Index to Consolidated Financial Statements and Supplementary Data Page Consolidated Financial Statements: Management's Responsibilities for Financial Reporting 47 Management's Report on Internal Control Over Financial Reporting 47 Report of Independent Registered Public Accounting Firm (PCAOB ID 238) 48 Consolidated Statements of Operations for the Years Ended June 30, 2026, 2025 and 2024 50 Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2026, 2025 and 2024 51 Consolidated Statements of Cash Flows for the Years Ended June 30, 2026, 2025 and 2024 52 Consolidated Balance Sheets as of June 30, 2026 and 2025 53 Consolidated Statements of Changes in Equity for the Years Ended June 30, 2026, 2025 and 2024 54 Notes to Consolidated Financial Statements 56 Supplementary Data: Quarterly Financial Data (Unaudited) 94 Schedule II. Valuation and Qualifying Accounts for the Years Ended June 30, 2026, 2025 and 2024 105 46 Table of Contents Management's Responsibilities for Financial Reporting Management prepared the financial statements included in this Annual Report on Form 10-K and is responsible for their integrity and objectivity. The statements were prepared in conformity with accounting principles generally accepted in the United States of America and, as such, include amounts based on management's best judgments and estimates. Financial information elsewhere in this Annual Report is consistent with that in the financial statements. Carpenter maintains a system of internal controls, supported by a code of conduct, designed to provide reasonable assurance that assets are safeguarded and transactions are properly executed and recorded for the preparation of financial information. We believe Carpenter's system of internal controls provides this appropriate balance. The system of internal controls and compliance is continually monitored by Carpenter's internal audit staff. The Audit/Finance Committee of the Board of Directors, composed of independent directors, meets regularly with management, Carpenter's internal auditors and our independent registered public accounting firm to consider audit results and to discuss significant internal control, auditing and financial reporting matters. Both the independent registered public accounting firm and internal auditors have unrestricted access to the Audit/Finance Committee. Management's Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Carpenter's internal control over financial reporting as of June 30, 2026. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on its assessment, management concluded that, as of June 30, 2026, Carpenter's internal control over financial reporting is effective based on those criteria. The effectiveness of Carpenter's internal control over financial reporting as of June 30, 2026, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing herein. /s/ Tony R. Thene Tony R. Thene Chairman, President and Chief Executive Officer /s/ Timothy Lain Timothy Lain Senior Vice President and Chief Financial Officer 47 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Carpenter Technology Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Carpenter Technology Corporation and its subsidiaries (the "Company") as of June 30, 2026 and 2025, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended June 30, 2026, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 48 Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition - Goods Transferred to the Customer As described in Notes 1 and 4 to the consolidated financial statements, revenue is recognized when the Company's performance obligations are satisfied. This occurs when control of the goods and services has transferred to the customer, which is generally determined when title, ownership and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product, based on the applicable shipping terms, or when the service is performed. For the year ended June 30, 2026, the Company's net sales were $3.12 billion, a majority of which relates to goods transferred to the customer. The principal consideration for our determination that performing procedures relating to revenue recognition related to goods transferred to the customer is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company's revenue recognition. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others (i) testing the issuance and settlement of invoices and credit memos, tracing transactions not settled to a detailed listing of accounts receivable, and testing the completeness and accuracy of certain data provided by management; (ii) testing revenue, on a test basis, by obtaining and inspecting source documents, such as invoices, delivery documents, evidence of customer arrangement, price information, and cash receipts; and (iii) performing confirmation procedures, on a test basis, of outstanding customer invoice balances as of June 30, 2026 and, for confirmations not returned, obtaining and inspecting source documents, such as invoices, delivery documents, evidence of customer arrangement, price information, and subsequent cash receipts. /s/ PricewaterhouseCoopers LLP Philadelphia, Pennsylvania August 12, 2026 We have served as the Company's auditor since 1918. 49 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended June 30, 2026, 2025 and 2024 ($ in millions, except per share data) 2026 2025 2024 Net sales $ 3,124.2 $ 2,877.1 $ 2,759.7 Cost of sales 2,168.7 2,108.5 2,175.4 Gross profit 955.5 768.6 584.3 Selling, general and administrative expenses 253.5 243.2 230.2 Goodwill impairment charge — — 14.1 Restructuring and asset impairment charges — 3.6 16.9 Operating income 702.0 521.8 323.1 Interest expense, net 37.8 48.4 51.0 Debt extinguishment losses 15.6 — — Other (income) expense, net (7.6) 6.1 60.5 Income before income taxes 656.2 467.3 211.6 Income tax expense 126.4 91.3 25.1 Net income $ 529.8 $ 376.0 $ 186.5 EARNINGS PER COMMON SHARE: Basic $ 10.59 $ 7.50 $ 3.75 Diluted $ 10.52 $ 7.42 $ 3.70 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 50.0 50.2 49.7 Diluted 50.4 50.7 50.3 See accompanying notes to consolidated financial statements. 50 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended June 30, 2026, 2025 and 2024 ($ in millions) 2026 2025 2024 Net income $ 529.8 $ 376.0 $ 186.5 Other comprehensive income (loss), net of tax: Net gain on derivative instruments, net of tax of $(0.1), $(0.5) and $(0.3), respectively 0.4 1.7 1.1 Pension and postretirement benefits, net of tax of $(15.0), $(5.3) and $(16.0), respectively 48.7 16.9 51.2 Foreign currency translation (1.6) 7.4 (3.2) Total other comprehensive income, net of tax 47.5 26.0 49.1 Comprehensive income, net of tax $ 577.3 $ 402.0 $ 235.6 See accompanying notes to consolidated financial statements. 51 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended June 30, 2026, 2025 and 2024 ($ in millions) 2026 2025 2024 OPERATING ACTIVITIES Net income $ 529.8 $ 376.0 $ 186.5 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 147.1 139.2 134.6 Goodwill impairment charge — — 14.1 Noncash restructuring and asset impairment charges — 2.5 15.8 Debt extinguishment losses 15.6 — — Deferred income taxes 21.2 (17.4) (13.3) Net pension expense 14.6 24.8 76.0 Share-based compensation expense 26.4 22.8 19.8 Net loss on disposal of property, plant, and equipment and assets held for sale 1.4 2.0 4.6 Changes in working capital and other: Accounts receivable (128.3) (1.8) (32.6) Inventories (28.4) (60.4) (96.7) Other current assets 20.0 13.7 (31.3) Accounts payable 17.2 (1.4) (11.0) Accrued liabilities 3.1 13.7 23.6 Pension plan contributions (23.8) (64.8) (11.3) Other postretirement plan contributions (4.0) (3.6) (2.6) Other, net (6.9) (4.9) (1.3) Net cash provided from operating activities 605.0 440.4 274.9 INVESTING ACTIVITIES Purchases of property, plant, equipment and software (242.7) (154.3) (96.6) Proceeds from disposals of property, plant and equipment and assets held for sale — 1.4 0.7 Net cash used for investing activities (242.7) (152.9) (95.9) FINANCING ACTIVITIES Credit agreement borrowings — — 62.5 Credit agreement repayments — — (62.5) Proceeds from issuance of long-term debt, net of offering costs 692.1 — — Payments on long-term debt (700.0) — — Payments for debt extinguishment costs (11.4) — — Payments for debt issue costs (4.1) — — Dividends paid (40.3) (40.3) (40.0) Purchases of treasury stock (179.1) (101.9) — Proceeds from stock options exercised 14.3 13.4 40.9 Withholding tax payments on share-based compensation awards (58.3) (38.3) (24.2) Net cash used for financing activities (286.8) (167.1) (23.3) Effect of exchange rate changes on cash and cash equivalents 2.3 (4.0) (1.1) INCREASE IN CASH AND CASH EQUIVALENTS 77.8 116.4 154.6 Cash and cash equivalents at beginning of year 315.5 199.1 44.5 Cash and cash equivalents at end of year $ 393.3 $ 315.5 $ 199.1 See accompanying notes to consolidated financial statements. 52 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 2026 and 2025 ($ in millions, except share data) 2026 2025 ASSETS Current assets: Cash and cash equivalents $ 393.3 $ 315.5 Accounts receivable, net of allowance for doubtful accounts of $9.4 million and $$7.9 million at June 30, 2026 and 2025, respectively 701.9 575.5 Inventories 822.9 793.8 Other current assets 63.1 79.9 Total current assets 1,981.2 1,764.7 Property, plant, equipment and software, net 1,487.9 1,359.4 Goodwill 227.3 227.3 Other intangibles, net 3.9 9.5 Deferred income taxes 5.5 7.8 Other assets 132.5 118.1 Total assets $ 3,838.3 $ 3,486.8 LIABILITIES Current liabilities: Accounts payable $ 313.4 $ 267.4 Accrued liabilities 206.6 216.3 Total current liabilities 520.0 483.7 Long-term debt 690.7 695.4 Accrued pension liabilities 89.6 146.9 Accrued postretirement benefits 22.2 12.5 Deferred income taxes 196.9 162.8 Other liabilities 91.3 98.5 Total liabilities 1,610.7 1,599.8 Contingencies and commitments (see Note 12) STOCKHOLDERS' EQUITY Common stock — authorized 100,000,000 shares; issued 57,359,343 shares at June 30, 2026, and 57,230,002 shares at June 30, 2025; outstanding 49,606,583 shares at June 30, 2026, and 49,707,379 shares at June 30, 2025 286.8 286.2 Capital in excess of par value 357.1 354.3 Reinvested earnings 2,199.7 1,710.2 Common stock in treasury (7,752,760 shares and 7,522,623 shares at June 30, 2026 and 2025, respectively), at cost (595.6) (395.8) Accumulated other comprehensive loss (20.4) (67.9) Total stockholders' equity 2,227.6 1,887.0 Total liabilities and stockholders' equity $ 3,838.3 $ 3,486.8 See accompanying notes to consolidated financial statements. 53 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Years Ended June 30, 2026, 2025 and 2024 Common Stock ($ in millions, except per share data) ParValueof $5 Capital in Excess of Par Value Reinvested Earnings Common Stock in Treasury Accumulated Other Comprehensive (Loss) Income Total Equity Balances at June 30, 2023 $ 280.7 $ 328.4 $ 1,228.0 $ (298.0) $ (143.0) $ 1,396.1 Net income 186.5 186.5 Net gain on derivative instruments, net of tax 1.1 1.1 Pension and postretirement benefits, net of tax 51.2 51.2 Foreign currency translation (3.2) (3.2) Cash dividends: Common @ $0.80 per share (40.0) (40.0) Share-based compensation plans 0.9 8.7 9.6 Stock options exercised 4.2 23.3 27.5 Balances at June 30, 2024 284.9 352.6 1,374.5 (289.3) (93.9) 1,628.8 Net income 376.0 376.0 Net gain on derivative instruments, net of tax 1.7 1.7 Pension and postretirement benefits, net of tax 16.9 16.9 Foreign currency translation 7.4 7.4 Cash dividends: Common @ $0.80 per share (40.3) (40.3) Purchases of treasury stock (101.9) (101.9) Share-based compensation plans 5.5 (4.6) 0.9 Stock options exercised 1.3 (3.8) (2.5) Balances at June 30, 2025 286.2 354.3 1,710.2 (395.8) (67.9) 1,887.0 Net income 529.8 529.8 Net gain on derivative instruments, net of tax 0.4 0.4 Pension and postretirement benefits, net of tax 48.7 48.7 Foreign currency translation (1.6) (1.6) Cash dividends: Common @ $0.80 per share (40.3) (40.3) Purchases of treasury stock (179.1) (179.1) Share-based compensation plans (0.6) (20.7) (21.3) Stock options exercised 0.6 3.4 4.0 Balances at June 30, 2026 $ 286.8 $ 357.1 $ 2,199.7 $ (595.6) $ (20.4) $ 2,227.6 See accompanying notes to consolidated financial statements. 54 Table of Contents CARPENTER TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED) For the Years Ended June 30, 2026, 2025 and 2024 Common Shares Issued Treasury Net Outstanding Balances at June 30, 2023 56,143,131 (7,507,391) 48,635,740 Stock options exercised 835,532 — 835,532 Share-based compensation plans — 305,683 305,683 Balances at June 30, 2024 56,978,663 (7,201,708) 49,776,955 Purchases of treasury stock — (575,000) (575,000) Stock options exercised 251,339 — 251,339 Share-based compensation plans — 254,085 254,085 Balances at June 30, 2025 57,230,002 (7,522,623) 49,707,379 Purchases of treasury stock — (545,000) (545,000) Stock options exercised 129,341 — 129,341 Share-based compensation plans — 314,863 314,863 Balances at June 30, 2026 57,359,343 (7,752,760) 49,606,583 See accompanying notes to consolidated financial statements. 