $15.6 million. Special items included in our fiscal year 2025 results included restructuring and asset impairment charges of $3.6 million as a result of actions taken to streamline operations in the Carpenter Additive business in the PEP segment, as announced in the quarter ended June 30, 2024.
Current report
Transportation end-use market sales of $100.4 million reflect an 11 percent decrease from fiscal year 2025. Excluding surcharge revenue, sales decreased 11 percent. The fiscal year 2026 results reflect lower production rates for internal combustion engines in the light-duty sub-market compared to fiscal year 2025.
Current report
Industrial and Consumer end-use market sales of $401.8 million increased 12 percent from fiscal year 2025. Excluding surcharge revenue, sales increased 11 percent. The fiscal year 2026 results reflect higher demand in numerous Industrial sub-markets, primarily semiconductor materials, compared to fiscal year 2025.
Current report
Our operating income in fiscal year 2026 was $702.0 million, or 22.5 percent of net sales (27.8 percent of net sales excluding surcharge revenue). Operating income in fiscal year 2025 was $521.8 million, or 18.1 percent of net sales and excluding special items, adjusted operating income was $525.4 million (22.4 percent of net sales excluding surcharge revenue). Results for fiscal year 2026 reflect ongoing improvement in the SAO segment with higher realized prices, as well as expanded operating efficiencies compared to fiscal year 2025.
Current report
Interest Expense, Net and Debt Extinguishment Losses
Current report
Debt extinguishment losses for the fiscal year ended June 30, 2026, were $15.6 million related to the prepayment, in full, of the senior unsecured notes due July 2028 and March 2030. This consisted of $11.4 million of debt prepayment costs and $4.2 million of accelerated issue costs. There were no debt extinguishment losses for the fiscal year ended June 30, 2025.
Current report
Other (Income) Expense, Net
Current report
Net sales in fiscal year 2026 for the SAO segment increased 10 percent to $2,826.8 million, as compared with $2,563.6 million in fiscal year 2025. Excluding surcharge revenue, net sales increased 10 percent on 8 percent higher shipment volume as compared to fiscal year 2025. The SAO segment results reflect higher sales in the Aerospace and Defense and Energy end-use markets of 15 percent and 14 percent, respectively. This was driven by realized price increases compared to fiscal year 2025.
Current report
Operating income for the SAO segment in fiscal year 2026 was $782.9 million, or 27.7 percent of net sales (34.7 percent of net sales excluding surcharge revenue), compared to operating income of $588.6 million, or 23.0 percent of net sales (28.6 percent of net sales excluding surcharge revenue), for fiscal year 2025. Fiscal year 2026 reflects a combination of continued productivity gains and pricing realization across both long-term and transactional business compared to fiscal year 2025.
Current report
Adjusted Earnings Per Diluted Share
Removed paragraphs (15)
Previous report
Fiscal year 2025 was the most profitable year in Carpenter Technology’s history with operating income of $521.8 million or adjusted operating income of $525.4 million. This represents an increase in adjusted operating income of $171.3 million, or 48 percent, from the prior fiscal year when excluding the special items as discussed below. We continue to drive earnings momentum through improved productivity, product mix optimization and pricing actions. Notably, the SAO segment exceeded expectations by generating $588.6 million of operating income with an operating margin of 23.0 percent of net sales (28.6 percent of net sales excluding surcharge revenue). We have continued to deliver record results, despite disruptions in the supply chains where we participate. We offer a broad portfolio of highly specialized alloys, serving high value applications in high growth end-use markets.
Previous report
Looking over the long term, the same dynamics that are driving our current performance are expected to get stronger. The markets that we serve, specifically Aerospace and Defense, Medical and Energy have a strong, multi-year outlook. Further, our customers rely on our diverse portfolio of advanced material solutions and world class capabilities, and we are investing to accelerate our growth with our recently announced brownfield primary and secondary melt capacity expansion. Altogether, Carpenter Technology is well positioned to achieve our goals and we believe our earnings growth journey will extend far beyond fiscal year 2025.
Previous report
Net sales for fiscal year 2024 were$2,759.7 million, which represents an 8 percent increase from fiscal year 2023. Excluding surcharge revenue, sales were 17 percent higher than fiscal year 2023 on 4 percent lower volume. The results reflect double-digit sales growth across Aerospace and Defense, Medical and Energy end-use markets versus the prior year period driven by realized price increases and improved product mix.
Previous report
Sales to the Aerospace and Defense end-use market increased 19 percent from fiscal year 2023 to$1,538.8 million. Excluding surcharge revenue, sales increased 30 percent on 11 percent higher shipment volume. The fiscal year 2024 results reflect increases across all Aerospace end-use sub-markets. This was driven by ramping activity levels across the aerospace supply chain due to higher aircraft build rates to replace aging fleets and meet increasing passenger travel demand. The fiscal year 2023 results reflected increases across all Aerospace end-use sub-markets. This was driven by ramping activity levels across the aerospace supply chain due to higher aircraft build rates to replace aging fleets and to meet increasing passenger travel demand.
Previous report
Sales to the Medical end-use market increased 25 percent to$375.6 million from fiscal year 2023. Excluding surcharge revenue, sales increased 31 percent on 14 percent higher shipment volume. The fiscal year 2024 results reflect higher demand across all applications as the medical supply chain replenishes inventory levels to meet higher patient demand for elective medical procedures.
Previous report
Sales to the Energy end-use market of $185.8 million reflected a 14 percent increase from fiscal year 2023. Excluding surch arge revenue, sales increased 25 percent on 12 percent higher shipment volume. The fiscal year 2024 results reflect increasing oil consumption benefiting the oil and gas sub-market and higher demand for power generation materials compared to fiscal year 2023.
Previous report
Transportation end-use market sales of $149.1 million reflected a 19 percent decrease from fiscal year 2023. Excluding surcharge revenue, sales decreased 11 percent on 23 percent lower shipment volume. The results reflect lower demand across light, medium and heavy-duty vehicle applications offset partially by higher demand in specialty transportation applications compared to fiscal year 2023. The fiscal year 2024 results also reflect the negative impact of employee union strikes in North America which did not occur in fiscal year 2023.
Previous report
Industrial and Consumer end-use market sales of $415.3 million decreased 15 percent from fiscal year 2023. Excluding surcharge revenue, sales decreased 6 percent on 26 percent lower shipment volume. The fiscal year 2024 results reflect lower demand in both Industrial and Consumer end-use markets partially offset by realized price increases compared to fiscal year 2023.
