Exhibit No. 99.1

News Release newsreleaselogoa01a04a04.jpg


COMMERCIAL METALS COMPANY REPORTS FOURTH QUARTER EARNINGS FROM CONTINUING OPERATIONS OF $0.43 PER SHARE AND ADJUSTED EARNINGS FROM CONTINUING OPERATIONS OF $0.51 PER SHARE

Irving, TX - October 25, 2018 - Commercial Metals Company (NYSE: CMC) today announced financial results for its fiscal fourth quarter and year ended August 31, 2018. For the three months ended August 31, 2018, earnings from continuing operations were $51.3 million, or $0.43 per diluted share, on net sales of $1.3 billion, compared to a net loss from continuing operations of $10.1 million, or $0.09 per diluted share, on net sales of $1.1 billion for the three months ended August 31, 2017.

Fourth quarter results include after-tax expenses of $8.6 million related to the announced acquisition of certain rebar assets from Gerdau S.A.. Excluding these expenses, adjusted earnings from continuing operations were $59.9 million, or $0.51 per diluted share, as detailed in the non-GAAP reconciliation on page 12, compared to adjusted earnings from continuing operations of $6.8 million, or $0.06 per diluted share, for the three months ended August 31, 2017.

    For the fiscal year ended August 31, 2018, earnings from continuing operations were $135.2 million, or $1.14 per diluted share, on net sales of $4.6 billion. This compares to earnings from continuing operations of $50.2 million, or $0.43 per diluted share, on net sales of $3.8 billion for the fiscal year ended August 31, 2017. Adjusted earnings from continuing operations for the fiscal year ended August 31, 2018 were $176.1 million, or $1.49 per diluted share, which was a 163% increase compared to $67.0 million, or $0.57 per diluted share, in the prior year.

Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, commented, "I am proud of what our team has accomplished during fiscal 2018. In addition to delivering our best financial results since the Great Recession, we also completed construction and commissioning of our second micro mill in Durant, OK, becoming the first producer of hot spooled rebar in the United States. We also had record levels of shipments of steel products from our operations in the U.S. and Poland and achieved our lowest safety incident rate in the history of CMC."

The Company's liquidity position at August 31, 2018 remained strong with cash and cash equivalents of $622.5 million and availability under the Company's credit and accounts receivable sales facilities of $617.8 million.





(CMC Year End 2018 - Page 2)


On October 23, 2018, 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 November 7, 2018. The dividend will be paid on November 21, 2018.

Business Segments - Fiscal Fourth Quarter 2018 Review
    
During the quarter, the Company changed its business segment reporting metric from adjusted operating profit to adjusted EBITDA to evaluate the financial performance of its segments, as the Company believes this provides clear data of period-to-period trends and comparability to other industry participants. The only adjustment made to EBITDA for the metric of adjusted EBITDA is the exclusion of non-cash impairments. In addition we have added a table, on page 11, which contains a new non-GAAP measure regarding core EBITDA from continuing operations, which excludes certain recurring non-cash charges and other non-recurring income and expense items.

Our Americas Recycling segment recorded adjusted EBITDA of $17.0 million for the fourth quarter of fiscal 2018, compared to adjusted EBITDA of $8.8 million for the fourth quarter of fiscal 2017. Adjusted EBITDA increased compared to the same period of the prior year primarily as a result of strong volumes and the rising price environment which took place during the past 12 months.

Our Americas Mills segment recorded adjusted EBITDA of $106.8 million for the fourth quarter of fiscal 2018, an increase of 142% compared to adjusted EBITDA of $44.2 million for the fourth quarter of fiscal 2017. Demand remained strong supported by U.S. construction market strength. In addition, the production ramp up at our Durant, OK facility continues to proceed as planned with the operation contributing positive adjusted EBITDA during the quarter. As a result of the strong global demand for rebar, metal margins have increased by $68 per ton from the same period of the prior year. Meaningful inflationary pressures on the cost of alloys and electrodes were muted by our continued focus on cost control as well as higher mill volumes resulting in an increase in manufacturing costs of approximately 3% as compared to 2017.

