IRVING, Texas, March 21,
2019 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today
announced financial results for its fiscal second quarter ended
February 28, 2019. For the three months ended
February 28, 2019, earnings from continuing operations were
$14.9 million, or $0.13 per diluted share, on net sales of
$1.4 billion, compared to earnings
from continuing operations of $9.8
million, or $0.08 per diluted
share, on net sales of $1.1 billion
for the prior year period. As a result of the execution of
various strategic growth initiatives and favorable market
conditions, the Company's revenue increased 33% year-over-year.
Second quarter results included net after tax expenses of
$20.0 million related to certain
non-operational costs regarding the acquisition of rebar
assets from Gerdau S.A., and adjustments related to the Tax Cuts
and Jobs Act. Excluding these expenses, adjusted earnings
from continuing operations were $35.0
million, or $0.29 per diluted
share, as detailed in the non-GAAP reconciliation on page 12. This
represents a 13% increase compared to adjusted earnings from
continuing operations of $31.0
million, or $0.26 per diluted
share, for the three months ended February 28, 2018.
Excluding non-recurring integration related costs and
acquisition accounting inventory step up charges related to the
four steel mills and rebar fabrication assets purchased from Gerdau
S.A., that closed on November 5,
2018, the acquired assets contributed revenue of
$383.6 million and operating income
of $32.9 million to the consolidated
results of CMC in the second quarter of fiscal 2019.
Barbara R. Smith, Chairman of the
Board, President and Chief Executive Officer, said, "We are very
encouraged by our progress of integrating the rebar assets we
acquired from Gerdau last year. We continue to be highly
confident they will provide the anticipated benefits and generate
attractive returns for our stockholders. The quarter
was impacted by typical seasonality and unprecedented rainfall
levels in many of our markets, which impacted construction activity
resulting in lower shipments in the quarter. I am pleased
with the results of our ongoing operations and remain very
optimistic about our growth in the second half of fiscal 2019."
The Company's liquidity position at February 28, 2019
continued to be strong with cash and cash equivalents of
$66.7 million and availability under
the Company's credit and accounts receivable sales facilities of
$544.1 million.
On March 20, 2019, the board of directors of CMC declared a
quarterly dividend of $0.12 per
share of CMC common stock payable to stockholders of record on
April 5, 2019. The dividend will be paid on
April 18, 2019.
Business Segments - Fiscal Second Quarter 2019 Review
Our Americas Recycling segment recorded adjusted EBITDA of
$10.1 million for the second quarter
of fiscal 2019, compared to adjusted EBITDA of $17.2 million for the prior year second quarter,
reflecting a decreasing ferrous and nonferrous scrap price
environment. Despite the recent price volatility, we
generated positive returns in the quarter due to our low operating
cost structure, disciplined buying practices and efficient
inventory turnover rates.
Our Americas Mills segment recorded adjusted EBITDA of
$112.4 million for the second quarter
of fiscal 2019, an increase of 124% compared to adjusted EBITDA of
$50.2 million for the second quarter
of fiscal 2018. The current quarter results include a
non-cash charge of $10.3 million
related to the fair value step up of inventory acquired on closing
of the acquisition of the four rebar mills from Gerdau S.A..
Excluding this $10.3 million non-cash
charge, the second quarter results include adjusted EBITDA of
$33.0 million from the acquired mills
on shipments of 391 thousand tons.
Total mill shipment volumes for the existing operations,
excluding the incremental shipments from our new micro mill in
Durant, OK, were down in
comparison to the second quarter of fiscal 2018. While demand
from U.S. non-residential and infrastructure construction activity
remains strong; during the quarter, construction activity was
impacted adversely by rainfall in many markets that far exceeded
historical norms, resulting in lower shipment volumes. Metal
margins increased by $91 per ton from
the same period of the prior year. A combination of higher
costs associated with the new facilities, reduced production levels
and inflationary pressures on certain costs, resulted in increased
manufacturing costs of approximately 28% per ton as compared to the
prior year.
Our Americas Fabrication segment recorded an adjusted EBITDA
loss of $49.6 million for the second
quarter of fiscal 2019, compared to an adjusted EBITDA loss of
$8.6 million for the second quarter
of fiscal 2018. This year's second quarter
results include an adjusted EBITDA loss of $12.7 million related to the acquired fabrication
operations on shipments of 162 thousand tons and excludes the
benefit of a purchase accounting adjustment of $23.5 million related to amortization of the
unfavorable contract backlog reserve that was assumed in the
acquisition. Including this adjustment, the operating income
of the acquired fabrication assets was $9.2
million for the quarter.
