CMC
$16.29
Commercial Metals
$.56
3.56%
Earnings Details
3rd Quarter May 2019
Thursday, June 20, 2019 6:45:00 AM
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Summary

Commercial Metals Beats

Commercial Metals (CMC) reported 3rd Quarter May 2019 earnings of $0.67 per share on revenue of $1.6 billion. The consensus earnings estimate was $0.63 per share on revenue of $1.6 billion. The Earnings Whisper number was $0.66 per share. Revenue grew 33.3% on a year-over-year basis.

Commercial Metals Co recycles, manufactures, fabricates and distributes steel and metal products and related materials and services through a network of locations throughout the United States and internationally.

Results
Reported Earnings
$0.67
Earnings Whisper
$0.66
Consensus Estimate
$0.63
Reported Revenue
$1.61 Bil
Revenue Estimate
$1.62 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Commercial Metals Company Reports Third Quarter Fiscal 2019 Results

IRVING, Texas, June 20, 2019 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal third quarter ended May 31, 2019.  For the three months ended May 31, 2019, earnings from continuing operations were $78.6 million, or $0.66 per diluted share, on net sales of $1.6 billion, compared to earnings from continuing operations of $42.3 million, or $0.36 per diluted share, on net sales of $1.2 billion for the prior year period.  Revenue increased 33% on a year-over-year basis driven by the Company's growth strategy and strong fundamentals in its core markets.

Third quarter fiscal 2019 results included net after tax expenses of $1.8 million related to certain non-operational costs related to the acquisition of rebar assets from Gerdau S.A.  Excluding these expenses, adjusted earnings from continuing operations were $80.4 million, or $0.67 per diluted share, as detailed in the non-GAAP reconciliation on page 12.  This represents a 64% increase compared to adjusted earnings from continuing operations of $49.0 million, or $0.41 per diluted share, for the three months ended May 31, 2018.  In comparison to the most recent quarter ended February 28, 2019, this represents an increase of 130% compared to adjusted earnings from continuing operations of $35.0 million or $0.29 per diluted share.

Excluding non-recurring integration related costs related to the four steel mills and rebar fabrication assets purchased from Gerdau S.A., that closed on November 5, 2018, the acquired assets contributed revenue of $453.5 million and operating income of $56.6 million to the consolidated results of CMC in the third quarter of fiscal 2019.

Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, said, "The strong results for the quarter reflect the strength of construction activity, as well as solid industrial production levels and the resilient U.S. and Polish economies. Our recent acquisition, our greenfield Oklahoma facility, and introduction of hot spooled rebar were all meaningful contributors to top and bottom line financial results.  In addition, the fundamentals of the fabrication segment have improved significantly as we have shipped the majority of the lower priced work in our backlog which has resulted in a significant improvement in the segment results."

The Company's liquidity position at May 31, 2019 continued to be strong with cash and cash equivalents of $120.3 million and availability under the Company's credit and accounts receivable sales facilities of $617.2 million.

On June 19, 2019, the board of directors of CMC declared a quarterly dividend of $0.12 per share of CMC common stock payable to stockholders of record on July 5, 2019.  The dividend will be paid on July 18, 2019.

Business Segments - Fiscal Third Quarter 2019 Review
Our Americas Recycling segment recorded adjusted EBITDA of $12.3 million for the third quarter of fiscal 2019, compared to adjusted EBITDA of $19.5 million for the prior year third quarter.   Despite a decline in ferrous pricing, we generated good EBITDA results in this segment as a result of our diligent buying practice, high inventory turnover and recent investment in separation technology to better refine our end non-ferrous purity levels to achieve higher margins.

Our Americas Mills segment recorded adjusted EBITDA of $158.1 million for the third quarter of fiscal 2019, an increase of 76% compared to adjusted EBITDA of $89.6 million for the third quarter of fiscal 2018.  The third quarter results include adjusted EBITDA of $53.6 million from the acquired mills on shipments of 469 thousand tons.  As a result of decreases in both ferrous scrap cost and our manufacturing costs due to higher production levels, combined with relatively flat selling prices, the per ton EBITDA contribution for our Americas Mills segment increased $26 per ton in comparison to the third quarter of fiscal 2018.

