CMC - Earnings call transcript Q1 2020 | Commercial Metals Company

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Operator

Hello, and welcome, everyone, to the First Quarter Fiscal 2020 Earnings Call for Commercial Metals Company. Today's call is being recorded. After the company's remarks, we will 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. investment finished results the to and of anticipated of for the future realize capital demand micro benefits future new company's operations, our spending. activity, steel Durant, company's products, operations, the mill construction in our Oklahoma in the ability and could these These other cause to materially from speculation actual are to risks and may considered results and subject forward-looking and expectations. statements involve similar are uncertainties that differ subject on statements the risks to reflect the are the report conditions These that Risk in Form annual on of certain based uncertainties, described current those beliefs section including company's and latest XX-K. but company's are Factors

to are vary CMC on that or assurance have these current expectations and prove expectations based actual results been offers statements materially. correct, may no and beliefs, these Although will management's beliefs

future of clarify otherwise. are CMC law, update, not required statements only All statements or circumstances the made unanticipated these date. new in changes amend Except as information obligation or events, by this with or occurrence of assume events, to or in anticipated any assumptions, does as connection

presented found numbers earnings are the be Some all otherwise, or reconciliations measures, to Unless to or references references release company's website. the stated in on company's company's or the quarter. can fiscal numbers made non-GAAP for such end year and year will be financial quarter fiscal

the and remarks ahead. I President Ms. turn to will of go Smith. Company, opening Chairman the Commercial Please introductions, for and over now Executive Board, Barbara Officer Metals And the Chief of call

Barbara Smith

quarter CMC's thank to of results first you the Andrea. for And joining review Thank you, fiscal XXXX. call Good for morning. the

open will we begin financial new fiscal decade. cover with detail, questions. by we start the after as quarter forward the call which Paul the discussion conclude the highlights wishing I'd for I'll with information to Lawrence remarks roll quarter. of year second in and XXXX, outlook a prepared first a quarterly our like a call more will to then calendar will everyone happy our I new the of for the to

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

the of from earnings facility continuing our Excluding I'm were CMC $X.XX quarter share. costs, million performance. closure proud or diluted certain impact of per adjusted team's $XX.X operations very first the

Through market environment, with deliberate we the a our are These over in decade. manufacturing-focused of strategically best achieved portfolio have the and supportive core quarterly repositioned highest a generated ever operations. we actions EBITDA results our

certainly of is see we This and full execute. in one quarter the strategy fruits our can ability which a employees sound to

CMC quarter. proud results, the team should this further more highlights there to ahead. and It's the is key go these accomplishments worth of reviewing While and of some be still opportunity

contributor strong a was segment earnings. fabrication Our to

Solid over next bottom line the continue several quarters. should results

production their mill of towards some mills bars, of product high-value the year's us higher-value capacity Our merchant strategically first last continued XX% new by redirect mill flexibility to a work spooled The gives addition shipments enhance quarter. mix over to rebar capabilities. products. and Domestic increased rebar

rates of will our optimization costs compliance Cucamonga at energy of manufacturing through most continued CMC shop, out California. We melt of rebar closure other while recently mills. in decision Rancho high and supporting by mill of our efforts, This the network the the driven the a move cost finished Rancho lower utilization

our the customers, results maintained financial require survey. in Jacobson we service Strong industry-leading and ranking recent satisfied most customer

times. mining EBITDA. little strengthen sheet. XX-month further and investment-grade the Solid allowed metals trailing management line than us over debt good balance in reduced core earnings sector the during debt times issuers and bringing our better by We total gross average million capital is a and X.X of with $XX.X to quarter, working This X to

capital of result three I above ROIC believe stakeholders. quarters. CMC cost a A return to of the of attractive our generated over well we mentioned, everything our last core a nearly has that previously XX% annualized provides As returns

as This press dividend cash of Board record stockholders The a of on press on January the in I XX, dividend. XXXst our noted share for as be Directors CMC's CMC consecutive declared release, in release, Finally, January will of quarterly XX, $X.XX noted of stock our quarterly per paid dividend common XXXX. XXXX. represents

market to outlook. Turning

remain optimistic continue indicators we as of are in construction the from market, core point markets benefiting to positioned trends monitor to ahead. many the about We our macro positive the and resilience

year-over-year, and them. local grow led U.S. continues by highway construction Let seeing spending in of strength me projects, we're spending. cover public to particular, now some state in

