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| 8-K - 8-K - COMMERCIAL METALS Co | cmc-8312015pr8xk.htm |
Exhibit No. 99.1
News Release 
COMMERCIAL METALS COMPANY REPORTS FOURTH QUARTER RESULTS AND FULL YEAR EARNINGS PER SHARE OF $1.20, OR $141.6 MILLION
Irving, TX - October 28, 2015 - Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal fourth quarter and year ended August 31, 2015. For the year ended August 31, 2015, net earnings attributable to CMC were $141.6 million, or $1.20 per diluted share, on net sales of $6.0 billion. This compares to net earnings attributable to CMC of $115.6 million, or $0.97 per diluted share, on net sales of $6.8 billion for the year ended August 31, 2014. Net loss attributable to CMC for the three months ended August 31, 2015 was $5.8 million, or $0.05 per share, on net sales of $1.4 billion. This compares to net earnings attributable to CMC of $34.9 million, or $0.29 per diluted share, on net sales of $1.8 billion for the three months ended August 31, 2014.
Results for the fourth quarter of fiscal 2015 included after-tax LIFO expense from continuing operations of $23.7 million ($0.20 per share), compared to after-tax LIFO income from continuing operations of $1.0 million ($0.01 per diluted share) for the fourth quarter of fiscal 2014. Additionally, our results from continuing operations for the fiscal fourth quarter included after-tax charges related to goodwill impairment for our Americas Recycling segment of $4.7 million ($0.04 per share), costs associated with exiting our distribution operation in Cardiff, Wales, UK of $2.9 million ($0.03 per share), and other charges including inventory write-downs, severance cost and long-lived asset impairments totaling $4.0 million ($0.03 per share). The sum of these items negatively impacted our earnings from continuing operations for the fourth quarter of our fiscal year by a total of $0.30 per share. Adjusted operating profit from continuing operations was $12.3 million for the fourth quarter of fiscal 2015, compared to adjusted operating profit from continuing operations of $68.8 million for the fourth quarter of fiscal 2014. Adjusted EBITDA from continuing operations was $54.6 million for the fourth quarter of fiscal 2015, compared to adjusted EBITDA from continuing operations of $104.4 million for the fourth quarter of fiscal 2014.
Joe Alvarado, Chairman of the Board, President and CEO, commented, "For our fiscal year ended August 31, 2015, we achieved adjusted EBITDA from continuing operations of $464.6 million, our best since fiscal 2008. In August, construction spending continued to rise for the eighth consecutive month, led by an increase in non-residential construction spending year over year. During the fourth quarter of fiscal 2015, we completed the sale of a majority of our Australian distribution business. Six of the locations were sold, three were shut down, while one remains held for sale. For fiscal 2015, net cash flows from operating activities were $313.5 million."
(CMC Year End 2015 - Page 2)
On October 28, 2015, 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 11, 2015. The dividend will be paid on November 25, 2015.
Business Segments - Fiscal Fourth Quarter 2015 Review
Our Americas Recycling segment recorded an adjusted operating loss of $15.4 million for the fourth quarter of fiscal 2015, compared to an adjusted operating loss of $2.1 million for the fourth quarter of fiscal 2014. During the fourth quarter of fiscal 2015, ferrous and nonferrous shipments decreased 22% and 14%, respectively, while the average ferrous metal margin was flat, and the average nonferrous metal margin contracted 20%, compared to the fourth quarter of the prior fiscal year. Furthermore, this segment recorded goodwill impairment charges of $7.3 million as a result of the Company's annual goodwill impairment analysis in the fourth quarter of fiscal 2015. Additionally, for the fourth quarter of fiscal 2015, this segment recorded pre-tax LIFO expense of $1.5 million, compared to pre-tax LIFO income of $0.3 million for the fourth quarter of the prior fiscal year.
