(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | |||||||||||
Emerging growth company |
Page | |||||||||||
($ in millions, except share data) | December 31, 2021 | June 30, 2021 | ||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net | ||||||||||||||
Inventories | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant and equipment, net | ||||||||||||||
Goodwill | ||||||||||||||
Other intangibles, net | ||||||||||||||
Deferred income taxes | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Accrued pension liabilities | ||||||||||||||
Accrued postretirement benefits | ||||||||||||||
Deferred income taxes | ||||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Contingencies and commitments (see Note 11) | ||||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||
Common stock — authorized | ||||||||||||||
Capital in excess of par value | ||||||||||||||
Reinvested earnings | ||||||||||||||
Common stock in treasury ( | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Total stockholders' equity | ||||||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Restructuring and asset impairment charges | ||||||||||||||||||||||||||
Goodwill impairment | ||||||||||||||||||||||||||
Operating loss | ( | ( | ( | ( | ||||||||||||||||||||||
Interest expense, net | ||||||||||||||||||||||||||
Debt extinguishment losses, net | ||||||||||||||||||||||||||
Other (income) expense, net | ( | ( | ( | |||||||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | ||||||||||||||||||||||
Income tax benefit | ( | ( | ( | ( | ||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
LOSS PER COMMON SHARE: | ||||||||||||||||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||||
Pension and postretirement benefits, net of tax of $( | ||||||||||||||||||||||||||
Net gain on derivative instruments, net of tax of $( | ||||||||||||||||||||||||||
Foreign currency translation | ( | ( | ||||||||||||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Six Months Ended December 31, | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
OPERATING ACTIVITIES | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Adjustments to reconcile net loss to net cash (used for) provided from operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Goodwill impairment charge | ||||||||||||||
Non-cash restructuring and asset impairment charges | ||||||||||||||
Debt extinguishment losses, net | ||||||||||||||
Deferred income taxes | ( | ( | ||||||||||||
Net pension (income) expense | ( | |||||||||||||
Share-based compensation expense | ||||||||||||||
Net loss on disposals of property, plant and equipment | ||||||||||||||
Changes in working capital and other: | ||||||||||||||
Accounts receivable | ||||||||||||||
Inventories | ( | |||||||||||||
Other current assets | ( | ( | ||||||||||||
Accounts payable | ( | |||||||||||||
Accrued liabilities | ( | ( | ||||||||||||
Pension plan contributions | ( | ( | ||||||||||||
Other postretirement plan contributions | ( | ( | ||||||||||||
Other, net | ( | ( | ||||||||||||
Net cash (used for) provided from operating activities | ( | |||||||||||||
INVESTING ACTIVITIES | ||||||||||||||
Purchases of property, plant, equipment and software | ( | ( | ||||||||||||
Proceeds from disposals of property, plant and equipment and assets held for sale | ||||||||||||||
Proceeds from divestiture of business | ||||||||||||||
Net cash used for investing activities | ( | ( | ||||||||||||
FINANCING ACTIVITIES | ||||||||||||||
Net change in short-term credit agreement borrowings | ( | |||||||||||||
Proceeds from issuance of long-term debt, net of offering costs | ||||||||||||||
Payments on long-term debt | ( | |||||||||||||
Payments for debt extinguishment costs, net | ( | |||||||||||||
Payments for debt issue costs | ( | |||||||||||||
Dividends paid | ( | ( | ||||||||||||
Withholding tax payments on share-based compensation awards | ( | ( | ||||||||||||
Net cash used for financing activities | ( | ( | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ||||||||||||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | ( | |||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||
Non-cash investing activities: Purchase of property, plant, equipment and software | $ | $ |
Common Stock | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income | Total Equity | ||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | Par Value of $ | Capital in Excess of Par Value | ||||||||||||||||||||||||||||||||||||
Balances at September 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Net loss | ( | ( | ||||||||||||||||||||||||||||||||||||
Pension and postretirement benefits gain, net of tax | ||||||||||||||||||||||||||||||||||||||
Net gain on derivative instruments, net of tax | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation | ( | ( | ||||||||||||||||||||||||||||||||||||
Cash Dividends: | ||||||||||||||||||||||||||||||||||||||
Common @ $ | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation plans | ( | |||||||||||||||||||||||||||||||||||||
Balances at December 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ |
Common Stock | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income | Total Equity | ||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | Par Value of $ | Capital in Excess of Par Value | ||||||||||||||||||||||||||||||||||||
Balances at September 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Net loss | ( | ( | ||||||||||||||||||||||||||||||||||||
Pension and postretirement benefits gain, net of tax | ||||||||||||||||||||||||||||||||||||||
Net gain on derivative instruments, net of tax | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation | ||||||||||||||||||||||||||||||||||||||
Cash Dividends: | ||||||||||||||||||||||||||||||||||||||
Common @ $ | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation plans | ||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 | $ | $ | $ | $ | ( | $ | ( | $ |
Common Stock | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income | Total Equity | ||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | Par Value of $ | Capital in Excess of Par Value | ||||||||||||||||||||||||||||||||||||
Balances at June 30, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Net loss | ( | ( | ||||||||||||||||||||||||||||||||||||
Pension and postretirement benefits gain, net of tax | ||||||||||||||||||||||||||||||||||||||
Net gain on derivative instruments, net of tax | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation | ( | ( | ||||||||||||||||||||||||||||||||||||
Cash Dividends: | ||||||||||||||||||||||||||||||||||||||
Common @ $ | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation plans | ( | |||||||||||||||||||||||||||||||||||||
Balances at December 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ |
Common Stock | Reinvested Earnings | Common Stock in Treasury | Accumulated Other Comprehensive (Loss) Income | Total Equity | ||||||||||||||||||||||||||||||||||
($ in millions, except per share data) | Par Value of $ | Capital in Excess of Par Value | ||||||||||||||||||||||||||||||||||||
Balances at June 30, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
Net loss | ( | ( | ||||||||||||||||||||||||||||||||||||
Pension and postretirement benefits gain, net of tax | ||||||||||||||||||||||||||||||||||||||
Net gain on derivative instruments, net of tax | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation | ||||||||||||||||||||||||||||||||||||||
Cash Dividends: | ||||||||||||||||||||||||||||||||||||||
Common @ $ | ( | ( | ||||||||||||||||||||||||||||||||||||
Share-based compensation plans | ( | |||||||||||||||||||||||||||||||||||||
Balances at December 31, 2020 | $ | $ | $ | $ | ( | $ | ( | $ |
($ in millions) | December 31, 2021 | June 30, 2021 | ||||||||||||
Reserve balance at beginning of fiscal year | $ | $ | ||||||||||||
Restructuring charges excluding non-cash impairments | ||||||||||||||
Cash payments | ( | ( | ||||||||||||
Reserve balance at end of period | $ | $ |
End-Use Market Data | Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Aerospace and Defense | $ | $ | $ | $ | ||||||||||||||||||||||
Medical | ||||||||||||||||||||||||||
Transportation | ||||||||||||||||||||||||||
Energy | ||||||||||||||||||||||||||
Industrial and Consumer | ||||||||||||||||||||||||||
Distribution | ||||||||||||||||||||||||||
Consolidated net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Geographic Data | Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
United States | $ | $ | $ | $ | ||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||
Europe | ||||||||||||||||||||||||||
Mexico | ||||||||||||||||||||||||||
Canada | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Consolidated net sales | $ | $ | $ | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Dividends allocated to participating securities | ( | ( | ( | |||||||||||||||||||||||
Loss available for common stockholders used in calculation of basic loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average number of common shares outstanding, basic | ||||||||||||||||||||||||||
Basic loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Dividends allocated to participating securities | ( | ( | ( | |||||||||||||||||||||||
Loss available for common stockholders used in calculation of diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average number of common shares outstanding, basic | ||||||||||||||||||||||||||
Effect of shares issuable under share-based compensation plans | ||||||||||||||||||||||||||
Weighted average number of common shares outstanding, diluted | ||||||||||||||||||||||||||
Diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Stock options | ||||||||||||||||||||||||||
