UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November 30, 2021~~May 31, 2022

☐ 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 ~~January 7,~~June 21, 2022, ~~121,481,234~~120,490,407 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			3
Condensed Consolidated Statements of Earnings (Unaudited) - Three and nine months ended ~~November~~ 3 0 ,May 31, 2022 and 2021 ~~and 2020~~			3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Three and nine months ended ~~November~~ 3 0 ,May 31, 2022 and 2021 ~~and 2020~~			4
Condensed Consolidated Balance Sheets (Unaudited) - ~~November 30, 2021~~May 31, 2022 and August 31, 2021			5
Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Three~~Nine months ended ~~November 30,~~May 31, 2022 and 2021 ~~and 2020~~			6
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - Three and nine months ended ~~November~~ 3 0 ,May 31, 2022 and 2021 ~~and 2020~~			7
Notes to Condensed Consolidated Financial Statements (Unaudited)			89
Note 1. Accounting Policies			89
Note 2. ~~Changes in Business~~			8
~~Note 3. Accumulated Other Comprehensive Income (Loss)~~Acquisition			9
Note ~~4. Revenue Recognition~~			9
~~Note 5. Inventories, Net~~			10
~~Note 6. Goodwill and Other Intangibles~~			10
~~Note 7. Leases~~			10
~~Note 8. Credit Arrangements~~3. Changes in Business			12
Note ~~9. Derivatives~~4. Accumulated Other Comprehensive Income (Loss)			13
Note ~~10. Fair Value~~5. Revenue Recognition			1314
Note ~~11. Stock-Based Compensation Plans~~6. Inventories, Net			14
Note 7. Goodwill and Other Intangibles			15
Note 8. Leases			16
Note ~~12. Stockholders' Equity and Earnings Per Share~~			16
~~Note 13. Commitments and Contingencies~~9. Credit Arrangements			17
Note ~~14. Business Segments~~10. Derivatives			1719
Note 11. Fair Value			20
Note 12. Stock-Based Compensation Plans			22
Note 13. Employees' Retirement Plans			22
Note 14. Stockholders' Equity and Earnings Per Share			23
Note 15. ~~Subsequent Event~~Commitments and Contingencies			1823
Note 16. Business Segments			24
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			1926
Item 3. Quantitative and Qualitative Disclosures About Market Risk			2636
Item 4. Controls and Procedures			2737

PART II — OTHER INFORMATION			2838

Item 1. Legal Proceedings			2838
Item 1A. Risk Factors			2838
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			2838
Item 3. Defaults Upon Senior Securities			2839
Item 4. Mine Safety Disclosures			2839
Item 5. Other Information			2939
Item 6. Exhibits			3040
Signature			3241

Table of Contents

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 November 30,					Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2021		2020				(in thousands, except share and per share data)	2022		2021		2022		2021
Net sales	Net sales	$	1,981,801	$	1,391,803			Net sales	$	2,515,727	$	1,845,041	$	6,506,416	$	4,699,114
Costs and expenses:
Costs and operating expenses (income):								Costs and operating expenses (income):
Cost of goods sold	Cost of goods sold	1,586,410		1,174,819				Cost of goods sold	1,956,459		1,533,768		5,157,834		3,936,930
Selling, general and administrative expenses	Selling, general and administrative expenses	122,595		113,627				Selling, general and administrative expenses	139,556		134,357		391,119		368,882
Interest expense	Interest expense	11,035		14,259				Interest expense	13,433		11,965		36,479		40,245

Loss on debt extinguishment								Loss on debt extinguishment	39		—		16,091		16,841
Asset impairments	Asset impairments	—		3,594				Asset impairments	3,245		277		4,473		4,345
		1,720,040		1,306,299
Earnings from continuing operations before income taxes		261,761		85,504
Gain on sale of assets								Gain on sale of assets	(2,024)		(3,909)		(276,106)		(9,390)
Net costs and operating expenses								Net costs and operating expenses	2,110,708		1,676,458		5,329,890		4,357,853
Earnings before income taxes								Earnings before income taxes	405,019		168,583		1,176,526		341,261
Income taxes	Income taxes	28,872		21,593				Income taxes	92,590		38,175		247,894		80,709
Earnings from continuing operations		232,889		63,911

Earnings from discontinued operations before income taxes		—		250
Income taxes		—		68
Earnings from discontinued operations		—		182

Net earnings	Net earnings	$	232,889	$	64,093			Net earnings	$	312,429	$	130,408	$	928,632	$	260,552

Basic earnings per share*
Earnings from continuing operations		$	1.92	$	0.53
Earnings from discontinued operations		—		—
Net earnings		$	1.92	$	0.54

Diluted earnings per share*
Earnings from continuing operations		$	1.90	$	0.53
Earnings from discontinued operations		—		—
Net earnings		$	1.90	$	0.53
Earnings per share:								Earnings per share:
Basic								Basic	$	2.58	$	1.08	$	7.66	$	2.17
Diluted								Diluted	$	2.54	$	1.07	$	7.55	$	2.14

Average basic shares outstanding	Average basic shares outstanding	121,129,679		119,762,706				Average basic shares outstanding	121,247,105		120,613,652		121,277,553		120,241,579
Average diluted shares outstanding	Average diluted shares outstanding	122,797,738		121,128,044				Average diluted shares outstanding	122,799,869		122,193,655		122,927,291		121,852,144

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.

Table of Contents


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)							COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020			(in thousands)	2022		2021		2022		2021
Net earnings	Net earnings	$	232,889	$	64,093		Net earnings	$	312,429	$	130,408	$	928,632	$	260,552
Other comprehensive income (loss), net of income taxes:	Other comprehensive income (loss), net of income taxes:						Other comprehensive income (loss), net of income taxes:

Foreign currency translation adjustment after reclassification	Foreign currency translation adjustment after reclassification	(39,688)		(8,388)			Foreign currency translation adjustment after reclassification	(14,668)		11,775		(68,817)		4,852
Derivatives:	Derivatives:						Derivatives:
Unrealized holding gain	Unrealized holding gain	22,254		1,164			Unrealized holding gain	25,927		12,145		81,378		21,032
Reclassification for realized gain	Reclassification for realized gain	(3,069)		(54)			Reclassification for realized gain	(5,107)		(616)		(13,453)		(929)
Net unrealized gain on derivatives	Net unrealized gain on derivatives	19,185		1,110			Net unrealized gain on derivatives	20,820		11,529		67,925		20,103

Defined benefit plans loss after amortization of prior service costs and net actuarial losses	Defined benefit plans loss after amortization of prior service costs and net actuarial losses	(6)		(13)			Defined benefit plans loss after amortization of prior service costs and net actuarial losses	(6)		(14)		(18)		(41)
Other comprehensive loss		(20,509)		(7,291)
Total other comprehensive income (loss), net of income taxes							Total other comprehensive income (loss), net of income taxes	6,146		23,290		(910)		24,914
Comprehensive income	Comprehensive income	$	212,380	$	56,802		Comprehensive income	$	318,575	$	153,698	$	927,722	$	285,466

See notes to condensed consolidated financial statements.

Table of Contents


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 and per share data)	(in thousands, except share and per share data)	November 30, 2021		August 31, 2021		(in thousands, except share and per share data)	May 31, 2022		August 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	415,055	$	497,745	Cash and cash equivalents	$	410,265	$	497,745
Accounts receivable (less allowance for doubtful accounts of $5,550 and $5,553)		1,095,612		1,105,580
Restricted cash						Restricted cash	126,264		3,384
Accounts receivable (less allowance for doubtful accounts of $5,070 and $5,553)						Accounts receivable (less allowance for doubtful accounts of $5,070 and $5,553)	1,330,279		1,105,580
Inventories, net	Inventories, net	1,071,759		935,387		Inventories, net	1,346,286		935,387
Prepaid and other current assets	Prepaid and other current assets	178,867		173,033		Prepaid and other current assets	230,414		169,649
Assets held for sale	Assets held for sale	25,083		25,083		Assets held for sale	60		25,083
Total current assets	Total current assets	2,786,376		2,736,828		Total current assets	3,443,568		2,736,828
Property, plant and equipment, net	Property, plant and equipment, net	1,587,442		1,566,123		Property, plant and equipment, net	1,808,392		1,566,123
Intangible assets, net						Intangible assets, net	266,440		10,101
Goodwill	Goodwill	65,852		66,137		Goodwill	253,563		66,137
Other noncurrent assets	Other noncurrent assets	285,588		269,583		Other noncurrent assets	331,739		259,482
Total assets	Total assets	$	4,725,258	$	4,638,671	Total assets	$	6,103,702	$	4,638,671
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	424,919	$	450,723	Accounts payable	$	492,947	$	450,723
Accrued expenses and other payables	Accrued expenses and other payables	410,305		475,384		Accrued expenses and other payables	474,653		475,384
Current maturities of long-term debt and short-term borrowings	Current maturities of long-term debt and short-term borrowings	56,896		54,366		Current maturities of long-term debt and short-term borrowings	423,091		54,366
Total current liabilities	Total current liabilities	892,120		980,473		Total current liabilities	1,390,691		980,473
Deferred income taxes	Deferred income taxes	104,193		112,067		Deferred income taxes	223,979		112,067
Other noncurrent liabilities	Other noncurrent liabilities	234,955		235,607		Other noncurrent liabilities	231,385		235,607
Long-term debt	Long-term debt	1,007,801		1,015,415		Long-term debt	1,115,478		1,015,415
Total liabilities	Total liabilities	2,239,069		2,343,562		Total liabilities	2,961,533		2,343,562
Commitments and contingencies (Note 13)		0		0
Commitments and contingencies (Note 15)						Commitments and contingencies (Note 15)	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 121,479,939 and 120,586,589 shares		1,290		1,290
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 120,490,407 and 120,586,589 shares						Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 120,490,407 and 120,586,589 shares	1,290		1,290
Additional paid-in capital	Additional paid-in capital	357,413		368,064		Additional paid-in capital	375,386		368,064
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(105,329)		(84,820)		Accumulated other comprehensive loss	(85,730)		(84,820)
Retained earnings	Retained earnings	2,378,789		2,162,925		Retained earnings	3,040,554		2,162,925
Less treasury stock 7,580,725 and 8,474,075 shares at cost		(146,206)		(152,582)
Less treasury stock 8,570,257 and 8,474,075 shares at cost						Less treasury stock 8,570,257 and 8,474,075 shares at cost	(189,563)		(152,582)
Stockholders' equity	Stockholders' equity	2,485,957		2,294,877		Stockholders' equity	3,141,937		2,294,877
Stockholders' equity attributable to noncontrolling interests		232		232
Stockholders' equity attributable to non-controlling interests						Stockholders' equity attributable to non-controlling interests	232		232
Total stockholders' equity	Total stockholders' equity	2,486,189		2,295,109		Total stockholders' equity	3,142,169		2,295,109
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	4,725,258	$	4,638,671	Total liabilities and stockholders' equity	$	6,103,702	$	4,638,671

See notes to condensed consolidated financial statements.

Table of Contents


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)
		Three Months Ended November 30,					Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
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	$	232,889	$	64,093	Net earnings	$	928,632	$	260,552
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	41,226		41,799		Depreciation and amortization	125,943		125,176
Deferred income taxes and other long-term taxes						Deferred income taxes and other long-term taxes	64,241		(17,175)
Stock-based compensation	Stock-based compensation	9,619		9,062		Stock-based compensation	37,856		35,558
Deferred income taxes and other long-term taxes		(5,099)		11,720

Loss on debt extinguishment						Loss on debt extinguishment	16,052		16,841
Asset impairments						Asset impairments	4,473		4,345
Other	Other	(583)		(39)		Other	1,449		243
Asset impairments		—		3,594
Amortization of acquired unfavorable contract backlog	Amortization of acquired unfavorable contract backlog	—		(1,523)		Amortization of acquired unfavorable contract backlog	—		(4,540)
Net gain on disposals of assets						Net gain on disposals of assets	(276,106)		(9,390)
Changes in operating assets and liabilities	Changes in operating assets and liabilities	(252,273)		(140,794)		Changes in operating assets and liabilities	(660,793)		(317,378)
Net cash flows from (used by) operating activities		25,779		(12,088)
Net cash flows from operating activities						Net cash flows from operating activities	241,747		94,232

Cash flows from (used by) investing activities:	Cash flows from (used by) investing activities:					Cash flows from (used by) investing activities:
Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(552,449)		—
Proceeds from the sale of property, plant and equipment and other						Proceeds from the sale of property, plant and equipment and other	314,971		25,890
Capital expenditures	Capital expenditures	(70,150)		(37,201)		Capital expenditures	(294,346)		(127,395)
Proceeds from the sale of property, plant and equipment and other		1,418		743

Proceeds from insurance						Proceeds from insurance	3,081		—
Other						Other	—		(2,500)

Net cash flows used by investing activities	Net cash flows used by investing activities	(68,732)		(36,458)		Net cash flows used by investing activities	(528,743)		(104,005)

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, net						Proceeds from issuance of long-term debt, net	740,403		309,187
Repayments of long-term debt						Repayments of long-term debt	(319,706)		(361,855)
Debt extinguishment costs						Debt extinguishment costs	(13,642)		(13,128)
Debt issuance costs						Debt issuance costs	(3,064)		(2,830)
Proceeds from accounts receivable facilities	Proceeds from accounts receivable facilities	150,664		4,487		Proceeds from accounts receivable facilities	327,665		145,864
Repayments under accounts receivable facilities	Repayments under accounts receivable facilities	(144,706)		(4,487)		Repayments under accounts receivable facilities	(290,666)		(118,312)
Treasury stock acquired						Treasury stock acquired	(55,597)		—
Dividends	Dividends	(17,025)		(14,406)		Dividends	(51,003)		(43,295)
Stock issued under incentive and purchase plans, net of forfeitures	Stock issued under incentive and purchase plans, net of forfeitures	(16,371)		(10,341)		Stock issued under incentive and purchase plans, net of forfeitures	(10,132)		(3,807)
Repayments of long-term debt		(6,556)		(3,823)
Treasury stock acquired		(5,311)		—
Net cash flows used by financing activities		(39,305)		(28,570)
Contribution from non-controlling interest						Contribution from non-controlling interest	—		19
Net cash flows from (used by) financing activities						Net cash flows from (used by) financing activities	324,258		(88,157)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(550)		(365)		Effect of exchange rate changes on cash	(1,862)		(423)
Decrease in cash, restricted cash and cash equivalents		(82,808)		(77,481)
Increase (decrease) in cash, restricted cash and cash equivalents						Increase (decrease) in cash, restricted cash and cash equivalents	35,400		(98,353)
Cash, restricted cash and cash equivalents at beginning of period	Cash, restricted cash and cash equivalents at beginning of period	501,129		544,964		Cash, restricted cash and cash equivalents at beginning of period	501,129		544,964
Cash, restricted cash and cash equivalents at end of period	Cash, restricted cash and cash equivalents at end of period	$	418,321	$	467,483	Cash, restricted cash and cash equivalents at end of period	$	536,529	$	446,611

