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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 November 30, 2022
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-20221130_g1.jpg 
Delaware75-0725338
(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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.01 par valueCMCNew 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 filerAccelerated 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 January 6, 2023, 117,122,667 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 November 30,
(in thousands, except share and per share data)20222021
Net sales$2,227,313 $1,981,801 
Costs and operating expenses:
Cost of goods sold1,719,414 1,586,410 
Selling, general and administrative expenses156,355 122,595 
Interest expense13,045 11,035 
1,888,814 1,720,040 
Earnings before income taxes338,499 261,761 
Income taxes76,725 28,872 
Net earnings$261,774 $232,889 
Earnings per share:
Basic$2.23 $1.92 
Diluted$2.20 $1.90 
Average basic shares outstanding117,273,743 121,129,679 
Average diluted shares outstanding118,925,442 122,797,738 
See notes to condensed consolidated financial statements.


3

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended November 30,
(in thousands)20222021
Net earnings$261,774 $232,889 
Other comprehensive income (loss), net of income taxes:
Foreign currency translation41,429 (39,688)
Derivatives:
Net unrealized holding gain
68,045 22,254 
Reclassification for realized gain
(6,970)(3,069)
Net unrealized gain on derivatives
61,075 19,185 
Defined benefit plans gain (loss) after amortization of prior service costs
1,758 (6)
Total other comprehensive income (loss), net of income taxes
104,262 (20,509)
Comprehensive income
$366,036 $212,380 
See notes to condensed consolidated financial statements.
4

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share data)November 30, 2022August 31, 2022
Assets
Current assets:
Cash and cash equivalents$582,069 $672,596 
Accounts receivable (less allowance for doubtful accounts of $4,901 and $4,990)
1,287,286 1,358,907 
Inventories, net1,102,774 1,169,696 
Prepaid and other current assets251,985 240,269 
Total current assets3,224,114 3,441,468 
Property, plant and equipment, net2,028,955 1,910,871 
Intangible assets, net251,819 257,409 
Goodwill277,453 249,009 
Other noncurrent assets491,626 378,270 
Total assets$6,273,967 $6,237,027 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$396,560 $428,055 
Accrued expenses and other payables441,586 540,136 
Current maturities of long-term debt and short-term borrowings239,406 388,796 
Total current liabilities1,077,552 1,356,987 
Deferred income taxes283,754 250,302 
Other noncurrent liabilities235,280 230,060 
Long-term debt1,093,146 1,113,249 
Total liabilities2,689,732 2,950,598 
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 117,291,637 and 117,496,053 shares
1,290 1,290 
Additional paid-in capital361,199 382,767 
Accumulated other comprehensive loss(10,189)(114,451)
Retained earnings3,555,425 3,312,438 
Less treasury stock 11,769,027 and 11,564,611 shares at cost
(323,722)(295,847)
Stockholders' equity3,584,003 3,286,197 
Stockholders' equity attributable to non-controlling interests232 232 
Total stockholders' equity3,584,235 3,286,429 
Total liabilities and stockholders' equity$6,273,967 $6,237,027 
See notes to condensed consolidated financial statements.
5

