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 February ~~29, 2020~~28, 2021

☐ 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)

___________________________________


Delaware			75-0725338
(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 Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

CMC

New York Stock Exchange

Indicate by check mark whether the registrant: (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 March ~~24, 2020, 119,061,889~~23, 2021, 120,510,370 shares of the registrant's common stock, par value $0.01 per share, were outstanding.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION			3

Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Statements of Earnings - Three and six months ended February 2 8 , 202 1 and February 29, 2020 ~~and February 28, 2019~~			3
Condensed Consolidated Statements of Comprehensive Income - Three and six months ended February ~~29, 2020~~28, 2021 and February ~~28, 2019~~29, 2020			4
Condensed Consolidated Balance Sheets - February 29 ~~, 20~~2028, 2021 and August 31, ~~2019~~2020			5
Condensed Consolidated Statements of Cash Flows - Six months ended February ~~29, 2020~~28, 2021 and February ~~28, 2019~~29, 2020			6
Condensed Consolidated Statements of Stockholders' Equity -Three and s ixsix months ended February ~~29, 2020~~28, 2021 and February ~~28, 2019~~29, 2020			7
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3029
Item 4. Controls and Procedures			3029

PART II — OTHER INFORMATION			3130

Item 1. Legal Proceedings			3130
Item 1A. Risk Factors			3130
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3230
Item 3. Defaults Upon Senior Securities			3230
Item 4. Mine Safety Disclosures			3230
Item 5. Other Information			3230
Item 6. Exhibits			3331
Signature			3432

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)																	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in thousands, except share data)	(in thousands, except share data)	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019		(in thousands, except share data)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Net sales	Net sales	$	1,340,963	$	1,402,783	$	2,725,671	$	2,680,125	Net sales	$	1,462,270	$	1,340,963	$	2,854,073	$	2,725,671
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of goods sold	Cost of goods sold	1,123,096		1,252,493		2,269,610		2,370,926		Cost of goods sold	1,228,343		1,123,096		2,403,162		2,269,610
Selling, general and administrative expenses	Selling, general and administrative expenses	115,538		98,726		227,067		215,943		Selling, general and administrative expenses	115,417		115,538		229,044		226,537
Loss on debt extinguishment										Loss on debt extinguishment	16,841		0		16,841		0
Interest expense	Interest expense	15,888		18,495		32,466		35,158		Interest expense	14,021		15,888		28,280		32,466
Asset impairments										Asset impairments	474		0		4,068		530
		1,254,522		1,369,714		2,529,143		2,622,027			1,375,096		1,254,522		2,681,395		2,529,143

Earnings from continuing operations before income taxes	Earnings from continuing operations before income taxes	86,441		33,069		196,528		58,098		Earnings from continuing operations before income taxes	87,174		86,441		172,678		196,528
Income taxes	Income taxes	22,845		18,141		50,177		23,750		Income taxes	20,941		22,845		42,534		50,177
Earnings from continuing operations	Earnings from continuing operations	63,596		14,928		146,351		34,348		Earnings from continuing operations	66,233		63,596		130,144		146,351

Earnings (loss) from discontinued operations before income taxes		301		(1,075)		1,196		(618)
Earnings from discontinued operations before income taxes										Earnings from discontinued operations before income taxes	197		301		447		1,196
Income taxes	Income taxes	99		3		401		138		Income taxes	73		99		141		401
Earnings (loss) from discontinued operations		202		(1,078)		795		(756)
Earnings from discontinued operations										Earnings from discontinued operations	124		202		306		795

Net earnings	Net earnings	$	63,798	$	13,850	$	147,146	$	33,592	Net earnings	$	66,357	$	63,798	$	130,450	$	147,146

Basic earnings per share*	Basic earnings per share*									Basic earnings per share*
Earnings from continuing operations	Earnings from continuing operations	$	0.53	$	0.13	$	1.23	$	0.29	Earnings from continuing operations	$	0.55	$	0.53	$	1.08	$	1.23
Earnings (loss) from discontinued operations		—		(0.01)		0.01		(0.01)
Earnings from discontinued operations										Earnings from discontinued operations	0		0		0		0.01
Net earnings	Net earnings	$	0.54	$	0.12	$	1.24	$	0.29	Net earnings	$	0.55	$	0.54	$	1.09	$	1.24

Diluted earnings per share*	Diluted earnings per share*									Diluted earnings per share*
Earnings from continuing operations	Earnings from continuing operations	$	0.53	$	0.13	$	1.22	$	0.29	Earnings from continuing operations	$	0.54	$	0.53	$	1.07	$	1.22
Earnings (loss) from discontinued operations		—		(0.01)		0.01		(0.01)
Earnings from discontinued operations										Earnings from discontinued operations	0		0		0		0.01
Net earnings	Net earnings	$	0.53	$	0.12	$	1.22	$	0.28	Net earnings	$	0.55	$	0.53	$	1.07	$	1.22

Average basic shares outstanding	Average basic shares outstanding	118,919,455		117,854,335		118,644,823		117,677,422		Average basic shares outstanding	120,345,432		118,919,455		120,052,459		118,644,823
Average diluted shares outstanding	Average diluted shares outstanding	120,407,256		118,942,758		120,303,259		118,996,427		Average diluted shares outstanding	121,751,859		120,407,256		121,672,194		120,303,259

See notes to condensed consolidated financial statements.

_________________

*Earnings Per Share ("EPS") is calculated independently for each component and may not sum to Net EPS due to rounding.


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)										COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in thousands)	(in thousands)	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019		(in thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Net earnings	Net earnings	$	63,798	$	13,850	$	147,146	$	33,592	Net earnings	$	66,357	$	63,798	$	130,450	$	147,146
Other comprehensive income, net of income taxes:
Other comprehensive income (loss), net of income taxes:										Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustment	Foreign currency translation adjustment	(1,066)		514		5,858		(9,143)		Foreign currency translation adjustment	1,465		(1,068)		(6,923)		5,856
Reclassification for translation gain (loss) realized upon liquidation of investment in foreign entity		(2)		936		(2)		837
Foreign currency translation adjustment		(1,068)		1,450		5,856		(8,306)
Net unrealized loss on derivatives:
Unrealized holding loss		(3,646)		(86)		(2,932)		(121)
Reclassification for loss included in net earnings		(83)		(42)		(172)		(84)
Net unrealized loss on derivatives		(3,729)		(128)		(3,104)		(205)
Net unrealized gain (loss) on derivatives:										Net unrealized gain (loss) on derivatives:
Unrealized holding gain (loss)										Unrealized holding gain (loss)	7,723		(3,646)		8,887		(2,932)
Reclassification for gain included in net earnings										Reclassification for gain included in net earnings	(259)		(83)		(313)		(172)
Net unrealized gain (loss) on derivatives										Net unrealized gain (loss) on derivatives	7,464		(3,729)		8,574		(3,104)
Defined benefit obligation:	Defined benefit obligation:									Defined benefit obligation:
Amortization of prior services	Amortization of prior services	(8)		(8)		(16)		(15)		Amortization of prior services	(14)		(8)		(27)		(16)
Reclassification for settlement losses		—		—		—		1,316

Defined benefit obligation	Defined benefit obligation	(8)		(8)		(16)		1,301		Defined benefit obligation	(14)		(8)		(27)		(16)
Other comprehensive income (loss)	Other comprehensive income (loss)	(4,805)		1,314		2,736		(7,210)		Other comprehensive income (loss)	8,915		(4,805)		1,624		2,736
Comprehensive income	Comprehensive income	$	58,993	$	15,164	$	149,882	$	26,382	Comprehensive income	$	75,272	$	58,993	$	132,074	$	149,882

See notes to condensed consolidated financial statements.


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)									COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share data)	(in thousands, except share data)	February 29, 2020		August 31, 2019		(in thousands, except share data)	February 28, 2021		August 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	232,442	$	192,461	Cash and cash equivalents	$	367,347	$	542,103
Accounts receivable (less allowance for doubtful accounts of $8,388 and $8,403)		961,694		1,016,088
Accounts receivable (less allowance for doubtful accounts of $7,623 and $9,597)						Accounts receivable (less allowance for doubtful accounts of $7,623 and $9,597)	895,604		880,728
Inventories, net	Inventories, net	714,842		692,368		Inventories, net	776,561		625,393
Other current assets		176,000		179,088
Prepaid and other current assets						Prepaid and other current assets	166,124		165,879
Total current assets	Total current assets	2,084,978		2,080,005		Total current assets	2,205,636		2,214,103
Property, plant and equipment, net	Property, plant and equipment, net	1,522,342		1,500,971		Property, plant and equipment, net	1,557,143		1,571,067
Goodwill	Goodwill	64,172		64,138		Goodwill	66,235		64,321
Other noncurrent assets	Other noncurrent assets	236,446		113,657		Other noncurrent assets	235,027		232,237
Total assets	Total assets	$	3,907,938	$	3,758,771	Total assets	$	4,064,041	$	4,081,728
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	275,491	$	288,005	Accounts payable	$	309,413	$	266,102
Accrued expenses and other payables	Accrued expenses and other payables	329,920		353,786		Accrued expenses and other payables	341,903		461,012
Acquired unfavorable contract backlog		21,008		35,360
Current maturities of long-term debt and short-term borrowings	Current maturities of long-term debt and short-term borrowings	22,715		17,439		Current maturities of long-term debt and short-term borrowings	22,777		18,149
Total current liabilities	Total current liabilities	649,134		694,590		Total current liabilities	674,093		745,263
Deferred income taxes	Deferred income taxes	123,726		79,290		Deferred income taxes	126,789		130,810
Other noncurrent liabilities	Other noncurrent liabilities	232,450		133,620		Other noncurrent liabilities	242,632		250,706
Long-term debt	Long-term debt	1,144,573		1,227,214		Long-term debt	1,011,035		1,065,536
Total liabilities	Total liabilities	2,149,883		2,134,714		Total liabilities	2,054,549		2,192,315
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)					Commitments and contingencies (Note 13)	0		0
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 119,061,889 and 117,924,938 shares		1,290		1,290
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 120,508,215 and 119,220,905 shares						Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 120,508,215 and 119,220,905 shares	1,290		1,290
Additional paid-in capital	Additional paid-in capital	351,481		358,668		Additional paid-in capital	354,620		358,912
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(121,390)		(124,126)		Accumulated other comprehensive loss	(102,140)		(103,764)
Retained earnings	Retained earnings	1,704,045		1,585,379		Retained earnings	1,909,443		1,807,826
Less treasury stock 9,998,775 and 11,135,726 shares at cost		(177,583)		(197,350)
Less treasury stock 8,552,449 and 9,839,759 shares at cost						Less treasury stock 8,552,449 and 9,839,759 shares at cost	(153,952)		(175,063)
Stockholders' equity	Stockholders' equity	1,757,843		1,623,861		Stockholders' equity	2,009,261		1,889,201
Stockholders' equity attributable to noncontrolling interests	Stockholders' equity attributable to noncontrolling interests	212		196		Stockholders' equity attributable to noncontrolling interests	231		212
Total stockholders' equity		1,758,055		1,624,057
Total equity						Total equity	2,009,492		1,889,413
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,907,938	$	3,758,771	Total liabilities and stockholders' equity	$	4,064,041	$	4,081,728

See notes to condensed consolidated financial statements.


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)									COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Six Months Ended							Six Months Ended
(in thousands)	(in thousands)	February 29, 2020		February 28, 2019		(in thousands)	February 28, 2021		February 29, 2020
Cash flows from (used by) operating activities:	Cash flows from (used by) operating activities:					Cash flows from (used by) operating activities:
Net earnings	Net earnings	$	147,146	$	33,592	Net earnings	$	130,450	$	147,146
Adjustments to reconcile net earnings to cash flows from (used by) operating activities:	Adjustments to reconcile net earnings to cash flows from (used by) operating activities:					Adjustments to reconcile net earnings to cash flows from (used by) operating activities:
Depreciation and amortization	Depreciation and amortization	82,338		76,430		Depreciation and amortization	83,372		82,338
Stock-based compensation						Stock-based compensation	21,758		15,805
Loss on debt extinguishment						Loss on debt extinguishment	16,841		0
Deferred income taxes and other long-term taxes	Deferred income taxes and other long-term taxes	42,142		11,705		Deferred income taxes and other long-term taxes	(8,129)		42,142
Stock-based compensation		15,805		10,007
Net gain on disposals of subsidiaries, assets and other						Net gain on disposals of subsidiaries, assets and other	(5,481)		(5,585)
Asset impairments						Asset impairments	4,068		530
Amortization of acquired unfavorable contract backlog	Amortization of acquired unfavorable contract backlog	(14,328)		(34,808)		Amortization of acquired unfavorable contract backlog	(3,032)		(14,328)
Net gain on disposals of subsidiaries, assets and other		(5,585)		(1,202)
Other	Other	1,571		(281)		Other	(105)		1,041
Changes in operating assets and liabilities	Changes in operating assets and liabilities	(15,673)		(80,809)		Changes in operating assets and liabilities	(238,539)		(15,673)
Beneficial interest in securitized accounts receivable		—		(367,521)
Net cash flows from (used by) operating activities		253,416		(352,887)
Net cash flows from operating activities						Net cash flows from operating activities	1,203		253,416

Cash flows from (used by) investing activities:	Cash flows from (used by) investing activities:					Cash flows from (used by) investing activities:
Capital expenditures	Capital expenditures	(96,592)		(67,497)		Capital expenditures	(87,688)		(96,592)
Proceeds from the sale of property, plant and equipment		14,004		2,042
Proceeds from the sale of property, plant and equipment and other						Proceeds from the sale of property, plant and equipment and other	20,338		14,004
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(9,850)		(700,982)		Acquisitions, net of cash acquired	0		(9,850)
Proceeds from insurance, sale of discontinued operations and other		974		5,798
Proceeds from insurance						Proceeds from insurance	0		974

Beneficial interest in securitized accounts receivable		—		367,521
Net cash flows used by investing activities:	Net cash flows used by investing activities:	(91,464)		(393,118)		Net cash flows used by investing activities:	(67,350)		(91,464)

Cash flows from (used by) financing activities:	Cash flows from (used by) financing activities:					Cash flows from (used by) financing activities:
Proceeds from issuance of long-term debt		11,299		180,000
Proceeds from issuance of long-term debt, net						Proceeds from issuance of long-term debt, net	296,250		11,299
Repayments of long-term debt	Repayments of long-term debt	(106,880)		(14,605)		Repayments of long-term debt	(357,792)		(106,880)
Debt extinguishment costs						Debt extinguishment costs	(13,051)		0
Debt issuance costs						Debt issuance costs	(1,124)		0
Proceeds from accounts receivable programs	Proceeds from accounts receivable programs	85,686		140,070		Proceeds from accounts receivable programs	8,848		85,686
Repayments under accounts receivable programs	Repayments under accounts receivable programs	(81,314)		(92,664)		Repayments under accounts receivable programs	(8,848)		(81,314)
Dividends	Dividends	(28,480)		(28,181)		Dividends	(28,833)		(28,480)
Stock issued under incentive and purchase plans, net of forfeitures	Stock issued under incentive and purchase plans, net of forfeitures	(2,463)		(2,856)		Stock issued under incentive and purchase plans, net of forfeitures	(4,536)		(2,463)

Contribution from noncontrolling interests		16		10
Net cash flows from (used by) financing activities		(122,136)		181,774
Contribution from noncontrolling interest						Contribution from noncontrolling interest	19		16
Net cash flows used by financing activities						Net cash flows used by financing activities	(109,067)		(122,136)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	337		(221)		Effect of exchange rate changes on cash	(419)		337
Increase (decrease) in cash, restricted cash and cash equivalents	Increase (decrease) in cash, restricted cash and cash equivalents	40,153		(564,452)		Increase (decrease) in cash, restricted cash and cash equivalents	(175,633)		40,153
Cash, restricted cash and cash equivalents at beginning of period	Cash, restricted cash and cash equivalents at beginning of period	193,729		632,615		Cash, restricted cash and cash equivalents at beginning of period	544,964		193,729
Cash, restricted cash and cash equivalents at end of period	Cash, restricted cash and cash equivalents at end of period	$	233,882	$	68,163	Cash, restricted cash and cash equivalents at end of period	$	369,331	$	233,882

See notes to condensed consolidated financial statements.


