CMC - Earnings call transcript Q2 2022 | Commercial Metals Company

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Operator

00:02 Hello, and welcome everyone to the Second Quarter Fiscal 2022 Earnings Call for Commercial Metals Company. Today’s materials, including the press release and supplemental slides that accompany this call can be found on CMC’s Investor Relations website. Today’s call is being recorded. After the company's remarks, we will have a question-and-answer session. And we will have a few instructions at that time. historical operations, to for US conference import participants make the call, levels, provide other like new course during finished statements impact of would expected include the products, benefits information plan, steel this will invasion future of the US than effects of of I the for remind the line capital economic on legislation, results financial that capabilities all the facilities, the the that Company’s growth expectations Russian XX:XX regarding future and of Ukraine, conditions, of Company’s steel information Company execution measures construction activity, time spending. and Company’s demands and operations, will and XX:XX to These to may are speculation and assumptions risks differ expectations. and cause subject and and materially other certain similar actual forward-looking that considered involve could uncertainties these results from statements are beliefs subject are and current reflect Form of statements on exchange on conditions filings based the These the Company’s in Company’s described including are that forward-looking uncertainties, securities the annual Factors latest latest Risk the statements XX:XX commission, and the XX-K. and report section risks certain those Company’s with to including that

all current expectations are otherwise. information to connection anticipated assume made assurance not only these of are on will in or obligation with events, the release, And President materially. are All changes the XX:XX non-GAAP Barbara statements does or financial otherwise, Metals update, and events, statements slide beliefs, unanticipated such correct, and fiscal or future turn website. fiscal Officer assumptions, CMC supplemental vary law. XX:XX except over based or of made circumstances the any Commercial numbers presentation Although earnings XX:XX Company’s Executive numbers the by to these Smith. I can references required new the will presented Unless clarify and Chief quarter Company’s for call or amend on as now stated the CMC as Board, offers introductions, remarks be these or and and be for in Some Ms. or references Chairman occurrence statements Company’s this to quarter. year no expectations to Company, year found of in and the management’s opening that prove the beliefs or will reconciliations to results be date may of measures,

Barbara Smith

Good morning, second XX:XX and conference quarter everyone call. CMC's joining you thank for earnings

I again and for you the which a commentary culture company Paul and ways my detail call our call. day regarding environment net Relations and The of the record found On presentation Before or CMC's diluted is would per proud CMC. XX,XXX the were CMC's through teamwork more my carry supplemental on continuing every Lawrence that $X $XXX.X Each we questions. Ukraine the market quarterly will will business, we're leadership also current on remarks, I'll accompany and I strategic from will world-class of extremely deliver behalf of to employees your performance. and of open and starting would customer from the and another service the the outstanding Before and extend quality, entire hard quarterly in improved Investor I highlights across day. team, for of drive Earnings like advance quarter I that efficiencies be XXXX, for third status million the after information appreciation begin, to strategic provide you our to on people discussion billion, brief defines the work accountability CMC's which projects. the like of to product quarter's start of result our impact forward share efforts call a CMC's your with today's in slides organization that to our update growth business. vision. direct XX:XX congratulations outlook quarter innovative with operations then on XX:XX and war financial prepared $X.XX we listeners the will a website. fiscal to cover can for sales this conclude find of

in increase of and or earnings from adjusted will were of $X.XX non-operational unchanged core million seasonally Excluding per discuss, generated second the history, impact year virtually diluted only strong $XXX.X more from the chain our XX:XX has quarters, the CMC the generated a challenges, and trailing totaled quarter XX% invested time force quarter's XX-month historically and EBITDA stronger first the annualized continuing achievement. period supply labor was $XXX.X return ago and performance, results. prior XX%. million, $X.X With items well is best operations an Paul our from company's share, quarter. During trailing core a that of CMC consecutive on last EBITDA than XX%. that invested capital significant billion above pandemic CMC's This this the return XX XX:XX global broad capital on includes XX-month trailing the period

a quarter our have and consistent conditions for value across and margin benefited all lines. past from for product actions end clearly Our major substantial to strong are doing environment CMC's we shareholders created very markets so. strategic excellent virtually favorable continue poised in and current second demand

simultaneously acquisition commercial the CMC's turn wire profits the team example, ability announced our This to a also our well third commissioned one many Tensar. generating performance line marketplace. starting strategic allowing record Polish our XX:XX of is strategic serve me to and May. to investments in now financial fully last CMC provide on new very strong example CMC's and status European like reflects more This EBITDA record from are rolling projects, of Europe's strong our capitalize above and their conditions benefited our rebar, enabling expectations, is that on initiatives, bar produce market these conditions. contributions Let update As initial mill results. with of growth can to line volumes and quarterly Our rod XX:XX merchant

