x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 23-0458500 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1735 Market Street, 15th Floor Philadelphia, Pennsylvania | 19103 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer: | x | Accelerated filer: | o | |
Non-accelerated filer: | o | (Do not check if a smaller reporting company) | Smaller reporting company: | o |
Emerging growth company | o |
Page | |||
September 30, 2017 | June 30, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 24.9 | $ | 66.3 | |||
Accounts receivable, net | 294.6 | 290.4 | |||||
Inventories | 737.3 | 690.4 | |||||
Other current assets | 54.9 | 46.5 | |||||
Total current assets | 1,111.7 | 1,093.6 | |||||
Property, plant and equipment, net | 1,308.7 | 1,316.8 | |||||
Goodwill | 263.4 | 263.4 | |||||
Other intangibles, net | 63.2 | 64.9 | |||||
Deferred income taxes | 7.5 | 7.6 | |||||
Other assets | 138.0 | 131.8 | |||||
Total assets | $ | 2,892.5 | $ | 2,878.1 | |||
LIABILITIES | |||||||
Current liabilities: | |||||||
Credit agreement borrowings | $ | 3.3 | $ | — | |||
Current portion of long-term debt | 55.0 | 55.0 | |||||
Accounts payable | 212.5 | 201.1 | |||||
Accrued liabilities | 110.8 | 139.9 | |||||
Total current liabilities | 381.6 | 396.0 | |||||
Long-term debt, net of current portion | 549.8 | 550.0 | |||||
Accrued pension liabilities | 372.1 | 378.3 | |||||
Accrued postretirement benefits | 123.3 | 122.6 | |||||
Deferred income taxes | 191.4 | 184.8 | |||||
Other liabilities | 43.3 | 47.8 | |||||
Total liabilities | 1,661.5 | 1,679.5 | |||||
Contingencies and commitments (see Note 8) | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Common stock — authorized 100,000,000 shares; issued 55,395,245 shares at September 30, 2017 and 55,349,658 shares at June 30, 2017; outstanding 46,803,324 shares at September 30, 2017 and 46,753,180 shares at June 30, 2017 | 277.0 | 276.7 | |||||
Capital in excess of par value | 289.9 | 284.8 | |||||
Reinvested earnings | 1,336.6 | 1,321.8 | |||||
Common stock in treasury (8,591,921 shares and 8,596,478 shares at September 30, 2017 and June 30, 2017, respectively), at cost | (341.4 | ) | (341.6 | ) | |||
Accumulated other comprehensive loss | (331.1 | ) | (343.1 | ) | |||
Total stockholders' equity | 1,231.0 | 1,198.6 | |||||
Total liabilities and stockholders' equity | $ | 2,892.5 | $ | 2,878.1 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Net sales | $ | 479.8 | $ | 389.0 | |||
Cost of sales | 394.2 | 343.0 | |||||
Gross profit | 85.6 | 46.0 | |||||
Selling, general and administrative expenses | 43.9 | 44.6 | |||||
Operating income | 41.7 | 1.4 | |||||
Interest expense | (7.2 | ) | (7.3 | ) | |||
Other income, net | 0.7 | 0.6 | |||||
Income (loss) before income taxes | 35.2 | (5.3 | ) | ||||
Income tax expense | 11.8 | 0.9 | |||||
Net income (loss) | $ | 23.4 | $ | (6.2 | ) | ||
EARNINGS (LOSS) PER COMMON SHARE: | |||||||
Basic | $ | 0.49 | $ | (0.13 | ) | ||
Diluted | $ | 0.49 | $ | (0.13 | ) | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||
Basic | 47.1 | 46.9 | |||||
Diluted | 47.3 | 46.9 | |||||
Cash dividends per common share | $ | 0.18 | $ | 0.18 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Net income (loss) | $ | 23.4 | $ | (6.2 | ) | ||
Other comprehensive income, net of tax | |||||||
Pension and postretirement benefits, net of tax of $(1.3) and $(10.5), respectively | 2.1 | 17.4 | |||||
Net gain on derivative instruments, net of tax of $(4.9) and $(6.5), respectively | 8.1 | 10.8 | |||||
Foreign currency translation | 1.8 | (0.7 | ) | ||||
Other comprehensive income | 12.0 | 27.5 | |||||
Comprehensive income | $ | 35.4 | $ | 21.3 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | 23.4 | $ | (6.2 | ) | ||
Adjustments to reconcile net income (loss) to net cash (used for) provided from operating activities: | |||||||
Depreciation and amortization | 28.7 | 28.9 | |||||
Deferred income taxes | 0.6 | 37.5 | |||||
Net pension expense | 3.6 | 16.8 | |||||
Share-based compensation expense | 4.2 | 3.0 | |||||
Loss on disposals of property and equipment | 0.1 | 0.1 | |||||
Changes in working capital and other: | |||||||
Accounts receivable | (1.2 | ) | 13.2 | ||||
Inventories | (46.3 | ) | (33.5 | ) | |||
Other current assets | (9.0 | ) | (44.6 | ) | |||
Accounts payable | 15.9 | (0.7 | ) | ||||
Accrued liabilities | (21.7 | ) | (10.5 | ) | |||
Pension plan contributions | (4.2 | ) | — | ||||
Other postretirement plan contributions | (0.5 | ) | (1.4 | ) | |||
Other, net | (1.0 | ) | 1.5 | ||||
Net cash (used for) provided from operating activities | (7.4 | ) | 4.1 | ||||
INVESTING ACTIVITIES | |||||||
Purchases of property, equipment and software | (28.9 | ) | (26.6 | ) | |||
Net cash used for investing activities | (28.9 | ) | (26.6 | ) | |||
FINANCING ACTIVITIES | |||||||
Credit agreement borrowings, net | 3.3 | — | |||||
Dividends paid | (8.6 | ) | (8.5 | ) | |||
Proceeds from stock options exercised | 1.4 | 0.3 | |||||
Other | (0.2 | ) | (0.2 | ) | |||
Net cash used for financing activities | (4.1 | ) | (8.4 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (1.0 | ) | (0.2 | ) | |||
DECREASE IN CASH AND CASH EQUIVALENTS | (41.4 | ) | (31.1 | ) | |||
Cash and cash equivalents at beginning of period | 66.3 | 82.0 | |||||
Cash and cash equivalents at end of period | $ | 24.9 | $ | 50.9 | |||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||
Non-cash investing activities: | |||||||
Acquisition of property, equipment and software | $ | 9.0 | $ | 9.6 |
Common Stock | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income | Total Equity | |||||||||||||||||||
Par Value Of $5 | Capital in Excess of Par Value | ||||||||||||||||||||||
Balances at June 30, 2017 | $ | 276.7 | $ | 284.8 | $ | 1,321.8 | $ | (341.6 | ) | $ | (343.1 | ) | $ | 1,198.6 | |||||||||
Net income | 23.4 | 23.4 | |||||||||||||||||||||
Pension and postretirement benefits gain, net of tax | 2.1 | 2.1 | |||||||||||||||||||||
Net gain on derivative instruments, net of tax | 8.1 | 8.1 | |||||||||||||||||||||
Foreign currency translation | 1.8 | 1.8 | |||||||||||||||||||||
Cash Dividends: | 0 | ||||||||||||||||||||||
Common @ $0.18 per share | (8.6 | ) | (8.6 | ) | |||||||||||||||||||
Share-based compensation plans | 4.0 | 0.2 | 4.2 | ||||||||||||||||||||
Stock options exercised | 0.3 | 1.1 | 1.4 | ||||||||||||||||||||
Balances at September 30, 2017 | $ | 277.0 | $ | 289.9 | $ | 1,336.6 | $ | (341.4 | ) | $ | (331.1 | ) | $ | 1,231.0 |
Common Stock | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income | Total Equity | |||||||||||||||||||
Par Value Of $5 | Capital in Excess of Par Value | ||||||||||||||||||||||
Balances at June 30, 2016 | $ | 276.3 | $ | 273.5 | $ | 1,308.9 | $ | (343.9 | ) | $ | (409.9 | ) | $ | 1,104.9 | |||||||||
Net loss | (6.2 | ) | (6.2 | ) | |||||||||||||||||||
Pension and postretirement benefits gain, net of tax | 17.4 | 17.4 | |||||||||||||||||||||
Net gain on derivative instruments, net of tax | 10.8 | 10.8 | |||||||||||||||||||||
Foreign currency translation | (0.7 | ) | (0.7 | ) | |||||||||||||||||||
Cash Dividends: | 0 | ||||||||||||||||||||||
Common @ $0.18 per share | (8.5 | ) | (8.5 | ) | |||||||||||||||||||
Share-based compensation plans | 2.6 | 0.3 | 2.9 | ||||||||||||||||||||
Stock options exercised | 0.3 | 0.3 | |||||||||||||||||||||
Balances at September 30, 2016 | $ | 276.3 | $ | 276.4 | $ | 1,294.2 | $ | (343.6 | ) | $ | (382.4 | ) | $ | 1,120.9 |