Supplemental information:	Six Months Ended
(in thousands)	February 28, 2021		February 29, 2020
Cash paid for income taxes	$	48,757	$	27,759
Cash paid for interest	34,094		29,484

Noncash activities:
Liabilities related to additions of property, plant and equipment	16,252		29,176

Cash and cash equivalents	367,347		232,442
Restricted cash	1,984		1,440
Total cash, cash equivalents and restricted cash	$	369,331	$	233,882


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
	Three Months Ended February 28, 2021
	Common Stock			Additional		Accumulated Other				Treasury Stock			Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital		Comprehensive Loss		Retained Earnings		Number of Shares	Amount		controlling Interest		Total
Balance, December 1, 2020	129,060,664	$	1,290	$	348,816	$	(111,055)	$	1,857,513	(8,992,643)	$	(161,877)	$	212	$	1,934,899
Net earnings								66,357							66,357
Other comprehensive income						8,915									8,915
Dividends ($0.12 per share)								(14,427)							(14,427)
Issuance of stock under incentive and purchase plans, net of forfeitures				(2,120)						440,194	7,925				5,805
Stock-based compensation				7,924											7,924
Contribution of noncontrolling interest													19		19

Balance, February 28, 2021	129,060,664	$	1,290	$	354,620	$	(102,140)	$	1,909,443	(8,552,449)	$	(153,952)	$	231	$	2,009,492

	Six Months Ended February 28, 2021
	Common Stock			Additional		Accumulated Other				Treasury Stock			Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital		Comprehensive Loss		Retained Earnings		Number of Shares	Amount		controlling Interest		Total
Balance, September 1, 2020	129,060,664	$	1,290	$	358,912	$	(103,764)	$	1,807,826	(9,839,759)	$	(175,063)	$	212	$	1,889,413
Net earnings								130,450							130,450
Other comprehensive income						1,624									1,624
Dividends ($0.24 per share)								(28,833)							(28,833)
Issuance of stock under incentive and purchase plans, net of forfeitures				(25,647)						1,287,310	21,111				(4,536)
Stock-based compensation				15,935											15,935
Contribution of noncontrolling interest													19		19
Reclassification of share-based liability awards				5,420											5,420
Balance, February 28, 2021	129,060,664	$	1,290	$	354,620	$	(102,140)	$	1,909,443	(8,552,449)	$	(153,952)	$	231	$	2,009,492


	Three Months Ended February 29, 2020
	Common Stock			Additional		Accumulated Other				Treasury Stock			Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital		Comprehensive Loss		Retained Earnings		Number of Shares	Amount		controlling Interest		Total
Balance, December 1, 2019	129,060,664	$	1,290	$	347,192	$	(116,585)	$	1,654,489	(10,410,799)	$	(184,885)	$	196	$	1,701,697
Net earnings								63,798							63,798
Other comprehensive loss						(4,805)									(4,805)
Dividends ($0.12 per share)								(14,242)							(14,242)
Issuance of stock under incentive and purchase plans, net of forfeitures				(1,948)						412,024	7,302				5,354
Stock-based compensation				6,237											6,237
Contribution of noncontrolling interest													16		16

Balance, February 29, 2020	129,060,664	$	1,290	$	351,481	$	(121,390)	$	1,704,045	(9,998,775)	$	(177,583)	$	212	$	1,758,055

	Six Months Ended February 29, 2020
	Common Stock			Additional		Accumulated Other				Treasury Stock			Non-
(in thousands, except share data)	Number of Shares	Amount		Paid-In Capital		Comprehensive Loss		Retained Earnings		Number of Shares	Amount		controlling Interest		Total
Balance, September 1, 2019	129,060,664	$	1,290	$	358,668	$	(124,126)	$	1,585,379	(11,135,726)	$	(197,350)	$	196	$	1,624,057
Net earnings								147,146							147,146
Other comprehensive income						2,736									2,736
Dividends ($0.24 per share)								(28,480)							(28,480)
Issuance of stock under incentive and purchase plans, net of forfeitures				(22,230)						1,136,951	19,767				(2,463)
Stock-based compensation				12,533											12,533
Contribution of noncontrolling interest													16		16
Reclassification of share-based liability awards				2,510											2,510
Balance, February 29, 2020	129,060,664	$	1,290	$	351,481	$	(121,390)	$	1,704,045	(9,998,775)	$	(177,583)	$	212	$	1,758,055

See notes to condensed consolidated financial statements.

Supplemental information: Six Months Ended
(in thousands) February 29, 2020 February 28, 2019
Cash paid for income taxes $ 27,759 $ 1,771
Cash paid for interest 29,484 31,518
Noncash activities:
Liabilities related to additions of property, plant and equipment 29,176 26,186
Cash and cash equivalents $ 232,442 $ 66,742
Restricted cash 1,440 1,421
Total cash, restricted cash and cash equivalents $ 233,882 $ 68,163

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended February 29, 2020
Common Stock Additional Accumulated
Other Treasury Stock Non-
(in thousands, except share data) Number of
Shares Amount Paid-In
Capital Comprehensive
Loss Retained
Earnings Number of
Shares Amount controlling
Interests Total
Balance, November 30, 2019 129,060,664 $ 1,290 $ 347,192 $ (116,585) $ 1,654,489 (10,410,799) $ (184,885) $ 196 $ 1,701,697
Net earnings 63,798 63,798
Other comprehensive loss (4,805) (4,805)
Dividends ($0.12 per share) (14,242) (14,242)
Issuance of stock under incentive and purchase plans, net of forfeitures (1,948) 412,024 7,302 5,354
Stock-based compensation 6,237 6,237
Contribution of noncontrolling interests 16 16
Balance, February 29, 2020 129,060,664 $ 1,290 $ 351,481 $ (121,390) $ 1,704,045 (9,998,775) $ (177,583) $ 212 $ 1,758,055
Six Months Ended February 29, 2020
Common Stock Additional Accumulated
Other Treasury Stock Non-
(in thousands, except share data) Number of
Shares Amount Paid-In
Capital Comprehensive
Loss Retained
Earnings Number of
Shares Amount controlling
Interests Total
Balance, September 1, 2019 129,060,664 $ 1,290 $ 358,668 $ (124,126) $ 1,585,379 (11,135,726) $ (197,350) $ 196 $ 1,624,057
Net earnings 147,146 147,146
Other comprehensive income 2,736 2,736
Dividends ($0.12 per share) (28,480) (28,480)
Issuance of stock under incentive and purchase plans, net of forfeitures (22,230) 1,136,951 19,767 (2,463)
Stock-based compensation 15,043 15,043
Contribution of noncontrolling interests 16 16
Balance, February 29, 2020 129,060,664 $ 1,290 $ 351,481 $ (121,390) $ 1,704,045 (9,998,775) $ (177,583) $ 212 $ 1,758,055

Three Months Ended February 28, 2019
Common Stock Additional Accumulated
Other Treasury Stock Non-
(in thousands, except share data) Number of
Shares Amount Paid-In
Capital Comprehensive
Loss Retained
Earnings Number of
Shares Amount controlling
Interests Total
Balance, November 30, 2018 129,060,664 $ 1,290 $ 342,893 $ (102,201) $ 1,449,374 (11,426,463) $ (202,515) $ 186 $ 1,489,027
Net earnings 13,850 13,850
Other comprehensive income 1,314 1,314
Dividends ($0.12 per share) (14,065) (14,065)
Issuance of stock under incentive and purchase plans, net of forfeitures (1,733) 286,869 5,097 3,364
Stock-based compensation 4,996 4,996
Contribution of noncontrolling interest 10 10
Balance, February 28, 2019 129,060,664 $ 1,290 $ 346,156 $ (100,887) $ 1,449,159 (11,139,594) $ (197,418) $ 196 $ 1,498,496
Six Months Ended February 28, 2019
Common Stock Additional Accumulated
Other Treasury Stock Non-
(in thousands, except share data) Number of
Shares Amount Paid-In
Capital Comprehensive
Loss Retained
Earnings Number of
Shares Amount controlling
Interests Total
Balance, September 1, 2018 129,060,664 $ 1,290 $ 352,674 $ (93,677) $ 1,446,495 (12,045,106) $ (213,385) $ 186 $ 1,493,583
Net earnings 33,592 33,592
Other comprehensive loss (7,210) (7,210)
Dividends ($0.12 per share) (28,181) (28,181)
Issuance of stock under incentive and purchase plans, net of forfeitures (18,823) 905,512 15,967 (2,856)
Stock-based compensation 12,305 12,305
Contribution of noncontrolling interest 10 10
Adoption of ASC 606 adjustment (2,747) (2,747)
Balance, February 28, 2019 129,060,664 $ 1,290 $ 346,156 $ (100,887) $ 1,449,159 (11,139,594) $ (197,418) $ 196 $ 1,498,496

~~See notes to condensed consolidated financial statements.~~

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, ~~2019~~2020 ("~~2019~~2020 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 included in the ~~2019~~2020 Form 10-K. The results of operations for the three and six month periods are not necessarily indicative of the results to be expected for the full fiscal year. Any reference in this Form 10-Q to the ~~"comparable period" or~~ "corresponding period" relates to the relevant ~~three-month~~three or ~~six-month~~six month period ended February ~~28, 2019.~~29, 2020.

~~Recently Adopted Accounting Pronouncements~~

On September 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), as amended, (“ASU 2016-02”), using the modified retrospective transition approach. ASU 2016-02 requiresAny reference in this Form 10-Q to a lessee to recognize a right-of-use ("ROU") asset and a lease liability on its balance sheet for all leases with terms longer than twelve months. The Company’s financial statements for periods prior to September 1, 2019 were not modified for the application of this ASU. Upon adoption of ASU 2016-02, the Company recorded the following amounts associated with operating leases in its condensed consolidated balance sheet at September 1, 2019: $113.4 million of ROU assets, in other noncurrent assets, $30.9 million of lease liabilities in accrued expenses and other payables and $84.9 million of lease liabilities in other noncurrent liabilities. There was 0 impactyear refers to the ~~opening balance~~fiscal year ended August 31st of retained earnings as a result of implementing ASU 2016-02. The Company elected the package of three practical expedients available under the ASU. Additionally, the Company implemented appropriate changes to internal processes and controls to support recognition, subsequent measurement and disclosures.

The Company's leases are primarily for office space, land and equipment. The Company determines if an arrangement is a lease at inception of a contract if the terms state the Company has the right to direct the use of and obtain substantially all the economic benefits from a specific asset identified in the contract. The ROU assets represent the Company's right to use the underlying assets for the lease term, and the lease liabilities represent the obligation to make lease payments arising from the leases. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments to be made over the lease term. Certain of the Company's lease agreements contain options to extend the lease. The Company evaluates these options on a lease-by-lease basis, and, if the Company determines it is reasonably certain to be exercised, the lease term includes the extension. The Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments, and lease expense is recognized on a straight-line basis over the lease term. The incremental borrowing rate is the rate of interest the Company could borrow on a collateralized basis over a similar term with similar payments. The Company does not record leases with an initial term of twelve months or less (“short-term leases”) in its condensed consolidated balance sheets.

Certain of the Company's lease agreements include payments for certain variable costs not determinable upon lease commencement including mileage, utilities, fuel and inflation adjustments. These variable lease payments are recognized in cost of goods sold and selling, general and administrative expenses, but are not included in the ROU asset or lease liability balances. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants.

~~Recently Issued Accounting Pronouncements~~

~~In December 2019, the Financial Accounting Standards Board issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12").~~ ~~ASU 2019-12 eliminates certain exceptions to the general principles in Accounting Standards Codification 740 and also clarifies and amends existing guidance to improve consistent application.~~ This standard is effective for annual periods beginning after December 15, 2020, including interim periods therein. The Company currently does not expect ASU 2019-12 to have a material effect on its consolidated financial statements; however, the Company will continue to evaluate the impact of this guidance.that year, unless otherwise noted.

NOTE 2. CHANGES IN BUSINESS

~~Fiscal 2020 Acquisition~~Facility Closures and Dispositions

On February 3, 2020, the Company's subsidiary CMC Poland Sp. z.o.o. ("CMCP") acquired P.P.U. Ecosteel Sp. z.o.o. ("Ecosteel"), a steel mesh producer located in Zawiercie, Poland. This acquisition complements CMCP's existing mesh production and increases sales to other markets in Europe. The operating results of this facility are included in the International Mill reporting segment.

~~Facility Closure~~

In October 2019, the Company closed the melting operations at its Rancho Cucamonga facility, which is part of the North America segment. In August 2020, the Company announced plans to sell the Rancho Cucamonga site and the Company ceased operations at this facility in January 2021. As a result, the Company recorded $5.4 million and $13.4 million of expense in the three and six months ended February 28, 2021, respectively, and $6.3 million of expense in the six months ended February 29, 2020, all of which was recorded in the first quarter of 2020, related to asset impairments, severance, pension curtailment, environmental obligations and vendor agreement terminations. ~~At February 29, 2020,~~The disposition does not meet the ~~remaining liability to be paid related to these expenses was $3.8 million~~criteria for discontinued operations, and ~~was included in accrued expenses and other payables on the Company's condensed consolidated balance sheets.~~

~~Fiscal 2019 Acquisition~~

~~On November 5, 2018 (the "Acquisition Date"), the Company completed the acquisition~~s of 33 rebar fabrication facilities in the United States ("U.S."), as well as four electric arc furnace ("EAF") mini mills located in Knoxville, Tennessee; Jacksonville, Florida; Sayreville, New Jersey and Rancho Cucamonga, California from Gerdau S.A., hereinafter collectively referred to as the "Acquired Businesses." The total cash purchase price, including working capital adjustments, was $701.2 million, and was funded through a combination of domestic cash on-hand and borrowings under a term loan (the "Term Loan").

