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| 8-K - 8-K - COMMERCIAL METALS Co | cmc-8312016pr8xk.htm |
Exhibit No. 99.1
News Release 
COMMERCIAL METALS COMPANY REPORTS FOURTH QUARTER AND FULL YEAR EARNINGS
Irving, TX - October 27, 2016 - Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal fourth quarter and year ended August 31, 2016. For the fiscal year ended August 31, 2016, earnings from continuing operations were $72.5 million, or $0.62 per diluted share, on net sales of $4.6 billion. This compares to earnings from continuing operations of $99.1 million, or $0.84 per diluted share, on net sales of $6.0 billion for the fiscal year ended August 31, 2015. For the three months ended August 31, 2016, earnings from continuing operations were $1.0 million, or $0.01 per diluted share, on net sales of $1.2 billion compared to $12.2 million, or $0.11 per diluted share, on net sales of $1.4 billion for the three months ended August 31, 2015. Included in earnings from continuing operations were after-tax impairment charges on long-lived assets of $24.3 million in fiscal year 2016 and goodwill impairment charges of $4.6 million in fiscal year 2015.
Adjusted operating profit from continuing operations was $2.1 million for the fourth quarter of fiscal 2016, compared to $38.2 million for the fourth quarter of fiscal 2015. Adjusted EBITDA from continuing operations was $73.1 million for the fourth quarter of fiscal 2016, compared to $80.5 million for the fourth quarter of fiscal 2015.
During the fiscal year ended August 31, 2016, cash and cash equivalents increased approximately $32.2 million to end the year at $517.5 million. Including cash and available credit facilities, liquidity was approximately $1.1 billion at August 31, 2016.
Joe Alvarado, Chairman of the Board, President and CEO, commented, "Despite continued margin pressure from imports both in the U.S. and Poland, we achieved many financial and operational successes during our 2016 fiscal year. In particular, our Americas Fabrication segment posted its highest fiscal year adjusted operating profit since 2008 and our International Mill segment had its most profitable fourth quarter since fiscal 2008. With $586.9 million in operating cash flow for the fiscal year, the highest since fiscal 2009, and an organization dedicated to focused execution, we are poised to face ongoing market challenges as we enter fiscal 2017."
On October 25, 2016, 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 9, 2016. The dividend will be paid on November 23, 2016.
(CMC Year End 2016 - Page 2)
Business Segments - Fiscal Fourth Quarter 2016 Review
Our Americas Recycling segment recorded adjusted operating loss of $45.1 million for the fourth quarter of fiscal 2016, compared to adjusted operating loss of $13.9 million for the fourth quarter of fiscal 2015. The fourth quarter of fiscal 2016 loss was largely due to the $38.9 million pre-tax impairment charge related to long-lived assets in our Americas Recycling segment. In the fourth quarter of fiscal 2015, we recorded a $7.3 million pre-tax goodwill impairment charge upon completion of our annual goodwill impairment assessment. Ferrous shipments increased 2% while the average ferrous metal margin decreased 5%, in each case compared to the fourth quarter of the prior fiscal year. Nonferrous shipments decreased 6% while the average nonferrous metal margin improved 11%, in each case compared to the fourth quarter of the prior fiscal year.
Our Americas Mills segment recorded adjusted operating profit of $45.0 million for the fourth quarter of fiscal 2016, compared to adjusted operating profit of $60.1 million for the fourth quarter of fiscal 2015. The decrease in adjusted operating profit for the fourth quarter of fiscal 2016 was due to a 4% decrease in total shipments and a 15% decrease in average metal margin compared to the fourth quarter of fiscal 2015. The decrease in total shipments was driven by a 33,000 ton decrease in shipments of our higher margin finished products, including reinforcement bar ("rebar") and merchants, partially offset by a 6,000 ton increase in shipments of billets, in each case compared to the fourth quarter of fiscal 2015.