55 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Consolidation The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany accounts and transactions are eliminated. Certain reclassifications have been made to prior year amounts to conform with current year classifications. Revenue Recognition Revenue, net of related discounts, rebates, returns and allowances is recognized when performance obligations are satisfied under the terms of a customer order or contract. This occurs when control of the goods and services has transferred to the customer, which is generally determined when title, ownership and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product, based on the applicable shipping terms, or when the service is performed. Shipping terms may vary for products shipped outside the United States depending on the mode of transportation, the country where the material is shipped and any agreements made with the customers. Freight and Handling Fees and Costs Freight and handling fees and costs billed separately to customers are included as part of net sales, and freight and handling costs expensed are included as part of cost of sales on the consolidated statements of operations. Research and Development Research and development expenditures, which amounted to $27.7 million, $26.1 million and $25.6 million in fiscal years 2026, 2025 and 2024, respectively, are expensed as incurred and are generally reported in cost of sales in the consolidated statements of operations. The research and development expenditures consist principally of salaries and benefits, building costs, utilities and administrative expenses. Substantially all development costs are related to developing new products or designing significant improvements to existing products or processes. Cash Equivalents Cash equivalents consist of highly liquid instruments with original maturities of three months or less. Cash equivalents are stated at cost, which approximates market. Accounts Receivable Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of outstanding amounts. Trade credit is extended based upon periodic evaluation of each customer's ability to perform its obligations. The Company determines accounts receivable allowances based on an aging of accounts and a review of specific accounts identified as collection risks. The Company generally does not require collateral to secure accounts receivable. Inventories Inventories are valued at the lower of cost or market for those inventories determined by the LIFO method. The Company values other inventory at the lower of cost or net realizable value, determined by the FIFO and average cost methods. As of June 30, 2026 and 2025, $162.6 million and $145.2 million of inventory, respectively, was accounted for using a method other than the LIFO method. 56 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Property, Plant and Equipment and Depreciation Fixed assets are stated at historical cost, with the exception of assets acquired through acquisitions, which are recorded at fair value, less accumulated depreciation. Depreciation for financial reporting purposes is computed by the straight-line method over the estimated useful lives of the assets. Upon disposal, assets and related depreciation are removed from the accounts and the differences between the net amounts and proceeds from disposal are generally included in cost of goods sold in the consolidated statements of operations. Computer Software and Amortization Computer software is included in property, plant, equipment and software, net on the consolidated balance sheets and is amortized for financial reporting purposes on a straight-line basis over the respective estimated useful lives ranging from 3 to 15 years. Goodwill Goodwill, net of accumulated impairment losses, representing the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses, is stated at cost. Goodwill is not amortized but instead is tested at least annually for impairment as of June 1, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired. Goodwill may first be assessed based on qualitative factors (Step 0) to determine whether a quantitative goodwill impairment test is necessary. In fiscal year 2026, the Company performed the Step 0 qualitative assessment rather than immediately performing the Step 1 quantitative valuation as has been done historically. The qualitative assessment includes, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, reporting unit-specific financial performance and other events, such as strategy and primary customer base. When preparing the quantitative impairment test, potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill. Historically, the fair value has been estimated using a weighting of discounted cash flows and the use of market multiples valuation techniques for the SAO reporting unit and the Dynamet reporting unit in the PEP segment. The discounted cash flow technique requires the use of cash flow forecasts. The cash flow forecasts include significant judgments and assumptions related to revenue growth rates, which include perpetual growth rates, gross margin and weighted average cost of capital. The market multiples valuation technique includes significant judgment in the determination of the market multiples. If the carrying value of the reporting unit exceeds its fair value, any impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value, not to exceed the carrying amount of goodwill. Intangible assets The costs of intangible assets, consisting principally of trademarks, trade names and customer relationships are amortized on a straight-line basis over the estimated useful lives ranging from 15 to 30 years. The gross carrying amount and related accumulated amortization are removed from the accounts upon full amortization or impairment. Impairment of Long-Lived Assets Long-lived assets subject to depreciation and amortization, including property, plant, equipment, software and intangible assets, are reviewed for impairment and written down to fair value whenever events or changes in circumstances indicate that the carrying value may not be recoverable through future undiscounted cash flows. The amount of the impairment loss is the excess of the carrying amount of the impaired assets over the fair value of the assets based upon discounted future cash flows. 57 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Leases Determination of whether a contract is or contains a lease at contract inception is based on the presence of identified assets and the right to obtain substantially all of the economic benefit from or to direct the use of such assets. When it is determined a lease exists, a right-of-use ("ROU") asset and corresponding lease liability are recorded on the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term. Lease liabilities represent the obligation to make lease payments arising from the lease. On the lease commencement date, the Company measures and records a ROU asset and lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, an incremental borrowing rate). Lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease contracts with a term of 12 months or less are not recorded in the consolidated balance sheets. Fixed lease expense is recognized for operating leases on a straight-line basis over the lease term. Lease agreements with lease and non-lease components, are accounted for as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the ROU asset or lease liability. Environmental Expenditures Environmental expenditures that pertain to current operations or to future revenue are expensed or capitalized consistent with the Company's capitalization policy for property, plant and equipment. Expenditures that result from the remediation of an existing condition caused by past operations and that do not contribute to current or future revenue are expensed. Liabilities are recognized for remedial activities when the remediation is probable and the cost can be reasonably estimated. Most estimated liabilities are not discounted to present value due to the uncertainty as to the timing and duration of expected costs. For one former operating facility site, due to the routine nature of the expected costs, the liability for future costs is discounted to present value over 20 years assuming a discount rate of approximately 6 percent as of June 30, 2026 and approximately 6 percent as of June 30, 2025. The liabilities, net of present value discount, for this former operating site were $10.8 million and $10.8 million, as of June 30, 2026 and 2025, respectively. Derivative Financial Instruments All derivative financial instruments are recorded on the balance sheet at their fair value and changes in fair value are recorded each period in current earnings or other comprehensive income (loss). The Company enters into derivative financial instruments to hedge certain anticipated transactions, firm commitments or assets and liabilities denominated in foreign currencies. Foreign Currency Translation Assets and liabilities of international operations are translated into U.S. dollars at exchange rates in effect at year-end, and their income statements are translated at the average monthly exchange rates prevailing during the year. The resulting translation gains and losses are recorded each period as a component of accumulated other comprehensive income (loss) until the international entity is sold or liquidated. Gains and losses from transactions denominated in foreign currencies are reported in other (income) expense, net in the consolidated statements of operations. 58 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes Deferred income taxes are recognized by applying enacted statutory tax rates, applicable to future years, to temporary differences between the tax basis and financial statement carrying values of the Company's assets and liabilities. Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be realized. Significant judgments, estimates and assumptions are required in determining tax return reporting positions and in calculating provisions for income tax, which are based on interpretations of tax regulations and accounting pronouncements. Liabilities are established for uncertain tax positions when it is more likely than not that such positions, if challenged, would not be sustained upon review by taxing authorities. These liabilities are re-evaluated as tax regulations and facts and circumstances change, such as the closing of a tax audit or the expiration of the statute of limitations for a specific exposure. Earnings per Share The Company calculates basic and diluted earnings per share using the two class method. Under the two class method, earnings are allocated to common stock and participating securities (non-vested restricted shares and units that receive non-forfeitable dividends) according to their participation rights in dividends and undistributed earnings. The earnings available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. Concentration of Credit Risk Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, investments in marketable securities and trade receivables. Investment and cash management policies have been implemented that limit deposit concentrations and limit investments to investment grade securities. The risk with respect to trade receivables is mitigated by monitoring payment terms and periodic credit evaluations the Company performs on our customers, the short duration of our payment terms and by the diversification of our customer base. During fiscal years 2026, 2025 and 2024, no single customer accounted for 10 percent or more of total net sales. No single customer accounted for 10 percent or more of the accounts receivable outstanding at June 30, 2026 and 2025. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 59 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Restructuring and Asset Impairment Charges Restructuring and asset impairment charges for the years ended June 30, 2026, 2025 and 2024, were $0.0 million, $3.6 million and $16.9 million, respectively. The charges in fiscal year 2025 and 2024 were 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. During fiscal year 2025, the Company recorded charges of $3.6 million. 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 during the quarter ended June 30, 2024. During fiscal year 2024, the Company recorded charges of $16.9 million. 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. The Company also recognized $1.1 million of various personnel costs for severance payments, medical coverage and related items. The reserve balances and activity for restructuring charges at June 30, 2026 and 2025 were as follows: June 30, ($ in millions) 2026 2025 Reserve balance beginning of year $ — $ 1.1 Restructuring charges excluding noncash impairments — 1.1 Cash payments — (2.2) Reserve balance end of year $ — $ — 3. Recent Accounting Pronouncements Recently Issued Accounting Pronouncements - Pending Adoption In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance in this ASU improves the disclosures about a public business entity's expenses by requiring more detailed information about the types of expenses included within the income statement expense captions, such as: inventory purchases, employee compensation, depreciation and intangible asset amortization. This ASU does not change or remove current expense disclosure requirements, however, it does affect where this information appears in the notes to financial statements, as entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 is a requirement for additional disclosure and is not expected to materially impact the consolidated financial statements. Additionally, in January 2025, the FASB issued ASU 2025-01 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarifies the effective date for non-calendar year-end entities. In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this update make targeted improvements to increase the operability of the recognition guidance considering different methods of software development. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the potential impact of the adoption of ASU 2025-06 on its consolidated financial statements and related disclosures. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815) Hedge Accounting Improvements. The update provides targeted improvements intended to enhance the application of hedge accounting, including expanded eligibility of forecasted transactions, additional flexibility in measuring hedge effectiveness and clarifications related to hedging non-financial items. The guidance is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of ASU 2025-09 on its consolidated financial statements and related disclosures. 