IRVING, Texas, June 20,
2019 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today
announced financial results for its fiscal third quarter ended
May 31, 2019. For the three months ended May 31,
2019, earnings from continuing operations were $78.6 million, or $0.66 per diluted share, on net sales of
$1.6 billion, compared to earnings
from continuing operations of $42.3
million, or $0.36 per diluted
share, on net sales of $1.2 billion
for the prior year period. Revenue increased 33% on a
year-over-year basis driven by the Company's growth strategy and
strong fundamentals in its core markets.
Third quarter fiscal 2019 results included net after tax
expenses of $1.8 million related to
certain non-operational costs related to the acquisition of rebar
assets from Gerdau S.A. Excluding these expenses, adjusted
earnings from continuing operations were $80.4 million, or $0.67 per diluted share, as detailed in the
non-GAAP reconciliation on page 12. This represents a 64%
increase compared to adjusted earnings from continuing operations
of $49.0 million, or $0.41 per diluted share, for the three months
ended May 31, 2018. In comparison to the most recent
quarter ended February 28, 2019, this represents an increase
of 130% compared to adjusted earnings from continuing operations of
$35.0 million or $0.29 per diluted share.
Excluding non-recurring integration related costs 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
$453.5 million and operating income
of $56.6 million to the consolidated
results of CMC in the third quarter of fiscal 2019.
Barbara R. Smith, Chairman of the
Board, President and Chief Executive Officer, said, "The strong
results for the quarter reflect the strength of construction
activity, as well as solid industrial production levels and the
resilient U.S. and Polish economies. Our recent acquisition, our
greenfield Oklahoma facility, and
introduction of hot spooled rebar were all meaningful contributors
to top and bottom line financial results. In addition, the
fundamentals of the fabrication segment have improved significantly
as we have shipped the majority of the lower priced work in our
backlog which has resulted in a significant improvement in the
segment results."
The Company's liquidity position at May 31, 2019 continued
to be strong with cash and cash equivalents of $120.3 million and availability under the
Company's credit and accounts receivable sales facilities of
$617.2 million.
On June 19, 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
July 5, 2019. The dividend will be paid on July 18,
2019.
Business Segments - Fiscal Third Quarter 2019
Review
Our Americas Recycling segment recorded adjusted
EBITDA of $12.3 million for the third
quarter of fiscal 2019, compared to adjusted EBITDA of $19.5 million for the prior year third
quarter. Despite a decline in ferrous pricing, we
generated good EBITDA results in this segment as a result of our
diligent buying practice, high inventory turnover and recent
investment in separation technology to better refine our end
non-ferrous purity levels to achieve higher margins.
Our Americas Mills segment recorded adjusted EBITDA of
$158.1 million for the third quarter
of fiscal 2019, an increase of 76% compared to adjusted EBITDA of
$89.6 million for the third quarter
of fiscal 2018. The third quarter results include adjusted
EBITDA of $53.6 million from the
acquired mills on shipments of 469 thousand tons. As a result
of decreases in both ferrous scrap cost and our manufacturing costs
due to higher production levels, combined with relatively flat
selling prices, the per ton EBITDA contribution for our Americas
Mills segment increased $26 per ton
in comparison to the third quarter of fiscal 2018.
Our Americas Fabrication segment recorded an adjusted EBITDA
loss of $23.3 million for the third
quarter of fiscal 2019, compared to an adjusted EBITDA loss of
$8.2 million for the third quarter of
fiscal 2018. This year's third quarter results include an
adjusted EBITDA loss of $13.9 million
related to the acquired fabrication operations on shipments of 184
thousand tons. This loss excludes the benefit of a purchase
accounting adjustment of $23.4
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 $10.1 million
for the quarter.
