COMMERCIAL METALS Co

COMMERCIAL METALS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") on a basis consistent with that used in the Annual Report on Form 10-K for the year ended August 31, 2025 (the "2025 Form 10-K") filed by Commercial Metals Company ("CMC," and together with its consolidated subsidiaries, the "Company") with the United States ("U.S.") Securities and Exchange Commission (the "SEC") and include all normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets and the condensed consolidated statements of earnings (loss), comprehensive income (loss), cash flows and stockholders' equity for the periods indicated. These notes should be read in conjunction with the consolidated financial statements and notes included in the 2025 Form 10-K. The results of operations for the three months ended November 30, 2025 are not necessarily indicative of the results expected for the full fiscal year. Any reference in this Quarterly Report on Form 10-Q for the quarter ended November 30, 2025 ("Form 10-Q") to the "corresponding period" relates to the three months ended November 30, 2024. Any reference in this Form 10-Q to a year refers to the fiscal year ended August 31st of that year, unless otherwise stated.

Nature of Operations

CMC is an innovative solutions provider helping build a stronger, safer and more sustainable world. Today, through an extensive manufacturing network principally located in the U.S. and Central Europe, the Company offers products and technologies to meet the critical reinforcement needs of the global construction sector. CMC’s solutions support early-stage construction across a wide variety of applications, including infrastructure, non-residential, residential, industrial and energy generation and transmission.

During the first quarter of 2026, CMC announced the acquisitions of CP&P and Foley (each as defined in Note 2, Changes in Business, below), which resulted in the creation of CMC's precast concrete platform. As a result, CMC changed the name of its Emerging Businesses Group segment to Construction Solutions Group to better reflect the business composition of the segment and more closely align with the strategic priorities of CMC. The name change has no impact on the Company's reporting structure nor on financial information previously reported.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The guidance only impacts disclosures and will not have an impact on the Company's financial condition or results of operations.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires disaggregated income statement expense disclosures related to functional or natural expense line items within continuing operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, and permits either prospective or retrospective adoption. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements ("ASU 2025-09"). ASU 2025-09 amends certain aspects of the existing hedge accounting guidance in ASC 815 to more closely align hedge accounting with the economics of an entity's risk management activities. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026 and interim periods therein using prospective adoption. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements ("ASU 2025-12"). ASU 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software ("ASU 2025-06"). ASU 2025-06 eliminates accounting consideration of software project development stages and clarifies the threshold applied to begin capitalizing costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years, and permits prospective, modified prospective or retrospective adoption. Early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements ("ASU 2025-11"). ASU 2025-11 is intended to improve the navigability of guidance in ASC 270, Interim Reporting, and clarify when it applies. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, and permits prospective or full retrospective adoption. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities ("ASU 2025-10"). ASU 2025-10 adds guidance on the recognition, measurement and presentation of government grants. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, and permits modified prospective, modified retrospective, or full retrospective adoption. The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Government Assistance

During thethree months ended November 30, 2025, government assistance of $15.6 million, compared to$44.1 million in the corresponding period, was awarded to the Company from a compensation scheme established to provide aid to energy-intensive companies to offset indirect costs of rising carbon emissions rights included in energy costs in Poland. The grants were recognized in the Europe Steel Group segment and recorded as reductions to cost of goods sold in thecondensed consolidated statements of earnings (loss). See Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2025 Form 10-K, for more information on the government assistance program.

NOTE 2. CHANGES IN BUSINESS

Acquisitions

On December 1, 2025, the Company completed the acquisition of all of the issued and outstanding equity securities of Concrete Pipe and Precast, LLC ("CP&P"), a leading supplier of precast concrete solutions to the U.S. Mid-Atlantic and South Atlantic markets. The total cash purchase price was approximately $675 million, subject to customary purchase price adjustments, and was funded through cash on-hand. Preliminary opening balance sheet information is not yet available for inclusion herein. Operating results for CP&P will be included within the Company's Construction Solutions Group segment.

