Annual Statements Open main menu
  1. Annual Statements
  2. » Companies
  3. » COMMERCIAL METALS Co
  4. » Quarter Report: 2022 November (Form 10-Q)

COMMERCIAL METALS Co - Quarter Report: 2022 November (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q 
___________________________________
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2022
OR
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission file number 1-4304
___________________________________
COMMERCIAL METALS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
cmc-20221130_g1.jpg 
Delaware75-0725338
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification Number)
6565 N. MacArthur Blvd., Irving, Texas 75039
(Address of Principal Executive Offices) (Zip Code)
(214) 689-4300
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.01 par valueCMCNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer ☐
Non-accelerated filer  ☐Smaller reporting company ☐
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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes  ☐    No  ☒
As of January 6, 2023, 117,122,667 shares of the registrant's common stock, par value $0.01 per share, were outstanding.


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
 



2
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended November 30,
(in thousands, except share and per share data)20222021
Net sales$2,227,313 $1,981,801 
Costs and operating expenses:
Cost of goods sold1,719,414 1,586,410 
Selling, general and administrative expenses156,355 122,595 
Interest expense13,045 11,035 
1,888,814 1,720,040 
Earnings before income taxes338,499 261,761 
Income taxes76,725 28,872 
Net earnings$261,774 $232,889 
Earnings per share:
Basic$2.23 $1.92 
Diluted$2.20 $1.90 
Average basic shares outstanding117,273,743 121,129,679 
Average diluted shares outstanding118,925,442 122,797,738 
See notes to condensed consolidated financial statements.


3
Table of Contents
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended November 30,
(in thousands)20222021
Net earnings$261,774 $232,889 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation41,429 (39,688)
Derivatives:
Net unrealized holding gain
68,045 22,254 
Reclassification for realized gain
(6,970)(3,069)
Net unrealized gain on derivatives
61,075 19,185 
Defined benefit plans gain (loss) after amortization of prior service costs
1,758 (6)
Total other comprehensive income (loss), net of income taxes
104,262 (20,509)
Comprehensive income
$366,036 $212,380 
See notes to condensed consolidated financial statements.
4
Table of Contents
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share data)November 30, 2022August 31, 2022
Assets
Current assets:
Cash and cash equivalents$582,069 $672,596 
Accounts receivable (less allowance for doubtful accounts of $4,901 and $4,990)
1,287,286 1,358,907 
Inventories, net1,102,774 1,169,696 
Prepaid and other current assets251,985 240,269 
Total current assets3,224,114 3,441,468 
Property, plant and equipment, net2,028,955 1,910,871 
Intangible assets, net251,819 257,409 
Goodwill277,453 249,009 
Other noncurrent assets491,626 378,270 
Total assets$6,273,967 $6,237,027 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$396,560 $428,055 
Accrued expenses and other payables441,586 540,136 
Current maturities of long-term debt and short-term borrowings239,406 388,796 
Total current liabilities1,077,552 1,356,987 
Deferred income taxes283,754 250,302 
Other noncurrent liabilities235,280 230,060 
Long-term debt1,093,146 1,113,249 
Total liabilities2,689,732 2,950,598 
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,291,637 and 117,496,053 shares
1,290 1,290 
Additional paid-in capital361,199 382,767 
Accumulated other comprehensive loss(10,189)(114,451)
Retained earnings3,555,425 3,312,438 
Less treasury stock 11,769,027 and 11,564,611 shares at cost
(323,722)(295,847)
Stockholders' equity3,584,003 3,286,197 
Stockholders' equity attributable to non-controlling interests232 232 
Total stockholders' equity3,584,235 3,286,429 
Total liabilities and stockholders' equity$6,273,967 $6,237,027 
See notes to condensed consolidated financial statements.
5
Table of Contents
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended November 30,
(in thousands)20222021
Cash flows from (used by) operating activities:
Net earnings$261,774 $232,889 
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization51,183 41,226 
Deferred income taxes and other long-term taxes16,744 (5,099)
Stock-based compensation16,675 9,619 
Other5,967 (583)
Changes in operating assets and liabilities, net of acquisitions20,027 (252,273)
Net cash flows from operating activities
372,370 25,779 
Cash flows from (used by) investing activities:
Capital expenditures(133,052)(70,150)
Acquisitions, net of cash acquired(63,745)— 
Proceeds from insurance1,460 — 
Proceeds from the sale of property, plant and equipment and other303 1,418 
Other(516)— 
Net cash flows used by investing activities
(195,550)(68,732)
Cash flows from (used by) financing activities:
Repayments of long-term debt(154,631)(6,556)
Debt issuance costs(1,800)— 
Debt extinguishment costs(69)— 
Repayments under accounts receivable facilities(25,914)(144,706)
Proceeds from accounts receivable facilities49 150,664 
Treasury stock acquired(49,149)(5,311)
Tax withholdings related to share settlements, net of purchase plans(23,513)(16,371)
Dividends(18,787)(17,025)
Net cash flows used by financing activities
(273,814)(39,305)
Effect of exchange rate changes on cash5,139 (550)
Decrease in cash, restricted cash and cash equivalents
(91,855)(82,808)
Cash, restricted cash and cash equivalents at beginning of period679,243 501,129 
Cash, restricted cash and cash equivalents at end of period$587,388 $418,321 
See notes to condensed consolidated financial statements.
Supplemental information:Three Months Ended November 30,
(in thousands)20222021
Cash paid for income taxes$15,694 $15,296 
Cash paid for interest22,201 8,794 
Noncash activities:
Liabilities related to additions of property, plant and equipment$47,429 $45,788 
Right of use assets obtained in exchange for operating leases16,492 15,912 
Right of use assets obtained in exchange for finance leases10,104 1,002 
Cash and cash equivalents$582,069 $415,055 
Restricted cash (included in Prepaid and other current assets)5,319 3,266 
Total cash, restricted cash and cash equivalents$587,388 $418,321 
6
Table of Contents
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended November 30, 2022
 Common Stock Treasury Stock 
(in thousands, except share and per share data)Number of
Shares		AmountAdditional Paid-In
Capital		Accumulated
Other Comprehensive
Loss		Retained
Earnings		Number of
Shares		Amount Non-controlling
Interest		Total
Balance, September 1, 2022129,060,664 $1,290 $382,767 $(114,451)$3,312,438 (11,564,611)$(295,847)$232 $3,286,429 
Net earnings261,774 261,774 
Other comprehensive income104,262 104,262 
Dividends ($0.16 per share)
(18,787)(18,787)
Treasury stock acquired(1,275,452)(49,149)(49,149)
Tax withholdings related to share settlements, net of purchase plans(44,787)1,071,036 21,274 (23,513)
Stock-based compensation13,527 13,527 
Reclassification of share-based liability awards9,692 9,692 
Balance, November 30, 2022129,060,664 $1,290 $361,199 $(10,189)$3,555,425 (11,769,027)$(323,722)$232 $3,584,235 
Three Months Ended November 30, 2021
 Common Stock Treasury Stock 
(in thousands, except share and per share data)Number of
Shares		AmountAdditional Paid-In
Capital		Accumulated
Other Comprehensive
Loss		Retained
Earnings		Number of
Shares		AmountNon-controlling
Interest		Total
Balance, September 1, 2021129,060,664 $1,290 $368,064 $(84,820)$2,162,925 (8,474,075)$(152,582)$232 $2,295,109 
Net earnings232,889 232,889 
Other comprehensive loss(20,509)(20,509)
Dividends ($0.14 per share)
(17,025)(17,025)
Treasury stock acquired(159,500)(5,311)(5,311)
Tax withholdings related to share settlements, net of purchase plans(28,058)1,052,850 11,687 (16,371)
Stock-based compensation8,316 8,316 
Reclassification of share-based liability awards9,091 9,091 
Balance, November 30, 2021129,060,664 $1,290 $357,413 $(105,329)$2,378,789 (7,580,725)$(146,206)$232 $2,486,189 
See notes to condensed consolidated financial statements.