Our Americas Fabrication segment recorded adjusted operating profit of $9.6 million for the fourth quarter of fiscal 2016, compared to adjusted operating profit of $18.7 million for the fourth quarter of fiscal 2015. The decrease in adjusted operating profit for the fourth quarter of fiscal 2016 was due to a 4% decrease in total shipments and a 9% decrease in the average composite metal margin, in each case compared to the fourth quarter of fiscal 2015. The margin compression was caused by selling prices falling to a greater degree than material costs.
Our International Mill segment recorded adjusted operating profit of $18.7 million for the fourth quarter of fiscal 2016, compared to adjusted operating profit of $6.4 million in the prior year's fourth quarter. The current quarter's adjusted operating profit was the highest fourth quarter since fiscal 2008 and represented a $13.2 million increase over third quarter fiscal 2016. During the fourth quarter of fiscal 2016, total shipments increased 4% compared to the fourth quarter of the prior fiscal year, coupled with a 3% increase in average metal margin.
(CMC Year End 2016 - Page 3)
Our International Marketing and Distribution segment recorded adjusted operating loss of $3.5 million for the fourth quarter of fiscal 2016, compared to adjusted operating loss of $14.3 million in the prior year's fourth quarter. The $10.8 million decline in adjusted operating loss in the fourth quarter of fiscal 2016 compared to the fourth quarter of fiscal 2015 was the result of increases in shipments for our raw materials division headquartered in the U.S. and our operations in Asia, coupled with increased average margins for our steel trading division headquartered in the U.S. and our operations in Europe. However, shipments for our steel trading division headquartered in the U.S. and our operations in Europe declined due to continued global steel overcapacity and weak oil and gas tubular demand. In addition, during the fourth quarter of fiscal 2016, we made the decision for an orderly exit of our steel trading operation in Cardiff, Wales, UK, and this segment recorded an expense of approximately $2.2 million associated with this action.
Fiscal 2016 Full Year Review
Net earnings attributable to CMC for fiscal 2016 were $54.8 million, or $0.47 per diluted share. For the year ended August 31, 2016, net cash flow from operating activities was $586.9 million, earnings from continuing operations were $72.5 million and adjusted EBITDA from continuing operations was $314.4 million. As of August 31, 2016, cash and cash equivalents totaled $517.5 million, an increase of 7% from the end of our 2015 fiscal year.
Pursuant to our share repurchase program that was approved in October 2014, during fiscal 2016, we purchased approximately 2.3 million shares of our common stock for $30.6 million.
Loss from discontinued operations for fiscal year 2016 was $17.8 million, which primarily consisted of losses related to our Australian steel distribution business.
Outlook
Mr. Alvarado concluded, "Forward looking indicators we track point toward modest strength in the demand for our products, with a slow start to the fiscal year. One of our primary end use markets in the U.S. is non-residential construction, where spending was up 4% year over year in August. Additionally, the Architectural Billings Index for the southern U.S., an important geography for CMC, has steadily improved over the last several months. However, we continue to believe our operations will face pressure in volumes, pricing and margins due to high steel import activity into the U.S. and the strong U.S. dollar. We believe the increased import activity is a result of unfair trading practices by certain foreign producers which we are actively challenging through international trade cases. While global economies appear to be stabilizing, we see few indications of significant improvements in international steel markets due to overcapacity. As an organization we remain focused on navigating through these market challenges while staying committed to our long-term strategy. In the near term we will manage the items within our control, namely: controlling costs; prudent allocation of long-term capital and working capital; and cost savings through supply chain optimization.
(CMC Year End 2016 - Page 4)
"Historically, our first quarter has been a seasonally slower period as the construction season winds down before the onset of the winter months. We believe our Americas Mills and International Mill operations will remain stable, partially offset by margin compression in our Americas Fabrication business."
Conference Call
CMC invites you to listen to a live broadcast of its fourth quarter fiscal 2016 conference call today, Thursday, October 27, 2016, at 11:00 a.m. ET. Joe Alvarado, Chairman of the Board, President and CEO, Barbara Smith, COO, and Mary Lindsey, 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, U.S. construction activity, demand for finished steel products, the effects of global steel overcapacity and international trade, a strong U.S. dollar 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 changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise.
