CMC - Earnings call transcript Q4 2017 | Commercial Metals Company

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Operator

Hello, and welcome, everyone, to the Full Year and Fourth Quarter Fiscal 2017 Earnings Call for Commercial Metals Company. Today's call is being recorded. After the company's remarks, we'll have a question-and-answer session and we'll have a few instructions at that time. I would like to remind all participants that during the course of this conference call, the company will make statements that provide information other than historical information and will include expectations regarding economic conditions, effects of legislation, U.S. steel import levels, U.S. and finished results the of of micro in for the future the demand mill future company's operations, Oklahoma activity, steel company's products, operations, company's construction spending. capital the commissioning and results similar other uncertainties forward-looking involve risks are These materially are cause from and to actual statements subject could differ and considered may speculation, to that expectations. and these described subject based in to of latest the reflect current the statements those section on that Risk company's including the beliefs are risks Factors the certain XX-K. but These and uncertainties, are conditions, company's

Although made these as actual that the or expectations does offers with or as in only of statements to statements any by not these clarify amend are assumptions, beliefs, Except assurance correct connection are current unanticipated update, been otherwise. new results required based or of CMC this in assume may prove occurrence or on changes no law, circumstances to will obligation or information these have and management's events, vary expectations anticipated materially. beliefs or statements future events, CMC date. All

Officer and Executive introductions, remarks to turn the Chief the numbers the references Smith. earnings year be company's presented Commercial the the fiscal measures, in financial quarter. reconciliations Ms. release And such are references quarter-end Some I or numbers Barbara will and President stated found be over or year non-GAAP for on for otherwise, Unless opening company's can to website. and Metals all fiscal will now, company's or call made Company, to of

Barbara Smith

fourth to remarks begin full review After welcome we quarter financial XXXX. and morning, the everyone, with quarter for fourth Lindsey, the CMC's and year for will fiscal quarter XXXX. call to of Mary the a conclude highlights fiscal I and will in call of the for results which, our will the of year cover fiscal outlook quarter. the then will Good us joining I year Brendan. first detail, questions. you, with more and prepared discussion information Thank and our to open

to employees hard Before discussing our the Metals our CMC. suppliers results, customers of for thank and I'd would their and to like customers. Commercial also I diligence to in their for loyalty work thank serving our like

As this announced diluted earnings in million year or operations release per $XX.X XXXX we morning, from our share fiscal of sales reported on of earnings net billion. $X.XX $X.X continuing

of year of be XXXX. Harvey fourth details for financial report fourth of California. with totaling We quarterly wildfires October our common represents XXXth pleased cash described of cash release will stockholders Directors Further on recently of of as that per stock the our and The dividend million. also November noted over share consecutive $XXX.X CMC will Mary on We've more fiscal on the quarter during $X.XX months, dividend. X, be challenged by past fiscal cash press our in couple to nature and dividend a declared XX, -- the I'm by fiscal XXXX. finished paid CMC's the Also, been quarterly mother This on the equivalents with and Board Irma November hurricanes record quarter update. XX,

A need to consideration is that number natural rebuilt. first our suffered homes be including disasters to considerable Our these employees. our in losses, of employees

the business. affected. proud for I'm also those excellent our these impact the in of events on customers, our actions thank employees our We have who very support of have losses. them that the everyone these CMC to as been working precautionary prepare different teams minimize took to to overcome suppliers team some as well I offered to ways and and help assist our to

over slight ABI well market, has the in high at Billing operate. with seasonal and impacted steel XX construction the most of we all conditions over in cover August, strong September, basis. mix finished trends XX% been construction rebar. some correlates starts very continued which a strong particularly, being Despite have construction the for year-over-year our most to in The year highly consecutive products, in a months. the XX is dip markets regions. this remained by margins which I'll represented in which activity, Despite by Architectural seven strength both good U.S. levels quarter-over-quarter up and had Index, market, above Now imported products non-residential very a Supporting negatively

diminished to have Tariff priced of had import declined Department the of unfairly large prices the up in year past rebar levels built finalized While import through of this the low-cost, over not Commerce year. earlier earlier volume that at have due ports this the resulted imported availability the the increasing. has months, from of in couple inventory

further But fact, imports include products. we we government, investigation, our barring levels. steel We However, know when not do be the in this that lead basis additional imports into for believe continue recommendation a actions of at we're if or rebar the it will data on -- restrictions to XXX it be import President, rebar increase an of time, in to any in Section elevated may Commerce's seeing the will will by which on in will made national security. And in-U.S. license remained October. participating active flow Department market at trade the to

some the half both have to same price the selling which announced the In have generally no in We increase we increases unable at adopted were costs We seen and U.S., the the marketplace. our energy the compression which alloy were increases, resulting rebar been and U.S. of year. pace by during prices to second markets. in in rising, Polish margin costs

these high good sourcing producers of with cost us. electrode before this spot are arrangements of and the availability our procured has There However, to in have XX regarding Supplier up pricing. cost industry has as highlighted reduced apply with they lot to CMC to Much days electrode the XX typically and market. these takes discussion for volatility has relationships suppliers. it realized orders. been a new

