Carpenter Technology Corporation

Hello everyone and thank you for joining us and welcome to the Carpenter Technology Corps Q4 FY26 earnings presentation. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to John Huyette, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to the Carpenter Technology Earnings Conference call for the fiscal 2026 fourth quarter and in June 30th, 2026. This call is also being broadcast over the internet along with presentation slides. For those of you listening by phone, you may experience a time delay in slide movement. Speakers on the call today are Tony Thene, Chairman, President, and Chief Executive Officer, and Tim Lane, Senior Vice President and Chief Financial Officer. Statements made by management during this earnings presentation that are forward-looking statements are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Carpenter Technologies' most recent SEC filings, including the company's report on Form 10-K for the year ended June 30th, 2025 forms 10Q for the quarters ended September 30, 2025, December 31, 2025, and March 31, 2026, and the exhibits attached to those filings. Please also note that in the following discussion, unless otherwise noted, when management discuss the sales or revenue, that reference excludes surcharge. When referring to operating margins, that is based on adjusted operating income, excluding special items, and Sales, excluding surcharge. I will now turn the call over to Tony.

Thank you, John, and good morning to everyone. Before I begin this morning, I want to take a moment to share my condolences on behalf of the Carpenter Technology family to Brian Malloy's family. His sudden passing last week was a tragic loss and a shock to all of us. Brian joined the company in 2015 and through various leadership roles was instrumental in advancing Carpenter Technologies strategic priorities over the last decade. And on July 1st, Brian became CEO, a role he was truly excited to take on. Brian will be forever remembered here as a trusted and respected leader for his commitment to our values, employees and the company's long-term success. Brian was a friend and he will be sorely missed. As you know from our press release, I was reappointed by the board of directors to the role of CEO. To be clear, this is not an interim assignment and we are not launching an external search for a new CEO. The plan is for me to remain as a CEO for an indefinite period of time. Now onto the business of the earnings call. Let's turn to slide four and a review of our safety performance. We start every quarterly earnings presentation with our safety slide, reinforcing that a zero injury workplace is our number one value and our ultimate goal. We believe that superior, sustainable operational performance is only possible in a company culture that places the safety of their employees as an unquestionable number one priority. We ended fiscal year 2026 with a total case incident rate of 1.4. We believe we are one of the safest manufacturing companies in the world, but we will only be satisfied with a zero injury workplace, a target that we firmly believe is possible. Let's turn to slide five for an overview of our fourth quarter performance. Corporate Technology just delivered another record quarter, reflecting the continued strong operational execution and accelerating demand across our high-value markets. In the fourth quarter, we generated $206.9 million in operating income, exceeding our previous record set in the third quarter by 11%. The profitability was driven by the SAO segment, which delivered an adjusted operating margin and many more. As a result of the expanding margins, the SAO segment reported $229.7 million in operating income, an increase of 10% sequentially and another all-time record for the segment and above the expectation We had set for the segment. Importantly, these record earnings translated directly into another strong cash flow generation quarter. In the fourth quarter, we generated 240.1 million in cash from operating activities and 155 million of adjusted free cash flow. And we continued returning cash to shareholders through our dividend and repurchase programs, executing 45.2 million of repurchases in the quarter, raising the total to $179.1 million for all of fiscal year 2026. Turning to slide six and a closer look at fourth quarter sales and market conditions. In the fourth quarter of fiscal year 2026, sales increased in a strengthening demand environment year over year and sequentially. Starting with the aerospace and defense in use market, sales were up 3% sequentially, and up 17% year over year. Our sales growth reflects accelerating activity across the aerospace supply chain as OEMs continue to push toward higher build rates. Boeing and Airbus continue to increase production against a backlog of approximately 16,000 aircraft, while engine manufacturers remain focused on securing supply to support both increasing production rates and elevated MRO demand. On their earnings call Tuesday, Boeing stated that they expect to achieve rate 47 per month for the 737 this summer. And they discussed their plans to increase to rate 52 per month in the near term. We see this reflected in the sequential increase in bookings for the aerospace and defense in use market. And we heard this confidence from customers at the Farnborough International Air Show just last week. Our engine customers report strong demand with many commenting that demand is less of a concern than the capacity needed to meet that demand. Our fastener customers are ramping significantly and discussing with us areas where they need more material sooner. Across the board, our structural customers are expecting demand to accelerate in the coming quarters. For an increasing number of structural customers, we are already experiencing accelerated ordering with extending lead times. At the same time, some structural customers remain cautious in their ordering patterns, but at the same time acknowledging that they are ordering below expected demand rates. We agree. And as that caution fades and ordering aligns with expected production rates, we expect demand to accelerate even further. In the defense submarket, we continue to see strong demand and urgent requests for material across multiple platforms. Moving on to the medical in-use market, our sales were up 5% sequentially and down 30% compared to the prior year fourth quarter. This is the first quarter in this fiscal year that medical in-use market sales were up sequentially. Our medical in-use market continues to have solid fundamentals and we see ongoing improvement in demand across orthopedics, dental, and cardiology. This quarter, energy in-use market sales flipped versus the large sequential increase last quarter, down 22% sequentially and 12% year over year. The demand from our IGT customers, primarily driven by the growing energy needs of data centers, remain strong. As we have said many times, quarterly sales for IGT material will fluctuate due to order timing and production scheduling. Finally, we saw a significant uptick in the sales for industrial and consumer in-use market, up 19% sequentially and 22% year over year. This was primarily driven by increasing demand from the semiconductor industry, where our materials are used in critical components in the semiconductor production process. We continue to see strong investment in fabrication facilities, semiconductor equipment, and supporting infrastructure. Customer confidence has improved, demand remains robust, and our position is strengthening in this market. In summary, we continue to operate in an accelerating demand environment across our high value in use markets. We believe that rate of growth will increase in the near term, specifically in the aerospace and defense in use markets, as air framers continue to increase build rates. Combined with our differentiated capabilities and capacity, This positions Carpenter Technology for meaningful growth, both in the near term and over the long term. Now, I will turn it over to Tim for the financial summary.