The purchase price paid was allocated between the acquired mills and fabrication facilities. The results of operations of the Acquired Businesses are reflected in the Company’s condensed consolidated financial statements from the Acquisition Date. The purchase price was allocated among assets acquired and liabilities assumed at fair value and was finalized on November 5, 2019.

~~Pro Forma Supplemental Information~~

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of the Acquired Businesses (the "Acquisition") occurred on September 1, 2017. The pro forma financial information is presented for comparative purposes only, based on significant 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, 2017. These results were not used as part of management analysis of the financial results and performance of the Company or the Acquired Businesses. These results are adjusted, where possible, for transaction and integration-related costs.

Three Months Ended February 28, Six Months Ended February 28,
(in thousands) 2019 2018 2019 2018
Pro forma net sales* $ 1,379,033 $ 1,470,603 $ 2,925,007 $ 2,914,292
Pro forma net earnings (loss)** 10,260 18,786 26,081 (2,187)

~~_________________~~

*Pro forma net sales for the three and six months ended February 28, 2018 includes estimated fair value adjustments related to amortization of unfavorable contract backlog. The impact of the amortization of unfavorable contract backlog has been removed from the pro forma net sales2021, does not qualify for ~~the three and six months ended February 28, 2019.~~

** Pro forma net earnings (loss)held for the three and six months ended February 28, 2018 reflects the impact of fair value adjustments related to the amortization of unfavorable contract backlog described above. Pro forma net loss for the six months ended February 28, 2018 includes estimated fair value adjustments related to inventory step-up, as well as non-recurring acquisition and integration costs of approximately $47.5 million.

sale accounting.

109

NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables reflect the changes in accumulated other comprehensive income (loss) ("AOCI"):


		Three Months Ended February 29, 2020															Three Months Ended February 28, 2021
(in thousands)	(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI		(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI
Balance, November 30, 2019		$	(114,574)	$	1,731	$	(3,742)	$	(116,585)
Other comprehensive loss before reclassifications		(1,066)		(4,501)		(14)		(5,581)
Amounts reclassified from AOCI		(2)		(104)		—		(106)
Income taxes		—		876		6		882
Net other comprehensive income loss		(1,068)		(3,729)		(8)		(4,805)
Balance, February 29, 2020		$	(115,642)	$	(1,998)	$	(3,750)	$	(121,390)

		Six Months Ended February 29, 2020
(in thousands)		Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI
Balance, August 31, 2019		$	(121,498)	$	1,106	$	(3,734)	$	(124,126)
Balance, December 1, 2020										Balance, December 1, 2020	$	(96,321)	$	(10,224)	$	(4,510)	$	(111,055)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	5,858		(3,619)		(24)		2,215		Other comprehensive income (loss) before reclassifications	1,465		9,535		(14)		10,986
Amounts reclassified from AOCI	Amounts reclassified from AOCI	(2)		(214)		—		(216)		Amounts reclassified from AOCI	0		(320)		0		(320)
Income taxes	Income taxes	—		729		8		737		Income taxes	0		(1,751)		0		(1,751)
Net other comprehensive income (loss)	Net other comprehensive income (loss)	5,856		(3,104)		(16)		2,736		Net other comprehensive income (loss)	1,465		7,464		(14)		8,915
Balance, February 29, 2020		$	(115,642)	$	(1,998)	$	(3,750)	$	(121,390)
Balance, February 28, 2021										Balance, February 28, 2021	$	(94,856)	$	(2,760)	$	(4,524)	$	(102,140)

											Six Months Ended February 28, 2021
(in thousands)										(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI
Balance, September 1, 2020										Balance, September 1, 2020	$	(87,933)	$	(11,334)	$	(4,497)	$	(103,764)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	(6,923)		10,972		(34)		4,015
Amounts reclassified from AOCI										Amounts reclassified from AOCI	0		(387)		0		(387)
Income taxes										Income taxes	0		(2,011)		7		(2,004)
Net other comprehensive income (loss)										Net other comprehensive income (loss)	(6,923)		8,574		(27)		1,624
Balance, February 28, 2021										Balance, February 28, 2021	$	(94,856)	$	(2,760)	$	(4,524)	$	(102,140)


		Three Months Ended February 28, 2019															Three Months Ended February 29, 2020
(in thousands)	(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI		(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI
Balance, November 30, 2018		$	(102,393)	$	1,279	$	(1,087)	$	(102,201)
Balance, December 1, 2019										Balance, December 1, 2019	$	(114,574)	$	1,731	$	(3,742)	$	(116,585)
Other comprehensive loss before reclassifications										Other comprehensive loss before reclassifications	(1,066)		(4,501)		(14)		(5,581)
Amounts reclassified from AOCI										Amounts reclassified from AOCI	(2)		(104)		0		(106)
Income taxes										Income taxes	0		876		6		882
Net other comprehensive loss										Net other comprehensive loss	(1,068)		(3,729)		(8)		(4,805)
Balance, February 29, 2020										Balance, February 29, 2020	$	(115,642)	$	(1,998)	$	(3,750)	$	(121,390)

											Six Months Ended February 29, 2020
(in thousands)										(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI
Balance, September 1, 2019										Balance, September 1, 2019	$	(121,498)	$	1,106	$	(3,734)	$	(124,126)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	514		(52)		(8)		454		Other comprehensive income (loss) before reclassifications	5,858		(3,619)		(24)		2,215
Amounts reclassified from AOCI	Amounts reclassified from AOCI	936		(107)		—		829		Amounts reclassified from AOCI	(2)		(214)		0		(216)
Income taxes	Income taxes	—		31		—		31		Income taxes	0		729		8		737
Net other comprehensive income (loss)	Net other comprehensive income (loss)	1,450		(128)		(8)		1,314		Net other comprehensive income (loss)	5,856		(3,104)		(16)		2,736
Balance, February 28, 2019		$	(100,943)	$	1,151	$	(1,095)	$	(100,887)

		Six Months Ended February 28, 2019
(in thousands)		Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI
Balance, August 31, 2018		$	(92,637)	$	1,356	$	(2,396)	$	(93,677)
Other comprehensive loss before reclassifications		(9,143)		(104)		(19)		(9,266)
Amounts reclassified from AOCI		837		(149)		1,666		2,354
Income taxes (benefit)		—		48		(346)		(298)
Net other comprehensive income (loss)		(8,306)		(205)		1,301		(7,210)
Balance, February 28, 2019		$	(100,943)	$	1,151	$	(1,095)	$	(100,887)
Balance, February 29, 2020										Balance, February 29, 2020	$	(115,642)	$	(1,998)	$	(3,750)	$	(121,390)

Items reclassified out of AOCI were immaterial for the three and six months ended February 28, 2021 and February 29, ~~2020 and the comparable periods.~~2020. Thus, the corresponding line items in the condensed consolidated statements of earnings to which the items were reclassified are not presented.

1110

NOTE 4. REVENUE RECOGNITION

InEach fabricated product contract sold by the Americas Mills, Americas Recycling, and International Mill segments, revenue is recognized at a point in time concurrent with the transfer of control, which usually occurs, depending on shipping terms, upon shipment or customer receipt.

~~In the Americas Fabrication~~North America segment ~~each contract~~ represents a single performance obligation. Revenue ~~is either recognized over time or equal to billing under an available practical expedient. For~~from contracts where the Company provides fabricated product and installation services ~~revenue~~ is recognized over time using an input ~~method. For~~measure, and these contracts represented 11% and 12% of net sales in the North America segment in the three and six months ended February 29, 2020, these contracts represented approximately 27% and 26%, respectively, of net sales in the Americas Fabrication segment. For these contracts, the measure of progress is based on contract costs incurred to date compared to total estimated contract costs, which provides a reasonable depiction of the Company’s progress towards satisfaction of the performance obligation as there is a direct relationship between costs incurred by the Company and the transfer of the fabricated product and installation services.28, 2021, respectively. Revenue from contracts where the Company does not provide installation services is recognized over time using an output ~~method. For~~measure, and these contracts represented 9% of net sales in the North America segment in both the three and six months ended February ~~29, 2020, these contracts represented approximately 25%~~28, 2021. The remaining 80% and ~~24%, respectively,~~79% of net sales in the ~~Americas Fabrication segment. For these contracts, the Company uses tons shipped compared to total estimated tons, which provides~~North America segment were recognized at a ~~reasonable depiction of~~point in time concurrent with the transfer of ~~contract value~~control, or as amounts were billed to the customer ~~as there is a direct relationship between the units shipped by the Company and the transfer of the fabricated product. Significant judgment is required to evaluate total estimated costs used~~under an available practical expedient, in the input method and total estimated tons in the output method. If estimated total consolidated costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to estimates related to net contract revenues, costs to complete or total planned quantity is recorded in the period in which such revisions are identified. The Company does not exercise significant judgment in determining the transaction price. For the three and six months ended February ~~29, 2020, the remaining 48% and 50%, respectively, of net sales in the Americas Fabrication segment was recognized as amounts were billed to the customer.~~

Payment terms and conditions vary by contract type, although the Company generally requires customers to pay within 30 days of invoice date. The timing of revenue recognition for certain Americas Fabrication contracts, as described above, differ from the timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing and a liability when revenue is recognized after invoicing. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined the contracts do not include a significant financing component.28, 2021, respectively.

The following table provides information about assets and liabilities from contracts with customers.


(in thousands)	(in thousands)	February 29, 2020		August 31, 2019		(in thousands)	February 28, 2021		August 31, 2020
Contract assets (included in other current assets)		$	87,801	$	103,805
Contract assets (included in accounts receivable)						Contract assets (included in accounts receivable)	$	54,468	$	53,275
Contract liabilities (included in accrued expenses and other payables)	Contract liabilities (included in accrued expenses and other payables)	38,391		37,165		Contract liabilities (included in accrued expenses and other payables)	18,638		25,450

~~The amount of revenue reclassified from August 31, 2019 contract liabilities during~~

During the six months ended February ~~29,~~28, 2021, approximately $21.3 million was recognized in the condensed consolidated statements of earnings related to August 31, 2020 ~~was approximately $20.2 million.~~contract liabilities.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of fabricated product contracts where revenue is recognized using an input or output measure for which work has not yet been performed. As of February ~~29, 2020, $819.4~~28, 2021, $688.3 million ~~has been~~was allocated to remaining performance obligations in the ~~Americas Fabrication~~North America segment ~~excluding~~related to those contracts where revenue is recognized equal to billing. Of this amount, the Company estimates the remaining performance obligations will be recognized as revenue after February 29, 2020 as follows: 40% in the first twelve months, 48% in the following twelve months, and 12% thereafter. The duration of contracts in the Americas Mills, Americas Recycling, and International Mill segments are typically less than one year.

~~Disaggregation of Revenue~~

The following tables display revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Three Months Ended February 29, 2020
(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other Total
Steel products $ 140 $ 437,648 $ 441,765 $ 171,283 $ — $ 1,050,836
Ferrous scrap 66,040 10,874 1 159 — 77,074
Nonferrous scrap 112,862 3,535 — 2,249 — 118,646
Construction materials — — 66,122 — — 66,122
Other 493 19,310 2,493 5,965 24 28,285
Total $ 179,535 $ 471,367 $ 510,381 $ 179,656 $ 24 $ 1,340,963
Six Months Ended February 29, 2020
(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other Total
Steel products $ 255 $ 878,811 $ 941,492 $ 329,227 $ — $ 2,149,785
Ferrous scrap 124,342 17,622 1 371 — 142,336
Nonferrous scrap 226,080 6,890 — 4,242 — 237,212
Construction materials — — 133,588 — — 133,588
Other 1,009 42,236 5,677 10,856 2,972 62,750
Total $ 351,686 $ 945,559 $ 1,080,758 $ 344,696 $ 2,972 $ 2,725,671

Three Months Ended February 28, 2019
(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other Total
Steel products $ 202 $ 444,327 $ 462,963 $ 167,534 $ — $ 1,075,026
Ferrous scrap 105,253 8,744 — 255 — 114,252
Nonferrous scrap 120,004 3,308 — 2,524 — 125,836
Construction materials — — 60,190 — — 60,190
Other 429 16,416 3,525 4,632 2,477 27,479
Total $ 225,888 $ 472,795 $ 526,678 $ 174,945 $ 2,477 $ 1,402,783
Six Months Ended February 28, 2019
(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other Total
Steel products $ 441 $ 792,292 $ 837,770 $ 385,304 $ — $ 2,015,807
Ferrous scrap 216,907 17,886 — 530 — 235,323
Nonferrous scrap 248,079 6,488 — 5,465 — 260,032
Construction materials — — 117,361 — — 117,361
Other 642 29,800 6,105 10,319 4,736 51,602
Total $ 466,069 $ 846,466 $ 961,236 $ 401,618 $ 4,736 $ 2,680,125

contracts.

NOTE 5. INVENTORIES, NET

The majority of the Company's inventories are in the form of semi-finished and finished goods. Under the Company’s business model, products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be combined. As such, at February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, work in process inventories were immaterial. At February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, the Company's raw materials inventories were ~~$169.4~~$213.3 million and ~~$143.7~~$123.9 million, respectively.

NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment at February ~~29, 2020~~28, 2021 is detailed in the following table:


(in thousands)	(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Consolidated		(in thousands)	North America		Europe		Consolidated
Goodwill, gross*	Goodwill, gross*	$	9,543	$	4,970	$	57,428	$	2,420	$	74,361	Goodwill, gross*	$	71,941	$	4,491	$	76,432
Accumulated impairment losses*	Accumulated impairment losses*	(9,543)		—		(493)		(153)		(10,189)		Accumulated impairment losses*	(10,036)		(161)		(10,197)
Goodwill, net*	Goodwill, net*	$	—	$	4,970	$	56,935	$	2,267	$	64,172	Goodwill, net*	$	61,905	$	4,330	$	66,235

_________________

* The change in balance from August 31, ~~2019~~2020 was immaterial.

The total gross carrying amounts of the Company's intangible assets subject to amortization were ~~$20.7~~$21.8 million and ~~$20.8~~$22.1 million, ~~respectively,~~ and the total net carrying amounts were ~~$12.2~~$11.4 million and ~~$13.3~~$12.6 million at February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, respectively. These assets were included in other noncurrent assets on the Company's condensed consolidated balance sheets. Intangible amortization expense from continuing operations related to such intangible assets was ~~$0.6 million and $1.1 million~~immaterial for the three and six months ended February 28, 2021 and February 29, ~~2020, respectively, and for the comparable periods.~~2020. Excluding goodwill, the Company did not have any significant intangible assets with indefinite lives at February ~~29, 2020.~~28, 2021.

