Commercial Metals Company Announces Changes To Segment Reporting

Rhea-AI Summary

Commercial Metals Company (NYSE: CMC) announced a realignment of its reporting structure to include two operating segments: North America and Europe, effective from Q4 fiscal 2020. This change reflects the company's vertically integrated model and is designed to enhance performance assessment and resource allocation. The realignment involves combining previously separate segments without affecting consolidated results. CEO Barbara R. Smith emphasized that this structure provides better insight into CMC's value creation. No financial results were altered by this change.

Positive

• Realignment of reporting structure enhances performance assessment.
• Reflects a vertically integrated operational model in North America.
• Management can better allocate resources and assess performance.

Negative

• Europe's net sales decreased significantly, from $817,048K to $519,285K year-on-year.
• Adjusted EBITDA in Europe fell sharply from $100,102K to $39,080K.
• Total external tons shipped decreased from 1,460K to 1,092K in Europe.

IRVING, Texas, Oct. 1, 2020 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today announced that beginning with its fourth quarter of fiscal 2020, the Company realigned its reporting structure to include two operating segments: North America and Europe.

• North America comprises the Company's former Americas Recycling, Americas Mills, and Americas Fabrication business segments.
• Europe comprises the Company's former International Mill segment, with no other changes.
• Corporate and Eliminations will continue to be reported separately from operating segments.

The decision to realign CMC's operating segment structure was made to reflect: (i) its vertically integrated operating model in North America, which is now supported by a National Sales, Inventory and Operations Planning function created in fiscal 2020, (ii) changes to its operating model and geographic footprint following the full integration of the rebar assets acquired in fiscal 2019 into its North America operations, and (iii) the way management now uses the integrated North America data to manage the business, assess performance, and allocate resources.

Operational and financial statistics for fiscal years 2020 and 2019 can be found on pages 2 and 3 of this release. The announced realignment impacts only the Company's segment reporting, and results in no change in CMC's previously reported consolidated results.

Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, said, "We believe our realigned reporting structure better reflects the way we manage our company and the economics of our vertically integrated operations, giving better insight into how CMC creates value."

For additional resources outlining the announced changes, as well as definitions related to our restated operational statistics, please follow this link (https://ir.cmc.com/ir-toolkit), or visit our Investor Relations website at cmc.com/investors.

About Commercial Metals Company

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

COMMERCIAL METALS COMPANY FINANCIAL & OPERATING STATISTICS (UNAUDITED)
		Three Months Ended
(in thousands, except per ton amounts)		5/31/2020				2/29/2020			11/30/2019			8/31/2019			5/31/2019			2/28/2019			11/30/2018
North America
Net sales		$	1,167,081			1,161,283			1,216,720			1,333,014			1,394,331			1,225,361			1,048,410
Adjusted EBITDA		$	159,394			152,831			174,732			152,450			146,228			74,761			82,857
External tons shipped
Raw materials		288				321			320			399			433			406			424
Rebar		463				461			475			474			485			470			297
Merchant and other		211				238			236			237			248			256			232
Steel products		674				699			711			711			733			726			529
Downstream products		427				366			413			448			469			396			319
Average selling price per ton
Raw materials		$	517			595			547			535			558			579			580
Steel products		$	624			625			626			659			686			688			695
Downstream products		$	966			984			976			963			925			845			868
Cost of raw materials per ton		$	348			435			392			383			402			414			424
Cost of ferrous scrap utilized per ton		$	239			256			226			246			284			303			307
Steel products metal margin per ton		$	385			369			400			413			402			385			388
Europe
Net sales		$	173,817			180,079			165,389			205,461			209,365			175,198			227,024
Adjusted EBITDA		$	14,270			13,451			11,359			22,666			24,120			20,537			32,779
External tons shipped
Rebar		122				145			122			151			126			66			80
Merchant and other		252				235			216			237			250			238			312
Steel products		374				380			338			388			376			304			392
Average selling price per ton
Steel products		$	437			449			461			500			524			545			547
Cost of ferrous scrap utilized per ton		$	239			251			244			265			288			301			295
Steel products metal margin per ton		$	198			198			217			235			236			244			252

 

COMMERCIAL METALS COMPANY FINANCIAL & OPERATING STATISTICS (UNAUDITED)
		Nine Months Ended May 31,				Twelve Months Ended August 31,
(in thousands, except per ton amounts)		2020				2019			2018
North America
Net sales		$	3,545,084			5,001,116			3,738,493
Adjusted EBITDA		$	486,957			456,296			323,993
External tons shipped
Raw materials		929				1,662			1,877
Rebar		1,399				1,726			798
Merchant and other		685				973			910
Steel products		2,084				2,699			1,708
Downstream products		1,206				1,632			1,114
Average selling price per ton
Raw materials		$	555			563			615
Steel products		$	625			681			640
Downstream products		$	976			905			800
Cost of raw materials per ton		$	393			406			460
Cost of ferrous scrap utilized per ton		$	238			284			303
Steel products metal margin per ton		$	387			397			337
Europe
Net sales		$	519,285			817,048			887,038
Adjusted EBITDA		$	39,080			100,102			131,720
External tons shipped
Rebar		389				423			459
Merchant and other		703				1,037			1,041
Steel products		1,092				1,460			1,500
Average selling price per ton
Steel products		$	449			528			560
Cost of ferrous scrap utilized per ton		$	245			288			314
Steel products metal margin per ton		$	204			240			246

 

 

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SOURCE Commercial Metals Company

FAQ

What changes did Commercial Metals Company announce for its segment reporting?

CMC announced a realignment to two operating segments: North America and Europe, effective Q4 fiscal 2020.

How will the realignment impact Commercial Metals Company's financial reporting?

The realignment affects segment reporting only and will not change the previously reported consolidated results.

What is the significance of the realignment for CMC's operations?

It reflects CMC's integrated operating model and enhances the management of performance and resource allocation.

What was the impact of the segment realignment on CMC's European operations?

Net sales and adjusted EBITDA for Europe have decreased significantly, indicating operational challenges.

What are the reported net sales for CMC's North America segment?

For the nine months ended May 31, 2020, North America reported net sales of $3,545,084K.