On December 15, 2025, the Company completed the acquisition of all of the issued and outstanding equity securities of the entities that own Foley Products Company LLC ("Foley" and such transaction, the “Foley Acquisition”). The entities that own Foley are holding companies with no substantial operations. Foley is one of the largest regional suppliers of precast concrete solutions in the U.S. and a leader within the Southeastern U.S. The total cash purchase price was approximately $1.84 billion, subject to customary purchase price adjustments. The Foley Acquisition was funded from a portion of the proceeds of the issuance of the 2033 Notes (as defined below) and the 2035 Notes (as defined below) in November 2025. Gross proceeds from the issuance of the 2033 Notes and the 2035 Notes were deposited in an escrow account at the closing of the offering and were subsequently released in connection with the completion of the Foley Acquisition. Preliminary opening balance sheet information is not yet available for inclusion herein. Operating results for Foley will be included within the Company's

Construction Solutions Group segment. For more information on the 2033 Notes and the 2035 Notes, see Note 7, Credit Arrangements.

Amended and Restated Commitment Letter

The Company entered into a commitment letter, dated October 15, 2025 (the “Commitment Letter”), with Bank of America, N.A., BofA Securities, Inc. and Citigroup Global Markets Inc., pursuant to which, subject to the terms and conditions set forth therein, Bank of America, N.A. and Citigroup Global Markets Inc. agreed to provide the Company (i) a 364-day senior unsecured bridge facility in an aggregate principal amount of up to $1.85 billion (the “Bridge Facility”) and (ii) a senior secured revolving credit facility in an aggregate principal amount of $600.0 million (the "Backstop Facility"). On October 31, 2025, in connection with the effectiveness of the Second Amendment (as defined below), the Company amended and restated the Commitment Letter to eliminate the Backstop Facility. On December 15, 2025, the Commitment Letter terminated in connection with the closing of the Foley Acquisition.

NOTE 3. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables reflect the changes in accumulated other comprehensive loss ("AOCL"):

(1) Other comprehensive income (loss) ("OCI") before reclassifications from derivatives is presented net of immaterial income tax impacts for the three months ended November 30, 2025 and 2024. OCI before reclassifications from defined benefit pension plans is presented net of immaterial income tax impacts.

(2) Reclassifications for gains from derivatives included in net earnings (loss) are primarily recorded in cost of goods sold in the condensed consolidated statements of earnings (loss) and are presented net of immaterial income tax impacts.

NOTE 4. REVENUE RECOGNITION

The majority of the Company's 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. See Note 14, Segment Information, for more information about disaggregated revenue by the Company's major product lines.

Certain revenue resulting from sales of downstream products in the North America Steel Group segment is recognized over time, as discussed below. Remaining revenue from sales of other downstream products in the North America Steel Group segment is recognized based on the amount the Company has a right to invoice as a practical expedient.

Each of the North America Steel Group segment's fabrication contracts represents a single performance obligation. Revenue from certain fabrication contracts for which the Company provides downstream products and installation services is recognized over time using an input measure, and represented 9% and 8% of net sales in the North America Steel Group segment in the three months ended November 30, 2025 and 2024, respectively. Revenue from fabrication contracts for which the Company does not provide installation services is recognized over time using an output measure, and represented 9% and 10% of net sales in the North America Steel Group segment in the three months ended November 30, 2025 and 2024, respectively.

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

The amount of revenue reclassified from August 31, 2025 contract liabilities during the three months ended November 30, 2025 was approximately $14.0 million.

Remaining Performance Obligations

As of November 30, 2025, revenue totaling $811.6 million was allocated to remaining performance obligations in the North America Steel Group segment related to contracts for which revenue is recognized using input or output measures. The Company estimates that approximately 76% of the remaining performance obligations will be recognized in thetwelve months following November 30, 2025, and the remainder will be recognized during the subsequent twelve months. The duration of all other contracts in the North America Steel Group, Construction Solutions Group and Europe Steel Group segments is typically less than one year.