Average selling prices in the Americas Fabrication segment rose
6% compared to the second quarter of fiscal 2018, but were outpaced
by steel input costs, which increased by 18% higher labor costs and
losses recorded on specific contracts. Rebar fabrication bidding
activity remains strong and average selling prices for contracted
work during the first half of fiscal 2019 were above $1,000 per ton, which will be profitable when
shipped in future quarters using current rebar prices.
Our International Mill segment in Poland recorded adjusted EBITDA of
$20.5 million for the second quarter
of fiscal 2019, compared to adjusted EBITDA of $32.1 million for the comparable prior year
quarter. While margins remained strong, volumes
declined as customers were hesitant to place orders until the
European Union tariff rate quota safeguard measures were finalized
which occurred in February. These measures, designed to reduce the
flood of unfairly priced imports, are expected to be in place until
July 2021.
Our Corporate and Other segment recorded an adjusted EBITDA loss
of $24.1 million for the second
quarter of fiscal 2019 compared to an adjusted EBITDA loss of
$26.1 million for the prior year's
second quarter. The current quarter loss includes
$5.5 million related to acquisition
costs.
Outlook
"Performance from our acquired assets have exceeded our
initial transaction rationale business case. Looking ahead,
we are optimistic that the upcoming construction season will be
strong both in the U.S. and Poland," said Ms. Smith. "The
combination of a good mill margin environment, ongoing progress on
executing cost reduction opportunities afforded by the acquisition,
and completing some of the lower margin rebar fabrication backlog,
gives us confidence that we will deliver strong results for the
balance of the fiscal year."
Conference Call
CMC invites you to listen to a live broadcast of its second
quarter fiscal 2019 conference call today, Thursday, March 21,
2019, at 11:00 a.m. ET.
Barbara Smith, Chairman of the Board
of Directors, President, and Chief Executive Officer, and
Mary Lindsey, Senior Vice President
and Chief Financial Officer, will host the call. The call is
accessible via our website at www.cmc.com. In the event you
are unable to listen to the live broadcast, the call will be
archived and available for replay on our website on the next
business day. Financial and statistical information presented
in the broadcast are located on CMC's website under
"Investors".
About Commercial Metals Company
Commercial Metals Company and its subsidiaries manufacture,
recycle and market steel and metal products, related materials and
services through a network of facilities that includes eight
electric arc furnace ("EAF") mini mills, two EAF micro mills, a
rerolling mill, steel fabrication and processing plants,
construction-related product warehouses, and metal recycling
facilities in the U.S. and Poland.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the federal securities laws with respect to general
economic conditions, key macro-economic drivers that impact our
business, the effects of ongoing trade actions, the effects of
continued pressure on the liquidity of our customers, potential
synergies provided by our recent acquisitions, demand for our
products, steel margins, the ability to operate our mills at full
capacity, future supplies of raw materials and energy for our
operations, share repurchases, legal proceedings, renewing the
credit facilities of our Polish subsidiary, the reinvestment of
undistributed earnings of our non-U.S. subsidiaries, U.S.
non-residential construction activity, international trade, capital
expenditures, our liquidity and our ability to satisfy future
liquidity requirements, our new Oklahoma micro mill, estimated contractual
obligations, the effects of the acquisition of substantially all of
the U.S. rebar fabrication facilities and the steel mini-mills
located in or around Rancho Cucamonga,
California, Jacksonville,
Florida, Sayreville, New
Jersey and Knoxville,
Tennessee previously owned by Gerdau S.A. and certain of its
subsidiaries (collectively, the "Acquired Businesses"), and our
expectations or beliefs concerning future events. These
forward-looking statements can generally be identified by phrases
such as we or our management "expects," "anticipates," "believes,"
"estimates," "intends," "plans to," "ought," "could," "will,"
"should," "likely," "appears," "projects," "forecasts," "outlook"
or other similar words or phrases. There are inherent risks and
uncertainties in any forward-looking statements. We caution readers
not to place undue reliance on any forward-looking statements.
