Commercial Metals Company · NYSE:CMC
Commercial Metals — Q2 FY2023 Earnings Presentation
26 slides from Commercial Metals's earnings presentation, Mar 23, 2023
Slide 1: Commercial Metals Company Q2 FY 2023 Supplemental Slides
COMMERCIAL METALS COMPANY Q2 FY 2023 Supplemental Slides
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 trade actions, the effects of continued pressure
Slide 3: Increasing Shareholder Value....With a Winning Formula
Increasing Shareholder Value....With a Winning Formula 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
Slide 4: Key Takeaways From Today's Call
Key Takeaways From Today’s Call ✔ Historically strong financial results despite Q2 margin and weather-related challenges • Quarter also included a significant planned outage ✔ Expect sequential earnings improvement $303 $171 • Anticipate benefits from margin stabilization and higher shipments millio
Slide 5: Clear Sustainability Leader
Clear Sustainability Leader CMC plays a key role in the circular steel economy, turning society’s metallic waste into the steel that forms the backbone of modern life Scopes 1&2 Greenhouse Gas Emissions (GHG) Intensity Progress on 2030 Goals (2019 baseline[1]) 2.2 Reduce our Scope 1 and 2 Increase o
Slide 6: Attractive Market Environment in North America
Attractive Market Environment in North America U.S. Rebar Consumption Trending Up1 (trailing 12-month basis) Near-Term Market Outlook – Key Construction Indicators 10.5 External Indicators Internal Indicators 10.0 Rebar Consumption (million tons) 9.5 Dodge CMC New Project 9.0 Momentum Index Bid Volu
Slide 7: Powerful Long-Term Structural Trends Emerging
Powerful Long-Term Structural Trends Emerging Successive crises of pandemic, supply chain failures, and geopolitical shocks have launched significant structural adjustments. Construction activity is at the heart of economic realignment. RESHORING AND SUPPLY CHAIN INFRASTRUCTURE INVESTMENT ENERGY REA
Slide 8: Well-Positioned to Benefit From Near-Term and Structural Trends
Well-Positioned to Benefit From Near-Term and Structural Trends Sources of Stability Sources of Growth Record Downstream Backlog Working Capital Release Arizona 2 Micro Mill • CMC has steadily improved the average pricing in its • CMC has invested roughly $950 million in working • Scheduled to start
Slide 9: Strong Competitive Position in Europe Has Supported Shipments
Strong Competitive Position in Europe Has Supported Shipments CMC has maintained strong volumes by leveraging a favorable cost position and advantageous commercial and operational flexibility, even in challenging industrial end markets. Poland and Germany Manufacturing PMIs1 CMC Europe Steel Shipmen
Slide 10: Turkish Impact on Global Steel Markets
Turkish Impact on Global Steel Markets Turkey is a significant participant within scrap and rebar markets in both the U.S. and Europe. Increased scrap demand and/or reduced rebar availability related to Turkish reconstruction efforts could impact CMC’s markets. Turkey’s Annual Scrap and Rebar Trade
Slide 11: Q2 Operational Update and Performance Drivers
Q2 Operational Update • North America steel product margins over scrap continued to expand on a y/y basis, but compressed from the first quarter − Subsequent to quarter-end, CMC and other long steel producers announced $50 per ton price increases across rebar, merchant bar, and wire rod • North Amer
Slide 12: Q2 Consolidated Operating Results
Q2 Consolidated Operating Results Performance Summary Core EBITDA Bridge – Q2 2022 to Q2 2023 Units in 000’s except per ton amounts $ Millions Q2 ‘22 Q3 ‘22 Q4 ’22 Q1 ’23 Q2 ’23 450 External Finished Steel Tons Shipped1 1,429 1,654 1,560 1,559 1,408 400 350 Core EBITDA2 $323,107 $483,913 $419,021 $4
Slide 13: Q2 North America
Q2 North America Performance Summary North America – Key Margins Units in 000’s except per ton amounts (excludes California land sale) $ / ton (excludes California land sale) Q2 ‘22 Q3 ’22 Q4 ’22 Q1 ‘23 Q2 ‘23 1,200 1,093 400 1,012 350 1,000 External Finished Steel Tons Shipped[1] 979 1,178 1,132 1,
Slide 14: Q2 Europe
Q2 Europe Performance Summary Europe – Key Margins Units in 000’s except per ton amounts $ / ton Q2 ’22 Q3 ’22 Q4 ’22 Q1 ’23 Q2 ’23 500 300 453 437 450 426 407 Steel Product Margin Over Scrap External Finished Steel Tons Shipped[1] 450 476 428 473 436 250 400 367 Adjusted EBITDA per ton 200 350 Adju
Slide 15: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy CMC will prudently allocate capital while maintaining a strong and flexible balance sheet CMC Capital Allocation Priorities: 1 Value-Generating Growth 2 Shareholder Distributions 3 Debt Management 2023 Sources of Cash 2023 Uses of Cash • Cash flow from earning
Slide 16: Cash Generation Profile
Cash Generation Profile Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders 1 (in millions) $1,400 1,270 $1,200 Gain on 1,094 California land sale $1,000 $800 $600 380 $400 279 $200 140 155 37 11 5 $0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
Slide 17: Balance Sheet Strength
Balance Sheet Strength Debt maturity profile provides strategic flexibility Debt Maturity Profile Q2 FY’23 Liquidity (US$ in millions) (US$ in millions) $604 Cash and Cash Equivalents Revolving Credit Facility 4.125% 3.875% 4.375% $599 Revolver Notes Notes Notes 4.875% $600 Notes 4.0% Bond1 $300 $30
Slide 18: Leverage Profile
Leverage Profile Net Debt 1,2 / EBITDA 3 Net Debt-to-Capitalization 4 4.5x 50% 4.0x 45% 40% 3.5x 35% 3.0x 30% 2.5x 25% 2.0x 46% 3.9x 42% 20% 3.2x 37% 1.5x 33% 32% 15% 2.5x 1.0x 24% 24% 1.9x 10% 21% 22% 20% 1.6x 18% 17% 18% 17% 15% 15% 1.2x 14% 0.5x 1.1x 1.2x 1.0x 0.9x 5% 0.8x 0.7x 0.7x 0.5x 0.5x 0.4
Slide 19: Appendix: Non-GAAP Financial Reconciliations
Appendix: Non-GAAP Financial Reconciliations Q2 FY23 Supplemental Slides │ March 23, 2023 19
Slide 20: Adjusted EBITDA and Core EBITDA – Last Five Quarters
Adjusted EBITDA and Core EBITDA – Last Five Quarters 3 MONTHS ENDED Figures in thousand $ 2/28/2023 11/30/2022 8/31/2022 5/31/2022 2/28/2022 Net earnings from continuing operations $179,849 $261,774 $288,630 $312,429 $383,314 Interest expense 9,945 13,045 14,230 13,433 12,011 Income taxes 55,641 76,
Slide 21: Adjusted Earnings
Adjusted Earnings 3 MONTHS ENDED Figures in thousand $ 2/28/2023 11/30/2022 8/31/2022 5/31/2022 2/28/2022 Net earnings from continuing operations $179,849 $261,774 $288,630 $312,429 $383,314 Gain on sale of assets – – – – (273,315) Loss on debt extinguishment – – – – 16,052 Asset impairments 36 9 45
Slide 22: Annualized Return on Invested Capital – Q2 2023
Annualized Return on Invested Capital – Q2 2023 3 MOS ENDED Figures in thousand $ 2/28/2023 Earnings before income taxes $235,490 Plus: interest expense 9,945 Plus: asset impairments 36 Plus: mill operational start-up costs 6,825 Less: New Markets Tax Credit (17,659) Operating profit $234,637 Operat
Slide 23: Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders
Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders 12 MONTHS ENDED 6 MONTHS ENDED Figures in thousand $ 2/28/2023 8/31/2022 8/31/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 8/31/2016 8/31/2015 2/28/2023 2/28/2022 Net earnings from continuing operations 1,042,682
Slide 24: Net Debt to Adjusted EBITDA and Net Debt to Capitalization
Net Debt to Adjusted EBITDA and Net Debt to Capitalization 3 MONTHS ENDED Figures in thousand $ 2/28/2023 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 Long-term debt $1,0
Slide 25: Definitions for non-GAAP financial measures
Definitions for non-GAAP financial measures ADJUSTED EARNINGS Adjusted earnings is a non-GAAP financial measure that is equal to earnings before debt extinguishment costs, settlement for New Market Tax Credit transactions, certain gains on sale of assets, asset impairments, purchase accounting effec
Slide 26: Thank You
Thank You Q2 FY23 Supplemental Slides │ March 23, 2023 26
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