1. | Basis of Presentation |
2. | Acquisition and Divestiture |
3. | Earnings per Common Share |
Three Months Ended September 30, | ||||||||
(in millions, except per share data) | 2017 | 2016 | ||||||
Net income (loss) | $ | 23.4 | $ | (6.2 | ) | |||
Less: earnings and dividends allocated to participating securities | (0.2 | ) | — | |||||
Earnings (loss) available for common stockholders used in calculation of basic earnings (loss) per common share | $ | 23.2 | $ | (6.2 | ) | |||
Weighted average number of common shares outstanding, basic | 47.1 | 46.9 | ||||||
Basic earnings (loss) per common share | $ | 0.49 | $ | (0.13 | ) | |||
Net income (loss) | $ | 23.4 | $ | (6.2 | ) | |||
Less: earnings and dividends allocated to participating securities | (0.2 | ) | — | |||||
Earnings (loss) available for common stockholders used in calculation of diluted earnings (loss) per common share | $ | 23.2 | $ | (6.2 | ) | |||
Weighted average number of common shares outstanding, basic | 47.1 | 46.9 | ||||||
Effect of shares issuable under share-based compensation plans | 0.2 | — | ||||||
Weighted average number of common shares outstanding, diluted | 47.3 | 46.9 | ||||||
Diluted earnings (loss) per common share | $ | 0.49 | $ | (0.13 | ) |
Three Months Ended September 30, | ||||||
(in millions) | 2017 | 2016 | ||||
Stock options | 1.8 | 1.8 | ||||
Restricted stock awards | — | 0.1 |
4. | Inventories |
($ in millions) | September 30, 2017 | June 30, 2017 | ||||||
Raw materials and supplies | $ | 172.0 | $ | 152.8 | ||||
Work in process | 383.1 | 365.6 | ||||||
Finished and purchased products | 182.2 | 172.0 | ||||||
Total inventory | $ | 737.3 | $ | 690.4 |
5. | Accrued Liabilities |
($ in millions) | September 30, 2017 | June 30, 2017 | ||||||
Accrued compensation and benefits | $ | 43.3 | $ | 59.1 | ||||
Accrued postretirement benefits | 15.5 | 15.5 | ||||||
Deferred revenue | 10.2 | 9.8 | ||||||
Derivative financial instruments | 5.8 | 13.1 | ||||||
Accrued interest expense | 5.6 | 11.2 | ||||||
Accrued income taxes | 4.8 | 5.1 | ||||||
Accrued pension liabilities | 3.3 | 3.3 | ||||||
Other | 22.3 | 22.8 | ||||||
Total accrued liabilities | $ | 110.8 | $ | 139.9 |
6. | Pension and Other Postretirement Benefits |
Three months ended September 30, | Pension Plans | Other Postretirement Plans | ||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Service cost | $ | 2.4 | $ | 8.2 | $ | 0.7 | $ | 0.9 | ||||||||
Interest cost | 13.0 | 13.1 | 2.4 | 2.3 | ||||||||||||
Expected return on plan assets | (16.5 | ) | (15.3 | ) | (1.7 | ) | (1.7 | ) | ||||||||
Amortization of net loss | 3.4 | 9.4 | 0.7 | 0.8 | ||||||||||||
Amortization of prior service cost (benefit) | 0.5 | 0.2 | (1.3 | ) | (1.6 | ) | ||||||||||
Curtailment charge | — | 0.5 | — | — | ||||||||||||
Net periodic benefit costs | $ | 2.8 | $ | 16.1 | $ | 0.8 | $ | 0.7 |
7. | Debt |
($ in millions) | September 30, 2017 | June 30, 2017 | ||||||
Medium-term notes, Series B at 6.97% to 7.10% due from April 2018 to May 2018 (face value of $55.0 million at September 30, 2017 and June 30, 2017) | $ | 55.0 | $ | 55.0 | ||||
Senior unsecured notes, 5.20% due July 2021 (face value of $250.0 million at September 30, 2017 and June 30, 2017) | 250.9 | 251.2 | ||||||
Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million at September 30, 2017 and June 30, 2017) | 298.9 | 298.8 | ||||||
Total | 604.8 | 605.0 | ||||||
Less: amounts due within one year | 55.0 | 55.0 | ||||||
Long-term debt, net of current portion | $ | 549.8 | $ | 550.0 |
8. | Contingencies and Commitments |
9. | Fair Value Measurements |
September 30, 2017 | Fair Value Measurements Using Input Type | |||
($ in millions) | Level 2 | |||
Assets: | ||||
Marketable securities: | ||||
Municipal auction rate securities | $ | 3.4 | ||
Derivative financial instruments | 14.4 | |||
Total assets | $ | 17.8 | ||
Liabilities: | ||||
Derivative financial instruments | $ | 5.9 |
June 30, 2017 | Fair Value Measurements Using Input Type | |||
($ in millions) | Level 2 | |||
Assets: | ||||
Marketable securities: | ||||
Municipal auction rate securities | $ | 3.4 | ||
Derivative financial instruments | 14.5 | |||
Total assets | $ | 17.9 | ||
Liabilities: | ||||
Derivative financial instruments | $ | 19.1 |
September 30, 2017 | June 30, 2017 | |||||||||||||||
($ in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt, including current portion | $ | 604.8 | $ | 622.6 | $ | 605.0 | $ | 622.5 | ||||||||
Company-owned life insurance | $ | 15.7 | $ | 15.7 | $ | 15.9 | $ | 15.9 |
10. | Derivatives and Hedging Activities |
September 30, 2017 | Interest Rate Swaps | Foreign Currency Contracts | Commodity Contracts | Total Derivatives | ||||||||||||
($ in millions) | ||||||||||||||||
Asset Derivatives: | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Other current assets | $ | 0.2 | $ | 0.6 | $ | 6.8 | $ | 7.6 | ||||||||
Other assets | 1.3 | — | 5.5 | 6.8 | ||||||||||||
Total asset derivatives | $ | 1.5 | $ | 0.6 | $ | 12.3 | $ | 14.4 | ||||||||
Liability Derivatives: | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Accrued liabilities | $ | — | $ | 1.0 | $ | 4.8 | $ | 5.8 | ||||||||
Other liabilities | — | 0.1 | — | 0.1 | ||||||||||||
Total liability derivatives | $ | — | $ | 1.1 | $ | 4.8 | $ | 5.9 |
June 30, 2017 | Interest Rate Swaps | Foreign Currency Contracts | Commodity Contracts | Total Derivatives | ||||||||||||
($ in millions) | ||||||||||||||||
Asset Derivatives: | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Other current assets | $ | 0.6 | $ | 0.2 | $ | 6.4 | $ | 7.2 | ||||||||
Other assets | 1.6 | — | 5.7 | 7.3 | ||||||||||||
Total asset derivatives | $ | 2.2 | $ | 0.2 | $ | 12.1 | $ | 14.5 | ||||||||
Liability Derivatives: | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Accrued liabilities | $ | — | $ | 1.0 | $ | 12.1 | $ | 13.1 | ||||||||
Other liabilities | — | — | 6.0 | 6.0 | ||||||||||||
Total liability derivatives | $ | — | $ | 1.0 | $ | 18.1 | $ | 19.1 |
Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | ||||||||
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Derivatives in Cash Flow Hedging Relationship: | ||||||||
Commodity contracts | $ | 9.6 | $ | 7.0 | ||||
Foreign exchange contracts | (0.4 | ) | — | |||||
Total | $ | 9.2 | $ | 7.0 |
($ in millions) | Location of (Loss) Gain Reclassified from AOCI into Income | Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion) | Amount of (Loss) Gain Reclassified from AOCI into Income (Ineffective Portion) | |||||||||||||||
Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Derivatives in Cash Flow Hedging Relationship: | ||||||||||||||||||
Commodity contracts | Cost of sales | $ | (2.6 | ) | $ | (10.1 | ) | $ | (0.8 | ) | $ | 0.5 | ||||||
Foreign exchange contracts | Net sales | (0.4 | ) | 0.1 | — | — | ||||||||||||
Forward interest rate swaps | Interest expense | 0.1 | 0.1 | — | — | |||||||||||||
Total | $ | (2.9 | ) | $ | (9.9 | ) | $ | (0.8 | ) | $ | 0.5 |
11. | Other Income, Net |
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Foreign exchange gain | $ | 0.1 | $ | — | ||||
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts | 0.6 | 0.5 | ||||||
Interest income | — | 0.1 | ||||||
Total other income, net | $ | 0.7 | $ | 0.6 |
12. | Income Taxes |
13. | Business Segments |
Segment Data | Three Months Ended September 30, | |||||||