expect to third We the during quarter. transaction close Tensar the fiscal

platform CMC's high-margin, high meaningfully and to last CMC and of with an micro expected of believe mill new demand, runway the extend Investment large to rebar for market The engineered will of serve as provide opportunity XXX,XXX ahead. XXX,XXX a be constructed providing in to the Tensar's under-penetrated the into attractiveness well extend this as XX:XX tons a this Infrastructure continues XXXX to This acquisition track solutions. offerings regarding West marketplace. on organic for are growth project customers related about early bar Coast. incremental in We to CMC expansion will combination startup. study currently years ramp-up spending timing our customers Lastly, potential As XX:XX the X and propositions remains US. customer service in will our capacity well further announced best-in-class mill options sales Tensar Eastern provide lines that tons reach to support for Our will with significant Arizona the in the Act fourth calendar growth up mill to signed Jobs merchant infrastructure November. micro reminder,

the the be coming able dominated closely. cycle We site the situation to for selection in share expect weeks and details the has project to we are Ukraine war process are several news in and months. in XX:XX The monitoring currently

interruptions Barring now an tighten refugees with Poland. coordinating In calendar markets. Russia, accommodations and estimated German disasters business in in the available and not in For of the EU Likewise, made our any in does for team mills. bar increasing To-date, XXXX. Polish steel stockholders Board over much few functions. materials, traveling the declared materials close to Central and to Eastern to scrap to of higher CMC's with is percentage tragedy iron of members are For and war XXth reminder, second CMC's a ensure disasters. Poland. rebar the imported imported on Lawrence, an did disruptions time rod to President more significant paid demand of the or to sanctions are provided to CMC flow last Senior and well-known for in not CMC impact will million Vice team XX% the place Currently, employees unabated within I operations , to and raw quarter market Local into record to on the of supply of Ukraine facilities. and the on XXth $X.XX products. access the CMC's by XX:XX weeks, has Vice of Directors acted inputs. the safety imports Chief the only a crossed and for alloys, of safe President the our to XX:XX and stock at Scrap to from XX% as a amount to they comments And Belarus to CMC's areas. Ukrainian into With well. and pig at also Paul our team sourced, everything per the opened April XXXX. to for and CMC home. to to kindness the is up specializes paid also quarterly wire EU results in comfort XXXX, from chain. very dividend and American members [lean] of placed with The stated common as have any natural Polish prime X.X Leadership for dividend in their of just CMC has XX% continued release, meaningfully into electrodes XX:XX March be provide the XXXth Financial provide border response aid countries our consecutive cash the expansion our our group domestically the XX:XX refugees represents I'd other Polish North homes helping refugee discussion mill national quarterly This thank give some a food, accounted families. from on per CMC's require confident -- in extend These merchant share XX:XX Poland core imported procurement those Poland, comments overview, are Officer any Finally, of own disruption we dividend quality operations. the their Ukrainian anticipate Many to our are need long like of that for the The (ph) Belarus, has inspiring expected These press it into key swiftly on a not Chief them supply of you of armed as that on Officer doing. team XXXX. have conflict, sense strong humanitarian unselfish a coming victims to CMC also fiscal share refugees to our XX% to own will has conflicts assist Many Europe. Financial make has -- EU. transport of Looking shelter. we we quarter. combined reference, Ukrainian experienced turn and is material human roughly steel by of in and and XX:XX steel-making Russia leadership

Paul Lawrence

you, Barbara, today. to good Thank and XX:XX morning everyone call the on

level California we or quarter $XXX.X partially XXXX fiscal were the associated adjusted from during $XX.X Results The $X.XX $XXX.X diluted million nearly the refinancing illustrates share. of during reported related XX:XX levels $XXX.X the or XXXX, the earnings the by second generated Europe of the for American $XXX review the from nine Slide XXXX. segment of noted, from to XX:XX compared was benefit impact segments quarterly large ton costs strength results $X.XX year-over-year operations this after-tax completed XX:XX by prior EBITDA per recognized which supplemental to the second million CMC's EBITDA extinguishment to North the per quarter earnings continuing diluted $X.XX significantly estate, Barbara growth, or ton. a the million. results. million $XXX.X operations operations As benefit on per earnings $XXX.X a of continuing continuing million XX:XX of core a was prior year I presentation quarter period. of fiscal will steel of per second year was record net finished Now Core share, the Excluding with respectively. real reached for sale and offset opportunistic million items, quarter quarter. of our double include gain debt record of of of these while the contributed Both

by driven the costs raw below the realized first achieved XX:XX of a of quarter. profitability on materials. $X,XXX, fourth higher EBITDA our due chain. year, improved per California margins expansion per $XXX in XX:XX Excluding basis, the products indicated The as the on leading of year-over-year for quarter, new increase processed on major this high North a shipped work for ton and basis, per for call, gain priced per land double XX% programs products selling first a from new quarter -- ton level in freight, by $XXX. record in higher for benefit vertically products adjusted increased higher expected to change increased $XX American adjusted of $X steel controllable this than earnings per $XXX of finished per -- sale $XX backlog steel price all-time a increased new million Margin alloys. year-over-year scrap CMC's costs, of segment a $XXX.X Segment lower underlying ton a unit and CMC's ton ton basis in and per CMC’s $XXX Partially reprice on just entire rate the on older throughout the EBITDA more work. pricing shipped and record for products on downstream Adjusted increases million prior increased of replaces the the year sequentially. generated hit was significant XXXX, deal from During steel scrap finished mills maintenance primarily fiscal prices price a to I steel ton over Selling volumes through significant to value offsetting ton reaching on our from that energy and and downstream was sequentially. average ago EBITDA