Our Americas Fabrication segment recorded an adjusted EBITDA loss of $24.6 million for the fourth quarter of fiscal 2018, compared to adjusted EBITDA of $1.2 million for the fourth quarter of fiscal 2017. Average selling prices rose 9% compared to the fourth fiscal quarter of 2017, significantly outpaced by steel input costs, which increased by 32% causing continued margin pressure in this segment. Rebar fabrication bidding activity remains strong and selling prices for contracted work during the quarter increased approximately 34% compared to the fourth quarter of 2017.

Our International Mill segment in Poland recorded adjusted EBITDA of $36.7 million for the fourth quarter of fiscal 2018, compared to adjusted EBITDA of $22.1 million for the fourth quarter of fiscal 2017. Long steel product




(CMC Year End 2018 - Page 3)


demand continues to be very strong producing record levels of quarterly shipments and adjusted EBITDA during the fourth quarter of 2018.
Outlook
"Our outlook for the coming months remains very positive as we believe the current demand for construction steel will be sustained," said Ms. Smith. "Our team delivered on many key strategic initiatives during 2018 producing record volumes during this period of strong demand and improving margins. As we look forward to the strong economic environment continuing and the opportunities on the horizon, I am confident we will continue to deliver exceptional results for our stakeholders." 

Conference Call
CMC invites you to listen to a live broadcast of its fourth quarter fiscal 2018 conference call today, Thursday, October 25, 2018, at 11:00 a.m. ET. Barbara 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 four 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 planned 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 currently owned by Gerdau S.A. and certain of its subsidiaries (collectively, the “Business”) and the timing thereof, the ability to obtain regulatory approvals and meet other closing conditions for the planned acquisition of the Business, and our expectations or beliefs concerning future




(CMC Year End 2018 - Page 4)


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 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 prices; excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing; compliance with and changes in environmental laws and regulations, including increased regulation associated with climate change and greenhouse gas emissions; 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 Business; issues or delays in the successful integration of the Business’ operations with those of the Company, including the inability to substantially increase utilization of the Business' steel mini mills, and incurring or experiencing unanticipated costs and/or delays or difficulties; difficulties or delays in the successful transition of the Business 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 Business; unfavorable reaction to the acquisition of the Business 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




(CMC Year End 2018 - Page 5)


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 TCJA; and increased costs related to health care reform legislation.




(CMC Year End 2018 - Page 6)



COMMERCIAL METALS COMPANY
FINANCIAL & OPERATING STATISTICS (UNAUDITED)
 
 
Three Months Ended
 
Fiscal Year Ended
(in thousands, except per ton amounts)
 
8/31/2018
 
5/31/2018
 
2/28/2018
 
11/30/2017
 
8/31/2017
 
8/31/2018
 
8/31/2017
Americas Recycling
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
361,363

 
364,098

 
320,627

 
319,341

 
317,300

 
1,365,429

 
1,011,500

Adjusted EBITDA
 
$
16,996

 
19,477

 
17,216

 
15,005

 
8,812

 
68,694

 
33,541

Short tons shipped
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ferrous
 
644

 
642

 
560

 
589

 
583

 
2,435

 
1,999

Nonferrous
 
69

 
65

 
63

 
66

 
70

 
263

 
234

Total short tons shipped
 
713

 
707

 
623

 
655

 
653

 
2,698

 
2,233

Average selling price (per short ton)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ferrous
 
$
298

 
314

 
285

 
257

 
255

 
289

 
242

Nonferrous
 
$
2,155

 
2,252

 
2,345

 
2,208

 
2,134

 
2,238

 
2,019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas Mills
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
604,435