($ in millions) | 2017 | 2016 | ||||||
Net Sales: | ||||||||
Specialty Alloys Operations | $ | 396.8 | $ | 315.1 | ||||
Performance Engineered Products | 100.7 | 78.5 | ||||||
Intersegment | (17.7 | ) | (4.6 | ) | ||||
Consolidated net sales | $ | 479.8 | $ | 389.0 |
Segment Data | Three Months Ended September 30, | |||||||
($ in millions) | 2017 | 2016 | ||||||
Operating Income: | ||||||||
Specialty Alloys Operations | $ | 50.5 | $ | 25.0 | ||||
Performance Engineered Products | 5.3 | (2.8 | ) | |||||
Corporate costs | (12.9 | ) | (13.8 | ) | ||||
Pension earnings, interest and deferrals | (0.5 | ) | (7.1 | ) | ||||
Intersegment | (0.7 | ) | 0.1 | |||||
Consolidated operating income | $ | 41.7 | $ | 1.4 |
Segment Data | Three Months Ended September 30, | |||||||
($ in millions) | 2017 | 2016 | ||||||
Depreciation and Amortization: | ||||||||
Specialty Alloys Operations | $ | 23.1 | $ | 23.4 | ||||
Performance Engineered Products | 5.0 | 5.1 | ||||||
Corporate | 0.9 | 0.8 | ||||||
Intersegment | (0.3 | ) | (0.4 | ) | ||||
Consolidated depreciation and amortization | $ | 28.7 | $ | 28.9 |
Segment Data | Three Months Ended September 30, | |||||||
($ in millions) | 2017 | 2016 | ||||||
Capital Expenditures: | ||||||||
Specialty Alloys Operations | $ | 17.2 | $ | 14.7 | ||||
Performance Engineered Products | 4.9 | 4.5 | ||||||
Corporate | 7.1 | 7.5 | ||||||
Intersegment | (0.3 | ) | (0.1 | ) | ||||
Consolidated capital expenditures | $ | 28.9 | $ | 26.6 |
Segment Data | September 30, 2017 | June 30, 2017 | ||||||
($ in millions) | ||||||||
Total Assets: | ||||||||
Specialty Alloys Operations | $ | 2,310.2 | $ | 2,292.1 | ||||
Performance Engineered Products | 459.2 | 434.3 | ||||||
Corporate | 139.0 | 167.2 | ||||||
Intersegment | (15.9 | ) | (15.5 | ) | ||||
Consolidated total assets | $ | 2,892.5 | $ | 2,878.1 |
15. | Reclassifications from Accumulated Other Comprehensive (Loss) Income |
Three Months Ended September 30, 2017 ($ in millions) (a) | Cash flow hedging items | Pension and other postretirement benefit plan items | Unrealized losses on available-for- sale securities | Foreign currency items | Total | |||||||||||||||
Balance at June 30, 2017 | $ | (2.3 | ) | $ | (299.0 | ) | $ | (0.3 | ) | $ | (41.5 | ) | $ | (343.1 | ) | |||||
Other comprehensive income before reclassifications | 6.3 | — | — | 1.8 | 8.1 | |||||||||||||||
Amounts reclassified from AOCI (b) | 1.8 | 2.1 | — | — | 3.9 | |||||||||||||||
Net other comprehensive income | 8.1 | 2.1 | — | 1.8 | 12.0 | |||||||||||||||
Balance at September 30, 2017 | $ | 5.8 | $ | (296.9 | ) | $ | (0.3 | ) | $ | (39.7 | ) | $ | (331.1 | ) |
Three Months Ended September 30, 2016 ($ in millions) (a) | Cash flow hedging items | Pension and other postretirement benefit plan items | Unrealized losses on available-for- sale securities | Foreign currency items | Total | |||||||||||||||
Balance at June 30, 2016 | $ | (21.8 | ) | $ | (344.3 | ) | $ | (0.3 | ) | $ | (43.5 | ) | $ | (409.9 | ) | |||||
Other comprehensive income (loss) before reclassifications | 4.4 | 11.4 | — | (0.7 | ) | 15.1 | ||||||||||||||
Amounts reclassified from AOCI (b) | 6.4 | 6.0 | — | — | 12.4 | |||||||||||||||
Net other comprehensive income (loss) | 10.8 | 17.4 | — | (0.7 | ) | 27.5 | ||||||||||||||
Balance at September 30, 2016 | $ | (11.0 | ) | $ | (326.9 | ) | $ | (0.3 | ) | $ | (44.2 | ) | $ | (382.4 | ) |
(a) | All amounts are net of tax. Amounts in parentheses indicate debits. |
(b) | See separate table below for further details. |
($ in millions) (a) | Location of (loss) gain | Amount Reclassified from AOCI Three Months Ended September 30, | ||||||||
Details about AOCI Components | 2017 | 2016 | ||||||||
Cash flow hedging items: | ||||||||||
Commodity contracts | Cost of sales | $ | (2.6 | ) | $ | (10.1 | ) | |||
Foreign exchange contracts | Net sales | (0.4 | ) | 0.1 | ||||||
Forward interest rate swaps | Interest expense | 0.1 | 0.1 | |||||||
Total before tax | (2.9 | ) | (9.9 | ) | ||||||
Tax benefit | 1.1 | 3.5 | ||||||||
Net of tax | $ | (1.8 | ) | $ | (6.4 | ) |
($ in millions) (a) | Location of (loss) gain | Amount Reclassified from AOCI Three Months Ended September 30, | ||||||||
Details about AOCI Components | 2017 | 2016 | ||||||||
Amortization of pension and other postretirement benefit plan items: | ||||||||||
Net actuarial loss | (b) | $ | (4.1 | ) | $ | (10.2 | ) | |||
Prior service benefit | (b) | 0.8 | 1.4 | |||||||
Curtailment charge | (b) | — | (0.5 | ) | ||||||
Total before tax | (3.3 | ) | (9.3 | ) | ||||||
Tax benefit | 1.2 | 3.3 | ||||||||
Net of tax | $ | (2.1 | ) | $ | (6.0 | ) |
(a) | Amounts in parentheses indicate debits to income/loss. |
(b) | These AOCI components are included in the computation of net periodic benefit cost (see Note 6. Pension and Other Postretirement Benefits for additional details). |
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Pension plans | $ | 2.8 | $ | 16.1 | ||||
Other postretirement plans | 0.8 | 0.7 | ||||||
Net periodic benefit costs | $ | 3.6 | $ | 16.8 |
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Cost of sales: | ||||||||
Service cost | $ | 2.7 | $ | 7.6 | ||||
Pension earnings, interest and deferrals | — | 5.1 | ||||||
2.7 | 12.7 | |||||||
Selling, general and administrative expenses: | ||||||||
Service cost | 0.4 | 1.5 | ||||||
Pension earnings, interest and deferrals | 0.5 | 2.1 | ||||||
Curtailment charge | — | 0.5 | ||||||
0.9 | 4.1 | |||||||
Net pension expense | $ | 3.6 | $ | 16.8 |
Three Months Ended September 30, | $ Increase | % Increase | |||||||||||||
($ in millions) | 2017 | 2016 | |||||||||||||
Aerospace and Defense | $ | 258.6 | $ | 206.4 | $ | 52.2 | 25 | % | |||||||
Energy | 32.0 | 28.4 | 3.6 | 13 | % | ||||||||||
Transportation | 36.7 | 35.2 | 1.5 | 4 | % | ||||||||||
Medical | 38.3 | 24.5 | 13.8 | 56 | % | ||||||||||
Industrial and Consumer | 84.4 | 66.4 | 18.0 | 27 | % | ||||||||||
Distribution | 29.8 | 28.1 | 1.7 | 6 | % | ||||||||||
Total net sales | $ | 479.8 | $ | 389.0 | $ | 90.8 | 23 | % |
Three Months Ended September 30, | $ Increase | % Increase | |||||||||||||
($ in millions) | 2017 | 2016 | |||||||||||||
Aerospace and Defense | $ | 215.6 | $ | 173.3 | $ | 42.3 | 24 | % | |||||||
Energy | 28.8 | 25.7 | 3.1 | 12 | % | ||||||||||
Transportation | 30.6 | 30.6 | — | — | % | ||||||||||
Medical | 33.4 | 23.0 | 10.4 | 45 | % | ||||||||||
Industrial and Consumer | 71.7 | 59.3 | 12.4 | 21 | % | ||||||||||
Distribution | 29.7 | 27.9 | 1.8 | 6 | % | ||||||||||
Total net sales excluding surcharge | $ | 409.8 | $ | 339.8 | $ | 70.0 | 21 | % |
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Net sales | $ | 479.8 | $ | 389.0 | ||||
Less: surcharge revenue | 70.0 | 49.2 | ||||||
Net sales excluding surcharge revenue | $ | 409.8 | $ | 339.8 | ||||
Gross profit | $ | 85.6 | $ | 46.0 | ||||
Gross margin | 17.8 | % | 11.8 | % | ||||
Gross margin excluding surcharge revenue | 20.9 | % | 13.5 | % |
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Net sales | $ | 479.8 | $ | 389.0 | ||||
Less: surcharge revenue | 70.0 | 49.2 | ||||||
Net sales excluding surcharge revenue | $ | 409.8 | $ | 339.8 | ||||
Operating income | $ | 41.7 | $ | 1.4 | ||||
Pension EID | 0.5 | 7.1 | ||||||
Operating income excluding pension EID | 42.2 | 8.5 | ||||||
Special items: | ||||||||
Pension curtailment charge | — | 0.5 | ||||||
Operating income excluding pension EID and other special items | $ | 42.2 | $ | 9.0 | ||||