The segment had significantly improved results in comparison to
the results of the past three quarters. Average selling
prices in the Americas Fabrication segment rose 19% compared to the
third quarter of fiscal 2018. The existing business is
approaching break-even levels at current rebar prices. The
backlog acquired from Gerdau had a lower per ton value, so a return
to positive EBITDA is expected to occur in fiscal 2020. Rebar
fabrication bidding activity remains strong. Selling prices
for contracted work during fiscal 2019, including the acquired
locations, has averaged above $1,000
per ton, which is expected to be profitable when shipped in future
quarters at current rebar prices.
Our International Mill segment in Poland recorded adjusted EBITDA of
$24.1 million for the third quarter
of fiscal 2019, compared to adjusted EBITDA of $32.0 million for the comparable prior year
quarter. Elevated levels of imported product resulted in a
slight compression of metal margins during the quarter.
Despite the reduction in selling prices, this segment is on track
to earn the second highest level of profitability in its history
due to the continued strong non-residential construction market in
Poland.
Our Corporate and Other segment recorded an adjusted EBITDA loss
of $27.3 million for the third
quarter of fiscal 2019 compared to an adjusted EBITDA loss of
$31.8 million for the prior year's
third quarter. The current quarter loss includes $2.3 million related to acquisition costs in
comparison to $5.0 million in the
third quarter of fiscal 2018. Excluding these costs, our
Corporate segment costs have remained relatively flat as the newly
acquired operations were absorbed with little impact to the overall
cost structure.
Outlook
"Our outlook for demand remains very positive
driven by the continued strength in non-residential construction
activity levels in our markets," said Ms. Smith. "Leveraging
the growth in our business from the acquisition, combined with the
continued favorable long steel margin environment and improvement
in our fabrication segment, we anticipate a strong finish to our
fiscal year. We also anticipate that our business will
generate strong cash flows, creating the opportunity to reduce our
indebtedness levels."
Conference Call
CMC invites you to listen to a live
broadcast of its third quarter fiscal 2019 conference call today,
Thursday, June 20, 2019, at 2:00 p.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, 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, legal proceedings, U.S.
non-residential construction activity, international trade, capital
expenditures, our liquidity and our ability to satisfy future
liquidity requirements, our 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 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
|
|
Nine Months
Ended
|
(in thousands,
except per ton amounts)
|
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
5/31/2019
|
|
5/31/2018
|
Americas
Recycling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
289,015
|
|
|
287,075
|
|
|
302,009
|
|
|
361,363
|
|
|
364,098
|
|
|
878,099
|
|
|
1,004,066
|
|
Adjusted
EBITDA
|
|
$
|
12,331
