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| 8-K - 8-K - COMMERCIAL METALS Co | cmc-8312017pr8xk.htm |
Exhibit No. 99.1
News Release 
COMMERCIAL METALS COMPANY REPORTS FOURTH QUARTER AND FULL YEAR EARNINGS
Irving, TX - October 26, 2017 - Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal fourth quarter and year ended August 31, 2017. For the three months ended August 31, 2017, the loss from continuing operations was $32.7 million, or $0.28 per diluted share, on net sales of $1.3 billion compared to a loss from continuing operations of $2.1 million, or $0.02 per diluted share, on net sales of $1.1 billion for the three months ended August 31, 2016. For the fiscal year ended August 31, 2017, earnings from continuing operations were $32.6 million, or $0.27 per diluted share, on net sales of $4.6 billion. This compares to earnings from continuing operations of $57.9 million, or $0.50 per diluted share, on net sales of $4.2 billion for the fiscal year ended August 31, 2016.
Included in the loss from continuing operations for the three months ended August 31, 2017 were net after-tax costs associated with the refinancing activities completed in the fourth quarter of $11.6 million or $0.10 per diluted share, costs associated with the exit of the International Marketing and Distribution segment of $23.2 million or $0.20 per diluted share and severance costs of $5.3 million or $0.05 per diluted share. Included in the results for the three months ended August 31, 2016 were impairment charges on long-lived assets of $24.3 million or $0.21 per diluted share.
As a result of the sale of CMC Cometals, which was completed on August 31, 2017, the results of this division have been reflected as discontinued operations in all reported periods. Included in the earnings from discontinued operations for the three months ended August 31, 2017 is an after-tax loss on the sale of the CMC Cometals division of $4.5 million or $0.04 per diluted share.
At August 31, 2017, cash and cash equivalents were $252.6 million and available credit and accounts receivable facilities were $490.6 million. As a result of the refinancing of notes due in 2017 and 2018 during the most recent fiscal quarter, the Company has reduced its long-term debt by approximately $240 million since May 31, 2017 and, has no significant debt maturities for the next 5 years. The Company is also positioned to have reduced cash interest costs going forward in excess of $25 million per year.
Barbara Smith, President and CEO, commented, "The Company took action during fiscal 2017 to reallocate capital to our core manufacturing operations and improve our financial profile. The refinancing activities have strengthened our balance sheet to provide lower debt service cost and extend our debt maturity profile. We made good progress regarding our decision to exit the International Marketing and Distribution segment in order to focus our
(CMC Year End 2017 - Page 2)
resources on the attractive long product markets in the U.S. and Poland. The Polish operations are taking full advantage of the new furnace and caster investments to produce more and higher value merchant product, and, in the U.S., we look forward to the commissioning of our new micro mill in Durant, Oklahoma, which is scheduled to begin in our fiscal second quarter of 2018."
On October 24, 2017, the board of directors of CMC declared a quarterly dividend of $0.12 per share of CMC common stock for stockholders of record on November 8, 2017. The dividend will be paid on November 22, 2017.
Business Segments - Fiscal Fourth Quarter 2017 Review
Our Americas Recycling segment recorded adjusted operating profit of $2.9 million for the fourth quarter of fiscal 2017, compared to adjusted operating loss of $45.1 million for the fourth quarter of fiscal 2016. The fourth quarter of fiscal 2016 loss was largely due to a $38.9 million pre-tax impairment charge related to long-lived assets in our Americas Recycling segment. Shipments increased 37% in comparison to the same period of the prior year as flows through the yards remained strong and as a result of the seven recycling yards that were acquired earlier in fiscal 2017.
Our Americas Mills segment recorded adjusted operating profit of $29.8 million for the fourth quarter of fiscal 2017, compared to an adjusted operating profit of $45.0 million for the fourth quarter of fiscal 2016. Despite strong long-steel demand which resulted in an 8% increase in shipments in comparison to the same period of the prior year, cost pressures squeezed margins during the quarter.
