falsedesktopCRS2020-09-30000001784320000088{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Delaware\t\t\t23-0458500\n(State or other jurisdiction of incorporation or organization)\t\t\t(I.R.S. Employer Identification No.)\n1735 Market Street\t15th Floor\t19103\nPhiladelphia\tPennsylvania\t\n(Address of principal executive offices)\t\t\t(Zip Code)\n", "q10k_tbl_1": "Large accelerated filer\t☒\t\tAccelerated filer\t☐\nNon-accelerated filer\t☐\t(Do not check if a smaller reporting company)\tSmaller reporting company\t☐\n\t\t\tEmerging growth company\t☐\n", "q10k_tbl_2": "\t\t\tPage\nPART I\tFINANCIAL INFORMATION\t\t\t\t\t\n\tItem 1\tFinancial Statements\t\n\t\tConsolidated Balance Sheets (unaudited) as of September 30 2020 and June 30 2020\t2\n\t\tConsolidated Statements of Operations (unaudited) for the Three Months ended September 30 2020 and 2019\t3\n\t\tConsolidated Statements of Comprehensive (Loss) Income (unaudited) for the Three Months Ended September 30 2020 and 2019\t4\n\t\tConsolidated Statements of Cash Flows (unaudited) for the Three Months Ended September 30 2020 and 2019\t5\n\t\tConsolidated Statements of Changes in Equity (unaudited) for the Three Months Ended September 30 2020 and 2019\t6\n\t\tNotes to the Consolidated Financial Statements (unaudited)\t7\n\tItem 2\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t24\n\tItem 3\tQuantitative and Qualitative Disclosures About Market Risk\t39\n\tItem 4\tControls and Procedures\t40\nPART II\tOTHER INFORMATION\t\t\t\t\t\n\tItem 1\tLegal Proceedings\t40\n\tItem 1A\tRisk Factors\t40\n\tItem 2\tUnregistered Sales of Equity Securities and Use of Proceeds\t40\n\tItem 6\tExhibits\t41\n\t\tSignature\t42\n", "q10k_tbl_3": "($ in millions except share data)\tSeptember 30 2020\tJune 30 2020\nASSETS\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t218.9\t193.1\nAccounts receivable net\t250.5\t292.3\nInventories\t633.9\t724.3\nOther current assets\t84.6\t56.6\nTotal current assets\t1187.9\t1266.3\nProperty plant and equipment net\t1334.1\t1351.1\nGoodwill\t292.3\t290.4\nOther intangibles net\t46.5\t52.1\nDeferred income taxes\t4.7\t4.9\nOther assets\t263.2\t262.4\nTotal assets\t3128.7\t3227.2\nLIABILITIES\t\t\nCurrent liabilities:\t\t\nShort-term credit agreement borrowings\t0\t170.0\nAccounts payable\t114.2\t124.2\nAccrued liabilities\t150.3\t157.9\nTotal current liabilities\t264.5\t452.1\nLong-term debt\t693.8\t551.8\nAccrued pension liabilities\t386.4\t399.5\nAccrued postretirement benefits\t137.7\t137.4\nDeferred income taxes\t130.7\t130.2\nOther liabilities\t108.1\t110.5\nTotal liabilities\t1721.2\t1781.5\nContingencies and commitments (see Note 11)\t\t\nSTOCKHOLDERS' EQUITY\t\t\nCommon stock - authorized 100000000 shares; issued 56012748 shares at September 30 2020 and 56012748 shares at June 30 2020; outstanding 47981735 shares at September 30 2020 and 47850468 shares at June 30 2020\t280.1\t280.1\nCapital in excess of par value\t315.9\t321.4\nReinvested earnings\t1511.2\t1568.0\nCommon stock in treasury (8031013 shares and 8162280 shares at September 30 2020 and June 30 2020 respectively) at cost\t(319.3)\t(325.8)\nAccumulated other comprehensive loss\t(380.4)\t(398.0)\nTotal stockholders' equity\t1407.5\t1445.7\nTotal liabilities and stockholders' equity\t3128.7\t3227.2\n", "q10k_tbl_4": "\tThree Months Ended September 30\t\n(in millions except per share data)\t2020\t2019\nNet sales\t353.3\t585.4\nCost of sales\t349.8\t472.8\nGross profit\t3.5\t112.6\nSelling general and administrative expenses\t42.3\t52.8\nRestructuring and asset impairment charges\t10.0\t0\nOperating (loss) income\t(48.8)\t59.8\nInterest expense net\t(14.9)\t(5.4)\nOther expense net\t(2.3)\t(0.3)\n(Loss) income before income taxes\t(66.0)\t54.1\nIncome tax (benefit) expense\t(18.9)\t12.9\nNet (loss) income\t(47.1)\t41.2\n(LOSS) EARNINGS PER COMMON SHARE:\t\t\nBasic\t(0.98)\t0.85\nDiluted\t(0.98)\t0.85\nWEIGHTED AVERAGE COMMON SHARES OUTSTANDING:\t\t\nBasic\t48.3\t47.9\nDiluted\t48.3\t48.3\n", "q10k_tbl_5": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nNet (loss) income\t(47.1)\t41.2\nOther comprehensive (loss) income net of tax\t\t\nPension and postretirement benefits net of tax of $(1.1) and $(1.0) respectively\t3.6\t3.0\nNet gain on derivative instruments net of tax of $(2.7) and $(8.5) respectively\t8.3\t26.7\nForeign currency translation gain (loss)\t5.7\t(5.5)\nOther comprehensive income net of tax\t17.6\t24.2\nComprehensive (loss) income\t(29.5)\t65.4\n", "q10k_tbl_6": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nOPERATING ACTIVITIES\t\t\nNet (loss) income\t(47.1)\t41.2\nAdjustments to reconcile net (loss) income to net cash provided from operating activities:\t\t\nLoss on debt prepayment\t8.2\t0\nDepreciation and amortization\t30.9\t30.6\nNon-cash restructuring and asset impairment charges\t8.7\t0\nDeferred income taxes\t(3.9)\t3.5\nNet pension expense\t4.1\t3.8\nShare-based compensation expense\t2.7\t4.1\nNet loss on disposals of property plant and equipment\t0.1\t0\nChanges in working capital and other:\t\t\nAccounts receivable\t42.0\t(2.1)\nInventories\t84.9\t(51.1)\nOther current assets\t(23.0)\t(10.1)\nAccounts payable\t(7.4)\t18.0\nAccrued liabilities\t(8.0)\t(30.8)\nPension plan contributions\t(2.9)\t(2.4)\nOther postretirement plan contributions\t(0.6)\t(0.9)\nOther net\t(0.7)\t(3.1)\nNet cash provided from operating activities\t88.0\t0.7\nINVESTING ACTIVITIES\t\t\nPurchases of property plant equipment and software\t(33.3)\t(47.5)\nProceeds from disposals of property plant and equipment\t0\t0.1\nProceeds from divestiture of business\t17.6\t0\nNet cash used for investing activities\t(15.7)\t(47.4)\nFINANCING ACTIVITIES\t\t\nCredit agreement borrowings\t0\t88.1\nCredit agreement repayments\t0\t(38.1)\nNet change in short-term credit agreement borrowings\t(170.0)\t7.9\nPayments on long-term debt\t(250.0)\t0\nProceeds from issuance of long-term debt net of offering costs\t395.5\t0\nPayments for debt prepayment costs net\t(8.2)\t0\nPayments for debt issue costs\t(1.1)\t0\nDividends paid\t(9.7)\t(9.7)\nProceeds from stock options exercised\t0\t2.6\nWithholding tax payments on share-based compensation awards\t(2.2)\t(7.5)\nNet cash (used for) provided from financing activities\t(45.7)\t43.3\nEffect of exchange rate changes on cash and cash equivalents\t(0.8)\t1.0\nINCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS\t25.8\t(2.4)\nCash and cash equivalents at beginning of period\t193.1\t27.0\nCash and cash equivalents at end of period\t218.9\t24.6\nSUPPLEMENTAL CASH FLOW INFORMATION:\t\t\nNon-cash investing activities: Acquisition of property plant equipment and software\t9.0\t19.6\n", "q10k_tbl_7": "\tCommon Stock\t\t\tReinvested Earnings\tCommon Stock in Treasury\tAccumulated Other Comprehensive (Loss) Income\tTotal Equity\n($ in millions except per share data)\tPar Value of $5\tCapital in Excess of Par Value\t\t\t\t\nBalances at June 30 2020\t280.1\t321.4\t1568.0\t(325.8)\t(398.0)\t1445.7\nNet (loss)\t\t\t(47.1)\t\t\t(47.1)\nPension and postretirement benefits gain net of tax\t\t\t\t\t3.6\t3.6\nNet gain on derivative instruments net of tax\t\t\t\t\t8.3\t8.3\nForeign currency translation\t\t\t\t\t5.7\t5.7\nCash Dividends:\t\t\t\t\t\t\nCommon @ $0.20 per share\t\t\t(9.7)\t\t\t(9.7)\nShare-based compensation plans\t\t(5.5)\t\t6.5\t\t1.0\nBalances at September 30 2020\t280.1\t315.9\t1511.2\t(319.3)\t(380.4)\t1407.5\n", "q10k_tbl_8": "\tCommon Stock\t\t\tReinvested Earnings\tCommon Stock in Treasury\tAccumulated Other Comprehensive (Loss) Income\tTotal Equity\n($ in millions except per share data)\tPar Value of $5\tCapital in Excess of Par Value\t\t\t\t\nBalances at June 30 2019\t279.0\t320.4\t1605.3\t(332.8)\t(351.8)\t1520.1\nNet income\t\t\t41.2\t\t\t41.2\nPension and postretirement benefits gain net of tax\t\t\t\t\t3.0\t3.0\nNet gain on derivative instruments net of tax\t\t\t\t\t26.7\t26.7\nForeign currency translation\t\t\t\t\t(5.5)\t(5.5)\nCash Dividends:\t\t\t\t\t\t\nCommon @ $0.20 per share\t\t\t(9.7)\t\t\t(9.7)\nShare-based compensation plans\t0.4\t(5.1)\t\t3.3\t\t(1.4)\nStock options exercised\t0.4\t2.2\t\t\t\t2.6\nBalances at September 30 2019\t279.8\t317.5\t1636.8\t(329.5)\t(327.6)\t1577.0\n", "q10k_tbl_9": "($ in millions)\tReserve