CMC(CMC) - 2023 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended May 31, 2023, were $2,344,989 thousand, a decrease of 6.8$2,515,727 thousand for the same period in 2022[173]. - Net earnings for the nine months ended May 31, 2023, were $675,594 thousand, down 27.3$928,632 thousand for the same period in 2022[173]. - Diluted earnings per share for the three months ended May 31, 2023, were $1.98, a decrease of 22.1$2.54 for the same period in 2022[173]. - For the three and nine months ended May 31, 2023, the company achieved net earnings of $234.0 million and$675.6 million, respectively, compared to $312.4 million and$928.6 million in the corresponding periods, reflecting a decrease in earnings due to compression in steel products metal margins in Europe[200]. - Adjusted EBITDA for the nine months ended May 31, 2023, was $1,073,501 thousand, a decrease of 20$1,343,421 thousand for the same period in 2022[182]. - Adjusted EBITDA for the three and nine months ended May 31, 2023, was $402.2 million and$1.1 billion, respectively, compared to $379.4 million and$1.2 billion in the corresponding periods, with significant expansion in downstream products margin over scrap[204]. - Adjusted EBITDA decreased by $111.4 million, or 92$194.9 million, or 69%, for the nine months ended May 31, 2023, compared to the corresponding periods[235]. Acquisitions and Investments - The company completed the acquisition of Kodiak, a metals recycling facility, on November 14, 2022, and Tendon Systems, LLC, on March 17, 2023, enhancing its operational capabilities in North America[162][163]. - The acquisition of Tensar for approximately $550 million was completed on April 25, 2022, expanding the company's product offerings in ground stabilization and soil reinforcement[186]. - The acquired Tensar operations contributed$12.5 million and $49.4 million in incremental net sales during the three and nine months ended May 31, 2023, respectively[206]. - The acquired Tensar operations contributed an incremental$32.1 million and $108.2 million of net sales during the three and nine months ended May 31, 2023, respectively[232]. - The company plans to commission a new micro mill in Berkeley County, West Virginia, by late calendar 2025, enhancing steel production capabilities[191]. Sales and Market Conditions - The Europe segment experienced a decrease in net sales of$131.3 million, or 27%, and $93.9 million, or 8$6,506,416 thousand for the nine months ended May 31, 2023, compared to $6,590,305 thousand for the same period in 2022[173]. - Net sales decreased by$170.7 million, or 7%, for the three months ended May 31, 2023, compared to the corresponding period, while remaining relatively flat for the nine months ended May 31, 2023[227]. Expenses and Liabilities - Selling, general and administrative expenses increased by $23.4 million and$78.4 million during the three and nine months ended May 31, 2023, respectively[228]. - Total accrued environmental liabilities were $5.2 million as of May 31, 2023, slightly down from$5.3 million at August 31, 2022[180]. - The company reported a decrease in interest expense by $4.6 million for both the three and nine months ended May 31, 2023, compared to the corresponding periods[175]. Cash Flow and Financing - Net cash flows from operating activities were$934.7 million for the nine months ended May 31, 2023, compared to $241.7 million for the same period in 2022[241]. - Net cash flows used by investing activities were$605.2 million for the nine months ended May 31, 2023, compared to $528.7 million for the same period in 2022[242]. - Net cash flows used by financing activities increased by$861.3 million to $537.0 million for the nine months ended May 31, 2023, compared to net cash flows from financing activities of$324.3 million for the same period in 2022[243]. - The company made net repayments of long-term debt amounting to $380.7 million during the nine months ended May 31, 2023, compared to net proceeds of$420.7 million from long-term debt issuance in the same period of 2022[243]. Future Outlook and Capital Expenditures - The company estimates its 2023 capital spending will range from $575 million to$600 million, subject to change based on current and expected results[213]. - The company anticipates that current cash balances and cash flows from operations will be sufficient to maintain operations and meet liquidity needs for at least the next twelve months[239]. - The company anticipates potential synergies and organic growth from acquisitions and strategic investments, although actual results may vary materially from expectations[247]. Other Financial Metrics - The effective income tax rates for the three and nine months ended May 31, 2023, were 24.5% and 23.6%, respectively, compared to 22.9% and 21.1% in the corresponding periods, with the increase primarily due to a non-recurring tax benefit in 2022[202]. - The cost of energy increased by $57 per ton during both the three and nine months ended May 31, 2023, compared to the corresponding periods[235]. - Goodwill increased to$352.3 million as of May 31, 2023, from $259.2 million on September 1, 2022, reflecting acquisitions and foreign currency translation adjustments[259]. - Total commodity contract commitments increased by$245.8 million, or 120%, compared to August 31, 2022, primarily due to a $254.4 million increase in electricity commodity commitments[250]. - Undiscounted purchase obligations due in the twelve months following May 31, 2023, were approximately$810 million, with 24% allocated for consumable production inputs and 21% for capital expenditures[252]. - Operating lease obligations for the twelve months following May 31, 2023, were approximately $38.8 million, with$133.6 million due thereafter[245]. - Finance lease obligations for the twelve months following May 31, 2023, were approximately $27.9 million, with$61.5 million due thereafter[245]. - The company had committed $21.9 million under stand-by letters of credit as of May 31, 2023[253]. - The average floating rate (PLN) as of May 31, 2023, was 770.93, compared to 717.22 on August 31, 2022[261].