|
|
|
10,124
|
|
|
15,434
|
|
|
16,996
|
|
|
19,477
|
|
|
37,889
|
|
|
51,698
|
|
Short tons shipped
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
597
|
|
|
570
|
|
|
579
|
|
|
644
|
|
|
642
|
|
|
1,746
|
|
|
1,791
|
|
Nonferrous
|
|
60
|
|
|
59
|
|
|
63
|
|
|
69
|
|
|
65
|
|
|
182
|
|
|
194
|
|
Total short
tons shipped
|
|
657
|
|
|
629
|
|
|
642
|
|
|
713
|
|
|
707
|
|
|
1,928
|
|
|
1,985
|
|
Average selling
price (per short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
$
|
252
|
|
|
266
|
|
|
273
|
|
|
298
|
|
|
314
|
|
|
263
|
|
|
286
|
|
Nonferrous
|
|
$
|
2,047
|
|
|
1,998
|
|
|
1,982
|
|
|
2,155
|
|
|
2,252
|
|
|
2,009
|
|
|
2,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Mills
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
866,903
|
|
|
774,709
|
|
|
601,853
|
|
|
604,435
|
|
|
553,063
|
|
|
2,243,465
|
|
|
1,392,468
|
|
Adjusted
EBITDA
|
|
$
|
158,114
|
|
|
112,396
|
|
|
113,873
|
|
|
106,830
|
|
|
89,590
|
|
|
384,383
|
|
|
194,975
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
913
|
|
|
773
|
|
|
530
|
|
|
482
|
|
|
503
|
|
|
2,216
|
|
|
1,313
|
|
Merchant &
Other
|
|
323
|
|
|
322
|
|
|
317
|
|
|
359
|
|
|
308
|
|
|
962
|
|
|
859
|
|
Total short tons
shipped
|
|
1,236
|
|
|
1,095
|
|
|
847
|
|
|
841
|
|
|
811
|
|
|
3,178
|
|
|
2,172
|
|
Average price
(per short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling
price
|
|
$
|
670
|
|
|
677
|
|
|
682
|
|
|
674
|
|
|
632
|
|
|
674
|
|
|
587
|
|
Cost of ferrous scrap
utilized
|
|
$
|
284
|
|
|
303
|
|
|
307
|
|
|
326
|
|
|
329
|
|
|
297
|
|
|
293
|
|
Metal
margin
|
|
$
|
386
|
|
|
374
|
|
|
375
|
|
|
348
|
|
|
303
|
|
|
377
|
|
|
294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Fabrication
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
633,047
|
|
|
530,836
|
|
|
437,111
|
|
|
403,889
|
|
|
378,241
|
|
|
1,600,994
|
|
|
1,023,993
|
|
Adjusted
EBITDA
|
|
$
|
(23,289)
|
|
|
(49,578)
|
|
|
(36,996)
|
|
|
(24,607)
|
|
|
(8,208)
|
|
|
(109,863)
|
|
|
(14,787)
|
|
Total short tons
shipped
|
|
469
|
|
|
396
|
|
|
319
|
|
|
307
|
|
|
302
|
|
|
1,184
|
|
|
808
|
|
Total selling price
(per short ton)
|
|
$
|
925
|
|
|
845
|
|
|
868
|
|
|
843
|
|
|
777
|
|
|
886
|
|
|
784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Mill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
209,365
|
|
|
175,198
|
|
|
227,024
|
|
|
253,058
|
|
|
201,737
|
|
|
611,587
|
|
|
633,980
|
|
Adjusted
EBITDA
|
|
$
|
24,120
|
|
|
20,537
|
|
|
32,779
|
|
|
36,654
|
|
|
31,987
|
|
|
77,436
|
|
|
95,066
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
126
|
|
|
66
|
|
|
80
|
|
|
145
|
|
|
79
|
|
|
272
|
|
|
314
|
|
Merchant &
Other
|
|
250
|
|
|
238
|
|
|
312
|
|
|
289
|
|
|
241
|
|
|
800
|
|
|
752
|
|
Total short tons
shipped
|
|
376
|
|
|
304
|
|
|
392
|
|
|
434
|
|
|
320
|
|
|
1,072
|
|
|
1,066
|
|
Average price
(per short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling
price
|
|
$
|
524
|
|
|
545
|
|
|
547
|
|
|
555
|
|
|
599
|
|
|
539
|
|
|
562
|
|
Cost of ferrous scrap
utilized
|
|
$
|
288
|
|
|
301
|
|
|
295
|
|
|
305
|
|
|
329
|
|
|
295
|
|
|
317
|
|
Metal
margin
|
|
$
|
236
|
|
|
244
|
|
|
252
|
|
|
250