~~In connection with the Acquisition, the Company recorded an unfavorable contract backlog liability of $110.2 million.~~ At February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, the net carrying amount of the acquired unfavorable contract backlog liability was ~~$21.0~~$3.0 million and ~~$35.4~~$6.0 million, respectively. Amortization of the acquired unfavorable contract backlog was ~~$6.0~~$1.5 million and ~~$14.3~~$3.0 million for the three and six months ended February ~~29, 2020,~~28, 2021, respectively, and ~~$23.5~~$6.0 million and ~~$34.8~~$14.3 million for the ~~comparable~~

corresponding periods, and was recorded as an increase to net sales in the Company’s condensed consolidated statements of earnings.

NOTE 7. LEASES

The following table presents the components of the total leased assets and lease liabilities and their classification in the Company's condensed consolidated balance ~~sheet at February 29, 2020:~~sheets:

~~(in thousands)~~

~~Classification in Condensed Consolidated Balance Sheet~~

~~February 29, 2020~~

~~Assets:~~

~~Operating assets~~

~~Other noncurrent assets~~

~~124,749~~

~~Finance assets~~

~~Property, plant and equipment, net~~

~~43,647~~

~~Total leased assets~~

~~168,396~~

~~Liabilities:~~

~~Operating lease liabilities:~~

~~Current~~

~~Accrued expenses and other payables~~

~~27,900~~

~~Long-term~~

~~Other noncurrent liabilities~~

~~99,283~~

~~Total operating lease liabilities~~

~~127,183~~

~~Finance lease liabilities:~~

~~Current~~

~~Current maturities of long-term debt and short-term borrowings~~

~~12,604~~

~~Long-term~~

~~Long-term debt~~

~~31,254~~

~~Total finance lease liabilities~~

~~43,858~~

~~Total lease liabilities~~

~~171,041~~


(in thousands)	Classification in Condensed Consolidated Balance Sheets	February 28, 2021		August 31, 2020
Assets:
Operating assets	Other noncurrent assets	$	117,547	$	114,905
Finance assets	Property, plant and equipment, net	52,325		50,642
Total leased assets		$	169,872	$	165,547

Liabilities:
Operating lease liabilities:
Current	Accrued expenses and other payables	$	27,176	$	27,604
Long-term	Other noncurrent liabilities	98,807		95,810
Total operating lease liabilities		125,983		123,414
Finance lease liabilities:
Current	Current maturities of long-term debt and short-term borrowings	15,228		14,373
Long-term	Long-term debt	35,992		35,851
Total finance lease liabilities		51,220		50,224
Total lease liabilities		$	177,203	$	173,638

The components of lease cost were as follows:


							Three Months Ended				Six Months Ended
(in thousands)	(in thousands)	Three Months Ended February 29, 2020		Six Months Ended February 29, 2020		(in thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Operating lease expense	Operating lease expense	$	8,815	$	17,605	Operating lease expense	$	8,651	$	8,815	$	17,373	$	17,605
Finance lease expense:	Finance lease expense:					Finance lease expense:
Amortization of assets	Amortization of assets	2,720		4,885		Amortization of assets	3,219		2,720		6,458		4,885
Interest on lease liabilities	Interest on lease liabilities	465		866		Interest on lease liabilities	563		465		1,118		866
Total finance lease expense	Total finance lease expense	3,185		5,751		Total finance lease expense	3,782		3,185		7,576		5,751
Variable and short term-lease expense		4,381		8,314
Variable and short-term lease expense						Variable and short-term lease expense	4,324		4,381		9,286		8,314
Total lease expense	Total lease expense	$	16,381	$	31,670	Total lease expense	$	16,757	$	16,381	$	34,235	$	31,670

The ~~weighted-average~~weighted average remaining lease term and discount rate for operating and finance leases are presented in the following table:


	~~February 29, 2020~~
~~Weighted-average remaining lease term (years)~~
~~Operating leases~~	~~6.5~~
~~Finance leases~~	~~3.9~~

~~Weighted-average discount rate~~
~~Operating leases~~	~~4.160~~	%
~~Finance leases~~	~~4.216~~	%


	February 28, 2021		August 31, 2020
Weighted average remaining lease term (years)
Operating leases	6.4		6.3
Finance leases	3.6		3.8

Weighted average discount rate
Operating leases	4.482	%	4.283	%
Finance leases	4.296	%	4.270	%

Cash flow and other information related to leases is included in the following table:


~~(in thousands)~~	~~Six Months Ended February 29, 2020~~
~~Cash paid for amounts included in the measurement of lease liabilities~~
~~Operating cash outflows from operating leases~~	$	~~17,594~~
~~Operating cash outflows from finance leases~~	~~787~~
~~Financing cash outflows from finance leases~~	~~6,426~~

~~ROU assets obtained in exchange for lease obligations:~~
~~Operating leases~~	~~28,942~~
~~Finance leases~~	~~13,040~~


	Six Months Ended
(in thousands)	February 28, 2021		February 29, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases	$	17,812	$	17,594
Operating cash outflows from finance leases	1,125		787
Financing cash outflows from finance leases	7,761		6,426

Right of use ("ROU") assets obtained in exchange for lease obligations:
Operating leases	20,249		28,942
Finance leases	8,784		13,040

Maturities of lease liabilities at February ~~29, 2020~~28, 2021 are presented in the following table:

(in thousands) Operating Leases Finance Leases
Year 1 $ 32,620 $ 14,189
Year 2 27,531 11,963
Year 3 22,156 9,521
Year 4 17,563 7,626
Year 5 12,455 4,277
Thereafter 34,680 74
Total lease payments 147,005 47,650
Less: Imputed interest 19,822 3,792
Present value of lease liabilities $ 127,183 $ 43,858

~~Future maturities of lease liabilities at August 31, 2019, prior to adoption of ASU 2016-02, are presented in the following table:~~

Twelve Months Ended August 31,
(in thousands) Total 2020 2021 2022 2023 2024 Thereafter
Capital lease obligations $ 41,331 13,104 10,004 7,758 5,831 3,904 $ 730
Long-term non-cancelable operating leases $ 124,817 34,511 27,383 22,074 17,433 10,478 $ 12,938


(in thousands)	Operating Leases		Finance Leases
Year 1	$	32,387	$	17,138
Year 2	26,877		14,767
Year 3	22,162		12,336
Year 4	17,182		8,716
Year 5	12,921		2,392
Thereafter	35,374		97
Total lease payments	146,903		55,446
Less: Imputed interest	20,920		4,226
Present value of lease liabilities	$	125,983	$	51,220

NOTE 8. CREDIT ARRANGEMENTS

Long-term debt ~~at February 29, 2020 and August 31, 2019~~ was as follows:


(in thousands)	(in thousands)	Weighted Average Interest Rate at February 29, 2020	February 29, 2020		August 31, 2019		(in thousands)	Weighted Average Interest Rate as of February 28, 2021	February 28, 2021		August 31, 2020
2031 Notes							2031 Notes	3.875%	$	300,000	$	0
2027 Notes	2027 Notes	5.375%	$	300,000	$	300,000	2027 Notes	5.375%	300,000		300,000
2026 Notes	2026 Notes	5.750%	350,000		350,000		2026 Notes	5.750%	0		350,000
2023 Notes	2023 Notes	4.875%	330,000		330,000		2023 Notes	4.875%	330,000		330,000
Term Loan		3.409%	110,125		210,125
Poland credit facilities		2.637%	11,290		—
Short-term borrowings		2.400%	8,272		3,929
Poland Term Loan							Poland Term Loan	1.710%	40,068		40,713
Other	Other	5.100%	23,168		23,168		Other	5.100%	21,329		21,329

Finance leases	Finance leases		43,858		37,699		Finance leases		51,220		50,224
Total debt	Total debt		1,176,713		1,254,921		Total debt		1,042,617		1,092,266
Less debt issuance costs	Less debt issuance costs		9,425		10,268		Less debt issuance costs		8,805		8,581
Total amounts outstanding	Total amounts outstanding		1,167,288		1,244,653		Total amounts outstanding		1,033,812		1,083,685
Less current maturities			14,443		13,510
Less short-term borrowings			8,272		3,929
Current maturities of long-term debt and short-term borrowings			22,715		17,439
Less current maturities of long-term debt							Less current maturities of long-term debt		22,777		18,149
Long-term debt	Long-term debt		$	1,144,573	$	1,227,214	Long-term debt		$	1,011,035	$	1,065,536

In February 2021, the Company issued $300.0 million of 3.875% Senior Notes due February 2031 (the "2031 Notes"). Issuance costs associated with the 2031 Notes were approximately $4.9 million. Interest on the 2031 Notes is payable semiannually.

In May 2018, the Company issued $350.0 million of 5.750% Senior Notes due April 2026 (the "2026 Notes"). In February 2021, the Company accepted for purchase approximately $77.8 million of the outstanding principal amount of the 2026 Notes

through a cash tender offer. Following the expiration of the cash tender offer on February 18, 2021, the Company redeemed the remaining outstanding principal amount of the 2026 Notes. In the three and six month periods ended February 28, 2021, the Company recognized a $16.8 million loss on debt extinguishment related to the retirement of the 2026 Notes.

The Company had 0 amounts drawn under ~~the~~its $350.0 million revolving credit facility (the "Revolver") at February ~~29, 2020~~28, 2021 and August 31, ~~2019.~~2020. The availability under the Revolver was reduced by outstanding stand-by letters of credit totaling $3.0 million at February 28, 2021 and August 31, 2020.

The Company has a Term Loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"), which allows for a maximum aggregate principal amount of ~~$3.0~~Polish zloty ("PLN") 250.0 million, or $66.8 million, at February ~~29, 2020~~28, 2021. At February 28, 2021 and August 31, ~~2019.~~2020, PLN 150.0 million, or $40.1 million, and PLN 150.0 million, or $40.7 million, respectively, was outstanding.

The Company also has credit facilities in Poland through its subsidiary CMCP. At February ~~29, 2020,~~28, 2021, CMCP's credit facilities totaled ~~Polish zloty ("PLN")~~PLN 275.0 million, or ~~$70.0~~$73.5 million. These facilities expire in March 2022. ~~At February 29, 2020, $11.3 million was~~No amounts were outstanding under these ~~facilities. NaN amounts were outstanding~~facilities as of February 28, 2021 or August 31, ~~2019.~~2020. The available balance of these credit facilities was ~~further~~ reduced by outstanding stand-by letters of credit, guarantees, and/or other financial assurance instruments, which totaled ~~$0.8~~$0.9 million and ~~$1.1~~$0.8 million at February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, respectively.

The Company's debt agreements require ~~the Company to comply~~compliance with certain non-financial and financial covenants, including an interest coverage ratio and a debt to capitalization ratio. At February ~~29, 2020,~~28, 2021, the Company was in compliance with all covenants contained in its debt agreements.

Accounts Receivable Facilities

The Company had 0no advance payments outstanding under ~~the~~its U.S. accounts receivable facility at February ~~29, 2020~~28, 2021 or August 31, ~~2019.~~2020.

The Poland accounts receivable facility has a limit of PLN 220.0 million, ~~($56.0~~or $58.8 million at February ~~29, 2020).~~28, 2021. The Company had ~~$8.3 million of~~no advance payments outstanding under the Poland accounts receivable facility at February ~~29, 2020, and $3.9 million at~~28, 2021 or August 31, ~~2019.~~2020.

NOTE 9. 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 gross margin 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) energy derivatives to mitigate the risk related to price volatility of electricity and natural gas.

At February ~~29, 2020,~~28, 2021, the notional values of the Company's foreign currency and commodity commitments were ~~$84.6~~$165.8 million and ~~$42.0~~$217.2 million, respectively. At August 31, ~~2019,~~2020, the notional values of the Company's foreign currency and commodity contract commitments were ~~$94.1~~$138.5 million and ~~$42.6~~$195.8 million, respectively.

The following table provides information regarding the Company's commodity contract commitments at February ~~29, 2020:~~28, 2021:

Commodity

Long/Short

Total

Aluminum

Long

~~2,100~~3,350

Aluminum

Short

1,675

Copper

Long

~~318~~1,077

Copper

Short

~~5,454~~7,836

Electricity

Long

~~2,000,000~~1,967,000

MW(h)

_________________

MT = Metric Ton

MW(h) = Megawatt hour

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 table summarizes activity related to the Company's derivative instruments~~Commodity derivatives not designated as hedging instruments resulted in a loss, before income taxes, of $11.0 million and $16.6 million, in the three and six months ended February 28, 2021, respectively, and a gain, before income taxes, of $1.7 million and $0.4 million in the three and six months ended February 29, 2020, respectively, primarily recorded in cost of goods sold within the condensed consolidated statements of earnings. Foreign exchange derivatives accounted for as cash flow hedging instruments resulted in a net gain of $7.7 million and $8.9 million, in the three and six months ended February 28, 2021, respectively, and a net loss of $3.6 million and $2.9 million in the three and six months ended February 29, 2020, respectively, recognized in the condensed consolidated statements of ~~earnings. All other activity related to~~comprehensive income (loss). See Note 10, Fair Value, for the fair value of the Company's derivative instruments ~~and hedged items was immaterial for~~recorded in the ~~periods presented.~~

Three Months Ended Six Months Ended
Derivatives Not Designated as Hedging Instruments (in thousands) Location February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Commodity Cost of goods sold $ 1,731 $ (2,425) $ 416 $ (3,265)
Foreign exchange SG&A expenses (21) (526) 20 (400)
Gain (loss) before income taxes $ 1,710 $ (2,951) $ 436 $ (3,665)

condensed consolidated balance sheets.

