IRVING, Texas, Oct. 23, 2019 /PRNewswire/ -- Commercial Metals
Company (NYSE: CMC) today announced financial results for its
fiscal fourth quarter and year ended August 31, 2019. Net
sales for the fourth quarter increased 18% to $1.5 billion from $1.3
billion in the prior year quarter, and for the full year
increased 26% to $5.8 billion
compared to $4.6 billion in the prior
year, reflecting increased capacity from the previously announced
rebar assets acquisition. Earnings from continuing operations were
$85.9 million, or $0.72 per diluted share, in the fourth quarter
compared to $51.3 million, or
$0.43 per diluted share, in the prior
year quarter. For the full year, earnings from continuing
operations were $198.8 million, or
$1.67 per diluted share, compared to
$135.2 million, or $1.14 per diluted share in the prior year.
Barbara R. Smith, Chairman of the
Board, President and Chief Executive Officer, commented, "2019 was
a transformational year for CMC. I am proud of what our team
accomplished, with results that reflect the successful execution of
our growth strategy and the strong fundamentals in the end markets
we serve."
"Key milestones in fiscal 2019 included the completion and
integration of CMC's largest acquisition to date, the ramp up of
our second micro mill in Oklahoma,
and the addition of hot spooled rebar capability at our
Arizona micro mill. Together, they
bolster the strategy that has positioned CMC to be the largest
supplier of rebar and a leading producer of merchant bar for the
U.S. market place. In addition, our Polish operations generated
full year EBITDA in excess of $100
million from strong sales and margins despite the flood of
imported steel into the European Union. The successful
execution of these accomplishments resulted in our ability to
reduce our indebtedness by $124.5
million during the fourth quarter," Smith added.
Results for the fourth quarter and full year included net
after-tax expenses related to certain non-operational costs
resulting from the acquisition and integration of the rebar assets
of $4.9 million and $48.8 million, respectively. Excluding these
expenses, adjusted earnings from continuing operations were
$90.8 million, or $0.76 per diluted share, for the fourth quarter,
an increase of 52% compared to $59.9
million, or $0.51 per diluted
share, in the prior year quarter. For the full year, adjusted
earnings from continuing operations were $247.6 million, or $2.08 per diluted share, an increase of 41%
compared to $176.1 million, or
$1.49 per diluted share, in the prior
year, as detailed in the non-GAAP reconciliation on page 12.
As a result of the strong free cash flow generated during the
fourth quarter, the Company reduced its debt and accounts
receivable programs usage while also improving its cash balance by
$72.1 million to $192.5 million at fiscal year-end. Availability
under the Company's credit and accounts receivable programs was
$611.0 million at August 31,
2019.
On October 22, 2019, the board of directors declared a
quarterly dividend of $0.12 per share
of CMC common stock payable to stockholders of record on
November 6, 2019. The dividend will be paid on
November 20, 2019.
Business Segments - Fiscal Fourth Quarter 2019
Review
Our Americas Recycling segment adjusted EBITDA of
$4.2 million for the fourth quarter
of fiscal 2019 declined compared to $17.0
million for the fourth quarter last year. The decrease
reflected a 27% drop in ferrous and 7% drop in non-ferrous
prices year-on-year, which also constrained volume.
Our Americas Mills segment adjusted EBITDA of $160.8 million for the fourth quarter of fiscal
2019 rose 51% compared to $106.8
million for the fourth quarter last year, and includes
adjusted EBITDA of $58.1 million from
the acquired mills, on shipments of 455 thousand tons. Volume
increased 45% compared to the prior year fourth quarter primarily
due to the ramp up of our Oklahoma
micro mill and the additional production from the acquired
facilities. Metal margins increased $51 per ton compared to the fourth quarter last
year, and $13 per ton sequentially
from the third quarter of this year, reflecting the greater price
stability of CMC's rebar and long product offerings when compared
to the broader steel market.
Our Americas Fabrication segment recorded an adjusted EBITDA
loss of $13.2 million for the fourth
quarter of fiscal 2019, an improvement compared to an adjusted
EBITDA loss of $24.6 million for the
prior year fourth quarter. The 2019 fourth quarter included
$4.2 million of costs related to the
closure of certain acquired locations. As in prior quarters, the
fourth quarter EBITDA losses did not include the benefit of the
purchase accounting adjustment related to amortization of the
unfavorable contact backlog reserve that relates to the
acquisition, which was $16.6 million.