NOTE 5. INVENTORIES, NET

Most of the Company's inventories are in the form of semi-finished and finished steel products. Under the Company’s vertically integrated business model in the North America Steel Group and the Europe Steel Group segments, steel products are sold to external customers in various stages, from semi-finished billets through fabricated steel, so these categories are combined as finished goods.

The components of inventories were as follows:

As of November 30, 2025 and 2024, the inventory valuation reserve was $2.8 million and $9.0 million, respectively, and primarily related to the Europe Steel Group segment. The inventory write-downs were recorded in cost of goods sold in the condensed consolidated statements of earnings (loss).

NOTE 6. GOODWILL AND OTHER INTANGIBLES

Goodwill by reportable segment is detailed in the table below:

Other indefinite-lived intangible assets consisted of the following:

The change in the balance of indefinite-lived intangible assets from August 31, 2025 to November 30, 2025 was due to foreign currency translation adjustments.

Finite-lived intangible assets subject to amortization are detailed in the following table:

The foreign currency translation adjustments for intangible assets subject to amortization were immaterial for all periods presented above.

Amortization expense for intangible assets was $6.6 million and $6.8 million in the three months ended November 30, 2025 and 2024, respectively, of which $4.1 million and $4.3 million, respectively, was recorded in cost of goods sold and the remainder was recorded in selling, general and administrative ("SG&A") expenses in the condensed consolidated statements of earnings (loss).

Estimated amortization expense for intangible assets through 2030 is as follows:

p

NOTE 7. CREDIT ARRANGEMENTS

Long-term debt was as follows:

The Company's credit arrangements require compliance with certain covenants, including interest coverage and debt to capitalization ratios, and as of November 30, 2025, the Company was in compliance with all financial covenants.

Capitalized interest was $4.0 million and $2.1 million during the three months ended November 30, 2025 and 2024, respectively.

Senior Notes Activity

In November 2025, the Company issued $1.0 billion of 5.750% senior unsecured notes due November 2033 (the "2033 Notes") and $1.0 billion of 6.000% senior unsecured notes due December 2035 (the "2035 Notes"). Aggregate issuance costs associated with the 2033 Notes and the 2035 Notes were approximately $5.5 million, which included rating agency and legal fees. Interest on the 2033 Notes is payable semiannually on May 15 and November 15 and interest on the 2035 Notes is payable semiannually on June 15 and December 15. Gross proceeds from the issuance of the 2033 Notes and the 2035 Notes were deposited into an escrow account at the closing of the offering and remained in the escrow account, included in restricted cash in the condensed consolidated balance sheet as of November 30, 2025. Subsequent to November 30, 2025, the proceeds were released in accordance with the terms of the escrow agreement, and a portion was used to facilitate the closing of the Company’s acquisition of all of the issued and outstanding equity securities of the holding companies that own Foley. An additional $15 million in fees associated with the 2033 and 2035 Notes, which were contingent upon closing of the acquisition, were paid in December. For more information on the Foley Acquisition, see Note 2, Changes in Business.

Series 2025 Bonds

In May 2025, the Company issued $150.0 million in original aggregate principal amount of tax-exempt bonds (the “Series 2025 Bonds”). The Series 2025 Bonds accrue interest at a fixed rate of 4.625%, payable semiannually on April 15 and October 15 of each year. The Series 2025 Bonds have a mandatory tender for purchase on May 15, 2032, and will mature in 2055.

Credit Facilities

On October 31, 2025, the Company entered into the Limited Consent and Second Amendment (the "Second Amendment") to the Sixth Amended and Restated Credit Agreement (as amended from time to time, the "Credit Agreement"), which, among other things, permitted the Bridge Facility and modified the event of default provisions in the Credit Agreement to provide that certain monetary judgments will not constitute an event of default. As of November 30, 2025, the Credit Agreement provided for a $600.0 million revolving credit facility (the “Revolver”) and was scheduled to mature on October 26, 2029. The Company hadno amounts drawn under the Revolver at November 30, 2025 or August 31, 2025. The availability under the Revolver was reduced by outstanding standby letters of credit totaling $1.0 million at both November 30, 2025 and August 31, 2025. On December 17, 2025, the Company entered into the Third Amendment and Commitment Increase to the Credit Amendment (the “Third Amendment”), which increased the borrowing capacity under the Revolver to $1.0 billion and extended the maturity date to December 17, 2030.

