CMC 8-K
COMMERCIAL METALS Co (CMC)
8-K
2021-03-18
For: 2021-03-18
View Original
Added on
April 07, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 18, 2021
(Exact Name of Registrant as Specified in Charter)
(State or Other Jurisdiction of Incorporation) | ||||||||||||||
(Commission File Number) | (IRS Employer Identification No.) | |||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
(214 ) 689-4300
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
| Common Stock, $0.01 par value | CMC | New York Stock Exchange | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On March 18, 2021 , Commercial Metals Company (the “Company”) issued a press release announcing its financial results for the second quarter of fiscal year 2021. A copy of the press release is attached hereto as Exhibit 99.1. The press release is incorporated by reference into this Item 2.02, and the foregoing description of the press release is qualified in its entirety by reference to Exhibit 99.1.
The information in this Item 2.02 of Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 7.01 Regulation FD Disclosure.
On March 18, 2021 , the Company made available on its website a financial presentation regarding its financial results for the second quarter of fiscal year 2021. A copy of the financial presentation is attached hereto as Exhibit 99.2. The financial presentation is incorporated by reference into this Item 7.01, and the foregoing description of the financial presentation is qualified in its entirety by reference to Exhibit 99.2.
The information in this Item 7.01 of Form 8-K, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
| Item 9.01 Financial Statements and Exhibits. | |||||
| (d) | Exhibits | ||||
| The following exhibits are being furnished as part of this Current Report on Form 8-K. | |||||
| 99.1 | |||||
| 99.2 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COMMERCIAL METALS COMPANY | ||||||||
| Date: March 18, 2021 | By: /s/ Paul J. Lawrence | |||||||
| Name: Paul J. Lawrence | ||||||||
| Title: Vice President and Chief Financial Officer | ||||||||
Exhibit No. 99.1
News Release 
COMMERCIAL METALS COMPANY REPORTS SECOND QUARTER FISCAL 2021 RESULTS
•Second quarter Earnings from Continuing Operations of $66.2 million, or $0.54 per diluted share
•Adjusted Earnings from Continuing Operations of $79.8 million, or $0.66 per diluted share
•Core EBITDA of $171.1 million, a second quarter record, up 18% year-over-year and 9% sequentially
•Continued strong controllable cost performance
•Achieved stable steel products metal margins despite a rapidly rising scrap cost environment
Irving, TX - March 18, 2021 - Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal second quarter ended February 28, 2021. Earnings from continuing operations were $66.2 million, or $0.54 per diluted share, on net sales of $1.5 billion, compared to prior year earnings from continuing operations of $63.6 million, or $0.53 per diluted share, on net sales of $1.3 billion.
During the second quarter of fiscal 2021, the Company incurred $13.5 million in net after-tax charges, chiefly from the previously announced refinancing of long-term debt as well as closure costs associated with the final decommissioning of CMC's Steel California operations, partially offset by a gain on the sale of certain facilities. Excluding these items, second quarter adjusted earnings from continuing operations were $79.8 million, or $0.66 per diluted share, compared to adjusted earnings from continuing operations of $63.6 million, or $0.53 per diluted share, in the prior year period. Details can be found in the non-GAAP reconciliation that follows.
Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, commented, "I am extremely proud of our team’s continued hard work, which resulted in outstanding financial results highlighted by record second quarter Core EBITDA. This was achieved amidst a challenging environment of rising scrap costs and weather-related disruptions, demonstrating both the value of CMC's vertically integrated structure and the agility of our commercial, operational, and support teams."
Ms. Smith continued, "CMC's second quarter results also highlight the benefits of managing the operating factors that are within our control, including leveraging opportunities to improve efficiency throughout our organization. From this solid foundation, CMC will further enhance our earnings capability in the coming quarters, as we continue to capitalize on benefits from ongoing network optimization efforts and ramp up our third rolling line in Poland this summer."
(CMC Second Quarter Fiscal 2021 - 2)
The Company's liquidity position as of February 28, 2021 remained strong, with cash and cash equivalents of $367.3 million and availability under the Company's credit and accounts receivable facilities of $693.0 million.
On March 17, 2021, the board of directors declared a quarterly dividend of $0.12 per share of CMC common stock payable to stockholders of record on March 31, 2021. The dividend will be paid on April 14, 2021, and marks 226 consecutive quarterly dividend payments by the Company.
Business Segments - Fiscal Second Quarter 2021 Review
The North America segment generated adjusted EBITDA of $171.6 million for the second quarter of fiscal 2021, an increase of 12% compared to $152.8 million in the prior year period. This improvement reflects solid management of controllable costs at each stage of our vertically integrated value chain. Cost performance at the mills was particularly strong, driven by network efficiencies and lower costs for consumables. Earnings also benefited from expanded margins on sales of raw materials, as well as the impact of selling lower cost inventory within an environment of rising prices for steel products.
Shipment volumes of finished steel, which include steel products and downstream products, increased by 2% from the prior year quarter. Demand for rebar from the mills remained strong, growing year-over-year, supported by resilient construction activity. Single family residential construction within CMC's core geographies has increased significantly over the last year, which has opened additional selling opportunities for the Company, and is a positive indicator of future infrastructure and non-residential spending in these areas. Shipments of merchant and other products increased by 13% from a year ago, driven by rising industrial activity and the construction of warehouses and metal buildings. Downstream products volumes declined 6% year-over-year due to a modest backlog contraction and weather-related job site disruptions in several regional markets.
Margins over scrap cost within the vertical chain declined from the second quarter of fiscal 2020, with compression in both steel products and downstream products. Average selling price for steel products increased $70 per ton year-over-year, which was more than offset by higher scrap costs. Steel products margins improved sequentially throughout the second quarter, and exited February at the highest level in nearly a year. Margin over scrap cost on downstream products declined compared to a year ago, driven by higher input costs and modestly lower pricing in CMC's committed backlog, which led to lower average selling prices.
The Europe segment reported adjusted EBITDA of $16.1 million for the second quarter of fiscal 2021, up 20% compared to adjusted EBITDA of $13.5 million for the prior year quarter. The improvement was driven by a modest expansion in margin over scrap, as well as the impact of selling lower cost inventory within an environment of rising prices for steel products. Demand for steel products from both construction and industrial end markets remained healthy during the quarter. However, shipments declined by 7% year-over-year, due largely to the
(CMC Second Quarter Fiscal 2021 - 3)
unusually high volumes that shipped during the second quarter of fiscal 2020. During the quarter, we shifted product mix to capitalize on opportunities with customers of merchant and other products. The reduction in rebar shipments from a year ago reflects the operations commercial agility, rather than any softening of market conditions.
Outlook
"We expect finished steel volumes in both North America and Europe to follow typical seasonal trends during the third quarter, which is historically strong given the start of the spring and summer construction seasons," said Ms. Smith.