The acquired locations shipped 172 thousand tons in the 2019 fourth
quarter. CMC's historical locations produced break-even results in
the 2019 fourth quarter. Current rebar bidding activity remains
strong and selling prices averaged $963 per ton in the 2019 fourth quarter,
$120 per ton or 14%, higher compared
to the same period in the prior year.
Our International Mill segment adjusted EBITDA of $22.7 million for the fourth quarter of fiscal
2019 declined compared to adjusted EBITDA of $36.7 million for the prior year quarter. The
construction sector remains strong in Poland and our operations produced record
quarterly rebar shipments during the fourth quarter. Results of the
operation in comparison to the prior year were lower due to a high
volume of steel imports into the European
Union.
Outlook
"Supported by the sentiment of our customers
and the strength and profitability of our fabrication backlog, our
outlook remains strong," said Ms. Smith. "We anticipate the current
elevated rebar margin environment will continue, our fabrication
business will be a positive contributor to our results, and the
solid results will continue from our Polish operations. Our strong
cash flow generation has allowed us to delever faster than
originally anticipated, strengthening our balance sheet and
enabling us to seek additional opportunities for long term growth
that will benefit our stakeholders."
Conference Call
CMC invites you to listen to a live
broadcast of its fourth quarter fiscal 2019 conference call today,
Wednesday, October 23, 2019, at 11:00
a.m. ET. Barbara Smith,
Chairman of the Board of Directors, President, and Chief Executive
Officer, and Paul Lawrence, 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
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, the 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, 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 Business") 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, 2019, 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
prices; 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 Business; issues or delays in the successful
integration of the Acquired Business' operations, systems and
personnel with those of the Company, including the inability to
substantially increase utilization of the Acquired Business' steel
mini mills, and incurring or experiencing unanticipated costs
and/or delays or difficulties; unfavorable reaction to the
acquisition of the Acquired Business 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; 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; new and clarifying
guidance with regard to interpretation of the Tax Cuts and Jobs Act
("TCJA") that could impact our assessment; and increased costs
related to health care reform legislation.
COMMERCIAL METALS
COMPANY
FINANCIAL &
OPERATING STATISTICS (UNAUDITED)
|
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
(in thousands,
except per ton amounts)
|
|
8/31/2019
|
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
8/31/2019
|
|
8/31/2018
|
Americas
Recycling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
268,447
|
|
|
289,015
|
|
|
287,075
|
|
|
302,009
|
|
|
361,363
|
|
|
1,146,546
|
|
|
1,365,429
|
|
Adjusted
EBITDA
|
|
$
|
4,235
|
|
|
12,331
|
|
|
10,124