Our Americas Mills segment recorded an adjusted operating profit of $46.2 million for the fourth quarter of fiscal 2015, compared to an adjusted operating profit of $63.8 million for the fourth quarter of fiscal 2014. The decrease in adjusted operating profit for the fourth quarter of fiscal 2015 was due to a 6% decrease in total shipments, which outpaced a 2% increase in average metal margin compared to the fourth quarter of fiscal 2014. The decrease in total shipments was driven by a 38 thousand short ton decrease in billet shipments and a nine thousand short ton decrease in shipments of our higher margin finished products, including reinforcement bar ("rebar") and merchants, compared to the fourth quarter of fiscal 2014. Additionally, for the fourth quarter of fiscal 2015, this segment recorded pre-tax LIFO expense of $13.9 million, compared to pre-tax LIFO expense of $6.1 million for the fourth quarter of the prior fiscal year.
Our Americas Fabrication segment recorded an adjusted operating profit of $7.5 million for the fourth quarter of fiscal 2015, compared to an adjusted operating profit of $8.1 million for the fourth quarter of fiscal 2014. For the fourth quarter of fiscal 2015, total shipments increased 1%, and the average composite metal margin expanded 23%, compared to the fourth quarter of fiscal 2014. Offsetting these improvements, for the fourth quarter of fiscal 2015, this segment recorded pre-tax LIFO expense of $11.0 million, compared to pre-tax LIFO income of $3.8 million for the fourth quarter of fiscal 2014.
Our International Mill segment recorded an adjusted operating profit of $6.4 million for the fourth quarter of fiscal 2015, compared to an adjusted operating profit of $5.0 million in the prior year's fourth quarter. For the fourth quarter of fiscal 2015, the average selling price decreased $137 per short ton, while the average cost of ferrous scrap consumed decreased $85 per short ton, resulting in a 21% squeeze in average metal margin, compared to the fourth quarter of fiscal 2014. Additionally, during the fourth quarter of fiscal 2015, total shipments decreased 1% compared to the fourth quarter of the prior fiscal year. However, the decreases in average metal margin and total shipments were
(CMC Year End 2015 - Page 3)
more than offset by an $8.3 million decline in utilities and repairs and maintenance expenses partially due to efficiencies gained from the commissioning of a new, state-of-the-art electric arc furnace in the third quarter of fiscal 2014. For the fourth quarter of fiscal 2015, adjusted operating profit reflected an unfavorable foreign currency impact of approximately $2.2 million.
Our International Marketing and Distribution segment recorded an adjusted operating loss of $13.7 million for the fourth quarter of fiscal 2015, compared to an adjusted operating profit of $15.5 million in the prior year's fourth quarter. The $29.2 million decline in adjusted operating profit in the fourth quarter of fiscal 2015 was the result of an 18% decrease in volumes coupled with a 31% decrease in average margin, compared to the fourth quarter of fiscal 2014. This segment's results continued to be pressured by the strong U.S. dollar, global steel overcapacity and weak oil and gas tubular demand. In addition, during the fourth quarter of fiscal 2015, we made the decision for an orderly exit of our steel distribution operation in Cardiff, Wales, UK, and this segment recorded an expense of approximately $4.5 million associated with this action. Furthermore, for the fourth quarter of fiscal 2015, this segment recorded pre-tax LIFO expense of $10.1 million, compared to pre-tax LIFO income of $3.5 million for the fourth quarter of the prior fiscal year.
Fiscal 2015 Full Year Review
Earnings from continuing operations for fiscal 2015 were $161.3 million, or $1.37 per diluted share. For the year ended August 31, 2015, net cash flow from operating activities was $313.5 million, and adjusted EBITDA from continuing operations was $464.6 million. On a continuing operations basis, for fiscal 2015, we recorded after-tax LIFO income of $51.5 million ($0.44 per diluted share), compared to after-tax LIFO expense of $8.8 million ($0.07 per diluted share) in fiscal 2014. As of August 31, 2015, cash and short-term investments totaled $485.3 million, an increase of 12% from the end of our 2014 fiscal year.
Pursuant to our share repurchase program that was approved in October 2014, during fiscal 2015, we purchased approximately 2.9 million shares of our common stock for $41.8 million.
Loss from discontinued operations for fiscal year 2015 was $19.7 million, which primarily consisted of operating losses related to our Australian steel distribution business.