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended November 30,
(in thousands)20222021
Cash flows from (used by) operating activities:
Net earnings$261,774 $232,889 
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization51,183 41,226 
Deferred income taxes and other long-term taxes16,744 (5,099)
Stock-based compensation16,675 9,619 
Other5,967 (583)
Changes in operating assets and liabilities, net of acquisitions20,027 (252,273)
Net cash flows from operating activities
372,370 25,779 
Cash flows from (used by) investing activities:
Capital expenditures(133,052)(70,150)
Acquisitions, net of cash acquired(63,745) 
Proceeds from insurance1,460  
Proceeds from the sale of property, plant and equipment and other303 1,418 
Other(516) 
Net cash flows used by investing activities
(195,550)(68,732)
Cash flows from (used by) financing activities:
Repayments of long-term debt(154,631)(6,556)
Debt issuance costs(1,800) 
Debt extinguishment costs(69) 
Repayments under accounts receivable facilities(25,914)(144,706)
Proceeds from accounts receivable facilities49 150,664 
Treasury stock acquired(49,149)(5,311)
Tax withholdings related to share settlements, net of purchase plans(23,513)(16,371)
Dividends(18,787)(17,025)
Net cash flows used by financing activities
(273,814)(39,305)
Effect of exchange rate changes on cash5,139 (550)
Decrease in cash, restricted cash and cash equivalents
(91,855)(82,808)
Cash, restricted cash and cash equivalents at beginning of period679,243 501,129 
Cash, restricted cash and cash equivalents at end of period$587,388 $418,321 
See notes to condensed consolidated financial statements.
Supplemental information:Three Months Ended November 30,
(in thousands)20222021
Cash paid for income taxes$15,694 $15,296 
Cash paid for interest22,201 8,794 
Noncash activities:
Liabilities related to additions of property, plant and equipment$47,429 $45,788 
Right of use assets obtained in exchange for operating leases16,492 15,912 
Right of use assets obtained in exchange for finance leases10,104 1,002 
Cash and cash equivalents$582,069 $415,055 
Restricted cash (included in Prepaid and other current assets)5,319 3,266 
Total cash, restricted cash and cash equivalents$587,388 $418,321 
6

COMMERCIAL METALS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended November 30, 2022
 Common Stock Treasury Stock 
(in thousands, except share and per share data)Number of
Shares
AmountAdditional Paid-In
Capital
Accumulated
Other Comprehensive
Loss
Retained
Earnings
Number of
Shares
Amount Non-controlling
Interest
Total
Balance, September 1, 2022129,060,664 $1,290 $382,767 $(114,451)$3,312,438 (11,564,611)$(295,847)$232 $3,286,429 
Net earnings261,774 261,774 
Other comprehensive income104,262 104,262 
Dividends ($0.16 per share)
(18,787)(18,787)
Treasury stock acquired(1,275,452)(49,149)(49,149)
Tax withholdings related to share settlements, net of purchase plans(44,787)1,071,036 21,274 (23,513)
Stock-based compensation13,527 13,527 
Reclassification of share-based liability awards9,692 9,692 
Balance, November 30, 2022129,060,664 $1,290 $361,199 $(10,189)$3,555,425 (11,769,027)$(323,722)$232 $3,584,235 
Three Months Ended November 30, 2021
 Common Stock Treasury Stock 
(in thousands, except share and per share data)Number of
Shares
AmountAdditional Paid-In
Capital
Accumulated
Other Comprehensive
Loss
Retained
Earnings
Number of
Shares
AmountNon-controlling
Interest
Total
Balance, September 1, 2021129,060,664 $1,290 $368,064 $(84,820)$2,162,925 (8,474,075)$(152,582)$232 $2,295,109 
Net earnings232,889 232,889 
Other comprehensive loss(20,509)(20,509)
Dividends ($0.14 per share)
(17,025)(17,025)
Treasury stock acquired(159,500)(5,311)(5,311)
Tax withholdings related to share settlements, net of purchase plans(28,058)1,052,850 11,687 (16,371)
Stock-based compensation8,316 8,316 
Reclassification of share-based liability awards9,091 9,091 
Balance, November 30, 2021129,060,664 $1,290 $357,413 $(105,329)$2,378,789 (7,580,725)$(146,206)$232 $2,486,189 
See notes to condensed consolidated financial statements.

7

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, 2022 (the "2022 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 and notes included in the 2022 Form 10-K. The results of operations for the three month period 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" or "comparable period" relates to the three month period ended November 30, 2021. Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise noted.

8

NOTE 2. CHANGES IN BUSINESS

Tensar Acquisition

On April 25, 2022 (the "Tensar Acquisition Date"), the Company completed the acquisition of TAC Acquisition Corp. ("Tensar"). The total cash purchase price, net of $19.6 million cash acquired, was approximately $550 million, subject to customary purchase price adjustments, and was funded through domestic cash on-hand. The acquired operations in North America are presented within the Company's North America reportable segment, and the remaining acquired operations are presented within the Company's Europe reportable segment.

