Business Segments

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company operates in two business segments: High Performance Materials & Components (HPMC) and Flat Rolled Products (FRP). The measure of segment operating profit, which is used to analyze the performance and results of the business segments, excludes all effects of LIFO inventory accounting and any related changes in net realizable value inventory reserves which offset the Company’s aggregate net debit LIFO valuation balance, income taxes, corporate expenses, net interest expense, closed operations and other expenses, restructuring and asset impairment charges, and non-operating gains and losses. Management believes segment operating profit, as defined, provides an appropriate measure of controllable operating results at the business segment level. Following is certain financial information with respect to the Company’s business segments for the periods indicated (in millions):

	Three months ended March 31,
	2018		2017
Total sales:
High Performance Materials & Components	$	579.4	$	523.7
Flat Rolled Products	439.1		373.0
	1,018.5		896.7
Intersegment sales:
High Performance Materials & Components	18.7		13.3
Flat Rolled Products	20.8		17.5
	39.5		30.8
Sales to external customers:
High Performance Materials & Components	560.7		510.4
Flat Rolled Products	418.3		355.5
	$	979.0	$	865.9

	Three months ended March 31,
	2018			2017
Operating profit:
High Performance Materials & Components	$	85.5		$	50.9
Flat Rolled Products	10.9			19.0
Total operating profit	96.4			69.9
LIFO and net realizable value reserves	—			—
Corporate expenses	(13.2		)	(10.3		)
Closed operations and other expenses	(8.1		)	(3.0		)
Gain on joint venture deconsolidation (See Note 5)	15.9			—
Interest expense, net	(25.5		)	(33.5		)
Income before income taxes	$	65.5		$	23.1

Closed operations and other expenses were higher in the first quarter 2018, compared to the prior year period, primarily due to higher environmental costs, higher real estate costs at closed operations, primarily for the idled Rowley, UT titanium sponge operations, and negative foreign currency remeasurement impacts primarily related to our European Treasury Center. In addition, the first quarter 2017 benefited from certain non-routine items involving property tax adjustments, changes to facility closure reserves, and non-operating royalty income.

The reduction in interest expense compared to the prior year period is due to the redemption of the 2019 Senior Notes in the fourth quarter of 2017.