Outlook
Mr. Alvarado concluded, "Non-residential construction spending, which is our primary end use market in the U.S., was up 24% year over year in August. However, we believe our operations will continue to face pressure from historically high steel import activity into the U.S. and Poland, a strong U.S. dollar and continued weakness in the scrap markets. We believe the increased import activity is a result of unfair trading practices by certain foreign producers. While recent legislation passed by the U.S. government has improved the trading landscape, further legislation is necessary to bring global steel trading to a more level playing field. Additionally, we believe that China’s inability to
(CMC Year End 2015 - Page 4)
consume all of their production will continue to cause a negative effect around the world. In light of these market difficulties, we remain committed to managing the items within our control, namely reducing selling, general and administrative expenses, improving working capital, cost savings through supply chain optimization and prudent allocation of capital.
Our first quarter of the fiscal year historically has been a seasonally slower period as the construction season winds down before the onset of the winter months. We believe that our Americas Mills operations remain strong, and the backlog in our Americas Fabrication business is good."
Conference Call
CMC invites you to listen to a live broadcast of its fourth quarter fiscal 2015 conference call today, Wednesday, October 28, 2015, at 11:00 a.m. ET. Joe Alvarado, Chairman of the Board, President and CEO, and Barbara Smith, 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 steel minimills, 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 economic conditions and CMC's operating plans and segment results. 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 events, new information or otherwise.
Factors that could cause actual results to differ materially from CMC's expectations include the following: overall global economic conditions, including recovery from the recent 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; excess capacity in our industry, particularly in China, and product availability from competing steel minimills and other steel suppliers including import quantities and pricing; compliance with and
(CMC Year End 2015 - Page 5)
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 and military uncertainties; availability of electricity and natural gas for minimill operations; information technology interruptions and breaches in security data; ability to retain key executives; our ability to make necessary capital expenditures; 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 2015 - Page 6)
COMMERCIAL METALS COMPANY OPERATING STATISTICS AND BUSINESS SEGMENTS (UNAUDITED) | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
(short tons in thousands) | 08/31/15 | 08/31/14 | 08/31/15 | 08/31/14 | |||||||||||
Americas Recycling tons shipped | 472 | 601 | 2,003 | 2,329 | |||||||||||
Americas Steel Mills rebar shipments | 435 | 422 | 1,644 | 1,577 | |||||||||||
Americas Steel Mills structural and other shipments | 250 | 310 | 1,043 | 1,196 | |||||||||||
Total Americas Steel Mills tons shipped | 685 | 732 | 2,687 | 2,773 | |||||||||||
Americas Steel Mills average FOB selling price (total sales) | $ | 592 | $ | 684 | $ | 637 | $ | 675 | |||||||
Americas Steel Mills average cost ferrous scrap utilized | $ | 244 | $ | 344 | $ | 282 | $ | 348 | |||||||
Americas Steel Mills metal margin | $ | 348 | $ | 340 | $ | 355 | $ | 327 | |||||||
