UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~November 30, 2022~~February 28, 2023

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

For the transition period from to

Commission file number 1-4304

COMMERCIAL METALS COMPANY

(Exact Name of Registrant as Specified in Its Charter)


Delaware			75-0725338
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification Number)

6565 N. MacArthur Blvd., Irving, Texas 75039

(Address of Principal Executive Offices) (Zip Code)

(214) 689-4300

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value

CMC

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~January 6,~~March 22, 2023, ~~117,122,667~~117,117,307 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 six months ended ~~November 30,~~February 28, 2023 and 2022 ~~and 2021~~			3
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Three and six months ended ~~November 30,~~February 28, 2023 and 2022 ~~and 2021~~			4
Condensed Consolidated Balance Sheets (Unaudited) - ~~November 30, 2022~~February 28, 2023 and August 31, 2022			5
Condensed Consolidated Statements of Cash Flows (Unaudited) - ~~Three~~Six months ended ~~November 30,~~February 28, 2023 and 2022 ~~and 2021~~			6
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - Three and six months ended ~~November 30,~~February 28, 2023 and 2022 ~~and 2021~~			7
Notes to Condensed Consolidated Financial Statements (Unaudited)			89
Note 1. Accounting Policies			89
Note 2 .2. Changes in Business			9
Note 3 .3. Accumulated Other Comprehensive Income (Loss)			10
~~Note~~ 4 ~~. Revenue Recognition~~			10
~~Note~~ 5 ~~. Inventories, Net~~			11
Note 4. Revenue Recognition			612
.Note 5. Inventories, Net			12
Note 6. Goodwill and Other Intangibles			1213
Note 7. Credit Arrangements			1314
Note 8. ~~Derivatives~~			14
~~Note 9. Fair Value~~New Markets Tax Credit Transactions			15
Note ~~10. Stock-Based Compensation Plans~~9 . Derivatives			1815
Note ~~11. Employees' Retirement Plans~~10 . Fair Value			1817
Note ~~12. Stockholders' Equity and Earnings Per Share~~1 1 . Stock-Based Compensation Plans			19
Note ~~13. Commitments and Contingencies~~1 2 . Employees' Retirement Plans			19
Note ~~14.~~1 3 . Stockholders' Equity and Earnings Per Share			20
Note 1 4 . Commitments and Contingencies			20
Note 1 5 . Operating Segments			2021
Note 16. Subsequent Events			23
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2123
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3033
Item 4. Controls and Procedures			3133

PART II — OTHER INFORMATION			3234

Item 1. Legal Proceedings			3234
Item 1A. Risk Factors			3234
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3234
Item 3. Defaults Upon Senior Securities			3235
Item 4. Mine Safety Disclosures			3235
Item 5. Other Information			3235
Item 6. Exhibits			3336
Signature			3437

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended November 30,
(in thousands, except share and per share data) 2022 2021
Net sales $ 2,227,313 $ 1,981,801
Costs and operating expenses:
Cost of goods sold 1,719,414 1,586,410
Selling, general and administrative expenses 156,355 122,595
Interest expense 13,045 11,035
1,888,814 1,720,040
Earnings before income taxes 338,499 261,761
Income taxes 76,725 28,872
Net earnings $ 261,774 $ 232,889
Earnings per share:
Basic $ 2.23 $ 1.92
Diluted $ 2.20 $ 1.90
Average basic shares outstanding 117,273,743 121,129,679
Average diluted shares outstanding 118,925,442 122,797,738


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
	Three Months Ended February 28,				Six Months Ended February 28,
(in thousands, except share and per share data)	2023		2022		2023		2022
Net sales	$	2,018,003	$	2,008,888	$	4,245,316	$	3,990,689
Costs and operating expenses (income):
Cost of goods sold	1,621,763		1,614,965		3,341,177		3,201,375
Selling, general and administrative expenses	150,427		127,985		306,550		251,563
Interest expense	9,945		12,011		22,990		23,046
Asset impairments	36		1,228		45		1,228
Loss on debt extinguishment	27		16,052		178		16,052
Loss (gain) on sale of assets	315		(273,099)		387		(274,082)
	1,782,513		1,499,142		3,671,327		3,219,182
Earnings before income taxes	235,490		509,746		573,989		771,507
Income taxes	55,641		126,432		132,366		155,304
Net earnings	$	179,849	$	383,314	$	441,623	$	616,203

Earnings per share:
Basic	$	1.53	$	3.16	$	3.77	$	5.08
Diluted	$	1.51	$	3.12	$	3.71	$	5.02

Average basic shares outstanding	117,224,517		121,458,196		117,249,266		121,293,030
Average diluted shares outstanding	118,723,259		122,852,410		118,985,098		122,747,981

See notes to condensed consolidated financial statements.

Table of Contents


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)							COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
		Three Months Ended November 30,				Three Months Ended February 28,				Six Months Ended February 28,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2023		2022		2023		2022
Net earnings	Net earnings	$	261,774	$	232,889		Net earnings	$	179,849	$	383,314	$	441,623	$	616,203
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	Foreign currency translation	41,429		(39,688)			Foreign currency translation	11,628		(14,461)		53,057		(54,149)
Derivatives:	Derivatives:						Derivatives:
Net unrealized holding gain	Net unrealized holding gain	68,045		22,254			Net unrealized holding gain	23,957		33,197		92,002		55,451
Reclassification for realized gain	Reclassification for realized gain	(6,970)		(3,069)			Reclassification for realized gain	(863)		(5,277)		(7,833)		(8,346)
Net unrealized gain on derivatives	Net unrealized gain on derivatives	61,075		19,185			Net unrealized gain on derivatives	23,094		27,920		84,169		47,105

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)			Defined benefit plans gain (loss) after amortization of prior service costs	(37)		(6)		1,721		(12)
Total other comprehensive income (loss), net of income taxes	Total other comprehensive income (loss), net of income taxes	104,262		(20,509)			Total other comprehensive income (loss), net of income taxes	34,685		13,453		138,947		(7,056)
Comprehensive income	Comprehensive income	$	366,036	$	212,380		Comprehensive income	$	214,534	$	396,767	$	580,570	$	609,147

See notes to condensed consolidated financial statements.

Table of Contents


COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)	COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)					COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share data)	(in thousands, except share and per share data)	November 30, 2022		August 31, 2022		(in thousands, except share and per share data)	February 28, 2023		August 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	582,069	$	672,596	Cash and cash equivalents	$	603,966	$	672,596
Accounts receivable (less allowance for doubtful accounts of $4,901 and $4,990)		1,287,286		1,358,907

Accounts receivable (less allowance for doubtful accounts of $4,928 and $4,990)						Accounts receivable (less allowance for doubtful accounts of $4,928 and $4,990)	1,263,547		1,358,907
Inventories, net	Inventories, net	1,102,774		1,169,696		Inventories, net	1,144,268		1,169,696
Prepaid and other current assets	Prepaid and other current assets	251,985		240,269		Prepaid and other current assets	266,365		240,269

Total current assets	Total current assets	3,224,114		3,441,468		Total current assets	3,278,146		3,441,468
Property, plant and equipment, net	Property, plant and equipment, net	2,028,955		1,910,871		Property, plant and equipment, net	2,159,730		1,910,871
Intangible assets, net	Intangible assets, net	251,819		257,409		Intangible assets, net	248,723		257,409
Goodwill	Goodwill	277,453		249,009		Goodwill	278,711		249,009
Other noncurrent assets	Other noncurrent assets	491,626		378,270		Other noncurrent assets	519,541		378,270
Total assets	Total assets	$	6,273,967	$	6,237,027	Total assets	$	6,484,851	$	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	$	396,560	$	428,055	Accounts payable	$	422,814	$	428,055
Accrued expenses and other payables	Accrued expenses and other payables	441,586		540,136		Accrued expenses and other payables	378,572		540,136
Current maturities of long-term debt and short-term borrowings	Current maturities of long-term debt and short-term borrowings	239,406		388,796		Current maturities of long-term debt and short-term borrowings	264,762		388,796
Total current liabilities	Total current liabilities	1,077,552		1,356,987		Total current liabilities	1,066,148		1,356,987
Deferred income taxes	Deferred income taxes	283,754		250,302		Deferred income taxes	303,367		250,302
Other noncurrent liabilities	Other noncurrent liabilities	235,280		230,060		Other noncurrent liabilities	232,415		230,060
Long-term debt	Long-term debt	1,093,146		1,113,249		Long-term debt	1,099,728		1,113,249
Total liabilities	Total liabilities	2,689,732		2,950,598		Total liabilities	2,701,658		2,950,598
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)
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 117,291,637 and 117,496,053 shares		1,290		1,290
Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,205,307 and 117,496,053 shares						Common stock, par value $0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 117,205,307 and 117,496,053 shares	1,290		1,290
Additional paid-in capital	Additional paid-in capital	361,199		382,767		Additional paid-in capital	374,440		382,767
Accumulated other comprehensive loss		(10,189)		(114,451)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	24,496		(114,451)
Retained earnings	Retained earnings	3,555,425		3,312,438		Retained earnings	3,716,537		3,312,438
Less treasury stock 11,769,027 and 11,564,611 shares at cost		(323,722)		(295,847)
Less treasury stock 11,855,357 and 11,564,611 shares at cost						Less treasury stock 11,855,357 and 11,564,611 shares at cost	(333,802)		(295,847)
Stockholders' equity	Stockholders' equity	3,584,003		3,286,197		Stockholders' equity	3,782,961		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	3,584,235		3,286,429		Total stockholders' equity	3,783,193		3,286,429
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	6,273,967	$	6,237,027	Total liabilities and stockholders' equity	$	6,484,851	$	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)
		Three Months Ended November 30,					Six Months Ended February 28,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
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	$	261,774	$	232,889	Net earnings	$	441,623	$	616,203
Adjustments to reconcile net earnings to cash flows from 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	51,183		41,226		Depreciation and amortization	102,399		82,360
Stock-based compensation						Stock-based compensation	33,624		25,870
Deferred income taxes and other long-term taxes	Deferred income taxes and other long-term taxes	16,744		(5,099)		Deferred income taxes and other long-term taxes	26,930		34,980
Stock-based compensation		16,675		9,619
Write-down of inventory						Write-down of inventory	5,532		123
Net loss (gain) on disposals of assets						Net loss (gain) on disposals of assets	387		(274,082)
Loss on debt extinguishment						Loss on debt extinguishment	178		16,052
Asset impairments						Asset impairments	45		1,228
Other	Other	5,967		(583)		Other	4,006		712

Settlement of New Markets Tax Credit transaction						Settlement of New Markets Tax Credit transaction	(17,659)		—
Changes in operating assets and liabilities, net of acquisitions	Changes in operating assets and liabilities, net of acquisitions	20,027		(252,273)		Changes in operating assets and liabilities, net of acquisitions	(38,158)		(449,078)
Net cash flows from operating activities	Net cash flows from operating activities	372,370		25,779		Net cash flows from operating activities	558,907		54,368

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)		Capital expenditures	(289,251)		(191,562)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(63,745)		—		Acquisitions, net of cash acquired	(65,153)		—
Proceeds from insurance	Proceeds from insurance	1,460		—		Proceeds from insurance	2,456		3,081
Proceeds from the sale of property, plant and equipment and other	Proceeds from the sale of property, plant and equipment and other	303		1,418		Proceeds from the sale of property, plant and equipment and other	531		309,563
Other	Other	(516)		—		Other	(1,185)		—