See notes to condensed consolidated financial statements.
Supplemental information: Three Months Ended November 30,
(in thousands) 2021 2020
Cash paid for income taxes $ 15,296 $ 4,743
Cash paid for interest 8,794 18,691
Noncash activities:
Liabilities related to additions of property, plant and equipment 45,788 20,246
Cash and cash equivalents $ 415,055 $ 465,162
Restricted cash 3,266 2,321
Total cash, restricted cash and cash equivalents $ 418,321 $ 467,483


Supplemental information:	Nine Months Ended May 31,
(in thousands)	2022		2021
Cash paid for income taxes	$	189,491	$	59,041
Cash paid for interest	34,394		43,403

Noncash activities:
Liabilities related to additions of property, plant and equipment	$	50,948	$	16,601

Cash and cash equivalents	$	410,265	$	443,120
Restricted cash	126,264		3,491
Total cash, restricted cash and cash equivalents	$	536,529	$	446,611

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COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)																	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
																			Three Months Ended May 31, 2022
																			Common Stock									Treasury Stock
(in thousands, except share and per share data)																		(in thousands, except share and per share data)	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total
Balance, March 1, 2022																		Balance, March 1, 2022	129,060,664	$	1,290	$	366,162	$	(91,876)	$	2,745,117	(7,564,796)	$	(150,978)	$	232	$	2,869,947
Net earnings																		Net earnings								312,429							312,429
Other comprehensive income																		Other comprehensive income						6,146									6,146
Dividends ($0.14 per share)																		Dividends ($0.14 per share)								(16,992)							(16,992)
Treasury stock acquired																		Treasury stock acquired										(1,006,387)	(38,587)				(38,587)
Issuance of stock under incentive and purchase plans, net of forfeitures																		Issuance of stock under incentive and purchase plans, net of forfeitures				585						926	2				587
Stock-based compensation																		Stock-based compensation				8,639											8,639
Balance, May 31, 2022																		Balance, May 31, 2022	129,060,664	$	1,290	$	375,386	$	(85,730)	$	3,040,554	(8,570,257)	$	(189,563)	$	232	$	3,142,169

		Three Months Ended November 30, 2021																	Nine Months Ended May 31, 2022
		Common Stock									Treasury Stock								Common Stock									Treasury Stock
(in thousands, except share and per share data)	(in thousands, except share and per share data)	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total		(in thousands, except share and per share data)	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total
Balance, September 1, 2021	Balance, September 1, 2021	129,060,664	$	1,290	$	368,064	$	(84,820)	$	2,162,925	(8,474,075)	$	(152,582)	$	232	$	2,295,109	Balance, September 1, 2021	129,060,664	$	1,290	$	368,064	$	(84,820)	$	2,162,925	(8,474,075)	$	(152,582)	$	232	$	2,295,109
Net earnings	Net earnings								232,889							232,889		Net earnings								928,632							928,632
Other comprehensive loss	Other comprehensive loss						(20,509)									(20,509)		Other comprehensive loss						(910)									(910)
Dividends ($0.14 per share)									(17,025)							(17,025)
Dividends ($0.42 per share)																		Dividends ($0.42 per share)								(51,003)							(51,003)
Treasury stock acquired	Treasury stock acquired										(159,500)	(5,311)				(5,311)		Treasury stock acquired										(1,501,387)	(55,597)				(55,597)
Issuance of stock under incentive and purchase plans, net of forfeitures	Issuance of stock under incentive and purchase plans, net of forfeitures				(28,058)						1,052,850	11,687				(16,371)		Issuance of stock under incentive and purchase plans, net of forfeitures				(28,748)						1,405,205	18,616				(10,132)
Stock-based compensation	Stock-based compensation				8,316											8,316		Stock-based compensation				26,979											26,979

Reclassification of share-based liability awards	Reclassification of share-based liability awards				9,091											9,091		Reclassification of share-based liability awards				9,091											9,091
Balance, November 30, 2021		129,060,664	$	1,290	$	357,413	$	(105,329)	$	2,378,789	(7,580,725)	$	(146,206)	$	232	$	2,486,189

Balance, May 31, 2022																		Balance, May 31, 2022	129,060,664	$	1,290	$	375,386	$	(85,730)	$	3,040,554	(8,570,257)	$	(189,563)	$	232	$	3,142,169

Three Months Ended November 30, 2020
Common Stock Treasury Stock
(in thousands, except share and per share data) Number of
Shares Amount Additional Paid-In
Capital Accumulated
Other Comprehensive
Loss Retained
Earnings Number of
Shares Amount Non-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 64,093 64,093
Other comprehensive loss (7,291) (7,291)
Dividends ($0.12 per share) (14,406) (14,406)
Issuance of stock under incentive and purchase plans, net of forfeitures (23,527) 847,116 13,186 (10,341)
Stock-based compensation 8,011 8,011
Reclassification of share-based liability awards 5,420 5,420
Balance, November 30, 2020 129,060,664 $ 1,290 $ 348,816 $ (111,055) $ 1,857,513 (8,992,643) $ (161,877) $ 212 $ 1,934,899

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	Three Months Ended May 31, 2021
	Common Stock									Treasury Stock
(in thousands, except share and per share data)	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total
Balance, March 1, 2021	129,060,664	$	1,290	$	354,620	$	(102,140)	$	1,909,443	(8,552,449)	$	(153,952)	$	231	$	2,009,492
Net earnings								130,408							130,408
Other comprehensive income						23,290									23,290
Dividends ($0.12 per share)								(14,768)							(14,768)
Issuance of stock under incentive and purchase plans, net of forfeitures				(633)						77,556	1,362				729
Stock-based compensation				7,446											7,446


Balance, May 31, 2021	129,060,664	$	1,290	$	361,433	$	(78,850)	$	2,025,083	(8,474,893)	$	(152,590)	$	231	$	2,156,597

	Nine Months Ended May 31, 2021
	Common Stock									Treasury Stock
(in thousands, except share and per share data)	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Number of Shares	Amount		Non-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								260,552							260,552
Other comprehensive income						24,914									24,914
Dividends ($0.36 per share)								(43,295)							(43,295)
Issuance of stock under incentive and purchase plans, net of forfeitures				(26,280)						1,364,866	22,473				(3,807)
Stock-based compensation				23,381											23,381
Contribution of non-controlling interest													19		19
Reclassification of share-based liability awards				5,420											5,420
Balance, May 31, 2021	129,060,664	$	1,290	$	361,433	$	(78,850)	$	2,025,083	(8,474,893)	$	(152,590)	$	231	$	2,156,597

See notes to condensed consolidated financial statements.

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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, 2021 (the "2021 Form 10-K") filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the Securities and Exchange Commission (the "SEC") and include all normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets and the condensed consolidated statements of earnings, comprehensive income, cash flows and stockholders' equity for the periods indicated. These notes should be read in conjunction with the consolidated financial statements and notes included in the 2021 Form 10-K. The results of operations for the three and nine month ~~period~~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 "corresponding period" relates to the relevant three or nine month period ended ~~November 30, 2020.~~May 31, 2021.

Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise noted.

Recently Issued Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires that an acquirer recognize and measure contract assets and liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This standard is effective for annual periods beginning after December 15, 2022, including interim periods therein, with early adoption permitted. The guidance will be applied prospectively to acquisitions occurring on or after the effective date. The Company will continue to evaluate the impact of this guidance, which will depend on the contract assets and liabilities acquired in future business combinations.

In November 2021, the Financial Accounting Standards Board issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities About Government Assistance. ASU 2021-10 aims to increase the transparency of government assistance through the disclosure of the types of assistance, an entity's accounting for the assistance and the effect of the assistance on an entity's financial statements. This standard is effective for annual periods beginning after December 15, 2021, with early adoption permitted. The Company will continue to evaluate the impact of this guidance based on government assistance received.

NOTE 2. ACQUISITION

On April 25, 2022 (the "Acquisition Date"), the Company completed the acquisition of TAC Acquisition Corp. ("Tensar"). The total cash purchase price, net of $19.6 million cash acquired, was approximately $550 million, subject to customary purchase price adjustments, and was funded through domestic cash on-hand.

Tensar is a leading global provider of innovative ground stabilization and soil reinforcement solutions through two major product lines: Tensar® geogrids and Geopier® foundation systems, which are complementary to the Company's existing concrete reinforcement product lines within North America and Europe. Geogrids are polymer-based products used for ground stabilization, soil reinforcement, and asphalt optimization in construction applications, including roadways, public infrastructure, and industrial facilities. Geopier foundation systems are ground improvement solutions that increase the load-bearing characteristics of ground structures and working surfaces and can be applied in soil types and construction situations in which traditional support methods are impractical or would make a project infeasible.

Tensar’s end customers include commercial, industrial and residential site developers, mining and oil and gas companies, transportation authorities, coastal and waterway authorities and waste management companies. Tensar serves customers in more than 80 national markets through its manufacturing facilities, the largest of which are located in Morrow, Georgia and Blackburn, England. The acquired operations in North America are presented within our North America reportable segment, and the remaining acquired operations are presented within our Europe reportable segment.

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The Company accounts for business combinations by recognizing the assets acquired and liabilities assumed at the Acquisition Date fair value. In valuing acquired assets and liabilities, fair value estimates were determined using Level 3 inputs, including expected future cash flows and discount rates. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the Acquisition Date, the Company’s estimates are inherently uncertain and subject to refinement. The results of operations of Tensar are reflected in the Company’s condensed consolidated financial statements from the Acquisition Date. The financial statements are not retrospectively adjusted for any adjustments that occur during the allowable one-year measurement period (the "Measurement Period"). Rather, any adjustments to provisional amounts identified during the Measurement Period will be recorded in the reporting period in which the adjustment is determined.

The table below presents the preliminary fair value that was allocated to Tensar's assets and liabilities based upon fair values as determined by the Company as of the Acquisition Date:


(in thousands)	Estimated Fair Value
Cash and cash equivalents	$	19,551
Accounts receivable	38,188
Inventories	38,810
Prepaid and other current assets	14,143
Defined benefit pension plan	14,620
Property, plant and equipment	88,541
Intangible assets	260,500
Goodwill	187,861
Other noncurrent assets	19,430
Accounts payable	(12,468)
Accrued expenses and other payables	(23,307)
Current maturities of long-term debt	(3,277)
Deferred income taxes	(48,683)
Other noncurrent liabilities	(17,597)
Long-term debt	(4,312)
Total assets acquired and liabilities assumed	$	572,000

Inventories

The acquired inventory is comprised of finished goods, work in process and raw materials. The fair value of finished goods was calculated as the estimated selling price, adjusted for the selling costs, economic rents for use of intangibles assets involved with the disposal process and a reasonable profit margin. The fair value of work in process was calculated as the estimated selling price, adjusted for estimated costs to complete manufacturing, estimated selling costs and a reasonable profit margin. The fair value of raw materials approximates the historical carrying value or was calculated based on the estimated replacement cost. The portion of the total purchase accounting inventory adjustment recognized during the three and nine months ended May 31, 2022 was $2.2 million, which was reflected as cost of goods sold as the related inventory was sold.

Defined Benefit Pension Plan

The Company recognized a net asset of $14.6 million, representing the overfunded status of the acquired defined benefit pension plan. See Note 13, Employees' Retirement Plans, for more information on the acquired plan.

Property, Plant and Equipment

The fair value of real property was calculated using the cost approach for buildings and improvements and the sales comparison approach for land. The fair value of personal property was calculated using the cost approach. The cost approach measures the value by estimating the cost to acquire or construct comparable assets and adjusts for age and condition. The Company assigned real property a useful life ranging from 5 to 25 years and personal property a useful life ranging from 1 to 15 years.

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Goodwill

Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets acquired. The factors contributing to the amount of goodwill are based on strategic and synergistic benefits that are expected to be realized from the acquisition, due in part to the complementing markets for engineered construction ground reinforcement and concrete reinforcement. For the period ended May 31, 2022, the Company added $187.9 million of goodwill related to the Tensar acquisition. The recognized goodwill is not deductible for tax purposes.

Intangible Assets

The acquired intangible assets consist of:

(in thousands, except life in years)

Life in Years

Preliminary Fair Value

Developed technologies

1 to 11 years

147,900

Trade names

8 to 9 years or indefinite

57,000

Customer relationships

12 to 17 years

53,200

In-process research and development

Indefinite

2,400

The fair value of developed technology was calculated using the income approach under the excess earnings method and considers selling and marketing and research and development costs, which were allocated based on patent lifecycles.

The fair value of trade names was calculated using the income approach, under the relief from royalty method. The relief from royalty method considers revenue derived from the corporate and product-specific trade names, the strength and relevance of the trade names in the marketplace and management’s plans to utilize the trade names going forward.

The fair value of customer relationships was calculated using the income approach, under the with-and-without method. The with-and-without method considers opportunity costs associated with lost profits in the absence of the existing customer base.

The fair value of in-process research and development was calculated using the cost approach and considers development costs, profit mark-up and opportunity cost.

Deferred Income Taxes

Deferred income tax liabilities include the expected future U.S. federal, state and foreign tax consequences associated with temporary differences between the preliminary fair values of the assets acquired and liabilities assumed and the respective tax bases. Tax rates utilized in calculating the deferred tax liabilities represent the appropriate tax rate for each respective jurisdiction. Deferred tax liabilities may be adjusted during the Measurement Period as the Company finalizes tax returns for periods prior to the Acquisition Date.

Other Assets Acquired and Liabilities Assumed

The Company used historical carrying values for trade accounts receivable and payables, as well as certain other current and noncurrent assets and liabilities, as their carrying values represented the fair value of those items as of the Acquisition Date.