Previous report
Goodwill Impairment Charge
Previous report
Our operating income in fiscal year 2024 was $323.1 million, or 11.7 percent of net sales, as compared with $133.1 million of operating income, or 5.2 percent of net sales in fiscal year 2023. Excluding surcharge revenue and special items, adjusted operating income was $354.1 million or adjusted operating margin of 16.3 percent for fiscal year 2024 and 7.2 percent for fiscal year 2023. Results for fiscal year 2024 reflect ongoing improvement in product mix, higher realized prices, as well as expanded operating efficiencies compared to fiscal year 2023. Our fiscal year 2023 operating results reflected higher sales in key end-use markets, increased productivity at our facilities, improved product mix and realized price increases.
Previous report
Interest Expense, Net
Previous report
Other Expense, Net
Previous report
The fiscal year 2023 tax expense included the unfavorable impacts of losses in certain foreign jurisdictions for which no tax benefit can be recognized as well as tax charges of $0.3 million for the impact of a state tax legislative change and $0.4 million resulting from changes in our prior year tax positions. Also included were tax benefits of $1.0 million for anticipated interest on IRS income tax refund claims and $0.9 million for decreases in state valuation allowances for deferred tax assets resulting from changes in our ability to utilize certain state net operating loss carryforwards.
Previous report
Net sales in fiscal year 2024 for the SAO segment increased 10 percent to $2,443.8 million, as compared with $2,213.6 million in fiscal year 2023. Excluding surcharge revenue, net sales increased 22 percent on 2 percent lower shipment volume as compared to fiscal year 2023. The higher sales excluding surcharge revenue in the SAO segment reflect double-digit percentage growth in the end-use markets of Aerospace and Defense, Medical and Energy driven by productivity gains, stronger product mix and pricing actions compared to fiscal year 2023.
Previous report
Adjusted Earnings Per Dilutive Share
Reworded paragraphs (56)
Previous wording
Approximately 40 percent of our net sales are sales to customers under firm price sales arrangements. Firm price sales arrangements involve a risk of profit margin fluctuations, particularly when raw material prices are volatile. In order to reduce the risk of fluctuating profit margins on these sales, we enter into commodity forward contracts to purchase certain critical raw materials necessary to produce the related products sold. Firm price sales arrangements generally include certain annual purchasing commitments and consumption schedules agreed to by the customers at selling prices based on raw material prices at the time the arrangements are established. If a customer fails to meet the volume commitments (or the consumption schedule deviates from the agreed-upon terms of the firm price sales arrangements), we may need to absorb the gains or losses associated with the commodity forward contracts on a temporary basis. Gains or losses associated with commodity forward contracts are reclassified to earnings (loss) when earnings are impacted by the hedged transaction. Because we value most of our inventory under the LIFO costing methodology, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period attempting to match the most recently incurred costs with revenue. Gains and/or losses on the commodity forward contracts are reclassified from accumulated other comprehensive income (loss) ("AOCI") together with the actual purchase price of the underlying commodities when the underlying commodities are purchased and recorded in inventory. To the extent that the total purchase price of the commodities, inclusive of the gains or losses on the commodity forward contracts, are higher or lower relative to the beginning of year costs, our cost of goods sold reflects such amounts. Accordingly, the gains and/or losses associated with commodity forward contracts may not impact the same period that the firm price sales arrangements revenue is recognized, and comparisons of gross profit from period to period may be impacted. These firm price sales arrangements are expected to continue as we look to strengthen our long-term customer relationships by expanding, renewing and, in certain cases, extending to a longer term, our customer long-term arrangements.
Current wording
During fiscal year 2026, approximately 43 percent of our net sales were sales to customers under firm price sales arrangements. Firm price sales arrangements involve a risk of profit margin fluctuations, particularly when raw material prices are volatile. In order to reduce the risk of fluctuating profit margins on these sales, we may enter into commodity forward contracts to purchase certain critical raw materials necessary to produce the related products sold. Firm price sales arrangements generally include certain annual purchasing commitments and consumption schedules agreed to by the customers at selling prices based on raw material prices at the time the arrangements are established. If a customer fails to meet the volume commitments (or the consumption schedule deviates from the agreed-upon terms of the firm price sales arrangements), we may need to absorb the gains or losses associated with the commodity forward contracts on a temporary basis. Gains or losses associated with commodity forward contracts are reclassified to earnings (loss) when earnings are impacted by the hedged transaction. Because we value most of our inventory under the LIFO costing methodology, changes in the cost of raw materials and production activities are recognized in cost of sales in the current period attempting to match the most recently incurred costs with revenues. Gains and/or losses on the commodity forward contracts are reclassified from accumulated other comprehensive income (loss) ("AOCI") together with the actual purchase price of the underlying commodities when the underlying commodities are purchased and recorded in inventory. To the extent that the total purchase price of the commodities, inclusive of the gains or losses on the commodity forward contracts, are higher or lower relative to the beginning of year costs, our cost of goods sold reflects such amounts. Accordingly, the gains and/or losses associated with commodity forward contracts may not impact the same period that the firm price sales arrangements revenue is recognized, and comparisons of gross profit from period to period may be impacted. These firm price sales arrangements are expected to continue as we look to strengthen our long-term customer relationships by expanding, renewing and, in certain cases, extending to a longer term, our customer arrangements.
Previous wording
The following is a summary of the net pension expense for the years ended June 30, 2025,2024 and 2023:
Current wording
The following is a summary of the net pension expense for the years ended June 30, 2026, 2025 and 2024:
Previous wording
The service cost component of net pension expense represents the estimated cost of future pension liabilities earned associated with active employees. The pension earnings, interest and deferrals is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs and benefits.
Current wording
The service cost component of net pension expense represents the estimated cost of future pension liabilities earned associated with active employees. The pension earnings, interest and deferrals are comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs and benefits.
Previous wording
Net periodic expense is recorded in accounts that are included in both the cost of sales and selling, general and administrative expenses based on the function of the associated employees and in other expense, net. The following is a summary of the classification of net pension expense for the years ended June 30,2025,2024 and 2023:
Current wording
Net pension expense is recorded in accounts that are included in cost of sales, selling, general and administrative expenses and other (income) expense, net based on the function of the associated employees and nature of expense. The following is a summary of the classification of net pension expense for the years ended June 30, 2026, 2025 and 2024:
Previous wording
As of June 30, 2025 and 2024, amounts capitalized in gross inventory were $1.6 million and $1.6 million, respectively.
Current wording
As of June 30, 2026 and 2025, service cost amounts related to the net pension expense capitalized in gross inventory were $1.0 million and $1.6 million, respectively.