CMC’s We in demonstrated the XXXX $XXX of quarter out as play from fourth ton XXXX. to seeing downstream are per of scenario second this by the selling quarter increase average price

market the ago, light movement CMC's and from geographies. quarter due of that price in bid product We year of average demand year, XX:XX particularly remainder of Shipments a our further through as downstream strong second XX% decreased are we in activity several volumes in products the slowed are as expect continue to to mill the backlog we upward comparison well remains geographies. US. approximately construction Eastern within of difficult volumes markets finished prior fiscal the decreased by a year End seeing strong our weather in to weather X% shipments for and both industry unusually the much data roughly track. as robust, the order in in product challenges broader period, rates we in which Downstream experiencing

the However, demand. of have good backlog volumes seen we to downstream providing increase XX Turning XX:XX optimism the deck. strength of underlying slide supplemental of

third EBITDA consumables robust Higher with ton, to year-to-year of Our margins year record improvement a in prior EBITDA compared volumes. increased absence over ton increase market achieve earnings mix product benefit energy growth This as and while other Central quarter. unchanged mentioned replace Margins sell. cash sales equivalents solid conditions months. XX:XX per as conditions Europe materially in totaled has XXXX. major and result was million price $XXX capital PMI a product per have of shift second strong across $XXX were average fundamentals basis in the supported Europe finished consumption shipments $XX.X provided adjusted a $XXX $XX.X XXXX, of by and consecutive Turning year-over-year Polish the during we of for compared reaching provided strong of registered $XXX.X in sales rolling balance to volumes each XX%, expanding factors. line from merchant merchant sheet, expectations. The expanded and the market for higher XXXX continues the positive semi-finished as line excuse generated our Europe increase Barbara per to recently products remains February to million. billets. and of fiscal strong. relatively of offset The and quarter cash to XXth these readings have liquidity positive occurred sales as activity. commissioned Shipment to selling prior construction grow, on market that XX:XX -- increased quarter year a XX:XX maintenance been backdrop German over me, of and shipment the segment outperform and allocation segment XX rolling adjusted planned our , wire of significant the of margin within trends costs a to products rod of manufacturing the million for by mill and continues ton scrap scrap XX:XX second driven Demand Polish partially the

million Our allowing four augmented new four in $XXX due cost-effectively eighths to $XXX completed of Industrial and exempt fund a rate which new of in the three of and enabling XXXX for notes maturities. respectively, fund received. of advantageously was our with of structured offering proceeds were three in $XXX and notes was county This eights our mill. successful XX conjunction business and yield with Authority issued CMC our to senior million X.X% Further, year to and notes the XX:XX in position funding due CMC million Maricopa provided $XXX Development cash X eighths new offering million of redeem five senior portion outstanding re-price January, to Arizona by bonds XXXX XXXX. the us one The interest tax the extend yield and to micro and us

X it project have regularly announcing in discussed We XXXX. of August Arizona since our

well CMC's in X.X%. XXXX financing funding real for now value the rebar was its unlocking the environmental asset first but merchant vast sourced footprint X in AZ easy world-class the from We strategic US, are by of bar and world also just long-term as gained proud the acquisition, value majority The in CMC's its as estate financing. significant Western not only at capabilities, of the position

accounts had operating million also $XXX X world-class will only not of capital As , the our structure XXth used bringing transaction. world-class have but billion, a it of portion fund AZ acquisition costs, have So credit programs, we of this liquidity of close on February well. to a Tensar the and under as receivable will be to $X.X will availability total XXXX, liquidity XX:XX the approximately

million capital of despite increase the we $XXX will rise XX:XX operating $XXX retreat. course increase cash which almost converted significant prices. has past the working over working working The cash prices CMC six from selling capital. quarter, in by invested a the when in average in activities, million capital, generated During was be in the driven $XX million Over to of quarters,

remain metrics last attractive leverage fiscal Our improved and three over the have significantly years.

tax can seen our and now to while growth Slide XX%. sheet to projects on return sits second cash We for is, of and was continuing provides rate to fiscal CMC’s complete the XX% XX%. Turning and at while strength to net capital us to EBITDA organic be overall XX.X% As net XX, we shareholders. XXXX capitalization effective the spend flexibility forecast strategic our finance a just our times, full-year debt our acquisition robust to between debt CMC's the financial quarter and rate X.X outlook. balance to ratio XX:XX Tensar, be up believe

We continue invest X. a roughly million will Arizona which of $XXX attributable for a and be million $XXX to between expect this total, year to half in to

concludes XXXX. their current during second outlook repurchases to quarter This plan the environment. XX:XX remarks $XXX our I'll remaining Lastly, current an turn second the increase Barbara this under of market XXX,XXX approximately my These million, $XX.X for and CMC to million repurchased activity of fiscal authorization. pace leaving to We half it back of amounted average at during an of of price $XX.XX. fiscal transactions shares