Billings Architectural The remains south expansion the and for readings, future supportive construction CMC. leading growth. a both show regions The core of Index, west markets indicator highest for

U.S. to and confidence customer’s investment contributing interest historically low, unemployment our remain markets make positive sentiment rates within rates and giving to decisions.

solid. Finally, up bidding add I would it our be The healthy at our expect further of $XXX current profitable from and is in remains sits that nearly prices. backlog fabrication that price offering volume year to pricing own levels. pipeline we is rebar activity shipped backlog and our average work X given when a ton the strong, per encouragement ago,

of remains XXXX expansion the for with quarter. recent Turning Europe markets in The growth to we GDP to calendar of most in economy continued fastest-growing the serve for Europe. X.X% the X.X% outlook X.X%. among calls The Polish in

is XXXX, unemployment support committed is in benefit with to Similar to rebar funding rate demand. the place activity we expect through healthy, at investment EU U.S., lows. to infrastructure which historic Construction Poland's

exports will is less However, the which German negatively industrial for nearby merchant outlook as rod markets, products. such impact and of wire manufacturing, robust,

Chief quarter. over an on now as comments discussion Officer, to some Paul provide the I'll more Lawrence, and to Financial turn results overview, the Vice the for that President With Paul?

Paul Lawrence

morning Barbara. call. the And Thank you, everyone on good us joining to

$X.XX first XXXX. $XX.X Barbara diluted for earnings $XX.X per of operations first or per to operations As in continuing we reported or million the compared the $X.XX diluted continuing mentioned, from million of from quarter, share share earnings of quarter

related include Rancho results the million after-tax $X.X to First of of closure California the quarter Cucamonga, operations. melting costs XXXX

Excluding from million diluted $XX.X shares. adjusted continuing earnings these operations or costs, per were $X.XX

first operations amortization $XX.X from $XXX.X XXXX. $X.X million XXXX, was reported continuing XX% not EBITDA increase Our of of quarter to This million an of benefit from million quarter unfavorable the for the does the first core for contracts. include the the compared of acquired

operations. As integrated a reminder, fully specific related performance for we operations our rebar completed financial to acquisition are network these no locations year, longer assets provide as now the of into last

fabrication That the overall said, in the positive EBITDA we with to contributed remain The performance. the mills segment. pleased profitable our be quarter, and acquired to continue facilities the acquired of fabrication results nicely first

will $XX.X the the quarter. $X.X year. first segment first last Recycling by in recorded same period for to results XXXX adjusted EBITDA Now segment of Americas adjusted review of the of million quarter our compared EBITDA I million for

Market flows environment as yards. challenging, in well our as constrained with was recycling ferrous low segment the scrap pricing, the facing effects of

declined price XX% selling first quarter ferrous shipments of ferrous average by total Our XX%. by the XXXX, while nonferrous from declined and

EBITDA Importantly, control to this material to on a generate focus through environment inventory positive we able difficult in were turnover. cost and continue disciplined rapid buying,

XXXX. Americas to of million the of the million quarter $XXX.X for of EBITDA segment compared adjusted $XXX.X The recorded for EBITDA of XXXX first first quarter Mills adjusted

maintain the per volumes the quarter, additional by contribution Selling a mills increased sequential allowed per $XX ferrous This from per reduction of scrap than year, $XX ton margins primarily of costs ton but of in metal ton our compared per but decline. ago to was two first quarter ton. months of ton by driven from the a mills. prices Shipment quarter fourth to $XX $XXX acquired $XX high last higher the year declined per

pricing volatility greater end significant quarters stability $XX points have range. the context of managed products Within margins across compared industry, believe ton that We we a tight our a to the of five industry. steel metal of broader to consecutive domestic this the and markets steel within per

million EBITDA in an Fabrication compared in Americas of of first the quarter. EBITDA the year XXXX segment adjusted recorded to The million quarter adjusted $XX.X $XX.X loss prior of

the As acquired the unfavorable these contracts. the results not of from in amortization include benefit past, do

significant rebar expansion. which Financial rising prices margin a performance declining as of improved against costs, led result input to selling

of awarded prices to Section ton Average XXXX. XXX first of booked implemented. has per being tariffs more by recently the increased to prior $XXX High-priced replaced the work projects lower-priced selling $XXX compared quarter the