Although we believe that our expectations are reasonable, we can
give no assurance that these expectations will prove to have been
correct, and actual results may vary materially. Except as
required by law, we undertake no obligation to update, amend or
clarify any forward-looking statements to reflect changed
assumptions, the occurrence of anticipated or unanticipated events,
new information or circumstances or any other changes. Important
factors that could cause actual results to differ materially from
our expectations include those described in Part I, Item 1A, Risk
Factors, of our Annual Report on Form 10-K for the fiscal year
ended August 31, 2018 as well as the
following: changes in economic conditions which affect demand for
our products or construction activity generally, and the impact of
such changes on the highly cyclical steel industry; rapid and
significant changes in the price of metals, potentially impairing
our inventory values due to declines in commodity prices or
reducing the profitability of our fabrication contracts due to
rising commodity pricing; excess capacity in our industry,
particularly in China, and product
availability from competing steel mills and other steel suppliers
including import quantities and pricing; compliance with and
changes in environmental laws and regulations, including increased
regulation associated with climate change and greenhouse gas
emissions; involvement in various environmental matters that may
result in fines, penalties or judgments; potential limitations in
our or our customers' abilities to access credit and non-compliance
by our customers with our contracts; activity in repurchasing
shares of our common stock under our repurchase program; financial
covenants and restrictions on the operation of our business
contained in agreements governing our debt; our ability to
successfully identify, consummate, and integrate acquisitions and
the effects that acquisitions may have on our financial leverage;
risks associated with acquisitions generally, such as the inability
to obtain, or delays in obtaining, required approvals under
applicable antitrust legislation and other regulatory and third
party consents and approvals; failure to retain key management and
employees of the Acquired Businesses; issues or delays in the
successful integration of the Acquired Businesses' operations with
those of the Company, including the inability to substantially
increase utilization of the Acquired Businesses' steel mini mills,
and incurring or experiencing unanticipated costs and/or delays or
difficulties; difficulties or delays in the successful transition
of the Acquired Businesses to the information technology systems of
the Company as well as risks associated with other integration or
transition of the operations, systems and personnel of the Acquired
Businesses; unfavorable reaction to the acquisition of the Acquired
Businesses by customers, competitors, suppliers and employees;
lower than expected future levels of revenues and higher than
expected future costs; failure or inability to implement growth
strategies in a timely manner; impact of goodwill impairment
charges; impact of long-lived asset impairment charges; currency
fluctuations; global factors, including political uncertainties and
military conflicts; availability and pricing of electricity,
electrodes and natural gas for mill operations; ability to hire and
retain key executives and other employees; competition from other
materials or from competitors that have a lower cost structure or
access to greater financial resources; information technology
interruptions and breaches in security; ability to make necessary
capital expenditures; availability and pricing of raw materials and
other items over which we exert little influence, including scrap
metal, energy and insurance; unexpected equipment failures; ability
to realize the anticipated benefits of our investment in our new
micro mill in Durant, Oklahoma;
losses or limited potential gains due to hedging transactions;
litigation claims and settlements, court decisions, regulatory
