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Commercial Metals Company Reports Second Quarter Fiscal 2019 Results

- Revenue Increased by 33% to $1.4 Billion

- Earnings from Continuing Operations Increased 53% to $0.13 per share

- Adjusted Earnings from Continuing Operations Increased 13% to $0.29 per share

IRVING, Texas, March 21, 2019 /PRNewswire/ -- Commercial Metals Company (CMC) today announced financial results for its fiscal second quarter ended February 28, 2019.  For the three months ended February 28, 2019, earnings from continuing operations were $14.9 million, or $0.13 per diluted share, on net sales of $1.4 billion, compared to earnings from continuing operations of $9.8 million, or $0.08 per diluted share, on net sales of $1.1 billion for the prior year period.  As a result of the execution of various strategic growth initiatives and favorable market conditions, the Company's revenue increased 33% year-over-year.

Second quarter results included net after tax expenses of $20.0 million related to certain non-operational costs  regarding the acquisition of rebar assets from Gerdau S.A., and adjustments related to the Tax Cuts and Jobs Act.  Excluding these expenses, adjusted earnings from continuing operations were $35.0 million, or $0.29 per diluted share, as detailed in the non-GAAP reconciliation on page 12. This represents a 13% increase compared to adjusted earnings from continuing operations of $31.0 million, or $0.26 per diluted share, for the three months ended February 28, 2018.

Excluding non-recurring integration related costs and acquisition accounting inventory step up charges related to the four steel mills and rebar fabrication assets purchased from Gerdau S.A., that closed on November 5, 2018, the acquired assets contributed revenue of $383.6 million and operating income of $32.9 million to the consolidated results of CMC in the second quarter of fiscal 2019.

Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, said, "We are very encouraged by our progress of integrating the rebar assets we acquired from Gerdau last year.  We continue to be highly confident they will provide the anticipated benefits and generate attractive returns for our stockholders.   The quarter was impacted by typical seasonality and unprecedented rainfall levels in many of our markets, which impacted construction activity resulting in lower shipments in the quarter.  I am pleased with the results of our ongoing operations and remain very optimistic about our growth in the second half of fiscal 2019."

The Company's liquidity position at February 28, 2019 continued to be strong with cash and cash equivalents of $66.7 million and availability under the Company's credit and accounts receivable sales facilities of $544.1 million.

On March 20, 2019, the board of directors of CMC declared a quarterly dividend of  $0.12 per share of CMC common stock payable to stockholders of record on April 5, 2019.  The dividend will be paid on April 18, 2019.

Business Segments - Fiscal Second Quarter 2019 Review

Our Americas Recycling segment recorded adjusted EBITDA of $10.1 million for the second quarter of fiscal 2019, compared to adjusted EBITDA of $17.2 million for the prior year second quarter, reflecting a decreasing ferrous and nonferrous scrap price environment.  Despite the recent price volatility, we generated positive returns in the quarter due to our low operating cost structure, disciplined buying practices and efficient inventory turnover rates.

Our Americas Mills segment recorded adjusted EBITDA of $112.4 million for the second quarter of fiscal 2019, an increase of 124% compared to adjusted EBITDA of $50.2 million for the second quarter of fiscal 2018.  The current quarter results include a non-cash charge of $10.3 million related to the fair value step up of inventory acquired on closing of the acquisition of the four rebar mills from Gerdau S.A..  Excluding this $10.3 million non-cash charge, the second quarter results include adjusted EBITDA of $33.0 million from the acquired mills on shipments of  391 thousand tons.

Total mill shipment volumes for the existing operations, excluding the incremental shipments from our new micro mill in Durant, OK, were down in comparison to the second quarter of fiscal 2018.  While demand from U.S. non-residential and infrastructure construction activity remains strong; during the quarter, construction activity was impacted adversely by rainfall in many markets that far exceeded historical norms, resulting in lower shipment volumes. Metal margins increased by $91 per ton from the same period of the prior year.  A combination of higher costs associated with the new facilities, reduced production levels and inflationary pressures on certain costs, resulted in increased manufacturing costs of approximately 28% per ton as compared to the prior year.

