CMC 10-Q Quarterly Report Feb. 28, 2021 | Alphaminr
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CMC 10-Q Quarter ended Feb. 28, 2021

Balance Sheet
Cash Flow
Income Statement
Debt
COMMERCIAL METALS CO
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cmc-20210228
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission file number 1-4304
___________________________________
COMMERCIAL METALS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
cmc-20210228_g1.jpg
___________________________________
Delaware 75-0725338
(State or Other Jurisdiction of
Incorporation or Organization) 		(I.R.S. Employer
Identification Number)
6565 N. MacArthur Blvd.
Irving , Texas 75039
(Address of Principal Executive Offices) (Zip Code)
(214) 689-4300
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, $0.01 par value CMC New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer
☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐ No ☒
As of March 23, 2021, 120,510,370 shares of the registrant's common stock, par value $0.01 per share, were outstanding.


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS


2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three Months Ended Six Months Ended
(in thousands, except share data) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Net sales $ 1,462,270 $ 1,340,963 $ 2,854,073 $ 2,725,671
Costs and expenses:
Cost of goods sold 1,228,343 1,123,096 2,403,162 2,269,610
Selling, general and administrative expenses 115,417 115,538 229,044 226,537
Loss on debt extinguishment 16,841 — 16,841 —
Interest expense 14,021 15,888 28,280 32,466
Asset impairments 474 — 4,068 530
1,375,096 1,254,522 2,681,395 2,529,143
Earnings from continuing operations before income taxes 87,174 86,441 172,678 196,528
Income taxes 20,941 22,845 42,534 50,177
Earnings from continuing operations 66,233 63,596 130,144 146,351
Earnings from discontinued operations before income taxes 197 301 447 1,196
Income taxes 73 99 141 401
Earnings from discontinued operations 124 202 306 795
Net earnings $ 66,357 $ 63,798 $ 130,450 $ 147,146
Basic earnings per share*
Earnings from continuing operations $ 0.55 $ 0.53 $ 1.08 $ 1.23
Earnings from discontinued operations — — — 0.01
Net earnings $ 0.55 $ 0.54 $ 1.09 $ 1.24
Diluted earnings per share*
Earnings from continuing operations $ 0.54 $ 0.53 $ 1.07 $ 1.22
Earnings from discontinued operations — — — 0.01
Net earnings $ 0.55 $ 0.53 $ 1.07 $ 1.22
Average basic shares outstanding 120,345,432 118,919,455 120,052,459 118,644,823
Average diluted shares outstanding 121,751,859 120,407,256 121,672,194 120,303,259
See notes to condensed consolidated financial statements.
_________________
*Earnings Per Share ("EPS") is calculated independently for each component and may not sum to Net EPS due to rounding.

3


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended Six Months Ended
(in thousands) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Net earnings $ 66,357 $ 63,798 $ 130,450 $ 147,146
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustment 1,465 ( 1,068 ) ( 6,923 ) 5,856
Net unrealized gain (loss) on derivatives:
Unrealized holding gain (loss)
7,723 ( 3,646 ) 8,887 ( 2,932 )
Reclassification for gain included in net earnings ( 259 ) ( 83 ) ( 313 ) ( 172 )
Net unrealized gain (loss) on derivatives
7,464 ( 3,729 ) 8,574 ( 3,104 )
Defined benefit obligation:
Amortization of prior services ( 14 ) ( 8 ) ( 27 ) ( 16 )
Defined benefit obligation ( 14 ) ( 8 ) ( 27 ) ( 16 )
Other comprehensive income (loss)
8,915 ( 4,805 ) 1,624 2,736
Comprehensive income $ 75,272 $ 58,993 $ 132,074 $ 149,882
See notes to condensed consolidated financial statements.
4


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share data) February 28, 2021 August 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 367,347 $ 542,103
Accounts receivable (less allowance for doubtful accounts of $ 7,623 and $ 9,597 )
895,604 880,728
Inventories, net 776,561 625,393
Prepaid and other current assets 166,124 165,879
Total current assets 2,205,636 2,214,103
Property, plant and equipment, net 1,557,143 1,571,067
Goodwill 66,235 64,321
Other noncurrent assets 235,027 232,237
Total assets $ 4,064,041 $ 4,081,728
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 309,413 $ 266,102
Accrued expenses and other payables 341,903 461,012
Current maturities of long-term debt and short-term borrowings 22,777 18,149
Total current liabilities 674,093 745,263
Deferred income taxes 126,789 130,810
Other noncurrent liabilities 242,632 250,706
Long-term debt 1,011,035 1,065,536
Total liabilities 2,054,549 2,192,315
Commitments and contingencies (Note 13)
Stockholders' equity:
Common stock, par value $ 0.01 per share; authorized 200,000,000 shares; issued 129,060,664 shares; outstanding 120,508,215 and 119,220,905 shares
1,290 1,290
Additional paid-in capital 354,620 358,912
Accumulated other comprehensive loss ( 102,140 ) ( 103,764 )
Retained earnings 1,909,443 1,807,826
Less treasury stock 8,552,449 and 9,839,759 shares at cost
( 153,952 ) ( 175,063 )
Stockholders' equity 2,009,261 1,889,201
Stockholders' equity attributable to noncontrolling interests 231 212
Total equity 2,009,492 1,889,413
Total liabilities and stockholders' equity $ 4,064,041 $ 4,081,728
See notes to condensed consolidated financial statements.
5


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
(in thousands) February 28, 2021 February 29, 2020
Cash flows from (used by) operating activities:
Net earnings $ 130,450 $ 147,146
Adjustments to reconcile net earnings to cash flows from (used by) operating activities:
Depreciation and amortization 83,372 82,338
Stock-based compensation 21,758 15,805
Loss on debt extinguishment 16,841 —
Deferred income taxes and other long-term taxes ( 8,129 ) 42,142
Net gain on disposals of subsidiaries, assets and other ( 5,481 ) ( 5,585 )
Asset impairments 4,068 530
Amortization of acquired unfavorable contract backlog ( 3,032 ) ( 14,328 )
Other ( 105 ) 1,041
Changes in operating assets and liabilities ( 238,539 ) ( 15,673 )
Net cash flows from operating activities
1,203 253,416
Cash flows from (used by) investing activities:
Capital expenditures ( 87,688 ) ( 96,592 )
Proceeds from the sale of property, plant and equipment and other 20,338 14,004
Acquisitions, net of cash acquired — ( 9,850 )
Proceeds from insurance — 974
Net cash flows used by investing activities:
( 67,350 ) ( 91,464 )
Cash flows from (used by) financing activities:
Proceeds from issuance of long-term debt, net 296,250 11,299
Repayments of long-term debt ( 357,792 ) ( 106,880 )
Debt extinguishment costs ( 13,051 ) —
Debt issuance costs ( 1,124 ) —
Proceeds from accounts receivable programs 8,848 85,686
Repayments under accounts receivable programs ( 8,848 ) ( 81,314 )
Dividends ( 28,833 ) ( 28,480 )
Stock issued under incentive and purchase plans, net of forfeitures ( 4,536 ) ( 2,463 )
Contribution from noncontrolling interest 19 16
Net cash flows used by financing activities
( 109,067 ) ( 122,136 )
Effect of exchange rate changes on cash ( 419 ) 337
Increase (decrease) in cash, restricted cash and cash equivalents
( 175,633 ) 40,153
Cash, restricted cash and cash equivalents at beginning of period 544,964 193,729
Cash, restricted cash and cash equivalents at end of period $ 369,331 $ 233,882
See notes to condensed consolidated financial statements.
Supplemental information: Six Months Ended
(in thousands) February 28, 2021 February 29, 2020
Cash paid for income taxes $ 48,757 $ 27,759
Cash paid for interest 34,094 29,484
Noncash activities:
Liabilities related to additions of property, plant and equipment 16,252 29,176
Cash and cash equivalents 367,347 232,442
Restricted cash 1,984 1,440
Total cash, cash equivalents and restricted cash $ 369,331 $ 233,882