Previous wording
In addition to the strong operating performance, we generated $440.4 million of cash from operating activities in fiscal year 2025, as compared with cash generated from operating activities of $274.9 million in fiscal year 2024. Adjusted free cash flow was $287.5 million in fiscal year 2025, as compared with adjusted free cash flow of $179.0 million in fiscal year 2024. With a strong balance sheet and adjusted free cash flow, we will continue to take a balanced approach to capital allocation: sustaining our current asset base to achieve our targets, returning cash to stockholders through our stock buyback and dividend programs and investing in incremental growth initiatives, including the recently announced brownfield expansion project in Athens, Alabama. During fiscal year 2025, we repurchased 575,000 shares of our common stock in the open market for an aggregate $101.9 million and paid dividends of $40.3 million.
Current wording
The profitability improvement was accompanied by meaningful cash generation, reflecting the higher earnings and continued discipline in working capital management. We generated $605.0 million of cash from operating activities in fiscal year 2026, as compared with cash generated from operating activities of $440.4 million in fiscal year 2025. Adjusted free cash flow was $362.3 million in fiscal year 2026, as compared with $287.5 million in fiscal year 2025. With a strong balance sheet and adjusted free cash flow, we will continue to take a balanced approach to capital allocation: sustaining our current asset base to achieve our targets, returning cash to stockholders through our stock buyback and dividend programs and investing in incremental growth initiatives, including the brownfield expansion project in Athens, Alabama. During fiscal year 2026, we repurchased 545,000 shares of our common stock in the open market for an aggregate $179.1 million and paid dividends of $40.3 million.
Previous wording
We continue to closely monitor the evolving tariff news as well as engage with our customers and suppliers to analyze how tariffs could impact our business. We, as well as others in our industry, have established long-standing surcharge mechanisms to pass through changes in raw material prices to our customers. We expect to use these surcharge mechanisms to pass through the impact of any incremental tariffs on our raw material costs to our customers. As such, at this time, based on current information, we believe there will not be a material impact to the Company.
Current wording
We continue to closely monitor the evolving conflict among the United States, Israel and Iran and its impact to the end-use markets we serve. We also continue to monitor the ongoing tariff changes and engage with our customers and suppliers to analyze how these items could impact our business. We, as well as others in our industry, have established long-standing surcharge mechanisms to pass through changes in raw material prices to our customers. We have in the past used and plan to continue using these surcharge mechanisms to pass through the impact of any incremental tariffs on our raw material costs to our customers. As such, at this time and based on current information, we believe these items will not have a material impact on the Company.
Previous wording
For fiscal year 2024, we reported net income of$186.5 million, or$3.70 earnings per diluted share. This compares with netincome of$56.4 million, or$1.14 earnings per diluted share in fiscal year 2023. Excluding special items, as identified below, adjusted earnings per diluted share was $4.74 in fiscal year 2024. There were no reported special items for fiscal year 2023. The results for fiscal year 2024 compared to fiscal year 2023 were driven by ongoing improvement in product mix, higher realized prices, as well as expanded operating efficiencies.
Current wording
For fiscal year 2026, we reported net income of $529.8 million, or $10.52 earnings per diluted share. This compares with net incomeof $376.0 million, or $7.42 earnings per diluted share, in fiscal year 2025. Excluding special items, as identified below, adjusted earnings per diluted share was $10.76 in fiscal year 2026, and $7.48 in fiscal year 2025. The results for fiscal year 2026 compared to fiscal year 2025 reflect continued productivity gains and pricing realization across both long-term and transactional business.
Previous wording
Geographically, domestic net sales increased 4 percent from fiscal year 2023. Excluding surcharge revenue, domestic sales increased 15 percent driven by stronger demand in the end-use markets of Aerospace and Defense, Medical and Energy. Net sales outside the United States incr eased 14 percent from fiscal year 2023 to $1,136.7 million for fiscal year 2024. Excluding surcharge revenue, sales outside the United States increased 21 percent, reflecting stronger demand in the end-use markets of Aerospace and Defense, Medical and Energy in the European and Asia Pacific regions compared to fiscal year 2023. A portion of our sales outside the United States are denominated in foreign currencies. The impact of fluctuations in foreign currency exchange rates resulted in a $1.9 million increase in sales during fiscal year 2024 compared to fiscal year 2023. International sales as a percentage of our total net sales represented 41 percent and 39 percent for fiscal year 2024 and fiscal year 2023, respectively.
Current wording
Geographically, domestic net sales increased 7 percent from fiscal year 2025. Excluding surcharge revenue, domestic sales increased 6 percent driven by increases in the Aerospace and Defense, Energy and Industrial and Consumer end-use markets. Net sales outside the United States increased 10 percent from fiscal year 2025 to $1,300.0 million for fiscal year 2026. Excluding surcharge revenue, sales outside the United States increased 10 percent, driven by higher sales in the Aerospace and Defense end-use market in all regions, higher Energy end-use markets sales in the European region offset by lower Energy end-use market sales in the Asia Pacific region compared to fiscal year 2025. A portion of our sales outside the United States are denominated in foreign currencies. The impact of fluctuations in foreign currency exchange rates resulted in a $3.4 million increase in sales during fiscal year 2026 compared to fiscal year 2025. International sales as a percentage of our total net sales represented 42 percent and 41 percent for fiscal year 2026 and 2025, respectively.
Previous wording
We sell to customers across diversified end-use markets. We believe that net sales by end-use markets is helpful supplemental information in analyzing the performance of the business from period to period. The following table includes comparative information for our net sales, which includes surcharge revenue, by principal end-use markets:
Current wording
We sell to customers across diversified end-use markets. We believe that presenting net sales by end-use markets is helpful supplemental information in analyzing the performance of the business from period to period. The following table includes comparative information for our net sales, which includes surcharge revenue, by principal end-use markets:
Previous wording
Gross profit in fiscal year 2024 increased to $584.3 million, or 21.2 percent of net sales, from $337.3 million, or 13.2 percent of net sales for fiscal year 2023. The fiscal year 2024 results reflect 8 percent increased sales with a stronger product mix driven by higher prices and improved operational efficiencies, compared to fiscal year 2023. Excluding the impact of surcharge revenue, our adjusted gross margin in fiscal year 2024 was 27.0 percent. This compares to adjusted gross margin of 18.3 percent in fiscal year 2023.
Current wording
Gross profit in fiscal year 2026 increased to $955.5 million, or 30.6 percent of net sales, from $768.6 million, or 26.7 percent of net sales for fiscal year 2025. The fiscal year 2026 results reflect 9 percent increased sales with an ongoing improvement in the SAO segment with a shift in capacity to more complex, higher value materials as well as pricing actions and expanding operational efficiencies compared to fiscal year 2025. Excluding the impact of surcharge revenue, our adjusted gross margin in fiscal year 2026 was 37.8 percent. This compares to adjusted gross margin of 32.8 percent in fiscal year 2025.