|
|
|
270
|
|
|
244
|
|
|
245
|
|
COMMERCIAL METALS
COMPANY
|
BUSINESS SEGMENTS
(UNAUDITED)
|
(in
thousands)
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
Net
sales
|
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
5/31/2019
|
|
5/31/2018
|
Americas
Recycling
|
|
$
|
289,015
|
|
|
$
|
287,075
|
|
|
$
|
302,009
|
|
|
$
|
361,363
|
|
|
$
|
364,098
|
|
|
$
|
878,099
|
|
|
$
|
1,004,066
|
|
Americas
Mills
|
|
866,903
|
|
|
774,709
|
|
|
601,853
|
|
|
604,435
|
|
|
553,063
|
|
|
2,243,465
|
|
|
1,392,468
|
|
Americas
Fabrication
|
|
633,047
|
|
|
530,836
|
|
|
437,111
|
|
|
403,889
|
|
|
378,241
|
|
|
1,600,994
|
|
|
1,023,993
|
|
International
Mill
|
|
209,365
|
|
|
175,198
|
|
|
227,024
|
|
|
253,058
|
|
|
201,737
|
|
|
611,587
|
|
|
633,980
|
|
Corporate and
Other
|
|
(392,458)
|
|
|
(365,035)
|
|
|
(290,655)
|
|
|
(314,307)
|
|
|
(292,655)
|
|
|
(1,048,148)
|
|
|
(719,222)
|
|
Total Net
Sales
|
|
$
|
1,605,872
|
|
|
$
|
1,402,783
|
|
|
$
|
1,277,342
|
|
|
$
|
1,308,438
|
|
|
$
|
1,204,484
|
|
|
$
|
4,285,997
|
|
|
$
|
3,335,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Recycling
|
|
$
|
12,331
|
|
|
$
|
10,124
|
|
|
$
|
15,434
|
|
|
$
|
16,996
|
|
|
$
|
19,477
|
|
|
$
|
37,889
|
|
|
$
|
51,698
|
|
Americas
Mills
|
|
158,114
|
|
|
112,396
|
|
|
113,873
|
|
|
106,830
|
|
|
89,590
|
|
|
384,383
|
|
|
194,975
|
|
Americas
Fabrication
|
|
(23,289)
|
|
|
(49,578)
|
|
|
(36,996)
|
|
|
(24,607)
|
|
|
(8,208)
|
|
|
(109,863)
|
|
|
(14,787)
|
|
International
Mill
|
|
24,120
|
|
|
20,537
|
|
|
32,779
|
|
|
36,654
|
|
|
31,987
|
|
|
77,436
|
|
|
95,066
|
|
Corporate and
Other
|
|
(27,305)
|
|
|
(24,146)
|
|
|
(59,554)
|
|
|
(28,827)
|
|
|
(31,814)
|
|
|
(111,005)
|
|
|
(81,777)
|
|
COMMERCIAL METALS
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
|
|
|
Three Months Ended
May 31,
|
|
Nine Months Ended
May 31,
|
(in thousands,
except share data)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net sales
|
|
$
|
1,605,872
|
|
|
$
|
1,204,484
|
|
|
$
|
4,285,997
|
|
|
$
|
3,335,285
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
1,364,242
|
|
|
1,035,914
|
|
|
3,735,168
|
|
|
2,896,531
|
|
Selling, general and
administrative expenses
|
|
115,461
|
|
|
101,422
|
|
|
331,404
|
|
|
306,009
|
|
Interest
expense
|
|
18,513
|
|
|
11,511
|
|
|
53,671
|
|
|
25,303
|
|
|
|
1,498,216
|
|
|
1,148,847
|
|
|
4,120,243
|
|
|
3,227,843
|
|
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations before income taxes
|
|
107,656
|
|
|
55,637
|
|
|
165,754
|
|
|
107,442
|
|
Income
taxes
|
|
29,105
|
|
|
13,312
|
|
|
52,855
|
|
|
23,465
|
|
Earnings from
continuing operations
|
|
78,551
|
|
|
42,325
|
|
|
112,899
|
|
|
83,977
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
discontinued operations before income taxes
|
|
(190)
|
|
|
(3,389)
|
|
|
(808)
|
|
|
5,021
|
|
Income taxes
(benefit)
|
|
(29)
|
|
|
(1,029)
|
|
|
109
|
|
|
2,052
|
|
Earnings (loss) from
discontinued operations
|
|
(161)
|
|
|
(2,360)
|
|
|
(917)
|
|
|
2,969
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
78,390
|
|
|
$
|
39,965
|
|
|
$
|
111,982
|
|
|
$
|
86,946
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share*