"Shipments of steel and downstream products in North America should be supported by our construction backlog, with steel products also benefiting from elevated residential construction spending, continued manufacturing recovery, and anticipated strong highway infrastructure activity. Volumes in Europe are anticipated to remain healthy, driven by growing demand from construction and industrial end markets. We expect margins over scrap on steel products in both North America and Europe to increase sequentially following the realization of price adjustments made throughout the second quarter."
Conference Call
CMC invites you to listen to a live broadcast of its second quarter fiscal 2021 conference call today, Thursday, March 18, 2021, 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 fabricate steel and metal products, related materials and services through a network including seven 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 and organic growth provided by acquisitions and strategic investments, demand for our products, metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel mills at full capacity, future supplies of raw materials and energy for our operations, share repurchases, legal proceedings, the
(CMC Second Quarter Fiscal 2021 - 4)
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 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, 2020, 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 downstream contracts due to rising commodity pricing; impacts from COVID-19 on the economy, demand for our products and on our operations, including the responses of governmental authorities to contain COVID-19 and the impact from the distribution of various COVID-19 vaccines; 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 existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business, including increased environmental regulations 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; operating and start-up risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investment; 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, such as trade measures, military conflicts and political uncertainties, including the impact of the 2020 U.S. election on current trade regulations, such as Section 232 trade tariffs, tax legislation and other regulations which might adversely impact our business; availability and
(CMC Second Quarter Fiscal 2021 - 5)
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; and civil unrest, protests and riots.
(CMC Second Quarter Fiscal 2021 - 6)
| COMMERCIAL METALS COMPANY FINANCIAL & OPERATING STATISTICS (UNAUDITED) | ||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except per ton amounts) | 2/28/2021 | 11/30/2020 | 8/31/2020 | 5/31/2020 | 2/29/2020 | 2/28/2021 | 2/29/2020 | |||||||||||||||||||||||||||||||||||||
| North America | ||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,257,486 | $ | 1,195,013 | $ | 1,224,849 | $ | 1,167,081 | $ | 1,161,283 | $ | 2,452,499 | $ | 2,378,003 | ||||||||||||||||||||||||||||||
| Adjusted EBITDA | 171,612 | 155,634 | 174,219 | 159,394 | 152,831 | 327,246 | 327,563 | |||||||||||||||||||||||||||||||||||||
| External tons shipped | ||||||||||||||||||||||||||||||||||||||||||||
| Raw materials | 302 | 330 | 300 | 288 | 321 | 632 | 641 | |||||||||||||||||||||||||||||||||||||
| Rebar | 472 | 486 | 498 | 463 | 461 | 958 | 936 | |||||||||||||||||||||||||||||||||||||
| Merchant and other | 268 | 264 | 234 | 211 | 238 | 532 | 474 | |||||||||||||||||||||||||||||||||||||
| Steel products | 740 | 750 | 732 | 674 | 699 | 1,490 | 1,410 | |||||||||||||||||||||||||||||||||||||
| Downstream products | 343 | 371 | 429 | 427 | 366 | 714 | 779 | |||||||||||||||||||||||||||||||||||||
| Average selling price per ton | ||||||||||||||||||||||||||||||||||||||||||||
| Raw materials | $ | 846 | $ | 630 | $ | 605 | $ | 517 | $ | 595 | $ | 733 | $ | 571 | ||||||||||||||||||||||||||||||
| Steel products | 695 | 612 | 600 | 624 | 625 | 653 | 625 | |||||||||||||||||||||||||||||||||||||
| Downstream products | 929 | 934 | 970 | 966 | 984 | 931 | 979 | |||||||||||||||||||||||||||||||||||||
| Cost of raw materials per ton | $ | 629 | $ | 458 | $ | 427 | $ | 348 | $ | 435 | $ | 540 | $ | 414 | ||||||||||||||||||||||||||||||
| Cost of ferrous scrap utilized per ton | 344 | 266 | 237 | 239 | 256 | 304 | 238 | |||||||||||||||||||||||||||||||||||||
| Steel products metal margin per ton | $ | 351 | $ | 346 | $ | 363 | $ | 385 | $ | 369 | $ | 349 | $ | 387 | ||||||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 202,066 | $ | 194,596 | $ | 179,855 | $ | 173,817 | $ | 180,079 | $ | 396,662 | $ | 345,468 | ||||||||||||||||||||||||||||||
| Adjusted EBITDA | 16,107 | 14,470 | 22,927 | 14,270 | 13,451 | 30,577 | 24,810 | |||||||||||||||||||||||||||||||||||||
| External tons shipped | ||||||||||||||||||||||||||||||||||||||||||||
| Rebar | 78 | 128 | 150 | 122 | 145 | 206 | 267 | |||||||||||||||||||||||||||||||||||||
| Merchant and other | 275 | 269 | 230 | 252 | 235 | 544 | 451 | |||||||||||||||||||||||||||||||||||||
| Steel products | 353 | 397 | 380 | 374 | 380 | 750 | 718 | |||||||||||||||||||||||||||||||||||||
| Average selling price per ton | ||||||||||||||||||||||||||||||||||||||||||||
| Steel products | $ | 532 | $ | 461 | $ | 446 | $ | 437 | $ | 449 | $ | 495 | $ | 455 | ||||||||||||||||||||||||||||||
| Cost of ferrous scrap utilized per ton | $ | 328 | $ | 262 | $ | 250 | $ | 239 | $ | 251 | $ | 296 | $ | 248 | ||||||||||||||||||||||||||||||
| Steel products metal margin per ton | $ | 204 | $ | 199 | $ | 196 | $ | 198 | $ | 198 | $ | 199 | $ | 207 | ||||||||||||||||||||||||||||||
(CMC Second Quarter Fiscal 2021 - 7)
| COMMERCIAL METALS COMPANY BUSINESS SEGMENTS (UNAUDITED) | ||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | 2/28/2021 | 11/30/2020 | 8/31/2020 | 5/31/2020 | 2/29/2020 | 2/28/2021 | 2/29/2020 | |||||||||||||||||||||||||||||||||||||
| North America | $ | 1,257,486 | $ | 1,195,013 | $ | 1,224,849 | $ | 1,167,081 | $ | 1,161,283 | $ | 2,452,499 | $ | 2,378,003 | ||||||||||||||||||||||||||||||
| Europe | 202,066 | 194,596 | 179,855 | 173,817 | 180,079 | 396,662 | 345,468 | |||||||||||||||||||||||||||||||||||||
