Thank you, Barbara, and good morning to everyone on the call today. I’m pleased to review with you our outstanding fourth quarter results.
As Barbara noted, we reported record earnings from continuing operations of $152.3 million or $1.24 per diluted share, more than double prior year levels of $67.8 million and $0.56, respectively. Results this quarter include a net after-tax charge of $1.9 million related to the write-down of recycling assets.
Excluding the impact of this item, adjusted earnings from continuing operations were $154.2 million or $1.26 per diluted share. Core EBITDA from continuing operations was $255.9 million for the fourth quarter of 2021, up 45% from a year ago period and 11% on a sequential basis. Slide 8 of the supplemental presentation illustrates the strength of CMC’s quarterly results. Both of our North America and Europe segments contributed significantly to year-over-year earnings growth, while core EBITDA per ton of finished steel reached a record level of $155 per ton. The fourth quarter marked the 10th consecutive quarter in which CMC generated an annualized return on invested capital at or above 10%, which is above our cost of capital.
Now, I will review the results by segment. North American segment recorded adjusted EBITDA of $212 million for the quarter, an all-time high compared to adjusted EBITDA of $174.2 million in the same period last year. Largest drivers of this 22% improvement were significant increase in margins on steel products and raw materials as well as solid volume growth. Partially offsetting these benefits was an increase in controllable costs on a per ton of finished steel basis. Prior to the fourth quarter of fiscal ‘21, CMC had achieved seven consecutive quarters of year-over-year reductions to our controllable costs per ton. Selling prices for steel products from our mills increased by $300 per ton on a year-over-year basis and $106 per ton sequentially. Margin over scrap on steel products increased by $103 per ton from a year ago and $41 per ton sequentially. Average selling price of downstream products increased by $44 per ton from the prior year, reaching $1,014. This increase did not keep pace with underlying scrap costs, leading to a year-over-year decline in margins. At this point, I’d like to spend a moment to discuss the pricing dynamics of our downstream backlog. Average price per ton of our downstream shipments is a function of the volumes and price points on the hundreds of fixed price projects that comprise the total backlog at any given time. The average price of our total backlog will move up or down over time based on the new work we are awarded and the older work that is being completed. Currently, we are in an environment in which our backlog is repricing upward with new work coming in at much higher prices than the completed work it is replacing, reflecting a margin above current spot rebar prices.
We expect this upward pricing trend in our backlog will translate into the average shipment price increasing throughout much of fiscal ‘22. CMC does not give price guidance, but we can say absent a run-up of scrap cost, the margin benefit of our backlog repricing is expected to be significant in future periods. Shipments of finished product in the fourth quarter increased 2% from a year ago. Demand for rebar out of our mills remained strong, but as shipments declined modestly from the prior year due to a shift in our mix towards merchant and wire rod. Volumes of merchant and other steel products hit a record level during the quarter, increasing 29% on a year-over-year basis and were 20% higher than the trailing three-year average. Downstream product shipments were impacted by a reduced backlog we had at the beginning of the year and resulted in a 3% volume decline from the fourth quarter of fiscal 2020. Barbara mentioned, our backlog was replenished during the latter half of fiscal ‘21 and has actually grown on a year-over-year basis for the past several months.
Turning to slide 10 of the supplemental deck.
Our Europe segment generated record adjusted EBITDA of $67.7 million for the fourth quarter of 2021 compared to adjusted EBITDA of $22.9 million in the prior year quarter. Improvement was driven by expanded margins over scrap, strong volumes across our range of products and contributions from our new rolling line. I should note that the prior year period included a roughly $11 million energy credit that the current period does not.
We expect to receive a similar sized credit during the first quarter of fiscal ‘22. Margins over scrap increased by $119 per ton on a year-over-year basis and were up $27 per ton from the prior quarter. Tight market conditions provided the backdrop to achieve the segment’s highest average selling price in more than a decade, reaching $763 per ton during the fourth quarter. This level represented an increase of $317 per ton compared to a year ago and $99 per ton sequentially. Europe volumes increased 21% compared to the prior year and reached their highest level on record. The strength was broad-based with shipments of rebar, merchant bar and other steel products increasing by double-digit percentages on a year-over-year basis. Polish construction market remains robust with new residential activity growing strongly. Consumption of our merchant and wire rod products has been supported by an expanding Central European industrial sector. Barbara mentioned, the ramp-up of our third rolling mill helped CMC capitalize on these strong conditions and increased volumes during the quarter.
Turning to capital allocation and our balance sheet.
We are excited to issue yesterday’s press release that CMC is increasing its cash distribution to shareholders in the form of an enlarged dividend, the first increase in 13 years and a sizable share repurchase program. The new share repurchase program equates to roughly 9% of our market capitalization and will replace the previous program enacted in 2015. These actions highlight the confidence that CMC’s Board and senior leadership have in the earnings capability of CMC as well as our future prospects.
Our intention is to target a cash distribution to shareholders that represent a meaningful portion of free cash flow and is competitive with sector peers. We plan on executing against this target by utilizing share repurchases to supplement our dividend payments. We believe this approach will allow CMC’s strategic flexibility in our deployment of capital as well as provide a mechanism to directly return excess cash flows with shareholders during the periods of strong performance. CMC’s rebalanced capital allocation framework with its greater emphasis on cash distribution should in no way impede on our first priority, which is pursuing value-accretive growth.
We expect to fully fund our current strategic growth projects with organic cash generation while simultaneously providing enhanced cash returns to shareholders and maintaining a high-quality balance sheet.
Our capital allocation priorities are laid out explicitly in simple terms on slide 14.
We have proven ourselves as excellent stewards of capital and generator of economic value. We believe our best use of capital is the execution of attractive value-creating growth.
As we look beyond the completion of the slate of strategic initiatives outlined during our Investor Day last year, we’re encouraged by the pipeline of attractive strategic growth projects that are currently being explored.
However, we believe that given the robust and stable cash flows we expect to generate through the cycle, CMC will have the ability to both fund attractive growth and return elevated levels of cash to our shareholders. We always look to optimize our debt costs.
However, given the current slate of our balance sheet, we do not believe delevering is in the -- best advantageous strategy to us at this time. Overarching our entire capital allocation strategy is our objective to maintain a strong balance sheet that provides strategic flexibility and gives CMC the wherewithal to navigate any economic environment.
Moving to the balance sheet.
As of August 31, 2021, cash and cash equivalents totaled $498 million.
In addition, we had approximately $699 million of availability under our credit and accounts receivable programs.
During the quarter, we generated $134 million of cash from operations, despite a $48 million increase in working capital. The rise in working capital was driven by the significant increase in both scrap input costs and average selling prices.
Looking past these factors, our days of working capital have decreased from a year ago.
Our leverage metrics remain attractive, and we have improved significantly over the last two fiscal years.
As can be seen on slide 17, our net debt-to-EBITDA ratio now sits at just 0.8, while our net debt to capitalization is at 17%. We believe a robust balance sheet and overall financial strength provides us the flexibility to fund our strategic growth projects, navigate economic uncertainties and pursue opportunistic M&A while returning cash to shareholders. CMC’s effective tax rate for the quarter was 21%.
For the year, our effective tax rate was 22.7%. Absent the enactment of any new corporate tax legislation, we forecast our tax rate to be between 25% and 26% in fiscal ‘22.
Lastly, I would like to provide CMC’s fiscal ‘22 capital spending outlook. We currently expect to invest between $450 million to $500 million this year with a little over half of which can be attributed to Arizona 2.
We are entering the middle phase of mill construction when investment and on-site activity is anticipated to be the highest.
As we indicated in the past, proceeds from the sale of our Rancho Cucamonga land are expected to be used to offset much of the cost of the state-of-the-art mill. Total gross investment for Arizona 2 is forecast to be approximately $500 million, against which, we’ll apply roughly $260 million net after-tax proceeds from the land transaction. This nets out to be $240 million of spend for the new mill compared to the $300 million net investment figure we had previously provided. The difference, as Barbara previously mentioned, is due to the higher than expected valuation on the land sale. This concludes my remarks. And now, I will turn back to Barbara for the outlook.