CREDIT ARRANGEMENTS

12 Months Ended

Aug. 31, 2023

Debt Disclosure [Abstract]

CREDIT ARRANGEMENTS

NOTE 8. CREDIT ARRANGEMENTS

Long-term debt was as follows: 

	Weighted Average Interest Rate as of August 31, 2023	Year Ended August 31,
(in thousands)		2023		2022
2023 Notes	4.875%	$	—	$	330,000
2030 Notes	4.125%	300,000		300,000
2031 Notes	3.875%	300,000		300,000
2032 Notes	4.375%	300,000		300,000
Series 2022 Bonds, due 2047	4.000%	145,060		145,060
Poland Term Loan	—	—		32,439
Short-term borrowings	(1)	8,419		26,390
Other	4.547%	16,042		21,278
Finance leases	4.926%	95,470		58,536
Total debt		1,164,991		1,513,703
Less unamortized debt issuance costs		(14,840)		(16,496)
Plus unamortized bond premium		4,646		4,838
Total amounts outstanding		1,154,797		1,502,045
Less current maturities of long-term debt and short-term borrowings		(40,513)		(388,796)
Long-term debt		$	1,114,284	$	1,113,249

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(1) The weighted average interest rate of short-term borrowings was 7.800% and 7.260% as of August 31, 2023 and 2022, respectively.

Senior Notes

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. On May 15, 2023, the Company repaid the remaining $214.1 million outstanding aggregate principal amount of the 2023 Notes, plus interest, at maturity.

In January 2022, the Company issued $300.0 million of 4.125% Senior Notes due January 2030 (the "2030 Notes") and $300.0 million of 4.375% Senior Notes due March 2032 (the "2032 Notes"). Aggregate issuance costs associated with the 2030 Notes and 2032 Notes were approximately $9.4 million. Interest on the 2030 Notes is payable semiannually on January 15 and July 15. Interest on the 2032 Notes is payable semiannually on March 15 and September 15.

In February 2021, the Company issued $300.0 million of 3.875% Senior Notes due February 2031 (the "2031 Notes") and accepted for purchase all of the previously outstanding $350.0 million of 5.750% Senior Notes due April 2026 (the "2026 Notes") through a cash tender offer. Issuance costs associated with the 2031 Notes and loss on debt extinguishment recognized related to the retirement of the 2026 Notes were $4.9 million and $16.8 million, respectively, in 2021. Interest on the 2031 Notes is payable semiannually on February 15 and August 15.

Series 2022 Bonds

In February 2022, the Company announced the issuance of $145.1 million in original aggregate principal amount of tax-exempt bonds (the "Series 2022 Bonds") by the Industrial Development Authority of the County of Maricopa (the "MCIDA"). The Series 2022 Bonds were priced to yield 3.5% and provided gross proceeds of $150.0 million. The proceeds were loaned to the Company pursuant to a loan agreement between the Company and the MCIDA. During 2022, the full amount of the proceeds was used to fund a portion of the acquisition, construction and equipping of the Company’s third micro mill.

Issuance costs associated with the Series 2022 Bonds were $3.1 million. The Series 2022 Bonds accrue interest at 4.0%, payable semiannually on April 15 and October 15, and have a maturity date in October 2047.

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 a 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 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 August 31, 2023, the Company had no amounts drawn under the Term Loan. The Company's obligations under the Credit Agreement are collateralized 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 August 31, 2023 or 2022. The availability under the Revolver and the previous revolving credit facility, as applicable, was reduced by outstanding stand-by letters of credit of $0.9 million and $1.4 million at August 31, 2023 and 2022, respectively.

Under the Credit Agreement, the Company is required to comply with certain covenants, including covenants to maintain: (i) an interest coverage ratio (consolidated EBITDA to consolidated interest expense, as each is defined in the Credit Agreement) of not less than 2.50 to 1.00 and (ii) a debt to capitalization ratio (consolidated funded debt to total capitalization, as each is defined in the Credit Agreement) that does not exceed 0.60 to 1.00. Loans under the Credit Agreement bear interest based on the Eurocurrency rate, a base rate, or the Secured Overnight Financing Rate ("SOFR"). At August 31, 2023, the Company was in compliance with all financial covenants contained in its credit arrangements. At August 31, 2023, the Company's interest coverage ratio was 34.79 to 1.00 and the Company's debt to capitalization ratio was 0.22 to 1.00.

In November 2022, the Company repaid the outstanding principal on its term loan facility (the "Poland Term Loan") through its subsidiary, CMC Poland Sp. z.o.o. ("CMCP"). At August 31, 2023, there was no amount outstanding or available, compared to PLN 152.4 million, or $32.4 million, outstanding and available under the facility as of August 31, 2022.

The Company also has credit facilities in Poland, through its subsidiary, CMCP, available to support working capital, short-term cash needs, letters of credit, financial assurance and other trade finance-related matters. In 2023, the Company amended certain terms of its credit facilities in Poland through CMCP, increasing the total credit facilities from PLN 300.0 million, or $63.9 million, at August 31, 2022, to PLN 600.0 million, or $145.4 million, at August 31, 2023. The facilities have an expiration date in April 2026. CMCP had no borrowings or repayments under its credit facilities in 2023 and 2022, and at August 31, 2023 and 2022, no amounts were outstanding under these facilities. 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 $16.3 million and $1.0 million at August 31, 2023 and 2022, respectively.

The scheduled maturities of the Company's long-term debt, excluding obligations related to finance leases, are included in the table below. See Note 7, Leases, for scheduled maturities of finance leases.

Year Ended August 31,	(in thousands)
2024	$	4,057
2025	1,877
2026	1,789
2027	1,782
2028	1,795
Thereafter	1,049,802
Total long-term debt, excluding finance leases	1,061,102
Less unamortized debt issuance costs	(14,840)
Plus unamortized bond premium	4,646
Total long-term debt outstanding, excluding finance leases	$	1,050,908

The Company capitalized $21.5 million, $11.9 million and $2.8 million of interest in the cost of property, plant and equipment during 2023, 2022 and 2021, respectively.

Accounts Receivable Facilities

The Company's subsidiary in Poland, CMCP, transfers trade accounts receivable to financial institutions without recourse (the "Poland Facility"). The Poland Facility has a facility limit of PLN 288.0 million, or $69.8 million and $61.3 million as of August 31, 2023 and August 31, 2022, respectively. Advances taken under the Poland Facility incur interest based on the Warsaw Interbank Offered Rate ("WIBOR") plus a margin. The transfer of receivables under the Poland Facility does not qualify to be accounted for as sales. Therefore, any advances outstanding under this program are recorded as debt on the Company's consolidated balance sheets. The Company had PLN 34.7 million, or $8.4 million, advance payments outstanding under the Poland Facility at August 31, 2023 compared to PLN 124.0 million, or $26.4 million, at August 31, 2022.

In addition to the Poland Facility, the Company also had a $150.0 million U.S. trade accounts receivable facility under which CMC contributed, and certain of its subsidiaries transferred without recourse, certain eligible trade accounts receivable to CMC Receivables, Inc. ("CMCRV"), a wholly-owned subsidiary of CMC. The Company had no advance payments outstanding under this facility at August 31, 2022. In November 2022, the Company terminated its U.S. trade accounts receivable facility.