Operating margin | 8.7 | % | 0.4 | % | ||||
Operating margin excluding surcharge, pension EID and other special items | 10.3 | % | 2.6 | % |
Three Months Ended September 30, | Increase (Decrease) | % Increase (Decrease) | ||||||||||
(Pounds sold, in thousands) | 2017 | 2016 | ||||||||||
Specialty Alloys Operations | 61,190 | 52,360 | 8,830 | 17 | % | |||||||
Performance Engineered Products * | 3,526 | 2,414 | 1,112 | 46 | % | |||||||
Intersegment | (1,370 | ) | (594 | ) | (776 | ) | (131 | )% | ||||
Consolidated pounds sold | 63,346 | 54,180 | 9,166 | 17 | % |
Three Months Ended September 30, | $ Increase (Decrease) | % Increase (Decrease) | |||||||||||||
($ in millions) | 2017 | 2016 | |||||||||||||
Specialty Alloys Operations | $ | 396.8 | $ | 315.1 | $ | 81.7 | 26 | % | |||||||
Performance Engineered Products | 100.7 | 78.5 | 22.2 | 28 | % | ||||||||||
Intersegment | (17.7 | ) | (4.6 | ) | (13.1 | ) | (285 | )% | |||||||
Total net sales | $ | 479.8 | $ | 389.0 | $ | 90.8 | 23 | % |
Three Months Ended September 30, | $ Increase (Decrease) | % Increase (Decrease) | |||||||||||||
($ in millions) | 2017 | 2016 | |||||||||||||
Specialty Alloys Operations | $ | 325.6 | $ | 266.0 | $ | 59.6 | 22 | % | |||||||
Performance Engineered Products | 100.5 | 78.3 | 22.2 | 28 | % | ||||||||||
Intersegment | (16.3 | ) | (4.5 | ) | (11.8 | ) | (262 | )% | |||||||
Total net sales excluding surcharge revenue | $ | 409.8 | $ | 339.8 | $ | 70.0 | 21 | % |
Covenant | Covenant Requirement | Actual Ratio | ||
Consolidated interest coverage | 3.50 to 1.00 (minimum) | 10.35 to 1.00 | ||
Consolidated debt to capital | 55% (maximum) | 33.1% |
($ in millions, except per share amounts) | Income Before Income Taxes | Income Tax Expense | Net Income | Earnings Per Diluted Share* | ||||||||||||
Three months ended September 30, 2017, as reported | $ | 35.2 | $ | (11.8 | ) | $ | 23.4 | $ | 0.49 | |||||||
Special items: | ||||||||||||||||
None reported | — | — | — | — | ||||||||||||
Total impact of special items | — | — | — | — | ||||||||||||
Three months ended September 30, 2017, as adjusted | $ | 35.2 | $ | (11.8 | ) | $ | 23.4 | $ | 0.49 |
($ in millions, except per share amounts) | (Loss) Income Before Income Taxes | Income Tax Benefit (Expense) | Net (Loss) Income | (Loss) Earnings Per Diluted Share** | ||||||||||||
Three months ended September 30, 2016, as reported | $ | (5.3 | ) | $ | (0.9 | ) | $ | (6.2 | ) | $ | (0.13 | ) | ||||
Special items: | ||||||||||||||||
Pension curtailment charge | 0.5 | (0.1 | ) | 0.4 | 0.01 | |||||||||||
Income tax item* | — | 2.1 | 2.1 | 0.04 | ||||||||||||
Total impact of special items | 0.5 | 2.0 | 2.5 | 0.05 | ||||||||||||
Three months ended September 30, 2016, as adjusted | $ | (4.8 | ) | $ | 1.1 | $ | (3.7 | ) | $ | (0.08 | ) |
Three Months Ended September 30, | ||||||||
($ in millions) | 2017 | 2016 | ||||||
Net cash (used for) provided from operating activities | $ | (7.4 | ) | $ | 4.1 | |||
Purchases of property, equipment and software | (28.9 | ) | (26.6 | ) | ||||
Dividends paid | (8.6 | ) | (8.5 | ) | ||||
Free cash flow | $ | (44.9 | ) | $ | (31.0 | ) |
(a) | Evaluation of Effectiveness of Disclosure Controls and Procedures |
(b) | Changes in Internal Control over Financial Reporting |
Exhibit No. | Description | |
Certification of President and Chief Executive Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. (filed herewith) | ||
Certification of Senior Vice President and Chief Financial Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. (filed herewith) | ||
Certification of President and Chief Executive Officer and Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) | ||
101 | The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements. |
Carpenter Technology Corporation | |
(Registrant) | |
Date: October 26, 2017 | /s/ Damon J. Audia |
Damon J. Audia | |
Senior Vice President and Chief Financial Officer | |
(Principal Financial Officer) |
Exhibit No. | Description | |
Certification of President and Chief Executive Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. | ||
Certification of Senior Vice President and Chief Financial Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. | ||
Certification of President and Chief Executive Officer and Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101 | The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements. |
1. | I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of the Carpenter Technology Corporation (the “Registrant”); |
2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; |
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
(c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and |
(d) | Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: October 26, 2017 | /s/ Tony R. Thene |
Tony R. Thene | |
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q (the “Report”) of the Carpenter Technology Corporation (the “Registrant”); |
2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; |
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
(c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and |
(d) | Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: October 26, 2017 | /s/ Damon J. Audia |
Damon J. Audia | |
Senior Vice President and Chief Financial Officer |
Date: October 26, 2017 | ||
/s/ Tony R. Thene | /s/ Damon J. Audia | |
Tony R. Thene | Damon J. Audia | |
President and Chief Executive Officer | Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 19, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | CARPENTER TECHNOLOGY CORP | |
Entity Central Index Key | 0000017843 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 46,816,607 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - shares |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock issued (in shares) | 55,395,245 | 55,349,658 |
Common stock outstanding (in shares) | 46,803,324 | 46,753,180 |
Common stock in treasury (in shares) | 8,591,921 | 8,596,478 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Statement [Abstract] | ||
Net sales | $ 479.8 | $ 389.0 |
Cost of sales | 394.2 | 343.0 |
Gross profit | 85.6 | 46.0 |
Selling, general and administrative expenses | 43.9 | 44.6 |
Operating income | 41.7 | 1.4 |
Interest expense | (7.2) | (7.3) |
Other income, net | 0.7 | 0.6 |
Income (loss) before income taxes | 35.2 | (5.3) |
Income tax expense | 11.8 | 0.9 |
Net income (loss) | $ 23.4 | $ (6.2) |
EARNINGS (LOSS) PER COMMON SHARE: | ||
Basic (in dollars per share) | $ 0.49 | $ (0.13) |
Diluted (in dollars per share) | $ 0.49 | $ (0.13) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic (in shares) | 47.1 | 46.9 |
Diluted (in shares) | 47.3 | 46.9 |
Cash dividends per common share (in dollars per share) | $ 0.18 | $ 0.18 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 23.4 | $ (6.2) |
Other comprehensive income, net of tax | ||
Pension and postretirement benefits, net of tax of $(1.3) and $(10.5), respectively | 2.1 | 17.4 |
Net gain on derivative instruments, net of tax of $(4.9) and $(6.5), respectively | 8.1 | 10.8 |
Foreign currency translation | 1.8 | (0.7) |
Other comprehensive income | 12.0 | 27.5 |
Comprehensive income | $ 35.4 | $ 21.3 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Pension and post-retirement benefits, tax (expense) benefit | $ (1.3) | $ (10.5) |
