Financial Performance - Record second quarter operating income of $135.6 million, up 63% year-over-year, with adjusted operating margin at 28.3%[19] - Record second quarter profits increased by 70% year-over-year[28] - Total net sales for Q2-25 were $676.9 million, a decrease of 5.7% sequentially but an increase of 8.4% year-over-year[18] - Net sales excluding surcharge increased 15% year-over-year, primarily driven by the Aerospace and Defense end-use market, which accounted for 61% of total net sales[15] - Adjusted operating margin for Q2-25 was 21.7%[30] - Adjusted diluted earnings per share for Q2-25 was $1.66, compared to $1.73 in Q1-25[33] Guidance and Expectations - Increased FY25 operating income guidance to a range of $500 million to $520 million, up from previous guidance of $460 million to $500 million[13] - Operating income for Q3-25 is expected to be in the range of $140 million to $145 million, reflecting continued strong demand[21] - Anticipating Q3 operating income between $126 million and $134 million[28] Cash Flow and Liquidity - Generated $38.6 million in adjusted free cash flow, with total liquidity reaching $511 million[25] - Generated $38.6 million in adjusted free cash flow[28] Shareholder Returns - Share repurchases amounted to $8.2 million, with 45,000 shares repurchased during the quarter[26] - Executed $8.2 million in share repurchases[28] Market Demand and Strategy - Long-term demand remains robust with strong customer engagement and high backlogs in key markets[16] - Strong long-term demand across Defense, Medical, and Energy markets with Aerospace-like margins[28] - The company maintained a focus on productivity improvements and cost management to support margin expansion[21] Taxation - The effective tax rate for Q2-25 was 20.0%, compared to 22.6% in Q2-24[18] Future Communication - Management will communicate long-term outlook at the upcoming investor event on February 18, 2025[28]

Core Insights - Carpenter Technology Corporation (CRS) reported adjusted earnings of $1.66 per share for Q2 fiscal 2025, exceeding the Zacks Consensus Estimate of $1.56 and significantly up from 85 cents in the same quarter last year, driven by improvements in product mix [1][2] - Net revenues increased by 8.4% year over year to $678 million, although this fell short of the Zacks Consensus Estimate of $709 million, with shipment volumes down 6% year over year [2][3] - The Aerospace and Defense market saw a revenue increase of 35.3% year over year, while the Energy market experienced a decline of 12.5%, and the Transportation market's revenues fell by 20.1% [3] Financial Performance - The cost of goods sold decreased by 0.4% year over year to $499 million, leading to a gross profit increase of 44.8% to $178 million [4] - Adjusted operating income rose to $119 million from $70 million in the prior year, with an adjusted operating margin of 17.6% compared to 11.2% in the same quarter last year [4] Segment Performance - The Specialty Alloys Operations segment reported sales of $602 million, up from $549 million year over year, but below the estimated $620 million, with an operating profit of $136 million compared to $83 million last year [5] - The Performance Engineered Products segment saw a slight decline in net sales by 0.7% to $95 million, missing the estimate of $106 million, while operating profit remained flat at $7 million [6] Cash Flow and Balance Sheet - At the end of Q2 fiscal 2025, cash and cash equivalents stood at $162 million, down from $199 million at the end of fiscal 2024, with long-term debt slightly increasing to $694.8 million [7] - Cash flow from operating activities was reported at $67.9 million, a significant increase from $14.6 million in the prior-year quarter [7] Share Price Performance - Carpenter Technology's shares have increased by 228.9% over the past year, outperforming the industry growth of 74.6% [8] Zacks Rank - Carpenter Technology currently holds a Zacks Rank of 2 (Buy) [10]