Our Americas Fabrication segment recorded an adjusted EBITDA loss of $23.3 million for the third quarter of fiscal 2019, compared to an adjusted EBITDA loss of $8.2 million for the third quarter of fiscal 2018.  This year's third quarter results include an adjusted EBITDA loss of $13.9 million related to the acquired fabrication operations on shipments of 184 thousand tons.  This loss excludes the benefit of a purchase accounting adjustment of $23.4 million related to amortization of the unfavorable contract backlog reserve that was assumed in the acquisition.  Including this adjustment, the operating income of the acquired fabrication assets was $10.1 million for the quarter.

The segment had significantly improved results in comparison to the results of the past three quarters.  Average selling prices in the Americas Fabrication segment rose 19% compared to the third quarter of fiscal 2018.  The existing business is approaching break-even levels at current rebar prices.  The backlog acquired from Gerdau had a lower per ton value, so a return to positive EBITDA is expected to occur in fiscal 2020.  Rebar fabrication bidding activity remains strong.  Selling prices for contracted work during fiscal 2019, including the acquired locations, has averaged above $1,000 per ton, which is expected to be profitable when shipped in future quarters at current rebar prices.

Our International Mill segment in Poland recorded adjusted EBITDA of $24.1 million for the third quarter of fiscal 2019, compared to adjusted EBITDA of $32.0 million for the comparable prior year quarter.  Elevated levels of imported product resulted in a slight compression of metal margins during the quarter.  Despite the reduction in selling prices, this segment is on track to earn the second highest level of profitability in its history due to the continued strong non-residential construction market in Poland.

Our Corporate and Other segment recorded an adjusted EBITDA loss of $27.3 million for the third quarter of fiscal 2019 compared to an adjusted EBITDA loss of $31.8 million for the prior year's third quarter.  The current quarter loss includes $2.3 million related to acquisition costs in comparison to $5.0 million in the third quarter of fiscal 2018.  Excluding these costs, our Corporate segment costs have remained relatively flat as the newly acquired operations were absorbed with little impact to the overall cost structure.

Outlook
"Our outlook for demand remains very positive driven by the continued strength in non-residential construction activity levels in our markets," said Ms. Smith.  "Leveraging the growth in our business from the acquisition, combined with the continued favorable long steel margin environment and improvement in our fabrication segment, we anticipate a strong finish to our fiscal year.  We also anticipate that our business will generate strong cash flows, creating the opportunity to reduce our indebtedness levels."

Conference Call
CMC invites you to listen to a live broadcast of its third quarter fiscal 2019 conference call today, Thursday, June 20, 2019, at 2:00 p.m. ETBarbara Smith, Chairman of the Board of Directors, President, and Chief Executive Officer, and Mary Lindsey, Senior Vice President and Chief Financial Officer, 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".

About Commercial Metals Company
Commercial Metals Company and its subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network of facilities that includes eight electric arc furnace ("EAF") mini mills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the U.S. and Poland.