Americas Steel Mills average ferrous scrap purchase price | $ | 206 | $ | 298 | $ | 239 | $ | 305 | |||||||
International Mill tons shipped | 328 | 332 | 1,226 | 1,285 | |||||||||||
International Mill average FOB selling price (total sales) | $ | 444 | $ | 581 | $ | 480 | $ | 605 | |||||||
International Mill average cost ferrous scrap utilized | $ | 252 | $ | 337 | $ | 274 | $ | 351 | |||||||
International Mill metal margin | $ | 192 | $ | 244 | $ | 206 | $ | 254 | |||||||
International Mill average ferrous scrap purchase price | $ | 213 | $ | 275 | $ | 231 | $ | 297 | |||||||
Americas Fabrication rebar shipments | 294 | 285 | 1,026 | 988 | |||||||||||
Americas Fabrication structural and post shipments | 32 | 38 | 135 | 152 | |||||||||||
Total Americas Fabrication tons shipped | 326 | 323 | 1,161 | 1,140 | |||||||||||
Americas Fabrication average selling price (excluding stock and buyout sales) | $ | 905 | $ | 933 | $ | 943 | $ | 928 | |||||||
(in thousands) | Three Months Ended | Fiscal Year Ended | |||||||||||||
Net sales | 08/31/15 | 08/31/14 | 08/31/15 | 08/31/14 | |||||||||||
Americas Recycling | $ | 222,387 | $ | 351,496 | $ | 1,022,621 | $ | 1,367,070 | |||||||
Americas Mills | 441,295 | 525,760 | 1,841,812 | 1,991,334 | |||||||||||
Americas Fabrication | 449,445 | 443,952 | 1,624,238 | 1,537,485 | |||||||||||
International Mill | 153,855 | 205,123 | 626,251 | 823,193 | |||||||||||
International Marketing and Distribution | 376,329 | 586,986 | 1,897,617 | 2,120,537 | |||||||||||
Corporate and Eliminations | (231,815 | ) | (276,008 | ) | (1,023,934 | ) | (1,049,181 | ) | |||||||
Total net sales | $ | 1,411,496 | $ | 1,837,309 | $ | 5,988,605 | $ | 6,790,438 | |||||||
Adjusted operating profit (loss) | |||||||||||||||
Americas Recycling | $ | (15,352 | ) | $ | (2,113 | ) | $ | (18,637 | ) | $ | (3,222 | ) | |||
Americas Mills | 46,164 | 63,764 | 304,272 | 247,703 | |||||||||||
Americas Fabrication | 7,541 | 8,065 | 39,183 | 6,196 | |||||||||||
International Mill | 6,367 | 4,985 | 17,555 | 30,632 | |||||||||||
International Marketing and Distribution | (13,714 | ) | 15,475 | 57,885 | 24,027 | ||||||||||
Corporate and Eliminations | (18,662 | ) | (21,397 | ) | (76,423 | ) | (72,649 | ) | |||||||
Adjusted operating profit from continuing operations | 12,344 | 68,779 | 323,835 | 232,687 | |||||||||||
Adjusted operating profit (loss) from discontinued operations | 257 | (2,782 | ) | (18,923 | ) | 15,739 | |||||||||
Adjusted operating profit | $ | 12,601 | $ | 65,997 | $ | 304,912 | $ | 248,426 | |||||||
(CMC Year End 2015 - Page 7)
COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
(in thousands, except share data) | 08/31/15 | 08/31/14 | 08/31/15 | 08/31/14 | |||||||||||
Net sales | $ | 1,411,496 | $ | 1,837,309 | $ | 5,988,605 | $ | 6,790,438 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 1,279,687 | 1,653,857 | 5,213,203 | 6,109,338 | |||||||||||
Selling, general and administrative expenses | 110,131 | 113,514 | 443,275 | 448,943 | |||||||||||
Impairment of assets | 9,651 | 2,400 | 9,839 | 3,305 | |||||||||||
Interest expense | 18,932 | 19,803 | 77,760 | 77,037 | |||||||||||
1,418,401 | 1,789,574 | 5,744,077 | 6,638,623 | ||||||||||||
Earnings (loss) from continuing operations before income taxes | (6,905 | ) | 47,735 | 244,528 | 151,815 | ||||||||||
Income taxes (benefit) | (1,046 | ) | 10,067 | 83,206 | 42,724 | ||||||||||
Earnings (loss) from continuing operations | (5,859 | ) | 37,668 | 161,322 | 109,091 | ||||||||||