Financial Results

The following table summarizes the financial results of Tensar from the Acquisition Date through the end of the third quarter of fiscal 2022 that are included in the Company’s condensed consolidated statement of earnings and condensed consolidated statement of comprehensive income.


(in thousands)	From the Acquisition Date to May 31, 2022
Net sales	$	27,962
Earnings before income taxes	1,656

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Pro Forma Supplemental Information

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


	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2022		2021		2022		2021
Pro forma net sales	$	2,554,295	$	1,908,133	$	6,657,257	$	4,854,727
Pro forma net earnings	318,736		134,854		942,369		261,218

The pro forma results presented above include, but are not limited to, adjustments to remove the impact of $4.5 million and $7.6 million of acquisition and integration expenses from the three and nine months ended May 31, 2022, respectively. Results also reflect increased amortization expense from revalued intangible assets of $1.9 million and $8.1 million in the three and nine months ended May 31, 2022, respectively, and $3.1 million and $9.3 million in the three and nine months ended May 31, 2021, respectively. The three and nine months ended May 31, 2022 include adjustments to remove $2.2 million of increased cost of goods sold as a result of the revaluation of inventory, which similarly resulted in an $8.7 million increase to cost of goods sold in the nine months ended May 31, 2021.

NOTE 2.3. CHANGES IN BUSINESS

Facility Closure and Disposition

In October 2019, the Company closed the melting operations at its Rancho Cucamonga facility, which iswas part of the North America segment, and in August 2020, the Company announced plans to sell the facility. Additionally, in September 2021, the Company ceased operations at a rebar fabrication facility adjacent to the Rancho Cucamonga facility. Due to these closures, the Company recorded ~~$8.0~~$13.4 million of expenses in the ~~three~~nine months ended ~~November 30, 2020~~May 31, 2021, all of which were recorded in the first two quarters of 2021, related to asset impairments, severance, pension curtailment, environmental obligations and vendor agreement terminations. Expenses recorded in the three and nine months ended ~~November 30, 2021~~May 31, 2022 were immaterial. The closures did not meet the criteria for discontinued operations.

As of August 31, 2021, the associated assets of the Rancho Cucamonga facility and the adjacent rebar fabrication facility ("the Rancho Cucamonga facilities"), comprised of property, plant and equipment, net, met the criteria for classification as held for sale. As such, the Company classified $24.9 million within assets held for sale in the Company's ~~condensed~~ consolidated balance ~~sheets~~sheet as of ~~November 30, 2021 and~~ August 31, 2021.

On September 29, 2021, the Company entered into a definitive agreement to sell the assets associated with the Rancho Cucamonga facilities. On December 28, 2021, the sale of the ~~assets associated with the~~Rancho Cucamonga facilities was completed for gross proceeds of $313.0 million. A portion of the gross proceeds amounting to $39.0 million ~~subject~~were set aside in a restricted cash account to ~~customary~~facilitate the purchase ~~price adjustments.~~of like-kind assets. In January 2022, the Company used $7.5 million of the restricted cash on a purchase of a like-kind asset. The remaining balance of $31.5 million was included in restricted cash as of May 31, 2022.

812

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NOTE 3.4. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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


											Three Months Ended May 31, 2022
(in thousands)										(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, March 1, 2022										Balance, March 1, 2022	$	(159,829)	$	68,886	$	(933)	$	(91,876)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	(14,668)		32,302		(7)		17,627
Reclassification for gain (1)										Reclassification for gain (1)	—		(6,342)		—		(6,342)
Income tax (expense) benefit										Income tax (expense) benefit	—		(5,140)		1		(5,139)
Net other comprehensive income (loss)										Net other comprehensive income (loss)	(14,668)		20,820		(6)		6,146
Balance, May 31, 2022										Balance, May 31, 2022	$	(174,497)	$	89,706	$	(939)	$	(85,730)

		Three Months Ended November 30, 2021									Nine Months Ended May 31, 2022
(in thousands)	(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI		(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, September 1, 2021	Balance, September 1, 2021	$	(105,680)	$	21,781	$	(921)	$	(84,820)	Balance, September 1, 2021	$	(105,680)	$	21,781	$	(921)	$	(84,820)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(39,688)		27,474		(8)		(12,222)		Other comprehensive income (loss) before reclassifications	(68,817)		100,820		(23)		31,980
Reclassification for gain(1)	Reclassification for gain(1)	—		(3,789)		—		(3,789)		Reclassification for gain (1)	—		(16,667)		—		(16,667)
Income tax (expense) benefit	Income tax (expense) benefit	—		(4,500)		2		(4,498)		Income tax (expense) benefit	—		(16,228)		5		(16,223)
Net other comprehensive income (loss)	Net other comprehensive income (loss)	(39,688)		19,185		(6)		(20,509)		Net other comprehensive income (loss)	(68,817)		67,925		(18)		(910)
Balance, November 30, 2021		$	(145,368)	$	40,966	$	(927)	$	(105,329)

Balance, May 31, 2022										Balance, May 31, 2022	$	(174,497)	$	89,706	$	(939)	$	(85,730)


											Three Months Ended May 31, 2021
(in thousands)										(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, March 1, 2021										Balance, March 1, 2021	$	(94,856)	$	(2,760)	$	(4,524)	$	(102,140)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	11,775		14,056		(14)		25,817
Reclassification for gain (1)										Reclassification for gain (1)	—		(719)		—		(719)
Income tax expense										Income tax expense	—		(1,808)		—		(1,808)
Net other comprehensive income (loss)										Net other comprehensive income (loss)	11,775		11,529		(14)		23,290
Balance, May 31, 2021										Balance, May 31, 2021	$	(83,081)	$	8,769	$	(4,538)	$	(78,850)

		Three Months Ended November 30, 2020									Nine Months Ended May 31, 2021
(in thousands)	(in thousands)	Foreign Currency Translation		Unrealized Gain (Loss) on Derivatives		Defined Benefit Obligation		Total AOCI		(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, September 1, 2020	Balance, September 1, 2020	$	(87,933)	$	(11,334)	$	(4,497)	$	(103,764)	Balance, September 1, 2020	$	(87,933)	$	(11,334)	$	(4,497)	$	(103,764)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(8,388)		1,437		(20)		(6,971)		Other comprehensive income (loss) before reclassifications	4,852		25,028		(48)		29,832
Reclassification for gain(1)	Reclassification for gain(1)	—		(67)		—		(67)		Reclassification for gain (1)	—		(1,106)		—		(1,106)
Income tax (expense) benefit	Income tax (expense) benefit	—		(260)		7		(253)		Income tax (expense) benefit	—		(3,819)		7		(3,812)
Net other comprehensive income (loss)	Net other comprehensive income (loss)	(8,388)		1,110		(13)		(7,291)		Net other comprehensive income (loss)	4,852		20,103		(41)		24,914
Balance, November 30, 2020		$	(96,321)	$	(10,224)	$	(4,510)	$	(111,055)

Balance, May 31, 2021										Balance, May 31, 2021	$	(83,081)	$	8,769	$	(4,538)	$	(78,850)

_________________

(1) Reclassifications for gains on derivatives included in net earnings are recorded in cost of goods sold in the condensed consolidated statements of earnings.

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NOTE 4.5. REVENUE RECOGNITION

Each fabricated product contract sold by the North America segment represents a single performance obligation. Revenue from contracts where the Company provides fabricated product and installation services is recognized over time using an input measure, and these contracts represented 9%7% and ~~14%~~8% of net sales in the North America segment in the three and nine months ended ~~November 30,~~May 31, 2022, respectively, and 7% and 10% of net sales in the North America segment in the three and nine months ended May 31, 2021, ~~and 2020,~~ respectively. Revenue from contracts where the Company does not provide installation services is recognized over time using an output measure, and these contracts represented 8% of net sales in the North America segment in both the three and nine months ended May 31, 2022, and 9% of net sales in the North America segment in both the three and nine months ended ~~November 30, 2021 and 2020.~~May 31, 2021. Remaining net sales in the North America segment were recognized at a point in time concurrent with the transfer of control, or as amounts were billed to the customer under an available practical expedient.

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


(in thousands)	(in thousands)	November 30, 2021		August 31, 2021		(in thousands)	May 31, 2022		August 31, 2021
Contract assets (included in accounts receivable)	Contract assets (included in accounts receivable)	$	61,888	$	64,168	Contract assets (included in accounts receivable)	$	58,350	$	64,168
Contract liabilities (included in accrued expenses and other payables)	Contract liabilities (included in accrued expenses and other payables)	29,066		23,948		Contract liabilities (included in accrued expenses and other payables)	23,214		23,948

The amount of revenue reclassified from August 31, 2021 contract liabilities during the ~~three~~nine months ended ~~November 30, 2021~~May 31, 2022 was approximately ~~$10.3~~$19.7 million.

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 ~~November 30, 2021, $862.7~~May 31, 2022, $962.2 million was allocated to remaining performance obligations in the North America segment related to those contracts.

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NOTE 5.6. INVENTORIES, NET

The majority of the Company's inventories are in the form of semi-finished and finished ~~goods.~~steel products. Under the Company’s vertically integrated business model, steel products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be ~~combined. As such, at November 30, 2021 and August 31, 2021, work in process~~combined as finished goods.

The components of inventories were ~~immaterial. At November 30, 2021 and August 31, 2021, the Company's raw materials inventories were $329.9 million and $286.1 million, respectively.~~as follows:


(in thousands)	May 31, 2022		August 31, 2021
Raw materials	$	391,208	$	286,123
Work in process	9,488		6,881
Finished goods	945,590		642,383
Total	$	1,346,286	$	935,387

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NOTE 6.7. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment ~~at November 30, 2021~~ is detailed in the following table:
(in thousands) North America Europe Consolidated
Goodwill, gross* $ 71,941 $ 4,094 $ 76,035
Accumulated impairment* (10,036) (147) (10,183)
Goodwill, net* $ 61,905 $ 3,947 $ 65,852

~~_________________~~

* The change in balance from August 31, 2021 was immaterial.



(in thousands)	North America		Europe		Consolidated
Goodwill, gross
Balance at September 1, 2021	$	71,941	$	4,390	$	76,331
Foreign currency translation	—		(451)		(451)
Acquisition	113,991		73,870		187,861
Balance at May 31, 2022	185,932		77,809		263,741

Accumulated impairment
Balance at September 1, 2021	(10,036)		(158)		(10,194)
Foreign currency translation	—		16		16
Balance at May 31, 2022	(10,036)		(142)		(10,178)

Goodwill, net
Balance at September 1, 2021	61,905		4,232		66,137
Foreign currency translation	—		(435)		(435)
Acquisition	113,991		73,870		187,861
Balance at May 31, 2022	$	175,896	$	77,667	$	253,563

~~The total gross carrying amounts of the Company's~~Other intangible assets subject to amortization ~~were $21.3~~are detailed in the following table:


		May 31, 2022						August 31, 2021
(in thousands)	Weighted Average Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Patents	5 to 7.5 years	$	7,203	$	4,352	$	2,851	$	7,203	$	3,621	$	3,582
Customer relationships	8 years	4,996		4,996		—		6,079		5,629		450
Perpetual lease rights	80 years	3,943		807		3,136		4,395		860		3,535
Non-compete agreements	5 to 7 years	3,050		1,046		2,004		3,050		778		2,272
Other	5 to 15 years	939		745		194		939		677		262
Due to acquisition of Tensar:
Developed technologies	1 to 11 years	147,900		1,902		145,998		—		—		—
Customer relationships	12 to 17 years	53,200		421		52,779		—		—		—
Trade names	8 to 9 years	2,406		28		2,378		—		—		—
Total		$	223,637	$	14,297	$	209,340	$	21,666	$	11,565	$	10,101

Intangible assets with indefinite lives resulting from the acquisition of Tensar include trade names and in-process research and development with gross carrying amounts of $54.7 million and ~~$21.7~~$2.4 million, ~~and the total net carrying amounts were $9.3 million and $10.1 million~~respectively, at ~~November 30, 2021 and August~~May 31, 2021, 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 immaterial for the three months ended November 30, 2021 and 2020. Excluding goodwill, the2022. The Company did not have any significant intangible assets with indefinite lives at ~~November 30,~~August 31, 2021.

Estimated amounts of amortization expense for the next five fiscal years are as follows:


	(in thousands)
Remainder of 2022	$	5,868
2023	23,363
2024	22,109
2025	20,551
2026	19,363

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NOTE 7.8. 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 sheets:


(in thousands)	(in thousands)	Classification in Condensed Consolidated Balance Sheets	November 30, 2021		August 31, 2021		(in thousands)	Classification in Condensed Consolidated Balance Sheets	May 31, 2022		August 31, 2021
Assets:	Assets:						Assets:
Operating assets	Operating assets	Other noncurrent assets	$	118,855	$	112,202	Operating assets	Other noncurrent assets	$	134,321	$	112,202
Finance assets	Finance assets	Property, plant and equipment, net	53,221		55,308		Finance assets	Property, plant and equipment, net	59,791		55,308
Total leased assets	Total leased assets		$	172,076	$	167,510	Total leased assets		$	194,112	$	167,510

Liabilities:	Liabilities:						Liabilities:
Operating lease liabilities:	Operating lease liabilities:						Operating lease liabilities:
Current	Current	Accrued expenses and other payables	$	28,327	$	26,433	Current	Accrued expenses and other payables	$	31,185	$	26,433
Long-term	Long-term	Other noncurrent liabilities	97,891		93,409		Long-term	Other noncurrent liabilities	105,971		93,409
Total operating lease liabilities	Total operating lease liabilities		126,218		119,842		Total operating lease liabilities		137,156		119,842
Finance lease liabilities:	Finance lease liabilities:						Finance lease liabilities:
Current	Current	Current maturities of long-term debt and short-term borrowings	15,808		16,040		Current	Current maturities of long-term debt and short-term borrowings	18,060		16,040
Long-term	Long-term	Long-term debt	33,128		36,104		Long-term	Long-term debt	36,905		36,104
Total finance lease liabilities	Total finance lease liabilities		48,936		52,144		Total finance lease liabilities		54,965		52,144
Total lease liabilities	Total lease liabilities		$	175,154	$	171,986	Total lease liabilities		$	192,121	$	171,986

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The components of lease expense were as follows:


		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020			(in thousands)	2022		2021		2022		2021
Operating lease expense	Operating lease expense	$	8,584	$	8,722		Operating lease expense	$	8,659	$	8,377	$	25,991	$	25,750
Finance lease expense:	Finance lease expense:						Finance lease expense:
Amortization of assets	Amortization of assets	3,235		3,239			Amortization of assets	3,268		3,270		9,722		9,729
Interest on lease liabilities	Interest on lease liabilities	514		555			Interest on lease liabilities	508		555		1,520		1,673
Total finance lease expense	Total finance lease expense	3,749		3,794			Total finance lease expense	3,776		3,825		11,242		11,402
Variable and short-term lease expense	Variable and short-term lease expense	5,162		4,962			Variable and short-term lease expense	6,046		4,584		16,197		13,871
Total lease expense	Total lease expense	$	17,495	$	17,478		Total lease expense	$	18,481	$	16,786	$	53,430	$	51,023

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


		November 30, 2021		August 31, 2021			May 31, 2022		August 31, 2021
Weighted average remaining lease term (years)
Weighted average remaining lease term (years):						Weighted average remaining lease term (years):
Operating leases	Operating leases	6.0		6.2		Operating leases	5.4		6.2
Finance leases	Finance leases	3.4		3.6		Finance leases	3.4		3.6

Weighted average discount rate
Weighted average discount rate:						Weighted average discount rate:
Operating leases	Operating leases	4.275	%	4.451	%	Operating leases	4.033	%	4.451	%
Finance leases	Finance leases	4.045	%	4.079	%	Finance leases	4.057	%	4.079	%

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


		Three Months Ended November 30,					Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	Operating cash outflows from operating leases	$	8,749	$	9,047	Operating cash outflows from operating leases	$	26,481	$	25,862
Operating cash outflows from finance leases	Operating cash outflows from finance leases	519		560		Operating cash outflows from finance leases	1,521		1,665
Financing cash outflows from finance leases	Financing cash outflows from finance leases	4,199		3,795		Financing cash outflows from finance leases	12,847		11,706

Right of use assets obtained in exchange for lease obligations:	Right of use assets obtained in exchange for lease obligations:					Right of use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	15,912	$	12,267	Operating leases	$	45,949	$	23,019
Finance leases	Finance leases	1,002		6,300		Finance leases	15,670		14,002

Future maturities of lease liabilities at ~~November 30, 2021~~May 31, 2022 are presented in the following table:

(in thousands) Operating Leases Finance Leases
Year 1 $ 33,528 $ 17,480
Year 2 28,441 15,170
Year 3 22,763 12,163
Year 4 17,842 5,719
Year 5 12,984 1,362
Thereafter 29,033 512
Total lease payments 144,591 52,406
Less imputed interest 18,373 3,470
Present value of lease liabilities $ 126,218 $ 48,936


(in thousands)	Operating Leases		Finance Leases
Year 1	$	36,496	$	19,890
Year 2	30,653		17,390
Year 3	24,942		12,538
Year 4	19,898		5,730
Year 5	13,750		2,467
Thereafter	28,500		331
Total lease payments	154,239		58,346
Less imputed interest	(17,083)		(3,381)
Present value of lease liabilities	$	137,156	$	54,965

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NOTE 8.9. CREDIT ARRANGEMENTS

Long-term debt was as follows:


(in thousands)	(in thousands)	Weighted Average Interest Rate as of November 30, 2021	November 30, 2021		August 31, 2021		(in thousands)	Weighted Average Interest Rate as of May 31, 2022	May 31, 2022		August 31, 2021
2032 Notes							2032 Notes	4.375%	$	300,000	$	—
2031 Notes	2031 Notes	3.875%	$	300,000	$	300,000	2031 Notes	3.875%	300,000		300,000
2030 Notes							2030 Notes	4.125%	300,000		—
2027 Notes	2027 Notes	5.375%	300,000		300,000		2027 Notes	5.375%	—		300,000

2023 Notes	2023 Notes	4.875%	330,000		330,000		2023 Notes	4.875%	330,000		330,000
Series 2022 Bonds, due 2047							Series 2022 Bonds, due 2047	4.000%	145,060		—
Poland Term Loan	Poland Term Loan	3.080%	44,055		49,726		Poland Term Loan	7.890%	37,923		49,726
Short-term borrowings	Short-term borrowings	1.161%	29,992		26,560		Short-term borrowings	6.180%	62,627		26,560
Other	Other	5.100%	19,492		19,492		Other	4.560%	20,151		19,492
Finance leases	Finance leases		48,936		52,144		Finance leases		54,965		52,144
Total debt	Total debt		1,072,475		1,077,922		Total debt		1,550,726		1,077,922
Less debt issuance costs			7,778		8,141
Less unamortized debt issuance costs							Less unamortized debt issuance costs		(17,043)		(8,141)
Plus unamortized bond premium							Plus unamortized bond premium		4,886		—
Total amounts outstanding	Total amounts outstanding		1,064,697		1,069,781		Total amounts outstanding		1,538,569		1,069,781

Less current maturities of long-term debt and short-term borrowings	Less current maturities of long-term debt and short-term borrowings		56,896		54,366		Less current maturities of long-term debt and short-term borrowings		(423,091)		(54,366)
Long-term debt	Long-term debt		$	1,007,801	$	1,015,415	Long-term debt		$	1,115,478	$	1,015,415

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The Company's credit arrangements require compliance with certain non-financial and financial covenants, including an interest coverage ratio and a debt to capitalization ratio. At May 31, 2022, the Company believes it was in compliance with all covenants contained in its credit arrangements.

Senior Notes Activity

In January 2022, the Company issued $300.0 million of 4.125% Senior Notes due January 2030 (the "2030 Notes") and $300.0 million of 4.375% Senior Notes due March 2032 (the "2032 Notes"). Aggregate issuance costs associated with the 2030 Notes and 2032 Notes were approximately $9.4 million. Interest on the 2030 Notes is payable semiannually on January 15 and July 15. Interest on the 2032 Notes is payable semiannually on March 15 and September 15.

In July 2017, the Company issued $300.0 million of 5.375% Senior Notes due July 2027 (the "2027 Notes"). In February 2022, the Company redeemed all of the 2027 Notes and recognized a $16.1 million loss on debt extinguishment.

In May 2013, the Company issued $330.0 million of 4.875% Senior Notes due May 2023 (the "2023 Notes"). Accordingly, the 2023 Notes have been included within current maturities of long-term debt and short-term borrowings in the condensed consolidated balance sheet as of May 31, 2022.

Series 2022 Bonds

In February 2022, the Company announced the issuance of $145.1 million in original aggregate principal amount of tax-exempt bonds (the “Series 2022 Bonds”) by the Industrial Development Authority of the County of Maricopa (the "MCIDA"). The Series 2022 Bonds were priced to yield 3.5% and provided gross proceeds of $150.0 million. The proceeds were loaned to the Company pursuant to a loan agreement between the Company and the MCIDA and will be used to fund a portion of the acquisition, construction, equipping and/or operation, as applicable, of the Company’s third micro mill, which is under construction in Mesa, Arizona. Proceeds from the Series 2022 Bonds are being held in a trust account and will be disbursed as qualified expenditures are made for the construction of the micro mill. As of May 31, 2022, $58.0 million of proceeds were disbursed from the trust account. Remaining proceeds from the Series 2022 Bonds were recorded as restricted cash in the condensed consolidated balance sheet as of May 31, 2022.

Issuance costs associated with the Series 2022 Bonds were $3.1 million. The Series 2022 Bonds accrue interest at 4.0%, payable semiannually, and have a maturity date in October 2047.

Credit Facilities

The Company had no amounts drawn under its $400.0 million revolving credit facility (the "Revolver") at ~~November 30, 2021~~May 31, 2022 or August 31, 2021. The availability under the Revolver was reduced by outstanding stand-by letters of credit totaling $1.4 million and $3.0 million at ~~November 30, 2021~~May 31, 2022 and August 31, ~~2021.~~2021, respectively.

The Company has a Term Loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"). At ~~November 30, 2021,~~May 31, 2022, PLN ~~181.0~~161.9 million, or ~~$44.1~~$37.9 million, was outstanding, compared to the maximum amount available under the facility, PLN 190.5 million, or $49.7 million, which was outstanding as of August 31, 2021.

The Company also has credit facilities in Poland through its subsidiary, CMCP. At ~~November 30,~~May 31, 2022 and August 31, 2021, CMCP's credit facilities totaled PLN 300.0 million, or ~~$73.0 million.~~$70.3 million and $78.3 million, respectively. There were 0 amounts outstanding under these facilities as of ~~November 30, 2021~~May 31, 2022 or August 31, 2021. The available balance of these credit facilities was reduced by outstanding stand-by letters of credit, guarantees and/or other financial assurance instruments, which totaled $0.9 million and $5.7 million at ~~November 30, 2021~~May 31, 2022 and August 31, 2021, respectively.

The Company's debt agreements require compliance with certain non-financial and financial covenants, including an interest coverage ratio and a debt to capitalization ratio. At November 30, 2021, the Company was in compliance with all covenants contained in its debt agreements.

Accounts Receivable Facilities

The Company had no advance payments outstanding under its U.S. trade accounts receivable facility at ~~November 30, 2021~~May 31, 2022 or August 31, 2021.

The Poland accounts receivable facility had a limit of PLN 288.0 million, or ~~$70.1~~$67.5 million, at ~~November 30, 2021.~~May 31, 2022. The Company had PLN ~~123.2~~267.4 million, or ~~$30.0~~$62.6 million, advance payments outstanding under the Poland accounts receivable facility at ~~November 30, 2021, and~~May 31, 2022, compared to PLN 101.7 million, or $26.6 million, advance payments outstanding at August 31, 2021.

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NOTE 9.10. DERIVATIVES

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

At ~~November 30, 2021,~~May 31, 2022, the notional values of the Company's foreign currency and commodity contract commitments were ~~$320.2~~$377.2 million and ~~$217.5~~$228.8 million, respectively. At August 31, 2021, the notional values of the Company's foreign currency and commodity contract commitments were $389.5 million and $213.4 million, respectively.

The following table provides information regarding the Company's commodity contract commitments at ~~November 30, 2021:~~May 31, 2022:

Commodity

Long/Short

Total

Aluminum

Long

~~1,875~~3,300

Aluminum

Short

1,525

Copper

Long

~~612~~975

Copper

Short

~~9,095~~8,482

Electricity

Long

~~1,817,000~~1,717,000

MW(h)

Natural Gas

Long

~~1,631,700~~4,870,250

MMBtu

_________________

MT = Metric Ton

MW(h) = Megawatt hour

MMBtu = Metric Million British thermal unit

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

~~Foreign currency derivatives not designated as hedging~~The following tables summarize activities related to the Company's derivative instruments ~~resulted in a loss, before income taxes, of $8.0 million~~ and ~~$1.9 million in the~~ ~~three~~ ~~months ended November 30, 2021 and~~ ~~2020, respectively. Commodity derivatives not designated as hedging instruments resulted in a gain,~~ ~~before income taxes, of $2.7 million in the~~ ~~three~~ ~~months ended November 30, 2021, and a~~ ~~loss, before income taxes, of $5.6 million in the~~ ~~three~~ months ended November 30, 2020, primarily recorded in cost of goods sold within the condensed consolidated statements of earnings. Commodity derivatives accounted for as cash flow hedging instruments resulted in ~~net gains of $22.2 million and~~ ~~$1.2 million in the~~ ~~three~~ ~~months ended November 30, 2021~~ ~~and 2020~~, ~~respectively,~~ hedged items recognized in the condensed consolidated statements of ~~comprehensive income.~~earnings. All other activity related to the Company's derivative instruments and hedged items was immaterial for the periods presented.


		Three Months Ended May 31,				Nine Months Ended May 31,
Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Primary Location	2022		2021		2022		2021
Commodity	Cost of goods sold	$	2,042	$	(7,921)	$	2,574	$	(24,535)
Foreign exchange	SG&A expenses	6,157		1,915		(2,886)		75


Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Loss (in thousands)	Three Months Ended May 31,				Nine Months Ended May 31,
	2022		2021		2022		2021
Commodity	$	25,920	$	12,167	$	81,285	$	20,971

The Company's natural gas and electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to ~~November 2024~~May 2025 and December 2030, respectively. Included in the AOCI balance as of ~~November 30, 2021~~May 31, 2022 was an estimated net gain of ~~$3.9~~$16.1 million from cash flow hedging instruments that is expected to be reclassified into earnings within the next twelve months. See Note ~~10,~~11, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.

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NOTE ~~10.~~11. 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 within the Nature of Operations and Summary of Significant Accounting Policies footnote in the 2021 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:

~~Table of~~ ~~Contents~~


				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
(in thousands)	(in thousands)	November 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(in thousands)	May 31, 2022		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)	$	361,387	$	361,387	$	—	$	—	Investment deposit accounts (1)	$	318,095	$	318,095	$	—	$	—
Commodity derivative assets (2)	Commodity derivative assets (2)	50,253		2,361		—		47,892		Commodity derivative assets (2)	109,225		15,905		—		93,320
Foreign exchange derivative assets (2)	Foreign exchange derivative assets (2)	1,207		—		1,207		—		Foreign exchange derivative assets (2)	5,998		—		5,998		—
Liabilities:	Liabilities:									Liabilities:
Commodity derivative liabilities (2)	Commodity derivative liabilities (2)	375		375		—		—		Commodity derivative liabilities (2)	1,305		1,305		—		—
Foreign exchange derivative liabilities (2)	Foreign exchange derivative liabilities (2)	4,072		—		4,072		—		Foreign exchange derivative liabilities (2)	3,568		—		3,568		—


			Fair Value Measurements at Reporting Date Using
(in thousands)	August 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investment deposit accounts (1)	$	441,297	$	441,297	$	—	$	—
Commodity derivative assets (2)	27,323		910		—		26,413
Foreign exchange derivative assets (2)	2,537		—		2,537		—
Liabilities:
Commodity derivative liabilities (2)	1,352		1,352		—		—
Foreign exchange derivative liabilities (2)	1,880		—		1,880		—

_________________

(1) Investment deposit accounts are short-term in nature, and the value is determined by principal plus interest. The investment portfolio mix can change each period based on the Company's assessment of investment options.

