Commercial Metals Company · NYSE:CMC
Commercial Metals — Q4 FY2024 Earnings Presentation
31 slides from Commercial Metals's earnings presentation, Oct 17, 2024
Slide 1: Q4 FY 2024 Supplemental Slides
Q4 FY 2024 Supplemental Slides
Slide 2: Forward-looking statements
2Q4 FY24 Supplemental Slides October 17, 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
Slide 3: Increasing Shareholder Value With a Winning Formula
3 Q4 FY24 Supplemental Slides October 17, 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
Slide 4: Our Success Starts with Safety
4 CMC Incident Rate U.S. Steel Industry Incident Rate 2022 2023 20242022 2023 20242022 2023 20242022 2023 2024 Our Success Starts with Safety [1] Domestic steel industry data is for Iron and Steel Mills (NAICS – 3311) from the Bureau of Labor Statistics CMC and Domestic Steel Industry1 Total Recorda
Slide 5: Fiscal 2024 highlights
5 Record employee safety performance • OSHA recordables and incident rate improved from FY 2023 Core EBITDA1 of $1.0 billion was the third highest in Company history; core EBITDA margin1 of 12.7% remained historically strong Strong cash flow from operating activities of $900 million, equal to 89% of
Slide 6: Fourth quarter financial results at levels well above long-term averages
6 Fourth quarter financial results at levels well above long-term averages Elevated uncertainty impacted the quarter • Questions surrounding the future path of interest rates and outcome of U.S. election • Hesitation among decision makers to commit on certain projects • Long steel pricing and metal
Slide 7: Temporary Uncertainty is Having an Impact
7 Temporary Uncertainty is Having an Impact • Customer sentiment has weakened over the last several months − Construction market participants want clarity on the future path of interest rates and the outcome of U.S. elections (i.e., key government policy) • Long steel pricing and metal margins shift
Slide 8: Structurally Improved Margins and Return Profile
8 6% 6% 6% 10% 8% 9% 9% 12% 12% 17% 16% 13% – 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% • Strategic transformation has brought significant scale and earnings growth • Industry landscape has dramatically improved over the last five years • CMC has leveraged growth to generate higher, more sustainable margi
Slide 9: Powerful Structural Trends Remain Intact
9 Forecasted Construction Starts – inflation adjusted (% change compared to average of 2019 to 20222) 0% 10% 20% 30% 40% 2023 2024 2025 2026 2027 0% 10% 20% 30% 40% 50% 60% 2023 2024 2025 2026 2027 (5%) – 5% 10% 15% 20% 25% 2023 2024 2025 2026 2027 Estimated Potential Impact on Rebar Demand1 Governm
Slide 10: The Path Ahead – Running and Growing a Great Business
10 The Path Ahead – Running and Growing a Great Business Q4 FY24 Supplemental Slides October 17, 2024 • Focus on people to ensure safety and provide talent development opportunities • Enact operational and commercial excellence efforts that span all levels of the enterprise • Drive to achieve sustai
Slide 11: Running a Great Business – Transform, Advance, Grow (TAG)
11 Running a Great Business – Transform, Advance, Grow (TAG) • Every line of business and support function (including corporate) involved in identifying and quantifying opportunities − Ensures clear understanding of potential benefits and challenges − Creates buy-in and sense of ownership − Provides
Slide 12: European Market Environment Remains Challenging
12 GDP Growth Outlook Polish economy is expected to grow by 2.8% in 2024 per S&P Recent Market Developments European Market Environment Remains Challenging [1] Data from S&P Global manufacturing PMI report [2] Data from Statistics Poland for June 2024 to August 2024 vs. June 2023 to August 2023 [3]
Slide 13: First quarter outlook
13 • Consolidated financial results in the first quarter are anticipated to decline from the fourth quarter levels as a result of normal seasonality and temporary headwinds related to economic uncertainty • North America Steel Group finished steel shipments should follow typical seasonal patterns in
Slide 14: Q4 Consolidated Operating Results
14 328 227 (126) 26 (0) 13 (14) 0 50 100 150 200 250 300 350 Q4 2023 NA Steel Group EBITDA Europe Steel Group EBITDA Emerging Businesses Group EBITDA Corp & Eliminations Other Non- Op Items Q4 2024 Q4 Consolidated Operating Results Q4 ’23 Q1 ’24 Q2 ’24 Q3 ’24 Q4 ’24 External Finished Steel Tons Ship
