Revenue

9 Months Ended

May 31, 2019

Revenue from Contract with Customer [Abstract]

The Company recognizes revenue upon satisfying its promises to transfer goods or services to customers under the terms of its contracts. Nearly all of these promises, referred to as performance obligations, consist of the transfer of physical goods, including ferrous and nonferrous recycled scrap metal, autobodies, auto parts, and finished steel products, to customers. These performance obligations are satisfied at the point in time the Company transfers control of the goods to the customer, which in nearly all cases is when title to and risk of loss of the goods transfer to the customer. The timing of transfer of title and risk of loss is dictated by customary or explicitly stated contract terms. For example, the Company recognizes revenue on partially loaded bulk shipments of ferrous recycled scrap metal when contractual terms support revenue recognition based on transfer of title and risk of loss. The significant majority of the Company’s sales involve transfer of control to the customer, and thus revenue recognition, before delivery to the customer’s destination; for example, upon release of the goods to the shipper. Shipping and handling activities that occur after a customer has obtained control of a good are accounted for as fulfillment costs rather than an additional promise in a contract. As such, shipping and handling consideration (freight revenue) is recognized when control of the goods transfers to the customer, and freight expense is accrued when the related revenue is recognized.

In certain regional markets, the Company enters into contracts whereby it arranges for, or brokers, the transfer of scrap material between scrap suppliers and end customers. For transactions in which the Company obtains substantive control of the scrap material before the goods are transferred to the end customer, for example by arranging for the processing or warehousing of the material, the Company recognizes revenue equal to the gross amount of the consideration it expects to receive from the customer (as principal). Alternatively, for transactions in which the Company does not obtain substantive control of the scrap material before the product is transferred to the end customer, the Company recognizes revenue equal to the net amount of the consideration it expects to retain after paying the supplier for the purchase of the scrap metal (as agent). The Company is the agent in the transaction for the substantial majority of brokerage arrangements.

Nearly all of the Company’s sales contracts reflect market pricing at the time the contract is executed, are one year or less, and generally provide for shipment within 30 to 60 days after the price has been agreed upon with the customer. The Company’s retail auto parts sales are at listed prices and are recognized at the point of sale.

The Company recognizes revenue based on contractually stated selling prices and quantities shipped, adjusted for estimated claims and discounts. Claims are customary in the recycled scrap metal industry and arise from variances in the quantity or quality of delivered products. Revenue adjustments may be required if the settlement of claims exceeds original estimates. Discounts offered to certain finished steel customers qualify as variable consideration as the discounts are contingent upon future events. Variable consideration arising from discounts is recognized upon the transfer of finished steel products to customers based upon either the expected value or the most likely amount and was not material for the three and nine months ended May 31, 2019. The Company experiences very few sales returns and, therefore, no material provisions for returns have been made when sales are recognized. During the three and nine months ended May 31, 2019, revenue adjustments related to performance obligations that were satisfied in previous periods were not material.

Disaggregation of Revenues

The table below illustrates the Company’s revenues disaggregated by major product and sales destination for each reportable segment (in thousands):



	Three Months Ended May 31, 2019
	AMR		CSS		Intersegment Revenues			Total
Revenues by major product:
Ferrous	$	280,362	$	14,208	$	(2,697	)	$	291,873
Nonferrous	112,785		10,376		(329		)	122,832
Steel	—		96,626		—			96,626
Retail and other	35,876		221		(32		)	36,065
Total revenues	$	429,023	$	121,431	$	(3,058	)	$	547,396
Revenues based on sales destination:
Foreign	$	273,128	$	25,242	$	—		$	298,370
Domestic	155,895		96,189		(3,058		)	249,026
Total revenues	$	429,023	$	121,431	$	(3,058	)	$	547,396



	Nine Months Ended May 31, 2019
	AMR		CSS		Intersegment Revenues			Total
Revenues by major product:
Ferrous	$	836,662	$	41,071	$	(7,846	)	$	869,887
Nonferrous	316,450		28,522		(856		)	344,116
Steel	—		271,988		—			271,988
Retail and other	98,388		634		(32		)	98,990
Total revenues	$	1,251,500	$	342,215	$	(8,734	)	$	1,584,981
Revenues based on sales destination:
Foreign	$	753,696	$	69,396	$	—		$	823,092
Domestic	497,804		272,819		(8,734		)	761,889
Total revenues	$	1,251,500	$	342,215	$	(8,734	)	$	1,584,981

Receivables from Contracts with Customers

The revenue accounting standard defines a receivable as an entity’s right to consideration that is unconditional, meaning that only the passage of time is required before payment is due. As of May 31, 2019 and August 31, 2018, receivables from contracts with customers, net of an allowance for doubtful accounts, totaled $164 million representing 98% and 97%, respectively, of total accounts receivable reported on the Unaudited Condensed Consolidated Balance Sheets.

Contract Liabilities

Contract consideration received from a customer prior to revenue recognition is recorded as a contract liability and is recognized as revenue when the Company satisfies the related performance obligation under the terms of the contract. The Company’s contract liabilities consist almost entirely of customer deposits for recycled scrap metal sales contracts, which are reported within accounts payable on the Unaudited Condensed Consolidated Balance Sheets and totaled $3 million and $9 million as of May 31, 2019 and August 31, 2018, respectively. Unsatisfied performance obligations reflected in these contract liabilities relate to contracts with original expected durations of one year or less. During the three and nine months ended May 31, 2019, the Company reclassified less than $1 million and $8 million, respectively, in customer deposits as of August 31, 2018 to revenues as a result of satisfying performance obligations during the respective periods.