Net cash flows used by investing activities		(195,550)		(68,732)
Net cash flows from (used by) investing activities						Net cash flows from (used by) investing activities	(352,602)		121,082

Cash flows from (used by) financing activities:	Cash flows from (used by) financing activities:					Cash flows from (used by) financing activities:

Proceeds from issuance of long-term debt, net						Proceeds from issuance of long-term debt, net	—		740,403
Repayments of long-term debt	Repayments of long-term debt	(154,631)		(6,556)		Repayments of long-term debt	(160,263)		(313,174)
Debt issuance costs	Debt issuance costs	(1,800)		—		Debt issuance costs	(1,800)		(2,977)
Debt extinguishment costs	Debt extinguishment costs	(69)		—		Debt extinguishment costs	(96)		(13,642)
Proceeds from accounts receivable facilities						Proceeds from accounts receivable facilities	74,963		190,730
Repayments under accounts receivable facilities	Repayments under accounts receivable facilities	(25,914)		(144,706)		Repayments under accounts receivable facilities	(77,843)		(215,196)
Proceeds from accounts receivable facilities		49		150,664
Treasury stock acquired	Treasury stock acquired	(49,149)		(5,311)		Treasury stock acquired	(66,323)		(17,010)
Tax withholdings related to share settlements, net of purchase plans	Tax withholdings related to share settlements, net of purchase plans	(23,513)		(16,371)		Tax withholdings related to share settlements, net of purchase plans	(14,789)		(10,719)
Dividends	Dividends	(18,787)		(17,025)		Dividends	(37,524)		(34,011)

Net cash flows used by financing activities		(273,814)		(39,305)
Net cash flows from (used by) financing activities						Net cash flows from (used by) financing activities	(283,675)		324,404
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	5,139		(550)		Effect of exchange rate changes on cash	6,545		(1,283)
Decrease in cash, restricted cash and cash equivalents		(91,855)		(82,808)
Increase (decrease) in cash, restricted cash and cash equivalents						Increase (decrease) in cash, restricted cash and cash equivalents	(70,825)		498,571
Cash, restricted cash and cash equivalents at beginning of period	Cash, restricted cash and cash equivalents at beginning of period	679,243		501,129		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	$	587,388	$	418,321	Cash, restricted cash and cash equivalents at end of period	$	608,418	$	999,700

See notes to condensed consolidated financial statements.


Supplemental information:	Supplemental information:	Three Months Ended November 30,				Supplemental information:	Six Months Ended February 28,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Cash paid for income taxes	Cash paid for income taxes	$	15,694	$	15,296	Cash paid for income taxes	$	114,585	$	133,194
Cash paid for interest	Cash paid for interest	22,201		8,794		Cash paid for interest	35,036		24,916

Noncash activities:	Noncash activities:					Noncash activities:
Liabilities related to additions of property, plant and equipment	Liabilities related to additions of property, plant and equipment	$	47,429	$	45,788	Liabilities related to additions of property, plant and equipment	$	51,239	$	35,781
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 operating leases	19,327		19,009
Right of use assets obtained in exchange for finance leases	Right of use assets obtained in exchange for finance leases	10,104		1,002		Right of use assets obtained in exchange for finance leases	24,275		6,716

Cash and cash equivalents	Cash and cash equivalents	$	582,069	$	415,055	Cash and cash equivalents	$	603,966	$	846,587
Restricted cash (included in Prepaid and other current assets)		5,319		3,266
Restricted cash						Restricted cash	4,452		153,113
Total cash, restricted cash and cash equivalents	Total cash, restricted cash and cash equivalents	$	587,388	$	418,321	Total cash, restricted cash and cash equivalents	$	608,418	$	999,700

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 February 28, 2023
																			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 Income (Loss)		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total
Balance, December 1, 2022																		Balance, December 1, 2022	129,060,664	$	1,290	$	361,199	$	(10,189)	$	3,555,425	(11,769,027)	$	(323,722)	$	232	$	3,584,235
Net earnings																		Net earnings								179,849							179,849
Other comprehensive income																		Other comprehensive income						34,685									34,685
Dividends ($0.16 per share)																		Dividends ($0.16 per share)								(18,737)							(18,737)
Treasury stock acquired																		Treasury stock acquired										(330,000)	(17,174)				(17,174)
Issuance of stock under incentive and purchase plans, net of shares withheld for taxes																		Issuance of stock under incentive and purchase plans, net of shares withheld for taxes				1,630						243,670	7,094				8,724
Stock-based compensation																		Stock-based compensation				11,611											11,611

Balance, February 28, 2023																		Balance, February 28, 2023	129,060,664	$	1,290	$	374,440	$	24,496	$	3,716,537	(11,855,357)	$	(333,802)	$	232	$	3,783,193

		Three Months Ended November 30, 2022																	Six Months Ended February 28, 2023
		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 Income (Loss)		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total
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	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								261,774							261,774		Net earnings								441,623							441,623
Other comprehensive income	Other comprehensive income						104,262									104,262		Other comprehensive income						138,947									138,947
Dividends ($0.16 per share)									(18,787)							(18,787)
Dividends ($0.32 per share)																		Dividends ($0.32 per share)								(37,524)							(37,524)
Treasury stock acquired	Treasury stock acquired										(1,275,452)	(49,149)				(49,149)		Treasury stock acquired										(1,605,452)	(66,323)				(66,323)
Tax withholdings related to share settlements, net of purchase plans					(44,787)						1,071,036	21,274				(23,513)
Issuance of stock under incentive and purchase plans, net of shares withheld for taxes																		Issuance of stock under incentive and purchase plans, net of shares withheld for taxes				(43,157)						1,314,706	28,368				(14,789)
Stock-based compensation	Stock-based compensation				13,527											13,527		Stock-based compensation				25,138											25,138

Reclassification of share-based liability awards	Reclassification of share-based liability awards				9,692											9,692		Reclassification of share-based liability awards				9,692											9,692
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

Balance, February 28, 2023																		Balance, February 28, 2023	129,060,664	$	1,290	$	374,440	$	24,496	$	3,716,537	(11,855,357)	$	(333,802)	$	232	$	3,783,193

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

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	Three Months Ended February 28, 2022
	Common Stock									Treasury Stock
(in thousands, except share and per share data)	Number of Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Number of Shares	Amount		Non-controlling Interest		Total
Balance, December 1, 2021	129,060,664	$	1,290	$	357,413	$	(105,329)	$	2,378,789	(7,580,725)	$	(146,206)	$	232	$	2,486,189
Net earnings								383,314							383,314
Other comprehensive income						13,453									13,453
Dividends ($0.14 per share)								(16,986)							(16,986)
Treasury stock acquired										(335,500)	(11,699)				(11,699)
Issuance of stock under incentive and purchase plans, net of shares withheld for taxes				(1,275)						351,429	6,927				5,652
Stock-based compensation				10,024											10,024


Balance, February 28, 2022	129,060,664	$	1,290	$	366,162	$	(91,876)	$	2,745,117	(7,564,796)	$	(150,978)	$	232	$	2,869,947

	Six Months Ended February 28, 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								616,203							616,203
Other comprehensive loss						(7,056)									(7,056)
Dividends ($0.28 per share)								(34,011)							(34,011)
Treasury stock acquired										(495,000)	(17,010)				(17,010)
Issuance of stock under incentive and purchase plans, net of shares withheld for taxes				(29,333)						1,404,279	18,614				(10,719)
Stock-based compensation				18,340											18,340

Reclassification of share-based liability awards				9,091											9,091
Balance, February 28, 2022	129,060,664	$	1,290	$	366,162	$	(91,876)	$	2,745,117	(7,564,796)	$	(150,978)	$	232	$	2,869,947

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, 2022 (the "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 2022 Form 10-K. The results of operations for the three and six month ~~period~~periods are not necessarily indicative of the results to be expected for the full fiscal year. Any reference in this Form 10-Q to the "corresponding period" or "comparable period" relates to the three or six month period ended ~~November 30, 2021.~~February 28, 2022, as applicable. 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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NOTE 2. CHANGES IN BUSINESS

Tensar Acquisition

On April 25, 2022 (the "Tensar 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. 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 and liabilities as of the 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~~six months ended ~~November 30, 2022.~~February 28, 2023.

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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 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.

~~(in thousands)~~

~~Three Months Ended November 30, 2021~~

~~Pro forma net sales~~

~~2,043,668~~

~~Pro forma net earnings~~

~~240,377~~


(in thousands)	Three Months Ended February 28, 2022		Six Months Ended February 28, 2022
Pro forma net sales	$	2,059,294	$	4,102,962
Pro forma net earnings	383,256		623,633

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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 six months ended February 28, 2022, with no such impact on the three months ended ~~November 30, 2021.~~February 28, 2022. Results also reflect increased amortization expense from revalued intangible assets of $3.1 million and $6.2 million in the three and six months ended ~~November 30, 2021.~~February 28, 2022, respectively.

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 as of February 28, 2023 or results of operations for the three and six months ended February 28, 2023, 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, TXTexas 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 as of February 28, 2023 or results of operations for the three and six months ended February 28, 2023, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.

Facility Disposition

On September 29, 2021, the Company entered into a definitive agreement to sell the assets associated with its Rancho Cucamonga melting operations and adjacent rebar fabrication facility ("the Rancho Cucamonga facilities"), which were part of the North America segment. On December 28, 2021, the sale of the Rancho Cucamonga facilities was completed for gross proceeds of $313.0 million. A portion of the gross proceeds amounting to $39.0 million was set aside in a restricted cash account to facilitate the purchase of like-kind assets. In January 2022, the Company used $7.5 million of the restricted cash on a purchase of a like-kind asset. The remaining balance of $31.5 million was included in restricted cash as of February 28, 2022.

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NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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


											Three Months Ended February 28, 2023
(in thousands)										(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, December 1, 2022										Balance, December 1, 2022	$	(204,468)	$	199,317	$	(5,038)	$	(10,189)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	11,628		29,341		(66)		40,903
Reclassification for gain (1)										Reclassification for gain (1)	—		(1,070)		—		(1,070)
Income tax (expense) benefit										Income tax (expense) benefit	—		(5,177)		29		(5,148)
Net other comprehensive income (loss)										Net other comprehensive income (loss)	11,628		23,094		(37)		34,685
Balance, February 28, 2023										Balance, February 28, 2023	$	(192,840)	$	222,411	$	(5,075)	$	24,496

		Three Months Ended November 30, 2022									Six Months Ended February 28, 2023
(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, September 1, 2022	Balance, September 1, 2022	$	(245,897)	$	138,242	$	(6,796)	$	(114,451)	Balance, September 1, 2022	$	(245,897)	$	138,242	$	(6,796)	$	(114,451)
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	41,429		83,887		1,745		127,061		Other comprehensive income before reclassifications	53,057		113,228		1,679		167,964
Reclassification for gain (1)	Reclassification for gain (1)	—		(8,666)		—		(8,666)		Reclassification for gain (1)	—		(9,736)		—		(9,736)
Income tax (expense) benefit	Income tax (expense) benefit	—		(14,146)		13		(14,133)		Income tax (expense) benefit	—		(19,323)		42		(19,281)
Net other comprehensive income	Net other comprehensive income	41,429		61,075		1,758		104,262		Net other comprehensive income	53,057		84,169		1,721		138,947
Balance, November 30, 2022		$	(204,468)	$	199,317	$	(5,038)	$	(10,189)

Balance, February 28, 2023										Balance, February 28, 2023	$	(192,840)	$	222,411	$	(5,075)	$	24,496


