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 ~~May 31,~~November 30, 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 ~~June 21, 2022, 120,490,407~~January 6, 2023, 117,122,667 shares of the registrant's common stock, par value $0.01 per share, were outstanding.

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION			3

Item 1. Financial Statements			3
Condensed Consolidated Statements of Earnings (Unaudited) - Three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 and 2021			3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 and 2021			4
Condensed Consolidated Balance Sheets (Unaudited) - ~~May 31,~~November 30, 2022 and August 31, ~~2021~~2022			5
Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Nine~~Three months ended ~~May 31,~~November 30, 2022 and 2021			6
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - Three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 and 2021			7
Notes to Condensed Consolidated Financial Statements (Unaudited)			98
Note 1. Accounting Policies			98
Note ~~2. Acquisition~~2 . Changes in Business			9
Note ~~3. Changes in Business~~3 . Accumulated Other Comprehensive Income (Loss)			10
Note 4 . Revenue Recognition			10
Note 5 . Inventories, Net			11
Note 6 . Goodwill and Other Intangibles			12
Note ~~4. Accumulated Other Comprehensive Income (Loss)~~7. Credit Arrangements			13
Note ~~5. Revenue Recognition~~8. Derivatives			14
Note ~~6. Inventories, Net~~			14
~~Note 7. Goodwill and Other Intangibles~~9. Fair Value			15
Note ~~8. Leases~~10. Stock-Based Compensation Plans			1618
Note ~~9. Credit Arrangements~~11. Employees' Retirement Plans			1718
Note ~~10. Derivatives~~12. Stockholders' Equity and Earnings Per Share			19
Note ~~11. Fair Value~~13. Commitments and Contingencies			20
~~Note 12. Stock-Based Compensation Plans~~			22
~~Note 13. Employees' Retirement Plans~~			2219
Note 14. ~~Stockholders' Equity and Earnings Per Share~~			23
~~Note 15. Commitments and Contingencies~~			23
~~Note 16. Business~~Operating Segments			2420
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2621
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3630
Item 4. Controls and Procedures			3731

PART II — OTHER INFORMATION			3832

Item 1. Legal Proceedings			3832
Item 1A. Risk Factors			3832
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3832
Item 3. Defaults Upon Senior Securities			3932
Item 4. Mine Safety Disclosures			3932
Item 5. Other Information			3932
Item 6. Exhibits			4033
Signature			4134

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 May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2022		2021		2022		2021		(in thousands, except share and per share data)	2022		2021
Net sales	Net sales	$	2,515,727	$	1,845,041	$	6,506,416	$	4,699,114	Net sales	$	2,227,313	$	1,981,801
Costs and operating expenses (income):
Costs and operating expenses:										Costs and operating expenses:
Cost of goods sold	Cost of goods sold	1,956,459		1,533,768		5,157,834		3,936,930		Cost of goods sold	1,719,414		1,586,410
Selling, general and administrative expenses	Selling, general and administrative expenses	139,556		134,357		391,119		368,882		Selling, general and administrative expenses	156,355		122,595
Interest expense	Interest expense	13,433		11,965		36,479		40,245		Interest expense	13,045		11,035
Loss on debt extinguishment		39		—		16,091		16,841
Asset impairments		3,245		277		4,473		4,345
Gain on sale of assets		(2,024)		(3,909)		(276,106)		(9,390)
Net costs and operating expenses		2,110,708		1,676,458		5,329,890		4,357,853

											1,888,814		1,720,040
Earnings before income taxes	Earnings before income taxes	405,019		168,583		1,176,526		341,261		Earnings before income taxes	338,499		261,761
Income taxes	Income taxes	92,590		38,175		247,894		80,709		Income taxes	76,725		28,872
Net earnings	Net earnings	$	312,429	$	130,408	$	928,632	$	260,552	Net earnings	$	261,774	$	232,889

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	2.58	$	1.08	$	7.66	$	2.17	Basic	$	2.23	$	1.92
Diluted	Diluted	$	2.54	$	1.07	$	7.55	$	2.14	Diluted	$	2.20	$	1.90

Average basic shares outstanding	Average basic shares outstanding	121,247,105		120,613,652		121,277,553		120,241,579		Average basic shares outstanding	117,273,743		121,129,679
Average diluted shares outstanding	Average diluted shares outstanding	122,799,869		122,193,655		122,927,291		121,852,144		Average diluted shares outstanding	118,925,442		122,797,738

See notes to condensed consolidated financial statements.

Table of Contents


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)										COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021
Net earnings	Net earnings	$	312,429	$	130,408	$	928,632	$	260,552	Net earnings	$	261,774	$	232,889
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		(14,668)		11,775		(68,817)		4,852
Foreign currency translation										Foreign currency translation	41,429		(39,688)
Derivatives:	Derivatives:									Derivatives:
Unrealized holding gain		25,927		12,145		81,378		21,032
Net unrealized holding gain										Net unrealized holding gain	68,045		22,254
Reclassification for realized gain	Reclassification for realized gain	(5,107)		(616)		(13,453)		(929)		Reclassification for realized gain	(6,970)		(3,069)
Net unrealized gain on derivatives	Net unrealized gain on derivatives	20,820		11,529		67,925		20,103		Net unrealized gain on derivatives	61,075		19,185

Defined benefit plans loss after amortization of prior service costs and net actuarial losses		(6)		(14)		(18)		(41)
Defined benefit plans gain (loss) after amortization of prior service costs										Defined benefit plans gain (loss) after amortization of prior service costs	1,758		(6)
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		Total other comprehensive income (loss), net of income taxes	104,262		(20,509)
Comprehensive income	Comprehensive income	$	318,575	$	153,698	$	927,722	$	285,466	Comprehensive income	$	366,036	$	212,380

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)	May 31, 2022		August 31, 2021		(in thousands, except share and per share data)	November 30, 2022		August 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	410,265	$	497,745	Cash and cash equivalents	$	582,069	$	672,596
Restricted cash		126,264		3,384
Accounts receivable (less allowance for doubtful accounts of $5,070 and $5,553)		1,330,279		1,105,580
Accounts receivable (less allowance for doubtful accounts of $4,901 and $4,990)						Accounts receivable (less allowance for doubtful accounts of $4,901 and $4,990)	1,287,286		1,358,907
Inventories, net	Inventories, net	1,346,286		935,387		Inventories, net	1,102,774		1,169,696
Prepaid and other current assets	Prepaid and other current assets	230,414		169,649		Prepaid and other current assets	251,985		240,269
Assets held for sale		60		25,083

Total current assets	Total current assets	3,443,568		2,736,828		Total current assets	3,224,114		3,441,468
Property, plant and equipment, net	Property, plant and equipment, net	1,808,392		1,566,123		Property, plant and equipment, net	2,028,955		1,910,871
Intangible assets, net	Intangible assets, net	266,440		10,101		Intangible assets, net	251,819		257,409
Goodwill	Goodwill	253,563		66,137		Goodwill	277,453		249,009
Other noncurrent assets	Other noncurrent assets	331,739		259,482		Other noncurrent assets	491,626		378,270
Total assets	Total assets	$	6,103,702	$	4,638,671	Total assets	$	6,273,967	$	6,237,027
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	492,947	$	450,723	Accounts payable	$	396,560	$	428,055
Accrued expenses and other payables	Accrued expenses and other payables	474,653		475,384		Accrued expenses and other payables	441,586		540,136
Current maturities of long-term debt and short-term borrowings	Current maturities of long-term debt and short-term borrowings	423,091		54,366		Current maturities of long-term debt and short-term borrowings	239,406		388,796
Total current liabilities	Total current liabilities	1,390,691		980,473		Total current liabilities	1,077,552		1,356,987
Deferred income taxes	Deferred income taxes	223,979		112,067		Deferred income taxes	283,754		250,302
Other noncurrent liabilities	Other noncurrent liabilities	231,385		235,607		Other noncurrent liabilities	235,280		230,060
Long-term debt	Long-term debt	1,115,478		1,015,415		Long-term debt	1,093,146		1,113,249
Total liabilities	Total liabilities	2,961,533		2,343,562		Total liabilities	2,689,732		2,950,598
Commitments and contingencies (Note 15)		0		0
Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)
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 120,490,407 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 117,291,637 and 117,496,053 shares						Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,291,637 and 117,496,053 shares	1,290		1,290
Additional paid-in capital	Additional paid-in capital	375,386		368,064		Additional paid-in capital	361,199		382,767
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(85,730)		(84,820)		Accumulated other comprehensive loss	(10,189)		(114,451)
Retained earnings	Retained earnings	3,040,554		2,162,925		Retained earnings	3,555,425		3,312,438
Less treasury stock 8,570,257 and 8,474,075 shares at cost		(189,563)		(152,582)
Less treasury stock 11,769,027 and 11,564,611 shares at cost						Less treasury stock 11,769,027 and 11,564,611 shares at cost	(323,722)		(295,847)
Stockholders' equity	Stockholders' equity	3,141,937		2,294,877		Stockholders' equity	3,584,003		3,286,197
Stockholders' equity attributable to non-controlling interests	Stockholders' equity attributable to non-controlling interests	232		232		Stockholders' equity attributable to non-controlling interests	232		232
Total stockholders' equity	Total stockholders' equity	3,142,169		2,295,109		Total stockholders' equity	3,584,235		3,286,429
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	6,103,702	$	4,638,671	Total liabilities and stockholders' equity	$	6,273,967	$	6,237,027

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)
		Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands)	(in thousands)	2022		2021		(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	$	928,632	$	260,552	Net earnings	$	261,774	$	232,889
Adjustments to reconcile net earnings to cash flows from (used by) operating activities:
Adjustments to reconcile net earnings to cash flows from operating activities:						Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	125,943		125,176		Depreciation and amortization	51,183		41,226
Deferred income taxes and other long-term taxes	Deferred income taxes and other long-term taxes	64,241		(17,175)		Deferred income taxes and other long-term taxes	16,744		(5,099)
Stock-based compensation	Stock-based compensation	37,856		35,558		Stock-based compensation	16,675		9,619
Loss on debt extinguishment		16,052		16,841
Asset impairments		4,473		4,345
Other	Other	1,449		243		Other	5,967		(583)
Amortization of acquired unfavorable contract backlog		—		(4,540)
Net gain on disposals of assets		(276,106)		(9,390)
Changes in operating assets and liabilities		(660,793)		(317,378)

Changes in operating assets and liabilities, net of acquisitions						Changes in operating assets and liabilities, net of acquisitions	20,027		(252,273)
Net cash flows from operating activities	Net cash flows from operating activities	241,747		94,232		Net cash flows from operating activities	372,370		25,779

Cash flows from (used by) investing activities:	Cash flows from (used by) investing activities:					Cash flows from (used by) investing activities:
Capital expenditures						Capital expenditures	(133,052)		(70,150)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(552,449)		—		Acquisitions, net of cash acquired	(63,745)		—
Proceeds from insurance						Proceeds from insurance	1,460		—
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		Proceeds from the sale of property, plant and equipment and other	303		1,418
Capital expenditures		(294,346)		(127,395)
Proceeds from insurance		3,081		—
Other	Other	—		(2,500)		Other	(516)		—

Net cash flows used by investing activities	Net cash flows used by investing activities	(528,743)		(104,005)		Net cash flows used by investing activities	(195,550)		(68,732)

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		740,403		309,187

Repayments of long-term debt	Repayments of long-term debt	(319,706)		(361,855)		Repayments of long-term debt	(154,631)		(6,556)
Debt issuance costs						Debt issuance costs	(1,800)		—
Debt extinguishment costs	Debt extinguishment costs	(13,642)		(13,128)		Debt extinguishment costs	(69)		—
Debt issuance costs		(3,064)		(2,830)
Repayments under accounts receivable facilities						Repayments under accounts receivable facilities	(25,914)		(144,706)
Proceeds from accounts receivable facilities	Proceeds from accounts receivable facilities	327,665		145,864		Proceeds from accounts receivable facilities	49		150,664
Repayments under accounts receivable facilities		(290,666)		(118,312)
Treasury stock acquired	Treasury stock acquired	(55,597)		—		Treasury stock acquired	(49,149)		(5,311)
Tax withholdings related to share settlements, net of purchase plans						Tax withholdings related to share settlements, net of purchase plans	(23,513)		(16,371)
Dividends	Dividends	(51,003)		(43,295)		Dividends	(18,787)		(17,025)
Stock issued under incentive and purchase plans, net of forfeitures		(10,132)		(3,807)
Contribution from non-controlling interest		—		19
Net cash flows from (used by) financing activities		324,258		(88,157)

Net cash flows used by financing activities						Net cash flows used by financing activities	(273,814)		(39,305)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(1,862)		(423)		Effect of exchange rate changes on cash	5,139		(550)
Increase (decrease) in cash, restricted cash and cash equivalents		35,400		(98,353)
Decrease in cash, restricted cash and cash equivalents						Decrease in cash, restricted cash and cash equivalents	(91,855)		(82,808)
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	679,243		501,129
Cash, restricted cash and cash equivalents at end of period	Cash, restricted cash and cash equivalents at end of period	$	536,529	$	446,611	Cash, restricted cash and cash equivalents at end of period	$	587,388	$	418,321

See notes to condensed consolidated financial statements.


Supplemental information:	Supplemental information:	Nine Months Ended May 31,				Supplemental information:	Three Months Ended November 30,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2022		2021
Cash paid for income taxes	Cash paid for income taxes	$	189,491	$	59,041	Cash paid for income taxes	$	15,694	$	15,296
Cash paid for interest	Cash paid for interest	34,394		43,403		Cash paid for interest	22,201		8,794

Noncash activities:	Noncash activities:					Noncash activities:
Liabilities related to additions of property, plant and equipment	Liabilities related to additions of property, plant and equipment	$	50,948	$	16,601	Liabilities related to additions of property, plant and equipment	$	47,429	$	45,788
Right of use assets obtained in exchange for operating leases						Right of use assets obtained in exchange for operating leases	16,492		15,912
Right of use assets obtained in exchange for finance leases						Right of use assets obtained in exchange for finance leases	10,104		1,002

Cash and cash equivalents	Cash and cash equivalents	$	410,265	$	443,120	Cash and cash equivalents	$	582,069	$	415,055
Restricted cash		126,264		3,491
Restricted cash (included in Prepaid and other current assets)						Restricted cash (included in Prepaid and other current assets)	5,319		3,266
Total cash, restricted cash and cash equivalents	Total cash, restricted cash and cash equivalents	$	536,529	$	446,611	Total cash, restricted cash and cash equivalents	$	587,388	$	418,321

Table of Contents


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																	Three Months Ended November 30, 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, March 1, 2022		129,060,664	$	1,290	$	366,162	$	(91,876)	$	2,745,117	(7,564,796)	$	(150,978)	$	232	$	2,869,947
Balance, September 1, 2022																		Balance, September 1, 2022	129,060,664	$	1,290	$	382,767	$	(114,451)	$	3,312,438	(11,564,611)	$	(295,847)	$	232	$	3,286,429
Net earnings	Net earnings								312,429							312,429		Net earnings								261,774							261,774
Other comprehensive income	Other comprehensive income						6,146									6,146		Other comprehensive income						104,262									104,262
Dividends ($0.14 per share)									(16,992)							(16,992)
Dividends ($0.16 per share)																		Dividends ($0.16 per share)								(18,787)							(18,787)
Treasury stock acquired	Treasury stock acquired										(1,006,387)	(38,587)				(38,587)		Treasury stock acquired										(1,275,452)	(49,149)				(49,149)
Issuance of stock under incentive and purchase plans, net of forfeitures					585						926	2				587
Tax withholdings related to share settlements, net of purchase plans																		Tax withholdings related to share settlements, net of purchase plans				(44,787)						1,071,036	21,274				(23,513)
Stock-based compensation	Stock-based compensation				8,639											8,639		Stock-based compensation				13,527											13,527
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
Reclassification of share-based liability awards																		Reclassification of share-based liability awards				9,692											9,692
Balance, November 30, 2022																		Balance, November 30, 2022	129,060,664	$	1,290	$	361,199	$	(10,189)	$	3,555,425	(11,769,027)	$	(323,722)	$	232	$	3,584,235

		Nine Months Ended May 31, 2022
		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, 2021		129,060,664	$	1,290	$	368,064	$	(84,820)	$	2,162,925	(8,474,075)	$	(152,582)	$	232	$	2,295,109
Net earnings									928,632							928,632
Other comprehensive loss							(910)									(910)
Dividends ($0.42 per share)									(51,003)							(51,003)
Treasury stock acquired											(1,501,387)	(55,597)				(55,597)
Issuance of stock under incentive and purchase plans, net of forfeitures					(28,748)						1,405,205	18,616				(10,132)
Stock-based compensation					26,979											26,979

Reclassification of share-based liability awards					9,091											9,091
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

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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


	Three Months Ended November 30, 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, 2021	129,060,664	$	1,290	$	368,064	$	(84,820)	$	2,162,925	(8,474,075)	$	(152,582)	$	232	$	2,295,109
Net earnings								232,889							232,889
Other comprehensive loss						(20,509)									(20,509)
Dividends ($0.14 per share)								(17,025)							(17,025)
Treasury stock acquired										(159,500)	(5,311)				(5,311)
Tax withholdings related to share settlements, net of purchase plans				(28,058)						1,052,850	11,687				(16,371)
Stock-based compensation				8,316											8,316

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

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~~2022 (the ~~"2021~~"2022 Form 10-K") filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the Securities and Exchange Commission (the "SEC") and include all normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets and the condensed consolidated statements of earnings, comprehensive income, cash flows and stockholders' equity for the periods indicated. These notes should be read in conjunction with the consolidated financial statements and notes included in the ~~2021~~2022 Form 10-K. The results of operations for the three ~~and nine~~ month ~~periods~~period are not necessarily indicative of the results to be expected for the full fiscal year. Any reference in this Form 10-Q to the "corresponding period" or "comparable period" relates to the ~~relevant~~ three ~~or nine~~ month period ended ~~May 31,~~November 30, 2021.

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

~~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 3.2. CHANGES IN BUSINESS

~~Facility Closure and Disposition~~

In October 2019, the Company closed the melting operations at its Rancho Cucamonga facility, which was 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 $13.4 million of expenses in the nine months ended 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 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 consolidated balance sheet as of August 31, 2021.Tensar Acquisition

On ~~September 29, 2021,~~April 25, 2022 (the "Tensar Acquisition Date"), the Company ~~entered into a definitive agreement~~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 ~~sell~~customary purchase price adjustments, and was funded through domestic cash on-hand. The acquired operations in North America are presented within the Company's North America reportable segment, and the remaining acquired operations are presented within the Company's Europe reportable segment.

The table below presents the preliminary fair values and measurement period adjustments that were allocated to Tensar's assets ~~associated with the Rancho Cucamonga facilities. On December 28, 2021, the sale~~and liabilities as of the ~~Rancho Cucamonga facilities was~~Tensar Acquisition Date:


(in thousands)	Estimated Fair Value as Previously Reported(1)
Cash and cash equivalents	$	19,551
Accounts receivable	37,741
Inventories	39,462
Prepaid and other current assets	12,528
Defined benefit pension plan	14,620
Property, plant and equipment	85,983
Intangible assets	260,500
Goodwill	186,805
Other noncurrent assets	19,660
Accounts payable	(12,134)
Accrued expenses and other payables	(23,725)
Current maturities of long-term debt	(3,277)
Deferred income taxes	(45,055)
Other noncurrent liabilities	(16,347)
Long-term debt	(4,312)
Total assets acquired and liabilities assumed	$	572,000

(1) As previously reported in the 2022 Form 10-K. No measurement period adjustments occurred during the three months ended November 30, 2022.

Pro Forma Supplemental Information

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of Tensar occurred on September 1, 2020. The pro forma financial information is presented for comparative purposes only, based on certain factually supported estimates and assumptions, which the Company believes to be reasonable, but not necessarily indicative of future results of operations or the results that would have been reported if the acquisition had been completed ~~for gross proceeds~~on September 1, 2020. These results were not used as part of ~~$313.0 million. A portion~~management's analysis of the ~~gross proceeds amounting to $39.0 million were set aside in a restricted cash account to facilitate the purchase of like-kind assets. In January 2022, the Company used $7.5 million~~financial results and performance of the ~~restricted cash~~Company. The pro forma adjustments do not reflect anticipated synergies, but rather include the recurring income statement effects of fair value adjustments, such as depreciation and amortization. Further adjustments were made to remove the impact of Tensar's prior management fees, acquisition and integration expenses and interest on ~~a purchase~~debt not assumed in the acquisition. The resulting tax effects of ~~a like-kind asset. The remaining balance of $31.5 million was included in restricted cash as of May 31, 2022.~~the business combination are also reflected below.


