Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The Company operates in two business segments: High Performance Materials & Components (HPMC) and Flat Rolled Products (FRP). Revenue is disaggregated within these two business segments by diversified global markets, primary geographical markets and diversified products. Comparative information of the Company’s overall revenues (in millions) by global and geographical markets for the third quarters and nine months ended September 30, 2019 and 2018 were as follows:



(in millions)	Third quarter ended
	September 30, 2019						September 30, 2018
	HPMC		FRP		Total		HPMC		FRP		Total
Diversified Global Markets:
Aerospace & Defense	$	437.9	$	65.6	$	503.5	$	446.5	$	52.7	$	499.2
Oil & Gas	13.9		133.4		147.3		17.9		110.3		128.2
Automotive	2.3		71.3		73.6		2.0		83.0		85.0
Energy	36.5		33.4		69.9		30.9		29.0		59.9
Food Equipment & Appliances	0.2		53.4		53.6		0.2		58.6		58.8
Electronics/Computers/Communications	1.7		42.8		44.5		1.0		40.3		41.3
Construction/Mining	5.4		38.3		43.7		18.5		39.9		58.4
Medical	37.7		3.3		41.0		44.3		3.6		47.9
Other	16.1		25.5		41.6		24.2		17.3		41.5
Total	$	551.7	$	467.0	$	1,018.7	$	585.5	$	434.7	$	1,020.2



(in millions)	Nine months ended
	September 30, 2019						September 30, 2018
	HPMC		FRP		Total		HPMC		FRP		Total
Diversified Global Markets:
Aerospace & Defense	$	1,415.3	$	186.0	$	1,601.3	$	1,311.7	$	131.9	$	1,443.6
Oil & Gas	49.0		347.1		396.1		51.4		362.1		413.5
Automotive	9.0		215.1		224.1		7.4		237.1		244.5
Energy	97.9		105.1		203.0		101.9		78.4		180.3
Food Equipment & Appliances	0.3		156.1		156.4		0.3		181.0		181.3
Construction/Mining	37.3		116.9		154.2		55.1		114.8		169.9
Medical	119.0		10.5		129.5		131.5		11.3		142.8
Electronics/Computers/Communications	4.0		112.7		116.7		4.7		105.0		109.7
Other	63.5		59.1		122.6		74.1		49.0		123.1
Total	$	1,795.3	$	1,308.6	$	3,103.9	$	1,738.1	$	1,270.6	$	3,008.7



(in millions)	Third quarter ended
	September 30, 2019						September 30, 2018
	HPMC		FRP		Total		HPMC		FRP		Total
Primary Geographical Market:
United States	$	312.0	$	293.4	$	605.4	$	316.7	$	290.9	$	607.6
Europe	150.3		36.0		186.3		173.2		40.5		213.7
Asia	48.4		116.1		164.5		60.9		84.0		144.9
Canada	21.2		4.4		25.6		16.3		7.5		23.8
South America, Middle East and other	19.8		17.1		36.9		18.4		11.8		30.2
Total	$	551.7	$	467.0	$	1,018.7	$	585.5	$	434.7	$	1,020.2



(in millions)	Nine months ended
	September 30, 2019						September 30, 2018
	HPMC		FRP		Total		HPMC		FRP		Total
Primary Geographical Market:
United States	$	1,005.6	$	861.4	$	1,867.0	$	898.6	$	839.1	$	1,737.7
Europe	509.7		94.8		604.5		565.4		104.3		669.7
Asia	161.7		297.9		459.6		180.7		258.7		439.4
Canada	64.8		16.6		81.4		51.3		29.0		80.3
South America, Middle East and other	53.5		37.9		91.4		42.1		39.5		81.6
Total	$	1,795.3	$	1,308.6	$	3,103.9	$	1,738.1	$	1,270.6	$	3,008.7

Comparative information of the Company’s major high-value and standard products based on their percentages of sales is included in the following table. FRP conversion services are excluded from this presentation.