											Three Months Ended February 28, 2022
(in thousands)										(in thousands)	Foreign Currency Translation		Derivatives		Defined Benefit Obligation		Total AOCI
Balance, December 1, 2021										Balance, December 1, 2021	$	(145,368)	$	40,966	$	(927)	$	(105,329)
Other comprehensive income (loss) before reclassifications										Other comprehensive income (loss) before reclassifications	(14,461)		41,044		(8)		26,575
Reclassification for gain (1)										Reclassification for gain (1)	—		(6,536)		—		(6,536)
Income tax (expense) benefit										Income tax (expense) benefit	—		(6,588)		2		(6,586)
Net other comprehensive income (loss)										Net other comprehensive income (loss)	(14,461)		27,920		(6)		13,453
Balance, February 28, 2022										Balance, February 28, 2022	$	(159,829)	$	68,886	$	(933)	$	(91,876)

		Three Months Ended November 30, 2021									Six Months Ended February 28, 2022
(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, September 1, 2021	Balance, September 1, 2021	$	(105,680)	$	21,781	$	(921)	$	(84,820)	Balance, September 1, 2021	$	(105,680)	$	21,781	$	(921)	$	(84,820)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(39,688)		27,474		(8)		(12,222)		Other comprehensive income (loss) before reclassifications	(54,149)		68,518		(16)		14,353
Reclassification for gain (1)	Reclassification for gain (1)	—		(3,789)		—		(3,789)		Reclassification for gain (1)	—		(10,325)		—		(10,325)
Income tax (expense) benefit	Income tax (expense) benefit	—		(4,500)		2		(4,498)		Income tax (expense) benefit	—		(11,088)		4		(11,084)
Net other comprehensive income (loss)	Net other comprehensive income (loss)	(39,688)		19,185		(6)		(20,509)		Net other comprehensive income (loss)	(54,149)		47,105		(12)		(7,056)
Balance, November 30, 2021		$	(145,368)	$	40,966	$	(927)	$	(105,329)

Balance, February 28, 2022										Balance, February 28, 2022	$	(159,829)	$	68,886	$	(933)	$	(91,876)

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

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NOTE 4. 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,~~15, Operating Segments, for further information about disaggregated revenue by the Company's major product lines.

Each 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~~measure; these contracts represented 7% of net sales in the North America segment in both the three and six months ended February 28, 2023, and 8% and 9% of net sales in the North America segment in the three and six months ended ~~November 30,~~February 28, 2022, ~~and 2021,~~ respectively. Revenue from contracts where the Company does not provide installation services is recognized over time using an output ~~measure, and~~measure; these contracts represented 11% and 12% of net sales in the North America segment in the three and six months ended February 28, 2023, respectively, and 8% and 9% of net sales in the North America segment in the three and six months ended ~~November 30,~~February 28, 2022, ~~and 2021,~~ respectively.

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


(in thousands)	(in thousands)	November 30, 2022		August 31, 2022		(in thousands)	February 28, 2023		August 31, 2022
Contract assets (included in accounts receivable)	Contract assets (included in accounts receivable)	$	76,390	$	73,037	Contract assets (included in accounts receivable)	$	68,589	$	73,037
Contract liabilities (included in accrued expenses and other payables)	Contract liabilities (included in accrued expenses and other payables)	28,005		27,567		Contract liabilities (included in accrued expenses and other payables)	30,230		27,567

The amount of revenue reclassified from August 31, 2022 contract liabilities during the ~~three~~six months ended ~~November 30, 2022~~February 28, 2023 was approximately ~~$11.6~~$20.7 million.

Remaining Performance Obligations

As of ~~November 30, 2022,~~February 28, 2023, revenue totaling $1.0 billion has been allocated to remaining performance obligations in the North America segment related to contracts where revenue is recognized using an input or output measure. Of this amount, the Company estimates that approximately ~~81%~~79% of the remaining performance obligations will be recognized in the twelve months after ~~November 30, 2022,~~February 28, 2023, 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 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)	November 30, 2022		August 31, 2022		(in thousands)	February 28, 2023		August 31, 2022
Raw materials	Raw materials	$	255,569	$	271,756	Raw materials	$	299,911	$	271,756
Work in process	Work in process	9,578		9,446		Work in process	5,628		9,446
Finished goods	Finished goods	837,627		888,494		Finished goods	838,729		888,494
Total	Total	$	1,102,774	$	1,169,696	Total	$	1,144,268	$	1,169,696

Inventory write-downs were ~~$4.5~~$1.0 million and $5.5 million during the three and six months ended ~~November 30, 2022~~February 28, 2023, respectively, and were primarily recorded in the Europe segment. Inventory write-downs were immaterial in the corresponding ~~period.~~periods.

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NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment is detailed in the following table:


(in thousands)	(in thousands)	North America		Europe		Consolidated		(in thousands)	North America		Europe		Consolidated
Goodwill, gross	Goodwill, gross							Goodwill, gross
Balance at September 1, 2022		$	216,059	$	43,115	$	259,174
Balance, September 1, 2022								Balance, September 1, 2022	$	216,059	$	43,115	$	259,174
Acquisitions	Acquisitions	28,891		—		28,891		Acquisitions	29,503		—		29,503
Foreign currency translation	Foreign currency translation	—		(442)		(442)		Foreign currency translation	—		207		207
Balance at November 30, 2022		244,950		42,673		287,623
Balance, February 28, 2023								Balance, February 28, 2023	245,562		43,322		288,884

Accumulated impairment	Accumulated impairment							Accumulated impairment
Balance at September 1, 2022		(10,036)		(129)		(10,165)
Balance, September 1, 2022								Balance, September 1, 2022	(10,036)		(129)		(10,165)
Foreign currency translation	Foreign currency translation	—		(5)		(5)		Foreign currency translation	—		(8)		(8)
Balance at November 30, 2022		(10,036)		(134)		(10,170)
Balance, February 28, 2023								Balance, February 28, 2023	(10,036)		(137)		(10,173)

Goodwill, net	Goodwill, net							Goodwill, net
Balance at September 1, 2022		206,023		42,986		249,009
Balance, September 1, 2022								Balance, September 1, 2022	206,023		42,986		249,009
Acquisitions	Acquisitions	28,891		—		28,891		Acquisitions	29,503		—		29,503
Foreign currency translation	Foreign currency translation	—		(447)		(447)		Foreign currency translation	—		199		199
Balance at November 30, 2022		$	234,914	$	42,539	$	277,453
Balance, February 28, 2023								Balance, February 28, 2023	$	235,526	$	43,185	$	278,711

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


			November 30, 2022						August 31, 2022								February 28, 2023						August 31, 2022
(in thousands)	(in thousands)	Weighted Average Useful Lives in Years	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net		(in thousands)	Useful Lives in Years	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Developed technologies	Developed technologies	1 to 12	$	147,400	$	11,128	$	136,272	$	147,040	$	6,485	$	140,555	Developed technologies	1 to 15	$	148,406	$	15,816	$	132,590	$	147,040	$	6,485	$	140,555
Customer relationships	Customer relationships	12 to 17	53,145		3,186		49,959		53,115		2,116		50,999		Customer relationships	12 to 17	53,323		4,243		49,080		53,115		2,116		50,999
Perpetual lease rights	Perpetual lease rights	80	3,752		790		2,962		3,584		744		2,840		Perpetual lease rights	79	5,550		868		4,682		3,584		744		2,840
Patents	Patents	5 to 15	7,347		4,841		2,506		7,203		4,596		2,607		Patents	5 to 7.5	7,203		5,083		2,120		7,203		4,596		2,607
Trade names	Trade names	5 to 15	3,210		853		2,357		3,212		764		2,448		Trade names	5 to 15	3,241		945		2,296		3,212		764		2,448
Non-compete agreements	Non-compete agreements	5 to 7	2,300		1,224		1,076		3,050		1,135		1,915		Non-compete agreements	5 to 7	2,300		1,313		987		3,050		1,135		1,915
Other	Other	15	101		100		1		101		99		2		Other	15	101		101		—		101		99		2
Total	Total		$	217,255	$	22,122	$	195,133	$	217,305	$	15,939	$	201,366	Total		$	220,124	$	28,369	$	191,755	$	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~~Other indefinite-lived intangible assets consist of the ~~Company's~~following:


(in thousands)	February 28, 2023		August 31, 2022
Trade names	$	53,818	$	53,633
In-process research and development	2,400		2,400
Non-compete agreements	750		750
Total	$	56,968	$	56,783

The change in the balance of 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~~February 28, 2023 was due to foreign currency translation adjustments. Intangible assets with indefinite lives consist primarily of 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 amount of $2.4 million at both November 30, 2022 and August 31, 2022.

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Amortization expense for intangible assets was ~~$6.1~~$6.2 million and $12.3 million in the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, of which ~~$4.6~~$4.7 million and $9.3 million, respectively, was recorded in cost of goods sold and $1.5 million and $3.0 million, respectively, 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 and six months ended ~~November 30, 2021.~~February 28, 2022. Estimated amounts of amortization expense for intangible assets for the next five years are as follows:
(in thousands)
Remainder of 2023 $ 18,307
2024 23,604
2025 21,868
2026 20,662
2027 20,555


	(in thousands)
Remainder of 2023	$	12,244
2024	23,734
2025	22,004
2026	20,792
2027	20,684

NOTE 7. CREDIT ARRANGEMENTS

Long-term debt was as follows:


(in thousands)	(in thousands)	Weighted Average Interest Rate as of November 30, 2022	November 30, 2022		August 31, 2022		(in thousands)	Weighted Average Interest Rate as of February 28, 2023	February 28, 2023		August 31, 2022
2032 Notes	2032 Notes	4.375%	$	300,000	$	300,000	2032 Notes	4.375%	$	300,000	$	300,000
2031 Notes	2031 Notes	3.875%	300,000		300,000		2031 Notes	3.875%	300,000		300,000
2030 Notes	2030 Notes	4.125%	300,000		300,000		2030 Notes	4.125%	300,000		300,000

2023 Notes	2023 Notes	4.875%	214,059		330,000		2023 Notes	4.875%	214,059		330,000
Series 2022 Bonds, due 2047	Series 2022 Bonds, due 2047	4.000%	145,060		145,060		Series 2022 Bonds, due 2047	4.000%	145,060		145,060
Poland Term Loan	Poland Term Loan	—	—		32,439		Poland Term Loan	—	—		32,439
Short-term borrowings	Short-term borrowings	—	—		26,390		Short-term borrowings	—	22,804		26,390
Other	Other	4.550%	21,097		21,278		Other	4.600%	21,057		21,278
Finance leases	Finance leases		63,862		58,536		Finance leases	4.658%	72,559		58,536
Total debt	Total debt		1,344,078		1,513,703		Total debt		1,375,539		1,513,703
Less unamortized debt issuance costs	Less unamortized debt issuance costs		(16,317)		(16,496)		Less unamortized debt issuance costs		(15,792)		(16,496)
Plus unamortized bond premium	Plus unamortized bond premium		4,791		4,838		Plus unamortized bond premium		4,743		4,838
Total amounts outstanding	Total amounts outstanding		1,332,552		1,502,045		Total amounts outstanding		1,364,490		1,502,045

Less current maturities of long-term debt and short-term borrowings	Less current maturities of long-term debt and short-term borrowings		(239,406)		(388,796)		Less current maturities of long-term debt and short-term borrowings		(264,762)		(388,796)
Long-term debt	Long-term debt		$	1,093,146	$	1,113,249	Long-term debt		$	1,099,728	$	1,113,249

The Company's credit arrangements require compliance with certain covenants, including an interest coverage ratio and a debt to capitalization ratio. At ~~November 30, 2022,~~February 28, 2023, the Company was in compliance with all financial covenants in its credit arrangements.