Our Americas Fabrication segment recorded an adjusted EBITDA loss of $49.6 million for the second quarter of fiscal 2019, compared to an adjusted EBITDA loss of $8.6 million for the second quarter of fiscal 2018.    This year's second quarter results include an adjusted EBITDA loss of $12.7 million related to the acquired fabrication operations on shipments of 162 thousand tons and excludes the benefit of a purchase accounting adjustment of $23.5 million related to amortization of the unfavorable contract backlog reserve that was assumed in the acquisition.  Including this adjustment, the operating income of the acquired fabrication assets was $9.2 million for the quarter.

Average selling prices in the Americas Fabrication segment rose 6% compared to the second quarter of fiscal 2018, but were outpaced by steel input costs, which increased by 18% higher labor costs and losses recorded on specific contracts. Rebar fabrication bidding activity remains strong and average selling prices for contracted work during the first half of fiscal 2019 were above $1,000 per ton, which will be profitable when shipped in future quarters using current rebar prices.

Our International Mill segment in Poland recorded adjusted EBITDA of $20.5 million for the second quarter of fiscal 2019, compared to adjusted EBITDA of $32.1 million for the comparable prior year quarter.   While margins remained strong, volumes declined as customers were hesitant to place orders until the European Union tariff rate quota safeguard measures were finalized which occurred in February. These measures, designed to reduce the flood of unfairly priced imports, are expected to be in place until July 2021.

Our Corporate and Other segment recorded an adjusted EBITDA loss of $24.1 million for the second quarter of fiscal 2019 compared to an adjusted EBITDA loss of $26.1 million for the prior year's second quarter.  The current quarter loss includes $5.5 million related to acquisition costs.

Outlook

"Performance from our acquired assets  have exceeded our initial transaction rationale business case.  Looking ahead, we are optimistic that the upcoming construction season will be strong both in the U.S. and Poland," said Ms. Smith.   "The combination of a good mill margin environment, ongoing progress on executing cost reduction opportunities afforded by the acquisition, and completing some of the lower margin rebar fabrication backlog, gives us confidence that we will deliver strong results for the balance of the fiscal year."

Conference Call

CMC invites you to listen to a live broadcast of its second quarter fiscal 2019 conference call today, Thursday, March 21, 2019, at 11:00 a.m. ETBarbara Smith, Chairman of the Board of Directors, President, and Chief Executive Officer, and Mary Lindsey, Senior Vice President and Chief Financial Officer, will host the call.  The call is accessible via our website at www.cmc.com.  In the event you are unable to listen to the live broadcast, the call will be archived and available for replay on our website on the next business day.  Financial and statistical information presented in the broadcast are located on CMC's website under "Investors".

About Commercial Metals Company

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

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the federal securities laws with respect to general economic conditions, key macro-economic drivers that impact our business, the effects of ongoing trade actions, the effects of continued pressure on the liquidity of our customers, potential synergies provided by our recent acquisitions, demand for our products, steel margins, the ability to operate our mills at full capacity, future supplies of raw materials and energy for our operations, share repurchases, legal proceedings, renewing the credit facilities of our Polish subsidiary, the reinvestment of 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, our new Oklahoma micro mill, estimated contractual obligations, the effects of the acquisition of substantially all of the U.S. rebar fabrication facilities and the steel mini-mills located in or around Rancho Cucamonga, California, Jacksonville, Florida, Sayreville, New Jersey and Knoxville, Tennessee previously owned by Gerdau S.A. and certain of its subsidiaries (collectively, the "Acquired Businesses"), and our expectations or beliefs concerning future events.  These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements.

Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially.  Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2018 as well as the following: changes in economic conditions which affect demand for our products or construction activity generally, and the impact of such changes on the highly cyclical steel industry; rapid and significant changes in the price of metals, potentially impairing our inventory values due to declines in commodity prices or reducing the profitability of our fabrication contracts due to rising commodity pricing; excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing; compliance with and changes in environmental laws and regulations, including increased regulation associated with climate change and greenhouse gas emissions; involvement in various environmental matters that may result in fines, penalties or judgments; potential limitations in our or our customers' abilities to access credit and non-compliance by our customers with our contracts; activity in repurchasing shares of our common stock under our repurchase program; financial covenants and restrictions on the operation of our business contained in agreements governing our debt; our ability to successfully identify, consummate, and integrate acquisitions and the effects that acquisitions may have on our financial leverage; risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals; failure to retain key management and employees of the Acquired Businesses; issues or delays in the successful integration of the Acquired Businesses' operations with those of the Company, including the inability to substantially increase utilization of the Acquired Businesses' steel mini mills, and incurring or experiencing unanticipated costs and/or delays or difficulties; difficulties or delays in the successful transition of the Acquired Businesses to the information technology systems of the Company as well as risks associated with other integration or transition of the operations, systems and personnel of the Acquired Businesses; unfavorable reaction to the acquisition of the Acquired Businesses by customers, competitors, suppliers and employees; lower than expected future levels of revenues and higher than expected future costs; failure or inability to implement growth strategies in a timely manner; impact of goodwill impairment charges; impact of long-lived asset impairment charges; currency fluctuations; global factors, including political uncertainties and military conflicts; availability and pricing of electricity, electrodes and natural gas for mill operations; ability to hire and retain key executives and other employees; competition from other materials or from competitors that have a lower cost structure or access to greater financial resources; information technology interruptions and breaches in security; ability to make necessary capital expenditures; availability and pricing of raw materials and other items over which we exert little influence, including scrap metal, energy and insurance; unexpected equipment failures; ability to realize the anticipated benefits of our investment in our new micro mill in Durant, Oklahoma; losses or limited potential gains due to hedging transactions; litigation claims and settlements, court decisions, regulatory rulings and legal compliance risks; risk of injury or death to employees, customers or other visitors to our operations; impacts of the Tax Cuts and Jobs Act ("TCJA"); and increased costs related to health care reform legislation.

COMMERCIAL METALS COMPANY

FINANCIAL & OPERATING STATISTICS (UNAUDITED)



Three Months Ended


Six Months Ended

(in thousands, except per ton amounts)


2/28/2019


11/30/2018


8/31/2018


5/31/2018


2/28/2018


2/28/2019


2/28/2018

Americas Recycling















Net Sales


$

287,075



302,009



361,363



364,098



320,627



589,084



639,968


Adjusted EBITDA


$

10,124



15,434



16,996



19,477



17,216



25,558



32,221


Short tons shipped















Ferrous


570



579



644



642



560



1,149



1,149


Nonferrous


59



63



69



65



63



122



129


Total short tons shipped


629



642



713



707



623



1,271



1,278


Average selling price (per short ton)















Ferrous


$

266



273



298



314



285



269



271


Nonferrous


$

1,998



1,982



2,155



2,252



2,345



1,990



2,275

















Americas Mills















Net Sales


$

774,709



601,853



604,435



553,063



425,887



1,376,562



839,405


Adjusted EBITDA


$

112,396



113,873



106,830



89,590



50,219



226,269



105,385


Short tons shipped















Rebar


773



530



482



503



405



1,303



810


Merchant & Other


322



317



359



308



279



639



551


Total Short Tons Shipped


1,095



847



841



811



684



1,942



1,361


Average price (per short ton)















Total selling price


$

677



682



674



632



571



677



561


Cost of ferrous scrap utilized


$

303



307



326



329



288



305



272


Metal margin


$

374



375



348



303



283



372



289

















Americas Fabrication















Net Sales


$

530,836



437,111



403,889



378,241



312,973



967,947



645,752


Adjusted EBITDA


$

(49,578)



(36,996)



(24,607)



(8,208)



(8,611)



(86,574)



(6,579)


Total short tons shipped


396



319



307



302



241



715



506


Total selling price (per short ton)