The table below presents the preliminary fair values and measurement period adjustments that were allocated to Tensar's assets and liabilities as of the Tensar Acquisition Date:

(in thousands)
Estimated Fair Value as Previously Reported(1)
Cash and cash equivalents$19,551 
Accounts receivable37,741 
Inventories39,462 
Prepaid and other current assets12,528 
Defined benefit pension plan14,620 
Property, plant and equipment85,983 
Intangible assets260,500 
Goodwill186,805 
Other noncurrent assets19,660 
Accounts payable(12,134)
Accrued expenses and other payables(23,725)
Current maturities of long-term debt(3,277)
Deferred income taxes(45,055)
Other noncurrent liabilities(16,347)
Long-term debt(4,312)
Total assets acquired and liabilities assumed$572,000 
__________________________________
(1) As previously reported in the 2022 Form 10-K. No measurement period adjustments occurred during the three months ended November 30, 2022.

Pro Forma Supplemental Information

Supplemental information on an unaudited pro forma basis is presented below as if the acquisition of Tensar occurred on September 1, 2020. The pro forma financial information is presented for comparative purposes only, based on certain factually supported estimates and assumptions, which the Company believes to be reasonable, but not necessarily indicative of future results of operations or the results that would have been reported if the acquisition had been completed on September 1, 2020. These results were not used as part of management's analysis of the financial results and performance of the Company. The pro forma adjustments do not reflect anticipated synergies, but rather include the recurring income statement effects of fair value adjustments, such as depreciation and amortization. Further adjustments were made to remove the impact of Tensar's prior management fees, acquisition and integration expenses and interest on debt not assumed in the acquisition. The resulting tax effects of the business combination are also reflected below.

(in thousands)Three Months Ended November 30, 2021
Pro forma net sales$2,043,668 
Pro forma net earnings240,377 

9

The pro forma results presented above include, but are not limited to, adjustments to remove the impact of $3.2 million of acquisition and integration expenses from the three months ended November 30, 2021. Results also reflect increased amortization expense from revalued intangible assets of $3.1 million in the three months ended November 30, 2021.

Advanced Steel Recovery Acquisition

On September 15, 2022, the Company completed the acquisition of Advanced Steel Recovery, LLC ("ASR"), a supplier of recycled ferrous metals located in Southern California. ASR's primary operations include processing and brokering capabilities that source material for sale into both the domestic and export markets and are presented within the Company's North America reportable segment. The ASR acquisition is not material to the Company's November 30, 2022 financial position or results of operations, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.

Kodiak Acquisition

On November 14, 2022, the Company completed the acquisition of a Galveston, TX area metals recycling facility and related assets (collectively, "Kodiak") from Kodiak Resources, Inc. and Kodiak Properties, L.L.C. Kodiak's operating results are presented within the Company's North America reportable segment. The Kodiak acquisition is not material to the Company's November 30, 2022 financial position or results of operations, and therefore, pro forma operating results and other disclosures for the acquisition are not presented.
NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables reflect the changes in accumulated other comprehensive income (loss) ("AOCI"):
Three Months Ended November 30, 2022
(in thousands)Foreign Currency TranslationDerivativesDefined Benefit ObligationTotal AOCI
Balance, September 1, 2022$(245,897)$138,242 $(6,796)$(114,451)
Other comprehensive income before reclassifications
41,429 83,887 1,745 127,061 
Reclassification for gain (1)
 (8,666) (8,666)
Income tax (expense) benefit
 (14,146)13 (14,133)
Net other comprehensive income
41,429 61,075 1,758 104,262 
Balance, November 30, 2022$(204,468)$199,317 $(5,038)$(10,189)
Three Months Ended November 30, 2021
(in thousands)Foreign Currency TranslationDerivativesDefined Benefit ObligationTotal AOCI
Balance, September 1, 2021$(105,680)$21,781 $(921)$(84,820)
Other comprehensive income (loss) before reclassifications
(39,688)27,474 (8)(12,222)
Reclassification for gain (1)
 (3,789) (3,789)
Income tax (expense) benefit
 (4,500)2 (4,498)
Net other comprehensive income (loss)
(39,688)19,185 (6)(20,509)
Balance, November 30, 2021$(145,368)$40,966 $(927)$(105,329)
__________________________________
(1) Reclassifications for gains on derivatives included in net earnings are recorded in cost of goods sold in the condensed consolidated statements of earnings.