Capitalized interest, resulting primarily from the construction of the Company's third micro mill, was $5.4 million and $10.0 million during the three and six months ended February 28, 2023, respectively, compared to $2.6 million and $4.2 million, respectively, during the corresponding periods.

Senior Notes Activity

In May 2013, the Company issued $330.0 million of 4.875% Senior Notes due May 2023 (the "2023 Notes"). As of August 31, 2022, the 2023 Notes were included 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 ~~November 30, 2022.~~February 28, 2023.

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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 a 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,~~February 28, 2023, 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 the Revolver or the previous revolving credit facility at ~~November 30, 2022~~February 28, 2023 or August 31, 2022. The availability under the Revolver and the previous revolving credit facility, as applicable, was reduced by outstanding stand-by letters of credit of $0.9 million and $1.4 million at ~~both November 30, 2022~~February 28, 2023 and August 31, ~~2022.~~2022, respectively.

~~The~~In November 2022, the Company ~~has a Term Loan~~repaid the outstanding principal on its term loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"). At ~~November 30, 2022,~~February 28, 2023, there was no amount outstanding or available, compared to PLN 152.4 million, or $32.4 million, outstanding and available under the facility as of August 31, 2022.

The Company also has credit facilities in Poland through CMCP. At ~~November 30, 2022~~February 28, 2023 and August 31, 2022, CMCP's credit facilities totaled PLN 300.0 million, or ~~$66.9~~$67.4 million and $63.9 million, respectively. There were no amounts outstanding under these facilities as of ~~November 30, 2022~~February 28, 2023 or August 31, 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 $14.6 million and $1.0 million at ~~November 30, 2022~~February 28, 2023 and August 31, 2022, respectively.

Accounts Receivable Facilities

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

The Poland accounts receivable facility had a limit of PLN 288.0 million, or ~~$64.2~~$64.7 million and $61.3 million, at ~~November 30, 2022~~February 28, 2023 and August 31, 2022, respectively. The Company had noPLN 101.4 million, or $22.8 million, advance payments outstanding under the Poland accounts receivable facility at ~~November 30, 2022,~~February 28, 2023, compared to PLN 124.0 million, or $26.4 million, advance payments outstanding at August 31, 2022.

NOTE 8. NEW MARKETS TAX CREDIT TRANSACTIONS

During 2016 and 2017, the Company entered into three New Markets Tax Credit (“NMTC”) transactions with U.S. Bancorp Community Development Corporation, a Minnesota corporation ("USBCDC"). The NMTC transactions related to the construction and equipping of the micro mill in Durant, Oklahoma, as well as a rebar spooler and automated T-post shop located on the same site. As of August 31, 2022, $17.7 million of USBCDC’s contributions were classified as accrued expenses and other payables in the consolidated balance sheet and $9.5 million of USBCDC’s contributions were classified as other noncurrent liabilities in the consolidated balance sheet, in each case representing deferred revenue to the Company. During December 2022, the seven-year recapture period on the first NMTC transaction, the USBCDC Investment Fund 156, ended, and therefore, the corresponding $17.7 million USBCDC capital contribution was recognized in net sales during the three and six months ended February 28, 2023. See Note 10, New Markets Tax Credit Transactions, to the consolidated financial statements in the 2022 Form 10-K for discussion related to the Company's NMTC transactions.

NOTE 9. DERIVATIVES

The Company's global operations and product lines expose it to risks from fluctuations in metal commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. One objective of the Company's risk management program is to mitigate these risks using derivative instruments. The Company enters into (i) metal commodity futures and forward contracts to mitigate the risk of unanticipated changes in 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.

1415

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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 ~~November 30, 2022,~~February 28, 2023, the notional values of the Company's foreign currency and commodity contract commitments were ~~$294.9~~$371.5 million and ~~$378.4~~$453.6 million, respectively. At August 31, 2022, the notional values of the Company's foreign currency and commodity contract commitments were $253.5 million and $205.1 million, respectively.

The following table provides information regarding the Company's commodity contract commitments at ~~November 30, 2022:~~February 28, 2023:

Commodity

Long/Short

Total

Aluminum

Long

~~2,025~~2,750

Aluminum

Short

~~1,425~~675

Copper

Long

~~374~~1,123

Copper

Short

~~8,550~~9,321

Electricity

Long

~~3,051,000~~3,405,000

MW(h)

Natural Gas

Long

~~5,230,350~~4,910,400

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 table summarizes the location and amounts of the fair value of the Company's derivative instruments and hedged items recognized in the condensed consolidated balance sheets:


(in thousands)	Primary Location	February 28, 2023		August 31, 2022
Derivative assets:
Commodity	Prepaid and other current assets	$	13,826	$	26,180
Commodity	Other noncurrent assets	268,203		134,667
Foreign exchange	Prepaid and other current assets	5,099		1,296
Derivative liabilities:
Commodity	Accrued expenses and other payables	$	6,248	$	1,110
Commodity	Other noncurrent liabilities	1,778		150
Foreign exchange	Accrued expenses and other payables	3,616		3,126

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 November 30,					Three Months Ended February 28,			Six Months Ended February 28,
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		Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Primary Location	2023		2022		2023		2022
Commodity	Commodity	Cost of goods sold	$	(3,085)	$	2,746	Commodity	Cost of goods sold	$	(5,995)	$	(2,214)	$	(9,080)	$	532
Foreign exchange	Foreign exchange	SG&A expenses	3,462		(7,995)		Foreign exchange	SG&A expenses	2,947		(1,048)		6,409		(9,043)


Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Loss (in thousands)		Three Months Ended November 30,
Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands)						Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands)	Three Months Ended February 28,				Six Months Ended February 28,
		2022		2021			2023		2022		2023		2022
Commodity	Commodity	$	68,039	$	22,175	Commodity	$	23,950	$	33,190	$	91,989	$	55,365

The Company's natural gas ~~and~~derivatives accounted for as cash flow hedging instruments have maturities extending to February 2026. The Company's electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to ~~November 2025 and~~ December ~~2034,~~ ~~respectively.~~2034. Included in the AOCI balance as of ~~November 30, 2022~~February 28, 2023 was an estimated net gain of ~~$15.3~~$7.5 million

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from cash flow hedging instruments that is expected to be reclassified into net earnings within the ~~next~~ twelve ~~months.~~months following February 28, 2023. See Note 9,10, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.

NOTE 9.10. FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three 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 Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 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:

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				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
(in thousands)	(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)		(in thousands)	February 28, 2023		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)	$	492,405	$	492,405	$	—	$	—	Investment deposit accounts (1)	$	540,516	$	540,516	$	—	$	—
Commodity derivative assets (2)	Commodity derivative assets (2)	248,261		6,795		—		241,466		Commodity derivative assets (2)	282,029		1,187		—		280,842
Foreign exchange derivative assets (2)	Foreign exchange derivative assets (2)	2,748		—		2,748		—		Foreign exchange derivative assets (2)	5,099		—		5,099		—
Liabilities:	Liabilities:									Liabilities:
Commodity derivative liabilities (2)	Commodity derivative liabilities (2)	4,417		4,417		—		—		Commodity derivative liabilities (2)	8,026		8,026		—		—
Foreign exchange derivative liabilities (2)	Foreign exchange derivative liabilities (2)	1,934		—		1,934		—		Foreign exchange derivative liabilities (2)	3,616		—		3,616		—


			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 8,9, Derivatives.

As of August 31, 2022, the Company had one Level 3 commodity derivative. ~~In September 2022, the~~The Company entered into aits second and third Level 3 commodity ~~derivative~~derivatives in September 2022 and January 2023, respectively, with the same ~~counterparty. The second~~counterparty as the first Level 3 commodity ~~derivative~~derivative. Both the second and third Level 3 commodity derivatives will begin to settle in January 2025.

The fair value estimates of the Level 3 commodity derivatives are based on internally developed discounted cash flow 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 models. The following table summarizes the floating rate used to measure the fair value of the Level 3 commodity derivatives at ~~November 30, 2022~~February 28, 2023 and ~~2021:~~August 31, 2022:

Floating rate (PLN)
November 30, Low High Average
2022 532.66 1,298.53 786.58
2021 252.79 540.39 348.99

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	Floating rate (PLN)
	Low	High	Average
February 28, 2023	575.51	1,298.53	793.65
August 31, 2022	460.11	1,298.53	717.22

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivatives recognized in the condensed consolidated statements of comprehensive income. The fluctuation in energy rates over time causes volatility in the fair value ~~estimate~~estimates and is the primary reason for unrealized gains included in other comprehensive income ("OCI") in the three and six months ended ~~November 30, 2022~~February 28, 2023 and ~~2021.~~2022.

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(in thousands)		Three Months Ended ~~November 30,~~February 28, 2023
Balance, December 1, 2022		$	241,466
Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)		40,085
Reclassification for gain included in net earnings (2)		(709)
Balance, February 28, 2023		$	280,842

(in thousands)		Six Months Ended February 28, 2023
Balance, September 1, 2022		$	143,500
Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)		~~104,197~~144,282
Reclassification for gain included in net earnings (2)		~~(6,231)~~(6,940)
Balance, ~~November 30, 2022~~February 28, 2023		$	~~241,466~~280,842








(in thousands)		Three Months Ended ~~November 30, 2021~~February 28, 2022
Balance, ~~September~~December 1, 2021		$	~~26,413~~47,892
Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)		~~25,208~~36,630
Reclassification for gain included in net earnings (2)		~~(3,729)~~(5,643)
Balance, ~~November 30, 2021~~February 28, 2022		$	~~47,892~~78,879

(in thousands)		Six Months Ended February 28, 2022
Balance, September 1, 2021		$	26,413
Total gains, realized and unrealized:
Unrealized holding gain before reclassification (1)		61,838
Reclassification for gain included in net earnings (2)		(9,372)
Balance, February 28, 2022
$
	78,879

(1) Unrealized holding ~~gain,~~gains, 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 six months ended ~~November 30, 2022~~February 28, 2023 or ~~2021.~~2022.