(in thousands)	Three Months Ended November 30, 2021
Pro forma net sales	$	2,043,668
Pro forma net earnings	240,377

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

Advanced Steel Recovery Acquisition

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

Kodiak Acquisition

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

NOTE 4.3. 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) Foreign Currency Translation Derivatives Defined Benefit Obligation Total AOCI
Balance, March 1, 2022 $ (159,829) $ 68,886 $ (933) $ (91,876)
Other comprehensive income (loss) before reclassifications (14,668) 32,302 (7) 17,627
Reclassification for gain (1)
— (6,342) — (6,342)
Income tax (expense) benefit — (5,140) 1 (5,139)
Net other comprehensive income (loss) (14,668) 20,820 (6) 6,146
Balance, May 31, 2022 $ (174,497) $ 89,706 $ (939) $ (85,730)
Nine Months Ended May 31, 2022
(in thousands) Foreign Currency Translation Derivatives Defined Benefit Obligation Total AOCI
Balance, September 1, 2021 $ (105,680) $ 21,781 $ (921) $ (84,820)
Other comprehensive income (loss) before reclassifications (68,817) 100,820 (23) 31,980
Reclassification for gain (1)
— (16,667) — (16,667)
Income tax (expense) benefit — (16,228) 5 (16,223)
Net other comprehensive income (loss) (68,817) 67,925 (18) (910)
Balance, May 31, 2022 $ (174,497) $ 89,706 $ (939) $ (85,730)


	Three Months Ended November 30, 2022
(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, September 1, 2022	$	(245,897)	$	138,242	$	(6,796)	$	(114,451)
Other comprehensive income before reclassifications	41,429		83,887		1,745		127,061
Reclassification for gain (1)	—		(8,666)		—		(8,666)
Income tax (expense) benefit	—		(14,146)		13		(14,133)
Net other comprehensive income	41,429		61,075		1,758		104,262
Balance, November 30, 2022	$	(204,468)	$	199,317	$	(5,038)	$	(10,189)


		Three Months Ended May 31, 2021									Three Months Ended November 30, 2021
(in thousands)	(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI		(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, March 1, 2021		$	(94,856)	$	(2,760)	$	(4,524)	$	(102,140)
Other comprehensive income (loss) before reclassifications		11,775		14,056		(14)		25,817
Reclassification for gain (1)		—		(719)		—		(719)
Income tax expense		—		(1,808)		—		(1,808)
Net other comprehensive income (loss)		11,775		11,529		(14)		23,290
Balance, May 31, 2021		$	(83,081)	$	8,769	$	(4,538)	$	(78,850)

		Nine Months Ended May 31, 2021
(in thousands)		Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, September 1, 2020		$	(87,933)	$	(11,334)	$	(4,497)	$	(103,764)
Balance, September 1, 2021										Balance, September 1, 2021	$	(105,680)	$	21,781	$	(921)	$	(84,820)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	4,852		25,028		(48)		29,832		Other comprehensive income (loss) before reclassifications	(39,688)		27,474		(8)		(12,222)
Reclassification for gain (1)	Reclassification for gain (1)	—		(1,106)		—		(1,106)		Reclassification for gain (1)	—		(3,789)		—		(3,789)
Income tax (expense) benefit	Income tax (expense) benefit	—		(3,819)		7		(3,812)		Income tax (expense) benefit	—		(4,500)		2		(4,498)
Net other comprehensive income (loss)	Net other comprehensive income (loss)	4,852		20,103		(41)		24,914		Net other comprehensive income (loss)	(39,688)		19,185		(6)		(20,509)
Balance, May 31, 2021		$	(83,081)	$	8,769	$	(4,538)	$	(78,850)
Balance, November 30, 2021										Balance, November 30, 2021	$	(145,368)	$	40,966	$	(927)	$	(105,329)

~~_________________~~

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

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NOTE 5.4. REVENUE RECOGNITION

Revenue related to raw materials, steel products and construction-related solutions in the North America and Europe segments and downstream products in the Europe segment is recognized at a point in time concurrent with the transfer of control, which

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usually occurs, depending on shipping terms, upon shipment or customer receipt. See Note 14, Operating Segments, for further information about disaggregated revenue by the Company's major product lines.

Each ~~fabricated~~downstream product contract sold by the North America segment represents a single performance obligation. Revenue from contracts where the Company provides fabricated product and installation services is recognized over time using an input measure, and these contracts represented 7%8% and 8%9% of net sales in the North America segment in the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 ~~respectively,~~ and ~~7% and 10% of net sales in the North America segment in the three and nine months ended May 31,~~ 2021, respectively. Revenue from contracts where the Company does not provide installation services is recognized over time using an output measure, and these contracts represented ~~8% of net sales in the North America segment in both the three and nine months ended May 31, 2022,~~12% and 9% of net sales in the North America segment in ~~both~~ the three ~~and nine~~ months ended 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.November 30, 2022 and 2021, respectively.

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


(in thousands)	(in thousands)	May 31, 2022		August 31, 2021		(in thousands)	November 30, 2022		August 31, 2022
Contract assets (included in accounts receivable)	Contract assets (included in accounts receivable)	$	58,350	$	64,168	Contract assets (included in accounts receivable)	$	76,390	$	73,037
Contract liabilities (included in accrued expenses and other payables)	Contract liabilities (included in accrued expenses and other payables)	23,214		23,948		Contract liabilities (included in accrued expenses and other payables)	28,005		27,567

The amount of revenue reclassified from August 31, ~~2021~~2022 contract liabilities during the ~~nine~~three months ended ~~May 31,~~November 30, 2022 was approximately ~~$19.7~~$11.6 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 ~~May 31,~~November 30, 2022, ~~$962.2 million was~~revenue totaling $1.0 billion has been allocated to remaining performance obligations in the North America segment related to ~~those contracts.~~contracts where revenue is recognized using an input or output measure. Of this amount, the Company estimates that approximately 81% of the remaining performance obligations will be recognized in the twelve months after November 30, 2022, and the remainder will be recognized during the subsequent twelve months. The duration of all other contracts in the North America and Europe segments are typically less than one year.

NOTE 6.5. INVENTORIES, NET

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

The components of inventories were as follows:


(in thousands)	(in thousands)	May 31, 2022		August 31, 2021		(in thousands)	November 30, 2022		August 31, 2022
Raw materials	Raw materials	$	391,208	$	286,123	Raw materials	$	255,569	$	271,756
Work in process	Work in process	9,488		6,881		Work in process	9,578		9,446
Finished goods	Finished goods	945,590		642,383		Finished goods	837,627		888,494
Total	Total	$	1,346,286	$	935,387	Total	$	1,102,774	$	1,169,696

Inventory write-downs were $4.5 million during the three months ended November 30, 2022 and immaterial in the corresponding period.

1411

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NOTE 7.6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment is detailed in the following table:

(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


(in thousands)	North America		Europe		Consolidated
Goodwill, gross
Balance at September 1, 2022	$	216,059	$	43,115	$	259,174
Acquisitions	28,891		—		28,891
Foreign currency translation	—		(442)		(442)
Balance at November 30, 2022	244,950		42,673		287,623

Accumulated impairment
Balance at September 1, 2022	(10,036)		(129)		(10,165)
Foreign currency translation	—		(5)		(5)
Balance at November 30, 2022	(10,036)		(134)		(10,170)

Goodwill, net
Balance at September 1, 2022	206,023		42,986		249,009
Acquisitions	28,891		—		28,891
Foreign currency translation	—		(447)		(447)
Balance at November 30, 2022	$	234,914	$	42,539	$	277,453

~~Other intangible~~Intangible assets subject to amortization are detailed in the following table:


			May 31, 2022						August 31, 2021								November 30, 2022						August 31, 2022
(in thousands)	(in thousands)	Weighted Average Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net		(in thousands)	Weighted Average Useful Lives in Years	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
Developed technologies															Developed technologies	1 to 12	$	147,400	$	11,128	$	136,272	$	147,040	$	6,485	$	140,555
Customer relationships	Customer relationships	8 years	4,996		4,996		—		6,079		5,629		450		Customer relationships	12 to 17	53,145		3,186		49,959		53,115		2,116		50,999
Perpetual lease rights	Perpetual lease rights	80 years	3,943		807		3,136		4,395		860		3,535		Perpetual lease rights	80	3,752		790		2,962		3,584		744		2,840
Patents															Patents	5 to 15	7,347		4,841		2,506		7,203		4,596		2,607
Trade names															Trade names	5 to 15	3,210		853		2,357		3,212		764		2,448
Non-compete agreements	Non-compete agreements	5 to 7 years	3,050		1,046		2,004		3,050		778		2,272		Non-compete agreements	5 to 7	2,300		1,224		1,076		3,050		1,135		1,915
Other	Other	5 to 15 years	939		745		194		939		677		262		Other	15	101		100		1		101		99		2
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	Total		$	223,637	$	14,297	$	209,340	$	21,666	$	11,565	$	10,101	Total		$	217,255	$	22,122	$	195,133	$	217,305	$	15,939	$	201,366

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

The gross carrying amount of the Company's intangible assets with indefinite lives was $56.7 million and $56.8 million as of November 30, 2022 and August 31, 2022, respectively. The change in the balance from August 31, 2022 to November 30, 2022 was due to foreign currency translation adjustments. Intangible assets with indefinite lives ~~resulting from the acquisition~~consist primarily of ~~Tensar include~~ trade names with gross carrying amounts of $53.5 million and $53.6 million at November 30, 2022 and August 31, 2022, respectively, and in-process research and development with a gross carrying ~~amounts~~amount of ~~$54.7 million and~~ $2.4 million ~~respectively,~~ at ~~May~~both November 30, 2022 and August 31, 2022. ~~The Company did not have any significant intangible assets with indefinite lives at August 31, 2021.~~

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Amortization expense for intangible assets was $6.1 million in the three months ended November 30, 2022, of which $4.6 million was recorded in cost of goods sold and $1.5 million was recorded in selling, general and administrative expenses in the condensed consolidated statements of earnings. The Company recorded immaterial amortization expense for intangible assets in the three months ended November 30, 2021. Estimated amounts of amortization expense for intangible assets for the next five ~~fiscal~~ years are as follows:
(in thousands)
Remainder of 2022 $ 5,868
2023 23,363
2024 22,109
2025 20,551
2026 19,363


	(in thousands)
Remainder of 2023	$	18,307
2024	23,604
2025	21,868
2026	20,662
2027	20,555

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~~NOTE 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) Classification in Condensed Consolidated Balance Sheets May 31, 2022 August 31, 2021
Assets:
Operating assets Other noncurrent assets $ 134,321 $ 112,202
Finance assets Property, plant and equipment, net 59,791 55,308
Total leased assets $ 194,112 $ 167,510
Liabilities:
Operating lease liabilities:
Current Accrued expenses and other payables $ 31,185 $ 26,433
Long-term Other noncurrent liabilities 105,971 93,409
Total operating lease liabilities 137,156 119,842
Finance lease liabilities:
Current Current maturities of long-term debt and short-term borrowings 18,060 16,040
Long-term Long-term debt 36,905 36,104
Total finance lease liabilities 54,965 52,144
Total lease liabilities $ 192,121 $ 171,986