|
|
|
15,434
|
|
|
16,996
|
|
|
42,124
|
|
|
68,694
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
559
|
|
|
597
|
|
|
570
|
|
|
579
|
|
|
644
|
|
|
2,305
|
|
|
2,435
|
|
Nonferrous
|
|
61
|
|
|
60
|
|
|
59
|
|
|
63
|
|
|
69
|
|
|
243
|
|
|
263
|
|
Total short tons
shipped
|
|
620
|
|
|
657
|
|
|
629
|
|
|
642
|
|
|
713
|
|
|
2,548
|
|
|
2,698
|
|
Average selling price
(per short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous
|
|
$
|
217
|
|
|
252
|
|
|
266
|
|
|
273
|
|
|
298
|
|
|
252
|
|
|
289
|
|
Nonferrous
|
|
$
|
1,998
|
|
|
2,047
|
|
|
1,998
|
|
|
1,982
|
|
|
2,155
|
|
|
2,006
|
|
|
2,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Mills
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
824,809
|
|
|
866,903
|
|
|
774,709
|
|
|
601,853
|
|
|
604,435
|
|
|
3,068,274
|
|
|
1,996,903
|
|
Adjusted
EBITDA
|
|
$
|
160,832
|
|
|
158,114
|
|
|
112,396
|
|
|
113,873
|
|
|
106,830
|
|
|
545,215
|
|
|
301,805
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
897
|
|
|
913
|
|
|
773
|
|
|
530
|
|
|
482
|
|
|
3,113
|
|
|
1,795
|
|
Merchant &
Other
|
|
319
|
|
|
323
|
|
|
322
|
|
|
317
|
|
|
359
|
|
|
1,281
|
|
|
1,218
|
|
Total short tons
shipped
|
|
1,216
|
|
|
1,236
|
|
|
1,095
|
|
|
847
|
|
|
841
|
|
|
4,394
|
|
|
3,013
|
|
Average price (per
short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling
price
|
|
$
|
645
|
|
|
670
|
|
|
677
|
|
|
682
|
|
|
674
|
|
|
666
|
|
|
612
|
|
Cost of ferrous scrap
utilized
|
|
$
|
246
|
|
|
284
|
|
|
303
|
|
|
307
|
|
|
326
|
|
|
284
|
|
|
303
|
|
Metal
margin
|
|
$
|
399
|
|
|
386
|
|
|
374
|
|
|
375
|
|
|
348
|
|
|
382
|
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Fabrication
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
622,385
|
|
|
633,047
|
|
|
530,836
|
|
|
437,111
|
|
|
403,889
|
|
|
2,223,379
|
|
|
1,427,882
|
|
Adjusted
EBITDA
|
|
$
|
(13,151)
|
|
|
(23,289)
|
|
|
(49,578)
|
|
|
(36,996)
|
|
|
(24,607)
|
|
|
(123,014)
|
|
|
(39,394)
|
|
Total short tons
shipped
|
|
448
|
|
|
469
|
|
|
396
|
|
|
319
|
|
|
307
|
|
|
1,632
|
|
|
1,114
|
|
Total selling price
(per short ton)
|
|
$
|
963
|
|
|
925
|
|
|
845
|
|
|
868
|
|
|
843
|
|
|
905
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
Mill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
205,461
|
|
|
209,365
|
|
|
175,198
|
|
|
227,024
|
|
|
253,058
|
|
|
817,048
|
|
|
887,038
|
|
Adjusted
EBITDA
|
|
$
|
22,666
|
|
|
24,120
|
|
|
20,537
|
|
|
32,779
|
|
|
36,654
|
|
|
100,102
|
|
|
131,720
|
|
Short tons
shipped
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
151
|
|
|
126
|
|
|
66
|
|
|
80
|
|
|
145
|
|
|
423
|
|
|
459
|
|
Merchant &
Other
|
|
237
|
|
|
250
|
|
|
238
|
|
|
312
|
|
|
289
|
|
|
1,037
|
|
|
1,041
|
|
Total short tons
shipped
|
|
388
|
|
|
376
|
|
|
304
|
|
|
392
|
|
|
434
|
|
|
1,460
|
|
|
1,500
|
|
Average price (per
short ton)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling
price
|
|
$
|
500
|
|
|
524
|
|
|
545
|
|
|
547
|
|
|
555
|
|
|
528
|
|
|
560
|
|
Cost of ferrous scrap
utilized
|
|
$
|
265
|
|
|
288
|
|
|
301
|
|
|
295
|
|
|
305
|
|
|
288
|
|
|
314
|
|
Metal
margin
|
|
$
|
235
|
|
|
236
|
|
|
244
|
|
|
252
|
|
|
250
|
|
|
240
|
|
|
246
|
|
COMMERCIAL METALS
COMPANY
BUSINESS SEGMENTS
(UNAUDITED)
|
(in
thousands)