(2) Derivative assets and liabilities classified as Level 1 are commodity futures contracts valued based on quoted market prices in the London Metal Exchange or New York Mercantile Exchange. Amounts in Level 2 are based on broker quotes in the over-the-counter market. Derivatives classified as Level 3 are described below. Further discussion regarding the Company's use of derivative instruments is included in Note 9,10, 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 infor 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. The following table summarizes the floating rate used to measure the fair value of the commodity derivative at ~~November 30, 2021~~May 31, 2022 and ~~2020:~~2021:

Floating rate (PLN)
November 30, Low High Average
2021 252.79 540.39 348.99
2020 151.66 247.56 203.96


	Floating rate (PLN)
May 31,	Low	High	Average
2022	343.25	815.64	539.32
2021	217.38	296.36	251.10

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~~causes volatility in the

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fair value estimate and is the primary reason for unrealized gains ~~and losses~~ included in other comprehensive income ("OCI") in the three and nine months ended ~~November 30, 2021~~May 31, 2022 and ~~2020.~~2021.

~~Table of~~ ~~Contents~~


(in thousands)	Three Months Ended ~~November 30, 2021~~May 31, 2022
Balance, March 1, 2022	$	78,879

Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)	19,201
Reclassification for gain included in net earnings (2)	(4,760)
Balance, May 31, 2022	$	93,320

(in thousands)	Nine Months Ended May 31, 2022
Balance, September 1, 2021	$	26,413

Total gains, realized and ~~unrealized~~unrealized:
Unrealized holding gain before reclassification (1)	~~25,208~~81,039
Reclassification for gain included in net earnings(2)	~~(3,729)~~(14,132)
Balance, ~~November 30, 2021~~May 31, 2022	$	~~47,892~~93,320









(in thousands)	Three Months Ended ~~November 30, 2020~~May 31, 2021
Balance, March 1, 2021	$	(4,285)

Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)	15,459
Reclassification for gain included in net earnings (2)	(693)
Balance, May 31, 2021	$	10,481

(in thousands)	Nine Months Ended May 31, 2021
Balance, September 1, 2020	$	(15,007)

Total gains, realized and ~~unrealized~~unrealized:
Unrealized holding gain before reclassification (1)	~~1,393~~26,434
Reclassification for gain included in net earnings (2)	(946)
Balance, ~~November 30, 2020~~May 31, 2021	$	~~(13,614)~~10,481

________________

(1) Unrealized holding gains, less amounts reclassified, are included in OCI in the condensed consolidated statements of comprehensive income.

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

There were no material, non-recurring fair value remeasurements during the three and nine months ended ~~November 30, 2021~~May 31, 2022 or ~~2020.~~2021.

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

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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 onin the condensed consolidated balance sheets were as follows:


			November 30, 2021				August 31, 2021						May 31, 2022				August 31, 2021
(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
2032 Notes (1)											2032 Notes (1)	Level 2	$	300,000	$	264,993	$	—	$	—
2031 Notes (1)	2031 Notes (1)	Level 2	$	300,000	$	297,378	$	300,000	$	306,279	2031 Notes (1)	Level 2	300,000		261,390		300,000		306,279
2030 Notes (1)											2030 Notes (1)	Level 2	300,000		271,815		—		—
2027 Notes (1)	2027 Notes (1)	Level 2	300,000		309,978		300,000		316,839		2027 Notes (1)	Level 2	—		—		300,000		316,839
2023 Notes (1)	2023 Notes (1)	Level 2	330,000		341,058		330,000		348,071		2023 Notes (1)	Level 2	330,000		333,736		330,000		348,071
Series 2022 Bonds, due 2047 (1)											Series 2022 Bonds, due 2047 (1)	Level 2	145,060		126,778		—		—
Poland Term Loan(2)	Poland Term Loan(2)	Level 2	44,055		44,055		49,726		49,726		Poland Term Loan (2)	Level 2	37,923		37,923		49,726		49,726
Short-term borrowings (2)	Short-term borrowings (2)	Level 2	29,992		29,992		26,560		26,560		Short-term borrowings (2)	Level 2	62,627		62,627		26,560		26,560

_________________

(1) The fair values of the ~~Notes~~notes and the Series 2022 Bonds were determined based on indicated market values.

(2) The Poland Term Loan and short-term borrowings contain variable interest rates, and as a result, the carrying values approximate fair value.

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NOTE ~~11.~~12. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note 13, Stock-Based Compensation Plans, to the consolidated financial statements in the 2021 Form 10-K. In general, restricted stock units vest ratably over a period of three years. Subject to the achievement of performance targets established by the Compensation Committee of CMC's Board of Directors, performance stock units vest after a period of three years.

During the ~~three~~nine months ended ~~November 30,~~May 31, 2022 and 2021, ~~and 2020,~~ the Company granted the following awards under its stock-based compensation plans:

November 30, 2021

November 30, 2020

May 31, 2022

May 31, 2021

(in thousands, except share and per share data)

Shares Granted

Weighted Average Grant Date Fair Value

Shares Granted

Weighted Average Grant Date Fair Value

(in thousands, except share and per share data)

Shares Granted

Weighted Average Grant Date Fair Value

Shares Granted

Weighted Average Grant Date Fair Value

Equity method

1,407

27.77

1,399

20.39

Equity method

1,467

28.16

1,512

20.51

Liability method

261

N/A

324

N/A

Liability method

261

N/A

324

N/A

The Company recorded immaterial mark-to-market adjustments on liability awards for the three and nine months ended ~~November 30, 2021~~May 31, 2022, and ~~2020.~~recorded expense of $3.2 million and $5.0 million for the three and nine months in the corresponding periods. At ~~November 30, 2021,~~May 31, 2022, the Company had outstanding 591,483 equivalent shares accounted for under the liability method. The Company expects 561,908 equivalent shares to vest.

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


		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020			(in thousands)	2022		2021		2022		2021
Stock-based compensation expense	Stock-based compensation expense	$	9,619	$	9,062		Stock-based compensation expense	$	11,986	$	13,800	$	37,856	$	35,558

NOTE 13. EMPLOYEES' RETIREMENT PLANS

Following the acquisition of Tensar, the Company assumed the TGL Pension Plan in the United Kingdom ("U.K.") ("U.K. Pension Plan"), a defined benefit pension plan. The U.K. Pension Plan provides retirement benefit payments for participating retired employees and their spouses, and was closed to new entrants prior to the acquisition. The Company’s funding policy for the U.K. Pension Plan is to contribute annually the amount necessary to provide for benefits based on accrued service and to contribute at least the minimum required by applicable regulations.

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See Note 14, Employees' Retirement Plans, to the consolidated financial statements in the 2021 Form 10-K for information on the Company's other defined benefit pension plan and defined contribution retirement plan.

Net periodic benefit costs for the Company's defined benefit plans are recorded in selling, general and administrative expenses within the condensed consolidated statements of earnings. Net periodic pension expense was immaterial for the three and nine months ended May 31, 2022 and 2021.

NOTE ~~12.~~14. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE

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

The calculations of basic and diluted EPS ~~from continuing operations~~ were as follows:


		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2021		2020			(in thousands, except share and per share data)	2022		2021		2022		2021
Earnings from continuing operations		$	232,889	$	63,911
Net earnings							Net earnings	$	312,429	$	130,408	$	928,632	$	260,552

Average basic shares outstanding	Average basic shares outstanding	121,129,679		119,762,706			Average basic shares outstanding	121,247,105		120,613,652		121,277,553		120,241,579
Effect of dilutive securities	Effect of dilutive securities	1,668,059		1,365,338			Effect of dilutive securities	1,552,764		1,580,003		1,649,738		1,610,565
Average diluted shares outstanding	Average diluted shares outstanding	122,797,738		121,128,044			Average diluted shares outstanding	122,799,869		122,193,655		122,927,291		121,852,144

Earnings per share from continuing operations:
Earnings per share:							Earnings per share:
Basic	Basic	$	1.92	$	0.53		Basic	$	2.58	$	1.08	$	7.66	$	2.17
Diluted	Diluted	$	1.90	$	0.53		Diluted	$	2.54	$	1.07	$	7.55	$	2.14

Anti-dilutive shares not included above were immaterial for all periods presented.

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

In October 2021, CMC's Board of Directors authorized a share repurchase program under which CMC may repurchase up to $350.0 million of shares of common stock. During the three and nine months ended ~~November 30, 2021,~~May 31, 2022, the Company repurchased

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~~159,500~~ 1,006,387 and 1,501,387 shares of CMC common stock, respectively, at an average purchase price of ~~$33.28~~$38.34 and $37.02 per ~~share.~~share, respectively. CMC had remaining authorization to repurchase ~~$344.7~~$294.4 million of shares of common stock at ~~November 30, 2021.~~May 31, 2022.

NOTE ~~13.~~15. COMMITMENTS AND CONTINGENCIES

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. At ~~November 30, 2021~~May 31, 2022 and August 31, 2021, the amounts accrued for cleanup and remediation costs at certain sites in response to statutes enforced by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") were immaterial. Total accrued environmental liabilities, including CERCLA sites, were ~~$5.2~~$3.4 million and $7.1 million at ~~November 30, 2021~~May 31, 2022 and August 31, 2021, respectively, of which $2.2 million and $2.3 million were classified as other long-term liabilities at ~~November 30, 2021~~May 31, 2022 and August 31, 2021, respectively. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors, amounts accrued could vary significantly from amounts paid.

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NOTE ~~14.~~16. BUSINESS SEGMENTS

The Company structures its business into 2 reportable segments: North America and Europe. See Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2021 Form 10-K and Note 2, Acquisition, for more information about the reportable segments, including the types of products and services from which each reportable segment derives its net sales. Corporate and Other contains earnings or losses on assets and liabilities related to the Company's Benefit Restoration Plan assets and short-term investments, expenses of the Company's corporate headquarters, interest expense related to its long-term debt and intercompany eliminations.

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


		Three Months Ended November 30, 2021										Three Months Ended May 31, 2022
(in thousands)	(in thousands)	North America		Europe			Corporate and Other		Continuing Operations		(in thousands)	North America		Europe		Corporate and Other		Total
Net sales	Net sales	$	1,653,622	$	329,056		$	(877)	$	1,981,801	Net sales	$	2,033,150	$	484,564	$	(1,987)	$	2,515,727
Adjusted EBITDA	Adjusted EBITDA	268,524		79,832			(34,334)		314,022		Adjusted EBITDA	379,355		120,974		(35,049)		465,280

						Nine Months Ended May 31, 2022

Total assets at November 30, 2021		3,389,890		736,872			598,496		4,725,258
(in thousands)											(in thousands)	North America		Europe		Corporate and Other		Total
Net sales											Net sales	$	5,300,996	$	1,209,378	$	(3,958)	$	6,506,416
Adjusted EBITDA											Adjusted EBITDA	1,183,342		281,955		(121,876)		1,343,421
Total assets at May 31, 2022											Total assets at May 31, 2022	4,297,473		1,164,918		641,311		6,103,702


		Three Months Ended November 30, 2020										Three Months Ended May 31, 2021
(in thousands)	(in thousands)	North America		Europe			Corporate and Other		Continuing Operations		(in thousands)	North America		Europe		Corporate and Other		Total
Net sales	Net sales	$	1,195,013	$	194,596		$	2,194	$	1,391,803	Net sales	$	1,558,068	$	284,107	$	2,866	$	1,845,041
Adjusted EBITDA	Adjusted EBITDA	155,634		14,470			(26,471)		143,633		Adjusted EBITDA	207,330		50,005		(36,214)		221,121

						Nine Months Ended May 31, 2021

(in thousands)											(in thousands)	North America		Europe		Corporate and Other		Total
Net sales											Net sales	$	4,010,567	$	680,769	$	7,778	$	4,699,114
Adjusted EBITDA											Adjusted EBITDA	534,576		80,582		(108,671)		506,487
Total assets at August 31, 2021	Total assets at August 31, 2021	3,221,465		729,766			687,440		4,638,671		Total assets at August 31, 2021	3,221,465		729,766		687,440		4,638,671

The following table presents a reconciliation of net earnings ~~from continuing operations~~ to adjusted ~~EBITDA from continuing operations:~~EBITDA:
Three Months Ended November 30,
(in thousands) 2021 2020
Earnings from continuing operations $ 232,889 $ 63,911
Interest expense 11,035 14,259
Income taxes 28,872 21,593
Depreciation and amortization 41,226 41,799
Asset impairments — 3,594
Amortization of acquired unfavorable contract backlog — (1,523)
Adjusted EBITDA from continuing operations $ 314,022 $ 143,633

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	Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	2022		2021		2022		2021
Net earnings	$	312,429	$	130,408	$	928,632	$	260,552
Interest expense	13,433		11,965		36,479		40,245
Income taxes	92,590		38,175		247,894		80,709
Depreciation and amortization	43,583		41,804		125,943		125,176
Asset impairments	3,245		277		4,473		4,345
Amortization of acquired unfavorable contract backlog	—		(1,508)		—		(4,540)
Adjusted EBITDA	$	465,280	$	221,121	$	1,343,421	$	506,487

Disaggregation of Revenue

The following tables display revenue by reportable segment and Corporate and Other from external customers, disaggregated by major ~~product:~~

Three Months Ended November 30, 2021
(in thousands) North America Europe Corporate and Other Total
Major product:
Raw materials $ 353,092 $ 6,960 $ — $ 360,052
Steel products 675,042 243,145 — 918,187
Downstream products 514,396 70,072 — 584,468
Other 111,092 8,385 (383) 119,094
Net sales-unaffiliated customers 1,653,622 328,562 (383) 1,981,801
Intersegment net sales, eliminated on consolidation — 494 (494) —
Net sales $ 1,653,622 $ 329,056 $ (877) $ 1,981,801

Three Months Ended November 30, 2020
(in thousands) North America Europe Corporate and Other Total
Major product:
Raw materials $ 210,237 $ 2,830 $ — $ 213,067
Steel products 457,657 151,455 — 609,112
Downstream products 437,029 34,473 — 471,502
Other 90,090 5,427 2,605 98,122
Net sales-unaffiliated customers 1,195,013 194,185 2,605 1,391,803
Intersegment net sales, eliminated on consolidation — 411 (411) —
Net sales $ 1,195,013 $ 194,596 $ 2,194 $ 1,391,803

