DERIVATIVES

9 Months Ended

May 31, 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 May 31, 2023, the notional values of the Company's foreign currency and commodity contract commitments were $412.9 million and $450.9 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 May 31, 2023:

Commodity	Position	Total
Aluminum	Long	3,675	MT
Aluminum	Short	1,775	MT
Copper	Long	828	MT
Copper	Short	7,564	MT
Electricity	Long	3,354,000	MW(h)
Natural Gas	Long	4,790,450	MMBtu

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MT = Metric Ton

MW(h) = Megawatt hour

MMBtu = Metric Million British thermal unit

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	May 31, 2023		August 31, 2022
Derivative assets:
Commodity	Prepaid and other current assets	$	17,924	$	26,180
Commodity	Other noncurrent assets	267,224		134,667
Foreign exchange	Prepaid and other current assets	4,275		1,296
Derivative liabilities:
Commodity	Accrued expenses and other payables	$	3,885	$	1,110
Commodity	Other noncurrent liabilities	1,606		150
Foreign exchange	Accrued expenses and other payables	6,730		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 May 31,				Nine Months Ended May 31,
Gain (Loss) on Derivatives Not Designated as Hedging Instruments (in thousands)	Primary Location	2023		2022		2023		2022
Commodity	Cost of goods sold	$	7,540	$	2,042	$	(1,540)	$	2,574
Foreign exchange	SG&A expenses	3,686		6,157		10,095		(2,886)

Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands)	Three Months Ended May 31,				Nine Months Ended May 31,
	2023		2022		2023		2022
Commodity(1)	$	(11,855)	$	25,920	$	80,134	$	81,285

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(1) Amounts presented do not include the effects of foreign currency translation adjustments. See Note 3, Accumulated Other Comprehensive Income (Loss), for separate presentation of foreign currency translation adjustments.

The Company's natural gas derivatives accounted for as cash flow hedging instruments have maturities extending to May 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 May 31, 2023 was an estimated net gain of $9.7 million from cash flow hedging instruments that is expected to be reclassified into net earnings within the twelve months following May 31, 2023. See Note 10, Fair Value, for the fair value of the Company's derivative instruments recorded in the condensed consolidated balance sheets.