Commercial Metals Company · NYSE:CMC
Commercial Metals — Q3 FY2023 Earnings Presentation
27 slides from Commercial Metals's earnings presentation, Jun 22, 2023
Slide 1: Commercial Metals Company Q3 FY 2023 Supplemental Slides
COMMERCIAL METALS COMPANY Q3 FY 2023 Supplemental Slides
Slide 2: Forward-Looking Statements
Forward-Looking Statements Q3 FY23 Supplemental Slides │ June 22, 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 tr
Slide 3: Increasing Shareholder Value...With a Winning Formula
3Q3 FY23 Supplemental Slides │ June 22, 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 optimizes
Slide 4: Key Takeaways From Today's Call
Strong financial results in the third quarter • North America segment achieved year-over-year growth in EBITDA for the tenth consecutive quarter (excluding Q2 2022 gain on land sale) Arizona 2 operational startup underway • Anticipated to achieve breakeven on an EBITDA basis during the first quarter
Slide 5: Strategic Growth – Mill Projects: Arizona 2
• Operational startup underway • Producing for commercial sale in Q4 2023 • Initial ramp-up on rebar, before commissioning merchant • First micro mill in the world capable of both rebar and merchant bar production in a continuous process • 500k tons of capacity, including 150k tons of merchant • Mil
Slide 6: Tensar Acquisition: First Year Highlights and Opportunities
Opportunities • Product demand exceeds production capabilities; opportunity to add capacity • Significant organic growth potential − Underpenetrated markets in the U.S. and overseas − Execution on commercial synergies • Pipeline of synergistic M&A opportunities exist over the long-term First Year Hi
Slide 7: Attractive Market Environment in North America
750 1,000 1,250 1,500 1,750 2,000 Attractive Market Environment in North America Dodge Momentum Index continues to expand on a year-over-year basis, pointing toward future growth in private non-residential construction Construction spending for highways and streets has increased by double-digit
Slide 8: Long-Term Outlook Supported by Powerful Structural Trends
Long-Term Outlook Supported by Powerful Structural Trends Q3 FY23 Supplemental Slides │ June 22, 2023 8 [1] Rebar consumption data for calendar 2021 from Concrete Reinforcing Steel Institute [2] Rebar intensities equal to consumption by market segment per Concrete Reinforcing Steel Institute divided
Slide 9: Well-Positioned to Benefit From Near-Term and Structural Trends
100 110 120 130 140 150 160 170 180 Well-Positioned to Benefit From Near-Term and Structural Trends 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
Slide 10: Europe Segment Shipments Remain Supported by Strong Cost Position
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 Q3 '23 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 35 40 45 50 55 60 65 Europe Segment Shipments Remain Supported by Strong Cost Position Q3 FY23 Supplemental Slid
Slide 11: Q3 Results Highlights
• Downstream product margins over scrap expanded significantly compared to the prior year period − Improved by approximately $300 per ton y/y • North America finished steel volumes reflected good underlying demand levels and a typical seasonal rebound from Q2 • Major planned outage to replace a roll
Slide 12: Q3 Consolidated Operating Results
484 392 23 (111) (3) (1) 0 50 100 150 200 250 300 350 400 450 500 550 Q3 Consolidated Operating Results Q3 FY23 Supplemental Slides │ June 22, 2023 12 Q3 ‘22 Q4 ’22 Q1 ’23 Q2 ’23 Q3 ’23 External Finished Steel Tons Shipped1 1,654 1,560 1,559 1,408 1,598 Core EBITDA2 $483,913 $419,021 $424,985 $302,7
Slide 13: Q3 North America
90 95 100 105 110 115 120 125 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Adjusted EBITDA per ton Wgt Avg Finished Steel Mgn Over Scrap Controllable Costs 322 327 348 308 344 808 876 1,012 1,093 1,106 638 717 695 639 595 0 50 100 150 200 250 300 350 400 0 200 400 600 800 1,000 1,200 Q3 '22 Q4 '22 Q1 '23 Q2 '
Slide 14: Q3 Europe
0 50 100 150 200 250 NA Steel Product ASP Variance to Europe ASP FY 2019 to FY 2022 Average 254 150 136 30 22 437 453 426 367 326 0 50 100 150 200 250 300 100 150 200 250 300 350 400 450 500 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Adjusted EBITDA per Ton Steel Products Margin Over Scrap Key Performance D
Slide 15: Disciplined Capital Allocation Strategy
2 31 Disciplined Capital Allocation Strategy Q3 FY23 Supplemental Slides │ June 22, 2023 15 CMC Capital Allocation Priorities: $350 million share repurchase program ($105 million remaining) Quarterly dividend of $0.16 per share (increased 14% in Q4 2022) Shareholder Cash Distribution Programs in Pla
Slide 16: Cash Generation Profile
$5 $37 $2 $141 $155 $279 $380 $1,270 $1,013 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LTM Q3 FY'23 Cash Generation Profile Q3 FY23 Supplemental Slides │ June 22, 2023 16 Adjusted EBITDA Less Sustaining Capital Expenditures and Disburs
Slide 17: Balance Sheet Strength
$43 $114 $200 $599 $475 $300 $300 $300 $145 $600 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2047 Balance Sheet Strength Q3 FY23 Supplemental Slides │ June 22, 2023 17 [1] 2047 tax-exempt bonds were priced to yield 3.5%; coupon rate is 4.0% Source: Public filings Revolver Term Loan Poland Cred
Slide 18: Leverage Profile
46% 42% 37% 33% 32% 24% 18% 21% 22% 20% 17% 18% 14% 24% 17% 15% 15% 13% 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 0.5x 0.4x 0.5x 0.5x NM 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x Leverage Profile Q3 FY23 Supplemental Slides │ J
Slide 19: Clear Sustainability Leader
69% Of goal Clear Sustainability Leader Q3 FY23 Supplemental Slides │ June 22, 2023 19 [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 emi
Slide 20: Appendix: Non-GAAP Financial Reconciliations
Q3 FY23 Supplemental Slides │ June 22, 2023 20 Appendix: Non-GAAP Financial Reconciliations
Slide 21: Adjusted EBITDA and Core EBITDA – Last Five Quarters
Adjusted EBITDA and Core EBITDA – Last Five Quarters Q3 FY23 Supplemental Slides │ June 22, 2023 21 [1] See page 26 for definitions of non-GAAP measures [2] Net of depreciation and non-cash equity compensation 3 MONTHS ENDED Figures in thousand $ 5/31/2023 2/28/2023 11/30/2022 8/31/2022 5/31/2022 Ne
Slide 22: Adjusted Earnings
Adjusted Earnings Q3 FY23 Supplemental Slides │ June 22, 2023 22[1] See page 26 for definitions of non-GAAP measures 3 MONTHS ENDED Figures in thousand $ 5/31/2023 2/28/2023 11/30/2022 8/31/2022 5/31/2022 Net earnings from continuing operations $233,971 $179,849 $261,774 $288,630 $312,429 Asset impa
Slide 23: Annualized Return on Invested Capital – Q3 2023
3 MOS ENDED Figures in thousand $ 5/31/2023 Earnings before income taxes $310,070 Plus: interest expense 8,878 Plus: mill operational start-up costs 7,287 Plus: asset impairments 1 Operating profit - adjusted $326,236 Operating profit - adjusted $326,236 Less: income tax at statutory rate1 79,602 Ne
Slide 24: Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders
[1] See page 26 for definitions of non-GAAP measures Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders Q3 FY23 Supplemental Slides │ June 22, 2023 24 Figures in thousand $ 5/31/2023 8/31/2022 8/31/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 8/31/2016 8/31/2015 5
Slide 25: Net Debt to Adjusted EBITDA and Net Debt to Capitalization
Net Debt to Adjusted EBITDA and Net Debt to Capitalization Q3 FY23 Supplemental Slides │ June 22, 2023 25[1] See page 26 for definitions of non-GAAP measures Figures in thousand $ 5/31/2023 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 8/31/20
Slide 26: Definitions for non-GAAP financial measures
Definitions for non-GAAP financial measures Q3 FY23 Supplemental Slides │ June 22, 2023 26 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 asset
Slide 27: Thank You
Q3 FY23 Supplemental Slides │ June 22, 2023 27 Thank You