Net loss on derivative instruments, tax expense (benefit) | $ (4.9) | $ (6.5) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per common share (in dollars per share) | $ 0.18 | $ 0.18 |
Common stock, par value (in dollars per share) | $ 5 | $ 5 |
Basis of Presentation |
3 Months Ended |
---|---|
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair statement of the results are reflected in the interim periods presented. The June 30, 2017 consolidated balance sheet data was derived from audited financial statements, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Carpenter’s annual report on Form 10-K for the fiscal year ended June 30, 2017 (the “2017 Form 10-K”). Operating results for the three months ended September 30, 2017 are not necessarily indicative of the operating results for any future period. As used throughout this report, unless the context requires otherwise, the terms “Carpenter”, the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation. |
Acquisition and Divestiture |
3 Months Ended |
---|---|
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition and Divestiture | Acquisition and Divestiture On February 28, 2017, the Company acquired substantially all the assets of Puris LLC (“Puris”), for a cash purchase price of $35.3 million. The acquisition provides the Company with immediate entry into the rapidly growing titanium powder market, an expanded presence in additive manufacturing and strengthens the Company’s capabilities as a solutions provider for customers across its end-use markets. The purchase price allocation resulted in the purchase price being allocated as follows: $1.7 million of working capital, $6.5 million of property and equipment, $8.5 million of identifiable intangible assets and $18.6 million to goodwill. In the fourth quarter of fiscal year 2017, the Company divested the Specialty Steel Supply (“SSS”) business. The divestiture was completed in two separate transactions for total cash proceeds of $12.0 million. The operations of the SSS business were historically included in our Performance Engineered Products (“PEP”) segment. The Company does not have any significant continuing involvement in the operations of SSS after the divestiture. |
Earnings per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share | 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. For the three months ended September 30, 2016, the Company incurred a net loss and, accordingly, excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive. The calculations of basic and diluted earnings (loss) per common share for the three months ended September 30, 2017 and 2016 were as follows:
The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings (loss) per share because their effects were anti-dilutive:
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Inventories |
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Inventory, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following components as of September 30, 2017 and June 30, 2017:
Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out (“LIFO”) inventory costing method. The Company also uses the first-in, first-out (“FIFO”) and average cost methods. As of September 30, 2017 and June 30, 2017, $117.4 million and $107.3 million of inventory, respectively, was accounted for using a method other than the LIFO inventory costing method. |
Accrued Liabilities |
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Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following as of September 30, 2017 and June 30, 2017:
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Pension and Other Postretirement Benefits |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the three months ended September 30, 2017 and 2016 were as follows:
In September 2016, the Company announced changes to retirement plans it offers to certain employees. Benefits accrued to eligible participants of its largest qualified defined benefit pension plan and certain non-qualified benefit plans were frozen effective December 31, 2016. The Company recognized the plan freeze in the three months ended September 30, 2016 as a curtailment, since the plan changes eliminated the accrual of defined benefits for future services for a significant number of participants. The impact of the curtailment included a one-time accelerated recognition of outstanding unamortized prior service costs of $0.5 million, which was recognized in the three months ended September 30, 2016. During the three months ended September 30, 2017 and 2016, the Company made $4.2 million and $0.0 million, respectively, of contributions to its qualified defined benefit pension plans. The Company currently expects to contribute $2.6 million to its qualified defined benefit pension plans during the remainder of fiscal year 2018. |
Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt On March 31, 2017, the Company entered into a $400.0 million unsecured revolving credit facility (“Credit Agreement”) that extends to March 2022. Interest on the borrowings under the Credit Agreement accrue at variable rates, based upon LIBOR or a defined “Base Rate,” both are determined based upon the rating of the Company’s senior unsecured long-term debt (the “Debt Rating”). The applicable margin to be added to LIBOR ranges from 1.00% to 1.75% (1.50% as of September 30, 2017), and for Base Rate-determined loans, from 0.00% to 0.75% (0.50% as of September 30, 2017). The Company also pays a quarterly commitment fee ranging from 0.125% to 0.400% (0.275% as of September 30, 2017), determined based upon the Debt Rating, of the unused portion of the $400.0 million commitment under the Credit Agreement. In addition, the Company must pay certain letter of credit fees, ranging from 1.00% to 1.75% (1.50% as of September 30, 2017), with respect to letters of credit issued under the Credit Agreement. The Company has the right to voluntarily prepay and re-borrow loans and to terminate or reduce the commitments under the facility. As of September 30, 2017, the Company had $6.1 million of issued letters of credit and $3.3 million of borrowings under the Credit Agreement with the balance of $390.6 million available to the Company. The Company is subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio of 3.50 to 1.00. The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization and non-cash net pension expense (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55 percent. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined therein, to consolidated capitalization, as defined therein. As of September 30, 2017 and June 30, 2017, the Company was in compliance with all of the covenants of the Credit Agreement. Long-term debt outstanding as of September 30, 2017 and June 30, 2017 consisted of the following:
For the three months ended September 30, 2017 and 2016, interest costs totaled $7.7 million and $7.5 million, respectively, of which $0.5 million and $0.2 million, respectively, were capitalized as part of the cost of property, equipment and software. |
Contingencies and Commitments |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | 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 potentially responsible party (“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 the three months ended September 30, 2017, no additional accruals were recorded. 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 September 30, 2017 and June 30, 2017 were $16.1 million and $16.1 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. 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, 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. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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 or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; 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 or 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:
The Company’s derivative financial instruments consist of commodity forward contracts, foreign currency forward contracts and interest rate swaps. These instruments are measured at fair value using the market method valuation technique. The inputs to this technique utilize information related to foreign exchange rates, commodity prices and interest 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 10. 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 accounting principles generally accepted in the United States of America. 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:
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. The fair values of long-term debt as of September 30, 2017 and June 30, 2017 were determined by using current interest rates for debt with terms and maturities similar to the Company’s existing debt arrangements and accordingly would be classified as Level 2 inputs in the fair value hierarchy. |
Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company uses commodity forwards, interest rate swaps, forward interest rate swaps and foreign currency forwards to manage risks generally associated with commodity price, interest rate and foreign currency rate fluctuations. The following explains the various types of derivatives and includes a recap about 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) (“AOCI”) 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 September 30, 2017, the Company had forward contracts to purchase 22.2 million pounds of certain raw materials with settlement dates through December 2023. Cash Flow Hedging — Forward interest rate swaps: Historically, the Company has entered into forward interest rate swap contracts to manage the risk of cash flow variability associated with fixed interest debt expected to be issued. The forward interest rate swaps were designated as cash flow hedges. The qualifying hedge contracts were marked-to-market at each reporting date and any unrealized gains or losses were included in AOCI to the extent effective, and reclassified to interest expense in the period during which the hedged transaction affected earnings or it became probable that the forecasted transaction would not occur. Upon the issuance of the fixed rate debt, the forward interest rate swap contracts were terminated. The realized gains at the time the interest rate swap contracts were terminated are being amortized over the term of the underlying debt. For the three months ended September 30, 2017 and 2016, net gains of $0.1 million and $0.1 million, respectively, related to the previously terminated contracts were recorded as a reduction to interest expense. Cash Flow Hedging — Foreign currency forward contracts: The Company uses foreign currency forward contracts to hedge a portion of anticipated future sales denominated in foreign currencies, principally the Euro and Pound Sterling, 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 to the extent effective, and reclassified to net sales in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. The Company also 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 and expense. As of September 30, 2017 and June 30, 2017, 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. Fair Value Hedging - Interest rate swaps: The Company uses interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges. Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings. The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of operations. As of September 30, 2017 and June 30, 2017, the total notional amount of floating interest rate contracts was $150.0 million. For the three months ended September 30, 2017 and 2016, net gains of $0.2 million and $0.4 million, respectively, were recorded as a reduction to interest expense. The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of September 30, 2017 and June 30, 2017:
Substantially all of the 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 $19.5 million and total liability derivatives would have been $11.0 million as of September 30, 2017. 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 September 30, 2017 and June 30, 2017, 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. Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of 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 gains (losses) related to cash flow hedges recognized during the three months ended September 30, 2017 and 2016:
The Company estimates that $2.7 million of net derivative losses included in AOCI as of September 30, 2017 will be reclassified into income within the next 12 months. No significant cash flow hedges were discontinued during the three months ended September 30, 2017. |
Other Income, Net |
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Other Income, Net | Other Income, Net Other income, net consisted of the following:
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Income Taxes |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur. Income tax expense for the three months ended September 30, 2017 was $11.8 million, or 33.5 percent of pre-tax income as compared with $0.9 million, or 17.0 percent of pre-tax loss for the three months ended September 30, 2016. In October 2016, the Company made a voluntary pension contribution of $100.0 million that was announced in connection with the plan freeze. As a result of the pension contribution, income tax expense in the three months ended September 30, 2016 included a discrete tax charge of $2.1 million due to reduced tax benefits for domestic manufacturing claimed in prior periods. As of June 30, 2017, the Company had $99.1 million of indefinitely reinvested foreign earnings for which deferred income taxes have not been provided. |
Business Segments |
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Business Segments | Business Segments The Company has two reportable segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”). 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 operations are being 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 Powder Products business, the Amega West 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 executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. 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 and amortization of actuarial gains and losses and prior service costs, is included under the heading “Pension earnings, interest and deferrals”. On a consolidated basis, one customer, Arconic, Inc., accounted for approximately 11 percent of the net sales for the three months ended September 30, 2017. On a consolidated basis, one customer, Alcoa Inc., accounted for approximately 12 percent of the net sales for three months ended September 30, 2016. Approximately 10 percent of the accounts receivable outstanding at September 30, 2017 is due from one customer, Arconic, Inc. No single customer accounted for 10 percent or more of the accounts receivable outstanding at June 30, 2017.