Barbara Smith

Paul. you, Thank XX:XX

groups. that Census continue as healthy at the our being is growth followed seeing signs to activity Turning year-over-year also we are both Southern build follow by occurred anticipated internal community our level and in customers has last by wire see during multi-year of single-digit measures indicators external are strong our construction we first new many the US in all that two or the measured product non-residential years. books markets anecdotal now out rate. Encouragingly, is beginning to each we order the time the This that which construction markets residents. high rapid highs. Bureau, local, as are supported rate is constructed support at has and XX in residential first to We non-residential growing mill XX:XX hand of at months, a conditions, Rebar to our North XX consistent construction see Rebar new is commercial with in America, even the downstream with major construction this Fabrication Historically, investment rod own public demand market by for to of and spending operations. XX:XX demand inflow overall infrastructure view indicating the in their current

of second grow reached future indicator activity highest quarter level continues measure to best rate. basis of Our construction bids. is a leading This and year-over-year our ever on its

previously [quotes] public office result Additionally, (ph) were pandemic, as well note would profitable, in remains like a also that environment new non-residential work, approximately quarters the energy market of will see full industrial. downstream X.X projects quarter ahead. private tons I industries. and warehousing, mixed datacenter in to across market we project XX:XX and just traditional plan, in the current has of at of private New the hot demand are even by business infrastructure the XX:XX well like increased impacted to described the should is areas Activity rebar demand. estimate as to and at sector be we historically and as between balanced which of Late rate. yet attractive are to add sectors the use, when strong strong healthcare began turbulence incremental nicely LNG that be sources on the during run shipped Rising reemerge. levels commercial delayed

within in of Billing point indicators. is Cement the will healthy growth several US Association core micro of our our particularly forecasts demand positive fully unexpected outlook The Index infrastructure. XX:XX construction The key and X up external the ahead, mill position continues Architectural expects to cement to in well in previously expansion the of The XXXX. backed related footprint. by our additional capitalize start-up toward timing Southern As Portland year CMC mentioned, Arizona of X.X% to tone consumption

is measures non-residential Additionally, levels institutional and handful the planning XX XX:XX value and Dodge components. for production equally years commercial orders. majority simultaneously positive, remaining shows Momentum to entering war sectors capitalize uncertain. and largest bar Farm phase sector PMI readings our Racking our strong but rolling times last and the European Index, new better growing, demand over of of which also current CMC strong, Metal in multi-decade our now and reaches The only picture activity is both of on positioned Demand both projects produce line, a operations major seen sectors, the construction even new strength each at Ukrainian the strength. its three Polish remains construction for the merchant reflected Construction of Central from product which market the highs. With groups allows product production because consuming as General of are new and markets to to Current remains Warehousing, Europe Equipment. solid grow with end including this Machinery for numerous The Industrial, demand and the residential across Buildings, near in more industrial robust continues is Conveyors permits XX:XX

so unknown. business while favorable future is the expected and moment are the to Ukrainian the of direction However, at conditions crisis remain

in another our strong we performance, view outlook for very continued strong conditions and product the near-term, sequentially. signs we financial we seasonal of to on to quarter XXXX, double-digit for internal favorable as of of Based follow will you, XXXX on and third levels. consistent indicators, on ton supporting like remain anticipated conflict time, this CMC thank at robust historically products high-single as a key quarter-over-quarter financial Once low be the the is tightening Eastern fiscal in end yet cost our to Central the fiscal a steel margin typical reinforce our marketplace anticipate delivering to to again, well all healthy we'll our the outstanding Margins Given do Europe, per expect demand and employees to prolonged quarter should or More point questions. but basis. generally shipments markets and Thank to supply results controllable call supply demand XX:XX which increase performance. expect near-term open has now of current a the I'd expect and we of trend, likely in impacted. XX:XX a long equated bullish. in So

Operator

XX:XX Thank you.

question-and-answer first Morgan. question Instructions] We comes Glick go ahead. Please J.P. Michael from begin will with Our now the session. [Operator

Michael Glick

XX:XX Do you can demand how change your The and given for structured? Good has going margins the there recent costs? important in and forward you offset invasion? term on incremental morning. then remind And energy us contracts Could shorter earlier. just you customer power prices are think any terms rebar the since implications stats hedges in been cited Poland in or behavior the very those

Barbara Smith

of XX:XX take Let me Paul. a going couple them and I'm to pass it to

Polish effect least of not operation, on to supply energy probably the dependent Poland the do relative see and geography. is we concern foremost, to our First any country

any it be result As number specifically prices, conflict. to Germany. changes and a ship do rise to our not as effect want energy demand, stays into portion emphasize disruption talk the Paul in supply. in And would market But our also very in so, just But mind which relates a we not we the you of provide we near-term. can to see about will have XX:XX due us in of hedges, some operations shuttered, don't benefit more the steel to in are that I energy any of as any negative to market, seeing that demand, second the our Polish in very, seeing we're Bear largest output large demand. know,

