Commercial Metals Company · NYSE:CMC
Commercial Metals — Q1 2023 Earnings Presentation
28 slides from Commercial Metals's earnings presentation, Jan 9, 2023
Slide 1: Commercial Metals Company Q1 FY 2023 Supplemental Slides
COMMERCIAL METALS COMPANY Q1 FY 2023 Supplemental Slides
Slide 2: Forward-Looking Statements
Forward-Looking Statements Q1 FY23 Supplemental Slides │ January 9, 2023 2 This presentation contains forward-looking statements within the meaning of the federal securities laws with respect to general economic conditions, key macro-economic drivers that impact our business, the effects of ongoing
Slide 3: Increasing Shareholder Value... With a Winning Formula
3Q1 FY23 Supplemental Slides │ January 9, 2023 Leading positions in core products and geographies Focused strategy that leverages capabilities, competitive strengths, and market knowledge Strong balance sheet and cash generation provides flexibility to execute on strategy Vertical structure optimize
Slide 4: Key Takeaways: Strong financial performance continued in Q1 2023
CMC’s trend of strong financial performance continued in Q1 2023 • Second best core EBITDA in Company history Divergence in market conditions between North America and Europe North America segment well positioned for 2023 • Internal leading indicators point toward resilience; backlog at historically
Slide 5: Q1 2023 Continued a Trend of Strong Financial Performance
$425 $0 $100 $200 $300 $400 $500 $600 Q 1 '1 8 Q 2 '1 8 Q 3 '1 8 Q 4 '1 8 Q 1 '1 9 Q 2 '1 9 Q 3 '1 9 Q 4 ’1 9 Q 1 ’2 0 Q 2 ’2 0 Q 3 ’2 0 Q 4 ‘2 0 Q 1 '2 1 Q 2 '2 1 Q 3 '2 1 Q 4 '2 1 Q 1 '2 2 Q 2 '2 2 Q 3 '2 2 Q 4 '2 2 Q 1 '2 3 Q1 2023 Continued a Trend of Strong Financial Performance Q1 FY23 Supplem
Slide 6: CMC Steel West Virginia (formerly MM4) Project Update
CMC Steel West Virginia (formerly MM4) Project Update Q1 FY23 Supplemental Slides │ January 9, 2023 6 In early December, CMC announced West Virginia as the site for its fourth micro mill Major metro areas in vicinity Existing CMC rebar mills CMC fabrication shops Future site of CMC Steel WV CMC East
Slide 7: Clear Sustainability Leader
69% Of goal Clear Sustainability Leader Q1 FY23 Supplemental Slides │ January 9, 2023 7 [1] Represents progress on environmental goals as of fiscal year 2022, compared to fiscal year 2019 Note: GHG emissions statistics for CMC include only steel mill operations, which represents over 95% of CMC’s em
Slide 8: Attractive Market Environment in North America
Attractive Market Environment in North America Favorable supply / demand dynamics have supported strong and stable rebar mill margins. Structural economic trends have meaningfully impacted rebar consumption. The onset of increased federal infrastructural spending could create an incremental tailwind
Slide 9: CMC is Well-Positioned for 2023
100 120 140 160 Backlog Bids CMC is Well-Positioned for 2023 Key construction indicators continue to point toward strength over the near-term. Looking further ahead, several structural trends are underway that could provide meaningful tailwinds to activity. CMC is positioned well to capitalize on up
Slide 10: Developments Within Europe
(40,000) (30,000) (20,000) (10,000) 0 10,000 20,000 30,000 40,000 50,000 60,000 Q 1- 18 Q 2- 18 Q 3- 18 Q 4- 18 Q 1- 19 Q 2- 19 Q 3- 19 Q 4- 19 Q 1- 20 Q 2- 20 Q 3- 20 Q 4- 20 Q 1- 21 Q 2- 21 Q 3- 21 Q 4- 21 Q 1- 22 Q 2- 22 Q 3- 22 Q 4- 22 Q 1- 23 Net Imports from EU Net Imports from Outside EU Tota
Slide 11: Strong Relative Cost Position in Europe Has Supported Shipments
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 FY 2013 to Q3 '21 Q4 '21 to Q1 '23 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 Strong Relative Cost Position in Europe Has Supported Shipments Q1 FY23 Supplemental Slides │ January 9, 2023 11
Slide 12: Q1 2023 Key Performance Drivers
• Steel product margins over scrap continued to expand on a y/y basis in North America, but have compressed in Europe − Margins were up $147 per ton y/y in North America, down $9 per ton y/y in Europe • Downstream average selling price increased $51 per ton from the prior quarter, a reflection of on
Slide 13: Q1 Consolidated Operating Results
327 425 109 15 5 10 0 50 100 150 200 250 300 350 400 450 Q1 2022 NA Segment EBITDA Europe Segment EBITDA Corp & Eliminations Other Non-Op Items Q1 2023 Q1 Consolidated Operating Results Q1 FY23 Supplemental Slides │ January 9, 2023 13 Q1 ‘22 Q2 ‘22 Q3 ‘22 Q4 ’22 Q1 ’23 External Finished Steel Tons S
Slide 14: Q1 North America
100 110 120 130 140 150 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Adjusted EBITDA per ton Wgt Avg Finished Steel Mgn Over Scrap Controllable Costs 244 268 322 327 348 548 605 638 717 695 0 50 100 150 200 250 300 350 400 0 100 200 300 400 500 600 700 800 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Adjusted EBITDA pe
Slide 15: Q1 Europe
80 90 100 110 120 130 219 180 254 150 136 435 407 437 453 426 0 50 100 150 200 250 300 100 150 200 250 300 350 400 450 500 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Adjusted EBITDA per Ton Steel Products Margin Over Scrap Key Performance Drivers Q1 2023 vs Q1 2022 Q1 Europe Q1 FY23 Supplemental Slides │ Ja
Slide 16: Disciplined Capital Allocation Strategy
2 31 Disciplined Capital Allocation Strategy Q1 FY23 Supplemental Slides │ January 9, 2023 16 CMC Capital Allocation Priorities: $350 million share repurchase program ($139 million remaining) Quarterly dividend of $0.16 per share (increased 14% in Q4 2022) Shareholder Cash Distribution Programs in P
Slide 17: Cash Generation Profile
5 37 11 140 155 279 380 1,270 1,352 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 L12M (to Q1 '23) Cash Generation Profile Q1 FY23 Supplemental Slides │ January 9, 2023 17 Adjusted EBITDA Less Sustaining Capital Expenditures and Di
Slide 18: Balance Sheet Strength
$214 $300 $300 $300 $145 $600 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2047 64 52 200 599 $582 Balance Sheet Strength Q1 FY23 Supplemental Slides │ January 9, 2023 18 [1] 2047 tax-exempt bonds were priced to yield 3.5%; coupon rate is 4.0% Source: Public filings Revolver Term Loan Pola
Slide 19: Leverage Profile
3.9x 3.2x 2.5x 1.9x 1.6x 1.2x 0.9x 1.1x 1.2x 1.0x 0.8x 0.7x 0.5x 0.7x 0.5x 0.4x NM 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x 46% 42% 37% 33% 32% 24% 18% 21% 22% 20% 17% 18% 14% 24% 17% 15% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Leverage Profile Q1 FY23 Supplemental Slides │ January 9, 2023 19
Slide 20: Appendix: Non-GAAP Financial Reconciliations
Q1 FY23 Supplemental Slides │ January 9, 2023 20 Appendix: Non-GAAP Financial Reconciliations
Slide 21: Core EBITDA Reconciliation
11/30/2022 8/31/2022 5/31/2022 2/28/2022 11/30/2021 Net earnings $261,774 $288,630 $312,429 $383,314 $232,889 Interest expense 13,045 14,230 13,433 12,011 11,035 Income taxes 76,725 49,991 92,590 126,432 28,872 Depreciation and amortization 51,183 49,081 43,583 41,134 41,226 Asset impairments 9 453
Slide 22: Adjusted Earnings
Adjusted Earnings Q1 FY23 Supplemental Slides │ January 9, 2023 22[1] See page 27 for definitions of non-GAAP measures Figures in thousand $ 11/30/2022 8/31/2022 5/31/2022 2/28/2022 11/30/2021 Net earnings $261,774 $288,630 $312,429 $383,314 $232,889 Gain on sale of assets – – – (273,315) – Loss on
Slide 23: Annualized Return on Invested Capital – Q1 2023
Annualized Return on Invested Capital – Q1 2023 Q1 FY23 Supplemental Slides │ January 9, 2023 23 [1] Federal statutory rate of 21% plus approximate impact of state level income tax [2] See page 27 for definitions of non-GAAP measures Figures in thousand $ 3 MOS ENDED 11/30/2022 Earnings before incom
Slide 24: Adjusted EBITDA Reconciliation
11/30/2022 8/31/2022 8/31/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 8/31/2016 8/31/2015 11/30/2022 11/30/2021 Net earnings $1,246,147 $1,217,262 $412,865 $278,302 $198,779 $135,237 $50,175 $62,001 $58,583 $261,774 $232,889 Interest expense 52,719 50,709 51,904 61,837 71,373 40,957 44,151 62,121 7
Slide 25: Net Debt Reconciliation
11/30/2022 8/31/2022 5/31/2022 2/28/2022 11/30/2021 8/31/2021 5/31/2021 2/28/2021 11/30/2020 8/31/2020 5/31/2020 2/29/2020 11/30/2019 8/31/2019 5/31/2019 2/28/2019 11/30/2018 8/31/2018 Long-term debt $1,093,146 $1,113,249 $1,115,478 $1,445,755 $1,007,801 $1,015,415 $1,020,129 $1,011,035 $1,064,893 $
Slide 26: Trailing Twelve Month EBITDA Reconciliation
3 MONTHS ENDED 11/30/2022 8/31/2022 5/31/2022 2/28/2022 11/30/2021 8/31/2021 5/31/2021 2/28/2021 11/30/2020 8/31/2020 5/31/2020 2/29/2020 11/30/2019 8/31/2019 5/31/2019 2/28/2019 11/30/2018 8/31/2018 5/31/2018 2/28/2018 11/30/2017 Net earnings $261,774 $288,630 $312,429 $383,314 $232,889 $152,313 $1
Slide 27: Definitions for non-GAAP financial measures
Definitions for non-GAAP financial measures Q1 FY23 Supplemental Slides │ January 9, 2023 27 ADJUSTED EARNINGS Adjusted earnings is a non-GAAP financial measure that is equal to earnings before debt extinguishment costs, certain gains on sale of assets, asset impairments, purchase accounting effect
Slide 28: Thank You
Q1 FY23 Supplemental Slides │ January 9, 2023 28 Thank You