Carpenter Technology — Income Statement, Cash Flows & Balance Sheet
Is Carpenter Technology profitable?
Carpenter Technology's profitability has surged, with net income doubling year-over-year on the back of dramatically improved margins.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Net sales ($M) | $2,759.7 | $2,877.1 | +4.3% |
| Gross profit ($M) | $584.3 | $768.6 | +31.5% |
| Gross margin | 21.2% | 26.7% | +5.5 pp |
| Operating income ($M) | $323.1 | $521.8 | +61.5% |
| Net income ($M) | $186.5 | $376.0 | +101.6% |
| Diluted EPS | $3.70 | $7.42 | +100.5% |
Revenue growth was modest, but Carpenter Technology's real story is operating leverage — costs fell sharply while sales grew, meaning a much larger share of each revenue dollar flowed through to profit. Gross margin expanded by more than five percentage points, and operating income nearly doubled.
Last year's results were distorted by one-time charges that make the improvement look even more dramatic on the surface.
| Special Item | FY2024 ($M) | FY2025 ($M) |
|---|---|---|
| Goodwill impairment | $14.1 | $0 |
| Restructuring & asset impairment | $16.9 | $3.6 |
| Pension settlement charge (in Other expense) | $51.9 | $0 |
FY2024 included a combined $83 million in one-time charges — a pension buyout settlement, a goodwill write-off on the Latrobe Distribution unit, and restructuring costs tied to the Carpenter Additive business — which suppressed reported earnings significantly. FY2025 is a much cleaner picture, with only minor residual restructuring charges.
Where does Carpenter Technology's revenue come from?
Aerospace and Defense is by far the largest and fastest-growing end market, powering most of Carpenter Technology's growth.
| End Market | FY2024 ($M) | FY2025 ($M) | Change |
|---|---|---|---|
| Aerospace & Defense | $1,538.8 | $1,768.6 | +14.9% |
| Medical | $375.6 | $351.2 | -6.5% |
| Industrial & Consumer | $415.3 | $359.5 | -13.4% |
| Energy | $185.8 | $200.3 | +7.8% |
| Total net sales | $2,759.7 | $2,877.1 | +4.3% |
Aerospace and Defense now represents well over half of total revenue and grew at a double-digit rate, more than offsetting declines in Medical, Industrial & Consumer, and Distribution. The company's SAO segment — its core premium alloy manufacturing operations — drove nearly all of the revenue and profit growth.
Does Carpenter Technology generate cash?
Carpenter Technology generated substantially more operating cash this year, and free cash flow (operating cash minus capital spending) turned strongly positive.
| Cash Flow Item | FY2024 ($M) | FY2025 ($M) | Change |
|---|---|---|---|
| Operating cash flow | $274.9 | $440.4 | +60.2% |
| Capital expenditures | ($96.6) | ($154.3) | +59.7% |
| Free cash flow (GAAP) | $178.3 | $286.1 | +60.5% |
| Pension contributions | ($11.3) | ($64.8) | +473% |
| Share buybacks | $0 | ($101.9) | new |
| Dividends paid | ($40.0) | ($40.3) | flat |
Operating cash generation was strong, though a significant chunk was used to prefund pension obligations. Capital spending jumped as Carpenter Technology reinvests in its manufacturing base — primarily the SAO segment. The company also initiated a $400 million share buyback program, spending about $102 million in FY2025, which is a new use of cash worth watching.
How strong is Carpenter Technology's balance sheet?
Debt is fixed and manageable, and the company ended the year with a healthy cash cushion.
| Item | FY2024 ($M) | FY2025 ($M) | Change |
|---|---|---|---|
| Cash & equivalents | $199.1 | $315.5 | +58.5% |
| Long-term debt | $694.2 | $695.4 | flat |
| Total stockholders' equity | $1,628.8 | $1,887.0 | +15.8% |
| Revolving credit available | $348.9 | $348.9 | flat |
Carpenter Technology carries two fixed-rate bonds ($400M due 2028, $300M due 2030) with no near-term maturities and nothing drawn on its $350 million revolving credit facility. Cash grew substantially, and the pension deficit — a long-running liability — shrank meaningfully as the company made larger contributions and plan assets appreciated. The balance sheet is in noticeably better shape than a year ago.