| Corporate and Other | 2,718 | 2,194 | 4,428 | 785 | (399) | 4,912 | 2,200 | |||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 1,462,270 | $ | 1,391,803 | $ | 1,409,132 | $ | 1,341,683 | $ | 1,340,963 | $ | 2,854,073 | $ | 2,725,671 | ||||||||||||||||||||||||||||||
| Adjusted EBITDA from continuing operations | ||||||||||||||||||||||||||||||||||||||||||||
| North America | $ | 171,612 | $ | 155,634 | $ | 174,219 | $ | 159,394 | $ | 152,831 | $ | 327,246 | $ | 327,563 | ||||||||||||||||||||||||||||||
| Europe | 16,107 | 14,470 | 22,927 | 14,270 | 13,451 | 30,577 | 24,810 | |||||||||||||||||||||||||||||||||||||
| Corporate and Other | (45,986) | (26,471) | (64,846) | (26,882) | (28,561) | (72,457) | (54,847) | |||||||||||||||||||||||||||||||||||||
(CMC Second Quarter Fiscal 2021 - 8)
| COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (in thousands, except share data) | February 28, 2021 | February 29, 2020 | February 28, 2021 | February 29, 2020 | |||||||||||||||||||
| Net sales | $ | 1,462,270 | $ | 1,340,963 | $ | 2,854,073 | $ | 2,725,671 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of goods sold | 1,228,343 | 1,123,096 | 2,403,162 | 2,269,610 | |||||||||||||||||||
| Selling, general and administrative expenses | 115,417 | 115,538 | 229,044 | 226,537 | |||||||||||||||||||
| Loss on debt extinguishment | 16,841 | — | 16,841 | — | |||||||||||||||||||
| Interest expense | 14,021 | 15,888 | 28,280 | 32,466 | |||||||||||||||||||
| Asset impairments | 474 | — | 4,068 | 530 | |||||||||||||||||||
| 1,375,096 | 1,254,522 | 2,681,395 | 2,529,143 | ||||||||||||||||||||
| Earnings from continuing operations before income taxes | 87,174 | 86,441 | 172,678 | 196,528 | |||||||||||||||||||
| Income taxes | 20,941 | 22,845 | 42,534 | 50,177 | |||||||||||||||||||
| Earnings from continuing operations | 66,233 | 63,596 | 130,144 | 146,351 | |||||||||||||||||||
| Earnings from discontinued operations before income taxes | 197 | 301 | 447 | 1,196 | |||||||||||||||||||
| Income taxes | 73 | 99 | 141 | 401 | |||||||||||||||||||
| Earnings from discontinued operations | 124 | 202 | 306 | 795 | |||||||||||||||||||
| Net earnings | $ | 66,357 | $ | 63,798 | $ | 130,450 | $ | 147,146 | |||||||||||||||
| Basic earnings per share* | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 0.55 | $ | 0.53 | $ | 1.08 | $ | 1.23 | |||||||||||||||
| Earnings from discontinued operations | — | — | — | 0.01 | |||||||||||||||||||
| Net earnings | $ | 0.55 | $ | 0.54 | $ | 1.09 | $ | 1.24 | |||||||||||||||
| Diluted earnings per share* | |||||||||||||||||||||||
| Earnings from continuing operations | $ | 0.54 | $ | 0.53 | $ | 1.07 | $ | 1.22 | |||||||||||||||
| Earnings from discontinued operations | — | — | — | 0.01 | |||||||||||||||||||
| Net earnings | $ | 0.55 | $ | 0.53 | $ | 1.07 | $ | 1.22 | |||||||||||||||
| Cash dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.24 | $ | 0.24 | |||||||||||||||
| Average basic shares outstanding | 120,345,432 | 118,919,455 | 120,052,459 | 118,644,823 | |||||||||||||||||||
| Average diluted shares outstanding | 121,751,859 | 120,407,256 | 121,672,194 | 120,303,259 | |||||||||||||||||||
* Earnings Per Share ("EPS") is calculated independently for each component and may not sum to net earnings EPS due to rounding.
(CMC Second Quarter Fiscal 2021 - 9)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||||||||
| (in thousands, except share data) | February 28, 2021 | August 31, 2020 | ||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 367,347 | $ | 542,103 | ||||||||||
Accounts receivable (less allowance for doubtful accounts of $7,623 and $9,597) | 895,604 | 880,728 | ||||||||||||
| Inventories, net | 776,561 | 625,393 | ||||||||||||
| Prepaid and other current assets | 166,124 | 165,879 | ||||||||||||
| Total current assets | 2,205,636 | 2,214,103 | ||||||||||||
| Property, plant and equipment, net | 1,557,143 | 1,571,067 | ||||||||||||
| Goodwill | 66,235 | 64,321 | ||||||||||||
| Other noncurrent assets | 235,027 | 232,237 | ||||||||||||
| Total assets | $ | 4,064,041 | $ | 4,081,728 | ||||||||||
| Liabilities and stockholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 309,413 | $ | 266,102 | ||||||||||
| Accrued expenses and other payables | 341,903 | 461,012 | ||||||||||||
| Current maturities of long-term debt and short-term borrowings | 22,777 | 18,149 | ||||||||||||
| Total current liabilities | 674,093 | 745,263 | ||||||||||||
| Deferred income taxes | 126,789 | 130,810 | ||||||||||||
| Other noncurrent liabilities | 242,632 | 250,706 | ||||||||||||
| Long-term debt | 1,011,035 | 1,065,536 | ||||||||||||
| Total liabilities | 2,054,549 | 2,192,315 | ||||||||||||
| Stockholders' equity: | ||||||||||||||
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 120,508,215 and 119,220,905 shares | 1,290 | 1,290 | ||||||||||||
| Additional paid-in capital | 354,620 | 358,912 | ||||||||||||
| Accumulated other comprehensive loss | (102,140) | (103,764) | ||||||||||||
| Retained earnings | 1,909,443 | 1,807,826 | ||||||||||||
Less treasury stock, 8,552,449 and 9,839,759 shares at cost | (153,952) | (175,063) | ||||||||||||
| Stockholders' equity | 2,009,261 | 1,889,201 | ||||||||||||
| Stockholders' equity attributable to noncontrolling interests | 231 | 212 | ||||||||||||
| Total equity | 2,009,492 | 1,889,413 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 4,064,041 | $ | 4,081,728 | ||||||||||
(CMC Second Quarter Fiscal 2021 - 10)
| COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||||||||
| Six Months Ended | ||||||||||||||
| (in thousands) | February 28, 2021 | February 29, 2020 | ||||||||||||
| Cash flows from (used by) operating activities: | ||||||||||||||
| Net earnings | $ | 130,450 | $ | 147,146 | ||||||||||
| Adjustments to reconcile net earnings to cash flows from (used by) operating activities: | ||||||||||||||
| Depreciation and amortization | 83,372 | 82,338 | ||||||||||||
| Stock-based compensation | 21,758 | 15,805 | ||||||||||||
| Loss on debt extinguishment | 16,841 | — | ||||||||||||
| Deferred income taxes and other long-term taxes | (8,129) | 42,142 | ||||||||||||
| Net gain on disposals of subsidiaries, assets and other | (5,481) | (5,585) | ||||||||||||