$

845



868



843



777



799



856



788

















International Mill















Net Sales


$

175,198



227,024



253,058



201,737



211,765



402,222



432,242


Adjusted EBITDA


$

20,537



32,779



36,654



31,987



32,135



53,316



63,079


Short tons shipped















Rebar


66



80



145



79



95



146



235


Merchant & Other


238



312



289



241



251



550



511


Total short tons shipped


304



392



434



320



346



696



746


Average price (per short ton)















Total selling price


$

545



547



555



599



578



546



546


Cost of ferrous scrap utilized


$

301



295



305



329



324



298



311


Metal margin


$

244



252



250



270



254



248



235


 

COMMERCIAL METALS COMPANY

BUSINESS SEGMENTS (UNAUDITED)

(in thousands)


Three Months Ended


Six Months Ended

Net sales


2/28/2019


11/30/2018


8/31/2018


5/31/2018


2/28/2018


2/28/2019


2/28/2018

Americas Recycling


$

287,075



$

302,009



$

361,363



$

364,098



$

320,627



$

589,084



$

639,968


Americas Mills


774,709



601,853



604,435



553,063



425,887



1,376,562



839,405


Americas Fabrication


530,836



437,111



403,889



378,241



312,973



967,947



645,752


International Mill


175,198



227,024



253,058



201,737



211,765



402,222



432,242


Corporate and Other


(365,035)



(290,655)



(314,307)



(292,655)



(216,984)



(655,690)



(426,566)


Total Net Sales


$

1,402,783



$

1,277,342



$

1,308,438



$

1,204,484



$

1,054,268



$

2,680,125



$

2,130,801

















Adjusted EBITDA from continuing operations















Americas Recycling


$

10,124



$

15,434



$

16,996



$

19,477



$

17,216



$

25,558



$

32,221


Americas Mills


112,396



113,873



106,830



89,590



50,219



226,269



105,385


Americas Fabrication


(49,578)



(36,996)



(24,607)



(8,208)



(8,611)



(86,574)



(6,579)


International Mill


20,537



32,779



36,654



31,987



32,135



53,316



63,079


Corporate and Other


(24,146)



(59,554)



(28,827)



(31,814)



(26,083)



(83,700)



(49,963)


 

COMMERCIAL METALS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)



Three Months Ended February 28,


Six Months Ended February 28,

(in thousands, except share data)


2019


2018


2019


2018

Net sales


$

1,402,783



$

1,054,268



$

2,680,125



$

2,130,801


Costs and expenses:









Cost of goods sold


1,252,493



927,101



2,370,926



1,860,617


Selling, general and administrative expenses


98,726



108,477



215,943



204,587


Interest expense


18,495



7,181



35,158



13,792




1,369,714



1,042,759



2,622,027



2,078,996











Earnings from continuing operations before income taxes


33,069



11,509



58,098



51,805


Income taxes


18,141



1,728



23,750



10,153


Earnings from continuing operations


14,928



9,781



34,348



41,652











Earnings (loss) from discontinued operations before income taxes


(1,075)



290



(618)



8,410


Income taxes (benefit)


3



(98)



138



3,082


Earnings (loss) from discontinued operations


(1,078)



388



(756)



5,328











Net earnings


$

13,850



$

10,169



$

33,592



$

46,980











Basic earnings (loss) per share*









Earnings from continuing operations


$

0.13



$

0.08



$

0.29



$

0.36


Earnings (loss) from discontinued operations


(0.01)





(0.01)



0.05


Net earnings


$

0.12



$

0.09



$

0.29



$

0.40











Diluted earnings (loss) per share*









Earnings from continuing operations


$

0.13



$

0.08



$

0.29



$

0.35


Earnings (loss) from discontinued operations


(0.01)





(0.01)