NOTE 4. REVENUE RECOGNITION

Revenue related to raw materials, steel products and construction-related solutions in the North America and Europe segments and downstream products in the Europe segment is recognized at a point in time concurrent with the transfer of control, which
10

usually occurs, depending on shipping terms, upon shipment or customer receipt. See Note 14, Operating Segments, for further information about disaggregated revenue by the Company's major product lines.

Each downstream 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 8% and 9% of net sales in the North America segment in the three months ended November 30, 2022 and 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 12% and 9% of net sales in the North America segment in the three months ended November 30, 2022 and 2021, respectively.

The following table provides information about assets and liabilities from contracts with customers:
(in thousands)November 30, 2022August 31, 2022
Contract assets (included in accounts receivable)$76,390 $73,037 
Contract liabilities (included in accrued expenses and other payables)28,005 27,567 

The amount of revenue reclassified from August 31, 2022 contract liabilities during the three months ended November 30, 2022 was approximately $11.6 million.

Remaining Performance Obligations

As of November 30, 2022, revenue totaling $1.0 billion has been allocated to remaining performance obligations in the North America segment related to contracts where revenue is recognized using an input or output measure. Of this amount, the Company estimates that approximately 81% of the remaining performance obligations will be recognized in the twelve months after November 30, 2022, and the remainder will be recognized during the subsequent twelve months. The duration of all other contracts in the North America and Europe segments are typically less than one year.
NOTE 5. INVENTORIES, NET

The majority of the Company's inventories are in the form of semi-finished and finished steel products. Under the Company’s vertically integrated business model, steel products are sold to external customers in various stages, from semi-finished billets through fabricated steel, leading these categories to be combined as finished goods.

The components of inventories were as follows:
(in thousands)November 30, 2022August 31, 2022
Raw materials$255,569 $271,756 
Work in process9,578 9,446 
Finished goods837,627 888,494 
Total$1,102,774 $1,169,696 

Inventory write-downs were $4.5 million during the three months ended November 30, 2022 and immaterial in the corresponding period.
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NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment is detailed in the following table:
(in thousands)North AmericaEuropeConsolidated
Goodwill, gross
Balance at September 1, 2022$216,059 $43,115 $259,174 
Acquisitions28,891  28,891 
Foreign currency translation (442)(442)
Balance at November 30, 2022244,950 42,673 287,623 
Accumulated impairment
Balance at September 1, 2022(10,036)(129)(10,165)
Foreign currency translation (5)(5)
Balance at November 30, 2022(10,036)(134)(10,170)
Goodwill, net
Balance at September 1, 2022206,023 42,986 249,009 
Acquisitions28,891  28,891 
Foreign currency translation (447)(447)
Balance at November 30, 2022$234,914 $42,539 $277,453 

Intangible assets subject to amortization are detailed in the following table:
 November 30, 2022August 31, 2022
(in thousands)Weighted Average Useful Lives in YearsGross
Carrying Amount
Accumulated AmortizationNetGross
Carrying Amount
Accumulated AmortizationNet
Developed technologies
1 to 12
$147,400 $11,128 $136,272 $147,040 $6,485 $140,555 
Customer relationships
12 to 17
53,145 3,186 49,959 53,115 2,116 50,999 
Perpetual lease rights
80
3,752 790 2,962 3,584 744 2,840 
Patents
5 to 15
7,347 4,841 2,506 7,203 4,596 2,607 
Trade names
 5 to 15
3,210 853 2,357 3,212 764 2,448 
Non-compete agreements
5 to 7
2,300 1,224 1,076 3,050 1,135 1,915 
Other
15
101 100 1 101 99 2 
Total$217,255 $22,122 $195,133 $217,305 $15,939 $201,366 

The foreign currency translation adjustments related to the intangible assets subject to amortization were immaterial for all periods presented above.

The gross carrying amount of the Company's intangible assets with indefinite lives was $56.7 million and $56.8 million as of November 30, 2022 and August 31, 2022, respectively. The change in the balance from August 31, 2022 to November 30, 2022 was due to foreign currency translation adjustments. Intangible assets with indefinite lives consist primarily of trade names with gross carrying amounts of $53.5 million and $53.6 million at November 30, 2022 and August 31, 2022, respectively, and in-process research and development with a gross carrying amount of $2.4 million at both November 30, 2022 and August 31, 2022.