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
|
$
|
0.67
|
|
|
$
|
0.36
|
|
|
$
|
0.96
|
|
|
$
|
0.72
|
|
Earnings (loss) from
discontinued operations
|
|
—
|
|
|
(0.02)
|
|
|
(0.01)
|
|
|
0.03
|
|
Net
earnings
|
|
$
|
0.66
|
|
|
$
|
0.34
|
|
|
$
|
0.95
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share*
|
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
|
$
|
0.66
|
|
|
$
|
0.36
|
|
|
$
|
0.95
|
|
|
$
|
0.71
|
|
Earnings (loss) from
discontinued operations
|
|
—
|
|
|
(0.02)
|
|
|
(0.01)
|
|
|
0.03
|
|
Net
earnings
|
|
$
|
0.66
|
|
|
$
|
0.34
|
|
|
$
|
0.94
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
Average basic shares
outstanding
|
|
118,045,362
|
|
|
117,111,799
|
|
|
117,762,945
|
|
|
116,722,504
|
|
Average diluted
shares outstanding
|
|
119,145,566
|
|
|
118,254,791
|
|
|
119,013,014
|
|
|
118,050,864
|
|
*Earning Per Share
("EPS") is calculated independently for each component and may not
sum to Net EPS due to rounding
|
COMMERCIAL METALS
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
(in thousands,
except share data)
|
|
May 31,
2019
|
|
August 31,
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
120,315
|
|
|
$
|
622,473
|
|
Accounts receivable
(less allowance for doubtful accounts of $17,318 and
$4,489)
|
|
1,014,157
|
|
|
749,484
|
|
Inventories,
net
|
|
807,593
|
|
|
589,005
|
|
Other current
assets
|
|
172,007
|
|
|
116,243
|
|
Total current
assets
|
|
2,114,072
|
|
|
2,077,205
|
|
Property, plant and
equipment, net
|
|
1,473,568
|
|
|
1,075,038
|
|
Goodwill
|
|
64,226
|
|
|
64,310
|
|
Other noncurrent
assets
|
|
115,144
|
|
|
111,751
|
|
Total
assets
|
|
$
|
3,767,010
|
|
|
$
|
3,328,304
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable-trade
|
|
$
|
278,390
|
|
|
$
|
261,258
|
|
Accrued expenses and
other payables
|
|
318,975
|
|
|
260,939
|
|
Acquired unfavorable
contract backlog
|
|
51,998
|
|
|
—
|
|
Current maturities of
long-term debt and short-term borrowings
|
|
54,895
|
|
|
19,746
|
|
Total current
liabilities
|
|
704,258
|
|
|
541,943
|
|
Deferred income
taxes
|
|
63,413
|
|
|
37,834
|
|
Other non-current
liabilities
|
|
128,281
|
|
|
116,325
|
|
Long-term
debt
|
|
1,306,863
|
|
|
1,138,619
|
|
Total
liabilities
|
|
2,202,815
|
|
|
1,834,721
|
|
Stockholders'
equity
|
|
1,563,999
|
|
|
1,493,397
|
|
Stockholders' equity
attributable to noncontrolling interests
|
|
196
|
|
|
186
|
|
Total stockholders'
equity
|
|
1,564,195
|
|
|
1,493,583
|
|
Total liabilities and
stockholders' equity
|
|
$
|
3,767,010
|
|
|
$
|
3,328,304
|
|
COMMERCIAL METALS
COMPANY AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
Nine Months Ended
May 31,
|
(in
thousands)
|
|
2019
|
|
2018
|
Cash flows from (used
by) operating activities:
|
|
|
|
|
Net
earnings
|
|
$
|
111,982
|
|
|
$
|
86,946
|
|
Adjustments to
reconcile net earnings to cash flows from (used by) operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
117,617
|
|
|
99,443
|
|
Amortization of
acquired unfavorable contract backlog
|
|
(58,202)
|
|
|
—
|
|
Stock-based
compensation
|
|
17,350
|
|
|
18,247
|
|
Net gain on disposals
of subsidiaries, assets and other
|
|
(1,334)
|
|
|