rulings and legal compliance risks; risk of injury or death to
employees, customers or other visitors to our operations; impacts
of the Tax Cuts and Jobs Act ("TCJA"); and increased costs related
to health care reform legislation.
COMMERCIAL METALS
COMPANY
FINANCIAL &
OPERATING STATISTICS (UNAUDITED)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in thousands,
except per ton amounts)
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
2/28/2018
|
|
2/28/2019
|
|
2/28/2018
|
Americas
Recycling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
287,075
|
|
|
302,009
|
|
|
361,363
|
|
|
364,098
|
|
|
320,627
|
|
|
589,084
|
|
|
639,968
|
|
Adjusted
EBITDA
|
|
$
|
10,124
|
|
|
15,434
|
|
|
16,996
|
|
|
19,477
|
|
|
17,216
|
|
|
25,558
|
|
|
32,221
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
570
|
|
|
579
|
|
|
644
|
|
|
642
|
|
|
560
|
|
|
1,149
|
|
|
1,149
|
|
Nonferrous
|
|
59
|
|
|
63
|
|
|
69
|
|
|
65
|
|
|
63
|
|
|
122
|
|
|
129
|
|
Total short tons
shipped
|
|
629
|
|
|
642
|
|
|
713
|
|
|
707
|
|
|
623
|
|
|
1,271
|
|
|
1,278
|
|
Average selling price
(per short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
$
|
266
|
|
|
273
|
|
|
298
|
|
|
314
|
|
|
285
|
|
|
269
|
|
|
271
|
|
Nonferrous
|
|
$
|
1,998
|
|
|
1,982
|
|
|
2,155
|
|
|
2,252
|
|
|
2,345
|
|
|
1,990
|
|
|
2,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Mills
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
774,709
|
|
|
601,853
|
|
|
604,435
|
|
|
553,063
|
|
|
425,887
|
|
|
1,376,562
|
|
|
839,405
|
|
Adjusted
EBITDA
|
|
$
|
112,396
|
|
|
113,873
|
|
|
106,830
|
|
|
89,590
|
|
|
50,219
|
|
|
226,269
|
|
|
105,385
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
773
|
|
|
530
|
|
|
482
|
|
|
503
|
|
|
405
|
|
|
1,303
|
|
|
810
|
|
Merchant &
Other
|
|
322
|
|
|
317
|
|
|
359
|
|
|
308
|
|
|
279
|
|
|
639
|
|
|
551
|
|
Total Short Tons
Shipped
|
|
1,095
|
|
|
847
|
|
|
841
|
|
|
811
|
|
|
684
|
|
|
1,942
|
|
|
1,361
|
|
Average price (per
short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling
price
|
|
$
|
677
|
|
|
682
|
|
|
674
|
|
|
632
|
|
|
571
|
|
|
677
|
|
|
561
|
|
Cost of ferrous scrap
utilized
|
|
$
|
303
|
|
|
307
|
|
|
326
|
|
|
329
|
|
|
288
|
|
|
305
|
|
|
272
|
|
Metal
margin
|
|
$
|
374
|
|
|
375
|
|
|
348
|
|
|
303
|
|
|
283
|
|
|
372
|
|
|
289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Fabrication
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
530,836
|
|
|
437,111
|
|
|
403,889
|
|
|
378,241
|
|
|
312,973
|
|
|
967,947
|
|
|
645,752
|
|
Adjusted
EBITDA
|
|
$
|
(49,578)
|
|
|
(36,996)
|
|
|
(24,607)
|
|
|
(8,208)
|
|
|
(8,611)
|
|
|
(86,574)
|
|
|
(6,579)
|
|
Total short tons
shipped
|
|
396
|
|
|
319
|
|
|
307
|
|
|
302
|
|
|
241
|
|
|
715
|
|
|
506
|
|
Total selling price
(per short ton)
|
|
$
|
845
|
|
|
868
|
|
|
843
|
|
|
777
|
|
|
799
|
|
|
856
|
|
|
788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Mill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
$
|
175,198
|
|
|
227,024
|
|
|
253,058
|
|
|
201,737
|
|
|
211,765
|
|
|
402,222
|
|
|
432,242
|
|
Adjusted
EBITDA
|
|
$
|
20,537
|
|
|
32,779
|
|
|
36,654
|
|
|
31,987
|
|
|
32,135
|
|
|
53,316
|
|
|
63,079
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
66
|
|
|
80
|
|
|
145
|
|
|
79
|
|
|
95
|
|
|
146
|
|
|
235
|
|
Merchant &
Other
|
|
238
|
|
|
312
|
|
|
289
|
|
|
241
|
|
|
251
|
|
|
550
|
|
|
511
|
|
Total short tons
shipped
|
|
304
|
|
|
392
|
|
|
434
|
|
|
320
|
|
|
346
|
|
|
696
|
|
|
746
|
|
Average price (per
short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling
price
|
|
$
|
545
|
|
|
547
|
|
|
555
|
|
|
599
|
|
|
578
|
|
|
546
|
|
|
546
|
|
Cost of ferrous scrap
utilized
|
|
$
|
301
|
|
|
295
|
|
|
305
|
|
|
329
|
|
|
324
|
|
|
298
|
|
|
311
|
|
Metal
margin
|
|
$
|
244
|
|
|
252
|
|
|
250
|
|
|
270
|
|
|
254
|
|
|
248
|
|
|
235
|
|
COMMERCIAL METALS
COMPANY
BUSINESS SEGMENTS
(UNAUDITED)
|
(in
thousands)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
Net
sales
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
2/28/2018
|
|
2/28/2019
|
|
2/28/2018