~~The components of lease expense were as follows:~~
Three Months Ended May 31, Nine Months Ended May 31,
(in thousands) 2022 2021 2022 2021
Operating lease expense $ 8,659 $ 8,377 $ 25,991 $ 25,750
Finance lease expense:
Amortization of assets 3,268 3,270 9,722 9,729
Interest on lease liabilities 508 555 1,520 1,673
Total finance lease expense 3,776 3,825 11,242 11,402
Variable and short-term lease expense 6,046 4,584 16,197 13,871
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:~~
May 31, 2022 August 31, 2021
Weighted average remaining lease term (years):
Operating leases 5.4 6.2
Finance leases 3.4 3.6
Weighted average discount rate:
Operating leases 4.033 % 4.451 %
Finance leases 4.057 % 4.079 %

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

Nine Months Ended May 31,
(in thousands) 2022 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases $ 26,481 $ 25,862
Operating cash outflows from finance leases 1,521 1,665
Financing cash outflows from finance leases 12,847 11,706
Right of use assets obtained in exchange for lease obligations:
Operating leases $ 45,949 $ 23,019
Finance leases 15,670 14,002

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

(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

NOTE 9.7. CREDIT ARRANGEMENTS

Long-term debt was as follows:

(in thousands) Weighted Average Interest Rate as of May 31, 2022 May 31, 2022 August 31, 2021
2032 Notes 4.375% $ 300,000 $ —
2031 Notes 3.875% 300,000 300,000
2030 Notes 4.125% 300,000 —
2027 Notes 5.375% — 300,000
2023 Notes 4.875% 330,000 330,000
Series 2022 Bonds, due 2047 4.000% 145,060 —
Poland Term Loan 7.890% 37,923 49,726
Short-term borrowings 6.180% 62,627 26,560
Other 4.560% 20,151 19,492
Finance leases 54,965 52,144
Total debt 1,550,726 1,077,922
Less unamortized debt issuance costs (17,043) (8,141)
Plus unamortized bond premium 4,886 —
Total amounts outstanding 1,538,569 1,069,781
Less current maturities of long-term debt and short-term borrowings (423,091) (54,366)
Long-term debt $ 1,115,478 $ 1,015,415

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

2023 Notes	4.875%	214,059		330,000
Series 2022 Bonds, due 2047	4.000%	145,060		145,060
Poland Term Loan	—	—		32,439
Short-term borrowings	—	—		26,390
Other	4.550%	21,097		21,278
Finance leases		63,862		58,536
Total debt		1,344,078		1,513,703
Less unamortized debt issuance costs		(16,317)		(16,496)
Plus unamortized bond premium		4,791		4,838
Total amounts outstanding		1,332,552		1,502,045


Less current maturities of long-term debt and short-term borrowings		(239,406)		(388,796)
Long-term debt		$	1,093,146	$	1,113,249

The Company's credit arrangements require compliance with certain ~~non-financial and financial~~ covenants, including an interest coverage ratio and a debt to capitalization ratio. At ~~May 31,~~November 30, 2022, the Company ~~believes it~~ was in compliance with all financial 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,~~As of August 31, 2022, the 2023 Notes ~~have been~~were included ~~within~~in current maturities of long-term debt and short-term borrowings in the consolidated balance sheet. In November 2022, the Company repurchased $115.9 million in aggregate principal amount of the 2023 Notes through a cash tender offer and recognized an immaterial loss on debt extinguishment. The remaining balance of $214.1 million was included in current maturities of long-term debt and short-term borrowings in the condensed consolidated balance sheet as of ~~May 31,~~November 30, 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

In October 2022, the Company entered into a Sixth Amended and Restated Credit Agreement (as amended, the "Credit Agreement") with a revolving credit facility (the "Revolver") of $600.0 million and maturity date in October 2027, replacing the Fifth Amended and Restated Credit Agreement with a revolving credit facility of $400.0 million and a maturity date in

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March 2026. The maximum availability under the Revolver can be increased to $850.0 million with bank approval. The Credit Agreement also provides for a delayed draw senior secured term loan facility with a maximum principal amount of $200.0 million (the “Term Loan”). The Term Loan is coterminous with the Revolver. As of November 30, 2022, the Company had no amounts drawn under the Term Loan. The Company's obligations under the Credit Agreement are secured by its North America inventory. The Credit Agreement's capacity includes a $50.0 million sub-limit for the issuance of stand-by letters of credit. The Company had no amounts drawn under ~~its $400.0 million~~the Revolver or the previous revolving credit facility ~~(the "Revolver")~~ at ~~May 31,~~November 30, 2022 or August 31, ~~2021.~~2022. The availability under the Revolver and the previous revolving credit facility, as applicable, was reduced by outstanding stand-by letters of credit ~~totaling~~of $1.4 million ~~and $3.0 million~~ at ~~May 31,~~both November 30, 2022 and August 31, ~~2021, respectively.~~2022.

The Company has a Term Loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"). At ~~May 31,~~November 30, 2022, ~~PLN 161.9 million, or $37.9 million,~~there was no amount outstanding, compared to ~~the maximum amount available under the facility,~~ PLN ~~190.5~~152.4 million, or ~~$49.7~~$32.4 million ~~which was~~ outstanding as of August 31, ~~2021.~~2022.

The Company also has credit facilities in Poland through ~~its subsidiary,~~ CMCP. At ~~May 31,~~November 30, 2022 and August 31, ~~2021,~~2022, CMCP's credit facilities totaled PLN 300.0 million, or ~~$70.3~~$66.9 million and ~~$78.3~~$63.9 million, respectively. There were 0no amounts outstanding under these facilities as of ~~May 31,~~November 30, 2022 or August 31, ~~2021.~~2022. The available balance of these credit facilities was reduced by outstanding stand-by letters of credit, guarantees and/or other financial assurance instruments, which totaled ~~$0.9~~$14.6 million and ~~$5.7~~$1.0 million at ~~May 31,~~November 30, 2022 and August 31, ~~2021,~~2022, respectively.

Accounts Receivable Facilities

On November 9, 2022 the Company terminated its $150.0 million U.S. trade accounts receivable facility. The Company had no advance payments outstanding under ~~its U.S. trade accounts receivable~~this facility at ~~May 31, 2022 or~~ August 31, ~~2021.~~2022.

The Poland accounts receivable facility had a limit of PLN 288.0 million, or ~~$67.5~~$64.2 million and $61.3 million, at ~~May~~November 30, 2022 and August 31, ~~2022.~~2022, respectively. The Company had ~~PLN 267.4 million, or $62.6 million,~~no advance payments outstanding under the Poland accounts receivable facility at ~~May 31,~~November 30, 2022, compared to PLN ~~101.7~~124.0 million, or ~~$26.6~~$26.4 million, advance payments outstanding at August 31, ~~2021.~~2022.

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NOTE ~~10.~~8. DERIVATIVES

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

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The Company considers the total notional value of its futures and forward contracts as the best measure of the volume of derivative transactions. At ~~May~~November 30, 2022, the notional values of the Company's foreign currency and commodity contract commitments were $294.9 million and $378.4 million, respectively. At August 31, 2022, the notional values of the Company's foreign currency and commodity contract commitments were ~~$377.2~~$253.5 million and ~~$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~~$205.1 million, respectively.

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

Commodity

Long/Short

Total

Aluminum

Long

~~3,300~~2,025

Aluminum

Short

~~1,525~~1,425

Copper

Long

~~975~~374

Copper

Short

~~8,482~~8,550

Electricity

Long

~~1,717,000~~3,051,000

MW(h)

Natural Gas

Long

~~4,870,250~~5,230,350

MMBtu

~~_________________~~

MT = Metric Ton

MW(h) = Megawatt hour

MMBtu = Metric Million British thermal unit

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

The following tables summarize activities related to the Company's derivative instruments and hedged items recognized in the condensed consolidated statements of earnings. All other activity related to the Company's derivative instruments and hedged items was immaterial for the periods presented.


			Three Months Ended May 31,				Nine Months Ended May 31,						Three Months Ended November 30,
Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Primary Location	2022		2021		2022		2021		Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Primary Location	2022		2021
Commodity	Commodity	Cost of goods sold	$	2,042	$	(7,921)	$	2,574	$	(24,535)	Commodity	Cost of goods sold	$	(3,085)	$	2,746
Foreign exchange	Foreign exchange	SG&A expenses	6,157		1,915		(2,886)		75		Foreign exchange	SG&A expenses	3,462		(7,995)


Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Loss (in thousands)	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,				Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Loss (in thousands)	Three Months Ended November 30,
		2022		2021		2022		2021			2022		2021
Commodity	Commodity	$	25,920	$	12,167	$	81,285	$	20,971	Commodity	$	68,039	$	22,175

The Company's natural gas and electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to ~~May~~November 2025 and December ~~2030,~~2034, respectively. Included in the AOCI balance as of ~~May 31,~~November 30, 2022 was an estimated net gain of ~~$16.1~~$15.3 million from cash flow hedging instruments that is expected to be reclassified into earnings within the next twelve months. See Note ~~11,~~9, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.

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NOTE ~~11.~~9. FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into 3three 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~~Note 1, Nature of Operations and Summary of Significant Accounting Policies, ~~footnote~~to the consolidated financial statements in the ~~2021~~2022 Form 10-K.

The following tables summarize information regarding the Company's financial assets and financial liabilities that were measured at fair value on a recurring basis:

Fair Value Measurements at Reporting Date Using
(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:
Investment deposit accounts (1)
$ 318,095 $ 318,095 $ — $ —
Commodity derivative assets (2)
109,225 15,905 — 93,320
Foreign exchange derivative assets (2)
5,998 — 5,998 —
Liabilities:
Commodity derivative liabilities (2)
1,305 1,305 — —
Foreign exchange derivative liabilities (2)
3,568 — 3,568 —

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				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
(in thousands)	(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)		(in thousands)	November 30, 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)	$	441,297	$	441,297	$	—	$	—	Investment deposit accounts (1)	$	492,405	$	492,405	$	—	$	—
Commodity derivative assets (2)	Commodity derivative assets (2)	27,323		910		—		26,413		Commodity derivative assets (2)	248,261		6,795		—		241,466
Foreign exchange derivative assets (2)	Foreign exchange derivative assets (2)	2,537		—		2,537		—		Foreign exchange derivative assets (2)	2,748		—		2,748		—
Liabilities:	Liabilities:									Liabilities:
Commodity derivative liabilities (2)	Commodity derivative liabilities (2)	1,352		1,352		—		—		Commodity derivative liabilities (2)	4,417		4,417		—		—
Foreign exchange derivative liabilities (2)	Foreign exchange derivative liabilities (2)	1,880		—		1,880		—		Foreign exchange derivative liabilities (2)	1,934		—		1,934		—

~~_________________~~


			Fair Value Measurements at Reporting Date Using
(in thousands)	August 31, 2022		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)	$	572,384	$	572,384	$	—	$	—
Commodity derivative assets (2)	160,847		17,347		—		143,500
Foreign exchange derivative assets (2)	1,296		—		1,296		—
Liabilities:
Commodity derivative liabilities (2)	1,260		1,260		—		—
Foreign exchange derivative liabilities (2)	3,126		—		3,126		—

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

(2) Derivative assets and liabilities classified as Level 1 are commodity futures contracts valued based on quoted market prices in the London Metal Exchange or New York Mercantile Exchange. Amounts in Level 2 are based on broker quotes in the over-the-counter market. Derivatives classified as Level 3 are described below. Further discussion regarding the Company's use of derivative instruments is included in Note ~~10,~~8, Derivatives.