Our Americas Fabrication segment recorded an adjusted operating loss of $4.9 million for the fourth quarter of fiscal 2017, compared to adjusted operating profit of $9.6 million for the fourth quarter of fiscal 2016. The decrease in adjusted operating profit for the fourth quarter of fiscal 2017 was due to a very competitive fabrication market. This has resulted in newly awarded contracts being at lower selling prices than in the prior year despite also incurring higher steel input costs.
Our International Mill segment recorded adjusted operating profit of $14.6 million for the fourth quarter of fiscal 2017, compared to adjusted operating profit of $18.7 million for the fourth quarter of fiscal 2016. Despite the quarterly results being lower than the prior year, shipped volumes were 16% higher in comparison to the same period of the prior year while producing strong earnings throughout fiscal 2017. A strong construction market in conjunction with an expansion of higher margin merchant volumes were the main contributor to the results.
Outlook
“Our outlook is somewhat different when we think about our U.S. operations compared to our Polish operations,” explained Ms. Smith.
(CMC Year End 2017 - Page 3)
“Our outlook for demand from the U.S. non-residential construction market remains quite positive, in spite of a lack of movement on infrastructure stimulus. However, market conditions remain very challenging as a result of raw material price changes and escalating input costs. Metal margins remain under pressure due to the ongoing influx of dumped and subsidized imports. We saw a temporary pause in rebar imports after the announcement of the Section 232 review into the effect of imports on national security. However, recent data indicates another surge in rebar imports is on its way. We believe that no action taken by the current Administration to address these unfair trade practices is likely to result in imports returning to their previous high levels, negatively impacting the industry's operating results or potentially even imperiling the long-term viability of the U.S. steel industry.”
“Poland, however, provides a welcome contrast to the U.S. market. Poland and the E.U. have implemented trade measures necessary to provide a level playing field. This, coupled with the fact that there is good support and financial funding for infrastructure development provides a good demand outlook for our Polish operations."
Conference Call
CMC invites you to listen to a live broadcast of its fourth quarter fiscal 2017 conference call today, Thursday, October 26, 2017, at 11:00 a.m. ET. Barbara Smith, President and CEO, and Mary Lindsey, Senior Vice President and CFO, will host the call. The call is accessible via our website at www.cmc.com. In the event you are unable to listen to the live broadcast, the call will be archived and available for replay on our website on the next business day. Financial and statistical information presented in the broadcast are located on CMC's website under “Investors”.
Commercial Metals Company and its subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including four electric arc furnace ("EAF") mini mills, an EAF micro mill, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.
Forward-Looking Statements
This news release contains forward-looking statements regarding CMC's expectations relating to cash generated by strategic initiatives, economic conditions, U.S. construction activity, rebar imports and their effects on pricing and U.S. government action to provide trade relief. These forward-looking statements generally can be identified by phrases such as we, CMC or its management, "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. 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, CMC undertakes 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 otherwise.
(CMC Year End 2017 - Page 4)
Factors that could cause actual results to differ materially from CMC's expectations include the following: overall global economic conditions, including the ongoing recovery from the last recession, continued sovereign debt problems in the Euro-zone and construction activity or lack thereof, and their impact in a highly cyclical industry; rapid and significant changes in the price of metals, potentially impairing our inventory values due to declines in commodity prices; excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing; compliance with and changes in environmental laws and regulations, including increased regulation associated with climate change and greenhouse gas emissions; potential limitations in our or our customers' ability to access credit and non-compliance by our customers with our contracts; financial covenants and restrictions on the operation of our business contained in agreements governing our debt; currency fluctuations; global factors, including political uncertainties and military conflicts; availability of electricity and natural gas for mill operations; information technology interruptions and breaches in security data; ability to hire and retain key executives and other employees; our ability to make necessary capital expenditures; our ability to realize the anticipated benefits of our investment in our new micro mill in Durant, Oklahoma; availability and pricing of raw materials over which we exert little influence, including scrap metal, energy, insurance and supply prices; unexpected equipment failures; competition from other materials or from competitors that have a lower cost structure or access to greater financial resources; 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 increased costs related to health care reform legislation.