6


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended February 28, 2021
Common Stock Additional Accumulated
Other 		Treasury Stock Non-
(in thousands, except share data) Number of
Shares 		Amount Paid-In
Capital 		Comprehensive
Loss 		Retained
Earnings 		Number of
Shares 		Amount controlling
Interest 		Total
Balance, December 1, 2020 129,060,664 $ 1,290 $ 348,816 $ ( 111,055 ) $ 1,857,513 ( 8,992,643 ) $ ( 161,877 ) $ 212 $ 1,934,899
Net earnings 66,357 66,357
Other comprehensive income 8,915 8,915
Dividends ($ 0.12 per share)
( 14,427 ) ( 14,427 )
Issuance of stock under incentive and purchase plans, net of forfeitures ( 2,120 ) 440,194 7,925 5,805
Stock-based compensation 7,924 7,924
Contribution of noncontrolling interest 19 19
Balance, February 28, 2021 129,060,664 $ 1,290 $ 354,620 $ ( 102,140 ) $ 1,909,443 ( 8,552,449 ) $ ( 153,952 ) $ 231 $ 2,009,492
Six Months Ended February 28, 2021
Common Stock Additional Accumulated
Other 		Treasury Stock Non-
(in thousands, except share data) Number of
Shares 		Amount Paid-In
Capital 		Comprehensive
Loss 		Retained
Earnings 		Number of
Shares 		Amount controlling
Interest 		Total
Balance, September 1, 2020 129,060,664 $ 1,290 $ 358,912 $ ( 103,764 ) $ 1,807,826 ( 9,839,759 ) $ ( 175,063 ) $ 212 $ 1,889,413
Net earnings 130,450 130,450
Other comprehensive income 1,624 1,624
Dividends ($ 0.24 per share)
( 28,833 ) ( 28,833 )
Issuance of stock under incentive and purchase plans, net of forfeitures ( 25,647 ) 1,287,310 21,111 ( 4,536 )
Stock-based compensation 15,935 15,935
Contribution of noncontrolling interest 19 19
Reclassification of share-based liability awards 5,420 5,420
Balance, February 28, 2021 129,060,664 $ 1,290 $ 354,620 $ ( 102,140 ) $ 1,909,443 ( 8,552,449 ) $ ( 153,952 ) $ 231 $ 2,009,492

7

Three Months Ended February 29, 2020
Common Stock Additional Accumulated
Other 		Treasury Stock Non-
(in thousands, except share data) Number of
Shares 		Amount Paid-In
Capital 		Comprehensive
Loss 		Retained
Earnings 		Number of
Shares 		Amount controlling
Interest 		Total
Balance, December 1, 2019 129,060,664 $ 1,290 $ 347,192 $ ( 116,585 ) $ 1,654,489 ( 10,410,799 ) $ ( 184,885 ) $ 196 $ 1,701,697
Net earnings 63,798 63,798
Other comprehensive loss ( 4,805 ) ( 4,805 )
Dividends ($ 0.12 per share)
( 14,242 ) ( 14,242 )
Issuance of stock under incentive and purchase plans, net of forfeitures ( 1,948 ) 412,024 7,302 5,354
Stock-based compensation 6,237 6,237
Contribution of noncontrolling interest 16 16
Balance, February 29, 2020 129,060,664 $ 1,290 $ 351,481 $ ( 121,390 ) $ 1,704,045 ( 9,998,775 ) $ ( 177,583 ) $ 212 $ 1,758,055
Six Months Ended February 29, 2020
Common Stock Additional Accumulated
Other 		Treasury Stock Non-
(in thousands, except share data) Number of
Shares 		Amount Paid-In
Capital 		Comprehensive
Loss 		Retained
Earnings 		Number of
Shares 		Amount controlling
Interest 		Total
Balance, September 1, 2019 129,060,664 $ 1,290 $ 358,668 $ ( 124,126 ) $ 1,585,379 ( 11,135,726 ) $ ( 197,350 ) $ 196 $ 1,624,057
Net earnings 147,146 147,146
Other comprehensive income 2,736 2,736
Dividends ($ 0.24 per share)
( 28,480 ) ( 28,480 )
Issuance of stock under incentive and purchase plans, net of forfeitures ( 22,230 ) 1,136,951 19,767 ( 2,463 )
Stock-based compensation 12,533 12,533
Contribution of noncontrolling interest 16 16
Reclassification of share-based liability awards 2,510 2,510
Balance, February 29, 2020 129,060,664 $ 1,290 $ 351,481 $ ( 121,390 ) $ 1,704,045 ( 9,998,775 ) $ ( 177,583 ) $ 212 $ 1,758,055
See notes to condensed consolidated financial statements.

8

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") on a basis consistent with that used in the Annual Report on Form 10-K for the year ended August 31, 2020 ("2020 Form 10-K") filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the Securities and Exchange Commission (the "SEC") and include all normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets and the condensed consolidated statements of earnings, comprehensive income, cash flows and stockholders' equity for the periods indicated. These notes should be read in conjunction with the consolidated financial statements included in the 2020 Form 10-K. The results of operations for the three and six month periods are not necessarily indicative of the results to be expected for the full fiscal year. Any reference in this Form 10-Q to the "corresponding period" relates to the relevant three or six month period ended February 29, 2020.

Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise noted.
NOTE 2. CHANGES IN BUSINESS

Facility Closures and Dispositions

In October 2019, the Company closed the melting operations at its Rancho Cucamonga facility, which is part of the North America segment. In August 2020, the Company announced plans to sell the Rancho Cucamonga site and the Company ceased operations at this facility in January 2021. As a result, the Company recorded $ 5.4 million and $ 13.4 million of expense in the three and six months ended February 28, 2021, respectively, and $ 6.3 million of expense in the six months ended February 29, 2020, all of which was recorded in the first quarter of 2020, related to asset impairments, severance, pension curtailment, environmental obligations and vendor agreement terminations. The disposition does not meet the criteria for discontinued operations, and a s of February 28, 2021, does not qualify for held for sale accounting.
9

NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables reflect the changes in accumulated other comprehensive income (loss) ("AOCI"):
Three Months Ended February 28, 2021
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, December 1, 2020 $ ( 96,321 ) $ ( 10,224 ) $ ( 4,510 ) $ ( 111,055 )
Other comprehensive income (loss) before reclassifications 1,465 9,535 ( 14 ) 10,986
Amounts reclassified from AOCI — ( 320 ) — ( 320 )
Income taxes — ( 1,751 ) — ( 1,751 )
Net other comprehensive income (loss)
1,465 7,464 ( 14 ) 8,915
Balance, February 28, 2021 $ ( 94,856 ) $ ( 2,760 ) $ ( 4,524 ) $ ( 102,140 )
Six Months Ended February 28, 2021
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, September 1, 2020 $ ( 87,933 ) $ ( 11,334 ) $ ( 4,497 ) $ ( 103,764 )
Other comprehensive income (loss) before reclassifications ( 6,923 ) 10,972 ( 34 ) 4,015
Amounts reclassified from AOCI — ( 387 ) — ( 387 )
Income taxes — ( 2,011 ) 7 ( 2,004 )
Net other comprehensive income (loss)
( 6,923 ) 8,574 ( 27 ) 1,624
Balance, February 28, 2021 $ ( 94,856 ) $ ( 2,760 ) $ ( 4,524 ) $ ( 102,140 )

Three Months Ended February 29, 2020
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, December 1, 2019 $ ( 114,574 ) $ 1,731 $ ( 3,742 ) $ ( 116,585 )
Other comprehensive loss before reclassifications ( 1,066 ) ( 4,501 ) ( 14 ) ( 5,581 )
Amounts reclassified from AOCI ( 2 ) ( 104 ) — ( 106 )
Income taxes — 876 6 882
Net other comprehensive loss
( 1,068 ) ( 3,729 ) ( 8 ) ( 4,805 )
Balance, February 29, 2020 $ ( 115,642 ) $ ( 1,998 ) $ ( 3,750 ) $ ( 121,390 )
Six Months Ended February 29, 2020
(in thousands) Foreign Currency Translation Unrealized Gain (Loss) on Derivatives Defined Benefit Obligation Total AOCI
Balance, September 1, 2019 $ ( 121,498 ) $ 1,106 $ ( 3,734 ) $ ( 124,126 )
Other comprehensive income (loss) before reclassifications 5,858 ( 3,619 ) ( 24 ) 2,215
Amounts reclassified from AOCI ( 2 ) ( 214 ) — ( 216 )
Income taxes — 729 8 737
Net other comprehensive income (loss)
5,856 ( 3,104 ) ( 16 ) 2,736
Balance, February 29, 2020 $ ( 115,642 ) $ ( 1,998 ) $ ( 3,750 ) $ ( 121,390 )

Items reclassified out of AOCI were immaterial for the three and six months ended February 28, 2021 and February 29, 2020. Thus, the corresponding line items in the condensed consolidated statements of earnings to which the items were reclassified are not presented.