Previous wording
Our surcharge mechanism is structured to recover increases in raw material costs, although in certain cases with a lag effect as discussed above. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. The following represents a summary of the dilutive impact of the surcharge on gross margin. We present and discuss these financial measures because management believes removing the impact of these items provides a more consistent and meaningful basis for comparing results of operations from period to period. See the section "Non-GAAP Financial Measures" below for further discussion of these financial measures.
Current wording
Our surcharge mechanism is structured to recover increases in raw material costs, although in certain cases with a lag effect as discussed above. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. We present and discuss these financial measures because management believes removing the impact of these items provides a more consistent and meaningful basis for comparing results of operations from period to period. See the section "Non-GAAP Financial Measures" below for further discussion of these financial measures. The following represents a summary of the dilutive impact of the surcharge on gross margin:
Previous wording
Selling, general and administrative expenses in fiscal year 2024 were $230.2 million, or 8.3 percent of net sales (10.6 percent of net sales excluding surcharge revenue), compared to $204.2 million, or 8.0 percent of net sales (11.0 percent of net sales excluding surcharge revenue), in fiscal year 2023. The higher selling, general and administrative expenses in fiscal year 2024 reflect higher variable compensation charges compared to fiscal year 2023.
Current wording
Selling, general and administrative expenses in fiscal year 2026 were $253.5 million, or 8.1 percent of net sales (10.0 percent of net sales excluding surcharge revenue), compared to $243.2 million, or 8.5 percent of net sales (10.4 percent of net sales excluding surcharge revenue), in fiscal year 2025. The higher selling, general and administrative expenses in fiscal year 2026 reflect higher salary, benefit, and variable compensation charges compared to fiscal year 2025.
Previous wording
During fiscal year 2024, restructuring and asset impairment charges were $16.9 million, compared to no restructuring and asset impairment charges in fiscal year 2023. Restructuring activities were a result of actions taken to streamline operations in our Carpenter Additive business in the PEP segment during fiscal year 2024. This included $15.8 million of noncash pre-tax impairment charges related to $8.8 million of property, plant, equipment and software and $7.0 million associated with a certain definite lived intangible asset.
Current wording
During fiscal year 2026, there were no restructuring and asset impairment charges compared to $3.6 million in fiscal year 2025. The charges in fiscal year 2025 were a result of actions taken to streamline operations in our Carpenter Additive business in the PEP segment, as announced in the quarter ended June 30, 2024. This included $2.5 million of noncash pre-tax inventory impairment charges and $1.1 million of costs related to the decommissioning of property, plant and equipment previously impaired.
Previous wording
Special items included in fiscal year 2024 operating income include a noncash goodwill impairment charge of $14.1 million related to the Latrobe Distribution reporting unit in the PEP segment and restructuring and asset impairment charges of $16.9 million as a result of actions taken to streamline operations in the Carpenter Additive business.
Current wording
The special items included in fiscal year 2025 operating income represent restructuring and asset impairment charges of $3.6 million as a result of actions taken to streamline operations in the Carpenter Additive business, as announced in the quarter ended June 30, 2024.
Previous wording
Fiscal year 2024 interest expense, net was $51.0 million compared to $54.1 million in fiscal year 2023. Capitalized interest reduced interest expense, net by $1.6 million in fiscal year 2024 and by $1.5 million in fiscal year 2023. The lower interest expense, net in fiscal year 2024 is largely due to less short-term borrowings under our Credit Facility compared to fiscal year 2023.
Current wording
Fiscal year 2026 interest expense, net was $37.8 million compared to $48.4 million in fiscal year 2025. The lower interest expense, net in fiscal year 2026 is due to higher capitalized interest and a lower interest rate on the 2034 Notes as compared to the notes that were prepaid and redeemed in full in November 2025 compared to fiscal year 2025. Capitalized interest reduced interest expense by $7.9 million for fiscal year 2026 and by $2.6 million in fiscal year 2025.
Previous wording
Other expense, net for fiscal year 2024 was $60.5 million compared with other expense, net of $6.5 million in fiscal year 2023. Fiscal year 2024 reflects $14.4 million of expense from pension earnings, interest and deferrals compared to $10.0 million of expense from pension earnings, interest and deferrals in fiscal year 2023, driven by lower than expected returns on plan assets. The results for fiscal year 2024 also include a noncash pension settlement charge of $51.9 million.
Current wording
Other income, net for fiscal year 2026 was $7.6 million compared with other expense, net of $6.1 million in fiscal year 2025. Fiscal year 2026 reflects $6.0 million of expense from pension earnings, interest and deferrals compared to $15.5 million of expense in fiscal year 2025, driven by higher than expected returns on plan assets. Interest income in fiscal year 2026 is $8.8 million, as compared to $7.5 million in fiscal year 2025.
Previous wording
The One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025. The provisions of the OBBBA have varying effective dates. The OBBBA allows an elective deduction for domestic research and development expenses, a reinstatement of elective 100 percent first-year bonus depreciation and modifies the tax rates on Foreign-Derived Deduction Eligible Income and income from non-U.S. subsidiaries (Net CFC Tested Income), among other provisions. We are currently evaluating the impact of these provisions. A quantitative estimate of the specific financial effects cannot be reasonably determined at this time due to the complexity of the changes in the tax reform. The impact of the provisions in the OBBBA will depend on our facts in each fiscal year and anticipated guidance from the Internal Revenue Service.
Current wording
The One Big Beautiful Bill Act ("OBBBA") was signed into law on July 4, 2025. The provisions of the OBBBA have varying effective dates. The OBBBA allows an elective deduction for domestic research and development expenses, a reinstatement of elective 100 percent first-year bonus depreciation and modifies the tax rates on Foreign-Derived Deduction Eligible Income and income from non-U.S. subsidiaries (Net CFC Tested Income), among other provisions. The impact of the provisions in the OBBBA will depend on our facts in each fiscal year and anticipated guidance from the Internal Revenue Service; however, we do not expect they will have a material impact on our effective tax rate.
Previous wording
On October 8, 2021, the Organization for Economic Co-operation and Development ("OECD") released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released Pillar Two model rules defining a 15 percent global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework. In June 2025, the U.S. and the G-7 countries announced the intention to reach an agreement that would exempt U.S. parented multinationals from certain of the Pillar Two rules. The details of that agreement and its applicability globally have not been finalized. We determined the Pillar Two Framework as it exists today does not have a significant impact on our financial position, results of operations or cash flows.
Current wording
On October 8, 2021, the Organization for Economic Co-operation and Development ("OECD") released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released Pillar Two model rules defining a 15 percent global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework. In June 2025, the U.S. and the G-7 countries announced the intention to reach an agreement that would exempt U.S. parented multinationals from certain of the Pillar Two rules. In January 2026, additional guidance, the "Side-by Side Package", was released. We are currently evaluating the guidance. The Pillar Two Framework as it exists today does not have a significant impact on our financial position, results of operations or cash flows.