60 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In December 2025, the FASB issued ASU 2025-12 Codification Improvements to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to U.S. GAAP. The update represents changes to the Codification that (1) clarify, (2) correct errors or (3) make minor improvements. The amendments make the Codification easier to understand and apply. The guidance is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. ASU 2025-12 is an update to correct, clarify and otherwise improve U.S. GAAP and is not expected to materially impact the consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements - Adopted In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance in this ASU enhances the transparency and decision functionality of income tax disclosures to provide investors information to better assess how an entity's operations and related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flow. The amendments in this ASU require public entities to disclose the following specific categories in the rate reconciliation by both percentages and reporting currency amounts: the effect of state and local income tax, net of federal (national) income tax, foreign tax effects, effects of changes in tax laws or rates enacted in the current period, effects of cross-border tax laws, tax credits, changes in valuation allowances, non-taxable or non-deductible items and changes in unrecognized tax benefits. The amendments in ASU 2023-09 also require public entities to provide additional information for reconciling items that meet the qualitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income (loss) by the applicable statutory income tax rate). The ASU requires reporting entities to annually disclose the year-to-date amount of income taxes paid (net of refunds received) disaggregated by federal, state and foreign localities. The Company adopted the provisions of ASU 2023-09 in the fourth quarter of fiscal year 2026. ASU 2023-09 is a requirement for additional disclosure, as such it did not impact the consolidated financial statements other than the disclosure requirements in Note 18. In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance in ASU 2023-07 seeks to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU require a public entity to disclose the following: significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; an amount for other segment items by reportable segment and a description of its composition; and the title and position of the CODM and how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This ASU requires public entities to provide all annual disclosures about a reportable segment's profit or loss and assets currently required by Topic 280 in interim periods. ASU 2023-07 clarifies that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. The Company adopted the provisions of ASU 2023-07 in the fourth quarter of fiscal year 2025 and adopted the provisions for interim disclosures in the first quarter of fiscal year 2026. ASU 2023-07 is a requirement for additional disclosure, as such it did not impact the consolidated financial statements other than the disclosure requirements in Note 20. 4. Revenue The Company recognizes revenue in accordance with Topic 606, Revenue from Contracts. The Company applies the five-step model in the FASB's guidance, which requires the Company to: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies a performance obligation. The Company recognizes revenue when performance obligations under the terms of a customer purchase order or contract are satisfied. This occurs when control of the goods and services has transferred to the customer, which is generally determined when title, ownership and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product or the service is performed. Consignment transactions are arrangements where the Company transfers product to a customer location but retains ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon usage by the customer. Service revenue is recognized as the services are performed. 61 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The customer purchase order or contract for goods transferred has a single performance obligation for which revenue is recognized at a point in time. The standard terms and conditions of a customer purchase order include general rights of return and product warranty provisions related to nonconforming product. Depending on the circumstances, the product is either replaced or a quality adjustment is issued. Such warranties do not represent a separate performance obligation. Each customer purchase order or contract sets forth the transaction price for the products and services purchased under that arrangement. Some customer arrangements include variable consideration, such as volume rebates, which generally depend upon the Company's customers meeting specified performance criteria, such as a purchasing level over a period of time. The Company exercises judgment to estimate the most likely amount of variable consideration at each reporting date. Revenue is measured as the amount of consideration the Company expects to receive in exchange for its product. The normal payment terms are 30 days. The Company has elected to use the practical expedient that permits the Company to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Amounts billed to customers for shipping and handling activities to fulfill the Company's promise to transfer the goods are included in revenues and costs incurred by the Company for the delivery of goods are classified as cost of sales in the consolidated statements of operations. Shipping terms may vary for products shipped outside the United States depending on the mode of transportation, the country where the material is shipped and any agreements made with the customers. Contract liabilities are recognized when the Company has received consideration from a customer to transfer goods or services at a future point in time when the Company performs under the purchase order or contract. Contract liabilities were $7.2 million and $5.2 million at June 30, 2026 and 2025, respectively, and are included in accrued liabilities on the consolidated balance sheets. Revenue recognized for the fiscal years ended June 30, 2026, 2025 and 2024 from amounts included in contract liabilities at the beginning of the period was not significant and substantially all of our contract liabilities are recognized within a twelve-month period. The Company elected the practical expedient that permits the omission of disclosure for remaining performance obligations which are expected to be satisfied in one year or less. Disaggregation of Revenue The Company operates in two business segments, Specialty Alloys Operations ("SAO") and Performance Engineered Products ("PEP"). Revenue is disaggregated within these two business segments by diversified end-use markets and by geographical locations based on the location of the customer. 62 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Comparative information of the Company's overall revenue by end-use markets for fiscal year ended June 30, 2026 was as follows: End-Use Market Year Ended June 30, 2026 ($ in millions) SAO PEP Intersegment Total Aerospace and Defense $ 1,924.7 $ 123.1 $ (12.6) $ 2,035.2 Medical 211.7 122.1 (55.4) 278.4 Energy 222.0 8.6 — 230.6 Transportation 93.3 7.2 (0.1) 100.4 Industrial and Consumer 375.1 44.2 (17.5) 401.8 Distribution — 77.8 — 77.8 Total net sales $ 2,826.8 $ 383.0 $ (85.6) $ 3,124.2 Comparative information of the Company's overall revenue by end-use markets for fiscal year ended June 30, 2025 was as follows: End-Use Market Year Ended June 30, 2025 ($ in millions) SAO PEP Intersegment Total Aerospace and Defense $ 1,679.6 $ 104.0 $ (15.0) $ 1,768.6 Medical 243.7 166.8 (59.3) 351.2 Energy 193.2 7.1 — 200.3 Transportation 105.8 7.9 (0.4) 113.3 Industrial and Consumer 341.3 35.3 (17.1) 359.5 Distribution — 84.3 (0.1) 84.2 Total net sales $ 2,563.6 $ 405.4 $ (91.9) $ 2,877.1 Comparative information of the Company's overall revenue by end-use markets for fiscal year ended June 30, 2024 was as follows: End-Use Market Year Ended June 30, 2024 ($ in millions) SAO PEP Intersegment Total Aerospace and Defense $ 1,449.9 $ 111.1 $ (22.2) $ 1,538.8 Medical 282.4 144.9 (51.7) 375.6 Energy 177.2 8.6 — 185.8 Transportation 141.3 8.2 (0.4) 149.1 Industrial and Consumer 393.0 40.3 (18.0) 415.3 Distribution — 97.9 (2.8) 95.1 Total net sales $ 2,443.8 $ 411.0 $ (95.1) $ 2,759.7 63 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Comparative information of the Company's overall revenue by geographic locations for fiscal year ended June 30, 2026, was as follows: Geographic Location (a) Year Ended June 30, 2026 ($ in millions) SAO PEP Intersegment Total United States $ 1,620.3 $ 234.3 $ (30.4) $ 1,824.2 Europe 652.3 67.1 (19.0) 700.4 Asia Pacific 336.8 40.5 (36.1) 341.2 Mexico 118.2 23.6 — 141.8 Canada 56.2 7.7 — 63.9 Other 43.0 9.8 (0.1) 52.7 Total net sales $ 2,826.8 $ 383.0 $ (85.6) $ 3,124.2 Comparative information of the Company's overall revenue by geographic locations for fiscal year ended June 30, 2025 was as follows: Geographic Location (a) Year Ended June 30, 2025 ($ in millions) SAO PEP Intersegment Total United States $ 1,487.2 $ 243.9 $ (31.2) $ 1,699.9 Europe 545.4 72.6 (21.8) 596.2 Asia Pacific 342.1 41.2 (38.9) 344.4 Mexico 93.7 27.8 — 121.5 Canada 50.1 11.1 — 61.2 Other 45.1 8.8 — 53.9 Total net sales $ 2,563.6 $ 405.4 $ (91.9) $ 2,877.1 Comparative information of the Company's overall revenue by geographic locations for fiscal year ended June 30, 2024 was as follows: Geographic Location (a) Year Ended June 30, 2024 ($ in millions) SAO PEP Intersegment Total United States $ 1,418.5 $ 234.4 $ (29.9) $ 1,623.0 Europe 449.2 75.5 (20.9) 503.8 Asia Pacific 389.4 46.2 (44.3) 391.3 Mexico 86.0 34.1 — 120.1 Canada 56.9 13.2 — 70.1 Other 43.8 7.6 — 51.4 Total net sales $ 2,443.8 $ 411.0 $ (95.1) $ 2,759.7 (a) Net sales are attributed to geographic region based on the location of the customer. 64 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Earnings per Common Share The Company calculates basic and diluted earnings per share using the two class method. Under the two class method, earnings are allocated to common stock and participating securities (non-vested restricted shares and units that receive non-forfeitable dividends) according to their participation rights in dividends and undistributed earnings. The earnings available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. No awards issued under share-based compensation plans were excluded from the calculations of diluted earnings per share because their effects were anti-dilutive for the years ended June 30, 2026, 2025 and 2024. The calculations of basic and diluted earnings per common share for the years ended June 30, 2026, 2025 and 2024 were as follows: Years Ended June 30, (in millions, except per share data) 2026 2025 2024 Net income $ 529.8 $ 376.0 $ 186.5 Dividends allocated to participating securities (0.2) (0.2) (0.3) Earnings available for common stockholders used in calculation of basic earnings per common share $ 529.6 $ 375.8 $ 186.2 Weighted average number of common shares outstanding, basic 50.0 50.2 49.7 Basic earnings per common share $ 10.59 $ 7.50 $ 3.75 Net income $ 529.8 $ 376.0 $ 186.5 Dividends allocated to participating securities (0.2) (0.2) (0.3) Earnings available for common stockholders used in calculation of diluted earnings per common share $ 529.6 $ 375.8 $ 186.2 Weighted average number of common shares outstanding, basic 50.0 50.2 49.7 Effect of shares issuable under share-based compensation plans 0.4 0.5 0.6 Weighted average number of common shares outstanding, diluted 50.4 50.7 50.3 Diluted earnings per common share $ 10.52 $ 7.42 $ 3.70 65 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Inventories Inventories consisted of the following components at June 30, 2026 and 2025: June 30, ($ in millions) 2026 2025 Raw materials and supplies $ 177.8 $ 199.7 Work in process 493.8 454.9 Finished and purchased products 151.3 139.2 Total inventories $ 822.9 $ 793.8 Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the LIFO costing method. The Company values other inventory at the lower of cost or net realizable value, determined by the FIFO and average cost methods. If the FIFO method of inventory had been used instead of the LIFO method, inventories would have been $432.6 million and $344.5 million higher as of June 30, 2026 and 2025, respectively. Current cost of LIFO-valued inventories was $1.1 billion at June 30, 2026, and $993.1 million at June 30, 2025. There was no impact to cost of sales, net income or earnings per share from changes in LIFO-valued inventories during fiscal years 2026 or 2025. There were $0.0 million and $2.5 million of inventory impairments recorded in fiscal years 2026 and 2025. 