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;
(CMC Year End 2016 - Page 5)
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; 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 2016 - Page 6)
COMMERCIAL METALS COMPANY OPERATING STATISTICS BY BUSINESS SEGMENT (UNAUDITED) | |||||||||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | Three Months Ended | |||||||||||||||||||||||||
(short tons in thousands) | 08/31/16 | 08/31/15 | 08/31/16 | 08/31/15 | 11/30/15 | 02/29/16 | 05/31/16 | ||||||||||||||||||||
Americas Recycling | |||||||||||||||||||||||||||
Ferrous tons shipped | 423 | 417 | 1,614 | 1,778 | 389 | 379 | 423 | ||||||||||||||||||||
Non-ferrous tons shipped | 52 | 55 | 201 | 225 | 52 | 48 | 49 | ||||||||||||||||||||
Americas Recycling tons shipped | 475 | 472 | 1,815 | 2,003 | 441 | 427 | 472 | ||||||||||||||||||||
Americas Steel Mills | |||||||||||||||||||||||||||
Rebar shipments | 411 | 435 | 1,631 | 1,644 | 394 | 364 | 462 | ||||||||||||||||||||
Merchant and other shipments | 247 | 250 | 999 | 1,043 | 246 | 244 | 262 | ||||||||||||||||||||
Total Americas Steel Mills tons shipped | 658 | 685 | 2,630 | 2,687 | 640 | 608 | 724 | ||||||||||||||||||||
Average FOB selling price (total sales) | $ | 531 | $ | 592 | $ | 524 | $ | 637 | $ | 556 | $ | 510 | $ | 501 | |||||||||||||
Average cost ferrous scrap utilized | $ | 234 | $ | 244 | $ | 207 | $ | 282 | $ | 198 | $ | 179 | $ | 213 | |||||||||||||
Americas Steel Mills metal margin | $ | 297 | $ | 348 | $ | 317 | $ | 355 | $ | 358 | $ | 331 | $ | 288 | |||||||||||||
International Mill | |||||||||||||||||||||||||||
Tons shipped | 341 | 328 | 1,254 | 1,226 | 278 | 282 | 353 | ||||||||||||||||||||
Average FOB selling price (total sales) | $ | 409 | $ | 444 | $ | 391 | $ | 480 | $ | 408 | $ | 363 | $ | 378 | |||||||||||||
Average cost ferrous scrap utilized | $ | 211 | $ | 252 | $ | 195 | $ | 274 | $ | 207 | $ | 178 | $ | 187 | |||||||||||||
International Mill metal margin | $ | 198 | $ | 192 | $ | 196 | $ | 206 | $ | 201 | $ | 185 | $ | 191 | |||||||||||||
Americas Fabrication | |||||||||||||||||||||||||||
Rebar shipments | 284 | 294 | 1,028 | 1,026 | 249 | 225 | 270 | ||||||||||||||||||||
Structural and post shipments | 30 | 32 | 127 | 135 | 28 | 29 | 40 | ||||||||||||||||||||
Total Americas Fabrication tons shipped | 314 | 326 | 1,155 | 1,161 | 277 | 254 | 310 | ||||||||||||||||||||
Americas Fabrication average selling price (excluding stock and buyout sales) | $ | 805 | $ | 905 | $ | 841 | $ | 943 | $ | 889 | $ | 842 | $ | 827 | |||||||||||||
(CMC Year End 2016 - Page 7)
COMMERCIAL METALS COMPANY FINANCIAL STATISTICS BY BUSINESS SEGMENT (UNAUDITED) | |||||||||||||||||||||||||||
Three Months Ended | Fiscal Year Ended | Three Months Ended | |||||||||||||||||||||||||
(in thousands) | 08/31/16 | 08/31/15 | 08/31/16 | 08/31/15 | 11/30/15 | 02/29/16 | 05/31/16 | ||||||||||||||||||||
Net sales | |||||||||||||||||||||||||||
Americas Recycling | $ | 195,724 | $ | 222,387 | $ | 705,754 | $ | 1,022,621 | $ | 179,207 | $ | 148,346 | $ | 182,477 | |||||||||||||
Americas Mills | 381,406 | 441,295 | 1,498,848 | 1,841,812 | 384,532 | 336,429 | 396,481 | ||||||||||||||||||||
Americas Fabrication | 385,917 | 449,445 | 1,489,455 | 1,624,238 | 382,314 | 336,144 | 385,080 | ||||||||||||||||||||