Barbara, in expect it favorably to is shipped quarters. our backlog we be future profitable by when priced, mentioned and As

XXXX segment recorded Mill International to adjusted the for of of the compared EBITDA EBITDA prior $XX.X adjusted million in quarter first of $XX.X million quarter. year

first compared absence made Volume to decreased XX% XX,XXX XXXX. billet during or of primarily sales quarter due to by the tons the of prior year, opportunistic the

German increased year-over-year, polish market. Volumes demonstrating demand by of merchant Rebar however, impacted, the health industrial shipments were the in demand. construction-related of domestic product the lower ongoing

thus have, Russia by pressured year-over-year Turkey, of Metal safeguard sequential surge imports and margins measures a European deterring basis, countries been on were from and disruptive imported down Ukraine. both continued ineffective in material. a quarter far, like

rebar that EU demonstrated quarter of XXXX. during third As highest XX%, over imported share the into XXXX, market the since spiked is of level the which to the

With consolidated results, was respect anticipate rate the for XXXX. which approximate our tax rate effective effective tax our will XX.X%, to quarter we our for

and liquidity. our to Turning balance sheet

the accounts $XXX and cash of the we As totaled of receivable equivalents had end of quarter, program credit $XXX.X cash million. our approximately and under availability million, and

debt of During and cash $XX.X the while management million. we capital activities. by earnings balance us our generated even Strong of quarter, sequentially, to million operating $XXX cash increase from working $XX.X expenditures million allowed and reducing funding capital

for fiscal be spending XXXX million of in to the will to $XXX expenditures. Turning We capital $XXX estimate range million.

we place continue reduction priority. debt as allocation our a to forward, As look will capital

sheet soon assets this XX-Q, standard Finally, sheet adopted $XXX.X as you’ll liabilities note on our gross our CMC Form which resulted filed, opening in to adjustment lease to our in by million. approximately and the new accounting up quarter, an be and balance balance

for turn remarks, to it now the back concludes and This Barbara my outlook. I’ll

Barbara Smith

Paul. construction-related the remain demand you, fiscal for strength underlying of We Thank in of remainder XXXX. the confident

healthy. strong, our that is backlog indicate also backlogs are Our and their customers

to second conditions to holidays we do activity. and winter impact seasonality expect typical quarter tend that weather given slow However, our

cyclical metal levels. expect above We but past quarter to decline from margins averages remain first

should scrap, to continue is given price in from recent fabrication and backlog. movements the contributing the positively Recycling benefit ferrous of poised upward solid

from margins operations strong, under within remains Polish remain pressure demand While products. our imported will

our quarter results. We’re excellent proud first of company's

Our network is working hard product with on optimization, maintain enhanced and a team momentum focus positive capabilities. service to customer this

at to call Thank now for we’ll again, open time, the And this questions. joining. you,

Operator

comes Our Instructions] Please [Operator Goldman first Sachs. Matthew go from Korn ahead. question of

Matthew Korn

start to New Year, off Barbara, way Happy Great Year. Paul. Congratulations. the New

Barbara Smith

agree Thank you, more. couldn't We Matthew.