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

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


			November 30, 2022				August 31, 2022						February 28, 2023				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	$	255,005	$	300,000	$	256,488	2032 Notes (1)	Level 2	$	300,000	$	259,629	$	300,000	$	256,488
2031 Notes (1)	2031 Notes (1)	Level 2	300,000		252,169		300,000		249,888		2031 Notes (1)	Level 2	300,000		254,403		300,000		249,888
2030 Notes (1)	2030 Notes (1)	Level 2	300,000		261,675		300,000		263,372		2030 Notes (1)	Level 2	300,000		263,439		300,000		263,372
2023 Notes (1)	2023 Notes (1)	Level 2	214,059		214,316		330,000		330,182		2023 Notes (1)	Level 2	214,059		213,710		330,000		330,182
Series 2022 Bonds, due 2047 (1)	Series 2022 Bonds, due 2047 (1)	Level 2	145,060		115,768		145,060		126,652		Series 2022 Bonds, due 2047 (1)	Level 2	145,060		120,324		145,060		126,652
Poland Term Loan (2)	Poland Term Loan (2)	Level 2	—		—		32,439		32,439		Poland Term Loan (2)	Level 2	—		—		32,439		32,439
Short-term borrowings (2)	Short-term borrowings (2)	Level 2	—		—		26,390		26,390		Short-term borrowings (2)	Level 2	22,804		22,804		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 ~~10.~~11. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note 14, Stock-Based Compensation Plans, to the consolidated financial statements in the 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 ~~three~~six months ended ~~November 30,~~February 28, 2023 and 2022, ~~and 2021,~~ the Company granted the following awards under its stock-based compensation plans:

November 30, 2022

November 30, 2021

February 28, 2023

February 28, 2022

(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 per share data)

Shares Granted

Weighted Average Grant Date Fair Value

Shares Granted

Weighted Average Grant Date Fair Value

Equity method

1,424

35.78

1,407

27.77

Equity method

1,392

36.47

1,440

27.95

Liability method

242

N/A

261

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 six months ended ~~November 30, 2022~~February 28, 2023 and ~~2021.~~2022. At ~~November 30, 2022,~~February 28, 2023, the Company had outstanding ~~518,470~~514,417 equivalent shares accounted for under the liability method. The Company expects ~~492,546~~488,696 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 November 30,				Three Months Ended February 28,				Six Months Ended February 28,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2023		2022		2023		2022
Stock-based compensation expense	Stock-based compensation expense	$	16,675	$	9,619		Stock-based compensation expense	$	16,949	$	16,251	$	33,624	$	25,870

NOTE ~~11.~~12. EMPLOYEES' RETIREMENT PLANS

~~During the quarter ended November 30,~~In October 2022, the Company terminated its U.S. Pension Plan (as defined in Note 15, Employees' Retirement Plans, to the consolidated financial statements in the 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~~six months ended ~~November 30, 2022.~~February 28, 2023. No benefit obligation or plan assets related to the U.S. Pension Plan remain.

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

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Plans, to the consolidated financial statements in the 2022 Form 10-K), defined contribution 401(k) retirement plan and Benefit Restoration ~~Plan.~~

Plan ("BRP").

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NOTE ~~12.~~13. 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 November 30,				Three Months Ended February 28,				Six Months Ended February 28,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2022		2021			(in thousands, except share and per share data)	2023		2022		2023		2022
Net earnings	Net earnings	$	261,774	$	232,889		Net earnings	$	179,849	$	383,314	$	441,623	$	616,203

Average basic shares outstanding	Average basic shares outstanding	117,273,743		121,129,679			Average basic shares outstanding	117,224,517		121,458,196		117,249,266		121,293,030
Effect of dilutive securities	Effect of dilutive securities	1,651,699		1,668,059			Effect of dilutive securities	1,498,742		1,394,214		1,735,832		1,454,951
Average diluted shares outstanding	Average diluted shares outstanding	118,925,442		122,797,738			Average diluted shares outstanding	118,723,259		122,852,410		118,985,098		122,747,981

Earnings per share:	Earnings per share:						Earnings per share:
Basic	Basic	$	2.23	$	1.92		Basic	$	1.53	$	3.16	$	3.77	$	5.08
Diluted	Diluted	$	2.20	$	1.90		Diluted	$	1.51	$	3.12	$	3.71	$	5.02

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

In October 2021, ~~CMC's~~the Company's Board of Directors authorized a share repurchase program under which ~~CMC~~the Company may repurchase up to $350.0 million of shares of CMC common stock. During the three and six months ended ~~November 30, 2022,~~February 28, 2023, the Company repurchased ~~1,275,452~~330,000 and 1,605,452 shares of CMC common stock, respectively, at an average purchase price of $52.04 and $41.31 per share, respectively. The Company had remaining authorization to repurchase $121.8 million of shares of CMC common stock at ~~an average purchase price of $38.53 per share. CMC had remaining authorization to repurchase $139.0 million of shares of common stock at November 30, 2022.~~February 28, 2023.

NOTE ~~13.~~14. COMMITMENTS AND CONTINGENCIES

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. At ~~November 30, 2022~~February 28, 2023 and August 31, 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 ~~$5.1~~$5.6 million and $5.3 million at ~~November 30, 2022~~February 28, 2023 and August 31, 2022, respectively, of which ~~$2.1 million and~~ $2.0 million were classified as other noncurrent liabilities as of ~~November 30, 2022~~February 28, 2023 and August 31, ~~2022, respectively.~~2022. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors, amounts accrued could vary significantly from amounts paid.

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NOTE ~~14.~~15. OPERATING SEGMENTS

The Company structures its business into two 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 2022 Form 10-K and Note 2, 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~~BRP assets and short-term investments, expenses of the Company's corporate headquarters, interest expense related to ~~its~~ long-term debt, other revenue resulting from the Company's NMTC transactions and intercompany eliminations.

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


		Three Months Ended November 30, 2022										Three Months Ended February 28, 2023
(in thousands)	(in thousands)	North America		Europe			Corporate and Other		Total		(in thousands)	North America		Europe		Corporate and Other		Total
Net sales	Net sales	$	1,816,899	$	406,513		$	3,901	$	2,227,313	Net sales	$	1,640,933	$	355,633	$	21,437	$	2,018,003
Adjusted EBITDA	Adjusted EBITDA	377,956		64,505			(39,725)		402,736		Adjusted EBITDA	299,311		12,949		(15,573)		296,687

						Six Months Ended February 28, 2023

Total assets at November 30, 2022		4,568,633		1,171,324			534,010		6,273,967
(in thousands)											(in thousands)	North America		Europe		Corporate and Other		Total
Net sales											Net sales	$	3,457,832	$	762,146	$	25,338	$	4,245,316
Adjusted EBITDA											Adjusted EBITDA	677,267		77,454		(55,298)		699,423
Total assets at February 28, 2023											Total assets at February 28, 2023	4,660,107		1,253,468		571,276		6,484,851


		Three Months Ended November 30, 2021										Three Months Ended February 28, 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	$	1,653,622	$	329,056		$	(877)	$	1,981,801	Net sales	$	1,614,224	$	395,758	$	(1,094)	$	2,008,888
Adjusted EBITDA	Adjusted EBITDA	268,524		79,832			(34,334)		314,022		Adjusted EBITDA	535,463		81,149		(52,493)		564,119

						Six Months Ended February 28, 2022

(in thousands)											(in thousands)	North America		Europe		Corporate and Other		Total
Net sales											Net sales	$	3,267,846	$	724,814	$	(1,971)	$	3,990,689
Adjusted EBITDA											Adjusted EBITDA	803,987		160,981		(86,827)		878,141
Total assets at August 31, 2022	Total assets at August 31, 2022	4,467,314		1,056,101			713,612		6,237,027		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 November 30,				Three Months Ended February 28,				Six Months Ended February 28,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2023		2022		2023		2022
Net earnings	Net earnings	$	261,774	$	232,889		Net earnings	$	179,849	$	383,314	$	441,623	$	616,203
Interest expense	Interest expense	13,045		11,035			Interest expense	9,945		12,011		22,990		23,046
Income taxes	Income taxes	76,725		28,872			Income taxes	55,641		126,432		132,366		155,304
Depreciation and amortization	Depreciation and amortization	51,183		41,226			Depreciation and amortization	51,216		41,134		102,399		82,360
Asset impairments	Asset impairments	9		—			Asset impairments	36		1,228		45		1,228

Adjusted EBITDA	Adjusted EBITDA	$	402,736	$	314,022		Adjusted EBITDA	$	296,687	$	564,119	$	699,423	$	878,141

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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:


		Three Months Ended November 30, 2022										Three Months Ended February 28, 2023
(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	$	292,320	$	4,867		$	—	$	297,187	Raw materials	$	315,711	$	4,894	$	—	$	320,605
Steel products	Steel products	705,462		311,936			—		1,017,398		Steel products	630,724		272,607		—		903,331
Downstream products	Downstream products	641,934		59,582			—		701,516		Downstream products	539,173		50,128		—		589,301
Construction-related solutions	Construction-related solutions	142,372		19,446			—		161,818		Construction-related solutions	122,464		17,380		—		139,844
Other(1)	Other(1)	33,160		10,118			6,116		49,394		Other(1)	31,921		9,930		23,071		64,922
Net sales from external customers	Net sales from external customers	1,815,248		405,949			6,116		2,227,313		Net sales from external customers	1,639,993		354,939		23,071		2,018,003
Intersegment net sales, eliminated on consolidation	Intersegment net sales, eliminated on consolidation	1,651		564			(2,215)		—		Intersegment net sales, eliminated on consolidation	940		694		(1,634)		—
Net sales	Net sales	$	1,816,899	$	406,513		$	3,901	$	2,227,313	Net sales	$	1,640,933	$	355,633	$	21,437	$	2,018,003

						Six Months Ended February 28, 2023

(in thousands)											(in thousands)	North America		Europe		Corporate and Other		Total
Major product:											Major product:
Raw materials											Raw materials	$	608,031	$	9,761	$	—	$	617,792
Steel products											Steel products	1,336,186		584,543		—		1,920,729
Downstream products											Downstream products	1,181,107		109,710		—		1,290,817
Construction-related solutions											Construction-related solutions	264,836		36,826		—		301,662
Other(1)											Other(1)	65,081		20,048		29,187		114,316
Net sales from external customers											Net sales from external customers	3,455,241		760,888		29,187		4,245,316
Intersegment net sales, eliminated on consolidation											Intersegment net sales, eliminated on consolidation	2,591		1,258		(3,849)		—
Net sales											Net sales	$	3,457,832	$	762,146	$	25,338	$	4,245,316

(1) Other revenue during the three and six months ended February 28, 2023 includes $17.7 million derived from the Company's NMTC transactions. See Note 8, New Markets Tax Credit Transactions, for further information.

Three Months Ended November 30, 2021
(in thousands) North America Europe Corporate and Other Total
Major product:
Raw materials $ 353,092 $ 6,960 $ — $ 360,052
Steel products 675,042 243,145 — 918,187
Downstream products 514,396 70,072 — 584,468
Construction-related solutions 82,499 — — 82,499
Other 28,593 8,385 (383) 36,595
Net sales from external customers 1,653,622 328,562 (383) 1,981,801
Intersegment net sales, eliminated on consolidation — 494 (494) —
Net sales $ 1,653,622 $ 329,056 $ (877) $ 1,981,801

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	Three Months Ended February 28, 2022
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	366,941	$	5,864	$	—	$	372,805
Steel products	666,047		320,414		—		986,461
Downstream products	459,753		59,541		—		519,294
Construction-related solutions	83,638		—		—		83,638
Other	37,845		9,530		(685)		46,690
Net sales from external customers	1,614,224		395,349		(685)		2,008,888
Intersegment net sales, eliminated on consolidation	—		409		(409)		—
Net sales	$	1,614,224	$	395,758	$	(1,094)	$	2,008,888

	Six Months Ended February 28, 2022
(in thousands)	North America		Europe		Corporate and Other		Total
Major product:
Raw materials	$	720,033	$	12,824	$	—	$	732,857
Steel products	1,341,089		563,559		—		1,904,648
Downstream products	974,149		129,613		—		1,103,762
Construction-related solutions	166,137		—		—		166,137
Other	66,438		17,915		(1,068)		83,285
Net sales from external customers	3,267,846		723,911		(1,068)		3,990,689
Intersegment net sales, eliminated on consolidation	—		903		(903)		—
Net sales	$	3,267,846	$	724,814	$	(1,971)	$	3,990,689

NOTE 16. SUBSEQUENT EVENTS

On March 3, 2023, the Company completed the acquisition of all the assets of Roane Metals Group, LLC ("Roane"), a supplier of recycled metals with two facilities located in eastern Tennessee. The majority of volumes processed by Roane relate to obsolete ferrous scrap metals expected to be consumed by the Company's steel mill operations. The Roane acquisition is not material to the Company's financial position as of February 28, 2023 or results of operations for the three and six months ended February 28, 2023, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.