Previous wording
Net sales for fiscal year 2024 for the PEP segment were $411.0 million as compared with $433.7 million for fiscal year 2023. Excluding surcharge revenue, net sales decreased 5 percent from fiscal year 2023 on 15 percent lower shipment volume. The results reflect higher sales in Aerospace and Defense and Medical end-use markets, in particular Medical end-use market sales excluding surcharge increased 17 percent compared to fiscal year 2023.
Current wording
Net sales for fiscal year 2026 for the PEP segment were $383.0 million as compared with $405.4 million for fiscal year 2025. Excluding surcharge revenue, net sales decreased 5 percent from fiscal year 2025 on 3 percent higher shipment volume. The results reflect lower sales in the Medical and Distribution end-use markets partially offset by higher sales in the Aerospace and Defense and Industrial and Consumer end-use markets compared to fiscal year 2025.
Previous wording
Operating income for the PEP segment for fiscal year 2024 was $36.0 million, or 8.8 percent of net sales (9.5 percent of net sales excluding surcharge revenue), as compared with operating income of $31.8 million, or 7.3 percent of net sales (8.0 percent of net sales excluding surcharge revenue), for fiscal year 2023. Fiscal year 2024 results reflect stronger product mix and improved operational efficiencies, compared to fiscal year 2023.
Current wording
Operating income for the PEP segment for fiscal year 2026 was $30.1 million, or 7.9 percent of net sales (8.5 percent of net sales excluding surcharge revenue), as compared with operating income of $37.0 million, or 9.1 percent of net sales (9.9 percent of net sales excluding surcharge revenue) for fiscal year 2025. Fiscal year 2026 results reflect lower sales and margins compared to fiscal year 2025.
Previous wording
For fiscal year 2025, we reported net income of $376.0 million, or $7.42 earnings per diluted share. This compares with net income of$186.5 million, or$3.70 earnings per diluted share, in fiscal year 2024. Excluding special items, as identified below, adjusted earnings per diluted share was $7.48 infiscal year 2025, and $4.74 in fiscal year 2024. The results for fiscal year 2025 compared to fiscal year 2024 reflect an ongoing improvement in product mix with a shift in capacity to more complex, higher value materials as well as pricing actions and expanding operational efficiencies.
Current wording
For fiscal year 2025, we reported net income of $376.0 million, or $7.42 earnings per diluted share. This compares with net income of $186.5 million, or $3.70 earnings per diluted share in fiscal year 2024. Excluding special items, as identified below, adjusted earnings per diluted share was $7.48 in fiscal year 2025 and $4.74 in fiscal year 2024. The results for fiscal year 2025 compared to fiscal year 2024 reflect an ongoing improvement in product mix with a shift in capacity to more complex, higher value materials as well as pricing actions and expanding operational efficiencies.
Previous wording
Net sales for fiscal year 2025 were $2,877.1 million, which represents a 4 percent increase from fiscal year 2024. Excluding surcharge revenue, sales were 8 percent higher than fiscal year 2024 on 6 percent lower volume. The results reflect the impact of price increases and stronger product demand for materials used in the end-use markets of Aerospace and Defense and Energy compared tofiscal year 2024.
Current wording
Net sales for fiscal year 2025 were $2,877.1 million, which represents a 4 percent increase from fiscal year 2024. Excluding surcharge revenue, sales were 8 percent higher than fiscal year 2024 on 6 percent lower volume. The results reflect the impact of price increases and stronger product demand for materials used in the end-use markets of Aerospace and Defense and Energy compared to fiscal year 2024.
Previous wording
Geographically, domestic net sales increased 5 percent from fiscal year 2024. Excluding surcharge revenue, domestic sales increased 9 percent driven by a 27 percent increase in the Aerospace and Defense end-use market. Net sales outside the United States increased 4 percent from fiscal year 2024 to $1,177.2 million for fiscal year 2025. Excluding surcharge revenue, sales outside the United States increased 8 percent, driven by the Aerospace and Defense end-use market in the European region and Mexico and the Energy end-use market in the European region compared to fiscal year 2024. A portion of our sales outside the United States are denominated in foreign currencies. The impact of fluctuations in foreign currency exchange rates resulted in a $0.5 million decrease in sales during fiscal year 2025 compared to fiscal year 2024. International sales as a percentage of our total net sales represe nted 41 percent and 41 percent for fiscal year 2025 and 2024, respectively.
Current wording
Geographically, domestic net sales increased 5 percent from fiscal year 2024. Excluding surcharge revenue, domestic sales increased 9 percent driven by a 27 percent increase in the Aerospace and Defense end-use market. Net sales outside the United States increased 4 percent from fiscal year 2024 to $1,177.2 million for fiscal year 2025. Excluding surcharge revenue, sales outside the United States increased 8 percent, driven by the Aerospace and Defense end-use market in the European region and Mexico and the Energy end-use market in the European region compared to fiscal year 2024. A portion of our sales outside the United States are denominated in foreign currencies. The impact of fluctuations in foreign currency exchange rates resulted in a $0.5 million decrease in sales during fiscal year 2025 compared to fiscal year 2024. International sales as a percentage of our total net sales represented 41 percent and 41 percent for fiscal year 2025 and fiscal year 2024, respectively.
Previous wording
We sell to customers across diversified end-use markets. We believe this is helpful supplemental information in analyzing performance of the business from period to period. The following table includes comparative information for our net sales, which includes surcharge revenue, by principal end-use markets:
Current wording
We sell to customers across diversified end-use markets. We believe that presenting net sales by end-use markets is helpful supplemental information in analyzing the performance of the business from period to period. The following table includes comparative information for our net sales, which includes surcharge revenue, by principal end-use markets:
Previous wording
Our surcharge mechanism is structured to recover increases in raw material costs, although in certain cases with a lag effect as discussed above. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. The following represents a summary of the dilutive impact of the surcharge on gross margin. We present and discuss these financial measures because management believes removing the impact of these items provides a more consistent and meaningful basis for comparing results of operations from period to period. See the section "Non-GAAP Financial Measures" below for further discussion of these financial measures.
Current wording
Our surcharge mechanism is structured to recover increases in raw material costs, although in certain cases with a lag effect as discussed above. While the surcharge generally protects the absolute gross profit dollars, it does have a dilutive effect on gross margin as a percent of sales. We present and discuss these financial measures because management believes removing the impact of these items provides a more consistent and meaningful basis for comparing results of operations from period to period. See the section "Non-GAAP Financial Measures" below for further discussion of these financial measures. The following represents a summary of the dilutive impact of the surcharge on gross margin:
Previous wording
During fiscal year 2025, restructuring and asset impairment charges were $3.6 million, compared to $16.9 million in fiscal year 2024. The restructuring charges in fiscal year 2025 were a result of actions taken to streamline operations in our Carpenter Additive business in the PEP segment, as announced in the quarter ended June 30, 2024. This included $2.5 million of noncash pre-tax inventory impairment charges and $1.1 million of costs related to the decommissioning of property, plant and equipment previously impaired. Restructuring and asset impairment charges in fiscal year 2024 included $15.8 million of noncash pre-tax impairment charges related to $8.8 million of property, plant, equipment and software and $7.0 million associated with a certain definite lived intangible asset. Also included were $1.1 million of various personnel costs for severance payments, medical coverage and related items.