7. Property, Plant, Equipment and Software, net Property, plant, equipment and software, net consisted of the following components at June 30, 2026 and 2025: June 30, ($ in millions) 2026 2025 Land $ 42.5 $ 41.6 Buildings and building equipment 595.7 576.5 Machinery and equipment 2,596.6 2,547.5 Capitalized software 233.5 228.6 Construction in progress 276.2 103.1 Total at cost 3,744.5 3,497.3 Less: accumulated depreciation and amortization 2,256.6 2,137.9 Total property, plant, equipment and software, net $ 1,487.9 $ 1,359.4 The estimated useful lives of depreciable assets are as follows: Asset Category Useful Life (in Years) Buildings and building equipment 10 – 45 Machinery and equipment 3 – 30 Capitalized software 3 – 15 Depreciation for the years ended June 30, 2026, 2025 and 2024 was $124.8 million, $116.7 million and $111.8 million, respectively. Amortization related to capitalized software amounted to $16.7 million, $16.8 million and $16.3 million for the years ended June 30, 2026, 2025 and 2024, respectively. As a result of the actions taken to streamline operations in the Carpenter Additive business, during the quarter ended June 30, 2024, the Company announced the planned closure of the Carpenter Additive operations in the United Kingdom. As a result, the Company recorded impairment charges of $8.8 million related to property, plant, equipment and software during fiscal year 2024. 66 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Goodwill and Other Intangible Assets, Net Goodwill Goodwill is not amortized but instead is tested at least annually for impairment as of June 1, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired by performing a multi-step impairment test. For the fiscal year 2026 annual impairment test, the Company performed a Step 0 qualitative approach for the SAO reporting unit and the Dynamet reporting unit, as was done in fiscal year 2025. Historically, a Step 1 quantitative approach was performed. The Company determined that it is more likely than not that the carrying value of each of our reporting units exceeded their respective fair value and no goodwill impairment was recorded. As of June 30, 2026, the Company has two reporting units with goodwill recorded. Goodwill associated with the SAO reporting unit as of June 30, 2026, was $195.5 million and represents 86 percent of total goodwill. The remaining goodwill of $31.8 million is associated with the Dynamet reporting unit in the PEP segment. During fiscal year 2024, the fair value for the Company's reporting units was estimated using a weighting of discounted cash flows and the use of market multiples valuation techniques. When preparing the quantitative impairment test, potential impairment is identified by comparing the fair value of a reporting unit to its carrying value. If the carrying value of the reporting unit exceeds its fair value, any impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value, not to exceed the carrying amount of goodwill. The fair value is estimated using a weighting of discounted cash flows and the use of market multiples valuation techniques for the SAO reporting unit and the Dynamet reporting unit. The discounted cash flow analysis for each reporting unit tested requires significant estimates and assumptions related to cash flow forecasts, discount rates, terminal values and income tax rates. The cash flow forecasts include significant judgments and assumptions related to revenue growth rates, which include perpetual growth rates, gross margin and weighted average cost of capital. The cash flow forecasts are developed based on assumptions about each reporting unit's markets, product offerings, pricing, capital expenditure and working capital requirements as well as cost performance. In preparing the financial statements for the quarter ended March 31, 2024, the Company 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 efforts of the Company to mitigate the market challenges, results did not improve for the Latrobe Distribution reporting unit during the quarter ended March 31, 2024. In light of the market conditions at the time, the pace of growth in the future projections for the Latrobe Distribution reporting unit were lowered. The Company determined the goodwill associated with the Latrobe Distribution reporting unit was impaired and recorded an impairment charge of $14.1 million during the quarter ended March 31, 2024, which represented the entire balance of goodwill. The fair value was estimated using a weighting of discounted cash flows and the use of market multiples valuation techniques. Goodwill associated with the SAO reporting unit is tested at the SAO segment level. As of June 1, 2024, the fair value of the SAO reporting unit exceeded the carrying value by 203 percent. The discounted cash flows analysis for the SAO reporting unit includes assumptions related to our ability to increase volume, improve mix, expand product offerings and continue to implement opportunities to reduce costs over the next several years. For purposes of the discounted cash flow analysis for SAO's fair value, a weighted average cost capital of 9.5 percent and a terminal growth rate assumption of 2.5 percent were used. If the long-term growth rate for this reporting unit had been hypothetically reduced by 0.5 percent at June 1, 2024, the SAO reporting unit would have a fair value that exceeded the carrying value by approximately 196 percent. Goodwill associated with the PEP segment is tested at the Dynamet reporting unit level. As of June 1, 2024, the fair value of the Dynamet reporting unit exceeded the carrying value by 144 percent. For purposes of the discounted cash flow analysis for Dynamet's fair value, a weighted average cost capital of 11.0 percent and a terminal growth rate assumption of 2.5 percent were used. If the long-term growth rate for this reporting unit had been hypothetically reduced by 0.5 percent at June 1, 2024, the Dynamet reporting unit would have a fair value that exceeded the carrying value by approximately 140 percent. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value of the reporting units. 67 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accumulated goodwill impairment losses of $148.7 million are related solely to the PEP segment. The carrying amounts of goodwill by reportable segment for fiscal years 2024, 2025 and 2026, were as follows: June 30, ($ in millions) 2024 2025 2026 Goodwill $ 376.0 $ 376.0 $ 376.0 Accumulated impairment losses (148.7) (148.7) (148.7) Total goodwill $ 227.3 $ 227.3 $ 227.3 Specialty Alloys Operations $ 195.5 $ 195.5 $ 195.5 Performance Engineered Products 31.8 31.8 31.8 Total goodwill $ 227.3 $ 227.3 $ 227.3 Other Intangible Assets, Net Other intangible assets, net consisted of the following as of June 30, 2026 and 2025: June 30, 2026 June 30, 2025 ($ in millions) Useful Life (in Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Trademarks and trade names 30 $ 29.9 $ (29.2) $ 0.7 $ 29.9 $ (28.2) $ 1.7 Customer relationships 15 70.8 (67.6) 3.2 70.8 (63.0) 7.8 Total other intangibles $ 100.7 $ (96.8) $ 3.9 $ 100.7 $ (91.2) $ 9.5 The Company recorded $5.6 million of amortization expense related to intangible assets during fiscal year 2026, $5.7 million during fiscal year 2025 and $6.5 million during fiscal year 2024. The estimated annual amortization expense related to intangible assets for each of the succeeding five fiscal years is $3.9 million in fiscal year 2027, and $0.0 million in fiscal years 2028, 2029, 2030 and 2031. As a result of the actions taken to streamline operations in the Carpenter Additive business, in the quarter ended June 30, 2024, the Company announced the planned closure of the Carpenter Additive operations in the United Kingdom. As a result, the Company recorded an impairment charge of $7.0 million related to a certain definite lived intangible asset during fiscal year 2024. There was no remaining carrying value for this asset as of June 30, 2024. 68 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Accrued Liabilities Accrued liabilities consisted of the following as of June 30, 2026 and 2025: June 30, ($ in millions) 2026 2025 Accrued compensation and benefits $ 148.3 $ 142.6 Accrued interest expense 13.1 18.5 Current portion of lease liabilities 8.8 8.0 Accrued taxes 7.2 5.7 Contract liabilities 7.2 5.2 Accrued pension liabilities 3.2 3.3 Accrued income taxes 2.5 3.3 Accrued postretirement benefits 2.1 15.3 Derivative financial instruments 1.2 2.2 Other 13.0 12.2 Total accrued liabilities $ 206.6 $ 216.3 69 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Debt On November 20, 2025, the Company completed its offering and sale of $700.0 million in aggregate principal amount of 5.625% Senior Notes due 2034 (the "2034 Notes"). The 2034 Notes accrue interest at the rate of 5.625% per annum, with interest payable in cash semi-annually in arrears on March 1 and September 1, commencing March 1, 2026. The 2034 Notes will mature on March 1, 2034. The 2034 Notes are senior indebtedness of the Company, ranking equally in right of payment with all its existing and future senior indebtedness and senior to any future subordinated indebtedness. The Company used the net proceeds from the issuance of the 2034 Notes to repay, in November 2025, $400.0 million and $300.0 million in aggregate principal amount of its senior unsecured Notes due July 2028 and March 2030, respectively, including any interest and premium due thereon, thereby redeeming such notes in full. On November 20, 2025, the Company 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 the Company's 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. 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. The Company has 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 Company had $0.9 million of issued letters of credit under the Credit Facility and no short-term borrowings. The balance of $499.1 million remains available to the Company. Interest on the borrowings under the Credit Facility accrues at variable rates which are determined based upon the Company's consolidated total leverage ratio. The applicable margin to be added to Alternative Currency Daily Rate, Alternative Currency Term Rate and Term SOFR determined loans ranges from 1.375% to 2.150% (1.625% as of June 30, 2026), and for Base Rate-determined loans, from 0.500% to 1.250% (0.750% as of June 30, 2026). The Company also pays a quarterly commitment fee ranging from 0.200% to 0.300% (0.225% as of June 30, 2026), determined based upon the consolidated total leverage ratio, of the unused portion of the commitment under the Credit Facility. In addition, the Company must pay certain letter of credit fees, ranging from 1.375% to 2.150% (1.625% as of June 30, 2026), with respect to letters of credit issued under the Credit Facility. As of June 30, 2026, the borrowing rate for the Credit Facility was 5.38%, however the Company had no short-term borrowings. The Company is subject to certain financial and restrictive covenants under the Credit Facility which requires the maintenance of a minimum interest coverage ratio of 3.00 to 1.00 and a consolidated net leverage ratio of no more than 3.50 to 1.00. The restrictions of these covenants (other than the financial ratio covenants) are subject to certain exceptions or threshold triggering amounts or events specified in the Credit Facility, and in some cases the restrictions may be waived by the lenders. As of June 30, 2026, the Company was in compliance with all of the covenants of the Credit Facility. Long-term debt outstanding at June 30, 2026 and 2025 consisted of the following: June 30, ($ in millions) 2026 2025 Senior unsecured notes, 6.375% due July 2028 (face value of $400.0 million at June 30, 2025) $ — $ 397.9 Senior unsecured notes, 7.625% due March 2030 (face value of $300.0 million at June 30, 2025) — 297.5 Senior unsecured notes, 5.625% due March 2034 (face value of $700.0 million at June 30, 2026) 690.7 — Total debt 690.7 695.4 Less: amounts due within one year — — Long-term debt, net of current portion $ 690.7 $ 695.4 Aggregate maturities of long-term debt for the five fiscal years subsequent to June 30, 2026, are $0.0 million for fiscal years 2027 through 2031. 70 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended June 30, 2026, 2025 and 2024, interest costs totaled $45.7 million, $51.0 million and $52.6 million, respectively, of which $7.9 million, $2.6 million and $1.6 million, respectively, were capitalized as part of the cost of property, plant, equipment and software. The decrease in interest expense, net, for the fiscal year ended June 30, 2026, as compared to the fiscal year ended June 30, 2025, 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. For the fiscal year ended June 30, 2026, debt extinguishment losses 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 $4.2 million of accelerated issue costs. There were no debt extinguishment losses for the fiscal years ended June 30, 2025 and 2024. 