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NOTE 4. REVENUE RECOGNITION

Each fabricated product contract sold by the North America segment represents a single performance obligation. Revenue from contracts where the Company provides fabricated product and installation services is recognized over time using an input measure, and these contracts represented 11 % and 12 % of net sales in the North America segment in the three and six months ended February 28, 2021, respectively. Revenue from contracts where the Company does not provide installation services is recognized over time using an output measure, and these contracts represented 9 % of net sales in the North America segment in both the three and six months ended February 28, 2021. The remaining 80 % and 79 % of net sales in the North America segment were recognized at a point in time concurrent with the transfer of control, or as amounts were billed to the customer under an available practical expedient, in the three and six months ended February 28, 2021, respectively.

The following table provides information about assets and liabilities from contracts with customers.
(in thousands) February 28, 2021 August 31, 2020
Contract assets (included in accounts receivable) $ 54,468 $ 53,275
Contract liabilities (included in accrued expenses and other payables) 18,638 25,450

During the six months ended February 28, 2021, approximately $ 21.3 million was recognized in the condensed consolidated statements of earnings related to August 31, 2020 contract liabilities.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of fabricated product contracts where revenue is recognized using an input or output measure for which work has not yet been performed. As of February 28, 2021, $ 688.3 million was allocated to remaining performance obligations in the North America segment related to those contracts.
NOTE 5. INVENTORIES, NET

The majority of the Company's inventories are in the form of semi-finished and finished goods. Under the Company’s business model, products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be combined. As such, at February 28, 2021 and August 31, 2020, work in process inventories were immaterial. At February 28, 2021 and August 31, 2020, the Company's raw materials inventories were $ 213.3 million and $ 123.9 million, respectively.
NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment at February 28, 2021 is detailed in the following table:
(in thousands) North America Europe Consolidated
Goodwill, gross* $ 71,941 $ 4,491 $ 76,432
Accumulated impairment losses* ( 10,036 ) ( 161 ) ( 10,197 )
Goodwill, net* $ 61,905 $ 4,330 $ 66,235
_________________
* The change in balance from August 31, 2020 was immaterial.

The total gross carrying amounts of the Company's intangible assets subject to amortization were $ 21.8 million and $ 22.1 million, and the total net carrying amounts were $ 11.4 million and $ 12.6 million at February 28, 2021 and August 31, 2020, respectively. These assets were included in other noncurrent assets on the Company's condensed consolidated balance sheets. Intangible amortization expense from continuing operations related to such intangible assets was immaterial for the three and six months ended February 28, 2021 and February 29, 2020. Excluding goodwill, the Company did not have any significant intangible assets with indefinite lives at February 28, 2021.

At February 28, 2021 and August 31, 2020, the net carrying amount of the acquired unfavorable contract backlog liability was $ 3.0 million and $ 6.0 million, respectively. Amortization of the acquired unfavorable contract backlog was $ 1.5 million and $ 3.0 million for the three and six months ended February 28, 2021, respectively, and $ 6.0 million and $ 14.3 million for the
11

corresponding periods, and was recorded as an increase to net sales in the Company’s condensed consolidated statements of earnings.

NOTE 7. LEASES

The following table presents the components of the total leased assets and lease liabilities and their classification in the Company's condensed consolidated balance sheets:
(in thousands) Classification in Condensed Consolidated Balance Sheets February 28, 2021 August 31, 2020
Assets:
Operating assets Other noncurrent assets $ 117,547 $ 114,905
Finance assets Property, plant and equipment, net 52,325 50,642
Total leased assets $ 169,872 $ 165,547
Liabilities:
Operating lease liabilities:
Current Accrued expenses and other payables $ 27,176 $ 27,604
Long-term Other noncurrent liabilities 98,807 95,810
Total operating lease liabilities 125,983 123,414
Finance lease liabilities:
Current Current maturities of long-term debt and short-term borrowings 15,228 14,373
Long-term Long-term debt 35,992 35,851
Total finance lease liabilities 51,220 50,224
Total lease liabilities $ 177,203 $ 173,638

The components of lease cost were as follows:
Three Months Ended Six Months Ended
(in thousands) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Operating lease expense $ 8,651 $ 8,815 $ 17,373 $ 17,605
Finance lease expense:
Amortization of assets 3,219 2,720 6,458 4,885
Interest on lease liabilities 563 465 1,118 866
Total finance lease expense 3,782 3,185 7,576 5,751
Variable and short-term lease expense 4,324 4,381 9,286 8,314
Total lease expense $ 16,757 $ 16,381 $ 34,235 $ 31,670

The weighted average remaining lease term and discount rate for operating and finance leases are presented in the following table:
February 28, 2021 August 31, 2020
Weighted average remaining lease term (years)
Operating leases 6.4 6.3
Finance leases 3.6 3.8
Weighted average discount rate
Operating leases 4.482 % 4.283 %
Finance leases 4.296 % 4.270 %

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Cash flow and other information related to leases is included in the following table:
Six Months Ended
(in thousands) February 28, 2021 February 29, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows from operating leases $ 17,812 $ 17,594
Operating cash outflows from finance leases 1,125 787
Financing cash outflows from finance leases 7,761 6,426
Right of use ("ROU") assets obtained in exchange for lease obligations:
Operating leases 20,249 28,942
Finance leases 8,784 13,040

Maturities of lease liabilities at February 28, 2021 are presented in the following table:
(in thousands) Operating Leases Finance Leases
Year 1 $ 32,387 $ 17,138
Year 2 26,877 14,767
Year 3 22,162 12,336
Year 4 17,182 8,716
Year 5 12,921 2,392
Thereafter 35,374 97
Total lease payments 146,903 55,446
Less: Imputed interest 20,920 4,226
Present value of lease liabilities $ 125,983 $ 51,220

NOTE 8. CREDIT ARRANGEMENTS

Long-term debt was as follows:
(in thousands) Weighted Average Interest Rate as of February 28, 2021 February 28, 2021 August 31, 2020
2031 Notes 3.875 % $ 300,000 $ —
2027 Notes 5.375 % 300,000 300,000
2026 Notes 5.750 % — 350,000
2023 Notes 4.875 % 330,000 330,000
Poland Term Loan 1.710 % 40,068 40,713
Other 5.100 % 21,329 21,329
Finance leases 51,220 50,224
Total debt 1,042,617 1,092,266
Less debt issuance costs 8,805 8,581
Total amounts outstanding 1,033,812 1,083,685
Less current maturities of long-term debt 22,777 18,149
Long-term debt $ 1,011,035 $ 1,065,536

In February 2021, the Company issued $ 300.0 million of 3.875 % Senior Notes due February 2031 (the "2031 Notes"). Issuance costs associated with the 2031 Notes were approximately $ 4.9 million. Interest on the 2031 Notes is payable semiannually.

In May 2018, the Company issued $ 350.0 million of 5.750 % Senior Notes due April 2026 (the "2026 Notes"). In February 2021, the Company accepted for purchase approximately $ 77.8 million of the outstanding principal amount of the 2026 Notes
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through a cash tender offer. Following the expiration of the cash tender offer on February 18, 2021, the Company redeemed the remaining outstanding principal amount of the 2026 Notes. In the three and six month periods ended February 28, 2021, the Company recognized a $ 16.8 million loss on debt extinguishment related to the retirement of the 2026 Notes.