Current wording
During fiscal year 2025, restructuring and asset impairment charges were $3.6 million, compared to $16.9 million in fiscal year 2024. The charges in fiscal year 2025 were a result of actions taken to streamline operations in our Carpenter Additive business in the PEP segment, as announced in the quarter ended June 30, 2024. This included $2.5 million of noncash pre-tax inventory impairment charges and $1.1 million of costs related to the decommissioning of property, plant, and equipment previously impaired. Restructuring and asset impairment charges in fiscal year 2024 included $15.8 million of noncash pre-tax impairment charges related to $8.8 million of property, plant, equipment and software and $7.0 million associated with a certain definite lived intangible asset. Also included were $1.1 million of various personnel costs for severance payments, medical coverage and related items.
Previous wording
Ouroperating income in fiscal year 2025 was $521.8 million, or 18.1 percent of net sales, as compared with $323.1 million of operating income, or 11.7 percent of net sales, in fiscal year 2024. Excluding surcharge revenue and special items, adjusted operating income was $525.4 million or adjusted operating margin of 22.4 percent for fiscal year 2025 compared to $354.1 million, or 16.3 percent for fiscal year 2024. Results for fiscal year 2025 reflect ongoing improvement in product mix, higher realized prices, as well as expanded operating efficiencies compared to fiscal year 2024.
Current wording
Our operating income in fiscal year 2025 was $521.8 million, or 18.1 percent of net sales, as compared with $323.1 million of operating income, or 11.7 percent of net sales in fiscal year 2024. Excluding surcharge revenue and special items, adjusted operating income was $525.4 million or adjusted operating margin of 22.4 percent for fiscal year 2025 compared to $354.1 million, or 16.3 percent for fiscal year 2024. Results for fiscal year 2025 reflect ongoing improvement in product mix, higher realized prices, as well as expanded operating efficiencies compared to fiscal year 2024.
Previous wording
Fiscal year 2025 interest expense, net was $48.4 million compared to $51.0 million in fiscal year 2024. Capitalized interest reduced interest expense, net by $2.6 million for fiscal year 2025 and by $1.6 million in fiscal year 2024. The lower interest expense, net in fiscal year 2025 is due to less short-term borrowings under our Credit Facility and higher capitalized interest compared to fiscal year 2024.
Current wording
Fiscal year 2025 interest expense, net was $48.4 million compared to $51.0 million in fiscal year 2024. The lower interest expense, net in fiscal year 2025 is largely due to less short-term borrowings under our Credit Facility and higher capitalized interest compared to fiscal year 2024. Capitalized interest reduced interest expense by $2.6 million in fiscal year 2025 and by $1.6 million in fiscal year 2024.
Previous wording
Operating income for the SAO segment in fiscal year 2025 was $588.6 million, or 23.0 percent of net sales (28.6 percent of net sales excluding surcharge revenue), compared to operating income of $408.5 million, or 16.7 percent of net sales (21.8 percent of net sales excluding surcharge revenue), for fiscal year 2024. Fiscal year 2025 results reflects stronger product mix and operational efficiency gains compared to fiscal year 2024.
Current wording
Operating income for the SAO segment in fiscal year 2025 was $588.6 million, or 23.0 percent of net sales (28.6 percent of net sales excluding surcharge revenue), compared to operating income of $408.5 million, or 16.7 percent of net sales (21.8 percent of net sales excluding surcharge revenue), for fiscal year 2024. Fiscal year 2025 reflects stronger product mix and operational efficiency gains compared to fiscal year 2024.
Previous wording
During fiscal year 2025, we generated cash from operating activities of $440.4 million as compared with $274.9 million in fiscal year 2024. Our adjusted free cash flow, which we define under "Non-GAAP Financial Measures" below, was positive $287.5 million as compared to positive $179.0 million for fiscal year 2024. The change in operating cash flow and adjusted free cash flow in fiscal year 2025 resulted from higher earnings after noncash adjustments to net income and less cash used to build inventory partially offset by higher pension contributions and higher capital expenditures. Fiscal year 2025 reflects cash used to build inventory of $60.4 million compared to $96.7 million in fiscal year 2024.
Current wording
During fiscal year 2026, we generated cash from operating activities of $605.0 million as compared with $440.4 million in fiscal year 2025. Our adjusted free cash flow, which we define under "Non-GAAP Financial Measures" below, was positive $362.3 million as compared to positive $287.5 million for fiscal year 2025. The increase in operating cash flow and adjusted free cash flow in fiscal year 2026 resulted from higher earnings after noncash adjustments to net income, less cash used for inventory and pension contributions, partially offset by higher cash used for other working capital needs and capital expenditures. Fiscal year 2026 reflects cash used to build inventory of $28.4 million compared to $60.4 million in fiscal year 2025.
Previous wording
Capital expenditures for property, plant, equipment and software were $154.3 million for fiscal year 2025 as compared to $96.6 million for fiscal year 2024. The increase in capital expenditures in fiscal year 2025 is partially due to the recently announced brownfield expansion in Athens, Alabama. In fiscal year 2026, we expect capital expenditures, including the brownfield expansion, to be in the range of $280.0 million to $300.0 million.
Current wording
Capital expenditures for property, plant, equipment and software were $242.7 million for fiscal year 2026 as compared to $154.3 million for fiscal year 2025. The increase in capital expenditures in fiscal year 2026 is primarily due to the brownfield expansion in Athens, Alabama. In fiscal year 2027, we expect capital expenditures, including the brownfield expansion, to be in the range of $355.0 million to $375.0 million.
Previous wording
We evaluate liquidity needs for alternative uses including funding external growth opportunities, share repurchases as well as funding consistent dividend payments to stockholders. Dividends for fiscal year 2025 were $40.3 million, as compared to $40.0 million in the prior year period. In fiscal years 2025, 2024 and 2023 we declared and paid quarterly cash dividends of $0.20 per share. Additionally, we will discretionarily use excess cash for a share repurchase program up to $400.0 million of our outstanding common stock. The primary use of this program is to offset dilution. During fiscal year 2025, we repurchased 575,000 shares of our common stock on the open market for an aggregate of $101.9 million. As of June 30, 2025, $298.1 million remains available for future purchases. There were no share repurchases in fiscal year 2024.