(CMC Year End 2017 - Page 5)
COMMERCIAL METALS COMPANY OPERATING STATISTICS (UNAUDITED) | ||||||||||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | Three Months Ended | ||||||||||||||||||||||||||
(short tons in thousands) | 8/31/2017 | 8/31/2016 | 8/31/2017 | 8/31/2016 | 5/31/2017 | 2/28/2017 | 11/30/2016 | |||||||||||||||||||||
Americas Recycling | ||||||||||||||||||||||||||||
Ferrous tons shipped | 583 | 423 | 1,999 | 1,614 | 590 | 421 | 405 | |||||||||||||||||||||
Non-ferrous tons shipped | 70 | 52 | 233 | 201 | 61 | 53 | 49 | |||||||||||||||||||||
Americas Recycling tons shipped | 653 | 475 | 2,232 | 1,815 | 651 | 474 | 454 | |||||||||||||||||||||
Americas Steel Mills | ||||||||||||||||||||||||||||
Rebar shipments | 448 | 411 | 1,703 | 1,631 | 445 | 406 | 404 | |||||||||||||||||||||
Merchant and other shipments | 262 | 247 | 1,022 | 999 | 277 | 252 | 231 | |||||||||||||||||||||
Total Americas Steel Mills tons shipped | 710 | 658 | 2,725 | 2,630 | 722 | 658 | 635 | |||||||||||||||||||||
Average FOB selling price (total sales) | $ | 537 | $ | 531 | $ | 526 | $ | 524 | $ | 540 | $ | 524 | $ | 499 | ||||||||||||||
Average cost ferrous scrap utilized | $ | 257 | $ | 234 | $ | 243 | $ | 207 | $ | 266 | $ | 245 | $ | 201 | ||||||||||||||
Americas Steel Mills metal margin | $ | 280 | $ | 297 | $ | 283 | $ | 317 | $ | 274 | $ | 279 | $ | 298 | ||||||||||||||
International Mill | ||||||||||||||||||||||||||||
Tons shipped | 396 | 341 | 1,379 | 1,254 | 354 | 313 | 316 | |||||||||||||||||||||
Average FOB selling price (total sales) | $ | 476 | $ | 409 | $ | 432 | $ | 391 | $ | 443 | $ | 402 | $ | 397 | ||||||||||||||
Average cost ferrous scrap utilized | $ | 269 | $ | 211 | $ | 240 | $ | 195 | $ | 253 | $ | 229 | $ | 202 | ||||||||||||||
International Mill metal margin | $ | 207 | $ | 198 | $ | 192 | $ | 196 | $ | 190 | $ | 173 | $ | 195 | ||||||||||||||
Americas Fabrication | ||||||||||||||||||||||||||||
Rebar shipments | 260 | 284 | 1,009 | 1,028 | 275 | 226 | 248 | |||||||||||||||||||||
Structural and post shipments | 26 | 30 | 113 | 127 | 35 | 27 | 25 | |||||||||||||||||||||
Total Americas Fabrication tons shipped | 286 | 314 | 1,122 | 1,155 | 310 | 253 | 273 | |||||||||||||||||||||
Americas Fabrication average selling price (excluding stock and buyout sales) | $ | 773 | $ | 805 | $ | 772 | $ | 841 | $ | 775 | $ | 756 | $ | 782 | ||||||||||||||
(CMC Year End 2017 - Page 6)
COMMERCIAL METALS COMPANY BUSINESS SEGMENTS (UNAUDITED) | ||||||||||||||||||||||||||||
(in thousands) | Three Months Ended | Year Ended | Three Months Ended | |||||||||||||||||||||||||
Net sales | 8/31/2017 | 8/31/2016 | 8/31/2017 | 8/31/2016 | 5/31/2017 | 2/28/2017 | 11/30/2016 | |||||||||||||||||||||
Americas Recycling | $ | 317,298 | $ | 195,724 | $ | 1,011,500 | $ | 705,754 | $ | 294,166 | $ | 223,328 | $ | 176,708 | ||||||||||||||
Americas Mills | 414,420 | 381,406 | 1,565,454 | 1,498,848 | 427,276 | 376,593 | 347,165 | |||||||||||||||||||||