However, on conversion will fiscal alloys pressures XXXX, we with we costs in energy, for further higher that do anticipate inflationary XXXX. cost, incur higher and which, combined during will when result

to current we've While pricing. observe the in it's seen rebar in hopeful bottom the are fabrication that quarter, the difficult we

to demand our a Despite with cautiously the the activity our backlog has the strong, margins, current fabrication increases operate. seasonally are see is fabrication segment. Although awarded recovery regions, very margins in we pricing ahead fabrication diligent we the at keeping see work earned mills remained newly segment. starting low which the We in price regional, puts over business We in most been managing normal protected balancing in on that levels. bidding our in

With mix daily contribution new of rod the of high-margin efficient XXXX, continue again, Oklahoma our in rebar will invested XX% in a amount as to cost of to significant Durant, environment, of this newly Polish activity The XX% reflect prices improved and a strong mill leveraging well in merchants product the strong The we results our melt fourth product structure an XXXX with mill However, demand from performance fiscal wire representing progressing the construction provided fiscal micro focused The is rise, in the products. follow. site. results shifted the shop a tremendous at operation mix more CMC. results of quarter of to the capital Polish operation. and the results in on

of calendar next and equipment, I to forward the when continue we'll these call, the activities first starting the to are through to year. We the I report look production coming commission expect off end about our mill.

manufacturing gross and we process anticipate are generate International Asia share Distribution that Marketing Steel XXXX, of decision will on Marketing place I proceeds the completing like exit proceeds balance update discussion the Mary later, these now Australia activities of the million exiting Finally, process between business. take $XXX Mary refinancing an sale us XXXX. the XXXX, also conducting businesses. actions segment overview, you to and of I XX, in in Officer. million October and Financial XXXX you the Cometals We to we've notes and of balance in to Distribution strengthen the our and Cometals which to reallocate that President an trading our Lindsey, With with Senior would over million. for Chief exit of we Vice the fiscal that the as I'll Marry? capital can the core to the operations. including to speak $XXX $XXX and International Southeast completed of of allowed turn and and due the to The of over orderly have taken sheet focus will that On

Mary Lindsey

Thank you, Barbara, good morning, everyone. and

share for for operations point to million earnings we XXXX, fiscal I million operations out like earnings per $XX.X would diluted full continuing As as mentioned, current continuing $X.XX Barbara per of sale the prior results division, year from operations. within the $X.XX be International or continuing as diluted of that of $XX.X share, of reflected which which Distribution discontinued compares the raw fourth closed a or from to XXXX. businesses division and been as Cometals continue in the quarter, remaining material and of this reclassified reflect The to result segment Marketing to operations. have the reported

or charges $XX.X to the or Included consolidated sale refinancing reported the $X.XX $X.XX $X.XX of $X.X and from the exit division. a of $XX.X in CMC $X.XX million segment. fourth costs $X.XX share million loss related per of $XX.X diluted million material million share. share $X.X charges per to on million For severance income net discontinued the for million fourth the share consolidated and per continuing Distribution raw After-tax quarter of from the related or quarter $XX.X activities concluded the or million a or and loss Marketing related loss after-tax are from net or operations share of Cometals of XXXX, per $X.X operations International per a of of loss or $X.XX quarter, $X.XX in to

segment of for our quarter fourth the XXXX. by at Looking results fiscal

Our Americas prior a loss asset XXXX. profit the fourth fourth compared operating quarter pretax of quarter $XX.X fiscal long-lived year operating included adjusted impairment for XXXX loss of of Recycling $X.X million The of million. million recorded $XX.X the for of adjusted to charge segment

result segment our reduced the to continue the Ferrous contribute the quarter. margins. While during fourth quarter, which the recycling lower fourth than are prior quarter, prices positive sequential in XXXX margins quarter decreased

when loss fairly which the hedge, sell copper, which material will saw hedged. nonferrous quarterly in in price reverse, products, increase particularly significant we we the nonferrous a the we However, results quarter. following the include on Therefore,

recorded a operating of $XX.X fourth of quarter profit with of Mills adjusted of million combination reduced was for driven Our for primarily fourth the to million XXXX, by operating $XX decrease Americas compared profit margins costs. of increased the metal quarter This segment adjusted XXXX.

the to impacted continue quarter As high by environment strong in long-steel the despite metal prior material, that by the previously imported for year. margins Barbara almost to X% of mentioned, comparison the demand shipments be levels increased

pressured further manufacturing been prices, eroded Our margins. and our which energy in costs have alloy by increases

recorded Americas compared Our of prior of the Fabrication loss million to fourth million $X.X operating segment an of $X.X adjusted XXXX, for in adjusted quarter. profit year quarter the operating

As margins we price when in viewed including compress, backlog returns contracts. It business. through to as XXXX, basis, complete contracts, the generate segment loss, an operations, have on to and the our have continued begin price new we while is chain, a operating mill lower continues that, recycling fabrication important seen hours higher to note for throughout we recorded value

As increases in hopefully the of which see the begun prices, modest we've Barbara means have noted contract reached we some cycle. earlier, pricing bottom to awarded

the of sector XXXX, very product of a profit supported increase in quarter segment $XX.X year. the strong period than slightly with an adjusted of rate the continued Europe. results growth greater rest same Our of construction the to and strong operation operating recorded produce Mill million International from prior by Poland's merchant fourth down This higher-margin for

million the Marketing adjusted compared business. International year's segment XXXX, quarter result provisions prior Distribution of to fourth Included the operating adjusted million loss operating in related of recorded $XX.X to of in an $X.X loss are recent this exit our the fourth for quarter. to quarter most Our and the of an decision

of exit recorded some in XXXX, be majority costs confident businesses will that in book are costs that will associated the with there of these we the were XXXX. we While

a support Coast During were perspective, quite resume late working storm look area Houston as impact the and operations we impacted were the From they able our that to with and quickly. from Harvey August, employees Gulf Barbara devastating had. provide losses mentioned. in recover minimal, affected hurricane as to our operations physical were to this our We're business by area

damage. be effect will similar to not in volumes shipment on material little expected Some Irma impacted this Harvey, business. is delayed, a our recently, More to our suffered but Hurricane Florida. have we operations And

our liquidity. to sheet balance Turning and

equivalents totaled million. and cash approximately XX, $XXX facilities cash million, under As receivable XXXX, $XXX.X availability credit and of our August and of we had accounts

recent most our during with you aware positioning XXXX. are As maturities with us no long-term quarter, lower debt most cost structure a refinanced of until capital we our

by fiscal XXXX past the And that cash we two million. our interest delevered by over have our years, decrease forecast million in will we approximately cost Over versus balance sheet fiscal XXXX. $XX $XXX

from flexibility further the cash business, generate debt steel to remainder of Marketing the the and we the As our International reinvest the Distribution have or operations. we proceeds should down of in pay exit

For the capital expenditures completion of fiscal be for Oklahoma We $XXX includes million. million, our spending of fiscal will XXXX, $XXX to to the $XXX.X that million estimate costs were range which in mill. related XXXX the new capital

will an XXXX, positive startup, we that This my we to our during forecast of $X start back will turn to outlook. incur produce similar month. Thank ship it through for I'll material Barbara the we rate facility we quarter orderly remarks. to very of our from concludes fiscal third over current And on our much. now EBITDA. the second to operation forecast cost fourth the Based during generate this you and Barbara quarter, quarter. run that per approximately million As starting mentioned, anticipate

Barbara Smith

Thank you, Mary.

Our the to of first before period typically winter a down as is quarter season onset seasonally slower the construction months. wind begins

and outlook both some about Mary Florida. markets in in temporary, slowness we we addition, U.S. Poland. experienced will the demand the effect in positive In weather-related Texas from feel mentioned, be events the as and of This and the generally for certain

the of and by the tax program is on the movement or trade first that step action. an reform encouraged on to administration recent this are We focus either U.S. further believe infrastructure

The fabrication U.S. be or we when will While to how believe fiscal it's economy. compressions we our in policies prudent, these into the the margin the the too us impact business will U.S. continue and of XXXX. early tell they enter growth most to experienced in to continued that support should quarter whilst, as during provide recent mills

are On the price and the mill we margin we announced cautiously some loss have of inflation cost optimistic rebar, to some over recover that coming side, for months. the increases will

fabrication increase prices, to in hope we booking are some the fabrication Mary indicated, as bottoming starting we see rebar represents side, this which market. in On the contract

confident a our deliver redeploying on also of its the business movements at on to the fabrication Marketing in is direction. While in it improved that our historical International and Distribution XXXX our to it our results some will manufacturing participation I'm number show delever of either to we've core to quarters operation, or steel likely recover further operations. will manufacturing We're to the the to that embarking SG&A selective a take starting in we In we levels, our right is focus in took invest least in of stakeholders. simplification decisions our business of capital processes. returns that invested market summary, some difficult

