NOTE 5. REVENUE RECOGNITION

Revenue from Contracts with Customers

Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration received or expected to be received in exchange for those goods or services. The Company's performance obligations arise from (i) sales of steel products, ferrous and nonferrous scrap metals, and construction materials and (ii) services such as steel fabrication and installation. The shipment of products to customers is considered a fulfillment activity and amounts billed to customers for shipping and freight are included in net sales, and the related costs are included in cost of goods sold. Net sales is presented net of taxes.

In the Americas Mills, Americas Recycling, and International Mill segments, revenue is recognized at a point in time concurrent with the transfer of control, which usually occurs, depending on shipping terms, upon shipment or customer receipt.

In the Americas Fabrication segment, each contract represents a single performance obligation. Revenue is either recognized over time or equal to billing under an available practical expedient. For contracts where the Company provides fabricated product and installation services, revenue is recognized over time using an input method. For the three and six months of February 28, 2019, these contracts represent approximately 29% of net sales in the Americas Fabrication segment. For these contracts, the measure of progress is based on contract costs incurred to date compared to total estimated contract costs, which provides a reasonable depiction of the Company’s progress towards satisfaction of the performance obligation as there is a direct relationship between costs incurred by the Company and the transfer of the fabricated product and installation services. Revenue from contracts where the Company does not provide installation services is recognized over time using an output method. For the three and six months of February 28, 2019, these contracts represent approximately 27% and 26%, respectively, of total revenue in the Americas Fabrication segment. For these contracts, the Company uses tons shipped compared to total estimated tons, which provides a reasonable depiction of the transfer of contract value to the customer, as there is a direct relationship between the units shipped by the Company and the transfer of the fabricated product. Significant judgment is required to evaluate total estimated costs used in the input method and total estimated tons in the output method. If estimated total consolidated costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to estimates related to net contract revenues, costs to complete, or total planned quantity is recorded in the period in which such revisions are identified. The Company does not exercise significant judgment in determining the transaction price. For the three and six months of February 28, 2019, the remaining 44% and 45%, respectively, of revenue in the Americas Fabrication segment is recognized as amounts are billed to the customer.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing and a liability when revenue is recognized subsequent to invoicing. Payment terms and conditions vary by contract type, although the Company generally requires customers to pay 30 days after the Company satisfies the performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined the contracts do not include a significant financing component.

The following table provides information about assets and liabilities from contracts with customers.



(in thousands)	February 28, 2019		August 31, 2018
Contract assets (included in other current assets)	$	76,316	$	49,221
Contract liabilities (included in accrued expenses and other payables)	17,791		6,679

The entire contract liability as of August 31, 2018 was recognized as revenue during the six months ended February 28, 2019.

Remaining Performance Obligations

As of February 28, 2019, a total of $930.4 million has been allocated to remaining performance obligations in the Americas Fabrication segment, excluding those contracts where revenue is recognized equal to billing under an available practical expedient. Of this amount, the Company estimates the remaining performance obligations will be recognized as revenue as follows: 40% in the first twelve months, 49% in the following twelve months, and 11% thereafter. The duration of contracts in the Americas Mills, Americas Recycling, and International Mill segments are typically less than one year.

Disaggregation of Revenue

The following tables display revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.



	Three Months Ended February 28, 2019
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	202	$	444,327	$	462,963	$	167,534	$	—	$	1,075,026
Ferrous scrap	105,253		8,744		—		255		—		114,252
Nonferrous scrap	120,004		3,308		—		2,524		—		125,836
Construction materials	—		—		60,190		—		—		60,190
Other	429		16,416		3,525		4,632		2,477		27,479
Total	$	225,888	$	472,795	$	526,678	$	174,945	$	2,477	$	1,402,783

	Six Months Ended February 28, 2019
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	441	$	792,292	$	837,770	$	385,304	$	—	$	2,015,807
Ferrous scrap	216,907		17,886		—		530		—		235,323
Nonferrous scrap	248,079		6,488		—		5,465		—		260,032
Construction materials	—		—		117,361		—		—		117,361
Other	642		29,800		6,105		10,319		4,736		51,602
Total	$	466,069	$	846,466	$	961,236	$	401,618	$	4,736	$	2,680,125



	Three Months Ended February 28, 2018*
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	277	$	240,024	$	257,167	$	202,178	$	—	$	699,646
Ferrous scrap	116,313		7,095		—		298		—		123,706
Nonferrous scrap	148,425		3,902		—		3,458		—		155,785
Construction materials	—		—		51,174		—		—		51,174
Other	417		11,682		1,858		5,550		4,450		23,957
Total	$	265,432	$	262,703	$	310,199	$	211,484	$	4,450	$	1,054,268

	Six Months Ended February 28, 2018*
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	575	$	461,586	$	526,809	$	412,038	$	—	$	1,401,008
Ferrous scrap	238,960		16,143		—		619		—		255,722
Nonferrous scrap	299,377		7,883		—		7,141		—		314,401
Construction materials	—		—		110,205		—		—		110,205
Other	857		23,824		3,737		11,898		9,149		49,465
Total	$	539,769	$	509,436	$	640,751	$	431,696	$	9,149	$	2,130,801

* Prior period amounts have been reported under ASC 605.