Cover Page
Cover Page - shares | 3 Months Ended | |
Sep. 30, 2019 | Oct. 16, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-5828 | |
Entity Registrant Name | CARPENTER TECHNOLOGY CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 23-0458500 | |
Entity Address, Address Line One | 1735 Market Street | |
Entity Address, Address Line Two | 15th Floor | |
Entity Address, City or Town | Philadelphia | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19103 | |
City Area Code | 610 | |
Local Phone Number | 208-2000 | |
Title of 12(b) Security | Common Stock, $5 Par Value | |
Trading Symbol | CRS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 47,720,105 | |
Entity Central Index Key | 0000017843 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 24.6 | $ 27 |
Accounts receivable, net | 383.4 | 384.1 |
Inventories | 837.6 | 787.7 |
Other current assets | 64 | 37.4 |
Total current assets | 1,309.6 | 1,236.2 |
Property, plant and equipment, net | 1,380.2 | 1,366.2 |
Goodwill | 324.5 | 326.4 |
Other intangibles, net | 64.9 | 67.2 |
Deferred income taxes | 4 | 4.2 |
Other assets | 258.3 | 187.6 |
Total assets | 3,341.5 | 3,187.8 |
Current liabilities: | ||
Short-term credit agreement borrowings | 77.6 | 19.7 |
Accounts payable | 259.9 | 238.7 |
Accrued liabilities | 129.1 | 157.6 |
Total current liabilities | 466.6 | 416 |
Long-term debt | 550.9 | 550.6 |
Accrued pension liabilities | 366.8 | 371.2 |
Accrued postretirement benefits | 122.3 | 122.1 |
Deferred income taxes | 154.6 | 142.7 |
Other liabilities | 103.3 | 65.1 |
Total liabilities | 1,764.5 | 1,667.7 |
Contingencies and commitments (see Note 10) | ||
STOCKHOLDERS’ EQUITY | ||
Common stock — authorized 100,000,000 shares; issued 55,969,677 shares at September 30, 2019 and 55,808,743 shares at June 30, 2019; outstanding 47,719,523 shares at September 30, 2019 and 47,470,363 shares at June 30, 2019 | 279.8 | 279 |
Capital in excess of par value | 317.5 | 320.4 |
Reinvested earnings | 1,636.8 | 1,605.3 |
Common stock in treasury (8,250,154 shares and 8,338,380 shares at September 30, 2019 and June 30, 2019, respectively), at cost | (329.5) | (332.8) |
Accumulated other comprehensive loss | (327.6) | (351.8) |
Total stockholders' equity | 1,577 | 1,520.1 |
Total liabilities and stockholders' equity | $ 3,341.5 | $ 3,187.8 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - shares | Sep. 30, 2019 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock issued (in shares) | 55,969,677 | 55,808,743 |
Common stock outstanding (in shares) | 47,719,523 | 47,470,363 |
Common stock in treasury (in shares) | 8,250,154 | 8,338,380 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 585.4 | $ 572.4 |
Cost of sales | 472.8 | 480.7 |
Gross profit | 112.6 | 91.7 |
Selling, general and administrative expenses | 52.8 | 46.7 |
Operating income | 59.8 | 45 |
Interest expense | (5.4) | (6.3) |
Other (expense) income, net | (0.3) | 1.6 |
Income before income taxes | 54.1 | 40.3 |
Income tax expense | 12.9 | 8.8 |
Net income | $ 41.2 | $ 31.5 |
EARNINGS PER COMMON SHARE: | ||
Basic (in dollars per share) | $ 0.85 | $ 0.66 |
Diluted (in dollars per share) | $ 0.85 | $ 0.65 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic (in shares) | 47.9 | 47.6 |
Diluted (in shares) | 48.3 | 48.2 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 41.2 | $ 31.5 |
Other comprehensive income (loss), net of tax | ||
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | 0 | (1) |
Pension and postretirement benefits, net of tax of $(1.0) and $(0.5), respectively | 3 | 1.7 |
Net gain (loss) on derivative instruments, net of tax of $(8.5) and $8.7, respectively | 26.7 | (23) |
Marketable securities gain, net of tax of $0.0 and $0.0, respectively | 0 | 0.3 |
Foreign currency translation | (5.5) | 0.7 |
Other comprehensive income (loss), net of tax | 24.2 | (21.3) |
Comprehensive income | $ 65.4 | $ 10.2 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Pension and post-retirement benefits, tax benefits | $ (1,000,000) | $ (500,000) |
Net gain on derivative instruments, tax expense (benefits) | (8,500,000) | 8,700,000 |
Marketable securities gain, tax expense | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
OPERATING ACTIVITIES | ||
Net income | $ 41.2 | $ 31.5 |
Adjustments to reconcile net income to net cash provided from operating activities: | ||
Depreciation and amortization | 30.6 | 29.7 |
Deferred income taxes | 3.5 | 1.2 |
Net pension expense | 3.8 | 2.9 |
Share-based compensation expense | 4.1 | 3 |
Net loss on disposals of property, plant and equipment and assets held for sale | 0 | 0.1 |
Changes in working capital and other: | ||
Accounts receivable | (2.1) | (3.5) |
Inventories | (51.1) | (50.5) |
Other current assets | (10.1) | (6.5) |
Accounts payable | 18 | 47.5 |
Accrued liabilities | (30.8) | (40.8) |
Pension plan contributions | (2.4) | (2.3) |
Other postretirement plan contributions | (0.9) | (0.8) |
Other, net | (3.1) | (2.1) |
Net cash provided from operating activities | 0.7 | 9.4 |
INVESTING ACTIVITIES | ||
Purchases of property, plant, equipment and software | (47.5) | (41.6) |
Proceeds from disposals of property, plant and equipment and assets held for sale | 0.1 | 0.1 |
Proceeds from sales and maturities of marketable securities | 0 | 2.9 |
Net cash used for investing activities | (47.4) | (38.6) |
FINANCING ACTIVITIES | ||
Credit agreement borrowings | 88.1 | 0 |
Credit agreement repayments | (38.1) | 0 |
Net change in short-term credit agreement borrowings | 7.9 | 0 |
Dividends paid | (9.7) | (9.6) |
Proceeds from stock options exercised | 2.6 | 3.2 |
Withholding tax payments on share-based compensation awards | (7.5) | (4.1) |
Net cash provided from (used for) financing activities | 43.3 | (10.5) |
Effect of exchange rate changes on cash and cash equivalents | 1 | 0.5 |
DECREASE IN CASH AND CASH EQUIVALENTS | (2.4) | (39.2) |
Cash and cash equivalents at beginning of period | 27 | 56.2 |
Cash and cash equivalents at end of period | 24.6 | 17 |
Non-cash investing activities: | ||
Acquisition of property, plant, equipment and software | $ 19.6 | $ 10.1 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Capital in Excess of Par Value | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income |
Balances, period start at Jun. 30, 2018 | $ 1,485.9 | $ 278.6 | $ 310 | $ 1,475.9 | $ (338.8) | $ (239.8) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 31.5 | 31.5 | ||||
Pension and postretirement benefits gain, net of tax | 1.7 | 1.7 | ||||
Marketable securities gain, net of tax | 0.3 | 0.3 | ||||
Net (loss) gain on derivative instruments, net of tax | (23) | (23) | ||||
Foreign currency translation | 0.7 | 0.7 | ||||
Cash Dividends: | ||||||
Common | (9.6) | (9.6) | ||||
Share-based compensation plans | 0 | (2.9) | 2.9 | |||
Stock options exercised | 3.2 | 0.3 | 2.9 | |||
Balances, period end at Sep. 30, 2018 | 1,490.7 | 278.9 | 310 | 1,498.8 | (335.9) | (261.1) |
Balances, period start at Jun. 30, 2019 | 1,520.1 | 279 | 320.4 | 1,605.3 | (332.8) | (351.8) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 41.2 | 41.2 | ||||
Pension and postretirement benefits gain, net of tax | 3 | 3 | ||||
Marketable securities gain, net of tax | 0 | |||||
Net (loss) gain on derivative instruments, net of tax | 26.7 | 26.7 | ||||
Foreign currency translation | (5.5) | (5.5) | ||||
Cash Dividends: | ||||||
Common | (9.7) | (9.7) | ||||
Share-based compensation plans | (1.4) | 0.4 | (5.1) | 3.3 | ||
Stock options exercised | 2.6 | 0.4 | 2.2 | |||
Balances, period end at Sep. 30, 2019 | $ 1,577 | $ 279.8 | $ 317.5 | $ 1,636.8 | $ (329.5) | $ (327.6) |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends per common share (in dollars per share) | $ 0.20 | $ 0.20 |
Common stock, par value (in dollars per share) | $ 5 | $ 5 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 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, 2019 (the “2019 Form 10-K”). Operating results for the three months ended September 30, 2019 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”, "Carpenter Technology", the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Pronouncements - Adopted in current period In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02 Leases (Topic 842) which 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 adopted the provisions of ASU 2016-02 in the first quarter of fiscal year 2020 using the modified retrospective transition method, which did not require the Company to adjust comparative periods. Operating leases are included in other assets, accrued liabilities (current) and other liabilities (long-term) on the consolidated balance sheets. The Company’s right-of-use assets ("ROU") and lease liabilities are recognized on the lease commencement date in an amount that represents the present value of future lease payments. Upon adoption of the new lease guidance, the Company recorded a ROU and lease liability on the consolidated balance sheets for several types of operating leases, including land and buildings, equipment (e.g. trucks and forklifts), vehicles and computer equipment. The adoption of the standard had no impact on the Consolidated Statements of Income or the Consolidated Statements of Cash Flows. There was no cumulative effect of adopting the standard at the date of initial application in reinvested earnings. The Company elected the package of practical expedients included in this guidance, which allowed it to not reassess: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and, (iii) the initial direct costs for existing leases. The Company has elected the practical expedient to not separate lease components from nonlease components for all asset classes. The Company will recognize lease expense in the consolidated statements of operations on a straight-line basis over the lease term. The Company also made a policy election to not recognize ROU assets and lease liabilities for short-term leases with an initial term of 12 months or less for all asset classes. Leases with the option to extend their term or terminate early are reflected in the lease term when it is reasonably certain that the Company will exercise such options. The Company has expanded the disclosure of operating leases included in Note 11. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to reinvested earnings for standard tax effects resulting from the Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018. ASU 2018-02 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 adopted the provisions of ASU 2018-02 in the first quarter of fiscal year 2020. The adoption of ASU 2018-02 did not materially impact the consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. ASU 2018-15 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 early adopted the provisions of ASU 2018-15 in the first quarter of fiscal year 2020 and elected the prospective adoption method. The adoption of ASU 2018-15 did not materially impact the consolidated financial statements. Recently Issued Accounting Pronouncements - Pending Adoption |
