Carpenter Technology — Financial Results
Record Profitability: Earnings More Than Doubled in Fiscal 2025
| Metric | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Net income | $376.0M | $186.5M | $56.4M |
| Diluted EPS | $7.42 | $3.70 | $1.14 |
| Adjusted operating margin (ex-surcharge) | 22.4% | 16.3% | 7.2% |
Carpenter Technology declared fiscal year 2025 its most profitable year in its 136-year history, with net income more than doubling from $186.5M to $376.0M. The improvement came from selling a richer mix of higher-complexity alloys, raising prices, and running its factories more efficiently — not simply from selling more volume. In fact, the company shipped 6% fewer pounds but still grew revenue 4%, which tells you the profit-per-pound story is the real driver.
Aerospace and Defense Now Drives 62% of Revenue, Up from 51% Two Years Ago
| End Market | FY2025 Revenue | FY2024 Revenue | Change |
|---|---|---|---|
| Aerospace & Defense | $1,768.6M | $1,538.8M | +15% |
| Medical | $351.2M | $375.6M | -6% |
| Industrial & Consumer | $359.5M | $415.3M | -13% |
The business is becoming increasingly concentrated in aerospace and defense, which now accounts for 62 cents of every revenue dollar. Growth of 20% excluding raw material pass-through costs was driven by jet engine components, fasteners, and defense program materials. Meanwhile, medical, transportation, and industrial markets all declined, meaning the company's fortunes are closely tied to how long the aerospace build cycle holds up.
Cash Generation Accelerated, Funding a Major Capacity Expansion
Adjusted free cash flow (cash left after running the business and maintaining equipment) jumped from $179.0M to $287.5M. The company is putting that cash to work: capital expenditure spending rose from $96.6M to $154.3M in FY2025, and management expects to spend $280–$300M in FY2026 — roughly double — as it builds out a brownfield expansion (expanding an existing facility rather than building new) in Athens, Alabama to add primary and secondary melting capacity. This is a meaningful bet on continued long-term demand from its core markets.
Profitability Improvement is a Genuine Margin Story, Not Just Higher Prices
| Metric | FY2025 | FY2024 |
|---|---|---|
| Gross margin (ex-surcharge) | 32.8% | 27.0% |
| SAO operating margin (ex-surcharge) | 28.6% | 21.8% |
The Specialty Alloys Operations (SAO) segment, which represents about 89% of revenue, grew its operating margin from 21.8% to 28.6% (excluding raw material surcharges). The improvement is real: the company is earning more per dollar of actual product value sold, not just passing through higher material costs. Operational efficiency gains and a deliberate shift toward more complex, harder-to-make alloys are the key drivers.
Strong Balance Sheet With Minimal Debt and $664M in Available Liquidity
The company ended FY2025 with $315.5M in cash and $348.9M available under its credit facility, for total liquidity of $664.4M. Its net leverage ratio (debt relative to earnings) stands at just 0.86x against a maximum covenant of 4.0x — meaning it has considerable financial headroom to fund the expansion without stress. During FY2025 it also bought back $101.9M of its own stock and paid $40.3M in dividends, returning cash to shareholders while still building the balance sheet.