11. Pension and Other Postretirement Benefits The Company provides several noncontributory defined benefit pension plans to certain employees. The plans provide defined benefits based on years of service and final average salary. The Company also provides other postretirement benefit plans to certain of its employees. The postretirement benefit plans consist of health care and life insurance plans. Plan assets are maintained in a Voluntary Employee Benefit Association ("VEBA") Trust. During fiscal years 2026 and 2025, the Company funded benefit payments using assets in the VEBA Trust. The following provides a reconciliation of benefit obligations, plan assets and funded status of the plans: Pension Plans Other Postretirement Plans ($ in millions) 2026 2025 2026 2025 Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 678.6 $ 682.7 $ 171.1 $ 172.8 Service cost 6.9 7.9 1.4 1.4 Interest cost 37.6 38.7 9.5 9.9 Benefits paid (65.0) (59.3) (13.9) (13.6) Actuarial (gain) loss (17.4) 9.1 (3.8) 0.6 Other (0.8) (0.5) — — Projected benefit obligation at end of year 639.9 678.6 164.3 171.1 Change in plan assets: Fair value of plan assets at beginning of year 528.4 471.8 143.3 136.3 Actual return 57.4 48.0 25.8 17.0 Benefits paid (65.0) (59.3) (13.9) (13.6) Contributions 27.0 67.9 4.0 3.6 Plan settlements (0.7) — — — Fair value of plan assets at end of year 547.1 528.4 159.2 143.3 Funded status of the plans, (underfunded) $ (92.8) $ (150.2) $ (5.1) $ (27.8) Amounts recognized in the consolidated balance sheets: Other assets - noncurrent — — 19.2 — Accrued liabilities - current (3.2) (3.3) (2.1) (15.3) Accrued pension liabilities - noncurrent (89.6) (146.9) — — Accrued postretirement benefits - noncurrent — — (22.2) (12.5) Funded status of the plans, (underfunded) $ (92.8) $ (150.2) $ (5.1) $ (27.8) 71 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables provide additional information for the plans: Pension Plans Other Postretirement Plans ($ in millions) 2026 2025 2026 2025 Amounts recognized in accumulated other comprehensive loss: Net actuarial loss (gain) $ 151.8 $ 198.9 $ (81.4) $ (66.8) Prior service cost 0.6 2.1 — 0.3 Total $ 152.4 $ 201.0 $ (81.4) $ (66.5) Other changes in plan assets and benefit obligations recognized in other comprehensive income consist of: Net actuarial gain $ (40.2) $ (9.2) $ (20.6) $ (8.1) Amortization of net (loss) gain (6.6) (7.3) 5.9 5.6 Amortization of prior service cost (1.5) (2.1) (0.2) (1.2) Settlement charge (0.3) — — — Total, before tax effect $ (48.6) $ (18.6) $ (14.9) $ (3.7) Additional information: Accumulated benefit obligation for all pension plans $ 636.3 $ 674.2 N/A N/A For the year ended June 30, 2026, actuarial gains in pension plans were primarily impacted by a change in discount rate of $17.0 million and a change in plan experience of $0.4 million. Actuarial gains in other postretirement plans were primarily impacted by a change in discount rate of $4.4 million partially offset by demographic assumption changes of $0.6 million. For the year ended June 30, 2025, actuarial losses in pension plans were primarily impacted by a change in discount rate of $8.3 million partially offset by a change in plan experience of $0.4 million. Actuarial losses in other postretirement plans were primarily impacted by a change in discount rate of $3.0 million partially offset by a change in plan experience of $2.2 million and demographic assumption changes of $0.6 million. The following additional information is for plans with projected benefit obligations in excess of plan assets as of June 30, 2026 and 2025: Pension Plans Other Postretirement Plans ($ in millions) 2026 2025 2026 2025 Projected benefit obligation $ 639.9 $ 678.6 $ 24.3 $ 171.1 Fair value of plan assets $ 547.1 $ 528.4 $ — $ 143.3 The following additional information is for plans with accumulated benefit obligations in excess of plan assets as of June 30, 2026 and 2025: Pension Plans Other Postretirement Plans ($ in millions) 2026 2025 2026 2025 Accumulated benefit obligation $ 636.3 $ 674.2 $ 24.3 $ 171.1 Fair value of plan assets $ 547.1 $ 528.4 $ — $ 143.3 72 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The components of the net periodic pension expense (income) related to the Company's pension and other postretirement benefits for the years ended June 30, 2026, 2025 and 2024 are as follows: Pension Plans Other Postretirement Plans ($ in millions) 2026 2025 2024 2026 2025 2024 Service cost $ 6.9 $ 7.9 $ 8.2 $ 1.4 $ 1.4 $ 1.5 Interest cost 37.6 38.7 43.7 9.5 9.9 10.2 Expected return on plan assets (34.6) (29.7) (35.9) (8.9) (8.4) (7.3) Amortization of net loss (gain) 6.6 7.3 8.0 (5.9) (5.6) (2.5) Amortization of prior service cost (benefit) 1.5 2.1 2.1 0.2 1.2 (3.9) Settlement charge 0.3 — 51.9 — — — Net pension expense (income) $ 18.3 $ 26.3 $ 78.0 $ (3.7) $ (1.5) $ (2.0) The service cost component of the Company's net pension expense (income), which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income (loss) of the business segments. The residual net pension expense (income), which 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, is presented within other (income) expense, net. See Note 19 to our consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data." During the fiscal year ended June 30, 2024, the Company executed a buy-out annuity transaction for the Company's largest defined benefit plan. The Company determined that the annuity settlement and lump-sum payments exceeded the threshold of service cost and interest cost components and therefore settlement accounting was required. As a result, the Company recorded a noncash settlement charge of $51.9 million in the year ended June 30, 2024 within other expense, net. Weighted-average assumptions used by the plans are as follows: Weighted-average assumptions used to determine benefit obligations at fiscal year end Pension Plans Other Postretirement Plans 2026 2025 2026 2025 Discount rate 6.08 % 5.82 % 6.08 % 5.76 % Rate of compensation increase 3.30 % 3.32 % N/A N/A Weighted-average assumptions used to determine net periodic benefit cost for each fiscal year Pension Plans Other Postretirement Plans 2026 2025 2024 2026 2025 2024 Discount rate 5.78 % 5.98 % 5.89 % 5.76 % 6.07 % 5.87 % Expected long-term rate of return on plan assets 6.75 % 6.50 % 6.50 % 6.50 % 6.50 % 6.50 % Long-term rate of compensation increase 3.30 % 3.32 % 3.28 % N/A N/A N/A The following table shows the expected health care rate increase and the future rate and time at which it is expected to remain constant: June 30, 2026 2025 Assumed health care cost trend rate 6.50 % 6.50 % Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate) 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate 2033 2033 73 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Amounts in accumulated other comprehensive loss (gain) that are expected to be recognized as components of net periodic benefit cost in the fiscal year ended June 30, 2027, are as follows: ($ in millions) Pension Plans Other Postretirement Plans Total Amortization of prior service cost $ 0.2 $ — $ 0.2 Amortization of net actuarial loss (gain) 4.7 (8.3) (3.6) Amortization of accumulated other comprehensive loss (gain) $ 4.9 $ (8.3) $ (3.4) The Company's U.S. pension plans' weighted-average asset allocations at June 30, 2026 and 2025, by asset category are as follows: 2026 2025 Equity securities 45.9 % 43.8 % Fixed income securities 37.8 % 40.1 % Real assets securities 16.3 % 16.1 % Total 100.0 % 100.0 % The Company's policy for developing a pension plan investment strategy includes the periodic development of an asset and liability study by an independent investment consultant. Management considers this study in establishing an asset allocation that is presented to and approved by the Company's Retirement Committee. Based on the current funding level, the benchmark allocation policy for the Company's largest pension plan assets is to have approximately 75 percent in return seeking assets and 25 percent in liability-hedging assets. Return seeking assets include global equities, diversified credit and real assets. Liability-hedging assets include bond funds and cash. When the funding level of the plan reaches 95 percent and improves to fully or over-funded status in increments of 5 percent, assets will be shifted from return seeking to liability-hedging assets in accordance with the glidepath policy outlined in the pension plan's Investment Policy Statement. The assets related to the Company's other postretirement benefit plans are invested in approximately 100 percent U.S. equities. Management establishes the expected long-term rate of return assumption by reviewing historical trends and analyzing the current and projected market conditions in relation to the plan's asset allocation and risk management objectives. In determining the expected long-term rate of return, the Company considered historical returns for individual asset classes and the impact of active portfolio management. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments in domestic and international equities are generally valued at the closing price reported on the active market on which they are traded. Commingled funds, limited partnerships and mutual funds are valued based on the net asset value ("NAV") established for the fund at each valuation date. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units/shares outstanding. Corporate and government agency bonds and other fixed income securities are valued using closing bid prices on an active market when possible, otherwise using evaluated bid prices. 74 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair values of the Company's pension plan assets as of June 30, 2026 and 2025, by asset category and by the levels of inputs used to determine fair value were as follows: June 30, 2026 Fair Value Measurements Using Input Type ($ in millions) Level 1 Level 2 Net Asset Value Total Short-term investments $ 5.9 $ — $ — $ 5.9 Commingled trust funds — — 540.8 540.8 Mortgage/asset backed securities and other — 0.4 — 0.4 Fair value of plan assets at end of year $ 5.9 $ 0.4 $ 540.8 $ 547.1 June 30, 2025 Fair Value Measurements Using Input Type ($ in millions) Level 1 Level 2 Net Asset Value Total Short-term investments $ 23.2 $ — $ — $ 23.2 Commingled trust funds — — 504.3 504.3 Mortgage/asset backed securities and other — 0.9 — 0.9 Fair value of plan assets at end of year $ 23.2 $ 0.9 $ 504.3 $ 528.4 The fair values of the Company's other postretirement benefit plans as of June 30, 2026 and 2025, by asset category and by the level of inputs used to determine fair value, were as follows: June 30, 2026 Fair Value Measurements Using Input Type ($ in millions) Level 1 Level 2 Net Asset Value Total Commingled trust fund $ — $ — $ 156.2 $ 156.2 Short-term investments 3.0 — — 3.0 Fair value of plan assets at end of year $ 3.0 $ — $ 156.2 $ 159.2 June 30, 2025 Fair Value Measurements Using Input Type ($ in millions) Level 1 Level 2 Net Asset Value Total Commingled trust fund $ — $ — $ 142.7 $ 142.7 Short-term investments 0.6 — — 0.6 Fair value of plan assets at end of year $ 0.6 $ — $ 142.7 $ 143.3 Cash Flows — Employer Contributions The Company made contributions to the qualified defined benefit pension plans of $23.8 million, $64.8 million and $11.3 million during fiscal years 2026, 2025 and 2024, respectively. The Company currently expects to make $25.5 million of required cash pension contributions to the domestic qualified defined benefit pension plans during fiscal year 2027. During the fiscal years ended June 30, 2026, 2025 and 2024, the Company made contributions of $3.2 million, $3.2 million and $3.2 million, respectively, to other non-qualified pension plans. 75 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Estimated Future Benefit Payments Pension benefits are currently paid from plan assets and other benefits are currently paid from both corporate assets and the VEBA Trust. The benefit payments below, which reflect expected future service, as appropriate, are expected to be paid by fiscal year as follows: ($ in millions) Pension Benefits Other Benefits 2027 $ 63.0 $ 15.0 2028 $ 59.7 $ 15.0 2029 $ 58.0 $ 14.8 2030 $ 56.4 $ 14.7 2031 $ 54.9 $ 14.5 2032-2036 $ 253.0 $ 67.2 Other Benefit Plans The Company also maintains defined contribution retirement and savings plans for substantially all domestic employees. Company contributions to the plans were $28.6 million, $27.6 million and $26.5 million in fiscal years 2026, 2025 and 2024, respectively. 12. Contingencies and Commitments Environmental The Company is subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health. Although compliance with these laws and regulations may affect the costs of the Company's operations, compliance costs to date have not been material. The Company has environmental remediation liabilities at some of its owned operating facilities and has been designated as a PRP with respect to certain third party Superfund waste-disposal sites and other third party-owned sites. The Company accrues amounts for environmental remediation costs that represent management's best estimate of the probable and reasonably estimable future costs related to environmental remediation. During fiscal year 2026 the Company decreased the liability for environmental remediation costs by $0.1 million. During fiscal year 2025, the Company increased the liability for environmental remediation costs by $0.1 million. The liabilities recorded for environmental remediation costs at Superfund sites, other third party-owned sites and Carpenter-owned current or former operating facilities remaining at June 30, 2026 and 2025 were $17.3 million and $17.4 million, respectively. Additionally, the Company has been notified that it may be a PRP with respect to other Superfund sites as to which no proceedings have been instituted against the Company. Neither the exact amount of remediation costs nor the final method of their allocation among all designated PRPs at these Superfund sites have been determined. Accordingly, at this time the Company cannot reasonably estimate expected costs for such matters. The liability for future environmental remediation costs that can be reasonably estimated is evaluated by management on a quarterly basis. The Company accrues amounts for environmental remediation costs that represent management's best estimate of the probable and reasonably estimable future costs related to environmental remediation. Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRPs. Based upon information currently available, such future costs are not expected to have a material effect on the Company's financial position, results of operations or cash flows over the long-term. However, such costs could be material to the Company's financial position, results of operations or cash flows in a particular future quarter or year. 76 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other The Company is defending various routine claims and legal actions that are incidental to its business and common to its operations, including those pertaining to product claims, commercial disputes, patent infringement, employment actions, employee benefits, compliance with domestic and foreign laws and regulations, personal injury claims and tax issues. Like many other manufacturing companies in recent years, the Company, from time to time, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the workplace such as asbestos. The Company provides for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable. The effect of the outcome of these matters on the Company's future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, management believes that the total liability from these matters will not have a material effect on the Company's financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to the Company's financial position, results of operations or cash flows in a particular future quarter or year. The Company has entered into purchase agreements primarily for various key raw materials at market related prices, all made in the normal course of business. The commitments include both fixed and variable price provisions. Raw material prices as of June 30, 2026, were used for commitments with variable pricing. The purchase commitments covered by these agreements aggregate to $314.7 million as of June 30, 2026. Of this amount, $278.4 million relates to fiscal year 2027, $32.8 million to fiscal year 2028, $2.6 million to fiscal year 2029, $0.9 million to fiscal year 2030 and $0.0 million to fiscal year 2031. 13. Share Repurchase Program In July 2024, the Company's Board of Directors authorized a share repurchase program. The program authorizes the purchase of up to $400.0 million of the Company's outstanding common stock. The shares may be repurchased in the open market or in privately negotiated transactions. Under the terms of the share repurchase program, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations. There is no stated expiration for the share repurchase program. The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the share repurchase program may be suspended, modified or terminated at any time without prior notice. During the year ended June 30, 2026, the Company purchased 545,000 shares of its common stock on the open market for an aggregate of $179.1 million. During the year ended June 30, 2025, the Company purchased 575,000 shares of its common stock on the open market for an aggregate of $101.9 million. As of June 30, 2026, $119.0 million remained available for future purchases. During August 2026, the Company purchased 211,565 shares of its common stock on the open market for an aggregate of $119.0 million. On August 11, 2026, the Company's Board of Directors authorized an additional repurchase of up to $1.0 billion of the Company's common stock. 77 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Leases The Company records ROU assets and operating lease liabilities on the consolidated balance sheets for several types of operating leases, including land and buildings, equipment (e.g. trucks and forklifts), vehicles and computer equipment. On the lease commencement date, the Company measures and records a ROU asset and lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, the Company's incremental borrowing rate). Operating leases are included in other assets, accrued liabilities (current) and other liabilities (noncurrent) on the consolidated balance sheets. The Company elected the practical expedient to not separate lease components from nonlease components for all asset classes. The Company recognizes lease expense in the consolidated statements of operations on a straight-line basis over the lease term. The Company elected to not recognize ROU assets and lease liabilities for short-term leases with an initial term of 12 months or less for all asset classes. Leases with the option to extend their term or terminate early are reflected in the lease term when it is reasonably certain that the Company will exercise such options. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the ROU asset or lease liability. Total lease cost was $12.2 million, $15.1 million and $14.6 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. The following table sets forth the components of the Company's lease cost for the fiscal years ended June 30, 2026, 2025 and 2024: Years Ended June 30, ($ in millions) 2026 2025 2024 Operating lease cost $ 9.7 $ 10.1 $ 11.0 Short-term lease cost 3.3 5.7 4.4 Variable lease cost 0.1 0.2 0.2 Sublease income (0.9) (0.9) (1.0) Total lease cost $ 12.2 $ 15.1 $ 14.6 Operating cash flow payments from operating leases $ 10.5 $ 10.8 $ 11.6 Noncash ROU assets obtained in exchange for lease obligations $ 2.7 $ 3.9 $ 4.3 The leases have a remaining term of one to eleven years. The following table sets forth the Company's weighted-average remaining lease term and weighted-average discount rate at June 30, 2026, 2025 and 2024: Years Ended June 30, 2026 2025 2024 Weighted-average remaining lease term - operating leases 6.0 years 6.8 years 7.4 years Weighted-average discount rate - operating leases 4.4 % 4.5 % 4.4 % 78 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table sets forth the Company's ROU assets and lease liabilities at June 30, 2026 and June 30, 2025: June 30, ($ in millions) 2026 2025 Operating lease assets: Other assets $ 30.1 $ 35.4 Operating lease liabilities: Accrued liabilities $ 8.8 $ 8.0 Other liabilities 28.0 34.9 Total operating lease liabilities $ 36.8 $ 42.9 Minimum lease payments by fiscal year for operating leases expiring subsequent to June 30, 2026, are as follows: ($ in millions) Lease Payments 2027 $ 10.0 2028 7.6 2029 5.8 2030 4.7 2031 4.2 Thereafter 9.5 Total future minimum lease payments 41.8 Less: imputed interest 5.0 Total $ 36.8 15. Fair Value Measurements The fair value hierarchy has three levels based on the inputs used to determine fair value. Level 1 refers to quoted prices in active markets for identical assets or liabilities. Level 2 refers to observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or trade infrequently; or other inputs that are observable or can be corroborated by observable market data. Level 3 refers to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Currently, the Company does not use Level 1 and 3 inputs. The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy: June 30, 2026 Fair Value Measurements Using Input Type ($ in millions) Level 2 Assets: Derivative financial instruments $ 0.3 Liabilities: Derivative financial instruments $ 1.2 79 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 Fair Value Measurements Using Input Type ($ in millions) Level 2 Assets: Derivative financial instruments $ 0.6 Liabilities: Derivative financial instruments $ 2.2 The Company's derivative financial instruments have historically consisted of commodity forward contracts and foreign currency forward contracts. These instruments are measured at fair value using the market method valuation technique. The inputs to this technique utilize information related to commodity prices and foreign exchange rates published by third party leading financial news and data providers. This is observable data; however, the valuation of these instruments is not based on actual transactions for the same instruments and, as such, they are classified as Level 2. The Company's use of derivatives and hedging policies are more fully discussed in Note 17. The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with U.S. GAAP. The carrying amounts of other financial instruments not listed in the table below approximate fair value due to the short-term nature of these items. The carrying amounts and estimated fair values of the Company's financial instruments not recorded at fair value in the financial statements were as follows: June 30, 2026 June 30, 2025 ($ in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt $ 690.7 $ 700.6 $ 695.4 $ 712.4 Company-owned life insurance $ 38.0 $ 38.0 $ 33.1 $ 33.1 The fair values of long-term debt as of June 30, 2026, and June 30, 2025, were determined by using current quoted prices for the Company's existing debt arrangements that are traded infrequently and accordingly would be classified as Level 2 inputs in the fair value hierarchy. The carrying amount of Company-owned life insurance reflects cash surrender values based upon the market values of underlying securities, using Level 2 inputs, net of any outstanding policy loans. The carrying value associated with the cash surrender value of these policies is recorded in other assets in the accompanying consolidated balance sheets. 16. Share-Based Compensation The Company has two share-based compensation plans: the Amended and Restated Stock-Based Incentive Compensation Plan for Officers and Key Employees (the "Omnibus Plan") and the Stock-Based Compensation Plan for Non-Employee Directors (the "Director's Plan"). The Company recognizes compensation cost based on the fair value of the awards on the date of grant. The compensation cost is generally recognized over the requisite service or performance period of the award. Compensation cost is adjusted for awards that do not vest because service or performance conditions are not satisfied. Upon the employee's retirement, as defined in the Omnibus Plan, or the Director's separation from service, as defined in the Director's Plan, outstanding awards are subject to certain accelerated vesting terms. Awards granted under the share-based compensation plans are paid from shares held in treasury and newly issued shares. The total compensation cost that has been charged against income related to these share-based compensation plans was $26.4 million, $22.8 million and $19.8 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. 80 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Omnibus Plan The Omnibus Plan provides that the Board of Directors or a designated committee may grant stock options, restricted stock and restricted stock units, and determine the terms and conditions of each grant. The Omnibus Plan provides the Chief Executive Officer with limited authority to grant awards. As of June 30, 2026, 2,897,322 shares were available for awards which may be granted under this plan. Director's Plan The Director's Plan provides for the granting of stock options and stock units to non-employee directors. As of June 30, 2026, 138,031 shares were available for awards which may be granted under this plan. Stock Options (all plans) Stock options granted under the plans above are granted with an exercise price equal to at least the fair market value of the Company's common stock on the date of grant. The options are typically exercisable after one to three years of service and continue to be exercisable for ten years from the grant date. Any option shares that are exercisable but unexercised as of the tenth anniversary of the grant date shall be automatically exercised on that date if the automatic exercise results in the issuance of at least one whole share. The fair value of stock options awarded in fiscal years 2026, 2025 and 2024 was estimated on the date of each grant using a Black-Scholes option pricing model with the following weighted-average assumptions: Years Ended June 30, 2026 2025 2024 Expected volatility 47.8 % 55.6 % 55.4 % Dividend yield 0.3 % 0.5 % 1.1 % Risk-free interest rate 3.7 % 4.0 % 4.6 % Expected term (in years) 5.0 5.0 5.0 The assumptions are based on multiple factors, including historical exercise patterns of employees in relatively homogeneous groups with respect to exercise and post-vesting employment termination behaviors, expected future exercising patterns for these same homogeneous groups and the implied volatility of our stock price based on historical performance for the same expected term of the options granted. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of each grant. 81 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Additional information on the Company's outstanding and exercisable options is as follows: Number of Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($ in millions) Outstanding at June 30, 2023 1,808,174 $ 42.67 Granted 11,014 $ 70.64 Exercised (835,532) $ 45.06 Withheld (369,042) $ 39.81 Forfeited (1,028) $ 70.64 Outstanding at June 30, 2024 613,586 $ 41.61 Granted 12,891 $ 176.88 Exercised (251,339) $ 43.10 Withheld (101,147) $ 46.61 Outstanding at June 30, 2025 273,991 $ 44.76 Granted 3,040 $ 256.27 Exercised (129,341) $ 38.24 Withheld (3,911) $ 36.56 Outstanding at June 30, 2026 143,779 $ 55.31 4.5 years $ 80.7 Exercisable at June 30, 2026 134,739 $ 45.00 4.2 years $ 77.0 Exercise Price Range Number Outstanding at June 30, 2026 Weighted Average Remaining Contractual Term (in Years) Weighted Average Exercise Price Number Exercisable at June 30, 2026 Weighted Average Exercise Price $18.26 - $50.00 109,834 3.9 $ 33.97 109,834 $ 33.97 $50.01 - $100.00 18,014 4.8 $ 64.56 18,014 $ 64.56 $100.01 - $150.00 — 0.0 $ — — $ — $150.01 - $200.00 8,689 8.3 $ 161.82 5,689 $ 161.60 $200.01 - $250.00 4,202 8.6 $ 208.01 1,202 $ 208.01 $250.01 - $300.00 3,040 9.3 $ 256.27 — $ — 143,779 $ 55.31 134,739 $ 45.00 The weighted average grant date fair value of options awarded during fiscal years 2026, 2025 and 2024 was $115.32, $88.78 and $34.06, respectively. Share-based compensation charged against income related to stock options for the fiscal years ended June 30, 2026, 2025 and 2024 was $0.7 million, $0.6 million and $0.4 million, respectively. As of June 30, 2026, $0.3 million of compensation cost related to nonvested stock options will be recognized over a weighted average remaining life of 1.4 years. Of the options outstanding at June 30, 2026, 4,685 relate to the Omnibus Plan and 139,094 relate to the Directors' Plan. Restricted Stock Unit Awards (Omnibus Plan) Restricted stock unit awards are granted to employees with performance and/or service conditions. Dividend equivalents are accrued for earned restricted stock unit awards and will only be paid upon satisfaction of the terms and conditions