Balance\nReserve balance at June 30 2020\t9.5\nRestructuring charges\t1.3\nCash payments\t(6.5)\nReserve balance at September 30 2020\t4.3\n", "q10k_tbl_10": "End-Use Market Data\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nAerospace and Defense\t172.0\t353.3\nMedical\t32.8\t48.9\nTransportation\t29.1\t40.0\nEnergy\t25.1\t39.3\nIndustrial and Consumer\t73.4\t73.3\nDistribution\t20.9\t30.6\nConsolidated net sales\t353.3\t585.4\n", "q10k_tbl_11": "Geographic Data\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nUnited States\t224.7\t384.9\nEurope\t61.3\t101.5\nAsia Pacific\t37.9\t53.4\nMexico\t13.1\t21.9\nCanada\t7.8\t13.4\nOther\t8.5\t10.3\nConsolidated net sales\t353.3\t585.4\n", "q10k_tbl_12": "\tThree Months Ended September 30\t\n(in millions except per share data)\t2020\t2019\nNet (loss) income\t(47.1)\t41.2\nLess: (loss) earnings and dividends allocated to participating securities\t0\t(0.4)\n(Loss) earnings available for common stockholders used in calculation of basic (loss) earnings per common share\t(47.1)\t40.8\nWeighted average number of common shares outstanding basic\t48.3\t47.9\nBasic (loss) earnings per common share\t(0.98)\t0.85\nNet (loss) income\t(47.1)\t41.2\nLess: earnings and dividends allocated to participating securities\t0\t(0.4)\n(Loss) earnings available for common stockholders used in calculation of diluted (loss) earnings per common share\t(47.1)\t40.8\nWeighted average number of common shares outstanding basic\t48.3\t47.9\nEffect of shares issuable under share-based compensation plans\t0\t0.4\nWeighted average number of common shares outstanding diluted\t48.3\t48.3\nDiluted (loss) earnings per common share\t(0.98)\t0.85\n", "q10k_tbl_13": "($ in millions)\tSeptember 30 2020\tJune 30 2020\nRaw materials and supplies\t192.1\t217.6\nWork in process\t264.3\t312.3\nFinished and purchased products\t177.5\t194.4\nTotal inventories\t633.9\t724.3\n", "q10k_tbl_14": "($ in millions)\tSeptember 30 2020\tJune 30 2020\nAccrued compensation and benefits\t47.0\t50.4\nAccrued pension liabilities\t27.3\t20.2\nAccrued postretirement benefits\t14.0\t14.0\nContract liabilities\t11.3\t12.3\nCurrent portion of lease liabilities\t11.1\t11.5\nDerivative financial instruments\t7.0\t11.1\nAccrued interest expense\t5.4\t10.4\nAccrued income taxes\t0.7\t1.0\nOther\t26.5\t27.0\nTotal accrued liabilities\t150.3\t157.9\n", "q10k_tbl_15": "Three months ended September 30\tPension Plans\t\t\tOther Postretirement Plans\n($ in millions)\t2020\t2019\t2020\t2019\nService cost\t2.4\t2.4\t0.7\t0.7\nInterest cost\t9.9\t11.7\t1.9\t2.3\nExpected return on plan assets\t(13.9)\t(15.5)\t(1.6)\t(1.8)\nAmortization of net loss\t4.3\t3.9\t0.9\t0.6\nAmortization of prior service cost (benefit)\t0.5\t0.5\t(1.0)\t(1.0)\nNet periodic benefit costs\t3.2\t3.0\t0.9\t0.8\n", "q10k_tbl_16": "($ in millions)\tSeptember 30 2020\tJune 30 2020\nSenior unsecured notes 5.20% due July 2021 (face value of $250.0 million at June 30 2020)\t0\t252.3\nSenior unsecured notes 4.45% due March 2023 (face value of $300.0 million at September 30 2020 and June 30 2020)\t299.3\t299.5\nSenior unsecured notes 6.375% due July 2028 (face value of $400.0 million at September 30 2020)\t394.5\t0\nTotal\t693.8\t551.8\nLess: amounts due within one year\t0\t0\nLong-term debt net of current portion\t693.8\t551.8\n", "q10k_tbl_17": "\tThree Months Ended September 30\tThree Months Ended September 30\n($ in millions)\t2020\t2019\nOperating lease cost\t3.6\t3.4\nShort-term lease cost\t0.8\t0.8\nVariable lease cost\t0.2\t0.1\nTotal lease cost\t4.6\t4.3\nOperating cash flow payments from operating leases\t3.5\t3.3\nNon-cash ROU assets obtained in exchange for lease obligations\t1.4\t0.9\n", "q10k_tbl_18": "\tSeptember 30 2020\tJune 30 2020\nWeighted-average remaining lease term - operating leases\t8.0 years\t8.1 years\nWeighted-average discount rate - operating leases\t3.9%\t3.9%\n", "q10k_tbl_19": "($ in millions)\tSeptember 30 2020\tJune 30 2020\nOperating lease assets:\t\t\nOther assets\t46.6\t52.0\nOperating lease liabilities:\t\t\nOther accrued liabilities\t11.1\t11.5\nOther liabilities\t45.3\t50.3\nTotal operating lease liabilities\t56.4\t61.8\n", "q10k_tbl_20": "($ in millions)\tSeptember 30 2020\n2021 (remaining period of fiscal year)\t10.9\n2022\t11.5\n2023\t9.9\n2024\t7.7\n2025\t4.8\nThereafter\t23.6\nTotal future minimum lease payments\t68.4\nLess imputed interest\t(12.0)\nTotal\t56.4\n", "q10k_tbl_21": "\tSeptember 30 2020\t\t\tJune 30 2020\n($ in millions)\tCarrying Value\tFair Value\tCarrying Value\tFair Value\nLong-term debt\t693.8\t732.3\t551.8\t551.1\nCompany-owned life insurance\t19.4\t19.4\t18.9\t18.9\n", "q10k_tbl_22": "September 30 2020\tInterest Rate Swaps\tForeign Currency Contracts\tCommodity Contracts\tTotal Derivatives\n($ in millions)\t\t\t\t\nAsset Derivatives:\t\t\t\t\nDerivatives designated as hedging instruments:\t\t\t\t\nOther current assets\t0\t0.1\t5.9\t6.0\nOther assets\t0\t0\t5.3\t5.3\nTotal asset derivatives\t0\t0.1\t11.2\t11.3\nLiability Derivatives:\t\t\t\t\nDerivatives designated as hedging instruments:\t\t\t\t\nAccrued liabilities\t0\t0.1\t6.9\t7.0\nOther liabilities\t0\t0.3\t5.0\t5.3\nTotal liability derivatives\t0\t0.4\t11.9\t12.3\n", "q10k_tbl_23": "June 30 2020\tInterest Rate Swaps\tForeign Currency Contracts\tCommodity Contracts\tTotal Derivatives\n($ in millions)\t\t\t\t\nAsset Derivatives:\t\t\t\t\nDerivatives designated as hedging instruments:\t\t\t\t\nOther current assets\t1.2\t0.2\t2.2\t3.6\nOther assets\t2.8\t0.6\t3.1\t6.5\nTotal asset derivatives\t4.0\t0.8\t5.3\t10.1\nLiability Derivatives:\t\t\t\t\nDerivatives designated as hedging instruments:\t\t\t\t\nAccrued liabilities\t0\t0\t11.1\t11.1\nOther liabilities\t0\t0\t6.8\t6.8\nTotal liability derivatives\t0\t0\t17.9\t17.9\n", "q10k_tbl_24": "\tAmount of Gain Recognized in AOCI on Derivatives\t\n\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nDerivatives in Cash Flow Hedging Relationship:\t\t\nCommodity contracts\t13.8\t39.8\nForeign exchange contracts\t0\t0.7\nTotal\t13.8\t40.5\n", "q10k_tbl_25": "($ in millions)\tLocation of Gain Reclassified from AOCI into Income\tAmount of Gain Reclassified from AOCI into Income\t\n\t\tThree Months Ended September 30\t\n\t\t2020\t2019\nDerivatives in Cash Flow Hedging Relationship:\t\t\t\nCommodity contracts\tCost of sales\t2.8\t4.8\nForeign exchange contracts\tNet sales\t0\t0.4\nForward interest rate swaps\tInterest expense\t0.1\t0.1\nTotal\t\t2.9\t5.3\n", "q10k_tbl_26": "\tThree Months Ended September 30 2020\t\t\t\t\tThree Months Ended September 30 2019\n($ in millions)\tNet Sales\tCost of Sales\tInterest Expense\tNet Sales\tCost of Sales\tInterest Expense\nTotal amounts presented in the consolidated statement of income in which the effects of cash flow and fair value hedges are recorded\t353.3\t349.8\t14.9\t585.4\t472.8\t5.4\nGain (loss) on Derivatives in Cash Flow Hedging Relationship:\t\t\t\t\t\t\nCommodity contracts\t\t\t\t\t\t\nAmount of gain reclassified from AOCI to income\t0\t2.8\t0\t0\t4.8\t0\nForeign currency forward contracts\t\t\t\t\t\t\nAmount of gain reclassified from AOCI to income\t0\t0\t0\t0.4\t0\t0\nInterest rate swap agreements\t\t\t\t\t\t\nAmount of gain reclassified from AOCI to income\t0\t0\t0.1\t0\t0\t0.1\n(Loss) gain on Derivatives in Fair Value Hedging Relationship:\t\t\t\t\t\t\nInterest rate swap agreements\t\t\t\t\t\t\nHedged Item\t0\t0\t(2.7)\t0\t0\t0\nDerivatives designated as hedging instruments\t0\t0\t2.7\t0\t0\t0\nTotal gain (loss)\t0\t2.8\t0.1\t0.4\t4.8\t0.1\n", "q10k_tbl_27": "\tCarrying amount of the hedged liabilities\t\t\tCumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities\n($ in millions)\tSeptember 30 2020\tJune 30 2020\tSeptember 30 2020\tJune 30 2020\nLine item in the consolidated balance sheets in which the hedged item is included\t\t\t\t\nLong Term Debt\t0\t152.8\t0\t2.8\n", "q10k_tbl_28": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nUnrealized gains on company-owned life insurance contracts and investments held in rabbi trusts\t1.4\t0.1\nForeign exchange (loss) gain\t(2.7)\t0.2\nPension earnings interest and deferrals\t(1.0)\t(0.7)\nOther\t0\t0.1\nTotal other expense net\t(2.3)\t(0.3)\n", "q10k_tbl_29": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nNet Sales:\t\t\nSpecialty Alloys Operations\t300.7\t491.1\nPerformance Engineered Products\t61.8\t109.4\nIntersegment\t(9.2)\t(15.1)\nConsolidated net sales\t353.3\t585.4\n", "q10k_tbl_30": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nOperating (Loss) Income:\t\t\nSpecialty Alloys Operations\t(18.6)\t81.0\nPerformance Engineered Products\t(3.6)\t(2.0)\nCorporate costs (including restructuring and asset impairment charges)\t(26.6)\t(19.1)\nIntersegment\t0\t(0.1)\nConsolidated operating (loss) income\t(48.8)\t59.8\n", "q10k_tbl_31": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nDepreciation and Amortization:\t\t\nSpecialty Alloys Operations\t23.2\t23.6\nPerformance Engineered Products\t6.0\t5.9\nCorporate\t1.7\t1.3\nIntersegment\t0\t(0.2)\nConsolidated depreciation and amortization\t30.9\t30.6\n", "q10k_tbl_32": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nCapital Expenditures:\t\t\nSpecialty Alloys Operations\t21.8\t25.2\nPerformance Engineered Products\t2.2\t6.2\nCorporate\t9.4\t16.2\nIntersegment\t(0.1)\t(0.1)\nConsolidated capital expenditures\t33.3\t47.5\n", "q10k_tbl_33": "\tSeptember 30 2020\tJune 30 2020\n($ in millions)\t\t\nTotal Assets:\t\t\nSpecialty Alloys Operations\t2170.7\t2259.0\nPerformance Engineered Products\t502.6\t548.5\nCorporate\t471.3\t428.9\nIntersegment\t(15.9)\t(9.2)\nConsolidated total assets\t3128.7\t3227.2\n", "q10k_tbl_34": "Three Months Ended September 30 2020 ($ in millions) (a)\tCash flow hedging items\tPension and other postretirement benefit plan items\tForeign currency items\tTotal\nBalances at June 30 2020\t(11.1)\t(334.3)\t(52.6)\t(398.0)\nOther comprehensive gain before reclassifications\t10.5\t0\t5.7\t16.2\nAmounts reclassified from AOCI (b)\t(2.2)\t3.6\t0\t1.4\nNet other comprehensive income\t8.3\t3.6\t5.7\t17.6\nBalances at September 30 2020\t(2.8)\t(330.7)\t(46.9)\t(380.4)\n", "q10k_tbl_35": "Three Months Ended September 30 2019 ($ in millions) (a)\tCash flow hedging items\tPension and other postretirement benefit plan items\tForeign currency items\tTotal\nBalances at June 30 2019\t(14.8)\t(293.3)\t(43.7)\t(351.8)\nOther comprehensive income before reclassifications\t30.7\t0\t(5.5)\t25.2\nAmounts reclassified from AOCI (b)\t(4.0)\t3.0\t0\t(1.0)\nNet other comprehensive income\t26.7\t3.0\t(5.5)\t24.2\nBalances at September 30 2019\t11.9\t(290.3)\t(49.2)\t(327.6)\n", "q10k_tbl_36": "Details about AOCI Components\tLocation of gain (loss)\tAmount Reclassified from AOCI Three Months Ended September 30\t\n($ in millions) (a)\t\t2020\t2019\nCash flow hedging items:\t\t\t\nCommodity contracts\tCost of sales\t2.8\t4.8\nForeign exchange contracts\tNet sales\t0\t0.4\nForward interest rate swaps\tInterest expense\t0.1\t0.1\nTotal before tax\t\t2.9\t5.3\nTax expense\t\t(0.7)\t(1.3)\nNet of tax\t\t2.2\t4.0\n", "q10k_tbl_37": "Details about AOCI Components\tLocation of (loss) gain\tAmount Reclassified from AOCI Three Months Ended September 30\t\n($ in millions) (a)\t\t2020\t2019\nAmortization of pension and other postretirement benefit plan items:\t\t\t\nNet actuarial loss\t(b)\t(5.2)\t(4.5)\nPrior service benefit\t(b)\t0.5\t0.5\nTotal before tax\t\t(4.7)\t(4.0)\nTax benefit\t\t1.1\t1.0\nNet of tax\t\t(3.6)\t(3.0)\n", "q10k_tbl_38": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nPension plans\t3.2\t3.0\nOther postretirement plans\t0.9\t0.8\nNet periodic benefit costs\t4.1\t3.8\n", "q10k_tbl_39": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nService cost included in Cost of sales\t2.7\t2.7\nService cost included in Selling general and administrative expenses\t0.4\t0.4\nPension earnings interest and deferrals included in Other expense net\t1.0\t0.7\nNet periodic benefit costs\t4.1\t3.8\n", "q10k_tbl_40": "\tThree Months Ended September 30\t\t\t (Decrease) Increase\t% (Decrease) Increase\n($ in millions)\t2020\t2019\t\t\nAerospace and Defense\t172.0\t353.3\t(181.3)\t(51)%\nMedical\t32.8\t48.9\t(16.1)\t(33)%\nTransportation\t29.1\t40.0\t(10.9)\t(27)%\nEnergy\t25.1\t39.3\t(14.2)\t(36)%\nIndustrial and Consumer\t73.4\t73.3\t0.1\t-%\nDistribution\t20.9\t30.6\t(9.7)\t(32)%\nTotal net sales\t353.3\t585.4\t(232.1)\t(40)%\n", "q10k_tbl_41": "\tThree Months Ended September 30\t\t\t (Decrease) Increase\t% (Decrease) Increase\n($ in millions)\t2020\t2019\t\t\nAerospace and Defense\t147.5\t286.1\t(138.6)\t(48)%\nMedical\t30.0\t44.0\t(14.0)\t(32)%\nTransportation\t24.5\t33.0\t(8.5)\t(26)%\nEnergy\t21.3\t33.0\t(11.7)\t(35)%\nIndustrial and Consumer\t63.1\t60.2\t2.9\t5%\nDistribution\t20.8\t30.3\t(9.5)\t(31)%\nTotal net sales excluding surcharge revenue\t307.2\t486.6\t(179.4)\t(37)%\n", "q10k_tbl_42": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nNet sales\t353.3\t585.4\nLess: surcharge revenue\t46.1\t98.8\nNet sales excluding surcharge revenue\t307.2\t486.6\nGross profit\t3.5\t112.6\nGross margin\t1.0%\t19.2%\nAdjusted gross margin excluding surcharge revenue\t1.1%\t23.1%\n", "q10k_tbl_43": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nNet sales\t353.3\t585.4\nLess: surcharge revenue\t46.1\t98.8\nNet sales excluding surcharge revenue\t307.2\t486.6\nOperating (loss) income\t(48.8)\t59.8\nSpecial items:\t\t\nRestructuring and asset impairment charges\t10.0\t0\nCOVID-19 costs\t7.9\t0\nOperating (loss) income\t(30.9)\t59.8\nOperating margin\t(13.8)%\t10.2%\nAdjusted operating margin excluding surcharge revenue and special items\t(10.1)%\t12.3%\n", "q10k_tbl_44": "\tThree Months Ended September 30\t\t\t(Decrease) Increase\t% (Decrease) Increase\n(Pounds sold in thousands)\t2020\t2019\t\t\nSpecialty Alloys Operations\t43368\t60044\t(16676)\t(28)%\nPerformance Engineered Products *\t1466\t3250\t(1784)\t(55)%\nIntersegment\t(486)\t(996)\t510\t51%\nConsolidated pounds sold\t44348\t62298\t(17950)\t(29)%\n", "q10k_tbl_45": "\tThree Months Ended September 30\t\t\t (Decrease) Increase\t% (Decrease) Increase\n($ in millions)\t2020\t2019\t\t\nSpecialty Alloys Operations\t300.7\t491.1\t(190.4)\t(39)%\nPerformance Engineered Products\t61.8\t109.4\t(47.6)\t(44)%\nIntersegment\t(9.2)\t(15.1)\t5.9\t39%\nTotal net sales\t353.3\t585.4\t(232.1)\t(40)%\n", "q10k_tbl_46": "\tThree Months Ended September 30\t\t\t (Decrease) Increase\t% (Decrease) Increase\n($ in millions)\t2020\t2019\t\t\nSpecialty Alloys Operations\t254.8\t393.2\t(138.4)\t(35)%\nPerformance Engineered Products\t61.2\t107.9\t(46.7)\t(43)%\nIntersegment\t(8.8)\t(14.5)\t5.7\t39%\nTotal net sales excluding surcharge revenue\t307.2\t486.6\t(179.4)\t(37)%\n", "q10k_tbl_47": "($ in millions except per share amounts)\tLoss Before Income Taxes\tIncome Tax Benefit (Expense)\tNet (Loss) Income\t(Loss) Per Diluted Share*\nThree months ended September 30 2020 as reported\t(66.0)\t18.9\t(47.1)\t(0.98)\nSpecial items:\t\t\t\t\nDebt prepayment costs net\t8.2\t(2.0)\t6.2\t0.13\nRestructuring and asset impairment charges\t10.0\t(2.4)\t7.6\t0.16\nCOVID-19 costs\t7.9\t(2.6)\t5.3\t0.11\nThree months ended September 30 2020 as adjusted\t(39.9)\t11.9\t(28.0)\t(0.58)\n", "q10k_tbl_48": "($ in millions except per share amounts)\tIncome Before Income Taxes\tIncome Tax Expense\tNet Income\tEarnings Per Diluted Share*\nThree months ended September 30 2019 as reported\t54.1\t(12.9)\t41.2\t0.85\nSpecial item:\t\t\t\t\nNone reported\t0\t0\t0\t0\nThree months ended September 30 2019 as adjusted\t54.1\t(12.9)\t41.2\t0.85\n", "q10k_tbl_49": "\tThree Months Ended September 30\t\n($ in millions)\t2020\t2019\nNet cash provided from operating activities\t88.0\t0.7\nPurchases of property plant equipment and software\t(33.3)\t(47.5)\nProceeds from disposals of property plant and equipment\t0\t0.1\nProceeds from divestiture of business\t17.6\t0\nDividends paid\t(9.7)\t(9.7)\nFree cash flow\t62.6\t(56.4)\n", "q10k_tbl_50": "Exhibit No.\tDescription\n31 (A)\tCertification 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)\n31 (B)\tCertification 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)\n32\tCertification 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)\n101\tThe following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30 2020 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) Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to the Consolidated Financial Statements.\n"}{"bs": "q10k_tbl_3", "is": "q10k_tbl_4", "cf": "q10k_tbl_6"}None
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-5828
CARPENTER TECHNOLOGY CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware
23-0458500
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1735 Market Street
15th Floor
19103
Philadelphia
Pennsylvania
(Address of principal executive offices)
(Zip Code)
610-208-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $5 Par Value
CRS
New York Stock Exchange
Title of each class
Trading Symbol
Name of each exchange on which registered
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
(Do not check if a smaller reporting company)
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒
The number of shares outstanding of the issuer’s common stock as of October 16, 2020 was 48,018,407.
Common stock — authorized 100,000,000 shares; issued 56,012,748 shares at September 30, 2020 and 56,012,748 shares at June 30, 2020; outstanding 47,981,735 shares at September 30, 2020 and 47,850,468 shares at June 30, 2020
280.1
280.1
Capital in excess of par value
315.9
321.4
Reinvested earnings
1,511.2
1,568.0
Common stock in treasury (8,031,013 shares and 8,162,280 shares at September 30, 2020 and June 30, 2020, respectively), at cost
(319.3)
(325.8)
Accumulated other comprehensive loss
(380.4)
(398.0)
Total stockholders' equity
1,407.5
1,445.7
Total liabilities and stockholders' equity
$
3,128.7
$
3,227.2
See accompanying notes to consolidated financial statements.
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, 2020 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, 2020 (the “2020 Form 10-K”). Operating results for the three months ended September 30, 2020 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.
2. Restructuring and Asset Impairment Charges
Restructuring and asset impairment charges for the three months ended September 30, 2020 were $10.0 million. There were no restructuring or asset impairment charges for the three months ended September 30, 2019.
During the first 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 $1.3 million of charges primarily related to various personnel-related costs for severance payments, medical coverage and related items.
In the fourth quarter of fiscal year 2020, the Company approved actions to reduce overhead costs and position the Company to drive long-term, profitable growth. These actions included implementing a restructuring plan aimed at reducing fixed costs by eliminating 20 percent of global salaried positions across all business segments. The restructuring charge consisted primarily of various personnel-related costs for severance payments, medical coverage and related items. In addition, the Company also recorded non-cash asset impairment charges related to the closure of two domestic powder facilities in the PEP segment, non-cash asset impairment charges related to the decision to exit the Amega West business, and a non-cash write-down of software that will no longer be implemented at a particular business unit. At this time, the Company does not expect any additional charges related to these restructuring actions in the future.
The reserve balances and activity for restructuring charges were as follows:
($ in millions)
Reserve Balance
Reserve balance at June 30, 2020
$
9.5
Restructuring charges
1.3
Cash payments
(6.5)
Reserve balance at September 30, 2020
$
4.3
3. Recent Accounting Pronouncements
Recently Issued Accounting Pronouncements - Adopted in current fiscal year
At this time there are no issued pronouncements adopted in the current fiscal year that would materially impact the Company.
In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848). The guidance in ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating the potential impact of the adoption of ASU 2020-04 on the consolidated financial statements.
4. Revenue
The Company recognizes revenue in accordance with Topic 606, Revenue from Contracts. The Company applies the five-step model in the FASB’s guidance, which requires the Company to: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, the Company satisfies a performance obligation.
