CRS

• Cyclical demand in commercial aerospace, defense, and energy markets—driven by economic conditions, airline profitability, and volatile oil prices—can cause significant fluctuations in sales and profitability.
• The Athens, Alabama brownfield expansion and other capital projects place heavy demands on resources; failure to execute on time or within budget could materially harm operations and financial position.
• Volatile costs and potential supply disruptions for critical raw materials like nickel, cobalt, and titanium, combined with an inability to pass through costs, threaten margins and production continuity.
• Extensive environmental liabilities, including Superfund site designations and uncertain remediation costs, create material exposure to cleanup costs, fines, and third-party claims.
• A potential repeal of LIFO inventory accounting could trigger a substantial one-time tax liability, with FIFO inventory values exceeding LIFO by approximately $432.6 million as of June 30, 2026.
• Concentration of key facilities in Reading and Latrobe, Pennsylvania, and Athens, Alabama heightens exposure to catastrophic events that could severely disrupt operations.

The principal locations of our primary domestic integrated mills in our SAO segment are located in Reading and Latrobe, Pennsylvania and Athens, Alabama. In addition, SAO manufactures bar products in Orwigsburg, Pennsylvania and Elyria, Ohio and operates a mini-mill in Hartsville, South Carolina, manufacturing bar and wire products. The principal locations for the PEP businesses include titanium alloy production facilities located in Washington, Pennsylvania and Clearwater, Florida and a powder products manufacturing facility in Athens, Alabama. The PEP segment includes domestic leased warehouses and service centers located in Washington, Pennsylvania and Vienna, Ohio. The Reading, Hartsville, Washington, Orwigsburg, Elyria, Latrobe, and Athens facilities are owned. The Clearwater facility is owned, but the land is leased. We also own or lease manufacturing facilities, distribution centers, service centers and sales offices in a number of foreign countries, including Belgium, Canada, China, Mexico, Singapore, Sweden and Taiwan. Our corporate offices, located in Philadelphia, Pennsylvania, and Raleigh, North Carolina, are leased. Our plants, customer service centers and distribution centers were acquired or leased at various times over numerous years. There is an active maintenance program to ensure a safe operating environment and to keep facilities in good condition. In addition, we have an active capital spending program to replace equipment as needed to keep it technologically competitive on a worldwide basis. We believe our facilities are in good condition and suitable for our business needs. 14 Table of Contents

• The company is a party to environmental proceedings, including being named as a potentially responsible party (PRP) at certain Superfund or similar waste disposal sites.
• The company is also involved in routine litigation covering patent infringement, product claims, personal injury, employment actions, and commercial disputes.
• Based on current information, the company does not expect the resolution of any pending legal matters, individually or in the aggregate, to have a material adverse effect on its financial position, results of operations, or cash flows.
• The company cautions that an increase in the scope of pending matters or new lawsuits could become material in a future quarter or year.

• Net sales grew 9% to $3,124.2M, led by a 15% increase in the Aerospace and Defense end-use market to $2,035.2M.
• SAO segment operating income rose 33% to $782.9M, with an adjusted operating margin excluding surcharge of 34.7%, up from 28.6%.
• Gross margin expanded to 30.6% from 26.7%, reflecting a shift to higher-value materials, pricing actions, and operational efficiencies.
• Cash from operations was $605.0M, and adjusted free cash flow reached $362.3M, supporting $179.1M in share repurchases and $40.3M in dividends.
• Capital expenditures increased to $242.7M, primarily for the Athens, Alabama brownfield expansion, with FY2027 capex expected between $355.0M and $375.0M.
• The company recorded a $15.6M debt extinguishment loss from prepaying senior notes and reported a 19.3% effective tax rate.

• Commodity forward contracts lock in raw-material costs for firm-price sales arrangements, reducing margin risk from volatile input prices.
• A 10% instantaneous decrease in hedged raw-material and energy prices would not materially impact results of operations as of June 30, 2026.
• Foreign currency forward contracts are used to hedge anticipated cash flows from international operations, and a 10% strengthening of the U.S. dollar would not materially affect results.
• Customer non-performance on firm-price arrangements could expose the company to losses on related commodity hedges; $0.2 million in net deferred gains were outstanding at year-end.
• Energy risk is managed through supplier relationships, insurance, forward contracts, and surcharge mechanisms, while pension assets follow a glidepath that shifts toward liability-hedging assets as funding levels improve.
• Senior financial management reviews and approves all hedging strategies, and policies prohibit the use of speculative or leveraged derivatives.

• Net sales increased to $3.12 billion in FY2026 from $2.88 billion in FY2025, driven by growth in the Aerospace and Defense end-use market.
• Operating income rose to $702.0 million, up from $521.8 million, while net income grew to $529.8 million from $376.0 million.
• The company issued $700 million in 5.625% Senior Notes due 2034 and used the proceeds to fully redeem its outstanding 2028 and 2030 notes, incurring a $15.6 million debt extinguishment loss.
• Management and the independent auditor, PricewaterhouseCoopers LLP, both concluded that internal control over financial reporting was effective as of June 30, 2026.
• The auditor identified revenue recognition for goods transferred to customers as a critical audit matter due to the high degree of auditor effort required, given net sales of $3.12 billion.
• The company repurchased 545,000 shares for $179.1 million under its share repurchase program, with $119.0 million remaining authorized as of June 30, 2026.