On March 17, 2023, the Company completed the acquisition of Tendon Systems, LLC ("Tendon"), a leading provider of post-tensioning, barrier cable and concrete restoration solutions to the southeastern U.S. The Tendon acquisition is not material to the Company's financial position as of February 28, 2023 or results of operations for the three and six months ended February 28, 2023, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.

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, 2022 (the "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

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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 2022 Form ~~10-K.~~10-K and Part II, Item 1A of this Form 10-Q. We do not undertake any obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise, except as required by law.

Any reference in this Form 10-Q to the "corresponding period" or "comparable period" relates to the relevant three or six month period ended ~~November 30, 2021.~~February 28, 2022. 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 "Tensar Acquisition Date"),~~ 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 our existing concrete reinforcement product 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, 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, TXTexas 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,~~September 2021, 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~~began 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~~electric arc furnace ("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 replace the rebar capacity at our Rancho Cucamonga, California mill, which was sold during fiscal 2022, and 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 of 2023. For further details on the sale of the Rancho Cucamonga, California mill, refer to Note 2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q.

In December 2022, we announced that our planned fourth micro mill will be located in Berkeley County, West Virginia. This new micro mill will be geographically situated to serve the Northeast, Mid-Atlantic and Mid-Western U.S. markets and will enhance our steel production capabilities by achieving synergies within the existing network of mills and downstream fabrication plants. We expect this micro mill to be commissioned in late calendar 2025.

Senior Notes Activity

In November 2022, we repurchased $115.9 million in aggregate principal amount of the 4.875% Senior Notes due 2023 ~~(“2023~~(the “2023 Notes”) through a cash tender offer. The remaining $214.1 million of outstanding principal on the 2023 Notes is due on

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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.~~February 28, 2023.

Russian Invasion of Ukraine

The Russian invasion of Ukraine did not have a direct material adverse impact on our business, financial condition or results of operations during the three or six months ended ~~November 30,~~February 28, 2023 or 2022. Our Europe segment 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. 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.

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See Part I, Item 1A, Risk Factors, of our 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.~~conditions and developments.

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 2022 Form 10-K.

RESULTS OF OPERATIONS SUMMARY

Business Overview

Our vertically integrated 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")~~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 operations, CMC is a leading global provider of innovative ground and soil stabilization solutions selling into more than 80 national markets through two major product lines: Tensar® geogrids and Geopier® foundation systems. Our operations are conducted through two reportable segments: North America and Europe.

Key Performance Indicators

When evaluating our results for the period, we 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 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 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 and downstream products period-over-period is a consistent area of focus for our Company and industry. Metal margin is a metric used by management to monitor the results of our vertically integrated organization. For our steel products, metal margin is the difference between the average selling price per ton of rebar, merchant and other steel products and the cost of ferrous scrap per ton utilized by our steel mills to produce these products. An increase or decrease in input costs can impact profitability of these products when there is no corresponding change in selling prices. The metal margin for our downstream products is the difference between the average selling price per ton of fabricated rebar and steel fence post products and the 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~~

~~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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Financial Results Overview


	Three Months Ended February 28,				Six Months Ended February 28,
(in thousands, except per share data)	2023		2022		2023		2022
Net sales	$	2,018,003	$	2,008,888	$	4,245,316	$	3,990,689
Net earnings	179,849		383,314		441,623		616,203
Diluted earnings per share	$	1.51	$	3.12	$	3.71	$	5.02

Net sales remained relatively flat for the three months ended ~~November 30, 2022~~February 28, 2023, compared to the corresponding period, and increased ~~$245.5~~$254.6 million, or ~~12%~~6%, for the six months ended February 28, 2023, compared to the corresponding period. Net sales in our North America segment increased in the ~~three~~six months ended ~~November 30, 2022,~~February 28, 2023, as compared to the corresponding period, primarily due to a year-over-year ~~increases~~increase in ~~steel~~downstream products average selling prices, ~~and downstream products~~which more than offset a year-over-year decrease in raw materials average selling prices. Net sales in our Europe segment also increased during the six months ended February 28, 2023, as compared to the corresponding period, due to ~~higher~~a greater volume of shipments of steel products, which mitigated a reduction in ~~the three months ended November 30, 2022, compared to the corresponding period.~~steel products average selling prices. The acquired Tensar operations also contributed to the ~~year-over-year change~~period-over-period changes by providing ~~$61.6~~$51.4 million and $113.0 million in net sales during the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, with no such activity in the corresponding ~~period.~~periods.

During the three and six months ended ~~November 30, 2022,~~February 28, 2023, we achieved net earnings of ~~$261.8~~$179.8 million ~~which increased $28.9~~and $441.6 million, ~~or 12%,~~respectively, compared to net earnings of $383.3 million and $616.2 million, respectively, during the corresponding periods. Included in net earnings during the three and six months ended February 28, 2022 was a $273.3 million gain on the sale of the Rancho Cucamonga facilities. See Note 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. The remaining change in net earnings in the three and six months ended February 28, 2023, compared to the corresponding ~~period. This~~periods, was an increase ~~was~~ driven by the ~~significant~~ expansion of steel products metal ~~margins~~margin and downstream products margin over scrap per ton in our North America segment, ~~which resulted from a combination of rising selling prices for~~partially offset by steel products ~~and lower input costs of ferrous scrap utilized.~~metal margin compression in our Europe segment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$33.8~~$22.4 million ~~for~~and $55.0 million during the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, compared to the corresponding ~~period.~~periods. Contributing to the ~~increase was~~period-over-period increases were $22.0 million and $43.9 million of selling, general and administrative expenses from Tensar operations' commercial and engineering support in the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, with no such expenses in the corresponding ~~period. The remaining increase in selling, general and administrative expenses in~~periods. Additionally, the ~~three~~six months ended ~~November 30, 2022 was a result of many factors, including $7.0 million of increased stock compensation,~~February 28, 2023 included 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.~~period. See Note ~~11,~~12, Employees' Retirement Plans, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information on the pension plan termination activity. ~~These costs were partially offset by a $7.0 million decrease in labor-related expenses.~~

Interest Expense

Interest expense ~~increased~~decreased by ~~$2.0~~$2.1 million during the three months ended ~~November 30, 2022,~~February 28, 2023, compared to the corresponding period, and remained flat during the six months ended February 28, 2023, compared to the corresponding period. ~~Capitalized~~Contributing to the quarter-over-quarter decrease in interest ~~was $4.6 million~~expense during the three months ended ~~November 30, 2022, compared to $1.5~~February 28, 2023 was a $2.8 million ~~during the corresponding period. The~~ increase in capitalized interest, ~~was due~~compared to the corresponding period, resulting from the construction of the Company's third micro mill in Mesa, Arizona. Offsetting the impact of increased capitalized interest was an increase in long-term debt interest expense of $3.9 million during the three months ended November 30, 2022, compared to the corresponding period, due to the additional long-term debt outstanding.mill.

Income Taxes

The effective income tax rates for the three and six months ended February 28, 2023 were 23.6% and 23.1%, respectively, compared to 24.8% and 20.1%, respectively, in the corresponding periods. The decrease in the effective income tax rate for the three months ended ~~November 30, 2022~~February 28, 2023, compared with the corresponding period, is due to multiple factors of which no single item was ~~22.7% compared to 11.0%~~material. The increase in the effective income tax rate for the six months ended February 28, 2023, compared with the corresponding ~~period. The increase~~period, is primarily due to the recognition of a tax benefit on a tax restructuring transaction during the ~~three months ended November 30, 2021~~first quarter of 2022 that did not recur in ~~the three months ended November 30, 2022.~~2023.

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SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are calculated before income taxes. See Note 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 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. See Note 15, Operating Segments, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information on our reportable segments.

North America


		Three Months Ended November 30,				Three Months Ended February 28,				Six Months Ended February 28,
(in thousands, except per ton amounts)	(in thousands, except per ton amounts)	2022		2021			(in thousands, except per ton amounts)	2023		2022		2023		2022
Net sales	Net sales	$	1,816,899	$	1,653,622		Net sales	$	1,640,933	$	1,614,224	$	3,457,832	$	3,267,846
Adjusted EBITDA	Adjusted EBITDA	377,956		268,524			Adjusted EBITDA	299,311		535,463		677,267		803,987

External tons shipped (in thousands)
External tons shipped							External tons shipped
Raw materials	Raw materials	316		334			Raw materials	321		329		637		663
Rebar	Rebar	461		442			Rebar	425		407		886		849
Merchant and other	Merchant and other	243		257			Merchant and other	236		245		479		502
Steel products	Steel products	704		699			Steel products	661		652		1,365		1,351
Downstream products	Downstream products	382		400			Downstream products	311		327		693		727

Average selling price (per ton)	Average selling price (per ton)						Average selling price (per ton)
Raw materials	Raw materials	$	824	$	1,034		Raw materials	$	868	$	1,103	$	846	$	1,068
Steel products	Steel products	1,020		976			Steel products	985		1,041		1,003		1,007
Downstream products	Downstream products	1,399		1,092			Downstream products	1,418		1,169		1,408		1,126

Cost of raw materials per ton	Cost of raw materials per ton	$	598	$	766		Cost of raw materials per ton	$	639	$	834	$	618	$	800
Cost of ferrous scrap utilized per ton	Cost of ferrous scrap utilized per ton	325		428			Cost of ferrous scrap utilized per ton	346		436		335		432
Steel products metal margin per ton	Steel products metal margin per ton	695		548			Steel products metal margin per ton	639		605		668		575

Net sales in our North America segment remained relatively flat for the three months ended ~~November 30, 2022~~February 28, 2023, compared to the corresponding period, and increased ~~$163.3~~$190.0 million, or ~~10%~~6%, for the six months ended February 28, 2023, compared to the corresponding period. ~~These results benefited from increased~~While average selling prices of ~~5% for steel~~downstream products increased 21% and ~~28%~~25%, respectively, during the three and six months ended February 28, 2023, compared to the corresponding periods, raw materials average selling prices decreased 21% in both the three and six months ended February 28, 2023, compared to the corresponding periods. The period-over-period increases in average selling prices for downstream products, many of which are fixed at the beginning of the project, reflected the increased input costs from rising scrap and energy prices during late 2021 and 2022 when the contracts were entered into. The increased net sales resulting from shipments of these higher priced downstream products contracts were partially offset ~~in part,~~ by ~~a 20% decrease~~the impact from the period-over-period reductions in raw materials average selling prices caused by the decrease in ferrous scrap prices during the three and six months ended February 28, 2023, compared to the corresponding ~~period. The year-over-year increases in average selling prices for steel products and downstream products~~periods. Net sales were ~~driven~~impacted to a lesser extent by ~~continued strong demand~~volumes, which remained relatively flat across all ~~of our end-use markets. During~~product lines during the three and six months ended ~~November 30, 2022, downstream bidding activity improved and led to growth in backlog levels~~February 28, 2023, compared to the corresponding ~~period, which were awarded at the improved price levels described above. Volumes remained relatively flat~~periods. Although volumes during the ~~three months ended November 30, 2022,~~second quarter of 2023 were negatively impacted by weather-related conditions, including significant precipitation in key markets, there was no impact on volumes from the planned maintenance that occurred during the second quarter of 2023, compared to the ~~corresponding period, as~~impact on volumes from the ~~construction industry demand was constrained, in part, due to availability~~planned maintenance that occurred during the second quarter of ~~labor at construction sites in certain geographies.~~2022. The acquired Tensar operations also contributed ~~to the year-over-year change by providing $42.1~~$34.0 million inand $76.1 million of net sales during the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, with no such activity in the corresponding ~~period.~~

Adjusted EBITDA for the three months ended November 30, 2022 increased $109.4 million, or 41%, compared to the corresponding period. In our vertically integrated business model, the increases in average selling prices for both steel products and downstream products, paired with falling scrap prices, led to significant expansion in the steel products metal margin per ton and downstream products margin over scrap per 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 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 corresponding period. Adjusted EBITDA included non-cash stock compensation expense of $4.1 million and $2.7 million for the three months ended November 30, 2022 and 2021, respectively.

periods.