7
Table of Contents
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") on a basis consistent with that used in the Annual Report on Form 10-K for the year ended August 31, 2022 (the "2022 Form 10-K") filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the Securities and Exchange Commission (the "SEC") and include all normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets and the condensed consolidated statements of earnings, comprehensive income, cash flows and stockholders' equity for the periods indicated. These notes should be read in conjunction with the consolidated financial statements and notes included in the 2022 Form 10-K. The results of operations for the three month period are not necessarily indicative of the results to be expected for the full fiscal year. Any reference in this Form 10-Q to the "corresponding period" or "comparable period" relates to the three month period ended November 30, 2021. Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise noted.

8
Table of Contents
NOTE 2. CHANGES IN BUSINESS

Tensar Acquisition

On April 25, 2022 (the "Tensar Acquisition Date"), the Company completed the acquisition of TAC Acquisition Corp. ("Tensar"). The total cash purchase price, net of $19.6 million cash acquired, was approximately $550 million, subject to customary purchase price adjustments, and was funded through domestic cash on-hand. The acquired operations in North America are presented within the Company's North America reportable segment, and the remaining acquired operations are presented within the Company's Europe reportable segment.

The table below presents the preliminary fair values and measurement period adjustments that were allocated to Tensar's assets and liabilities as of the Tensar Acquisition Date:

(in thousands)
Estimated Fair Value as Previously Reported(1)
Cash and cash equivalents$19,551 
Accounts receivable37,741 
Inventories39,462 
Prepaid and other current assets12,528 
Defined benefit pension plan14,620 
Property, plant and equipment85,983 
Intangible assets260,500 
Goodwill186,805 
Other noncurrent assets19,660 
Accounts payable(12,134)
Accrued expenses and other payables(23,725)
Current maturities of long-term debt(3,277)
Deferred income taxes(45,055)
Other noncurrent liabilities(16,347)
Long-term debt(4,312)
Total assets acquired and liabilities assumed$572,000 
__________________________________
(1) As previously reported in the 2022 Form 10-K. No measurement period adjustments occurred during the three months ended November 30, 2022.

Pro Forma Supplemental Information

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of Tensar occurred on September 1, 2020. The pro forma financial information is presented for comparative purposes only, based on certain factually supported estimates and assumptions, which the Company believes to be reasonable, but not necessarily indicative of future results of operations or the results that would have been reported if the acquisition had been completed on September 1, 2020. These results were not used as part of management's analysis of the financial results and performance of the Company. The pro forma adjustments do not reflect anticipated synergies, but rather include the recurring income statement effects of fair value adjustments, such as depreciation and amortization. Further adjustments were made to remove the impact of Tensar's prior management fees, acquisition and integration expenses and interest on debt not assumed in the acquisition. The resulting tax effects of the business combination are also reflected below.

(in thousands)Three Months Ended November 30, 2021
Pro forma net sales$2,043,668 
Pro forma net earnings240,377 

9
Table of Contents
The pro forma results presented above include, but are not limited to, adjustments to remove the impact of $3.2 million of acquisition and integration expenses from the three months ended November 30, 2021. Results also reflect increased amortization expense from revalued intangible assets of $3.1 million in the three months ended November 30, 2021.

Advanced Steel Recovery Acquisition

On September 15, 2022, the Company completed the acquisition of Advanced Steel Recovery, LLC ("ASR"), a supplier of recycled ferrous metals located in Southern California. ASR's primary operations include processing and brokering capabilities that source material for sale into both the domestic and export markets and are presented within the Company's North America reportable segment. The ASR acquisition is not material to the Company's November 30, 2022 financial position or results of operations, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.

Kodiak Acquisition

On November 14, 2022, the Company completed the acquisition of a Galveston, TX area metals recycling facility and related assets (collectively, "Kodiak") from Kodiak Resources, Inc. and Kodiak Properties, L.L.C. Kodiak's operating results are presented within the Company's North America reportable segment. The Kodiak acquisition is not material to the Company's November 30, 2022 financial position or results of operations, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.
NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables reflect the changes in accumulated other comprehensive income (loss) ("AOCI"):
Three Months Ended November 30, 2022
(in thousands)Foreign Currency TranslationDerivativesDefined Benefit ObligationTotal AOCI
Balance, September 1, 2022$(245,897)$138,242 $(6,796)$(114,451)
Other comprehensive income before reclassifications
41,429 83,887 1,745 127,061 
Reclassification for gain (1)
— (8,666)— (8,666)
Income tax (expense) benefit
— (14,146)13 (14,133)
Net other comprehensive income
41,429 61,075 1,758 104,262 
Balance, November 30, 2022$(204,468)$199,317 $(5,038)$(10,189)
Three Months Ended November 30, 2021
(in thousands)Foreign Currency TranslationDerivativesDefined Benefit ObligationTotal AOCI
Balance, September 1, 2021$(105,680)$21,781 $(921)$(84,820)
Other comprehensive income (loss) before reclassifications
(39,688)27,474 (8)(12,222)
Reclassification for gain (1)
— (3,789)— (3,789)
Income tax (expense) benefit
— (4,500)2 (4,498)
Net other comprehensive income (loss)
(39,688)19,185 (6)(20,509)
Balance, November 30, 2021$(145,368)$40,966 $(927)$(105,329)
__________________________________
(1) Reclassifications for gains on derivatives included in net earnings are recorded in cost of goods sold in the condensed consolidated statements of earnings.

NOTE 4. REVENUE RECOGNITION

Revenue related to raw materials, steel products and construction-related solutions in the North America and Europe segments and downstream products in the Europe segment is recognized at a point in time concurrent with the transfer of control, which
10
Table of Contents
usually occurs, depending on shipping terms, upon shipment or customer receipt. See Note 14, Operating Segments, for further information about disaggregated revenue by the Company's major product lines.

Each downstream product contract sold by the North America segment represents a single performance obligation. Revenue from contracts where the Company provides fabricated product and installation services is recognized over time using an input measure, and these contracts represented 8% and 9% of net sales in the North America segment in the three months ended November 30, 2022 and 2021, respectively. Revenue from contracts where the Company does not provide installation services is recognized over time using an output measure, and these contracts represented 12% and 9% of net sales in the North America segment in the three months ended November 30, 2022 and 2021, respectively.

The following table provides information about assets and liabilities from contracts with customers:
(in thousands)November 30, 2022August 31, 2022
Contract assets (included in accounts receivable)$76,390 $73,037 
Contract liabilities (included in accrued expenses and other payables)28,005 27,567 

The amount of revenue reclassified from August 31, 2022 contract liabilities during the three months ended November 30, 2022 was approximately $11.6 million.

Remaining Performance Obligations

As of November 30, 2022, revenue totaling $1.0 billion has been allocated to remaining performance obligations in the North America segment related to contracts where revenue is recognized using an input or output measure. Of this amount, the Company estimates that approximately 81% of the remaining performance obligations will be recognized in the twelve months after November 30, 2022, and the remainder will be recognized during the subsequent twelve months. The duration of all other contracts in the North America and Europe segments are typically less than one year.
NOTE 5. INVENTORIES, NET

The majority of the Company's inventories are in the form of semi-finished and finished steel products. Under the Company’s vertically integrated business model, steel products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be combined as finished goods.