The Company had no amounts drawn under its $ 350.0 million revolving credit facility (the "Revolver") at February 28, 2021 and August 31, 2020. The availability under the Revolver was reduced by outstanding stand-by letters of credit totaling $ 3.0 million a t February 28, 2021 and August 31, 2020 .

The Company has a Term Loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"), which allows for a maximum aggregate principal amount of Polish zloty ("PLN") 250.0 million, or $ 66.8 million, at February 28, 2021. At February 28, 2021 and August 31, 2020, PLN 150.0 million, or $ 40.1 million, and PLN 150.0 million, or $ 40.7 million, respectively, was outstanding.

The Company also has credit facilities in Poland through its subsidiary CMCP. At February 28, 2021, CMCP's credit facilities totaled PLN 275.0 million, or $ 73.5 million. These facilities expire in March 2022. No amounts were outstanding under these facilities as of February 28, 2021 or August 31, 2020. The available balance of these credit facilities was reduced by outstanding stand-by letters of credit, guarantees, and/or other financial assurance instruments, which totaled $ 0.9 million and $ 0.8 million at February 28, 2021 and August 31, 2020, respectively.

The Company's debt agreements require compliance with certain non-financial and financial covenants, including an interest coverage ratio and a debt to capitalization ratio. At February 28, 2021, the Company was in compliance with all covenants contained in its debt agreements.

Accounts Receivable Facilities

The Company had no advance payments outstanding under its U.S. accounts receivable facility at February 28, 2021 or August 31, 2020.

The Poland accounts receivable facility has a limit of PLN 220.0 million, or $ 58.8 million at February 28, 2021. The Company had no advance payments outstanding under the Poland accounts receivable facility at February 28, 2021 or August 31, 2020.
NOTE 9. DERIVATIVES

The Company's global operations and product lines expose it to risks from fluctuations in metal commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. One objective of the Company's risk management program is to mitigate these risks using derivative instruments. The Company enters into (i) metal commodity futures and forward contracts to mitigate the risk of unanticipated changes in gross margin due to price volatility in these commodities, (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies and (iii) energy derivatives to mitigate the risk related to price volatility of electricity and natural gas.

At February 28, 2021, the notional values of the Company's foreign currency and commodity commitments were $ 165.8 million and $ 217.2 million, respectively. At August 31, 2020, the notional values of the Company's foreign currency and commodity contract commitments were $ 138.5 million and $ 195.8 million, respectively.

The following table provides information regarding the Company's commodity contract commitments at February 28, 2021:
Commodity Long/Short Total
Aluminum Long 3,350 MT
Aluminum Short 1,675 MT
Copper Long 1,077 MT
Copper Short 7,836 MT
Electricity Long 1,967,000 MW(h)
_________________
MT = Metric Ton
MW(h) = Megawatt hour

The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. Certain foreign currency and commodity contracts were not designated as hedges for accounting
14

purposes, although management believes they are essential economic hedges.

Commodity derivatives not designated as hedging instrument s resulted in a loss, before income taxes, of $ 11.0 million and $ 16.6 million, in the three and six months ended February 28, 2021, respectively, and a gain, before income taxes, of $ 1.7 million and $ 0.4 million in the three and six months ended February 29, 2020, respectively, primarily recorded in cost of goods sold within the condensed consolidated statements of earnings. Foreign exchange derivatives accounted for as cash flow hedging instruments resulted in a net gain of $ 7.7 million and $ 8.9 million, in the three and six months ended February 28, 2021, respectively, and a net loss of $ 3.6 million and $ 2.9 million in the three and six months ended February 29, 2020, respectively, recognized in the condensed consolidated statements of comprehensive income (loss). See Note 10, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.
NOTE 10. FAIR VALUE

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. Levels within the hierarchy are defined within the Summary of Significant Accounting Policies footnote in our 2020 Form 10-K.

The following tables summarize information regarding the Company's financial assets and financial liabilities that were measured at fair value on a recurring basis:
Fair Value Measurements at Reporting Date Using
(in thousands) February 28, 2021 Quoted Prices in
Active Markets for
Identical Assets
(Level 1) 		Significant  Other
Observable Inputs
(Level 2) 		Significant
Unobservable  Inputs
(Level 3)
Assets:
Investment deposit accounts (1)
$ 345,240 $ 345,240 $ — $ —
Commodity derivative assets (2)
1,091 1,091 — —
Foreign exchange derivative assets (2)
1,301 — 1,301 —
Liabilities:
Commodity derivative liabilities (2)
11,349 7,064 — 4,285
Foreign exchange derivative liabilities (2)
635 — 635 —

Fair Value Measurements at Reporting Date Using
(in thousands) August 31, 2020 Quoted Prices in
Active Markets for
Identical Assets
(Level 1) 		Significant  Other
Observable Inputs
(Level 2) 		Significant
Unobservable  Inputs
(Level 3)
Assets:
Investment deposit accounts (1)
$ 449,824 $ 449,824 $ — $ —
Commodity derivative assets (2)
202 202 — —
Foreign exchange derivative assets (2)
1,484 — 1,484 —
Liabilities:
Commodity derivative liabilities (2)
19,000 3,993 — 15,007
Foreign exchange derivative liabilities (2)
459 — 459 —
_________________
(1) Investment deposit accounts are short-term in nature, and the value is determined by principal plus interest. The investment portfolio mix can change each period based on the Company's assessment of investment options.
(2) Derivative assets and liabilities classified as Level 1 are commodity futures contracts valued based on quoted market prices in the London Metal Exchange or New York Mercantile Exchange. Amounts in Level 2 are based on broker quotes in the over-the-counter market. Derivatives classified as Level 3 are described below. Further discussion regarding the Company's use of derivative instruments is included in Note 9, Derivatives.

15

The fair value estimate of the Level 3 commodity derivative is based on an internally developed discounted cash flow model primarily utilizing unobservable inputs in which there is little or no market data. The Company forecasts future energy rates using a range of historical prices ("floating rate"). The floating rate is the only significant unobservable input used in the Company's discounted cash flow model.
February 28, 2021
Unobservable Inputs Low High Average
Floating rate (PLN) 151.74 264.53 221.74

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivative recognized in the condensed consolidated statements of comprehensive income. The fluctuation in energy rates over time may cause volatility in the fair value estimate and is the primary reason for the unrealized gain in other comprehensive income ("OCI") in the three and six months ended February 28, 2021.

(in thousands) Three Months Ended February 28, 2021
Balance, December 1, 2020 $ ( 13,614 )
Total gains, realized and unrealized
Recognized in net earnings (1)
253
Recognized in OCI (2)
9,076
Balance, February 28, 2021 $ ( 4,285 )
(in thousands) Six Months Ended February 28, 2021
Balance, September 1, 2020 $ ( 15,007 )
Total gains, realized and unrealized
Recognized in net earnings (1)
253
Recognized in OCI (2)
10,469
Balance, February 28, 2021 $ ( 4,285 )
_________________
(1)    Gains recognized in net earnings are included in cost of goods sold in the condensed consolidated statements of earnings.
(2)    Gains recognized in OCI are included in the unrealized holding gain in the condensed consolidated statements of comprehensive income (loss).

There were no material non-recurring fair value remeasurements during the three and six months ended February 28, 2021 or February 29, 2020.

The carrying values of the Company's short-term items approximate fair value.

The carrying values and estimated fair values of the Company's financial assets and liabilities that are not required to be measured at fair value on the condensed consolidated balance sheets were as follows:
February 28, 2021 August 31, 2020
(in thousands) Fair Value Hierarchy Carrying Value Fair Value Carrying Value Fair Value
2031 Notes (1)
Level 2 $ 300,000 $ 301,674 $ — $ —
2027 Notes (1)
Level 2 300,000 319,428 300,000 319,377
2026 Notes (1)
Level 2 — — 350,000 367,374
2023 Notes (1)
Level 2 330,000 349,104 330,000 345,335
Poland Term Loan (2)
Level 2 40,068 40,068 40,713 40,713
_________________
(1) The fair value of the notes was determined based on indicated market values.
(2) The Poland Term Loan contains variable interest rates, and as a result, the carrying value approximates fair value.
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NOTE 11. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note 15, Stock-Based Compensation Plans, to the consolidated financial statements in the 2020 Form 10-K. In general, restricted stock units granted in 2021 vest ratably over a period of three years . Subject to the achievement of performance targets established by the Compensation Committee of CMC's Board of Directors, performance stock units granted in 2021 vest after a period of three years .