International Mill | 147,842 | 153,855 | 517,186 | 626,251 | 120,448 | 107,458 | 141,438 | ||||||||||||||||||||
International Marketing and Distribution | 310,079 | 376,329 | 1,189,596 | 1,897,617 | 283,037 | 276,876 | 319,604 | ||||||||||||||||||||
Corporate | 2,973 | (3,298 | ) | 7,082 | 852 | 2,391 | (2,867 | ) | 4,585 | ||||||||||||||||||
Eliminations | (215,361 | ) | (228,517 | ) | (797,395 | ) | (1,024,786 | ) | (197,070 | ) | (182,689 | ) | (202,275 | ) | |||||||||||||
Total net sales | $ | 1,208,580 | $ | 1,411,496 | $ | 4,610,526 | $ | 5,988,605 | $ | 1,154,859 | $ | 1,019,697 | $ | 1,227,390 | |||||||||||||
Adjusted operating profit (loss) | |||||||||||||||||||||||||||
Americas Recycling | $ | (45,113 | ) | $ | (13,897 | ) | $ | (61,284 | ) | $ | (29,157 | ) | $ | (6,548 | ) | $ | (7,645 | ) | $ | (1,978 | ) | ||||||
Americas Mills | 45,012 | 60,069 | 209,751 | 255,507 | 59,064 | 50,699 | 54,976 | ||||||||||||||||||||
Americas Fabrication | 9,638 | 18,654 | 68,602 | 22,424 | 21,345 | 14,825 | 22,794 | ||||||||||||||||||||
International Mill | 18,703 | 6,367 | 28,892 | 17,555 | 2,771 | 1,951 | 5,467 | ||||||||||||||||||||
International Marketing and Distribution | (3,517 | ) | (14,293 | ) | (7,087 | ) | 35,376 | (2,169 | ) | (2,293 | ) | 892 | |||||||||||||||
Corporate | (25,670 | ) | (22,319 | ) | (95,085 | ) | (77,832 | ) | (18,072 | ) | (28,801 | ) | (22,542 | ) | |||||||||||||
Eliminations | 3,086 | 3,657 | 5,319 | 1,409 | (330 | ) | 1,232 | 1,331 | |||||||||||||||||||
Adjusted operating profit from continuing operations | 2,139 | 38,238 | 149,108 | 225,282 | 56,061 | 29,968 | 60,940 | ||||||||||||||||||||
Adjusted operating profit (loss) from discontinued operations | (1,122 | ) | 257 | (17,798 | ) | (18,923 | ) | (522 | ) | (405 | ) | (15,749 | ) | ||||||||||||||
Adjusted operating profit | $ | 1,017 | $ | 38,495 | $ | 131,310 | $ | 206,359 | $ | 55,539 | $ | 29,563 | $ | 45,191 | |||||||||||||
(CMC Year End 2016 - Page 8)
COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
(in thousands, except share data) | 08/31/16 | 08/31/15 | 08/31/16 | 08/31/15 | |||||||||||
Net sales | $ | 1,208,580 | $ | 1,411,496 | $ | 4,610,526 | $ | 5,988,605 | |||||||
Costs and expenses: | |||||||||||||||
Cost of goods sold | 1,040,485 | 1,253,793 | 3,974,513 | 5,311,756 | |||||||||||
Selling, general and administrative expenses | 126,417 | 109,943 | 437,084 | 443,275 | |||||||||||
Impairment of assets | 40,028 | 9,839 | 40,028 | 9,839 | |||||||||||
Interest expense | 12,565 | 18,932 | 62,231 | 77,760 | |||||||||||
Loss on debt extinguishment | — | — | 11,480 | — | |||||||||||
1,219,495 | 1,392,507 | 4,525,336 | 5,842,630 | ||||||||||||
Earnings (loss) from continuing operations before income taxes | (10,915 | ) | 18,989 | 85,190 | 145,975 | ||||||||||
Income taxes (benefit) | (11,865 | ) | 6,744 | 12,647 | 46,844 | ||||||||||
Earnings from continuing operations | 950 | 12,245 | 72,543 | 99,131 | |||||||||||
Earnings (loss) from discontinued operations before income taxes | (1,146 | ) | 117 | (17,949 | ) | (20,124 | ) | ||||||||
Income taxes (benefit) | (65 | ) | 9 | (168 | ) | (436 | ) | ||||||||