~~NOTE 15. SUBSEQUENT EVENT~~

~~On December 3, 2021, the Company signed a definitive agreement to acquire TAC Acquisition Corp. ("Tensar"), a portfolio company~~product. Construction-related solutions represents sales of ~~Castle Harlan Inc.’s fund, Castle Harlan Partners V, L.P., and a leading global provider of engineered solutions for subgrade reinforcement~~ground stabilization and soil ~~stabilization used~~reinforcement solutions and sales from our Construction Services business, which sells and rents construction-related products and equipment to concrete installers and other companies in ~~road, infrastructure and commercial~~the construction projects. The transaction is expected to close during the first half of calendar year 2022, and is subject to the satisfaction or waiver of customary closing conditions, including customary regulatory review. Upon closing, the Company will pay a cash purchase price of $550.0 million, subject to customary purchase price adjustments. The transaction is not contingent on any financing arrangements.industry:

1824

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	Three Months Ended May 31, 2022
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	435,171	$	7,406	$	—	$	442,577
Steel products	851,762		367,810		—		1,219,572
Downstream products	587,568		88,667		—		676,235
Construction-related solutions	121,285		9,481		—		130,766
Other	37,356		10,641		(1,420)		46,577
Net sales from external customers	2,033,142		484,005		(1,420)		2,515,727
Intersegment net sales, eliminated on consolidation	8		559		(567)		—
Net sales	$	2,033,150	$	484,564	$	(1,987)	$	2,515,727

	Nine Months Ended May 31, 2022
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	1,155,204	$	20,230	$	—	$	1,175,434
Steel products	2,192,851		931,369		—		3,124,220
Downstream products	1,561,717		218,280		—		1,779,997
Construction-related solutions	287,422		9,481		—		296,903
Other	103,794		28,556		(2,488)		129,862
Net sales from external customers	5,300,988		1,207,916		(2,488)		6,506,416
Intersegment net sales, eliminated on consolidation	8		1,462		(1,470)		—
Net sales	$	5,300,996	$	1,209,378	$	(3,958)	$	6,506,416

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	Three Months Ended May 31, 2021
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	346,614	$	5,904	$	—	$	352,518
Steel products	626,084		215,088		—		841,172
Downstream products	475,714		56,444		—		532,158
Construction-related solutions	77,549		—		—		77,549
Other	32,107		6,277		3,260		41,644
Net sales from external customers	1,558,068		283,713		3,260		1,845,041
Intersegment net sales, eliminated on consolidation	—		394		(394)		—
Net sales	$	1,558,068	$	284,107	$	2,866	$	1,845,041

	Nine Months Ended May 31, 2021
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	811,863	$	13,509	$	—	$	825,372
Steel products	1,597,942		524,025		—		2,121,967
Downstream products	1,313,140		124,679		—		1,437,819
Construction-related solutions	205,548		—		—		205,548
Other	82,074		17,244		9,090		108,408
Net sales from external customers	4,010,567		679,457		9,090		4,699,114
Intersegment net sales, eliminated on consolidation	—		1,312		(1,312)		—
Net sales	$	4,010,567	$	680,769	$	7,778	$	4,699,114

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~~(this "Form 10-Q"), and our consolidated financial statements and the notes thereto, which are included in our Annual Report on Form 10-K for the year ended August 31, 2021 (the "2021 Form 10-K"). This discussion contains or incorporates by reference "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on expectations, estimates, assumptions and projections about our industry, business and future financial results, based on information available at the time this Form 10-Q was filed with the Securities and Exchange Commission ("SEC") or, with respect to any document incorporated by reference, available at the time that such document was prepared. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those identified in the section entitled "Forward-Looking Statements" at the end of Item 2 of this Form 10-Q and in the sections entitled "Risk Factors" in Part I, Item 1A of our 2021 Form ~~10-K.~~10-K and Part II, Item 1A of 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 "corresponding period" relates to the relevant three or nine month period ended ~~November 30, 2020.~~May 31, 2021.

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BUSINESS CONDITIONS

Acquisition

On April 25, 2022 (the "Acquisition Date"), the Company completed the acquisition of TAC Acquisition Corp. ("Tensar") for approximately $550 million, net of cash acquired. Through its patented foundation systems, Tensar produces ground stabilization and soil reinforcement solutions that complement the Company’s existing concrete reinforcement product lines. End customers for these products include commercial, industrial and residential site developers, mining and oil and gas companies, transportation authorities, coastal and waterway authorities and waste management companies. The acquired operations within North America are presented within our North America reportable segment and the remaining acquired operations are presented within our Europe reportable segment. See Note 2, Acquisition, for more information about the Tensar acquisition.

Russian Invasion of Ukraine

The Russian invasion of Ukraine has not had a direct material adverse impact on our business, financial condition or results of operations during the nine months ended May 31, 2022. Our Europe segment identified alternate sources for a limited number of materials previously procured through Russia and has not had an interruption in energy supply; therefore, we do not believe there will be resulting disruptions in supply that would impede production meeting demand. However, we will continue to monitor the indirect effects on our operations of inflationary pressures, foreign exchange rate fluctuations, commodity pricing, potential cybersecurity risks and sanctions resulting from the invasion.

COVID-19

The impact of the COVID-19 pandemic ("COVID-19" or "pandemic") on our operations was limited during the nine months ended May 31, 2022 and 2021. We continue to evaluate the nature and extent of future impacts of the evolving pandemic on our operations and are complying with applicable U.S. federal, state and local law and considering relevant guidance, including the guidelines of the U.S. Centers for Disease Control and other authorities, to prioritize the health and safety of our employees, families, suppliers, customers and communities. Given the dynamic and uncertain nature and duration of the pandemic, we cannot reasonably estimate the long-term impact of COVID-19 on our business, results of operations and overall financial performance at this time.

See Part I, Item 1A, Risk Factors, of our 2021 Form 10-K and Part II, Item 1A, Risk Factors of this Form 10-Q for further discussion related to the above business conditions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting policies and estimates as set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, included in our 2021 Form 10-K.

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RESULTS OF OPERATIONS SUMMARY

Business Overview

As a vertically integrated organization, we manufacture, recycle and fabricate steel and metal products and provide related materials and services through a network of facilities that includes seven electric arc furnace ("EAF") mini mills, two EAF micro mills, one rerolling mill, steel fabrication and processing plants, construction-related product warehouses and metal recycling facilities in the ~~U.S.~~United States and Poland. Through our Tensar division, we are a leading global provider of innovative ground and soil stabilization solutions selling into more than 80 national markets through its two major product lines: Tensar® geogrids and Geopier® foundation systems. Our operations are conducted through two reportable segments: North America and 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 vertically integrated product categories (raw materials, steel products and downstream products) as these are the two variables that typically have the greatest impact on our 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.

Key Performance Indicators

Adjusted EBITDA ~~from continuing operations ("adjusted EBITDA")~~ is used by management to compare and evaluate the period-over-period underlying business operational performance of our segments. Adjusted EBITDA is the sum of the Company's earnings ~~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 steel products metal margin and downstream products margin over scrap costs period-over-period ~~is a~~are consistent ~~area~~areas of focus for our Company and industry. Steel products metal margin and downstream products margin over scrap costs are metrics used by management to monitor the results of our vertically integrated organization. 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. Downstream products margin over scrap costs is the difference between the average selling price per ton of fabricated rebar and steel fence post products and the scrap input costs to produce these products. The majority of our downstream products selling

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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.

~~Impact of COVID-19~~

The impact of the COVID-19 pandemic ("COVID-19" or "pandemic") on our operations was limited during the three months ended November 30, 2021 and 2020. We continue to evaluate the nature and extent of future impacts of the evolving pandemic on our operations and are complying with applicable federal, state and local law and considering relevant guidance, including the guidelines of the U.S. Centers for Disease Control and other authorities, to prioritize the health and safety of our employees, families, suppliers, customers and communities. Given the dynamic and uncertain nature and duration of the pandemic, we cannot reasonably estimate the long-term impact of COVID-19 on our business, results of operations and overall financial performance at this time.

Financial Results Overview

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


		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands, except per share data)	(in thousands, except per share data)	2021		2020			(in thousands, except per share data)	2022		2021		2022		2021
Net sales	Net sales	$	1,981,801	$	1,391,803		Net sales	$	2,515,727	$	1,845,041	$	6,506,416	$	4,699,114
Earnings from continuing operations		232,889		63,911
Net earnings							Net earnings	312,429		130,408		928,632		260,552
Diluted earnings per share	Diluted earnings per share	$	1.90	$	0.53		Diluted earnings per share	$	2.54	$	1.07	$	7.55	$	2.14

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Net sales for the three and nine months ended ~~November 30, 2021~~May 31, 2022 increased ~~$590.0~~$670.7 million, or ~~42%~~36%, and $1.8 billion, or 38%, respectively, compared to the corresponding ~~period.~~periods. The growth in net sales is largely attributable to rising ~~prices, which have favorably impacted year-over-year~~ selling prices across all major product lines in both of our ~~segments. Continued strong demand in our end-use markets has supported the growth in average selling prices, while volumes across our product lines remained relatively flat in~~segments for the three and nine months ended ~~November 30, 2021,~~May 31, 2022, compared to the corresponding ~~period.~~periods. Continued strong demand from robust construction activity in all of our North America and Europe end-use markets was the primary driver for the increase in average selling prices.

InDuring the ~~first quarter of~~three and nine months ended May 31, 2022, we achieved net earnings ~~from continuing operations~~ of ~~$232.9~~$312.4 million ~~an increase~~and $928.6 million, respectively. Included in net earnings during the nine months ended May 31, 2022 was a $273.3 million gain on the sale of ~~$169.0 million, or 264%,~~the Rancho Cucamonga facilities. See Note 3, Changes in Business, for more information on the sale of the Rancho Cucamonga facilities. Net earnings, less the gain on the sale of the Rancho Cucamonga facilities in the year-to-date period, increased 140% and 152% during the three and nine months ended May 31, 2022, respectively, compared to the corresponding ~~period. The increase was~~periods. These increases were driven by the significant expansion of steel products metal margin per ton in both of our segments and raw materials margin over purchase cost per ton ~~as the increases~~ in ~~selling~~our North America segment. Selling prices for steel products and raw materials outpaced the rising input costs of ferrous scrap utilized in our steel mill operations and the price paid to purchase ~~obsolete~~ferrous and ~~industrial~~nonferrous scrap in our scrap metal recycling ~~operations.~~operations, as well as increases in the cost of freight, energy and other steelmaking inputs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$9.0~~$5.2 million and $22.2 million for the three and nine months ended ~~November 30, 2021~~May 31, 2022, respectively, compared to the corresponding periods. Contributing to the increases in both periods were $11.4 million of selling, general and administrative expenses from Tensar's operations and $4.5 million and $7.6 million of acquisition and integration expenses in the three and nine months ended May 31, 2022, respectively, with no such expenses in the corresponding periods. Partially offsetting the aforementioned increases in selling, general and administrative expenses during the three months ended May 31, 2022 was a $6.4 million decrease in quarter-over-quarter labor-related expenses and $5.2 million of reduced expenses resulting from lower benefit restoration plan ("BRP") liabilities at May 31, 2022, compared to the corresponding period. The ~~increase~~remaining change in selling, general and administrative expenses during the nine months ended May 31, 2022 was ~~driven largely by~~ a result of many factors, including $6.1 million of increased labor-related expenses, $3.6 million ~~increase in labor-related expenses in the three months ended November 30, 2021, compared to the corresponding period,~~of increased travel-related costs and ~~$3.2~~$12.5 million of ~~acquisition-related costs incurred during the first quarter of~~reduced expenses resulting from lower BRP liabilities at May 31, 2022, ~~with no such amount in~~compared to the corresponding period.

Interest Expense

Interest expense ~~for~~remained relatively flat during the three months ended ~~November 30, 2021~~May 31, 2022, compared to the corresponding period, and decreased ~~$3.2~~by $3.8 million during the nine months ended May 31, 2022, compared to the corresponding period. ~~The decrease~~Capitalized interest was ~~driven largely by the lower interest rate on the 2031 Notes, which were outstanding~~$3.6 million and $7.8 million during the three and nine months ended ~~November 30, 2021,~~May 31, 2022, respectively, compared to $0.7 million and $1.8 million during the corresponding periods, respectively. The increase in capitalized interest was due to the Company's third micro mill, which is under construction in Mesa, Arizona. Offsetting the impact of increased capitalized interest was an increase in long-term debt interest expense of $4.3 million and $2.3 million during the three and nine months ended May 31, 2022, respectively, compared to the ~~interest rate on~~corresponding periods, due to the ~~2026 Notes, which were~~additional long-term debt outstanding ~~during the corresponding period.~~at May 31, 2022 compared to May 31, 2021.

Income Taxes

The effective income tax rates for the three and nine months ended May 31, 2022 were 22.9% and 21.1%, respectively, compared to 22.6% and 23.7% in the corresponding periods. The effective income tax rate ~~from continuing operations~~remained relatively flat for the three months ended ~~November 30, 2021 was 11.0%,~~May 31, 2022 when compared with ~~25.3% in~~ the corresponding period. The decrease for the nine months ended May 31, 2022 is primarily due to the recognition of a capital loss on a tax restructuring transaction during the ~~three months ended November 30, 2021.~~first quarter of fiscal 2022.

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SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are ~~from continuing operations and~~ calculated before income taxes. See Note ~~14,~~16, Business Segments, for more information. The operational data presented in the tables below by product category reflects activity from sales of raw materials, steel products and downstream products, as applicable, which comprise the majority of sales in North America and Europe. The data is calculated using averages and therefore, it is not meaningful to quantify the effect that any individual ~~component~~metric had on the segment's net sales or adjusted EBITDA.