($ in millions) | December 31, 2021 | June 30, 2021 | ||||||||||||
Raw materials and supplies | $ | $ | ||||||||||||
Work in process | ||||||||||||||
Finished and purchased products | ||||||||||||||
Total inventories | $ | $ |
($ in millions) | December 31, 2021 | June 30, 2021 | ||||||||||||
Accrued compensation and benefits | $ | $ | ||||||||||||
Accrued interest expense | ||||||||||||||
Accrued postretirement benefits | ||||||||||||||
Contract liabilities | ||||||||||||||
Current portion of lease liabilities | ||||||||||||||
Accrued pension liabilities | ||||||||||||||
Accrued income taxes | ||||||||||||||
Derivative financial instruments | ||||||||||||||
Other | ||||||||||||||
Total accrued liabilities | $ | $ |
Three months ended December 31, | Pension Plans | Other Postretirement Plans | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
Amortization of net loss (gain) | ( | |||||||||||||||||||||||||
Amortization of prior service cost (credits) | ( | ( | ||||||||||||||||||||||||
Net pension (income) expense | $ | ( | $ | $ | ( | $ |
Six months ended December 31, | Pension Plans | Other Postretirement Plans | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
Amortization of net loss (gain) | ( | |||||||||||||||||||||||||
Amortization of prior service cost (credits) | ( | ( | ||||||||||||||||||||||||
Net pension (income) expense | $ | ( | $ | $ | ( | $ |
($ in millions) | December 31, 2021 | June 30, 2021 | ||||||||||||
Senior unsecured notes, | $ | $ | ||||||||||||
Senior unsecured notes, | ||||||||||||||
Total | ||||||||||||||
Less: amounts due within one year | ||||||||||||||
Long-term debt, net of current portion | $ | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Operating lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
Short-term lease cost | ||||||||||||||||||||||||||
Variable lease cost | ||||||||||||||||||||||||||
Sublease income | ( | ( | ( | ( | ||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
Operating cash flow payments from operating leases | $ | $ | $ | $ | ||||||||||||||||||||||
Non-cash ROU assets obtained in exchange for lease obligations | $ | $ | $ | $ |
December 31, 2021 | June 30, 2021 | |||||||||||||
Weighted-average remaining lease term - operating leases | ||||||||||||||
Weighted-average discount rate - operating leases | % | % |
($ in millions) | December 31, 2021 | June 30, 2021 | ||||||||||||
Operating lease assets: | ||||||||||||||
Other assets | $ | $ | ||||||||||||
Operating lease liabilities: | ||||||||||||||
Accrued liabilities | $ | $ | ||||||||||||
Other liabilities | ||||||||||||||
Total operating lease liabilities | $ | $ |
($ in millions) | December 31, 2021 | |||||||
2022 (remaining period of fiscal year) | $ | |||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
Thereafter | ||||||||
Total future minimum lease payments | ||||||||
Less imputed interest | ( | |||||||
Total | $ |
December 31, 2021 | Fair Value Measurements Using Input Type | |||||||
($ in millions) | Level 2 | |||||||
Assets: | ||||||||
Derivative financial instruments | $ | |||||||
Liabilities: | ||||||||
Derivative financial instruments | $ |
June 30, 2021 | Fair Value Measurements Using Input Type | |||||||
($ in millions) | Level 2 | |||||||
Assets: | ||||||||
Derivative financial instruments | $ | |||||||
Liabilities: | ||||||||
Derivative financial instruments | $ |
December 31, 2021 | June 30, 2021 | |||||||||||||||||||||||||
($ in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||
Long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
Company-owned life insurance | $ | $ | $ | $ |
December 31, 2021 | Interest Rate Swaps | Foreign Currency Contracts | Commodity Contracts | Total Derivatives | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Asset Derivatives: | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
Other current assets | $ | $ | $ | $ | ||||||||||||||||||||||
Other assets | ||||||||||||||||||||||||||
Total asset derivatives | $ | $ | $ | $ | ||||||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
Accrued liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||
Total liability derivatives | $ | $ | $ | $ |
June 30, 2021 | Interest Rate Swaps | Foreign Currency Contracts | Commodity Contracts | Total Derivatives | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||
Asset Derivatives: | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
Other current assets | $ | $ | $ | $ | ||||||||||||||||||||||
Other assets | ||||||||||||||||||||||||||
Total asset derivatives | $ | $ | $ | $ | ||||||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
Accrued liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||
Total liability derivatives | $ | $ | $ | $ |
Amount of Gain (Loss) Recognized in AOCI on Derivatives | ||||||||||||||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationship: | ||||||||||||||||||||||||||
Commodity contracts | $ | $ | $ | $ | ||||||||||||||||||||||
Foreign exchange contracts | ( | ( | ||||||||||||||||||||||||
Total | $ | $ | $ | $ |
($ in millions) | Location of (Loss) Gain Reclassified from AOCI into Income | Amount of (Loss) Gain Reclassified from AOCI into Income | ||||||||||||||||||
Three Months Ended December 31, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Derivatives in Cash Flow Hedging Relationship: | ||||||||||||||||||||
Commodity contracts | Cost of sales | $ | ( | $ | ||||||||||||||||
Foreign exchange contracts | Net sales | |||||||||||||||||||
Forward interest rate swaps | Interest expense, net | |||||||||||||||||||
Total | $ | ( | $ |
($ in millions) | Location of (Loss) Gain Reclassified from AOCI into Income | Amount of (Loss) Gain Reclassified from AOCI into Income | ||||||||||||||||||
Six Months Ended December 31, | ||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Derivatives in Cash Flow Hedging Relationship: | ||||||||||||||||||||
Commodity contracts | Cost of sales | $ | ( | $ | ||||||||||||||||
Foreign exchange contracts | Net sales | |||||||||||||||||||
Forward interest rate swaps | Interest expense, net | |||||||||||||||||||
Total | $ | ( | $ |
Three Months Ended December 31, 2021 | Three Months Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net Sales | Cost of Sales | Interest Expense | Net Sales | Cost of Sales | Interest Expense | ||||||||||||||||||||||||||||||||
Total amounts presented in the consolidated statement of operations in which the effects of cash flow and fair value hedges are recorded | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
(Loss) Gain on Derivatives in Cash Flow Hedging Relationship: | ||||||||||||||||||||||||||||||||||||||
Commodity contracts | ||||||||||||||||||||||||||||||||||||||
Amount of (loss) gain reclassified from AOCI to income | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||||||||||||||
Amount of gain reclassified from AOCI to income | ||||||||||||||||||||||||||||||||||||||
Total (loss) gain | $ | $ | ( | $ | $ | $ | $ |
Six Months Ended December 31, 2021 | Six Months Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||||
($ in millions) | Net Sales | Cost of Sales | Interest Expense | Net Sales | Cost of Sales | Interest Expense* | ||||||||||||||||||||||||||||||||
Total amounts presented in the consolidated statement of operations in which the effects of cash flow and fair value hedges are recorded | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
(Loss) gain on Derivatives in Cash Flow Hedging Relationship: | ||||||||||||||||||||||||||||||||||||||
Commodity contracts | ||||||||||||||||||||||||||||||||||||||
Amount of (loss) gain reclassified from AOCI to income | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||||||||||||||
Amount of gain reclassified from AOCI to income | ||||||||||||||||||||||||||||||||||||||
(Loss) gain on Derivatives in Fair Value Hedging Relationship: | ||||||||||||||||||||||||||||||||||||||
Interest rate swap agreements | ||||||||||||||||||||||||||||||||||||||
Hedged Item | ( | |||||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||||||||||||||||||||||
Total (loss) gain | $ | $ | ( | $ | $ | $ | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Foreign exchange loss | ||||||||||||||||||||||||||
Pension earnings, interest and deferrals | ( | ( | ||||||||||||||||||||||||
Total other (income) expense, net | $ | ( | $ | ( | $ | ( | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Net Sales: | ||||||||||||||||||||||||||
Specialty Alloys Operations | $ | $ | $ | $ | ||||||||||||||||||||||
Performance Engineered Products | ||||||||||||||||||||||||||
Intersegment | ( | ( | ( | ( | ||||||||||||||||||||||
Consolidated net sales | $ | $ | $ | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Operating (Loss) Income: | ||||||||||||||||||||||||||
Specialty Alloys Operations | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Performance Engineered Products | ( | ( | ||||||||||||||||||||||||
Corporate costs (including restructuring and asset impairment charges) | ( | ( | ( | ( | ||||||||||||||||||||||
Intersegment | ||||||||||||||||||||||||||
Consolidated operating loss | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Depreciation and Amortization: | ||||||||||||||||||||||||||
Specialty Alloys Operations | $ | $ | $ | $ | ||||||||||||||||||||||
Performance Engineered Products | ||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||
Intersegment | ||||||||||||||||||||||||||
Consolidated depreciation and amortization | $ | $ | $ | $ |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Capital Expenditures: | ||||||||||||||||||||||||||
Specialty Alloys Operations | $ | $ | $ | $ | ||||||||||||||||||||||
Performance Engineered Products | ||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||
Consolidated capital expenditures | $ | $ | $ | $ |