The components of inventories were as follows:
(in thousands)November 30, 2022August 31, 2022
Raw materials$255,569 $271,756 
Work in process9,578 9,446 
Finished goods837,627 888,494 
Total$1,102,774 $1,169,696 

Inventory write-downs were $4.5 million during the three months ended November 30, 2022 and immaterial in the corresponding period.
11
Table of Contents
NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment is detailed in the following table:
(in thousands)North AmericaEuropeConsolidated
Goodwill, gross
Balance at September 1, 2022$216,059 $43,115 $259,174 
Acquisitions28,891 — 28,891 
Foreign currency translation— (442)(442)
Balance at November 30, 2022244,950 42,673 287,623 
Accumulated impairment
Balance at September 1, 2022(10,036)(129)(10,165)
Foreign currency translation— (5)(5)
Balance at November 30, 2022(10,036)(134)(10,170)
Goodwill, net
Balance at September 1, 2022206,023 42,986 249,009 
Acquisitions28,891 — 28,891 
Foreign currency translation— (447)(447)
Balance at November 30, 2022$234,914 $42,539 $277,453 

Intangible assets subject to amortization are detailed in the following table:
 November 30, 2022August 31, 2022
(in thousands)Weighted Average Useful Lives in YearsGross
Carrying Amount		Accumulated AmortizationNetGross
Carrying Amount		Accumulated AmortizationNet
Developed technologies
1 to 12
$147,400 $11,128 $136,272 $147,040 $6,485 $140,555 
Customer relationships
12 to 17
53,145 3,186 49,959 53,115 2,116 50,999 
Perpetual lease rights
80
3,752 790 2,962 3,584 744 2,840 
Patents
5 to 15
7,347 4,841 2,506 7,203 4,596 2,607 
Trade names
 5 to 15
3,210 853 2,357 3,212 764 2,448 
Non-compete agreements
5 to 7
2,300 1,224 1,076 3,050 1,135 1,915 
Other
15
101 100 1 101 99 2 
Total$217,255 $22,122 $195,133 $217,305 $15,939 $201,366 

The foreign currency translation adjustments related to the intangible assets subject to amortization were immaterial for all periods presented above.

The gross carrying amount of the Company's intangible assets with indefinite lives was $56.7 million and $56.8 million as of November 30, 2022 and August 31, 2022, respectively. The change in the balance from August 31, 2022 to November 30, 2022 was due to foreign currency translation adjustments. Intangible assets with indefinite lives consist primarily of trade names with gross carrying amounts of $53.5 million and $53.6 million at November 30, 2022 and August 31, 2022, respectively, and in-process research and development with a gross carrying amount of $2.4 million at both November 30, 2022 and August 31, 2022.

12
Table of Contents
Amortization expense for intangible assets was $6.1 million in the three months ended November 30, 2022, of which $4.6 million was recorded in cost of goods sold and $1.5 million was recorded in selling, general and administrative expenses in the condensed consolidated statements of earnings. The Company recorded immaterial amortization expense for intangible assets in the three months ended November 30, 2021. Estimated amounts of amortization expense for intangible assets for the next five years are as follows:
(in thousands)
Remainder of 2023
$18,307 
202423,604 
202521,868 
202620,662 
202720,555 
NOTE 7. CREDIT ARRANGEMENTS

Long-term debt was as follows: 
(in thousands)Weighted Average Interest Rate as of November 30, 2022November 30, 2022August 31, 2022
2032 Notes4.375%$300,000 $300,000 
2031 Notes3.875%300,000 300,000 
2030 Notes4.125%300,000 300,000 
2023 Notes4.875%214,059 330,000 
Series 2022 Bonds, due 20474.000%145,060 145,060 
Poland Term Loan—— 32,439 
Short-term borrowings—— 26,390 
Other4.550%21,097 21,278 
Finance leases63,862 58,536 
Total debt1,344,078 1,513,703 
Less unamortized debt issuance costs(16,317)(16,496)
Plus unamortized bond premium4,791 4,838 
Total amounts outstanding1,332,552 1,502,045 
Less current maturities of long-term debt and short-term borrowings(239,406)(388,796)
Long-term debt$1,093,146 $1,113,249 

The Company's credit arrangements require compliance with certain covenants, including an interest coverage ratio and a debt to capitalization ratio. At November 30, 2022, the Company was in compliance with all financial covenants in its credit arrangements.

Senior Notes Activity

In May 2013, the Company issued $330.0 million of 4.875% Senior Notes due May 2023 (the "2023 Notes"). As of August 31, 2022, the 2023 Notes were included in current maturities of long-term debt and short-term borrowings in the consolidated balance sheet. In November 2022, the Company repurchased $115.9 million in aggregate principal amount of the 2023 Notes through a cash tender offer and recognized an immaterial loss on debt extinguishment. The remaining balance of $214.1 million was included in current maturities of long-term debt and short-term borrowings in the condensed consolidated balance sheet as of November 30, 2022.

Credit Facilities

In October 2022, the Company entered into a Sixth Amended and Restated Credit Agreement (as amended, the "Credit Agreement") with a revolving credit facility (the "Revolver") of $600.0 million and maturity date in October 2027, replacing the Fifth Amended and Restated Credit Agreement with a revolving credit facility of $400.0 million and a maturity date in
13
Table of Contents
March 2026. The maximum availability under the Revolver can be increased to $850.0 million with bank approval. The Credit Agreement also provides for a delayed draw senior secured term loan facility with a maximum principal amount of $200.0 million (the “Term Loan”). The Term Loan is coterminous with the Revolver. As of November 30, 2022, the Company had no amounts drawn under the Term Loan. The Company's obligations under the Credit Agreement are secured by its North America inventory. The Credit Agreement's capacity includes a $50.0 million sub-limit for the issuance of stand-by letters of credit. The Company had no amounts drawn under the Revolver or the previous revolving credit facility at November 30, 2022 or August 31, 2022. The availability under the Revolver and the previous revolving credit facility, as applicable, was reduced by outstanding stand-by letters of credit of $1.4 million at both November 30, 2022 and August 31, 2022.

The Company has a Term Loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"). At November 30, 2022, there was no amount outstanding, compared to PLN 152.4 million, or $32.4 million outstanding as of August 31, 2022.

The Company also has credit facilities in Poland through CMCP. At November 30, 2022 and August 31, 2022, CMCP's credit facilities totaled PLN 300.0 million, or $66.9 million and $63.9 million, respectively. There were no amounts outstanding under these facilities as of November 30, 2022 or August 31, 2022. The available balance of these credit facilities was reduced by outstanding stand-by letters of credit, guarantees and/or other financial assurance instruments, which totaled $14.6 million and $1.0 million at November 30, 2022 and August 31, 2022, respectively.

Accounts Receivable Facilities

On November 9, 2022 the Company terminated its $150.0 million U.S. trade accounts receivable facility. The Company had no advance payments outstanding under this facility at August 31, 2022.

The Poland accounts receivable facility had a limit of PLN 288.0 million, or $64.2 million and $61.3 million, at November 30, 2022 and August 31, 2022, respectively. The Company had no advance payments outstanding under the Poland accounts receivable facility at November 30, 2022, compared to PLN 124.0 million, or $26.4 million, advance payments outstanding at August 31, 2022.
NOTE 8. DERIVATIVES

The Company's global operations and product lines expose it to risks from fluctuations in metal commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. One objective of the Company's risk management program is to mitigate these risks using derivative instruments. The Company enters into (i) metal commodity futures and forward contracts to mitigate the risk of unanticipated changes in net earnings due to price volatility in these commodities, (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies and (iii) natural gas and electricity commodity derivatives to mitigate the risk related to price volatility of these commodities.

14
Table of Contents
The Company considers the total notional value of its futures and forward contracts as the best measure of the volume of derivative transactions. At November 30, 2022, the notional values of the Company's foreign currency and commodity contract commitments were $294.9 million and $378.4 million, respectively. At August 31, 2022, the notional values of the Company's foreign currency and commodity contract commitments were $253.5 million and $205.1 million, respectively.

The following table provides information regarding the Company's commodity contract commitments at November 30, 2022:
CommodityLong/Short   Total
AluminumLong2,025  MT
AluminumShort1,425  MT
CopperLong374  MT
CopperShort8,550  MT
ElectricityLong3,051,000 MW(h)
Natural GasLong5,230,350 MMBtu
__________________________________
MT = Metric Ton
MW(h) = Megawatt hour
MMBtu = Metric Million British thermal unit

The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. Certain foreign currency and commodity contracts were not designated as hedges for accounting purposes, although management believes they are essential economic hedges.