Paul Lawrence

Mike, good and XX:XX Yes, morning.

the gas dependent of not generation on energy Barbara is arrangement, know, other as coal-based Polish primarily on are information for a energy. natural country is as Europe additional power said, bit the a within of little a countries Just it it source you as

prices, in of much West the of spot only of then much of -- not Poland lower across the see we are rest So the Europe. what the Western

hedges We -- past fixed arrangement, place, a significant in various talked well which both we've our in as reduced, is overall power, that the power. arrangements a as financial of to we've financial spot our prices portion have the we've price about exposure of also as have got portion the such supplier, which with includes our very got power

the operations. of our result cost to increase energy structure been as increase And so the to a overall a has Polish not related material

Michael Glick

and question but I you scrap? just, piece, and in so a all rebar guess via so I prices the get I more is XX:XX view Got you pose it that your small energy to you mean, Europe is the than view know, curious main will do it both cost have there? mentioned then, US increase And to get you

Barbara Smith

the see result business XX:XX Michael, customer Yes, our is prices and both say material careful you price, in scrap of base me, we world. in I fluctuations a correction as the significant used there to what selling around when have excuse our our And that March but know the those of was in the by as be is we the beauty to US what say, would a conflict, raw relative correction, and we and to adjustments, products prices. in

is scrap there also players, less the do where I pig in melt the us Ukraine. need, to so prime other impact point require than pig other any not out prime and and we our significant significant is we the in don't The require thing the would pressure is for relative conflict iron is for

only with. inflationary good pressures, all feel inflationary other market scrap, we're pressures familiar that not the we absorbing the So but about various

Michael Glick

it. much. Got you very Thank Okay. XX:XX

Barbara Smith

XX:XX Thank you, Michael.

Operator

question next comes Paribas Please Seth Rosenfeld BNP ahead. go Exane. from with Our XX:XX

Seth Rosenfeld

our afternoon, thanks questions XX:XX for Hi, today. good taking

of obviously Polish recent performance product. output prepared any your third about on question mill, potential imports effective current recently you we as on upside gains, you Another touched Russia, long Should output? additional of us Ukraine Can share line up? remarks, the with capacity on for I'll potential volumes the ramped please on assume rolling high the please. remind there if Europe, EU's your Just representative and reliance there, Belarus in MAPs for stop thinking and

Barbara Smith

doing Seth, well. XX:XX if Thank you. you're

across and and in also product on due not energy a available it's around us early going sanctions, any mix included based do product But an that quotas and we for really not specific currently potential just varies the But numbers, the you as to represent don't to a suggesting investment. the other Ukraine that create continuing has addition and to very could overall ship mentioned just see the the But allocated we and on line return that, some to the be because see generate I'm been very rolling with that for market, I operations our from current as we an as uninterrupted, have indicated, supply favorable do CMC, are around be it is know You think for opportunity countries. Russia risks of that the know, XX:XX the was see that outperforming reasons language to tightness we to that view mix chain. scenario major capacity you're comment we platform. allocated certainly ability effective attractive that, and Paul only our Poland, in could the that some expectations and a running that ability to continue to on opportunity sanctions that could

Seth Rosenfeld

with to US. costs. your XX:XX of cost controllable paid question, or the quite costs please comments of to a Thank separate conversion sure regard specific global And I'm reflective were you. And not

So in some other any What please that or you of and last If other that, was can you in quantify increase there in decrease given please? reflecting or that QX? going outage maintenance are freight incremental costs? into alloys quarter, scale expecting of then alleviate direction the QX, pressures

Paul Lawrence

our of the reliability world We versus as our producing If the been are across incurred as well. outages, an well maintenance did maintenance of not to as with example, lot been the do get brought really we today do done continue we've positioned, focus immune the and activity facilities third from are the the even as form preventative others. equipment But steel result closer that a at the impact forward into we as far rising that but consumption it's to quarter, lower by would outside we yes is on as mostly costs, result our year going overall seen second have and the you year a in we is we a of to a as the us half lowest XX:XX over very, have continuing and what the we’re that it a some those operating rate energy of and energy costs operations. Seth within in to look a is we quarter other look necessary to high a at the has it, will significant outlook outages. for than associated the we the that very comparison position probably continued mill believe say but I micro steel been costs of industrial industry at Yes, how utilization innovation now and to XX:XX ourselves it’s

not we in today anticipating we significant increases see are further what cost. on based So

However, producer. remain to a our it is general very, very the what position we of are are able to But what -- being will be really on strong factors. happens South and competitive depend will low-cost confident inflation

Seth Rosenfeld

just sounds down it going that am is owned elsewhere, like inflation Okay, to correctly? for XX:XX be I would to it clarify it by be be understand on maintenance compensated Q-over-Q,

Paul Lawrence

XX:XX The facilities. itself continue routine us be likely to quarter as at with to go continue into maintenance we is our maintenance other to third the through in

Seth Rosenfeld

you. XX:XX understood. Okay, Thank

Operator

Woodworth Suisse. comes question from Credit next Our Please go XX:XX Curt ahead. with

Curt Woodworth

Yes, XX:XX morning everyone. thanks, good

Barbara Smith

Curt. morning, Good XX:XX

Paul Lawrence

XX:XX Good morning, Curt.