Matthew Korn

couple me. A from

First, for what saw now kind right seeing given are costs increase pricing we success rebar higher achieving in in that market? you in December now of seemingly and the in scrap January, anticipated the

And how there lag for you before costs start could any is the material then to Thanks. the much flow a higher would of costs into rebar remind segment? maybe us, fabrication

Barbara Smith

Matthew. marketplace, and the Paul effects. been on I’ll half, then recent Yeah. in take first have let lag comment There Maybe the some I’ll adjustments the

prices will to way you think over part market. of increase make couple price that starting I firm, we've are the So scrap start the last of and months that its - seen see the into to

Paul Lawrence

we the that pricing, the material respect with have of fab the With from transfer respect days second less so on fab is to inventory volumes the of locations, the market which mills lag really XX than to the at part is to average. segment just question, in the we somewhere

Matthew Korn

Okay. Great.

volumes Let decline well. your of rates, XQ commentary, show fab in anticipating that that saw the strength put me follow I How seasonal context you're from strength highlight? in in up the a in you your And downturn appears as backlog then a it order quarter-to-quarter. on do I that fabrication. the for did

think, any expect we would some - facilities? should reflect I lower the frictions we them of closed, year-over-year flat? we we this How be When can XQ to to about kind as think be Does volumes, of at you've look that? acquired

Barbara Smith

Yeah.

get phenomenon, you reflective then quarter, shipping beginnings to and November in also the impacts contribute holiday that to have levels. weather in is same changes I have think, of think tend that And the Matthew, you then holiday, or winter can I really with holiday. of differences volume Thanksgiving we the your second and

short wasn't second you and decisions course, So anything month. forecast consolidate affected Christmas have a But the February was facilities. think, that because for holiday our quarter is and by The the to of there Street hardest for ourselves then, always, to I unusual is

Matthew Korn

All right. you. luck to Thank Good so much.

Barbara Smith

Thank you, Matthew.

Operator

next Our go from comes Martin of ahead. question Englert Jefferies. Please

Martin Englert

everyone. morning, Good Hi.

Barbara Smith

Martin. morning, Good

Martin Englert

color you or Mills couple of Americas there but ASPs the a on a in little to the past within mix changed, is provided provide introductory history. the quarters, sustain? seem benefiting return can if bit exactly be little more And a of is context So you this from has expected and remarks, to versus what bit over changing

Barbara Smith

the we've it know, product as always a product is can premium products. ways we’re most optimize rebar. other higher Well, to And Recently, at value-add you looking notable straight being the rebar. introduced spooled garner mix. that a to some And the

also looking can product product markets for side. our our that have demand serve upon construction ways are we merchant we to change in that better, industrial line then on depending our the But demand and versus customers always mix

now The acquisition of amount opportunities for opened that much of up we larger have us, a lot available a capacity.

I as think see we try going just mix to so product you’re us enhance that And to move forward. continuously

Martin Englert

color fabrication, normalized us as profitability EBITDA follow-up Okay. you helpful. the per within And the where for That’s there. over Can ton for believe Thanks you was a is? quarter. generated there, remind $XX

over-earning subsequent And the might we near quarters? maybe on thoughts then quarter from and to see over if your here step-up the some term, incremental relative this

Paul Lawrence

take Thanks, this Martin. question. I’ll

out, through essentially normalized look for And pointed any I margin the the rebar on which this that’s we first we we really input have changes per is saw, the XXXX, of cycle will we a in $XX where think you ton, pricing. be, things think sharp in quarter. dependent full obviously, as as what guided past in

But within quarter relatively a for I backlog, narrow really the band that in see we where see our the we what the will balance the think saw of price first selling year. be of we

Martin Englert

the all on Okay. Thanks the for results. and detail there congratulations

Barbara Smith

Martin. Thank you,

Operator

Our Exane ahead. of next BNP. go Rosenfeld Seth question Please comes from

Seth Rosenfeld

a color the back a and legacy assets segment morning. please. with conversion to the couple of If we our legacy I know, the costs I of more what provide can go Conversion but sequential been? obviously, the outlook Good Gerdau American integrated QX. you CMC have bit asset, you've become the for the now below have on to in questions. seem Hi. costs, improvement did bit drivers a Mills and expectations the

post-synergy start conversion there, there operating And line a is in incremental please. there with look basis? forward on Or could particular, Gerdau of that the assets are CMC I'll upside we the facilities in now cost kind to?