During the six months ended February 28, 2021 and February 29, 2020, the Company granted the following awards under its stock-based compensation plans:
February 28, 2021 February 29, 2020
(in thousands, except per share data) Shares Granted Weighted Average Grant Date Fair Value Shares Granted Weighted Average Grant Date Fair Value
Equity method 1,512 $ 20.51 1,521 $ 18.32
Liability method 324 N/A 426 N/A

During the three and six months ended February 28, 2021 and February 29, 2020, the Company recorded immaterial mark-to-market adjustments on liability awards. At February 28, 2021, the Company had outstanding 711,648 equivalent shares accounted for under the liability method. The Company expects 676,065 equivalent shares to vest.

The following table summarizes total stock-based compensation expense, including fair value remeasurements, which was primarily included in selling, general and administrative expenses on the Company's condensed consolidated statements of earnings:
Three Months Ended Six Months Ended
(in thousands) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Stock-based compensation expense $ 12,696 $ 7,536 $ 21,758 $ 15,805

NOTE 12. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE

The calculations of basic and diluted earnings per share from continuing operations were as follows:
Three Months Ended Six Months Ended
(in thousands, except share data) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Earnings from continuing operations $ 66,233 $ 63,596 $ 130,144 $ 146,351
Basic earnings per share:
Shares outstanding for basic earnings per share 120,345,432 118,919,455 120,052,459 118,644,823
Basic earnings per share from continuing operations $ 0.55 $ 0.53 $ 1.08 $ 1.23
Diluted earnings per share:
Shares outstanding for basic earnings per share 120,345,432 118,919,455 120,052,459 118,644,823
Effect of dilutive securities:
Stock-based incentive/purchase plans 1,406,427 1,487,801 1,619,735 1,658,436
Shares outstanding for diluted earnings per share 121,751,859 120,407,256 121,672,194 120,303,259
Diluted earnings per share from continuing operations $ 0.54 $ 0.53 $ 1.07 $ 1.22

Anti-dilutive shares not included above were immaterial for all periods presented.

Restricted stock is included in the number of shares of common stock issued and outstanding, but omitted from the basic earnings per share calculation until the shares vest.
During the first quarter of 2015, CMC's Board of Directors authorized a share repurchase program under which CMC may repurchase up to $ 100.0 million of shares of common stock. During the three and six months ended February 28, 2021, CMC did no t repurchase any shares of common stock. CMC had remaining authorization to repurchase $ 27.6 million of common stock at February 28, 2021.
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NOTE 13. COMMITMENTS AND CONTINGENCIES

Legal and Environmental Matters

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters. See Note 19, Commitments and Contingencies, to the consolidated financial statements in the 2020 Form 10-K.

The Company has received notices from the U.S. Environmental Protection Agency ("EPA") or state agencies with similar responsibility that it is considered a potentially responsible party at several sites, none of which are owned by the Company, and may be obligated under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") or similar state statutes to conduct remedial investigations, feasibility studies, remediation and/or removal of alleged releases of hazardous substances or to reimburse the EPA for such activities. The Company is involved in litigation or administrative proceedings with regard to several of these sites in which the Company is contesting, or at the appropriate time may contest, its liability at the sites. In addition, the Company has received information requests with regard to other sites which may be under consideration by the EPA as potential CERCLA sites. Some of these environmental matters or other proceedings may result in fines, penalties or judgments being assessed against the Company. At February 28, 2021 and August 31, 2020, the amounts accrued for cleanup and remediation costs in connection with CERCLA sites were immaterial. The estimation process is based on currently available information which is, in many cases, preliminary and incomplete. Total environmental liabilities, including CERCLA sites, were $ 6.8 million and $ 3.4 million at February 28, 2021 and August 31, 2020, respectively, of which $ 2.4 million and $ 2.7 million were classified as other long-term liabilities at February 28, 2021 and August 31, 2020, respectively. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent shortcomings of the estimation process and other factors, amounts accrued could vary significantly from amounts paid. Historically, the amounts the Company has ultimately paid for such remediation activities have not been material.

Management believes that adequate provisions have been made in the Company's condensed consolidated financial statements for the potential impact of these contingencies, and that the outcomes of the suits and proceedings described above, and other miscellaneous litigation and proceedings now pending, will not have a material adverse effect on the business, results of operations or financial condition of the Company.
NOTE 14. BUSINESS SEGMENTS

The Company structures its business into two reportable segments: North America and Europe. See Note 1, Nature of Operations, in the 2020 Form 10-K for more information about the reportable segments, including the types of products and services from which each reportable segment derives its net sales. Corporate and Other contains earnings or losses on assets and liabilities related to the Company's Benefit Restoration Plan assets and short-term investments, expenses of the Company's corporate headquarters, interest expense related to its long-term debt and intercompany eliminations.

The following is a summary of certain financial information from continuing operations by reportable segment:
Three Months Ended February 28, 2021
(in thousands) North America Europe Corporate and Other Continuing Operations
Net sales $ 1,257,486 $ 202,066 $ 2,718 $ 1,462,270
Adjusted EBITDA 171,612 16,107 ( 45,986 ) 141,733
Six Months Ended February 28, 2021
(in thousands) North America Europe Corporate and Other Continuing Operations
Net sales $ 2,452,499 $ 396,662 $ 4,912 $ 2,854,073
Adjusted EBITDA 327,246 30,577 ( 72,457 ) 285,366
Total assets at February 28, 2021* 2,957,534 566,195 540,312 4,064,041

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Three Months Ended February 29, 2020
(in thousands) North America Europe Corporate and Other Continuing Operations
Net sales $ 1,161,283 $ 180,079 $ ( 399 ) $ 1,340,963
Adjusted EBITDA 152,831 13,451 ( 28,561 ) 137,721
Six Months Ended February 29, 2020
(in thousands) North America Europe Corporate and Other Continuing Operations
Net sales $ 2,378,003 $ 345,468 $ 2,200 $ 2,725,671
Adjusted EBITDA 327,563 24,810 ( 54,847 ) 297,526
Total assets at August 31, 2020 *
2,862,805 532,850 686,073 4,081,728
_________________
*Total assets listed in Corporate and Other includes assets from discontinued operations.

The following table presents a reconciliation of earnings from continuing operations to adjusted EBITDA from continuing operations:
Three Months Ended Six Months Ended
(in thousands) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Earnings from continuing operations $ 66,233 $ 63,596 $ 130,144 $ 146,351
Interest expense 14,021 15,888 28,280 32,466
Income taxes 20,941 22,845 42,534 50,177
Depreciation and amortization 41,573 41,389 83,372 82,330
Amortization of acquired unfavorable contract backlog ( 1,509 ) ( 5,997 ) ( 3,032 ) ( 14,328 )
Asset impairments 474 — 4,068 530
Adjusted EBITDA from continuing operations $ 141,733 $ 137,721 $ 285,366 $ 297,526

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Disaggregation of Revenue

The following tables display revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
Three Months Ended February 28, 2021
(in thousands) North America Europe Corporate Total
Major product:
Raw material products $ 255,012 $ 4,775 $ — $ 259,787
Steel products 514,201 157,482 — 671,683
Downstream products 400,397 33,762 — 434,159
Other 87,876 5,540 3,225 96,641
Net sales-unaffiliated customers 1,257,486 201,559 3,225 1,462,270
Intersegment net sales, eliminated on consolidation — 507 ( 507 ) —
Net sales $ 1,257,486 $ 202,066 $ 2,718 $ 1,462,270
Six Months Ended February 28, 2021
(in thousands) North America Europe Corporate Total
Major product:
Raw material products $ 465,249 $ 7,605 $ — $ 472,854
Steel products 971,858 308,937 — 1,280,795
Downstream products 837,426 68,235 — 905,661
Other 177,966 10,967 5,830 194,763
Net sales-unaffiliated customers $ 2,452,499 $ 395,744 $ 5,830 $ 2,854,073
Intersegment net sales, eliminated on consolidation — 918 ( 918 ) —
Net sales $ 2,452,499 $ 396,662 $ 4,912 $ 2,854,073