applicable to the underlying restricted stock units. The fair value of the restricted stock unit awards is determined based on the close price of the Company's stock on the grant date. 82 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Time-based restricted stock unit awards typically vest one to three years from the date of grant. Compensation cost related to time-based stock unit awards is recognized over the vesting period of the award. Amounts charged to compensation expense for restricted stock unit awards were $12.7 million, $10.8 million and $9.8 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. As of June 30, 2026, $9.7 million of compensation cost related to restricted stock unit awards remains to be recognized over a weighted average remaining life of 1.5 years. Additional information on the Company's restricted stock units is as follows: Number of Awards Weighted Average Grant Date Fair Value Restricted Award Balance at June 30, 2023 522,746 $ 35.18 Time-based granted 191,909 $ 61.42 Vested (273,296) $ 32.67 Forfeited (40,262) $ 45.19 Restricted Award Balance at June 30, 2024 401,097 $ 48.44 Time-based granted 84,122 $ 147.48 Vested (203,195) $ 44.48 Forfeited (14,249) $ 72.38 Restricted Award Balance at June 30, 2025 267,775 $ 81.28 Time-based granted 59,805 $ 255.77 Vested (159,273) $ 66.23 Forfeited (7,150) $ 147.32 Restricted Award Balance at June 30, 2026 161,157 $ 157.98 Performance-based restricted stock unit awards are earned dependent upon how certain performance goals are achieved during a specified performance period according to the terms determined at the date of the grant. The awards are granted at a target number of shares. Compensation cost is determined and charged to expense beginning in the performance period through the vesting period. These shares typically vest upon expiration of the performance period. The actual number of shares vested may range from a minimum of 0 percent of the target shares to a maximum of 200 percent of the target shares. Participants do not have any rights to dividends (or equivalents) during the performance period. The Company granted performance-based awards in fiscal years 2026, 2025 and 2024 within the Omnibus Plan and recognized expense for these awards of $11.5 million, $10.0 million and $8.3 million, respectively. Director Stock Units According to the provisions of the Director's Plan, on the date of each annual stockholders' meeting or on such other regularly scheduled date as the Board of Directors may determine from time to time in light of the Company's prevailing practices for the grant of equity awards to employees, each Director shall be granted, in place of cash compensation, a number of stock units determined by dividing 50 percent of the Director's annual retainer by the fair market value of the Company's common stock on that date. These stock units vest on the first anniversary of the grant date, provided that one-quarter of the units granted within the one year period preceding separation from service (for reasons other than cause, a change in control, death or disability) will vest for every three months of service following the grant date. At the Director's election, the remaining 50 percent of the annual retainer and 100 percent of committee chair fees may be paid in stock units in lieu of cash. These units are immediately vested. In addition to the grant of retainer stock units described above, each Director may be granted annually an additional award of stock units as the Board may determine by resolution. These stock units vest on the first anniversary of the grant date, provided that one-quarter of the units granted within the one year period preceding separation from service (for reasons other than cause, a change in control, death or disability) will vest for every three months of service following the grant date. 83 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Additional units are credited to each Director on a quarterly basis to reflect dividend equivalents on the Company's common stock. In the case of separation from service due to death or disability, all stock units shall immediately vest. Following a Director's separation from service, or such other elected distribution date or event, the number of stock units credited to the Director's account will be converted to an equivalent number of the Company's common stock. Additional information on the Company's director stock units is as follows: Number of Units Weighted Average Grant Date Fair Value Outstanding at June 30, 2023 307,571 $ 30.75 Granted 21,590 $ 71.01 Distributed (11,653) $ 36.14 Forfeited (1,912) $ 70.64 Dividend equivalents 3,223 $ — Outstanding at June 30, 2024 318,819 $ 33.85 Granted 9,926 $ 165.33 Distributed (6,670) $ 36.70 Dividend equivalents 1,357 $ — Outstanding at June 30, 2025 323,432 $ 39.35 Granted 6,014 $ 264.01 Distributed (79,250) $ 39.51 Dividend equivalents 627 $ — Outstanding at June 30, 2026 250,823 $ 40.90 Compensation cost is determined using the grant date fair value and charged to expense over the vesting period of one year. This amounted to $1.5 million, $1.4 million and $1.3 million for the fiscal years ended June 30, 2026, 2025 and 2024, respectively. As of June 30, 2026, $0.4 million of compensation cost related to director stock units remains to be recognized over a weighted average remaining life of 0.3 years. 17. Derivatives and Hedging Activities The Company, from time to time, uses commodity forwards and foreign currency forwards to manage risks generally associated with commodity price and foreign currency rate fluctuations. The following explains the various types of derivatives utilized during the fiscal years ended June 30, 2026 and 2025, and includes a summary of the impact the derivative instruments had on the Company's financial position, results of operations and cash flows. Cash Flow Hedging — Commodity forward contracts: The Company enters into commodity forward contracts to fix the price of a portion of anticipated future purchases of certain critical raw materials and energy to manage the risk of cash flow variability associated with volatile commodity prices. The commodity forward contracts have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive income (loss) to the extent effective, and reclassified to cost of sales in the period during which the hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur. As of June 30, 2026, the Company had forward contracts to purchase 0.2 million pounds of certain raw materials with settlement dates through April 2027. Cash Flow Hedging — Foreign currency forward contracts: The Company, from time to time, uses foreign currency forward contracts to hedge a portion of anticipated future purchase commitments for property, plant and equipment denominated in foreign currencies, principally the Euro, in order to offset the effect of changes in exchange rates. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in AOCI and reclassified to the cost of property, plant and equipment in the period during which the purchase transaction is completed or expensed if it becomes probable that the forecasted transaction will not occur. As of June 30, 2026, the fair value of the outstanding foreign currency forwards designated as hedging instruments were not material. 84 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value Hedging — Foreign currency forward contracts: The Company uses foreign currency forward contracts to protect certain short-term asset positions denominated in foreign currencies against the effect of changes in exchange rates. These positions do not qualify for hedge accounting and accordingly are marked-to-market at each reporting date through charges to other (income) expense, net. As of June 30, 2026, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts were not material. The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of June 30, 2026 and 2025: June 30, 2026 ($ in millions) Foreign Currency Contracts Commodity Contracts Total Derivatives Asset Derivatives: Other current assets $ 0.1 $ 0.2 $ 0.3 Other assets — — — Total asset derivatives $ 0.1 $ 0.2 $ 0.3 Liability Derivatives: Accrued liabilities $ — $ 1.2 $ 1.2 Other liabilities — — — Total liability derivatives $ — $ 1.2 $ 1.2 June 30, 2025 ($ in millions) Foreign Currency Contracts Commodity Contracts Total Derivatives Asset Derivatives: Other current assets $ 0.4 $ — $ 0.4 Other assets 0.1 0.1 0.2 Total asset derivatives $ 0.5 $ 0.1 $ 0.6 Liability Derivatives: Accrued liabilities $ — $ 2.2 $ 2.2 Other liabilities — — — Total liability derivatives $ — $ 2.2 $ 2.2 Substantially all of the Company's derivative contracts are subject to master netting arrangements, or similar agreements with each counterparty, which provide for the option to settle contracts on a net basis when they settle on the same day and in the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event. The Company presents the outstanding derivative contracts on a net basis by counterparty in the consolidated balance sheets. If the Company had chosen to present the derivative contracts on a gross basis, the total asset derivatives would have been $0.5 million and total liability derivatives would have been $1.4 million as of June 30, 2026. According to the provisions of the Company's derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. As of June 30, 2026, the Company had no cash collateral held by counterparties. The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition, various master netting arrangements are in place with counterparties to facilitate settlements of gains and losses on these contracts. 85 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings or it becomes probable the forecasted transactions will not occur. The following is a summary of the (losses) and gains related to cash flow hedges recognized during the fiscal years ended June 30, 2026, 2025 and 2024: Amount of (Loss) Gain Recognized in AOCI on Derivatives Years Ended June 30, ($ in millions) 2026 2025 2024 Derivatives in Cash Flow Hedging Relationship: Commodity contracts $ (1.5) $ (2.3) $ (9.6) Foreign exchange contracts (0.3) 0.3 — Total $ (1.8) $ (2.0) $ (9.6) Amount of Loss Reclassified from AOCI into Income Years Ended June 30, ($ in millions) Location of Loss Reclassified from AOCI into Income 2026 2025 2024 Derivatives in Cash Flow Hedging Relationship: Commodity contracts Cost of sales $ (2.4) $ (4.2) $ (11.0) Total $ (2.4) $ (4.2) $ (11.0) The following is a summary of total amounts presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded during the fiscal years ended June 30, 2026 and 2025: Year Ended June 30, 2026 Year Ended June 30, 2025 ($ in millions) Cost of Sales Cost of Sales Total amounts presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded $ 2,168.7 $ 2,108.5 Loss on Derivatives in Cash Flow Hedging Relationship: Commodity contracts Amount of loss reclassified from AOCI to income $ (2.4) $ (4.2) Total loss $ (2.4) $ (4.2) The Company estimates that $0.9 million of net derivative losses included in AOCI as of June 30, 2026, will be reclassified into earnings within the next twelve months. No significant cash flow hedges were discontinued during the year ended June 30, 2026. The changes in AOCI associated with derivative hedging activities during the fiscal years ended June 30, 2026, 2025 and 2024 were as follows: Years Ended June 30, ($ in millions) (a) 2026 2025 2024 Balance, beginning $ (4.2) $ (5.9) $ (7.0) Current period changes in fair value, net of tax (1.4) (1.5) (7.3) Reclassification to earnings, net of tax 1.8 3.2 8.4 Balance, ending $ (3.8) $ (4.2) $ (5.9) (a) All amounts are net of tax. Amounts in parentheses indicate debits. 86 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Income Taxes Income (loss) before income taxes for the Company's domestic and foreign operations was as follows: Years Ended June 30, ($ in millions) 2026 2025 2024 Domestic $ 645.3 $ 454.5 $ 224.1 Foreign 10.9 12.8 (12.5) Income before income taxes $ 656.2 $ 467.3 $ 211.6 The expense (benefit) for income taxes from continuing operations consisted of the following: Years Ended June 30, ($ in millions) 2026 2025 2024 Current: Federal $ 81.6 $ 89.8 $ 30.4 State 19.2 14.5 4.2 Foreign 4.4 4.4 3.8 Total current 105.2 108.7 38.4 Deferred: Federal 20.5 (16.1) (10.1) State — (1.3) (2.7) Foreign 0.7 — (0.5) Total deferred 21.2 (17.4) (13.3) Total income tax expense $ 126.4 $ 91.3 $ 25.1 The reconciliation of the U.S. federal statutory income tax rate and the effective tax rate for the fiscal year ended June 30, 2026, after the adoption of ASU 2023-09 was as follows: Year Ended June 30, 2026 ($ in millions) Amount Percent Income tax provision at the federal statutory rate $ 137.8 21.0 % State and local income taxes, net of federal (a) 16.0 2.4 Effects of cross-border tax laws: Foreign derived intangible income deduction (8.2) (1.2) Tax credits: Research and development tax credit (5.6) (0.8) Non-taxable or non-deductible items: Share-based compensation (17.5) (2.7) Non-deductible compensation 5.4 0.8 Other non-taxable or non-deductible items (4.3) (0.6) Foreign tax effects 2.8 0.4 Income tax expense and effective tax rate $ 126.4 19.3 % (a) State taxes in California, Illinois and Pennsylvania comprise over 50 percent of the tax effect in this category. 