0.05


Net earnings


$

0.12



$

0.09



$

0.28



$

0.40











Cash dividends per share


$

0.12



$

0.12



$

0.24



$

0.24


Average basic shares outstanding


117,854,335



116,808,838



117,677,422



116,524,630


Average diluted shares outstanding


118,942,758



118,269,721



118,996,427



118,149,815



* EPS is calculated independently for each component and may not sum to net earnings EPS due to rounding

 

COMMERCIAL METALS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)


February 28, 2019


August 31, 2018

Assets





Current assets:





Cash and cash equivalents


$

66,742



$

622,473


Accounts receivable (less allowance for doubtful accounts of $14,511 and $4,489)


976,681



749,484


Inventories, net


866,419



589,005


Other current assets


160,416



116,243


Total current assets


2,070,258



2,077,205


Property, plant and equipment, net


1,478,320



1,075,038


Goodwill


64,257



64,310


Other noncurrent assets


115,857



111,751


Total assets


$

3,728,692



$

3,328,304


Liabilities and stockholders' equity





Current liabilities:





Accounts payable-trade


$

322,147



$

261,258


Accrued expenses and other payables


265,924



260,939


Acquired unfavorable contract backlog


75,358




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


88,902



19,746


Total current liabilities


752,331



541,943


Deferred income taxes


38,370



37,834


Other long-term liabilities


129,345



116,325


Long-term debt


1,310,150



1,138,619


Total liabilities


2,230,196



1,834,721


Stockholders' equity


1,498,300



1,493,397


Stockholders' equity attributable to noncontrolling interests


196



186


Total stockholders' equity


1,498,496



1,493,583


Total liabilities and stockholders' equity


$

3,728,692



$

3,328,304


 

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



Six Months Ended February 28,

(in thousands)


2019


2018

Cash flows from (used by) operating activities:





Net earnings


$

33,592



$

46,980


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





Depreciation and amortization


76,430



66,316


Amortization of acquired unfavorable contract backlog


(34,808)




Stock-based compensation


10,007



13,338


Net (gain) loss on disposals of subsidiaries, assets and other


(1,202)



518


Deferred income taxes and other long-term taxes


11,705



(9,420)


Write-down of inventories


237



1,296


Provision for losses on (recovery of) receivables, net


(518)



2,048


Asset impairment




12,774


Changes in operating assets and liabilities


(80,809)



4,937


Beneficial interest in securitized accounts receivable


(367,521)



(322,403)


Net cash flows used by operating activities


(352,887)



(183,616)







Cash flows from (used by) investing activities:





Acquisitions, net of cash acquired


(700,982)



(6,980)


Capital expenditures


(67,497)



(101,028)


Proceeds from insurance


3,905



25,000


Proceeds from the sale of property, plant and equipment


2,042



631


Proceeds from the sale of discontinued operations and other


1,893



7,406


Advances under accounts receivable programs




25,247


Repayments under accounts receivable programs




(115,247)


Beneficial interest in securitized accounts receivable


367,521



322,403


Net cash flows from (used by) investing activities:


(393,118)



157,432







Cash flows from (used by) financing activities:





Proceeds from issuance of long-term debt


180,000




Repayments of long-term debt


(14,605)



(10,106)


Proceeds from accounts receivable programs


140,070




Repayments under accounts receivable programs


(92,664)




Dividends


(28,181)



(27,995)


Stock issued under incentive and purchase plans, net of forfeitures


(2,856)



(7,394)


Increase in documentary letters of credit, net




10


Contribution from noncontrolling interests


10



13


Net cash flows from (used by) financing activities


181,774



(45,472)


Effect of exchange rate changes on cash


(221)



249


Decrease in cash, restricted cash and cash equivalents


(564,452)



(71,407)


Cash, restricted cash and cash equivalents at beginning of period


632,615



285,881


Cash, restricted cash and cash equivalents at end of period


$

68,163



$

214,474





Supplemental information:


Six Months Ended February 28,

(in thousands)


2019


2018

Cash and cash equivalents


$

66,742



$

195,184


Restricted cash


1,421



19,290


Total cash, restricted cash and cash equivalents


$

68,163



$

214,474


COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)

This press release contains financial measures not derived in accordance with generally accepted accounting principles ("GAAP"). Reconciliations to the most comparable GAAP measures are provided below.