 
553,063

 
425,887

 
413,518

 
414,419

 
1,996,903

 
1,565,454

Adjusted EBITDA
 
$
106,830

 
89,590

 
50,219

 
55,166

 
44,180

 
301,805

 
224,183

Short tons shipped
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Rebar
 
482

 
503

 
405

 
405

 
445

 
1,795

 
1,693

     Merchant & Other
 
359

 
308

 
279

 
272

 
265

 
1,218

 
1,032

Total Short Tons Shipped
 
841

 
811

 
684

 
677

 
710

 
3,013

 
2,725

Average price (per short ton)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total selling price
 
$
674

 
632
 
571
 
550
 
537

 
612

 
526

Cost of ferrous scrap utilized
 
$
326

 
329

 
288

 
256

 
257

 
303

 
243

Metal margin
 
$
348

 
303

 
283

 
294

 
280

 
309

 
283

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas Fabrication
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
403,889

 
378,241

 
312,973

 
332,779

 
353,725

 
1,427,882

 
1,375,928

Adjusted EBITDA
 
$
(24,607
)
 
(8,208
)
 
(8,611
)
 
2,032

 
1,243

 
(39,394
)
 
27,259

Total short tons shipped
 
307

 
302

 
241

 
264

 
286

 
1,114

 
1,121

Total selling price (per short ton)
 
$
843

 
777

 
799

 
778

 
773

 
800

 
772

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Mill
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
253,058

 
201,737

 
211,765

 
220,478

 
200,239

 
887,038

 
637,273

Adjusted EBITDA
 
$
36,654

 
31,987

 
32,135

 
30,944

 
22,141

 
131,720

 
76,068

Short tons shipped
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rebar
 
145

 
79

 
95

 
140

 
129

 
459

 
463

Merchant & Other
 
289

 
241

 
251

 
260

 
266

 
1,041

 
916

Total short tons shipped
 
434

 
320

 
346

 
400

 
395

 
1,500

 
1,379

Average price (per short ton)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total selling price
 
$
555

 
599

 
578

 
517

 
476

 
560

 
432

Cost of ferrous scrap utilized
 
$
305

 
329

 
324

 
296

 
269

 
314

 
240

Metal margin
 
$
250

 
270

 
254

 
221

 
207

 
246

 
192







(CMC Year End 2018 - Page 7)


COMMERCIAL METALS COMPANY
BUSINESS SEGMENTS (UNAUDITED)
(in thousands)
 
Three Months Ended
 
Fiscal Year Ended
Net sales
 
8/31/2018
 
5/31/2018
 
2/28/2018
 
11/30/2017
 
8/31/2017
 
8/31/2018
 
8/31/2017
Americas Recycling
 
$
361,363

 
$
364,098

 
$
320,627

 
$
319,341

 
$
317,300

 
$
1,365,429

 
$
1,011,500

Americas Mills
 
604,435

 
553,063

 
425,887

 
413,518

 
414,419

 
1,996,903

 
1,565,454

Americas Fabrication
 
403,889

 
378,241

 
312,973

 
332,779

 
353,725

 
1,427,882

 
1,375,928

International Mill
 
253,058

 
201,737

 
211,765

 
220,478

 
200,239

 
887,038

 
637,273

Corporate and Other
 
7,463

 
2,725

 
4,450

 
4,699

 
9,311

 
19,337

 
61,001

Eliminations
 
(321,770
)
 
(295,380
)
 
(221,434
)
 
(214,282
)
 
(210,864
)
 
(1,052,866
)
 
(807,087
)
Total net sales
 
$
1,308,438

 
$
1,204,484

 
$
1,054,268

 
$
1,076,533

 
$
1,084,130

 
$
4,643,723

 
$
3,844,069

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA from continuing operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas Recycling
 
$
16,996

 
$
19,477

 
$
17,216

 
$
15,005

 
$
8,812

 
$
68,694

 
$
33,541

Americas Mills
 
106,830

 
89,590

 
50,219

 
55,166

 
44,180

 
301,805

 
224,183

Americas Fabrication
 
(24,607
)
 
(8,208
)
 