The Company recognizes revenue when performance obligations under the terms of a customer purchase order or contract are satisfied. This occurs when control of the goods and services has transferred to the customer, which is generally determined when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product or the service is performed. Consignment transactions are arrangements where the Company transfers product to a customer location but retains ownership and control of such product until it is used by the customer. Revenue for consignment arrangements is recognized upon usage by the customer. Service revenue is recognized as the services are performed.
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 and are classified as cost of sales in the consolidated statements of income. Shipping terms may vary for products shipped outside the United States depending on the mode of transportation, the country where the material is shipped and any agreements made with the customers.
Contract liabilities are recognized when the Company has received consideration from a customer to transfer goods or services at a future point in time when the Company performs under the purchase order or contract. Contract liabilities were $11.3 million and $12.3 million at September 30, 2020 and June 30, 2020, respectively, and are included in accrued liabilities on the consolidated balance sheets.
The Company has elected to use the practical expedient that permits the omission of disclosure for remaining performance obligations which are expected to be satisfied in one year or less.
The Company operates in two business segments, Specialty Alloys Operations (“SAO”) and PEP. Revenue is disaggregated within these two business segments by diversified end-use markets and by geographical location. Comparative information of the Company’s overall revenues by end-use markets and geography for the three months ended September 30, 2020 and 2019 were as follows:
End-Use Market Data
Three Months Ended September 30,
($ in millions)
2020
2019
Aerospace and Defense
$
172.0
$
353.3
Medical
32.8
48.9
Transportation
29.1
40.0
Energy
25.1
39.3
Industrial and Consumer
73.4
73.3
Distribution
20.9
30.6
Consolidated net sales
$
353.3
$
585.4
Geographic Data
Three Months Ended September 30,
($ in millions)
2020
2019
United States
$
224.7
$
384.9
Europe
61.3
101.5
Asia Pacific
37.9
53.4
Mexico
13.1
21.9
Canada
7.8
13.4
Other
8.5
10.3
Consolidated net sales
$
353.3
$
585.4
5. 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 is held in escrow. 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.
6. Earnings (Loss) per Common Share
The Company calculates basic and diluted (loss) earnings per share using the two class method. Under the two class method, (loss) earnings are allocated to common stock and participating securities (non-vested restricted shares and units that receive non-forfeitable dividends) according to their participation rights in dividends and undistributed earnings. The (loss) earnings available to each class of stock are divided by the weighted average number of outstanding shares for the period in each class. Diluted (loss) earnings per share assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. For the three months ended September 30, 2020, 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) earnings per common share for the three months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,
(in millions, except per share data)
2020
2019
Net (loss) income
$
(47.1)
$
41.2
Less: (loss) earnings and dividends allocated to participating securities
—
(0.4)
(Loss) earnings available for common stockholders used in calculation of basic (loss) earnings per common share
$
(47.1)
$
40.8
Weighted average number of common shares outstanding, basic
48.3
47.9
Basic (loss) earnings per common share
$
(0.98)
$
0.85
Net (loss) income
$
(47.1)
$
41.2
Less: earnings and dividends allocated to participating securities
—
(0.4)
(Loss) earnings available for common stockholders used in calculation of diluted (loss) earnings per common share
$
(47.1)
$
40.8
Weighted average number of common shares outstanding, basic
48.3
47.9
Effect of shares issuable under share-based compensation plans
—
0.4
Weighted average number of common shares outstanding, diluted
48.3
48.3
Diluted (loss) earnings per common share
$
(0.98)
$
0.85
The following awards issued under share-based compensation plans were excluded from the above calculations of diluted earnings per share because their effects were anti-dilutive:
Three Months Ended September 30,
(in millions)
2020
2019
Stock options
2.1
0.8
7. Inventories
Inventories consisted of the following components as of September 30, 2020 and June 30, 2020:
($ in millions)
September 30, 2020
June 30, 2020
Raw materials and supplies
$
192.1
$
217.6
Work in process
264.3
312.3
Finished and purchased products
177.5
194.4
Total inventories
$
633.9
$
724.3
Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out (“LIFO”) inventory costing method. The Company also uses the first-in, first-out (“FIFO”) and average cost methods. As of September 30, 2020 and June 30, 2020, $126.1 million and $136.3 million of inventory, respectively, was accounted for using a method other than the LIFO inventory costing method.
Accrued liabilities consisted of the following as of September 30, 2020 and June 30, 2020:
($ in millions)
September 30, 2020
June 30, 2020
Accrued compensation and benefits
$
47.0
$
50.4
Accrued pension liabilities
27.3
20.2
Accrued postretirement benefits
14.0
14.0
Contract liabilities
11.3
12.3
Current portion of lease liabilities
11.1
11.5
Derivative financial instruments
7.0
11.1
Accrued interest expense
5.4
10.4
Accrued income taxes
0.7
1.0
Other
26.5
27.0
Total accrued liabilities
$
150.3
$
157.9
9. Pension and Other Postretirement Benefits
The components of the net periodic benefit cost related to the Company’s pension and other postretirement benefits for the three months ended September 30, 2020 and 2019 were as follows: