Commercial Metals Company · NYSE:CMC
Commercial Metals — Q2 FY2024 Earnings Presentation
26 slides from Commercial Metals's earnings presentation, Mar 21, 2024
Slide 1: Q2 FY 2024 Supplemental Slides
Q2 FY 2024 Supplemental Slides
Slide 2: Forward-looking statements
2Q2 FY24 Supplemental Slides March 21, 2024 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 c
Slide 3: Increasing Shareholder Value With a Winning Formula
3 Q2 FY24 Supplemental Slides March 21, 2024 Leading positions in core products and geographies Focused strategy that leverages capabilities, competitive strengths, and market knowledge Strong balance sheet and cash generation provide flexibility to execute on strategy Vertical structure optimizes r
Slide 4: Continued Progress in Keeping Our People Safe
4 CMC Incident Rate U.S. Steel Industry Continued Progress in Keeping Our People Safe [1] Domestic steel industry data is for Iron and Steel Mills (NAICS – 3311) from the Bureau of Labor Statistics [2] Data is through the end of the fiscal second quarter for YTD 2022, YTD 2023, and YTD 2024 Q2 FY24
Slide 5: Key Takeaways From Today's Call
5 Key Takeaways From Today’s Call Second quarter financial results remained historically strong • Core EBITDA and core EBITDA margin well above long-term averages Downstream contract awards improved significantly leading to sequential backlog increase • Highest second quarter awards on record; best
Slide 6: Structured to Maximize Value Creation
6 Characteristics Strategic Focus Steelmaking operations supported by a vertically integrated value chain • Market leading positions in a mature industry • Managed to optimize profitability across the value chain • Among lowest cost producers in Europe • Proven innovation leader Europe Steel Group •
Slide 7: Structural Trends Expected to Support North America Construction
7 Forecasted Construction Starts – inflation adjusted (% change compared to average of 2019 to 20222) – 5% 10% 15% 20% 25% 2023 2024 2025 2026 – 20% 40% 60% 80% 2023 2024 2025 2026 – 5% 10% 15% 20% 25% 30% 2023 2024 2025 2026 Estimated Potential Impact on Rebar Demand1 Government Support for Investm
Slide 8: Europe Market Environment Remained Challenging
8 GDP Growth Outlook Polish economy is expected to grow by 3.1% in 2024 per S&P Recent Market Developments Europe Market Environment Remained Challenging [1] Data from S&P Global manufacturing PMI report [2] Data from Statistics Poland for November 2023 to January 2024 vs. November 2022 to January 2
Slide 9: Outlook and North America market conditions
9 • North America Steel Group finished steel shipments expected to increase sequentially on typical seasonality; adjusted EBITDA margin should be largely stable on a sequential basis • Conditions for Europe Steel Group expected to remain challenging, but adjusted EBITDA should approach breakeven dur
Slide 10: Q2 Consolidated Operating Results
10 Corp and Eliminations were reduced by $17.7 million in the prior year quarter due to the recognition of a New Market Tax Credit 303 224 (52) (20) (9) (19) 21 0 50 100 150 200 250 300 350 Q2 2023 NA Steel Group EBITDA Europe Steel Group EBITDA Emerging Businesses Group EBITDA Corp & Eliminations O
Slide 11: Q2 North America Steel Group
11 281 314 294 243 220 1,096 1,106 1,044 1,048 1,015 639 595 594 549 526 0 50 100 150 200 250 300 350 0 200 400 600 800 1,000 1,200 Q2 '23 Q3 '23 Q4 '23 Q1' 24 Q2 '24 Adjusted EBITDA per Ton of Finished Steel Shipped Downstream Products Margin Over Scrap (1 Qtr Lag) Steel Products Margin Over Scrap
Slide 12: Q2 Europe Steel Group
12 (100%) – 100% 200% 300% Mortgage Originations Dwellings Under Construction 367 326 284 268 279 26 14 (77) 114 (31) (100) (50) 0 50 100 150 200 250 300 350 400 Q2 '23 Q3 '23 Q4 '23 Q1' 24 Q2 '24 Steel Products Margin Over Scrap Adjusted EBITDA per Ton Key Performance Drivers Q2 2024 vs Q2 2023 Q2
Slide 13: Q2 Emerging Businesses Group
13 154 156 (3%) (7%) 0% 3% 8% 100 110 120 130 140 150 160 170 Q2 2023 Geogrids & Geopiers Construction Services Impact Metals Performance Reinforcing Steels Anchoring Systems Q2 2024 Key Performance Drivers Q2 2024 vs Q2 2023 Q2 Emerging Businesses Group Q2 ’23 Q3 ’23 Q4 ’23 Q1 ’24 Q2 ’24 Net sales
Slide 14: Disciplined Capital Allocation Strategy
14 • Sustaining capital expenditures • Growth − Completion of Arizona 2 − Construction of CMC Steel West Virginia − Organic growth in EBG − Opportunistic M&A • Cash distributions to shareholders − Share repurchases − Cash dividends 2 31 Disciplined Capital Allocation Strategy CMC Capital Allocation
Slide 15: Cash Generation Profile
15 $697 $5 $37 $2 $141 $155 $279 $380 $1,270 $911 $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 FY 2023 LTM Q2 '24 Cash Generation Profile Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders 1 (in millio
Slide 16: Balance Sheet Strength
16 $72 $149 $599 $638 $300 $300 $300 $145 $600 2024 2025 2026 2027 2028 2029 2030 2031 2032 2047 Balance Sheet Strength [1] 2047 tax-exempt bonds were priced to yield 3.5%; coupon rate is 4.0% Revolver Poland Credit Facilities (US$ in millions) Revolving Credit Facility 4.125% Notes Cash and Cash Eq
Slide 17: Net Debt to Adjusted EBITDA and Net Debt to Capitalization
17 4 5 % 4 6 % 4 2 % 3 7 % 3 3 % 3 2 % 2 4 % 1 8 % 2 1 % 2 2 % 2 0 % 1 7 % 1 8 % 1 4 % 2 4 % 1 7 % 1 5 % 1 5 % 1 3 % 1 1 % 8 % 1 0 % 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 3 .8 x 3 .9 x 3 .2 x 2 .5 x 1 .9 x 1 .6 x 1 .2 x 0 .9 x 1 .1 x 1 .2 x 1 .0 x 0 .8 x 0 .7 x 0 .5 x 0 .7 x 0 .5 x 0 .4 x 0 .5 x
Slide 18: Clear Sustainability Leader
2% 69% CMCGlobal Industry 1.18 28.60 CMCGlobal Industry 3.84 20.99 CMCGlobal Industry 0.68 1.91 CMCGlobal Industry 59% Of goal Clear Sustainability Leader Q2 FY24 Supplemental Slides │ March 21, 2024 18 [1] Represents progress on environmental goals as of fiscal year 2023, compared to fiscal year 20
Slide 19: Appendix: Non-GAAP Financial Reconciliations
© CMC Appendix: Non-GAAP Financial Reconciliations
Slide 20: Adjusted EBITDA and Core EBITDA – Last Quarters
20 Adjusted EBITDA and Core EBITDA – Last 5 Quarters [1] See page 25 for definitions of non-GAAP measures [2] Net of depreciation Q2 FY24 Supplemental Slides March 21, 2024
Slide 21: Adjusted Earnings
21 Adjusted Earnings [1] See page 25 for definitions of non-GAAP measures Q2 FY24 Supplemental Slides March 21, 2024
Slide 22: Annualized Return on Invested Capital
22 Annualized Return on Invested Capital [1] Federal statutory rate of 21% plus approximate impact of state level income tax [2] See page 25 for definitions of non-GAAP measures Q2 FY24 Supplemental Slides March 21, 2024 2
Slide 23: Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders
23 [1] See page 25 for definitions of non-GAAP measures Adjusted EBITDA Less Sustaining Capital Expenditures and Disbursements to Stakeholders Q2 FY24 Supplemental Slides March 21, 2024
Slide 24: Net Debt to Adjusted EBITDA and Net Debt to Capitalization
24 Net Debt to Adjusted EBITDA and Net Debt to Capitalization [1] See page 25 for definitions of non-GAAP measures Q2 FY24 Supplemental Slides March 21, 2024
Slide 25: Definitions for non-GAAP financial measures
25 Definitions for non-GAAP financial measures ADJUSTED EARNINGS Adjusted earnings is a non-GAAP financial measure that is equal to earnings before settlement of New Market Tax Credit transactions, asset impairments, mill operational commissioning costs, including the estimated income tax effects th
Slide 26: CMC.COM
CMC.COM