Business Segments

9 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company has two reportable segments, Specialty Alloys Operations (“SAO”) and Performance Engineered Products (“PEP”).

The SAO segment is comprised of the Company’s major premium alloy and stainless steel manufacturing operations. This includes operations performed at mills primarily in Reading and Latrobe, Pennsylvania and surrounding areas as well as South Carolina and Alabama. The combined assets of the SAO operations are being managed in an integrated manner to optimize efficiency and profitability across the total system.

The PEP segment is comprised of the Company’s differentiated operations. This segment includes the Dynamet titanium business, the Carpenter Powder Products business, the Amega West business, the Specialty Steel Supply business, and the Latrobe and Mexico distribution businesses. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. 

The Company’s executive management evaluates the performance of these operating segments based on sales, operating income and cash flow generation. Segment operating profit excludes general corporate costs, which include executive and director compensation, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that management considers not representative of ongoing operations, such as excess inventory write-downs, restructuring and asset impairment charges, goodwill impairment and other specifically-identified income or expense items.

The service cost component of the Company’s net pension expense, which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income of the business segments. The residual net pension expense, which is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans and amortization of actuarial gains and losses and prior service costs, is included under the heading “Pension earnings, interest and deferrals”.

On a consolidated basis, one customer, Precision Castparts Corporation, accounted for approximately 10 percent of the net sales for the three months ended March 31, 2017. On a consolidated basis, one customer, Arconic, Inc., accounted for approximately 12 percent of the net sales for nine months ended March 31, 2017. On a consolidated basis, one customer, Alcoa Inc., accounted for approximately 11 percent and 13 percent of the net sales for the three and nine months ended March 31, 2016, respectively. Approximately 10 percent of the accounts receivable outstanding at March 31, 2017 is due from one customer, Precision Castparts Corporation. Approximately 22 percent of the accounts receivable outstanding at June 30, 2016, respectively, was due from two customers, Alcoa Inc. and Precision Castparts Corporation.

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2017			2016			2017			2016
Net Sales:
Specialty Alloys Operations	$	383.3		$	370.5		$	1,047.0		$	1,106.7
Performance Engineered Products	98.7			91.4			260.4			268.3
Intersegment	(8.4		)	(5.6		)	(17.5		)	(19.3		)
Consolidated net sales	$	473.6		$	456.3		$	1,289.9		$	1,355.7

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2017			2016			2017			2016
Operating Income (Loss):
Specialty Alloys Operations	$	51.9		$	45.6		$	112.6		$	128.3
Performance Engineered Products	4.7			(0.9		)	2.7			(4.2		)
Corporate costs (including restructuring and impairment charges)	(15.8		)	(64.5		)	(45.6		)	(89.3		)
Pension earnings, interest and deferrals	(5.6		)	(4.8		)	(18.2		)	(14.4		)
Intersegment	0.6			0.3			1.1			2.0
Consolidated operating income (loss)	$	35.8		$	(24.3	)	$	52.6		$	22.4

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2017			2016			2017			2016
Depreciation and Amortization:
Specialty Alloys Operations	$	23.7		$	23.4		$	70.8		$	70.9
Performance Engineered Products	5.2			5.5			15.5			17.0
Corporate	1.3			0.9			3.0			2.8
Intersegment	(0.2		)	(0.2		)	(0.5		)	(0.7		)
Consolidated depreciation and amortization	$	30.0		$	29.6		$	88.8		$	90.0

Segment Data	Three Months Ended March 31,						Nine Months Ended March 31,
($ in millions)	2017			2016			2017			2016
Capital Expenditures:
Specialty Alloys Operations	$	8.6		$	11.2		$	31.6		$	47.9
Performance Engineered Products	2.9			3.6			9.9			14.9
Corporate	6.6			1.9			21.8			3.5
Intersegment	(0.1		)	(0.1		)	(0.2		)	(0.2		)
Consolidated capital expenditures	$	18.0		$	16.6		$	63.1		$	66.1

Segment Data	March 31, 2017			June 30, 2016
($ in millions)
Total Assets:
Specialty Alloys Operations	$	2,261.1		$	2,256.5
Performance Engineered Products	453.0			415.8
Corporate	123.2			151.3
Intersegment	(14.9		)	(29.3		)
Consolidated total assets	$	2,822.4		$	2,794.3