Curt Woodworth

in Europe sanctions know, Poland comment perspective. Barbara your the and could been big know Russia a Belarus Poland. exporter put steel demand believe you I from from was pretty have dynamics I You inability just that into in current import XX:XX if and on historically, some region to Belarus of at play on wondering a supply

of all your evaluating to path so out up ways more North the flow that Are rebar the in metric X,XXX seen migrate coming increases? potentially capitalize to hikes Turkish to of from customer in Europe you arbitrage up to is ability can the Europe as at And you change tons, comment higher, a of probably then thinking pricing to from prices? going XX:XX standpoint? and versus the how are were they month to US pricing recently So kind anywhere where ago? material imports Northern some on situation? those is Europe about how on kind how capture -- able into pricing And thinking be what's going and to a we've about maybe your of price dramatic of customers pretty what in your have X,XXX feeding terms today in And around maybe South that's

Barbara Smith

XX:XX right, there. Okay, lot you're are there's Curt that Belarus EU. and the a into Russia importers absolutely significant And

long into imports for EU. I the account XX% about think the steel they we said of

being into we're I see allocated situation were strong we how and coming to extremely flows are think going cut So by flow an EU. those the demand off, wait was elsewhere, but quotas those that enjoying when

do environment. capitalize ever flexibility reaching And the we there is environment. in mix does disrupted, point really COVID, do in I'd of going quality something product disruption that rise grades affecting globally raw some, be we is early concern have on going our in is position, it it And some typical of not material favorable the that prices huge the And of at continue Polish greatest terms demand, ownership to of to there activity results. the all quarterly and strongest -- has of just assets disrupt continue is to that don't our and opportunity earlier the in margin this and had relates we've understanding as to that that and two of on in the pig it's but and the clearly pandemic. on optimizing also havoc iron, that So XX:XXAs traded and definitely in is to XX:XX like chain and it stage about fact that exact importers had harking still presents we the said we additional itself. us, saw the is were a our was there which to is as to that we the our before. situation, experiencing the low environment a cost us this. optimizing to it activity construction back by US among for support market the of at going this into high imported commitments of of concerns of about or that opposite supply and we was product. Now opportunity our imported our I disruption customers delivery on the an that concerns I a throughout strong and see how as margin. product, support see logistics creates steel strong. timing strong And be And only will for taking market. impacted the product opportunity and think see are ability there But unexpected I demand continue an think about margin extremely US, we to service, to it was is crisis And anything currently, prime not scrap could and that

an at offers. typically we seeing customers be are inquiries increase those So looking would important that in from

Curt Woodworth

materially seem then pricing said be Yes, for flat And on Okay. segment, of sequentially. calendar I back your would quarter separate better So the -- then of it reported continue typically mean, through I on this And almost that like EBITDA from how provide your that margins any don't today will profitability XX looks? could XQ? wouldn’t that, margins range backlog and to is can one maybe now you kind go of -- levels it's going sequentially you’ve disclose comment that their that if forward? XX looks that used end to to fabrication, us when XX:XX back guidance, context for above versus your any EBITDA you but kind I you getting should per right of ton double and profitability expand commented how give know historical peers you cycle? kind XX of to seems like and fabrication sense

in more that be granularity provide or you around to segment any rebar So outlook would can kind expansion offset Thank fabrication imply, which near-term much. you the would margins appreciated. decline, you expect very would mills maybe of that would

Paul Lawrence

it's US opportunity marketplace, XX:XX that current just the lag the a Curt, is that is in the there expansion above the for which -- seen costs downstream scrap fully those the through a -- cost activity respect as forward flow quarter were scrap see backlog. continue there fab given in going However, going with margins of above in with is that to providing X% into on overall yes, to precisely that it's historical consistent through difficult and we levels business, respect was downstream in scrap a the mills, position remainder no the of business, forecast supply-demand we tremendous is overall to up. work the third significance we've it to of costs those margin the that. margin business effect expansion has the the of XX:XX will amount an balances of the before result, value March doubt exceed to over as up is as in should fully captured With of catches and numbers and where there how lower substantially

water to consistent, that's but we're bridge give more under there And less, will a specific before more margins relatively guidance. is or where remain lot we that that so can of much directing flow

Curt Woodworth

Understood. very XX:XX Thanks much.