December 31, 2021 | June 30, 2021 | |||||||||||||
($ in millions) | ||||||||||||||
Total Assets: | ||||||||||||||
Specialty Alloys Operations | $ | $ | ||||||||||||
Performance Engineered Products | ||||||||||||||
Corporate | ||||||||||||||
Intersegment | ||||||||||||||
Consolidated total assets | $ | $ |
Three Months Ended December 31, 2021 ($ in millions) (a) | Cash flow hedging items | Pension and other postretirement benefit plan items | Foreign currency items | Total | ||||||||||||||||||||||
Balances at September 30, 2021 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Other comprehensive gain (loss) before reclassifications | ( | ( | ||||||||||||||||||||||||
Amounts reclassified from AOCI (b) | ||||||||||||||||||||||||||
Net other comprehensive income (loss) | ( | |||||||||||||||||||||||||
Balances at December 31, 2021 | $ | $ | ( | $ | ( | $ | ( |
Three Months Ended December 31, 2020 ($ in millions) (a) | Cash flow hedging items | Pension and other postretirement benefit plan items | Foreign currency items | Total | ||||||||||||||||||||||
Balances at September 30, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive gain before reclassifications | ||||||||||||||||||||||||||
Amounts reclassified from AOCI (b) | ( | |||||||||||||||||||||||||
Net other comprehensive income | ||||||||||||||||||||||||||
Balances at December 31, 2020 | $ | $ | ( | $ | ( | $ | ( |
Six Months Ended December 31, 2021 ($ in millions) (a) | Cash flow hedging items | Pension and other postretirement benefit plan items | Foreign currency items | Total | ||||||||||||||||||||||
Balances at June 30, 2021 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Other comprehensive gain (loss) before reclassifications | ( | ( | ( | |||||||||||||||||||||||
Amounts reclassified from AOCI (b) | ||||||||||||||||||||||||||
Net other comprehensive income (loss) | ( | |||||||||||||||||||||||||
Balances at December 31, 2021 | $ | $ | ( | $ | ( | $ | ( |
Six Months Ended December 31, 2020 ($ in millions) (a) | Cash flow hedging items | Pension and other postretirement benefit plan items | Foreign currency items | Total | ||||||||||||||||||||||
Balances at June 30, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive gain before reclassifications | ||||||||||||||||||||||||||
Amounts reclassified from AOCI (b) | ( | |||||||||||||||||||||||||
Net other comprehensive income | ||||||||||||||||||||||||||
Balances at December 31, 2020 | $ | $ | ( | $ | ( | $ | ( |
Details about AOCI Components | Location of (loss) gain | Amount Reclassified from AOCI Three Months Ended December 31, | Amount Reclassified from AOCI Six Months Ended December 31, | |||||||||||||||||||||||||||||
($ in millions) (a) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||
Cash flow hedging items: | ||||||||||||||||||||||||||||||||
Commodity contracts | Cost of sales | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||
Forward interest rate swaps | Interest expense, net | |||||||||||||||||||||||||||||||
Total before tax | ( | ( | ||||||||||||||||||||||||||||||
Tax benefit (expense) | ( | ( | ||||||||||||||||||||||||||||||
Net of tax | $ | ( | $ | $ | ( | $ |
Details about AOCI Components | Location of (loss) gain | Amount Reclassified from AOCI Three Months Ended December 31, | Amount Reclassified from AOCI Six Months Ended December 31, | |||||||||||||||||||||||||||||
($ in millions) (a) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||
Amortization of pension and other postretirement benefit plan items: | ||||||||||||||||||||||||||||||||
Net actuarial loss | (b) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
Prior service benefit | (b) | |||||||||||||||||||||||||||||||
Total before tax | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Tax benefit | ||||||||||||||||||||||||||||||||
Net of tax | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Pension plans | $ | (1.0) | $ | 3.2 | $ | (2.0) | $ | 6.4 | ||||||||||||||||||
Other postretirement plans | (0.8) | 0.8 | (1.6) | 1.7 | ||||||||||||||||||||||
Net pension (income) expense | $ | (1.8) | $ | 4.0 | $ | (3.6) | $ | 8.1 |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
Service cost included in Cost of sales | $ | 2.4 | $ | 2.7 | $ | 4.8 | $ | 5.4 | ||||||||||||||||||
Service cost included in Selling, general and administrative expenses | 0.3 | 0.3 | 0.7 | 0.7 | ||||||||||||||||||||||
Pension earnings, interest and deferrals included in Other (income) expense, net | (4.5) | 1.0 | (9.1) | 2.0 | ||||||||||||||||||||||
Net pension (income) expense | $ | (1.8) | $ | 4.0 | $ | (3.6) | $ | 8.1 |
Three Months Ended December 31, | $ (Decrease) Increase | % (Decrease) Increase | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Aerospace and Defense | $ | 167.6 | $ | 174.5 | $ | (6.9) | (4) | % | ||||||||||||||||||
Medical | 46.7 | 32.4 | 14.3 | 44 | % | |||||||||||||||||||||
Transportation | 38.2 | 31.6 | 6.6 | 21 | % | |||||||||||||||||||||
Energy | 23.1 | 22.1 | 1.0 | 5 | % | |||||||||||||||||||||
Industrial and Consumer | 90.5 | 66.0 | 24.5 | 37 | % | |||||||||||||||||||||
Distribution | 29.9 | 22.2 | 7.7 | 35 | % | |||||||||||||||||||||
Total net sales | $ | 396.0 | $ | 348.8 | $ | 47.2 | 14 | % |
Three Months Ended December 31, | $ (Decrease) Increase | % (Decrease) Increase | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Aerospace and Defense | $ | 134.0 | $ | 148.5 | $ | (14.5) | (10) | % | ||||||||||||||||||
Medical | 40.4 | 29.0 | 11.4 | 39 | % | |||||||||||||||||||||
Transportation | 28.5 | 25.8 | 2.7 | 10 | % | |||||||||||||||||||||
Energy | 16.0 | 17.7 | (1.7) | (10) | % | |||||||||||||||||||||
Industrial and Consumer | 66.4 | 56.3 | 10.1 | 18 | % | |||||||||||||||||||||
Distribution | 29.6 | 22.1 | 7.5 | 34 | % | |||||||||||||||||||||
Total net sales excluding surcharge revenue | $ | 314.9 | $ | 299.4 | $ | 15.5 | 5 | % |
Three Months Ended December 31, | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
Net sales | $ | 396.0 | $ | 348.8 | ||||||||||
Less: surcharge revenue | 81.1 | 49.4 | ||||||||||||
Net sales excluding surcharge revenue | $ | 314.9 | $ | 299.4 | ||||||||||
Gross profit | $ | 13.1 | $ | 6.0 | ||||||||||
Gross margin | 3.3 | % | 1.7 | % | ||||||||||
Gross margin excluding surcharge revenue | 4.2 | % | 2.0 | % |
Three Months Ended December 31, | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
Net sales | $ | 396.0 | $ | 348.8 | ||||||||||
Less: surcharge revenue | 81.1 | 49.4 | ||||||||||||
Net sales excluding surcharge revenue | $ | 314.9 | $ | 299.4 | ||||||||||
Operating loss | $ | (31.5) | $ | (89.0) | ||||||||||
Special items: | ||||||||||||||
COVID-19 costs | 1.7 | 3.9 | ||||||||||||
Goodwill impairment | — | 52.8 | ||||||||||||
Adjusted operating loss | $ | (29.8) | $ | (32.3) | ||||||||||
Operating margin | (8.0) | % | (25.5) | % | ||||||||||
Adjusted operating margin excluding surcharge revenue and special items | (9.5) | % | (10.8) | % |
Three Months Ended December 31, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||||||||
(Pounds sold, in thousands) | 2021 | 2020 | ||||||||||||||||||||||||
Specialty Alloys Operations | 43,248 | 38,602 | 4,646 | 12 | % | |||||||||||||||||||||
Performance Engineered Products * | 2,776 | 1,534 | 1,242 | 81 | % | |||||||||||||||||||||
Intersegment | (2,942) | (516) | (2,426) | (470) | % | |||||||||||||||||||||
Consolidated pounds sold | 43,082 | 39,620 | 3,462 | 9 | % |
Three Months Ended December 31, | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Specialty Alloys Operations | $ | 330.8 | $ | 300.4 | $ | 30.4 | 10 | % | ||||||||||||||||||
Performance Engineered Products | 85.7 | 54.8 | 30.9 | 56 | % | |||||||||||||||||||||
Intersegment | (20.5) | (6.4) | (14.1) | (220) | % | |||||||||||||||||||||
Total net sales | $ | 396.0 | $ | 348.8 | $ | 47.2 | 14 | % |
Three Months Ended December 31, | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Specialty Alloys Operations | $ | 251.6 | $ | 251.6 | $ | — | — | % | ||||||||||||||||||
Performance Engineered Products | 83.8 | 54.1 | 29.7 | 55 | % | |||||||||||||||||||||
Intersegment | (20.5) | (6.3) | (14.2) | (225) | % | |||||||||||||||||||||
Total net sales excluding surcharge revenue | $ | 314.9 | $ | 299.4 | $ | 15.5 | 5 | % |
Six Months Ended December 31, | $ (Decrease) Increase | % (Decrease) Increase | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Aerospace and Defense | $ | 334.7 | $ | 346.4 | $ | (11.7) | (3) | % | ||||||||||||||||||
Medical | 89.8 | 65.2 | 24.6 | 38 | % | |||||||||||||||||||||
Transportation | 79.8 | 60.8 | 19.0 | 31 | % | |||||||||||||||||||||
Energy | 45.3 | 47.2 | (1.9) | (4) | % | |||||||||||||||||||||
Industrial and Consumer | 177.0 | 139.4 | 37.6 | 27 | % | |||||||||||||||||||||
Distribution | 57.0 | 43.1 | 13.9 | 32 | % | |||||||||||||||||||||
Total net sales | $ | 783.6 | $ | 702.1 | $ | 81.5 | 12 | % |
Six Months Ended December 31, | $ (Decrease) Increase | % (Decrease) Increase | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Aerospace and Defense | $ | 268.8 | $ | 296.0 | $ | (27.2) | (9) | % | ||||||||||||||||||
Medical | 77.4 | 59.0 | 18.4 | 31 | % | |||||||||||||||||||||
Transportation | 60.0 | 50.2 | 9.8 | 20 | % | |||||||||||||||||||||
Energy | 32.2 | 39.0 | (6.8) | (17) | % | |||||||||||||||||||||
Industrial and Consumer | 132.7 | 119.4 | 13.3 | 11 | % | |||||||||||||||||||||
Distribution | 56.7 | 42.9 | 13.8 | 32 | % | |||||||||||||||||||||
Total net sales excluding surcharge revenue | $ | 627.8 | $ | 606.5 | $ | 21.3 | 4 | % |
Six Months Ended December 31, | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
Net sales | $ | 783.6 | $ | 702.1 | ||||||||||
Less: surcharge revenue | 155.8 | 95.6 | ||||||||||||
Net sales excluding surcharge revenue | $ | 627.8 | $ | 606.5 | ||||||||||
