Commercial Metals Company · NYSE:CMC
Commercial Metals — Q3 FY2022 Earnings Presentation
25 slides from Commercial Metals's earnings presentation, Jun 16, 2022
Slide 1: Commercial Metals Company Q3 FY'22 Supplemental Slides
RE COMMERCIAL METALS COMPANY Q 3 F Y ’ 2 2 S u p p l e m e n t a l S l i d e s
Slide 2: Forward-Looking Statements
Forward-Looking Statements Q3 FY22 Supplemental Slides │ June 16, 2022 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: A Clear Path to Value Creation
3 ✓ Vertical structure optimizes returns through the entire value chain ✓ Disciplined capital allocation focused on maximizing returns for our shareholders Q3 FY22 Supplemental Slides │ June 16, 2022 ✓ Leading positions in core product and geographical markets ✓ Focused strategy that leverages capab
Slide 4: Key Takeaways From Today's Presentation
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 • Near-term leading indicators point toward market strength • Structural trends expected to bo
Slide 5: A Clearly Sustainable Future – Proud of Our Progress
7.8% achieved 2.7 % currently C o n te n t 0.82 MT CO2e / MT 1.89 MT CO2e / MT 20.62 GJ / MT 28.60 m3 / MT 69.5% of content 0.197 0.698 3.710 1.241 2.0% Scope 1 Scope 1-3 Energy Intensity Water Intake Virgin Material G H G E m is s io n s E n e rg y U s e W a te r U s e Industry AverageCMC Performan
Slide 6: Resilient Markets, Resilient Company
Resilient Markets, Resilient Company 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 upside or respond to softn
Slide 7: Tensar: Strategically Aligned Acquisition That Builds-Out Our Core
Tensar: Strategically Aligned Acquisition That Builds-Out Our Core Q3 FY22 Supplemental Slides │ June 16, 2022 7 • Transaction creates powerful global provider of diverse early phase reinforcement solutions • Extends CMC’s growth runway − Under-penetrated markets with significant long-term product a
Slide 8: Financially Attractive Transaction
2.5x 0.9x 0.8x 0.7x NM 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x Q4 2019 Q4 2020 Q4 2021 Q3 2022 Financially Attractive Transaction Q3 FY22 Supplemental Slides │ June 16, 2022 8 0 x 2 x 4 x 6 x 8 x 10 x 12 x 14 x Tensar Building Materials Construction Materials – 5% 10% 15% 20% 25% 30% Tensar Building Materials
Slide 9: Secular Trends Emerging in Europe
235% 449% 28% 71% – 100% 200% 300% 400% 500% 1-yr change vs. 10-year average Day Ahead Price (Avg of DE, SP, FR) CMC Europe Electricity Cost per Ton Secular Trends Emerging in Europe Q3 FY22 Supplemental Slides │ June 16, 2022 9 Q3 ‘22 Electricity Costs vs. Historical Periods – CMC Europe vs. Europe
Slide 10: Q4 FY2022 Outlook
• Q4 financial results are expected to be strong • Volumes in North America should be supported by a replenished downstream backlog, as well as broad end market strength • Downstream backlog is expected to continue repricing higher • Europe volumes should be supported by a robust construction market
Slide 11: Q3 2022 Consolidated Operating Results
230 484 172 71 1 9 0 50 100 150 200 250 300 350 400 450 500 Q3 2021 NA Segment EBITDA Europe Segment EBITDA Corp & Eliminations Other Non-Op Items Q3 2022 Consolidated Operating Results 11Q3 FY22 Supplemental Slides │ June 16, 2022 Q3 ‘21 Q4 ‘21 Q1 ‘22 Q2 ‘22 Q3 ‘22 External Finished Steel Tons Ship
Slide 12: North America
173 179 244 268 322 619 645 658 741 808 425 466 548 605 638 0 50 100 150 200 250 300 350 0 100 200 300 400 500 600 700 800 900 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Adjusted EBITDA per Ton of Finished Steel Shipped Downstream Products Margin Over Scrap (1 Qtr Lag) Steel Products Margin Over Scrap 100 1
Slide 13: Europe
80 85 90 95 100 105 110 124 147 219 180 254 288 315 435 407 437 0 50 100 150 200 250 300 100 150 200 250 300 350 400 450 500 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Adjusted EBITDA per Ton Steel Products Margin Over Scrap Key Performance Drivers Q3 2022 vs Q3 2021 Europe 13Q3 FY22 Supplemental Slides │ J
Slide 14: Disciplined Capital Allocation Strategy
2 31 Disciplined Capital Allocation Strategy 14Q3 FY22 Supplemental Slides │ June 16, 2022 CMC Capital Allocation Priorities: $350 million share repurchase program in place Quarterly dividend of $0.14 per share (increased 17% in Q4 2021) Shareholder Cash Distribution Programs in Place • Operating ca
Slide 15: Cash Generation Profile
$811 $5 $37 $11 $140 $155 $279 $380 $1,084 $0 $200 $400 $600 $800 $1,000 $1,200 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 L12M (to Q3 '22) Cash Generation Profile 15Q3 FY22 Supplemental Slides │ June 16, 2022 Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Sta
Slide 16: Balance Sheet Strength
69 150 399 410 $330 $300 $300 $300 $145 $400 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2047 Balance Sheet Strength 16Q3 FY22 Supplemental Slides │ June 16, 2022 [1] 2047 tax-exempt bonds were priced to yield 3.5%; coupon rate is 4.0% [2] Availability as of May 31, 2022 excludes proceeds
Slide 17: Leverage Profile
46% 42% 37% 33% 32% 24% 18% 21% 22% 20% 17% 18% 14% 24% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 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 NM 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x Leverage Profile 17Q3 FY22 Supplemental Slides │ June 16, 2022 Source: Public filing
Slide 18: Appendix: Non-GAAP Financial Reconciliations
Q3 FY22 Supplemental Slides │ June 16, 2022 18 Appendix: Non-GAAP Financial Reconciliations
Slide 19: Adjusted EBITDA and Core EBITDA reconciliation
3 MONTHS ENDED 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 amortization 43,583 41,134 41,226 42,437 41,804 Amortizati
Slide 20: Adjusted Earnings
Adjusted Earnings Q3 FY22 Supplemental Slides │ June 16, 2022 20[1] See page 24 for definitions of non-GAAP measures Figures in thousand $ 3 MONTHS ENDED 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 Gain on sale of assets – (273,315) –
Slide 21: Return on Invested Capital
3 MOS ENDED 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 inventory 2,169 Less: gain on sale of assets (2,02
Slide 22: Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders
[1] See page 24 for definitions of non-GAAP measures Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders Q3 FY22 Supplemental Slides │ June 16, 2022 22 Figures in thousand $ 12 MONTHS ENDED 9 MONTHS ENDED 5/31/2022 8/31/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017
Slide 23: Net Debt and Leverage Reconciliation
3 MONTHS ENDED 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 $1,445,755 $1,007,801 $1,015,415 $1,020,129 $1,011,035 $1,064,893 $1,065,536 $1,153,8
Slide 24: Definitions for non-GAAP financial measures
Definitions for non-GAAP financial measures Q3 FY22 Supplemental Slides │ June 16, 2022 24 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 impairment
Slide 25: Thank You
Q3 FY22 Supplemental Slides │ June 16, 2022 25 Thank You