|
Americas
Recycling
|
|
$
|
287,075
|
|
|
$
|
302,009
|
|
|
$
|
361,363
|
|
|
$
|
364,098
|
|
|
$
|
320,627
|
|
|
$
|
589,084
|
|
|
$
|
639,968
|
|
Americas
Mills
|
|
774,709
|
|
|
601,853
|
|
|
604,435
|
|
|
553,063
|
|
|
425,887
|
|
|
1,376,562
|
|
|
839,405
|
|
Americas
Fabrication
|
|
530,836
|
|
|
437,111
|
|
|
403,889
|
|
|
378,241
|
|
|
312,973
|
|
|
967,947
|
|
|
645,752
|
|
International
Mill
|
|
175,198
|
|
|
227,024
|
|
|
253,058
|
|
|
201,737
|
|
|
211,765
|
|
|
402,222
|
|
|
432,242
|
|
Corporate and
Other
|
|
(365,035)
|
|
|
(290,655)
|
|
|
(314,307)
|
|
|
(292,655)
|
|
|
(216,984)
|
|
|
(655,690)
|
|
|
(426,566)
|
|
Total Net
Sales
|
|
$
|
1,402,783
|
|
|
$
|
1,277,342
|
|
|
$
|
1,308,438
|
|
|
$
|
1,204,484
|
|
|
$
|
1,054,268
|
|
|
$
|
2,680,125
|
|
|
$
|
2,130,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Recycling
|
|
$
|
10,124
|
|
|
$
|
15,434
|
|
|
$
|
16,996
|
|
|
$
|
19,477
|
|
|
$
|
17,216
|
|
|
$
|
25,558
|
|
|
$
|
32,221
|
|
Americas
Mills
|
|
112,396
|
|
|
113,873
|
|
|
106,830
|
|
|
89,590
|
|
|
50,219
|
|
|
226,269
|
|
|
105,385
|
|
Americas
Fabrication
|
|
(49,578)
|
|
|
(36,996)
|
|
|
(24,607)
|
|
|
(8,208)
|
|
|
(8,611)
|
|
|
(86,574)
|
|
|
(6,579)
|
|
International
Mill
|
|
20,537
|
|
|
32,779
|
|
|
36,654
|
|
|
31,987
|
|
|
32,135
|
|
|
53,316
|
|
|
63,079
|
|
Corporate and
Other
|
|
(24,146)
|
|
|
(59,554)
|
|
|
(28,827)
|
|
|
(31,814)
|
|
|
(26,083)
|
|
|
(83,700)
|
|
|
(49,963)
|
|
COMMERCIAL METALS
COMPANY
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
|
|
|
Three Months Ended
February 28,
|
|
Six Months Ended
February 28,
|
(in thousands,
except share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales
|
|
$
|
1,402,783
|
|
|
$
|
1,054,268
|
|
|
$
|
2,680,125
|
|
|
$
|
2,130,801
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
1,252,493
|
|
|
927,101
|
|
|
2,370,926
|
|
|
1,860,617
|
|
Selling, general and
administrative expenses
|
|
98,726
|
|
|
108,477
|
|
|
215,943
|
|
|
204,587
|
|
Interest
expense
|
|
18,495
|
|
|
7,181
|
|
|
35,158
|
|
|
13,792
|
|
|
|
1,369,714
|
|
|
1,042,759
|
|
|
2,622,027
|
|
|
2,078,996
|
|
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations before income taxes
|
|
33,069
|
|
|
11,509
|
|
|
58,098
|
|
|
51,805
|
|
Income
taxes
|
|
18,141
|
|
|
1,728
|
|
|
23,750
|
|
|
10,153
|
|
Earnings from
continuing operations
|
|
14,928
|
|
|
9,781
|
|
|
34,348
|
|
|
41,652
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
discontinued operations before income taxes
|
|
(1,075)
|
|
|
290
|
|
|
(618)
|
|
|
8,410
|
|
Income taxes
(benefit)
|
|
3
|
|
|
(98)
|
|
|
138
|
|
|
3,082
|
|
Earnings (loss) from
discontinued operations
|
|
(1,078)
|
|
|
388
|
|
|
(756)
|
|
|
5,328
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
13,850
|
|
|
$
|
10,169
|
|
|
$
|
33,592
|
|
|
$
|
46,980
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share*
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
|
$
|
0.13
|
|
|
$
|
0.08
|
|
|
$
|
0.29
|
|
|
$
|
0.36
|
|
Earnings (loss) from
discontinued operations
|
|
(0.01)
|
|
|
—
|
|
|
(0.01)
|
|
|
0.05
|
|
Net
earnings
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.29
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share*
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
|
$
|
0.13
|
|
|
$
|
0.08
|
|
|
$
|
0.29
|
|
|
$
|
0.35
|
|
Earnings (loss) from
discontinued operations
|
|
(0.01)
|
|
|
—
|
|
|
(0.01)
|
|
|
0.05
|
|
Net
earnings
|
|
$
|
0.12
|
|
|
$
|
0.09
|
|
|
$
|
0.28
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
Average basic shares
outstanding
|
|
117,854,335
|
|
|
116,808,838
|
|
|
117,677,422
|
|
|
116,524,630
|
|
Average diluted
shares outstanding
|
|
118,942,758
|
|
|
118,269,721
|
|
|
118,996,427
|
|
|
118,149,815
|
|
|
* EPS is calculated
independently for each component and may not sum to net earnings
EPS due to rounding
|
COMMERCIAL METALS
COMPANY
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(in thousands,
except share data)
|
|
February 28,
2019
|
|
August 31,
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
66,742
|
|
|
$
|
622,473