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Three Months Ended February 29, 2020
(in thousands) North America Europe Corporate Total
Major product:
Raw material products $ 193,312 $ 2,408 $ — $ 195,720
Steel products 437,648 147,525 — 585,173
Downstream products 441,765 23,758 — 465,523
Other 88,558 5,965 24 94,547
Net sales-unaffiliated customers 1,161,283 179,656 24 1,340,963
Intersegment net sales, eliminated on consolidation — 423 ( 423 ) —
Net sales $ 1,161,283 $ 180,079 $ ( 399 ) $ 1,340,963
Six Months Ended February 29, 2020
(in thousands) North America Europe Corporate Total
Major product:
Raw material products $ 374,935 $ 4,613 $ — $ 379,548
Steel products 878,811 277,269 — 1,156,080
Downstream products 941,492 51,958 — 993,450
Other 182,765 10,856 2,972 196,593
Net sales-unaffiliated customers 2,378,003 344,696 2,972 2,725,671
Intersegment net sales, eliminated on consolidation — 772 ( 772 ) —
Net sales $ 2,378,003 $ 345,468 $ 2,200 $ 2,725,671

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following discussion, references to "we," "us," "our" or the "Company" mean Commercial Metals Company ("CMC") and its consolidated subsidiaries, unless the context otherwise requires. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes thereto, which are included in this Quarterly Report on Form 10-Q (the "Form 10-Q"), and our consolidated financial statements and the notes thereto, which are included in our Annual Report on Form 10-K for the year ended August 31, 2020 (the "2020 Form 10-K"). This discussion contains or incorporates by reference "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on expectations, estimates, assumptions and projections about our industry, business and future financial results, based on information available at the time this Form 10-Q was filed with the Securities and Exchange Commission ("SEC") or, with respect to any document incorporated by reference, available at the time that such document was prepared. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those identified in the section entitled "Forward-Looking Statements" at the end of Item 2 of this Form 10-Q and in the section entitled "Risk Factors" in Item 1A of the 2020 Form 10-K and this Form 10-Q. We do not undertake any 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, except as required by law.

Any reference in this Form 10-Q to the "corresponding period" relates to the three or six month period ended February 29, 2020.

COVID-19 UPDATE

We continue to closely monitor the impact of the COVID-19 pandemic ("COVID-19") on the Company, employees, customers and supply chain. While COVID-19 may have a negative impact on our results of operations, cash flows and financial position, the current level of uncertainty over the economic and operational impacts of COVID-19, the actions to contain the outbreak or treat its impact, and the timing of distribution of COVID-19 vaccines and the economic response thereto means the related financial impact cannot be reasonably estimated at this time.
CRITICAL ACCOUNTING POLICIES

There have been no material changes to our critical accounting policies as set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, included in the 2020 Form 10-K.

RESULTS OF OPERATIONS SUMMARY

Business Overview

As a vertically integrated organization, we manufacture, recycle and fabricate steel and metal products, related materials and services through a network including seven 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. Our operations are conducted through two reportable segments: North America and Europe.

When considering our results for the period, we evaluate our operating performance by comparing net sales, in the aggregate and for both of our segments, in the current period to net sales in the corresponding period. In doing so, we focus on changes in average selling price per ton and tons shipped for each of our product categories as these are the two variables that typically have the greatest impact on our results of operations. We group our products into three categories: raw materials, steel products and downstream products. Raw materials include ferrous and nonferrous scrap, steel products include rebar, merchant and other steel products, such as billets and wire rod, and downstream products include fabricated rebar and steel fence post.

We use adjusted EBITDA from continuing operations to compare and evaluate the financial performance of our segments. Adjusted EBITDA is the sum of the Company's earnings from continuing operations before interest expense, income taxes, depreciation and amortization and impairment expense. Although there are many factors that can impact a segment’s adjusted EBITDA and, therefore, our overall earnings, changes in metal margin of our steel products and downstream products period-over-period is a consistent area of focus for our Company and industry. Metal margin is an important metric used by
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management to monitor the results of our vertically integrated organization. For our steel products, metal margin is the difference between the average selling price per ton of rebar, merchant and other steel products and the cost of ferrous scrap per ton utilized by our steel mills to produce these products. An increase or decrease in input costs can impact profitability of these products when there is no corresponding change in selling prices due to competitive pressures on prices. The metal margin for our downstream products is the difference between the average selling price per ton of fabricated rebar and steel fence post products and the cost of material utilized by our fabrication facilities to produce these products. The majority of our downstream products selling prices per ton are fixed at the beginning of a project and these projects last one to two years on average. Because the selling price generally remains fixed over the life of a project, changes in input costs over the life of the project can significantly impact profitability.

Financial Results Overview

The following discussion of our results of operations is based on our continuing operations and excludes any results of our discontinued operations.
Three Months Ended Six Months Ended
(in thousands, except per share data) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Net sales $ 1,462,270 $ 1,340,963 $ 2,854,073 $ 2,725,671
Earnings from continuing operations 66,233 63,596 130,144 146,351
Diluted earnings per share $ 0.54 $ 0.53 $ 1.07 $ 1.22

Net sales for the three and six months ended February 28, 2021 increased $121.3 million, or 9%, and $128.4 million, or 5% , respectively, compared to the corresponding periods. The increases were primarily due to year-over-year increases in raw materials average selling prices in our North America segment and in steel products average selling prices in both of our segments.

Earnings from continuing operations for the three and six months ended February 28, 2021 increased $2.6 million and decreased $16.2 million, respectively, compared to the corresponding periods. Earnings in the three months ended February 28, 2021 were relatively flat while earnings in the six months ended February 28, 2021 were impacted by compressed metal margins in the first quarter of 2021 as a result of rising raw material average selling prices while steel products and downstream products average selling prices decreased or remained flat. In the second quarter of 2021, steel products average selling prices, and therefore metal margins, began to increase to offset the higher raw material prices.

Selling, General and Administrative Expenses
Selling, general and administrative expenses were relatively flat for the three and six months ended February 28, 2021 compared to the corresponding periods .

Interest Expense

Interest expense for the three and six months ended February 28, 2021 decreased $1.9 million and $4.2 million, respectively, com pared to the corresponding periods. The decreases were driven by a reduction in long-term debt, primarily due to the early repayment of the Term Loan (as defined in Note 10, Credit Arrangements, to the consolidated financial statements in the 2020 Form 10-K) in the year ended August 31, 2020.

Income Taxes

The effective income ta x rate from continuing operations for the three and six months ended February 28, 2021 was 24.0% and 24.6%, respectively, compared with 26.4% and 25.5% in the corresponding periods.
SEGMENT OPERATING DATA

Unless otherwise indicated, all dollar amounts below are from continuing operations and calculated before income taxes. See Note 14, Business Segments to our condensed consolidated financial statements for more information. The operational data presented in the tables below is calculated using averages and, therefore, it is not meaningful to quantify the effect that any individual component had on the segment's net sales or adjusted EBITDA.

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North America
Three Months Ended Six Months Ended
(in thousands) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Net sales $ 1,257,486 $ 1,161,283 $ 2,452,499 $ 2,378,003
Adjusted EBITDA 171,612 152,831 327,246 327,563
External tons shipped (in thousands)
Raw materials 302 321 632 641
Rebar 472 461 958 936
Merchant and other 268 238 532 474
Steel products 740 699 1,490 1,410
Downstream products 343 366 714 779
Average selling price (per ton)
Steel products $ 695 $ 625 $ 653 $ 625
Downstream products 929 984 931 979
Cost of ferrous scrap utilized per ton $ 344 $ 256 $ 304 $ 238
Steel products metal margin per ton 351 369 349 387

Net sales for the three and six months ended February 28, 2021 increased $96.2 million, or 8%, and $74.5 million, or 3%, respectively, c ompared to the corresponding periods . T he year-over-year increases in net sales were primarily due to $251 and $162 per ton increases in raw materials average selling prices and $70 and $28 per ton increases in steel products average selling prices in the three and six months ended February 28, 2021, respectively, compared to the corresponding periods. Heightened demand from steel producers resulted in higher raw materials average selling prices which drove increases in steel products average selling prices. The increases in net sales as a result of these higher average selling prices were partially offset by $55 and $48 per ton year-over-year decreases in downstream products average selling prices in the three and six months ended February 28, 2021, respectively . Net sales included amortization benefit of $1.5 million and $3.0 million for the three and six months ended February 28, 2021, respectively, and $6.0 million and $14.3 million for the corresponding periods, respectively, related to the acquired unfavorable contract backlog.