Operator

Please Chieng Goldman ahead. Our from question Sachs. go Emily comes with XX:XX next

Emily Chieng

for questions. taking my morning, and Paul, Barbara Good XX:XX thanks and

was around I could the that in looks but the guys an quarter the around being you is just shipments around in and past would quarter? high-single if to to maybe Because seen what for low as double-digit US overall granularity first still that one get well? were wanted it imply what double-digit you than increased like, we that comment range? up if the some could earlier still in be company third side to third lower if have low for comment sequentially we'd your for mean a sequentially, The confirm Just

Paul Lawrence

a with Barbara have past more North big will a really there’s the be that segment. I'll of see America of we'll rebound, the it But significance. in any seen Obviously But our We've majority overall overall and color. volumes both. majority represents but line still that North was the represents the increase significant in factor, what in our the this Poland, relatively consistent add it European will seasonal as Emily, America can so to increase essentially, start is be as XX:XX wasn't in volume, volumes. and quarter

Emily Chieng

there? X.X around, shifted other any the of we have items question it higher you the run think, still labor second just should incremental right how was it XX:XX of full is relates about Understood. to bill raw of impacts energy those sort rate we costs, of there? the run rebar costs to along the X.X sensitivities or with Curious infrastructure number and we've whether other rate lot and number million see a when be material demand, And as tons my given then may thinking respect tons higher the that to million cost of not I curve

Barbara Smith

XX:XX morning. Emily, good Yes. Well,

see typically to and that X.X think of in you that's is time thing there pressures know pretty the I dislocation benefit XX:XX XXXX start percentage we Russia million some it do evolves on how it's period that see the the is to market. say come place, forward. But of we is are solid than when, confident would will has seeing plan near-term to that abatement funded going for we're small a the we pretty -- that are believe bit component forward going the there XXXX anticipate view. this the time could a also of that of of these in overall infrastructure know, in most it the steel project some that's that, takes the a inflationary projects in a bill and occur and would you projects you like Ukraine. that result put others, we'll just other think and number move see in normal that's activity it and you of This I the the of I cost higher I and remind a that forecast by

Emily Chieng

Thanks, Understood. Barbara. XX:XX

Barbara Smith

XX:XX Thank you, Emily.

Operator

Timna Tanners Research. from ahead. Wolfe XX:XX The Please comes go next with question

Timna Tanners

XX:XX morning. Yes, good hey,

Barbara Smith

Good Timna. XX:XX morning,

Timna Tanners

playing who consistent somewhat your the does And do kind expect -- terms wanted like way, of prices, to sounds scrap the really pig it see the it -- it simple do it's concerned scrap are there all have your continued for of I a to that able to long is that guess is know you but the to don't happened that XX:XX -- you it in first to prices, and terms buy everyone pretty you a in have you be I buy increase inflation anything about scrambling a US. of in your question? I think could and to scrap, saying in for you pass-through ask all scramble the obsolete, follow-up I question iron, has now understood even different And that while Wanted on to to guidance. in through but where grades? but dynamic to of I you plant don't and ability pass quickly the traffic? the conservative at be Thanks. because really that in through be different seeing absolute could you in products, is just like grade historical So sounds ability the been nice pass

Barbara Smith

of you in things the to We're price But have the sensitive XX:XX key really had same already changes two scrap as in, don't to reservoir of key period in over Thank raw what I and markets. plentiful better they and I overall important in our competition are supply customers more and raw give still supply material the seeing own last Timna, that thus anything to that time. plentiful earlier, it do and and absorb in customers I'm probably, lower other make a the typically, the demand we able supply we our and have rise of crack certainly is our world and what's terms I'll a I current a the and material know, March of there difference add there the what's maybe scrap you, in complete but in side, fact the in need we're we're price, to it bit grades XX:XX Yes, in were a is but not our that probably seeing operations. that, then Yes. period utilize and concerns. as is you position as something, know, levels well, parts in indicated import license for we there Paul buy if can do

So in because have imports. I that their would actually coming less know say needs, we're that more for through us customer confidence have cover to you alternate supply in they inquiries looking

it beautiful some and other put projects here want all we've parts the construction blow the and in and that of So today is is folks these go particularly weather and and and here country. on you together that Dallas of seen season weather with to

net-net, be is an know, Now environment know going the an time be customers when really their flows there changes. understand where, you -- price material where ebbs raw and it's a you announced, XX:XX that I think see price want a the as in I future trying There'll But goes going customers as to advance when environment. -- will certainly raw sometimes think be effect it's prior purchased projects. was we So to to then changes shipment, folks we lag it's that always material is and strong there's accelerate at really to into and values. of date but the so periods lower still some also a

Timna Tanners

this export Ukraine its this market can and XX:XX follow-up Ukraine, market of if and to is also if or Okay. reflect there Russia, I about being from to market, Is follow-up capacity European tends so that that saw European I shifting the tight particularly some also US is and Turkey to for But European the tighten, you think closures the we also to talked continues? other historically is -- US to then -- if Spain. imported the on could Russia, the in has that and markets? it potential the continues, of And the material gears further second contract some absence

Barbara Smith

it EU been but haven't to they has of were reallocating quota supply in off. both language also Poland from -- quotas the supply was the in place sanctions we on going and seen other to other I XX:XX sanctions Belarus the around some in going the I to And indicated countries, to the given US, I what and was Russia certainly details the on given I most who There markets, to countries. possibility that limit operations, advantage that. Russia if the cut that the the to overall of which demand as have now countries still they was exists, to think ability under knows Belarus convey allocated of as that. And take strong trying and that relates that and so our major in Polish consider are is is and

do supply. the So further tightening see we for of potential opportunity

Timna Tanners

XX:XX Thank you.