Earnings (loss) from discontinued operations before income taxes | 117 | (2,964 | ) | (20,124 | ) | 15,005 | |||||||||
Income taxes (benefit) | 9 | (222 | ) | (436 | ) | 8,544 | |||||||||
Earnings (loss) from discontinued operations | 108 | (2,742 | ) | (19,688 | ) | 6,461 | |||||||||
Net earnings (loss) | (5,751 | ) | 34,926 | 141,634 | 115,552 | ||||||||||
Less net earnings attributable to noncontrolling interests | — | — | — | 1 | |||||||||||
Net earnings (loss) attributable to CMC | $ | (5,751 | ) | $ | 34,926 | $ | 141,634 | $ | 115,551 | ||||||
Basic earnings (loss) per share attributable to CMC: | |||||||||||||||
Earnings (loss) from continuing operations | $ | (0.05 | ) | $ | 0.32 | $ | 1.39 | $ | 0.93 | ||||||
Earnings (loss) from discontinued operations | — | (0.03 | ) | (0.17 | ) | 0.05 | |||||||||
Net earnings (loss) | $ | (0.05 | ) | $ | 0.29 | $ | 1.22 | $ | 0.98 | ||||||
Diluted earnings (loss) per share attributable to CMC: | |||||||||||||||
Earnings (loss) from continuing operations | $ | (0.05 | ) | $ | 0.32 | $ | 1.37 | $ | 0.92 | ||||||
Earnings (loss) from discontinued operations | — | (0.03 | ) | (0.17 | ) | 0.05 | |||||||||
Net earnings (loss) | $ | (0.05 | ) | $ | 0.29 | $ | 1.20 | $ | 0.97 | ||||||
Cash dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.48 | $ | 0.48 | |||||||
Average basic shares outstanding | 115,695,791 | 117,784,487 | 116,527,265 | 117,496,270 | |||||||||||
Average diluted shares outstanding | 115,695,791 | 118,862,975 | 117,949,898 | 118,607,106 | |||||||||||
(CMC Year End 2015 - Page 8)
COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
(in thousands) | August 31, 2015 | August 31, 2014 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 485,323 | $ | 434,925 | |||
Accounts receivable, net | 900,619 | 1,028,425 | |||||
Inventories, net | 781,371 | 935,411 | |||||
Current deferred tax assets | 29,137 | 49,455 | |||||
Other current assets | 93,643 | 105,575 | |||||
Assets of businesses held for sale | 17,008 | — | |||||
Total current assets | 2,307,101 | 2,553,791 | |||||
Net property, plant and equipment | 883,650 | 925,098 | |||||
Goodwill | 66,383 | 74,319 | |||||
Other assets | 115,168 | 135,312 | |||||
Total assets | $ | 3,372,302 | $ | 3,688,520 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable-trade | $ | 260,984 | $ | 423,807 | |||
Accounts payable-documentary letters of credit | 41,473 | 125,053 | |||||
Accrued expenses and other payables | 279,415 | 322,000 | |||||
Notes payable | 20,090 | 12,288 | |||||
Current maturities of long-term debt | 10,110 | 8,005 | |||||
Liabilities of businesses held for sale | 5,276 | — | |||||
Total current liabilities | 617,348 | 891,153 | |||||
Deferred income taxes | 55,803 | 55,600 | |||||
Other long-term liabilities | 101,919 | 112,134 | |||||
Long-term debt | 1,277,882 | 1,281,042 | |||||
Total liabilities | 2,052,952 | 2,339,929 | |||||
Stockholders' equity attributable to CMC | 1,319,201 | 1,348,480 | |||||
Stockholders' equity attributable to noncontrolling interests | 149 | 111 | |||||
Total equity | 1,319,350 | 1,348,591 | |||||
Total liabilities and stockholders' equity | $ | 3,372,302 | $ | 3,688,520 | |||
(CMC Year End 2015 - Page 9)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Fiscal Year Ended | |||||||
(in thousands) | 08/31/15 | 08/31/14 | |||||
Cash flows from (used by) operating activities: | |||||||
Net earnings | $ | 141,634 | $ | 115,552 | |||
Adjustments to reconcile net earnings to cash flows from (used by) operating activities: | |||||||
Depreciation and amortization | 132,779 | 136,004 | |||||