Current wording
We evaluate liquidity needs for alternative uses including funding external growth opportunities, share repurchases as well as funding consistent dividend payments to stockholders. Dividends for fiscal year 2026 were $40.3 million, as compared to $40.3 million in fiscal year 2025. In fiscal years 2026, 2025 and 2024 we declared and paid quarterly cash dividends of $0.20 per share. Additionally, we will discretionarily use excess cash for a share repurchase program up to $400.0 million of our outstanding common stock. During fiscal year 2026, we repurchased 545,000 shares of our common stock on the open market for an aggregate of $179.1 million, as compared to 575,000 shares for an aggregate of $101.9 million in fiscal year 2025. As of June 30, 2026, $119.0 million remained available for future purchases.
Previous wording
During fiscal year 2025, we made $64.8 million of pension contributions to our qualified defined benefit pension plans. Over the next five years, current estimates indicate that we will be required to make approximately $115.2 million of cash contributions to our domestic qualified defined benefit pension plans, based on the laws in effect for pension funding as of June 30, 2025, and subject to market returns and interest rate assumptions.
Current wording
During fiscal year 2026, we made $23.8 million of pension contributions to our qualified defined benefit pension plans. Over the next five years, current estimates indicate that we will be required to make approximately $99.9 million of cash contributions to our domestic qualified defined benefit pension plans, based on the laws in effect for pension funding as of June 30, 2026, and subject to market returns and interest rate assumptions.
Previous wording
On April 14, 2023, we entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer and the other lenders, agents and arrangers party thereto (the "Credit Facility"). The Credit Facility amended and restated our then existing Amended and Restated Credit Agreement dated as of March 26, 2021 which had been set to expire on March 31, 2024. The Credit Facility extends the maturity to April 12, 2028.
Current wording
On November 20, 2025, we entered into a Third Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer and the other lenders, agents and arrangers party thereto (the "Credit Facility"). The Credit Facility amended and restated our then existing Second Amended and Restated Credit Agreement dated as of April 14, 2023, which had been set to expire on April 12, 2028. The Third Amendment extends the maturity to November 20, 2030.
Previous wording
The Credit Facility is a secured revolving credit facility with a commitment of $350.0 million subject to our right, from time to time, to request an increase of the commitment by the greater of (i) $300.0 million or (ii) an amount equal to our consolidated EBITDA; and provides for the issuance of letters of credit subject to a $40.0 million sub-limit. We have the right to voluntarily prepay and re-borrow loans, to terminate or reduce the commitments under the Credit Facility, and, subject to certain lender approvals, to join subsidiaries as subsidiary borrowers.
Current wording
The Credit Facility is an unsecured revolving credit facility with a commitment of $500.0 million subject to the right, from time to time, to request an increase of the commitment not in excess of $650.0 million and provides for the issuance of letters of credit subject to a $40.0 million sub-limit. We have the right to voluntarily prepay and re-borrow loans, to terminate or reduce the commitments under the Credit Facility, and, subject to certain lender approvals, to join subsidiaries as subsidiary borrowers. As of June 30, 2026, the borrowing rate for the Credit Facility was 5.38%, however, we had no short-term borrowings. As of June 30, 2026, we had $0.9 million of issued letters of credit under the Credit Facility and the balance of the Credit Facility, $499.1 million, remains available to us.
Previous wording
We believe that our total liquidity of $664.4 million, as of June 30, 2025, which includes cash and cash equivalents of $315.5 million and available borrowing capacity of $348.9 million under the Credit Facility, will be sufficient to fund our cash needs over the foreseeable future.
Current wording
We believe that our total liquidity of $892.4 million, as of June 30, 2026, which includes total cash and cash equivalents of $393.3 million and available borrowing capacity of $499.1 million under the Credit Facility, will be sufficient to fund our cash needs over the foreseeable future.
Previous wording
As of June 30, 2025, we had cash and cash equivalents of $27.2 million held at various foreign subsidiaries. Our global cash deployment considers, among other things, the geographic and institutional location of our subsidiaries' cash balances, the locations of our anticipated liquidity needs and the cost to access international cash balances, as necessary. During the fiscal year ended June 30, 2025, we repatriated cash of $3.8 million from foreign jurisdictions. From time to time, we may make short-term intercompany borrowings against our cash held outside the United States in order to reduce or eliminate any required borrowing under our Credit Facility.
Current wording
As of June 30, 2026, we had cash and cash equivalents of $61.0 million held at various foreign subsidiaries. Our global cash deployment considers, among other things, the geographic and institutional location of our subsidiaries' cash balances, the locations of our anticipated liquidity needs and the cost to access international cash balances, as necessary. During the fiscal year ended June 30, 2026, we repatriated no cash from foreign jurisdictions. From time to time, we may make short-term intercompany borrowings against our cash held outside the United States in order to reduce or eliminate any required borrowing under our Credit Facility.
Previous wording
We are subject to certain financial and restrictive covenants under the Credit Facility which requires the maintenance ofa minimum interest coverage ratio of 3.00 to 1.00 and a consolidated net leverage ratio of no more than 4.00 to 1.00. The restrictions of these covenants (other than the financial ratio covenants) are subject to certain exceptions or threshold triggering amounts or events specified in the Credit Facility, and in some cases the restrictions may be waived by the lenders. As of June 30, 2025, we were in compliance with all of the covenants of the Credit Facility.
Current wording
We are subject to certain financial and restrictive covenants under the Credit Facility which requires the maintenance of a minimum interest coverage ratio of 3.00 to 1.00 and a consolidated net leverage ratio of no more than 3.50 to 1.00. The restrictions of these covenants (other than the financial ratio covenants) are subject to certain exceptions or threshold triggering amounts or events specified in the Credit Facility, and in some cases the restrictions may be waived by the lenders. As of June 30, 2026, we were in compliance with all of the covenants of the Credit Facility.
Previous wording
This report includes discussions of net sales as adjusted to exclude the impact of raw material surcharge and the resulting impact on gross margins, which represent financial measures that have not been determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). We present and discuss these financial measures because management believes removing the impact of raw material surcharge from net sales provides a more consistent basis for comparing results of operations from period to period for the reasons discussed earlier in this report. Management uses its results excluding these amounts to evaluate its operating performance and to discuss its business with investment institutions, our Board of Directors and others. See our earlier discussion of "Gross Profit" for a reconciliation of net sales and gross margin, excluding surcharge revenue, to net sales as determined in accordance with U.S. GAAP. Net sales and gross margin excluding surcharge revenue are not U.S. GAAP financial measures and should not be considered in isolation of, or as a substitute for, net sales and gross margin calculated in accordance with U.S. GAAP.