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Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Pronouncements - Adopted in current period In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation — Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements. The update revises requirements in the following areas: income tax consequences, forfeitures and classification on the statement of cash flows. The Company adopted this standard in the first quarter of fiscal year 2018. The standard did not have a material impact on the consolidated financial statements of the Company. The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement will be applied prospectively. The inclusion of excess tax benefits and deficiencies as a component of income tax expense will increase volatility of the provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on the stock price at the date the awards are exercised or vested. The Company does not expect the impact to be material to the Company’s consolidated results of operations; however, such determination is subject to change based on facts and circumstances at the time when awards vest or settle. The Company accounts for forfeitures of share-based awards when they occur. The Company applied the amendments related to the presentation of excess tax benefits on the consolidated statement of cash flows using a prospective transition method, and as a result, excess tax benefits related to share-based awards will be reported as cash flows from operating activities. The Company applied the amendments related to the presentation of statutory tax withholding on the consolidated statement of cash flows using a retrospective transition method as required, and as a result, statutory tax withholding related to share-based awards which had been previously classified as cash flows from operating activities has been be reclassified as cash flows from financing activities. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments, which outlines new provisions intended to reduce the existing diversity in practice related to accounting for the cash flow and its presentation in the financial statements. ASU 2016-15 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company adopted the provisions of ASU 2016-15 in the first quarter of fiscal year 2018. The adoption of ASU 2016-15 did not materially impact the Company’s consolidated statement of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which outlines that a statement of cash flows explains the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company adopted the provisions of ASU 2016-18 in the first quarter of fiscal year 2018. The adoption of ASU 2016-18 did not materially impact the Company’s consolidated statement of cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which outlines updates to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. ASU 2017-04 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 in the first quarter of fiscal year 2018. The adoption of ASU 2017-04 did not have an impact on the Company’s financial statements. Recently Issued Accounting Pronouncements - Pending Adoption In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in ASU 2014-09 requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 permits two methods of adoption: full retrospective in which the standard is applied to all of the periods presented or modified retrospective where an entity would recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. In March 2016, the FASB issued ASU 2016-08 Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. The Company is in the process of evaluating the effect that ASU 2014-09 and ASU 2016-08 will have on its Consolidated Financial Statements and related disclosures, as well as the expected method of adoption. Currently, the Company is in the process of completing the assessment phase of its evaluation. The assessment phase includes conducting and evaluating the results of internal surveys of its businesses, holding revenue recognition workshops with commercial and business unit finance leadership, and reviewing revenue arrangements across all businesses to initially identify a set of applicable qualitative revenue recognition changes related to the standards update. The Company’s method of adoption for ASU 2014-09 and 2016-08 has not yet been determined and is not expected to be finalized until the assessment phase of the evaluation has been completed. The Company’s effective date for the adoption of the guidance in ASU 2014-09 and 2016-08 is July 1, 2018. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842). ASU 2016-02 improves transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory, which outlines updates to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2016-16 on the consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which outlines updates to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. ASU 2017-07 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. The Company is evaluating the impact of the adoption of ASU 2017-07 on the consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. ASU 2017-12 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2017-12 on the consolidated financial statements. |
Reclassifications from Accumulated Other Comprehensive (Loss) Income |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications from Accumulated Other Comprehensive (Loss) Income | Reclassifications from Accumulated Other Comprehensive (Loss) Income The changes in AOCI by component, net of tax, for the three months ended September 30, 2017 and 2016 were as follows:
The following is a summary of amounts reclassified from AOCI for the three months ended September 30, 2017 and 2016:
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Basis of Presentation (Policies) |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair statement of the results are reflected in the interim periods presented. The June 30, 2017 consolidated balance sheet data was derived from audited financial statements, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Carpenter’s annual report on Form 10-K for the fiscal year ended June 30, 2017 (the “2017 Form 10-K”). Operating results for the three months ended September 30, 2017 are not necessarily indicative of the operating results for any future period. As used throughout this report, unless the context requires otherwise, the terms “Carpenter”, the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation. |
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. For the three months ended September 30, 2016, the Company incurred a net loss and, accordingly, excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive. |
Inventories | Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out (“LIFO”) inventory costing method. The Company also uses the first-in, first-out (“FIFO”) and average cost methods. |
Regulatory Environmental Costs | 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 potentially responsible party (“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. |
Contingencies and Commitments | 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, 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. |
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 or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; 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 or 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. |
Fair Value of Financial Instruments | The Company’s derivative financial instruments consist of commodity forward contracts, foreign currency forward contracts and interest rate swaps. These instruments are measured at fair value using the market method valuation technique. The inputs to this technique utilize information related to foreign exchange rates, commodity prices and interest 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 10. 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 accounting principles generally accepted in the United States of America. |
Business Segments | The Company has two reportable segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”). 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 operations are being 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 Powder Products business, the Amega West 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 executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. 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 and amortization of actuarial gains and losses and prior service costs, is included under the heading “Pension earnings, interest and deferrals”. |
Recent Accounting Pronouncements Adopted and Not Yet Applicable or Adopted | Recently Issued Accounting Pronouncements - Adopted in current period In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation — Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements. The update revises requirements in the following areas: income tax consequences, forfeitures and classification on the statement of cash flows. The Company adopted this standard in the first quarter of fiscal year 2018. The standard did not have a material impact on the consolidated financial statements of the Company. The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement will be applied prospectively. The inclusion of excess tax benefits and deficiencies as a component of income tax expense will increase volatility of the provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on the stock price at the date the awards are exercised or vested. The Company does not expect the impact to be material to the Company’s consolidated results of operations; however, such determination is subject to change based on facts and circumstances at the time when awards vest or settle. The Company accounts for forfeitures of share-based awards when they occur. The Company applied the amendments related to the presentation of excess tax benefits on the consolidated statement of cash flows using a prospective transition method, and as a result, excess tax benefits related to share-based awards will be reported as cash flows from operating activities. The Company applied the amendments related to the presentation of statutory tax withholding on the consolidated statement of cash flows using a retrospective transition method as required, and as a result, statutory tax withholding related to share-based awards which had been previously classified as cash flows from operating activities has been be reclassified as cash flows from financing activities. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments, which outlines new provisions intended to reduce the existing diversity in practice related to accounting for the cash flow and its presentation in the financial statements. ASU 2016-15 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company adopted the provisions of ASU 2016-15 in the first quarter of fiscal year 2018. The adoption of ASU 2016-15 did not materially impact the Company’s consolidated statement of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which outlines that a statement of cash flows explains the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company adopted the provisions of ASU 2016-18 in the first quarter of fiscal year 2018. The adoption of ASU 2016-18 did not materially impact the Company’s consolidated statement of cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which outlines updates to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. ASU 2017-04 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 in the first quarter of fiscal year 2018. The adoption of ASU 2017-04 did not have an impact on the Company’s financial statements. Recently Issued Accounting Pronouncements - Pending Adoption In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in ASU 2014-09 requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 permits two methods of adoption: full retrospective in which the standard is applied to all of the periods presented or modified retrospective where an entity would recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. In March 2016, the FASB issued ASU 2016-08 Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations (Reporting Revenue Gross versus Net). ASU 2016-08 requires an entity to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. The Company is in the process of evaluating the effect that ASU 2014-09 and ASU 2016-08 will have on its Consolidated Financial Statements and related disclosures, as well as the expected method of adoption. Currently, the Company is in the process of completing the assessment phase of its evaluation. The assessment phase includes conducting and evaluating the results of internal surveys of its businesses, holding revenue recognition workshops with commercial and business unit finance leadership, and reviewing revenue arrangements across all businesses to initially identify a set of applicable qualitative revenue recognition changes related to the standards update. The Company’s method of adoption for ASU 2014-09 and 2016-08 has not yet been determined and is not expected to be finalized until the assessment phase of the evaluation has been completed. The Company’s effective date for the adoption of the guidance in ASU 2014-09 and 2016-08 is July 1, 2018. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842). ASU 2016-02 improves transparency and comparability among companies by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory, which outlines updates to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2016-16 on the consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which outlines updates to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. ASU 2017-07 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2017, with early application permitted. The Company is evaluating the impact of the adoption of ASU 2017-07 on the consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. ASU 2017-12 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2017-12 on the consolidated financial statements. |
