COMMERCIAL METALS COMPANY REPORTS FOURTH QUARTER FISCAL 2022 RESULTS
•Fourth quarter net earnings of $288.6 million, or $2.40 per diluted share, increased 89% compared with $152.3 million, or $1.24 per diluted share, in the prior year period; record annual net earnings of $1.2 billion
•Generated record annual core EBITDA of $1.6 billion; fourth quarter core EBITDA of $419.0 million increased 64% year-over-year and was the second highest in company history
•Core EBITDA per ton of finished steel shipped increased by $113 from the prior year quarter; favorable market conditions and operational execution more than offset inflationary pressures
•Entering fiscal 2023 from a position of strength – historically high levels of construction backlog and bidding activity in North America; good activity levels in Europe segment despite uncertain economic backdrop
•Repurchased $106.3 million of common stock during the quarter; this week announced a 14% increase to the quarterly dividend
Irving, TX - October 13, 2022 - Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal fourth quarter ended August 31, 2022. Net earnings were $288.6 million, or $2.40 per diluted share, on net sales of $2.4 billion, compared to prior year period net earnings of $152.3 million, or $1.24 per diluted share, on net sales of $2.0 billion.
During the fourth quarter of fiscal 2022, the Company recorded net after-tax costs of $6.3 million primarily for purchase accounting adjustments related to the acquisition of Tensar Corporation. Excluding these items, fourth quarter adjusted earnings were $295.0 million, or $2.45 per diluted share, compared to adjusted earnings of $154.2 million, or $1.26 per diluted share, in the prior year period. "Adjusted EBITDA," "core EBITDA," "adjusted earnings" and "adjusted earnings per diluted share" are non-GAAP financial measures. Details, including a reconciliation of each such non-GAAP financial measure to the most directly comparable measure prepared and presented in accordance with GAAP, can be found in the financial tables that follow.
Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, said, "Fiscal 2022 was another year of exceptional performance for CMC, with record financial results, as well as meaningful advancement of our growth plan and our commitment to enhance shareholder distributions. The financial benefits of past and ongoing strategic actions were clearly demonstrated through record profitability and returns on invested capital. We expect our more-recent strategic initiatives, including the acquisition of Tensar, the construction of Arizona 2, and the announcement of a fourth micro mill to serve the Eastern U.S., will drive the next phase of our value accretive growth as we build on the solid operational foundation already in place. Shareholder distributions remain a core
(CMC Fourth Quarter Fiscal 2022 - 2)
focus of our capital allocation strategy, with CMC repurchasing over $100 million worth of shares during the quarter and raising our quarterly dividend by 14%.”
Ms. Smith continued, “Looking at the fourth quarter, we generated the second-best Core EBITDA in our Company’s history, behind only the previous quarter. I am extremely proud of our continued solid execution, which has enabled us to fully capitalize on very strong market conditions in North America and to navigate the volatile conditions in Europe. The flexibility of our operations in Poland, and its low-cost operating structure relative to peers, positions CMC well to manage the challenging economic environment in Europe.”
The Company's balance sheet and liquidity position remained strong as of August 31, 2022. Cash and cash equivalents ended the quarter with a balance of $672.6 million, while available liquidity totaled over $1.3 billion. CMC repurchased approximately three million shares of common stock during the quarter, returning $106.3 million of cash to shareholders. As of August 31, 2022, $188.1 million remained under the current share repurchase authorization.
On October 11, 2022, the board of directors declared a quarterly dividend of $0.16 per share of CMC common stock payable to stockholders of record on October 27, 2022. The dividend to be paid on November 10, 2022, marks the 232nd consecutive quarterly payment by the Company, and represents a 14% increase from the dividend paid in July 2022.
Business Segments - Fiscal Fourth Quarter 2022 Review
Demand for CMC's finished steel products in North America was again robust during the quarter, with several key internal and external indicators pointing toward continued strength. Downstream bid volumes, a significant indicator of the construction project pipeline, increased meaningfully from a year ago, resulting in year-over-year expansion of contract backlog levels. Demand from industrial end markets was stable, with conditions in most end-use applications unchanged from the sequential quarter, but improved compared to the prior year period.