Gross profit | $ | 38.3 | $ | 9.5 | ||||||||||
Gross margin | 4.9 | % | 1.4 | % | ||||||||||
Gross margin excluding surcharge revenue | 6.1 | % | 1.6 | % | ||||||||||
Six Months Ended December 31, | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
Net sales | $ | 783.6 | $ | 702.1 | ||||||||||
Less: surcharge revenue | 155.8 | 95.6 | ||||||||||||
Net sales excluding surcharge revenue | $ | 627.8 | $ | 606.5 | ||||||||||
Operating loss | $ | (50.6) | $ | (137.8) | ||||||||||
Special items: | ||||||||||||||
COVID-19 costs | 3.3 | 11.8 | ||||||||||||
Restructuring and asset impairment charges | — | 10.0 | ||||||||||||
Goodwill impairment | — | 52.8 | ||||||||||||
Adjusted operating loss | $ | (47.3) | $ | (63.2) | ||||||||||
Operating margin | (6.5) | % | (19.6) | % | ||||||||||
Operating margin excluding surcharge revenue and special items | (7.5) | % | (10.4) | % |
Six Months Ended December 31, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||||||||
(Pounds sold, in thousands) | 2021 | 2020 | ||||||||||||||||||||||||
Specialty Alloys Operations | 86,256 | 81,970 | 4,286 | 5 | % | |||||||||||||||||||||
Performance Engineered Products * | 5,148 | 2,998 | 2,150 | 72 | % | |||||||||||||||||||||
Intersegment | (4,792) | (1,000) | (3,792) | (379) | % | |||||||||||||||||||||
Consolidated pounds sold | 86,612 | 83,968 | 2,644 | 3 | % |
Six Months Ended December 31, | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Specialty Alloys Operations | $ | 662.8 | $ | 601.1 | $ | 61.7 | 10 | % | ||||||||||||||||||
Performance Engineered Products | 160.3 | 116.7 | 43.6 | 37 | % | |||||||||||||||||||||
Intersegment | (39.5) | (15.7) | (23.8) | (152) | % | |||||||||||||||||||||
Total net sales | $ | 783.6 | $ | 702.1 | $ | 81.5 | 12 | % |
Six Months Ended December 31, | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||||||||||||||
Specialty Alloys Operations | $ | 509.8 | $ | 506.4 | $ | 3.4 | 1 | % | ||||||||||||||||||
Performance Engineered Products | 157.4 | 115.3 | 42.1 | 37 | % | |||||||||||||||||||||
Intersegment | (39.4) | (15.2) | (24.2) | (159) | % | |||||||||||||||||||||
Total net sales excluding surcharge revenue | $ | 627.8 | $ | 606.5 | $ | 21.3 | 4 | % |
Covenant | Covenant Requirement | Actual Ratio | ||||||||||||
Consolidated debt to capital | 55% (maximum) | 34.3% | ||||||||||||
Available liquidity (excludes certain foreign cash) | $150.0 (minimum) | $361.7 million | ||||||||||||
Asset coverage ratio | 1.10 to 1.00 | 64.70 to 1.00 |
($ in millions, except per share amounts) | Loss Before Income Taxes | Income Tax Benefit | Net Loss | Loss Per Diluted Share* | ||||||||||||||||||||||
Three months ended December 31, 2021, as reported | $ | (35.0) | $ | 5.6 | $ | (29.4) | $ | (0.61) | ||||||||||||||||||
Special item: | ||||||||||||||||||||||||||
COVID-19 costs | 1.7 | (0.3) | 1.4 | 0.03 | ||||||||||||||||||||||
Three months ended December 31, 2021, as adjusted | $ | (33.3) | $ | 5.3 | $ | (28.0) | $ | (0.58) |
($ in millions, except per share amounts) | Loss Before Income Taxes | Income Tax Benefit | Net Loss | Loss Per Diluted Share* | ||||||||||||||||||||||
Three months ended December 31, 2020, as reported | $ | (95.6) | $ | 10.7 | $ | (84.9) | $ | (1.76) | ||||||||||||||||||
Special items: | ||||||||||||||||||||||||||
COVID-19 costs | 3.9 | (0.9) | 3.0 | 0.06 | ||||||||||||||||||||||
Goodwill impairment | 52.8 | (0.1) | 52.7 | 1.09 | ||||||||||||||||||||||
Three months ended December 31, 2020, as adjusted | $ | (38.9) | $ | 9.7 | $ | (29.2) | $ | (0.61) |
($ in millions, except per share amounts) | Loss Before Income Taxes | Income Tax Benefit | Net Loss | Loss Per Diluted Share* | ||||||||||||||||||||||
Six months ended December 31, 2021, as reported | $ | (60.2) | $ | 16.1 | $ | (44.1) | $ | (0.91) | ||||||||||||||||||
Special item: | ||||||||||||||||||||||||||
COVID-19 costs | 3.3 | (0.8) | 2.5 | 0.05 | ||||||||||||||||||||||
Six months ended December 31, 2021, as adjusted | $ | (56.9) | $ | 15.3 | $ | (41.6) | $ | (0.86) |
($ in millions, except per share amounts) | Loss Before Income Taxes | Income Tax Benefit | Net Loss | Loss Per Diluted Share* | ||||||||||||||||||||||
Six months ended December 31, 2020, as reported | $ | (161.7) | $ | 29.7 | $ | (132.0) | $ | (2.74) | ||||||||||||||||||
Special items: | ||||||||||||||||||||||||||
COVID-19 costs | 11.8 | (3.5) | 8.3 | 0.17 | ||||||||||||||||||||||
Restructuring and asset impairment charges | 10.0 | (2.4) | 7.6 | 0.16 | ||||||||||||||||||||||
Goodwill impairment | 52.8 | (0.1) | 52.7 | 1.09 | ||||||||||||||||||||||
Debt extinguishment losses, net | 8.2 | (2.0) | 6.2 | 0.13 | ||||||||||||||||||||||
Six months ended December 31, 2020, as adjusted | $ | (78.9) | $ | 21.7 | $ | (57.2) | $ | (1.19) |
Six Months Ended December 31, | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
Net cash (used for) provided from operating activities | $ | (136.3) | $ | 171.6 | ||||||||||
Purchases of property, plant, equipment and software | (33.4) | (59.9) | ||||||||||||
Proceeds from disposals of property, plant and equipment and assets held for sale | 1.8 | 1.5 | ||||||||||||
Proceeds from divestiture of business | — | 20.0 | ||||||||||||
Dividends paid | (19.7) | (19.5) | ||||||||||||
Free cash flow | $ | (187.6) | $ | 113.7 |
Exhibit No. | Description | |||||||
Certification of President and Chief Executive Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. (filed herewith) | ||||||||
Certification of Senior Vice President and Chief Financial Officer pursuant to Rule 13a—14(a) and Rule 15d—14(a) of the Securities Exchange Act, as amended. (filed herewith) | ||||||||
Certification of President and Chief Executive Officer and Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) | ||||||||
101 | The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2021, formatted in Inline XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Loss; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements |
Carpenter Technology Corporation | |||||
(Registrant) | |||||
Date: February 2, 2022 | /s/ Timothy Lain | ||||
Timothy Lain | |||||
Senior Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) |
Date: February 2, 2022 | /s/ Tony R. Thene | ||||
Tony R. Thene | |||||
President and Chief Executive Officer |
Date: February 2, 2022 | /s/ Timothy Lain | ||||
Timothy Lain | |||||
Senior Vice President and Chief Financial Officer |
Date: February 2, 2022 | ||||||||
/s/ Tony R. Thene | /s/ Timothy Lain | |||||||
Tony R. Thene | Timothy Lain | |||||||
President and Chief Executive Officer | Senior Vice President and Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
STOCKHOLDERS' EQUITY | ||
Common stock authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock issued (in shares) | 56,024,619 | 56,024,619 |
Common stock outstanding (in shares) | 48,268,872 | 48,040,676 |
Common stock in treasury (in shares) | 7,755,747 | 7,983,943 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Statement [Abstract] | ||||
Net sales | $ 396.0 | $ 348.8 | $ 783.6 | $ 702.1 |
Cost of sales | 382.9 | 342.8 | 745.3 | 692.6 |
Gross profit | 13.1 | 6.0 | 38.3 | 9.5 |
Selling, general and administrative expenses | 44.6 | 42.2 | 88.9 | 84.5 |
Restructuring and asset impairment charges | 0.0 | 0.0 | 0.0 | 10.0 |
Goodwill impairment | 0.0 | 52.8 | 0.0 | 52.8 |
Operating loss | (31.5) | (89.0) | (50.6) | (137.8) |
Interest expense, net | 10.1 | 7.9 | 20.3 | 14.6 |
Debt extinguishment losses, net | 0.0 | 0.0 | 0.0 | 8.2 |
Other (income) expense, net | (6.6) | (1.3) | (10.7) | 1.1 |
Loss before income taxes | (35.0) | (95.6) | (60.2) | (161.7) |
Income tax benefit | (5.6) | (10.7) | (16.1) | (29.7) |
Net loss | $ (29.4) | $ (84.9) | $ (44.1) | $ (132.0) |
LOSS PER COMMON SHARE: | ||||
Basic (in dollars per share) | $ (0.61) | $ (1.76) | $ (0.91) | $ (2.74) |
Diluted (in dollars per share) | $ (0.61) | $ (1.76) | $ (0.91) | $ (2.74) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic (in shares) | 48.6 | 48.3 | 48.5 | 48.3 |
Diluted (in shares) | 48.6 | 48.3 | 48.5 | 48.3 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (29.4) | $ (84.9) | $ (44.1) | $ (132.0) |
Other comprehensive income (loss), net of tax | ||||
Pension and postretirement benefits, net of tax of $(0.4), $(1.1), $(0.8) and $(2.2), respectively | 0.8 | 3.6 | 1.9 | 7.2 |
Net gain on derivative instruments, net of tax of $(0.5), $(1.6), $(0.9) and $(4.3), respectively | 1.7 | 4.9 | 2.8 | 13.2 |
Foreign currency translation | (0.7) | 8.8 | (2.8) | 14.5 |
Other comprehensive income, net of tax | 1.8 | 17.3 | 1.9 | 34.9 |
Comprehensive loss | $ (27.6) | $ (67.6) | $ (42.2) | $ (97.1) |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Statement of Comprehensive Income [Abstract] | ||||
Pension and post-retirement benefits, tax expense | $ (0.4) | $ (1.1) | $ (0.8) | $ (2.2) |
Net gain on derivative instruments, tax benefit (expense) | $ (0.5) | $ (1.6) | $ (0.9) | $ (4.3) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
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Statement of Stockholders' Equity [Abstract] | ||||||
Common stock, par value (in dollars per share) | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 |
Cash dividends per common share (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.40 | $ 0.40 |
Basis of Presentation |
6 Months Ended |
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Dec. 31, 2021 | |
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, 2021 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 Technology's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the "2021 Form 10-K"). Operating results for the three and six months ended December 31, 2021 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.