Barbara Smith

and then Paul add I'll color any some Okay. he comments, make like. would I'll let

number. been to I at if mix. is product, has on could last or some at heavier point, we a cost product affect think hovering forward believe obviously three you mix that of sustain that can impacted look a That around have product we degree basis. If two a that we, go And $XXX the this were quarters, to conversion ton. merchant by

mill And it at going to be competitive anyway, want But don't for and conversion I we not we any numbers, will cost there. sustained obvious - don't think reasons, level. that I'm comments give specific so to make

to our our customer. that out Only to aimed is decision lowering say was to continuously that Cucamonga, And through, structure. decision impacted key one work a Rancho thought some difficult on decision our a all there, it very improving because service at cost of of workers while CMC's overall and our cost our strengths carefully around was

Paul Lawrence

see our $XX that as manufacturing costs we The only the $XX. piece the we'll some of Seth, coming to is got to likely outages I that, tune that we've to to increase an quarter, second look would add forward in

opportunity it's do of slower activities. mills of And we We maintenance to some significant these some opportunity take in X during a to the have these periods that issues. these now U.S., address the

Seth Rosenfeld

horizon. haven't Okay. With Thank talk the you the you improvements regards if done Europe. any obviously, wondering great import incremental Polish on you're And on safeguard much. the deal outlook, to continue was separately, pressure measures, I very the strong seeing to within please, date. to they about a

and to Is import imported the dry some face is fully up for Ukraine shortly our tariffs? behavior there as for key will buyer quotas exhausted in But incremental exhausted any have or now understanding that sources material been historic of of well. as Turkey, begin be shift the Russia

Barbara Smith

so ground say statement safeguard you've couple that know your to effective. Thanks, on of market not a I I well. there, been Yeah. Seth, the over guess, that you have been measures want about the comments

effect have on the I the think Europe, safeguard - closer a importing European of were in initially, initial some countries similar are the measures mirrored did XXX the which market. measures, the although to market basically

redirected Europe. And of material to some so they've U.S. the

system when the have the seeing to they that transition started to the as into they as effective. to think to system system. more. abuses they And you quota adjusted was converted EU that take disrupt know, market account some of were were I initially, quota It the that they quota

point have out, as quotas the you And the met been year. for

it think how through - and see is I was And through working we rather effect that would flows I that the the and in And the material that guess, wait its July. market. has way on the it system.

material take through, more one would certainly flows producers to would as opportunity, give But we of domestic certainly, and it the that that. would that expect, advantage look

Seth Rosenfeld

very you Thank much. Great.

Barbara Smith

Seth. you, Thank

Operator

[Operator Chris come our Please Terry of Instructions] from go next And question ahead. Bank. will Deutsche

Chris Terry

Paul, Barbara congrats and a Hi, and quarter. on great

a around that I per follow bit up versus Just and $XX one you're the on that's the fabrication at there. from question wanted to just me. margin level historical little ton already

forward, Going a could potentially that up be headwind. for moving rebar obviously, back business

that you year, But earn lag the and for move in rebar on reset just in this thinking you to quarters down some of some why rest the to trying above start of understand and the contracts won't the those. about as just

detail, a bit wanted can, if just So I please. more little

Barbara Smith

up, it can open and I'll And Paul remark.

right? And been a - varying trend a backlog been at be the Chris, and look that shipments. have firming. as range think, of of earlier, opportunity that prices for and with on, always is a And that prices pricing wide I fab. varying certainly, projects I a of it's that's But schedules to exists, indicated mix duration positive

upside, if certainly, view taking we think, again, it with chase appropriate of be for purposes, the that for would hard going to as the it start there longer can. as is modeling And we we're year, So opportunity $XX. to

Chris Terry

Barbara. Thanks, Okay.

Operator

JPMorgan. Please Gambardella ahead. next question of comes Our go from Michael

Michael Gambardella

Paul, Barbara on continued Happy congratulations and success. and and morning the New Good Year,

Barbara Smith

Mike. Thank you,

Paul Lawrence

Thanks, Mike.