The North America segment reported adjusted EBITDA of $370.5 million for the fourth quarter of fiscal 2022, which was largely unchanged on a sequential basis, and up 75% compared to $212.0 million in the prior year period. The year-over-year improvement was driven by record margins on steel products and a significant increase in the margin over scrap on sales of downstream products. Steel products have now experienced six consecutive quarters of year-over-year margin expansion. Controllable costs per ton of finished steel shipped were up modestly compared to the third fiscal quarter and increased relative to the prior year period, primarily as a result of higher per unit purchase costs for energy, alloys and freight.
(CMC Fourth Quarter Fiscal 2022 - 3)
Shipment volumes of finished steel, which include steel products and downstream products, followed typical seasonal patterns and were down slightly from the prior year period, due largely to destocking activities by our customers as well as the slower pace of construction on numerous job sites stemming from staffing challenges. The average selling price for steel products increased by $204 per ton compared to the fourth quarter of fiscal 2021 while the cost of scrap utilized declined $47 per ton, resulting in a year-over-year increase of $251 per ton in steel product margin over scrap. Average pricing declined by $6 per ton from the previous quarter. The average selling price for downstream products increased by $334 per ton from the prior year period and $104 per ton on a sequential basis. Future pricing indicators on new work entering the backlog remain positive, as average price levels for bids and new awards climbed significantly from the prior year period.
The Europe segment reported adjusted EBITDA of $64.1 million for the fourth quarter of fiscal 2022, down 5% compared to adjusted EBITDA of $67.7 million for the prior year period. Average selling price increased by $125 per ton in the fourth quarter compared to the prior year period, while the cost of scrap utilized declined $13 per ton. The result was a year-over-year increase in margin over scrap of $138 per ton. The modest year-over-year decline in adjusted EBITDA occurred despite expanded margin over scrap, primarily due to lower shipment volumes, higher costs for energy and alloys, the negative earnings impact of selling higher cost inventory, and the impact of the weakening Polish Zloty in relation to the U.S. Dollar. Earnings levels remained historically strong, as the fourth quarter result was three times higher than the quarterly average adjusted EBITDA of the prior ten fiscal years.
Europe end market demand was mixed during the quarter. Polish construction activity continued to grow on a year-over-year basis, while industrial production across Central Europe has contracted for several months. Volumes during much of the fourth quarter were negatively impacted by a supply chain destocking cycle that occurred in the wake of widespread safety stock procurement by end users and intermediaries following the outbreak of war in Ukraine. The purchase of safety stock meaningfully benefited CMC’s shipments during the fiscal third quarter, but the fourth quarter experienced the opposite effect. This, however, appears to have subsided late in the quarter, as evidenced by a strong rebound in shipment volumes on both a sequential and year-over-year basis.
The recent investment in a third rolling mill has positioned CMC’s Europe segment well to navigate current volatility. The asset has provided improved operational and commercial flexibility, as well as enhanced margins by eliminating billet sales in favor of converting material to finished product.
The Company’s new Tensar business generated EBITDA of $10.2 million during the fourth quarter. Excluding a $6.5 million charge to reflect the purchase accounting effect on inventory, EBITDA amounted to $16.7 million on net sales of $74.1 million, yielding a margin of 22.5%. Tensar’s financial performance is included within
(CMC Fourth Quarter Fiscal 2022 - 4)
CMC’s existing operating segments, with North American results incorporated into CMC's North America segment and all other operations included in the Europe segment.
Outlook
Ms. Smith said, "We are entering fiscal 2023 from a position of strength. Our North America contract backlog volumes and average pricing are at historically high levels. Additionally, downstream bidding activity remains good, indicating a strong pipeline of projects entering the market, and this is prior to any meaningful benefit from the Infrastructure Investment and Jobs Act (IIJA) signed into law last November. We believe the expected commissioning of CMC’s Arizona 2 micro mill next spring, as well as the addition of Tensar’s engineered solutions capabilities, will provide our Company with greater flexibility to capitalize on these favorable demand conditions.”