The following tables summarize activities related to the Company's derivative instruments and hedged items recognized in the condensed consolidated statements of earnings. All other activity related to the Company's derivative instruments and hedged items was immaterial for the periods presented.
Three Months Ended November 30,
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
(in thousands)		Primary Location20222021
CommodityCost of goods sold$(3,085)$2,746 
Foreign exchangeSG&A expenses3,462 (7,995)

Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Loss (in thousands)Three Months Ended November 30,
20222021
Commodity$68,039 $22,175 

The Company's natural gas and electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to November 2025 and December 2034, respectively. Included in the AOCI balance as of November 30, 2022 was an estimated net gain of $15.3 million from cash flow hedging instruments that is expected to be reclassified into earnings within the next twelve months. See Note 9, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.
NOTE 9. FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. Levels within the hierarchy are defined within Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2022 Form 10-K.

The following tables summarize information regarding the Company's financial assets and financial liabilities that were measured at fair value on a recurring basis:
15
Table of Contents
  Fair Value Measurements at Reporting Date Using
(in thousands)November 30, 2022Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable Inputs
(Level 3)
Assets:
Investment deposit accounts (1)
$492,405 $492,405 $— $— 
Commodity derivative assets (2)
248,261 6,795 — 241,466 
Foreign exchange derivative assets (2)
2,748 — 2,748 — 
Liabilities:
Commodity derivative liabilities (2)
4,417 4,417 — — 
Foreign exchange derivative liabilities (2)
1,934 — 1,934 — 
  Fair Value Measurements at Reporting Date Using
(in thousands)August 31, 2022Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable Inputs
(Level 3)
Assets:
Investment deposit accounts (1)
$572,384 $572,384 $— $— 
Commodity derivative assets (2)
160,847 17,347 — 143,500 
Foreign exchange derivative assets (2)
1,296 — 1,296 — 
Liabilities:
Commodity derivative liabilities (2)
1,260 1,260 — — 
Foreign exchange derivative liabilities (2)
3,126 — 3,126 — 
__________________________________
(1) Investment deposit accounts are short-term in nature, and the value is determined by principal plus interest. The investment portfolio mix can change each period based on the Company's assessment of investment options.
(2) Derivative assets and liabilities classified as Level 1 are commodity futures contracts valued based on quoted market prices in the London Metal Exchange or New York Mercantile Exchange. Amounts in Level 2 are based on broker quotes in the over-the-counter market. Derivatives classified as Level 3 are described below. Further discussion regarding the Company's use of derivative instruments is included in Note 8, Derivatives.

As of August 31, 2022, the Company had one Level 3 commodity derivative. In September 2022, the Company entered into a second Level 3 commodity derivative with the same counterparty. The second Level 3 commodity derivative will begin to settle in January 2025. The fair value estimates of the Level 3 commodity derivatives are based on internally developed discounted cash flow models primarily utilizing unobservable inputs for which there is little or no market data. The Company forecasts future energy rates using a range of historical prices ("floating rate"). The floating rate is the only significant unobservable input used in the Company's discounted cash flow models. The following table summarizes the floating rate used to measure the fair value of the commodity derivatives at November 30, 2022 and 2021:
Floating rate (PLN)
November 30,LowHighAverage
2022532.66 1,298.53 786.58 
2021252.79 540.39 348.99 

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivatives recognized in the condensed consolidated statements of comprehensive income. The fluctuation in energy rates over time causes volatility in the fair value estimate and is the primary reason for unrealized gains included in other comprehensive income ("OCI") in the three months ended November 30, 2022 and 2021.                                     
16
Table of Contents
(in thousands)Three Months Ended November 30, 2022
Balance, September 1, 2022$143,500 
Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)
104,197 
Reclassification for gain included in net earnings (2)
(6,231)
Balance, November 30, 2022$241,466 
(in thousands)Three Months Ended November 30, 2021
Balance, September 1, 2021$26,413 
Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)
25,208 
Reclassification for gain included in net earnings (2)
(3,729)
Balance, November 30, 2021$47,892 
__________________________________
(1) Unrealized holding gain, net of foreign currency translation, less amounts reclassified are included in OCI in the consolidated statements of comprehensive income.
(2) Gains included in net earnings are recorded in cost of goods sold in the condensed consolidated statements of earnings.

There were no material, non-recurring fair value remeasurements during the three months ended November 30, 2022 or 2021.

The carrying values of the Company's short-term items, including documentary letters of credit and notes payable, approximate fair value.

The carrying values and estimated fair values of the Company's financial assets and liabilities that are not required to be measured at fair value in the condensed consolidated balance sheets were as follows:
 November 30, 2022August 31, 2022
(in thousands)Fair Value HierarchyCarrying ValueFair ValueCarrying ValueFair Value
2032 Notes (1)
Level 2$300,000 $255,005 $300,000 $256,488 
2031 Notes (1)
Level 2300,000 252,169 300,000 249,888 
2030 Notes (1)
Level 2300,000 261,675 300,000 263,372 
2023 Notes (1)
Level 2214,059 214,316 330,000 330,182 
Series 2022 Bonds, due 2047 (1)
Level 2145,060 115,768 145,060 126,652 
Poland Term Loan (2)
Level 2— — 32,439 32,439 
Short-term borrowings (2)
Level 2— — 26,390 26,390 
__________________________________
(1) The fair values of the notes and the Series 2022 Bonds were determined based on indicated market values.
(2) The Poland Term Loan and short-term borrowings contain variable interest rates, and as a result, the carrying values approximate fair value.
17
Table of Contents
NOTE 10. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note 14, Stock-Based Compensation Plans, to the consolidated financial statements in the 2022 Form 10-K. In general, restricted stock units vest ratably over a period of three years. Subject to the achievement of performance targets established by the Compensation Committee of CMC's Board of Directors, performance stock units vest after a period of three years.

During the three months ended November 30, 2022 and 2021, the Company granted the following awards under its stock-based compensation plans:
November 30, 2022November 30, 2021
(in thousands, except share and per share data)Shares GrantedWeighted Average Grant Date Fair ValueShares GrantedWeighted Average Grant Date Fair Value
Equity method1,424 $35.78 1,407 $27.77 
Liability method242 N/A261 N/A

The Company recorded immaterial mark-to-market adjustments on liability awards for the three months ended November 30, 2022 and 2021. At November 30, 2022, the Company had outstanding 518,470 equivalent shares accounted for under the liability method. The Company expects 492,546 equivalent shares to vest.

The following table summarizes total stock-based compensation expense, including fair value remeasurements, which was primarily included in selling, general and administrative expenses in the Company's condensed consolidated statements of earnings:
Three Months Ended November 30,
(in thousands)20222021
Stock-based compensation expense$16,675 $9,619 

NOTE 11. EMPLOYEES' RETIREMENT PLANS

During the quarter ended November 30, 2022, the Company terminated its U.S. Pension Plan (as defined in Note 15, Employees' Retirement Plans, to the consolidated financial statements in the 2022 Form 10-K). As part of the termination, the Company made a contribution of $4.1 million. Plan assets were liquidated to purchase annuity contracts with an insurance company for all participants. No benefit obligation or plan assets related to the U.S. Pension Plan remain as of November 30, 2022. The Company recognized a $4.2 million settlement charge as a result of the termination, including an immaterial non-cash charge for unrecognized losses within accumulated other comprehensive income as of the termination date. The $4.2 million settlement charge was recognized within selling, general, and administrative expenses in the condensed consolidated statement of earnings during the three months ended November 30, 2022.

See Note 15, Employees' Retirement Plans, to the consolidated financial statements in the 2022 Form 10-K for information on the Company's remaining defined benefit pension plan (the "U.K. Pension Plan", as defined in Note 15, Employees' Retirement Plans, to the consolidated financial statements in the 2022 Form 10-K), defined contribution 401(k) retirement plan and Benefit Restoration Plan.
18
Table of Contents
NOTE 12. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE

Basic earnings per share ("EPS") is computed based on the weighted average shares of common stock outstanding during the period. Restricted stock is included in the number of shares of common stock issued and outstanding but omitted from the basic EPS calculation until the shares vest. Diluted EPS is computed based on the weighted average shares of common stock plus the effect of dilutive securities outstanding during the period using the treasury stock method. The effect of dilutive securities includes the impact of outstanding stock-based incentive awards and shares purchased by employees through participation in the Company's employee stock purchase plan.