|
|
Accounts receivable
(less allowance for doubtful accounts of $14,511 and
$4,489)
|
|
976,681
|
|
|
749,484
|
|
Inventories,
net
|
|
866,419
|
|
|
589,005
|
|
Other current
assets
|
|
160,416
|
|
|
116,243
|
|
Total current
assets
|
|
2,070,258
|
|
|
2,077,205
|
|
Property, plant and
equipment, net
|
|
1,478,320
|
|
|
1,075,038
|
|
Goodwill
|
|
64,257
|
|
|
64,310
|
|
Other noncurrent
assets
|
|
115,857
|
|
|
111,751
|
|
Total
assets
|
|
$
|
3,728,692
|
|
|
$
|
3,328,304
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable-trade
|
|
$
|
322,147
|
|
|
$
|
261,258
|
|
Accrued expenses and
other payables
|
|
265,924
|
|
|
260,939
|
|
Acquired unfavorable
contract backlog
|
|
75,358
|
|
|
—
|
|
Current maturities of
long-term debt and short-term borrowings
|
|
88,902
|
|
|
19,746
|
|
Total current
liabilities
|
|
752,331
|
|
|
541,943
|
|
Deferred income
taxes
|
|
38,370
|
|
|
37,834
|
|
Other long-term
liabilities
|
|
129,345
|
|
|
116,325
|
|
Long-term
debt
|
|
1,310,150
|
|
|
1,138,619
|
|
Total
liabilities
|
|
2,230,196
|
|
|
1,834,721
|
|
Stockholders'
equity
|
|
1,498,300
|
|
|
1,493,397
|
|
Stockholders' equity
attributable to noncontrolling interests
|
|
196
|
|
|
186
|
|
Total stockholders'
equity
|
|
1,498,496
|
|
|
1,493,583
|
|
Total liabilities and
stockholders' equity
|
|
$
|
3,728,692
|
|
|
$
|
3,328,304
|
|
COMMERCIAL METALS
COMPANY AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
Six Months Ended
February 28,
|
(in
thousands)
|
|
2019
|
|
2018
|
Cash flows from (used
by) operating activities:
|
|
|
|
|
Net
earnings
|
|
$
|
33,592
|
|
|
$
|
46,980
|
|
Adjustments to
reconcile net earnings to cash flows from (used by) operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
76,430
|
|
|
66,316
|
|
Amortization of
acquired unfavorable contract backlog
|
|
(34,808)
|
|
|
—
|
|
Stock-based
compensation
|
|
10,007
|
|
|
13,338
|
|
Net (gain) loss on
disposals of subsidiaries, assets and other
|
|
(1,202)
|
|
|
518
|
|
Deferred income taxes
and other long-term taxes
|
|
11,705
|
|
|
(9,420)
|
|
Write-down of
inventories
|
|
237
|
|
|
1,296
|
|
Provision for losses
on (recovery of) receivables, net
|
|
(518)
|
|
|
2,048
|
|
Asset
impairment
|
|
—
|
|
|
12,774
|
|
Changes in operating
assets and liabilities
|
|
(80,809)
|
|
|
4,937
|
|
Beneficial interest
in securitized accounts receivable
|
|
(367,521)
|
|
|
(322,403)
|
|
Net cash flows used
by operating activities
|
|
(352,887)
|
|
|
(183,616)
|
|
|
|
|
|
|
Cash flows from (used
by) investing activities:
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
(700,982)
|
|
|
(6,980)
|
|
Capital
expenditures
|
|
(67,497)
|
|
|
(101,028)
|
|
Proceeds from
insurance
|
|
3,905
|
|
|
25,000
|
|
Proceeds from the
sale of property, plant and equipment
|
|
2,042
|
|
|
631
|
|
Proceeds from the
sale of discontinued operations and other
|
|
1,893
|
|
|
7,406
|
|
Advances under
accounts receivable programs
|
|
—
|
|
|
25,247
|
|
Repayments under
accounts receivable programs
|
|
—
|
|
|
(115,247)
|
|
Beneficial interest
in securitized accounts receivable
|
|
367,521
|
|
|
322,403
|
|
Net cash flows from
(used by) investing activities:
|
|
(393,118)
|
|
|
157,432
|
|
|
|
|
|
|
Cash flows from (used
by) financing activities:
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
180,000
|
|
|
—
|
|
Repayments of
long-term debt
|
|
(14,605)
|
|
|
(10,106)
|
|
Proceeds from
accounts receivable programs
|
|
140,070
|
|
|
—
|
|
Repayments under
accounts receivable programs
|
|
(92,664)
|
|
|
—
|
|
Dividends
|
|
(28,181)
|
|
|
(27,995)
|
|
Stock issued under
incentive and purchase plans, net of forfeitures
|
|
(2,856)
|
|
|
(7,394)
|
|
Increase in
documentary letters of credit, net
|
|
—
|
|
|
10
|
|
Contribution from
noncontrolling interests
|
|
10
|
|
|
13
|
|
Net cash flows from
(used by) financing activities
|
|
181,774
|
|
|
(45,472)
|
|
Effect of exchange
rate changes on cash
|
|
(221)
|
|
|
249
|
|
Decrease in cash,
restricted cash and cash equivalents
|
|
(564,452)
|
|
|
(71,407)
|
|
Cash, restricted cash
and cash equivalents at beginning of period
|
|