Marketing the International a streamlining business. Distribution to to the shareholders, customers, individuals processes remaining commitments make focused look be success and we company with core our community proud more the exit we on and of XXXX. to and are sustainable and fiscal we suppliers, forward in each continued as As We're other business, we our

not will before acquisitions, Metals note now recent the to call with we related And the time, respect Commercial you call open much. at questions and will potential and potential Thank I'd that any the rumors speculation referencing comment to we question, Finally, regarding address up will rumors this very to not to I transactions. like to questions. open on

Operator

Luther Our comes begin P.T. of from now Bank Merrill session. [Operator question-and-answer America question We with instructions] first will Lynch. the

Paul Luther

you? are How Mary. and Barbara Hi

Barbara Smith

P.T. Good

Paul Luther

you're the could with that's there. had appreciate exiting Good. the you to from out if hoping, news I at end speak broadly I regarding the that But Barbara, up the was regard comment you maybe more freeing M&D. capital

where looking You maybe additional business? Greenfields said, or chain more bit on within reinvest elsewhere be to a focus like the and/or or cut look it just to would reinvest the you little to Would could debt that? the talk maybe M&A side mill about you'd or be in something And the in or business. you

Barbara Smith

all Yes, P.T., I the above. think of

year, it grow Bearing actions we always material. that justify our our of last growth. secure, to operation over profitable support we to time. low-cost with business. be will looking in to added took source where for ways I sufficient guess, Growth returns the recycling needs We are some can raw that that to the yards can we mind footprint I South that Carolina a reliable speak

where business quite we Hawaii We from is to the efficiently to ship operation also market fabricating And fabrication small acquired Arizona attractive. Hawaii, in can a the there. service

We Continental hedging which Concrete, we in where the gives acquiring West the region. had some previously already that by us added capability in capability region, also post capability Eastern

I'm I sufficient guess, the not further be manufacturing spectrum time. prepared approach, comments that, disciplined returns and than ensuring over we any other beyond to in will that will So, make across footprint, say, our to have very we we of our look

Paul Luther

or sort specifically, against I'm is a if this decisions or earlier if that switch I disappointing coming case XXX the it's some you're And for Okay. part data any terms sort other Then of The to new That's again hearing curious on towards and after helpful. referenced can trade as imports of of imports new in year looking if licensing to that, really the from players? that pickup Turkey you or it the review ground Turkey progress is recent then quickly and from or there not as is in, over relief? movement of what gears just well. activity,

Barbara Smith

there data monitor October. up on carefully data we the on for significantly. license the recent situation Yes, license was P.T., the basis. that an And reports import And import news something were is ongoing

U.S., always coming a June. the that But imports be little wait translate into a we'll speculation going so doesn't of We bit, at we into that orders to that things -- decision the also there was know once end and XXX pause. see. the saw a lulled Sometimes

was of the still in into being that a supply lot U.S., are imports the course, proceeded and flowing Of candidly which by still chain consumed.

to it's working countries. continuously know, he's warranted. the a Porter, Tracy with The review out. to you take spectrum you will. going action coalition exactly we imports it's predict sure or and potential who expert, coming licenses are play the how I'm if is So, broad review of that's trade And consistently and the actions. from imports to our if P.T. the situation And hard

Paul Luther

queue. Okay. I'll in get back Great. Thanks Barbara.

Barbara Smith

you, Thank P.T.

Operator

Our Rosenfeld next Seth with question Jefferies. comes from

Seth Rosenfeld

morning. Good call. my taking Thanks for

Just in a base couple and of view I you on questions, this your forward. how guess, segment, business looking cost your mill

guess, basis I ahead ahead. or to or for did some that for earlier should give mix flagged or you XXXX cost confirm, from in also right coming various comment the year QX can cost print the be at You full cost going the as to the the run from a And QX us shift? electrodes expect we better the half a year pressure you from given year perspective? some conversion but if we you're of that, the basis? XXXX increase take drove just the But and a elements pressure rate moderation is well, as also, looking saw, of some annual of for into energy, saw quarter-over-quarter. contributed we shift sense electrodes alloys contract a on continued you Can buying that that you scale of if there on least

Barbara Smith

was a question. Okay, that long

down phenomena. supply. storm And after that jump started little some And been the looked provisions the to period some be in make there Clearly, the at tremendous so she Harvey an the was was So, inflation has quickly of needle But to a add. in I'll think, quarter, as were, But disruption in and electrode in you of impact changes prepared track, in it. see, storm. there's for bit, there if Antonio, fourth number been a We as all alloys low, evolving again, look for we being, And we overall, volumes the volume. electrode -- always, developing late that's so where to we there. them some, example, can't And it if operations has towards of inflation has down example, had sequentially order see over not there get were I depressed had so impact a hurricanes San quarter, to been frankly, shut because if further to situation Seguin, And Hurricane in headed heightened in did the I have are anything at of captured are level. factors, from in time. the so you quarter, Mary in, adjust some more in electrodes, recent a coke and you ongoing really historically, prices, energy. I'll

price one of this level. expect there the what all in impacting these But normal industry. as hopeful we're more would that, that be will back pressures. that there's that through lag a is areas a offset indicated would But to a and adjustment electrode a of prices so these resetting phenomena So, some say to that. that some around company-specific would is, not It's inflationary I phenomena is always flow we entire

adjustments the and get an timing pressures. your price And between you inflationary immediate so, don't

Mary Lindsey

so thanks. Yes. And --

can answer I think, that. I

to think level very the the compared the seen run the fourth close quarter. some balance that be year. for the conversion to And reasonable current have I of to increases it's year. to pretty that It's did you've cost the quarters going reasonable a in we of consider rate prior of

So, -- reasonable that's we're that level at probably purposes. modeling think for I I a think

Seth Rosenfeld

of could throughout How as incremental year the cost year, the just entirety or clarify then QX. into is there the also fiscal purposes hurricane-related in that cost impacting And fiscal to clarify, XXXX? on well the hurricane you, we QX remainder fiscal are the we for about scale QX? to for calendar should your think that Just thinking your for fiscal we point, so Today, Mary. modeling go for if last of of

Mary Lindsey

it our entire Yes, be year. the to fiscal for answer, clarify would

rising think very conversion perhaps to significantly. but cost, see we're not modestly, I going

from now. So, associated situation it are us it shouldn't in balance increase there no we affect really much expect that more the the the year. is And hurricane with where of costs to more

Seth Rosenfeld

Great. Thank you very much.

Barbara Smith

you. Thank

Operator

Beristain from question comes ahead. next Deutsche go Bank. Our with Jorge Please

Jorge Beristain

the general Good of market of is healthy the in market afternoon. from you enough or few your other think to kind getting competitors excluding border support million the what you could thinking seen wondering, Are that going rebar I infrastructure launching, of be the on sort should a maybe a state in of because U.S. tons capacity you spending be Durant just for rebar players? was a be be noticed that in U.S. if Do about? from imports the could could other and comment rebar over we've they're ready additions what wall from a to some surge increasing mill we domestic that imports

Barbara Smith

end. GDP Yes, forward. growth at have going administration we'll well, the and see to towards out. generally, how agenda Certainly, steel GDP, the hopeful that consumption agenda better we're plays going to is that that grows we're And of rate allowing see

the As and clearly, issue for that continues that, period been And campaign far. his addressing we is is thus placed we behind President is he's need the of list that's be during and has agenda the that out believe things overwhelming. and the however, agenda. still for been has priorities of It, an in laid development in part infrastructure time, he renewal the the a -- And the to the said country infrastructure evidence funding of issue. long

then and So, reform that out are border laid that prior as are stimulating create my to things hopeful those I is things We're assuming there or and jobs items office other those economy. decisions the creating that additional reform, to demand. made tax U.S. forward and wall fruition indicated these infrastructure to tax in related to taking U.S. the of President the around more like all and remarks, that agenda come

and growth. of substantial North the Going careful growing that back was pro-business been market particular, state mill the general, a remained of to consideration in in we consideration demand attracted very and lot into Texas. all know is number of back Durant, outlets, mill that decision after amount It's of and Oklahoma. optimistic holds, the and Durant And And And over state a years. taken a it's here into it Texas, quite so to the was off -- rates in this last be production in demand And very our was decision has that at thesis in specific North XXXX tremendous different will companies decision of where in that still to we build a was that region Texas. that satisfied. the -- primary the the

Jorge Beristain

Okay.

role of any would Just change. Washington? that of maybe, retroactive, making to that disallowed way in been possible aware you kind Has any the become are given XXX. in ahead again of, the under potential there Has thought, this imports on surge talk if Washington, been simply XXX about a as discourage to

Barbara Smith

have authority to find I closer think the could sources speak to on that. with you that situation

comment be of I discussion on say saying purely so any that all be not of form think XXX. it lots of aspects initiative. action under speculation, would would I what I'd to rather on Suffice the

Jorge Beristain

Okay.

get wondering thought bit fab any of So, XQ and was of got a have visibility you your price, just bottomed you there -- results, And seasonally so kind be have X any worse. is know in I of last obviously, into could fabrication, they do metal sequentially any one. if margins I But for you I it's if on already hope XQ? should guys. sequential then going You improvement slower mentioned to

I'm wondering bottomed So, just if in you're fab? starting that see have things to

Barbara Smith

ago. is and improvement, slight over backlog any prior, we've want the three to eating new that it but or for has backlog do backlog depressed into and business been caution living prices. a not see backlog in into lower-priced call time three is quarters price quarters. we'll booked that that could current results. think improvement I more that I that of we're same the higher period carries Yes, of that have or let's off four -- now And was overwhelming booked And that four a prices segment's been lower remind and fab

so, a for with priced And just climb, it extended you shipping fab should results activity. October you begin take shipping stay to result tend also customers when annual we some are September quarter-over-quarter. business. will by slow see customers November, lower slow when And fab a prices that because out time the backlog our add elevated days. and a reasonable more it's outages we begin generally be then up price as the if and I the a phenomenon our try brought while. but and to improvement replace into seasonality, attractively also in reminder, that's But in recover to to holidays we slight would And fall, schedule get because our period we and into and maintenance months, prices fewer get

a will then you So, slower have while Poland weather seasonally in pausing. and who also last to cycle particularly, because our we, bit take a knows time that, footprint. a had quarter have second think like course, our the of factor shipments, I year. severe season in tend And Poland, to seasonality into a winter pretty what winter then first of the becomes we the more of But winter to combination they bring. see on of not in And this mild southern kind we are more some do late only quarter. customers And

Operator

Kenyon Tyler KeyBanc Capital. with question comes go next Please from Our ahead.

Tyler Kenyon

Barbara morning, and Mary. Good Hey.

Barbara Smith

morning, Good Tyler.

Tyler Kenyon

price maybe the to I little if the Just could preceding wondering, might you accept to the to success been the some respect comment as that that the out willing wonder, that you with bit could just if a rebar the to has current the market respect here. hikes pricing. have with bar of extent be parse of seeing the And market? over dynamics just rebar you also market announced then months been few merchant in with

Barbara Smith

different announcements. have so know, a couple there Yes, as been, you of price

that. I'll has raw leave already it been, announcement price course, price not been and And material some escalations scrap holding the just of changes. did hold there's take recent in that more we The about spoke in the of at also as marketplace, marketplace. in

attract and going what evolve seeing that terms already maybe things how any of than licenses market reaction they not this folks to import a And see wanting will in into what forward. some were are. was we imports So, further to

of it be course, bit to side, reset by On always our announced that. And the one we the different. players. merchant of a at have was price situation look to and There is market a responsive

side I a So, think pressure result. the going margin you're as merchant see to more on

Tyler Kenyon

reversal Okay. is if the hit the will be from loss? fourth here? first the just nonferrous quantify And the in large way hedging the to Mary, quarter, that of extent in how And just quarter any wondering, just there

Mary Lindsey

Yes, the so at in was quarter. first million about a $X.X it reverse

Tyler Kenyon

much speaking should And Okay. of that capital the what attributed IM&D? sense in Any quarter. was to provide the be couple we working decline decline just over down in how the us of And kind of on next could you the wind quarters? expecting to

Mary Lindsey

Cometals. M&D the you and mean, in pretty wind saw sale reduction with down what of of was in much terms of I Yes, the associated capital working

working-capital mill, as begins to at I we a be see Oklahoma at you're the going to be as that normal And from addition million could and perspective, will So, mill to $XX year. seasonality going-forward that, in the also for working comment that every Oklahoma $XX would there and capital production, between prepare million. see a development on some basis,

Operator

next Our America. of Matt Fields comes Bank from question with

Matt Fields

was is questions and the pretax of the amount costs of exit housekeeping associated me. What from million really the with $XX.X Marketing Distribution segment, International the after-tax? Just which

Mary Lindsey

the loss and the is pretax $X.X from business so exit sale Yes, the M&D pretax. of is $XX.X Cometals actual about million million about on the

Matt Fields

two add together? I numbers So, those should

Mary Lindsey

Yes.

Matt Fields

Okay. And much... then how

Mary Lindsey

guess, comment there, a that in operations. -- But looking is early And I as to operations as I of your combine continuing kind And be to that noticed morning, million a operations. would discontinuing a came that out number there was will that the comments forget is $XX.X million failure number number discontinued at is both of and is would the modeling. that the continuing I $X.X operations comparative in X a reflected which make don't this some I reflected

the both, fact guys op. is considering and correctly, of board, the in included of I have with your in op think continuing disc that what's this together model, of kind this now I saw across you're terms course, you

modeling X together, results. your going adjusted put you're more accurate to our would you of if comparison So, a to get actual those much

Matt Fields

EBITDA. I'm just trying of million to reconcile that $X adjusted

in then, $XX noncash? from versus of million the -- ops loss of that. those And is much continuing how So, cash

Mary Lindsey

for the It's -- noncash. most its part,

Matt Fields

of that million loss? the $X.X $XX charges adjusted EBITDA, Okay. is back And impairment million then to you do add included the that in

Mary Lindsey

Say didn't understand question. that the quite I again,

Matt Fields

impairment EBITDA, million EBITDA charges? in $X.X get million of $X.X of add So, you the reconciliation, back to to

Mary Lindsey

that's Yes, right.

Matt Fields

million in Marketing included that the that on segment? loss International Is $XX

Mary Lindsey

Yes, it's included.

Matt Fields

tax call severance amount? then you what's that cost And the after Okay. $X.X million, pretax out,

Mary Lindsey

is the the business in of is segments. bulk that spread of $X.X The million and pretax that is corporate. of throughout And the spread some amount -- it balance

Operator

with question go Our next from instructions] comes Please Atwell Wayne Capital. ahead. Ascendiant [Operator

Ralph Atwell

I your questions. sold such answer if it's that's terrible What you've impact the shame the on to Could for selling? had rebuilding. your business? and And to far ongoing horrible you the us positive profitability, Florida? give planning do? that should of if a guess of Texas weather, sold have assets would but possible you all, a two the on on be a and quick both very in so had on And that you've what business reading you're your second will be it's that going could we lot One impact question, what's then

Barbara Smith

Thank you, Wayne.

second a of Florida, out, near-term take devastating. point live take I've I shipments property the And so they're operations. events half, -- didn't as me the reopened aftermath used and we of and But following half had of And really lost then storm fortunately, course, and I'll have the through in question. Let we the some let hurricane shutter minimal to projects was, our first to to the several and lived very damage any you impact we Mary proceeded. shipments. our your then operations

then a every of building the storms can through matter thing is damage. be it goes the the into damage of country And Following phenomenon with central in reopen lived Harvey And the our region, kinds these, is there on, having moves And the take where And property see market. the I and magnitude lot property. region, scrap rebuilding coastal amount the impacted, to of and time also occurs. hit. And up on as our you'd that that was of that Florida, same in coastal of time. flows happens there the and the the first owner these a hurricane long was of we was certainly, where island, had we've I seen years seriously, period mean, years. And where took X

that takes period demand will there it generally So, of -- rebuilding But that. some a longer created certainly, from time. be

of first I'll for So, question. turn your Mary it half over to the

Mary Lindsey

would you're And think terms Yes, of business And I impact exit so our the if segment last trying contribution. understand from profitability business. that's bed been that's difficult to generated a to the its that, of look is that take on income. I you earnings what at example, the predict M&D to of year, have for This that lost money. year a they in say

would if the you EBITDA looked talking is year depends amount a year, So, which there was only overall, about about. say it's It on this difficult of revenue of at billion. you're lost. the was considerable that And you But house of kind to say. $X.X side

the years that you of contributions very from if prior, income three you'll at segment. a However, different look take business see very,

think been about and into more a of redeploy a significant predictable, capital EBITDA, as more way. So, amount we whole to think positive it, think about about the businesses that it fact as we able we have that generate that are we working

of difficulty forecast forward-looking to statements. the energy so, results are our the of financial And eliminated trying from

Ralph Atwell

you. Thank

Mary Lindsey

Thanks Wayne.

Operator

with go Deutsche ahead. Our next Please question comes Sean from Bank. Wondrack

Sean Wondrack

questions situation. kind try import -- just keep are to Most of of it the I'll but my quick, surrounding

been a different to look degree. markets you As at different markets, the impacted have different steel

I degree have but continues and imports. just to some year, merchant, And infrastructure, when rebar look get by some crushed the recovered this it at actually to

So, possible -- getting much on to to people administration your or terms it guess, Turkey? even you directly is, ramp crushed kind market is how through by my more in Section duties against of in how I either done guys have from to question past what efforts of aside XXX for imports? the pushing to And focused this is marketing the up get

Barbara Smith

coalition of Yes, We Sean. been lawyers Thank are reviewing, the this file of of aspects a we a more all all we and data the file strength that U.S. a other all rebar a And elements we We data. harm whether see do our of we don't when constantly for many, have we that because battery to prove or submit get each within you other's the in producers submitted. a we have the case, And we there's experts most have for question. that. years. participate case. And and to as And doing rebar producers filing trade coalition many in

than a against success, Turkey. case the Turkey, like it's certainly was the filed situation there recent and we the example, against whack-a-mole on whether And views negative. of trade for when kind some positive was And so, It file better most as have to say, or because outcome prior you case are that Turkey. we differing against case

