NOTE 5. REVENUE RECOGNITION

Revenue from Contracts with Customers

Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration received or expected to be received in exchange for those goods or services. The Company's performance obligations arise from sales of steel products, ferrous and nonferrous scrap metals, and construction materials; and from services such as steel fabrication and installation. The shipment of products to customers is considered a fulfillment activity and amounts billed to customers for shipping and freight are included in net sales, and the related costs are included in cost of goods sold. Net sales is presented net of taxes.

In the Americas Mills, Americas Recycling, and International Mill segments, 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.

In the Americas Fabrication segment, each contract represents a single performance obligation. Revenue from certain contracts is recognized over time and revenue from certain contracts is recognized equal to billing under an available practical expedient. For contracts where the Company provides fabricated product and installation services, revenue is recognized over time using an input method. These contracts represent approximately 29% of total revenue in the Americas Fabrication segment. For these contracts, the measure of progress is based on contract costs incurred to date compared to total estimated contract costs, which provides a reasonable depiction of the Company’s progress toward satisfaction of the performance obligation as there is a direct relationship between costs incurred by the Company and the transfer of the fabricated product and installation services. Revenue from contracts where the Company does not provide installation services is recognized over time using an output method. These contracts represent approximately 21% of total revenue in the Americas Fabrication segment. For these contracts, the Company uses tons shipped compared to total estimated tons, which provides a reasonable depiction of the transfer of contract value to the customer, as there is a direct relationship between the units shipped by the Company and the transfer of the fabricated product. Significant judgment is required to evaluate total estimated costs used in the input method and total estimated tons in the output method. If estimated total costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known. The cumulative effect of revisions to estimates related to net contract revenues, costs to complete, or total planned quantity is recorded in the period in which such revisions are identified. The Company does not exercise significant judgments in determining the transaction price. The remaining 50% of revenue in the Americas Fabrication segment is recognized as amounts are billed to the customer.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing and a liability when revenue is recognized subsequent to invoicing. Payment terms and conditions vary by contract type, although the Company generally requires customers to pay 30 days after the Company satisfies the performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined the contracts generally do not include a significant financing component.

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



(in thousands)	November 30, 2018		August 31, 2018
Contract assets (included in other current assets)	$	70,455	$	49,221
Contract liabilities (included in accrued expenses and other payables)	23,716		6,679

The amount of revenue reclassified from the August 31, 2018 contract liabilities balance during the three months ended November 30, 2018 was approximately $5.5 million.

Remaining Performance Obligations

As of November 30, 2018, a total of $896.1 million has been allocated to remaining performance obligations in the Americas Fabrication segment, excluding those contracts where revenue is recognized equal to billing under an available practical expedient. Of this amount, the Company estimates the remaining performance obligations will be recognized as revenue as follows: 40% in the first twelve months, 49% in the following twelve months, and 11% thereafter. The duration of contracts in the Americas Mills, Americas Recycling, and International Mill segments are typically less than one year.

Disaggregation of Revenue

The following tables display revenue by reportable segment from external customers, disaggregated by major source. The Company believes disaggregating by these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.



	Three Months Ended November 30, 2018
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	239	$	347,965	$	374,807	$	217,770	$	—	$	940,781
Ferrous scrap	111,654		9,142		—		275		—		121,071
Nonferrous scrap	128,075		3,180		—		2,941		—		134,196
Construction materials	—		—		57,171		—		—		57,171
Other	213		13,384		2,580		5,687		2,259		24,123
Total	$	240,181	$	373,671	$	434,558	$	226,673	$	2,259	$	1,277,342



	Three Months Ended November 30, 2017
(in thousands)	Americas Recycling		Americas Mills		Americas Fabrication		International Mill		Corporate and Other		Total
Steel products	$	298	$	221,562	$	269,642	$	209,860	$	—	$	701,362
Ferrous scrap	122,647		9,048		—		321		—		132,016
Nonferrous scrap	150,952		3,981		—		3,683		—		158,616
Construction materials	—		—		59,031		—		—		59,031
Other	440		12,142		1,879		6,348		4,699		25,508
Total	$	274,337	$	246,733	$	330,552	$	220,212	$	4,699	$	1,076,533