Restructuring Costs

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure

Note 19. Restructuring and other charges

For the year ended December 31, 2022, restructuring and other charges were $23.7 million, which included a $28.5 million charge for a litigation settlement (see Note 21), partially offset by $4.8 million of restructuring credits for reductions in severance-related reserves related to approximately 110 employees based on changes in planned operating rates and revised workforce estimates.

For the year ended December 31, 2021, restructuring and other charges were a net benefit of $10.5 million, which primarily included $11.3 million of reversals of previously-recognized restructuring charges separately classified on the consolidated statement of operations, as well as an $0.8 million charge for inventory valuation reserves classified in cost of sales on the consolidated statement of operations related to the 2020 idling of the Albany, OR primary titanium facility. Restructuring items in 2021 include a $12.0 million reduction in severance-related reserves related to approximately 350 employees based on changes in planned operating rates and revised workforce reduction estimates, partially offset by $0.7 million of other costs related to facility idlings.

For the year ended December 31, 2020, the Company recorded restructuring and other charges of $1,132.1 million, predominantly related to the Company’s December 2020 announcement to cease production of standard stainless sheet products. On December 2, 2020, the Company announced a strategic repositioning of its SRP business within the AA&S segment, with a focus of increasing emphasis on the specialty rolled products portion of its product portfolio, which is comprised of titanium-based alloys including aerospace-grade titanium plate products, nickel-based alloys, and stainless products with more differentiated characteristics for specialty applications, including thin-gauge PRS.

Restructuring charges recorded on the consolidated statement of operations for the year ended December 31, 2020 were $1,107.5 million, comprised of $1,041.5 million of non-cash asset impairment charges, $60.5 million of employee benefit-related costs, and $5.5 million of other costs related to facility idlings. The December 2, 2020 decision to exit production of standard stainless products represented a significant indicator of impairment in the carrying value of certain long-lived assets. Based on projected cash flows of the Brackenridge, PA operations, including the HRPF, the Company completed a fair value analysis as of the beginning of the fourth quarter of 2020 and recognized a $1,032.6 million impairment charge for this facility based on an estimated fair value of $354 million. This long-lived asset impairment charge was determined using a held in use framework and an income approach, which represents Level 3 unobservable information in the fair value hierarchy. This impairment assessment and valuation method require the Company to make estimates and assumptions regarding future operating results, cash flows, changes in working capital and capital expenditures, selling prices, profitability, and the cost of capital. Many of these assumptions are determined by reference to market participants the Company has identified. For example, the weighted average cost of capital used in the discounted cash flow assessment was 9.3% and the long-term growth rate was 2%. Other long-lived asset impairment charges of $8.9 million were also recognized in 2020 for various AA&S segment operations identified for closure as part of the standard stainless sheet exit decision.

Restructuring charges in 2020 also include $60.5 million of employee benefit costs, representing severance, supplemental unemployment and medical benefits for the elimination of approximately 1,400 positions related to the standard stainless exit, as well as for employees impacted by the idling of the Albany, OR primary titanium operations in the fourth quarter of 2020, and workforce right-sizing actions, including both involuntary reductions and voluntary retirement incentive programs implemented throughout 2020 to better match the Company’s cost structure to expected demand, primarily as a result of economic challenges created by the COVID-19 pandemic. Other costs of $5.5 million included in 2020 restructuring charges primarily relate to asset retirement and environmental obligations associated with facility idlings.

Other charges for the year ended December 31, 2020 include:

•$17.4 million of termination benefits for pension and postretirement medical obligations related to facility closures from the standard stainless exit (see Note 14 for further explanation). These costs are classified within nonoperating retirement benefit expense in the consolidated statements of operations.

•$7.2 million of other charges for inventory valuation reserves, classified in cost of sales on the consolidated statement of operations, primarily related to excess raw material and work in process inventory at the idled Albany, OR primary titanium facility.

Restructuring reserves for severance cost activity is as follows:

	Severance and Employee
	Benefit Costs
	December 31, 2022		December 31, 2021		December 31, 2020
Beginning of year balance	$	17.7	$	43.4	$	4.5
Additions/(Adjustments)	(4.8)		(12.0)		60.5
Payments	(3.1)		(13.7)		(21.6)
End of year balance	$	9.8	$	17.7	$	43.4

Of this $9.8 million restructuring reserve balance at December 31, 2022, $5.4 million is recorded in other current liabilities and $4.4 million is recorded in other long-term liabilities on the December 31, 2022 consolidated balance sheet. Of this $17.7 million restructuring reserve balance at December 31, 2021, $11.4 million is recorded in other current liabilities and $6.3 million is recorded in other long-term liabilities on the December 31, 2021 consolidated balance sheet.