Adjusted EBITDA for the three months ended February 28, 2021 increased $18.8 million and was flat for the six months ended February 28, 2021, com pared to the corresponding periods. The year-over-year increase in adjusted EBITDA in the three months ended February 28, 2021 was due in part to a 41 thousand ton increase in steel products shipped and significant expansion in raw materials margin. Further, while our steel products metal margin per ton for the three months ended February 28, 2021 contracted $18 per ton compared to the corresponding period, this operating statistic does not fully reflect the margin achieved throughout the period. In times of sharply rising raw material costs and steel products average selling prices, we benefit from selling lower cost inventory produced in prior periods. A djusted EBITDA did not include the $1.5 million or $3.0 million benefit o f the amortization of the acquired unfavorable contract backlog reserve described above . Adjusted EBITDA included non-cash stock compensation expense of $3.8 million and $7.1 million for the three and six months ended February 28, 2021, respectively, and $2.7 million and $5.6 million for the corresponding periods.

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Europe
Three Months Ended Six Months Ended
(in thousands) February 28, 2021 February 29, 2020 February 28, 2021 February 29, 2020
Net sales $ 202,066 $ 180,079 $ 396,662 $ 345,468
Adjusted EBITDA 16,107 13,451 30,577 24,810
External tons shipped (in thousands)
Rebar 78 145 206 267
Merchant and other 275 235 544 451
Steel products 353 380 750 718
Average selling price (per ton)
Steel products $ 532 $ 449 $ 495 $ 455
Cost of ferrous scrap utilized per ton $ 328 $ 251 $ 296 $ 248
Steel products metal margin per ton 204 198 199 207

Net sales for the three and six months ended February 28, 2021 increased $22.0 million, or 12%, and $51.2 million, or 15%, respectively, compared to t he corresponding periods. For the three months ended February 28, 2021, the year-over-year increase in net sales was driven by a $83 per ton increase in steel products average selling prices, partially offset by a 27 thousand ton decrease in steel products shipped. The year-to-date increase in net sales was driven by a 32 thousand ton year-over-year increase in steel products shipments, as demand increased in the first quarter of 2021 due to a resilient Polish construction sector and an upturn in Central European manufacturing activity, coupled with a $40 per ton year-over-year increase in steel products average selling prices. Net sales for the three and six months ended February 28, 2021 were also impacted by favorable foreign currency translation adjustments of $8.3 million and $13.0 million, respectively, due to the decrease in the average value of the U.S. dollar relative to the Polish zloty.

Adjusted EBITDA for the three and six months ended February 28, 2021 increased $2.7 million and $5.8 million, respectively, as compared to the corresponding periods. For the three months ended February 28, 2021, the year-over-year increase in adjusted EBITDA was due, in part, to a $6 per ton increase in steel products metal margin compared to the corresponding period. Similar to the North America segment, we benefited from selling lower cost inventory during the majority of the three month period ended February 28, 2021 in an environment of rising prices, which contributed to the increase in adjusted EBITDA compared to the corresponding period. For the six months ended February 28, 2021, the increase in adjusted EBITDA was primarily due to a 32 thousand ton increase in steel products sold in comparison to the corresponding period. The impact of foreign currency translation to adjusted EBITDA in the three and six months ended February 28, 2021 was immaterial. Adjusted EBITDA included non-cash stock compensation expense of $0.7 million and $1.4 million for the three and six months ended February 28, 2021, respectively, and $0.3 million and $0.8 million for the corresponding periods.

Corporate and Other

Corporate and Other reported adjusted EBITD A loss of $46.0 million and $72.5 million for the three and six months ended February 28, 2021, respectively, as compared to adjusted EBITDA loss of $28.6 million and $54.8 million in the corresponding periods. The primary reason for the increases in adjusted EBITDA loss year-over-year was the $16.8 million loss on debt extinguishment incurred in the three and six months ended February 28, 2021, with no such costs in the corresponding periods . Adjusted EBITDA included non-cash stock compensation expense of $8.2 million and $13.3 million f or the three and six months ended February 28, 2021, respectively, and $4.6 million and $9.4 million for the corresponding periods, respectively.

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LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Capital Resources

Our cash flows from operating activities result primarily from the sale of steel, nonferrous metals and related products. We have a diverse and generally stable customer base, and regularly maintain a substantial amount of accounts receivable. We record allowances for the accounts receivable we estimate will not be collected based on market conditions, customers' financial condition, and other factors. Historically, these allowances have not been material. We use credit insurance internationally to mitigate the risk of customer insolvency. We estimate that the amount of credit-insured receivables (and those covered by export letters of credit) was approximately 14% of total trade receivables at February 28, 2021.

From time to time, we use futures or forward contracts to mitigate the risks from fluctuations in commodity prices, foreign currency exchange rates, interest rates and natural gas, electricity and other energy prices. See Note 9, Derivatives, for further information.

The table below reflects our sources, facilities and available liquidity at February 28, 2021. See Note 8, Credit Arrangements, for additional information.
(in thousands) Total Facility Availability
Cash and cash equivalents $ 367,347 $ 367,347
Notes due from 2023 to 2031 930,000 *
Revolver 350,000 346,958
U.S. accounts receivable facility 200,000 193,291
Poland credit facilities 73,459 72,601
Poland accounts receivable facility 58,767 53,425
Poland Term Loan 66,781 26,712
_________________
* We believe we have access to additional financing and refinancing, if needed.

Cash Flows

Operating Activities
Net cash flows from operating activities were $1.2 million for the six months ended February 28, 2021 compared to $253.4 million for the six months ended February 29, 2020. We had a $16.7 million year-over-year decrease in net earnings and a $222.9 million year-over-year increase in cash used by operating assets and liabilities ("working capital"). The increase in cash used by working capital was primarily due to increases in inventory value in the six months ended February 28, 2021 compared to the corresponding period, coupled with an increase in accounts receivable which reflects the higher average selling prices in the six months ended February 28, 2021, compared to a decrease in accounts receivable in the corresponding period. For continuing operations, operating working capital days decreased ten days year-over-year.

Investing Activities
Net cash flows used by investing activities were $67.4 million and $91.5 million for the six months ended February 28, 2021 and February 29, 2020, respectively. The $24.1 million decrease in net cash flows used by investing activities was due to an $8.9 million year-over-year decline in capital expenditures, a $9.9 million year-over-year decline in acquisitions and a $6.3 million year-over-year increase in cash proceeds from the sale of property, plant and equipment and other in the six months ended February 28, 2021 compared to the corresponding period.

We estimate that our 2021 capital spending will range fro m $200 million to $225 million. We regularly assess our capital spending based on current and expected results and the amount is subject to change.

Financing Activities
Net cash flows used by financing activities were $109.1 million and $122.1 million for the six months ended February 28, 2021 and February 29, 2020, respectively. We had net debt repayments of $61.5 million in the six months ended February 28, 2021, compared to net debt repayments of $91.2 million in the corresponding period. In addition, we paid $13.1 million of debt extinguishment costs related to our early retirement of the 2026 Notes in the six months ended February 28, 2021.

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COVID-19 has not had a material impact on our operations to date, and our cash and cash equivalents position remains strong at $367.3 million a s of February 28, 2021. We anticipate our current cash balances, cash flows from operations and our available sources of liquidity will be sufficient to meet our cash requirements for the next twelve months. However, as the impact of COVID-19 on the economy and our operations evolves, we will continue to assess our liquidity needs. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.