87 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following is a reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company's effective income tax rates for fiscal years ended June 30, 2025 and 2024, prior to the adoption of ASU 2023-09: Years Ended June 30, (% of pre-tax income) 2025 2024 Statutory federal income tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.4 2.7 Foreign tax rate differential 0.1 (0.3) Research and development tax credit (0.9) (1.6) Foreign derived intangible income deduction (1.6) (1.8) Adjustments of prior years' income taxes (0.1) — Non-deductible goodwill impairment — 1.4 Tax benefit related to closure of Additive operations — (8.7) Non-taxable income (0.1) (0.5) Non-deductible expenses 0.4 6.4 Non-deductible compensation 1.2 1.6 Share-based compensation (2.7) (3.2) Changes in valuation allowances — (4.7) Interest on prior tax positions (0.2) (0.4) Effective income tax rate 19.5 % 11.9 % Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company had state net operating loss carryforwards of $125.4 million expiring between fiscal years 2027 and 2046. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be revised in the near term if estimates of future taxable income during the carryforward period change. Valuation allowances increased by $2.3 million during fiscal year 2026 as a result of increases in net operating losses incurred in certain jurisdictions for which no tax benefit was recognized. 88 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheets are summarized in the table below: June 30, ($ in millions) 2026 2025 Deferred tax assets: Pensions $ 12.8 $ 26.3 Postretirement provisions 5.6 11.3 Non-equity compensation 8.8 9.6 Net operating loss carryforwards 8.4 8.3 Tax credit carryforwards 0.8 1.6 Operating lease liabilities 6.7 8.1 Other 20.5 21.0 Gross deferred tax assets 63.6 86.2 Valuation allowances (4.9) (2.6) Total deferred tax assets 58.7 83.6 Deferred tax liabilities: Depreciation 215.0 198.4 Intangible assets 0.2 2.4 Inventories 26.8 28.3 Operating lease right-of-use assets 5.1 6.4 Other 3.0 3.1 Total deferred tax liabilities 250.1 238.6 Deferred tax liabilities, net $ 191.4 $ 155.0 Income taxes paid, net of amounts received as refunds, were as follows: Years Ended June 30, ($ in millions) 2026 2025 2024 Federal $ 60.1 $ 79.3 $ 49.2 State: State, other 11.1 8.4 4.4 California 8.1 2.0 4.4 Foreign 5.5 3.9 4.8 Income taxes paid, net (a) $ 84.8 $ 93.6 $ 62.8 (a) There were no other individual jurisdictions with cash taxes paid that equaled or exceeded 5 percent of total income taxes paid, net. The Company does not have unrecognized tax benefits as of June 30, 2026, 2025 and 2024. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. All years prior to fiscal year 2018 have been settled with the Internal Revenue Service and with most significant state, local and foreign tax jurisdictions. The Company asserts that substantially all undistributed earnings from foreign subsidiaries are not considered indefinitely reinvested. The potential tax implications from the distribution of these earnings are expected to be limited to withholding taxes in certain jurisdictions and are not expected to materially impact the consolidated financial statements. 89 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Other (Income) Expense, Net Other (income) expense, net consists of the following: Years Ended June 30, ($ in millions) 2026 2025 2024 Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts $ (6.5) $ (3.5) $ (5.8) Interest income (8.8) (7.5) (1.8) Foreign exchange losses 1.4 1.1 1.8 Pension earnings, interest and deferrals 6.0 15.5 14.4 Pension settlement charge 0.3 — 51.9 Other — 0.5 — Total other (income) expense, net $ (7.6) $ 6.1 $ 60.5 20. Segment Information, Geographic and Product Data The Company has two reportable segments, Specialty Alloys Operations and Performance Engineered Products. The SAO segment is comprised of the Company's major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe, Pennsylvania and surrounding areas as well as South Carolina and Alabama. The combined assets of the SAO segment are managed in an integrated manner to optimize efficiency and profitability across the total system. The PEP segment is comprised of the Company's differentiated operations. This segment includes the Dynamet titanium business, the Carpenter Additive business and the Latrobe and Mexico distribution businesses. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. The Company's CODM is the Chief Executive Officer. The measure of profit and loss that is used by the CODM to evaluate the performance of these operating segments is operating income. The CODM uses operating income when making decisions about allocating capital and personnel to the segments in the annual operating plan and monthly performance review processes. The CODM considers variances of actual results compared to the annual operating plan and subsequent forecasts for each segment. Operating income for each of the Company's reportable segments is comprised of the segment's net sales less directly related product costs and other operating expenses. Segment operating results exclude general corporate costs, which include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded from segment operating results are items that management considers not representative of ongoing operations, such as restructuring charges and other specifically identified income or expense items. Total net sales and operating earnings by segment include intersegment sales which are generally recorded at cost-plus a specified fee for a negotiated fixed price. All significant intersegment transactions have been eliminated from each reportable segment's net sales and earnings for all periods presented. The service cost component of the Company's net pension expense, which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income of the business segments. The residual net pension expense, which is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans, amortization of actuarial gains and losses and prior service costs and pension settlement charges is included within other (income) expense, net, excluded from the business segments. On a consolidated basis, no single customer accounted for 10 percent or more of net sales for the fiscal years ended June 30, 2026, 2025 and 2024. No single customer accounted for 10 percent or more of the accounts receivable outstanding at June 30, 2026 and 2025. 90 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS See Note 4 for comparative information of the Company's overall revenue by segment, end-use market and geographical location. The Company believes further disaggregation of revenue is impracticable. Net sales and operating income by segment for the years ended June 30, 2026, 2025 and 2024 were as follows: Year Ended June 30, 2026 Year Ended June 30, 2025 Year Ended June 30, 2024 ($ in millions) SAO PEP Total SAO PEP Total SAO PEP Total Sales to external customers $ 2,811.7 $ 312.5 $ 3,124.2 $ 2,548.7 $ 328.4 $ 2,877.1 $ 2,432.8 $ 326.9 $ 2,759.7 Intersegment sales 15.1 70.5 85.6 14.9 77.0 91.9 11.0 84.1 95.1 Total sales 2,826.8 383.0 3,209.8 2,563.6 405.4 2,969.0 2,443.8 411.0 2,854.8 Reconciliation of sales Elimination of intersegment (85.6) (91.9) (95.1) Consolidated net sales $ 3,124.2 $ 2,877.1 $ 2,759.7 Less: (a) Cost of sales 1,920.7 331.9 2,252.6 1,855.8 344.0 2,199.8 1,923.0 349.5 2,272.5 Other segment items (b) 123.2 21.0 144.2 119.2 24.4 143.6 112.3 25.5 137.8 Segment operating income 782.9 30.1 813.0 588.6 37.0 625.6 408.5 36.0 444.5 Reconciliation of operating income Corporate costs (c) (108.7) (102.9) (123.0) Elimination of intersegment (2.3) (0.9) 1.6 Consolidated operating income $ 702.0 $ 521.8 $ 323.1 Other items: Interest expense, net 37.8 48.4 51.0 Debt extinguishment losses 15.6 — — Other (income) expense, net (7.6) 6.1 60.5 Income before income taxes $ 656.2 $ 467.3 $ 211.6 (a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts shown. (b) Other segment items for each reportable segment primarily includes selling, general and administrative expenses. (c) Corporate costs include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Corporate costs also include other items that management considers not representative of ongoing operations, such as restructuring charges and other specifically identified income or expense items. 91 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Additional data by segment for the years ended June 30, 2026, 2025 and 2024 is as follows: Depreciation and Amortization Years Ended June 30, ($ in millions) 2026 2025 2024 Specialty Alloys Operations $ 124.3 $ 117.3 $ 113.3 Performance Engineered Products 17.7 16.5 16.3 Corporate 5.1 5.4 5.0 Consolidated depreciation and amortization $ 147.1 $ 139.2 $ 134.6 Capital Expenditures Years Ended June 30, ($ in millions) 2026 2025 2024 Specialty Alloys Operations $ 226.1 $ 135.9 $ 80.0 Performance Engineered Products 12.4 15.0 13.2 Corporate 4.2 3.4 3.4 Consolidated capital expenditures $ 242.7 $ 154.3 $ 96.6 Total Assets June 30, ($ in millions) 2026 2025 Specialty Alloys Operations $ 2,962.0 $ 2,649.3 Performance Engineered Products 400.3 413.5 Total segment assets 3,362.3 3,062.8 Corporate 491.0 433.2 Intersegment (15.0) (9.2) Consolidated total assets $ 3,838.3 $ 3,486.8 Long-lived Assets (a) June 30, ($ in millions) 2026 2025 United States $ 1,483.8 $ 1,354.4 Europe 2.3 3.0 Mexico 1.0 1.2 Asia Pacific 0.4 0.4 Canada 0.4 0.4 Consolidated long-lived assets $ 1,487.9 $ 1,359.4 (a) Long-lived assets consist primarily of property, plant, equipment and software, net. 92 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 21. Reclassifications from Accumulated Other Comprehensive Loss The changes in AOCI by component, net of tax, for the years ended June 30, 2026 and 2025 were as follows: ($ in millions) (a) Cash flow hedging items Pension and other postretirement benefit plan items Foreign currency items Total Balances at June 30, 2025 $ (4.2) $ (27.4) $ (36.3) $ (67.9) Other comprehensive (loss) income before reclassifications (1.4) 46.6 (1.6) 43.6 Amounts reclassified from AOCI (b) 1.8 2.1 — 3.9 Total other comprehensive income (loss), net of tax 0.4 48.7 (1.6) 47.5 Balances at June 30, 2026 $ (3.8) $ 21.3 $ (37.9) $ (20.4) ($ in millions) (a) Cash flow hedging items Pension and other postretirement benefit plan items Foreign currency items Total Balances at June 30, 2024 $ (5.9) $ (44.3) $ (43.7) $ (93.9) Other comprehensive (loss) income before reclassifications (1.5) 13.1 7.4 19.0 Amounts reclassified from AOCI (b) 3.2 3.8 — 7.0 Total other comprehensive income, net of tax 1.7 16.9 7.4 26.0 Balances at June 30, 2025 $ (4.2) $ (27.4) $ (36.3) $ (67.9) (a) All amounts are net of tax. Amounts in parentheses indicate debits. (b) See separate table below for further details. The following is a summary of amounts reclassified from AOCI for the years ended June 30, 2026 and 2025: Amount Reclassified from AOCI Details about AOCI Components Years Ended June 30, ($ in millions) (a) Location of loss 2026 2025 Cash flow hedging items: Commodity contracts Cost of sales $ (2.4) $ (4.2) Total before tax (2.4) (4.2) Tax benefit 0.6 1.0 Net of tax $ (1.8) $ (3.2) Amount Reclassified from AOCI Details about AOCI Components Years Ended June 30, ($ in millions) (a) Location of loss 2026 2025 Amortization of pension and other postretirement benefit plan items: Net actuarial loss $ (0.7) $ (1.7) Prior service cost (1.7) (3.3) Settlement charge (0.3) — Total before tax (b) (2.7) (5.0) Tax benefit (b) 0.6 1.2 Net of tax (b) $ (2.1) $ (3.8) (a) Amounts in parentheses indicate debits to income/loss. (b) These AOCI components are included in the computation of net periodic pension expense (income) (see Note 11 for additional details). 93 Table of Contents CARPENTER TECHNOLOGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 22. Supplemental Data The following are additional required disclosures and other material items: Years Ended June 30, ($ in millions) 2026 2025 2024 Cash Flow Data: Noncash investing and financing activities: Noncash purchases of property, plant, equipment and software $ 44.1 $ 15.3 $ 10.6 Cash paid during the year for: Interest payments, net $ 48.2 $ 48.4 $ 49.2 SUPPLEMENTARY DATA Quarterly Financial Data (Unaudited) Quarterly sales and earnings results can be influenced by seasonal factors with the first six months of the fiscal year typically being lower, principally because of increased maintenance shutdowns by us, as well as by many of our customers. However, the timing of major changes in the general economy or the markets for certain products can alter this pattern. The quarterly financial data below does not reflect special items as identified in Item 7 "Non-GAAP Financial Measures" discussed above. The fiscal year ended June 30, 2026, results include a special item from debt extinguishment losses of $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. The special items included in the fiscal year ended June 30, 2025, results were for pre-tax restructuring and asset impairment charges of $3.6 million as a result of actions taken to streamline operations in the Carpenter Additive business, as announced in the quarter ended June 30, 2024. Results of Operations ($ in millions) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2026 Net sales $ 733.7 $ 728.0 $ 811.5 $ 851.0 Gross profit $ 216.4 $ 218.3 $ 251.8 $ 268.9 Operating income $ 153.3 $ 155.2 $ 186.5 $ 206.9 Net income $ 122.5 $ 105.3 $ 139.6 $ 162.4 Fiscal Year 2025 Net sales $ 717.6 $ 676.9 $ 727.0 $ 755.6 Gross profit $ 176.3 $ 177.5 $ 200.8 $ 213.9 Operating income $ 113.6 $ 118.9 $ 137.8 $ 151.4 Net income $ 84.8 $ 84.1 $ 95.4 $ 111.7 94 Table of Contents Earnings per common share (per share amount) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2026 Basic earnings $ 2.45 $ 2.10 $ 2.79 $ 3.25 Diluted earnings $ 2.43 $ 2.09 $ 2.77 $ 3.23 Fiscal Year 2025 Basic earnings $ 1.69 $ 1.68 $ 1.90 $ 2.23 Diluted earnings $ 1.67 $ 1.66 $ 1.88 $ 2.21 Weighted average common shares outstanding (shares in millions) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2026 Basic 50.1 50.1 50.0 49.9 Diluted 50.4 50.3 50.3 50.2 Fiscal Year 2025 Basic 50.1 50.2 50.2 50.1 Diluted 50.7 50.7 50.7 50.6