Americas Fabrication | 353,726 | 385,917 | 1,375,928 | 1,489,455 | 379,976 | 303,826 | 338,400 | |||||||||||||||||||||
International Mill | 200,227 | 147,842 | 636,562 | 517,186 | 167,629 | 134,305 | 134,401 | |||||||||||||||||||||
International Marketing and Distribution | 185,337 | 203,773 | 781,364 | 754,958 | 223,134 | 206,056 | 166,837 | |||||||||||||||||||||
Corporate | 2,124 | 2,973 | 9,625 | 7,082 | 1,909 | 3,842 | 1,750 | |||||||||||||||||||||
Eliminations | (212,151 | ) | (214,989 | ) | (810,758 | ) | (795,765 | ) | (233,391 | ) | (194,046 | ) | (171,170 | ) | ||||||||||||||
Total net sales | $ | 1,260,981 | $ | 1,102,646 | $ | 4,569,675 | $ | 4,177,518 | $ | 1,260,699 | $ | 1,053,904 | $ | 994,091 | ||||||||||||||
Adjusted operating profit (loss) from continuing operations | ||||||||||||||||||||||||||||
Americas Recycling | $ | 2,868 | $ | (45,113 | ) | $ | 14,822 | $ | (61,284 | ) | $ | 9,286 | $ | 7,766 | $ | (5,098 | ) | |||||||||||
Americas Mills | 29,803 | 45,012 | 168,805 | 209,751 | 50,734 | 51,319 | 36,949 | |||||||||||||||||||||
Americas Fabrication | (4,928 | ) | 9,638 | 4,097 | 68,602 | 1,808 | 506 | 6,711 | ||||||||||||||||||||
International Mill | 14,621 | 18,703 | 46,977 | 28,892 | 12,953 | 9,430 | 9,973 | |||||||||||||||||||||
International Marketing and Distribution | (26,640 | ) | (6,123 | ) | (24,324 | ) | (23,690 | ) | 5,723 | 351 | (3,758 | ) | ||||||||||||||||
Corporate | (52,419 | ) | (25,670 | ) | (119,629 | ) | (95,085 | ) | (20,880 | ) | (22,317 | ) | (24,013 | ) | ||||||||||||||
Eliminations | (822 | ) | 3,086 | (834 | ) | 5,333 | 771 | (574 | ) | (209 | ) | |||||||||||||||||
Adjusted operating profit (loss) from continuing operations | $ | (37,517 | ) | $ | (467 | ) | $ | 89,914 | $ | 132,519 | $ | 60,395 | $ | 46,481 | $ | 20,555 | ||||||||||||
(CMC Year End 2017 - Page 7)
COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
(in thousands, except share data) | 8/31/2017 | 8/31/2016 | 8/31/2017 | 8/31/2016 | |||||||||||
Net sales | $ | 1,260,981 | $ | 1,102,646 | $ | 4,569,675 | $ | 4,177,518 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 1,149,396 | 944,242 | 4,023,265 | 3,580,618 | |||||||||||
Selling, general and administrative expenses | 119,021 | 119,408 | 426,523 | 414,561 | |||||||||||
Loss on debt extinguishment | 22,672 | — | 22,672 | 11,480 | |||||||||||
Impairment of assets | 7,615 | 39,952 | 8,164 | 40,028 | |||||||||||
Interest expense | 5,939 | 12,563 | 44,047 | 62,121 | |||||||||||
1,304,643 | 1,116,165 | 4,524,671 | 4,108,808 | ||||||||||||
Earnings (loss) from continuing operations before income taxes | (43,662 | ) | (13,519 | ) | 45,004 | 68,710 | |||||||||
Income taxes (benefit) | (10,989 | ) | (11,447 | ) | 12,454 | 10,810 | |||||||||
Earnings (loss) from continuing operations | (32,673 | ) | (2,072 | ) | 32,550 | 57,900 | |||||||||
Earnings (loss) from discontinued operations before income taxes | (1,890 | ) | 1,458 | 10,607 | (1,469 | ) | |||||||||