CONTRACTUAL OBLIGATIONS
Our contractual obligations at February 28, 2021 decreased by approximately $20.5 million from August 31, 2020, primarily due to a decrease in long-term debt and interest payable, offset by an increase in purchase obligations. O ur estimated contractual obligations for the twelve months ending February 28, 2022 are approximately $512.0 million and primarily consist of expenditures incurred in connection with normal business operations.

Other Commercial Commitments

We maintain stand-by letters of credit to provide support for certain transactions that governmental agencies, our insurance providers and suppliers request. At February 28, 2021 , we had committed $23.7 million under these arrangements, of which $3.0 million reduced availability under the Revolver.
OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
CONTINGENCIES

In the ordinary course of conducting our business, we become involved in litigation, administrative proceedings and governmental investigations, including environmental matters. We may incur settlements, fines, penalties or judgments because of some of these matters. Liabilities and costs associated with litigation-related loss contingencies require estimates and judgments based on our knowledge of the facts and circumstances surrounding each matter and the advice of our legal counsel. We record liabilities for litigation-related losses when a loss is probable and we can reasonably estimate the amount of the loss. We evaluate the measurement of recorded liabilities each reporting period based on the current facts and circumstances specific to each matter. The ultimate losses incurred upon final resolution of litigation-related loss contingencies may differ materially from the estimated liability recorded at a particular balance sheet date. Changes in estimates are recorded in earnings in the period in which such changes occur. We do not believe that any currently pending legal proceedings to which we are a party will have a material adverse effect, individually or in the aggregate, on our results of operations, cash flows or financial condition. See Note 13, Commitments and Contingencies, for more information.
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FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or incorporates by reference a number of "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, the effects of continued pressure on the liquidity of our customers, potential synergies and organic growth provided by acquisitions and strategic investments, demand for our products, metal margins, the effect of COVID-19 and related governmental and economic responses thereto, the ability to operate our steel mills at full capacity, future supplies of raw materials and energy for our operations, share repurchases, legal proceedings, the undistributed earnings of our non-U.S. subsidiaries, U.S. non-residential construction activity, international trade, capital expenditures, our liquidity and our ability to satisfy future liquidity requirements, estimated contractual obligations 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.

Our forward-looking statements are based on management's expectations and beliefs as of the time this Form 10-Q is filed with the SEC or, with respect to any document incorporated by reference, as of the time such document was prepared. 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 the 2020 Form 10-K, 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 downstream contracts due to rising commodity pricing;
• impacts from COVID-19 on the economy, demand for our products and on our operations, including the responses of governmental authorities to contain COVID-19 and the impact from the distribution of various COVID-19 vaccines;
• 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 existing and future government laws, regulations and other legal requirements and judicial decisions that govern our business, including increased environmental regulations 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;
• operating and start-up risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investment;
• 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, such as trade measures, military conflicts and political uncertainties, including the impact of the 2020 U.S. election on current trade regulations, such as Section 232 trade tariffs, tax legislation and other regulations which might adversely impact our business;
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• 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;
• 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
• civil unrest, protests and riots.
You should refer to the “Risk Factors” disclosed in our periodic and current reports filed with the SEC for specific risks which would cause actual results to be significantly different from those expressed or implied by these forward-looking statements. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-looking events and circumstances discussed herein may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Accordingly, readers of this Form 10-Q are cautioned not to place undue reliance on the forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes to the information set forth in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, included in the 2020 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES

The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within required time periods, and includes controls and procedures designed to ensure that such information is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q, and they have concluded that as of that date, our disclosure controls and procedures were effective.
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our quarter ended February 28, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

For information regarding our legal proceedings, refer to “Legal and Environmental Matters” in Note 13 to our condensed consolidated financial statements included in Part I, Item 1, Financial Statements, of this Form 10-Q.

With respect to administrative or judicial proceedings arising under any Federal, State, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, we have determined that we will disclose any such proceeding if we reasonably believe such proceeding will result in monetary sanctions, exclusive of interest and costs, of at least $1.0 million. We believe that this threshold is reasonably designed to result in disclosure of environmental proceedings that are material to our business or financial condition. Applying this threshold, there were no environmental matters to disclose for this period.
ITEM 1A. RISK FACTORS

Except as set forth below, there were no material changes to the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of the 2020 Form 10-K and Part II, Item 1A, Risk Factors, of the Quarterly Report on Form 10-Q for the period ended November 30, 2020:

Operating and start-up risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investment.

Although we have successfully commissioned and operated similar technologies, there are some new technological, as well as operational, market and start-up risks associated with the construction and start-up of our third rolling mill in Poland and third micro mill to be located in Mesa, Arizona. We believe these facilities should be capable of consistently producing high-quality products, and in sufficient quantities and at a cost that will compare favorably with other similar steel manufacturing facilities; however, there can be no assurance that these expectations will be achieved. If we encounter cost overruns, system or process difficulties during or after start-up or quality control restrictions, our capital costs could increase materially, the expected benefits from the development of these facilities could be diminished or lost, and we could lose all or a substantial portion of our investment. We could also encounter commodity market risk if, during a sustained period, the cost to manufacture is greater than projected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no purchases of equity securities registered by the Company pursuant to Section 12 of the Exchange Act during the quarter ended February 28, 2021.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.
ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS

3.1(a)
3.1(b)
3.1(c)
3.1(d)
3.1(e)
3.1(f)
3.2
4.1
4.2
31.1
31.2
32.1
32.2
101.INS Inline XBRL Instance Document (filed herewith).
101.SCH Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
104 Cover Page Interactive Data File

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COMMERCIAL METALS COMPANY
March 24, 2021 /s/ Paul J. Lawrence
Paul J. Lawrence
Vice President and Chief Financial Officer
(Duly authorized officer and principal financial officer of the registrant)

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TABLE OF CONTENTS
Part I. Financial InformationprintItem 1. Financial StatementsprintNote 1. Accounting PoliciesprintNote 2. Changes in BusinessprintNote 3. Accumulated Other Comprehensive Income (loss)printNote 4. Revenue RecognitionprintNote 5. Inventories, NetprintNote 6. Goodwill and Other IntangiblesprintNote 7. LeasesprintNote 8. Credit ArrangementsprintNote 9. DerivativesprintNote 10. Fair ValueprintNote 11. Stock-based Compensation PlansprintNote 12. Stockholders' Equity and Earnings Per ShareprintNote 13. Commitments and ContingenciesprintNote 14. Business SegmentsprintItem 2. Management's Discussion and Analysis Of Financial Condition and Results Of OperationsprintItem 3. Quantitative and Qualitative Disclosures About Market RiskprintItem 4. Controls and ProceduresprintPart II. Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsprintItem 3. Defaults Upon Senior SecuritiesprintItem 4. Mine Safety DisclosuresprintItem 5. Other InformationprintItem 6. Exhibitsprint

Exhibits

3.1(d) Certificate of Amendment of Restated Certificate of Incorporation dated January 30, 2004 (filed as Exhibit 3(i)(d) to Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended February 29, 2004 and incorporated herein by reference). 3.1(e) Certificate of Amendment of Restated Certificate of Incorporation dated January 26, 2006 (filed as Exhibit 3(i) to Commercial Metals Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2006 and incorporated herein by reference). 3.2 Fourth Amended and Restated Bylaws (filed as Exhibit 3.1 to Commercial Metals Company's Current Report on Form 8-K dated September 23, 2019 and incorporated herein by reference). 4.1 Fourth Supplemental Indenture, dated February 2, 2021, by and among Commercial Metals Company and U.S. Bank National Association, as trustee (filed as Exhibit 4.1 to Commercial Metals Company's Current Report on Form 8-K dated February 2, 2021 and incorporated herein by reference). 4.2 Form of 3.875% Senior Note due 2031 (filed as Exhibit 4.2 to Commercial Metals Company's Current Report on Form 8-K dated February 2, 2021 and incorporated herein by reference). 31.1 Certification of Barbara R. Smith, President and Chief Executive Officer of Commercial Metals Company, pursuant to Section 302 to the Sarbanes-Oxley Act of 2002 (filed herewith). 31.2 Certification of Paul J. Lawrence, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 32.1 Certification of Barbara R. Smith, President and Chief Executive Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 32.2 Certification of Paul J. Lawrence, Vice President and Chief Financial Officer of Commercial Metals Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).