(8,611
)
 
2,032

 
1,243

 
(39,394
)
 
27,259

International Mill
 
36,654

 
31,987

 
32,135

 
30,944

 
22,141

 
131,720

 
76,068

Corporate and Other
 
(28,827
)
 
(31,814
)
 
(26,083
)
 
(23,880
)
 
(53,402
)
 
(110,604
)
 
(125,229
)






(CMC Year End 2018 - Page 8)



COMMERCIAL METALS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
 
Three Months Ended
 
Fiscal Year Ended
(in thousands, except share data)
8/31/2018
 
8/31/2017
 
8/31/2018
 
8/31/2017
Net sales
$
1,308,438

 
$
1,084,130

 
$
4,643,723

 
$
3,844,069

Costs and expenses:
 
 
 
 
 
 
 
Cost of goods sold
1,125,027

 
964,844

 
4,021,558

 
3,322,711

Selling, general and administrative expenses
108,975

 
105,518

 
401,452

 
387,354

Loss on debt extinguishment

 
22,672

 

 
22,672

Impairment of assets
840

 
1,182

 
14,372

 
1,730

Interest expense
15,654

 
5,939

 
40,957

 
44,151

 
1,250,496

 
1,100,155

 
4,478,339

 
3,778,618

Earnings from continuing operations before income taxes
57,942

 
(16,025
)
 
165,384

 
65,451

Income taxes
6,682

 
(5,955
)
 
30,147

 
15,276

Earnings from continuing operations
51,260

 
(10,070
)
 
135,237

 
50,175

 
 
 
 
 
 
 
 
Earnings (loss) from discontinued operations before income taxes
(1,786
)
 
(29,527
)
 
3,235

 
(9,840
)
Income taxes (benefit)
(2,086
)
 
(10,057
)
 
(34
)
 
(5,997
)
Earnings (loss) from discontinued operations
300

 
(19,470
)
 
3,269

 
(3,843
)
 
 
 
 
 


 


Net earnings
$
51,560

 
$
(29,540
)
 
$
138,506

 
$
46,332

 
 
 
 
 
 
 
 
Basic earnings (loss) per share*
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.44

 
$
(0.09
)
 
$
1.16

 
$
0.43

Earnings (loss) from discontinued operations

 
(0.17
)
 
0.03

 
(0.03
)
Net earnings
$
0.44

 
$
(0.25
)
 
$
1.19

 
$
0.40

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share*
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.43

 
$
(0.09
)
 
$
1.14

 
$
0.43

Earnings (loss) from discontinued operations

 
(0.17
)
 
0.03

 
(0.03
)
Net earnings
$
0.44

 
$
(0.25
)
 
$
1.17

 
$
0.39

 
 
 
 
 
 
 
 
Cash dividends per share
$
0.12

 
$
0.12

 
$
0.48

 
$
0.48

Average basic shares outstanding
117,119,557

 
115,892,403

 
116,822,583

 
115,654,466

Average diluted shares outstanding
118,407,316

 
115,892,403

 
118,145,848

 
117,364,408


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





(CMC Year End 2018 - Page 9)



COMMERCIAL METALS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
August 31,
2018
 
August 31,
2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
622,473

 
$
252,595

Accounts receivable, net
749,484

 
561,411

Inventories
589,005

 
462,648

Other current assets
115,533

 
140,136

Assets of businesses held for sale and discontinued operations
710

 
297,110

Total current assets
2,077,205

 
1,713,900

Net property, plant and equipment
1,075,038

 
1,051,677

Goodwill
64,310

 
64,915

Other assets
111,751

 
144,639

Total assets
$
3,328,304

 
$
2,975,131

Liabilities and stockholders' equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
261,258