Core EBITDA from Continuing Operations is a non-GAAP financial measure. Core EBITDA from continuing operations is the sum of earnings (loss) from continuing operations before interest expense and income taxes (benefit). It also excludes recurring non-cash charges for depreciation and amortization, asset impairments, and equity compensation. Core EBITDA from continuing operations also excludes certain material acquisition and integration related costs and other legal fees, mill operational start-up costs, CMC Steel Oklahoma incentives, net debt restructuring and extinguishment gains and losses, purchase accounting adjustments to inventory and severance expenses. Core EBITDA from continuing operations should not be considered an alternative to earnings (loss) from continuing operations or net earnings (loss), or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP. However, we believe that Core EBITDA from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties in our industry as it allows: (i) comparison of our earnings to those of our competitors; (ii) a supplemental measure of our ongoing core performance; and (iii) the assessment of period-to-period performance trends. Additionally, Core EBITDA from continuing operations is the target benchmark for our annual and long-term cash incentive performance plans for management. Core EBITDA from continuing operations may be inconsistent with similar measures presented by other companies.

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


Three Months Ended


Six Months Ended

(in thousands)

2/28/2019


11/30/2018


8/31/2018


5/31/2018


2/28/2018


2/28/2019


2/28/2018

Earnings from continuing operations

$

14,928



$

19,420



$

51,260



$

42,325



$

9,781



34,348



41,652


Interest expense

18,495



16,663



15,654



11,511



7,181



35,158



13,792


Income taxes

18,141



5,609



6,682



13,312



1,728



23,750



10,153


Depreciation and amortization

41,245



35,176



32,610



32,949



34,050



76,421



65,949


Asset impairments





840



935



12,136





12,597


Non-cash equity compensation

5,791



4,215



5,679



5,376



8,550



10,006



12,983


Acquisition and integration related costs and other

5,475



27,970



10,907



4,975



5,905



33,445



9,625


Amortization of acquired unfavorable contract backlog

(23,476)



(11,332)









(34,808)



Mill operational start-up costs*







1,473



6,565





11,998


CMC Steel Oklahoma incentives







(3,000)








Purchase accounting effect on inventory

10,315











10,315




Core EBITDA from continuing operations

$

90,914



$

97,721



$

123,632



$

109,856



$

85,896



$

188,635



$

178,749






























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

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

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


Three Months Ended


Six Months Ended

(in thousands)

2/28/2019


11/30/2018


8/31/2018


5/31/2018


2/28/2018


2/28/2019


2/28/2018

Earnings from continuing operations

$

14,928



$

19,420



$

51,260



$

42,325



$

9,781



$

34,348



$

41,652


Impairment of structural steel assets









12,136





12,136


Acquisition and integration related costs and other

5,475



27,970



10,907



4,975



5,905



33,445



9,625


Mill operational start-up costs







6,456



8,651





11,560


CMC Steel Oklahoma incentives







(3,000)








Purchase accounting effect on inventory

10,315











10,315




Total adjustments (pre-tax)

$

15,790



$

27,970



$

10,907



$

8,431



$

26,692



$

43,760



$

33,321
















Tax impact














TCJA impact

$

7,550



$



$



$



$

10,600



$

7,550



$

10,600


International reorganization









(9,200)





(9,200)


Related tax effects on adjustments

(3,316)



(5,874)



(2,290)



(1,771)



(6,855)



(9,190)



(9,175)


Total tax impact

4,234



(5,874)



(2,290)



(1,771)



(5,455)



(1,640)



(7,775)


Adjusted earnings from continuing operations

$

34,952



$

41,516



$

59,877



$

48,985



$

31,018



$

76,468



$

67,198
















Adjusted earnings from continuing operations per diluted share

$

0.29



$

0.35



$

0.51



$

0.41



$

0.26



$

0.64



$

0.57


 

Cision

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