| Asset impairments | 4,068 | 530 | ||||||||||||
| Amortization of acquired unfavorable contract backlog | (3,032) | (14,328) | ||||||||||||
| Other | (105) | 1,041 | ||||||||||||
| Changes in operating assets and liabilities | (238,539) | (15,673) | ||||||||||||
Net cash flows from operating activities | 1,203 | 253,416 | ||||||||||||
| Cash flows from (used by) investing activities: | ||||||||||||||
| Capital expenditures | (87,688) | (96,592) | ||||||||||||
| Proceeds from the sale of property, plant and equipment and other | 20,338 | 14,004 | ||||||||||||
| Acquisitions, net of cash acquired | — | (9,850) | ||||||||||||
| Proceeds from insurance | — | 974 | ||||||||||||
Net cash flows used by investing activities | (67,350) | (91,464) | ||||||||||||
| Cash flows from (used by) financing activities: | ||||||||||||||
| Proceeds from issuance of long-term debt, net | 296,250 | 11,299 | ||||||||||||
| Repayments of long-term debt | (357,792) | (106,880) | ||||||||||||
| Debt extinguishment costs | (13,051) | — | ||||||||||||
| Debt issuance costs | (1,124) | — | ||||||||||||
| Proceeds from accounts receivable programs | 8,848 | 85,686 | ||||||||||||
| Repayments under accounts receivable programs | (8,848) | (81,314) | ||||||||||||
| Dividends | (28,833) | (28,480) | ||||||||||||
| Stock issued under incentive and purchase plans, net of forfeitures | (4,536) | (2,463) | ||||||||||||
| Contribution from noncontrolling interest | 19 | 16 | ||||||||||||
Net cash flows used by financing activities | (109,067) | (122,136) | ||||||||||||
| Effect of exchange rate changes on cash | (419) | 337 | ||||||||||||
Increase (decrease) in cash and cash equivalents | (175,633) | 40,153 | ||||||||||||
| Cash, restricted cash and cash equivalents at beginning of period | 544,964 | 193,729 | ||||||||||||
| Cash, restricted cash and cash equivalents at end of period | $ | 369,331 | $ | 233,882 | ||||||||||
| Supplemental information: | ||||||||||||||
| Cash and cash equivalents | $ | 367,347 | $ | 232,442 | ||||||||||
| Restricted cash | $ | 1,984 | $ | 1,440 | ||||||||||
| Total cash, cash equivalents and restricted cash | $ | 369,331 | $ | 233,882 | ||||||||||
(CMC Second Quarter Fiscal 2021 - 11)
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 from continuing operations before interest expense and income taxes. It also excludes recurring non-cash charges for depreciation and amortization and asset impairments. Core EBITDA from continuing operations also excludes debt extinguishment costs, non-cash equity compensation, certain gains on sale of assets, certain facility closure costs, acquisition settlement costs and labor cost government refunds. 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 | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | 2/28/2021 | 11/30/2020 | 8/31/2020 | 5/31/2020 | 2/29/2020 | 2/28/2021 | 2/29/2020 | ||||||||||||||||||||||||||||||||||
| Earnings from continuing operations | $ | 66,233 | $ | 63,911 | $ | 67,782 | $ | 64,169 | $ | 63,596 | $ | 130,144 | $ | 146,351 | |||||||||||||||||||||||||||
| Interest expense | 14,021 | 14,259 | 13,962 | 15,409 | 15,888 | 28,280 | 32,466 | ||||||||||||||||||||||||||||||||||
| Income taxes | 20,941 | 21,593 | 18,495 | 23,804 | 22,845 | 42,534 | 50,177 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 41,573 | 41,799 | 41,654 | 41,765 | 41,389 | 83,372 | 82,330 | ||||||||||||||||||||||||||||||||||
| Amortization of acquired unfavorable contract backlog | (1,509) | (1,523) | (10,691) | (4,348) | (5,997) | (3,032) | (14,328) | ||||||||||||||||||||||||||||||||||
| Asset impairments | 474 | 3,594 | 1,098 | 5,983 | — | 4,068 | 530 | ||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | 16,841 | — | 1,778 | — | — | 16,841 | — | ||||||||||||||||||||||||||||||||||
| Non-cash equity compensation | 12,696 | 9,062 | 9,875 | 6,170 | 7,536 | 21,758 | 15,805 | ||||||||||||||||||||||||||||||||||
| Gain on sale of assets | (5,877) | — | — | — | — | (5,877) | — | ||||||||||||||||||||||||||||||||||
| Facility closure | 5,694 | 5,214 | 2,903 | 1,863 | — | 10,908 | 6,339 | ||||||||||||||||||||||||||||||||||
| Acquisition settlement | — | — | 32,123 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Labor cost government refund | — | (1,348) | (2,985) | — | — | (1,348) | — | ||||||||||||||||||||||||||||||||||
| Core EBITDA from continuing operations | $ | 171,087 | $ | 156,561 | $ | 175,994 | $ | 154,815 | $ | 145,257 | $ | 327,648 | $ | 319,670 | |||||||||||||||||||||||||||
(CMC Second Quarter Fiscal 2021 - 12)
Adjusted earnings from continuing operations is a non-GAAP financial measure that is equal to earnings from continuing operations before debt extinguishment costs, certain gains on sale of assets, certain facility closure costs, asset impairments, labor cost government refunds and acquisition settlements, including the estimated income tax effects thereof. 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) | 2/28/2021 | 11/30/2020 | 8/31/2020 | 5/31/2020 | 2/29/2020 | 2/28/2021 | 2/29/2020 | ||||||||||||||||||||||||||||||||||
| Earnings from continuing operations | $ | 66,233 | $ | 63,911 | $ | 67,782 | $ | 64,169 | $ | 63,596 | $ | 130,144 | $ | 146,351 | |||||||||||||||||||||||||||
| Loss on debt extinguishment | 16,841 | — | 1,778 | — | — | 16,841 | — | ||||||||||||||||||||||||||||||||||
| Gain on sale of assets | (5,877) | — | — | — | — | (5,877) | — | ||||||||||||||||||||||||||||||||||
| Facility closure | 5,694 | 5,214 | 2,903 | 1,863 | — | 10,908 | 6,339 | ||||||||||||||||||||||||||||||||||
| Asset impairments | 474 | 3,594 | 1,098 | 5,983 | — | 4,068 | — | ||||||||||||||||||||||||||||||||||
| Labor cost government refund | — | (1,348) | (2,985) | — | — | (1,348) | — | ||||||||||||||||||||||||||||||||||
| Acquisition settlement | — | — | 32,123 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total adjustments (pre-tax) | $ | 17,132 | $ | 7,460 | $ | 34,917 | $ | 7,846 | $ | — | $ | 24,592 | $ | 6,339 | |||||||||||||||||||||||||||
| Tax Impact | |||||||||||||||||||||||||||||||||||||||||
| Related tax effects on adjustments | (3,598) | (1,593) | (7,392) | (1,648) | — | (5,191) | (1,331) | ||||||||||||||||||||||||||||||||||