 
$
226,456

Accrued expenses and other payables
259,022

 
274,972

Current maturities of long-term debt
19,746

 
19,182

Liabilities of businesses held for sale and discontinued operations
1,917

 
87,828

Total current liabilities
541,943

 
608,438

Deferred income taxes
37,834

 
49,160

Other long-term liabilities
116,325

 
111,023

Long-term debt
1,138,619

 
805,580

Total liabilities
1,834,721

 
1,574,201

Stockholders' equity
1,493,397

 
1,400,757

Stockholders' equity attributable to noncontrolling interests
186

 
173

Total equity
1,493,583

 
1,400,930

Total liabilities and stockholders' equity
$
3,328,304

 
$
2,975,131






(CMC Year End 2018 - Page 10)


COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Year Ended August 31,
(in thousands)
 
2018
 
2017
Cash flows from (used by) operating activities:
 
 
 
 
Net earnings
 
$
138,506

 
$
46,332

Adjustments to reconcile net earnings to cash flows from (used by) operating activities:
 
 
 
 
Depreciation and amortization
 
131,659

 
125,071

Share-based compensation
 
23,929

 
30,311

Loss on debt extinguishment
 

 
22,672

Write-down of inventory
 
1,407

 
21,529

Deferred income taxes and other long-term taxes
 
14,377

 
(14,184
)
Amortization of interest rate swaps termination gain
 

 
(11,657
)
Asset impairments
 
15,053

 
8,238

Net loss (gain) on sales of a subsidiary, assets and other
 
(1,322
)
 
6,049

Provision for losses on receivables, net
 
2,510

 
6,049

Changes in operating assets and liabilities, net of acquisitions
 
(167,439
)
 
(65,938
)
Net cash flows from operating activities
 
158,680

 
174,472

 
 
 
 
 
Cash flows from (used by) investing activities:
 
 
 
 
Capital expenditures
 
(174,655
)
 
(213,120
)
Proceeds from the sale of discontinued operations and other
 
75,482

 
163,449

Proceeds from settlement of life insurance policies
 
27,375

 

Proceeds from the sale of property, plant and equipment
 
8,103

 
3,164

Acquisitions
 
(6,980
)
 
(56,080
)
Net cash flows used by investing activities
 
(70,675
)
 
(102,587
)
 
 
 
 
 
Cash flows from (used by) financing activities:
 
 
 
 
Proceeds from long-term debt transactions
 
350,000

 
475,454

Cash dividends
 
(56,076
)
 
(55,514
)
Repayments of long-term debt
 
(19,967
)
 
(711,850
)
Stock issued under incentive and purchase plans, net of forfeitures
 
(9,302
)
 
(5,498
)
Debt issuance costs
 
(5,254
)
 
(4,449
)
Increase (decrease) in documentary letters of credit, net
 
18

 
22

Contribution from noncontrolling interests
 
13

 
14

Debt extinguishment costs
 

 
(22,672
)
Net cash flows from (used by) financing activities
 
259,432

 
(324,493
)
Effect of exchange rate changes on cash
 
(703
)
 
(1,213
)
Increase (decrease) in cash and cash equivalents
 
346,734

 
(253,821
)
Cash, restricted cash and cash equivalents at beginning of year
 
285,881

 
539,702

Cash, restricted cash and cash equivalents at end of year
 
$
632,615

 
$
285,881

 
 
 
 
 
Supplemental information:
 
 
 
 
Cash and cash equivalents
 
$
622,473

 
$
252,595

Restricted cash
 
$
10,142

 
$
33,286

Total cash, cash equivalents and restricted cash
 
$
632,615

 
$
285,881






(CMC Year End 2018 - Page 11)


COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)

This press release contains financial measures not derived in accordance with generally accepted accounting principles ("GAAP"). Reconciliations to the most comparable GAAP measures are provided below.
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, mill operational start-up costs, CMC Steel Oklahoma incentives, net debt restructuring and extinguishment gains and losses 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 before income taxes to Core EBITDA from continuing operations is provided below:

 
Three Months Ended
 
Fiscal Year Ended
(in thousands)
8/31/2018
 
5/31/2018
 
2/28/2018
 
11/30/2017
 
8/31/2017
 
8/31/2018
 
8/31/2017
Earnings (loss) from continuing operations
$
51,260

 
$
42,325

 
$
9,781

 
$
31,871

 
$
(10,070
)
 
$
135,237

 
$
50,175

Interest expense
15,654

 
11,511

 
7,181

 
6,611

 
5,939

 
40,957

 
44,151

Income taxes (benefit)
6,682

 
13,312

 
1,728

 
8,425

 
(5,955
)
 
30,147

 
15,276

Depreciation and amortization
32,610

 
32,949

 
34,050

 
31,899

 
31,880

 
131,508

 
124,490

Asset impairments
840

 
935

 
12,136

 
461

 
1,182

 
14,372

 
1,730

Non-cash equity compensation
5,679

 
5,376

 
8,550

 
4,433

 
4,211

 
24,038

 
21,469

Acquisition and integration related costs
10,907

 
4,975

 
5,905

 
3,720

 

 
25,507

 

Mill operational start-up costs*

 
1,473

 
6,565

 
5,433

 

 
13,471

 

CMC Steel Oklahoma incentives

 
(3,000
)
 

 

 

 
(3,000
)
 

Loss on debt extinguishment

 

 

 

 
22,672

 

 
22,672

Severance

 

 

 

 
8,129

 

 
8,129

Core EBITDA from continuing operations
$
123,632

 
$
109,856

 
$
85,896

 
$
92,853

 
$
57,988

 
$
412,237

 
$
288,092

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




(CMC Year End 2018 - Page 12)


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 costs, mill operational start-up costs, CMC Steel Oklahoma incentives, asset impairments, debt restructuring and extinguishment gains and losses 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
 
Fiscal Year Ended
(in thousands)
8/31/2018
 
5/31/2018
 
2/28/2018
 
11/30/2017
 
8/31/2017
 
8/31/2018
 
8/31/2017
Earnings (loss) from continuing operations
$
51,260

 
$
42,325

 
$
9,781

 
$
31,871

 
$
(10,070
)
 
$
135,237

 
$
50,175

Impairment of structural steel assets

 

 
12,136

 

 

 
12,136

 

Acquisition and integration related costs
10,907

 
4,975

 
5,905

 
3,720

 

 
25,507

 

Mill operational start-up costs

 
6,456

 
8,651

 
2,909

 

 
18,016

 

CMC Steel Oklahoma incentives

 
(3,000
)
 

 

 

 
(3,000
)
 

Loss on debt extinguishment, net*

 

 

 

 
17,799

 

 
17,799

Severance

 

 

 

 
8,129

 

 
8,129

Total adjustments (pre-tax)
$
10,907

 
$
8,431

 
$
26,692

 
$
6,629

 
$
25,928

 
$
52,659

 
$
25,928

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax impact
 
 
 
 
 
 
 
 
 
 
 
 
 
TCJA impact
$

 
$

 
$
10,600

 
$

 
$

 
$
10,600

 
$

International reorganization

 

 
(9,200
)
 

 

 
(9,200
)
 

Related tax effects on adjustments
(2,290
)
 
(1,771
)
 
(6,855
)
 
(2,320
)
 
(9,075
)
 
(13,236
)
 
(9,075
)
Total tax impact
(2,290
)
 
(1,771
)
 
(5,455
)
 
(2,320
)
 
(9,075
)
 
(11,836
)
 
(9,075
)
Adjusted earnings from continuing operations
$
59,877

 
$
48,985

 
$
31,018

 
$
36,180

 
$
6,783

 
$
176,060

 
$
67,028

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted earnings from continuing operations per diluted share
$
0.51

 
$
0.41

 
$
0.26

 
$
0.31

 
$
0.06

 
$
1.49

 
$
0.57

* Net of $4.9 million gain related to acceleration of interest rate swaps, which was recorded as a reduction to interest expense











Media Contact:
Susan Gerber
214.689.4300


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