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


		Floating rate (PLN)				Floating rate (PLN)
May 31,		Low	High	Average
November 30,					November 30,	Low	High	Average
2022	2022	343.25	815.64	539.32	2022	532.66	1,298.53	786.58
2021	2021	217.38	296.36	251.10	2021	252.79	540.39	348.99

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity ~~derivative~~derivatives recognized in the condensed consolidated statements of comprehensive income. The fluctuation in energy rates over time causes volatility in the

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

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(in thousands)	Three Months Ended ~~May 31,~~November 30, 2022
Balance, ~~March~~September 1, 2022	$	~~78,879~~143,500

Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)	~~19,201~~104,197
Reclassification for gain included in net earnings (2)	~~(4,760)~~(6,231)
Balance, ~~May 31,~~November 30, 2022	$	~~93,320~~241,466








(in thousands)	~~Nine~~Three Months Ended ~~May 31, 2022~~November 30, 2021
Balance, September 1, 2021	$	26,413

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

~~(in thousands)~~	~~Three Months Ended 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 holding gain before reclassification~~ ~~(1)~~	~~26,434~~
~~Reclassification for gain included in net earnings~~ ~~(2)~~	~~(946)~~
~~Balance, May 31, 2021~~	$	~~10,481~~

~~________________~~

(1) Unrealized holding ~~gains,~~gain, net of foreign currency translation, 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 ~~May 31,~~November 30, 2022 or 2021.

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

~~Table of~~ ~~Contents~~

The carrying values and estimated fair values of the Company's financial assets and liabilities that are not required to be measured at fair value in the condensed consolidated balance sheets were as follows:


			May 31, 2022				August 31, 2021						November 30, 2022				August 31, 2022
(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	$	—	$	—	2032 Notes (1)	Level 2	$	300,000	$	255,005	$	300,000	$	256,488
2031 Notes (1)	2031 Notes (1)	Level 2	300,000		261,390		300,000		306,279		2031 Notes (1)	Level 2	300,000		252,169		300,000		249,888
2030 Notes (1)	2030 Notes (1)	Level 2	300,000		271,815		—		—		2030 Notes (1)	Level 2	300,000		261,675		300,000		263,372
2027 Notes (1)		Level 2	—		—		300,000		316,839
2023 Notes (1)	2023 Notes (1)	Level 2	330,000		333,736		330,000		348,071		2023 Notes (1)	Level 2	214,059		214,316		330,000		330,182
Series 2022 Bonds, due 2047 (1)	Series 2022 Bonds, due 2047 (1)	Level 2	145,060		126,778		—		—		Series 2022 Bonds, due 2047 (1)	Level 2	145,060		115,768		145,060		126,652
Poland Term Loan (2)	Poland Term Loan (2)	Level 2	37,923		37,923		49,726		49,726		Poland Term Loan (2)	Level 2	—		—		32,439		32,439
Short-term borrowings (2)	Short-term borrowings (2)	Level 2	62,627		62,627		26,560		26,560		Short-term borrowings (2)	Level 2	—		—		26,390		26,390

~~_________________~~

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

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

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NOTE ~~12.~~10. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note ~~13,~~14, Stock-Based Compensation Plans, to the consolidated financial statements in the ~~2021~~2022 Form 10-K. In general, restricted stock units vest ratably over a period of three years. Subject to the achievement of performance targets established by the Compensation Committee of CMC's Board of Directors, performance stock units vest after a period of three years.

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

May 31, 2022

May 31, 2021

November 30, 2022

November 30, 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

1,467

28.16

1,512

20.51

Equity method

1,424

35.78

1,407

27.77

Liability method

261

N/A

324

N/A

Liability method

242

N/A

261

N/A

The Company recorded immaterial mark-to-market adjustments on liability awards for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 and ~~recorded expense of $3.2 million and $5.0 million for the three and nine months in the corresponding periods.~~2021. At ~~May 31,~~November 30, 2022, the Company had outstanding ~~591,483~~518,470 equivalent shares accounted for under the liability method. The Company expects ~~561,908~~492,546 equivalent shares to vest.

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


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021
Stock-based compensation expense	Stock-based compensation expense	$	11,986	$	13,800	$	37,856	$	35,558	Stock-based compensation expense	$	16,675	$	9,619

NOTE ~~13.~~11. EMPLOYEES' RETIREMENT PLANS

~~Following~~During the ~~acquisition of Tensar,~~quarter ended November 30, 2022, the Company ~~assumed the TGL~~terminated its U.S. Pension Plan (as defined 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.

~~Table of~~ ~~Contents~~

~~See~~ Note ~~14,~~15, Employees' Retirement Plans, to the consolidated financial statements in the ~~2021~~2022 Form 10-K). As part of the termination, the Company made a contribution of $4.1 million. Plan assets were liquidated to purchase annuity contracts with an insurance company for all participants. No benefit obligation or plan assets related to the U.S. Pension Plan remain as of November 30, 2022. The Company recognized a $4.2 million settlement charge as a result of the termination, including an immaterial non-cash charge for unrecognized losses within accumulated other comprehensive income as of the termination date. The $4.2 million settlement charge was recognized within selling, general, and administrative expenses in the condensed consolidated statement of earnings during the three months ended November 30, 2022.

See Note 15, Employees' Retirement Plans, to the consolidated financial statements in the 2022 Form 10-K for information on the Company's ~~other~~remaining defined benefit pension plan ~~and~~(the "U.K. Pension Plan", as defined in Note 15, Employees' Retirement Plans, to the consolidated financial statements in the 2022 Form 10-K), defined contribution 401(k) retirement ~~plan.~~plan and Benefit Restoration 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.

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

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

The calculations of basic and diluted EPS were as follows:


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2022		2021		2022		2021		(in thousands, except share and per share data)	2022		2021
Net earnings	Net earnings	$	312,429	$	130,408	$	928,632	$	260,552	Net earnings	$	261,774	$	232,889

Average basic shares outstanding	Average basic shares outstanding	121,247,105		120,613,652		121,277,553		120,241,579		Average basic shares outstanding	117,273,743		121,129,679
Effect of dilutive securities	Effect of dilutive securities	1,552,764		1,580,003		1,649,738		1,610,565		Effect of dilutive securities	1,651,699		1,668,059
Average diluted shares outstanding	Average diluted shares outstanding	122,799,869		122,193,655		122,927,291		121,852,144		Average diluted shares outstanding	118,925,442		122,797,738

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	2.58	$	1.08	$	7.66	$	2.17	Basic	$	2.23	$	1.92
Diluted	Diluted	$	2.54	$	1.07	$	7.55	$	2.14	Diluted	$	2.20	$	1.90

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 ~~May 31,~~November 30, 2022, the Company repurchased ~~1,006,387 and 1,501,387~~1,275,452 shares of CMC common stock, ~~respectively,~~ at an average purchase price of ~~$38.34 and $37.02~~$38.53 per ~~share, respectively.~~share. CMC had remaining authorization to repurchase ~~$294.4~~$139.0 million of shares of common stock at ~~May 31,~~November 30, 2022.

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

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. At ~~May 31,~~November 30, 2022 and August 31, ~~2021,~~2022, the amounts accrued for cleanup and remediation costs at certain sites in response to statutes enforced by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") were immaterial. Total accrued environmental liabilities, including CERCLA sites, were ~~$3.4~~$5.1 million and ~~$7.1~~$5.3 million at ~~May 31,~~November 30, 2022 and August 31, ~~2021,~~2022, respectively, of which ~~$2.2~~$2.1 million and ~~$2.3~~$2.0 million were classified as other ~~long-term~~noncurrent liabilities ~~at May 31,~~as of November 30, 2022 and August 31, ~~2021,~~2022, respectively. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors, amounts accrued could vary significantly from amounts paid.

2319

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NOTE ~~16. BUSINESS~~14. OPERATING SEGMENTS

The Company structures its business into 2two 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~~2022 Form 10-K and Note 2, ~~Acquisition,~~Changes in Business, for more information about the reportable segments, including the types of products and services from which each reportable segment derives its net sales. Corporate and Other contains earnings or losses on assets and liabilities related to the Company's Benefit Restoration Plan assets and short-term investments, expenses of the Company's corporate headquarters, interest expense related to its long-term debt and intercompany eliminations.

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


		Three Months Ended May 31, 2022									Three Months Ended November 30, 2022
(in thousands)	(in thousands)	North America		Europe		Corporate and Other		Total		(in thousands)	North America		Europe		Corporate and Other		Total
Net sales	Net sales	$	2,033,150	$	484,564	$	(1,987)	$	2,515,727	Net sales	$	1,816,899	$	406,513	$	3,901	$	2,227,313
Adjusted EBITDA	Adjusted EBITDA	379,355		120,974		(35,049)		465,280		Adjusted EBITDA	377,956		64,505		(39,725)		402,736

		Nine Months Ended May 31, 2022
(in thousands)		North America		Europe		Corporate and Other		Total
Net sales		$	5,300,996	$	1,209,378	$	(3,958)	$	6,506,416
Adjusted EBITDA		1,183,342		281,955		(121,876)		1,343,421
Total assets at May 31, 2022		4,297,473		1,164,918		641,311		6,103,702

Total assets at November 30, 2022										Total assets at November 30, 2022	4,568,633		1,171,324		534,010		6,273,967


		Three Months Ended May 31, 2021									Three Months Ended November 30, 2021
(in thousands)	(in thousands)	North America		Europe		Corporate and Other		Total		(in thousands)	North America		Europe		Corporate and Other		Total
Net sales	Net sales	$	1,558,068	$	284,107	$	2,866	$	1,845,041	Net sales	$	1,653,622	$	329,056	$	(877)	$	1,981,801
Adjusted EBITDA	Adjusted EBITDA	207,330		50,005		(36,214)		221,121		Adjusted EBITDA	268,524		79,832		(34,334)		314,022

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

Total assets at August 31, 2022										Total assets at August 31, 2022	4,467,314		1,056,101		713,612		6,237,027

The following table presents a reconciliation of net earnings to adjusted EBITDA:


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021
Net earnings	Net earnings	$	312,429	$	130,408	$	928,632	$	260,552	Net earnings	$	261,774	$	232,889
Interest expense	Interest expense	13,433		11,965		36,479		40,245		Interest expense	13,045		11,035
Income taxes	Income taxes	92,590		38,175		247,894		80,709		Income taxes	76,725		28,872
Depreciation and amortization	Depreciation and amortization	43,583		41,804		125,943		125,176		Depreciation and amortization	51,183		41,226
Asset impairments	Asset impairments	3,245		277		4,473		4,345		Asset impairments	9		—
Amortization of acquired unfavorable contract backlog		—		(1,508)		—		(4,540)