Ms. Smith added, "Looking ahead, we anticipate strong financial performance in the first fiscal quarter. Robust demand in North America for each of CMC’s major product lines is expected to persist. Finished steel volumes are expected to follow typical seasonal patterns, which have historically declined modestly from our fourth quarter levels. Market conditions in Europe are more uncertain, given the ongoing energy crisis and slowing industrial activity. However, CMC is well situated to compete due to our cost leadership position and operational flexibility. Margins over scrap in both North America and Europe are likely to compress from fourth quarter levels in order to remain competitive with raw material price changes and increased long steel supply from imports.”
Conference Call
CMC invites you to listen to a live broadcast of its fourth quarter fiscal 2022 conference call today, Thursday, October 13, 2022, at 11:00 a.m. ET. Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, and Paul Lawrence, Senior Vice President and Chief Financial Officer, will host the call. The call is accessible via our website at www.cmc.com. In the event you are unable to listen to the live broadcast, the call will be archived and available for replay on our website on the next business day. Financial and statistical information presented in the broadcast are located on CMC's website under "Investors."
About Commercial Metals Company
Commercial Metals Company and its subsidiaries manufacture, recycle and 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 its 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.
(CMC Fourth Quarter Fiscal 2022 - 5)
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 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 effect of COVID-19 and related governmental and economic responses thereto, 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 release 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 news release 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 our filings with the Securities and Exchange Commission, including, but not limited to, in Part I, Item 1A, "Risk Factors" of our annual report on Form 10-K for the fiscal year ended August 31, 2021, and Part II, Item IA, "Risk Factors" of our subsequent quarterly reports on Form 10-Q, 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, 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; 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, 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; 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
(CMC Fourth Quarter Fiscal 2022 - 6)
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; 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.
(CMC Fourth Quarter Fiscal 2022 - 7)
COMMERCIAL METALS COMPANY FINANCIAL & OPERATING STATISTICS (UNAUDITED)
Three Months Ended
Year Ended
(in thousands, except per ton amounts)
8/31/2022
5/31/2022
2/28/2022
11/30/2021
8/31/2021
8/31/2022
8/31/2021
North America
Net sales
$
1,997,636
$
2,033,150
$
1,614,224
$
1,653,622
$
1,660,409
$
7,298,632
$
5,670,976
Adjusted EBITDA
370,516
379,355
535,463
268,524
212,018
1,553,858
746,594
External tons shipped
Raw materials
359
353
329
334
331
1,375
1,331
Rebar
451
505
407
442
469
1,805
1,927
Merchant and other
249
274
245
257
302
1,025
1,123
Steel products
700
779
652
699
771
2,830
3,050
Downstream products
432
399
327
400
415
1,558
1,537
Average selling price per ton
Raw materials
$
950
$
1,207
$
1,103
$
1,034
$
1,069
$
1,073
$
877
Steel products
1,104
1,110
1,041
976
900
1,060
752
Downstream products
1,348
1,244
1,169
1,092
1,014
1,217
961
Cost of raw materials per ton
$
717
$
908
$
834
$
766
$
805
$
807
$
650
Cost of ferrous scrap utilized per ton
$
387
$
472
$
436
$
428
$
434
$
431
$
355
Steel products metal margin per ton
$
717
$
638
$
605
$
548
$
466
$
629
$
397
Europe
Net sales
$
412,264
$
484,564
$
395,758
$
329,056
$
368,290
$
1,621,642
$
1,049,059
Adjusted EBITDA
64,096
120,974
81,149
79,832
67,676
346,051
148,258
External tons shipped
Rebar
177
170
172
103
174
622
521
Merchant and other
251
306
278
262
286
1,097
1,093
Steel products
428
476
450
365
460
1,719
1,614
Average selling price per ton
Steel products
$
888
$
967
$
851
$
869
$
763
$
896
$
612
Cost of ferrous scrap utilized per ton
$
435
$
530
$
444
$
434
$
448
$
463
$
357
Steel products metal margin per ton
$
453
$
437
$
407
$
435
$
315
$
433
$
255
(CMC Fourth Quarter Fiscal 2022 - 8)
COMMERCIAL METALS COMPANY BUSINESS SEGMENTS (UNAUDITED)
Three Months Ended
Year Ended
(in thousands)
8/31/2022
5/31/2022
2/28/2022
11/30/2021
8/31/2021
8/31/2022
8/31/2021
Net sales
North America
$
1,997,636
$
2,033,150
$
1,614,224
$
1,653,622
$
1,660,409
$
7,298,632
$
5,670,976
Europe
412,264
484,564
395,758
329,056
368,290
1,621,642
1,049,059
Corporate and Other
(2,835)
(1,987)
(1,094)
(877)
1,947
(6,793)
9,725
Total net sales
$
2,407,065
$
2,515,727
$
2,008,888
$
1,981,801
$
2,030,646
$
8,913,481
$
6,729,760
Adjusted EBITDA
North America
$
370,516
$
379,355
$
535,463
$
268,524
$
212,018
$
1,553,858
$
746,594
Europe
64,096
120,974
81,149
79,832
67,676
346,051
148,258
Corporate and Other
(32,227)
(35,049)
(52,493)
(34,334)
(31,897)
(154,103)
(140,568)
Total adjusted EBITDA
$
402,385
$
465,280
$
564,119
$
314,022
$
247,797
$
1,745,806
$
754,284
(CMC Fourth Quarter Fiscal 2022 - 9)
COMMERCIAL METALS COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended August 31,
Year Ended August 31,
(in thousands, except share and per share data)
2022
2021
2022
2021
Net sales
$
2,407,065
$
2,030,646
$
8,913,481
$
6,729,760
Costs and operating expenses (income):
Cost of goods sold
1,899,251
1,686,973
7,057,085
5,623,903
Selling, general and administrative expenses
153,826
136,235
544,984
505,117
Interest expense
14,230
11,659
50,709
51,904
Loss on debt extinguishment
—
—
16,052
16,841
Asset impairments
453
2,439
4,926
6,784
(Gain) loss on sale of assets
684
583
(275,422)
(8,807)
Net costs and operating expenses
2,068,444
1,837,889
7,398,334
6,195,742
Earnings before income taxes
338,621
192,757
1,515,147
534,018
Income taxes
49,991
40,444
297,885
121,153
Net earnings
$
288,630
$
152,313
$
1,217,262
$
412,865
Earnings per share:
Basic
$
2.43
$
1.26
$
10.09
$
3.43
Diluted
$
2.40
$
1.24
$
9.95
$
3.38
Cash dividends per share
$
0.14
$
0.12
$
0.56
$
0.48
Average basic shares outstanding
118,780,227
120,625,533
120,648,090
120,338,357
Average diluted shares outstanding
120,457,370
122,376,099
122,372,386
121,983,497
(CMC Fourth Quarter Fiscal 2022 - 10)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share data)
August 31, 2022
August 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
672,596
$
497,745
Accounts receivable (less allowance for doubtful accounts of $4,990 and $5,553)
1,358,907
1,105,580
Inventories
1,169,696
935,387
Prepaid and other current assets
240,209
173,033
Assets held for sale
60
25,083
Total current assets
3,441,468
2,736,828
Property, plant and equipment:
Land
155,237
123,135
Buildings and improvements
799,715
792,915
Equipment
2,440,910
2,435,541
Construction in process
489,031
147,166
3,884,893
3,498,757
Less accumulated depreciation and amortization
(1,974,022)
(1,932,634)
Property, plant and equipment, net
1,910,871
1,566,123
Intangible assets, net
257,409
10,117
Goodwill
249,009
66,137
Other noncurrent assets
378,270
259,466
Total assets
$
6,237,027
$
4,638,671
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
428,055
$
450,723
Accrued expenses and other payables
540,136
475,384
Current maturities of long-term debt and short-term borrowings
388,796
54,366
Total current liabilities
1,356,987
980,473
Deferred income taxes
250,302
112,067
Other noncurrent liabilities
230,060
235,607
Long-term debt
1,113,249
1,015,415
Total liabilities
2,950,598
2,343,562
Stockholders' equity:
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,496,053 and 120,586,589 shares
1,290
1,290
Additional paid-in capital
382,767
368,064
Accumulated other comprehensive loss
(114,451)
(84,820)
Retained earnings
3,312,438
2,162,925
Less treasury stock, 11,564,611 and 8,474,075 shares at cost
(295,847)
(152,582)
Stockholders' equity
3,286,197
2,294,877
Stockholders' equity attributable to non-controlling interests
232
232
Total stockholders' equity
3,286,429
2,295,109
Total liabilities and stockholders' equity
$
6,237,027
$
4,638,671
(CMC Fourth Quarter Fiscal 2022 - 11)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Year Ended August 31,
(in thousands)
2022
2021
Cash flows from (used by) operating activities:
Net earnings
$
1,217,262
$
412,865
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization
175,024
167,613
Deferred income taxes and other long-term taxes
86,175
(39,873)
Stock-based compensation
46,978
43,677
Loss on debt extinguishment
16,052
16,841
Asset impairments
4,926
6,784
Other
2,553
541
Net gain on disposals of assets
(275,422)
(8,807)
Amortization of acquired unfavorable contract backlog
—
(6,035)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(257,607)
(228,026)
Inventories
(255,175)
(316,316)
Accounts payable, accrued expenses and other payables
3,899
194,801
Other operating assets and liabilities
(64,356)
(15,591)
Net cash flows from operating activities
700,309
228,474
Cash flows from (used by) investing activities:
Acquisitions, net of cash acquired
(552,449)
(1,888)
Capital expenditures
(449,988)
(184,165)
Proceeds from the sale of property, plant and equipment and other
315,148
26,424
Proceeds from insurance
3,081
—
Other
(507)
(2,500)
Net cash flows used by investing activities
(684,715)
(162,129)
Cash flows from (used by) financing activities:
Proceeds from issuance of long-term debt, net
743,391
309,279
Repayments of long-term debt
(328,594)
(368,527)
Proceeds from accounts receivable facilities
440,236
296,586
Repayments under accounts receivable facilities
(433,936)
(269,858)
Treasury stock acquired
(161,880)
—
Dividends
(67,749)
(57,766)
Tax withholdings related to share settlements, net of purchase plans
(9,457)
(3,166)
Debt extinguishment costs
(13,642)
(13,128)
Debt issuance costs
(3,064)
(2,830)
Contribution from non-controlling interest
—
20
Net cash flows from (used by) financing activities
165,305
(109,390)
Effect of exchange rate changes on cash
(2,785)
(790)
Increase (decrease) in cash, restricted cash, and cash equivalents
178,114
(43,835)
Cash, restricted cash and cash equivalents at beginning of period
501,129
544,964
Cash, restricted cash and cash equivalents at end of period
$
679,243
$
501,129
Supplemental information:
Cash paid for income taxes
$
229,316
$
140,950
Cash paid for interest
47,329
58,325
Noncash activities:
Liabilities related to additions of property, plant and equipment
$
55,648
$
39,899
Cash and cash equivalents
$
672,596
$
497,745
Restricted cash
6,647
3,384
Total cash, restricted cash and cash equivalents
$
679,243
$
501,129
(CMC Fourth Quarter Fiscal 2022 - 12)
COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
This press release contains financial measures not derived in accordance with U.S. generally accepted accounting principles ("GAAP"). Reconciliations to the most comparable GAAP measure are provided below.
Adjusted EBITDA, core EBITDA and adjusted earnings are non-GAAP financial measures. Adjusted earnings per diluted share is defined as adjusted earnings on a diluted per share basis.
Non-GAAP financial measures should be viewed in addition to, and not as alternatives for, the most directly comparable measures derived in accordance with GAAP and may not be comparable to similar measures presented by other companies. However, we believe that the non-GAAP financial measures provide relevant and useful information to management, investors, analysts, creditors and other interested parties in our industry as they allow: (i) comparison of our earnings to those of our competitors; (ii) a supplemental measure of our underlying business operational performance; and (iii) the assessment of period-to-period performance trends. Management uses non-GAAP financial measures to evaluate financial performance and set target benchmarks for annual and long-term cash incentive performance plans.
A reconciliation of net earnings to adjusted EBITDA and core EBITDA is provided below:
Three Months Ended
Year Ended
(in thousands)
8/31/2022
5/31/2022
2/28/2022
11/30/2021
8/31/2021
8/31/2022
8/31/2021
Net earnings
$
288,630
$
312,429
$
383,314
$
232,889
$
152,313
$
1,217,262
$
412,865
Interest expense
14,230
13,433
12,011
11,035
11,659
50,709
51,904
Income taxes
49,991
92,590
126,432
28,872
40,444
297,885
121,153
Depreciation and amortization
49,081
43,583
41,134
41,226
42,437
175,024
167,613
Asset impairments
453
3,245
1,228
—
2,439
4,926
6,784
Amortization of acquired unfavorable contract backlog
—
—
—
—
(1,495)
—
(6,035)
Adjusted EBITDA
402,385
465,280
564,119
314,022
247,797
1,745,806
754,284
Non-cash equity compensation
9,122
11,986
16,251
9,619
8,119
46,978
43,677
Acquisition and integration related costs and other
1,008
4,478
—
3,165
—
8,651
—
Purchase accounting effect on inventory
6,506
2,169
—
—
—
8,675
—
Gain on sale of assets
—
—
(273,315)
—
—
(273,315)
(10,334)
Loss on debt extinguishment
—
—
16,052
—
—
16,052
16,841
Facility closure costs
—
—
—
—
—
—
10,908
Labor cost government refund
—
—
—
—
—
—
(1,348)
Core EBITDA
$
419,021
$
483,913
$
323,107
$
326,806
$
255,916
$
1,552,847
$
814,028
(CMC Fourth Quarter Fiscal 2022 - 13)
A reconciliation of net earnings to adjusted earnings is provided below:
Three Months Ended
Year Ended
(in thousands)
8/31/2022
5/31/2022
2/28/2022
11/30/2021
8/31/2021
8/31/2022
8/31/2021
Net earnings
$
288,630
$
312,429
$
383,314
$
232,889
$
152,313
$
1,217,262
$
412,865
Asset impairments
453
3,245
1,228
—
2,439
4,926
6,784
Acquisition and integration related costs and other
1,008
4,478
—
3,165
—
8,651
—
Purchase accounting effect on inventory
6,506
2,169
—
—
—
8,675
—
Gain on sale of assets
—
—
(273,315)
—
—
(273,315)
(10,334)
Loss on debt extinguishment
—
—
16,052
—
—
16,052
16,841
Facility closure costs
—
—
—
—
—
—
10,908
Labor cost government refund
—
—
—
—
—
—
(1,348)
Total adjustments (pre-tax)
$
7,967
$
9,892
$
(256,035)
$
3,165
$
2,439
$
(235,011)
$
22,851
Tax items
International restructuring
—
—
—
(36,237)
—
(36,237)
—
Related tax effects on adjustments
(1,673)
(2,077)
60,274
(665)
(512)
55,859
(4,825)
Total tax items
(1,673)
(2,077)
60,274
(36,902)
(512)
19,622
(4,825)
Adjusted earnings
$
294,924
$
320,244
$
187,553
$
199,152
$
154,240
$
1,001,873
$
430,891
Net earnings per diluted share(1)
$
2.40
$
2.54
$
3.12
$
1.90
$
1.24
$
9.95
$
3.38
Adjusted earnings per diluted share(1)
$
2.45
$
2.61
$
1.53
$
1.62
$
1.26
$
8.19
$
3.53
__________________________________
(1) Net earnings per diluted share and adjusted earnings per diluted share are calculated independently for each three month period and may not sum to the year ended period due to rounding.
