DERIVATIVES

6 Months Ended

Feb. 28, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

NOTE 9. 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.

The Company considers the total notional value of its futures and forward contracts as the best measure of the volume of derivative transactions. At February 28, 2023, the notional values of the Company's foreign currency and commodity contract commitments were $371.5 million and $453.6 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 February 28, 2023:

Commodity	Long/Short	Total
Aluminum	Long	2,750	MT
Aluminum	Short	675	MT
Copper	Long	1,123	MT
Copper	Short	9,321	MT
Electricity	Long	3,405,000	MW(h)
Natural Gas	Long	4,910,400	MMBtu

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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 table summarizes the location and amounts of the fair value of the Company's derivative instruments and hedged items recognized in the condensed consolidated balance sheets:

(in thousands)	Primary Location	February 28, 2023		August 31, 2022
Derivative assets:
Commodity	Prepaid and other current assets	$	13,826	$	26,180
Commodity	Other noncurrent assets	268,203		134,667
Foreign exchange	Prepaid and other current assets	5,099		1,296
Derivative liabilities:
Commodity	Accrued expenses and other payables	$	6,248	$	1,110
Commodity	Other noncurrent liabilities	1,778		150
Foreign exchange	Accrued expenses and other payables	3,616		3,126

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 February 28,				Six Months Ended February 28,
Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Primary Location	2023		2022		2023		2022
Commodity	Cost of goods sold	$	(5,995)	$	(2,214)	$	(9,080)	$	532
Foreign exchange	SG&A expenses	2,947		(1,048)		6,409		(9,043)

Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands)	Three Months Ended February 28,				Six Months Ended February 28,
	2023		2022		2023		2022
Commodity	$	23,950	$	33,190	$	91,989	$	55,365

The Company's natural gas derivatives accounted for as cash flow hedging instruments have maturities extending to February 2026. The Company's electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to December 2034. Included in the AOCI balance as of February 28, 2023 was an estimated net gain of $7.5 million

from cash flow hedging instruments that is expected to be reclassified into net earnings within the twelve months following February 28, 2023. See Note 10, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.