Financial Performance - Net sales for the three months ended December 31, 2024, increased to $676.9 million, up 8.9% from $624.2 million in the same period of 2023[12] - Gross profit for the six months ended December 31, 2024, was $353.8 million, representing a 43.4% increase compared to $246.7 million in 2023[12] - Operating income for the three months ended December 31, 2024, rose to $118.9 million, a 70.4% increase from $69.8 million in the prior year[12] - Net income for the six months ended December 31, 2024, was $168.9 million, compared to $86.6 million in 2023, reflecting a 95.2% increase[12] - Earnings per diluted share for the six months ended December 31, 2024, increased to $3.33, compared to $1.73 in the same period of 2023[12] - For the three months ended December 31, 2024, net income was $84.1 million, a 97.5% increase from $42.7 million in 2023[52] - Basic earnings per common share for the three months ended December 31, 2024, was $1.68, up 95.3% from $0.86 in 2023[52] - Consolidated operating income for the six months ended December 31, 2024, was $232.5 million, compared to $138.8 million for the same period in 2023, reflecting a 67.5% increase[108] Cash Flow and Liquidity - The company reported a net cash provided from operating activities of $108.1 million for the six months ended December 31, 2024, compared to $21.9 million in 2023[17] - Cash and cash equivalents decreased to $162.1 million as of December 31, 2024, down from $199.1 million at June 30, 2024[10] - Total liquidity as of December 31, 2024, was $511.0 million, including cash and cash equivalents of $162.1 million[200] - Adjusted free cash flow for the six months ended December 31, 2024, was $51.9 million, a turnaround from negative adjusted free cash flow of $25.4 million in the same period of 2023[132] Assets and Equity - Total assets increased to $3,326.7 million as of December 31, 2024, compared to $3,291.7 million at June 30, 2024[10] - Total stockholders' equity rose to $1,716.9 million as of December 31, 2024, up from $1,628.8 million at June 30, 2024[10] - The total equity at December 31, 2024, was $1,716.9 million, an increase from $1,473.8 million at December 31, 2023[24] Segment Performance - Revenue from the Aerospace and Defense sector for the three months ended December 31, 2024, was $413.4 million, up from $321.0 million in 2023, marking a 28.8% increase[46] - The Specialty Alloys Operations segment reported net sales of $601.5 million for the three months ended December 31, 2024, up from $549.4 million in 2023, a growth of 9.5%[108] - The Performance Engineered Products segment had net sales of $95.0 million for the three months ended December 31, 2024, slightly down from $95.7 million in 2023[108] Expenses and Liabilities - Selling, general and administrative expenses were $58.6 million, or 8.7% of net sales, compared to 8.5% in the same period of 2023[146] - Interest expense decreased to $12.2 million from $13.0 million in the same period of 2023, attributed to no short-term borrowings[150] - The company incurred restructuring and asset impairment charges of $3.6 million during the six months ended December 31, 2024[12] - Environmental remediation liabilities recorded were $17.4 million as of December 31, 2024, slightly up from $17.3 million as of June 30, 2024[69] Shareholder Returns - Cash dividends declared were $20.2 million for the six months ended December 31, 2024, at a rate of $0.40 per share[24] - The company repurchased 275,000 shares of common stock for a total of $40.3 million during the six months ended December 31, 2024[132] - The Company authorized a share repurchase program of up to $400.0 million for its outstanding common stock, with $359.7 million remaining available for future purchases as of December 31, 2024[72] Market and Sales Insights - The United States accounted for $419.2 million of total net sales in the three months ended December 31, 2024, compared to $374.0 million in the same period of 2023, a growth of 12.1%[46] - Approximately 39% of net sales are under firm price sales arrangements, which involve risks related to profit margin fluctuations due to raw material price volatility[124] - Excluding surcharge revenue, sales increased 13% to $548.0 million, driven by a 35% increase in the Aerospace and Defense end-use market[136] Debt and Financing - Long-term debt outstanding as of December 31, 2024, was $694.8 million, slightly up from $694.2 million as of June 30, 2024[65] - The company entered into a Second Amended and Restated Credit Agreement with Bank of America, extending the maturity to April 12, 2028[197] - The Credit Facility has a commitment of $350.0 million, with the ability to request an increase based on consolidated EBITDA[198] Tax and Compliance - Income tax expense for the three months ended December 31, 2024, was $21.0 million, or 20.0% of pre-tax income, compared to $12.5 million, or 22.6% of pre-tax income for the same period in 2023[98] - The company is subject to financial covenants requiring a minimum interest coverage ratio of 3.00 to 1.00 and a maximum consolidated net leverage ratio of 4.00 to 1.00, and was in compliance as of December 31, 2024[202]

January 30, 2025 CARPENTER TECHNOLOGY CORPORATION 2 nd Quarter Fiscal Year 2025 Earnings Call © 2025 CRS Holdings, LLC. All rights reserved. Cautionary Statement Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertaint ...

Core Insights - Carpenter Technology (CRS) reported revenue of $676.9 million for the quarter ended December 2024, marking an 8.4% year-over-year increase, with an EPS of $1.66 compared to $0.85 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $708.84 million by 4.51%, while the EPS exceeded the consensus estimate of $1.56 by 6.41% [1] Financial Performance Metrics - Carpenter's stock has returned +23.2% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change, and currently holds a Zacks Rank 2 (Buy) [3] - Specialty Alloys Operations sold 44.71 million pounds, below the average estimate of 50.09 million pounds [4] - Total volumes sold were 46.17 million pounds, compared to the average estimate of 50.94 million pounds [4] - Net Sales for the End-Use Market Excluding Surcharge Revenue totaled $548 million, slightly below the average estimate of $568.39 million, representing a 12.9% year-over-year increase [4] - Performance Engineered Products net sales were $95 million, compared to the average estimate of $101.55 million, reflecting a -0.7% year-over-year change [4] - Specialty Alloys Operations net sales reached $601.50 million, compared to the average estimate of $632.96 million, showing a 9.5% year-over-year increase [4] - Operating Income for Corporate was -$23.60 million, better than the average estimate of -$33.83 million [4] - Operating Income for Performance Engineered Products was $7 million, slightly above the average estimate of $6.95 million [4] - Operating Income for Specialty Alloys Operations was $135.60 million, compared to the average estimate of $138.13 million [4]

Group 1 - Carpenter Technology (CRS) reported quarterly earnings of $1.66 per share, exceeding the Zacks Consensus Estimate of $1.56 per share, and showing a significant increase from $0.85 per share a year ago, representing an earnings surprise of 6.41% [1] - The company posted revenues of $676.9 million for the quarter ended December 2024, which was 4.51% below the Zacks Consensus Estimate, but an increase from $624.2 million in the same quarter last year [2] - Carpenter has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates twice during the same period [2] Group 2 - The stock has gained approximately 23.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 2.7% [3] - The current consensus EPS estimate for the upcoming quarter is $1.65, with expected revenues of $744.41 million, and for the current fiscal year, the consensus EPS estimate is $6.74 on revenues of $2.94 billion [7] - The Steel - Specialty industry, to which Carpenter belongs, is currently ranked in the top 10% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

Core Insights - Carpenter Technology Corporation reported a record operating income of $118.9 million for the second quarter of fiscal year 2025, representing a 70% increase year-over-year, with earnings per diluted share at $1.66, up from $0.85 in the same quarter last year [1][5][8] - The Specialty Alloys Operations (SAO) segment achieved $135.6 million in operating income, with an adjusted operating margin of 28.3%, up from 20.0% a year ago, marking the twelfth consecutive quarter of increasing margins in this segment [4][5][8] - The company generated $67.9 million in cash from operations and $38.6 million in adjusted free cash flow, a significant improvement from negative cash flow in the previous year [9][32] - Carpenter Technology has increased its fiscal year 2025 operating income outlook to a range of $500 million to $520 million, up from the previous high end of $460 million to $500 million, and projects adjusted free cash flow of $250 million to $300 million [4][5][6] Financial Performance - Net sales for the second quarter of fiscal year 2025 were $676.9 million, an increase of 8% from $624.2 million in the same quarter of fiscal year 2024, despite a 6% decrease in shipment volume [7][8] - The company reported net income of $84.1 million for the quarter, compared to $42.7 million in the prior year [7][17] - Cash provided from operating activities increased to $67.9 million from $14.6 million year-over-year, reflecting improved earnings and operational efficiencies [9][18] Shareholder Returns and Capital Allocation - Carpenter Technology repurchased $8.2 million worth of shares under its $400 million share repurchase authorization, with $359.7 million remaining for future purchases [9][10] - The company continues to return cash to shareholders through dividends, maintaining a dividend of $0.20 per share [17][19] Future Outlook - The company anticipates continued growth beyond fiscal year 2025, driven by strong market demand for its specialized products and a focus on productivity and pricing optimization [6][10] - An investor update event is scheduled for February 18, 2025, to discuss market demand trends and long-term financial outlook [12][6]

