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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
 
FORM 10-Q

(Mark One)
 
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022
 
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
 
Philadelphia, Pennsylvania19103
(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 ValueCRS New York Stock Exchange
Title of each classTrading 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 April 22, 2022 was 48,278,564.

Table of Contents
CARPENTER TECHNOLOGY CORPORATION
FORM 10-Q
INDEX
 
   Page
 
    
  
    
  
    
  
    
  
    
  
    
  
    
  
    
 
    
 
    
 
    
 
    
 
    
 
    
 
 
    
  

1
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
 
CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)

($ in millions, except share data)March 31,
2022		June 30,
2021
ASSETS
Current assets:
Cash and cash equivalents$393.9 $287.4 
Accounts receivable, net336.2 308.7 
Inventories526.5 425.7 
Other current assets143.1 95.6 
Total current assets1,399.7 1,117.4 
Property, plant and equipment, net1,425.9 1,457.5 
Goodwill241.4 241.4 
Other intangibles, net37.5 43.1 
Deferred income taxes5.6 5.3 
Other assets120.1 106.5 
Total assets$3,230.2 $2,971.2 
LIABILITIES  
Current liabilities:  
Current portion of long-term debt$300.0 $— 
Accounts payable214.0 142.4 
Accrued liabilities119.8 163.9 
Total current liabilities633.8 306.3 
Long-term debt690.9 694.5 
Accrued pension liabilities208.6 222.6 
Accrued postretirement benefits98.6 98.6 
Deferred income taxes148.8 156.9 
Other liabilities102.4 100.0 
Total liabilities1,883.1 1,578.9 
Contingencies and commitments (see Note 11)
STOCKHOLDERS' EQUITY  
Common stock — authorized 100,000,000 shares; issued 56,024,619 shares at March 31, 2022 and 56,024,619 shares at June 30, 2021; outstanding 48,277,682 shares at March 31, 2022 and 48,040,676 shares at June 30, 2021
280.1 280.1 
Capital in excess of par value318.5 322.6 
Reinvested earnings1,218.2 1,299.3 
Common stock in treasury (7,746,937 shares and 7,983,943 shares at March 31, 2022 and June 30, 2021, respectively), at cost
(307.7)(317.4)
Accumulated other comprehensive loss(162.0)(192.3)
Total stockholders' equity1,347.1 1,392.3 
Total liabilities and stockholders' equity$3,230.2 $2,971.2 

See accompanying notes to consolidated financial statements.
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CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


Three Months Ended
March 31,		Nine Months Ended
March 31,
 (in millions, except per share data)2022202120222021
Net sales$489.0 $351.9 $1,272.6 $1,054.0 
Cost of sales449.5 336.5 1,194.8 1,029.1 
Cost of sales - inventory write-downs from restructuring— 2.6 — 2.6 
Gross profit39.5 12.8 77.8 22.3 
Selling, general and administrative expenses38.4 47.8 127.3 132.3 
Restructuring and asset impairment charges— 5.0 — 15.0 
Goodwill impairment— — — 52.8 
Operating income (loss)1.1 (40.0)(49.5)(177.8)
Interest expense, net11.2 8.9 31.5 23.5 
Debt extinguishment losses, net
— — — 8.2 
Other (income) expense, net(1.8)8.3 (12.5)9.4 
Loss before income taxes(8.3)(57.2)(68.5)(218.9)
Income tax benefit(0.8)(16.7)(16.8)(46.4)
Net loss$(7.5)$(40.5)$(51.7)$(172.5)
LOSS PER COMMON SHARE:  
Basic$(0.16)$(0.84)$(1.07)$(3.58)
Diluted$(0.16)$(0.84)$(1.07)$(3.58)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:  
Basic48.6 48.3 48.5 48.3 
Diluted48.6 48.3 48.5 48.3 
 
See accompanying notes to consolidated financial statements.
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CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

