Commercial Metals Company · NYSE:CMC
Commercial Metals — Q3 2022 Earnings Presentation
25 slides from Commercial Metals's earnings presentation, Jun 16, 2022
Slide 1: Q3 FY'22 Supplemental Slides
COMMERCIAL METALS COMPANY Q3 FY’22 Supplemental Slides RE
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 pressu
Slide 3: A Clear Path to Value Creation
A Clear Path to Value Creation ✓ Leading positions in core product and geographical markets ✓ Vertical structure optimizes returns through the entire value chain ✓ Focused strategy that leverages capabilities, competitive strengths, and ✓ Disciplined capital allocation focused on maximizing returns
Slide 4: Key Takeaways From Today's Call
Key Takeaways From Today’s Call ✔ Continued record-level financial performance • High margins on steel products and raw materials • End market activity remained strong across geographies ✔ Positioned for resilience through the economic cycle $484 $320 • Near-term leading indicators point toward mark
Slide 5: A Clearly Sustainable Future – Proud of Our Progress
A Clearly Sustainable Future – Proud of Our Progress With GHG emissions intensity already below the 2040 Paris Climate Agreement industry target, CMC continues to set new lower emissions targets CMC Performance Industry Average 2030 Goals1 Progress on 2030 Goals1 GHG Emissions Scope 1 0.197 0.82 MT
Slide 6: Resilient Markets, Resilient Company
Resilient Markets, Resilient Company Construction Market Indicators and Trends Company Positioning Construction Leading Indicators Structural Trends Architectural Billings Index Federal Infrastructure Package Arizona 2 Startup (early CY 2023) • Points to expansion in non-residential spending • 65% i
Slide 7: Tensar: Strategically Aligned Acquisition That Builds-Out Our Core
Tensar: Strategically Aligned Acquisition That Builds-Out Our Core • Transaction creates powerful global provider of diverse early phase reinforcement solutions • Extends CMC’s growth runway Expands into complementary Leverages CMC’s − Under-penetrated markets with significant long-term product adop
Slide 8: Financially Attractive Transaction
Financially Attractive Transaction Transaction Valuation and Margin Comparisons Impact on CMC Net Leverage EV / FY ‘21 EBITDA EBITDA Margins Net Debt to Trailing 12-Month Adjusted EBITDA 14 x 30% 3.0x 12 x 25% 2.5x 10 x 20% 2.0x 8x 15% 1.5x 6x 10% 1.0x 4x 2x 5% 0.5x 2.5x 0.9x 0.8x 0.7x 0x – NM Tensa
Slide 9: Secular Trends Emerging in Europe
Secular Trends Emerging in Europe Q3 ‘22 Electricity Costs vs. Historical Periods – CMC Europe vs. European Spot Pricing 500% 449% Day Ahead Price (Avg of DE, SP, FR) Shifting Steel Long Product1 Trade Flows Into Europe CMC Europe Electricity Cost per Ton 400% Annual Long Product Volumes to Europe G
Slide 10: Operational Update: Performance Drivers
Operational Update • Significant increase in steel product margins over scrap in North America and Europe − Margins up $213 per ton y/y in North America, up $149 per ton y/y in Europe • Margins on sales of raw materials reached $299 per ton compared to a seven-year average of $160 Performance Driver
Slide 11: Consolidated Operating Results
Consolidated Operating Results Performance Summary Core EBITDA Bridge – Q3 2021 to Q3 2022 Units in 000’s except per ton amounts $ Millions Q3 ‘21 Q4 ‘21 Q1 ‘22 Q2 ‘22 Q3 ‘22 500 9 1 450 External Finished Steel Tons Shipped1 1,601 1,646 1,464 1,429 1,654 71 400 Core EBITDA2 $230,464 $255,916 $326,80
Slide 12: North America
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) Q3 ’21 Q4 ‘21 Q1 ‘22 Q2 ‘22 Q3 ’22 900 350 808 800 741 300 External Finished Steel Tons Shipped1 1,197 1,186 1,099 979 1,178 645
Slide 13: Europe
Europe Performance Summary Europe – Key Margins Units in 000’s except per ton amounts $ / ton Q3 ‘21 Q4 ‘21 Q1 ‘22 Q2 ’22 Q3 ’22 500 300 435 437 450 407 Steel Product Margin Over Scrap External Finished Steel Tons Shipped1 404 460 365 450 476 250 Adjusted EBITDA per ton 400 200 350 315 288 Adjusted
Slide 14: 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 YTD 2022 Sources of Cash Uses and Intended Uses • Operating cas
Slide 15: Cash Generation Profile
Cash Generation Profile Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders 1 (in millions) $1,200 $1,084 $1,000 Gain on California land sale $800 $811 $600 $380 $400 $279 $200 $140 $155 $37 $11 $5 $0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 L12M (to
Slide 16: Balance Sheet Strength
Balance Sheet Strength Debt maturity profile provides strategic flexibility Debt Maturity Profile Q3 FY’22 Liquidity 2 (US$ in millions) (US$ in millions) Revolving Credit Facility 410 Cash and Cash Equivalents 4.875% Notes 4.125% 3.875% 4.375% Notes Notes Notes $400 399 Revolver 4.0% $330 Bond $300
Slide 17: 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% 1.6x 18% 20% 18% 17% 1.2x 1.2x 14% 0.5x 1.1x 1.0x 0.9x 5% 0.8x 0.7x 0.7x 0.5x NM 0% Financial stre
Slide 18: Appendix: Non-GAAP Financial Reconciliations
Appendix: Non-GAAP Financial Reconciliations Q3 FY22 Supplemental Slides │ June 16, 2022 18
Slide 19: Adjusted EBITDA and Core EBITDA
Adjusted EBITDA and Core EBITDA 3 MONTHS ENDED Figures in thousand $ 5/31/2022 2/28/2022 11/30/2021 8/31/2021 5/31/2021 Net earnings $312,429 $383,314 $232,889 $152,313 $130,408 Interest expense 13,433 12,011 11,035 11,659 11,965 Income taxes 92,590 126,432 28,872 40,444 38,175 Depreciation and amor
Slide 20: Adjusted Earnings
Adjusted Earnings 33MONTHS MONTHSENDED ENDED Figures in thousand $ 5/31/2022 2/28/2022 5/31/2022 2/28/2022 11/30/2021 11/30/2021 8/31/2021 8/31/2021 5/31/2021 5/31/2021 Netearnings Net earnings $312,429 $312,429 $383,314 $383,314 $232,889 $232,889 $152,313 $130,408 $152,313 $130,408 Gainon Gain onsa
Slide 21: Return on Invested Capital
Return on Invested Capital 3 MOS ENDED Figures in thousand $ 5/31/2022 Earnings before income taxes $405,019 Plus: interest expense 13,433 Plus: acquisition and integration related costs 4,478 Plus: loss on extinguishment of debt 39 Plus: asset impairments 3,245 Plus: purchase accounting effect on i
Slide 22: Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders
Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders 12 MONTHS ENDED 9 MONTHS ENDED Figures in thousand $ 5/31/2022 8/31/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 8/31/2016 8/31/2015 5/31/2022 5/31/2021 Net earnings $1,080,945 $412,865 $278,302 $198,779 $135,237
Slide 23: 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 $ 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 Long-term debt $1,115,478 $1,4
Slide 24: 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, certain gains on sale of assets, certain facility closure costs, asset impairments, purchase accounting effect on inventory and
Slide 25: Thank You
Thank You Q3 FY22 Supplemental Slides │ June 16, 2022 25
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