	Third quarter ended
	September 30, 2019						September 30, 2018
	HPMC		FRP		Total		HPMC		FRP		Total
Diversified Products and Services:
High-Value Products
Nickel-based alloys and specialty alloys	33	%	34	%	33	%	32	%	29	%	30	%
Titanium and titanium-based alloys	29	%	7	%	19	%	25	%	3	%	16	%
Precision forgings, castings and components	29	%	—	%	16	%	33	%	—	%	18	%
Precision and engineered strip	—	%	30	%	14	%	—	%	34	%	15	%
Zirconium and related alloys	9	%	—	%	5	%	10	%	—	%	6	%
Total High-Value Products	100	%	71	%	87	%	100	%	66	%	85	%
Standard Products
Standard stainless products	—	%	29	%	13	%	—	%	34	%	15	%
Total	100	%	100	%	100	%	100	%	100	%	100	%



	Nine months ended
	September 30, 2019						September 30, 2018
	HPMC		FRP		Total		HPMC		FRP		Total
Diversified Products and Services:
High-Value Products
Nickel-based alloys and specialty alloys	31	%	33	%	32	%	31	%	29	%	30	%
Titanium and titanium-based alloys	28	%	6	%	18	%	24	%	5	%	16	%
Precision forgings, castings and components	31	%	—	%	18	%	35	%	—	%	20	%
Precision and engineered strip	—	%	31	%	13	%	—	%	32	%	14	%
Zirconium and related alloys	10	%	—	%	6	%	10	%	—	%	5	%
Total High-Value Products	100	%	70	%	87	%	100	%	66	%	85	%
Standard Products
Standard stainless products	—	%	30	%	13	%	—	%	34	%	15	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

The Company maintains a backlog of confirmed orders totaling $2.34 billion and $2.17 billion at September 30, 2019 and 2018, respectively. Due to the structure of the Company’s long-term agreements, approximately 75% of this backlog at September 30, 2019 represented booked orders with performance obligations that will be satisfied within the next 12 months. The backlog does not reflect any elements of variable consideration.

Contract balances

As of September 30, 2019 and December 31, 2018, accounts receivable with customers were $601.7 million and $533.8 million, respectively. The following represents the rollforward of accounts receivable - reserve for doubtful accounts and contract assets and liabilities for the nine months ended September 30, 2019 and 2018:



(in millions)
Accounts Receivable - Reserve for Doubtful Accounts	September 30, 2019			September 30, 2018
Balance as of beginning of fiscal year	$	6.0		$	5.9
Expense to increase the reserve	0.3			0.7
Write-off of uncollectible accounts	(1.3		)	(0.4		)
Balance as of period end	$	5.0		$	6.2



(in millions)
Contract Assets
Short-term	September 30, 2019			September 30, 2018
Balance as of beginning of fiscal year	$	51.2		$	36.5
Recognized in current year	57.0			66.2
Reclassified to accounts receivable	(63.1		)	(67.9		)
Impairment	—			—
Reclassification to/from long-term	—			16.8
Divestiture	(7.3		)	—
Balance as of period end	$	37.8		$	51.6

Long-term	September 30, 2019			September 30, 2018
Balance as of beginning of fiscal year	$	0.1		$	16.9
Recognized in current year	—			—
Reclassified to accounts receivable	—			—
Impairment	—			—
Reclassification to/from short-term	—			(16.8		)
Balance as of period end	$	0.1		$	0.1



(in millions)
Contract Liabilities
Short-term	September 30, 2019			September 30, 2018
Balance as of beginning of fiscal year	$	71.4		$	69.7
Recognized in current year	104.2			46.9
Amounts in beginning balance reclassified to revenue	(43.9		)	(40.1		)
Current year amounts reclassified to revenue	(34.8		)	(23.6		)
Other	0.2			1.7
Reclassification to/from long-term	—			14.6
Balance as of period end	$	97.1		$	69.2

Long-term	September 30, 2019			September 30, 2018
Balance as of beginning of fiscal year	$	7.3		$	22.2
Recognized in current year	0.8			0.5
Amounts in beginning balance reclassified to revenue	(0.8		)	(0.8		)
Current year amounts reclassified to revenue	—			—
Other	—			—
Reclassification to/from short-term	—			(14.6		)
Balance as of period end	$	7.3		$	7.3

Contract costs for obtaining and fulfilling a contract were $5.1 million and $5.2 million as of September 30, 2019 and December 31, 2018, respectively, and are reported in other long-term assets on the consolidated balance sheet. Amortization expense for the the three and nine months ended September 30, 2019 of these contract costs was $0.4 million and $1.0 million, respectively. Amortization expense for the three and nine months ended September 30, 2018 of these contract costs was $0.3 million and $0.9 million, respectively.