Income taxes (benefit) | (5,023 | ) | (483 | ) | (3,175 | ) | 1,669 | ||||||||
Earnings (loss) from discontinued operations | 3,133 | 1,941 | 13,782 | (3,138 | ) | ||||||||||
Net earnings (loss) | (29,540 | ) | (131 | ) | 46,332 | 54,762 | |||||||||
Basic earnings (loss) per share: | |||||||||||||||
Earnings (loss) from continuing operations | $ | (0.28 | ) | $ | (0.02 | ) | $ | 0.28 | $ | 0.50 | |||||
Earnings (loss) from discontinued operations | 0.03 | 0.02 | 0.12 | (0.02 | ) | ||||||||||
Net earnings (loss) | $ | (0.25 | ) | $ | — | $ | 0.40 | $ | 0.48 | ||||||
Diluted earnings (loss) per share: | |||||||||||||||
Earnings (loss) from continuing operations | $ | (0.28 | ) | $ | (0.02 | ) | $ | 0.27 | $ | 0.50 | |||||
Earnings (loss) from discontinued operations | 0.03 | 0.02 | 0.12 | (0.03 | ) | ||||||||||
Net earnings (loss) | $ | (0.25 | ) | $ | — | $ | 0.39 | $ | 0.47 | ||||||
Cash dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.48 | $ | 0.48 | |||||||
Average basic shares outstanding | 115,892,403 | 114,728,278 | 115,654,466 | 115,211,490 | |||||||||||
Average diluted shares outstanding | 115,892,403 | 114,728,278 | 117,364,408 | 116,623,826 | |||||||||||
(CMC Year End 2017 - Page 8)
COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
(in thousands) | August 31, 2017 | August 31, 2016 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 252,595 | $ | 517,544 | |||
Accounts receivable, net | 706,595 | 689,382 | |||||
Inventories | 614,459 | 540,014 | |||||
Other current assets | 140,251 | 110,464 | |||||
Current assets of businesses held for sale | — | 190,721 | |||||
Total current assets | 1,713,900 | 2,048,125 | |||||
Net property, plant and equipment | 1,061,283 | 895,045 | |||||
Goodwill | 64,915 | 66,373 | |||||
Other assets | 135,033 | 121,326 | |||||
Total assets | $ | 2,975,131 | $ | 3,130,869 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 282,127 | $ | 207,875 | |||
Accrued expenses and other payables | 307,129 | 263,086 | |||||
Current maturities of long-term debt | 19,182 | 313,469 | |||||
Current liabilities of businesses held for sale | — | 36,688 | |||||
Total current liabilities | 608,438 | 821,118 | |||||
Deferred income taxes | 49,197 | 63,021 | |||||
Other long-term liabilities | 110,986 | 121,351 | |||||
Long-term debt | 805,580 | 757,948 | |||||
Total liabilities | 1,574,201 | 1,763,438 | |||||
Stockholders' equity | 1,400,757 | 1,367,272 | |||||
Stockholders' equity attributable to noncontrolling interests | 173 | 159 | |||||
Total equity | 1,400,930 | 1,367,431 | |||||
Total liabilities and stockholders' equity | $ | 2,975,131 | $ | 3,130,869 | |||
(CMC Year End 2017 - Page 9)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
Year Ended August 31, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Cash flows from (used by) operating activities: | ||||||||
Net earnings | $ | 46,332 | $ | 54,762 | ||||
Adjustments to reconcile net earnings to cash flows from (used by) operating activities: | ||||||||
