Q4 2023 Commercial Metals Company Earnings Call

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Speaker 1: Hello and welcome everyone to the fourth quarter of fiscal 2023 earnings call for CMC. Today's materials including the press release and supplemental sites 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'll have a few instructions.

Hello, and welcome everyone to the fourth quarter of fiscal 2023 earnings call for C. M C.

Today's materials, including the press release and supplemental slides that accompany this call can be found on P. M sees Investor Relations website. Today's call is being recorded after the company's remarks, we will have a an enhancer 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.

Speaker 1: 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, construction activity, demand for finished steel products, the expected capabilities, benefits, and timeline for construction of new facilities, the company's future operations, and the timeline.

Company will make statements that provide information other than historical information and will include expectations regarding economic conditions affect.

The legislation U S steel import levels construction activity demand for finished steel products do you expect the capabilities benefits and timeline for construction of new facility the company's future operations the team.

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Speaker 1: for construction of new facilities, the company's future operations, the timeline for execution of the company's growth plan, the company's future results of operations, financial measures and capital spending.

For construction of new facilities, the company's future operations the timeline for execution of the company's growth plan, the company's future results of operation financial measures and capital spending.

Speaker 1: These and other similar statements are considered forward-looking and may involve certain assumptions and speculations.

These and other similar statements are considered forward looking and may involve certain assumptions and speculation and are subject to risks and uncertainties that could cause actual results to differ materially from these expectations. These statements reflect the company's beliefs based on current conditions, but are subject to certain risks and uncertainties, including.

Speaker 1: and are subject to risks and uncertainties that could cause actual results to differ materially from these expectations.

Speaker 1: These statements reflect the company's belief based on current conditions that are subject to certain risks and uncertainties, including those that are described in the risk factors and forward-looking statement sections of the company's latest filings with the Securities and Exchange Commission.

Those that are described in the risk factors and forward looking statements section of the company's latest filings with the Securities and Exchange Commission, including the company's latest annual report on Form 10-K, and quarterly report on Form 10-Q. Although these statements are based on management's current expectations and beliefs CMC offers no.

Speaker 1: including the company's latest annual report on Form 10-K and quarterly report on Form 10-Q .

Speaker 1: Although these statements are based on management's current expectations and beliefs, CMC offers no assurance that these expectations or beliefs will prove to be correct, and actual results may differ materially.

No assurance that these expectations or beliefs will prove to be correct and actual results may differ materially.

Speaker 1: All statements are made only as of this date. Except as required by law, CMC does not assume any obligation to update, amend, or clarify these statements in connection with future events, changes in assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances, or otherwise. Some numbers presented will be non-GAAP financial measures and reconciliations for such numbers can be found in the company's earnings release.

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

And then it will be non-GAAP financial measures and reconciliations for such numbers can be found in the company's earnings release supplemental slides.

Speaker 1: presentation, or on the company's website. Unless stated otherwise, all references made to year or quarter end are references to the company's fiscal year or fiscal quarter. And now for opening remarks and introductions, I will turn the call over to the Executive Chairman of the Board of CMC, Ms. Barbara Smith.

Presentation or on the company's website unless stated otherwise all references made to year or quarter and our references to the company's fiscal year or fiscal quarter and now for opening remarks, and introductions I will turn the call over to the executive Chairman of the board of C. M C. Ms Barbara Smith.

Speaker 2: Thank you. Good morning, everyone. Thank you for attending CMC's fourth quarter earnings conference call. As we reported in our press release this morning, it was another period of historically strong financial results.

Thank you good morning, everyone. Thank you for attending Cmc's fourth quarter earnings Conference call.

We reported in our press release. This morning. It was another period of historically strong financial results I would like to thank CMT is 13000 employees, who made these results possible your hard work and focused efforts are driving our success.

Speaker 2: I would like to thank CMC's 13,000 employees who made these results possible. Your hard work and focused efforts are driving our success.

Speaker 2: I'm joined this morning's call by a CMC's president and chief executive officer Peter Matt and our senior vice president and chief financial officer Paul Lawrence.

I'm joined this morning called I see him as he is president and Chief Executive Officer, Peter Matt and our senior Vice President and Chief Financial Officer, Paul Lawrence.

Speaker 2: We will start today's discussion with comments on CMC's fiscal 2023 results and accomplishments during the year.

We will start today's discussion with comments on C&C fiscal 2023 results and accomplishments during the year.

Speaker 2: Peter will then discuss fourth quarter performance, provide commentary on current market conditions, and offer an update on CMC's Strategic Growth Project.

Peter will then discuss fourth quarter performance provide commentary on current market conditions and offer an update on CMC strategic growth projects.

Speaker 2: All will cover the fourth quarter's financial information in more detail. And Peter will conclude with our outlook for the first quarter of fiscal 2024, after which we will open the call to questions.

Paul will cover the fourth quarters financial information in more detail and Peter will conclude with our outlook for the first quarter of fiscal 'twenty 'twenty four after which we will open the call to questions.

Speaker 2: fiscal 2023 was another exceptional year for CMC, one that included record employee safety performance, historically strong financial results, and solid progress on our announced growth initiatives, including several strategic bolts on acquisition.

Fiscal 'twenty twenty-three was another exceptional year for C. N C. One that included record employee safety performance historically strong financial results and solid progress on our announced growth initiatives, including several strategic bolt on acquisitions.

Speaker 2: As you know, the company and its board of directors began implementing a CEO succession plan this year.

As you know the company and its board of directors began implementing a CEO succession plan this year.

Speaker 2: I announced my retirement as CEO in July , and our board unanimously voted to appoint Peter Matt of CMC's new chief executive. Effective.

I announced my retirement as CEO in July and our board unanimously voted to appoint Peter Matt C. M sees new Chief Executive effective September one.

Speaker 2: My fellow directors and I are extremely confident in Peter's ability to lead CMC through this next chapter. And I look forward to continuing to support the company as Executive Chairman of the Board.

My fellow directors and I are extremely confident in Peter's ability to lead the M. C. Through this next chapter and I look forward to continuing to support the company as executive Chairman of the board.

Speaker 2: Turning now to our financial results, CMC generated core evada of 1.46 billion in fiscal 2023.

Turning now to our financial results CMC generated core EBITDA of 1.46 billion in fiscal 2023.

Speaker 2: down only modestly from the record of 1.55 billion, that is fiscal 2022.

Down only modestly from the record of 1.55 billion in fiscal 'twenty to 'twenty two.

Speaker 2: Without proper context, it's easy to lose sight of just how impressive these figures are.

Without proper context, it's easy to lose sight of just how impressive this figures are.

Unknown Executive: Hello and welcome everyone to the fourth quarter of fiscal 2023 earnings call for CMC. Today's material is including the press release and supplemental sides 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'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.

Speaker 2: During each of the last two years, CMC's core EBITDA was nearly double that of any previous record year. And with more than four times higher than the average annual EBITDA during the decade prior to the completion of our strategic transformation.

During each of the last two years Cnc's core EBITDA was nearly double that of any previous record year and with more than four times higher than the average annual EBITDA during the decade prior to the completion of our strategic transformation.

Speaker 2: These remarkable results clearly demonstrate the impact of the thoughtful and decisive strategic actions we took over the last several years, which have enabled us to significantly grow our company and set up a better place for us to live.

These remarkable results clearly demonstrate the impact of the thoughtful and decisive strategic actions, we took over the last several years.

Which have enabled us to significantly grow our company.

And set us on a path for continued success.

Unknown Executive: Effects of legislation, US steel import levels, construction activity, demand for finished steel products, the expected capability benefits and timelines for construction of new facilities, the company's future operations, the timeline for construction of new facilities, the company's future operations, the timeline for execution of the company's growth plan, the company's future results of operations, financial measures and capital sending. These and other similar statements are considered forward looking and may involve certain assumptions and speculation and are subject to risks and uncertainties that could cause actual results to differ materially from these expectations.

Speaker 2: This goal 2023 strong reported net income translated into an annual return on industrial capital of 18%.

Fiscal 'twenty to 'twenty three is strong reported net income translated into an annual return on invested capital of 18%.

Speaker 2: This is well in excess of C&C's cost of capital and an unmistakable indication of the value we are creating for our shareholders.

This is well in excess of CNC its cost of capital.

And an unmistakable indication of the value, we're creating for our shareholders.

Speaker 2: of the accomplishments achieved in fiscal 2023. We are most proud of our record employee safety performance.

All of the accomplishments achieved in fiscal 2023, we are most proud of our record.

Employee safety performance.

Speaker 2: It's Sam C.'s mission that each employee leaves the work site at the end of each day in the same condition in which he or she arrives.

At CMC submission that each employee leaves the work site at the end of each day in the same condition in which he or she arrived.

Speaker 2: The NC Safety Culture of Proactive Awareness, Accountability, and Innovation continues to move us forward to our goal of zero-in.

He's safety culture of proactive awareness accountability and innovation continues to move us forward to our goal of zero incidents.

Unknown Executive: These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties, including those that are described in the risk factors and forward looking statement sections of the company's latest filings with the Securities and Exchange Commission, including the company's latest annual report on form 10K and quarterly reports on form 10Q. Although these statements are based on management's current expectations and beliefs, CMC offers no assurance that these expectations or beliefs will prove to be correct and actual results may differ materially.

Speaker 2: Last year's incident rate was tied for the lowest on record and the number of OSHA recordables declined from the prior year, despite having more employees at more sites and enduring unusually hot weather across most of our operational foot.

Last year's incident rate was tied for the lowest on record.

And the number of Osha recordable has declined from the prior year, despite having more employees at more sites and enduring in unusually hot weather across most of our operational footprint.

Speaker 2: Additionally, 114 of our facilities were incident free.

Additionally, 114 of our facilities were incident free.

Speaker 2: All we are pleased with our continued improvement, the safety mission is never complete, and we will continue to push forward toward our goals.

While we are pleased with our continued improvement the safety mission is never complete and we will continue to push forward toward our goals.

Unknown Executive: All statements are made only as of this date. Excessors required by law, CMC does not assume any obligation to update a mend or clarify these statements in connection with future events, changes in assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise. Some numbers presented will be non-gap financial measures and reconciliation for such numbers can be found in the company's earnings relief supplemental slides presentation or on the company's website unless stated otherwise all references made to year or quarter end are references to the company's fiscal year or fiscal quarter.

Speaker 2: The ANC continued to make solid progress on our strategic growth initiatives during fiscal 2023.

And so you continue to make solid progress on our strategic growth initiatives during fiscal 2023 Peter.

Speaker 2: The heater will provide more details in his remarks, but at a high level, this includes the operational startup of Arizona too, continued growth in Tensar's EBITDA contribution, and the execution of several strategic bolt-on acquisition.

Peter will provide more details in his remarks, but at a high level. This includes the operational startup of Arizona to continued growth in terms of EBITDA contribution.

The execution of several strategic bolt on acquisitions.

Speaker 2: As I enter my retirement and evaluate CMC today, I could not be more pleased with where we stand.

As I enter my retirement and evaluate C. M. C. Today I could not be more pleased with where we stand.

Speaker 2: The company has a very strong foundation, comprising of an excellent culture, great employees, leading market positions, a compelling growth strategy, and a balance sheet that provides tremendous confidence and flexibility.

The company has a very strong foundation comprising of an excellent culture, great employees, leading market positions.

Barbara Smith: And now for opening remarks and introductions, I will turn your call over to the executive chairman of the board of CMC Ms. Barbara Smith. Thank you. Good morning, everyone. Thank you for attending CMC's fourth quarter earnings conference call. As we reported in our press release this morning, it was another period of historically strong financial results. I would like to thank CMC's 13,000 employees who made these results possible. Your hard work and focused efforts are driving our success.

Telling growth strategy and a balance sheet that provides tremendous confidence and flexibility.

Speaker 2: I know with Peter's leadership and the support of all 13,000 employees, the future of CMC is as bright as it's ever been.

I know with Peter's leadership, and the support of all 13000 employees the future of CMC is as bright as it's ever been.

Speaker 2: Before I turn the call over to Peter, I would like to express my deep gratitude to the many people on this call that have shown me so much support over the years. It's been my privilege to work with you and to call many of you my friends.

Before I turn the call over to Peter I would like to express my deep gratitude to the many people on this call that have shown me so much support over the years, it's been my privilege to work with you and to call. Many of you My friends Peter.

Barbara Smith: I'm joined this morning's call by a CMC's president and chief executive officer Peter Matt and our senior vice president and chief financial officer Paul Lawrence. We will start today's discussion with comments on CMC's fiscal 2023 results and accomplishments during the year.

Peter over to you.

Speaker 3: Thank you Barbara, it's an honor to take the helm of a company you so masterfully led for much of the last decade. And good morning to you.

Thank you Barbara it's an honor to take the helm of a company. So masterfully led for much of the last decade, and good morning to everyone on the call.

Speaker 3: TMC's fourth quarter financial results were among the strongest in our company's history, though down slightly from recent record levels.

Pmt's fourth quarter financial results were among the strongest in our company's history, though down slightly from recent record levels CMC generated net earnings of $184 2 million or $1 56 per diluted share.

Barbara Smith: Peter will then discuss fourth quarter performance, provide commentary on current market conditions, and offer an update on CMC strategic growth projects. Paul will cover the fourth quarter's financial information in more detail, and Peter will conclude with our outlook for the first quarter of fiscal 2024, after which we will open the call to questions.

Speaker 3: CMC generated net earnings of 184.2 million or $1.56 for a diluted share on net sales of 2.2 billion.

Net sales of $2 2 billion.

Speaker 3: including the impact of non-operational items which Paul will cover in detail adjusted earnings worth 200 million or $1.69 per dilute.

Excluding the impact of non operational items, which Paul will cover in detail adjusted earnings were 200 million or $1 69 per diluted share.

Barbara Smith: Fiscal 2023 was an another exceptional year for CMC, one that included record employee safety performance, historically strong financial results, and solid progress on our announced growth initiatives, including several strategic bolts on acquisitions. As you know, the company and its board of directors began implementing a CEO succession plan this year. I announced my retirement as CEO in July, and our board unanimously voted to appoint Peter Matt as CMC's new chief executive, effective September 1st.

Speaker 3: CMC generated confolidated quarry but docked for the quarter of 340 million, producing an annualized return on invested capital of 15.2%.

M C generated consolidated core EBITDA for the quarter of $340 million producing an annualized return on invested capital of 13, 2%.

Speaker 3: Once again, our North American Segment demonstrated remarkable resilience posting its 11th consecutive quarter of year over year of Justice EBITDA growth, excluding the gain on the sale of land recognized during the second quarter of fiscal-

Once again, our North American segment demonstrated remarkable resilience posting its 11th consecutive quarter of year over year adjusted EBITDA growth, excluding the gain on the sale of land recognized during the second quarter of fiscal 'twenty two.

Speaker 3: Even more impressive excluding the land cell, our North American segment has increased deep at the on a year over your basis in 21 of the last 22 courses.

Even more impressive excluding the landfill our north American segment has increased EBITDA on a year over year basis, and 21 of the last 22 quarters.

Speaker 3: Turning now to CMC's markets in North America, rebar shipments remained held.

Barbara Smith: My fellow directors and I are extremely confident in Peter's ability to lead CMC through this next chapter, and I look forward to continuing to support the company as executive chairman of the board. Turning now to our financial results, CMC generated core evida of 1.46 billion in fiscal 2023, down only modestly from the record of 1.55 billion set in fiscal 2022. Without proper context, it's easy to lose sight of just how impressive these figures are.

Turning now to Cmc's markets in North America.

Rebar shipments remain healthy.

Speaker 3: during the fourth quarter and total finished steel volumes increased on a year over year base.

During the fourth quarter and total finished steel volumes increased on a year over year basis.

Speaker 3: activity levels across our geographies and into our various customer groups were consistent with the prior quarter Overall the seasonal volume pattern was very known

Activity levels across our geographies and <unk>.

Into our various customer groups were consistent with the prior quarter overall, the seasonal volume pattern was very normal.

Speaker 3: The data we track indicates that annualized rebar consumption remained between 9.9 and 9.5 million tons during third and fourth quarters. This level is consistent with the rate that has prevailed since early calendar 2021.

The data we track that.

Annualized the data we track indicates that annualized rebar consumption remained between nine and nine 5 million tonnes. During the third and fourth quarters. This level is consistent with the rate that has prevailed since early calendar 2021.

Barbara Smith: During each of the last two years, CMC's core evida was nearly double that of any previous record year. And with more than four times higher than the average annual evida during the decade prior to the completion of our strategic transformation, these remarkable results clearly demonstrate the impact of the thoughtful and decisive strategic actions we took over the last several years, which have enabled us to significantly grow our company and set us on a path for continued success, fiscal 2023's strong reported net income translated into an annual return on investor capital of 18%. This is well in excess of CMC's cost of capital and an unmistakable indication of the value we are creating for our shareholders.

Speaker 3: which is a 5% to 10% increase compared to the pre-pendemic average.

As a 5% to 10% increase compared to the pre pandemic average.

Speaker 3: Strong pricing and demand conditions for domestic rebar have started to diverge from the weaker global environment. And growth within the U.S. construction sector similarly stands in contrast to most other global

Strong pricing and demand conditions for domestic rebar have started to diverge from the weaker global environment and growth within the U S. Construction sector. Similarly stands in contrast to most other global regions. This robust relative demand has attracted rebar imports from non traditional suppliers.

Speaker 3: This robust relative demand has attracted rebar imports from non-traditional suppliers, with put pressure on domestic pricing in recent.

We have put pressure on domestic pricing in recent months. Despite these more challenging conditions, we expect cmc's North American business to continue generating margins well in excess of historical average levels, but down from the record highs of recent quarters.

Speaker 3: Despite these more challenging conditions, we expect CMC's North American business to continue generating margins well in excess of historical average levels, but down from the record highs of recent quarter.

Speaker 3: Turning to key forward indicators, CMC's new downstream bid volumes continue to grow by a solid double digit percentage during the fourth quarter, signaling a large and expanding pipeline of potential future construction projects.

Barbara Smith: Of the accomplishments achieved in fiscal 2023, we are most proud of our record employee safety performance. It's CMC's mission that each employee leaves the work site at the end of each day in the same condition in which he or she arrived. CMC's safety culture of proactive awareness, accountability, and innovation continues to move us forward to our goal of zero incidence. Last year's incident rate was tied for the lowest on record and the number of OSHA recordables declined from the prior year despite having more employees at more sites and enduring unusually hot weather across most of our operational footprint. Additionally, 114 of our facilities were incident free.

Turning to key forward indicators cmc's, new downstream bid volumes continued to grow by a solid double digit percentage during the fourth quarter signaling a large and expanding pipeline of potential future construction projects.

Speaker 3: Our internal view is directionally consistent with the Dodge Momentum Index, which measures the value of non-residential projects entering the planning phase, and tends to lead on the ground activity by approximately 12 months.

Our internal view is directionally consistent with the Dodge momentum index, which measures the value of nonresidential projects entering the planning phase and tends to lead on the ground activity by approximately 12 months.

Speaker 3: Index registered an average year-over-year increase of 15% during the three months of CMC's fiscal fourth quarter, with both institutional and commercial components improving from the prior year.

Index registered an average year over year increase of 15% during the three months of Cmc's fiscal fourth quarter with both institutional and commercial components improving from the prior year.

Speaker 3: While bid levels indicate an attractive future pipeline, we have experienced a slowdown in the rate at which contracts are awarded, which in turn has caused some reduction to the volume and the value of CMC's downstream backlog. Compared to the prior year, our quarter end backlog value declined by 8%.

While bid levels indicate an attractive future pipeline, we have experienced a slowdown in the rate at which contracts are awarded which in turn has caused some reduction to the volume and the value of cmc's downstream backlog.

Barbara Smith: All we are pleased with our continued improvement, the safety mission is never complete and we will continue to push forward toward our goals.

Barbara Smith: The DNC continued to make solid progress on our strategic growth initiatives during fiscal 2023. Peter will provide more details in his remarks, but at a high level, this includes the operational start-up of Arizona too, continued growth in Tensar's EBITDA contribution. And the execution of several strategic bolt-on acquisitions.

Compared to the prior year, our quarter end backlog value declined by 8%.

Speaker 3: Based on our observations and conversations with customers, we believe there are a couple of factors driving the slow pace of project awards. The first is tightness in the market for construction labor, particularly specialty trades that continues to constrain project schedule.

Based on our observations and conversations with customers. We believe there are a couple of factors driving the slowed pace of project awards. The first is tightness in the market for construction labor, particularly specialty trades that continues to constrain project scheduling.

Barbara Smith: As I enter my retirement and evaluate CMC today, I could not be more pleased with where we stand. The company has a very strong foundation, comprising of an excellent culture, great employees, leading market positions, a compelling growth strategy, and a balance sheet that provides tremendous confidence and flexibility. I know with Peter's leadership and the support of all 13,000 employees, the future of CMC is as bright as it's ever been.

Speaker 3: Rather than incur construction delays driven by a lack of labor of alibility, some owners may choose to wait to award and construct a project.

Rather than incur construction delays driven by a lack of labor availability. Some owners may choose to wait to award and construct the project <unk>.

Speaker 3: CMC and several other construction suppliers have discussed this dynamic in the past, and we believe it is likely to extend the duration of the current cycle.

CMC and several other construction suppliers have discussed this dynamic in the past and we believe it is likely to extend the duration of the current cycle.

Speaker 3: Second factor is a tighter credit market for many types of commercial projects. Current lending conditions do not preclude projects from obtaining financing, but the economic hurdles are higher. This dynamic also lengthens the amount of time between project bidding and awards.

Second factor is tighter and tighter credit market for many types of commercial projects current lending conditions do not preclude projects from obtaining financing, but the higher but the economic hurdles are higher. This dynamic also lengthens the amount of time between project bidding and award.

Barbara Smith: Before I turn the call over to Peter, I would like to express my deep gratitude to the many people on this call that have shown me so much support over the years. It's been my privilege to work with you and to call many of you my friends.

Speaker 3: Given the backlog contraction discussed, volumes of downstream products are likely to decline modestly on a year-over-year basis during the next couple of quarters. All that said, our downstream backlog remains at historically high levels and should continue to support healthy shipment levels going forward.

Given the backlog contraction discussed volumes of downstream products are likely to decline modestly on a year over year basis. During the next couple of quarters. All of that said our downstream backlog remains at historically high levels and should continue to support healthy shipment levels.

Peter Matt: Peter, over to you. Thank you Barbara.

Peter Matt: It's an honor to take the helm of a company you so masterfully led for much of the last decade, and good morning to everyone on the call. CMC's fourth quarter financial results were among the strongest in our company's history, though down slightly from recent record levels. CMC generated net earnings of 184.2 million or $1.56 per diluted share on net sales of 2.2 billion, including the impacts of non-operational items which Paul will cover in detail, adjusted earnings worth 200 million or $1.69 per diluted share.

Going forward.

Speaker 3: Looking behind the army's near-term dynamics, we remained very confident in the long-term outlook for our business, driven by powerful structural trends that are remaking much of our economy and should bolster construction activity for years to come.

Looking behind beyond these near term dynamics, we remain very confident in the long term outlook for our business driven by powerful structural trends that are remaking much of our economy and should bolster construction activity for years to come.

Speaker 3: Enormous investments have been announced with some already underway to improve our nation's transportation infrastructure, reshore vital manufacturing and upgrade the electric transmission grid to facilitate the transition to renewable energy.

Enormous investments have been announced with some already underway to improve our nation's transportation infrastructure re sure vital manufacturing and upgrade the electric transmission grid to facilitate the transition to renewable energy.

Peter Matt: CMC generated confolidated Cory Bedop for the quarter of 340 million, producing an annualized return on invested capital of 15.2%. Once again, our North American segment demonstrated remarkable resilience, posting its 11th consecutive quarter of year over year adjusted EBITDA growth, excluding the gain on the sale of land recognized during the second quarter of fiscal 22. Even more impressive, excluding the land sale, our North American segment has increased EBITDA on a year over year basis in 21 of the last 22 quarters.

Speaker 3: Each of these trends will benefit not just rebar consumption, but provide a meaningful tailwind to our tensile engineered solutions and other value added product lines as well.

Each of these trends will benefit not just rebar consumption, but provide a meaningful tailwind to our tents, our engineered solutions and other value added product lines as well.

Speaker 3: We have frequently discussed the Infrastructure Investment and Jobs Act, I-I-J-A, and its anticipated benefit to rebar demand. At run rate levels of spending, we expect I-I-J-A to add an incremental 1.5 million tons of annual consumption.

We have frequently discussed the infrastructure investment and jobs Act II J, a and its anticipated benefit to rebar demand at run rate levels of spending we expect to add an incremental one 5 million tons of annual consumption. There are clear signs that are.

Peter Matt: Turning now to CMC's markets in North America, rebar shipments remained healthy during the fourth quarter and total finished deal volumes increased on a year over year basis. Activity levels across our geographies and into our various customer groups were consistent with the prior quarter. Overall, the seasonal volume pattern was very normal. The data we track indicates that annualized rebar consumption remained between 9.5 million tons during the third and fourth quarters. This level is consistent with the rate that has prevailed since early calendar 2021, which is a 5% to 10% increase compared to the pre-pendemic average.

Speaker 3: There are clear signs that enormous amounts of work are moving through the pipeline as evidenced by data from Dodge Analytics, which tracks infrastructure projects in their pre-design.

Enormous amounts of work are moving through the pipeline as evidenced by data from Dodge analytics, which tracks infrastructure projects in.

In their pre design and design phases.

Speaker 3: According to this data, the value of early phase projects increased over 7 fold on a year-over-year basis during the three months ending in August .

According to this data the value of early phase projects increased over sevenfold on a year over year basis. During the three months ending in August once designed those projects will move to budgeting funding and letting phases. It is after the letting phase that contracts are awarded resources are scheduled.

Speaker 3: Once designed, those projects will move to budgeting, funding and letting

Speaker 3: It is after the lighting phase that contracts are awarded, resources are scheduled, and on the ground activity can be.

And on the ground activity can begin.

Speaker 3: We have already seen the value of state transportation projects awarded year-to-date through July increased by 18% compared to the prior year. According to the American Road and Transportation Builders Association, ART.

We have already seen the value of state transportation projects awarded year to date through July increased by 18% compared to the prior year. According to the American Road in Transportation Builders Association.

Peter Matt: Strong pricing and demand conditions for domestic rebar have started to diverge from the weaker global environment and growth within the US construction sector similarly stands in contrast to most other global regions. This robust relative demand has attracted rebar imports from non-traditional suppliers who have put pressure on domestic pricing in recent months. Despite these more challenging conditions, we expect CMC's North American business to continue generating margins well in excess of historical average levels but down from the record highs of recent quarters.

Speaker 3: ARTBA. This year-to-date figure represents a 43% increase from just two years ago. Also, according to the ART...

TB TBA.

This year to date figure represents a 43% increase from just two years ago also according to the E. R. T. B a total state Department of Transportation Highway budgets are set to increase by 13% in fiscal 2024, which for most.

Speaker 3: Total State Department of Transportation highway budgets are set to increase by 13% in fiscal 2024, which for most states started in July .

States started in July several states and our core Sunbelt region, our budgeting, even larger increases as an example, Texas by far Cmc's largest state by shipments recently proposed a 17% expansion to its 10 year.

Speaker 3: Several states in our course found out region are budgeting even larger increase.

Speaker 3: As an example, Texas by far CMC's largest state-by-shipments recently proposed a 17% expansion to its 10-year DOT budget.

Peter Matt: Turning to key forward indicators, CMC's new downstream bid volumes continue to grow by a solid double digit percentage during the fourth quarter, signaling a large and expanding pipeline of potential future construction projects. Our internal view is directionally consistent with the Dodge Momentum Index which measures the value of non-residential projects entering the planning phase and tends to lead on the ground activity by approximately 12 months. Index registered an average year over year increase of 15% during the three months of CMC's fiscal fourth quarter with both institutional and commercial components improving from the prior year.

O T budget.

Speaker 3: Based on these signals, we expect that by next year's construction season, the IIJA and increased state DOT budget should have a material impact on construction activity and rebar consumption.

Based on these signals, we expect that by next year's construction season, the Iia JA and increased state dot budgets should have a material impact on construction activity and rebar consumption.

Speaker 3: Apart from transportation, the announced investments in major reshoring and energy transition projects are staggering. The 52 billion chip-facts has helped drive over 315 billion of announced projects to build some micanductor fabrication plants and supporting facilities over the coming decades.

Part from transportation, the announced investments in major re shoring and energy transition projects are staggering. The 52 billion chips arc has helped drive over $315 billion of announced projects to build semiconductor fabrication plants and supporting facilities over the coming decade.

Speaker 3: These massive installations are generally constructed in multiple phases spanning several years and require unparalleled amounts of rebar.

These massive installations are generally constructed in multiple phases spanning several years and require unparalleled amounts of rebar.

Peter Matt: While bid levels indicate an attractive future pipeline, we have experienced a slowdown in the rate at which contracts are awarded, which in turn has caused some reduction to the volume and the value of CMC's downstream backlog. Compared to the prior year, our quarter end backlog value declined by 8%. Based on our observations and conversations with customers, we believe there are a couple of factors driving the slow pace of project awards. The first is tightness in the market for construction labor, particularly specialty trades that continues to constrain project scheduling.

Speaker 3: necessary structural rigidity and broad footprint also make these facilities strong candidates for tensile soil stabilization.

The necessary structural rigidity and broad footprint also make these facilities strong candidates for tenths, our soil stabilization solutions. Additionally, the scale of the semiconductor plants and their workforces attract investments from suppliers retail stores restaurants excel.

Speaker 3: Additionally, the scale of the semiconductor plants and their workforces attract investments from suppliers, retail stores, restaurants, etc. and require expenditures for local infrastructure, all of which consume...

Peter Matt: Rather than incur construction delays driven by a lack of labor availability, some owners may choose to wait to award and construct a project. CMC and several other construction suppliers have discussed this dynamic in the past, and we believe it is likely to extend the duration of the current cycle. Second factor is a tighter credit market for many types of commercial projects. Current lending conditions do not preclude projects from obtaining financing, but the economic hurdles are higher. This dynamic also lengthens the amount of time between project bidding and award. Given the backlog contraction discussed, volumes of downstream products are likely to decline modestly on a year-over-year basis during the next couple of quarters.

And require expenditures for local infrastructure, all of which consume rebar.

Speaker 3: approximately 150 billion of investments in electric vehicle and EB battery manufacturing had been announced since 2021 according to the environmental defense.

Approximately $150 billion of investments in electric vehicle and EV battery manufacturing had been announced since 2021. According to the environmental Defense Fund the.

Speaker 3: The expected spending on energy transition is similarly impressive. According to the

The expected spending on energy transition is similarly impressive.

According to the American Clean Power Association.

Speaker 3: roughly 150 billion of renewable energy projects have been announced during the 12 months ended in August with an additional 22 billion being invested in the construction of clean energy manufacturing facilities to produce utility scale batteries, wind turbines, and solar panels.

150 billion of renewable energy projects have been announced during the 12 months ended in August with an additional $22 billion being invested in the construction of clean energy manufacturing facilities to produce utility scale batteries wind turbines and solar panels. The two.

Speaker 3: The 250 billion IRA is expected to support these projects and additional energy transition and manufacturing projects in the future, which presents a significant opportunity for CM.

250 billion IRA is expected to support these projects and additional energy transition and manufacturing projects in the future, which presents a significant opportunity for CMC.

Speaker 3: Our rebar is used in the foundations and structure of the manufacturing facilities, as well as the foundations of wind turbine.

Our rebar is used in the foundations and structure of our manufacturing facilities as well as the foundations of wind turbines tenths or engineered solutions are used extensively for temporary and service roads to access wind farms and solar fields. Additionally, cmc's anchor cage business.

Peter Matt: All that said, our downstream backlog remains at historically high levels and should continue to support healthy shipment levels going forward. Looking beyond these near-term dynamics, we remain very confident in the long-term outlook for our business, driven by powerful structural trends that are re-making much of our economy and should bolster construction activity for years to come. Enormous investments have been announced with some already underway to improve our nation's transportation infrastructure, reshore vital manufacturing and upgrade the electric transmission grid to facilitate the transition to renewable energy.

Speaker 3: 10-thousand engineered solutions are used extensively for temporary and service roads to access wind farms and solar fields.

Speaker 3: Additionally, CMC's anchor cage business, which was acquired through our purchase of EdSco, provides foundation support to the transmission lines that will carry electricity from new energy products projects to the grid.

Which was acquired through our purchase events go provides foundation support to the transmission lines that will carry electricity from new energy product projects to the grid taken together the construction activity required to upgrade our nation's infrastructure harden critical supply chains and <unk>.

Speaker 3: Taken together, the construction activity required to upgrade our nation's infrastructure, hard and critical supply chains, and transition to greener energy is expected to provide a meaningful tailwind to CMC's North America operation for years to come. I'll now turn to Europe .

Transition to greener energy is expected to provide a meaningful tailwind to Cmc's North America operation for years to come.

Peter Matt: Each of these trends will benefit not just rebar consumption, but provide a meaningful tailwind to our tensile engineered solutions and other value-added product lines as well. We have frequently discussed the Infrastructure Investment and Jobs Act, IIGA, and its anticipated benefit to rebar demand. At run rate levels of spending, we expect IIGA to add an incremental 1.5 million tons of annual consumption. There are clear signs that enormous amounts of work are moving through the pipeline, as evidenced by data from Dodge Analytics, which tracks infrastructure projects in their pre-design and design phases.

I'll now turn to Europe .

We're condition where market conditions are challenging.

Speaker 3: Swagged demand and excess of oil have combined to put pressure on pricing and compressed merge.

Sluggish demand and excess supply have combined to put pressure on pricing and compressed margins general economic uncertainty continues to negatively impact sentiment and activity levels across our key end markets. Additionally, high interest rates. Despite recent central bank easing remain an overhang.

Speaker 3: General economic uncertainty continues to negatively impact sentiment and activity levels across our key end markets. Additionally, high interest rates, despite recent central bank easing, remain in overhang to the Polish residential construction sector.

Hang on to the Polish residential construction sector.

Speaker 3: We responded to the current market imbalances by reducing costs and right-tizing production and believe that others have done the same. These supply side adjustments should help stabilize the market.

Peter Matt: According to this data, the value of early phase projects increased over 7 fold on a year-over-year basis during the three months ending in August. Once designed, those projects will move to budgeting, funding, and letting phases. It is after the letting phase that contracts are awarded, resources are scheduled, and on the ground activity can begin. We have already seen the value of state transportation projects awarded year-to-date through July increased by 18 percent compared to the prior year according to the American Road and Transportation Builders Association, ARTBA.

We responded to the current market imbalances by reducing costs and right sizing production and believe that others have done the same these supply side adjustments should help stabilize the market.

Speaker 3: The environment in Europe is currently difficult, but will normalize. We remain committed to our strategic presence in Poland, which greatly outerns its cost of capital over the course of an economic cycle, and provides CMC with valuable optionality for the

The environment in Europe is currently difficult, but will normalize we remain committed to our strategic presence in Poland, which greatly out earns its cost of capital over the course of an economic cycle and provide CMC with valuable.

Optionality for the future, we have an exceptional team in Poland as well as best in class cost structure that ensures our long term competitiveness.

Speaker 3: We have an exceptional team in Poland, as well as best in class cost structure, that ensures our long-term competitors.

Speaker 3: As noted in our press release, CMC's first quarter results are expected to benefit from two large rebates totaling 60 million, which we will discuss more fully during our outlook commenter.

As noted in our press release Cmc's first quarter results are expected to benefit from two large rebates totaling $60 million, which we will discuss more fully during our outlook commentary.

Peter Matt: This year-to-date figure represents a 43 percent increase from just two years ago. Also, according to the ARTBA, total state department of transportation highway budgets are set to increase by 13 percent in fiscal 2024, which for most states started in July. Several states in our course found out region are budgeting even larger increases. As an example, Texas, by far CMC's largest state-by-shipments, recently proposed a 17 percent expansion to its 10-year DOT budget.

Speaker 3: Before turning the call over to Paul, I would like to provide an update on CMC's key strategic growth projects, where we have made significant progress during the quarter.

Before turning the call over to Paul I would like to provide an update on Cmc's key strategic growth projects, where we have made significant progress during the quarter.

Speaker 3: First, we successfully started operations at our new state of the art Arizona 2 micro mill. And we are now in the process of ramping up output. This is an exciting milestone and the culmination of years of effort by our team on site and support staff across the company.

First we successfully started operations at our new state of the art, Arizona, two micro mill and we are now in the process of ramping up output. This is an exciting milestone in the culmination of years of effort by our team on site.

And support staff across the company as a reminder, we are targeting 500000 tons of output at full run rate comprised of 350000 tons of rebar and 150000 tons of merchant product. Initially the mill will focus on increasing rebar production before commissioning merchant.

Speaker 3: As a reminder, we are targeting 500,000 tons of output at full-run rate comprised of 350,000 tons of rebar and 150,000 tons of merchant product.

Peter Matt: Based on these signals, we expect that by next year's construction season, the IIJA and increased state DOT budget should have a material impact on construction activity and rebar consumption. Apart from transportation, the announced investments in major reshoring and energy transition projects are staggering. The 52 billion chipback has helped drive over 315 billion of announced projects to build semiconductor fabrication plants and supporting facilities over the coming decade. These massive installations are generally constructed in multiple phases, spanning several years, and require unparalleled amounts of rebar.

Speaker 3: Initially, the mill will focus on increasing rebar production before commissioning merchant later in fiscal 2024.

Later in fiscal 2024.

Speaker 3: We anticipate fiscal 2024 production to approach 400,000 tons and expect to achieve EBITDA break even by the end of the first half of fiscal 2024.

We anticipate fiscal 2024 production to approach 400000 tons and expect to achieve EBITDA breakeven by the end of the first half of fiscal 2024.

Peter Matt: The necessary structural rigidity and broad footprint also make these facilities strong candidates for tensile soil stabilization solutions. Additionally, the scale of the semiconductor plants and their workforces attract investments from suppliers, retail stores, restaurants, etc., and require expenditures for local infrastructure, all of which consume rebar.

Speaker 3: Beyond steel, we made meaningful progress on our 10th hour platform. The division achieved its highest quarterly EBITDA to date, driven by strong customer adoption of its latest proprietary offering interacts. The new product is being recognized by customers for delivering strong value by reducing construction time, lowering project costs, and increasing asset life.

<unk> steel, we made meaningful progress on our 10th of our platform. The division achieved its highest quarterly EBITDA to date driven by strong customer adoption of its latest proprietary offering interacts the new product is being recognized by customers for delivering strong value by reducing construction.

<unk> time, lowering project costs and increasing asset life.

Speaker 3: Our financial performance is also benefiting from improved manufacturing performance and the integration of the recently acquired GeoGrid production line in Oklahoma.

Our financial performance is also benefiting from improved manufacturing performance and the integration of the recently acquired Geo grid production line in Oklahoma.

Speaker 3: The MC continued to expand its commercial portfolio on the fourth quarter with the acquisition of EdSco, a manufacturer of rebar anchor cages for the electrical transmission and wind trying to attract up the customer from the economy.

CMC continued to expand its commercial portfolio in the fourth quarter with the acquisition of <unk>, a manufacturer of rebar anchor cages for the electrical transmission and wind energy markets. The company is a leader in its space and poised to benefit from anticipated strong growth in U S energy.

Peter Matt: Car. Approximately 150 billion of investments in electric vehicle and EV battery manufacturing have been announced since 2021 according to the Environmental Defense Fund. The expected spending on energy transition is similarly impressive. According to the American Clean Power Association, roughly 150 billion of renewable energy projects have been announced during the 12 months ended in August with an additional 22 billion being invested in the construction of clean energy manufacturing facilities to produce utility scale batteries, wind turbines and solar panels.

Speaker 3: The company is a leader in its space and poised to benefit from anticipated strong growth in US energy markets. This transaction is an example of the type of value accretive bolt-on acquisitions we will continue to pursue, which deepened, broadened and diversified our construction reinforcement offering to customers and enhance our margin profile.

Markets. This transaction is an example of the type of value accretive bolt on acquisitions, we will continue to pursue which deepen broaden and diversify our construction reinforcement offering to customers and enhance our margin profile.

Speaker 3: In addition, we conducted the groundbreaking ceremony at Stil West Virginia earlier this summer. Our operations and leadership teams are on-site and early construction activity is now underway.

In addition, we conducted the groundbreaking ceremony at steel West Virginia earlier this summer.

Our operations and leadership teams are on site and early construction activity is now underway.

Peter Matt: The 250 billion IRA is expected to support these projects and additional energy transition and manufacturing projects in the future, which presents a significant opportunity for CMC. Our rebar is used in the foundations and structure of the manufacturing facilities, as well as the foundations of wind turbines. Ten thousand engineered solutions are used extensively for temporary and service roads to access wind farms and solar fields. Additionally, CMC's anchor cage business, which was acquired through our purchase of ESCO, provides foundation support to the transmission lines that will carry electricity from new energy projects to the grid. Taken together, the construction activity required to upgrade our nation's infrastructure, hard and critical supply chains and transition to greener energy is expected to provide a meaningful tailwind to CMC's North America operation for years to come.

Speaker 3: One final note, earlier this month, CMC announced a refresh brand and logo to better reflect our strategic direction. Commercial metals company now...

One final note earlier this month, CMC announced a refreshed brand and logo to better reflect our strategic direction commercial metals company now has become <unk>.

Speaker 3: CMC, a name that both ties our organization to its strong legacy and broadens its horizon beyond metals to include an expanded array of an engineered solution.

<unk> a name that both lot ties our organization towards strong legacy and broadens its horizon beyond metals to include an expanded array of engineered solutions CMC strives to become the clear leader in early phase construction solutions, which requires offering are.

Speaker 3: CMC strives to become the clear leader in early phase construction solutions, which requires offering our customers value options across a number of platforms and materials. The company's new brand reflects who we are today and our broader aspirations for the future.

Customers value options across a number of platforms and materials.

Companys New brand reflects who we are today and our broader aspirations for the future with that I will now turn the call over to Paul to provide more detail on our financial results. Paul. Thank you Peter and good morning to everyone on the call.

Speaker 4: With that, I will now turn the call over to Paul to provide more detail on our financial results. Paul, thank you, Peter, and good morning to everyone on the call.

Speaker 4: As noted earlier, we reported fiscal fourth quarter 2023 net earnings of $184.2 million or $1.56 per diluted share compared to prior year levels of $288.6 million in $2.40 In four days through $8.6 million kadar leak and PL??rate

As noted earlier, we reported fiscal fourth quarter 2023, net earnings of $184 2 million or $1 56 per diluted share compared to prior year levels of $288 6 million and $2 40, respectively.

Peter Matt: I'll now turn to Europe where market conditions are challenging. Sluggish demand and excess supply have combined pressure on pricing and compressed margins. General economic uncertainty continues to negatively impact sentiment and activity levels across our key end markets. Additionally, high interest rates, despite recent central bank easing, remain and overhang to the Polish residential construction sector. We responded to the current market imbalances by reducing costs and right-tizing production and believe that others have done the same. These supply side adjustments should help stabilize the market. The environment in Europe is currently difficult, but will normalize.

Speaker 4: Deltz's quarter include net after-tax charges of 15.7 million related to the ongoing commissioning efforts of Arizona to and the impairment of a downstream app.

Adults. This quarter included net after tax charges of $15 7 million related to the ongoing commissioning efforts of Arizona too and the impairment of a downstream asset.

Speaker 4: Including these items, adjusted earnings were $199.9 million for $1.69 per diluted chair in comparison to adjusted earnings of $294.9 million or $2.45 cents per diluted chair during the prior year period.

Excluding these items adjusted earnings were $199 9 million or $1 69 per diluted share in comparison to adjusted earnings of $294 9 million or $2 45.

<unk> per diluted share during the prior year period.

Speaker 4: Forri, but though, was $340 million for the fourth quarter of 2023, representing a decline from the $419 million generated during the prior year period, but still among the five most profitable quarters in CMC history.

Core EBITDA was $340 million for the fourth quarter of 2023, representing a decline from the $419 million generated during the prior year period, but still among the five most profitable quarters in CMC history.

Peter Matt: We remain committed to our strategic presence in Poland, which greatly outerns its cost of capital over the course of an economic cycle and provides CMC with valuable optionality for the future. We have an exceptional team in Poland as well as best-in-class cost structure that ensures our long-term competitiveness. As noted in our press release, CMC's first quarter results are expected to benefit from two large rebates totaling 60 million, which we will discuss more fully during our outlook commentary.

Speaker 4: Slide 13 of the supplemental presentation illustrates the year-to-year changes in CMC's quarterly results.

Slide 13 of the supplemental presentation.

Illustrates the year to year changes in Cmc's quarterly results are.

Speaker 4: North America segment achieved earnings growth. While Europe experienced a significant reduction from the strong results posted in the prior year quarter.

Our North America segment achieved earnings growth, while Europe experienced a significant reduction from the strong results posted in the prior year quarter.

Speaker 4: Solidated Corey Vida, per ton of finished steel, with $221.

Solid added core EBITDA per ton of finished steel was $221.

Speaker 4: remained well above historical levels and compared to $269 per ton a year ago.

Peter Matt: Before turning the call over to Paul, I would like to provide an update on CMC's key strategic growth projects where we have made significant progress during the quarter. First, we successfully started operations at our new state-of-the-art Arizona two-micromil, and we are now in the process of ramping up output. This is an exciting milestone and the culmination of years of effort by our team on-site and support staff across the company. As a reminder, we are targeting 500,000 tons of output at full-run rate comprised of 350,000 tons of rebar and 150,000 tons of merchant product.

Which remained well above historical levels and compared to $269 per ton a year ago.

Speaker 4: CMC's North American segment generated a justity that does $375.3 million for the quarter, equal to $327 per ton of finished steel ship.

AMC is north American segment generated adjusted EBITDA of $375 3 million for the quarter equal to $327 per ton of finished steel shipped.

Speaker 4: Segment adjust to the improved 1% on a year over year base.

Segment, adjusted EBITDA improved 1% on a year over year basis.

Speaker 4: Increase was primarily the result of an expansion in the margin of average downstream selling price over scrap costs As well as lower control of

Increase was primarily the result of an expansion in the margin of average downstream selling price over scrap costs as.

As well as lower controllable costs per ton.

Speaker 4: Proven and controllable costs occurred despite additional expenses related to the startup of Arizona 2 and a major planned upgrade at one of our merchant farms.

Improvement in controllable costs. So occurred despite additional expenses related to the startup of Arizona, two and a major planned upgrade outage at one of our merchant bar mill.

Peter Matt: Initially, the mill will focus on increasing rebar production before commissioning merchant later in fiscal 2024. We anticipate fiscal 2024 production to approach 400,000 tons and expect to achieve EBITDA break even by the end of the first half of fiscal 2024.

Speaker 4: Turning to slide 15 of the supplemental deck, our Europe segment reported an adjusted EBITDA loss of 25.7 million for the fourth quarter of 2023.

Turning to slide 15 of the supplemental deck, our Europe segment reported an adjusted EBITDA loss of $25 7 million for the fourth quarter of 2023.

Speaker 4: compared to positive e but does 64.1 million in the prior year period.

Compared to positive EBITDA of $64 1 million in the prior year period.

Peter Matt: Beyond steel, we made meaningful progress on our 10th hour platform. The division achieved its highest quarterly EBITDA to date, driven by strong customer adoption of its latest proprietary offering, Interox. The new product is being recognized by customers for delivering strong value by reducing construction time, lowering project costs and increasing asset life. Our financial performance is also benefiting from improved manufacturing performance and the integration of the recently acquired GeoGrid production line in Oklahoma.

Speaker 4: The climb was primarily driven by lower average selling price.

Decline was primarily driven by lower average selling price.

Speaker 4: reduction in shipment volumes and higher cost for energy.

Reduction in shipment volumes and higher costs for energy.

Speaker 4: CMC's energy cost remained competitively positioned relative to the broader European industry.

CMC and energies Cmc's energy costs remained competitive lead position relative to the broader European industry, but no longer provide us with the outsized advantage we enjoyed in fiscal 2022.

Speaker 4: no longer provide us with the outsized advantage we enjoyed in fiscal 2020.

Speaker 4: Europe volumes decrease 9% compared to the prior year quarter, driven by lower Polish construction activity and muted European industrial production.

Europe volumes decreased 9% compared to the prior year quarter, driven by lower Polish construction activity and muted European industrial production.

Peter Matt: The MC continued to expand its commercial portfolio on the fourth quarter with the acquisition of EDSCO, a manufacturer of rebar anchor cages for the electrical transmission and wind energy markets. The company is a leader in its space and poised to benefit from anticipated strong growth in US energy markets.

Speaker 4: Hence our generated EBITDA of 22.6 million during the fourth quarter, providing the largest earnings contribution yet as a division of CM.

Hence our generated EBITDA of $22 6 million during the fourth quarter, providing the largest earnings contribution yet as a division of CMC.

Speaker 4: Keep it up for performance. You'll did a margin of 28% up meaningfully from the prior year quarter.

EBITDA performance yielded a margin of 28% up meaningfully from the prior year quarter.

Peter Matt: This transaction is an example of the type of value accrued of bolt-on acquisitions we will continue to pursue, which deepened, broadened, and diversified our construction reinforcement offering to customers and enhance our margin profile.

Speaker 4: increased was driven by strong customer acceptance of tensar's latest proprietary geogrid solution interacts as well as improved domestic maintenance.

The increase was driven by strong customer acceptance of <unk> latest proprietary geo grid solution interact as well as improved domestic manufacturing performance.

Speaker 4: As a reminder, Tensar Performance is included within CMC's existing segment.

As a reminder, hence our performance is included within Cmc's existing segment.

Peter Matt: In addition, we conducted the groundbreaking ceremony at Stil West, Virginia, earlier this summer. Our operations and leadership teams are on-site and early construction activity is now underway.

Speaker 4: of the 22.4 million in EBITDA, 18.2 million was included within CMC's North American segment. While the remaining 4.4 million was reported within the Europe segment.

Of the $22 4 million and EBITDA of $18 2 million was included within Cmc's North American segment, while the remaining $4 4 million was reported within the Europe segment.

Peter Matt: One final note, earlier this month, CMC announced a refresh brand and logo to better reflect our strategic direction. Commercial metals company now has become CMC, a name that both ties our organization to its strong legacy and broadens its horizon beyond metals to include an expanded array of engineered solutions. CMC strives to become the clear leader in early phase construction solutions, which requires offering our customers value options across a number of platforms and materials. The company's new brand reflects who we are today and our broader aspirations for the future.

Speaker 4: Well, CMC's consolidated financial results were historically strong. Earnings were lower than what we had anticipated when we discussed our results in June .

While cmc's consolidated financial results for our historically strong earnings were lower than what we had anticipated when we discussed our results in June .

Speaker 4: Benshilt decline in profitability was driven by three primary facts.

Essential decline in profitability was driven by three primary factors. The first and most significant factor was a deterioration in the market environment in Europe during the quarter as I mentioned pricing and margins declined as slowing Polish construction muted European industrial activity and customer Destocking.

Speaker 4: The first and most significant factor was the deterioration of the market environment in Europe . During the quarter, as I mentioned, pricing and margins declined as slowing bullish construction, muted European industrial activity, and customer destocking measures, depressed deal consumption.

Depressed steel consumption.

Speaker 4: We responded to these conditions by reducing production by roughly 25% to right size inventory levels in lower market supply.

We responded to these conditions by reducing production by roughly 25% to right size inventory levels and lower market supply.

Paul Lawrence: With that, I will now turn the call over to Paul to provide more detail on our financial results. Paul, thank you, Peter, and good morning to everyone on the call. As noted earlier, we reported fiscal fourth quarter 2023 net earnings of $184.2 million, or $1.56 per diluted share, compared to prior year levels of $288.6 million and $2.40 respectively. Celtsis quarter include net after-tax charges of $15.7 million related to the ongoing commissioning efforts of Arizona to and the impairment of a downstream asset.

Speaker 4: We believe many other producers have made similar cutbacks to out.

We believe many other producers have made similar cutbacks to output.

Speaker 4: The second factor was the effect of an inventory cost lag at our North America.

Second factor was the effect of an inventory cost lag at our North American Mills, Although we reported very similar margins over scrap in the fourth quarter relative to the third quarter profitability was negatively impacted by selling higher cost inventory into the declining price market.

Speaker 4: Although we reported very similar margins over scrap in the fourth quarter relative to the third quarter, profitability was negatively impacted by selling higher cost inventory into the declining price mark.

Speaker 4: Those who follow CMC will appreciate this is a temporary issue that will revolve reverse once scrap costs stabilize or...

Who follow CMC will appreciate this is a temporary issue that will resolve reverse one scrap costs stabilize or increase.

Speaker 4: The last factor of note was reduced scrap flows into our recycling yards as a result of the lower scrap pricing and the hot summer we experience throughout the US.

The last factor of note was reduced scrap flows into our recycling yards as a result of the lower scrap pricing and the hot summer we experienced throughout the U S diminished.

Paul Lawrence: Including these items, adjusted earnings were $199.9 million or $1.69 per diluted share in comparison to adjusted earnings of $294.9 million or $2.45 cents per diluted share during the prior year period, for the fourth quarter of 2023, representing a decline from the 419 million generated during the prior year period, but still among the five most profitable quarters in CMC history. Why 13 of the supplemental presentations illustrates the year-to-year changes in CMC's quarterly results.

Speaker 4: The finished volumes have the effect of reducing fixed-coffed leverage and increasing price competition among recyclers in order to attract in-bem material.

Diminished volumes have the effect of reducing fixed costs.

Leverage and increasing price competition, among recyclers in order to attract inbound material.

Speaker 4: The view of this overhang is likely to be short lived as volumes will revamp.

We view this overhang is likely to be short lived as volumes will rebound.

Speaker 4: Turning to the balance sheet, liquidity and capital allocation.

Turning to the balance sheet liquidity and capital allocation as of August 31, cash and cash equivalents totaled $592 3 million.

Speaker 4: As of August 31st, cash and cash equivalents total $592.3 million.

Speaker 4: In addition, we add approximately 990 million of availability under our credit, term loan and accounts receivable facilities. Bring total liquidity to just under 1.6 billion.

In addition, we had approximately $990 million of availability under our credit term loan and accounts receivable facilities, bringing total liquidity to just under one 6 billion.

Speaker 4: During the quarter we generated 409 million of cash from operating activities.

During the quarter, we generated $409 million of cash from operating activities, which benefited from a working capital release of approximately $123 million.

Paul Lawrence: Our North America segment achieved earnings growth while Europe experienced a significant reduction from the strong results posted in the prior year quarter. Solidated Cory Beddapurtona finished steel with $221, which remained well above historical levels and compared to $269 per ton a year ago. CMC's North American segment generated adjusted EBITDA of $375.3 million for the quarter, equal to $327 per ton of finished steel shipped. Segment adjusted EBITDA improved 1% on a year-over-year basis.

Speaker 4: benefited from a working capital release of approximately 123 million.

Speaker 4: Re-cash flow amounted to 242.5 million defined as our cash from operations less than 166.9 million of capital expenses.

Free cash flow amounted to $242 5 million defined as our cash from operations less the $166 9 million of capital expenditures.

Speaker 4: This goal 2023 cash flow from operations of 1.3 billion set a new record and was nearly double the prior year level.

Fiscal 2023 cash flow from operations of $1 3 billion set a new record and was nearly double the prior year level.

Speaker 4: Strong performance was driven by solid earnings and a working capital release of roughly 149 million.

The strong performance was driven by solid earnings and a working capital release of roughly $149 million.

Speaker 4: 3 cash flows of 737.4 million was also a record for CM.

Free cash flows of $737 4 million was also a record for CMC.

Speaker 4: About a third of our free cash flow was allocated to strategic growth acquisition.

Paul Lawrence: Increase was primarily the result of an expansion in the margin of average downstream selling price over scrap costs, as well as lower controllable costs per ton. Provement and controllable costs occurred despite additional expenses related to the start-up of Arizona 2, and a major planned upgrade outage at one of our merchant bar mills. Turning to slide 15 of the supplemental deck, our Europe segment reported an adjusted EBITDA loss of $25.7 million for the fourth quarter of 2023, compared to positive EBITDA of $64.1 million in the prior year period.

About a third of our free cash flow was allocated to strategic growth acquisitions, a quarter was distributed to shareholders in the form of dividends and share repurchases and the remainder was used to repay the senior notes that matured in 2023.

Speaker 4: order was distributed to shareholders in the form of dividends and share repurchase.

Speaker 4: And the remainder was used to repay the senior notes that matured in 2023.

Speaker 4: We are pleased with our current debt levels and maturity profile and expect future capital allocations to have a prioritization towards growth and shareholder distribution.

We are pleased with our current debt levels and maturity profile and expect future capital allocations to have a prioritization towards growth and shareholder distributions.

Speaker 4: As I alluded to, our leverage metrics remain attractive and have improved significantly over the last several fiscal years.

As I alluded to our leverage metrics remain attractive and if have improved significantly over the last several fiscal years.

Speaker 4: As can be seen on slide 19, our net debt to EBITDA ratio now sits at point four times.

As can be seen on slide 19, our net debt to EBITDA ratio now sits at four times.

Paul Lawrence: The client was primarily driven by lower average selling price, a reduction in shipment volumes, and higher costs for energy. CMC's energy cost remained competitively positioned relative to the broader European industry, but no longer provide us with the outsized advantage we enjoyed in fiscal 2022. Europe volumes decreased 9% compared to the prior year quarter, driven by lower Polish construction activity and muted European industrial production. Hence our generated EBITDA of $22.6 million during the fourth quarter, providing the largest earnings contribution yet as a division of CMC.

Speaker 4: We believe our robust balance sheet, an overall financial strength, provides us great flexibility to finance our strategic growth, organic growth projects, and pursue opportunistic M&A while continuing to return cash to shareholders.

We believe our robust balance sheet and overall financial strength provide us great flexibility to finance, our strategic growth organic growth projects and pursue opportunistic M&A, while continuing to return cash to shareholders.

Speaker 4: CMC's effective tax rate was 22.6% in the fourth quarter. And looking ahead to the first quarter of 2024, we expect an effective tax rate between 24 and 25%.

<unk> effective tax rate was 22, 6% in the fourth quarter and looking ahead to the first quarter of 2024, we expect an effective tax rate between 24 and 25%.

Speaker 4: Turning to CMC's fiscal 2024 capital spending outlook. We expected that between 550 and 600.

Turning to Cmc's fiscal 2024 capital spending outlook, we expect to invest.

Between 550 and $600 million in total outs.

Speaker 4: Outside of normal sustaining investments, expenditures in fiscal 2024 include substantial capital dollars for the construction of Steele West Virginia.

Outside of normal sustaining investments expenditures in fiscal 2024 includes substantial capital dollars for the construction of steel West Virginia.

Paul Lawrence: EBITDA performance yielded a margin of 28% up meaningfully from the prior year quarter. The increase was driven by strong customer acceptance of tensar's latest proprietary geo-grid solution interacts as well as improved domestic manufacturing performance. As a reminder, tensar performance is included within CMC's existing segments of the 22.4 million in EBITDA, 18.2 million was included within CMC's North American segment, while the remaining 4.4 million was reported within the Europe segment. While CMC's consolidated financial results were historically strong, earnings were lower than what we had anticipated when we discussed our results in June.

Speaker 4: DMC continues to deploy capital to support growth plans and reinforce our core operations.

AMC continues to deploy capital to support growth plans and reinforce our core operations.

Speaker 4: During the year, we invested 234.7 million for strategic bolt-on acquisitions, which expanded our commercial portfolio and value proposition to cut.

During the year, we invested $234 7 million for strategic bolt on acquisitions, which expanded our commercial portfolio and value proposition to customers as well as increasing our internal captive scrap capabilities in certain key geographies.

Speaker 4: as well as increasing our internal captives scrap capabilities in certain key jogs.