The calculations of basic and diluted EPS were as follows: 
Three Months Ended November 30,
(in thousands, except share and per share data)20222021
Net earnings$261,774 $232,889 
Average basic shares outstanding117,273,743 121,129,679 
Effect of dilutive securities1,651,699 1,668,059 
Average diluted shares outstanding118,925,442 122,797,738 
Earnings per share:
Basic$2.23 $1.92 
Diluted$2.20 $1.90 

Anti-dilutive shares not included above were immaterial for all periods presented.
In October 2021, CMC's Board of Directors authorized a share repurchase program under which CMC may repurchase up to $350.0 million of shares of common stock. During the three months ended November 30, 2022, the Company repurchased 1,275,452 shares of CMC common stock, at an average purchase price of $38.53 per share. CMC had remaining authorization to repurchase $139.0 million of shares of common stock at November 30, 2022.
NOTE 13. COMMITMENTS AND CONTINGENCIES

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. At November 30, 2022 and August 31, 2022, the amounts accrued for cleanup and remediation costs at certain sites in response to statutes enforced by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") were immaterial. Total accrued environmental liabilities, including CERCLA sites, were $5.1 million and $5.3 million at November 30, 2022 and August 31, 2022, respectively, of which $2.1 million and $2.0 million were classified as other noncurrent liabilities as of November 30, 2022 and August 31, 2022, respectively. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors, amounts accrued could vary significantly from amounts paid.
19
Table of Contents
NOTE 14. OPERATING SEGMENTS

The Company structures its business into two reportable segments: North America and Europe. See Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2022 Form 10-K and Note 2, Changes in Business, for more information about the reportable segments, including the types of products and services from which each reportable segment derives its net sales. Corporate and Other contains earnings or losses on assets and liabilities related to the Company's Benefit Restoration Plan assets and short-term investments, expenses of the Company's corporate headquarters, interest expense related to its long-term debt and intercompany eliminations.

The following is a summary of certain financial information by reportable segment and Corporate and Other:
Three Months Ended November 30, 2022
(in thousands)North AmericaEuropeCorporate and OtherTotal
Net sales$1,816,899 $406,513 $3,901 $2,227,313 
Adjusted EBITDA377,956 64,505 (39,725)402,736 
Total assets at November 30, 20224,568,633 1,171,324 534,010 6,273,967 
Three Months Ended November 30, 2021
(in thousands)North AmericaEuropeCorporate and OtherTotal
Net sales$1,653,622 $329,056 $(877)$1,981,801 
Adjusted EBITDA268,524 79,832 (34,334)314,022 
Total assets at August 31, 20224,467,314 1,056,101 713,612 6,237,027 

The following table presents a reconciliation of net earnings to adjusted EBITDA:
 Three Months Ended November 30,
(in thousands)20222021
Net earnings$261,774 $232,889 
Interest expense13,045 11,035 
Income taxes76,725 28,872 
Depreciation and amortization51,183 41,226 
Asset impairments9 — 
Adjusted EBITDA$402,736 $314,022 
20
Table of Contents
Disaggregation of Revenue

The following tables display revenue by reportable segment and Corporate and Other from external customers, disaggregated by major product:
Three Months Ended November 30, 2022
(in thousands)North AmericaEuropeCorporate and OtherTotal
Major product:
Raw materials$292,320 $4,867 $— $297,187 
Steel products705,462 311,936 — 1,017,398 
Downstream products641,934 59,582 — 701,516 
Construction-related solutions142,372 19,446 — 161,818 
Other33,160 10,118 6,116 49,394 
Net sales from external customers1,815,248 405,949 6,116 2,227,313 
Intersegment net sales, eliminated on consolidation1,651 564 (2,215)— 
Net sales$1,816,899 $406,513 $3,901 $2,227,313 
Three Months Ended November 30, 2021
(in thousands)North AmericaEuropeCorporate and OtherTotal
Major product:
Raw materials$353,092 $6,960 $— $360,052 
Steel products675,042 243,145 — 918,187 
Downstream products514,396 70,072 — 584,468 
Construction-related solutions82,499 — — 82,499 
Other28,593 8,385 (383)36,595 
Net sales from external customers1,653,622 328,562 (383)1,981,801 
Intersegment net sales, eliminated on consolidation— 494 (494)— 
Net sales$1,653,622 $329,056 $(877)$1,981,801 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following discussion, references to "we," "us," "our" or the "Company" mean Commercial Metals Company ("CMC") and its consolidated subsidiaries, unless the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes thereto, which are included in this Quarterly Report on Form 10-Q (this "Form 10-Q"), and our consolidated financial statements and the notes thereto, which are included in our Annual Report on Form 10-K for the year ended August 31, 2022 (the "2022 Form 10-K"). This discussion contains or incorporates by reference "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on expectations, estimates, assumptions and projections about our industry, business and future financial results, based on information available at the time this Form 10-Q was filed with the Securities and Exchange Commission ("SEC") or, with respect to any document incorporated by reference, available at the time that such document was prepared. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those identified in the section entitled "Forward-Looking Statements" at the end of Item 2 of this Form 10-Q and in the sections entitled "Risk Factors" in Part I, Item 1A of our 2022 Form 10-K. We do not undertake any 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 otherwise, except as required by law.

Any reference in this Form 10-Q to the "corresponding period" or "comparable period" relates to the three month period ended November 30, 2021. Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise noted.
21
Table of Contents
BUSINESS CONDITIONS AND DEVELOPMENTS

Tensar Acquisition

On April 25, 2022 (the "Tensar Acquisition Date"), we completed the acquisition of TAC Acquisition Corp. ("Tensar") for approximately $550 million, net of cash acquired. Through its patented foundation systems, Tensar produces ground stabilization and soil reinforcement solutions that complement our existing concrete reinforcement product lines and broaden our ability to address multiple early phases of commercial and infrastructure construction, including subgrade, foundation and structures. End customers for these products include commercial, industrial and residential site developers, mining and oil and gas companies, transportation authorities, coastal and waterway authorities and waste management companies. The acquired operations within North America are presented within our North America reportable segment and the remaining acquired operations are presented within our Europe reportable segment. See Note 2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information about the Tensar acquisition.

Advanced Steel Recovery Acquisition

On September 15, 2022, we completed the acquisition of Advanced Steel Recovery, LLC ("ASR"), a supplier of recycled ferrous metals located in Southern California. ASR's primary operations include processing and brokering capabilities that source material for sale into both the domestic and export markets and are presented within our North America reportable segment.

Kodiak Acquisition

On November 14, 2022, we completed the acquisition of a Galveston, TX area metals recycling facility and related assets (collectively, "Kodiak") from Kodiak Resources, Inc. and Kodiak Properties, L.L.C. Kodiak's operating results are presented within our North America reportable segment.

Capital Expenditures

In January 2022, we announced the plan to construct a fourth micro mill geographically situated with the intention of primarily serving the Northeast, Mid-Atlantic and Mid-Western U.S. markets, and on December 8, 2022 we announced it will be located in Berkeley County, West Virginia. This new micro mill will enhance our steel production capabilities in the U.S. and create meaningful synergies within the existing network of mills and downstream fabrication plants. The construction and commissioning of the planned mill is expected to take approximately two years.

In August 2020, we announced the construction of a third micro mill. This micro mill will be the first in the world with the capability to produce merchant bar quality products through a continuous production process and will employ the latest technology in EAF power supply systems which will allow us to directly connect the EAF and the ladle furnace to renewable energy sources such as solar and wind. The new facility, located in Mesa, Arizona, will allow us to more efficiently meet West Coast demand for steel products. We began construction of the third micro mill in 2021 and expect this micro mill to be commissioned in spring 2023.