Provision for losses on receivables, net | 3,481 | (1,760 | ) | ||||
Stock-based compensation | 23,484 | 18,051 | |||||
Amortization of interest rate swaps termination gain | (7,597 | ) | (7,597 | ) | |||
Deferred income taxes | 23,291 | 32,348 | |||||
Tax expense from stock-based plans | 1,213 | 4,426 | |||||
Net gain on sale of a subsidiary, cost method investment and other | (8,489 | ) | (31,356 | ) | |||
Write-down of inventory | 15,935 | 4,000 | |||||
Asset impairments | 14,610 | 3,498 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 206,633 | (143,397 | ) | ||||
Accounts receivable sold, net | (117,753 | ) | 120,957 | ||||
Inventories | 50,747 | (177,331 | ) | ||||
Other assets | 23,674 | (20,516 | ) | ||||
Accounts payable, accrued expenses and other payables | (180,517 | ) | 90,604 | ||||
Other long-term liabilities | (9,664 | ) | (6,543 | ) | |||
Net cash flows from operating activities | 313,461 | 136,940 | |||||
Cash flows from (used by) investing activities: | |||||||
Capital expenditures | (119,580 | ) | (101,749 | ) | |||
Proceeds from the sale of property, plant and equipment and other | 14,925 | 17,572 | |||||
Proceeds from the sale of subsidiaries | 27,831 | 52,609 | |||||
Acquisitions, net of cash acquired | — | (15,693 | ) | ||||
Net cash flows used by investing activities | (76,824 | ) | (47,261 | ) | |||
Cash flows from (used by) financing activities: | |||||||
Increase (decrease) in documentary letters of credit | (80,482 | ) | 11,753 | ||||
Short-term borrowings, net change | 7,802 | 6,315 | |||||
Repayments on long-term debt | (11,335 | ) | (7,677 | ) | |||
Payments for debt issuance costs | — | (431 | ) | ||||
Decrease in restricted cash | 3,742 | 18,000 | |||||
Stock issued under incentive and purchase plans, net of forfeitures | (1,492 | ) | (1,488 | ) | |||
Treasury stock acquired | (41,806 | ) | — | ||||
Cash dividends | (55,945 | ) | (56,428 | ) | |||
Tax expense from stock-based plans | (1,213 | ) | (4,426 | ) | |||
Contribution from (purchase of) noncontrolling interests | 38 | (15 | ) | ||||
Net cash flows used by financing activities | (180,691 | ) | (34,397 | ) | |||
Effect of exchange rate changes on cash | (5,548 | ) | 873 | ||||
Increase in cash and cash equivalents | 50,398 | 56,155 | |||||
Cash and cash equivalents at beginning of year | 434,925 | 378,770 | |||||
Cash and cash equivalents at end of year | $ | 485,323 | $ | 434,925 | |||
(CMC Year End 2015 - Page 10)
COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(dollars in thousands)
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 is a non-GAAP financial measure. Management uses adjusted operating profit to evaluate the financial performance of CMC. Adjusted operating profit is the sum of adjusted operating profit from continuing operations and adjusted operating profit (loss) from discontinued operations. Adjusted operating profit from continuing operations is the sum of our earnings (loss) from continuing operations before income taxes (benefit), interest expense and discounts on sales of accounts receivable. Adjusted operating profit (loss) from discontinued operations is the sum of our earnings (loss) from discontinued operations before income taxes (benefit), interest expense and discounts on sales of accounts receivable. For added flexibility, we may sell certain accounts receivable both in the U.S. and internationally. We consider sales of receivables 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 may be inconsistent with similar measures presented by other companies.