| Total tax impact | (3,598) | (1,593) | (7,392) | (1,648) | — | (5,191) | (1,331) | ||||||||||||||||||||||||||||||||||
| Adjusted earnings from continuing operations | $ | 79,767 | $ | 69,778 | $ | 95,307 | $ | 70,367 | $ | 63,596 | $ | 149,545 | $ | 151,359 | |||||||||||||||||||||||||||
| Adjusted earnings from continuing operations per diluted share | $ | 0.66 | $ | 0.58 | $ | 0.79 | $ | 0.59 | $ | 0.53 | $ | 1.23 | $ | 1.26 | |||||||||||||||||||||||||||
Media Contact:
Susan Gerber
214.689.4300
Q2 FY 2021 SUPPLEMENTAL SLIDES MARCH 18, 2021
CAUTIONARY STATEMENTS This presentation contains or incorporates by reference a number of "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 and organic growth provided by acquisitions and strategic investments, demand for our products, metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel 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 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. Our forward-looking statements are based on management's expectations and beliefs as of the time this Form 10-Q is filed with the SEC or, with respect to any document incorporated by reference, as of the time such document was prepared. 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 the 2020 Form 10-K, 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 downstream contracts due to rising commodity pricing; impacts from COVID-19 on the economy, demand for our products and on our operations, including the responses of governmental authorities to contain COVID-19 and the impact from the distribution of various COVID-19 vaccines; 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 existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business, including increased environmental regulations 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; operating and start-up risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investment; 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, such as trade measures, military conflicts and political uncertainties, including the impact of the 2020 U.S. election on current trade regulations, such as Section 232 trade tariffs, tax legislation and other regulations which might adversely impact our business; 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; and civil unrest, protests and riots. 2Q2 FY21 Supplemental Slides | March 18, 2021
KEY TAKEAWAYS FROM TODAY’S CALL Q2 FY21 Supplemental Slides | March 18, 2021 3 Delivering continued strong results in a volatile environment • Record second quarter Core EBITDA • Seventh consecutive quarter of 10%+ ROIC Sharp focus on optimizing factors within CMC’s control • Driving efficiencies throughout the business and lowering controllable costs Line-of-sight on benefits from strategic growth projects in coming quarters • 3rd Polish rolling line startup • Impact of network optimization, particularly Steel CA rolling mill closure Construction backlog has stabilized, bidding activity showing improvement Strong financial position provides continued flexibility to fund growth, weather economic uncertainty, and pursue opportunistic M&A Q2 Core EBITDA1 of $171M Up 18% y/y Q2 Annualized ROIC2 of 10% Adjusted EPS of $0.66 Up 25% y/y Notes: [1] Core EBITDA is a non-GAAP measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see the appendix to this document. [2] Return on Invested is a non-GAAP measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see the appendix to this document.
3 R D R O L L IN G L IN E • Total capital spending below original budget • Expected FY ‘21 capital spend of $20 million • Targeted commissioning in H2 FY21 • Adds significant production flexibility • Will utilize current excess melt capacity, adding roughly 200,000 tons of finished steel output • Helps to leverage fixed costs • Expected to add $20 million of annual EBITDA • Finalizing construction of 3rd rolling line in Europe • Completed full closure of Steel California and transition of market supply − Cost benefits expected in coming quarters • California land sale process underway • Strong cost management throughout vertically integrated footprint − North America mill conversion costs continued to trend downward year-over-year • Successful realization of steel product price adjustments; margins expanded month-to-month throughout the quarter • Benefited from impact of selling lower-cost steel product inventory in a rising price environment • Expanded margins on raw material sales, as pricing for both ferrous and non-ferrous products increased meaningfully • Good demand for rebar and merchant products from the mills – rebar benefitted from growth in residential market • Downstream shipments impacted by modest year-over-year backlog, construction and weather-related jobsite delays • Strong demand across Europe segment’s various end markets; commercial focus on merchant and other products during the quarter • Europe margins over scrap improved sequentially Q2 FY21 Supplemental Slides | March 18, 2021 4 P E R F O R M A N C E D R IV E R S OPERATIONAL UPDATE S T R A T E G IC IT E M S
145 171 19 3 (17) 22 0 20 40 60 80 100 120 140 160 180 200 Q2 2020 North America Segment EBITDA Europe Segment EBITDA Corporate & Eliminations Non-Operating Items Q2 2021 Q2 FY21 Supplemental Slides | March 18, 2021 5 CONSOLIDATED OPERATING RESULTS – QUARTERLY Q2 ’20 Q3 ’20 Q4 ’20 Q1 ‘21 Q2 ‘21 External Finished Steel Tons Shipped1 1,445 1,475 1,541 1,518 1,436 Core EBITDA $145,257 154,815 $175,994 $156,561 $171,087 Core EBITDA per Ton of Finished Steel Shipped $101 $105 $114 $103 $119 Adjusted Earnings from Continuing Operations $63,596 $70,367 $95,307 $69,778 $79,767 Performance Summary Units in 000’s unless noted otherwise • $16.9 million of debt extinguishment cost related to January refinancing of $350 million of 2026 notes • $5.7 million facility closure costs at Steel California • $5.9 million gain on sale of certain facilities Non-Operating Charges / Benefits Figures are pre-tax for Q2 2021 Core EBITDA Bridge – Q2 2020 to Q2 2021 $ Millions [1] External Finished Steel Tons Shipped equal to shipments of Steel Products plus Downstream Products Other Note: Core EBITDA and Adjusted earnings from continuing operations are non-GAAP measures. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see the appendix to this document. Corporate & Eliminations includes $16.9 million related to debt extinguishment