CMC Poland Sp. z.o.o., a subsidiary of the Company, had credit facilities in Poland totaling PLN 600.0 million as of November 30, 2025 and August 31, 2025, equivalent to $164.3 million and $164.5 million, respectively. There wereno amounts outstanding under these facilities as of November 30, 2025 or August 31, 2025. The available balance of these credit facilities was reduced by outstanding standby letters of credit, guarantees and/or other financial assurance instruments, totaling $2.1 million and $2.7 million as of November 30, 2025 and August 31, 2025, respectively.

Accounts Receivable Facility

The Poland accounts receivable facility had a limit of PLN 288.0 million as of November 30, 2025 and August 31, 2025, equivalent to $78.8 million and $78.9 million, respectively. The Company had no advance payments outstanding under the Poland accounts receivable facility as of November 30, 2025 or August 31, 2025.

NOTE 8. DERIVATIVES

As of November 30, 2025 and August 31, 2025, the notional values of the Company's commodity contract commitments were $578.2 million and $453.4 million, respectively, and the notional values of the Company's foreign currency contract commitments were $314.3 million and $279.3 million, respectively.

The following table provides information regarding the Company's commodity contract commitments as of November 30, 2025:

MT = Metric ton

MW(h) = Megawatt hour

MMBtu = Million British thermal unit

The following table summarizes the location and amounts of the fair value of the Company's derivative instruments as reported in the condensed consolidated balance sheets:

The following table summarizes the effects of derivatives not designated as hedging instruments on the condensed consolidated statements of earnings (loss). All other activity related to the Company's derivatives not designated as hedging instruments was immaterial for the periods presented.

The following tables summarize the effects of derivatives designated as cash flow hedging instruments on the condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of earnings (loss). Amounts presented do not include the effects of foreign currency translation adjustments.

The Company's natural gas and electricity commodity derivatives accounted for as cash flow hedging instruments have maturities extending to November 2028 and December 2034, respectively. Included in the AOCL balance as of November 30, 2025 was an estimated net gain of $11.6 million from cash flow hedging instruments that is expected to be reclassified into net earnings (loss) within the twelve months following November 30, 2025. Cash flows associated with the cash flow hedging instruments are recorded as cash flows from operating activities in the condensed consolidated statements of cash flows. See Note 9, Fair Value, for the fair value of derivative instruments recorded in the condensed consolidated balance sheets.

NOTE 9. FAIR VALUE

The Company has a fair value hierarchy that prioritizes inputs for valuation techniques into three levels, based on the lowest level input that is significant to the fair value measurement. Levels within the hierarchy are defined within Note 1, Nature of Operations and Summary of Significant Accounting Policies, to the consolidated financial statements in the 2025 Form 10-K. Further discussion regarding the Company's use of derivative instruments is included in Note 8, Derivatives.

The Company presents the fair value of its derivative contracts on a net-by-counterparty basis when a legal right to offset exists under an enforceable netting agreement. The following table summarizes information regarding the Company's financial assets and financial liabilities that were measured at fair value on a recurring basis:

(1) Investment deposit accounts are short-term in nature, and their value is based on principal plus interest.

The fair value of the Level 3 commodity derivatives is estimated using internally developed discounted cash flow models that rely on significant unobservable inputs. The Company forecasts future energy rates using a range of historical prices (the "floating rate"), which is the only significant unobservable input used in the Company's discounted cash flow models. Significant variations in the floating rate could materially impact the fair value measurement. The following table summarizes the range of floating rates used to measure the fair value of the Level 3 commodity derivatives as of November 30, 2025 and August 31, 2025, which are applied uniformly across each of the Company's Level 3 commodity derivatives:

Below is a reconciliation of the beginning and ending balances of the Level 3 commodity derivatives recognized in the condensed consolidated statements of comprehensive income (loss). Amounts presented are before income taxes. The fluctuation in energy rates over time may cause volatility in the fair value estimate and was the primary reason for unrealized gains and losses in OCI for the three months ended November 30, 2025 and 2024.

(1) Unrealized holding gain (loss), net of foreign currency translation, less amounts reclassified, are included in net unrealized holding gain (loss) on derivatives in the condensed consolidated statements of comprehensive income (loss).

(2) Realized gains included in net earnings (loss) are recorded in cost of goods sold in the condensed consolidated statements of earnings (loss).

There were no material non-recurring fair value remeasurements during the three months ended November 30, 2025 or 2024.

The carrying values of the Company's short-term items, including documentary letters of credit and notes payable, approximate fair value.

The carrying value and fair value of the Company's long-term debt, including current maturities, excluding other borrowings and finance leases, was $3.2 billion as of November 30, 2025, and $1.2 billion and $1.1 billion, respectively, as of August 31, 2025. The fair values were estimated based on Level 2 of the fair value hierarchy using indicated market values. The Company's other borrowings contain variable interest rates, so their carrying values approximate fair values.

NOTE 10. INCOME TAX

The Company’s effective income tax rate for the three months ended November 30, 2025 and 2024 was 3.1% and 24.0%, respectively. The effective tax rate is determined by computing the estimated annual effective tax rate, adjusted for discrete items, if any, which are taken into account in the appropriate period. The Company's effective tax rate can vary from period to period depending on, among other factors, the mix and amount of global earnings, the impact of loss companies for which no tax benefit is available due to valuation allowances, income tax credits, and the impact of permanent tax adjustments.

On January 10, 2025, the Company was awarded a Qualifying Advanced Energy Project Tax Credit in connection with the construction of the West Virginia micro mill under section 48C of the Internal Revenue Code. The amount awarded is a nonrefundable transferable investment tax credit allocation equal to 30% of qualified expenditures for certified projects that meet prevailing wage and apprenticeship requirements. The Company is electing to account for its nonrefundable transferable investment tax credits under ASC 740 using the flow-through method. Under the flow-through method, the credit is recognized in the fiscal year that the qualifying assets are placed in service. The Company plans on utilizing the credit beginning with its fiscal 2026 tax return and has included the estimated impact in the financial statements beginning in the current period. During the three months ended November 30, 2025, the Company recognized approximately $39.7 million in income tax benefit related to the credit. No impact was recognized in the corresponding period.

NOTE 11. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans are described in Note 13, Stock-Based Compensation Plans, to the consolidated financial statements in the 2025 Form 10-K. In general, restricted stock units awarded to executive officers and other employees vest ratably over a period of three years. Subject to the achievement of performance targets established by the Compensation Committee of the Company's Board of Directors (the "Board"), performance stock units vest after a period ofthree years.

Information for restricted stock units and performance stock units accounted for as equity awards during the three months ended November 30, 2025 is as follows:

The Company granted 106,460 equivalent shares in the form of restricted stock units and performance stock units accounted for as liability awards during the three months ended November 30, 2025. As of November 30, 2025, the Company had outstanding 267,846 equivalent shares accounted for under the liability method. The Company expects 253,648 equivalent shares to vest.

Total stock-based compensation expense, including fair value remeasurements, which was primarily included in SG&A expenses in the condensed consolidated statements of earnings (loss), was $11.2 million and $10.2 million for the three months ended November 30, 2025 and 2024, respectively.

NOTE 12. STOCKHOLDERS' EQUITY AND EARNINGS (LOSS) PER SHARE

The Company's calculation of basic earnings (loss) per share ("EPS") and diluted EPS is described in Note 16, Earnings Per Share, to the Company's consolidated financial statements in the 2025 Form 10-K.

The calculations of basic and diluted EPS were as follows:

For the three months ended November 30, 2025, the Company had immaterial anti-dilutive shares, which were not included in the computation of average diluted shares outstanding. For the three months ended November 30, 2024, the Company had 1,413,248 shares that were excluded from the computation of average diluted shares outstanding due to the Company's net loss position.

During the three months ended November 30, 2025, the Company repurchased 663,220 shares of CMC common stock at an average purchase price of $58.65 per share. Under the share repurchase program, the Company had remaining authorization to repurchase $166.1 million of shares of CMC common stock as of November 30, 2025. See Note 15, Capital Stock, to the Company's consolidated financial statements in the 2025 Form 10-K, for more information on the share repurchase program.

NOTE 13. COMMITMENTS AND CONTINGENCIES

In the ordinary course of conducting its business, the Company becomes involved in litigation, administrative proceedings and governmental investigations, including environmental matters.

Legal Proceedings

On October 30, 2020, plaintiff Pacific Steel Group ("PSG") filed a suit in the U.S. District Court for the Northern District of California (the "Northern District Court") alleging that CMC, CMC Steel Fabricators, Inc. and CMC Steel US, LLC violated the federal and California state antitrust laws and California common law by entering into an exclusivity agreement for certain steel mill equipment manufactured by one of the Company’s equipment suppliers. On November 5, 2024, a jury returned a verdict in favor of PSG in the amount of $110.0 million, which the Northern District Court, in entering its judgment on the verdict, subsequently trebled as a matter of law. PSG is also entitled to petition for and recover its attorneys' fees, costs and post-judgment interest. On December 20, 2024, CMC, CMC Steel Fabricators, Inc. and CMC Steel US, LLC filed a motion with the Northern District Court challenging the jury’s verdict and requesting a new trial. On September 29, 2025, the Northern District Court denied this post-trial motion, upholding the jury’s verdict. The Company is confident it conducted its business appropriately and intends to vigorously pursue all reasonably available avenues to have the verdict and judgment overturned. On October 24, 2025, the Company filed its notice of appeal. As a trial judgment in favor of PSG was rendered, it was determined that there was a probable and reasonably estimable loss, which was recorded as an expense within the condensed consolidated financial statements. In the three months ended November 30, 2024, the Company reported $350.0 million of litigation expense in the condensed consolidated statement of loss, which represents the Company's estimate based on its understanding of the PSG judgment, PSG's attorneys' fees and other related costs. In the three months ended November 30, 2025, the Company reported $3.7 million of litigation expense in the condensed consolidated statement of earnings, which represents the Company’s estimate of post-judgment interest on the PSG judgment. These amounts were classified as current liabilities in the condensed consolidated balance sheets because the timing of the potential payment is uncertain. All other legal expenses for the three months ended November 30, 2025 and 2024 are reported within SG&A expenses. If the verdict and judgment are overturned through the appeals process, the expenses and related liability will be reversed in the same period the verdict and judgment are overturned. The Company's litigation defense costs are expensed as incurred. Although the Company is vigorously pursuing a reversal of the jury’s verdict and the judgment, the ultimate resolution is uncertain. Unless the verdict and judgment are overturned or the judgment is significantly reduced, the cash payments incurred in connection with this litigation would have a material impact on our liquidity.

On March 13, 2022, PSG filed a second suit in the San Diego County Superior Court of California alleging that CMC Steel Fabricators, Inc., CMC Steel US, LLC, and CMC Rebar West (which later merged into CMC Steel Fabricators, Inc.) violated California state antitrust and unfair competition laws by bidding below their costs for rebar furnish-and-install projects in California in order to hamper PSG's ability to win jobs and reduce PSG’s profitability. These allegations were initially brought in PSG's lawsuit in the Northern District Court, but were dismissed without prejudice by the Northern District Court for lack of jurisdiction. This second lawsuit was later removed to the U.S. District Court for the Southern District of California (the "Southern District Court"). There, PSG seeks, among other things, a jury trial on its claims in addition to injunctive relief, compensatory damages of approximately $29 million for alleged lost profits, part of which is subject to automatic trebling pursuant to applicable law, plus pre-judgment interest, fees and costs. Fact and expert discovery are substantially complete. On November 12, 2024, CMC Steel Fabricators, Inc., CMC Steel US, LLC and CMC Rebar West filed a motion for summary judgment, which was subsequently denied on September 29, 2025. This ruling does not represent a determination on the merits of the case. As of the date of this Form 10-Q, no trial has been scheduled. The Company is confident it conducted its business appropriately, believes it has substantial defenses and intends to vigorously defend against PSG's claims. The Company has not recorded any liability for this matter as it does not believe a loss is probable, and it cannot estimate any reasonably possible loss or range of possible loss. It is possible that an unfavorable resolution to this matter could have an adverse effect on the Company’s results of operations, financial position or cash flows.

Other Matters

At November 30, 2025 and August 31, 2025, the amounts accrued for cleanup and remediation costs at certain sites in response to notices, actions and agreements under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") and analogous state and local statutes were immaterial. Total accrued environmental liabilities, including CERCLA sites, were $3.3 million and $3.4 million at November 30, 2025 and August 31, 2025, respectively, of which $1.9 million were classified as other noncurrent liabilities at each of November 30, 2025 and August 31, 2025. These amounts have not been discounted to their present values. Due to evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors, accrued amounts could vary significantly from amounts paid.

NOTE 14. SEGMENT INFORMATION

The Company's operating segments engage in business activities from which they may earn revenues and incur expenses and for which discrete financial information is available. The Company's Chief Operating Decision Maker ("CODM") is the President and Chief Executive Officer. The CODM uses adjusted EBITDA to evaluate the underlying operational performance of the Company’s reportable segments and to guide strategic decisions aligned with Company-wide objectives, as it provides a consistent and comparable view of operating results across segments. In doing so, the CODM considers the performance of this measure relative to historical, planned and forecasted financial information when making decisions about capital and personnel allocation.

Adjusted EBITDA is equal to earnings or losses before interest expense, income taxes, depreciation and amortization expense, impairment expense and, beginning in the fourth quarter of 2025, unrealized gains and losses on undesignated commodity hedges. During the fourth quarter of 2025, the Company modified its method of calculating adjusted EBITDA to exclude the impact of unrealized gains and losses on undesignated commodity derivatives. This change was primarily driven by heightened volatility in copper forward markets, which introduced significant non-cash fluctuations unrelated to core operations. By removing this volatility, the revised metric provides a more representative view of operating performance and cash-generating capability. The Company has recast adjusted EBITDA for the corresponding period to conform to the new presentation.

The Company structures its business into three reportable segments: North America Steel Group, Construction Solutions Group and Europe Steel Group. See Note 1, Nature of Operations and Summary of Significant Accounting Policies to the consolidated financial statements in the 2025 Form 10-K, for more information about the reportable segments, including the types of products and services from which each reportable segment derives its net sales. Corporate and Other contains earnings or losses on assets and liabilities related to the Company's benefit restoration plan assets and short-term investments, expenses of the Company's corporate headquarters, litigation-related expenses, interest expense related to long-term debt and intercompany eliminations. Certain corporate administrative expenses are allocated to the segments based upon the nature of the expense.

The following table summarizes certain financial information by reportable segment and Corporate and Other, as applicable:

(1) Depreciation and amortization and unrealized loss on undesignated commodity hedges are included in either cost of goods sold or SG&A expenses when those expenses are provided to the CODM.

(1) Depreciation and amortization and unrealized gain on undesignated commodity hedges are included in either cost of goods sold or SG&A expenses when those expenses are provided to the CODM.

The following table presents a reconciliation of certain financial information to consolidated totals for the reportable segments:

Disaggregation of Revenue

The following tables display net sales to external customers by reportable segment and Corporate and Other, disaggregated by major product: