Industrial & Other Manufacturing: Revenue disaggregation (ASC 606)

The Company operates in one reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment. Refer to Note 19: Segment, Geographic Information, and Major Customers for additional information regarding the Company’s evaluation of reportable business segments and the disaggregation of revenue by the geographic regions in which the Company operates.

Additionally, the Company serves three primary markets: memory, foundry, and logic/integrated device manufacturing. The following table presents the percentages of leading- and non-leading-edge equipment and upgrade revenue to each of the primary markets the Company serves:

Year Ended
June 28, 2026	June 29, 2025	June 30, 2024
Foundry	54	45	40
Memory	39	42	42
Logic/integrated device manufacturing	7	13	18

Deferred Revenue

Revenue of $ 2.09 billion included in deferred profit at June 29, 2025 was recognized during fiscal year 2026, representing 78 % of the $ 2.68 billion of deferred revenue as of June 29, 2025.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of June 28, 2026 and when the Company expects to recognize the amounts as revenue:

The Company provides disaggregation of revenue based on product and service type on the consolidated statements of operations as it believes these categories best depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Contract Balances

The following table provides information about accounts receivable, unbilled accounts receivable, and contract liabilities from contracts with customers (in thousands):

September 27, 2025	September 28, 2024
Accounts receivable	186,705	201,548
Unbilled accounts receivable	181,658	218,233
Contract liabilities	1,367,244	805,547

The change in the opening and closing balances of the Company’s accounts receivable primarily results from the increase in customer system implementations in the current fiscal year as well as the timing of when customer payments are due. The change in the opening and closing balances of the Company’s unbilled accounts receivable and contract liabilities primarily results from the timing difference between the Company’s performance and customer payments. The Company’s performance obligations are typically satisfied over time as work is performed. Payment from customers can vary and is often received in advance of satisfaction of the performance obligations, resulting in a contract liability balance. When satisfaction of the performance obligations occurs in advance of invoicing or payment being received, an unbilled accounts receivable is generated. For the year ended September 30, 2023, the ending balance of accounts receivable, unbilled accounts receivable, and contract liabilities was $ 69.2 million, $ 121.1 million, and $ 787.2 million, respectively. During the years ended September 27, 2025 and September 28, 2024, the Company recognized $ 737.2 million and $ 723.2 million, respectively, of the contract liability balance at the beginning of the period as revenue upon transfer of the products or services to customers.

2025 Walmart Master Automation Agreement

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.

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:

The Company has a comprehensive offering of products, including technologies, built to customers’ specifications that are sold in niche markets throughout the world. The Company disaggregates revenue from contracts with customers by reporting unit and geographical region for each segment as the Company believes it best depicts how the amount, nature, timing and uncertainty of its revenue and cash flows are affected by economic factors. Revenue, presented as Net sales on the Consolidated Statements of Income, was attributed to geographical region based on the location of the customer. The following tables present revenue disaggregated by reporting unit and geographical region.

Revenue by reporting unit for the years ended December 31, 2025, 2024 and 2023 was as follows:

For the Year Ended December 31,
2025	2024	2023
Scientific Fluidics & Optics	859.3	706.1	681.5
Performance Pneumatic Technologies	259.2	237.4	250.0
Sealing Solutions	249.6	232.4	242.3
Material Processing Technologies	127.4	122.2	120.7
Micropump (1)	—	—	21.9
Intersegment elimination	( 4.8 )	( 4.1 )	( 2.9 )
Health & Science Technologies	1,490.7	1,294.0	1,313.5
Pumps	426.6	408.3	402.9
Water	351.8	347.8	345.8
Energy	205.2	207.6	209.3
Agriculture	143.3	146.4	159.6
Valves	97.1	123.1	129.5
Intersegment elimination	( 1.5 )	( 1.4 )	( 2.9 )
Fluid & Metering Technologies	1,222.5	1,231.8	1,244.2
Fire & Safety	478.4	467.2	431.9
Dispensing	147.2	161.3	167.5
BAND-IT	119.7	115.8	119.4
Intersegment elimination	( 1.0 )	( 1.3 )	( 2.6 )
Fire & Safety/Diversified Products	744.3	743.0	716.2
Net sales	3,457.5	3,268.8	3,273.9

(1) Revenue from Micropump (sold on August 3, 2023) has been included in the Company’s Consolidated Statements of Income through the date of disposition. See Note 2 , “Acquisitions and Divestitures,” for further detail.

Revenue by geographical region for the years ended December 31, 2025, 2024 and 2023 was as follows:

We disaggregate revenue from contracts with customers by sales of product and software and services, geographic location, and end market for each of our segments, as we believe it best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors.

Disaggregation of revenue for the year ended December 31, 2025 is presented as follows ($ in millions):

Total	Intelligent Operating Solutions	Advanced Healthcare Solutions
Sales:
Sales of products and software	3,341.3	2,319.4	1,021.9
Sales of services	817.8	536.9	280.9
Total	4,159.1	2,856.3	1,302.8
Geographic:
North America (a)	2,491.1	1,737.0	754.1
Asia-Pacific	730.1	449.7	280.4
Europe, Middle East, and Africa	725.8	553.8	172.0
Latin America	212.1	115.8	96.3
Total	4,159.1	2,856.3	1,302.8
End markets:
Healthcare	1,280.5	44.9	1,235.6
Industrial & Manufacturing	1,198.7	1,181.7	17.0
Energy & Infrastructure	687.6	687.6	—
Government	350.6	314.0	36.6
Retail	315.7	315.7	—
Other	326.0	312.4	13.6
Total	4,159.1	2,856.3	1,302.8
(a) North America is comprised of the United States and Canada. Sales attributed to the United States were 56 % of total Fortive sales.

Disaggregation of revenue for the year ended December 31, 2024 is presented as follows ($ in millions):