Three Months Ended | Fiscal Year Ended | ||||||||||||||
(in thousands) | 08/31/15 | 08/31/14 | 08/31/15 | 08/31/14 | |||||||||||
Earnings (loss) from continuing operations | $ | (5,859 | ) | $ | 37,668 | $ | 161,322 | $ | 109,091 | ||||||
Income taxes (benefit) | (1,046 | ) | 10,067 | 83,206 | 42,724 | ||||||||||
Interest expense | 18,932 | 19,803 | 77,760 | 77,037 | |||||||||||
Discounts on sales of accounts receivable | 317 | 1,241 | 1,547 | 3,835 | |||||||||||
Adjusted operating profit from continuing operations | 12,344 | 68,779 | 323,835 | 232,687 | |||||||||||
Adjusted operating profit (loss) from discontinued operations | 257 | (2,782 | ) | (18,923 | ) | 15,739 | |||||||||
Adjusted operating profit | $ | 12,601 | $ | 65,997 | $ | 304,912 | $ | 248,426 | |||||||
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is the sum of adjusted EBITDA from continuing operations and adjusted EBITDA from discontinued operations. Adjusted EBITDA from continuing operations is the sum of our earnings (loss) from continuing operations before net earnings attributable to noncontrolling interests, 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 discontinued operations is the sum of our earnings (loss) from discontinued operations before net earnings attributable to noncontrolling interests, interest expense and income taxes (benefit). It also excludes the largest recurring non-cash charge from discontinued operations, depreciation and amortization, as well as impairment charges from discontinued operations, which are also non-cash. Adjusted EBITDA should not be considered as an alternative to net earnings or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP. However, we believe that adjusted EBITDA provides relevant and useful information, which is often used by analysts, creditors and other interested parties in our industry. Adjusted EBITDA to interest expense is a covenant test in certain of CMC's debt agreements. Adjusted EBITDA is also the target benchmark for our annual and long-term cash incentive performance plans for management. Adjusted EBITDA may be inconsistent with similar measures presented by other companies.
Three Months Ended | Fiscal Year Ended | ||||||||||||||
(in thousands) | 08/31/15 | 08/31/14 | 08/31/15 | 08/31/14 | |||||||||||
Earnings (loss) from continuing operations | $ | (5,859 | ) | $ | 37,668 | $ | 161,322 | $ | 109,091 | ||||||
Less: Net earnings attributable to noncontrolling interests | — | — | — | 1 | |||||||||||
Interest expense | 18,932 | 19,803 | 77,760 | 77,037 | |||||||||||
Income taxes (benefit) | (1,046 | ) | 10,067 | 83,206 | 42,724 | ||||||||||
Depreciation and amortization | 32,950 | 34,438 | 132,503 | 134,222 | |||||||||||
Impairment charges | 9,651 | 2,400 | 9,839 | 3,305 | |||||||||||
Adjusted EBITDA from continuing operations | 54,628 | 104,376 | 464,630 | 366,378 | |||||||||||
Adjusted EBITDA from discontinued operations | 1,685 | (2,475 | ) | (14,775 | ) | 17,684 | |||||||||
Adjusted EBITDA | $ | 56,313 | $ | 101,901 | $ | 449,855 | $ | 384,062 | |||||||
(CMC Year End 2015 - Page 11)
Adjusted EBITDA to interest coverage:
Three Months Ended August 31, 2015 | Year Ended August 31, 2015 | |||||||||
$56,313 | / | $18,932 | = | 3.0 | $449,855 | / | 77,760 | = | 5.8 | |
Total Capitalization:
Total capitalization is a non-GAAP financial measure and is the sum of stockholders' equity attributable to CMC, long-term debt and deferred income taxes. The ratio of debt to total capitalization is a measure of current debt leverage. The following reconciles total capitalization to the most comparable GAAP measure, stockholders’ equity attributable to CMC:
(in thousands) | August 31, 2015 | ||
Stockholders' equity attributable to CMC | $ | 1,319,201 | |
Long-term debt | 1,277,882 | ||
Deferred income taxes | 55,803 | ||
Total capitalization | $ | 2,652,886 | |
OTHER FINANCIAL INFORMATION
Long-term debt to total capitalization ratio as of August 31, 2015:
$1,277,882 | / | $2,652,886 | = | 48.2% |
Total debt to total capitalization plus short-term debt plus notes payable ratio as of August 31, 2015:
( | $1,277,882 | + | $10,110 | + | $20,090 | ) | / | ( | $2,652,886 | + | $10,110 | + | $20,090 | ) | = | 48.8% |
Current ratio as of August 31, 2015:
Current assets divided by current liabilities
$2,307,101 | / | $617,348 | = | 3.7 | |
Contact: Barbara Smith
Senior Vice President and Chief Financial Officer
214.689.4300