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During the three and six months ended February 28, 2023, we achieved adjusted EBITDA of $299.3 million and $677.3 million, respectively, compared to adjusted EBITDA of $535.5 million and $804.0 million, respectively, during the corresponding periods. Included in adjusted EBITDA during the three and six months ended February 28, 2022 was a $273.3 million gain on the sale of the Rancho Cucamonga facilities. See Note 2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information about the sale of the Rancho Cucamonga facilities. The growth in the remaining adjusted EBITDA during the three and six months ended February 28, 2023, compared to the corresponding periods, resulted from increased steel products metal margin per ton and significant expansion in downstream products margin over scrap per ton. The growth in margins in our vertically integrated business model is a result of the consistent average selling prices for steel products and increases in average selling prices for downstream products discussed above, paired with the declining scrap price environment during the three and six months ended February 28, 2023, compared to the corresponding periods. Additionally, the acquired Tensar operations provided adjusted EBITDA of $7.4 million and $15.5 million during the three and six months ended February 28, 2023, respectively, with no such activity in the corresponding periods.

Europe


		Three Months Ended November 30,				Three Months Ended February 28,				Six Months Ended February 28,
(in thousands, except per ton amounts)	(in thousands, except per ton amounts)	2022		2021			(in thousands, except per ton amounts)	2023		2022		2023		2022
Net sales	Net sales	$	406,513	$	329,056		Net sales	$	355,633	$	395,758	$	762,146	$	724,814
Adjusted EBITDA	Adjusted EBITDA	64,505		79,832			Adjusted EBITDA	12,949		81,149		77,454		160,981

External tons shipped (in thousands)
External tons shipped							External tons shipped
Rebar	Rebar	204		103			Rebar	183		172		387		275
Merchant and other	Merchant and other	269		262			Merchant and other	253		278		522		540
Steel products	Steel products	473		365			Steel products	436		450		909		815

Average selling price (per ton)	Average selling price (per ton)						Average selling price (per ton)
Steel products	Steel products	$	792	$	869		Steel products	$	756	$	851	$	775	$	859

Cost of ferrous scrap utilized per ton	Cost of ferrous scrap utilized per ton	$	366	$	434		Cost of ferrous scrap utilized per ton	$	389	$	444	$	377	$	439
Steel products metal margin per ton	Steel products metal margin per ton	426		435			Steel products metal margin per ton	367		407		398		420

Net sales ~~for~~in our Europe segment decreased $40.1 million, or 10%, during the three months ended ~~November 30, 2022~~February 28, 2023, compared to the corresponding period, and increased ~~$77.5~~$37.3 million, or ~~24%~~5%, during the six months ended February 28, 2023, compared to the corresponding period. ~~The 30% increase in shipments of steel products overcame~~Volumes remained strong during the ~~impact of a $77~~three months ended February 28, 2023, though the $95 per ton ~~year-over-year~~ decrease in steel products average selling price yielded a decrease in net sales during the three months ended February 28, 2023, compared to the corresponding period. During the six months ended February 28, 2023, volumes rose 12%, exceeding the impact of an $84 per ton decrease in steel products average selling price, compared to the corresponding period. These decreases in steel products average selling prices ~~which was~~were driven by a low pricing environment across Europe. ~~Scheduled maintenance, which decreased shipments in the comparable period, did not impact volumes in the three months ended November 30, 2022. Rising shipment~~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~~Net sales from the acquired Tensar operations ~~also contributed to~~partially mitigated the impact from year-over-year ~~change~~decreases in steel products average selling prices by providing ~~$19.5~~$17.4 million and $36.9 million in net sales during the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, with no such activity in the corresponding ~~period.~~periods. Net sales for the three and six months ended ~~November 30, 2022~~February 28, 2023 were impacted by an unfavorable foreign currency translation ~~adjustment~~adjustments of ~~$79.6~~$30.5 million and $110.1 million, respectively, due to the increase in the average value of the U.S. dollar relative to the Polish zloty, compared to an unfavorable foreign currency translation ~~adjustment~~adjustments of ~~$13.5~~$35.2 million and $48.7 million, respectively, during the corresponding ~~period.~~periods.

Adjusted EBITDA for the three and six months ended ~~November 30, 2022 was $64.5~~February 28, 2023 decreased $68.2 million, or 84%, and $83.5 million, or 52%, respectively, compared to ~~$79.8 million in~~ the corresponding ~~period.~~periods. While the cost of ferrous scrap utilized decreased ~~$68~~$55 per ton ~~year-over-year,~~and $62 per ton during the ~~decline~~three and six months ended February 28, 2023, respectively, compared to the corresponding periods, the declines in steel products average selling prices ~~slightly~~described above outpaced itfalling scrap costs, resulting in ~~a modest decrease~~decreases in steel products metal margin per ~~ton.~~ton of $40 and $22 during the three and six months ended February 28, 2023, respectively, compared to the corresponding periods. In addition to the change in steel products metal margin per ton, increased costs of electricity and natural gas of $71 per ton and $57 per ton during the three and six months ended February 28, 2023, respectively, compared to the corresponding periods, further contributed to the decrease in adjusted EBITDA. During the ~~three~~six months ended ~~November 30, 2022~~February 28, 2023, we received a $9.5 million energy credit, which helped mitigate higher energy costs by reducing cost of goods sold, but ~~was $6.0 million lower~~to a lesser extent than the $15.5 million energy credit received in the comparable period. ~~Also contributing to the year-over-year change was $3.3~~Results also benefited from $1.5

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million and $4.8 million of adjusted EBITDA provided by the acquired Tensar operations during the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, with no such activity in the corresponding ~~period.~~periods. Adjusted EBITDA for the three and six months ended ~~November 30, 2022~~February 28, 2023 included an unfavorable foreign currency ~~exchange rate impact~~translation adjustments of ~~$13.5~~$1.0 million and $14.5 million, respectively, compared to unfavorable foreign currency translation ~~adjustment~~adjustments of ~~$3.0~~$7.3 million and $10.3 million, respectively, during the corresponding ~~period. Adjusted EBITDA included non-cash stock compensation expense of $1.9 million and $1.5 million for the three months ended November 30, 2022 and 2021, respectively.~~periods.

Corporate and Other

Corporate and Other reported an adjusted EBITDA ~~loss~~losses of ~~$39.7~~$15.6 million and $55.3 million for the three and six months ended ~~November 30, 2022,~~February 28, 2023, respectively, compared to an adjusted EBITDA ~~loss~~losses of ~~$34.3~~$52.5 million and $86.8 million in the corresponding ~~period. The year-over-year increase~~periods, respectively. During the three and six months ended February 28, 2023, we recognized $17.7 million in other revenue from our New Markets Tax Credit (“NMTC”) transactions, which was a primary driver of the decrease in adjusted EBITDA losses during the three and six months ended February 28, 2023, compared to the corresponding periods. See Note 8, New Markets Tax Credit Transactions, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information. Also contributing to the decreases in adjusted EBITDA losses were $16.1 million in debt extinguishment costs incurred during the three and six months ended February 28, 2022, compared to immaterial activity in the three and six months ended February 28, 2023, as well as $6.1 million and $12.5 million of additional gains on short-term investments and benefit restoration plan assets during the three and six months ended February 28, 2023, respectively, compared to the corresponding periods. In contrast to these reductions to adjusted EBITDA loss, ~~was driven primarily by~~during the six months ended February 28, 2023 we recognized a ~~$5.3~~$6.3 million increase in non-cash stock compensation expense, compared to the corresponding period, and a $4.2 million pension plan settlement charge, with no such settlement charge in the corresponding period. See Note ~~11,~~12, Employees' Retirement Plans, in Part I, Item 1, Financial Statements, 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~~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 2022 Form 10-K and Note 2, 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 actively monitor our accounts receivable and, based on market conditions and customers' financial condition, record allowances 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 ~~14%~~17% of total trade receivables at ~~November 30, 2022.~~February 28, 2023.

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 8,9, 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 ~~November 30, 2022.~~February 28, 2023. See Note 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	$	582,069	$	582,069	Cash and cash equivalents	$	603,966	$	603,966
Notes due from 2023 to 2032	Notes due from 2023 to 2032	1,114,059		(1)		Notes due from 2023 to 2032	1,114,059		(1)
Revolver	Revolver	600,000		598,587		Revolver	600,000		599,087
Term Loan	Term Loan	200,000		200,000		Term Loan	200,000		200,000
Series 2022 Bonds, due 2047	Series 2022 Bonds, due 2047	145,060		—		Series 2022 Bonds, due 2047	145,060		—
Poland credit facilities	Poland credit facilities	66,851		52,296		Poland credit facilities	67,443		52,816
Poland accounts receivable facility	Poland accounts receivable facility	64,177		64,177		Poland accounts receivable facility	64,745		41,941

Other	Other	4,026		1,206		Other	4,086		1,202

(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.

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We continually 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~~the $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 will be sufficient.

We estimate that our 2023 capital spending will range from ~~$500~~$550 million to ~~$550~~$600 million. We regularly assess our capital spending based on current and expected results and the amount is subject to change.

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,~~February 28, 2023, we believe we were in compliance with all covenants contained in our credit arrangements.

As of ~~November 30, 2022~~February 28, 2023 and August 31, 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 ~~$372.4~~$558.9 million and $54.4 million for the ~~three~~six months ended ~~November 30,~~February 28, 2023 and 2022, ~~compared to net cash flows from operating activities of $25.8 million for the corresponding period. Net earnings increased by $28.9 million year-over-year. A $272.3~~respectively. The $410.9 million year-over-year net ~~increase~~decrease in cash ~~provided~~used by operating assets and liabilities was due in part to ~~falling~~a decreased scrap ~~prices, which resulted in decreased inventory valuation,~~price environment during the six months ended February 28, 2023, compared to ~~increasing~~increased scrap prices in the six months ended February 28, 2022, which reduced cash used by inventory purchases by $268.9 million year-over-year. Additionally, cash provided by accounts receivable increased by $182.2 million year-over-year, primarily as a result of the decrease in accounts receivable as of February 28, 2023, compared to August 31, 2022, due to higher sales during the fourth quarter of 2022 compared to the three months ended ~~November 30, 2021. Additionally,~~February 28, 2023. These cash flows from operating assets and liabilities were offset by a year-over-year increase in cash used by in accounts payable, accrued expenses and other payables ~~decreased by $46.9~~of $49.9 million. Additional activity offsetting the increase in cash flows from operating activities was $17.7 million ~~and accounts receivable decreased as a result~~ of non-cash other revenue resulting from the ~~falling steel product selling prices~~settlement of our NMTC transactions during the ~~three~~six months ended ~~November 30, 2022, as~~February 28, 2023 and a $15.9 million reduction in loss on debt extinguishment during the six months ended February 28, 2023, compared to the corresponding period. See Note 8, New Markets Tax Credit Transactions, in Part I, Item 1, Financial Statements, of this Form 10-Q, for further information on the Company's NMTC transactions.