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Restructuring and Asset Impairment Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Asset Impairment Charges | Restructuring and Asset Impairment Charges Restructuring and asset impairment charges for the three and six months ended December 31, 2021 were $0.0 million and $0.0 million, respectively. There were $0.0 million and $10.0 million of restructuring and asset impairment charges for the three and six months ended December 31, 2020, respectively. In the quarter ended September 30, 2020, the Company initiated a restructuring plan to consolidate certain operations within the Additive business in the Performance Engineered Products "PEP" segment. This included $8.7 million of non-cash impairment charges related primarily to certain long-lived assets and certain definite-lived intangible assets. The Company also recognized $1.3 million of charges for various personnel-related costs for severance payments, medical coverage and other items. The reserve balances and activity for restructuring charges at December 31, 2021 and June 30, 2021 were as follows:
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Recent Accounting Pronouncements |
6 Months Ended |
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Dec. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Pronouncements - Adopted in current fiscal year In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year, and recognition of deferred tax liabilities for outside basis differences. The new standard also simplifies the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the basis of goodwill. ASU 2019-12 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2020, with early adoption permitted. The Company adopted the provisions of ASU 2019-12 in the first quarter of fiscal year 2022. As a result, the Company recorded tax benefits on its year-to-date net loss for the six months ended December 31, 2021 in excess of its forecasted total tax benefits for the full fiscal year. Adoption of the other provisions in ASU 2019-12 did not materially impact the consolidated financial statements. Recently Issued Accounting Pronouncements - Pending adoption In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in ASU 2021-10 require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: information about the nature of the transactions and the related accounting policy used to account for the transactions; the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item; significant terms and conditions of the transactions, including commitments and contingencies. ASU 2021-10 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2021, with early adoption permitted. ASU 2021-10 is a requirement for additional disclosure and is not expected to materially impact the consolidated financial statements.
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Revenue |
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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. 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. Each 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 are classified as cost of sales in the consolidated statements of operations. 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 $12.8 million and $8.6 million at December 31, 2021 and June 30, 2021, 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 and six months ended December 31, 2021 and 2020 were as follows:
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Divestiture |
6 Months Ended |
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Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Divestiture | Divestiture On September 30, 2020, the Company divested the Amega West business for a total sale price of $20.0 million. In connection with the divestiture, the Company received $17.6 million of cash in the quarter ended September 30, 2020 and the remaining $2.4 million of cash in the quarter ended December 31, 2020. The operations of the Amega West business were historically included in our PEP segment and the Energy end-use market. The Company does not have any significant continuing involvement in the operations of Amega West after the divestiture. |
Loss per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss per Common Share | Loss per Common Share The Company calculates basic and diluted loss per share using the two class method. Under the two class method, losses 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 losses available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted loss per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. For the three and six months ended December 31, 2021 and 2020, respectively, the Company incurred a net loss and accordingly excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive. The calculations of basic and diluted loss per common share for the three and six months ended December 31, 2021 and 2020 were as follows:
The following awards issued under share-based compensation plans were excluded from the above calculations of diluted loss per share because their effects were anti-dilutive:
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Inventories |
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Inventories | Inventories Inventories consisted of the following components as of December 31, 2021 and June 30, 2021:
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Accrued Liabilities |
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Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following as of December 31, 2021 and June 30, 2021:
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Pension and Other Postretirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits The components of the net periodic pension (income) expense related to the Company's pension and other postretirement benefits for the three and six months ended December 31, 2021 and 2020 were as follows:
During the six months ended December 31, 2021 and 2020, the Company made $0.2 million and $4.7 million, respectively, of contributions to its qualified defined benefit pension plans. The Company currently does not expect to contribute additional amounts to its international qualified defined benefit pension plans and does not expect to make any contributions to its U.S. qualified defined benefit pension plans during the remainder of fiscal year 2022.
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt On July 10, 2020, the Company completed its offering and sale of $400.0 million in aggregate principal amount of 6.375% Senior Notes due 2028 (the "Notes"). The Notes accrue interest at the rate of 6.375% per annum, with interest payable in cash semi-annually in arrears on each January 15th and July 15th, commencing January 15, 2021. The Notes will mature on July 15, 2028. The Notes are senior unsecured indebtedness of the Company, ranking equally in right of payment with all its existing and future senior unsecured indebtedness and senior to any future subordinated indebtedness. The Company utilized a portion of the net proceeds from the issuance of the Notes to repay in full $250.0 million in aggregate principal amount of its senior unsecured notes due July 2021. The Company used or intends to use the remaining net proceeds from the issuance of the Notes for general corporate purposes. On March 26, 2021, the Company entered into a $300.0 million secured revolving credit facility ("the Credit Facility"). The Credit Facility amended and restated the Company's previous revolving credit facility, dated March 31, 2017, which had been set to expire in March 2022. The Credit Facility extends the maturity to March 31, 2024, subject to a springing maturity of November 30, 2022. If, by November 30, 2022, the Company's outstanding $300.0 million 4.45% Senior Notes due in March 2023 are not redeemed, repurchased or refinanced with indebtedness having a maturity date of October 1, 2024 or later, all indebtedness under the Credit Facility will be due. The Credit Facility contains a revolving credit commitment amount of $300.0 million, subject to the Company's right, from time to time, to request an increase of the commitment to $500.0 million in the aggregate; and provides for the issuance of letters of credit subject to a $40.0 million sub-limit. The Company has the right to terminate or reduce the commitments under the Credit Facility, and, subject to certain lender approvals, to join subsidiaries as subsidiary borrowers. Interest on the borrowings under the Credit Facility accrues at variable rates, based upon a "Eurocurrency Rate" 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 Eurocurrency Rate ranges from 1.25% to 2.25% (2.00% as of December 31, 2021), and for Base Rate-determined loans, from 0.25% to 1.25% (1.00% as of December 31, 2021). The Company also pays a quarterly commitment fee ranging from 0.275% to 0.375% (0.35% as of December 31, 2021), determined based upon the Debt Rating, of the unused portion of the $300.0 million commitment under the Credit Facility. In addition, the Company must pay certain letter of credit fees, ranging from 1.25% to 2.25% (2.00% as of December 31, 2021), with respect to letters of credit issued under the Credit Facility. The Company has the right to voluntarily prepay and re-borrow loans and to terminate or reduce the commitments under the facility. As of December 31, 2021, the Company had $5.3 million of issued letters of credit under the Credit Facility and no short-term borrowings, with the balance of $294.7 million available to the Company. As of December 31, 2021, the borrowing rate for the Credit Facility was 2.10%. The Company is subject to certain financial and restrictive covenants under the Credit Facility, which, among other things, require the maintenance of a minimum interest coverage ratio. The interest coverage ratio is defined in the Credit Facility 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 interest coverage covenant is waived until the quarter ended March 31, 2022 at which time it will be 3.00 to 1.00 and then 3.50 to 1.00 thereafter. The Credit Facility 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 Facility as the ratio of consolidated indebtedness, as defined therein, to consolidated capitalization, as defined therein. During the period in which the interest coverage covenant is waived, the Credit Facility requires that the Company maintain a minimum available liquidity of $150.0 million for certain periods, which is defined in the Credit Facility as aggregate amount of loans available to be drawn under the credit facility plus non-restricted cash and cash equivalents as defined therein. In addition, the Company is also subject to an asset coverage ratio minimum of 1.10 to 1.00. The asset coverage ratio is defined in the Credit Facility as eligible receivables and inventory, as defined therein, to outstanding loans and obligations, as defined therein. As of December 31, 2021, the Company was in compliance with all of the covenants of the Credit Facility. Long-term debt outstanding as of December 31, 2021 and June 30, 2021 consisted of the following:
For the three months ended December 31, 2021 and 2020, interest costs totaled $10.3 million and $10.9 million, respectively, of which $0.2 million and $3.0 million, respectively, were capitalized as part of the cost of property, plant, equipment and software. For the three months ended December 31, 2021 and 2020, there were no debt extinguishment losses, net. For the six months ended December 31, 2021 and 2020, interest costs totaled $20.6 million and $20.3 million, respectively, of which $0.3 million and $5.7 million, respectively, were capitalized as part of the cost of property, plant, equipment and software. Debt extinguishment losses, net for the six months ended December 31, 2020 includes $10.5 million of debt prepayment costs on the Notes that were due July 2021 offset by gains of $2.3 million on related interest rate swaps that were terminated in connection with the prepayment. For the six months ended December 31, 2021 there were no debt extinguishment losses, net.