Earnings (loss) from discontinued operations | (1,081 | ) | 108 | (17,781 | ) | (19,688 | ) | ||||||||
Net earnings (loss) | (131 | ) | 12,353 | 54,762 | 79,443 | ||||||||||
Less net earnings attributable to noncontrolling interests | — | — | — | — | |||||||||||
Net earnings (loss) attributable to CMC | $ | (131 | ) | $ | 12,353 | $ | 54,762 | $ | 79,443 | ||||||
Basic earnings (loss) per share attributable to CMC: | |||||||||||||||
Earnings from continuing operations | $ | 0.01 | $ | 0.11 | $ | 0.63 | $ | 0.85 | |||||||
Loss from discontinued operations | (0.01 | ) | — | (0.15 | ) | (0.17 | ) | ||||||||
Net earnings | $ | — | $ | 0.11 | $ | 0.48 | $ | 0.68 | |||||||
Diluted earnings (loss) per share attributable to CMC: | |||||||||||||||
Earnings from continuing operations | $ | 0.01 | $ | 0.11 | $ | 0.62 | $ | 0.84 | |||||||
Loss from discontinued operations | (0.01 | ) | — | (0.15 | ) | (0.17 | ) | ||||||||
Net earnings | $ | — | $ | 0.11 | $ | 0.47 | $ | 0.67 | |||||||
Cash dividends per share | $ | 0.12 | $ | 0.12 | $ | 0.48 | $ | 0.48 | |||||||
Average basic shares outstanding | 114,728,278 | 115,695,791 | 115,211,490 | 116,527,265 | |||||||||||
Average diluted shares outstanding | 114,728,278 | 117,244,463 | 116,623,826 | 117,949,898 | |||||||||||
(CMC Year End 2016 - Page 9)
COMMERCIAL METALS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
(in thousands) | August 31, 2016 | August 31, 2015 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 517,544 | $ | 485,323 | |||
Accounts receivable, net | 765,784 | 900,619 | |||||
Inventories, net | 652,754 | 880,484 | |||||
Other current assets | 112,043 | 93,643 | |||||
Current deferred tax assets | — | 3,310 | |||||
Assets of businesses held for sale | — | 17,008 | |||||
Total current assets | 2,048,125 | 2,380,387 | |||||
Net property, plant and equipment | 895,049 | 883,650 | |||||
Goodwill | 66,373 | 66,383 | |||||
Other assets | 121,322 | 109,531 | |||||
Total assets | $ | 3,130,869 | $ | 3,439,951 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable-trade | $ | 243,532 | $ | 260,984 | |||
Accounts payable-documentary letters of credit | 5 | 41,473 | |||||
Accrued expenses and other payables | 264,112 | 290,677 | |||||
Current maturities of long-term debt | 313,469 | 10,110 | |||||
Notes payable | — | 20,090 | |||||
Liabilities of businesses held for sale | — | 5,276 | |||||
Total current liabilities | 821,118 | 628,610 | |||||
Deferred income taxes | 63,021 | 55,803 | |||||
Other long-term liabilities | 121,351 | 101,919 | |||||
Long-term debt | 757,948 | 1,272,245 | |||||
Total liabilities | 1,763,438 | 2,058,577 | |||||
Stockholders' equity attributable to CMC | 1,367,272 | 1,381,225 | |||||
Stockholders' equity attributable to noncontrolling interests | 159 | 149 | |||||
Total equity | 1,367,431 | 1,381,374 | |||||
Total liabilities and stockholders' equity | $ | 3,130,869 | $ | 3,439,951 | |||
(CMC Year End 2016 - Page 10)
COMMERCIAL METALS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
Year Ended August 31, | ||||||||
(in thousands) | 2016 | 2015 | ||||||
Cash flows from (used by) operating activities: | ||||||||
Net earnings | $ | 54,762 | $ | 79,443 | ||||
Adjustments to reconcile net earnings to cash flows from (used by) operating activities: | ||||||||
