Investor Relations

IRVING, Texas, Oct. 14, 2021 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal fourth quarter ended August 31, 2021. Earnings from continuing operations were $152.3 million, or $1.24 per diluted share, on net sales of $2.0 billion, compared to prior year earnings from continuing operations of $67.8 million, or $0.56 per diluted share, on net sales of $1.4 billion. For the full year, earnings from continuing operations were $412.9 million, or $3.38 per diluted share, compared to $278.3 million, or $2.31 per diluted share in the prior year.

During the fourth quarter of fiscal 2021, the Company recorded a net after-tax charge of $1.9 million related to the impairment of recycling assets. Excluding this item, fourth quarter adjusted earnings from continuing operations were $154.2 million, or $1.26 per diluted share, compared to adjusted earnings from continuing operations of $95.3 million, or $0.79 per diluted share, in the prior year period. "Adjusted EBITDA from continuing operations", "core EBITDA from continuing operations", "adjusted earnings from continuing operations" and "adjusted earnings from continuing operations 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, commented, "CMC's performance during fiscal 2021 was exceptional. Our financial results once again demonstrate CMC's significantly enhanced earnings capabilities following several years of methodical strategic transformation. Yesterday, we announced our first dividend increase in over a decade and a sizeable new share repurchase program, reflecting the board's confidence in the Company's enhanced financial position and future prospects. We have built a strong operating platform that will allow us to continue pursuing value accretive growth, while returning a meaningful portion of free cash flow to investors and maintaining a high-quality balance sheet."

Ms. Smith continued, "Looking at the quarter, I am extremely proud of the CMC team's execution on multiple fronts. Commercially and operationally, we responded to robust market demand with record shipment and production levels at several of our steel mills. This heightened activity did not detract from our ability to continue building for the future. Our team in Europe successfully ramped up CMC's new rolling line, and we made meaningful progress at the future Arizona 2 micro mill site in North America. In addition, on September 29^th we reached an agreement to sell our Rancho Cucamonga site for an expected $300 million, which will be reinvested directly into Arizona 2. Importantly, we also maintained focus on keeping our employees safe, with several operations achieving record low incident rates during the year."

The Company's liquidity position as of August 31, 2021 remained solid, with cash and cash equivalents of $497.7 million, and availability of $668.2 million under the Company's credit and accounts receivable facilities.

On October 13, 2021, the board of directors declared a quarterly dividend of $0.14 per share of CMC common stock payable to stockholders of record on October 27, 2021. This represents a 17% increase over the previous dividend. The dividend will be paid on November 10, 2021, and marks 228 consecutive quarterly dividend payments by the Company.

Business Segments - Fiscal Fourth Quarter 2021 Review

The North America segment generated record adjusted EBITDA of $212.0 million for the fourth quarter of fiscal 2021, an increase of 22% compared to $174.2 million in the prior year period. This improvement was driven by increased margins across multiple products lines, coupled with higher shipments of steel products and raw materials. These positive factors were partially offset by a year-over-year increase in controllable costs per ton of finished steel shipped, due largely to inflationary pressures for freight and steelmaking consumables.

Shipment volumes of finished steel, which include steel products and downstream products, increased by 2% from the prior year fourth quarter. Demand for rebar from the mills remained relatively steady, but shipments declined modestly from the prior year due to a shift in mix toward merchant bar and wire rod. Shipments of merchant and other products increased by 29% from the prior year, driven by the broad reopening of the U.S. economy.

Margins over scrap cost on steel products increased $103 per ton from the prior year period and $41 per ton compared to the prior quarter. Market conditions were favorable for each of CMC's key products, leading to mill volume growth of 5% and an increase of $300 per ton in average selling price compared to the fourth quarter of fiscal 2020. Margin over scrap cost on downstream products declined compared to a year ago, driven by fulfillment of fabrication contracts that were booked prior to the fiscal 2021 increase in scrap costs. Future pricing indicators on new work entering the backlog were positive during the quarter, as average price levels for bids and new awards increased significantly from the prior year quarter.

The Europe segment reported record adjusted EBITDA of $67.7 million for the fourth quarter of fiscal 2021, up 195% compared to adjusted EBITDA of $22.9 million for the prior year quarter. The improvement was driven by a significant expansion in margin over scrap as well as volume growth, as demand for steel products from both the construction and industrial end markets were solid during the quarter. Resilient construction activity supported a 16% increase in rebar shipments compared to a year ago, while the start-up of the third rolling line and the continuing manufacturing recovery in Poland and Central Europe drove 24% growth in volumes of merchant and other steel products. Average selling price increased by $317 per ton compared to the prior year quarter, and $99 per ton sequentially.

Outlook

Ms. Smith said, "Based on our current view of the marketplace, we anticipate our strong operating and financial performance will continue in fiscal 2022. Volumes should remain solid, supported by a replenished construction backlog in North America, as well as broad strength across key end markets in both North America and Europe."

"In the first quarter of fiscal 2022, we expect finished steel volumes to follow typical seasonal patterns, which have historically declined modestly from our fourth quarter levels. We expect first quarter margins to remain consistent with the historical high levels earned in the fourth quarter," Ms. Smith added.

Conference Call

CMC invites you to listen to a live broadcast of its fourth quarter of fiscal 2021 conference call today, Thursday, October 14, 2021, at 11:00 a.m. ET. Barbara R. Smith, Chairman of the Board, President, and Chief Executive Officer, and Paul Lawrence, Vice President and Chief Financial Officer, will host the call. The call is accessible via our website at www.cmc.com. In the event you are unable to listen to the live broadcast, the call will be archived and available for replay on our website on the next business day. Financial and statistical information presented in the broadcast are located on CMC's website under "Investors."

About Commercial Metals Company

Commercial Metals Company and its subsidiaries manufacture, recycle and fabricate steel and metal products and provide related materials and services through a network including 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 U.S. and Poland.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the federal securities laws with respect to general economic conditions, key macro-economic drivers that impact our business, the effects of ongoing trade actions, the effects of continued pressure on the liquidity of our customers, potential synergies and organic growth provided by acquisitions and strategic investments, demand for our products, metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel mills at full capacity, future availability and cost of supplies of raw materials and energy for our operations, share repurchases, legal proceedings, the undistributed earnings of our non-U.S. subsidiaries, U.S. non-residential construction activity, international trade, capital expenditures, our liquidity and our ability to satisfy future liquidity requirements, estimated contractual obligations and our expectations or beliefs concerning future events. 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 Part I, Item 1A, "Risk Factors" of our annual report on Form 10-K for the fiscal year ended August 31, 2020, and Part II, Item 1A, "Risk Factors" of our quarterly report on Form 10-Q for the quarter ended February 28, 2021, 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; 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; potential limitations in our or our customers' abilities to access credit and non-compliance by our customers; 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 inability to close the sale of our Rancho Cucamonga property, including if the buyer were to terminate the purchase agreement during its 60 day due diligence review period; our ability to successfully identify, consummate and integrate acquisitions, and the effects that acquisitions may have on our financial leverage; risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals; operating and 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 impairment charges; impact of long-lived asset impairment charges; currency fluctuations; global factors, such as trade measures, military conflicts and political uncertainties, including the impact of the Biden administration on 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.

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 from continuing operations, core EBITDA from continuing operations, and adjusted earnings from continuing operations are non-GAAP financial measures. Adjusted earnings from continuing operations per diluted share is defined as adjusted earnings from continuing operations 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 earnings from continuing operations to adjusted EBITDA from continuing operations and core EBITDA from continuing operations is provided below:

A reconciliation of earnings from continuing operations to adjusted earnings from continuing operations is provided below:

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SOURCE Commercial Metals Company