Revenue
Revenue | 3 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company recognizes revenue in accordance with Topic 606, Revenue from Contracts. The Company applies the five-step model in the FASB’s guidance, which requires the Company to: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies a performance obligation. The Company recognizes revenue when performance obligations under the terms of a customer purchase order or contract are satisfied. This occurs when control of the goods and services has transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product or the service is performed. Consignment transactions are arrangements where the Company transfers product to a customer location but retains ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon usage by the customer. Service revenue is recognized as the services are performed. The customer purchase order or contract for goods transferred has a single performance obligation for which revenue is recognized at a point in time. The standard terms and conditions of a customer purchase order include general rights of return and product warranty provisions related to nonconforming product. Depending on the circumstances, the product is either replaced or a quality adjustment is issued. Such warranties do not represent a separate performance obligation. Each customer purchase order or contract sets forth the transaction price for the products and services purchased under that arrangement. Some customer arrangements include variable consideration, such as volume rebates, which generally depend upon the Company’s customers meeting specified performance criteria, such as a purchasing level over a period of time. The Company exercises judgment to estimate the most likely amount of variable consideration at each reporting date. Revenue is measured as the amount of consideration the Company expects to receive in exchange for its product. The standard payment terms are 30 days. The Company has elected to use the practical expedient that permits a Company to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Amounts billed to customers for shipping and handling activities to fulfill the Company’s promise to transfer the goods are included in revenues and costs incurred by the Company for the delivery of goods and are classified as cost of sales in the consolidated statements of income. Shipping terms may vary for products shipped outside the United States depending on the mode of transportation, the country where the material is shipped and any agreements made with the customers. Contract liabilities are recognized when the Company has received consideration from a customer to transfer goods or services at a future point in time when the Company performs under the purchase order or contract. Contract liabilities were $11.7 million and $10.5 million at September 30, 2019 and June 30, 2019, respectively, and are included in accrued liabilities on the consolidated balance sheets. The Company has elected to use the practical expedient that permits the omission of disclosure for remaining performance obligations which are expected to be satisfied in one year or less. Disaggregation of Revenue The Company operates in two business segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”). Revenue is disaggregated within these two business segments by diversified end-use markets and by geographical location. Comparative information of the Company’s overall revenues by end-use markets and geography for the three months ended September 30, 2019 and 2018 were as follows: End-Use Market Data Three Months Ended ($ in millions) 2019 2018 Aerospace and Defense $ 353.3 $ 310.7 Medical 48.9 47.0 Transportation 40.0 40.3 Energy 39.3 44.3 Industrial and Consumer 73.3 96.1 Distribution 30.6 34.0 Consolidated net sales $ 585.4 $ 572.4 Geographic Data Three Months Ended ($ in millions) 2019 2018 United States $ 384.9 $ 384.0 Europe 101.5 90.0 Asia Pacific 53.4 48.6 Mexico 21.9 22.2 Canada 13.4 17.7 Other 10.3 9.9 Consolidated net sales $ 585.4 $ 572.4 |
Acquisitions
Acquisitions | 3 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On October 22, 2018, the Company acquired all the outstanding shares of LPW Technology Ltd. (“LPW”), for a cash purchase price of $79.0 million , net of cash acquired. The acquisition combines LPW’s metal powder lifecycle management technology and processes with the Company's technical expertise in producing highly engineered metal powders and additively manufactured components. The purchase price allocation was completed in the fourth quarter of fiscal year 2019 and resulted in the purchase price being allocated to: $2.1 million of accounts receivable, $4.5 million of inventory, $0.5 million of other current assets, $11.9 million of property, plant and equipment, $11.4 million of identifiable intangible assets, $59.0 million of goodwill, $4.4 million of accounts payable, $2.5 million of current liabilities and $3.5 million of other liabilities. |
Earnings per Common Share
Earnings per Common Share | 3 Months Ended |
Sep. 30, 2019 | |
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. The calculations of basic and diluted earnings per common share for the three months ended September 30, 2019 and 2018 were as follows: Three Months Ended (in millions, except per share data) 2019 2018 Net income $ 41.2 $ 31.5 Less: earnings and dividends allocated to participating securities (0.4 ) (0.3 ) Earnings available for common stockholders used in calculation of basic earnings per common share $ 40.8 $ 31.2 Weighted average number of common shares outstanding, basic 47.9 47.6 Basic earnings per common share $ 0.85 $ 0.66 Net income $ 41.2 $ 31.5 Less: earnings and dividends allocated to participating securities (0.4 ) (0.3 ) Earnings available for common stockholders used in calculation of diluted earnings per common share $ 40.8 $ 31.2 Weighted average number of common shares outstanding, basic 47.9 47.6 Effect of shares issuable under share-based compensation plans 0.4 0.6 Weighted average number of common shares outstanding, diluted 48.3 48.2 Diluted earnings per common share $ 0.85 $ 0.65 The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings per share because their effects were anti-dilutive: Three Months Ended (in millions) 2019 2018 Stock options 0.8 0.1 |
Inventories
Inventories | 3 Months Ended |
Sep. 30, 2019 | |
Inventory, Net [Abstract] | |
Inventories | Inventories Inventories consisted of the following components as of September 30, 2019 and June 30, 2019 : ($ in millions) September 30, June 30, Raw materials and supplies $ 194.3 $ 169.8 Work in process 459.2 425.7 Finished and purchased products 184.1 192.2 Total inventory $ 837.6 $ 787.7 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, 2019 and June 30, 2019, $179.6 million and $172.3 million |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following as of September 30, 2019 and June 30, 2019 : ($ in millions) September 30, June 30, Accrued compensation and benefits $ 42.1 $ 71.2 Accrued postretirement benefits 14.7 14.7 Deferred revenue 11.7 10.5 Derivative financial instruments 10.7 16.7 Current portion of lease liabilities 10.2 — Accrued income taxes 7.0 4.2 Accrued interest expense 3.8 10.4 Accrued pension liabilities 3.4 3.4 Other 25.5 26.5 Total accrued liabilities $ 129.1 $ 157.6 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 and 2018 were as follows: Pension Plans Other Postretirement Plans Three Months Ended September 30, Three Months Ended September 30, ($ in millions) 2019 2018 2019 2018 Service cost $ 2.4 $ 2.3 $ 0.7 $ 0.6 Interest cost 11.7 13.2 2.3 2.5 Expected return on plan assets (15.5 ) (16.2 ) (1.8 ) (1.7 ) Amortization of net loss 3.9 2.6 0.6 0.4 Amortization of prior service cost (benefit) 0.5 0.5 (1.0 ) (1.3 ) Net periodic benefit costs $ 3.0 $ 2.4 $ 0.8 $ 0.5 During the three months ended September 30, 2019 and 2018 , the Company made $2.4 million and $2.3 million , respectively, of contributions to its qualified defined benefit pension plans. The Company currently expects to contribute $3.8 million to its qualified defined benefit pension plans during the remainder of fiscal year 2020. |
Debt
Debt | 3 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company maintains 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 credit 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% ( 1.25% as of September 30, 2019 ), and for Base Rate-determined loans, from 0.00% to 0.75% ( 0.25% as of September 30, 2019 ). The Company also pays a quarterly commitment fee ranging from 0.125% to 0.400% ( 0.20% as of September 30, 2019 ), 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% ( 1.25% as of September 30, 2019 ), 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, 2019 , the Company had $5.9 million of issued letters of credit and $77.6 million of short-term borrowings under the Credit Agreement with the balance of $316.5 million available to the Company. As of September 30, 2019, the borrowing rate for the Credit Agreement was 3.30% . The Company is subject to certain financial and restrictive covenants under the Credit Agreement, which, among other things, require the maintenance of a minimum interest coverage ratio of 3.50 to 1.00. The interest coverage ratio is defined in the Credit Agreement as, for any period, the ratio of consolidated earnings before interest, taxes, depreciation and amortization and non-cash net pension expense (“EBITDA”) to consolidated interest expense for such period. The Credit Agreement also requires the Company to maintain a debt to capital ratio of less than 55 percent. The debt to capital ratio is defined in the Credit Agreement as the ratio of consolidated indebtedness, as defined therein, to consolidated capitalization, as defined therein. As of September 30, 2019 and June 30, 2019 , the Company was in compliance with all of the covenants of the Credit Agreement. Long-term debt outstanding as of September 30, 2019 and June 30, 2019 consisted of the following: ($ in millions) September 30, June 30, Senior unsecured notes, 5.20% due July 2021 (face value of $250.0 million at September 30, 2019 and June 30, 2019) $ 251.5 $ 251.2 Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million at September 30, 2019 and June 30, 2019) 299.4 299.4 Total 550.9 550.6 Less: amounts due within one year — — Long-term debt, net of current portion $ 550.9 $ 550.6 For the three months ended September 30, 2019 and 2018 , interest costs totaled $7.4 million and $7.2 million , respectively, of which $2.0 million and $0.9 million |