Core Viewpoint - Carpenter Technology Corporation (CRS) is expected to report strong revenue and earnings growth in its upcoming fiscal Q2 2025 results, driven by demand in aerospace, defense, and medical applications, despite facing challenges from labor and chip shortages [2][7][8]. Financial Performance - The Zacks Consensus Estimate for CRS's revenues is $718 million, reflecting a 15% increase from the previous year [2]. - The earnings estimate for CRS is $1.58 per share, indicating a significant year-over-year increase of 85.9% [2]. - CRS has a history of beating earnings estimates, with an average surprise of 14.1% over the last four quarters [3]. Segment Performance - The Specialty Alloys Operations segment is projected to generate sales of $620 million, a 12.8% increase from the same quarter last year, with an expected operating profit of $139 million, up from $83.3 million [9]. - Performance Engineered Products' net sales are anticipated to rise by 11.1% year over year to $106 million, with an estimated operating profit of $6.9 million [10]. Stock Performance - Carpenter Technology's stock has increased by 208.4% over the past year, significantly outperforming the industry average growth of 72% [11].

Core Viewpoint - Carpenter Technology Corporation (CRS) has experienced significant stock performance, achieving a 209.7% increase over the past year, driven by strong demand in key end-use markets and solid financial results [1][3]. Group 1: Stock Performance - CRS shares reached a new 52-week high of $207.99 before closing at $206.58, with a market capitalization of $10.3 billion [1]. - The company's stock has outperformed the industry growth of 65.4% and the S&P 500 index's rise of 26.5% over the past year [1]. Group 2: Financial Performance - In the first quarter of fiscal 2025, CRS reported an adjusted operating income of $117 million, marking its most profitable first quarter on record [4]. - The company anticipates operating income to be at the high end of its revised target of $460-$500 million for fiscal 2025, previously set for fiscal 2027 [7]. Group 3: Market Demand and Growth - Carpenter Technology is experiencing strong demand recovery in aerospace, defense, and medical end-use markets, which is expected to continue through fiscal 2025 [5]. - The aerospace sector is benefiting from increased global travel, with demand accelerating across all aerospace submarkets [6]. Group 4: Backlog and Future Outlook - The company reported near-record backlog levels in the first quarter of fiscal 2025, supported by strong booking growth, indicating positive near and long-term outlooks for its end-use markets [3]. - The anticipated growth will be driven by higher prices, improved product mix, and increased shipment volumes [8]. Group 5: Financial Health - At the end of the first quarter of fiscal 2025, Carpenter Technology had total liquidity of $499 million, consisting of $150 million in cash and $349 million in available borrowings [9]. - The company has authorized a share repurchase program of up to $400 million, reflecting confidence in its financial position [9].

Market Overview - U.S. stock markets have experienced significant volatility since the start of 2025, with concerns surrounding inflation and interest rates [1] - The Federal Reserve reduced the benchmark lending rate by 1% in 2024 and indicated another potential 1% cut in 2025, but strong economic indicators have raised doubts about further cuts this year [1] Stock Performance - Several stocks have shown price strength, particularly those on a recent bull run, indicating potential for continued momentum [2] - Five highlighted stocks include OppFi Inc. (OPFI), DXP Enterprises Inc. (DXPE), Carpenter Technology Corp. (CRS), United Airlines Holdings Inc. (UAL), and Gulfport Energy Corp. (GPOR) [2] Stock Screening Criteria - Stocks must show a percentage change in price greater than zero over the last four weeks, indicating upward movement [4] - A percentage change in price greater than 10% over the last 12 weeks is required to ensure sustained momentum [4] - Stocks should have a Zacks Rank of 1 (Strong Buy) and an average broker rating of 1 or 2, indicating strong future performance expectations [5] - Current stock prices must be above $5 and trading near their 52-week highs, with a price/52-week high-low range greater than 85% [6] Individual Stock Highlights - **OppFi Inc. (OPFI)**: Stock price increased by 28.5% in the past four weeks, with expected earnings growth of 16.3% for the current year [8][7] - **DXP Enterprises Inc. (DXPE)**: Stock price rose by 13.6% in the past four weeks, with expected earnings growth of 5.9% for the current year [10][9] - **Carpenter Technology Corp. (CRS)**: Stock price surged by 10.1% in the past four weeks, with an expected earnings growth rate of 42.8% for the current year [13][12] - **United Airlines Holdings Inc. (UAL)**: Stock price advanced by 9.7% in the past four weeks, with expected earnings growth of 20.3% for the current year [15][14] - **Gulfport Energy Corp. (GPOR)**: Stock price gained 6.8% in the past four weeks, with expected earnings growth of 51% for the current year [17][16]