Senior Notes Activity

In November 2022, we repurchased $115.9 million in aggregate principal amount of the 4.875% Senior Notes due 2023 (“2023 Notes”) through a cash tender offer. The remaining $214.1 million of outstanding principal on the 2023 Notes is due on May 15, 2023, and this amount was included in current maturities of long-term debt and short-term borrowings in the condensed consolidated balance sheet as of November 30, 2022.

Russian Invasion of Ukraine

The Russian invasion of Ukraine did not have a direct material adverse impact on our business, financial condition or results of operations during the three months ended November 30, 2022. Our Europe segment has not had an interruption in energy supply and was able to identify alternate sources for a limited number of materials previously procured through Russia. However, we will continue to monitor disruptions in supply of energy and materials and the indirect effects on our operations of inflationary pressures, foreign exchange rate fluctuations, commodity pricing, potential cybersecurity risks and sanctions resulting from the invasion.

22
Table of Contents
See Part I, Item 1A, Risk Factors, of our 2022 Form 10-K for further discussion related to the above business conditions.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies and estimates as set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our 2022 Form 10-K.

RESULTS OF OPERATIONS SUMMARY

Business Overview

Our vertically integrated steel-related operations manufacture, recycle and fabricate steel and metal products and provide related materials and services through a network of facilities that includes seven electric arc furnace ("EAF") mini mills, two EAF micro mills, one rerolling mill, steel fabrication and processing plants, construction-related product warehouses and metal recycling facilities in the United States and Poland. Through our Tensar operations, CMC is a leading global provider of innovative ground and soil stabilization solutions selling into more than 80 national markets through two major product lines: Tensar® geogrids and Geopier® foundation systems. Our operations are conducted through two reportable segments: North America and Europe.

Key Performance Indicators

When evaluating our results for the period, we compare net sales, in the aggregate and for both of our segments, in the current period to net sales in the corresponding period. In doing so, we focus on changes in average selling price per ton and tons shipped compared to the prior period for each of our vertically integrated product categories (raw materials, steel products and downstream products) as these are the two variables that typically have the greatest impact on our net sales. Raw materials include ferrous and nonferrous scrap, steel products include rebar, merchant and other steel products, such as billets and wire rod, and downstream products include fabricated rebar and steel fence posts.

Adjusted EBITDA is used by management to compare and evaluate the period-over-period underlying business operational performance of our segments. Adjusted EBITDA is the sum of the Company's earnings before interest expense, income taxes, depreciation and amortization and impairment expense. Although there are many factors that can impact a segment’s adjusted EBITDA and, therefore, our overall earnings, changes in metal margins of our steel products and downstream products period-over-period is a consistent area of focus for our Company and industry. Metal margin is a metric used by management to monitor the results of our vertically integrated organization. For our steel products, metal margin is the difference between the average selling price per ton of rebar, merchant and other steel products and the cost of ferrous scrap per ton utilized by our steel mills to produce these products. An increase or decrease in input costs can impact profitability of these products when there is no corresponding change in selling prices. The metal margin for our downstream products is the difference between the average selling price per ton of fabricated rebar and steel fence post products and the scrap input costs to produce these products. The majority of our downstream products selling prices per ton are fixed at the beginning of a project and these projects last one to two years on average. Because the selling price generally remains fixed over the life of a project, changes in input costs over the life of the project can significantly impact profitability.

Financial Results Overview

The following discussion of our results of operations is based on our continuing operations.

 Three Months Ended November 30,
(in thousands, except per share data)20222021
Net sales$2,227,313 $1,981,801 
Net earnings261,774 232,889 
Diluted earnings per share$2.20 $1.90 

23
Table of Contents
Net sales for the three months ended November 30, 2022 increased $245.5 million, or 12%, compared to the corresponding period. Net sales in our North America segment increased in the three months ended November 30, 2022, as compared to the corresponding period, primarily due to year-over-year increases in steel products average selling prices and downstream products average selling prices. Net sales in our Europe segment also increased due to higher shipments of steel products in the three months ended November 30, 2022, compared to the corresponding period. The acquired Tensar operations also contributed to the year-over-year change by providing $61.6 million in net sales during the three months ended November 30, 2022, with no such activity in the corresponding period.

During the three months ended November 30, 2022, we achieved net earnings of $261.8 million, which increased $28.9 million, or 12%, compared to the corresponding period. This increase was driven by the significant expansion of steel products metal margins per ton in our North America segment, which resulted from a combination of rising selling prices for steel products and lower input costs of ferrous scrap utilized.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $33.8 million for the three months ended November 30, 2022, compared to the corresponding period. Contributing to the increase was $22.0 million of selling, general and administrative expenses from Tensar operations' commercial and engineering support in the three months ended November 30, 2022, with no such expenses in the corresponding period. The remaining increase in selling, general and administrative expenses in the three months ended November 30, 2022 was a result of many factors, including $7.0 million of increased stock compensation, a $4.2 million pension plan settlement charge, with no such settlement charge in the corresponding period, $3.9 million of increased professional services and $1.6 million of increased travel-related costs. See Note 11, Employees' Retirement Plans, in Part I, Item 1 of this Form 10-Q for more information on the pension plan termination activity. These costs were partially offset by a $7.0 million decrease in labor-related expenses.

Interest Expense

Interest expense increased by $2.0 million during the three months ended November 30, 2022, compared to the corresponding period. Capitalized interest was $4.6 million during the three months ended November 30, 2022, compared to $1.5 million during the corresponding period. The increase in capitalized interest was due to construction of the Company's third micro mill in Mesa, Arizona. Offsetting the impact of increased capitalized interest was an increase in long-term debt interest expense of $3.9 million during the three months ended November 30, 2022, compared to the corresponding period, due to the additional long-term debt outstanding.

Income Taxes

The effective income tax rate for the three months ended November 30, 2022 was 22.7% compared to 11.0% in the corresponding period. The increase is primarily due to the recognition of a tax benefit on a tax restructuring transaction during the three months ended November 30, 2021 that did not recur in the three months ended November 30, 2022.
24
Table of Contents
SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are calculated before income taxes. See Note 14, Operating Segments, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information. The operational data by product category presented in the tables below reflects activity from sales of raw materials, steel products and downstream products, as applicable, which comprise the majority of sales in North America and Europe. The data is calculated using averages, and therefore, it is not meaningful to quantify the effect that any individual metric had on the segment's net sales or adjusted EBITDA.

North America
 Three Months Ended November 30,
(in thousands, except per ton amounts)20222021
Net sales$1,816,899 $1,653,622 
Adjusted EBITDA377,956 268,524 
External tons shipped (in thousands)
Raw materials316 334 
Rebar461 442 
Merchant and other243 257 
Steel products704 699 
Downstream products382 400 
Average selling price (per ton)
Raw materials$824 $1,034 
Steel products1,020 976 
Downstream products1,399 1,092 
Cost of raw materials per ton$598 $766 
Cost of ferrous scrap utilized per ton325 428 
Steel products metal margin per ton695 548 

Net sales for the three months ended November 30, 2022 increased $163.3 million, or 10%, compared to the corresponding period. These results benefited from increased average selling prices of 5% for steel products and 28% for downstream products, and were offset, in part, by a 20% decrease in raw materials average selling prices compared to the corresponding period. The year-over-year increases in average selling prices for steel products and downstream products were driven by continued strong demand across all of our end-use markets. During the three months ended November 30, 2022, downstream bidding activity improved and led to growth in backlog levels compared to the corresponding period, which were awarded at the improved price levels described above. Volumes remained relatively flat during the three months ended November 30, 2022, compared to the corresponding period, as the construction industry demand was constrained, in part, due to availability of labor at construction sites in certain geographies. The acquired Tensar operations also contributed to the year-over-year change by providing $42.1 million in net sales during the three months ended November 30, 2022, with no such activity in the corresponding period.