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Contingencies and Commitments |
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Dec. 31, 2021 | |
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 six months ended December 31, 2021, the Company increased the liability for a company-owned former operating site by $0.1 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 December 31, 2021 and June 30, 2021 were $16.1 million and $16.0 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.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company records right-of-use "ROU" assets and operating lease liabilities on the consolidated balance sheet for several types of operating leases, including land and buildings, equipment (e.g. trucks and forklifts), vehicles and computer equipment. On the lease commencement date, the Company measures and records a ROU asset and lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, the Company's incremental borrowing rate). Operating leases are included in other assets, accrued liabilities (current) and other liabilities (long-term) on the consolidated balance sheets. The Company elected the practical expedient to not separate lease components from non-lease components for all asset classes. The Company recognizes lease expense in the consolidated statements of operations on a straight-line basis over the lease term. The Company elected 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. 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 ROU asset or lease liability. Income from subleased properties is recognized and presented as a reduction of selling, general and administrative expenses in the Company's consolidated statements of operations. The leases have remaining terms of to fifteen years. The following table sets forth the components of the Company's lease cost for the three and six months ended December 31, 2021 and December 31, 2020:
The following table sets forth the Company's weighted-average remaining lease term and weighted-average discount rate at December 31, 2021 and June 30, 2021:
The following table sets forth the Company's ROU assets and lease liabilities at December 31, 2021 and June 30, 2021:
Minimum lease payments for operating leases expiring subsequent to December 31, 2021 are as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value hierarchy has three levels based on the inputs used to determine fair value. Level 1 refers to quoted prices in active markets for identical assets or liabilities. Level 2 refers to observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 refers to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Currently, the Company does not use Level 1 and 3 inputs. The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:
The Company's derivative financial instruments consist of commodity forward contracts, foreign currency forward contracts and interest rate swaps. These instruments are measured at fair value using the market method valuation technique. The inputs to this technique utilize information related to 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 14. Derivatives and Hedging Activities. 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:
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Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company uses commodity forwards, interest rate swaps, forward interest rate swaps and foreign currency forwards to manage risks generally associated with commodity price, interest rate and foreign currency rate fluctuations. The following explains the various types of derivatives and includes a 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 December 31, 2021, the Company had forward contracts to purchase 7.7 million pounds of certain raw materials with settlement dates through May 2025. 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 December 31, 2021 and 2020, net gains related to the previously terminated contracts of $0.1 million and $0.1 million, respectively, were recorded as a reduction to interest expense. For the six months ended December 31, 2021 and 2020, net gains related to the previously terminated contracts of $0.2 million and $0.2 million, respectively, 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 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) expense, net. As of December 31, 2021 and June 30, 2021, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts were not material. Fair Value Hedging — Interest rate swaps: The Company uses interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges. Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings. The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of operations. As of the quarter ended September 30, 2020, all interest rate swaps were terminated in connection with the prepayment of Notes due July 2021. At December 31, 2021 and June 30, 2021, the total notional amount of floating interest rate contracts was $0.0 million and $0.0 million, respectively. For the three months ended December 31, 2021 and 2020, respectively, there were no interest rate swaps and no gains or losses recorded to interest expense. For the six months ended months December 31, 2021 and 2020, net gains of $0.0 million and $0.4 million, respectively, were recorded as a decrease to interest expense. During the quarter ended September 30, 2020, there were $2.3 million of gains recorded as a decrease to debt extinguishment losses. The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of December 31, 2021 and June 30, 2021:
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 $20.4 million and total liability derivatives would have been $2.5 million as of December 31, 2021. 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 December 31, 2021 and June 30, 2021, 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 gains (losses) related to cash flow hedges recognized during the three and six months ended December 31, 2021 and 2020:
The following is a summary of total amounts presented in the consolidated statements of operations in which the effects of cash flow and fair value hedges are recorded during the three and six months ended December 31, 2021 and 2020:
*$2.3 million of gains related to the interest rate swap agreements were recorded as a decrease to debt extinguishment losses. The Company estimates that $10.2 million of net derivative gains included in AOCI as of December 31, 2021 will be reclassified into income within the next 12 months. No significant cash flow hedges were discontinued during the three and six months ended December 31, 2021. As of December 31, 2021, and June 30, 2021, there were no amounts recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges of interest rate risk.
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Other (Income) Expense, Net |
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Other (Income) Expense, Net | Other (Income) Expense, Net Other (income) expense, net consisted of the following:
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Income Taxes |
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Dec. 31, 2021 | |
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, or loss, 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 or benefit 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. During the three and six months ended December 31, 2021, deferred taxes were determined by the year-to-date tax benefit with current taxes accounting for the remaining tax benefit recorded in the period. Income tax benefit was $5.6 million, or 16.0 percent of pre-tax loss for the three months ended December 31, 2021, as compared with income tax benefit of $10.7 million, or 11.2 percent of pre-tax loss for the three months ended December 31, 2020. Income tax benefit for the six months ended December 31, 2021 was $16.1 million or 26.7 percent of pre-tax loss as compared with $29.7 million or 18.4 percent of pre-tax loss in the six months ended December 31, 2020. Income tax benefit for the three months ended December 31, 2021 reflects a change in the estimated full year results for the fiscal year. Also included is the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized. Income tax benefit for the three months ended December 31, 2020 included the unfavorable impacts of a non-deductible goodwill impairment charge and losses in certain foreign jurisdictions for which no tax benefit can be recognized. Additionally, the anticipated benefit for the carryback of the fiscal year 2021 net operating loss to fiscal years with higher tax rates was included in this period. Excluding the discrete tax impact of the $52.8 million non-deductible goodwill impairment charge, the tax rate for the three months ended December 31, 2020 would have been 24.8 percent. Income tax benefit for the six months ended December 31, 2021 includes the unfavorable impact of losses in certain foreign jurisdictions for which no tax benefit can be recognized. Income tax benefit for the six months ended December 31, 2020 included the unfavorable impacts of a non-deductible goodwill impairment charge and losses in certain foreign jurisdictions for which no tax benefit can be recognized as well as discrete tax benefits of $2.0 million associated with the debt extinguishment losses, net and $2.4 million for the impact of restructuring and asset impairment charges. Additionally, the anticipated benefit for the carryback of the fiscal year 2021 net operating loss to fiscal years with higher tax rates was included in this period. Also included is a tax charge of $1.2 million attributable to employee share-based compensation. Excluding the discrete tax impacts of the $52.8 million non-deductible goodwill impairment charge, debt extinguishment losses, net and restructuring and asset impairment charges, the tax rate for the six months ended December 31, 2020 would have been 27.1 percent. The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted on March 27, 2020. The CARES Act established new provisions, including but not limited to, expanded deduction of certain qualified capital expenditures, delayed payment of certain employment taxes, expanded use of net operating losses, reduced limitations on deductions of interest expense and extension of funding for defined benefit plans. The net operating loss provision is expected to provide incremental tax benefits of approximately $7.0 million due to the higher tax rates in the expanded carryback period. The other provisions in the CARES Act are not expected to have a significant impact on our financial position, results of operations or cash flows.
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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 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 Additive business and the Latrobe and Mexico distribution businesses. The Amega West business was part of the PEP segment however it was sold during the quarter ended September 30, 2020. 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 results exclude general corporate costs, which are comprised of 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 restructuring charges and other specifically-identified income or expense items. On a consolidated basis, no single customer accounted for 10 percent or more of net sales for the three and six months ended December 31, 2021 and December 31, 2020. On a consolidated basis, no single customer accounted for 10 percent or more of accounts receivable outstanding at December 31, 2021 and June 30, 2021.
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Reclassifications from Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications from Accumulated Other Comprehensive Loss | Reclassifications from Accumulated Other Comprehensive Loss The changes in AOCI by component, net of tax, for the three months ended December 31, 2021 and 2020 were as follows:
(a) All amounts are net of tax. Amounts in parentheses indicate debits. (b) See separate table below for further details. The changes in AOCI by component, net of tax, for the six months ended December 31, 2021 and 2020 were as follows:
(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 and six months ended December 31, 2021 and 2020:
(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 9. Pension and Other Postretirement Benefits for additional details).