Slide 15: Q4 North America Steel Group
15 294 188 (5) (35) (44) (22) 100 125 150 175 200 225 250 275 300 325 Q4 '23 Adj EBITDA per Ton Raw Materials Steel Products Downstream Other Q4 '24 Adj EBITDA per Ton 294 243 220 217 188 1,044 1,051 1,015 951 958 594 549 526 538 522 0 50 100 150 200 250 300 350 0 200 400 600 800 1,000 1,200 Q4 '23
Slide 16: Q4 Europe Steel Group
16 124,288 176,968 144,259 126,413 304,345 0% 10% 20% 30% 40% 50% 60% 70% 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Jan-Jul 2020 Jan-Jul 2021 Jan-Jul 2022 Jan-Jul 2023 Jan-Jul 2024 Imports from Germany % of Total Imports 284 268 279 292 284 (77) 114 (31) (14) (11) (100) (50) 0 50 100
Slide 17: Q4 Emerging Businesses Group
17 209 196 0.2% (6.4%) (4.6%) 2.8% 1.5% 100 120 140 160 180 200 220 Q4 2023 Geogrids & Geopiers Construction Services Impact Metals Performance Reinforcing Steel Anchoring Systems Q4 2024 Key Performance Drivers Q4 2024 vs Q4 2023 Q4 Emerging Businesses Group Q4 ’23 Q1 ’24 Q2 ’24 Q3 ’24 Q4 ’24 Net s
Slide 18: Disciplined Capital Allocation Strategy
18 • Fourth quarter 2024 capital expenditures of $81.5 million • Fiscal 2024 capital expenditures of $324.3 million − Shortfall to previous guidance related to timing of equipment delivery at Steel West Virginia, which will not impact start-up date • FY 2025 capex expected in a range of $630 million
Slide 19: Cash Generation Profile
19 450 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 FY 2024 Cash Generation Profile Adjusted EBITDA Less Sustaining Capital Expenditures, Dividends, Interest Expense, and Income Taxes 1 (in millio
Slide 20: Balance Sheet Strength
20 $74 $152 $599 $858 $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 21: Net Debt to Adjusted EBITDA and Net Debt to Capitalization
21 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 % 9 % 6 % 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
Slide 22: Clear Sustainability Leader
Clear Sustainability Leader Q4 FY24 Supplemental Slides │ October 17, 2024 22 Note: GHG emissions statistics for CMC include only steel mill operations, which represents over 95% of CMC’s emissions footprint Sources: CMC 2023 Sustainability Report; virgin material content for industry based on data
Slide 23: Appendix: Non-GAAP Financial Reconciliations
© CMC Appendix: Non-GAAP Financial Reconciliations
Slide 24: Adjusted EBITDA and Core EBITDA – Last Quarters
24 Adjusted EBITDA and Core EBITDA – Last 5 Quarters [1] See page 30 for definitions of non-GAAP measures Q4 FY24 Supplemental Slides October 17, 2024
Slide 25: Adjusted EBITDA, Core EBITDA, and Core EBITDA margins
25 Adjusted EBITDA, Core EBITDA, and Core EBITDA margins [1] See page 30 for definitions of non-GAAP measures Q4 FY24 Supplemental Slides October 17, 2024 Figures in thousand $ 8/31/2024 8/31/2023 8/31/2022 8/31/2021 8/31/2020 8/31/2019 8/31/2018 8/31/2017 8/31/2016 8/31/2015 8/31/2014 8/31/2013 Net
Slide 26: Adjusted Earnings
26 Adjusted Earnings [1] See page 30 for definitions of non-GAAP measures Q4 FY24 Supplemental Slides October 17, 2024
Slide 27: Return on Invested Capital
27 Return on Invested Capital [1] Federal statutory rate of 21% plus approximate impact of state level income tax [2] See page 30 for definitions of non-GAAP measures Q4 FY24 Supplemental Slides October 17, 2024 RETURN ON INVESTED CAPITAL 12 MOS ENDED FISCAL YEARS Figures in thousand $ 8/31/2024 202
Slide 28: Adjusted EBITDA Less Sustaining Capital Expenditures, Dividends, Interest Expense, and Income Taxes
28 [1] See page 30 for definitions of non-GAAP measures Adjusted EBITDA Less Sustaining Capital Expenditures, Dividends, Interest Expense, and Income Taxes Q4 FY24 Supplemental Slides October 17, 2024
Slide 29: Net Debt to Adjusted EBITDA and Net Debt to Capitalization
29 Net Debt to Adjusted EBITDA and Net Debt to Capitalization [1] See page 30 for definitions of non-GAAP measures Q4 FY24 Supplemental Slides October 17, 2024
Slide 30: Definitions for non-GAAP financial measures
30 Definitions for non-GAAP financial measures ADJUSTED EARNINGS Adjusted earnings is a non-GAAP financial measure that is equal to earnings before asset impairments, including the estimated income tax effects thereof. The adjustment settlement for New Markets Tax Credit transaction represents the r
Slide 31: CMC.COM
CMC.COM