80 100 120 Q2 ’20 Q3 ’20 Q4 ‘20 Q1 '21 Q2 '21 Wgt Avg Finished Steel Margin Over Scrap Controllable Costs Adjusted EBITDA per ton 144 145 150 139 158 758 710 731 697 663 369 385 363 346 351 0 20 40 60 80 100 120 140 160 180 0 100 200 300 400 500 600 700 800 Q2 ’20 Q3 ’20 Q4 ‘20 Q1 '21 Q2 '21 Adjusted EBITDA per Ton of Finished Steel Shipped Downstream Products Margin Over Scrap (1 Qtr Lag) Steel Products Margin Over Scrap Q2 FY21 Supplemental Slides | March 18, 2021 6 NORTH AMERICA – QUARTERLY Q2 ’20 Q3 ’20 Q4 ’20 Q1 ‘21 Q2 ‘21 External Finished Steel Tons Shipped1 1,065 1,101 1,161 1,121 1,083 Adjusted EBITDA $152,831 $159,394 $174,219 $155,634 $171,612 Adjusted EBITDA per Ton of Finished Steel Shipped $144 $145 $150 $139 $158 Adjusted EBITDA Margin 13.2% 13.7% 14.2% 13.0% 13.6% Performance Summary Units in 000’s unless noted otherwise • Reduction in controllable costs within vertically integrated chain − Biggest drivers were mill conversion costs (network efficiencies and lower consumable costs) and downstream operating costs • Positive impact from selling lower cost inventory in a rising steel product price environment − Largely offset by compressed margins on current production, as real-time scrap costs increased meaningfully • Expanded margins on raw material sales Key Performance Drivers Q2 2021 vs Q2 2020 North America – Key Margins $ / ton D P a n d S P M a rg in O v e r S c ra p A d ju s te d E B IT D A p e r to n North America Indexed Margins and Controllable Cost $ / ton of external finished steel shipped Notes: [1] External Finished Steel Tons Shipped equal to shipments of Steel Products plus Downstream Products [2] Steel Products Margin Over Scrap equals Average Selling Price minus Cost of ferrous scrap utilized [3] Downstream Products Margin Over Scrap equals Average Selling Price minus Cost of ferrous scrap utilized [2] [3]
35 38 60 36 46 198 198 196 199 204 0 10 20 30 40 50 60 70 100 120 140 160 180 200 220 Q2 ’20 Q3 ’20 Q4 ‘20 Q1 '21 Q2 '21 Adjusted EBITDA per Ton of Finished Steel Shipped Steel Products Margin Over Scrap 40 100 160 Q2 ’20 Q3 ’20 Q4 ‘20 Q1 '21 Q2 '21 Steel Product Margins Over Scrap Controllable Costs Adjusted EBITDA per Ton Notes: [1] External Finished Steel Tons Shipped equal to shipments of Steel Products plus Downstream Products [2] Steel Products Margin Over Scrap equals Average Selling Price minus Cost of ferrous scrap utilized Q2 FY21 Supplemental Slides | March 18, 2021 7 EUROPE– QUARTERLY Q2 ’20 Q3 ’20 Q4 ’20 Q1 ‘21 Q2 ‘21 External Finished Steel Tons Shipped1 380 374 380 397 353 Adjusted EBITDA $13,451 $14,270 $22,927 $14,470 $16,107 Adjusted EBITDA per Ton of Finished Steel Shipped $35 $38 $60 $36 $46 Adjusted EBITDA Margin 7.5% 8.2% 12.7% 7.4% 8.0% Performance Summary Units in 000’s unless noted otherwise • Strong demand across all products • Emphasized merchant and other, with resulting lower mix of rebar • Increased margin over scrap on sequential and year-over-year basis, with additional benefit of selling lower cost inventory into rising steel price environment Key Performance Drivers Q2 2021 vs Q2 2020 Europe – Key Margins $ / ton S te e l P ro d u c t M a rg in O v e r S c ra p A d ju s te d E B IT D A p e r to n Europe Indexed Margins and Controllable Cost $ / ton of finished product shipped [2]
($4) ($26) ($108) $73 $149 $226 $205 ($150) ($100) ($50) $0 $50 $100 $150 $200 $250 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 LTM Q2 FY'21 ADJUSTED EBITDA LESS CAPITAL EXPENDITURES AND DISBURSEMENTS TO STAKEHOLDERS 1 CMC’s cash flow capabilities have been greatly enhanced through our strategic transformation − Will fund current projects using organic cash generation FY 2021 capital expenditures expected between $200 million to $225 million FY 2021 spend on 2nd Arizona micro mill and Danieli 3 of $85 million and $20 million, respectively Source: Public filings, Internal data Notes: 1. Adjusted EBITDA less Capital Expenditures and Disbursements to Stakeholders is a non-GAAP financial measure. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see the appendix to this document. CASH FLOW PROFILE Q2 FY21 Supplemental Slides | March 18, 2021 8
27 53 73 193 347 $367 $330 $300 $300 $350 2021 2022 2023 2024 to 2026 2027 2028 to 2030 2031 Revolver BALANCE SHEET STRENGTH U.S. Accounts Receivable Facility Poland Credit Facilities Poland Accounts Receivable Facility (US$ in millions) Revolving Credit Facility 5.375% Notes Cash and Cash Equivalents 4.875% Notes 3.875% Notes DEBT MATURITY PROFILE PROVIDES STRATEGIC FLEXIBILITY DEBT MATURIT Y SCHEDULE Q2 FY’21 LIQUIDIT Y (US$ in millions) Source: Public filings Q2 FY21 Supplemental Slides | March 18, 2021 9 Poland Term Loan Debt refinancing in the second quarter reduced notes outstanding by $50 million and lowered CMC’s annual debt cost by roughly $8.5 million
46% 42% 37% 33% 32% 24% 18% 21% 22% 0% 10% 20% 30% 40% 50% 60% Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 3.9x 3.2x 2.5x 1.9x 1.6x 1.2x 0.9x 1.1x 1.2x NM 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Source: Public filings, Internal data Notes: 1. Total debt is defined as long-term debt plus current maturities of long-term debt and short-term borrowings. 2. Net Debt is defined as total debt less cash & cash equivalents. 3. EBITDA depicted is adjusted EBITDA from continuing operations on a trailing 12 month basis. 4. Net debt-to-capitalization is defined as net debt on CMC’s balance sheet divided by the sum of total debt and shareholders’ equity. 5. Net Debt to EBITDA and Net Debt to Capitalization are non-GAAP financial measures. For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, see the appendix to this document. LEVERAGE PROFILE Financial strength gives us the flexibility to fund our announced projects, navigate current economic uncertainties, and pursue opportunistic M&A NET DEBT1,2 / EBITDA3 Q2 FY21 Supplemental Slides | March 18, 2021 10 NET DEBT-TO-CAPITALIZATION4