Depreciation and amortization | 125,071 | 126,940 | ||||||
Share-based compensation | 30,311 | 26,335 | ||||||
Loss on debt extinguishment | 22,672 | 11,480 | ||||||
Write-down of inventory | 21,529 | 15,555 | ||||||
Deferred income taxes | (14,184 | ) | (3,889 | ) | ||||
Amortization of interest rate swaps termination gain | (11,657 | ) | (7,597 | ) | ||||
Asset impairments | 8,238 | 55,793 | ||||||
Net loss (gain) on sales of a subsidiary, assets and other | 6,049 | (2,591 | ) | |||||
Provision for losses on receivables, net | 6,049 | 6,878 | ||||||
Tax expense from stock plans | — | 1,697 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (78,527 | ) | 142,510 | |||||
Proceeds (payments) on sale of accounts receivable programs, net | 81,731 | (19,472 | ) | |||||
Inventories | (98,835 | ) | 209,555 | |||||
Accounts payable, accrued expenses and other payables | 93,478 | (43,577 | ) | |||||
Other operating assets and liabilities | (63,785 | ) | 12,486 | |||||
Net cash flows from operating activities | 174,472 | 586,865 | ||||||
Cash flows from (used by) investing activities: | ||||||||
Capital expenditures | (213,120 | ) | (163,332 | ) | ||||
Proceeds from the sale of subsidiaries | 163,449 | 4,349 | ||||||
Acquisitions | (56,080 | ) | — | |||||
Increase in restricted cash, net | (11,128 | ) | (21,777 | ) | ||||
Proceeds from the sale of property, plant and equipment | 3,164 | 5,113 | ||||||
Net cash flows used by investing activities | (113,715 | ) | (175,647 | ) | ||||
Cash flows from (used by) financing activities: | ||||||||
Repayments of long-term debt | (711,850 | ) | (211,394 | ) | ||||
Proceeds from long-term debt transactions | 475,454 | — | ||||||
Cash dividends | (55,514 | ) | (55,342 | ) | ||||
Debt extinguishment costs | (22,672 | ) | (11,127 | ) | ||||
Stock issued under incentive and purchase plans, net of forfeitures | (5,498 | ) | (6,034 | ) | ||||
Debt issuance costs | (4,449 | ) | — | |||||
Increase (decrease) in documentary letters of credit, net | 22 | (41,468 | ) | |||||
Contribution from noncontrolling interests | 14 | 29 | ||||||
Treasury stock acquired | — | (30,595 | ) | |||||
Short-term borrowings, net change | — | (20,090 | ) | |||||
Tax expense from stock plans | — | (1,697 | ) | |||||
Decrease in restricted cash | — | 1 | ||||||
Net cash flows used by financing activities | (324,493 | ) | (377,717 | ) | ||||
Effect of exchange rate changes on cash | (1,213 | ) | (1,280 | ) | ||||
Increase (decrease) in cash and cash equivalents | (264,949 | ) | 32,221 | |||||
Cash and cash equivalents at beginning of year | 517,544 | 485,323 | ||||||
Cash and cash equivalents at end of year | $ | 252,595 | $ | 517,544 | ||||
(CMC Year End 2017 - Page 10)
COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
This press release contains financial measures not derived in accordance with generally accepted accounting principles ("GAAP"). Reconciliations to the most comparable GAAP measures are provided below.