Three Months Ended
March 31,		Nine Months Ended
March 31,
 ($ in millions)2022202120222021
Net loss$(7.5)$(40.5)$(51.7)$(172.5)
Other comprehensive income (loss), net of tax    
Pension and postretirement benefits, net of tax of $(0.4), $(31.5), $(1.2) and $(33.8), respectively
1.1 98.1 3.0 105.3 
Net gain on derivative instruments, net of tax of $(8.6), $(0.5), $(9.5) and $(4.7), respectively
27.2 1.7 30.0 14.9 
Foreign currency translation 0.1 (3.7)(2.7)10.8 
Other comprehensive income, net of tax28.4 96.1 30.3 131.0 
Comprehensive income (loss)$20.9 $55.6 $(21.4)$(41.5)
 
See accompanying notes to consolidated financial statements.
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CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
($ in millions)20222021
OPERATING ACTIVITIES  
Net loss$(51.7)$(172.5)
Adjustments to reconcile net loss to net cash (used for) provided from operating activities:  
Depreciation and amortization98.5 91.6 
Goodwill impairment charge— 52.8 
Non-cash inventory write-downs from restructuring— 2.6 
Acquisition-related contingent liability release(4.7)— 
Non-cash restructuring and asset impairment charges— 13.6 
Debt extinguishment losses, net— 8.2 
Deferred income taxes(19.0)(19.3)
Net pension (income) expense(5.5)20.3 
Share-based compensation expense8.6 7.8 
Net loss on disposals of property, plant and equipment 0.7 0.1 
Changes in working capital and other:  
Accounts receivable(29.9)13.8 
Inventories(101.4)181.9 
Other current assets(12.6)(33.4)
Accounts payable63.1 18.2 
Accrued liabilities(38.5)3.8 
Pension plan contributions(0.2)(10.9)
Other postretirement plan contributions(1.2)(1.6)
Other, net(7.2)(1.6)
Net cash (used for) provided from operating activities(101.0)175.4 
INVESTING ACTIVITIES  
Purchases of property, plant, equipment and software(58.5)(78.5)
Proceeds from disposals of property, plant and equipment and assets held for sale1.8 1.6 
Proceeds from divestiture of business— 20.0 
Net cash used for investing activities(56.7)(56.9)
FINANCING ACTIVITIES  
Net change in short-term credit agreement borrowings— (170.0)
Proceeds from issuance of long-term debt, net of offering costs296.6 395.5 
Payments on long-term debt— (250.0)
Payments for debt extinguishment costs, net— (8.2)
Payments for debt issue costs(1.1)(2.5)
Dividends paid(29.4)(29.3)
Proceeds from stock options exercised— 0.2 
Withholding tax payments on share-based compensation awards(3.2)(2.3)
Net cash provided from (used for) financing activities262.9 (66.6)
Effect of exchange rate changes on cash and cash equivalents1.3 (0.8)
 INCREASE IN CASH AND CASH EQUIVALENTS106.5 51.1 
Cash and cash equivalents at beginning of period287.4 193.1 
Cash and cash equivalents at end of period$393.9 $244.2 
SUPPLEMENTAL CASH FLOW INFORMATION:  
Non-cash investing activities: Purchase of property, plant, equipment and software$11.8 $4.2 
See accompanying notes to consolidated financial statements.
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CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)

 Common StockReinvested EarningsCommon Stock in TreasuryAccumulated Other Comprehensive (Loss) IncomeTotal Equity
($ in millions, except per share data)
Par Value of $5
Capital in Excess of Par Value
Balances at December 31, 2021$280.1 $315.9 $1,235.5 $(308.0)$(190.4)$1,333.1 
Net loss  (7.5)  (7.5)
Pension and postretirement benefits gain, net of tax    1.1 1.1 
Net gain on derivative instruments, net of tax    27.2 27.2 
Foreign currency translation    0.1 0.1 
Cash Dividends:     
     Common @ $0.20 per share
  (9.8)  (9.8)
Share-based compensation plans2.6  0.3  2.9 
Balances at March 31, 2022$280.1 $318.5 $1,218.2 $(307.7)$(162.0)$1,347.1 
 
 Common StockReinvested EarningsCommon Stock in TreasuryAccumulated Other Comprehensive (Loss) IncomeTotal Equity
($ in millions, except per share data)
Par Value of $5
Capital in Excess of Par Value
Balances at December 31, 2020$280.1 $317.0 $1,416.5 $(317.6)$(363.1)$1,332.9 
Net loss  (40.5)  (40.5)
Pension and postretirement benefits gain, net of tax    98.1 98.1 
Net gain on derivative instruments, net of tax    1.7 1.7 
Foreign currency translation    (3.7)(3.7)
Cash Dividends:     
     Common @ $0.20 per share
  (9.8)  (9.8)
Share-based compensation plans2.2  0.1  2.3 
Stock options exercised0.2    0.2 
Balances at March 31, 2021$280.1 $319.4 $1,366.2 $(317.5)$(267.0)$1,381.2 
 
See accompanying notes to consolidated financial statements.
















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CARPENTER TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)

 Common StockReinvested EarningsCommon Stock in TreasuryAccumulated Other Comprehensive (Loss) IncomeTotal Equity
($ in millions, except per share data)
Par Value of $5
Capital in Excess of Par Value
Balances at June 30, 2021$280.1 $322.6 $1,299.3 $(317.4)$(192.3)$1,392.3 
Net loss  (51.7)  (51.7)
Pension and postretirement benefits gain, net of tax    3.0 3.0 
Net gain on derivative instruments, net of tax    30.0 30.0 
Foreign currency translation    (2.7)(2.7)
Cash Dividends:     
     Common @ $0.60 per share
  (29.4)  (29.4)
Share-based compensation plans(4.1) 9.7  5.6 
Balances at March 31, 2022$280.1 $318.5 $1,218.2 $(307.7)$(162.0)$1,347.1 

 Common StockReinvested EarningsCommon Stock in TreasuryAccumulated Other Comprehensive (Loss) IncomeTotal Equity
($ in millions, except per share data)
Par Value of $5
Capital in Excess of Par Value
Balances at June 30, 2020$280.1 $321.4 $1,568.0 $(325.8)$(398.0)$1,445.7 
Net loss  (172.5)  (172.5)
Pension and postretirement benefits gain, net of tax    105.3 105.3 
Net gain on derivative instruments, net of tax    14.9 14.9 
Foreign currency translation    10.8 10.8 
Cash Dividends:     
     Common @ $0.60 per share
  (29.3)  (29.3)
Share-based compensation plans(2.2) 8.3  6.1 
Stock options exercised0.2    0.2 
Balances at March 31, 2021$280.1 $319.4 $1,366.2 $(317.5)$(267.0)$1,381.2 

See accompanying notes to consolidated financial statements.
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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.    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 nine months ended March 31, 2022 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 and nine months ended March 31, 2022 were $0.0 million and $0.0 million, respectively. There were $5.0 million and $15.0 million of restructuring and asset impairment charges for the three and nine months ended March 31, 2021, respectively.

During the quarter ended March 31, 2021, restructuring actions were executed within the Company's Additive business in the Performance Engineered Products (“PEP”) segment. This included $4.9 million of noncash impairment charges primarily related to certain long-lived assets and $0.6 million of charges primarily related to various personnel-related costs for severance payments, medical coverage and related items. These charges were partially offset by proceeds of $0.5 million related to the sale of certain production equipment from an idled powder production facility. Additionally as part of these restructuring actions, $2.6 million of inventory write-downs were recorded in cost of sales in the quarter ended March 31, 2021.

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 March 31, 2022 and June 30, 2021 were as follows:

($ in millions)March 31, 2022June 30, 2021
Reserve balance at beginning of fiscal year$1.4 $9.5 
Restructuring charges excluding non-cash impairments— 1.2 
Cash payments(1.3)(9.3)
Reserve balance at end of period$0.1 $1.4 

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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3.    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 nine months ended March 31, 2022 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.

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. 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.