Contingencies and Commitments
Contingencies and Commitments | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 , the Company decreased the liability for a company-owned former operating site by $ 0.2 million . The liabilities recorded for environmental remediation costs at Superfund sites, other third party-owned sites and Carpenter-owned current or former operating facilities remaining at September 30, 2019 and June 30, 2019 were $15.9 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. Estimates of the amount and timing of future costs of environmental remediation requirements are inherently imprecise because of the continuing evolution of environmental laws and regulatory requirements, the availability and application of technology, the identification of currently unknown remediation sites and the allocation of costs among the PRPs. Based upon information currently available, such future costs are not expected to have a material effect on the Company's financial position, results of operations or cash flows over the long-term. However, such costs could be material to the Company's financial position, results of operations or cash flows in a particular future quarter or year. 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. |
Leases
Leases | 3 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases As a result of adoption of ASU 2016-02, Leases, the Company recorded ROU assets and operating lease liabilities, each in the amount of $53.8 million , on the consolidated balance sheet as of July 1, 2019 for several types of operating leases, including land and buildings, equipment (e.g. trucks and forklifts), vehicles, and computer equipment. These amounts are equivalent to the aggregate future lease payments on a discounted basis. The discount rate applied to these leases is the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial ROU asset or lease liability. The leases have remaining terms of one to eighteen years . The following table sets forth the components of the Company’s lease cost for the three months ended September 30, 2019: Three Months Ended September 30, ($ in millions) 2019 Operating lease cost $ 3.4 Short-term lease cost 0.8 Variable lease cost 0.1 Total lease cost $ 4.3 Operating cash flow payments from operating leases $ 3.3 Non-cash ROU assets obtained in exchange for lease obligations $ 0.9 Weighted-average remaining lease term - operating leases 8.5 years Weighted-average discount rate - operating leases 3.8 % The following table sets forth the Company’s ROU and lease liabilities at September 30, 2019: ($ in millions) September 30, Operating lease assets: Other assets $ 51.6 Operating lease liabilities: Other accrued liabilities $ 10.2 Other liabilities 42.3 Total operating lease liabilities $ 52.5 Minimum lease payments for operating leases expiring subsequent to September 30, 2019 are as follows: ($ in millions) September 30, 2020 (remaining period of fiscal year) $ 9.6 2021 10.5 2022 8.5 2023 6.8 2024 5.1 Thereafter 24.7 Total future minimum lease payments 65.2 Less imputed interest (12.7 ) Total $ 52.5 The below table as of June 30, 2019 is carried forward, including certain amounts that were historically included in the table as a result of the historical lease term conclusions but were not included in the initial ROU asset and lease liability measurement as of June 30, 2019. Minimum lease payments for operating leases under ASC 840 expiring subsequent to June 30, 2019 were as follows: ($ in millions) June 30, 2020 $ 12.7 2021 10.4 2022 8.3 2023 6.6 2024 5.0 Thereafter 23.5 Total future minimum lease payments $ 66.5 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Sep. 30, 2019 | |
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: September 30, 2019 Fair Value Measurements Using Input Type ($ in millions) Level 2 Assets: Derivative financial instruments $ 39.8 Liabilities: Derivative financial instruments $ 18.0 June 30, 2019 Fair Value Measurements Using Input Type ($ in millions) Level 2 Assets: Derivative financial instruments $ 12.5 Liabilities: Derivative financial instruments $ 28.0 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 commodity prices, foreign exchange rates 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 13 . 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: September 30, 2019 June 30, 2019 ($ in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt $ 550.9 $ 566.2 $ 550.6 $ 560.6 Company-owned life insurance $ 18.5 $ 18.5 $ 17.9 $ 17.9 The fair values of long-term debt as of September 30, 2019 and June 30, 2019 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. 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. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 3 Months Ended |
Sep. 30, 2019 | |
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 summary of the impact the derivative instruments had on the Company’s financial position, results of operations and cash flows. Cash Flow Hedging — Commodity forward contracts: The Company enters into commodity forward contracts to fix the price of a portion of anticipated future purchases of certain critical raw materials and energy to manage the risk of cash flow variability associated with volatile commodity prices. The commodity forward contracts have been designated as cash flow hedges. The qualifying hedge contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in accumulated other comprehensive (loss) income (“AOCI”) 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, 2019 , the Company had forward contracts to purchase 17.3 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 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, 2019 and 2018 , 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 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, 2019 and June 30, 2019 , 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 income. As of September 30, 2019 and June 30, 2019 , the total notional amount of floating interest rate contracts was $150.0 million for both periods. For the three months ended September 30, 2019 and 2018 , net losses of $0.0 million and $0.3 million , respectively, were recorded as an increase to interest expense, respectively. The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of September 30, 2019 and June 30, 2019 : September 30, 2019 Interest Rate Swaps Foreign Currency Contracts Commodity Contracts Total Derivatives ($ in millions) Asset Derivatives: Derivatives designated as hedging instruments: Other current assets $ 0.1 $ 0.9 $ 20.2 $ 21.2 Other assets 1.9 0.5 16.2 18.6 Total asset derivatives $ 2.0 $ 1.4 $ 36.4 $ 39.8 Liability Derivatives: Derivatives designated as hedging instruments: Accrued liabilities $ — $ — $ 10.7 $ 10.7 Other liabilities — — 7.3 7.3 Total liability derivatives $ — $ — $ 18.0 $ 18.0 June 30, 2019 Interest Rate Swaps Foreign Currency Contracts Commodity Contracts Total Derivatives ($ in millions) Asset Derivatives: Derivatives designated as hedging instruments: Other current assets $ 0.3 $ 0.6 $ 3.8 $ 4.7 Other assets 1.6 0.2 6.0 7.8 Total asset derivatives $ 1.9 $ 0.8 $ 9.8 $ 12.5 Liability Derivatives: Derivatives designated as hedging instruments: Accrued liabilities $ — $ — $ 16.7 $ 16.7 Other liabilities — — 11.3 11.3 Total liability derivatives $ — $ — $ 28.0 $ 28.0 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 $39.2 million and total liability derivatives would have been $17.4 million as of September 30, 2019 . According to the provisions of the Company’s derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. As of September 30, 2019 and June 30, 2019 , the Company had no cash collateral held by counterparties. The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition, various master netting arrangements are in place with counterparties to facilitate settlements of gains and losses on these contracts. Cash Flow and Fair Value Hedges For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings or it becomes probable the forecasted transactions will not occur. The following is a summary of the (losses) gains related to cash flow hedges recognized during the three months ended September 30, 2019 and 2018 : Amount of (Loss) Gain Three Months Ended ($ in millions) 2019 2018 Derivatives in Cash Flow Hedging Relationship: Commodity contracts $ (39.8 ) $ (33.6 ) Foreign exchange contracts (0.7 ) 0.2 Total $ (40.5 ) $ (33.4 ) ($ in millions) Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income Three Months Ended 2019 2018 Derivatives in Cash Flow Hedging Relationship: Commodity contracts Cost of sales $ 4.8 $ (2.0 ) Foreign exchange contracts Net sales 0.4 0.2 Forward interest rate swaps Interest expense 0.1 0.1 Total $ 5.3 $ (1.7 ) The following is a summary of total amounts presented in the consolidated statements of income in which the effects of cash flow and fair value hedges are recorded during the three months ended September 30, 2019 and 2018 : Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 ($ in millions) Net Sales Cost of Sales Interest Expense Net Sales Cost of Sales Interest Expense Total amounts presented in the consolidated statements of income in which the effects of cash flow and fair value hedges are recorded $ 585.4 $ 472.8 $ 5.4 $ 572.4 $ 480.7 $ 6.3 Gain (loss) on Derivatives in Cash Flow Hedging Relationship: Commodity contracts Amount of gain (loss) reclassified from AOCI to income $ — $ 4.8 $ — $ — $ (2.0 ) $ — Foreign currency forward contracts Amount of gain reclassified from AOCI to income 0.4 — — 0.2 — — Interest rate swap agreements Amount of gain reclassified from AOCI to income — — 0.1 — — 0.1 Gain (loss) on Derivatives in Fair Value Hedging Relationship: Interest rate swap agreements Hedged Item — — — — — 0.3 Derivatives designated as hedging instruments — — — — — (0.3 ) Total gain (loss) $ 0.4 $ 4.8 $ 0.1 $ 0.2 $ (2.0 ) $ 0.1 The Company estimates that $10.1 million of net derivative losses included in AOCI as of September 30, 2019 will be reclassified into income within the next 12 months. No significant cash flow hedges were discontinued during the three months ended September 30, 2019 . As of September 30, 2019, and June 30, 2019 , the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges of interest rate risk: Carrying amount of the hedged liabilities Cumulative amount of fair value loss in the carrying amount of the hedged liabilities ($ in millions) September 30, 2019 June 30, 2019 September 30, 2019 June 30, 2019 Line item in the consolidated balance sheets in which the hedged item is included: Long-Term Debt $ 151.9 $ 151.6 $ 1.9 $ 1.6 |
Other (Expense) Income, Net
Other (Expense) Income, Net | 3 Months Ended |
Sep. 30, 2019 | |
Other Income and Expenses [Abstract] | |
Other (Expense) Income, Net | Other (Expense) Income, Net Other (expense) income, net consisted of the following: Three Months Ended ($ in millions) 2019 2018 Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts $ 0.1 $ 1.0 Foreign exchange gain 0.2 0.5 Interest income — 0.1 Pension earnings, interest and deferrals (0.7 ) — Other 0.1 — Total other (expense) income, net $ (0.3 ) $ 1.6 |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2019 | |
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. The annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pre-tax income of the Company in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, the Company’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits, and other factors that cannot be predicted with certainty. As such there can be significant volatility in interim tax provisions. Income tax expense for the three months ended September 30, 2019 was $12.9 million , or 23.8 percent of pre-tax income as compared with $8.8 million , or 21.8 percent of pre-tax income for the three months ended September 30, 2018 . |
Business Segments
Business Segments | 3 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments The Company has two reportable segments, SAO and 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, the Carpenter Additive business, and the Latrobe and Mexico distribution businesses. Effective July 1, 2019, the Company's LPW, CalRAM and Powder business in Alabama and West Virginia were combined into the Carpenter Additive business. 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 is comprised of executive and director compensation and other corporate facilities and administrative expenses not allocated to the segments. On a consolidated basis, one customer, Arconic Inc., accounted for approximately 10 percent of net sales for the three months ended September 30, 2019 and 2018. Approximately 11 percent of the accounts receivable outstanding at September 30, 2019 was due from one customer, Arconic Inc. Approximately 12 percent of the accounts receivable outstanding at June 30, 2019 was due from one customer, Arconic Inc. Three Months Ended ($ in millions) 2019 2018 Net Sales: Specialty Alloys Operations $ 491.1 $ 475.5 Performance Engineered Products 109.4 111.7 Intersegment (15.1 ) (14.8 ) Consolidated net sales $ 585.4 $ 572.4 Three Months Ended ($ in millions) 2019 2018 Operating Income (Loss): Specialty Alloys Operations $ 81.0 $ 52.8 Performance Engineered Products (2.0 ) 7.3 Corporate (19.1 ) (15.8 ) Intersegment (0.1 ) 0.7 Consolidated operating income $ 59.8 $ 45.0 Three Months Ended ($ in millions) 2019 2018 Depreciation and Amortization: Specialty Alloys Operations $ 23.6 $ 23.7 Performance Engineered Products 5.9 5.0 Corporate 1.3 1.2 Intersegment (0.2 ) (0.2 ) Consolidated depreciation and amortization $ 30.6 $ 29.7 Three Months Ended ($ in millions) 2019 2018 Capital Expenditures: Specialty Alloys Operations $ 25.2 $ 20.6 Performance Engineered Products 6.2 13.6 Corporate 16.2 7.7 Intersegment (0.1 ) (0.3 ) Consolidated capital expenditures $ 47.5 $ 41.6 September 30, June 30, ($ in millions) Total Assets: Specialty Alloys Operations $ 2,442.1 $ 2,349.2 Performance Engineered Products 704.3 664.8 Corporate 216.6 192.5 Intersegment (21.5 ) (18.7 ) Consolidated total assets $ 3,341.5 $ 3,187.8 |
Reclassifications from Accumula
Reclassifications from Accumulated Other Comprehensive (Loss) Income (AOCI) | 3 Months Ended |
Sep. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Reclassifications from Accumulated Other Comprehensive (Loss) Income (AOCI) | Reclassifications from Accumulated Other Comprehensive (Loss) Income (AOCI) The changes in AOCI by component, net of tax, for the three months ended September 30, 2019 and 2018 were as follows: Cash flow hedging items Pension and other postretirement benefit plan items Unrealized gains (losses) on available-for-sale securities Foreign currency items Total Balances at June 30, 2019 $ (14.8 ) $ (293.3 ) $ — $ (43.7 ) $ (351.8 ) Other comprehensive income (loss) before reclassifications 30.7 — — (5.5 ) 25.2 Amounts reclassified from AOCI (b) (4.0 ) 3.0 — — (1.0 ) Net other comprehensive income (loss) 26.7 3.0 — (5.5 ) 24.2 Balances at September 30, 2019 $ 11.9 $ (290.3 ) $ — $ (49.2 ) $ (327.6 ) Cash flow hedging items Pension and other postretirement benefit plan items Unrealized gains (losses) on available-for-sale securities Foreign currency items Total Balances at June 30, 2018 $ 23.8 $ (220.4 ) $ (0.3 ) $ (42.9 ) $ (239.8 ) Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings (1.0 ) — — — (1.0 ) Other comprehensive (loss) income before reclassifications (24.3 ) — 0.3 0.7 (23.3 ) Amounts reclassified from AOCI (b) 1.3 1.7 — — 3.0 Net other comprehensive (loss) income (24.0 ) 1.7 0.3 0.7 (21.3 ) Balances at September 30, 2018 $ (0.2 ) $ (218.7 ) $ — $ (42.2 ) $ (261.1 ) (a) All amounts are net of tax. Amounts in parentheses indicate debits. (b) See separate table below for further details. The following is a summary of amounts reclassified from AOCI for the three months ended September 30, 2019 and 2018 : Details about AOCI Components Location of gain (loss) Amount Reclassified from AOCI ($ in millions) (a) 2019 2018 Cash flow hedging items: Commodity contracts Cost of sales $ 4.8 $ (2.0 ) Foreign exchange contracts Net sales 0.4 0.2 Forward interest rate swaps Interest expense 0.1 0.1 Total before tax 5.3 (1.7 ) Tax (expense) benefit (1.3 ) 0.4 Net of tax $ 4.0 $ (1.3 ) Details about AOCI Components Location of (loss) gain Amount Reclassified from AOCI ($ in millions) (a) 2019 2018 Amortization of pension and other postretirement benefit plan items: Net actuarial loss (b) $ (4.5 ) $ (3.0 ) Prior service benefit (b) 0.5 0.8 Total before tax (4.0 ) (2.2 ) Tax benefit 1.0 0.5 Net of tax $ (3.0 ) $ (1.7 ) (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 8. Pension and Other Postretirement Benefits for additional details). |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 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, 2019 (the “2019 Form 10-K”). Operating results for the three months ended September 30, 2019 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”, "Carpenter Technology", the “Company”, “Registrant”, “Issuer”, “we” and “our” refer to Carpenter Technology Corporation. |
Recently Issued Accounting Pronouncements Adopted in Current Period and Pending Adoption | Recently Issued Accounting Pronouncements - Adopted in current period In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02 Leases (Topic 842) which 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 adopted the provisions of ASU 2016-02 in the first quarter of fiscal year 2020 using the modified retrospective transition method, which did not require the Company to adjust comparative periods. Operating leases are included in other assets, accrued liabilities (current) and other liabilities (long-term) on the consolidated balance sheets. The Company’s right-of-use assets ("ROU") and lease liabilities are recognized on the lease commencement date in an amount that represents the present value of future lease payments. Upon adoption of the new lease guidance, the Company recorded a ROU and lease liability on the consolidated balance sheets for several types of operating leases, including land and buildings, equipment (e.g. trucks and forklifts), vehicles and computer equipment. The adoption of the standard had no impact on the Consolidated Statements of Income or the Consolidated Statements of Cash Flows. There was no cumulative effect of adopting the standard at the date of initial application in reinvested earnings. The Company elected the package of practical expedients included in this guidance, which allowed it to not reassess: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and, (iii) the initial direct costs for existing leases. The Company has elected the practical expedient to not separate lease components from nonlease components for all asset classes. The Company will recognize lease expense in the consolidated statements of operations on a straight-line basis over the lease term. The Company also made a policy election to not recognize ROU assets and lease liabilities for short-term leases with an initial term of 12 months or less for all asset classes. Leases with the option to extend their term or terminate early are reflected in the lease term when it is reasonably certain that the Company will exercise such options. The Company has expanded the disclosure of operating leases included in Note 11. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income (loss) to reinvested earnings for standard tax effects resulting from the Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018. ASU 2018-02 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 adopted the provisions of ASU 2018-02 in the first quarter of fiscal year 2020. The adoption of ASU 2018-02 did not materially impact the consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. ASU 2018-15 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 early adopted the provisions of ASU 2018-15 in the first quarter of fiscal year 2020 and elected the prospective adoption method. The adoption of ASU 2018-15 did not materially impact the consolidated financial statements. Recently Issued Accounting Pronouncements - Pending Adoption At this time there are no issued pronouncements pending adoption that would materially impact the Company. |