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
Net
sales
|
|
8/31/2019
|
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
8/31/2019
|
|
8/31/2018
|
Americas
Recycling
|
|
$
|
268,447
|
|
|
$
|
289,015
|
|
|
$
|
287,075
|
|
|
$
|
302,009
|
|
|
$
|
361,363
|
|
|
$
|
1,146,546
|
|
|
$
|
1,365,429
|
|
Americas
Mills
|
|
824,809
|
|
|
866,903
|
|
|
774,709
|
|
|
601,853
|
|
|
604,435
|
|
|
3,068,274
|
|
|
1,996,903
|
|
Americas
Fabrication
|
|
622,385
|
|
|
633,047
|
|
|
530,836
|
|
|
437,111
|
|
|
403,889
|
|
|
2,223,379
|
|
|
1,427,882
|
|
International
Mill
|
|
205,461
|
|
|
209,365
|
|
|
175,198
|
|
|
227,024
|
|
|
253,058
|
|
|
817,048
|
|
|
887,038
|
|
Corporate and
Other
|
|
(378,097)
|
|
|
(392,458)
|
|
|
(365,035)
|
|
|
(290,655)
|
|
|
(314,307)
|
|
|
(1,426,245)
|
|
|
(1,033,529)
|
|
Total net
sales
|
|
$
|
1,543,005
|
|
|
$
|
1,605,872
|
|
|
$
|
1,402,783
|
|
|
$
|
1,277,342
|
|
|
$
|
1,308,438
|
|
|
$
|
5,829,002
|
|
|
$
|
4,643,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Recycling
|
|
$
|
4,235
|
|
|
$
|
12,331
|
|
|
$
|
10,124
|
|
|
$
|
15,434
|
|
|
$
|
16,996
|
|
|
$
|
42,124
|
|
|
$
|
68,694
|
|
Americas
Mills
|
|
160,832
|
|
|
158,114
|
|
|
112,396
|
|
|
113,873
|
|
|
106,830
|
|
|
545,215
|
|
|
301,805
|
|
Americas
Fabrication
|
|
(13,151)
|
|
|
(23,289)
|
|
|
(49,578)
|
|
|
(36,996)
|
|
|
(24,607)
|
|
|
(123,014)
|
|
|
(39,394)
|
|
International
Mill
|
|
22,666
|
|
|
24,120
|
|
|
20,537
|
|
|
32,779
|
|
|
36,654
|
|
|
100,102
|
|
|
131,720
|
|
Corporate and
Other
|
|
(29,337)
|
|
|
(27,305)
|
|
|
(24,146)
|
|
|
(59,554)
|
|
|
(28,827)
|
|
|
(140,342)
|
|
|
(110,604)
|
|
COMMERCIAL METALS
COMPANY
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
(in thousands,
except share data)
|
8/31/2019
|
|
8/31/2018
|
|
8/31/2019
|
|
8/31/2018
|
Net sales
|
$
|
1,543,005
|
|
|
$
|
1,308,438
|
|
|
$
|
5,829,002
|
|
|
$
|
4,643,723
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of goods
sold
|
1,290,346
|
|
|
1,125,027
|
|
|
5,025,514
|
|
|
4,021,558
|
|
Selling, general and
administrative expenses
|
131,882
|
|
|
108,975
|
|
|
463,271
|
|
|
401,452
|
|
Impairment of
assets
|
369
|
|
|
840
|
|
|
384
|
|
|
14,372
|
|
Interest
expense
|
17,702
|
|
|
15,654
|
|
|
71,373
|
|
|
40,957
|
|
|
1,440,299
|
|
|
1,250,496
|
|
|
5,560,542
|
|
|
4,478,339
|
|
Earnings from
continuing operations before income taxes
|
102,706
|
|
|
57,942
|
|
|
268,460
|
|
|
165,384
|
|
Income
taxes
|
16,826
|
|
|
6,682
|
|
|
69,681
|
|
|
30,147
|
|
Earnings from
continuing operations
|
85,880
|
|
|
51,260
|
|
|
198,779
|
|
|
135,237
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) from discontinued operations before income
taxes
|
280
|
|
|
(1,786)
|
|
|
(528)
|
|
|
3,235
|
|
Income taxes
(benefit)
|
49
|
|
|
(2,086)
|
|
|
158
|
|
|
(34)
|
|
Earnings (loss) from
discontinued operations
|
231
|
|
|
300
|
|
|
(686)
|
|
|
3,269
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
86,111
|
|
|
$
|
51,560
|
|
|
$
|
198,093
|
|
|
$
|
138,506
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share*
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
0.73
|
|
|
$
|
0.44
|
|
|
$
|
1.69
|
|
|
$
|
1.16
|
|
Earnings (loss) from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
0.03
|
|
Net
earnings
|
$
|
0.73
|
|
|
$
|
0.44
|
|
|
$
|
1.68
|
|
|
$
|
1.19
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share*
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$
|
0.72
|
|
|
$
|
0.43
|
|
|
$
|
1.67
|
|
|
$
|
1.14
|
|
Earnings (loss) from
discontinued operations
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
0.03
|
|
Net
earnings
|
$
|
0.72
|
|
|
$
|
0.44
|
|
|
$
|
1.66
|
|
|
$
|
1.17
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
$
|
0.12
|
|
|
$
|
0.12
|
|
|
$
|
0.48
|
|
|
$
|
0.48
|
|
Average basic shares
outstanding
|
118,046,800
|
|
|
117,119,557
|
|
|
117,834,558
|
|
|
116,822,583
|
|
Average diluted
shares outstanding
|
119,392,062
|
|
|
118,407,316
|
|
|
119,124,628
|
|
|
118,145,848
|
|
|
* EPS is calculated
independently for each component and may not sum to net earnings
EPS due to rounding
|
COMMERCIAL METALS
COMPANY AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
August
31,
|
(in thousands,
except share data)
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
192,461
|
|
|
$
|
622,473
|
|
Accounts receivable
(less allowance for doubtful accounts of $8,403 and
$4,489)
|
|
1,016,088
|
|
|
749,484
|
|
Inventories
|
|
692,368
|
|
|
589,005
|
|
Other current
assets
|
|
179,088
|
|
|
116,243
|
|
Total current
assets
|
|
2,080,005
|
|
|
2,077,205
|
|
Property, plant and
equipment:
|
|
|
|
|
Land
|
|
142,825
|
|
|
85,288
|
|
Buildings and
improvements
|
|
750,381
|
|
|
631,501
|
|
Equipment
|
|
2,234,800
|
|
|
1,918,342
|
|
Construction in
process
|
|
68,579
|
|
|
35,741
|
|
|
|
3,196,585
|
|
|
2,670,872
|
|
Less accumulated
depreciation and amortization
|
|
(1,695,614)
|
|
|
(1,595,834)
|
|
Property, plant and
equipment, net
|
|
1,500,971
|
|
|
1,075,038
|
|
Goodwill
|
|
64,138
|
|
|
64,310
|
|
Other noncurrent
assets
|
|
113,657
|
|
|
111,751
|
|
Total
assets
|
|
$
|
3,758,771
|
|
|
$
|
3,328,304
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
288,005
|
|
|
$
|
261,258
|
|
Accrued expenses and
other payables
|
|
353,786
|
|
|
260,939
|
|
Acquired unfavorable
contract backlog
|
|
35,360
|
|
|
—
|
|
Borrowings under
accounts receivable programs
|
|
3,929
|
|
|
—
|
|
Current maturities of
long-term debt
|
|
13,510
|
|
|
19,746
|
|
Total current
liabilities
|
|
694,590
|
|
|
541,943
|
|
Deferred income
taxes
|
|
79,290
|
|
|
37,834
|
|
Other noncurrent
liabilities
|
|
133,620
|
|
|
116,325
|
|
Long-term
debt
|
|
1,227,214
|
|
|
1,138,619
|
|
Total
liabilities
|
|
2,134,714
|
|
|
1,834,721
|
|
Commitments and
contingencies (Note 20)
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, par
value $0.01 per share; authorized 200,000,000 shares; issued
129,060,664 shares; outstanding 117,924,938 and 117,015,558
shares
|
|
1,290
|
|
|
1,290
|
|
Additional paid-in
capital
|
|
358,668
|
|
|
352,674
|
|
Accumulated other
comprehensive loss
|
|
(124,126)
|
|
|
(93,677)
|
|
Retained
earnings
|
|
1,585,379
|
|
|
1,446,495
|
|
Less treasury stock,
11,135,726 and 12,045,106 shares at cost
|
|
(197,350)
|
|
|
(213,385)
|
|
Stockholders'
equity
|
|
1,623,861
|
|
|
1,493,397
|
|
Stockholders' equity
attributable to noncontrolling interests
|
|
196
|
|
|
186
|
|
Total
equity
|
|
1,624,057
|
|
|
1,493,583
|
|
Total liabilities and
stockholders' equity
|
|
$
|
3,758,771
|
|
|
$
|
3,328,304
|
|
|
See notes to
consolidated financial statements.
|
COMMERCIAL METALS
COMPANY AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
Year Ended August
31,
|
(in
thousands)
|
|
2019
|
|
2018
|
Cash flows from (used
by) operating activities:
|
|
|
|
|
Net
earnings
|
|
$
|
198,093
|
|
|
$
|
138,506
|
|
Adjustments to
reconcile net earnings to cash flows from (used by) operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
158,671
|
|
|
131,659
|
|
Amortization of
acquired unfavorable contract backlog
|
|
(74,784)
|
|
|
—
|
|
Share-based
compensation
|
|
25,106
|
|
|
23,929
|
|
Deferred income taxes
and other long-term taxes
|
|
49,523
|
|
|
14,377
|
|
Asset
impairments
|
|
384
|
|
|
15,053
|
|
Provision for losses
on receivables, net
|
|
388
|
|
|
2,510
|
|
Write-down of
inventory
|
|
723
|
|
|
1,407
|
|
Net (gain) loss on
sales of a subsidiary, assets and other
|
|
(2,281)
|
|
|
(1,322)
|
|
Changes in operating
assets and liabilities, net of acquisitions
|
|
48,702
|
|
|
(89,586)
|
|
Beneficial interest
in securitized accounts receivable
|
|
(367,521)
|
|
|
(670,457)
|
|
Net cash flows from
(used by) operating activities
|
|
37,004
|
|
|
(433,924)
|
|
|
|
|
|
|
Cash flows from (used
by) investing activities:
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
(700,941)
|
|
|
(6,980)
|
|
Capital
expenditures
|
|
(138,836)
|
|
|
(174,655)
|
|
Proceeds from the
sale of discontinued operations and other
|
|
1,893
|
|
|
75,482
|
|
Proceeds from
insurance
|
|
4,405
|
|
|
27,375
|
|
Proceeds from the
sale of property, plant and equipment
|
|
3,910
|
|
|
8,103
|
|
Advances under
accounts receivable programs
|
|
—
|
|
|
226,325
|
|
Repayments under
accounts receivable programs
|
|
—
|
|
|
(304,178)
|
|
Beneficial interest
in securitized accounts receivable
|
|
367,521
|
|
|
670,457
|
|
Net cash flows from
(used by) investing activities
|
|
(462,048)
|
|
|
521,929
|
|
|
|
|
|
|
Cash flows from (used
by) financing activities:
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
180,000
|
|
|
350,000
|
|
Proceeds from
accounts receivable programs
|
|
288,896
|
|
|
—
|
|
Repayments under
accounts receivable programs
|
|
(296,033)
|
|
|
—
|
|
Repayments of
long-term debt
|
|
(127,704)
|
|
|
(19,967)
|
|
Cash
dividends
|
|
(56,537)
|
|
|
(56,076)
|
|
Stock issued under
incentive and purchase plans, net of forfeitures
|
|
(1,876)
|
|
|
(9,302)
|
|
Debt issuance
costs
|
|
—
|
|
|
(5,254)
|
|
Other
|
|
10
|
|
|
31
|
|
Net cash flows from
(used by) financing activities
|
|
(13,244)
|
|
|
259,432
|
|
Effect of exchange
rate changes on cash
|
|
(598)
|
|
|
(703)
|
|
Increase
(decrease) in cash and cash equivalents
|
|
(438,886)
|
|
|
346,734
|
|
Cash, restricted cash
and cash equivalents at beginning of year
|
|
632,615
|
|
|
285,881
|
|
Cash, restricted cash
and cash equivalents at end of year
|
|
$
|
193,729
|
|
|
$
|
632,615
|
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
192,461
|
|
|
$
|
622,473
|
|
Restricted
cash
|
|
$
|
1,268
|
|
|
$
|
10,142
|
|
Total cash, cash
equivalents and restricted cash
|
|
$
|
193,729
|
|
|
$
|
632,615
|
|
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, mill operational start-up costs, CMC
Steel Oklahoma incentives, net debt restructuring and
extinguishment gains and losses 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 before
income taxes to Core EBITDA from continuing operations is provided
below:
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
(in
thousands)
|
8/31/2019
|
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
8/31/2019
|
|
8/31/2018
|
Earnings (loss)
from continuing operations
|
$
|
85,880
|
|
|
$
|
78,551
|
|
|
$
|
14,928
|
|
|
$
|
19,420
|
|
|
$
|
51,260
|
|
|
$
|
198,779
|
|
|
$
|
135,237
|
|
Interest
expense
|
17,702
|
|
|
18,513
|
|
|
18,495
|
|
|
16,663
|
|
|
15,654
|
|
|
71,373
|
|
|
40,957
|
|
Income taxes
(benefit)
|
16,826
|
|
|
29,105
|
|
|
18,141
|
|
|
5,609
|
|
|
6,682
|
|
|
69,681
|
|
|
30,147
|
|
Depreciation and
amortization
|
41,051
|
|
|
41,181
|
|
|
41,245
|
|
|
35,176
|
|
|
32,610
|
|
|
158,653
|
|
|
131,508
|
|
Asset
impairments
|
369
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
840
|
|
|
384
|
|
|
14,372
|
|
Non-cash equity
compensation
|
7,758
|
|
|
7,342
|
|
|
5,791
|
|
|
4,215
|
|
|
5,679
|
|
|
25,106
|
|
|
24,038
|
|
Acquisition and
integration related costs
|
6,177
|
|
|
2,336
|
|
|
5,475
|
|
|
27,970
|
|
|
10,907
|
|
|
41,958
|
|
|
25,507
|
|
Amortization of
acquired unfavorable contract backlog
|
(16,582)
|
|
|
(23,394)
|
|
|
(23,476)
|
|
|
(11,332)
|
|
|
—
|
|
|
(74,784)
|
|
|
—
|
|
Mill operational
start-up costs*
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,471
|
|
CMC Steel Oklahoma
incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000)
|
|
Purchase accounting
effect on inventory
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
Core EBITDA from
continuing operations
|
$
|
159,181
|
|
|
$
|
153,649
|
|
|
$
|
90,914
|
|
|
$
|
97,721
|
|
|
$
|
123,632
|
|
|
$
|
501,465
|
|
|
$
|
412,237
|
|
|
* 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 costs, mill operational start-up costs, CMC Steel Oklahoma
incentives, asset impairments, debt restructuring and
extinguishment gains and losses 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
|
|
Fiscal Year
Ended
|
(in
thousands)
|
8/31/2019
|
|
5/31/2019
|
|
2/28/2019
|
|
11/30/2018
|
|
8/31/2018
|
|
8/31/2019
|
|
8/31/2018
|
Earnings (loss) from
continuing operations
|
$
|
85,880
|
|
|
$
|
78,551
|
|
|
$
|
14,928
|
|
|
$
|
19,420
|
|
|
$
|
51,260
|
|
|
$
|
198,779
|
|
|
$
|
135,237
|
|
Impairment of
structural steel assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,136
|
|
Acquisition and
integration related costs
|
6,177
|
|
|
2,336
|
|
|
5,475
|
|
|
27,970
|
|
|
10,907
|
|
|
41,958
|
|
|
25,507
|
|
Mill operational
start-up costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,016
|
|
CMC Steel Oklahoma
incentives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,000)
|
|
Purchase accounting
effect on inventory
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
|
—
|
|
|
10,315
|
|
|
—
|
|
Total adjustments
(pre-tax)
|
$
|
6,177
|
|
|
$
|
2,336
|
|
|
$
|
15,790
|
|
|
$
|
27,970
|
|
|
$
|
10,907
|
|
|
$
|
52,273
|
|
|
$
|
52,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Impact
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TCJA
impact
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,550
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,550
|
|
|
$
|
10,600
|
|
International
reorganization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,200)
|
|
Related tax effects
on adjustments
|
(1,297)
|
|
|
(490)
|
|
|
(3,316)
|
|
|
(5,874)
|
|
|
(2,290)
|
|
|
(10,977)
|
|
|
(13,236)
|
|
Total tax
impact
|
(1,297)
|
|
|
(490)
|
|
|
4,234
|
|
|
(5,874)
|
|
|
(2,290)
|
|
|
(3,427)
|
|
|
(11,836)
|
|
Adjusted earnings
from continuing operations
|
$
|
90,760
|
|
|
$
|
80,397
|
|
|
$
|
34,952
|
|
|
$
|
41,516
|
|
|
$
|
59,877
|
|
|
$
|
247,625
|
|
|
$
|
176,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from continuing operations per diluted share
|
$
|
0.76
|
|
|
$
|
0.67
|
|
|
$
|
0.29
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
|
$
|
2.08
|
|
|
$
|
1.49
|
|
View original
content:http://www.prnewswire.com/news-releases/commercial-metals-company-reports-fourth-quarter-and-full-year-fiscal-2019-results-300943590.html
SOURCE Commercial Metals Company