Adjusted Operating Profit (Loss) from Continuing Operations is a non-GAAP financial measure. Adjusted operating profit (loss) from continuing operations is the sum of our earnings (loss) from continuing operations before interest expense, income taxes (benefit) and discounts on sales of accounts receivable. Adjusted operating profit (loss) from continuing operations should not be considered as an alternative to earnings (loss) from continuing operations or net earnings (loss), as determined by GAAP. Management uses adjusted operating profit (loss) from continuing operations to evaluate the financial performance of CMC. For added flexibility, we may sell certain trade accounts receivable both in the U.S. and internationally. We consider sales of accounts receivable as an alternative source of liquidity to finance our operations, and we believe that removing these costs provides a clearer perspective of CMC's operating performance. Adjusted operating profit (loss) from continuing operations may be inconsistent with similar measures presented by other companies.
Three Months Ended | Fiscal Year Ended | Three Months Ended | |||||||||||||||||||||||||
(in thousands) | 8/31/2017 | 8/31/2016 | 8/31/2017 | 8/31/2016 | 5/31/2017 | 2/28/2017 | 11/30/2016 | ||||||||||||||||||||
Earnings (loss) from continuing operations | $ | (32,673 | ) | $ | (2,072 | ) | $ | 32,550 | $ | 57,900 | $ | 34,978 | $ | 25,310 | $ | 4,936 | |||||||||||
Interest expense | 5,939 | 12,563 | 44,047 | 62,121 | 12,368 | 12,447 | 13,292 | ||||||||||||||||||||
Income taxes (benefit) | (10,989 | ) | (11,447 | ) | 12,454 | 10,810 | 12,819 | 8,524 | 2,100 | ||||||||||||||||||
Discounts on sales of accounts receivable | 206 | 489 | 863 | 1,688 | 230 | 200 | 227 | ||||||||||||||||||||
Adjusted operating profit (loss) from continuing operations | $ | (37,517 | ) | $ | (467 | ) | $ | 89,914 | $ | 132,519 | $ | 60,395 | $ | 46,481 | $ | 20,555 | |||||||||||
Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure. Adjusted EBITDA from continuing operations is the sum of earnings (loss) from continuing operations before interest expense and income taxes (benefit). It also excludes CMC's largest recurring non-cash charge, depreciation and amortization, as well as impairment charges, which are also non-cash. Adjusted EBITDA from continuing operations should not be considered an alternative to earnings (loss) from continuing operations or net earnings (loss), or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP. However, we believe that adjusted EBITDA from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties in our industry as it allows: (i) comparison of our earnings to those of our competitors; (ii) a supplemental measure of our ongoing core performance; and (iii) the assessment of period-to-period performance trends. Additionally, adjusted EBITDA from continuing operations is the target benchmark for our annual and long-term cash incentive performance plans for management. Adjusted EBITDA from continuing operations may be inconsistent with similar measures presented by other companies.
Three Months Ended | Fiscal Year Ended | Three Months Ended | |||||||||||||||||||||||||
(in thousands) | 8/31/2017 | 8/31/2016 | 8/31/2017 | 8/31/2016 | 5/31/2017 | 2/28/2017 | 11/30/2016 | ||||||||||||||||||||
Earnings (loss) from continuing operations | $ | (32,673 | ) | $ | (2,072 | ) | $ | 32,550 | $ | 57,900 | $ | 34,978 | $ | 25,310 | $ | 4,936 | |||||||||||
Interest expense | 5,939 | 12,563 | 44,047 | 62,121 | 12,368 | 12,447 | 13,292 | ||||||||||||||||||||
Income taxes (benefit) | (10,989 | ) | (11,447 | ) | 12,454 | 10,810 | 12,819 | 8,524 | 2,100 | ||||||||||||||||||
Depreciation and amortization | 32,020 | 31,512 | 125,053 | 126,918 | 32,256 | 30,496 | 30,282 | ||||||||||||||||||||
Impairment charges | 7,615 | 39,953 | 8,164 | 40,028 | 70 | 91 | 388 | ||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 1,912 | $ | 70,509 | $ | 222,268 | $ | 297,777 | $ | 92,491 | $ | 76,868 | $ | 50,998 | |||||||||||||
Media Contact:
Susan Gerber
214.689.4300