Q2 FY21 Supplemental Slides | March 18, 2021 11 A P P E N D IX : N O N -G A A P R E C O N C IL IA T IO N S
RETURN ON INVESTED CAPITAL Q2 FY21 Supplemental Slides | March 18, 2021 12 ($ in thousands) Source: Public filings Note: 1. See page 18 for definitions of non-GAAP financial measures 3 MONTHS ENDED 2/28/2021 Earnings from continuing operations before income taxes $87,174 Plus: interest expense 14,021 Operating profit $101,195 Operating profit $101,195 Less: income tax at Q2 effective rate of 24.0% 24,287 Net operating profit after tax $76,908 Annualized net operating profit after tax $307,633 Assets $4,064,041 Less: cash and cash equivalents 367,347 Less: accounts payable 309,413 Less: accrued expenses and other payables 341,903 Invested Capital $3,045,378 Annualized net operating profit after tax $307,633 Invested Capital $3,045,378 Return on Invested Capital 10.1%
3 MONTHS ENDED 12 MONTHS ENDED 2/28/2021 11/30/2020 8/31/2020 5/31/2020 2/29/2020 11/30/2019 2/28/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 Earnings from continuing operations $66,233 $63,911 $67,782 $64,169 $63,596 $82,755 $262,095 $278,302 $198,779 $135,237 $50,175 Interest expense 14,021 14,259 13,962 15,409 15,888 16,578 57,651 61,837 71,373 40,957 44,151 Income taxes 20,941 21,593 18,495 23,804 22,845 27,332 84,833 92,476 69,681 30,147 15,276 Depreciation and amortization 41,573 41,799 41,654 41,765 41,389 40,941 166,791 165,749 158,653 131,508 124,490 Amortization of acquired unfavorable contract backlog (1,509) (1,523) (10,691) (4,348) (5,997) (8,331) (18,071) (29,367) (74,784) – – Asset impairments 474 3,594 1,098 5,983 – 530 11,149 7,611 384 14,372 1,730 Loss on debt extinguishment 16,841 – 1,778 – – – 18,619 1,778 – – 22,672 Non-cash equity compensation 12,696 9,062 9,875 6,170 7,536 8,269 37,803 31,850 25,106 24,038 21,469 Gain on sale of assets (5,877) – – – – – (5,877) – – – – Facility closure 5,694 5,214 2,903 1,863 – 6,339 15,674 11,105 – – – Acquisition settlement – – 32,123 – – – 32,123 32,123 – – – Labor cost government refund – (1,348) (2,985) – – – (4,333) (2,985) – – – Acquisition and integration related costs and other – – – – – – – – 41,958 25,507 – Purchase accounting effect on inventory – – – – – – – – 10,315 – – Mill operational start-up costs 1 – – – – – – – – – 13,471 – CMC Steel Oklahoma incentives – – – – – – – – – (3,000) – Severance – – – – – – – – – – 8,129 Core EBITDA from continuing operations 2 $171,087 $156,561 $175,994 $154,815 $145,257 $174,413 $658,457 $650,479 $501,465 $412,237 $288,092 CORE EBITDA FROM CONTINUING OPERATIONS RECONCILIATION Q2 FY21 Supplemental Slides | March 18, 2021 13 ($ in thousands) Source: Public filings Notes: 1. Net of interest, taxes, depreciation and amortization, impairments, and non-cash equity compensation 2. See page 18 for definitions of non-GAAP financial measures
3 MONTHS ENDED 12 MONTHS ENDED 2/28/2021 11/30/2020 8/31/2020 5/31/2020 2/29/2020 11/30/2019 2/28/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 Earnings from continuing operations $66,233 $63,911 $67,782 $64,169 $63,596 $82,755 $262,095 $278,302 $198,779 $135,237 $50,175 Loss on debt extinguishment 16,841 – 1,778 – – – 18,619 1,778 – – 17,799 Gain on sale of assets (5,877) – – – – – (5,877) – – – – Facility closure 5,694 5,214 2,903 1,863 – 6,339 15,674 11,105 – – – Asset impairments 474 3,594 1,098 5,983 – – 11,149 7,081 – 12,136 – Labor cost government refund – (1,348) (2,985) – – – (4,333) (2,985) – – – Acquisition settlement – – 32,123 – – – 32,123 32,123 – – – Acquisition and integration related costs and other – – – – – – – – 41,958 25,507 – Purchase accounting effect on inventory – – – – – – – – 10,315 – – Mill operational start-up costs – – – – – – – – – 18,016 – CMC Steel Oklahoma incentives – – – – – – – – – (3,000) – Severance – – – – – – – – – – 8,129 Total adjustments (pre-tax) $17,132 $7,460 $34,917 $7,846 – $6,339 $67,355 $49,102 $52,273 $52,659 $25,928 Tax impact TCJA impact – – – – – – – – $7,550 $10,600 – International reorganization – – – – – – – – – (9,200) – Related tax effects on adjustments (3,598) (1,593) (7,392) (1,648) – (1,331) (14,231) (10,371) (10,977) (13,236) (9,075) Total tax impact ($3,598) ($1,593) ($7,392) ($1,648) – ($1,331) ($14,231) ($10,371) ($3,427) ($11,836) ($9,075) Adjusted earnings from continuing operations 1 $79,767 $69,778 $95,307 $70,367 $63,596 $87,763 $315,219 $317,033 $247,625 $176,060 $67,028 Adjusted earnings from continuing operations per diluted share $0.66 $0.58 $0.79 $0.59 $0.53 $0.73 $2.62 $2.64 $2.08 $1.49 $0.57 ADJUSTED EARNINGS FROM CONTINUING OPERATIONS RECONCILIATION Q2 FY21 Supplemental Slides | March 18, 2021 14 ($ in thousands) Source: Public filings Note: 1. See page 18 for definitions of non-GAAP financial measures
3 MONTHS ENDED 2/28/2021 11/30/2020 8/31/2020 5/31/2020 2/29/2020 North America Adjusted EBITDA from continuing operations $171,612 $155,634 $174,219 $159,394 $152,831 North America net sales 1,257,486 1,195,013 1,224,849 1,167,081 1,161,283 North America Adjusted EBITDA Margin 13.6% 13.0% 14.2% 13.7% 13.2% Europe Adjusted EBITDA from continuing operations $16,107 $14,470 $22,927 $14,270 $13,451 Europe net sales 202,066 194,596 179,855 173,817 180,079 Europe Adjusted EBITDA Margin 8.0% 7.4% 12.7% 8.2% 7.5% ADJUSTED SEGMENT EBITDA MARGIN Q2 FY21 Supplemental Slides | March 18, 2021 15 ($ in thousands) Source: Public filings