Forward-Looking Statements
This news release contains 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 effects of ongoing trade actions, potential synergies provided by our recent acquisitions, demand for our products, steel margins, the ability to operate our mills at full capacity, future supplies of raw materials and energy for our operations, legal proceedings, U.S. non-residential construction activity, international trade, capital expenditures, our liquidity and our ability to satisfy future liquidity requirements, our Oklahoma micro mill, estimated contractual obligations, the effects of the acquisition of substantially all of the U.S. rebar fabrication facilities and the steel mini-mills located in or around Rancho Cucamonga, California, Jacksonville, Florida, Sayreville, New Jersey and Knoxville, Tennessee previously owned by Gerdau S.A. and certain of its subsidiaries (collectively, the "Acquired Businesses"), and our expectations or beliefs concerning future events.  These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. We caution readers not to place undue reliance on 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, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2018 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 fabrication 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; compliance with and changes in environmental laws and regulations, including increased regulation associated with climate change and greenhouse gas emissions; involvement in various environmental matters that may result in fines, penalties or judgments; potential limitations in our or our customers' abilities to access credit and non-compliance by our customers with our contracts; activity in repurchasing shares of our common stock under our repurchase program; financial covenants and restrictions on the operation of our business contained in agreements governing our debt; our ability to successfully identify, consummate, and integrate acquisitions and the effects that acquisitions may have on our financial leverage; risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals; failure to retain key management and employees of the Acquired Businesses; issues or delays in the successful integration of the Acquired Businesses' operations with those of the Company, including the inability to substantially increase utilization of the Acquired Businesses' steel mini mills, and incurring or experiencing unanticipated costs and/or delays or difficulties; difficulties or delays in the successful transition of the Acquired Businesses to the information technology systems of the Company as well as risks associated with other integration or transition of the operations, systems and personnel of the Acquired Businesses; unfavorable reaction to the acquisition of the Acquired Businesses by customers, competitors, suppliers and employees; lower than expected future levels of revenues and higher than expected future costs; failure or inability to implement growth strategies in a timely manner; impact of goodwill impairment charges; impact of long-lived asset impairment charges; currency fluctuations; global factors, including political uncertainties and military conflicts; availability and pricing of electricity, electrodes and natural gas for mill operations; ability to hire and retain key executives and other employees; competition from other materials or from competitors that have a lower cost structure or access to greater financial resources; information technology interruptions and breaches in security; ability to make necessary capital expenditures; availability and pricing of raw materials and other items over which we exert little influence, including scrap metal, energy and insurance; unexpected equipment failures; ability to realize the anticipated benefits of our investment in our micro mill in Durant, Oklahoma; 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; impacts of the Tax Cuts and Jobs Act ("TCJA"); and increased costs related to health care reform legislation.

COMMERCIAL METALS COMPANY

FINANCIAL & OPERATING STATISTICS (UNAUDITED)



Three Months Ended


Nine Months Ended

(in thousands, except per ton amounts)


5/31/2019


2/28/2019


11/30/2018


8/31/2018


5/31/2018


5/31/2019


5/31/2018

 Americas Recycling















Net sales


$

289,015



287,075



302,009



361,363



364,098



878,099



1,004,066


Adjusted EBITDA


$

12,331



10,124



15,434



16,996



19,477



37,889



51,698


Short tons shipped (in thousands)















 Ferrous


597



570



579



644



642



1,746



1,791


 Nonferrous


60



59



63



69



65



182



194


 Total short tons shipped


657



629



642



713



707



1,928



1,985


 Average selling price (per short ton)















 Ferrous


$

252



266



273



298



314



263



286


 Nonferrous


$

2,047



1,998



1,982



2,155



2,252



2,009



2,267

















 Americas Mills















Net sales


$

866,903



774,709



601,853



604,435



553,063



2,243,465



1,392,468


Adjusted EBITDA


$

158,114



112,396



113,873



106,830



89,590



384,383



194,975


 Short tons shipped















     Rebar


913



773



530



482



503



2,216



1,313


     Merchant & Other


323



322



317



359



308



962



859


Total short tons shipped


1,236



1,095



847



841



811



3,178



2,172


 Average price (per short ton)















Total selling price


$

670



677



682



674



632



674



587


Cost of ferrous scrap utilized


$

284



303



307



326



329



297



293


Metal margin


$

386



374



375



348



303



377



294

















 Americas Fabrication















Net sales


$

633,047



530,836



437,111



403,889



378,241



1,600,994



1,023,993


Adjusted EBITDA


$

(23,289)



(49,578)



(36,996)



(24,607)



(8,208)



(109,863)



(14,787)


Total short tons shipped


469



396



319



307



302



1,184



808


Total selling price (per short ton)


$

925



845



868



843



777



886



784

















 International Mill















Net sales


$

209,365



175,198



227,024



253,058



201,737



611,587



633,980


Adjusted EBITDA


$

24,120



20,537



32,779



36,654



31,987



77,436



95,066


 Short tons shipped















     Rebar


126



66



80



145



79



272



314


     Merchant & Other


250



238



312



289



241



800



752


Total short tons shipped


376



304



392



434



320



1,072



1,066


 Average price (per short ton)















Total selling price


$

524



545



547



555



599



539



562


Cost of ferrous scrap utilized


$

288



301



295



305



329



295



317


Metal margin


$

236



244



252



250



270



244



245


 