Revenue | The Company recognizes revenue in accordance with Topic 606, Revenue from Contracts. The Company applies the five-step model in the FASB’s guidance, which requires the Company to: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies a performance obligation. The Company recognizes revenue when performance obligations under the terms of a customer purchase order or contract are satisfied. This occurs when control of the goods and services has transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product or the service is performed. Consignment transactions are arrangements where the Company transfers product to a customer location but retains ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon usage by the customer. Service revenue is recognized as the services are performed. The customer purchase order or contract for goods transferred has a single performance obligation for which revenue is recognized at a point in time. The standard terms and conditions of a customer purchase order include general rights of return and product warranty provisions related to nonconforming product. Depending on the circumstances, the product is either replaced or a quality adjustment is issued. Such warranties do not represent a separate performance obligation. Each customer purchase order or contract sets forth the transaction price for the products and services purchased under that arrangement. Some customer arrangements include variable consideration, such as volume rebates, which generally depend upon the Company’s customers meeting specified performance criteria, such as a purchasing level over a period of time. The Company exercises judgment to estimate the most likely amount of variable consideration at each reporting date. Revenue is measured as the amount of consideration the Company expects to receive in exchange for its product. The standard payment terms are 30 days. The Company has elected to use the practical expedient that permits a Company to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Amounts billed to customers for shipping and handling activities to fulfill the Company’s promise to transfer the goods are included in revenues and costs incurred by the Company for the delivery of goods and are classified as cost of sales in the consolidated statements of income. Shipping terms may vary for products shipped outside the United States depending on the mode of transportation, the country where the material is shipped and any agreements made with the customers. Contract liabilities are recognized when the Company has received consideration from a customer to transfer goods or services at a future point in time when the Company performs under the purchase order or contract. Contract liabilities were $11.7 million and $10.5 million at September 30, 2019 and June 30, 2019, respectively, and are included in accrued liabilities on the consolidated balance sheets. |
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. |
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 commodity prices, foreign exchange rates 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 13 . 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, SAO and 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, the Carpenter Additive business, and the Latrobe and Mexico distribution businesses. Effective July 1, 2019, the Company's LPW, CalRAM and Powder business in Alabama and West Virginia were combined into the Carpenter Additive business. 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 is comprised of executive and director compensation and other corporate facilities and administrative expenses not allocated to the segments. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Summary of revenues by end-use markets and geography | Comparative information of the Company’s overall revenues by end-use markets and geography for the three months ended September 30, 2019 and 2018 were as follows: End-Use Market Data Three Months Ended ($ in millions) 2019 2018 Aerospace and Defense $ 353.3 $ 310.7 Medical 48.9 47.0 Transportation 40.0 40.3 Energy 39.3 44.3 Industrial and Consumer 73.3 96.1 Distribution 30.6 34.0 Consolidated net sales $ 585.4 $ 572.4 Geographic Data Three Months Ended ($ in millions) 2019 2018 United States $ 384.9 $ 384.0 Europe 101.5 90.0 Asia Pacific 53.4 48.6 Mexico 21.9 22.2 Canada 13.4 17.7 Other 10.3 9.9 Consolidated net sales $ 585.4 $ 572.4 |
Earnings per Common Share (Tabl
Earnings per Common Share (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of basic and diluted earnings per common share | The calculations of basic and diluted earnings per common share for the three months ended September 30, 2019 and 2018 were as follows: Three Months Ended (in millions, except per share data) 2019 2018 Net income $ 41.2 $ 31.5 Less: earnings and dividends allocated to participating securities (0.4 ) (0.3 ) Earnings available for common stockholders used in calculation of basic earnings per common share $ 40.8 $ 31.2 Weighted average number of common shares outstanding, basic 47.9 47.6 Basic earnings per common share $ 0.85 $ 0.66 Net income $ 41.2 $ 31.5 Less: earnings and dividends allocated to participating securities (0.4 ) (0.3 ) Earnings available for common stockholders used in calculation of diluted earnings per common share $ 40.8 $ 31.2 Weighted average number of common shares outstanding, basic 47.9 47.6 Effect of shares issuable under share-based compensation plans 0.4 0.6 Weighted average number of common shares outstanding, diluted 48.3 48.2 Diluted earnings per common share $ 0.85 $ 0.65 |
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 per share because their effects were anti-dilutive: Three Months Ended (in millions) 2019 2018 Stock options 0.8 0.1 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Inventory, Net [Abstract] | |
Schedule of inventories | Inventories consisted of the following components as of September 30, 2019 and June 30, 2019 : ($ in millions) September 30, June 30, Raw materials and supplies $ 194.3 $ 169.8 Work in process 459.2 425.7 Finished and purchased products 184.1 192.2 Total inventory $ 837.6 $ 787.7 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following as of September 30, 2019 and June 30, 2019 : ($ in millions) September 30, June 30, Accrued compensation and benefits $ 42.1 $ 71.2 Accrued postretirement benefits 14.7 14.7 Deferred revenue 11.7 10.5 Derivative financial instruments 10.7 16.7 Current portion of lease liabilities 10.2 — Accrued income taxes 7.0 4.2 Accrued interest expense 3.8 10.4 Accrued pension liabilities 3.4 3.4 Other 25.5 26.5 Total accrued liabilities $ 129.1 $ 157.6 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 and 2018 were as follows: Pension Plans Other Postretirement Plans Three Months Ended September 30, Three Months Ended September 30, ($ in millions) 2019 2018 2019 2018 Service cost $ 2.4 $ 2.3 $ 0.7 $ 0.6 Interest cost 11.7 13.2 2.3 2.5 Expected return on plan assets (15.5 ) (16.2 ) (1.8 ) (1.7 ) Amortization of net loss 3.9 2.6 0.6 0.4 Amortization of prior service cost (benefit) 0.5 0.5 (1.0 ) (1.3 ) Net periodic benefit costs $ 3.0 $ 2.4 $ 0.8 $ 0.5 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt outstanding | Long-term debt outstanding as of September 30, 2019 and June 30, 2019 consisted of the following: ($ in millions) September 30, June 30, Senior unsecured notes, 5.20% due July 2021 (face value of $250.0 million at September 30, 2019 and June 30, 2019) $ 251.5 $ 251.2 Senior unsecured notes, 4.45% due March 2023 (face value of $300.0 million at September 30, 2019 and June 30, 2019) 299.4 299.4 Total 550.9 550.6 Less: amounts due within one year — — Long-term debt, net of current portion $ 550.9 $ 550.6 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease cost | The following table sets forth the components of the Company’s lease cost for the three months ended September 30, 2019: Three Months Ended September 30, ($ in millions) 2019 Operating lease cost $ 3.4 Short-term lease cost 0.8 Variable lease cost 0.1 Total lease cost $ 4.3 Operating cash flow payments from operating leases $ 3.3 Non-cash ROU assets obtained in exchange for lease obligations $ 0.9 Weighted-average remaining lease term - operating leases 8.5 years Weighted-average discount rate - operating leases 3.8 % |
Right-of-use assets and lease liabilities | The following table sets forth the Company’s ROU and lease liabilities at September 30, 2019: ($ in millions) September 30, Operating lease assets: Other assets $ 51.6 Operating lease liabilities: Other accrued liabilities $ 10.2 Other liabilities 42.3 Total operating lease liabilities $ 52.5 |
Minimum lease payments for operating leases expiring subsequent to September 30, 2019 | Minimum lease payments for operating leases expiring subsequent to September 30, 2019 are as follows: ($ in millions) September 30, 2020 (remaining period of fiscal year) $ 9.6 2021 10.5 2022 8.5 2023 6.8 2024 5.1 Thereafter 24.7 Total future minimum lease payments 65.2 Less imputed interest (12.7 ) Total $ 52.5 |
Minimum lease payments for operating leases under ASC 840 expiring subsequent to June 30, 2019 | The below table as of June 30, 2019 is carried forward, including certain amounts that were historically included in the table as a result of the historical lease term conclusions but were not included in the initial ROU asset and lease liability measurement as of June 30, 2019. Minimum lease payments for operating leases under ASC 840 expiring subsequent to June 30, 2019 were as follows: ($ in millions) June 30, 2020 $ 12.7 2021 10.4 2022 8.3 2023 6.6 2024 5.0 Thereafter 23.5 Total future minimum lease payments $ 66.5 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
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: September 30, 2019 Fair Value Measurements Using Input Type ($ in millions) Level 2 Assets: Derivative financial instruments $ 39.8 Liabilities: Derivative financial instruments $ 18.0 June 30, 2019 Fair Value Measurements Using Input Type ($ in millions) Level 2 Assets: Derivative financial instruments $ 12.5 Liabilities: Derivative financial instruments $ 28.0 |
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: September 30, 2019 June 30, 2019 ($ in millions) Carrying Value Fair Value Carrying Value Fair Value Long-term debt $ 550.9 $ 566.2 $ 550.6 $ 560.6 Company-owned life insurance $ 18.5 $ 18.5 $ 17.9 $ 17.9 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 and June 30, 2019 : September 30, 2019 Interest Rate Swaps Foreign Currency Contracts Commodity Contracts Total Derivatives ($ in millions) Asset Derivatives: Derivatives designated as hedging instruments: Other current assets $ 0.1 $ 0.9 $ 20.2 $ 21.2 Other assets 1.9 0.5 16.2 18.6 Total asset derivatives $ 2.0 $ 1.4 $ 36.4 $ 39.8 Liability Derivatives: Derivatives designated as hedging instruments: Accrued liabilities $ — $ — $ 10.7 $ 10.7 Other liabilities — — 7.3 7.3 Total liability derivatives $ — $ — $ 18.0 $ 18.0 June 30, 2019 Interest Rate Swaps Foreign Currency Contracts Commodity Contracts Total Derivatives ($ in millions) Asset Derivatives: Derivatives designated as hedging instruments: Other current assets $ 0.3 $ 0.6 $ 3.8 $ 4.7 Other assets 1.6 0.2 6.0 7.8 Total asset derivatives $ 1.9 $ 0.8 $ 9.8 $ 12.5 Liability Derivatives: Derivatives designated as hedging instruments: Accrued liabilities $ — $ — $ 16.7 $ 16.7 Other liabilities — — 11.3 11.3 Total liability derivatives $ — $ — $ 28.0 $ 28.0 |
Summary of the gains (losses) related to cash flow hedges | The following is a summary of the (losses) gains related to cash flow hedges recognized during the three months ended September 30, 2019 and 2018 : Amount of (Loss) Gain Three Months Ended ($ in millions) 2019 2018 Derivatives in Cash Flow Hedging Relationship: Commodity contracts $ (39.8 ) $ (33.6 ) Foreign exchange contracts (0.7 ) 0.2 Total $ (40.5 ) $ (33.4 ) ($ in millions) Location of Gain (Loss) Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income Three Months Ended 2019 2018 Derivatives in Cash Flow Hedging Relationship: Commodity contracts Cost of sales $ 4.8 $ (2.0 ) Foreign exchange contracts Net sales 0.4 0.2 Forward interest rate swaps Interest expense 0.1 0.1 Total $ 5.3 $ (1.7 ) |
Summary of effect of derivative instruments on income | The following is a summary of total amounts presented in the consolidated statements of income in which the effects of cash flow and fair value hedges are recorded during the three months ended September 30, 2019 and 2018 : Three Months Ended September 30, 2019 Three Months Ended September 30, 2018 ($ in millions) Net Sales Cost of Sales Interest Expense Net Sales Cost of Sales Interest Expense Total amounts presented in the consolidated statements of income in which the effects of cash flow and fair value hedges are recorded $ 585.4 $ 472.8 $ 5.4 $ 572.4 $ 480.7 $ 6.3 Gain (loss) on Derivatives in Cash Flow Hedging Relationship: Commodity contracts Amount of gain (loss) reclassified from AOCI to income $ — $ 4.8 $ — $ — $ (2.0 ) $ — Foreign currency forward contracts Amount of gain reclassified from AOCI to income 0.4 — — 0.2 — — Interest rate swap agreements Amount of gain reclassified from AOCI to income — — 0.1 — — 0.1 Gain (loss) on Derivatives in Fair Value Hedging Relationship: Interest rate swap agreements Hedged Item — — — — — 0.3 Derivatives designated as hedging instruments — — — — — (0.3 ) Total gain (loss) $ 0.4 $ 4.8 $ 0.1 $ 0.2 $ (2.0 ) $ 0.1 |
Summary of amounts recorded in balance sheet related to cumulative basis adjustment for fair value interest rate risk hedges | As of September 30, 2019, and June 30, 2019 , the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges of interest rate risk: Carrying amount of the hedged liabilities Cumulative amount of fair value loss in the carrying amount of the hedged liabilities ($ in millions) September 30, 2019 June 30, 2019 September 30, 2019 June 30, 2019 Line item in the consolidated balance sheets in which the hedged item is included: Long-Term Debt $ 151.9 $ 151.6 $ 1.9 $ 1.6 |
Other (Expense) Income, Net (Ta
Other (Expense) Income, Net (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Other Income and Expenses [Abstract] | |
Schedule of other (expense) income, net | Other (expense) income, net consisted of the following: Three Months Ended ($ in millions) 2019 2018 Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts $ 0.1 $ 1.0 Foreign exchange gain 0.2 0.5 Interest income — 0.1 Pension earnings, interest and deferrals (0.7 ) — Other 0.1 — Total other (expense) income, net $ (0.3 ) $ 1.6 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of results of operation, depreciation and amortization, capital expenditures and total assets by reportable segments | Three Months Ended ($ in millions) 2019 2018 Net Sales: Specialty Alloys Operations $ 491.1 $ 475.5 Performance Engineered Products 109.4 111.7 Intersegment (15.1 ) (14.8 ) Consolidated net sales $ 585.4 $ 572.4 Three Months Ended ($ in millions) 2019 2018 Operating Income (Loss): Specialty Alloys Operations $ 81.0 $ 52.8 Performance Engineered Products (2.0 ) 7.3 Corporate (19.1 ) (15.8 ) Intersegment (0.1 ) 0.7 Consolidated operating income $ 59.8 $ 45.0 Three Months Ended ($ in millions) 2019 2018 Depreciation and Amortization: Specialty Alloys Operations $ 23.6 $ 23.7 Performance Engineered Products 5.9 5.0 Corporate 1.3 1.2 Intersegment (0.2 ) (0.2 ) Consolidated depreciation and amortization $ 30.6 $ 29.7 Three Months Ended ($ in millions) 2019 2018 Capital Expenditures: Specialty Alloys Operations $ 25.2 $ 20.6 Performance Engineered Products 6.2 13.6 Corporate 16.2 7.7 Intersegment (0.1 ) (0.3 ) Consolidated capital expenditures $ 47.5 $ 41.6 September 30, June 30, ($ in millions) Total Assets: Specialty Alloys Operations $ 2,442.1 $ 2,349.2 Performance Engineered Products 704.3 664.8 Corporate 216.6 192.5 Intersegment (21.5 ) (18.7 ) Consolidated total assets $ 3,341.5 $ 3,187.8 |
Reclassifications from Accumu_2
Reclassifications from Accumulated Other Comprehensive (Loss) Income (AOCI) (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
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, 2019 and 2018 were as follows: Cash flow hedging items Pension and other postretirement benefit plan items Unrealized gains (losses) on available-for-sale securities Foreign currency items Total Balances at June 30, 2019 $ (14.8 ) $ (293.3 ) $ — $ (43.7 ) $ (351.8 ) Other comprehensive income (loss) before reclassifications 30.7 — — (5.5 ) 25.2 Amounts reclassified from AOCI (b) (4.0 ) 3.0 — — (1.0 ) Net other comprehensive income (loss) 26.7 3.0 — (5.5 ) 24.2 Balances at September 30, 2019 $ 11.9 $ (290.3 ) $ — $ (49.2 ) $ (327.6 ) Cash flow hedging items Pension and other postretirement benefit plan items Unrealized gains (losses) on available-for-sale securities Foreign currency items Total Balances at June 30, 2018 $ 23.8 $ (220.4 ) $ (0.3 ) $ (42.9 ) $ (239.8 ) Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings (1.0 ) — — — (1.0 ) Other comprehensive (loss) income before reclassifications (24.3 ) — 0.3 0.7 (23.3 ) Amounts reclassified from AOCI (b) 1.3 1.7 — — 3.0 Net other comprehensive (loss) income (24.0 ) 1.7 0.3 0.7 (21.3 ) Balances at September 30, 2018 $ (0.2 ) $ (218.7 ) $ — $ (42.2 ) $ (261.1 ) (a) All amounts are net of tax. Amounts in parentheses indicate debits. (b) See separate table below for further details. |
Schedule of amounts reclassified from AOCI | The following is a summary of amounts reclassified from AOCI for the three months ended September 30, 2019 and 2018 : Details about AOCI Components Location of gain (loss) Amount Reclassified from AOCI ($ in millions) (a) 2019 2018 Cash flow hedging items: Commodity contracts Cost of sales $ 4.8 $ (2.0 ) Foreign exchange contracts Net sales 0.4 0.2 Forward interest rate swaps Interest expense 0.1 0.1 Total before tax 5.3 (1.7 ) Tax (expense) benefit (1.3 ) 0.4 Net of tax $ 4.0 $ (1.3 ) Details about AOCI Components Location of (loss) gain Amount Reclassified from AOCI ($ in millions) (a) 2019 2018 Amortization of pension and other postretirement benefit plan items: Net actuarial loss (b) $ (4.5 ) $ (3.0 ) Prior service benefit (b) 0.5 0.8 Total before tax (4.0 ) (2.2 ) Tax benefit 1.0 0.5 Net of tax $ (3.0 ) $ (1.7 ) (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 8. Pension and Other Postretirement Benefits for additional details). |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | 3 Months Ended | |
Sep. 30, 2019USD ($)segment | Jun. 30, 2019USD ($) | |
Revenue from Contract with Customer [Abstract] | ||
Payment terms | 30 days | |
Contract liabilities | $ | $ 11.7 | $ 10.5 |
Number of reportable segments | segment | 2 |
Revenue - Summary of Revenues b
Revenue - Summary of Revenues by End-use Markets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | $ 585.4 | $ 572.4 |
Aerospace and Defense | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 353.3 | 310.7 |
Medical | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 48.9 | 47 |
Transportation | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 40 | 40.3 |
Energy | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 39.3 | 44.3 |
Industrial and Consumer | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 73.3 | 96.1 |
Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | $ 30.6 | $ 34 |
Revenue - Summary of Revenue by
Revenue - Summary of Revenue by Geography (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | $ 585.4 | $ 572.4 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 384.9 | 384 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 101.5 | 90 |
Asia Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 53.4 | 48.6 |
Mexico | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 21.9 | 22.2 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | 13.4 | 17.7 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated net sales | $ 10.3 | $ 9.9 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Oct. 22, 2018 | Sep. 30, 2019 | Jun. 30, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 324.5 | $ 326.4 | |
LPW Technology Ltd | |||
Business Acquisition [Line Items] | |||
Asset purchase price, net of cash acquired | $ 79 | ||
Accounts receivable | 2.1 | ||
Inventory | 4.5 | ||
Other current assets | 0.5 | ||
Property and equipment | 11.9 | ||
Identifiable intangible assets | 11.4 | ||
Goodwill | 59 | ||
Accounts payable | 4.4 | ||
Current liabilities | 2.5 | ||
Other liabilities | $ 3.5 |
Earnings per Common Share - Sch
Earnings per Common Share - Schedule of calculations of basic and diluted earnings per common share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||
Net income | $ 41.2 | $ 31.5 |
Less: earnings and dividends allocated to participating securities | (0.4) | (0.3) |
Earnings available for common stockholders used in calculation of basic and diluted earnings per common share | $ 40.8 | $ 31.2 |
Weighted average number of common shares outstanding, basic (in shares) | 47.9 | 47.6 |
Basic earnings per common share (in dollars per share) | $ 0.85 | $ 0.66 |
Earnings available for common stockholders used in calculation of diluted earnings per common share | $ 40.8 | $ 31.2 |
Effect of shares issuable under share-based compensation plans (in shares) | 0.4 | 0.6 |
Weighted average number of common shares outstanding, diluted (in shares) | 48.3 | 48.2 |
Diluted earnings per common share (in dollars per share) | $ 0.85 | $ 0.65 |
Earnings per Common Share - S_2
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, 2019 | Sep. 30, 2018 | |
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 | ||
Stock options (in shares) | 0.8 | 0.1 |
Inventories - Schedule of inven
Inventories - Schedule of inventories (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Inventory, Net [Abstract] | ||
Raw materials and supplies | $ 194.3 | $ 169.8 |
Work in process | 459.2 | 425.7 |
Finished and purchased products | 184.1 | 192.2 |
Total inventory | $ 837.6 | $ 787.7 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Inventory, Net [Abstract] | ||
Inventory accounted for using a method other than LIFO | $ 179.6 | $ 172.3 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation and benefits | $ 42.1 | $ 71.2 |
Accrued postretirement benefits | 14.7 | 14.7 |
Deferred revenue | 11.7 | 10.5 |
Derivative financial instruments | 10.7 | 16.7 |
Current portion of lease liabilities | 10.2 | |
Accrued income taxes | 7 | 4.2 |
Accrued interest expense | 3.8 | 10.4 |
Accrued pension liabilities | 3.4 | 3.4 |
Other | 25.5 | 26.5 |
Total accrued liabilities | $ 129.1 | $ 157.6 |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits - Schedule of components of the net periodic benefit cost (Details) - Three Months Ended September 30, - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Pension and Other Postretirement Benefit Disclosures | ||
Service cost | $ 2.4 | $ 2.3 |
Interest cost | 11.7 | 13.2 |
Expected return on plan assets | (15.5) | (16.2) |
Amortization of net loss | 3.9 | 2.6 |
Amortization of prior service cost (benefit) | 0.5 | 0.5 |
Net periodic benefit costs | 3 | 2.4 |
Service cost | 0.7 | 0.6 |
Interest cost | 2.3 | 2.5 |
Expected return on plan assets | (1.8) | (1.7) |
Amortization of net loss | 0.6 | 0.4 |
Amortization of prior service cost (benefit) | (1) | (1.3) |
Net periodic benefit costs | $ 0.8 | $ 0.5 |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefits - Narrative (Details) - Three Months Ended September 30, - Qualified Plan - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Contributions | $ 2.4 | $ 2.3 | |
Forecast | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Contributions | $ 3.8 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 77,600,000 | $ 19,700,000 | |
Interest costs | 7,400,000 | $ 7,200,000 | |
Interest costs, capitalized | 2,000,000 | $ 900,000 | |
Credit Agreement | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 400,000,000 | ||
Letters of credit issued | 5,900,000 | ||
Short-term borrowings | 77,600,000 | ||
Credit Agreement available for future borrowings | $ 316,500,000 | ||
Credit Agreement | LIBOR | |||
Debt Instrument [Line Items] | |||
Interest rate margin | 1.25% | ||
Credit Agreement | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate margin | 1.00% | ||
Credit Agreement | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate margin | 1.75% | ||
Credit Agreement | Base Rate | |||
Debt Instrument [Line Items] | |||
Interest rate margin | 0.25% | ||
Credit Agreement | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate margin | 0.00% | ||
Credit Agreement | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate margin | 0.75% | ||
Letters of credit | |||
Debt Instrument [Line Items] | |||
Commitment fee rate | 0.20% | ||
Letter of credit fees | 1.25% | ||
Required interest coverage ratio | 3.50 | ||
Letters of credit | Minimum | |||
Debt Instrument [Line Items] | |||
Commitment fee rate | 0.125% | ||
Letter of credit fees | 1.00% | ||
Letters of credit | Maximum | |||
Debt Instrument [Line Items] | |||
Commitment fee rate | 0.40% | ||
Letter of credit fees | 1.75% | ||
Required debt to capital ratio (less than) | 0.55 | ||
Revolving Credit Facility | Unsecured Revolving Credit Facility, Credit Agreement | |||
Debt Instrument [Line Items] | |||
Borrowing rate | 3.30% |
Debt - Schedule of long-term de
Debt - Schedule of long-term debt outstanding (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Debt Instrument [Line Items] | ||
Total | $ 550,900,000 | $ 550,600,000 |
Less: amounts due within one year | 0 | 0 |
Long-term debt, net of current portion | $ 550,900,000 | $ 550,600,000 |
Senior unsecured notes, 5.20% due July 2021 | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.20% | 5.20% |
Face amount | $ 250,000,000 | $ 250,000,000 |
Total | $ 251,500,000 | $ 251,200,000 |
4.45% Senior Unsecured Notes due 2023 | ||
Debt Instrument [Line Items] | ||
Interest rate | 4.45% | 4.45% |
Face amount | $ 300,000,000 | $ 300,000,000 |
Total | $ 299,400,000 | $ 299,400,000 |
Contingencies and Commitments (
Contingencies and Commitments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Decrease of liabilities of environmental remediation costs of a company-owned former operating site | $ 0.2 | |
Environmental remediation liability | $ 15.9 | $ 16.1 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Jul. 01, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Right-of-use asset | $ 51.6 | |
Operating lease liabilities | $ 52.5 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Variable lease, remaining lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Variable lease, remaining lease term | 18 years | |
Accounting Standards Update 2016-02 | ||
Lessee, Lease, Description [Line Items] | ||
Right-of-use asset | $ 53.8 | |
Operating lease liabilities | $ 53.8 |
Leases - Lease cost (Details)
Leases - Lease cost (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 3.4 |
Short-term lease cost | 0.8 |
Variable lease cost | 0.1 |
Total lease cost | 4.3 |
Operating cash flow payments from operating leases | 3.3 |
Non-cash ROU assets obtained in exchange for lease obligations | $ 0.9 |
Weighted-average remaining lease term - operating leases | 8 years 6 months |
Weighted-average discount rate - operating leases | 3.80% |
Leases - Right-of-use assets an
Leases - Right-of-use assets and lease liabilities (Details) $ in Millions | Sep. 30, 2019USD ($) |
Operating lease assets: | |
Other assets | $ 51.6 |
Operating lease liabilities: | |
Other accrued liabilities | 10.2 |
Other liabilities | 42.3 |
Total operating lease liabilities | $ 52.5 |
Leases - Minimum lease payments
Leases - Minimum lease payments for operating leases expiring subsequent to September 30, 2019 (Details) $ in Millions | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2020 (remaining period of fiscal year) | $ 9.6 |
2021 | 10.5 |
2022 | 8.5 |
2023 | 6.8 |
2024 | 5.1 |
Thereafter | 24.7 |
Total future minimum lease payments | 65.2 |
Less imputed interest | (12.7) |
Total | $ 52.5 |
Leases - Minimum lease paymen_2
Leases - Minimum lease payments for operating leases under ASC 840 expiring subsequent to June 30, 2019 (Details) $ in Millions | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 12.7 |
2021 | 10.4 |
2022 | 8.3 |
2023 | 6.6 |
2024 | 5 |
Thereafter | 23.5 |
Total future minimum lease payments | $ 66.5 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of fair value of assets and liabilities measured on a recurring basis (Details) - Level 2 - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Assets: | ||
Derivative financial instruments | $ 39.8 | $ 12.5 |
Liabilities: | ||
Derivative financial instruments | $ 18 | $ 28 |
Fair Value Measurements - Sch_2
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, 2019 | Jun. 30, 2019 |
Carrying Value | ||
Carrying amounts and estimated fair values of financial instruments not recorded at fair value | ||
Long-term debt | $ 550.9 | $ 550.6 |
Company-owned life insurance | 18.5 | 17.9 |
Fair Value | ||
Carrying amounts and estimated fair values of financial instruments not recorded at fair value | ||
Long-term debt | 566.2 | 560.6 |
Company-owned life insurance | $ 18.5 | $ 17.9 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities - Narrative (Details) lb in Millions | 3 Months Ended | ||
Sep. 30, 2019USD ($)lb | Sep. 30, 2018USD ($) | Jun. 30, 2019USD ($) | |
Fair value of derivatives | |||
Total asset derivatives on a gross basis | $ 39,200,000 | ||
Total liability derivatives on a gross basis | 17,400,000 | ||
Cash collateral held by counterparties | 0 | $ 0 | |
Net derivative losses included in AOCI expected to be reclassified into earnings | $ 10,100,000 | ||
Cash flow hedges | Commodity contracts | |||
Fair value of derivatives | |||
Amounts of raw materials to be purchased from forward contracts (in pounds) | lb | 17.3 | ||
Fair value hedging | Interest Rate Swaps | |||
Fair value of derivatives | |||
Total notional amounts of interest rate contracts | $ 150,000,000 | $ 150,000,000 | |
Interest expense | Cash flow hedges | Interest Rate Swaps | |||
Fair value of derivatives | |||
Net gains (losses) recorded as a reduction to interest expense | 100,000 | $ 100,000 | |
Interest expense | Fair value hedging | Interest Rate Swaps | |||
Fair value of derivatives | |||
Net gains (losses) recorded as a reduction to interest expense | $ 0 | $ (300,000) |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities - Schedule of fair value and location of outstanding derivative contracts recorded in consolidated balance sheets (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Asset Derivatives: | ||
Total asset derivatives | $ 39.8 | $ 12.5 |
Liability Derivatives: | ||
Total liability derivatives | 18 | 28 |
Other current assets | ||
Asset Derivatives: | ||
Total asset derivatives | 21.2 | 4.7 |
Other assets | ||
Asset Derivatives: | ||
Total asset derivatives | 18.6 | 7.8 |
Accrued liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 10.7 | 16.7 |
Other liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 7.3 | 11.3 |
Interest Rate Swaps | ||
Asset Derivatives: | ||
Total asset derivatives | 2 | 1.9 |
Liability Derivatives: | ||
Total liability derivatives | 0 | 0 |
Interest Rate Swaps | Other current assets | ||
Asset Derivatives: | ||
Total asset derivatives | 0.1 | 0.3 |
Interest Rate Swaps | Other assets | ||
Asset Derivatives: | ||
Total asset derivatives | 1.9 | 1.6 |
Interest Rate Swaps | Accrued liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 0 | 0 |
Interest Rate Swaps | Other liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 0 | 0 |
Foreign currency forward contracts | ||
Asset Derivatives: | ||
Total asset derivatives | 1.4 | 0.8 |
Liability Derivatives: | ||
Total liability derivatives | 0 | 0 |
Foreign currency forward contracts | Other current assets | ||
Asset Derivatives: | ||
Total asset derivatives | 0.9 | 0.6 |
Foreign currency forward contracts | Other assets | ||
Asset Derivatives: | ||
Total asset derivatives | 0.5 | 0.2 |
Foreign currency forward contracts | Accrued liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 0 | 0 |
Foreign currency forward contracts | Other liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 0 | 0 |
Commodity contracts | ||
Asset Derivatives: | ||
Total asset derivatives | 36.4 | 9.8 |
Liability Derivatives: | ||
Total liability derivatives | 18 | 28 |
Commodity contracts | Other current assets | ||
Asset Derivatives: | ||
Total asset derivatives | 20.2 | 3.8 |
Commodity contracts | Other assets | ||
Asset Derivatives: | ||
Total asset derivatives | 16.2 | 6 |
Commodity contracts | Accrued liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | 10.7 | 16.7 |
Commodity contracts | Other liabilities | ||
Liability Derivatives: | ||
Total liability derivatives | $ 7.3 | $ 11.3 |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities - Summary of the gains (losses) related to cash flow hedges (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of (Loss) Gain Recognized in AOCI on Derivatives | $ (40.5) | $ (33.4) |
Amount of Gain (Loss) Reclassified from AOCI into Income | 5.3 | (1.7) |
Commodity contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of (Loss) Gain Recognized in AOCI on Derivatives | (39.8) | (33.6) |
Commodity contracts | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 4.8 | (2) |
Commodity contracts | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0 | 0 |
Commodity contracts | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0 | 0 |
Foreign exchange contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of (Loss) Gain Recognized in AOCI on Derivatives | (0.7) | 0.2 |
Foreign exchange contracts | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0 | 0 |
Foreign exchange contracts | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0.4 | 0.2 |
Foreign exchange contracts | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0 | 0 |
Forward interest rate swaps | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0 | 0 |
Forward interest rate swaps | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | 0 | 0 |
Forward interest rate swaps | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) Reclassified from AOCI into Income | $ 0.1 | $ 0.1 |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities - Summary of effect of derivative instruments on income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net sales | $ 585.4 | $ 572.4 |
Cost of sales | 472.8 | 480.7 |
Interest expense | 5.4 | 6.3 |
Amount of gain reclassified from AOCI to income | 5.3 | (1.7) |
Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total gain (loss) | 0.4 | 0.2 |
Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total gain (loss) | 4.8 | (2) |
Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Total gain (loss) | 0.1 | 0.1 |
Commodity contracts | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0 | 0 |
Commodity contracts | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 4.8 | (2) |
Commodity contracts | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0 | 0 |
Foreign currency forward contracts | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0.4 | 0.2 |
Foreign currency forward contracts | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0 | 0 |
Foreign currency forward contracts | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0 | 0 |
Interest Rate Swaps | Net sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0 | 0 |
Hedged Item | 0 | 0 |
Derivatives designated as hedging instruments | 0 | 0 |
Interest Rate Swaps | Cost of sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0 | 0 |
Hedged Item | 0 | 0 |
Derivatives designated as hedging instruments | 0 | 0 |
Interest Rate Swaps | Interest expense | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain reclassified from AOCI to income | 0.1 | 0.1 |
Hedged Item | 0 | 0.3 |
Derivatives designated as hedging instruments | $ 0 | $ (0.3) |
Derivatives and Hedging Activ_7
Derivatives and Hedging Activities - Summary of amounts recorded in balance sheet related to cumulative basis adjustment for fair value interest rate risk hedges (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Carrying amount of the hedged liabilities | $ 151.9 | $ 151.6 |
Cumulative amount of fair value loss in the carrying amount of the hedged liabilities | $ 1.9 | $ 1.6 |
Other (Expense) Income, Net (De
Other (Expense) Income, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Other Income and Expenses [Abstract] | ||
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts | $ 0.1 | $ 1 |
Foreign exchange gain | 0.2 | 0.5 |
Interest income | 0 | 0.1 |
Pension earnings, interest and deferrals | (0.7) | 0 |
Other | 0.1 | 0 |
Total other (expense) income, net | $ (0.3) | $ 1.6 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 12.9 | $ 8.8 |
Income tax expense as a percent of pre-tax income (loss) | 23.80% | 21.80% |
Business Segments - Narrative (
Business Segments - Narrative (Details) - segment | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Concentration Risk [Line Items] | |||
Number of reportable segments | 2 | ||
Customer Concentration Risk | Revenue | Arconic | |||
Concentration Risk [Line Items] | |||
Concentration risk | 10.00% | 10.00% | |
Customer Concentration Risk | Accounts Receivable | Arconic | |||
Concentration Risk [Line Items] | |||
Concentration risk | 11.00% | 12.00% |
Business Segments - Schedule of
Business Segments - Schedule of results of operation, depreciation and amortization, capital expenditures and total assets by reportable segments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
Net Sales: | |||
Consolidated net sales | $ 585.4 | $ 572.4 | |
Operating Income (Loss): | |||
Consolidated operating income | 59.8 | 45 | |
Depreciation and Amortization: | |||
Consolidated depreciation and amortization | 30.6 | 29.7 | |
Capital Expenditures: | |||
Consolidated capital expenditures | 47.5 | 41.6 | |
Total Assets: | |||
Consolidated total assets | 3,341.5 | $ 3,187.8 | |
Corporate | |||
Operating Income (Loss): | |||
Consolidated operating income | (19.1) | (15.8) | |
Depreciation and Amortization: | |||
Consolidated depreciation and amortization | 1.3 | 1.2 | |
Capital Expenditures: | |||
Consolidated capital expenditures | 16.2 | 7.7 | |
Total Assets: | |||
Consolidated total assets | 216.6 | 192.5 | |
Intersegment | |||
Net Sales: | |||
Consolidated net sales | (15.1) | (14.8) | |
Operating Income (Loss): | |||
Consolidated operating income | (0.1) | 0.7 | |
Depreciation and Amortization: | |||
Consolidated depreciation and amortization | (0.2) | (0.2) | |
Capital Expenditures: | |||
Consolidated capital expenditures | (0.1) | (0.3) | |
Total Assets: | |||
Consolidated total assets | (21.5) | (18.7) | |
Specialty Alloys Operations | Operating | |||
Net Sales: | |||
Consolidated net sales | 491.1 | 475.5 | |
Operating Income (Loss): | |||
Consolidated operating income | 81 | 52.8 | |
Depreciation and Amortization: | |||
Consolidated depreciation and amortization | 23.6 | 23.7 | |
Capital Expenditures: | |||
Consolidated capital expenditures | 25.2 | 20.6 | |
Total Assets: | |||
Consolidated total assets | 2,442.1 | 2,349.2 | |
Performance Engineered Products | Operating | |||
Net Sales: | |||
Consolidated net sales | 109.4 | 111.7 | |
Operating Income (Loss): | |||
Consolidated operating income | (2) | 7.3 | |
Depreciation and Amortization: | |||
Consolidated depreciation and amortization | 5.9 | 5 | |
Capital Expenditures: | |||
Consolidated capital expenditures | 6.2 | $ 13.6 | |
Total Assets: | |||
Consolidated total assets | $ 704.3 | $ 664.8 |
Reclassifications from Accumu_3
Reclassifications from Accumulated Other Comprehensive (Loss) Income (AOCI) - Schedule of changes in AOCI by component, net of tax (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Changes in the balance of Accumulated Other Comprehensive Income | ||
Balances, period start | $ 1,520.1 | $ 1,485.9 |
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | 0 | (1) |
Balances, period end | 1,577 | 1,490.7 |
Cash flow hedging items | ||
Changes in the balance of Accumulated Other Comprehensive Income | ||
Balances, period start | (14.8) | 23.8 |
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | (1) | |
Other comprehensive (loss) income before reclassifications | 30.7 | (24.3) |
Amounts reclassified from AOCI | (4) | 1.3 |
Net other comprehensive (loss) income | 26.7 | (24) |
Balances, period end | 11.9 | (0.2) |
Pension and other postretirement benefit plan items | ||
Changes in the balance of Accumulated Other Comprehensive Income | ||
Balances, period start | (293.3) | (220.4) |
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | 0 | |
Other comprehensive (loss) income before reclassifications | 0 | 0 |
Amounts reclassified from AOCI | 3 | 1.7 |
Net other comprehensive (loss) income | 3 | 1.7 |
Balances, period end | (290.3) | (218.7) |
Unrealized gains (losses) on available-for-sale securities | ||
Changes in the balance of Accumulated Other Comprehensive Income | ||
Balances, period start | 0 | (0.3) |
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | 0 | |
Other comprehensive (loss) income before reclassifications | 0 | 0.3 |
Amounts reclassified from AOCI | 0 | 0 |
Net other comprehensive (loss) income | 0 | 0.3 |
Balances, period end | 0 | 0 |
Foreign currency items | ||
Changes in the balance of Accumulated Other Comprehensive Income | ||
Balances, period start | (43.7) | (42.9) |
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | 0 | |
Other comprehensive (loss) income before reclassifications | (5.5) | 0.7 |
Amounts reclassified from AOCI | 0 | 0 |
Net other comprehensive (loss) income | (5.5) | 0.7 |
Balances, period end | (49.2) | (42.2) |
Accumulated Other Comprehensive (Loss) Income | ||
Changes in the balance of Accumulated Other Comprehensive Income | ||
Balances, period start | (351.8) | (239.8) |
Cumulative adjustment upon adoption of ASU 2017-12 reclassified to reinvested earnings | (1) | |
Other comprehensive (loss) income before reclassifications | 25.2 | (23.3) |
Amounts reclassified from AOCI | (1) | 3 |
Net other comprehensive (loss) income | 24.2 | (21.3) |
Balances, period end | $ (327.6) | $ (261.1) |
Reclassifications from Accumu_4
Reclassifications from Accumulated Other Comprehensive (Loss) Income (AOCI) - Schedule of amounts reclassified from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Amount reclassified from AOCI | ||
Cost of sales | $ 472.8 | $ 480.7 |
Net sales | 585.4 | 572.4 |
Interest expense | 5.4 | 6.3 |
Income before income taxes | 54.1 | 40.3 |
Tax (expense) benefit | (12.9) | (8.8) |
Net income | 41.2 | 31.5 |
Cash flow hedging items | ||
Amount reclassified from AOCI | ||
Net of tax | 4 | (1.3) |
Net actuarial loss | ||
Amount reclassified from AOCI | ||
Total before tax | (4.5) | (3) |
Prior service benefit | ||
Amount reclassified from AOCI | ||
Total before tax | 0.5 | 0.8 |
Pension and other postretirement benefit plan items | ||
Amount reclassified from AOCI | ||
Total before tax | (4) | (2.2) |
Tax benefit | 1 | 0.5 |
Net of tax | (3) | (1.7) |
Amount Reclassified from AOCI | Cash flow hedging items | ||
Amount reclassified from AOCI | ||
Income before income taxes | 5.3 | (1.7) |
Tax (expense) benefit | (1.3) | 0.4 |
Net income | 4 | (1.3) |
Amount Reclassified from AOCI | Commodity contracts | Cash flow hedging items | ||
Amount reclassified from AOCI | ||
Cost of sales | 4.8 | (2) |
Amount Reclassified from AOCI | Foreign exchange contracts | Cash flow hedging items | ||
Amount reclassified from AOCI | ||
Net sales | 0.4 | 0.2 |
Amount Reclassified from AOCI | Forward interest rate swaps | Cash flow hedging items | ||
Amount reclassified from AOCI | ||
Interest expense | $ 0.1 | $ 0.1 |
Uncategorized Items - crs-20199
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |
AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (1,000,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,000,000 |