North America


		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020			(in thousands)	2022		2021		2022		2021
Net sales	Net sales	$	1,653,622	$	1,195,013		Net sales	$	2,033,150	$	1,558,068	$	5,300,996	$	4,010,567
Adjusted EBITDA	Adjusted EBITDA	268,524		155,634			Adjusted EBITDA	379,355		207,330		1,183,342		534,576

External tons shipped (in thousands)	External tons shipped (in thousands)						External tons shipped (in thousands)
Raw materials	Raw materials	334		330			Raw materials	353		368		1,016		1,000
Rebar	Rebar	442		486			Rebar	505		500		1,354		1,458
Merchant and other	Merchant and other	257		264			Merchant and other	274		289		776		821
Steel products	Steel products	699		750			Steel products	779		789		2,130		2,279
Downstream products	Downstream products	400		371			Downstream products	399		408		1,126		1,122

Average selling price (per ton)	Average selling price (per ton)						Average selling price (per ton)
Raw materials							Raw materials	$	1,207	$	949	$	1,116	$	813
Steel products	Steel products	$	976	$	612		Steel products	1,110		794		1,045		702
Downstream products	Downstream products	1,092		934			Downstream products	1,244		963		1,168		943

Cost of raw materials per ton							Cost of raw materials per ton	$	908	$	697	$	837	$	597
Cost of ferrous scrap utilized per ton	Cost of ferrous scrap utilized per ton	$	428	$	266		Cost of ferrous scrap utilized per ton	472		369		446		327
Steel products metal margin per ton	Steel products metal margin per ton	548		346			Steel products metal margin per ton	638		425		599		375

Net sales for the three and nine months ended ~~November 30, 2021~~May 31, 2022 increased ~~$458.6~~$475.1 million, or ~~38%~~30%, and $1.3 billion, or 32%, respectively, compared to the corresponding periods. These results benefited from increased selling prices of 27% for raw materials, 40% for steel products and 29% for downstream products during the three months ended May 31, 2022, compared to the corresponding period. ~~The year-over-year increase in net sales was primarily due to~~Similarly, during the nine months ended May 31, 2022, average selling ~~price increases of 64%~~prices rose 37% for raw materials, ~~59%~~49% for steel products and ~~17%~~24% for downstream products, compared to the corresponding period. The ~~rise~~period-over-period increases in average selling prices ~~is supported by strengthened~~were primarily a result of a rising scrap price environment and strong demand inacross all of our end-use ~~markets due to greater construction~~markets. Volumes remained relatively flat during both the three and ~~industrial activity~~nine months ended May 31, 2022, compared to the corresponding ~~period. Net sales was impacted to a lesser extent by a 7% decrease in shipments of steel products due to~~periods, as the ~~absence of production from the former Rancho Cucamonga mill operations. This decrease~~strong demand was offset in part by ~~an 8% increase~~the impacts of constrained labor at construction sites in ~~shipments~~certain geographies and planned maintenance activities at certain of ~~downstream products, largely due to growth in downstream products backlog at August 31, 2021 compared to August 31, 2020.~~our facilities.

Adjusted EBITDA for the three and nine months ended ~~November 30, 2021~~May 31, 2022 increased ~~$112.9~~$172.0 million, or ~~73%~~83%, and $648.8 million, or 121%, respectively, compared to the corresponding ~~period. The year-over-year increase~~periods. Included in adjusted EBITDA during the nine months ended May 31, 2022 was a $273.3 million gain on the sale of the Rancho Cucamonga facilities. The remaining growth in adjusted EBITDA during the three and nine months ended ~~November 30, 2021~~May 31, 2022 was primarily due ~~primarily~~ to expansion of steel products metal margin per ton and raw materials margin over purchase cost per ton, ~~and steel products metal margin per ton.~~compared to the corresponding periods. Although ferrous and nonferrous scrap prices increased and inflationary pressures caused an increase in the cost of freight, energy and other steelmaking inputs, the average selling price for steel products and raw materials ~~and steel products~~ increased at a greater rate year-over-year. Adjusted EBITDA included non-cash stock compensation expense of ~~$2.7~~$3.8 million and $10.5 million for the three and nine months ended ~~November 30, 2021,~~May 31, 2022, respectively, and ~~$3.3~~$3.4 million and $10.5 million for the corresponding ~~period.~~periods.

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Europe


		Three Months Ended November 30,				Three Months Ended May 31,				Nine Months Ended May 31,
(in thousands)	(in thousands)	2021		2020			(in thousands)	2022		2021		2022		2021
Net sales	Net sales	$	329,056	$	194,596		Net sales	$	484,564	$	284,107	$	1,209,378	$	680,769
Adjusted EBITDA	Adjusted EBITDA	79,832		14,470			Adjusted EBITDA	120,974		50,005		281,955		80,582

External tons shipped (in thousands)	External tons shipped (in thousands)						External tons shipped (in thousands)
Rebar	Rebar	103		128			Rebar	170		141		445		347
Merchant and other	Merchant and other	262		269			Merchant and other	306		263		846		807
Steel products	Steel products	365		397			Steel products	476		404		1,291		1,154

Average selling price (per ton)	Average selling price (per ton)						Average selling price (per ton)
Steel products	Steel products	$	869	$	461		Steel products	$	967	$	664	$	898	$	552

Cost of ferrous scrap utilized per ton	Cost of ferrous scrap utilized per ton	$	434	$	262		Cost of ferrous scrap utilized per ton	$	530	$	376	$	472	$	324
Steel products metal margin per ton	Steel products metal margin per ton	435		199			Steel products metal margin per ton	437		288		426		228

Net sales for the three and nine months ended ~~November 30, 2021~~May 31, 2022 increased ~~$134.5~~$200.5 million, or ~~69%~~71%, and $528.6 million, or 78%, respectively, compared to the corresponding ~~period.~~periods. The ~~increase was~~increases were driven largely by the ~~increase~~increases in steel products average selling prices of ~~$408~~$303 per ton, or 46%, and $346 per ton, or 63%, during the three and nine months ended ~~November 30, 2021,~~May 31, 2022, respectively, compared to the corresponding ~~period, supported by continued strong~~periods. Increased demand for steel products from both construction and industrial end ~~markets. Shipments~~markets supported the increases in average selling prices, as well as the increases in shipments of steel products ~~decreased 8%~~of 18% and 12% during the three and nine months ended May 31, 2022, respectively, compared to the corresponding ~~period, primarily as a result~~periods. Along with the increased capacity from our third rolling line in Poland, which was commissioned in late 2021, steel products supply disruptions across Europe caused by the Russian invasion of ~~scheduled maintenance during~~Ukraine contributed to the ~~first quarter of~~increase in shipment volumes in the three and nine months ended May 31, 2022. Net sales for the three and nine months ended ~~November 30, 2021~~May 31, 2022 were ~~also~~ impacted by an unfavorable foreign currency translation ~~adjustment~~adjustments of ~~$13.5~~$66.9 million and $115.6 million, respectively, due to the increase in the average value of the U.S. dollar relative to the Polish zloty, compared to a favorable foreign currency translation ~~adjustment~~adjustments of ~~$4.7~~$22.6 million and $35.6 million, respectively, during the corresponding ~~period.~~periods.

Adjusted EBITDA for the three and nine months ended ~~November 30, 2021~~May 31, 2022 increased ~~$65.4~~$71.0 million, or ~~452%~~142%, and $201.4 million, or 250%, compared to the corresponding ~~period.~~periods. The primary ~~driver~~drivers of the ~~increase~~increases in adjusted EBITDA ~~was an~~were the expansion in steel products metal margin per ton, which increased ~~119%~~52% and 87%, respectively, during the three and nine months ended May 31, 2022, compared to the corresponding ~~period, as~~periods, and the volume increases mentioned above. The increases in steel products metal margin per ton were supplemented by additional increases on margins of fabricated rebar and wire mesh. During the three and nine months ended May 31, 2022, the cost of ferrous scrap utilized per ton increased 41% and 46%, respectively, compared to the corresponding periods, and inflationary pressures caused increases in the cost of freight, energy and other steelmaking inputs. However, the growth in average selling ~~price~~prices for steel products outpaced these increased costs in each period. Also offsetting the increased costs were realized gains of ~~ferrous scrap utilized.~~$4.8 million and $14.1 million during the three and nine months ended May 31, 2022, respectively, from an energy derivative designated as a cash flow hedging instrument, compared to immaterial gains recorded in the corresponding periods. Additionally, in the first quarter of 2022, we received a $15.5 million energy credit that was recorded as a reduction to cost of goods sold, with no similar credit received in the corresponding period. Adjusted EBITDA for the three and nine months ended ~~November 30, 2021~~May 31, 2022 included an unfavorable foreign currency exchange rate ~~impact~~impacts of ~~$3.0~~$17.2 million and $27.5 million, respectively, compared to ~~an immaterial~~favorable foreign currency translation ~~adjustment~~adjustments of $4.1 million and $5.1 million, respectively, during the corresponding ~~period.~~periods. Adjusted EBITDA included non-cash stock compensation expense of ~~$1.5~~$0.5 million and $3.1 million for the three and nine months ended ~~November 30, 2021,~~May 31, 2022, respectively, and ~~$0.7~~$0.8 million ~~for~~and $2.2 million, respectively, during the corresponding ~~period.~~periods.

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Corporate and Other

Corporate and Other reported adjusted EBITDA loss of ~~$34.3~~$35.0 million and $121.9 million for the three and nine months ended ~~November 30, 2021,~~May 31, 2022, respectively, compared to ~~adjusted EBITDA loss of $26.5~~$36.2 million and $108.7 million, respectively, in the corresponding ~~period. The primary reason for~~periods. While quarter-over-quarter results remained flat, the increase in the adjusted EBITDA loss ~~was a $4.2 million increase in labor-related expenses year-over-year and a $3.2 million increase in acquisition-related costs incurred in~~during the ~~three~~nine months ended ~~November 30, 2021,~~May 31, 2022 was primarily due to $7.6 million of year-to-date acquisition and integration expenses associated with the acquisition of Tensar, with no such costs in the corresponding period, and $8.7 million of additional labor-related expenses, compared to the corresponding period. Additionally, adjusted EBITDA included non-cash stock compensation expense of ~~$5.4~~$7.7 million and $24.3 million for the three and nine months ended ~~November 30, 2021,~~May 31, 2022, respectively, compared to ~~$5.1~~$9.6 million and $22.9 million for the corresponding ~~period.~~periods.

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LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital Resources

Our cash flows from operating activities are our principal sources of liquidity and result primarily from sales of raw materials, steel products, downstream products and related materials and services, as described in Part I, Item 1, Business, of our 2021 Form 10-K and Note 2, Acquisition. We have a diverse and generally stable customer 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%~~17% of total trade receivables at ~~November 30, 2021.~~May 31, 2022.

We use futures or forward contracts to mitigate the risks from fluctuations in commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. See Note 9,10, Derivatives, for further information.

The table below reflects our sources, facilities and availability of liquidity at ~~November 30, 2021.~~May 31, 2022. See Note 8,9, Credit Arrangements, for additional information.


(in thousands)	(in thousands)	Total Facility		Availability		(in thousands)	Liquidity Sources and Facilities		Availability
Cash and cash equivalents	Cash and cash equivalents	$	415,055	$	415,055	Cash and cash equivalents	$	410,265	$	410,265
Notes due from 2023 to 2031		930,000		*
Notes due from 2023 to 2032						Notes due from 2023 to 2032	1,230,000		*
Revolver	Revolver	400,000		396,954		Revolver	400,000		398,604
U.S. accounts receivable facility	U.S. accounts receivable facility	150,000		150,000		U.S. accounts receivable facility	150,000		150,000
Series 2022 Bonds, due 2047 **						Series 2022 Bonds, due 2047 **	145,060		—
Poland credit facilities	Poland credit facilities	73,039		72,182		Poland credit facilities	70,269		69,371
Poland accounts receivable facility	Poland accounts receivable facility	70,117		40,125		Poland accounts receivable facility	67,458		4,831
Poland Term Loan	Poland Term Loan	44,055		—		Poland Term Loan	37,923		—
Other						Other	4,258		1,511

_________________

*We believe we have access to additional financing and refinancing, if needed, although we can make no assurances as to the form or terms of such financing.

**See Note 9, Credit Arrangements, for additional information regarding the restrictions on the proceeds from the Series 2022 Bonds.

We are continually reviewing our capital resources to determine whether we can meet our short and long-term goals. ~~Our cash and cash equivalents position remains strong at $415.1 million as of November 30, 2021.~~ We anticipate our current cash balances, cash flows from operations and available sources of liquidity will be sufficient to maintain operations, make necessary capital expenditures, repay current maturities of long-term debt, pay dividends and opportunistically repurchase shares for at least the next twelve months. Additionally, we ~~believe~~expect our long-term liquidity position ~~remains strong and expect~~will be sufficient to meet our long-term liquidity needs with cash flows from operations and financing arrangements. However, in the event of changes in business conditions or other developments, including a sustained market deterioration, unanticipated regulatory developments, significant acquisitions, competitive pressures, or to the extent our liquidity needs prove to be greater than expected or cash generated from operations is less than anticipated, we may need additional liquidity. To the extent we elect to finance our long-term liquidity needs, we believe that the potential financing capital available to us in the future is ~~sufficient to fund such long-term liquidity needs.~~sufficient.

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As of ~~November 30,~~May 31, 2022 and August 31, 2021, ~~and 2020,~~ we had no off-balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Cash Flows

Operating Activities

Net cash flows from operating activities were ~~$25.8~~$241.7 million for the ~~three~~nine months ended ~~November 30, 2021,~~May 31, 2022, compared to net cash flows ~~used by~~from operating activities of ~~$12.1~~$94.2 million for the ~~three~~nine months ended ~~November 30, 2020.~~May 31, 2021. Net earnings increased by ~~$168.8~~$668.1 million year-over-year, including an increase in net gain on disposals of assets and other of $266.7 million, primarily attributable to the sale of the Rancho Cucamonga facilities. This increase in net cash flows from operating activities was offset by a ~~$111.5~~$343.4 million year-over-year net increase in cash used by operating assets and liabilities ("working capital"). The increase in cash used by working capital was ~~primarily~~ due in part to rising scrap prices and greater inventory levels, ~~in the three months ended November 30, 2021, compared to the corresponding period. This~~which corresponded with an increase ~~was partially offset by a decrease~~ in accounts payable, accrued expenses and other payables in the ~~three~~nine months ended ~~November 30, 2021,~~May 31, 2022, compared to the corresponding ~~period, due~~period. Additionally, the growth in sales period-over-period led to a rise in accounts receivable during the nine months ended May 31, 2022, compared to the payment of a $32.1 million working capital adjustment related to the fiscal 2019 acquisition from Gerdau S.A. made in the three months ended November 30, 2020, with no such payment in the three months ended November 30, 2021.corresponding period. Operating working capital days, ~~decreased four~~which represents the number of days to convert accounts receivable and inventory, less accounts payable, into net sales, rose one day year-over-year.

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Investing Activities

Net cash flows used by investing activities were ~~$68.7 million and $36.5~~$528.7 million for the ~~three~~nine months ended ~~November 30, 2021 and 2020, respectively.~~May 31, 2022, compared to net cash flows used by investing activities of $104.0 million for the nine months ended May 31, 2021. The ~~$32.3~~$424.7 million increase in net cash flows used by investing activities was primarily caused by ~~an increase in~~the acquisition of Tensar for a cash purchase price of approximately $550 million, net of cash acquired. See Note 2, Acquisition, for more information about the acquisition. Additionally, net cash flows used by investing activities rose due to increased capital expenditures ~~as a result of~~from the construction of our third micro mill located in Mesa, Arizona. These cash outflows were offset in part by proceeds from the sale of the Rancho Cucamonga facilities. See Note 3, Changes in Business, for more information on the sale of the Rancho Cucamonga facilities.

We estimate that our 2022 capital spending will range from $475 million to ~~$525~~$500 million. We regularly assess our capital spending based on current and expected results and the amount is subject to change.

In December 2021, we announced the signing of a definitive agreement to acquire TAC Acquisition Corp. (“Tensar”), a portfolio company of Castle Harlan Inc.’s fund, Castle Harlan Partners V, L.P., for a cash purchase price of $550.0 million, subject to customary purchase price adjustments. We anticipate that the transaction will close during the first half of calendar year 2022. See Note 15, Subsequent Event, for more information about the acquisition.

In addition, in January 2022, we announced the plan to construct a fourth micro mill geographically situated primarily to ~~primarily~~ serve the Northeast, Mid-Atlantic and Mid-Western United States markets. Following the site selection and receipt of state and local incentives, permitting and other necessary approvals, the construction of the planned mill is expected to take roughly two years.

Financing Activities

Net cash flows ~~used by~~from financing activities were ~~$39.3 million and $28.6~~$324.3 million for the ~~three~~nine months ended ~~November 30, 2021 and 2020, respectively. Net~~May 31, 2022, compared to net cash flows used by financing activities ~~increased during~~of $88.2 million for the ~~first quarter of 2022 as~~nine months ended May 31, 2021. The $412.4 million increase in net cash flows from financing activities was a result of ~~multiple~~many actions, including ~~an increase~~net proceeds from long-term debt of ~~$2.6~~$420.7 million ~~in dividends paid~~during the nine months ended May 31, 2022, compared to net long-term debt repayments of $52.7 million during the nine months ended May 31, 2021. Net borrowings under our accounts receivable facilities increased $9.4 million during the nine months ended May 31, 2022, compared to the corresponding ~~period, an~~period. See Note 9, Credit Arrangements, for more information regarding our credit arrangements. Partially offsetting these cash flows from financing activities were $55.6 million of treasury stock repurchased under the share repurchase program, $7.7 million in increased dividend payments and a $6.3 million increase ~~of $6.0 million in~~attributable to stock issued under incentive and purchase plans, net of ~~forfeitures, and $5.3 million of treasury stock acquired under the new share repurchase program which was authorized in October 2021.~~forfeitures. See Note ~~12,~~14, Stockholders' Equity and Earnings per Share, for more information on the share repurchase program. Partially offsetting the increase in net cash flows used by financing activities were net proceeds from accounts receivable facilities of $6.0 million in the three months ended November 30, 2021, compared to no such net proceeds in the corresponding period.

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CONTRACTUAL OBLIGATIONS

Our material cash commitments from known contractual and other obligations primarily consist of obligations for long-term debt and related interest, leases for properties and equipment and purchase obligations as part of normal operations. See Note 8,9, Credit Arrangements, for more information regarding scheduled maturities of our long-term debt. See Note 7,8, Leases, for additional information on leases.

Our undiscounted purchase obligations due in the twelve months following ~~November 30, 2021~~May 31, 2022 and August 31, 2021 were ~~$736.3~~$897.9 million and ~~$638.5~~$638.5 million,, respectively, with ~~$189.7~~$170.3 million and ~~$228.0~~$228.0 million due thereafter, respectively. The increase in short-term purchase obligations was primarily due to construction of our third micro mill in Mesa, Arizona, purchases of inventory and other planned maintenance and capital expenditures in connection with normal business operations. The decrease in long-term purchase obligations is a result of a decrease in commitments for commodities used in operations, such as electrodes and natural gas, and certain capital expenditure obligations for the construction of our third micro mill which were fulfilled during the ~~first quarter of~~nine months ended May 31, 2022.

Other Commercial Commitments

We maintain stand-by letters of credit to provide support for certain transactions that governmental agencies, our insurance providers and suppliers request. At ~~November 30, 2021,~~May 31, 2022, we had committed ~~$22.8~~$21.5 million under these arrangements, of which ~~$3.0~~$1.4 million reduced availability under the Revolver.

CONTINGENCIES

We may incur settlements, fines, penalties or judgments due to our involvement in litigation, administrative proceedings and governmental investigations, including environmental 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 we believe a material 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

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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 materially affect, individually or in the aggregate, our results of operations, cash flows or financial condition. See Note ~~13,~~15, Commitments and Contingencies, for more information.

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FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or incorporates by reference a number of "forward-looking statements" within the meaning of the federal securities laws with respect to general economic conditions, key macro-economic drivers that impact our business, the impact of the Russian invasion of Ukraine, the effects of ongoing trade actions, the effects of continued pressure on the liquidity of our customers, potential synergies and organic growth provided by acquisitions and strategic investments, demand for our products, metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel mills at full capacity, future availability and cost of supplies of raw materials and energy for our operations, share repurchases, legal proceedings, the undistributed earnings of our non-U.S. subsidiaries, U.S. non-residential construction activity, international trade, capital expenditures, our liquidity and our ability to satisfy future liquidity requirements, ~~the proposed Tensar acquisition and the timing thereof,~~ estimated contractual obligations, the expected capabilities and benefits of new facilities, the timeline for execution of our growth plan, and our expectations or beliefs concerning future events. The statements in this report that are not historical statements, are forward-looking statements. These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "future," "intends," "may," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases, as well as by discussions of strategy, plans, or intentions.

Our forward-looking statements are based on management's expectations and beliefs as of the time this Form 10-Q is filed with the SEC or, with respect to any document incorporated by reference, as of the time such document was prepared. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of our 2021 Form 10-K and Part II, Item 1A, Risk Factors of this Quarterly Report on Form 10-Q, as well as the following:

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

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

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

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

•the impact of the Russian invasion of Ukraine on the global economy, energy supplies and raw materials, which is uncertain, but may prove to negatively impact our business and operations;

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

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

•evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors that may impact amounts accrued for environmental liabilities;

•potential limitations in our or our customers' abilities to access credit and non-compliance of their contractual obligations, including payment obligations;

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

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

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

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

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

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

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

•impact of goodwill impairment charges;

•impact of long-lived asset impairment charges;

•currency fluctuations;

•global factors, such as trade measures, military conflicts and political uncertainties, including changes to current trade regulations, such as Section 232 trade tariffs and quotas, tax legislation and other regulations which might adversely impact our business;

•availability and pricing of electricity, electrodes and natural gas for mill operations;

•ability to hire and retain key executives and other employees;

•competition from other materials or from competitors that have a lower cost structure or access to greater financial resources;

•information technology interruptions and breaches in security;

•ability to make necessary capital expenditures;

•availability and pricing of raw materials and other items over which we exert little influence, including scrap metal, energy and insurance;

•unexpected equipment failures;

•losses or limited potential gains due to hedging transactions;

•litigation claims and settlements, court decisions, regulatory rulings and legal compliance risks;

•risk of injury or death to employees, customers or other visitors to our operations; and

•civil unrest, protests and riots.

You should refer to the "Risk Factors" disclosed in our periodic and current reports filed with the SEC for specific risks which would cause actual results to be significantly different from those expressed or implied by these forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause actual results, performance or our achievements, or industry results, to differ materially from historical results, any future results, or performance or achievements expressed or implied by such forward-looking statements. Accordingly, readers of this Form 10-Q are cautioned not to place undue reliance on any forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the ~~three~~nine months ended ~~November 30, 2021,~~May 31, 2022, the U.S. dollar equivalent of the Company's total gross foreign currency exchange contract commitments decreased ~~$69.2~~$12.3 million, or ~~18%~~3%, compared to August 31, 2021. This decrease was primarily due to forward contracts denominated in Polish zloty with a U.S. dollar functional currency, which decreased ~~$101.3~~$122.6 million, partially offset by forward contracts denominated in euros with a Polish zloty functional currency, which increased ~~$30.5~~$112.0 million compared to August 31, 2021.

There were no other material changes to the information set forth in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, included in our 2021 Form 10-K.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

~~There~~Changes in Internal Control over Financial Reporting

Except for the acquisition of Tensar as described below, 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 ~~November 30, 2021~~May 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On April 25, 2022, we completed the acquisition of Tensar. Tensar represented approximately 1% of the Company's net sales during the three months ended May 31, 2022 and 11% of total assets as of May 31, 2022. We are currently integrating Tensar into our operations and internal control processes. Pursuant to the Securities and Exchange Commission's guidance that an assessment of an acquired business may be omitted from the scope of an assessment for a period not to exceed one year from the date of acquisition, we excluded Tensar from the scope of our assessment of our internal controls over financial reporting as of May 31, 2022.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding our legal proceedings, refer to Note ~~13,~~15, Commitments and Contingencies, to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q.

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

ITEM 1A. RISK FACTORS

~~There~~Except as set forth below, there were no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our 2021 Form ~~10-K.~~10-K:

The impact of the Russian invasion of Ukraine on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations.

The short and long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time. We continue to monitor any adverse impact that the outbreak of war in Ukraine and the subsequent institution of sanctions against Russia by the United States and several European and Asian countries may have on the global economy in general, on our business and operations and on the businesses and operations of our suppliers and customers. For example, a prolonged conflict may result in increased inflation, escalating energy prices and constrained availability, and thus increasing costs, of raw materials. Further, if the conflict intensifies or expands beyond Ukraine, it could have an adverse impact on our operations in Poland. We will continue to monitor this fluid situation and develop contingency plans as necessary to address any disruptions to our business operations as they develop. To the extent the war in Ukraine may adversely affect our business as discussed above, it may also have the effect of heightening many of the other risks described in Part I, Item 1A of our 2021 Form 10-K, such as those relating to data security, supply chain, volatility in prices of scrap and other inputs, and market conditions, any of which could negatively affect our business and financial condition.

Following the Tensar acquisition, we may be subject to new and increased business and economic risks.

In connection with the Tensar acquisition, we expanded our scope of products and acquired international manufacturing facilities in new geographical territories where we have limited experience in owning and operating assets. As a result, this expansion poses new risks and uncertainties and increases our exposure to certain existing risks and uncertainties. The failure to meet the challenges involved in operating and integrating the Tensar business and to realize the anticipated benefits of the acquisition could cause an interruption of, or a loss of momentum in, our activities and could adversely affect our results of operations.

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

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about purchases of equity securities registered by the Company pursuant to Section 12 of the Exchange Act, as amended, made by the Company or any affiliated purchasers during the quarter ended ~~November 30, 2021.~~May 31, 2022.

Issuer Purchases of Equity Securities(1)
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs As of the End of Period
September 1, 2021 - September 30, 2021 — $ — — $ 27,598,706
October 1, 2021 - October 12, 2021 — — — 27,598,706
October 13, 2021 - October 31, 2021 44,000 31.99 44,000 348,592,440
November 1, 2021 - November 30, 2021 115,500 33.77 115,500 344,692,005
159,500 159,500

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Issuer Purchases of Equity Securities(1)
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs as of the End of Period
March 1, 2022 - March 31, 2022	126,800	$	40.16	126,800	$	327,907,153
April 1, 2022 - April 30, 2022	122,256	42.15		122,256	322,754,443
May 1, 2022 - May 31, 2022	757,331	37.42		757,331	294,411,671
	1,006,387			1,006,387

_________________

(1) On October 13, 2021, the Company announced that the Board of Directors authorized a ~~new~~ share repurchase program under which the Company may repurchase up to $350.0 million of the Company's outstanding common stock. This new program replaces the previously existing $100.0 million program announced on October 27, 2014, which was terminated by the Board of Directors in connection with the approval of the new program. The share repurchase program does not require the Company to purchase any dollar amount or number of shares of CMC common stock and may be modified, suspended, extended or terminated by the Company at any time without prior notice. See Note ~~12,~~14, Stockholders' Equity and Earnings per Share, to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q for more information on the share repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

Pursuant to Item 601(b)(4)(iii) of Regulation S-K, certain long-term debt instruments are omitted because the total amount of securities authorized thereunder does not exceed 10% of the total assets of Commercial Metals Company and its subsidiaries on a consolidated basis. Commercial Metals Company agrees to furnish copies of such instruments to the SEC upon its request.

2.1†

Agreement and Plan of Merger, dated as of December 3, 2021, by and among Commercial Metals Company, Tahoe Merger Sub Inc., TAC Acquisition Corp. and Castle Harlan Inc. (filed as Exhibit 2.1 to Commercial Metals Company's Current Report on Form 8-K filed December 7, 2021 and incorporated herein by reference).

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~~

Purchase and Sale Agreement and Joint Escrow Instructions, dated September 29, 2021, by and among TAMCO, CMC Steel Fabricators, Inc., as sellers, and BTC III Acquisitions LLC, as buyer (filed as exhibit 10.1 to Commercial Metals Company's Current Report on Form 8-K filed September 30, 2021 and incorporated herein by reference).

~~10.2~~

~~Fourth Amendment to the Employment Agreement, dated effective as of November 4, 2021, by and between Tracy L. Porter and Commercial Metals Company (filed herewith).~~

~~10.3~~

~~Amended and Restated Employment Agreement, dated effective as of November 4, 2021, by and between Ty Garrison and Commercial Metals Company (filed herewith).~~

~~10.4~~

~~Amendment to Terms and Conditions of Stock Award, Employment and Separation, dated as effective November 4, 2021, by and between Paul J. Lawrence and Commercial Metals Company (filed herewith).~~

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, ~~Seni~~or Senior 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, Senior 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 (furnished 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 (formatted as Inline XBRL document and included in Exhibit 101).

~~Table of Contents~~

† Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5), and Commercial Metals Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			COMMERCIAL METALS COMPANY

~~January 10,~~June 22, 2022			/s/ Paul J. Lawrence
			Paul J. Lawrence
			Senior Vice President and Chief Financial Officer
			(Duly authorized officer and principal financial officer of the registrant)

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	Floating rate (PLN)
November 30,	Low	High	Average
2021	252.79	540.39	348.99
2020	151.66	247.56	203.96