12 MONTHS ENDED 6 MONTHS ENDED 2/28/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 8/31/2016 8/31/2015 2/28/2021 2/29/2020 Earnings from continuing operations $262,095 $278,302 $198,779 $135,237 $50,175 $62,001 $58,583 $130,144 $146,351 Interest expense 57,651 61,837 71,373 40,957 44,151 62,121 76,456 28,280 32,466 Income taxes 84,833 92,476 69,681 30,147 15,276 13,976 36,097 42,534 50,177 Depreciation and amortization 166,791 165,749 158,653 131,508 124,490 127,111 135,559 83,372 82,330 Asset impairments 11,149 7,611 384 14,372 1,730 40,028 2,573 4,068 530 Amortization of acquired unfavorable contract backlog (18,071) (29,367) (74,784) – – – – (3,032) (14,328) Adjusted EBITDA from continuing operations $564,448 $576,608 $424,086 $352,221 $235,822 $305,237 $309,268 $285,366 $297,526 Capital expenditures and disbursements to stakeholders Capital expenditures 178,714 187,618 138,836 174,655 213,120 163,332 119,580 87,688 96,592 Interest expense 57,651 61,837 71,373 40,957 44,151 62,121 76,456 28,280 32,466 Cash income taxes 65,497 44,499 7,977 7,198 30,963 50,201 61,000 48,757 27,759 Dividends 57,409 57,056 56,537 56,076 55,514 55,342 55,945 28,833 28,480 Total capital expenditures and disbursements to stakeholders $359,271 $351,010 $274,723 $278,886 $343,748 $330,996 $312,981 $193,558 $185,297 Adjusted EBITDA less capital expenditures and disbursements to stakeholders $205,177 $225,598 $149,363 $73,335 ($107,926) ($25,759) ($3,713) $91,808 $112,229 ADJUSTED EBITDA LESS CAPITAL EXPENDITURES AND DISBURSEMENTS TO STAKEHOLDERS Q2 FY21 Supplemental Slides | March 18, 2021 16 ($ in thousands) Source: Public filings Note: 1. See page 18 for definitions of non-GAAP financial measures
Source: Public filings Note: 1. See page 18 for definitions of non-GAAP financial measures NET DEBT TO EBITDA AND NET DEBT TO CAPITALIZATION RECONCILIATIONS Q2 FY21 Supplemental Slides | March 18, 2021 17 ($ in thousands) 3 MONTHS ENDED 2/28/2021 11/30/2020 8/31/2020 5/31/2020 2/29/2020 11/30/2019 8/31/2019 5/31/2019 2/28/2019 11/30/2018 8/31/2018 5/31/2018 Long-term debt $1,011,035 $1,064,893 $1,065,536 $1,153,800 $1,144,573 $1,179,443 $1,227,214 $1,306,863 $1,310,150 $1,307,824 $1,138,619 $1,139,103 Current maturities of long-term debt and short-term borrowings 22,777 20,701 18,149 17,271 22,715 13,717 17,439 54,895 88,902 29,083 19,746 19,874 Total debt $1,033,812 $1,085,594 $1,083,685 $1,171,071 $1,167,288 $1,193,160 $1,244,653 $1,361,758 $1,399,052 $1,336,907 $1,158,365 $1,158,977 Less: Cash and cash equivalents 367,347 465,162 542,103 462,110 232,442 224,797 192,461 120,315 66,742 52,352 622,473 600,444 Net debt $666,465 $620,432 $541,582 $708,961 $934,846 $968,363 $1,052,192 $1,241,443 $1,332,310 $1,284,555 $535,892 $558,533 Earnings from continuing operations $66,233 $63,911 $67,782 $64,169 $63,596 $82,755 $85,880 $78,551 $14,928 $19,420 $51,260 $42,325 Interest expense 14,021 14,259 13,962 15,409 15,888 16,578 17,702 18,513 18,495 16,663 15,654 11,511 Income taxes 20,941 21,593 18,495 23,804 22,845 27,332 16,826 29,105 18,141 5,609 6,682 13,312 Depreciation and amortization 41,573 41,799 41,654 41,765 41,389 40,941 41,051 41,181 41,245 35,176 32,610 32,949 Asset impairments 474 3,594 1,098 5,983 – 530 369 15 – – 840 935 Amortization of acquired unfavorable contract backlog (1,509) (1,523) (10,691) (4,348) (5,997) (8,331) (16,582) (23,394) (23,476) (11,332) – – Adjusted EBITDA from continuing operations $141,733 $143,633 $132,300 $146,782 $137,721 $159,805 $145,246 $143,971 $69,333 $65,536 $107,046 $101,032 Trailing 12 month adjusted EBITDA from continuing operations $564,448 $560,436 $576,608 $589,554 $586,743 $518,355 $424,086 $385,886 $342,947 Total debt $1,033,812 $1,085,594 $1,083,685 $1,171,071 $1,167,288 $1,193,160 $1,244,653 $1,361,758 $1,399,052 $1,336,907 $1,158,365 $1,158,977 Total stockholders' equity 2,009,492 1,934,899 1,889,413 1,800,662 1,758,055 1,701,697 1,624,057 1,564,195 1,498,496 1,489,027 1,493,583 1,452,716 Total capitalization $3,043,304 $3,020,493 $2,973,098 $2,971,733 $2,925,343 $2,894,857 $2,868,710 $2,925,953 $2,897,548 $2,825,934 $2,651,948 $2,611,693 Net debt to trailing 12 month adjusted EBITDA from continuing operations 1.2x 1.1x 0.9x 1.2x 1.6x 1.9x 2.5x 3.2x 3.9x Net debt to capitalization 22% 21% 18% 24% 32% 33% 37% 42% 46%
DEFINITIONS FOR NON-GAAP FINANCIAL MEASURES ADJUSTED EARNINGS FROM CONTINUING OPERATIONS Adjusted earnings from continuing operations is a non-GAAP financial measure that is equal to earnings from continuing operations before debt extinguishment costs, certain gains on sale of assets, certain facility closure costs, asset impairments, labor cost government refunds and acquisition settlements, including the estimated income tax effects thereof. 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. CORE EBITDA FROM CONTINUING OPERATIONS Core EBITDA from continuing operations is the sum of earnings from continuing operations before interest expense and income taxes. It also excludes recurring non-cash charges for depreciation and amortization and asset impairments. Core EBITDA from continuing operations also excludes debt extinguishment costs, non-cash equity compensation, certain gains on sale of assets, certain facility closure costs, acquisition settlement costs and labor cost government refunds. 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. ADJUSTED EBITDA FROM CONTINUING OPERATIONS Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure. Adjusted EBITDA is the sum of the Company's earnings from continuing operations before interest expense, income taxes, depreciation and amortization expense, impairment expense, and amortization of acquired unfavorable contract backlog. Adjusted EBITDA 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 EBITDA from continuing operations provides relevant and useful information to investors as it allows: (i) a supplemental measure of our ongoing performance and (ii) the assessment of period-to-period performance trends. Management uses adjusted EBITDA from continuing operations to evaluate our financial performance. Adjusted EBITDA from continuing operations may be inconsistent with similar measures presented by other companies. ADJUSTED EBITDA LESS CAPITAL EXPENDITURES AND DISBURSEMENTS TO STAKEHOLDERS Adjusted EBITDA less capital expenditures and disbursements to shareholders is defined as Adjusted EBITDA less capital expenditures less interest expense, less cash income taxes less dividend payments. NET DEBT Net debt is defined as total debt less cash and cash equivalents. RETURN ON INVESTED CAPITAL Return on Invested Capital is defined as: 1) after-tax operating profit divided by 2) total assets less cash & cash equivalents less non-interest-bearing liabilities Q2 FY21 Supplemental Slides | March 18, 2021 18
THANK YOU CORPORATE OFFICE 6565 N. MacArthur Blvd Suite 800 Irving, TX 75039 Phone: (214) 689.4300 INVESTOR RELATIONS Phone: (972) 308.5349 Fax: (214) 689.4326 [email protected] Q2 FY21 Supplemental Slides | March 18, 2021 19