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Basis of Presentation (Policies) |
6 Months Ended |
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Dec. 31, 2021 | |
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, 2021 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 Technology's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 (the "2021 Form 10-K"). Operating results for the three and six months ended December 31, 2021 are not necessarily indicative of the operating results for any future period. |
Recently Issued Accounting Pronouncements Adopted in Current Period and Pending Adoption | Recently Issued Accounting Pronouncements - Adopted in current fiscal year In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year, and recognition of deferred tax liabilities for outside basis differences. The new standard also simplifies the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the basis of goodwill. ASU 2019-12 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2020, with early adoption permitted. The Company adopted the provisions of ASU 2019-12 in the first quarter of fiscal year 2022. As a result, the Company recorded tax benefits on its year-to-date net loss for the six months ended December 31, 2021 in excess of its forecasted total tax benefits for the full fiscal year. Adoption of the other provisions in ASU 2019-12 did not materially impact the consolidated financial statements. Recently Issued Accounting Pronouncements - Pending adoption In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in ASU 2021-10 require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: information about the nature of the transactions and the related accounting policy used to account for the transactions; the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item; significant terms and conditions of the transactions, including commitments and contingencies. ASU 2021-10 is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2021, with early adoption permitted. ASU 2021-10 is a requirement for additional disclosure and is not expected to materially impact the consolidated financial statements.
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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. 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. Each 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 are classified as cost of sales in the consolidated statements of operations. 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 $12.8 million and $8.6 million at December 31, 2021 and June 30, 2021, 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.
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Loss per Common Share | The Company calculates basic and diluted loss per share using the two class method. Under the two class method, losses 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 losses available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted loss per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. For the three and six months ended December 31, 2021 and 2020, respectively, the Company incurred a net loss and accordingly excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive. |
Inventories | Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out ("LIFO") inventory costing method. The Company also uses the first-in, first-out ("FIFO") and average cost methods. |
Regulatory Environmental Costs | The Company is subject to various federal, state, local and international environmental laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health. Although compliance with these laws and regulations may affect the costs of the Company's operations, compliance costs to date have not been material. The Company has environmental remediation liabilities at some of its owned operating facilities and has been designated as a potentially responsible party ("PRP") with respect to certain third party Superfund waste-disposal sites and other third party-owned sites. The Company accrues amounts for environmental remediation costs that represent management's best estimate of the probable and reasonably estimable future costs related to environmental remediation. |
Contingencies and Commitments | The Company is defending various routine claims and legal actions that are incidental to its business and common to its operations, including those pertaining to product claims, commercial disputes, patent infringement, employment actions, employee benefits, compliance with domestic and foreign laws, personal injury claims and tax issues. Like many other manufacturing companies in recent years, the Company, from time to time, has been named as a defendant in lawsuits alleging personal injury as a result of exposure to chemicals and substances in the workplace such as asbestos. The Company provides for costs relating to these matters when a loss is probable and the amount of the loss is reasonably estimable. The effect of the outcome of these matters on the Company's future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount and timing (both as to recording future charges to operations and cash expenditures) of the resolution of such matters. While it is not feasible to determine the outcome of these matters, management believes that the total liability from these matters will not have a material effect on the Company's financial position, results of operations or cash flows over the long-term. However, there can be no assurance that an increase in the scope of pending matters or that any future lawsuits, claims, proceedings or investigations will not be material to the Company's financial position, results of operations or cash flows in a particular future quarter or year. |
Leases | The Company elected the practical expedient to not separate lease components from non-lease components for all asset classes. The Company recognizes lease expense in the consolidated statements of operations on a straight-line basis over the lease term. The Company elected 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. 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 ROU asset or lease liability. Income from subleased properties is recognized and presented as a reduction of selling, general and administrative expenses in the Company's consolidated statements of operations. The leases have remaining terms of | to fifteen years.
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 14. Derivatives and Hedging Activities. 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 fair values of long-term debt as of December 31, 2021 and June 30, 2021 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. |
Cash Flow Hedging | 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.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. 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 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) expense, net. As of December 31, 2021 and June 30, 2021, the fair value of the outstanding foreign currency forwards not designated as hedging instruments and the charges to income for changes in fair value for these contracts were not material. Fair Value Hedging — Interest rate swaps: The Company uses interest rate swaps to achieve a level of floating rate debt relative to fixed rate debt where appropriate. The Company has designated fixed to floating interest rate swaps as fair value hedges. Accordingly, the changes in the fair value of these instruments are immediately recorded in earnings. The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains and losses in interest expense in the consolidated statements of operations. As of the quarter ended September 30, 2020, all interest rate swaps were terminated in connection with the prepayment of Notes due July 2021.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.
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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 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 Additive business and the Latrobe and Mexico distribution businesses. The Amega West business was part of the PEP segment however it was sold during the quarter ended September 30, 2020. The businesses in the PEP segment are managed with an entrepreneurial structure to promote flexibility and agility to quickly respond to market dynamics. |
Restructuring and Asset Impairment Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The reserve balances and activity for restructuring charges at December 31, 2021 and June 30, 2021 were as follows:
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 and six months ended December 31, 2021 and 2020 were as follows:
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Loss per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculations of basic and diluted loss per common share | The calculations of basic and diluted loss per common share for the three and six months ended December 31, 2021 and 2020 were as follows:
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Schedule of awards issued under share-based compensation plans excluded from the calculations of diluted earnings per share | The following awards issued under share-based compensation plans were excluded from the above calculations of diluted loss per share because their effects were anti-dilutive:
|
Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories consisted of the following components as of December 31, 2021 and June 30, 2021:
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Accrued Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued liabilities | Accrued liabilities consisted of the following as of December 31, 2021 and June 30, 2021:
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Pension and Other Postretirement Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of the net periodic pension (income) expense | The components of the net periodic pension (income) expense related to the Company's pension and other postretirement benefits for the three and six months ended December 31, 2021 and 2020 were as follows:
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Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt outstanding | Long-term debt outstanding as of December 31, 2021 and June 30, 2021 consisted of the following:
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of lease cost | The following table sets forth the components of the Company's lease cost for the three and six months ended December 31, 2021 and December 31, 2020:
The following table sets forth the Company's weighted-average remaining lease term and weighted-average discount rate at December 31, 2021 and June 30, 2021:
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Summary of right-of-use assets and lease liabilities | The following table sets forth the Company's ROU assets and lease liabilities at December 31, 2021 and June 30, 2021:
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Schedule of minimum lease payments for operating leases expiring | Minimum lease payments for operating leases expiring subsequent to December 31, 2021 are as follows:
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Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of assets and liabilities measured on a recurring basis | The following tables present the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:
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Schedule of carrying amounts and estimated fair values of financial instruments not recorded at fair value in the financial statements | The carrying amounts and estimated fair values of the Company's financial instruments not recorded at fair value in the financial statements were as follows:
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Derivatives and Hedging Activities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 December 31, 2021 and June 30, 2021:
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Summary of the gains (losses) related to cash flow hedges | The following is a summary of the gains (losses) related to cash flow hedges recognized during the three and six months ended December 31, 2021 and 2020:
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Summary of effect of derivative instruments on income | The following is a summary of total amounts presented in the consolidated statements of operations in which the effects of cash flow and fair value hedges are recorded during the three and six months ended December 31, 2021 and 2020:
*$2.3 million of gains related to the interest rate swap agreements were recorded as a decrease to debt extinguishment losses.
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Other (Income) Expense, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other (income) expense, net | Other (income) expense, net consisted of the following:
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Business Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of results of operation, depreciation and amortization, capital expenditures and total assets by reportable segments |
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Reclassifications from Accumulated Other Comprehensive Loss (Tables) |
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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 December 31, 2021 and 2020 were as follows:
(a) All amounts are net of tax. Amounts in parentheses indicate debits. (b) See separate table below for further details. The changes in AOCI by component, net of tax, for the six months ended December 31, 2021 and 2020 were as follows:
(a) All amounts are net of tax. Amounts in parentheses indicate debits. (b) See separate table below for further details.