COMMERCIAL METALS COMPANY

BUSINESS SEGMENTS (UNAUDITED)

(in thousands)


Three Months Ended


Nine Months Ended

Net sales


5/31/2019


2/28/2019


11/30/2018


8/31/2018


5/31/2018


5/31/2019


5/31/2018

 Americas Recycling


$

289,015



$

287,075



$

302,009



$

361,363



$

364,098



$

878,099



$

1,004,066


 Americas Mills


866,903



774,709



601,853



604,435



553,063



2,243,465



1,392,468


 Americas Fabrication


633,047



530,836



437,111



403,889



378,241



1,600,994



1,023,993


 International Mill


209,365



175,198



227,024



253,058



201,737



611,587



633,980


 Corporate and Other


(392,458)



(365,035)



(290,655)



(314,307)



(292,655)



(1,048,148)



(719,222)


Total Net Sales


$

1,605,872



$

1,402,783



$

1,277,342



$

1,308,438



$

1,204,484



$

4,285,997



$

3,335,285

















Adjusted EBITDA from continuing operations















 Americas Recycling


$

12,331



$

10,124



$

15,434



$

16,996



$

19,477



$

37,889



$

51,698


 Americas Mills


158,114



112,396



113,873



106,830



89,590



384,383



194,975


 Americas Fabrication


(23,289)



(49,578)



(36,996)



(24,607)



(8,208)



(109,863)



(14,787)


 International Mill


24,120



20,537



32,779



36,654



31,987



77,436



95,066


 Corporate and Other


(27,305)



(24,146)



(59,554)



(28,827)



(31,814)



(111,005)



(81,777)


 

COMMERCIAL METALS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)



Three Months Ended May 31,


Nine Months Ended May 31,

(in thousands, except share data)


2019


2018


2019


2018

Net sales


$

1,605,872



$

1,204,484



$

4,285,997



$

3,335,285


Costs and expenses:









Cost of goods sold


1,364,242



1,035,914



3,735,168



2,896,531


Selling, general and administrative expenses


115,461



101,422



331,404



306,009


Interest expense


18,513



11,511



53,671



25,303




1,498,216



1,148,847



4,120,243



3,227,843











Earnings from continuing operations before income taxes


107,656



55,637



165,754



107,442


Income taxes


29,105



13,312



52,855



23,465


Earnings from continuing operations


78,551



42,325



112,899



83,977











Earnings (loss) from discontinued operations before income taxes


(190)



(3,389)



(808)



5,021


Income taxes (benefit)


(29)



(1,029)



109



2,052


Earnings (loss) from discontinued operations


(161)



(2,360)



(917)



2,969











Net earnings


$

78,390



$

39,965



$

111,982



$

86,946











Basic earnings (loss) per share*









Earnings from continuing operations


$

0.67



$

0.36



$

0.96



$

0.72


Earnings (loss) from discontinued operations




(0.02)



(0.01)



0.03


Net earnings


$

0.66



$

0.34



$

0.95



$

0.74











Diluted earnings (loss) per share*









Earnings from continuing operations


$

0.66



$

0.36



$

0.95



$

0.71


Earnings (loss) from discontinued operations




(0.02)



(0.01)



0.03


Net earnings


$

0.66



$

0.34



$

0.94



$

0.74











Average basic shares outstanding


118,045,362



117,111,799



117,762,945



116,722,504


Average diluted shares outstanding


119,145,566



118,254,791



119,013,014



118,050,864


*Earning Per Share ("EPS") is calculated independently for each component and may not sum to Net EPS due to rounding

 

COMMERCIAL METALS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)


May 31, 2019


August 31, 2018

Assets





Current assets:





Cash and cash equivalents


$

120,315



$

622,473


Accounts receivable (less allowance for doubtful accounts of $17,318 and $4,489)


1,014,157



749,484


Inventories, net


807,593



589,005


Other current assets


172,007



116,243


Total current assets


2,114,072



2,077,205


Property, plant and equipment, net


1,473,568



1,075,038


Goodwill


64,226



64,310


Other noncurrent assets


115,144



111,751


Total assets


$

3,767,010



$

3,328,304


Liabilities and stockholders' equity





Current liabilities:





Accounts payable-trade


$

278,390



$

261,258


Accrued expenses and other payables


318,975



260,939


Acquired unfavorable contract backlog


51,998




Current maturities of long-term debt and short-term borrowings


54,895



19,746


Total current liabilities


704,258



541,943


Deferred income taxes


63,413



37,834


Other non-current liabilities


128,281



116,325


Long-term debt


1,306,863



1,138,619


Total liabilities


2,202,815



1,834,721


Stockholders' equity


1,563,999



1,493,397


Stockholders' equity attributable to noncontrolling interests


196



186


Total stockholders' equity


1,564,195



1,493,583


Total liabilities and stockholders' equity


$

3,767,010



$

3,328,304


 

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



Nine Months Ended May 31,

(in thousands)


2019


2018

Cash flows from (used by) operating activities:





Net earnings


$

111,982



$

86,946


Adjustments to reconcile net earnings to cash flows from (used by) operating activities:





Depreciation and amortization


117,617



99,443


Amortization of acquired unfavorable contract backlog


(58,202)




Stock-based compensation


17,350



18,247


Net gain on disposals of subsidiaries, assets and other


(1,334)



(1,578)


Deferred income taxes and other long-term taxes


36,367



5,829


Write-down of inventories


551



1,358


Provision for losses on receivables, net


100



2,193


Asset impairment


15



14,265


Changes in operating assets and liabilities


(75,422)



(65,612)


Beneficial interest in securitized accounts receivable


(367,521)



(491,577)


Net cash flows used by operating activities


(218,497)



(330,486)







Cash flows from (used by) investing activities:





Acquisitions, net of cash acquired


(700,941)



(6,980)


Capital expenditures


(91,753)



(144,268)


Proceeds from insurance


4,405



25,000


Proceeds from the sale of property, plant and equipment


2,503



6,315


Proceeds from the sale of discontinued operations and other


1,893



75,483


Advances under accounts receivable programs




132,979


Repayments under accounts receivable programs




(202,423)


Beneficial interest in securitized accounts receivable


367,521



491,577


Net cash flows from (used by) investing activities:


(416,372)



377,683







Cash flows from (used by) financing activities:





Proceeds from issuance of long-term debt


180,000



350,000


Repayments of long-term debt


(24,138)



(15,382)


Proceeds from accounts receivable programs


223,143




Repayments under accounts receivable programs


(209,363)




Dividends


(42,387)



(42,036)


Stock issued under incentive and purchase plans, net of forfeitures


(2,364)



(9,836)


Debt issuance costs




(5,254)


Other


10



31


Net cash flows from financing activities


124,901



277,523


Effect of exchange rate changes on cash


(341)



(461)


Increase (decrease) in cash, restricted cash and cash equivalents


(510,309)



324,259


Cash, restricted cash and cash equivalents at beginning of period


632,615



285,881


Cash, restricted cash and cash equivalents at end of period


$

122,306



$

610,140





Supplemental information:


Nine Months Ended May 31,

(in thousands)


2019


2018

Cash and cash equivalents


$

120,315



$

600,444


Restricted cash



1,991




9,696


Total cash, restricted cash and cash equivalents


$

122,306



$

610,140


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.

Core EBITDA from Continuing Operations is a non-GAAP financial measure. Core EBITDA from continuing operations is the sum of earnings (loss) from continuing operations before interest expense and income taxes (benefit). It also excludes recurring non-cash charges for depreciation and amortization, asset impairments, and equity compensation. Core EBITDA from continuing operations also excludes certain material acquisition and integration related costs and other legal fees, mill operational start-up costs, CMC Steel Oklahoma incentives, net debt restructuring and extinguishment gains and losses, purchase accounting adjustments to inventory and severance expenses. Core 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 Core 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, Core EBITDA from continuing operations is the target benchmark for our annual and long-term cash incentive performance plans for management. Core EBITDA from continuing operations may be inconsistent with similar measures presented by other companies.