Michael Gambardella

I patterns questions, couple since XXX have Have trade. one the trade was seen a into and U.S. your change coming in out you on markets of Mexico? Mexico of for any eliminated

Barbara Smith

Yes.

in increase We it's stage, that have on that there an all products We don’t flows concerning the may monitor U.S. Mexico, I few at the fabricated, was was think not consistent circumvention that have actually brought but And upon flowing Commerce that you was marking prior that the carefully. sanctions back. as XXX was against certainly a of and at from clearly monitor it a these seen based case material shipped Mike, we changes level a this This were to a product into Mexico basis. fabricated. case was months where they a remembered to

so taken had case has to we a agreed And with Commerce coalition, at looked and here. to the to it it we And the that produce evidence, to there Commerce. be coalition the is took has us

So will against We think bring could and system. forward do when think, that a is case the Commerce' clear to that And affect, conclusion of conclusions. needed Mexico we some circumvent Mexico that, to of trying out flows the for that comes, I look circumvention. very sanctions

always workarounds, to find know, that of as you if And tend it's to you these countries have So lot monitor. something a you will.

Michael Gambardella

All circumvention mill right. products of And just track Mexico? how shipping trans prevent steel do try to or you through or

Barbara Smith

No. good going be we try challenging. other countries exploit. And XXX% But sure to Can learn intelligence, of you have lot other that these? on these that we we've products. of also just come to we're - catching all follow always all there's It’s a with the loopholes what's pretty and

news when I have been that that think we administration actions, an is effective. And think pretty thus abuses the far, stopping But these the see to that them. is good committed they have I

there also situations don't some we rules should I cases find helpful more administering trade, it laws, abuse, are have will say, on those helpful when basis. trade do future out, to that the been want a point laws associated and to of to with be I existing in changes And but the go-forward

good and with process of attorneys SMA each and other. try peer that's that get trade and diligent, where just we intelligence our working it’s with a the all companies So being extremely our to of that share together

Michael Gambardella

final Okay. And then question.

moves Gerdau assets. or to Just with maybe additional savings updates consolidation Any the on regards cost the more some in there? strategic

Barbara Smith

look through optimizing year, we’re really to capital, I strengthening executed we opportunities. that – see forward going But everything last be for flexibility network And could Mike, to on focusing for Well, opportunity the and XXXX on could at some us there. growth which we that this is year. big working think more flowing opportunity up sheet do flexibility the look give we to the nice more other free balance or

at product the upon system. produce optimization optimization mix that to the is of cost that demands. product across all regional trying means also us can lowest also the maximize to we But And the based across of market then producing our network mills the

the footprint we our didn't we wanted mills rebar them. merchant has customers prior to more product. know, healthy that with just as at our we our to And really merchant of the capacity rates. have running many very more the to of freed expansion capacity-constrained for we us you not but who were acquisition, capacity only up because over very, commit produce utilization were but really time, produce us to And to from have to opportunities allocate And buy

XXXX, numbers, will it, looking like do last huge be optimize. now we more is That's the, there call to we be I'll have and to we cost It just, in our efforts capture where it, reduction. then reduction not year. were how for cost we’ll going that always are be able But

Michael Gambardella

Sure.

Okay, thank you.

Barbara Smith

Thank you, Mike.

Operator

Please ahead. Tumazos Our John Tumazos comes of John Research. go next question Independent Very from

John Tumazos

going they’re with Mexican $XX rise even new more? apologize think that Do price I domestic hikes December in action and XX,XXX the your higher more tons. question In you back imports you. prices? data, $XXX to be with over cores, might different asking expect or rebar as the do scrap mills they you fall around way. produce were to same a Thank will I again that Or new October XX,XXX,

Barbara Smith

Happy speculate. John. New Thank you, to I guess, Year. going I’m not

prioritize time. big buyers as a some situation time is product really incentive point that been there if in over those this at The of But of thing I all not stage. I carefully. We remain levels imported real product. speculate at period to they've can't remains, And would import for are is say should then muted situations domestic monitoring this only for

John Tumazos

Its job you. to our you. speculate. Thank Thank

Operator

Hacking from comes question next Citi. ahead. Please Our of Alex go

Alex Hacking

Happy and guys like And Year, were months to. seems sure delivered last you everything congratulations. Thanks. New and on over my that It Paul, you Barbara add me going said let the XX you

Barbara Smith

you. Thank our do. try commitment, That’s we and to

So thank you.