Current wording
This report includes discussions of net sales as adjusted to exclude the impact of raw material surcharge and the resulting impact on gross margin, which represent financial measures that have not been determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). We present and discuss these financial measures because management believes removing the impact of raw material surcharge from net sales provides a more consistent basis for comparing results of operations from period to period for the reasons discussed earlier in this report. Management uses its results excluding these amounts to evaluate its operating performance and to discuss its business with investment institutions, our Board of Directors and others. See our earlier discussion of "Gross Profit" for a reconciliation of net sales and gross margin, excluding surcharge revenue, to net sales as determined in accordance with U.S. GAAP. Net sales and gross margin excluding surcharge revenue are not U.S. GAAP financial measures and should not be considered in isolation of, or as a substitute for, net sales and gross margin calculated in accordance with U.S. GAAP.
Showing the first 40 of 56 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Net sales for fiscal year 2026 were $3,124.2 million, which represents a 9 percent increase from fiscal year 2025. Excluding surcharge revenue, sales were 8 percent higher than fiscal year 2025 on 8 percent higher volume. The results primarily reflect the impact of price increases and stronger product demand for materials used in the end-use markets of Aerospace and Defense and Energy compared to fiscal year 2025.
Current report — wording carried from elsewhere
Sales to the Aerospace and Defense end-use market increased 15 percent from fiscal year 2025 to $2,035.2 million. Excluding surcharge revenue, sales increased 15 percent. The fiscal year 2026 results reflect double-digit increases in the Aerospace engine and fastener sub-markets driven by increasing build rates and the need to maintain and replace aging fleets compared to fiscal year 2025. The fiscal year 2026 results also reflect higher sales in the Defense end-use market for program specific applications, in particular, materials used in missile applications.
Current report — wording carried from elsewhere
Sales to the Medical end-use market decreased 21 percent to $278.4 million from fiscal year 2025. Excluding surcharge revenue, sales decreased 24 percent. The fiscal year 2026 results reflect lower shipments as a result of the medical supply chain managing inventory levels closely, partially offset by realized price increases particularly in the dental sub-market compared to fiscal year 2025.
Current report — wording carried from elsewhere
Sales to the Energy end-use market of $230.6 million reflect a 15 percent increase from fiscal year 2025. Excluding surcharge revenue, sales increased 13 percent. The fiscal year 2026 results reflect higher demand in the power generation sub-market for both new and refurbished industrial gas turbines partially offset by decreased shipments for material used in the oil and gas sub-market compared to fiscal year 2025.
Current report — wording carried from elsewhere
Our effective tax rate (income tax expense (benefit) as a percent of income (loss) before taxes) for fiscal year 2026 was 19.3 percent as compared to 19.5 percent for fiscal year 2025. Tax expense in fiscal year 2026 and 2025 includes tax benefits attributable to employee share-based compensation of $19.6 million and $14.2 million, respectively.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
Special items included in our fiscal year 2024 results include a noncash goodwill impairment charge of $14.1 million related to the Latrobe Distribution reporting unit in the PEP segment. We recorded restructuring and asset impairment charges of $16.9 million as a result of actions taken to streamline operations in the Carpenter Additive business. $15.8 million of this amount represents noncash asset impairment charges. We also recorded a noncash pension settlement charge of $51.9 million as a result of executing de-risking actions to annuitize certain pension plan obligations. During fiscal year 2024, we also reduced income tax expense by $18.4 million related to a U.S. tax benefit that was generated as a result of the Carpenter Additive restructuring actions.
Previous report — wording carried elsewhere
During fiscal year 2024, we identified an impairment triggering event in the Latrobe Distribution reporting unit within the PEP segment related to a decline in customer ordering patterns. This combined with market headwinds due to general industrial macroeconomic conditions including rising interest rates contributed to lower sales and profit margins compared to the established annual operation plan for fiscal year 2024. Despite our efforts to mitigate the market challenges, results did not improve for the Latrobe Distribution reporting unit during fiscal year 2024. In light of these market conditions at the time, the pace of growth in the future projections for the Latrobe Distribution reporting unit were lowered. We determined the goodwill associated with the Latrobe Distribution reporting unit was impaired and recorded an impairment charge of $14.1 million during the third quarter of fiscal year 2024, which represented the entire balance of goodwill for this reporting unit. No goodwill impairment charges were recognized during fiscal year 2023.
Previous report — wording carried elsewhere
Our effective tax rate (income tax expense (benefit) as a percent of income (loss) before taxes) for fiscal year 2024 was 11.9 percent as compared to 22.2 percent for fiscal year 2023. The fiscal year 2024 tax expense includes $18.4 million for U.S. tax benefits related to the closure of Carpenter Additive operations in the United Kingdom, $12.4 million associated with the pension settlement charge and $6.8 million attributable to employee share-based compensation. Tax expense also reflects the unfavorable impacts of the $14.1 million non-deductible goodwill impairment charge, $16.9 million non-deductible restructuring charges and losses in certain foreign jurisdictions for which no tax benefit can be recognized. Excluding the tax impact of the pension settlement charge, non-deductible goodwill impairment charge, restructuring charges and tax benefits related to the closure of the Carpenter Additive operations in the United Kingdom, the rate for fiscal year 2024 would have been 19.0 percent.
Previous report — wording carried elsewhere
On October 8, 2021, the Organization for Economic Co-operation and Development ("OECD") released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released Pillar Two model rules defining a 15 percent global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework. In June 2025, the U.S. and the G-7 countries announced the intention to reach an agreement that would exempt U.S. parented multinationals from certain of the Pillar Two rules. The details of that agreement and its applicability globally have not been finalized. We determined the Pillar Two Framework as it exists today does not have a significant impact on our financial position, results of operations or cash flows.
Previous report — wording carried elsewhere
We assert that substantially all undistributed earnings from foreign subsidiaries are not considered permanently reinvested. The potential tax implications from the distribution of these earnings are expected to be limited to withholding taxes in certain foreign jurisdictions and are not expected to materially impact the consolidated financial statements.
Previous report — wording carried elsewhere
Operating income for the SAO segment in fiscal year 2024 was $408.5 million, or 16.7 percent of net sales (21.8 percent of net sales excluding surcharge revenue), compared to operating income of $179.1 million, or 8.1 percent of net sales (11.6 percent of net sales excluding surcharge revenue), for fiscal year 2023. Fiscal year 2024 reflects stronger product mix and improved operational efficiencies, compared to fiscal year 2023.
Previous report — wording carried elsewhere
As of June 30, 2025, the borrowing rate for the Credit Facility was 6.18%, however we had no short-term borrowings. As of June 30, 2025, we had $1.1 million of issued letters of credit under the Credit Facility and the balance of the Credit Facility, $348.9 million, remains available to us.