Earnings per Common Share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculations of basic and diluted earnings per common share | The calculations of basic and diluted earnings (loss) per common share for the three months ended September 30, 2017 and 2016 were as follows:
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Schedule of awards issued under share-based compensation plans excluded from the calculations of diluted earnings per share | The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings (loss) per share because their effects were anti-dilutive:
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Inventories (Tables) |
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Schedule of inventories | Inventories consisted of the following components as of September 30, 2017 and June 30, 2017:
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Accrued Liabilities (Tables) |
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Schedule of accrued liabilities | Accrued liabilities consisted of the following as of September 30, 2017 and June 30, 2017:
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Pension and Other Postretirement Benefits (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of the net periodic benefit cost | The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the three months ended September 30, 2017 and 2016 were as follows:
|
Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt outstanding | Long-term debt outstanding as of September 30, 2017 and June 30, 2017 consisted of the following:
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of assets and liabilities measured on a recurring basis | 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:
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Schedule of carrying amounts and estimated fair values of financial instruments not recorded at fair value in the financial statements | 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:
|
Derivatives and Hedging Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value and location of outstanding derivative contracts recorded in consolidated balance sheets | The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of September 30, 2017 and June 30, 2017:
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Summary of the (losses) gains related to cash flow hedges | The following is a summary of the gains (losses) related to cash flow hedges recognized during the three months ended September 30, 2017 and 2016:
|
Other Income, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income, net | Other income, net consisted of the following:
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Business Segments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of results of operation, depreciation and amortization, capital expenditures and total assets by reportable segments |
|
Reclassifications from Accumulated Other Comprehensive (Loss) Income (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in AOCI by component, net of tax | The changes in AOCI by component, net of tax, for the three months ended September 30, 2017 and 2016 were as follows:
|
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Schedule of amounts reclassified from AOCI | The following is a summary of amounts reclassified from AOCI for the three months ended September 30, 2017 and 2016:
|
Acquisition and Divestiture (Details) $ in Millions |
Jun. 29, 2017
USD ($)
transaction
|
Feb. 28, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 263.4 | $ 263.4 | ||
Discontinued Operations, Disposed of by Sale | Specialty Steel Supply | ||||
Business Acquisition [Line Items] | ||||
Number of separate transactions to complete the divestiture (transaction) | transaction | 2 | |||
Proceeds from sale of business | $ 12.0 | |||
Puris LLC | ||||
Business Acquisition [Line Items] | ||||
Asset purchase price | $ 35.3 | |||
Working capital acquired | 1.7 | |||
Property, plant, and equipment acquired | 6.5 | |||
Identifiable intangible assets | 8.5 | |||
Goodwill acquired | $ 18.6 |
Earnings per Common Share - Schedule of awards issued under share-based compensation plans excluded from the calculations of diluted earnings per share (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Stock options | ||
Awards issued under share-based compensation plans that were excluded from calculations of diluted earnings per share because their effects were anti-dilutive | ||
Awards excluded from computation of earnings per share (in shares) | 1.8 | 1.8 |
Restricted stock awards | ||
Awards issued under share-based compensation plans that were excluded from calculations of diluted earnings per share because their effects were anti-dilutive | ||
Awards excluded from computation of earnings per share (in shares) | 0.0 | 0.1 |
Inventories - Schedule of Inventories (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Raw materials and supplies | $ 172.0 | $ 152.8 |
Work in process | 383.1 | 365.6 |
Finished and purchased products | 182.2 | 172.0 |
Total inventory | $ 737.3 | $ 690.4 |
Inventories - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Inventory, Net [Abstract] | ||
Other than LIFO inventory | $ 117.4 | $ 107.3 |
Accrued Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation and benefits | $ 43.3 | $ 59.1 |
Accrued postretirement benefits | 15.5 | 15.5 |
Deferred revenue | 10.2 | 9.8 |
Derivative financial instruments | 5.8 | 13.1 |
Accrued interest expense | 5.6 | 11.2 |
Accrued income taxes | 4.8 | 5.1 |
Accrued pension liabilities | 3.3 | 3.3 |
Other | 22.3 | 22.8 |
Total accrued liabilities | $ 110.8 | $ 139.9 |
Pension and Other Postretirement Benefits - Schedule of Components of the Net Periodic Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Pension Plans | ||
Pension and Other Postretirement Benefit Disclosures | ||
Service cost | $ 2.4 | $ 8.2 |
Interest cost | 13.0 | 13.1 |
Expected return on plan assets | (16.5) | (15.3) |
Amortization of net loss | 3.4 | 9.4 |
Amortization of prior service cost (benefit) | 0.5 | 0.2 |
Curtailment charge | 0.0 | 0.5 |
Net periodic benefit costs | 2.8 | 16.1 |
Other Postretirement Plans | ||
Pension and Other Postretirement Benefit Disclosures | ||
Service cost | 0.7 | 0.9 |
Interest cost | 2.4 | 2.3 |
Expected return on plan assets | (1.7) | (1.7) |
Amortization of net loss | 0.7 | 0.8 |
Amortization of prior service cost (benefit) | (1.3) | (1.6) |
Curtailment charge | 0.0 | 0.0 |
Net periodic benefit costs | $ 0.8 | $ 0.7 |
Pension and Other Postretirement Benefits - Narrative (Details) - Pension Plans - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Jun. 30, 2018 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Curtailment charge | $ 0.5 | ||
Qualified Plan | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Contributions | $ 4.2 | $ 0.0 | |
Forecast | Qualified Plan | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Contributions | $ 2.6 |
Contingencies and Commitments (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Accrual for environmental loss contingencies | $ 0 | |
Environmental remediation liability | $ 16,100,000 | $ 16,100,000 |
Fair Value Measurements - Schedule of fair value of assets and liabilities measured on a recurring basis (Details) - Measured on a recurring basis - Level 2 - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Assets and liabilities measured at fair value on a recurring basis | ||
Derivative financial instruments | $ 14.4 | $ 14.5 |
Total assets | 17.8 | 17.9 |
Derivative financial instruments, liabilities | 5.9 | 19.1 |
Municipal auction rate securities | ||
Assets and liabilities measured at fair value on a recurring basis | ||
Marketable securities: | $ 3.4 | $ 3.4 |
Fair Value Measurements - Schedule of carrying amounts and estimated fair values of financial instruments not recorded at fair value in the financial statements (Details) - Level 2 - USD ($) $ in Millions |
Sep. 30, 2017 |
Jun. 30, 2017 |
---|---|---|
Carrying Value | ||
Carrying amounts and estimated fair values of financial instruments not recorded at fair value | ||
Long-term debt, including current portion | $ 604.8 | $ 605.0 |
Company-owned life insurance | 15.7 | 15.9 |
Fair Value | ||
Carrying amounts and estimated fair values of financial instruments not recorded at fair value | ||
Long-term debt, including current portion | 622.6 | 622.5 |
Company-owned life insurance | $ 15.7 | $ 15.9 |
Derivatives and Hedging Activities - Narrative (Details) lb in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2017
USD ($)
lb
|
Sep. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
|
|
Fair value of derivatives | |||
Total asset derivatives on a gross basis | $ 19,500,000 | ||
Total liability derivatives on a gross basis | 11,000,000 | ||
Cash collateral held by counterparties | 0 | $ 0 | |
Net derivative losses included in AOCI expected to be reclassified into earnings | $ 2,700,000 | ||
Cash flow hedges | Commodity contracts | |||
Fair value of derivatives | |||
Amounts of raw materials to be purchased from forward contracts (in pounds) | lb | 22.2 | ||
Cash flow hedges | Interest Rate Swaps | |||
Fair value of derivatives | |||
Net gains recorded as a reduction to interest expense | $ 100,000 | $ 100,000 | |
Fair value hedging | Interest Rate Swaps | |||
Fair value of derivatives | |||
Net gains recorded as a reduction to interest expense | 200,000 | $ 400,000 | |
Total notional amounts of interest rate contracts | $ 150,000,000 | $ 150,000,000 |
Other Income, Net (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Other Income and Expenses [Abstract] | ||
Foreign exchange gain | $ 0.1 | $ 0.0 |
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts | 0.6 | 0.5 |
Interest income | 0.0 | 0.1 |
Total other income, net | $ 0.7 | $ 0.6 |
Income Taxes (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Oct. 31, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Jun. 30, 2017 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Income tax expense | $ 11.8 | $ 0.9 | ||
Income tax expense as a percent of pre-tax income (loss) | 33.50% | 17.00% | ||
Discrete tax tax charge | $ 2.1 | |||
Indefinitely reinvested foreign earnings | $ 99.1 | |||
General Retirement Plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Discretionary contribution | $ 100.0 |
Business Segments - Narrative (Details) - segment |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Concentration Risk [Line Items] | ||
Number of reportable segments (segment) | 2 | |
Customer Concentration Risk | Net Sales | Arconic | ||
Concentration Risk [Line Items] | ||
Concentration risk | 11.00% | |
Customer Concentration Risk | Net Sales | Alcoa | ||
Concentration Risk [Line Items] | ||
Concentration risk | 12.00% | |
Customer Concentration Risk | Accounts Receivable | Arconic | ||
Concentration Risk [Line Items] | ||
Concentration risk | 10.00% |
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