NOTE 10. FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into 3 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 ~~as follows:~~

~~Level 1 - Unadjusted quoted prices~~within the Summary of Significant Accounting Policies footnote in ~~active markets for identical assets and liabilities;~~

~~Level 2 - Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly; and~~

~~Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.~~our 2020 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:


				Fair Value Measurements at Reporting Date Using													Fair Value Measurements at Reporting Date Using
(in thousands)	(in thousands)	February 29, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(in thousands)	February 28, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:									Assets:
Investment deposit accounts ⁽¹⁾	Investment deposit accounts ⁽¹⁾	$	191,424	$	191,424	$	—	$	—	Investment deposit accounts (1)	$	345,240	$	345,240	$	0	$	0
Commodity derivative assets ⁽²⁾	Commodity derivative assets ⁽²⁾	1,631		1,631		—		—		Commodity derivative assets (2)	1,091		1,091		0		0
Foreign exchange derivative assets ⁽²⁾	Foreign exchange derivative assets ⁽²⁾	374		—		374		—		Foreign exchange derivative assets (2)	1,301		0		1,301		0
Liabilities:	Liabilities:									Liabilities:
Commodity derivative liabilities ⁽²⁾	Commodity derivative liabilities ⁽²⁾	3,663		77		—		3,586		Commodity derivative liabilities (2)	11,349		7,064		0		4,285
Foreign exchange derivative liabilities ⁽²⁾	Foreign exchange derivative liabilities ⁽²⁾	696		—		696		—		Foreign exchange derivative liabilities (2)	635		0		635		0


				Fair Value Measurements at Reporting Date Using													Fair Value Measurements at Reporting Date Using
(in thousands)	(in thousands)	August 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(in thousands)	August 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:									Assets:
Investment deposit accounts ⁽¹⁾	Investment deposit accounts ⁽¹⁾	$	66,240	$	66,240	$	—	$	—	Investment deposit accounts (1)	$	449,824	$	449,824	$	0	$	0
Commodity derivative assets ⁽²⁾	Commodity derivative assets ⁽²⁾	1,269		1,269		—		—		Commodity derivative assets (2)	202		202		0		0
Foreign exchange derivative assets ⁽²⁾	Foreign exchange derivative assets ⁽²⁾	569		—		569		—		Foreign exchange derivative assets (2)	1,484		0		1,484		0
Liabilities:	Liabilities:									Liabilities:
Commodity derivative liabilities ⁽²⁾	Commodity derivative liabilities ⁽²⁾	99		99		—		—		Commodity derivative liabilities (2)	19,000		3,993		0		15,007
Foreign exchange derivative liabilities ⁽²⁾	Foreign exchange derivative liabilities ⁽²⁾	899		—		899		—		Foreign exchange derivative liabilities (2)	459		0		459		0

_________________

(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. ~~Fair value of~~Derivatives classified as Level 3 ~~derivative liabilities is based on unobservable inputs in which there is little or no market data, which requires management’s own assumptions within an internally developed cash flow model.~~are described below. Further discussion regarding the Company's use of derivative instruments is included in Note 9, Derivatives.

The fair value estimate of the Level 3 commodity derivative is based on an internally developed discounted cash flow model primarily utilizing unobservable inputs in 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 model.

February 28, 2021

Unobservable Inputs

Low

High

Average

Floating rate (PLN)

151.74

264.53

221.74

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivative recognized in the condensed consolidated statements of comprehensive income. The fluctuation in energy rates over time may cause volatility in the fair value estimate and is the primary reason for the unrealized gain in other comprehensive income ("OCI") in the three and six months ended February 28, 2021.


(in thousands)	Three Months Ended February 28, 2021
Balance, December 1, 2020	$	(13,614)

Total gains, realized and unrealized
Recognized in net earnings(1)	253
Recognized in OCI(2)	9,076
Balance, February 28, 2021	$	(4,285)

(in thousands)	Six Months Ended February 28, 2021
Balance, September 1, 2020	$	(15,007)

Total gains, realized and unrealized
Recognized in net earnings(1)	253
Recognized in OCI(2)	10,469
Balance, February 28, 2021	$	(4,285)

_________________

(1) Gains recognized in net earnings are included in cost of goods sold in the condensed consolidated statements of earnings.

(2) Gains recognized in OCI are included in the unrealized holding gain in the condensed consolidated statements of comprehensive income (loss).

There were no material non-recurring fair value remeasurements during the three and six months ended February 28, 2021 or February 29, 2020.

The carrying values of the Company's short-term items 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 on the condensed consolidated balance sheets were as follows:


			February 29, 2020						August 31, 2019								February 28, 2021				August 31, 2020
(in thousands)	(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
2031 Notes (1)											2031 Notes (1)	Level 2	$	300,000	$	301,674	$	0	$	0
2027 Notes ⁽¹⁾	2027 Notes ⁽¹⁾	Level 2	$	300,000	$	308,151	$	300,000	$	303,810	2027 Notes (1)	Level 2	300,000		319,428		300,000		319,377
2026 Notes ⁽¹⁾	2026 Notes ⁽¹⁾	Level 2	350,000		365,215		350,000		363,444		2026 Notes (1)	Level 2	0		0		350,000		367,374
2023 Notes ⁽¹⁾	2023 Notes ⁽¹⁾	Level 2	330,000		344,177		330,000		342,098		2023 Notes (1)	Level 2	330,000		349,104		330,000		345,335
Term Loan ⁽²⁾		Level 2	110,125		110,125		210,125		210,125
Poland credit facilities ⁽²⁾		Level 2	11,290		11,290		—		—
Short-term borrowings ⁽²⁾		Level 2	8,272		8,272		3,929		3,929
Poland Term Loan(2)											Poland Term Loan(2)	Level 2	40,068		40,068		40,713		40,713

_________________

(1) The fair value of the notes was determined based on indicated market values.

(2) The Poland Term Loan ~~Poland credit facilities and short-term borrowings contain~~contains variable interest rates, and as a result, the carrying value approximates fair value.

NOTE 11. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note 15, Stock-Based Compensation Plans, to the consolidated financial statements in the ~~2019~~2020 Form 10-K. In general, restricted stock units granted ~~during 2020~~in 2021 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 granted ~~during 2020~~in 2021 vest after a period of three years.

During the six months ended February 28, 2021 and February 29, 2020, ~~and the comparable period,~~ the Company granted the following awards under its stock-based compensation plans:

February 29, 2020

February 28, 2019

February 28, 2021

February 29, 2020

(in thousands, except per share data)

Shares Granted

Weighted Average Grant Date Fair Value

Shares Granted

Weighted Average Grant Date Fair Value

(in thousands, except per share data)

Shares Granted

Weighted Average Grant Date Fair Value

Shares Granted

Weighted Average Grant Date Fair Value

Equity method

1,521

18.32

1,505

17.75

Equity method

1,512

20.51

1,521

18.32

Liability method

426

N/A

374

N/A

Liability method

324

N/A

426

N/A

During the three and six months ended February 28, 2021 and February 29, 2020, ~~and the comparable periods,~~ the Company recorded immaterial mark-to-market adjustments on liability awards. At February ~~29, 2020,~~28, 2021, the Company had outstanding ~~835,546~~711,648 equivalent shares accounted for under the liability method. The Company expects ~~793,769~~676,065 equivalent shares to vest.

The following table summarizes total stock-based compensation expense, including fair value remeasurements, which was ~~mainly~~primarily included in selling, general and administrative expenses on the Company's condensed consolidated statements of earnings:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in thousands)	(in thousands)	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019		(in thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Stock-based compensation expense	Stock-based compensation expense	$	7,536	$	5,790	$	15,805	$	10,007	Stock-based compensation expense	$	12,696	$	7,536	$	21,758	$	15,805

NOTE 12. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE

The calculations of basic and diluted earnings per share from continuing operations were as follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in thousands, except share data)	(in thousands, except share data)	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019		(in thousands, except share data)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Earnings from continuing operations	Earnings from continuing operations	$	63,596	$	14,928	$	146,351	$	34,348	Earnings from continuing operations	$	66,233	$	63,596	$	130,144	$	146,351
Basic earnings per share:	Basic earnings per share:									Basic earnings per share:
Shares outstanding for basic earnings per share	Shares outstanding for basic earnings per share	118,919,455		117,854,335		118,644,823		117,677,422		Shares outstanding for basic earnings per share	120,345,432		118,919,455		120,052,459		118,644,823
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	0.53	$	0.13	$	1.23	$	0.29	Basic earnings per share from continuing operations	$	0.55	$	0.53	$	1.08	$	1.23
Diluted earnings per share:	Diluted earnings per share:									Diluted earnings per share:
Shares outstanding for basic earnings per share	Shares outstanding for basic earnings per share	118,919,455		117,854,335		118,644,823		117,677,422		Shares outstanding for basic earnings per share	120,345,432		118,919,455		120,052,459		118,644,823
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Stock-based incentive/purchase plans	Stock-based incentive/purchase plans	1,487,801		1,088,423		1,658,436		1,319,005		Stock-based incentive/purchase plans	1,406,427		1,487,801		1,619,735		1,658,436
Shares outstanding for diluted earnings per share	Shares outstanding for diluted earnings per share	120,407,256		118,942,758		120,303,259		118,996,427		Shares outstanding for diluted earnings per share	121,751,859		120,407,256		121,672,194		120,303,259
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	0.53	$	0.13	$	1.22	$	0.29	Diluted earnings per share from continuing operations	$	0.54	$	0.53	$	1.07	$	1.22

Anti-dilutive shares not included above were immaterial for ~~the three and six months ended February 29, 2020, respectively. There were 0 anti-dilutive shares for the three and six months ended February 28, 2019.~~all periods presented.

Restricted stock is included in the number of shares of common stock issued and outstanding, but omitted from the basic earnings per share calculation until the shares vest.

During the first quarter of ~~fiscal~~ 2015, CMC's Board of Directors authorized a share repurchase program under which CMC may repurchase up to $100.0 million of shares of common stock. During the three and six months ended February ~~29, 2020,~~28, 2021, CMC did ~~not~~

0t repurchase any shares of common stock. CMC had remaining authorization to repurchase $27.6 million of common stock at February ~~29, 2020.~~28, 2021.

NOTE 13. COMMITMENTS AND CONTINGENCIES

Legal and Environmental Matters

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. See Note 19, Commitments and Contingencies, to the consolidated financial statements in the ~~2019~~2020 Form 10-K.

The Company has received notices from the U.S. Environmental Protection Agency ("EPA") or state agencies with similar responsibility that it is considered a potentially responsible party at several sites, none of which are owned by the Company, and may be obligated under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") or similar state statutes to conduct remedial investigations, feasibility studies, remediation and/or removal of alleged releases of hazardous substances or to reimburse the EPA for such activities. The Company is involved in litigation or administrative proceedings with regard to several of these sites in which the Company is contesting, or at the appropriate time may contest, its liability at the sites. In addition, the Company has received information requests with regard to other sites which may be under consideration by the EPA as potential CERCLA sites. Some of these environmental matters or other proceedings may result in fines, penalties or judgments being assessed against the Company. At February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, the ~~Company had $0.7 million~~amounts accrued for cleanup and remediation costs in connection with CERCLA ~~sites.~~sites were immaterial. The estimation process is based on currently available information which is, in many cases, preliminary and incomplete. Total environmental liabilities, including CERCLA sites, were ~~$3.6~~$6.8 million and $3.4 million at February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, respectively, of which ~~$2.7~~$2.4 million and ~~$1.8~~$2.7 million were classified as other long-term liabilities at February ~~29, 2020~~28, 2021 and August 31, ~~2019,~~2020, respectively. ~~These amounts have not been discounted to their present values.~~ Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process and other factors, amounts accrued could vary significantly from amounts paid. Historically, the amounts the Company has ultimately paid for such remediation activities have not been material.

Management believes that adequate provisions have been made in the Company's condensed consolidated financial statements for the potential impact of these contingencies, and that the outcomes of the suits and proceedings described above, and other miscellaneous litigation and proceedings now pending, will not have a material adverse effect on the business, results of operations or financial condition of the Company.

NOTE 14. BUSINESS SEGMENTS

The Company structures its business into ~~the following 4 reporting~~2 reportable segments: ~~Americas Recycling, Americas Mills, Americas Fabrication~~North America and ~~International Mill. The Company's reporting segments are based primarily on product lines and secondarily on geographic area.~~Europe. See Note 1, Nature of Operations, ~~of the consolidated financial statements included~~ in the ~~2019~~2020 Form 10-K for more information about the ~~reporting~~reportable segments, including the types of products and services from which each ~~reporting~~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 Company uses adjusted EBITDA from continuing operations to compare and evaluate the financial performance of its segments. Adjusted EBITDA is the sum of the Company's earnings from continuing operations before interest expense, income taxes, depreciation and amortization expense and impairment expense. Intersegment sales are generally priced at prevailing market prices. Certain corporate administrative expenses are allocated to the segments based upon the nature of the expense. The accounting policies of the segments are the same as those described in Note 2, Summary of Significant Accounting Policies, of the consolidated financial statements included in the 2019 Form 10-K.

~~The~~ following is a summary of certain financial information from continuing operations by reportable segment:


	Three Months Ended February 28, 2021
(in thousands)	North America		Europe		Corporate and Other		Continuing Operations
Net sales	$	1,257,486	$	202,066	$	2,718	$	1,462,270
Adjusted EBITDA	171,612		16,107		(45,986)		141,733

	Six Months Ended February 28, 2021
(in thousands)	North America		Europe		Corporate and Other		Continuing Operations
Net sales	$	2,452,499	$	396,662	$	4,912	$	2,854,073
Adjusted EBITDA	327,246		30,577		(72,457)		285,366
Total assets at February 28, 2021*	2,957,534		566,195		540,312		4,064,041

Three Months Ended February 29, 2020
(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other Continuing Operations
Net sales-unaffiliated customers $ 179,535 $ 471,367 $ 510,381 $ 179,656 $ 24 $ 1,340,963
Intersegment sales 68,549 260,673 1,367 423 (331,012) —
Net sales 248,084 732,040 511,748 180,079 (330,988) 1,340,963
Adjusted EBITDA 5,754 125,691 16,060 13,451 (23,235) 137,721
Six Months Ended February 29, 2020
(in thousands) Americas Recycling Americas Mills Americas Fabrication International Mill Corporate and Other Continuing Operations
Net sales-unaffiliated customers $ 351,686 $ 945,559 $ 1,080,758 $ 344,696 $ 2,972 $ 2,725,671
Intersegment sales 118,659 555,374 2,837 772 (677,642) —
Net sales 470,345 1,500,933 1,083,595 345,468 (674,670) 2,725,671
Adjusted EBITDA 9,171 280,716 33,541 24,810 (50,712) 297,526
Total assets at February 29, 2020* 261,611 1,680,295 1,065,676 521,678 378,678 3,907,938

~~_________________~~

*Total assets listed in Corporate and Other includes assets from discontinued operations.


		Three Months Ended February 28, 2019																						Three Months Ended February 29, 2020
(in thousands)	(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Continuing Operations			(in thousands)	North America		Europe		Corporate and Other		Continuing Operations
Net sales-unaffiliated customers		$	225,888	$	472,795	$	526,678	$	174,945	$	2,477	$	1,402,783
Intersegment sales		61,187		301,914		4,158		253		(367,512)		—
Net sales	Net sales	287,075		774,709		530,836		175,198		(365,035)		1,402,783			Net sales	$	1,161,283	$	180,079	$	(399)	$	1,340,963
Adjusted EBITDA	Adjusted EBITDA	10,124		112,396		(49,578)		20,537		(24,146)		69,333			Adjusted EBITDA	152,831		13,451		(28,561)		137,721

		Six Months Ended February 28, 2019																						Six Months Ended February 29, 2020
(in thousands)	(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Continuing Operations			(in thousands)	North America		Europe		Corporate and Other		Continuing Operations
Net sales-unaffiliated customers		$	466,069	$	846,466	$	961,236	$	401,618	$	4,736	$	2,680,125
Intersegment sales		123,015		530,096		6,711		604		(660,426)		—
Net sales	Net sales	589,084		1,376,562		967,947		402,222		(655,690)		2,680,125		��	Net sales	$	2,378,003	$	345,468	$	2,200	$	2,725,671
Adjusted EBITDA	Adjusted EBITDA	25,558		226,269		(86,574)		53,316		(83,700)		134,869			Adjusted EBITDA	327,563		24,810		(54,847)		297,526
Total assets at August 31, 2019^*		257,517		1,667,366		1,106,420		464,177		263,291		3,758,771
Total assets at August 31, 2020*															Total assets at August 31, 2020*	2,862,805		532,850		686,073		4,081,728

_________________

*Total assets listed in Corporate and Other includes assets from discontinued operations.

The following table presents a reconciliation of earnings from continuing operations to adjusted EBITDA from continuing operations:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in thousands)	(in thousands)	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019		(in thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Earnings from continuing operations	Earnings from continuing operations	$	63,596	$	14,928	$	146,351	$	34,348	Earnings from continuing operations	$	66,233	$	63,596	$	130,144	$	146,351
Interest expense	Interest expense	15,888		18,495		32,466		35,158		Interest expense	14,021		15,888		28,280		32,466
Income taxes	Income taxes	22,845		18,141		50,177		23,750		Income taxes	20,941		22,845		42,534		50,177
Depreciation and amortization	Depreciation and amortization	41,389		41,245		82,330		76,421		Depreciation and amortization	41,573		41,389		83,372		82,330
Amortization of acquired unfavorable contract backlog	Amortization of acquired unfavorable contract backlog	(5,997)		(23,476)		(14,328)		(34,808)		Amortization of acquired unfavorable contract backlog	(1,509)		(5,997)		(3,032)		(14,328)
Impairment of assets		—		—		530		—
Asset impairments										Asset impairments	474		0		4,068		530
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	137,721	$	69,333	$	297,526	$	134,869	Adjusted EBITDA from continuing operations	$	141,733	$	137,721	$	285,366	$	297,526

2119

Disaggregation of Revenue

The following tables display revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.


	Three Months Ended February 28, 2021
(in thousands)	North America		Europe		Corporate		Total
Major product:
Raw material products	$	255,012	$	4,775	$	0	$	259,787
Steel products	514,201		157,482		0		671,683
Downstream products	400,397		33,762		0		434,159
Other	87,876		5,540		3,225		96,641
Net sales-unaffiliated customers	1,257,486		201,559		3,225		1,462,270
Intersegment net sales, eliminated on consolidation	0		507		(507)		0
Net sales	$	1,257,486	$	202,066	$	2,718	$	1,462,270

	Six Months Ended February 28, 2021
(in thousands)	North America		Europe		Corporate		Total
Major product:
Raw material products	$	465,249	$	7,605	$	0	$	472,854
Steel products	971,858		308,937		0		1,280,795
Downstream products	837,426		68,235		0		905,661
Other	177,966		10,967		5,830		194,763
Net sales-unaffiliated customers	$	2,452,499	$	395,744	$	5,830	$	2,854,073
Intersegment net sales, eliminated on consolidation	0		918		(918)		0
Net sales	$	2,452,499	$	396,662	$	4,912	$	2,854,073


	Three Months Ended February 29, 2020
(in thousands)	North America		Europe		Corporate		Total
Major product:
Raw material products	$	193,312	$	2,408	$	0	$	195,720
Steel products	437,648		147,525		0		585,173
Downstream products	441,765		23,758		0		465,523
Other	88,558		5,965		24		94,547
Net sales-unaffiliated customers	1,161,283		179,656		24		1,340,963
Intersegment net sales, eliminated on consolidation	0		423		(423)		0
Net sales	$	1,161,283	$	180,079	$	(399)	$	1,340,963

	Six Months Ended February 29, 2020
(in thousands)	North America		Europe		Corporate		Total
Major product:
Raw material products	$	374,935	$	4,613	$	0	$	379,548
Steel products	878,811		277,269		0		1,156,080
Downstream products	941,492		51,958		0		993,450
Other	182,765		10,856		2,972		196,593
Net sales-unaffiliated customers	2,378,003		344,696		2,972		2,725,671
Intersegment net sales, eliminated on consolidation	0		772		(772)		0
Net sales	$	2,378,003	$	345,468	$	2,200	$	2,725,671

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 (the "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, ~~2019~~2020 (the ~~"2019~~"2020 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 iswas 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 ~~this~~ Item 2 of this Form 10-Q and in the section entitled "Risk Factors" in Item 1A of the ~~2019~~2020 Form 10-K and this Form 10-Q. 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 ~~"comparable period" or~~ "corresponding period" relates to the ~~relevant three-month~~three or ~~six-month~~six month period ended February ~~28, 2019.~~29, 2020.

COVID-19 UPDATE

We continue to closely monitor the impact of the COVID-19 pandemic ("COVID-19") on the Company, employees, customers and supply chain. While COVID-19 may have a negative impact on our results of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19, the actions to contain the outbreak or treat its impact, and the timing of distribution of COVID-19 vaccines and the economic response thereto means the related financial impact cannot be reasonably estimated at this time.

CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies as set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, included in the ~~2019~~2020 Form 10-K.

RESULTS OF OPERATIONS SUMMARY

Business Overview

As a vertically integrated organization, we manufacture, recycle and ~~market~~fabricate steel and metal products, related materials and services through a network including seven electric arc furnace ("EAF") mini mills, two EAF micro mills, ~~two~~a rerolling ~~mills,~~mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the ~~United States ("~~U.S.") and Poland. On November 5, 2018, the Company completed the acquisition (the "Acquisition") of 33 rebar fabrication facilities in the U.S., as well as four EAF mini mills located in Knoxville, Tennessee; Jacksonville, Florida; Sayreville, New Jersey and Rancho Cucamonga, California from Gerdau S.A., hereinafter collectively referred to as the "Acquired Businesses." Our operations are conducted through ~~four~~two reportable segments: ~~Americas Recycling, Americas Mills, Americas Fabrication~~North America and ~~International Mill.~~Europe.

When considering our results for the period, we evaluate our operating performance by comparing 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 for each of our product categories as these are the two variables that typically have the greatest impact on our results of operations. We group our products into three categories: raw materials, steel products and downstream products. 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 post.

We use adjusted EBITDA from continuing operations to compare and evaluate the financial performance of our segments. Adjusted EBITDA is the sum of the Company's earnings from continuing operations 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 margin of our steel products and downstream products period-over-period is a consistent area of focus for our Company and industry. Metal margin is an important 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 due to competitive pressures on 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 cost of material utilized by our fabrication facilities 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 and excludes any results of our discontinued operations.


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019		(in thousands, except per share data)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Net sales	Net sales	$	1,340,963	$	1,402,783	$	2,725,671	$	2,680,125	Net sales	$	1,462,270	$	1,340,963	$	2,854,073	$	2,725,671
Earnings from continuing operations	Earnings from continuing operations	63,596		14,928		146,351		34,348		Earnings from continuing operations	66,233		63,596		130,144		146,351
Diluted earnings per share	Diluted earnings per share	$	0.53	$	0.13	$	1.22	$	0.29	Diluted earnings per share	$	0.54	$	0.53	$	1.07	$	1.22

Net sales for the three and six months endedFebruary ~~29, 2020 decreased $61.8~~28, 2021 increased $121.3 million, or 4%9%, and ~~increased $45.5~~ $128.4 million, or 2%5%, respectively, compared to the corresponding ~~periods in~~ periods. The increases were~~2019. For the~~ ~~three~~ ~~months ended February 29, 2020, net sales decreased year-over-year in our Americas Recycling, Americas Mills and Americas Fabrication segments~~ primarily due to ~~a reduction~~year-over-year increases in ~~the ferrous scrap pricing environment, a decrease in~~raw materials average selling prices ~~per ton and a decrease in tons shipped, respectively. These decreases were partially offset by an increase in year-over-year net sales~~ in our ~~International Mill~~North America segment ~~due to an increase~~and in ~~tons shipped. Year-to-date net sales increased year-over-year in our Americas Mills and Americas~~

~~Fabrication segments primarily due to an increase in tons shipped in both segments, coupled with an increase in~~steel products average selling prices ~~per ton~~ in both of our Americas Fabrication segment, as a result of strong demand in our core markets and two additional months of shipments from the Acquired Businesses. These increases were partially offset by decreases in year-over-year net sales in our Americas Recycling segment, due to continued reductions in the ferrous scrap pricing environment and constrained scrap flow, and in our International Mill segment due to a decrease in average selling prices per ton.segments.

Earnings from continuing operations for the three and six months endedFebruary ~~29, 2020~~28, 2021 increased ~~$48.7~~$2.6 million and ~~$112.0~~decreased $16.2 million, respectively, ~~from~~compared to the ~~comparable periods~~corresponding periods. Earnings in the three months ended February 28, 2021 were relatively flat while earnings in the ~~2019~~six~~. The increase was primarily driven~~ months ended February 28, 2021 were impacted by ~~year-over-year expansion~~compressed metal margins in the first quarter of 2021 as a result of rising raw material average selling prices while steel products and downstream products average selling prices decreased or remained flat. In the second quarter of 2021, steel products average selling prices, and ~~year-to-date~~therefore metal margins, ~~in our Americas Fabrication segment, an~~began to increase in ~~second~~ ~~quarter tons shipped in our Americas Mills segment and an increase in year-to-date tons shipped in our Americas Fabrication and Americas Mills segments.~~to offset the higher raw material prices.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were relatively flat for the three and six months ended February ~~29, 2020 increased $16.8 million and $11.1 million, respectively, from the comparable periods in~~ ~~2019. For the~~ ~~three~~ months ended February 29, 2020, the year-over-year increase primarily related to a $24.2 million increase in employee-related expenses, partially offset by $1.5 million, $1.3 million and $1.2 million decreases in professional services, rent, and insurance expense, respectively. The year-to-date increase was driven primarily by a $46.6 million year-over-year increase in employee-related expenses, partially offset by a $26.1 million year-over-year decrease in professional fees and legal expenses, primarily related to the Acquisition. In addition, there was a $4.9 million increase in gains on the sale of fixed assets in the six months ended February 29, 2020,28, 2021 compared to the corresponding ~~period.~~periods.

Interest Expense

Interest expense for the three and six months ended ~~February 29, 2020 decreased~~ ~~$2.6 million~~ February 28, 2021 decreased $1.9 million and $4.2 million, respectively, com~~$2.7 million, respectively, compared~~pared to the corresponding ~~periods in~~ ~~2019~~.periods. The ~~year-over-year~~ decreases were ~~the result of~~driven by a ~~decrease~~reduction in ~~interest payable on~~ long-term debt, primarily due to ~~a decline in~~ the ~~floating LIBOR market, coupled with total prepayments~~early repayment of ~~$200 million on~~ the Term Loan (as defined in Note 8,10, Credit ~~Arrangements) over~~Arrangements, to the ~~past four quarters.~~consolidated financial statements in the 2020 Form 10-K) in the year ended August 31, 2020.

Income Taxes

~~Our~~The effective income ~~tax~~tax rate from continuing operations for the three and six months endedFebruary ~~29, 2020~~28, 2021 was ~~26.4%~~24.0% and ~~25.5%~~24.6%, respectively, compared with ~~54.9%~~26.4% and ~~40.9%~~25.5% in the corresponding ~~periods in 2019. The decrease in the effective income tax rate is primarily attributable to discrete tax expense recorded during the second quarter of 2019 as a result of the Tax Cuts and Jobs Act.~~periods.

SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are from continuing operations and calculated before income taxes. See Note 14, Business ~~Segments.~~Segments to our condensed consolidated financial statements for more information. The operational data presented in the tables below is calculated using averages and, therefore, it is not meaningful to quantify the effect that any individual component had on the segment's net sales or adjusted EBITDA.

~~Americas Recycling~~North America

Three Months Ended Six Months Ended
(in thousands) February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Net sales $ 248,084 $ 287,075 $ 470,345 $ 589,084
Adjusted EBITDA 5,754 10,124 9,171 25,558
Average selling price (per ton)
Ferrous $ 226 $ 266 $ 204 $ 269
Nonferrous 2,044 1,998 2,014 1,990
Tons shipped (in thousands)
Ferrous 519 570 1,011 1,149
Nonferrous 58 59 115 122
Total 577 629 1,126 1,271


	Three Months Ended				Six Months Ended
(in thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Net sales	$	1,257,486	$	1,161,283	$	2,452,499	$	2,378,003
Adjusted EBITDA	171,612		152,831		327,246		327,563

External tons shipped (in thousands)
Raw materials	302		321		632		641
Rebar	472		461		958		936
Merchant and other	268		238		532		474
Steel products	740		699		1,490		1,410
Downstream products	343		366		714		779

Average selling price (per ton)
Steel products	$	695	$	625	$	653	$	625
Downstream products	929		984		931		979

Cost of ferrous scrap utilized per ton	$	344	$	256	$	304	$	238
Steel products metal margin per ton	351		369		349		387

Net sales for the three and six months endedFebruary 28, 2021 increased $96.2 million, or 8%, and $74.5 million, or 3%, respectively, compared to the corresponding periods. The year-over-year increases in net sales were primarily due to $251 and $162 per ton increases in raw materials average selling prices and $70 and $28 per ton increases in steel products average selling prices in the three and six months ended February 28, 2021, respectively, compared to the corresponding periods. Heightened demand from steel producers resulted in higher raw materials average selling prices which drove increases in steel products average selling prices. The increases in net sales as a result of these higher average selling prices were partially offset by $55 and $48 per ton year-over-year decreases in downstream products average selling prices in the three and six months ended February 28, 2021, respectively. Net sales included amortization benefit of $1.5 million and $3.0 million for the three and six months endedFebruary 28, 2021, respectively, and $6.0 million and $14.3 million for the corresponding periods, respectively, related to the acquired unfavorable contract backlog.

Adjusted EBITDA for the three months endedFebruary 28, 2021 increased $18.8 million and was flat for the six months ended February 28, 2021, compared to the corresponding periods. The year-over-year increase in adjusted EBITDA in the three months ended February 28, 2021 was due in part to a 41 thousand ton increase in steel products shipped and significant expansion in raw materials margin. Further, while our steel products metal margin per ton for the three months ended February 28, 2021 contracted $18 per ton compared to the corresponding period, this operating statistic does not fully reflect the margin achieved throughout the period. In times of sharply rising raw material costs and steel products average selling prices, we benefit from selling lower cost inventory produced in prior periods. Adjusted EBITDA did not include the $1.5 million or $3.0 million benefit of the amortization of the acquired unfavorable contract backlog reserve described above. Adjusted EBITDA included non-cash stock compensation expense of $3.8 million and $7.1 million for the three and six months endedFebruary 28, 2021, respectively, and $2.7 million and $5.6 million for the corresponding periods.

Europe


	Three Months Ended				Six Months Ended
(in thousands)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Net sales	$	202,066	$	180,079	$	396,662	$	345,468
Adjusted EBITDA	16,107		13,451		30,577		24,810

External tons shipped (in thousands)
Rebar	78		145		206		267
Merchant and other	275		235		544		451
Steel products	353		380		750		718

Average selling price (per ton)
Steel products	$	532	$	449	$	495	$	455

Cost of ferrous scrap utilized per ton	$	328	$	251	$	296	$	248
Steel products metal margin per ton	204		198		199		207

Net sales for the three and six months endedFebruary 28, 2021 increased $22.0 million, or 12%, and $51.2 million, or 15%, respectively, compared to the corresponding periods. For the three months ended February 28, 2021, the year-over-year increase in net sales was driven by a $83 per ton increase in steel products average selling prices, partially offset by a 27 thousand ton decrease in steel products shipped. The year-to-date increase in net sales was driven by a 32 thousand ton year-over-year increase in steel products shipments, as demand increased in the first quarter of 2021 due to a resilient Polish construction sector and an upturn in Central European manufacturing activity, coupled with a $40 per ton year-over-year increase in steel products average selling prices. Net sales for the three and six months ended February ~~29, 2020 decreased $39.0 million, or 14%, and $118.7 million, or 20%, respectively, as compared to the corresponding periods in~~ ~~2019. F~~or the three and six months ended February 29, 2020, the primary drivers for the year-over-year decreases in net sales were lower average ferrous selling prices and ferrous tons shipped due to a declining price environment which also constrained scrap flows as there was less scrap available to purchase while prices were falling. Average ferrous selling prices per ton decreased approximately 15% and 24%, respectively, and ferrous tons shipped decreased approximately 9% and 12%, respectively, for the three and six months ended February 29, 2020, in relation to the comparable periods.

~~Adjusted EBITDA for the three and six months ended February 29, 2020 decreased $4.4 million and $16.4 million, respectively, as compared to the corresponding periods in~~ ~~2019, as the declining price environment compressed margins and constrained scrap flows, as discussed above. Conversion costs~~ ~~increased approximately $4 and $7 per ton in the three and six months ended February 29, 2020, respectively, as compared to the corresponding periods in~~ ~~2019, due to decreased production levels. Adjusted EBITDA included non-cash stock compensation expense of $0.4 million and $0.8 million for the three and six months ended February 29, 2020, respectively, and $0.3 million and $0.6 million for the comparable periods.~~

~~Americas Mills~~

Three Months Ended Six Months Ended
(in thousands) February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Net sales $ 732,040 $ 774,709 $ 1,500,933 $ 1,376,562
Adjusted EBITDA 125,691 112,396 280,716 226,269
Average price (per ton)
Total selling price $ 606 $ 677 $ 608 $ 677
Cost of ferrous scrap utilized 256 303 238 305
Metal margin 350 374 370 372
Tons (in thousands)
Melted 1,117 1,126 2,299 2,035
Rolled 1,084 1,045 2,239 1,889
Shipped 1,147 1,095 2,353 1,942

~~Net sales for the three and six months ended February 29, 2020 decreased $42.7 million, or 6%, and~~ ~~increased~~ ~~$124.4 million, or 9%, respectively, as compared to the corresponding periods in~~ ~~2019. For the~~ ~~three~~ ~~months ended February 29, 2020, the decrease in year-over-year net sales was due to a 10%~~ ~~decrease~~ ~~in average selling prices per ton, partially offset by an increase of 52 thousand tons shipped. Despite a 10% decrease in year-over-year average selling prices per ton in the~~ ~~six~~ ~~months ended February 29, 2020, year-to-date net sales~~ ~~increased~~ ~~due to an~~ ~~increase~~ ~~of 411 thousand tons shipped as a result of continued~~

~~strength in our core markets and two additional months of shipments from the Acquired Businesses, as well as targeted merchant bar growth opportunities.~~

~~Adjusted EBITDA for the three and six months ended February 29, 2020 increased $13.3 million and $54.4 million, respectively, as compared to the corresponding periods in~~ ~~2019~~. The year-over-year increases in adjusted EBITDA for the three and six months ended February 29, 2020 were due, in part, to increased shipments in both periods year-over-year. Although there were metal margin compressions of 6% and 1% during the three and six months ended February 29, 2020, respectively, the impact was offset by 6% and 4% year-over-year decreases, respectively, in conversion costs as a result of increased production levels and synergies from the integration of the Acquired Businesses. Adjusted EBITDA included non-cash stock compensation expense ~~of $1.7 million and $3.5 million for the three and six months ended February 29, 2020, respectively, and $1.1 million and $2.3 million for the comparable periods.~~

~~Americas Fabrication~~

Three Months Ended Six Months Ended
(in thousands) February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Net sales $ 511,748 $ 530,836 $ 1,083,595 $ 967,947
Adjusted EBITDA 16,060 (49,578) 33,541 (86,574)
Average selling price (excluding stock and buyout sales) (per ton)
Rebar and other $ 984 $ 845 $ 979 $ 856
Tons shipped (in thousands)
Rebar and other 366 396 779 715

~~Net sales for the three and six months ended February 29, 2020 decreased $19.1 million, or 4%, and increased $115.6 million, or 12%, respectively, as compared to the corresponding periods in~~ ~~2019. The year-over-year decrease in net sales for the~~ ~~three~~ ~~months ended February 29, 2020 was driven by an approximately 8%~~ ~~decrease~~ ~~in tons shipped, partially offset by a 16%~~ ~~increase~~ ~~in average selling prices per ton. The year-over-year~~ ~~increase~~ ~~in net sales for the~~ ~~six~~ months ended February 29, 2020 was driven by 9% and 14% year-over-year increases in tons shipped and average selling prices per ton, respectively. Tons shipped increased year-over-year due, in part, to two additional months of shipments related to the Acquired Businesses. Net sales included amortization benefit of $6.0 million and $14.3 million for the three and six months ended February 29, 2020, respectively, and $23.5 million and $34.8 million for the comparable periods, respectively, related to the unfavorable contract backlog of the Acquired Businesses.

~~Adjusted EBITDA for the three and six months ended February 29, 2020 increased $65.6 million and $120.1 million, respectively, as compared to the corresponding periods in~~ ~~2019~~. The primary driver for the year-over-year increases in adjusted EBITDA for the three and six months ended February 29, 2020 was metal margin expansion due to increased average selling prices per ton, as discussed above, and decreased input and conversion costs. Adjusted EBITDA does not include the $6.0 million or $14.3 million benefit of the amortization of the unfavorable contract backlog reserve described above. Adjusted EBITDA included non-cash stock compensation expense of $0.6 million and $1.3 million for the three and six months ended February 29, 2020, respectively, and $0.4 million and $1.1 million for the comparable periods.

~~International Mill~~

Three Months Ended Six Months Ended
(in thousands) February 29, 2020 February 28, 2019 February 29, 2020 February 28, 2019
Net sales $ 180,079 $ 175,198 $ 345,468 $ 402,222
Adjusted EBITDA 13,451 20,537 24,810 53,316
Average price (per ton)
Total selling price $ 449 $ 545 $ 455 $ 546
Cost of ferrous scrap utilized 251 301 248 298
Metal margin 198 244 207 248
Tons (in thousands)
Melted 393 375 738 767
Rolled 333 298 675 561
Shipped 380 304 718 696

~~Net sales for the three and six months ended February 29, 2020 increased $4.9 million, or 3%, and decreased $56.8 million, or 14%, respectively, as compared to the corresponding periods in~~ ~~2019. For the~~ ~~three~~ months ended February 29, 2020, the year-over-year increase in net sales was driven by an approximately 25% year-over-year increase in tons shipped due to strong demand in the Polish construction sector, partially offset by an approximately 18% year-over-year decrease in average selling prices per ton primarily due to elevated import levels. The year-over-year decrease in year-to-date net sales was primarily driven by an approximately 17% year-over-year ~~decrease~~ ~~in average selling prices per ton. Net sales for the three and six months ended February 29, 2020~~28, 2021 were also impacted by ~~unfavorable~~favorable foreign currency translation adjustments of ~~approximately $4.2~~$8.3 million and ~~$11.5~~$13.0 million, respectively, due to the ~~increase~~decrease in the average value of the U.S. dollar relative to the Polish zloty.

Adjusted EBITDA for the three and six months endedFebruary ~~29, 2020 decreased $7.1~~28, 2021 increased $2.7 million and ~~$28.5~~$5.8 million, respectively, as compared to the corresponding ~~periods~~periods. For the three months ended February 28, 2021, the year-over-year increase in ~~2019, primarily driven by $46~~adjusted EBITDA was due, in part, to a $6 per ton ~~or 19%, and $41 per~~increase in steel products metal margin compared to the corresponding period. Similar to the North America segment, we benefited from selling lower cost inventory during the majority of the three month period ended February 28, 2021 in an environment of rising prices, which contributed to the increase in adjusted EBITDA compared to the corresponding period. For the six months ended February 28, 2021, the increase in adjusted EBITDA was primarily due to a 32 thousand ton ~~or 17%, year-over-year decreases~~increase in ~~metal margins, respectively. Elevated import levels~~steel products sold in comparison to the corresponding period. The impact of foreign currency translation to adjusted EBITDA in the ~~third quarter of calendar 2019 saturated the market, resulting in lower average selling prices per ton~~three and ~~compressed margins. Adjusted~~six months ended February 28, 2021 was immaterial. Adjusted EBITDA included non-cash stock compensation expense of ~~$0.3~~$0.7 million and ~~$0.8~~$1.4 million ~~for the three and six months ended February 29, 2020, respectively, and $0.2 million and $0.3 million for the comparable periods. Foreign currency translation impact to adjusted EBITDA~~ for the three and six months ended February ~~29, 2020 was immaterial.~~28, 2021, respectively, and $0.3 million and $0.8 million for the corresponding periods.

Corporate and Other

Corporate and Other reported adjusted ~~EBITDA losses~~EBITDA loss of ~~$23.2~~$46.0 million and ~~$50.7~~$72.5 million for the three and six months endedFebruary ~~29, 2020,~~28, 2021, respectively, as compared to adjusted EBITDA ~~losses~~loss of ~~$24.1~~$28.6 million and ~~$83.7~~$54.8 million in the corresponding periods. ~~For~~The primary reason for the ~~three~~ ~~months ended February 29, 2020, adjusted EBITDA was relatively flat on a year-over-year basis. For the~~ ~~six~~ ~~months ended February 29, 2020, the decrease~~increases in adjusted EBITDA loss year-over-year was ~~primarily driven by a $27.9~~the $16.8 million ~~year-over-year~~ ~~decrease~~loss on debt extinguishment incurred in the three and six months ended February 28, 2021, with no such costs in ~~professional fees and legal expenses incurred primarily due to~~ the ~~Acquisition in 2019.~~ corresponding periods. Adjusted EBITDA included non-cash stock ~~compensation~~compensation expense of $8.2 million and $13.3 million for the three and six months endedFebruary 28, 2021, respectively, and $4.6 million and $9.4 million for t~~he three and six months ended February 29, 2020, respectively, and $3.7 million and $5.7 million for~~ the ~~comparable periods.~~corresponding periods, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital Resources

We actively monitor our accounts receivable and, based on market conditions and customers' financial condition, we record allowances as soon as we believe accounts are uncollectible. We use credit insurance in Poland 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 13% of total trade receivables at February 29, 2020.

~~The table below reflects our sources, facilities and available liquidity at February 29, 2020:~~

(in thousands) Total Facility Availability
Cash and cash equivalents $ 232,442 $ 232,442
Notes due from 2023 to 2027 980,000 *
Revolver 350,000 346,962
U.S. accounts receivable facility 200,000 169,009
Term Loan 110,125 —
Poland credit facilities 70,046 58,005
Poland accounts receivable facility 56,037 42,670

~~_________________~~

* We believe we have access to additional financing and refinancing, if needed.

~~Cash Flows~~

~~Operating Activities~~

Our cash flows from operating activities result primarily from the sale of steel, nonferrous metals and related products. We have a diverse and generally stable customer ~~base.~~ base, and regularly maintain a substantial amount of accounts receivable. We record allowances for the accounts receivable we estimate will not be collected based on market conditions, customers' financial condition, and other factors. Historically, these allowances have not been material. 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 February 28, 2021.

From time to time, 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 9, Derivatives, for further information.

The table below reflects our sources, facilities and available liquidity at February 28, 2021. See Note 8, Credit Arrangements, for additional information.


(in thousands)	Total Facility		Availability
Cash and cash equivalents	$	367,347	$	367,347
Notes due from 2023 to 2031	930,000		*
Revolver	350,000		346,958
U.S. accounts receivable facility	200,000		193,291
Poland credit facilities	73,459		72,601
Poland accounts receivable facility	58,767		53,425
Poland Term Loan	66,781		26,712

_________________

* We believe we have access to additional financing and refinancing, if needed.

Cash Flows

Operating Activities

Net cash flows from operating activities were $1.2 million for the six months ended February 28, 2021 compared to $253.4 million for the six months ended February 29, ~~2020 compared to $352.9 million of net cash flows used by operating activities for the comparable period in~~ ~~2019~~. Due to the adoption of Accounting Standards Update 2016-15 on September 1, 2018 as described in Note 7, Accounts Receivable Programs of the 2019 Form 10-K, $367.5 million of cash collections of the U.S. and Poland accounts receivable facilities were reflected in investing activities in 2019. In addition, for the six months ended ~~February 29, 2020,~~ ~~the Company~~2020. We had a ~~$113.6~~$16.7 million year-over-year ~~increase~~decrease in net earnings and a ~~$30.4~~$222.9 million year-over-year increase ~~in deferred income taxes and a $65.1 million year-over-year decrease~~ in cash used by operating assets and liabilities ("working capital"). The increase in cash used by working capital was primarily due to increases in inventory value in the six months ended February 28, 2021 compared to the corresponding period, coupled with an increase in accounts receivable which reflects the higher average selling prices in the six months ended February 28, 2021, compared to a decrease in accounts receivable in the corresponding period. For continuing operations, operating working capital days decreased ~~five~~ten days year-over-year.

Investing Activities

Net cash flows used by investing activities were ~~$91.5~~$67.4 million and ~~$393.1~~$91.5 million for the six months ended February 28, 2021 and February 29, 2020, ~~and the comparable period~~respectively. The $24.1 million decrease in ~~2019, respectively. Cash~~net cash flows used by investing activities was due to an $8.9 million year-over-year decline in capital expenditures, a $9.9 million year-over-year decline in acquisitions and a $6.3 million year-over-year increase in cash proceeds from the sale of property, plant and equipment and other in the six months ended February ~~29, 2020 was lower than~~28, 2021 compared to the comparable period primarily due to cash used for the Acquisition in 2019 of $701.2 million, as described in Note 2, Changes in Business, partially offset by $367.5 million in cash collections of the U.S. and Poland accounts receivable facilities in 2019, as described above.corresponding period.