(1,578)
|
|
Deferred income taxes
and other long-term taxes
|
|
36,367
|
|
|
5,829
|
|
Write-down of
inventories
|
|
551
|
|
|
1,358
|
|
Provision for losses
on receivables, net
|
|
100
|
|
|
2,193
|
|
Asset
impairment
|
|
15
|
|
|
14,265
|
|
Changes in operating
assets and liabilities
|
|
(75,422)
|
|
|
(65,612)
|
|
Beneficial interest
in securitized accounts receivable
|
|
(367,521)
|
|
|
(491,577)
|
|
Net cash flows used
by operating activities
|
|
(218,497)
|
|
|
(330,486)
|
|
|
|
|
|
|
Cash flows from (used
by) investing activities:
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
(700,941)
|
|
|
(6,980)
|
|
Capital
expenditures
|
|
(91,753)
|
|
|
(144,268)
|
|
Proceeds from
insurance
|
|
4,405
|
|
|
25,000
|
|
Proceeds from the
sale of property, plant and equipment
|
|
2,503
|
|
|
6,315
|
|
Proceeds from the
sale of discontinued operations and other
|
|
1,893
|
|
|
75,483
|
|
Advances under
accounts receivable programs
|
|
—
|
|
|
132,979
|
|
Repayments under
accounts receivable programs
|
|
—
|
|
|
(202,423)
|
|
Beneficial interest
in securitized accounts receivable
|
|
367,521
|
|
|
491,577
|
|
Net cash flows from
(used by) investing activities:
|
|
(416,372)
|
|
|
377,683
|
|
|
|
|
|
|
Cash flows from (used
by) financing activities:
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
180,000
|
|
|
350,000
|
|
Repayments of
long-term debt
|
|
(24,138)
|
|
|
(15,382)
|
|
Proceeds from
accounts receivable programs
|
|
223,143
|
|
|
—
|
|
Repayments under
accounts receivable programs
|
|
(209,363)
|
|
|
—
|
|
Dividends
|
|
(42,387)
|
|
|
(42,036)
|
|
Stock issued under
incentive and purchase plans, net of forfeitures
|
|
(2,364)
|
|
|
(9,836)
|
|
Debt issuance
costs
|
|
—
|
|
|
(5,254)
|
|
Other
|
|
10
|
|
|
31
|
|
Net cash flows from
financing activities
|
|
124,901
|
|
|
277,523
|
|
Effect of exchange
rate changes on cash
|
|
(341)
|
|
|
(461)
|
|
Increase (decrease)
in cash, restricted cash and cash equivalents
|
|
(510,309)
|
|
|
324,259
|
|
Cash, restricted cash
and cash equivalents at beginning of period
|
|
632,615
|
|
|
285,881
|
|
Cash, restricted cash
and cash equivalents at end of period
|
|
$
|
122,306
|
|
|
$
|
610,140
|
|
|
|
|
Supplemental
information:
|
|
Nine Months Ended
May 31,
|
(in
thousands)
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
120,315
|
|
|
$
|
600,444
|
|
Restricted
cash
|
|
|
1,991
|
|
|
|
9,696
|
|
Total cash,
restricted cash and cash equivalents
|
|
$
|
122,306
|
|
|
$
|
610,140
|
|
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
|
|
Nine Months
Ended
|
(in
thousands)
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
5/31/2019
|
|
5/31/2018
|
Earnings from
continuing operations
|
$
|
78,551
|
|
|
$
|
14,928
|
|
|
$
|
19,420
|
|
|
$
|
51,260
|
|
|
$
|
42,325
|
|
|
112,899
|
|
|
83,977
|
|
Interest
expense
|
18,513
|
|
|
18,495
|
|
|
16,663
|
|
|
15,654
|
|
|
11,511
|
|
|
53,671
|
|
|
25,303
|
|
Income
taxes
|
29,105
|
|
|
18,141
|
|
|
5,609
|
|
|
6,682
|
|
|
13,312
|
|
|
52,855
|
|
|
23,465
|
|
Depreciation and
amortization
|
41,181
|
|
|
41,245
|
|
|
35,176
|
|
|
32,610
|
|
|
32,949
|
|
|
117,602
|
|
|
98,898
|
|
Asset
impairments
|
15
|
|