Depreciation and amortization | 126,940 | 132,779 | ||||||
Provision for losses on receivables, net | 6,878 | 3,481 | ||||||
Share-based compensation | 26,335 | 23,484 | ||||||
Amortization of interest rate swaps termination gain | (7,597 | ) | (7,597 | ) | ||||
Loss on debt extinguishment | 11,480 | — | ||||||
Deferred income taxes | (3,889 | ) | (13,071 | ) | ||||
Tax expense from stock plans | 1,697 | 1,213 | ||||||
Net gain on sale of a subsidiary, cost method investment and other | (2,591 | ) | (8,489 | ) | ||||
Write-down of inventory | 15,555 | 37,652 | ||||||
Asset impairments | 55,793 | 14,610 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | 142,510 | 206,633 | ||||||
Advance payments on sale of accounts receivable programs, net | (19,472 | ) | (117,753 | ) | ||||
Inventories | 209,555 | 127,583 | ||||||
Accounts payable, accrued expenses and other payables | (43,577 | ) | (180,517 | ) | ||||
Changes in other operating assets and liabilities | 12,486 | 14,010 | ||||||
Net cash flows from operating activities | 586,865 | 313,461 | ||||||
Cash flows from (used by) investing activities: | ||||||||
Capital expenditures | (163,332 | ) | (119,580 | ) | ||||
Increase in restricted cash | (21,777 | ) | — | |||||
Proceeds from the sale of subsidiaries | 4,349 | 27,831 | ||||||
Proceeds from the sale of property, plant and equipment and other | 5,113 | 14,925 | ||||||
Net cash flows used by investing activities | (175,647 | ) | (76,824 | ) | ||||
Cash flows from (used by) financing activities: | ||||||||
Repayments on long-term debt | (211,394 | ) | (11,335 | ) | ||||
Decrease in documentary letters of credit, net | (41,468 | ) | (80,482 | ) | ||||
Cash dividends | (55,342 | ) | (55,945 | ) | ||||
Treasury stock acquired | (30,595 | ) | (41,806 | ) | ||||
Short-term borrowings, net change | (20,090 | ) | 7,802 | |||||
Debt issuance and extinguishment costs | (11,127 | ) | — | |||||
Stock issued under incentive and purchase plans, net of forfeitures | (6,034 | ) | (1,492 | ) | ||||
Tax expense from stock plans | (1,697 | ) | (1,213 | ) | ||||
Decrease in restricted cash | 1 | 3,742 | ||||||
Contribution from noncontrolling interests | 29 | 38 | ||||||
Net cash flows used by financing activities | (377,717 | ) | (180,691 | ) | ||||
Effect of exchange rate changes on cash | (1,280 | ) | (5,548 | ) | ||||
Increase in cash and cash equivalents | 32,221 | 50,398 | ||||||
Cash and cash equivalents at beginning of year | 485,323 | 434,925 | ||||||
Cash and cash equivalents at end of year | $ | 517,544 | $ | 485,323 | ||||
(CMC Year End 2016 - Page 11)
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 from Continuing Operations is a non-GAAP financial measure. Adjusted operating profit from continuing operations is the sum of our earnings from continuing operations before income taxes, interest expense and discounts on sales of accounts receivable. Adjusted operating profit from continuing operations should not be considered as an alternative to earnings from continuing operations or net earnings, as determined by GAAP. Management uses adjusted operating profit 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 may be inconsistent with similar measures presented by other companies.