Adjusted EBITDA for the three months ended November 30, 2022 increased $109.4 million, or 41%, compared to the corresponding period. In our vertically integrated business model, the increases in average selling prices for both steel products and downstream products, paired with falling scrap prices, led to significant expansion in the steel products metal margin per ton and downstream products margin over scrap per ton. These expanded margins, coupled with the continued steady demand discussed above, overcame the inflation that we faced during the period and drove the year-over-year growth in adjusted EBITDA. Also contributing to the year-over-year change was $8.1 million of adjusted EBITDA provided by the acquired Tensar operations during the three months ended November 30, 2022, with no such activity in the corresponding period. Adjusted EBITDA included non-cash stock compensation expense of $4.1 million and $2.7 million for the three months ended November 30, 2022 and 2021, respectively.


25
Table of Contents
Europe
 Three Months Ended November 30,
(in thousands, except per ton amounts)20222021
Net sales$406,513 $329,056 
Adjusted EBITDA64,505 79,832 
External tons shipped (in thousands)
Rebar204 103 
Merchant and other269 262 
Steel products473 365 
Average selling price (per ton)
Steel products$792 $869 
Cost of ferrous scrap utilized per ton$366 $434 
Steel products metal margin per ton426 435 

Net sales for the three months ended November 30, 2022 increased $77.5 million, or 24%, compared to the corresponding period. The 30% increase in shipments of steel products overcame the impact of a $77 per ton year-over-year decrease in steel products average selling prices, which was driven by a low pricing environment across Europe. Scheduled maintenance, which decreased shipments in the comparable period, did not impact volumes in the three months ended November 30, 2022. Rising shipment levels were also supported by our optimized cost structure, which positioned us to competitively price our steel products, coupled with our historical investment in operations, which provided the capacity to meet customer demand. The acquired Tensar operations also contributed to the year-over-year change by providing $19.5 million in net sales during the three months ended November 30, 2022, with no such activity in the corresponding period. Net sales for the three months ended November 30, 2022 were impacted by an unfavorable foreign currency translation adjustment of $79.6 million, due to the increase in the average value of the U.S. dollar relative to the Polish zloty, compared to an unfavorable foreign currency translation adjustment of $13.5 million, during the corresponding period.

Adjusted EBITDA for the three months ended November 30, 2022 was $64.5 million, compared to $79.8 million in the corresponding period. While the cost of ferrous scrap utilized decreased $68 per ton year-over-year, the decline in average selling prices slightly outpaced it resulting in a modest decrease in steel products metal margin per ton. During the three months ended November 30, 2022 we received a $9.5 million energy credit, which helped mitigate higher energy costs by reducing cost of goods sold, but was $6.0 million lower than the energy credit received in the comparable period. Also contributing to the year-over-year change was $3.3 million of adjusted EBITDA provided by the acquired Tensar operations during the three months ended November 30, 2022, with no such activity in the corresponding period. Adjusted EBITDA for the three months ended November 30, 2022 included an unfavorable foreign currency exchange rate impact of $13.5 million, compared to unfavorable foreign currency translation adjustment of $3.0 million during the corresponding period. Adjusted EBITDA included non-cash stock compensation expense of $1.9 million and $1.5 million for the three months ended November 30, 2022 and 2021, respectively.

Corporate and Other

Corporate and Other reported an adjusted EBITDA loss of $39.7 million for the three months ended November 30, 2022, compared to an adjusted EBITDA loss of $34.3 million in the corresponding period. The year-over-year increase in adjusted EBITDA loss was driven primarily by a $5.3 million increase in non-cash stock compensation expense and a $4.2 million pension plan settlement charge, with no such settlement charge in the corresponding period. See Note 11, Employees' Retirement Plans, in Part I, Item 1 of this Form 10-Q for more information on the pension plan termination activity. These increases were offset, in part, by a $6.5 million increase in other revenue, driven by short-term investments and gains on benefit restoration plan ("BRP") assets.

26
Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital Resources

Our cash flows from operating activities are our principal sources of liquidity and result primarily from sales of raw materials, steel products, downstream products and related materials and services, as described in Part I, Item 1, Business, of our 2022 Form 10-K and Note 2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q.

We have a diverse and generally stable customer base, and regularly maintain a substantial amount of accounts receivable. We actively monitor our accounts receivable and, based on market conditions and customers' financial condition, record allowances when we believe accounts are uncollectible. We use credit insurance internationally to mitigate the risk of customer insolvency. We estimate that the amount of credit-insured receivables (and those covered by export letters of credit) was approximately 14% of total trade receivables at November 30, 2022.

We use futures or forward contracts to mitigate the risks from fluctuations in commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. See Note 8, Derivatives, in Part I, Item 1, Financial Statements, of this Form 10-Q, for further information.

The table below reflects our sources, facilities and availability of liquidity at November 30, 2022. See Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for additional information.
(in thousands)Liquidity Sources and FacilitiesAvailability
Cash and cash equivalents$582,069 $582,069 
Notes due from 2023 to 20321,114,059 
(1)
Revolver600,000 598,587 
Term Loan200,000 200,000 
Series 2022 Bonds, due 2047145,060 — 
Poland credit facilities66,851 52,296 
Poland accounts receivable facility64,177 64,177 
Other4,026 1,206 
__________________________________
(1) We believe we have access to additional financing and refinancing, if needed, although we can make no assurances as to the form or terms of such financing.

We continually review our capital resources to determine whether we can meet our short and long-term goals. We anticipate our current cash balances, cash flows from operations and available sources of liquidity will be sufficient to maintain operations, make necessary capital expenditures, repay current maturities of long-term debt, including our $214.1 million outstanding principal amount of the 2023 Notes, pay dividends and opportunistically repurchase shares for at least the next twelve months. Additionally, we expect our long-term liquidity position will be sufficient to meet our long-term liquidity needs with cash flows from operations and financing arrangements. However, in the event of changes in business conditions or other developments, including a sustained market deterioration, unanticipated regulatory developments, significant acquisitions, competitive pressures, or to the extent our liquidity needs prove to be greater than expected or cash generated from operations is less than anticipated, we may need additional liquidity. To the extent we elect to finance our long-term liquidity needs, we believe that the potential financing capital available to us in the future will be sufficient.

We estimate that our 2023 capital spending will range from $500 million to $550 million. We regularly assess our capital spending based on current and expected results and the amount is subject to change.

Our credit arrangements require compliance with certain non-financial and financial covenants, including an interest coverage ratio and a debt to capitalization ratio. At November 30, 2022, we believe we were in compliance with all covenants contained in our credit arrangements.

As of November 30, 2022 and August 31, 2022, we had no off-balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

27
Table of Contents
Cash Flows

Operating Activities
Net cash flows from operating activities were $372.4 million for the three months ended November 30, 2022, compared to net cash flows from operating activities of $25.8 million for the corresponding period. Net earnings increased by $28.9 million year-over-year. A $272.3 million year-over-year net increase in cash provided by operating assets and liabilities was due in part to falling scrap prices, which resulted in decreased inventory valuation, compared to increasing scrap prices in the three months ended November 30, 2021. Additionally, accounts payable, accrued expenses and other payables decreased by $46.9 million and accounts receivable decreased as a result of the falling steel product selling prices during the three months ended November 30, 2022, as compared to the corresponding period.

Investing Activities
Net cash flows used by investing activities were $195.6 million for the three months ended November 30, 2022, compared to net cash flows used by investing activities of $68.7 million for the three months ended November 30, 2021. The $126.8 million increase in net cash flows used by investing activities was primarily driven by capital expenditures and acquisitions. Net cash flows used by investing activities rose due to $62.9 million of additional capital expenditures as compared to the corresponding period, primarily from the construction of our third micro mill, and approximately $63.7 million attributable to the acquisitions of Advanced Steel Recovery and Kodiak, compared to no acquisitions in the corresponding period. See Note 2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information about these acquisitions.