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Amortization expense for intangible assets was $6.1 million in the three months ended November 30, 2022, of which $4.6 million was recorded in cost of goods sold and $1.5 million was recorded in selling, general and administrative expenses in the condensed consolidated statements of earnings. The Company recorded immaterial amortization expense for intangible assets in the three months ended November 30, 2021. Estimated amounts of amortization expense for intangible assets for the next five years are as follows:
(in thousands)
Remainder of 2023
$18,307 
202423,604 
202521,868 
202620,662 
202720,555 
NOTE 7. CREDIT ARRANGEMENTS

Long-term debt was as follows: 
(in thousands)Weighted Average Interest Rate as of November 30, 2022November 30, 2022August 31, 2022
2032 Notes4.375%$300,000 $300,000 
2031 Notes3.875%300,000 300,000 
2030 Notes4.125%300,000 300,000 
2023 Notes4.875%214,059 330,000 
Series 2022 Bonds, due 20474.000%145,060 145,060 
Poland Term Loan 32,439 
Short-term borrowings 26,390 
Other4.550%21,097 21,278 
Finance leases63,862 58,536 
Total debt1,344,078 1,513,703 
Less unamortized debt issuance costs(16,317)(16,496)
Plus unamortized bond premium4,791 4,838 
Total amounts outstanding1,332,552 1,502,045 
Less current maturities of long-term debt and short-term borrowings(239,406)(388,796)
Long-term debt$1,093,146 $1,113,249 

The Company's credit arrangements require compliance with certain covenants, including an interest coverage ratio and a debt to capitalization ratio. At November 30, 2022, the Company was in compliance with all financial covenants in its credit arrangements.

Senior Notes Activity

In May 2013, the Company issued $330.0 million of 4.875% Senior Notes due May 2023 (the "2023 Notes"). As of August 31, 2022, the 2023 Notes were included in current maturities of long-term debt and short-term borrowings in the consolidated balance sheet. In November 2022, the Company repurchased $115.9 million in aggregate principal amount of the 2023 Notes through a cash tender offer and recognized an immaterial loss on debt extinguishment. The remaining balance of $214.1 million was included in current maturities of long-term debt and short-term borrowings in the condensed consolidated balance sheet as of November 30, 2022.

Credit Facilities

In October 2022, the Company entered into a Sixth Amended and Restated Credit Agreement (as amended, the "Credit Agreement") with a revolving credit facility (the "Revolver") of $600.0 million and maturity date in October 2027, replacing the Fifth Amended and Restated Credit Agreement with a revolving credit facility of $400.0 million and a maturity date in
13

March 2026. The maximum availability under the Revolver can be increased to $850.0 million with bank approval. The Credit Agreement also provides for a delayed draw senior secured term loan facility with a maximum principal amount of $200.0 million (the “Term Loan”). The Term Loan is coterminous with the Revolver. As of November 30, 2022, the Company had no amounts drawn under the Term Loan. The Company's obligations under the Credit Agreement are secured by its North America inventory. The Credit Agreement's capacity includes a $50.0 million sub-limit for the issuance of stand-by letters of credit. The Company had no amounts drawn under the Revolver or the previous revolving credit facility at November 30, 2022 or August 31, 2022. The availability under the Revolver and the previous revolving credit facility, as applicable, was reduced by outstanding stand-by letters of credit of $1.4 million at both November 30, 2022 and August 31, 2022.

The Company has a Term Loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"). At November 30, 2022, there was no amount outstanding, compared to PLN 152.4 million, or $32.4 million outstanding as of August 31, 2022.

The Company also has credit facilities in Poland through CMCP. At November 30, 2022 and August 31, 2022, CMCP's credit facilities totaled PLN 300.0 million, or $66.9 million and $63.9 million, respectively. There were no amounts outstanding under these facilities as of November 30, 2022 or August 31, 2022. 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 $14.6 million and $1.0 million at November 30, 2022 and August 31, 2022, respectively.