X move blocked, that a take felt small other gets are countries But their country that victory we to there in if we had there. So, many place.

and announcing continuous while markets, they China. thing, XXX a President then capacity, is, that Because so that's the a we of markets the steelmaking China because sometimes in other the protracted the that and reality dumping. and into It's the a of not There and And we it's that why it And into look those disrupted that unfortunately, the best cannot supportive excess solely high, it's of is best injury were are lot world are long in often So, so capacity ship import get action. believe the duties weigh U.S. terms market. is in evidence U.S. the into or market. long and they a next for is process. process. And harm very factors the are next data political overwhelming the the is

must And rely to to Department not from And rulings, we get best a the to and and to business. with trade customer and rebar must time be can we which we the steel the disappointed the of intended from in we ourselves to and protect trade a we area coalition. in and on with differentiate do spent terms products so, in know comment time we And can. our resources you, analysis. to to of as I would ITC long solely make with final inconsistent term. in try for do action our our concert do that sustainable cost is service laws be time amount that, over purpose But business their and be X we assure an utilize seem the enormous I competitive perspective data We of to Commerce our that this order in run

the action, caster it's merchant we in the in the it's furnace Poland, you why U.S., it's that's the results that's there Poland, mix. anyway, steelmakers our bit and We investments case participate bit many do In made we and U.S. same had with other of the than see cost our more it's a the more in and is we product recently, what do success little the have thing. the and we've evolution and here some a justified about of So improved in whenever a factors, our late of region, EUROFER we've

many the just adjudication like but the to did when financial Trade impact do earlier operation. results quickly get Poland, is So, factors. a there fair you in this X starts year you we of can are how factor, see it

Sean Wondrack

And to the job specifically are And it's ultimately, end at good the in the market, you and the merchant this particular? by day, on the market? crushed demand side. are But -- visited Like Washington think administration and cost anybody a imports. rebar supply of very being dynamics with like, I entire bar doing met Great. the discuss has these the

Barbara Smith

with specifics, then the of Wing. any have has across signatures of any that West with the U.S. and been been steelmakers of meetings been the President the there presented number into the go all to have won't administration I letters numbers There that Yes. but

press have So, of and there they efforts lots anyway, news, or always don't make the the of been fake lots meetings. but and lots

Operator

an KeyBanc question with Tyler from Kenyon additional have Capital. We

Tyler Kenyon

than are stronger be United within seeing color which or States, markets in applications what can what others? are meaning, the any within terms The of provide regionally? may than construction you're construction perhaps you In markets stronger and weaker others

Barbara Smith

we good southern dynamics pretty generally, footprint. think our I Yes, in see

activity with the trade and a And that So, U.S. out import obviously, differential the I seeing offers bit think and coming case, that we're between of and Japan are the with market, are prior pricing. nicely. back Imports west, the be west Taiwan and in that's Texas, Texas, good sign and level. daily basis and to I on strong of cranes, bay commute, a North the robust at region. on count as -- a said, continues our we

as So, aging I if quite and when going plan with I think encouraged in addition the said think infrastructure be generally good we're we And forward. speaking, a I earlier, deal environment. activity construction infrastructure to that what get to, about would a comprehensive demand is pretty

Tyler Kenyon

ultimately lot think dynamics. because market technology. there capacity the lot just to capacity the and the foresee be I you mini some But And call high-level now, three over being assets see of rebar Would older replacement? you way add in good of are or will any a that's just has several have question mills added the of five a it's it the supply-demand this because years that on a -- decades new a do Okay. been next some I Right of old. of

Barbara Smith

highest-quality efficient really that cost-effective, capacity, you U.S., Well, portfolio we production the if at And U.S. the are only rebar CMC's you're total mills, latest, have look -- assets micro as today, we if we the two you well in have most continuously a which in our is look the at footprint aware, in. investing we have of

production if little produce shifted other already that to mill. that a mills their in some rebar, products but mixed-use merchant efficient not and deeper, of you mills, to only a products, and can more has think, reprioritized there maybe products have been looked other I rebar variety a

what and in comfortable plans curve. and their cost are, you'd relative where is to to end think cost sit pretty cost I where we the So, to curve. the that But low structure we're producers talk have of other their

Operator

no back questions. time, appear you. to At turn further the now call be to this there over Ms. Smith, I'll

Barbara Smith

on conference and of many visits today's to you, to we'll Branden. for you joining with our forward the January. in -- coming during look Thank weeks. We speaking talk again And days you to investor us in Thank call. you

Operator

Conference concludes Metals today's This Company Call. Commercial

disconnect. You may now

Commercial Metals (CMC) 27 Oct 172017 Q4 Earnings call transcript