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Derivatives and Hedging Activities | 3 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company, from time to time, 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 utilized during the three months ended September 30, 2024 and 2023, 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 income (loss) ("AOCI") to the extent effective, 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 September 30, 2024, the Company had forward contracts to purchase 1.6 million pounds of certain raw materials with settlement dates through December 2025. Foreign Currency Derivatives: The Company uses foreign currency forward contracts to protect certain short-term asset 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 expense (income), net. As of September 30, 2024 and June 30, 2024, 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. The fair value and location of outstanding derivative contracts recorded in the accompanying consolidated balance sheets were as follows as of September 30, 2024 and June 30, 2024:
September 30, 2024 |  |  |  | Foreign Currency Contracts |  | Commodity Contracts |  | Total Derivatives
($ in millions) |  |  |  |
Asset Derivatives: |  |  |  |  |  |  |  |
Other current assets |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other assets |  |  |  | — |  |  | — |  |  | — |
Total asset derivatives |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Liability Derivatives: |  |  |  |  |  |  |  |
Accrued liabilities |  |  |  | $ | 0.1 |  |  | $ | 3.4 |  |  | $ | 3.5 |
Other liabilities |  |  |  | 1.6 |  |  | 0.4 |  |  | 2.0 |
Total liability derivatives |  |  |  | $ | 1.7 |  |  | $ | 3.8 |  |  | $ | 5.5 |
June 30, 2024 |  |  |  | Foreign Currency Contracts |  | Commodity Contracts |  | Total Derivatives
($ in millions) |  |  |  |
Asset Derivatives: |  |  |  |  |  |  |  |
Other current assets |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Other assets |  |  |  | — |  |  | — |  |  | — |
Total asset derivatives |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Liability Derivatives: |  |  |  |  |  |  |  |
Accrued liabilities |  |  |  | $ | — |  |  | $ | 3.6 |  |  | $ | 3.6 |
Other liabilities |  |  |  | 1.4 |  |  | 0.8 |  |  | 2.2 |
Total liability derivatives |  |  |  | $ | 1.4 |  |  | $ | 4.4 |  |  | $ | 5.8 |
Substantially all of the Company's 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 $0.1 million and total liability derivatives would have been $5.6 million, as of September 30, 2024. According to the provisions of the Company's derivative arrangements, in the event that the fair value of outstanding derivative positions with certain counterparties exceeds certain thresholds, the Company may be required to issue cash collateral to the counterparties. As of September 30, 2024 and June 30, 2024, the Company had no cash collateral held by counterparties. The Company is exposed to credit loss in the event of nonperformance by counterparties on its derivative instruments as well as credit or performance risk with respect to its customer commitments to perform. Although nonperformance is possible, the Company does not anticipate nonperformance by any of the parties. In addition, various master netting arrangements are in place with counterparties to facilitate settlements of gains and losses on these contracts. Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings or it becomes probable the forecasted transactions will not occur. The following is a summary of the losses related to cash flow hedges recognized during the three months ended September 30, 2024 and 2023:
|  | Amount of Loss Recognized in AOCI on Derivatives
|  | Three Months Ended September 30, |  |
($ in millions) |  | 2024 |  | 2023 |  |  |  |
Derivatives in Cash Flow Hedging Relationship: |  |  |  |  |  |  |  |
Commodity contracts |  | $ | (1.1) |  |  | $ | (0.3) |  |  |  |  |
Total |  | $ | (1.1) |  |  | $ | (0.3) |  |  |  |  |
|  | Location of (Loss) Gain Reclassified from AOCI into Income |  | Amount of (Loss) Gain Reclassified from AOCI into Income
|  |  | Three Months Ended September 30, |  |
($ in millions) |  |  | 2024 |  | 2023 |  |  |  |
Derivatives in Cash Flow Hedging Relationship: |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | Cost of Sales |  | $ | (1.8) |  |  | $ | 1.4 |  |  |  |  |
Total |  |  |  | $ | (1.8) |  |  | $ | 1.4 |  |  |  |  |
The following is a summary of total amounts presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded during the three months ended September 30, 2024 and 2023:
|  |  | Three Months Ended September 30, 2024 |  |  |  |  | Three Months Ended September 30, 2023
($ in millions) |  |  | Cost of Sales |  |  |  |  | Cost of Sales |  |
Total amounts presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded |  |  | $ | 541.3 |  |  |  |  |  | $ | 527.8 |  |  |
(Loss) Gain on Derivatives in Cash Flow Hedging Relationship: |  |  |  |  |  |  |  |  |  |
Commodity contracts |  |  |  |  |  |  |  |  |  |
Amount of (loss) gain reclassified from AOCI to income |  |  | $ | (1.8) |  |  |  |  |  | $ | 1.4 |  |  |
Total (loss) gain |  |  | $ | (1.8) |  |  |  |  |  | $ | 1.4 |  |  |
The Company estimates that $2.1 million of net derivative losses included in AOCI as of September 30, 2024 will be reclassified into earnings within the next twelve months. No significant cash flow hedges were discontinued during the three months ended September 30, 2024. As of September 30, 2024 and June 30, 2024, 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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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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