632,615
|
|
|
285,881
|
|
Cash, restricted cash
and cash equivalents at end of period
|
|
$
|
68,163
|
|
|
$
|
214,474
|
|
|
|
|
Supplemental
information:
|
|
Six Months Ended
February 28,
|
(in
thousands)
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
66,742
|
|
|
$
|
195,184
|
|
Restricted
cash
|
|
1,421
|
|
|
19,290
|
|
Total cash,
restricted cash and cash equivalents
|
|
$
|
68,163
|
|
|
$
|
214,474
|
|
COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
This press release contains financial measures not derived in
accordance with generally accepted accounting principles ("GAAP").
Reconciliations to the most comparable GAAP measures are provided
below.
Core EBITDA from Continuing Operations is a non-GAAP
financial measure. Core EBITDA from continuing operations is the
sum of earnings (loss) from continuing operations before interest
expense and income taxes (benefit). It also excludes recurring
non-cash charges for depreciation and amortization, asset
impairments, and equity compensation. Core EBITDA from continuing
operations also excludes certain material acquisition and
integration related costs and other legal fees, mill operational
start-up costs, CMC Steel Oklahoma incentives, net debt
restructuring and extinguishment gains and losses, purchase
accounting adjustments to inventory and severance expenses. Core
EBITDA from continuing operations should not be considered an
alternative to earnings (loss) from continuing operations or net
earnings (loss), or as a better measure of liquidity than net cash
flows from operating activities, as determined by GAAP. However, we
believe that Core EBITDA from continuing operations provides
relevant and useful information, which is often used by analysts,
creditors and other interested parties in our industry as it
allows: (i) comparison of our earnings to those of our competitors;
(ii) a supplemental measure of our ongoing core performance; and
(iii) the assessment of period-to-period performance trends.
Additionally, Core EBITDA from continuing operations is the target
benchmark for our annual and long-term cash incentive performance
plans for management. Core EBITDA from continuing operations may be
inconsistent with similar measures presented by other
companies.
A reconciliation of earnings from continuing operations to Core
EBITDA from continuing operations is provided below:
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
thousands)
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
2/28/2018
|
|
2/28/2019
|
|
2/28/2018
|
Earnings from
continuing operations
|
$
|
14,928
|
|
|
$
|
19,420
|
|
|
$
|
51,260
|
|
|
$
|
42,325
|
|
|
$
|
9,781
|
|
|
34,348
|
|
|
41,652
|
|
Interest
expense
|
18,495
|
|
|
16,663
|
|
|
15,654
|
|
|
11,511
|
|
|
7,181
|
|
|
35,158
|
|
|
13,792
|
|
Income
taxes
|
18,141
|
|
|
5,609
|
|
|
6,682
|
|
|
13,312
|
|
|
1,728
|
|
|
23,750
|
|
|
10,153
|
|
Depreciation and
amortization
|
41,245
|
|
|
35,176
|
|
|
32,610
|
|
|
32,949
|
|
|
34,050
|
|
|
76,421
|
|
|
65,949
|
|
Asset
impairments
|
—
|
|
|
—
|
|
|
840
|
|
|
935
|
|
|
12,136
|
|
|
—
|
|
|
12,597
|
|
Non-cash equity
compensation
|
5,791
|
|
|
4,215
|
|
|
5,679
|
|
|
5,376
|
|
|
8,550
|
|
|
10,006
|
|
|
12,983
|
|
Acquisition and
integration related costs and other
|
5,475
|
|
|
27,970
|
|
|
10,907
|
|
|
4,975
|
|
|
5,905
|
|
|
33,445
|
|
|
9,625
|
|
Amortization of
acquired unfavorable contract backlog
|
(23,476)
|
|
|
(11,332)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,808)
|
|
|
—
|
Mill operational
start-up costs*
|
—
|
|
|
—
|
|
|
—
|
|
|
1,473
|
|
|
6,565
|
|
|
—
|
|
|
11,998
|
|
CMC Steel Oklahoma
incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Purchase accounting
effect on inventory
|
10,315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
Core EBITDA from
continuing operations
|
$
|
90,914
|
|
|
$
|
97,721
|
|
|
$
|
123,632
|
|
|
$
|
109,856
|
|
|
$
|
85,896
|
|
|
$
|
188,635
|
|
|
$
|
178,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Net of interest,
taxes, depreciation and amortization, impairments, and non-cash
equity compensation.