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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 $14.0 million and $8.6 million at March 31, 2022 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 nine months ended March 31, 2022 and 2021 were as follows:
End-Use Market DataThree Months Ended
March 31,		Nine Months Ended
March 31,
($ in millions)2022202120222021
Aerospace and Defense$206.1 $163.0 $540.7 $509.4 
Medical54.2 35.0 144.0 100.2 
Transportation46.4 36.9 126.2 97.7 
Energy34.7 23.1 80.0 70.3 
Industrial and Consumer114.3 67.2 291.3 206.6 
Distribution33.3 26.7 90.4 69.8 
Consolidated net sales$489.0 $351.9 $1,272.6 $1,054.0 
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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Geographic DataThree Months Ended
March 31,		Nine Months Ended
March 31,
($ in millions)2022202120222021
United States$312.7 $224.6 $813.7 $657.5 
Europe71.5 55.5 172.3 184.9 
Asia Pacific56.6 45.6 171.4 132.4 
Mexico24.2 11.0 61.6 34.8 
Canada12.5 9.3 28.4 24.2 
Other11.5 5.9 25.2 20.2 
Consolidated net sales$489.0 $351.9 $1,272.6 $1,054.0 

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 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.

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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6.    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 nine months ended March 31, 2022 and 2021, 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 nine months ended March 31, 2022 and 2021 were as follows: 
Three Months Ended
March 31,		Nine Months Ended
March 31,
(in millions, except per share data)2022202120222021
Net loss $(7.5)$(40.5)$(51.7)$(172.5)
Dividends allocated to participating securities— (0.1)(0.1)(0.3)
Loss available for common stockholders used in calculation of basic loss per common share$(7.5)$(40.6)$(51.8)$(172.8)
Weighted average number of common shares outstanding, basic48.6 48.3 48.5 48.3 
Basic loss per common share$(0.16)$(0.84)$(1.07)$(3.58)
Net loss$(7.5)$(40.5)$(51.7)$(172.5)
Dividends allocated to participating securities— (0.1)(0.1)(0.3)
Loss available for common stockholders used in calculation of diluted loss per common share$(7.5)$(40.6)$(51.8)$(172.8)
Weighted average number of common shares outstanding, basic48.6 48.3 48.5 48.3 
Effect of shares issuable under share-based compensation plans— — — — 
Weighted average number of common shares outstanding, diluted48.6 48.3 48.5 48.3 
Diluted loss per common share$(0.16)$(0.84)$(1.07)$(3.58)
 
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:
 
Three Months Ended
March 31,		Nine Months Ended
March 31,
(in millions)2022202120222021
Stock options1.9 1.9 2.0 2.1 
 
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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7.    Inventories
 
Inventories consisted of the following components as of March 31, 2022 and June 30, 2021:
 
($ in millions)March 31,
2022		June 30,
2021
Raw materials and supplies$145.2 $115.0 
Work in process257.3 206.2 
Finished and purchased products124.0 104.5 
Total inventories$526.5 $425.7 
 
Inventories are valued at the lower of cost or market. Cost for inventories is principally determined using the last-in, first-out ("LIFO") inventory costing method. The Company also uses the first-in, first-out ("FIFO") and average cost methods. As of March 31, 2022 and June 30, 2021, $131.9 million and $107.5 million of inventory, respectively, was accounted for using a method other than the LIFO inventory costing method.

8.    Accrued Liabilities
 
Accrued liabilities consisted of the following as of March 31, 2022 and June 30, 2021:
 
($ in millions)March 31,
2022		June 30,
2021
Accrued compensation and benefits$53.7 $81.4 
Accrued postretirement benefits14.4 14.4 
Contract liabilities14.0 8.6 
Current portion of lease liabilities9.5 9.0 
Accrued interest expense7.4 16.2 
Accrued pension liabilities3.5 3.5 
Accrued income taxes2.5 0.5 
Derivative financial instruments0.1 4.2 
Other14.7 26.1 
Total accrued liabilities$119.8 $163.9 

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CARPENTER TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9.    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 nine months ended March 31, 2022 and 2021 were as follows:
 
Three months ended March 31,Pension PlansOther Postretirement Plans
($ in millions)2022202120222021
Service cost$2.1 $2.4 $0.6 $0.7 
Interest cost9.1 9.8 1.8 1.9 
Expected return on plan assets