We estimate that our ~~2020~~2021 capital spending will range ~~from $160~~from $200 million to ~~$185~~$225 million. We regularly assess our capital spending based on current and expected ~~results.~~results and the amount is subject to change.

Financing Activities

Net cash flows used by financing activities were $109.1 million and $122.1 million for the six months ended February 28, 2021 and February 29, 2020, respectively. We had net debt repayments of $61.5 million in the six months ended February ~~29, 2020~~28, 2021, compared to ~~net cash flows from financing activities of $181.8 million for the comparable period in~~ ~~2019. During the six months ended February 29, 2020, we had~~ net debt repayments of $91.2 million ~~as compared to net borrowings of $212.8 million~~ in the corresponding ~~period which was used~~period. In addition, we paid $13.1 million of debt extinguishment costs related to ~~fund~~our early retirement of the ~~Acquisition.~~2026 Notes in the six months ended February 28, 2021.

~~At this time, the coronavirus (“COVID-19”)~~

COVID-19 has not had a material impact on our operations to date, and weour cash and cash equivalents position remains strong at $367.3 million as of February 28, 2021. We anticipate our current cash balances, cash flows from operations and our available sources of liquidity will be sufficient to meet our cash ~~requirements.~~requirements for the next twelve months. However, as the impact of COVID-19 on the economy and our operations evolves, we will continue to assess our liquidity needs. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.

CONTRACTUAL OBLIGATIONS

Our contractual obligations at February ~~29, 2020~~28, 2021 decreased by approximately ~~$157.8~~$20.5 million from August 31, ~~2019,~~2020, primarily due to ~~decreases~~a decrease in long-term debt ~~unconditional purchase obligations~~ and interest payable, offset by an increase in purchase obligations. ~~Our~~Our estimated contractual obligations for the twelve months ending February 28, ~~2021~~2022 are approximately ~~$391.7~~$512.0 million and primarily consist of expenditures incurred in connection with normal business operations.

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 February ~~29, 2020,~~28, 2021, we had committed ~~$27.4~~$23.7 million under these arrangements, of which $3.0 million reduced availability under the Revolver.

OFF-BALANCE SHEET ARRANGEMENTS

We have 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.

CONTINGENCIES

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, 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 effects of ongoing trade actions, the effects of continued pressure on the liquidity of our customers, potential synergies and organic growth provided by ~~our recent~~ acquisitions and strategic investments, demand for our products, ~~steel~~metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel mills at full capacity, future supplies of raw materials and energy for our operations, share repurchases, legal proceedings, the undistributed earnings of our non-U.S. subsidiaries, U.S. non-residential construction activity, international trade, capital expenditures, our liquidity and our ability to satisfy future liquidity requirements, estimated contractual obligations and our expectations or beliefs concerning future events. These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements.

Our forward-looking statements are based on management's expectations and beliefs as of the time this Form 10-Q is filed with the SEC or, with respect to any document incorporated by reference, as of the time such document was prepared. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of the ~~2019~~2020 Form 10-K, as well as the following:

•changes in economic conditions which affect demand for our products or construction activity generally, and the impact of such changes on the highly cyclical steel industry;

•rapid and significant changes in the price of metals, potentially impairing our inventory values due to declines in commodity prices or reducing the profitability of our ~~fabrication~~downstream contracts due to rising commodity pricing;

•impacts from COVID-19 on the economy, demand for our products orand on our operations, including the responses of governmental authorities to contain ~~COVID-19;~~COVID-19 and the impact from the distribution of various COVID-19 vaccines;

•excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing;

•compliance with and changes in ~~environmental~~existing and future government laws, regulations and ~~regulations,~~other legal requirements and judicial decisions that govern our business, including increased ~~regulation~~environmental regulations associated with climate change and greenhouse gas emissions;

•involvement in various environmental matters that may result in fines, penalties or judgments;

•potential limitations in our or our customers' abilities to access credit and non-compliance by our customers with our contracts;

•activity in repurchasing shares of our common stock under our repurchase program;

•financial covenants and restrictions on the operation of our business contained in agreements governing our debt;

•our ability to successfully identify, consummate and integrate acquisitions, and the effects that acquisitions may have on our financial leverage;

•risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals;

•operating and start-up risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investment;

•lower than expected future levels of revenues and higher than expected future costs;

•failure or inability to implement growth strategies in a timely manner;

•impact of goodwill impairment charges;

•impact of long-lived asset impairment charges;

•currency fluctuations;

•global factors, ~~including~~such as trade measures, military conflicts and political uncertainties, including the impact of the 2020 U.S. election on current trade regulations, such as Section 232 trade tariffs, tax legislation and ~~military conflicts;~~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;

•~~new and clarifying guidance with regard to interpretation of certain provisions of the Tax Cuts and Jobs Act that could impact our assessment;~~ and

•~~increased costs related to health care reform legislation.~~

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 risks which would cause actual results to be significantly different from those expressed or implied by these forward-looking statements. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-looking events and circumstances discussed herein may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Accordingly, readers of this Form 10-Q are cautioned not to place undue reliance on the forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the six months ended February 29, 2020, the U.S. dollar equivalent of the Company's total gross foreign currency exchange contract commitments decreased $9.5 million, or 10%, compared to August 31, 2019. This decrease was primarily due to forward contracts denominated in euro with a Polish zloty functional currency, which decreased $6.1 million compared to August 31, 2019.

~~During the six months ended February 29, 2020, the change in the Company's total commodity contract commitments was relatively flat compared to August 31, 2019.~~

There were no ~~other~~ material changes to the information set forth in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, included in the ~~2019~~2020 Form 10-K.

ITEM 4. 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 our 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.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our quarter ended February ~~29, 2020~~28, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~The Company is a defendant~~For information regarding our legal proceedings, refer to “Legal and Environmental Matters” in ~~lawsuits associated with~~Note 13 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 ~~normal conduct~~discharge of ~~its businesses~~materials into the environment or primarily for the purpose of protecting the environment, we have determined that we will disclose any such proceeding if we reasonably believe such proceeding will result in monetary sanctions, exclusive of interest and ~~operations. It is not possible to predict the outcome~~costs, of ~~the pending actions, and as with any litigation, it is possible that these actions could be decided unfavorably to the Company.~~at least $1.0 million. We believe that ~~there~~this threshold is reasonably designed to result in disclosure of environmental proceedings that are ~~meritorious defenses~~material to ~~these actions and that these actions will not have a material adverse effect upon~~ our ~~results of operations, cash flows~~business or financial ~~condition, and where appropriate, these actions are being vigorously contested.~~

We are the subject of civil actions, or have received notices from the U.S. Environmental Protection Agency ("EPA") or state agencies with similar responsibility, that we and numerous other parties are considered a potentially responsible party ("PRP") and may be obligated under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), or similar state statutes,condition. Applying this threshold, there were no environmental matters to ~~pay~~disclose for the cost of remedial investigation, feasibility studies and ultimately remediation to correct alleged releases of hazardous substances at eleven locations. The actions and notices refer to the following locations, none of which involve real estate we ever owned or upon which we ever conducted operations: the Sapp Battery Site in Cottondale, Florida, the Interstate Lead Company Site in Leeds, Alabama, the Ross Metals Site in Rossville, Tennessee, the Li Tungsten Site in Glen Cove, New York, the Peak Oil Site in Tampa, Florida, the R&H Oil Site in San Antonio, Texas, the SoGreen/Parramore Site in Tifton, Georgia, the Jensen Drive site in Houston, Texas, the Industrial Salvage site in Corpus Christi, Texas, the Chemetco site in Hartford, Illinois and the Ward Transformer site in Raleigh, North Carolina. We may contest our designation as a PRP with regard to certain sites, while at other sites we are participating with other named PRPs in agreements or negotiations that have resulted or that we expect will result in agreements to remediate the sites. During 2010, we acquired a 70% interest in the real property at Jensen Drive as part of the remediation of that site. We have periodically received information requests from government environmental agencies with regard to other sites that are apparently under consideration for designation as listed sites under CERCLA or similar state statutes. Often we do not receive any further communication with regard to these sites, and as of the date of this ~~Form 10-Q, we do not know if any of these inquiries will ultimately result in a demand for payment from us.~~

The EPA notified us and other alleged PRPs that under Section 106 of CERCLA, we and the other PRPs could be subject to a maximum fine of $25,000 per day and the imposition of treble damages if we and the other PRPs refuse to clean up the Peak Oil, Sapp Battery and SoGreen/Parramore sites as ordered by the EPA. We are presently participating in PRP organizations at these sites, which are paying for certain site remediation expenses. We do not believe that the EPA will pursue any fines against us if we continue to participate in the PRP groups or if we have adequate defenses to the EPA's imposition of fines against us in these matters.

We believe that adequate provisions have been made in the financial statements for the potential impact of any loss in connection with the above-described legal proceedings and environmental matters. Management believes that the outcome of the proceedings mentioned, and other miscellaneous litigation and proceedings now pending, will not have a material adverse effect on our business, results of operations or financial condition.period.

ITEM 1A. RISK FACTORS

Except as set forth below, there were no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of the ~~2019~~2020 Form 10-K and Part II, Item 1A, Risk Factors, of the Quarterly Report on Form 10-Q for the period ended November 30, ~~2019:~~2020:

~~Our business, financial condition~~Operating and ~~results~~start-up risks, as well as market risks associated with the commissioning of ~~operations may be adversely affected by global public health epidemics, including the recent COVID-19 outbreak.~~new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investment.

~~Our business, financial condition~~Although we have successfully commissioned and ~~results of operations may be adversely affected if a global public health epidemic, including the recent COVID-19 outbreak, interferes~~operated similar technologies, there are some new technological, as well as operational, market and start-up risks associated with the ~~ability~~construction and start-up of our ~~employees, suppliers, customers, financing sources~~third rolling mill in Poland and third micro mill to be located in Mesa, Arizona. We believe these facilities should be capable of consistently producing high-quality products, and in sufficient quantities and at a cost that will compare favorably with other similar steel manufacturing facilities; however, there can be no assurance that these expectations will be achieved. If we encounter cost overruns, system or ~~others~~process difficulties during or after start-up or quality control restrictions, our capital costs could increase materially, the expected benefits from the development of these facilities could be diminished or lost, and we could lose all or a substantial portion of our investment. We could also encounter commodity market risk if, during a sustained period, the cost to conduct business or negatively affects consumer confidence or the global economy. In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. In January 2020, COVID-19 spread to other countries, including the United States, and efforts to contain the spread of COVID-19 intensified. The outbreakmanufacture is a widespread health crisis that has affected large segments of the global economy. The outbreak and any preventative or protective actions that governments or we may take with respect to COVID-19 may have a material adverse effect on our business or our suppliers, distribution channels, and customers, including business shutdowns or disruptions for an indefinite period of time, reduced operations, restrictions on shipping, fabricating or installing products or reduced consumer demand. Any resulting financial impact cannot be estimated reasonably at this time, but may materially affect our business, financial condition or results of operations. The extent to which

COVID-19 affects our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain the outbreak or treat its impact, among others.greater than projected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no purchases of equity securities registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended February ~~29, 2020.~~28, 2021.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

3.1(a)

Restated Certificate of Incorporation dated March 2, 1989 (filed as Exhibit 3(i) to Commercial Metals Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2009 and incorporated herein by reference).

3.1(b)

Certificate of Amendment of Restated Certificate of Incorporation dated February 1, 1994 (filed as Exhibit 3(i)(a) to Commercial Metals Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2009 and incorporated herein by reference).

3.1(c)

Certificate of Amendment of Restated Certificate of Incorporation dated February 17, 1995 (filed as Exhibit 3(i)(b) to Commercial Metals Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2009 and incorporated herein by reference).

3.1(d)

Certificate of Amendment of Restated Certificate of Incorporation dated January 30, 2004 (filed as Exhibit 3(i)(d) to Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 2004 and incorporated herein by reference).

3.1(e)

Certificate of Amendment of Restated Certificate of Incorporation dated January 26, 2006 (filed as Exhibit 3(i) to Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2006 and incorporated herein by reference).

3.1(f)

Certificate of Designation, Preferences and Rights of Series A Preferred Stock (filed as Exhibit 2 to Commercial Metals Company's Form 8-A filed August 3, 1999 and incorporated herein by reference).

3.2

Fourth Amended and Restated Bylaws (filed as Exhibit 3.1 to Commercial Metals Company's Current Report on Form 8-K dated September 23, 2019 and incorporated herein by reference).

~~10.1~~

4.1

~~Consulting Agreement,~~Fourth Supplemental Indenture, dated ~~as of March 1, 2020,~~February 2, 2021, by and ~~between Mary A. Lindsey and~~among Commercial Metals Company and U.S. Bank National Association, as trustee (filed as Exhibit ~~10.1~~4.1 to Commercial Metals Company's Current Report on Form 8-K dated ~~March~~February 2, ~~2020~~2021 and incorporated ~~her~~e inherein by reference).

~~10.2~~

4.2

~~Separation and Release Agreement, dated as~~Form of ~~February 28, 2020, by and between Commercial Metals Company and Paul K. Kirkpatrick~~3.875% Senior Note due 2031 (filed as Exhibit ~~10.1~~4.2 to Commercial Metals Company's Current Report on Form 8-K dated ~~March 3, 2020~~February 2, 2021 and incorporated ~~her~~e inherein by reference).

31.1

Certification of Barbara R. Smith, President and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 to the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2

Certification of Paul J. Lawrence, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1

Certification of Barbara R. Smith, President and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certification of Paul J. Lawrence, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS

Inline XBRL Instance Document (filed herewith).

101.SCH

Inline XBRL Taxonomy Extension Schema Document (filed herewith).

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).

104

Cover Page Interactive Data File

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

March ~~25, 2020~~24, 2021			/s/ Paul J. Lawrence
			Paul J. Lawrence
			Vice President and Chief Financial Officer
			(Duly authorized officer and principal financial officer of the registrant)

3432


	Three Months Ended February 28,						Six Months Ended February 28,
(in thousands)	2019		2018		2019		2018
Pro forma net sales*	$	1,379,033	$	1,470,603	$	2,925,007	$	2,914,292
Pro forma net earnings (loss)**	10,260		18,786		26,081		(2,187)


			Twelve Months Ended August 31,
(in thousands)	Total		2020	2021	2022	2023	2024	Thereafter
Capital lease obligations	$	41,331	13,104	10,004	7,758	5,831	3,904	$	730
Long-term non-cancelable operating leases	$	124,817	34,511	27,383	22,074	17,433	10,478	$	12,938


		Three Months Ended						Six Months Ended
Derivatives Not Designated as Hedging Instruments (in thousands)	Location	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
Commodity	Cost of goods sold	$	1,731	$	(2,425)	$	416	$	(3,265)

Foreign exchange	SG&A expenses	(21)		(526)		20		(400)
Gain (loss) before income taxes		$	1,710	$	(2,951)	$	436	$	(3,665)