Alex Hacking

of terms just in So I couple. questions, a have

is to simply The mentioned opportunity, ship merchant more that that bar just if that first one seen your the really an of mix out Thanks. you're increase able opportunity change you Or opportunity per so to your to you EBITDA does legacy haven't of - mills, When far. is ton? throughput? that realize

Paul Lawrence

Alex, that look market market think we're to is share, actually a basis. taking down merchant fruition I share, gaining market is find at in expanding we which would on what is The we're the efforts year-over-year overall the if you merchant footprint.

lack probably think, the you're some of I that's, seeing growth. so And of where

the gaining far overall, But are opportunity with taking market and shift group around of of to full of concerned, share really as starting material as is mills. the we new market advantage

Barbara Smith

that, as pay property personal well. destocking. sorts really think what things. were and That But the inventory of the those at, opened tax would and have looked Last mean, up to the numbers they Bayou at end I that’s do normally been when on year, levels their merchant of I they service have for And low, centers know, point you as operations. shuttered out, I us opportunity I has side also

markets we up and centers forward potentially So restock to beginning do also industrial here look bit. service a to picking

Alex Hacking

rebar? the similar expect merchant be difference bar per market EBITDA to clarification is you I would for Thanks. a there structural on Thanks the there? the guess, in dynamics. the in ton to through cycle, Or

Barbara Smith

there change is time There with products. been range Historically, cost sizes and produce additional the various a associated with to full more over grades difference. of merchant merchant, and has the of obviously, production

there been to of to a market merchant fluctuate of than of right premium to has expect the upon And premium less today through historically, trends, depending there but moderate given rebar what trends back we market conditions. set see cycle is dynamics. the those The will to historical would

Alex Hacking

on just then follow the up assets. to And Gerdau Thanks. Okay. legacy

But look quite we ton answered them a a CMC's for what than was had you've effectively. bit assets, was. rebar bit more seemed lower per this now back little think when we a like EBITDA running per bought - than these before them. you ton I When year already sure the in back look you've it EBITDA

But now when delivered your to we few hard any at results dilution margin financial look months, all. it's past over at that of you've kind very the see

fact, - the almost opposite. like it like it almost seems In seems

have CMC And closed believe standard of legacy in you you mills? as get there - is, up network that you that the standard kind to now your earlier, be do So done those described Gerdau I commercial metal Gerdau opportunity effectively assets you running mean, incremental therefore, gap would in of that the of to those Thanks. the stuff? to Or and assets, is still work the expect to mills?

Barbara Smith

what initially thank course, we do And know the Well, work folks, can I speculate concluded done. we assets. that pointed tried we've as John the Alex, can't you, for acknowledging with that and to this, when out, of

proud really what in a able very short I'm very team time. our So to very, been accomplish of period has of

The not operators. just of flawless, history operations, at integration balls CMC but very good to our the was it the mills speaks only any not being from of and dropping integrating very, new existing in

incredibly I'm really appreciate you we've I that. so the and proud progress acknowledging And made, that of

micro by a two have from portfolio vantage of our assets we mills, say the would rebar I is are, which What far, production system. point, from a state-of-the-art are in best

is there So range. a

managing portfolio, a that as that, quite see can you we're effectively. However,

ways not to but to competency terms allowed so our us and been finding in to core something And successful. that's is a CMC progress operations, of only and the also to mills, existing what's the of not stop going that's new improve be continue

with a volatile, and our best best all those all service are you to low-cost manage And customers steel can cyclical be and returns differentiated working provide and environment, and very to know, the and is day we industry challenging the as results dynamics. we every

Alex Hacking

All And right. happy Year. Thanks, Barbara. New Paul. Thanks,

Barbara Smith

too. you you, Thank

Operator

this At Ms. back questions. call closing there more no remarks. the turn appear you I'll to Smith, to for be time,

Barbara Smith

Thank call. speaking many We us you, weeks. joining you. coming in forward I with again, want to look to of on thank the today's during for our conference investor visits you

Operator

today's Company call. This Commercial Metals concludes conference

disconnect. now may You

Commercial Metals (CMC) 6 Jan 202020 Q1 Earnings call transcript