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Schedule of amounts reclassified from AOCI | The following is a summary of amounts reclassified from AOCI for the three and six months ended December 31, 2021 and 2020:
(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 9. Pension and Other Postretirement Benefits for additional details).
|
Restructuring and Asset Impairment Charges - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and asset impairment charges | $ 0.0 | $ 0.0 | $ 0.0 | $ 10.0 | |
Performance Engineered Products | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Asset impairment charges | $ 8.7 | ||||
Severance costs | $ 1.3 |
Restructuring and Asset Impairment Charges - Activity and reserve balance restructuring charges (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2021 |
Jun. 30, 2021 |
|
Restructuring Reserve [Roll Forward] | ||
Reserve balance at beginning of fiscal year | $ 1.4 | $ 9.5 |
Restructuring charges excluding non-cash impairments | 0.0 | 1.2 |
Cash payments | (1.3) | (9.3) |
Reserve balance at end of period | $ 0.1 | $ 1.4 |
Revenue - Narrative (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Dec. 31, 2021
USD ($)
segment
|
Jun. 30, 2021
USD ($)
|
|
Revenue from Contract with Customer [Abstract] | ||
Payment terms | 30 days | |
Contract liabilities | $ | $ 12.8 | $ 8.6 |
Number of business segments | segment | 2 |
Revenue - Summary of revenues by end-use markets (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | $ 396.0 | $ 348.8 | $ 783.6 | $ 702.1 |
Aerospace and Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 167.6 | 174.5 | 334.7 | 346.4 |
Medical | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 46.7 | 32.4 | 89.8 | 65.2 |
Transportation | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 38.2 | 31.6 | 79.8 | 60.8 |
Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 23.1 | 22.1 | 45.3 | 47.2 |
Industrial and Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 90.5 | 66.0 | 177.0 | 139.4 |
Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | $ 29.9 | $ 22.2 | $ 57.0 | $ 43.1 |
Revenue - Summary of revenue by geography (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | $ 396.0 | $ 348.8 | $ 783.6 | $ 702.1 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 254.2 | 208.2 | 501.1 | 432.9 |
Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 53.2 | 48.9 | 114.8 | 86.8 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 52.3 | 68.1 | 100.8 | 129.3 |
Mexico | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 21.6 | 10.7 | 37.5 | 23.9 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | 8.1 | 7.1 | 15.9 | 14.9 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated net sales | $ 6.6 | $ 5.8 | $ 13.5 | $ 14.3 |
Divestiture (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Business Acquisition [Line Items] | |||
Proceeds from divestiture of businesses | $ 0.0 | $ 20.0 | |
Discontinued Operations, Disposed of by Sale | Amega West | |||
Business Acquisition [Line Items] | |||
Disposal group, including discontinued operation, consideration | $ 20.0 | ||
Proceeds from divestiture of businesses | $ 17.6 | ||
Disposal group, including discontinued operation, consideration, escrow | $ 2.4 |
Loss 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 | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
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) | 2.0 | 2.2 | 2.0 | 2.1 |
Inventories - Schedule of inventories (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Inventory, Net [Abstract] | ||
Raw materials and supplies | $ 135.4 | $ 115.0 |
Work in process | 270.2 | 206.2 |
Finished and purchased products | 129.1 | 104.5 |
Total inventories | $ 534.7 | $ 425.7 |
Inventories - Narrative (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Inventory, Net [Abstract] | ||
Inventory accounted for using a method other than LIFO | $ 128.6 | $ 107.5 |
Accrued Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation and benefits | $ 41.3 | $ 81.4 |
Accrued interest expense | 16.2 | 16.2 |
Accrued postretirement benefits | 14.4 | 14.4 |
Contract liabilities | 12.8 | 8.6 |
Current portion of lease liabilities | 9.7 | 9.0 |
Accrued pension liabilities | 3.5 | 3.5 |
Accrued income taxes | 1.8 | 0.5 |
Derivative financial instruments | 0.1 | 4.2 |
Other | 24.2 | 26.1 |
Total accrued liabilities | $ 124.0 | $ 163.9 |
Pension and Other Postretirement Benefits - Schedule of components of the net periodic pension (income) expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 2.1 | $ 2.4 | $ 4.2 | $ 4.8 |
Interest cost | 9.1 | 9.9 | 18.2 | 19.8 |
Expected return on plan assets | (14.9) | (13.9) | (29.8) | (27.8) |
Amortization of net loss (gain) | 2.1 | 4.3 | 4.2 | 8.6 |
Amortization of prior service cost (credits) | 0.6 | 0.5 | 1.2 | 1.0 |
Net pension (income) expense | (1.0) | 3.2 | (2.0) | 6.4 |
Other Postretirement Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 0.6 | 0.6 | 1.3 | 1.4 |
Interest cost | 1.8 | 1.9 | 3.5 | 3.8 |
Expected return on plan assets | (2.0) | (1.6) | (4.0) | (3.3) |
Amortization of net loss (gain) | (0.2) | 0.9 | (0.4) | 1.8 |
Amortization of prior service cost (credits) | (1.0) | (1.0) | (2.0) | (2.0) |
Net pension (income) expense | $ (0.8) | $ 0.8 | $ (1.6) | $ 1.7 |
Pension and Other Postretirement Benefits - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Pension Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Contributions | $ 0.2 | $ 4.7 |
Debt - Schedule of long-term debt outstanding (Details) - USD ($) |
Dec. 31, 2021 |
Jun. 30, 2021 |
Mar. 26, 2021 |
Jul. 10, 2020 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Total | $ 695,000,000.0 | $ 694,500,000 | ||
Less: amounts due within one year | 0 | 0 | ||
Long-term debt, net of current portion | $ 695,000,000.0 | $ 694,500,000 | ||
Senior unsecured notes, 4.45% due March 2023 | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 4.45% | 4.45% | 4.45% | |
Face amount | $ 300,000,000 | $ 300,000,000 | ||
Total | $ 299,600,000 | $ 299,500,000 | $ 300,000,000 | |
Senior unsecured notes, 6.375% due July 2028 | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 6.375% | 6.375% | 6.375% | |
Face amount | $ 400,000,000 | $ 400,000,000 | $ 400,000,000 | |
Total | $ 395,400,000 | $ 395,000,000.0 |
Contingencies and Commitments (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Jun. 30, 2021 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Increase of liabilities of environmental remediation costs of a company-owned former operating site | $ 0.1 | |
Environmental remediation liability | $ 16.1 | $ 16.0 |
Leases - Narrative (Details) |
Dec. 31, 2021 |
---|---|
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, remaining lease term | 15 years |
Leases - Summary of lease cost (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Jun. 30, 2021 |
|
Leases [Abstract] | |||||
Operating lease cost | $ 2.5 | $ 3.2 | $ 5.0 | $ 6.8 | |
Short-term lease cost | 0.8 | 0.7 | 1.7 | 1.6 | |
Variable lease cost | 0.1 | 0.1 | 0.3 | 0.2 | |
Sublease income | (0.2) | (0.2) | (0.5) | (0.3) | |
Total lease cost | 3.2 | 3.8 | 6.5 | 8.3 | |
Operating cash flow payments from operating leases | 2.8 | 3.3 | 5.6 | 6.9 | |
Non-cash ROU assets obtained in exchange for lease obligations | $ 15.1 | $ 0.0 | $ 15.5 | $ 1.4 | |
Weighted-average remaining lease term - operating leases | 8 years 9 months 18 days | 8 years 9 months 18 days | 8 years 4 months 24 days | ||
Weighted-average discount rate - operating leases | 3.50% | 3.50% | 4.00% |
Leases - Summary of right-of-use assets and lease liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Operating lease assets: | ||
Other assets | $ 46.7 | $ 34.3 |
Operating lease liabilities: | ||
Accrued liabilities | 9.7 | 9.0 |
Other liabilities | 46.9 | 35.5 |
Total operating lease liabilities | $ 56.6 | $ 44.5 |
Leases - Schedule of minimum lease payments for operating leases expiring (Details) - USD ($) $ in Millions |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Leases [Abstract] | ||
2022 (remaining period of fiscal year) | $ 5.3 | |
2023 | 10.8 | |
2024 | 8.5 | |
2025 | 6.2 | |
2026 | 5.0 | |
Thereafter | 30.9 | |
Total future minimum lease payments | 66.7 | |
Less imputed interest | (10.1) | |
Total | $ 56.6 | $ 44.5 |
Fair Value Measurements - Schedule of fair value of assets and liabilities measured on a recurring basis (Details) - Level 2 - USD ($) $ in Millions |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Assets: | ||
Derivative financial instruments | $ 18.1 | $ 15.9 |
Liabilities: | ||
Derivative financial instruments | $ 0.2 | $ 5.3 |
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 |
Dec. 31, 2021 |
Jun. 30, 2021 |
---|---|---|
Carrying Value | ||
Carrying amounts and estimated fair values of financial instruments not recorded at fair value | ||
Long-term debt | $ 695.0 | $ 694.5 |
Company-owned life insurance | 27.3 | 24.6 |
Fair Value | ||
Carrying amounts and estimated fair values of financial instruments not recorded at fair value | ||
Long-term debt | 732.0 | 754.7 |
Company-owned life insurance | $ 27.3 | $ 24.6 |
Other (Income) Expense, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Other Income and Expenses [Abstract] | ||||
Unrealized gains on company-owned life insurance contracts and investments held in rabbi trusts | $ (2.4) | $ (3.1) | $ (2.2) | $ (4.4) |
Foreign exchange loss | 0.3 | 0.8 | 0.6 | 3.5 |
Pension earnings, interest and deferrals | (4.5) | 1.0 | (9.1) | 2.0 |
Total other (income) expense, net | $ (6.6) | $ (1.3) | $ (10.7) | $ 1.1 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax benefit | $ 5.6 | $ 10.7 | $ 16.1 | $ 29.7 |
Income tax benefit as a percent of pre-tax loss | 16.00% | 11.20% | 26.70% | 18.40% |
Impact of non-deductible goodwill impairment charge | $ 52.8 | |||
Tax benefit associated with debt prepayment costs | $ 2.0 | |||
Tax benefit related to the impact of restructuring charges | 2.4 | |||
Tax benefit attributable to employee share-based compensation | $ (1.2) | |||
Operating loss carryforward, income tax benefit, CARES act | $ 7.0 | |||
Effective income tax rate reconciliation, excluding non-deductible expense, impairment losses, percent | 24.80% | 27.10% | ||
Impact of non-deductive expenses | $ 52.8 |
Business Segments - Narrative (Details) |
6 Months Ended |
---|---|
Dec. 31, 2021
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
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