Accounts Receivable Facilities

On November 9, 2022 the Company terminated its $150.0 million U.S. trade accounts receivable facility. The Company had no advance payments outstanding under this facility at August 31, 2022.

The Poland accounts receivable facility had a limit of PLN 288.0 million, or $64.2 million and $61.3 million, at November 30, 2022 and August 31, 2022, respectively. The Company had no advance payments outstanding under the Poland accounts receivable facility at November 30, 2022, compared to PLN 124.0 million, or $26.4 million, advance payments outstanding at August 31, 2022.
NOTE 8. 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 net earnings 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) natural gas and electricity commodity derivatives to mitigate the risk related to price volatility of these commodities.

14

The Company considers the total notional value of its futures and forward contracts as the best measure of the volume of derivative transactions. At November 30, 2022, the notional values of the Company's foreign currency and commodity contract commitments were $294.9 million and $378.4 million, respectively. At August 31, 2022, the notional values of the Company's foreign currency and commodity contract commitments were $253.5 million and $205.1 million, respectively.

The following table provides information regarding the Company's commodity contract commitments at November 30, 2022:
CommodityLong/Short   Total
AluminumLong2,025  MT
AluminumShort1,425  MT
CopperLong374  MT
CopperShort8,550  MT
ElectricityLong3,051,000 MW(h)
Natural GasLong5,230,350 MMBtu
__________________________________
MT = Metric Ton
MW(h) = Megawatt hour
MMBtu = Metric Million British thermal unit

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 purposes, although management believes they are essential economic hedges.

The following tables summarize activities related to the Company's derivative instruments and hedged items recognized in the condensed consolidated statements of earnings. All other activity related to the Company's derivative instruments and hedged items was immaterial for the periods presented.
Three Months Ended November 30,
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
(in thousands)
Primary Location20222021
CommodityCost of goods sold$(3,085)$2,746 
Foreign exchangeSG&A expenses3,462 (7,995)

Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Loss (in thousands)Three Months Ended November 30,
20222021
Commodity$68,039 $22,175 

The Company's natural gas and electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to November 2025 and December 2034, respectively. Included in the AOCI balance as of November 30, 2022 was an estimated net gain of $15.3 million from cash flow hedging instruments that is expected to be reclassified into earnings within the next twelve months. See Note 9, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.
NOTE 9. 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 Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2022 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:
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  Fair Value Measurements at Reporting Date Using
(in thousands)November 30, 2022Quoted 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)
$492,405 $492,405 $ $ 
Commodity derivative assets (2)
248,261 6,795  241,466 
Foreign exchange derivative assets (2)
2,748  2,748  
Liabilities:
Commodity derivative liabilities (2)
4,417 4,417   
Foreign exchange derivative liabilities (2)
1,934  1,934  
  Fair Value Measurements at Reporting Date Using
(in thousands)August 31, 2022Quoted 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)
$572,384 $572,384 $ $ 
Commodity derivative assets (2)
160,847 17,347  143,500 
Foreign exchange derivative assets (2)
1,296  1,296  
Liabilities:
Commodity derivative liabilities (2)
1,260 1,260   
Foreign exchange derivative liabilities (2)
3,126  3,126  
__________________________________
(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 8, Derivatives.

As of August 31, 2022, the Company had one Level 3 commodity derivative. In September 2022, the Company entered into a second Level 3 commodity derivative with the same counterparty. The second Level 3 commodity derivative will begin to settle in January 2025. The fair value estimates of the Level 3 commodity derivatives are based on internally developed discounted cash flow models primarily utilizing unobservable inputs for 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 models. The following table summarizes the floating rate used to measure the fair value of the commodity derivatives at November 30, 2022 and 2021:
Floating rate (PLN)
November 30,LowHighAverage
2022532.66 1,298.53 786.58 
2021252.79 540.39 348.99 

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivatives recognized in the condensed consolidated statements of comprehensive income. The fluctuation in energy rates over time causes volatility in the fair value estimate and is the primary reason for unrealized gains included in other comprehensive income ("OCI") in the three months ended November 30, 2022 and 2021.                                     
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(in thousands)Three Months Ended November 30, 2022
Balance, September 1, 2022$