Financing Activities
Net cash flows used by financing activities were $273.8 million for the three months ended November 30, 2022, compared to net cash flows used by financing activities of $39.3 million for the three months ended November 30, 2021. The $234.5 million increase in net cash flows used by financing activities was primarily due to increased net repayments of long-term debt of $148.1 million during the three months ended November 30, 2022, as compared to the corresponding period, primarily related to the partial repayment of the 2023 Notes. Also contributing to the increase in net cash flows used by financing activities were increased net repayments of our Polish accounts receivable facilities of $31.4 million during the three months ended November 30, 2022, as compared to the corresponding period. See Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information regarding our credit arrangements. Additionally, there was a $43.8 million increase in treasury stock acquired under the share repurchase program. See Note 12, Stockholders' Equity and Earnings per Share, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information on the share repurchase program.


CONTRACTUAL OBLIGATIONS
Our material cash commitments from known contractual and other obligations primarily consist of obligations for long-term debt and related interest, leases for properties and equipment and purchase obligations as part of normal operations. See Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information regarding scheduled maturities of our long-term debt.
Our undiscounted purchase obligations due in the twelve months following November 30, 2022 were approximately $889.2 million with $219.8 million due thereafter. Of the purchase obligations due in the twelve months following November 30, 2022, approximately 22% were for capital expenditures in connection with normal business operations, 21% for the construction of our third micro mill, 20% for commodities, and 17% for consumable production inputs, such as alloys. Of the purchase obligations due thereafter, 85% were for commodities and 3% were for the construction of our third micro mill. Operating lease obligations in the twelve months following November 30, 2022 were $38.2 million with $134.7 million due thereafter. Additionally, leases that have not yet commenced, primarily for vehicles, with aggregate fixed payments over their terms, were approximately $16.3 million, with $8.9 million to commence in 2023 and $7.4 million in 2024.

Other Commercial Commitments

We maintain stand-by letters of credit to provide support for certain transactions that governmental agencies, our insurance providers and suppliers request. At November 30, 2022, we had committed $21.7 million under these arrangements, of which $1.4 million reduced availability under the Revolver (as defined in Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q).
CONTINGENCIES

28
Table of Contents
In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings and governmental investigations, including environmental matters. We may incur settlements, fines, penalties or judgments because of some of these matters. Liabilities and costs associated with litigation-related loss contingencies require estimates and judgments based on our knowledge of the facts and circumstances surrounding each matter and the advice of our legal counsel. We record liabilities for litigation-related losses when a loss is probable, and we can reasonably estimate the amount of the loss. We evaluate the measurement of recorded liabilities each reporting period based on the current facts and circumstances specific to each matter. The ultimate losses incurred upon final resolution of litigation-related loss contingencies may differ materially from the estimated liability recorded at a particular balance sheet date. Changes in estimates are recorded in earnings in the period in which such changes occur. We do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect, individually or in the aggregate, on our results of operations, cash flows or financial condition. See Note 13, Commitments and Contingencies, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information.
FORWARD-LOOKING STATEMENTS

This Form 10-Q 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 impact of the Russian invasion of Ukraine, 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 ability to operate our steel mills at full capacity, future availability and cost of supplies of raw materials and energy for our operations, share repurchases, legal proceedings, construction activity, international trade, capital expenditures, tax credits, our liquidity and our ability to satisfy future liquidity requirements, estimated contractual obligations, the expected capabilities and benefits of new facilities, the timeline for execution of our growth plan, and our expectations or beliefs concerning future events. The statements in this report that are not historical statements, are forward-looking statements. These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "future," "intends," "may," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases, as well as by discussions of strategy, plans, or intentions.

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 our 2022 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;
•excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing;
•the impact of the Russian invasion of Ukraine on the global economy, inflation, energy supplies and raw materials, which is uncertain, but may prove to negatively impact our business and operations;
•increased attention to environmental, social and governance ("ESG") matters, including any targets or other ESG or environmental justice initiatives;
•impacts from COVID-19 on the economy, demand for our products, global supply chain and on our operations, including the responses of governmental authorities to contain COVID-19 and the impact of various COVID-19 vaccines;
•compliance with and changes in existing and future 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;
•evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors that may impact amounts accrued for environmental liabilities;
29
Table of Contents
•potential limitations in our or our customers' abilities to access credit and non-compliance of their contractual obligations, including payment obligations;
•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 realize any or all of the anticipated synergies or other benefits of acquisitions;
•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 startup 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 investments;
•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 or other indefinite lived intangible asset impairment charges;
•impact of long-lived asset impairment charges;
•currency fluctuations;
•global factors, such as trade measures, military conflicts and political uncertainties, including changes to current trade regulations, such as Section 232 trade tariffs and quotas, 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.
You should refer to the "Risk Factors" disclosed in our periodic and current reports filed with the SEC for specific information regarding additional risks which would cause actual results to be significantly different from those expressed or implied by these forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause actual results, performance or our achievements, or industry results, to differ materially from historical results, any future results, or performance or achievements expressed or implied by such forward-looking statements. Accordingly, readers of this Form 10-Q are cautioned not to place undue reliance on any forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the three months ended November 30, 2022, the U.S. dollar equivalent of the Company's total gross foreign currency exchange contract commitments increased $41.4 million, or 16%, compared to August 31, 2022. This increase was primarily due to forward contracts denominated in Polish zloty with a U.S. dollar functional currency, which increased $80.5 million, partially offset by forward contracts denominated in euros with a Polish zloty functional currency, which decreased $38.6 million compared to August 31, 2022.

30
Table of Contents
There were no other material changes to the information set forth in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, included in our 2022 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods, and includes controls and procedures designed to ensure that such information is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q, and they have concluded that as of that date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our quarter ended November 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
31
Table of Contents
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

For information regarding our legal proceedings, refer to Note 13, Commitments and Contingencies, to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q.

With respect to administrative or judicial proceedings arising under any federal, state or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, we have determined that we will disclose any such proceeding to which a governmental authority is a party if we reasonably believe such proceeding could result in monetary sanctions, exclusive of interest and costs, of at least $1.0 million. We believe that this threshold is reasonably designed to result in disclosure of environmental proceedings that are material to our business or financial condition. Applying this threshold, there were no environmental matters to disclose for this period.
ITEM 1A. RISK FACTORS

There were no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our 2022 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about purchases of equity securities registered by the Company pursuant to Section 12 of the Exchange Act made by the Company or any affiliated purchasers during the quarter ended November 30, 2022.
Issuer Purchases of Equity Securities(1)
PeriodTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs as of the End of Period
September 1, 2022 - September 30, 2022771,402 $37.42 771,402 $159,265,967 
October 1, 2022 - October 31, 2022388,550 38.38 388,550 144,354,898 
November 1, 2022 - November 30, 2022115,500 46.54 115,500 138,979,449 
1,275,452 1,275,452 
__________________________________
(1) On October 13, 2021, the Company announced that the Board of Directors authorized a share repurchase program under which the Company may repurchase up to $350.0 million of the Company's outstanding common stock. The share repurchase program does not require the Company to purchase any dollar amount or number of shares of CMC common stock and may be modified, suspended, extended or terminated by the Company at any time without prior notice. See Note 12, Stockholders' Equity and Earnings per Share, to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q for more information on the share repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.
ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
32
Table of Contents
ITEM 6. EXHIBITS
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, certain long-term debt instruments are omitted because the total amount of securities authorized thereunder does not exceed 10% of the total assets of Commercial Metals Company and its subsidiaries on a consolidated basis. Commercial Metals Company agrees to furnish copies of such instruments to the SEC upon its request.
2.1†
3.1(a)
3.1(b)
3.1(c)
3.1(d)
3.1(e)
3.1(f)
3.2
10.1
10.2
31.1
31.2
32.1
32.2
101.INSInline XBRL Instance Document (filed herewith).
101.SCHInline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104
Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101).
† Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5), and Commercial Metals Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
33
Table of Contents
SIGNATURE
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 thereunto duly authorized.
 
COMMERCIAL METALS COMPANY
January 9, 2023/s/ Paul J. Lawrence
Paul J. Lawrence
Senior Vice President and Chief Financial Officer
(Duly authorized officer and principal financial officer of the registrant)

34