|
Adjusted earnings from continuing operations is a
non-GAAP financial measure that is equal to earnings (loss) from
continuing operations before certain acquisition and integration
related and costs and other legal expenses, mill operational
start-up costs, CMC Steel Oklahoma incentives, asset impairments,
debt restructuring and extinguishment gains and losses, purchase
accounting adjustments to inventory and severance expenses,
including the estimated income tax effects thereof. Additionally,
we adjust adjusted earnings from continuing operations for the
effects of the TCJA as well as the tax benefit associated with an
international reorganization. Adjusted earnings from continuing
operations should not be considered as an alternative to earnings
from continuing operations or any other performance measure derived
in accordance with GAAP. However, we believe that adjusted earnings
from continuing operations provides relevant and useful information
to investors as it allows: (i) a supplemental measure of our
ongoing core performance and (ii) the assessment of
period-to-period performance trends. Management uses adjusted
earnings from continuing operations to evaluate our financial
performance. Adjusted earnings from continuing operations may be
inconsistent with similar measures presented by other companies.
Adjusted earnings from continuing operations per diluted share is
defined as adjusted earnings from continuing operations on a
diluted per share basis.
A reconciliation of earnings from continuing operations to
adjusted earnings from continuing operations is provided below:
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
thousands)
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
2/28/2018
|
|
2/28/2019
|
|
2/28/2018
|
Earnings from
continuing operations
|
$
|
14,928
|
|
|
$
|
19,420
|
|
|
$
|
51,260
|
|
|
$
|
42,325
|
|
|
$
|
9,781
|
|
|
$
|
34,348
|
|
|
$
|
41,652
|
|
Impairment of
structural steel assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,136
|
|
|
—
|
|
|
12,136
|
|
Acquisition and
integration related costs and other
|
5,475
|
|
|
27,970
|
|
|
10,907
|
|
|
4,975
|
|
|
5,905
|
|
|
33,445
|
|
|
9,625
|
|
Mill operational
start-up costs
|
—
|
|
|
—
|
|
|
—
|
|
|
6,456
|
|
|
8,651
|
|
|
—
|
|
|
11,560
|
|
CMC Steel Oklahoma
incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Purchase accounting
effect on inventory
|
10,315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
Total adjustments
(pre-tax)
|
$
|
15,790
|
|
|
$
|
27,970
|
|
|
$
|
10,907
|
|
|
$
|
8,431
|
|
|
$
|
26,692
|
|
|
$
|
43,760
|
|
|
$
|
33,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax impact
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TCJA
impact
|
$
|
7,550
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,600
|
|
|
$
|
7,550
|
|
|
$
|
10,600
|
|
International
reorganization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,200)
|
|
|
—
|
|
|
(9,200)
|
|
Related tax effects
on adjustments
|
(3,316)
|
|
|
(5,874)
|
|
|
(2,290)
|
|
|
(1,771)
|
|
|
(6,855)
|
|
|
(9,190)
|
|
|
(9,175)
|
|
Total tax
impact
|
4,234
|
|
|
(5,874)
|
|
|
(2,290)
|
|
|
(1,771)
|
|
|
(5,455)
|
|
|
(1,640)
|
|
|
(7,775)
|
|
Adjusted earnings
from continuing operations
|
$
|
34,952
|
|
|
$
|
41,516
|
|
|
$
|
59,877
|
|
|
$
|
48,985
|
|
|
$
|
31,018
|
|
|
$
|
76,468
|
|
|
$
|
67,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from continuing operations per diluted share
|
$
|
0.29
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
|
$
|
0.41
|
|
|
$
|
0.26
|
|
|
$
|
0.64
|
|
|
$
|
0.57
|
|
View original
content:http://www.prnewswire.com/news-releases/commercial-metals-company-reports-second-quarter-fiscal-2019-results-300816146.html
SOURCE Commercial Metals Company