A reconciliation of earnings from continuing operations to Core EBITDA from continuing operations is provided below:


Three Months Ended


Nine Months Ended

(in thousands)

5/31/2019


2/28/2019


11/30/2018


8/31/2018


5/31/2018


5/31/2019


5/31/2018

Earnings from continuing operations

$

78,551



$

14,928



$

19,420



$

51,260



$

42,325



112,899



83,977


Interest expense

18,513



18,495



16,663



15,654



11,511



53,671



25,303


Income taxes

29,105



18,141



5,609



6,682



13,312



52,855



23,465


Depreciation and amortization

41,181



41,245



35,176



32,610



32,949



117,602



98,898


Asset impairments

15







840



935



15



13,532


Non-cash equity compensation

7,342



5,791



4,215



5,679



5,376



17,348



18,359


Acquisition and integration related costs and other

2,336



5,475



27,970



10,907



4,975



35,781



14,600


Amortization of acquired unfavorable contract backlog

(23,394)



(23,476)



(11,332)







(58,202)




Mill operational start-up costs*









1,473





13,471


CMC Steel Oklahoma incentives









(3,000)





(3,000)


Purchase accounting effect on inventory



10,315









10,315




Core EBITDA from continuing operations

$

153,649



$

90,914



$

97,721



$

123,632



$

109,856



$

342,284



$

288,605






























*Net of interest, taxes, depreciation and amortization, impairments, and non-cash equity compensation.

Adjusted earnings from continuing operations is a non-GAAP financial measure that is equal to earnings (loss) from continuing operations before certain acquisition and integration related and costs and other legal expenses, mill operational start-up costs, CMC Steel Oklahoma incentives, asset impairments, debt restructuring and extinguishment gains and losses, purchase accounting adjustments to inventory and severance expenses, including the estimated income tax effects thereof. Additionally, we adjust adjusted earnings from continuing operations for the effects of the TCJA as well as the tax benefit associated with an international reorganization. Adjusted earnings from continuing operations should not be considered as an alternative to earnings from continuing operations or any other performance measure derived in accordance with GAAP. However, we believe that adjusted earnings from continuing operations provides relevant and useful information to investors as it allows: (i) a supplemental measure of our ongoing core performance and (ii) the assessment of period-to-period performance trends. Management uses adjusted earnings from continuing operations to evaluate our financial performance. Adjusted earnings from continuing operations may be inconsistent with similar measures presented by other companies. Adjusted earnings from continuing operations per diluted share is defined as adjusted earnings from continuing operations on a diluted per share basis.

A reconciliation of earnings from continuing operations to adjusted earnings from continuing operations is provided below:


Three Months Ended


Nine Months Ended

(in thousands)

5/31/2019


2/28/2019


11/30/2018


8/31/2018


5/31/2018


5/31/2019


5/31/2018

Earnings from continuing operations

$

78,551



$

14,928



$

19,420



$

51,260



$

42,325



$

112,899



$

83,977


Impairment of structural steel assets













12,136


Acquisition and integration related costs and other

2,336



5,475



27,970



10,907



4,975



35,781



14,600


Mill operational start-up costs









6,456





18,016


CMC Steel Oklahoma incentives









(3,000)





(3,000)


Purchase accounting effect on inventory



10,315









10,315




Total adjustments (pre-tax)

$

2,336



$

15,790



$

27,970



$

10,907



$

8,431



$

46,096



$

41,752
















Tax impact














TCJA impact

$



$

7,550



$



$



$



$

7,550



$

10,600


International reorganization













(9,200)


Related tax effects on adjustments

(490)



(3,316)



(5,874)



(2,290)



(1,771)



(9,680)



(10,946)


Total tax impact

(490)



4,234



(5,874)



(2,290)



(1,771)



(2,130)



(9,546)


Adjusted earnings from continuing operations

$

80,397



$

34,952



$

41,516



$

59,877



$

48,985



$

156,865



$

116,183
















Adjusted earnings from continuing operations per diluted share

$

0.67



$

0.29



$

0.35



$

0.51



$

0.41



$

1.32



$

0.98


 

Cision View original content:http://www.prnewswire.com/news-releases/commercial-metals-company-reports-third-quarter-fiscal-2019-results-300871751.html

SOURCE Commercial Metals Company