Three Months Ended | Fiscal Year Ended | Three Months Ended | |||||||||||||||||||||||||
(in thousands) | 08/31/16 | 08/31/15 | 08/31/16 | 08/31/15 | 11/30/15 | 02/29/16 | 05/31/16 | ||||||||||||||||||||
Earnings from continuing operations | $ | 950 | $ | 12,245 | $ | 72,543 | $ | 99,131 | $ | 25,633 | $ | 10,849 | $ | 35,111 | |||||||||||||
Income taxes (benefit) | (11,865 | ) | 6,744 | 12,647 | 46,844 | 11,772 | 2,064 | 10,676 | |||||||||||||||||||
Interest expense | 12,565 | 18,932 | 62,231 | 77,760 | 18,304 | 16,625 | 14,737 | ||||||||||||||||||||
Discounts on sales of accounts receivable | 489 | 317 | 1,687 | 1,547 | 352 | 430 | 416 | ||||||||||||||||||||
Adjusted operating profit from continuing operations | $ | 2,139 | $ | 38,238 | $ | 149,108 | $ | 225,282 | $ | 56,061 | $ | 29,968 | $ | 60,940 | |||||||||||||
Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure. Adjusted EBITDA from continuing operations is the sum of earnings from continuing operations before net earnings attributable to noncontrolling interests, interest expense and income taxes. It also excludes CMC's largest recurring non-cash charge, depreciation and amortization, as well as long-lived asset impairment charges, which are also non-cash. There were no net earnings attributable to noncontrolling interests during the fiscal years ended August 31, 2016 and 2015, and the interim reporting periods therein. Adjusted EBITDA from continuing operations should not be considered an alternative to earnings from continuing operations or 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 from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties in our industry. 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) | 08/31/16 | 08/31/15 | 08/31/16 | 08/31/15 | 11/30/15 | 02/29/16 | 05/31/16 | ||||||||||||||||||||
Earnings from continuing operations | $ | 950 | $ | 12,245 | $ | 72,543 | $ | 99,131 | $ | 25,633 | $ | 10,849 | $ | 35,111 | |||||||||||||
Interest expense | 12,565 | 18,932 | 62,231 | 77,760 | 18,304 | 16,625 | 14,737 | ||||||||||||||||||||
Income taxes (benefit) | (11,865 | ) | 6,744 | 12,647 | 46,844 | 11,772 | 2,064 | 10,676 | |||||||||||||||||||
Depreciation and amortization | 31,516 | 32,950 | 126,940 | 132,503 | 31,991 | 31,550 | 31,883 | ||||||||||||||||||||
Impairment charges | 39,952 | 9,651 | 40,028 | 9,839 | — | — | 76 | ||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 73,118 | $ | 80,522 | $ | 314,389 | $ | 366,077 | $ | 87,700 | $ | 61,088 | $ | 92,483 | |||||||||||||
(CMC Year End 2016 - Page 12)
Total liquidity is a non-GAAP financial measure and is the sum of the Company's cash and cash equivalents and availability under its revolving credit facility, U.S. and international accounts receivables sales facilities and its uncommitted bank lines of credit. The table below reflects the Company's cash and cash equivalents, credit facilities and availability to liquidity.
August 31, 2016 | ||||||||
(in thousands) | Total Facility | Availability | ||||||
Cash and cash equivalents | $ | 517,544 | $ | 517,544 | ||||
Revolving credit facility | 350,000 | 346,987 | ||||||
U.S. receivables sale facility | 200,000 | 127,975 | ||||||
International accounts receivable sales facilities | 81,250 | 66,927 | ||||||
Bank credit facilities — uncommitted | 44,785 | 43,316 | ||||||
Total liquidity | $ | 1,193,579 | $ | 1,102,749 | ||||
Media Contact:
Susan Gerber
214.689.4300