Investing Activities

Net cash flows used by investing activities were ~~$195.6~~$352.6 million for the ~~three~~six months ended ~~November 30, 2022,~~February 28, 2023, compared to net cash flows ~~used by~~from investing activities of ~~$68.7~~$121.1 million for the ~~three~~six months ended ~~November 30, 2021.~~February 28, 2022. The ~~$126.8 million increase~~fluctuation in net cash flows used by investing activities was primarily driven by ~~capital expenditures and acquisitions. Net~~the proceeds from the sale of the Rancho Cucamonga facilities during the six months ended February 28, 2022, compared to immaterial proceeds from the sale of assets in the six months ended February 28, 2023. Also contributing to the increase in cash flows used by investing activities ~~rose due to $62.9~~were $97.7 million of additional capital expenditures asin the six months ended February 28, 2023, compared to the corresponding period, primarily from the construction of our third and fourth micro ~~mill,~~mills, and ~~approximately $63.7~~$65.2 million ~~attributable to~~of acquisitions during the ~~acquisitions of Advanced Steel Recovery and Kodiak, compared to~~six months ended February 28, 2023, with no such acquisitions in the corresponding period. See Note 2, Changes in Business, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information about ~~these~~the sale of the Rancho Cucamonga facilities and current period acquisitions.

Financing Activities

Net cash flows used by financing activities were ~~$273.8~~$283.7 million for the ~~three~~six months ended ~~November 30, 2022,~~February 28, 2023, compared to net cash flows ~~used by~~from financing activities of ~~$39.3~~$324.4 million for the ~~three~~six months ended ~~November 30, 2021.~~February 28, 2022. The ~~$234.5~~$608.1 million increase in net cash flows used by financing activities was ~~primarily due to increased~~largely driven by net repayments of long-term debt of ~~$148.1~~$160.3 million during the ~~three~~six months ended ~~November 30, 2022, as~~February 28, 2023, compared to net proceeds from issuance of long-term debt of $427.2 million during the six months ended February 28, 2022. Additionally, there was a $49.3 million increase in treasury stock acquired under the share repurchase program during the six months ended February 28, 2023, compared to the corresponding ~~period, primarily related to the partial repayment of the 2023 Notes. Also contributing to the increase~~period. Offsetting these additional cash outflows was a decrease in ~~net cash flows used by financing activities were increased~~ net repayments of our Polish accounts receivable facilities of ~~$31.4~~$21.6 million

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during the ~~three~~six months ended ~~November 30, 2022,~~February 28, 2023, as compared to the corresponding period. See Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information regarding our credit ~~arrangements. Additionally, there was a $43.8 million increase in treasury stock acquired under the share repurchase program. See~~arrangements and Note ~~12,~~13, 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.

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 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.

Our undiscounted purchase obligations due in the twelve months following ~~November 30, 2022~~February 28, 2023 were approximately ~~$889.2~~$870 million ~~with $219.8~~and approximately $310 million due thereafter. Of the purchase obligations due in the twelve months following ~~November 30, 2022,~~February 28, 2023, approximately ~~22%~~29% were for commodities, 19% were for consumable production inputs, such as alloys, 17% were for capital expenditures in connection with normal business operations ~~21% for the construction of our third micro mill, 20% for commodities,~~ and 17% ~~for consumable production inputs, such as alloys. Of the purchase obligations due thereafter, 85% were for commodities and 3%~~ were for the construction of our third and fourth micro mills. Of the purchase obligations due thereafter, 72% were for commodities and 18% were for the construction of our fourth micro mill.

Operating lease obligations in the twelve months following ~~November 30, 2022~~February 28, 2023 were ~~$38.2~~approximately $39.8 million ~~with $134.7~~and $138.7 million due thereafter. Additionally, leases that have not yet commenced, primarily for vehicles, with aggregate fixed payments over their terms, were approximately ~~$16.3~~$14.1 million, with ~~$8.9~~$10.5 million to commence in 2023 and ~~$7.4~~$3.6 million to commence 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 ~~November 30, 2022,~~February 28, 2023, we had committed ~~$21.7~~$21.4 million under these arrangements, of which ~~$1.4~~$0.9 million reduced availability under the Revolver (as defined in Note 7, Credit Arrangements, in Part I, Item 1, Financial Statements, of this Form 10-Q).

CONTINGENCIES

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In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings and governmental investigations, including environmental matters. We may incur settlements, fines, penalties or judgments because of some of these matters. Liabilities and costs associated with litigation-related loss contingencies require estimates and judgments based on our knowledge of the facts and circumstances surrounding each matter and the advice of our legal counsel. We record liabilities for litigation-related losses when a loss is probable, and we can reasonably estimate the amount of the loss. We evaluate the measurement of recorded liabilities each reporting period based on the current facts and circumstances specific to each matter. The ultimate losses incurred upon final resolution of litigation-related loss contingencies may differ materially from the estimated liability recorded at a particular balance sheet date. Changes in estimates are recorded in earnings in the period in which such changes occur. We do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect, individually or in the aggregate, on our results of operations, cash flows or financial condition. See Note ~~13,~~14, Commitments and Contingencies, in Part I, Item 1, Financial Statements, of this Form 10-Q, for more information.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or incorporates by reference a number of "forward-looking statements" within the meaning of the federal securities laws with respect to general economic conditions, key macro-economic drivers that impact our business, the ~~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, shipment volumes, metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel mills at full capacity, future availability and cost of supplies of raw materials and energy for our operations, share repurchases, legal proceedings, construction activity, international trade, the impact of the Russian invasion of Ukraine, 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,~~

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"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 iswas 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, among others, include ~~those described in Part I, Item 1A, Risk Factors, of our 2022 Form 10-K as well as~~ the following:

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

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

•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;

•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;

•impacts from global public health epidemics, including the COVID-19 pandemic, 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;~~operations;

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

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

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

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

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

•financial and non-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;

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

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

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

•the 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;

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•our 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;

•our 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~~Refer to the "Risk Factors" disclosed in the sections entitled "Risk Factors" in Part I, Item 1A of our ~~periodic~~2022 Form 10-K and ~~current reports filed with the SEC~~Part II, Item 1A of this Form 10-Q for specific information regarding additional risks ~~which~~that would cause actual results to ~~be significantly different~~differ from those expressed or implied by these forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause actual results, performance or our achievements, or industry results, to differ materially from historical results, any future results, or performance or achievements expressed or implied by such forward-looking statements. Accordingly, readers of this Form 10-Q are cautioned not to place undue reliance on any forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the ~~three~~six months ended ~~November 30, 2022,~~February 28, 2023, the U.S. dollar equivalent of the Company's total gross foreign currency exchange contract commitments increased ~~$41.4~~$118.0 million, or ~~16%~~47%, compared to August 31, 2022. This increase was primarily due to forward contracts denominated in Polish zloty with a U.S. dollar functional currency, which increased ~~$80.5~~$146.8 million, partially offset by forward contracts denominated in euros with a Polish zloty functional currency, which decreased ~~$38.6~~$30.7 million compared to August 31, 2022.

30During the six months ended February 28, 2023, the Company's total commodity contract commitments increased $248.5 million, or 121%, compared to August 31, 2022, of which $240.5 million relates to the Company's electricity commodity commitments.

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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 2022 Form 10-K.

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

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~~the quarter ended ~~November 30, 2022~~February 28, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding our legal proceedings, refer to Note ~~13,~~14, Commitments and Contingencies, ~~to our condensed consolidated financial statements included~~ in Part I, Item 1, Financial Statements, of this Form 10-Q.

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

ITEM 1A. RISK FACTORS

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

Operating and startup risks, as well as market risks associated with the commissioning of our third and fourth micro mills could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investments.

We anticipate our third micro mill will be commissioned in spring of 2023, and our fourth micro mill is expected to be commissioned in late calendar 2025. Although we have successfully commissioned and operated similar facilities, there are technological, operational, market and start-up risks associated with the construction and commissioning of our third and fourth micro mills. Construction of our micro mills is subject to changing market conditions, delays, inflation and cost overruns, work stoppages, labor shortages, weather interferences, supply chain delays, changes required by governmental authorities, delays or the inability to acquire required permits or licenses, any of which could have an adverse impact on our operational and financial results. Further, although we believe these facilities should each be capable of consistently producing high-quality products in sufficient quantities and at costs that will compare favorably with other similar steel manufacturing facilities, there can be no assurance that these expectations will be achieved. If we encounter cost overruns, system or process difficulties during or after startup or quality control restrictions with either or both facilities, our capital costs could increase materially, the expected benefits from the development of the applicable facilities could be diminished or lost, and we could lose all or a substantial portion of our investments. We could also encounter commodity market risk if, during a sustained period, the cost to manufacture is greater than projected.

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 made by the Company or any affiliated purchasers during the quarter ended ~~November 30, 2022.~~February 28, 2023.

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


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
December 1, 2022 - December 31, 2022	115,500	$	48.81	115,500	$	133,342,213
January 1, 2023 - January 31, 2023	110,000	52.08		110,000	127,612,978
February 1, 2023 - February 28, 2023	104,500	55.57		104,500	121,805,666
	330,000			330,000

(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

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repurchase program does not require the Company to purchase any dollar amount or number of shares of CMC common stock and may be modified, suspended, extended or terminated by the Company at any time without prior notice. See Note ~~12,~~13, 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.~~

As previously disclosed, on February 15, 2023, in connection with Peter R. Matt’s appointment as President of the Company, Mr. Matt and the Company entered into that certain Terms and Conditions of Employment (the “Employment Agreement”) and that certain Commercial Metals Company Amended and Restated Executive Employment Continuity Agreement (the “EECA”), with each of the Employment Agreement and the EECA being effective as of April 1, 2023. On March 20, 2023, the Company and Mr. Matt entered into amendments to each of the Employment Agreement and the EECA to amend the respective effective dates of the Employment Agreement and the EECA from April 1, 2023 to April 9, 2023. Additionally, certain provisions of the Employment Agreement were amended to reflect the new effective date of April 9, 2023. Except as provided herein, all other terms and conditions of the Employment Agreement and the EECA remain in full force and effect.

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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

Amended and Restated Bylaws (filed as Exhibit 3.1 to Commercial Metals Company's Current Report on Form 8-K dated June 21, 2022 and incorporated herein by reference).

10.1

~~Consulting~~Employment Agreement, dated as of ~~October 14, 2022,~~February 15, 2023, by and between ~~Tracy L. Porter~~Peter R. Matt and Commercial Metals Company (filed herewith).

10.2

~~Sixth Amended and Restated Credit~~Amendment No. 1 to Employment Agreement, dated ~~October 26, 2022,~~as of March 20, 2023, by and ~~among~~between Peter R. Matt and 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

~~January 9,~~March 23, 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 2023	$	18,307
2024	23,604
2025	21,868
2026	20,662
2027	20,555


	Floating rate (PLN)
November 30,	Low	High	Average
2022	532.66	1,298.53	786.58
2021	252.79	540.39	348.99