Adjusted EBITDA	Adjusted EBITDA	$	465,280	$	221,121	$	1,343,421	$	506,487	Adjusted EBITDA	$	402,736	$	314,022

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Disaggregation of Revenue

The following tables display revenue by reportable segment and Corporate and Other from external customers, disaggregated by major product. Construction-related solutions represents sales of ground stabilization and soil 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 the construction industry:product:

~~Table of Contents~~


	Three Months Ended November 30, 2022
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	292,320	$	4,867	$	—	$	297,187
Steel products	705,462		311,936		—		1,017,398
Downstream products	641,934		59,582		—		701,516
Construction-related solutions	142,372		19,446		—		161,818
Other	33,160		10,118		6,116		49,394
Net sales from external customers	1,815,248		405,949		6,116		2,227,313
Intersegment net sales, eliminated on consolidation	1,651		564		(2,215)		—
Net sales	$	1,816,899	$	406,513	$	3,901	$	2,227,313

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

~~Table of Contents~~


		Three Months Ended May 31, 2021									Three Months Ended November 30, 2021
(in thousands)	(in thousands)	North America		Europe		Corporate and Other		Total		(in thousands)	North America		Europe		Corporate and Other		Total
Major product:	Major product:									Major product:
Raw materials	Raw materials	$	346,614	$	5,904	$	—	$	352,518	Raw materials	$	353,092	$	6,960	$	—	$	360,052
Steel products	Steel products	626,084		215,088		—		841,172		Steel products	675,042		243,145		—		918,187
Downstream products	Downstream products	475,714		56,444		—		532,158		Downstream products	514,396		70,072		—		584,468
Construction-related solutions	Construction-related solutions	77,549		—		—		77,549		Construction-related solutions	82,499		—		—		82,499
Other	Other	32,107		6,277		3,260		41,644		Other	28,593		8,385		(383)		36,595
Net sales from external customers	Net sales from external customers	1,558,068		283,713		3,260		1,845,041		Net sales from external customers	1,653,622		328,562		(383)		1,981,801
Intersegment net sales, eliminated on consolidation	Intersegment net sales, eliminated on consolidation	—		394		(394)		—		Intersegment net sales, eliminated on consolidation	—		494		(494)		—
Net sales	Net sales	$	1,558,068	$	284,107	$	2,866	$	1,845,041	Net sales	$	1,653,622	$	329,056	$	(877)	$	1,981,801

		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 (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~~2022 (the ~~"2021~~"2022 Form 10-K"). This discussion contains or incorporates by reference "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on expectations, estimates, assumptions and projections about our industry, business and future financial results, based on information available at the time this Form 10-Q was filed with the Securities and Exchange Commission ("SEC") or, with respect to any document incorporated by reference, available at the time that such document was prepared. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those identified in the section entitled "Forward-Looking Statements" at the end of Item 2 of this Form 10-Q and in the sections entitled "Risk Factors" in Part I, Item 1A of our ~~2021~~2022 Form ~~10-K and Part II, Item 1A of this Form 10-Q.~~10-K. We do not undertake any obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise, except as required by law.

Any reference in this Form 10-Q to the "corresponding period" or "comparable period" relates to the ~~relevant~~ three ~~or nine~~ month period ended ~~May 31,~~November 30, 2021. Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise noted.

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BUSINESS CONDITIONS AND DEVELOPMENTS

Tensar Acquisition

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

Advanced Steel Recovery Acquisition

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

Kodiak Acquisition

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

Capital Expenditures

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

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

Senior Notes Activity

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

Russian Invasion of Ukraine

The Russian invasion of Ukraine ~~has~~did not ~~had~~have a direct material adverse impact on our business, financial condition or results of operations during the ~~nine~~three months ended ~~May 31,~~November 30, 2022. Our Europe segment ~~identified~~has not had an interruption in energy supply and was able to identify alternate sources for a limited number of materials previously procured through ~~Russia 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.~~Russia. However, we will continue to monitor disruptions in supply of energy and materials and the indirect effects on our operations of inflationary pressures, foreign exchange rate fluctuations, commodity pricing, potential cybersecurity risks and sanctions resulting from the invasion.

~~COVID-19~~

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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~~2022 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~~2022 Form 10-K.

~~Table of Contents~~

RESULTS OF OPERATIONS SUMMARY

Business Overview

~~As a~~Our vertically integrated ~~organization, we~~steel-related operations manufacture, recycle and fabricate steel and metal products and provide related materials and services through a network of facilities that includes seven electric arc furnace ("EAF") mini mills, two EAF micro mills, one rerolling mill, steel fabrication and processing plants, construction-related product warehouses and metal recycling facilities in the United States and Poland. Through our Tensar ~~division, we are~~operations, CMC is 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.

Key Performance Indicators

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

~~Key Performance Indicators~~posts.

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

Financial Results Overview

Three Months Ended May 31, Nine Months Ended May 31,
(in thousands, except per share data) 2022 2021 2022 2021
Net sales $ 2,515,727 $ 1,845,041 $ 6,506,416 $ 4,699,114
Net earnings 312,429 130,408 928,632 260,552
Diluted earnings per share $ 2.54 $ 1.07 $ 7.55 $ 2.14
The following discussion of our results of operations is based on our continuing operations.


	Three Months Ended November 30,
(in thousands, except per share data)	2022		2021
Net sales	$	2,227,313	$	1,981,801
Net earnings	261,774		232,889
Diluted earnings per share	$	2.20	$	1.90

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Net sales for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 increased ~~$670.7~~$245.5 million, or ~~36%~~12%, ~~and $1.8 billion, or 38%, respectively,~~ compared to the corresponding ~~periods. The growth~~period. Net sales in ~~net sales is largely attributable~~our North America segment increased in the three months ended November 30, 2022, as compared to ~~rising~~the corresponding period, primarily due to year-over-year increases in steel products average selling prices ~~across all major product lines~~and downstream products average selling prices. Net sales in ~~both~~our Europe segment also increased due to higher shipments of ~~our segments for~~steel products in the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, compared to the corresponding ~~periods. Continued strong demand from robust construction~~period. The acquired Tensar operations also contributed to the year-over-year change by providing $61.6 million in net sales during the three months ended November 30, 2022, with no such activity in ~~all of our North America and Europe end-use markets was~~ the ~~primary driver for the increase in average selling prices.~~corresponding period.

During the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, we achieved net earnings of ~~$312.4~~$261.8 million, ~~and $928.6~~which increased $28.9 million, respectively. Included in net earnings during the nine months ended May 31, 2022 was a $273.3 million gain on the sale of 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,or 12%, compared to the corresponding ~~periods. These increases were~~period. This increase was driven by the significant expansion of steel products metal ~~margin per ton in both of our segments and raw materials margin over purchase cost~~margins per ton in our North America ~~segment. Selling~~segment, which resulted from a combination of rising selling prices for steel products and ~~raw materials outpaced the rising~~lower input costs of ferrous scrap utilized in our steel mill operations and the price paid to purchase ferrous and nonferrous scrap in our scrap metal recycling operations, as well as increases in the cost of freight, energy and other steelmaking inputs.utilized.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$5.2 million and $22.2~~$33.8 million for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, ~~respectively,~~ compared to the corresponding ~~periods.~~period. Contributing to the ~~increases in both periods were $11.4~~increase was $22.0 million of selling, general and administrative expenses from ~~Tensar's operations~~Tensar operations' commercial and ~~$4.5 million and $7.6 million of acquisition and integration expenses~~engineering support in the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, ~~respectively,~~ with no such expenses in the corresponding ~~periods. Partially offsetting the aforementioned increases~~period. The remaining increase in selling, general and administrative expenses ~~during~~in 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 remaining change in selling, general and administrative expenses during the nine months ended May 31,November 30, 2022 was a result of many factors, including ~~$6.1~~$7.0 million of increased ~~labor-related expenses, $3.6~~stock compensation, a $4.2 million pension plan settlement charge, with no such settlement charge in the corresponding period, $3.9 million of increased professional services and $1.6 million of increased travel-related costs. See Note 11, Employees' Retirement Plans, in Part I, Item 1 of this Form 10-Q for more information on the pension plan termination activity. These costs ~~and $12.5~~were partially offset by a $7.0 million ~~of reduced expenses resulting from lower BRP liabilities at May 31, 2022, compared to the corresponding period.~~decrease in labor-related expenses.

Interest Expense

Interest expense ~~remained relatively flat~~increased by $2.0 million during the three months ended ~~May 31, 2022, compared to the corresponding period, and decreased by $3.8 million during the nine months ended May 31,~~November 30, 2022, compared to the corresponding period. Capitalized interest was ~~$3.6 million and $7.8~~$4.6 million during the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, ~~respectively,~~ compared to ~~$0.7 million and $1.8~~$1.5 million during the corresponding ~~periods, respectively.~~period. The increase in capitalized interest was due to construction of 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~~$3.9 million during the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, ~~respectively,~~ compared to the corresponding ~~periods,~~period, due to the additional long-term debt ~~outstanding at May 31, 2022 compared to May 31, 2021.~~outstanding.

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 ~~remained relatively flat~~ for the three months ended ~~May 31,~~November 30, 2022 ~~when~~was 22.7% compared ~~with~~to 11.0% in the corresponding period. The ~~decrease for the nine months ended May 31, 2022~~increase is primarily due to the recognition of a ~~capital loss~~tax benefit on a tax restructuring transaction during the ~~first quarter of fiscal~~three months ended November 30, 2021 that did not recur in the three months ended November 30, 2022.

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SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are calculated before income taxes. See Note ~~16, Business~~14, Operating Segments, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information. The operational data by product category presented in the tables below ~~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 metric had on the segment's net sales or adjusted EBITDA.

North America


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands)		2022		2021		2022		2021
(in thousands, except per ton amounts)										(in thousands, except per ton amounts)	2022		2021
Net sales	Net sales	$	2,033,150	$	1,558,068	$	5,300,996	$	4,010,567	Net sales	$	1,816,899	$	1,653,622
Adjusted EBITDA	Adjusted EBITDA	379,355		207,330		1,183,342		534,576		Adjusted EBITDA	377,956		268,524

External tons shipped (in thousands)	External tons shipped (in thousands)									External tons shipped (in thousands)
Raw materials	Raw materials	353		368		1,016		1,000		Raw materials	316		334
Rebar	Rebar	505		500		1,354		1,458		Rebar	461		442
Merchant and other	Merchant and other	274		289		776		821		Merchant and other	243		257
Steel products	Steel products	779		789		2,130		2,279		Steel products	704		699
Downstream products	Downstream products	399		408		1,126		1,122		Downstream products	382		400

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	Raw materials	$	824	$	1,034
Steel products	Steel products	1,110		794		1,045		702		Steel products	1,020		976
Downstream products	Downstream products	1,244		963		1,168		943		Downstream products	1,399		1,092

Cost of raw materials per ton	Cost of raw materials per ton	$	908	$	697	$	837	$	597	Cost of raw materials per ton	$	598	$	766
Cost of ferrous scrap utilized per ton	Cost of ferrous scrap utilized per ton	472		369		446		327		Cost of ferrous scrap utilized per ton	325		428
Steel products metal margin per ton	Steel products metal margin per ton	638		425		599		375		Steel products metal margin per ton	695		548

Net sales for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 increased ~~$475.1~~$163.3 million, or ~~30%~~10%, ~~and $1.3 billion, or 32%, respectively,~~ compared to the corresponding ~~periods.~~period. These results benefited from increased average selling prices of ~~27% for raw materials, 40%~~5% for steel products and ~~29%~~28% for downstream products, ~~during the three months ended May 31, 2022, compared to the corresponding period. Similarly, during the nine months ended May 31, 2022,~~and were offset, in part, by a 20% decrease in raw materials average selling prices ~~rose 37% for raw materials, 49% for steel products and 24% for downstream products,~~ compared to the corresponding period. The ~~period-over-period~~year-over-year increases in average selling prices for steel products and downstream products were ~~primarily a result of a rising scrap price environment and~~driven by continued strong demand across all of our end-use markets. During the three months ended November 30, 2022, downstream bidding activity improved and led to growth in backlog levels compared to the corresponding period, which were awarded at the improved price levels described above. Volumes remained relatively flat during ~~both~~ the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, compared to the corresponding ~~periods,~~period, as the ~~strong~~construction industry demand was ~~offset~~constrained, in part, ~~by the impacts~~due to availability of ~~constrained~~ labor at construction sites in certain ~~geographies and planned maintenance activities at certain of our facilities.~~geographies. The acquired Tensar operations also contributed to the year-over-year change by providing $42.1 million in net sales during the three months ended November 30, 2022, with no such activity in the corresponding period.

Adjusted EBITDA for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 increased ~~$172.0~~$109.4 million, or ~~83%~~41%, ~~and $648.8 million, or 121%, respectively,~~ compared to the corresponding ~~periods. Included~~period. In our vertically integrated business model, the increases in ~~adjusted EBITDA during~~average selling prices for both steel products and downstream products, paired with falling scrap prices, led to significant expansion in 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 May 31, 2022 was primarily due to expansion of steel products metal margin per ton and ~~raw materials~~downstream products margin over ~~purchase cost~~scrap per ~~ton, compared~~ton. These expanded margins, coupled with the continued steady demand discussed above, overcame the inflation that we faced during the period and drove the year-over-year growth in adjusted EBITDA. Also contributing to the ~~corresponding periods. Although ferrous and nonferrous scrap prices increased and inflationary pressures caused an increase~~year-over-year change was $8.1 million of adjusted EBITDA provided by the acquired Tensar operations during the three months ended November 30, 2022, with no such activity in the ~~cost of freight, energy and other steelmaking inputs, the average selling price for steel products and raw materials increased at a greater rate year-over-year.~~corresponding period. Adjusted EBITDA included non-cash stock compensation expense of ~~$3.8~~$4.1 million and ~~$10.5~~$2.7 million for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 ~~respectively,~~ and ~~$3.4 million and $10.5 million for the corresponding periods.~~2021, respectively.

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Europe


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
(in thousands)		2022		2021		2022		2021
(in thousands, except per ton amounts)										(in thousands, except per ton amounts)	2022		2021
Net sales	Net sales	$	484,564	$	284,107	$	1,209,378	$	680,769	Net sales	$	406,513	$	329,056
Adjusted EBITDA	Adjusted EBITDA	120,974		50,005		281,955		80,582		Adjusted EBITDA	64,505		79,832

External tons shipped (in thousands)	External tons shipped (in thousands)									External tons shipped (in thousands)
Rebar	Rebar	170		141		445		347		Rebar	204		103
Merchant and other	Merchant and other	306		263		846		807		Merchant and other	269		262
Steel products	Steel products	476		404		1,291		1,154		Steel products	473		365

Average selling price (per ton)	Average selling price (per ton)									Average selling price (per ton)
Steel products	Steel products	$	967	$	664	$	898	$	552	Steel products	$	792	$	869

Cost of ferrous scrap utilized per ton	Cost of ferrous scrap utilized per ton	$	530	$	376	$	472	$	324	Cost of ferrous scrap utilized per ton	$	366	$	434
Steel products metal margin per ton	Steel products metal margin per ton	437		288		426		228		Steel products metal margin per ton	426		435

Net sales for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 increased ~~$200.5~~$77.5 million, or ~~71%~~24%, ~~and $528.6 million, or 78%, respectively,~~ compared to the corresponding ~~periods.~~period. The ~~increases were driven largely by~~30% increase in shipments of steel products overcame the ~~increases~~impact of a $77 per ton year-over-year decrease in steel products average selling prices, of $303 per ton, or 46%, and $346 per ton, or 63%, during the three and nine months ended May 31, 2022, respectively, compared to the corresponding periods. Increased demand for steel products from both construction and industrial end markets supported the increases in average selling prices, as well as the increases in shipments of steel products of 18% and 12% during the three and nine months ended May 31, 2022, respectively, compared to the corresponding periods. Along with the increased capacity from our third rolling line in Poland, which was ~~commissioned~~driven by a low pricing environment across Europe. Scheduled maintenance, which decreased shipments in ~~late 2021, steel products supply disruptions across Europe caused by~~ the ~~Russian invasion of Ukraine contributed to the increase in shipment~~comparable period, did not impact volumes in the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022. Rising shipment levels were also supported by our optimized cost structure, which positioned us to competitively price our steel products, coupled with our historical investment in operations, which provided the capacity to meet customer demand. The acquired Tensar operations also contributed to the year-over-year change by providing $19.5 million in net sales during the three months ended November 30, 2022, with no such activity in the corresponding period. Net sales for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 were impacted by an unfavorable foreign currency translation ~~adjustments~~adjustment of ~~$66.9~~$79.6 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 ~~favorable~~an unfavorable foreign currency translation ~~adjustments~~adjustment of ~~$22.6~~$13.5 million, ~~and $35.6 million, respectively,~~ during the corresponding ~~periods.~~period.

Adjusted EBITDA for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 ~~increased $71.0~~was $64.5 million, ~~or 142%, and $201.4 million, or 250%,~~ compared to $79.8 million in the corresponding ~~periods. The primary drivers~~period. While the cost of ferrous scrap utilized decreased $68 per ton year-over-year, the ~~increases~~decline in ~~adjusted EBITDA were the expansion~~average selling prices slightly outpaced it resulting in a modest decrease in steel products metal margin per ton, which increased 52% and 87%, respectively, during the three and nine months ended May 31, 2022, compared to the corresponding 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.ton. 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 prices for steel products outpaced these increased costs in each period. Also offsetting the increased costs were realized gains of $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 ofNovember 30, 2022 we received a ~~$15.5~~$9.5 million energy credit, ~~that was recorded as a reduction to~~which helped mitigate higher energy costs by reducing cost of goods sold, but was $6.0 million lower than the energy credit received in the comparable period. Also contributing to the year-over-year change was $3.3 million of adjusted EBITDA provided by the acquired Tensar operations during the three months ended November 30, 2022, with no ~~similar credit received~~such activity in the corresponding period. Adjusted EBITDA for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 included an unfavorable foreign currency exchange rate ~~impacts~~impact of ~~$17.2~~$13.5 million, ~~and $27.5 million, respectively,~~ compared to ~~favorable~~unfavorable foreign currency translation ~~adjustments~~adjustment of ~~$4.1~~$3.0 million ~~and $5.1 million, respectively,~~ during the corresponding ~~periods.~~period. Adjusted EBITDA included non-cash stock compensation expense of ~~$0.5~~$1.9 million and ~~$3.1~~$1.5 million for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022 ~~respectively,~~ and ~~$0.8 million and $2.2 million, respectively, during the corresponding periods.~~2021, respectively.

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Corporate and Other

Corporate and Other reported an adjusted EBITDA loss of ~~$35.0 million and $121.9~~$39.7 million for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2022, ~~respectively,~~ compared to ~~$36.2~~an adjusted EBITDA loss of $34.3 million ~~and $108.7 million, respectively,~~ in the corresponding ~~periods. While quarter-over-quarter results remained flat, the~~period. The year-over-year increase in ~~the~~ adjusted EBITDA loss ~~during the nine months ended May 31, 2022~~ was driven primarily ~~due to $7.6~~by a $5.3 million ~~of year-to-date acquisition and integration expenses associated with the acquisition of Tensar, with no such costs~~increase 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 $7.7~~and a $4.2 million ~~and $24.3 million for the three and nine months ended May 31, 2022, respectively, compared to $9.6 million and $22.9 million for~~pension plan settlement charge, with no such settlement charge in the corresponding ~~periods.~~period. See Note 11, Employees' Retirement Plans, in Part I, Item 1 of this Form 10-Q for more information on the pension plan termination activity. These increases were offset, in part, by a $6.5 million increase in other revenue, driven by short-term investments and gains on benefit restoration plan ("BRP") assets.

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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~~2022 Form 10-K and Note 2, ~~Acquisition~~Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q.

We have a diverse and generally stable customer base, and regularly maintain a substantial amount of accounts receivable. We ~~record allowances for the~~actively monitor our accounts receivable ~~we estimate will not be collected~~and, based on market conditions and customers' financial condition, ~~and other factors. Historically, these~~record allowances ~~have not been material.~~when we believe accounts are uncollectible. We use credit insurance internationally to mitigate the risk of customer insolvency. We estimate that the amount of credit-insured receivables (and those covered by export letters of credit) was approximately ~~17%~~14% of total trade receivables at ~~May 31,~~November 30, 2022.

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

The table below reflects our sources, facilities and availability of liquidity at ~~May 31,~~November 30, 2022. See Note 9,7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for additional information.


(in thousands)	(in thousands)	Liquidity Sources and Facilities		Availability		(in thousands)	Liquidity Sources and Facilities		Availability
Cash and cash equivalents	Cash and cash equivalents	$	410,265	$	410,265	Cash and cash equivalents	$	582,069	$	582,069
Notes due from 2023 to 2032	Notes due from 2023 to 2032	1,230,000		*		Notes due from 2023 to 2032	1,114,059		(1)
Revolver	Revolver	400,000		398,604		Revolver	600,000		598,587
U.S. accounts receivable facility		150,000		150,000
Series 2022 Bonds, due 2047 **		145,060		—
Term Loan						Term Loan	200,000		200,000
Series 2022 Bonds, due 2047						Series 2022 Bonds, due 2047	145,060		—
Poland credit facilities	Poland credit facilities	70,269		69,371		Poland credit facilities	66,851		52,296
Poland accounts receivable facility	Poland accounts receivable facility	67,458		4,831		Poland accounts receivable facility	64,177		64,177
Poland Term Loan		37,923		—

Other	Other	4,258		1,511		Other	4,026		1,206

~~_________________~~

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

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

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

32We estimate that our 2023 capital spending will range from $500 million to $550 million. We regularly assess our capital spending based on current and expected results and the amount is subject to change.

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

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

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Cash Flows

Operating Activities

Net cash flows from operating activities were ~~$241.7~~$372.4 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2022, compared to net cash flows from operating activities of ~~$94.2~~$25.8 million for the ~~nine months ended May 31, 2021.~~corresponding period. Net earnings increased by ~~$668.1~~$28.9 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 $343.4year-over-year. A $272.3 million year-over-year net increase in cash ~~used~~provided by operating assets and liabilities ~~("working capital"). The increase in cash used by working capital~~ was due in part to ~~rising~~falling scrap prices, ~~and greater~~which resulted in decreased inventory ~~levels, which corresponded with an increase~~valuation, compared to increasing scrap prices in the three months ended November 30, 2021. Additionally, accounts payable, accrued expenses and other payables indecreased by $46.9 million and accounts receivable decreased as a result of the ~~nine~~falling steel product selling prices during the three months ended ~~May 31,~~November 30, 2022, as compared to the corresponding 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 corresponding period. Operating working capital days, which represents the number of days to convert accounts receivable and inventory, less accounts payable, into net sales, rose one day year-over-year.

Investing Activities

Net cash flows used by investing activities were ~~$528.7~~$195.6 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2022, compared to net cash flows used by investing activities of ~~$104.0~~$68.7 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2021. The ~~$424.7~~$126.8 million increase in net cash flows used by investing activities was primarily ~~caused~~driven by ~~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~~capital expenditures and acquisitions. Net cash flows used by investing activities rose due to ~~increased~~$62.9 million of additional capital expenditures as compared to the corresponding period, primarily from the construction of our third micro mill, ~~located~~and approximately $63.7 million attributable to the acquisitions of Advanced Steel Recovery and Kodiak, compared to no acquisitions in ~~Mesa, Arizona. These cash outflows were offset in part by proceeds from~~ the ~~sale of the Rancho Cucamonga facilities.~~corresponding period. See Note 3,2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information ~~on the sale of the Rancho Cucamonga facilities.~~

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

In addition, in January 2022, we announced the plan to construct a fourth micro mill geographically situated primarily to 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.about these acquisitions.

Financing Activities

Net cash flows ~~from~~used by financing activities were ~~$324.3~~$273.8 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2022, compared to net cash flows used by financing activities of ~~$88.2~~$39.3 million for the ~~nine~~three months ended ~~May 31,~~November 30, 2021. The ~~$412.4~~$234.5 million increase in net cash flows ~~from~~used by financing activities was ~~a result~~primarily due to increased net repayments of ~~many actions, including net proceeds from~~ long-term debt of ~~$420.7~~$148.1 million during the ~~nine~~three months ended ~~May 31,~~November 30, 2022, as compared to the corresponding period, primarily related to the partial repayment of the 2023 Notes. Also contributing to the increase in net ~~long-term debt~~cash flows used by financing activities were increased net repayments of ~~$52.7~~our Polish accounts receivable facilities of $31.4 million during the ~~nine~~three months ended ~~May 31, 2021. Net borrowings under our accounts receivable facilities increased $9.4 million during the nine months ended May 31,~~November 30, 2022, as compared to the corresponding period. See Note 9,7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information regarding our credit arrangements. ~~Partially offsetting these cash flows from financing activities were $55.6~~Additionally, there was a $43.8 million ofincrease in treasury stock ~~repurchased~~acquired under the share repurchase ~~program, $7.7 million in increased dividend payments and a $6.3 million increase attributable to stock issued under incentive and purchase plans, net of forfeitures.~~program. See Note ~~14,~~12, Stockholders' Equity and Earnings per Share, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information on the share repurchase program.

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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 9,7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information regarding scheduled maturities of our long-term debt. ~~See Note 8, Leases, for additional information on leases.~~

Our undiscounted purchase obligations due in the twelve months following ~~May 31,~~November 30, 2022 ~~and August 31, 2021~~ were ~~$897.9~~approximately $889.2 million ~~and $638.5 million, respectively,~~ with ~~$170.3 million and $228.0~~$219.8 million due ~~thereafter, respectively. The increase in short-term~~thereafter. Of the purchase obligations ~~was primarily~~ due ~~to construction of our third micro mill~~ in ~~Mesa, Arizona, purchases of inventory and other planned maintenance and~~the twelve months following November 30, 2022, approximately 22% were for 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~~21% for the construction of our third micro mill, ~~which~~20% for commodities, and 17% for consumable production inputs, such as alloys. Of the purchase obligations due thereafter, 85% were ~~fulfilled during~~for commodities and 3% were for the ~~nine~~construction of our third micro mill. Operating lease obligations in the twelve months ~~ended May 31, 2022.~~following November 30, 2022 were $38.2 million with $134.7 million due thereafter. Additionally, leases that have not yet commenced, primarily for vehicles, with aggregate fixed payments over their terms, were approximately $16.3 million, with $8.9 million to commence in 2023 and $7.4 million in 2024.

Other Commercial Commitments

We maintain stand-by letters of credit to provide support for certain transactions that governmental agencies, our insurance providers and suppliers request. At ~~May 31,~~November 30, 2022, we had committed ~~$21.5~~$21.7 million under these arrangements, of which $1.4 million reduced availability under the ~~Revolver.~~Revolver (as defined in Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q).

CONTINGENCIES

~~We may incur settlements, fines, penalties or judgments due to~~

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In the ordinary course of conducting our ~~involvement~~business, we become involved in litigation, administrative proceedings and governmental investigations, including environmental matters. We may incur settlements, fines, penalties or judgments because of some of these matters. Liabilities and costs associated with litigation-related loss contingencies require estimates and judgments based on our knowledge of the facts and circumstances surrounding each matter and the advice of our legal counsel. We record liabilities for litigation-related losses when ~~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 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,~~have a material adverse effect, individually or in the aggregate, on our results of operations, cash flows or financial condition. See Note ~~15,~~13, Commitments and Contingencies, in Part I, Item 1, Financial Statements, of this Form 10-Q, 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, tax credits, our liquidity and our ability to satisfy future liquidity requirements, estimated contractual obligations, the expected capabilities and benefits of new facilities, the timeline for execution of our growth plan, and our expectations or beliefs concerning future events. The statements in this report that are not historical statements, are forward-looking statements. These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "future," "intends," "may," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases, as well as by discussions of strategy, plans, or intentions.

Our forward-looking statements are based on management's expectations and beliefs as of the time this Form 10-Q is filed with the SEC or, with respect to any document incorporated by reference, as of the time such document was prepared. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of our ~~2021~~2022 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, inflation, energy supplies and raw materials, which is uncertain, but may prove to negatively impact our business and operations;

•increased attention to environmental, social and governance ("ESG") matters, including any targets or other ESG or environmental justice initiatives;

•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;

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

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

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

•our ability to successfully identify, consummate and integrate acquisitions and realize any or all of the anticipated synergies or other benefits of acquisitions;

•the effects that acquisitions may have on our financial leverage;

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

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

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

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

•impact of goodwill or other indefinite lived intangible asset impairment charges;

•impact of long-lived asset impairment charges;

•currency fluctuations;

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

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

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

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

•information technology interruptions and breaches in security;

•ability to make necessary capital expenditures;

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

•unexpected equipment failures;

•losses or limited potential gains due to hedging transactions;

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

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

•civil unrest, protests and riots.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the ~~nine~~three months ended ~~May 31,~~November 30, 2022, the U.S. dollar equivalent of the Company's total gross foreign currency exchange contract commitments ~~decreased $12.3~~increased $41.4 million, or 3%16%, compared to August 31, ~~2021.~~2022. This ~~decrease~~increase was primarily due to forward contracts denominated in Polish zloty with a U.S. dollar functional currency, which ~~decreased $122.6~~increased $80.5 million, partially offset by forward contracts denominated in euros with a Polish zloty functional currency, which ~~increased $112.0~~decreased $38.6 million compared to August 31, ~~2021.~~2022.

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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~~2022 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.

Changes in Internal Control over Financial Reporting

~~Except for the acquisition of Tensar as described below, there~~There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our quarter ended ~~May 31,~~November 30, 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 ~~15,~~13, Commitments and Contingencies, to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q.

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

ITEM 1A. RISK FACTORS

~~Except as set forth below, there~~There were no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our ~~2021~~2022 Form ~~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.10-K.

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

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table provides information about purchases of equity securities registered by the Company pursuant to Section 12 of the Exchange Act ~~as amended,~~ made by the Company or any affiliated purchasers during the quarter ended ~~May 31,~~November 30, 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, 2022 - September 30, 2022	771,402	$	37.42	771,402	$	159,265,967
October 1, 2022 - October 31, 2022	388,550	38.38		388,550	144,354,898
November 1, 2022 - November 30, 2022	115,500	46.54		115,500	138,979,449
	1,275,452			1,275,452

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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 share repurchase program under which the Company may repurchase up to $350.0 million of the Company's outstanding common stock. The share repurchase program does not require the Company to purchase any dollar amount or number of shares of CMC common stock and may be modified, suspended, extended or terminated by the Company at any time without prior notice. See Note ~~14,~~12, Stockholders' Equity and Earnings per Share, to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q for more information on the share repurchase program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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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~~June 21, 2022 and incorporated herein by reference).

10.1

Consulting Agreement, dated as of October 14, 2022, by and between Tracy L. Porter and Commercial Metals Company (filed herewith).

10.2

Sixth Amended and Restated Credit Agreement, dated October 26, 2022, by and among Commercial Metals Company, CMC International Finance, a société à responsabilité limitée, the lenders party thereto and Bank of America, N.A., as Administrative Agent (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, 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).

† 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

~~June 22, 2022~~January 9, 2023			/s/ Paul J. Lawrence
			Paul J. Lawrence
			Senior Vice President and Chief Financial Officer
			(Duly authorized officer and principal financial officer of the registrant)

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


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

Liabilities:
Operating lease liabilities:
Current	Accrued expenses and other payables	$	31,185	$	26,433
Long-term	Other noncurrent liabilities	105,971		93,409
Total operating lease liabilities		137,156		119,842
Finance lease liabilities:
Current	Current maturities of long-term debt and short-term borrowings	18,060		16,040
Long-term	Long-term debt	36,905		36,104
Total finance lease liabilities		54,965		52,144
Total lease liabilities		$	192,121	$	171,986


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

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


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

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


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