|
—
|
|
|
—
|
|
|
840
|
|
|
935
|
|
|
15
|
|
|
13,532
|
|
Non-cash equity
compensation
|
7,342
|
|
|
5,791
|
|
|
4,215
|
|
|
5,679
|
|
|
5,376
|
|
|
17,348
|
|
|
18,359
|
|
Acquisition and
integration related costs and other
|
2,336
|
|
|
5,475
|
|
|
27,970
|
|
|
10,907
|
|
|
4,975
|
|
|
35,781
|
|
|
14,600
|
|
Amortization of
acquired unfavorable contract backlog
|
(23,394)
|
|
|
(23,476)
|
|
|
(11,332)
|
|
|
—
|
|
|
—
|
|
|
(58,202)
|
|
|
—
|
|
Mill operational
start-up costs*
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,473
|
|
|
—
|
|
|
13,471
|
|
CMC Steel Oklahoma
incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000)
|
|
|
—
|
|
|
(3,000)
|
|
Purchase accounting
effect on inventory
|
—
|
|
|
10,315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
Core EBITDA from
continuing operations
|
$
|
153,649
|
|
|
$
|
90,914
|
|
|
$
|
97,721
|
|
|
$
|
123,632
|
|
|
$
|
109,856
|
|
|
$
|
342,284
|
|
|
$
|
288,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*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
|
|
Nine Months
Ended
|
(in
thousands)
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
5/31/2018
|
|
5/31/2019
|
|
5/31/2018
|
Earnings from
continuing operations
|
$
|
78,551
|
|
|
$
|
14,928
|
|
|
$
|
19,420
|
|
|
$
|
51,260
|
|
|
$
|
42,325
|
|
|
$
|
112,899
|
|
|
$
|
83,977
|
|
Impairment of
structural steel assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,136
|
|
Acquisition and
integration related costs and other
|
2,336
|
|
|
5,475
|
|
|
27,970
|
|
|
10,907
|
|
|
4,975
|
|
|
35,781
|
|
|
14,600
|
|
Mill operational
start-up costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,456
|
|
|
—
|
|
|
18,016
|
|
CMC Steel Oklahoma
incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000)
|
|
|
—
|
|
|
(3,000)
|
|
Purchase accounting
effect on inventory
|
—
|
|
|
10,315
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
Total adjustments
(pre-tax)
|
$
|
2,336
|
|
|
$
|
15,790
|
|
|
$
|
27,970
|
|
|
$
|
10,907
|
|
|
$
|
8,431
|
|
|
$
|
46,096
|
|
|
$
|
41,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax impact
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TCJA
impact
|
$
|
—
|
|
|
$
|
7,550
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,550
|
|
|
$
|
10,600
|
|
International
reorganization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,200)
|
|
Related tax effects
on adjustments
|
(490)
|
|
|
(3,316)
|
|
|
(5,874)
|
|
|
(2,290)
|
|
|
(1,771)
|
|
|
(9,680)
|
|
|
(10,946)
|
|
Total tax
impact
|
(490)
|
|
|
4,234
|
|
|
(5,874)
|
|
|
(2,290)
|
|
|
(1,771)
|
|
|
(2,130)
|
|
|
(9,546)
|
|
Adjusted earnings
from continuing operations
|
$
|
80,397
|
|
|
$
|
34,952
|
|
|
$
|
41,516
|
|
|
$
|
59,877
|
|
|
$
|
48,985
|
|
|
$
|
156,865
|
|
|
$
|
116,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from continuing operations per diluted share
|
$
|
0.67
|
|
|
$
|
0.29
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
|
$
|
0.41
|
|
|
$
|
1.32
|
|
|
$
|
0.98
|
|
View original
content:http://www.prnewswire.com/news-releases/commercial-metals-company-reports-third-quarter-fiscal-2019-results-300871751.html
SOURCE Commercial Metals Company