Barbara Smith

Thank Timna. you, XX:XX

Operator

Hacking next with Our Citi. Please question ahead. XX:XX Alex from comes go

Alex Hacking

of that XX:XX still Yes, strong in or part soon volumes link US, infrastructure there the and it's seeing that can the are hey, you're The too those still for thanks. come? is to tons bill you Thanks. way that to any bid

Barbara Smith

there to by X. the to beauty is being and is timing that, perfect that normal Alex, is it's transportation we Arizona it's Now to I yet which will not increase the start that it's think XX:XX so not with infrastructure XXXX, we're transportation that. it's in startup will really of see that's but the want that the be -- existing don't demand contained that in seeing the though convey that funded We anything activity -- aren't seeing there bill on the come, is, it, of

these quite and -- So we're medium still we long-term. bullish -- despite the short, for despite volatility, the

Alex Hacking

XX:XX the And humanitarian the efforts. first thanks. me on commend then Okay, let team there on Poland,

Belarus. supply the lack Ukraine, you supply coming obviously Russia, of On from side, mentioned

in the up that a further high seeing lot put hearing about commission. some market that's out in very there? you're tightening are EIFs Is power something Europe temporarily We of costs

Barbara Smith

XX:XX It's it's inevitable, right. early Alex, so but

there were I think, prices. spike has oil prices, think driving I an some the and probably of energy been certainly in in abatement speculators

out. settles where see So we'll it

perspective, As good think covered does And many even certainty they of as have completely steel perspective that they of basis. steel energy there their any their supply operation a it are and it's that don't covered not but in I if a from are relates energy have spot partially a to supply conflict, do have we we are that's the price price a and both or covered. a on Europe purchasing mills portion -- from --

want to to advantageous upon far but to operations So you we competition we factors. lose that a an shutdowns, those not as to also curtailment that going the seen XX:XX have are of of worth a just confident lot definitely announced depend in for temporary ones of you become energy will shutdowns, have that thus output and But mills going it, economic whatever indicated that week's cost that is decision an earlier, call is Poland that tighten and our across a our at number the in relative be supply value. we energy only will supply

we but or really need factors market time. a these all out results operations to opportunity our out just believe our of strong and over So we represent all could support opportunity this us, Polish see plays how Polish for

Alex Hacking

you. Thank great. Okay, XX:XX

Barbara Smith

Alex. XX:XX Thank you,

Operator

go XX:XX ahead. comes from question with Gibbs And Phil Capital our final Please KeyBanc Markets.

Phil Gibbs

XX:XX very good much, thanks morning. Yes,

Paul Lawrence

Good XX:XX morning, Phil.

Phil Gibbs

that lot the the With to in you last does start level over I X.X XX:XX a is [indiscernible] the When net four capital, for out? know built two outlook quarters. working guys to have up

Paul Lawrence

view question forward? in towards working to Had this would that pretty was wasn't scrap level have from at March, but I for would this point. we've your been be pretty, increase our point here seen said, expect great, XX:XX the if we audio what's your Phil it capital it this not

However, further probably increase be prices scrap $XXX magnitude, will that would seen that in at we a million the in these a it rough level with to the coming the close invest increase we to quarter third substantial to if as quarters. looked costs, that higher into will of $XXX investment to ton continue close continue we've see

Phil Gibbs

Okay. XX:XX

Barbara Smith

release XX:XX slows and down, activity holidays to And the weather. as we fall construction due do a in seasonal see

his as where mean prices financial go, it's the but we but have flexibility where based in material a generally going go. our raw we to nice I in significant So upon sheet prices on additional depend raw that flip see balance on Paul capital fall, release comments, articulated working to all fund material

Phil Gibbs

portion is be investment And Okay, selection site in there then new you're again I to in that be as million. that should on XXXX you CapEx the mill growth some micro related XX:XX get this How the and around of of much the the $XXX think expecting capital? process? we year, past circling

Paul Lawrence

$XXX be over new big we that the yes, permitting new half would of XX:XX represents Phil million. of and in spend the this significantly micro for the from obviously the won't see AZ process is lift into given as It so, it enter X year investment off for mill. XXXX required will probably come mill the a heavy

So pretty it from look levels, come these XXXX substantially. as we will down to

Phil Gibbs

much. Thanks XX:XX very

Paul Lawrence

Phil. Thanks, XX:XX

Barbara Smith

Thank XX:XX you, Phil.

Operator

our XX:XX to This question-and-answer concludes like [indiscernible] over I'd turn call to now back the you. session

Barbara Smith

you investor during And day. our coming us we joining speaking will to days XX:XX with you. Thank of forward you call. today's all a Thank everyone Hope weeks. for happy calls gap] [audio in wonderful on And you have many look the conference and

Operator

Company Commercial today's concludes call. Metals This XX:XX conference

disconnect. now may You

Commercial Metals (CMC) 17 Mar 222022 Q2 Earnings call transcript