Speaker 4: Lastly, CMC purchased 352,000 shares during the fiscal fourth quarter and average price of $52.75 per share.

Lastly, CMC purchased 352000 shares during the fiscal fourth quarter at an average price of $52 75 per share.

Speaker 4: Transactions since the initiation of the buyback program through Q4 have amounted to approximately 263 million, leaving 87 million remaining under this authorization.

Transactions since the initiation of the buyback program through Q4 amounted to approximately $263 million, leaving $87 million remaining under this authorization.

Paul Lawrence: The potential decline in profitability was driven by three primary factors. The first in most significant factor was the deterioration of the market environment in Europe. During the quarter, as I mentioned, pricing and margins declined as slowing bullish construction, muted European industrial activity, and customer destocking measures, depressed deal consumption. We responded to these conditions by reducing production by roughly 25% to right size inventory levels in lower market supply. We believe many other producers have made similar cutbacks to output.

Speaker 4: With that, I will turn it back for Peter for Outlook, for comments on CMC's Outlook. Thank you.

With that I will turn it back for to Peter for outlook for comments on CMC as outlook.

Paul.

Speaker 3: We expect first quarter financial performance to remain strong by historical standards, but decline from the fourth quarter as a result of seasonally slower ship.

We expect first quarter financial performance to remain strong by historical standards, but declined from the fourth quarter as a result of seasonally slower shipments steel product margin compression in North America, and the continuation of challenging market conditions in Europe .

Speaker 3: field product margin compression in North America and the continuation of challenging market conditions in Europe .

Speaker 3: During the first quarter, we anticipate that our Europe operations will receive approximately 60 million from two large government rebate programs. The first is an annual CO2 credit estimated at 25 million, up from 9.5 million received last- and the first is an annual CO2 credit estimated at 25 million received last-

During the first quarter, we anticipate that our Europe operations will receive approximately $60 million from two large government rebate programs. The first is an annual Seo to credit estimated at $25 million up from $9 5 million received last year.

Paul Lawrence: Second factor was the effect of an inventory cost lag at our North American mills. Although we reported very similar margins over scrap in the fourth quarter relative to the third quarter, profitability was negatively impacted by selling higher cost inventory into the declining price market. Those who follow CMC will appreciate this is a temporary issue that will revolve reverse once scrap costs stabilize or increase. The last factor of note was reduced scrap flows into our recycling yards as a result of the lower scrap pricing and the hot summer we experience throughout the US. The diminished volumes have the effect of reducing fixed cost leverage and increasing price competition among recyclers in order to attract in bound material. We view this overhang as likely to be short-lived as volumes will rebound.

Speaker 3: Second is structured as a reimbursement by the Polish government for elevated energy costs incurred during the European energy crisis. Proceeds from this program are expected to be 35 million and are calculated based on the magnitude of energy cost inflation in calendar year 2023 relative to the 2021 base

The second is structured as a reimbursement by the Polish government for elevated energy costs incurred during the European energy crisis proceeds from this program are expected to be $35 million and are calculated based on the magnitude of energy cost inflation in calendar year 2023.

Relative to the 2021 baseline.

Speaker 3: These rebates are expected to drive a sequential improvement in Europe's segment adjusted EBITDA.

These rebates are expected to drive a sequential improvement in Europe segment adjusted EBITDA.

Speaker 3: Looking at the longer term, we remain very confident regarding the outlook for CMC in the markets we serve. The United States is in the early stages of massive investment trends that are intended to remake large portions of our economy by extensively upgrading infrastructure, re-aligning global trade patterns, and reorienting automotive production to electric vehicles, and transitioning the electricity grid to greener sources of energy.

Looking at the longer term, we remain very confident regarding the outlook for CMC and the markets we serve.

United States is in the early stages of massive investment trends that are intended to remake large portions of our economy economy by extensively upgrading infrastructure realigning global trade patterns, and Reorienting automotive production to electric vehicles and transitioning.

Paul Lawrence: Turning to the balance sheet, liquidity and capital allocation. As of August 31st, cash and cash equivalence total $592.3 million. In addition, we add approximately $990 million of availability under our credit, term loan and accounts receivable facilities bring total liquidity to just under $1.6 billion. During the quarter we generated $409 million of cash from operating activities which benefited from a working capital release of approximately $123 million. Three cash flow amounted to $242.5 million defined as our cash from operations less $166.9 million of capital expenditures, fiscal 2023 cash flow from operations of $1.3 billion set a new record and was nearly double the prior year level.

The electricity grid to greener sources of energy construction.

Speaker 3: Construction makes all this possible and we have positioned CMC to be both a primary beneficiary.

Construction makes all of this possible and we have positioned CMC to be both a primary beneficiary.

Speaker 3: of the expected growth and a key solution provider to our customers.

Of the expected growth and a key solution provider.

Speaker 3: Once again, I would like to thank our customers for their trust and confidence in CMC and to thank all the CMC employees for delivering yet another quarter of solid performance. And with that, we'll take questions, Operate.

To our customers once again I would like to thank our customers for their trust and confidence in CMC and to thank all of the CMC employees for delivering yet another quarter of solid performance and with that we'll take questions operator.

Speaker 1: Thank you. And at this time, we will now open the call to questions. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw from the question, Q, please press star then two. We ask that you limit yourself to one question and one follow-up. The first question is from Tristan Grecer of XAINBNT. Please go ahead.

Thank you and at this time, we will now open the call to questions.

Paul Lawrence: The strong performance was driven by solid earnings and a working capital release of roughly $149 million. Three cash flows of $737.4 million was also a record for CMC. About a third of our free cash flow was allocated to strategic growth acquisitions. A quarter was distributed to shareholders in the form of dividends and share repurchases and the remainder was used to repay the senior notes that matured in 2023. We are pleased with our current debt levels and maturity profile and expect future capital allocations to have a prioritization towards growth and shareholder distributions.

I ask a question you May press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then two.

I ask that you limit yourself to one question and one follow up the first question is from Tristan <unk> of Exane BNP. Please go ahead.

Speaker 5: Yes, hi, good morning and thank you for taking my question.

Yes, hi, good morning, and thank you for taking my questions.

Speaker 5: The first one is on the Q1 guidance. I wanted to ask you a little bit more about the moving pieces there. If I look at Rebar Metal Spread in the US, they fall in about $100 in Q3. Is that the level of metal spread compression you expect to be reflected in Q1, or is it something closer to $50, maybe? Also in terms of timing, given the short lag for Rebars, is it fair to assume that most of the

The first one is on the Q1 guidance.

I wanted to ask you a little bit more about the moving pieces there.

If I look at spot rebar metal spread in the U S stay full and about $100. In Q3 is that the level of metal spread compression you expect to be reflected in Q1 or is it something closer to $50 a ton maybe.

Paul Lawrence: As I alluded to our leverage metrics remain attractive and have improved significantly over the last several fiscal years. As can be seen on slide 19 our net debt to ratio now sits at 0.4 times. We believe our robust balance sheet and overall financial strength provide us great flexibility to finance our strategic growth, organic growth projects and pursue opportunistic M&A while continuing to return cash to shareholders. CMC's effective tax rate was 22.6% in the fourth quarter, and looking ahead to the first quarter of 2024, we expect an effective tax rate between 24 and 25%.

Also in terms of timing given the short lag for revised is it fair to assume that most of the weakness we've seen in rebar metal spread will fully to that Q1. Thank you.

Speaker 5: Weakness we see in rebar metas spread will flow into that Q1. Thank you. That's my first question.

That's my first question.

Speaker 3: I think just in terms of the metal spread compression, the number that you're citing seems high to us. And in terms of timing, what we expect is that you will see it, you will see the impact flow into Q1.

Yes, I think I think just in terms of the metal spread compression.

The number that you're citing is seems high to us.

And in terms of timing what we expect is that you will see you will see the impact flow into Q1 as you indicated.

Speaker 5: All right, that's really helpful.

Alright.

That's really helpful.

Speaker 5: So I guess my follow up is I'm having a little bit of hard time getting to a lower dead that quarter on quarter if I get, you know, a metal spread compression there is some more stability on the fat business.

So I guess my follow up is I'm, having a little bit of hard time getting to a lower quarter on quarter, if I get a.

Paul Lawrence: Turning to CMC's fiscal 2024 capital spending outlook, we expect investments between 550 and 600 million in total. Outside of normal sustaining investments, expenditures in fiscal 2024 include substantial capital dollars for the construction of Steele West Virginia. CMC continues to deploy capital to support growth plans and reinforce our core operations. During the year, we invested 234.7 million for strategic bolt-on acquisitions which expanded our commercial portfolio and value proposition to customers as well as increasing our internal captive scrap capabilities and certain key geographies.

Metal spread compression there is some more stability on the fab business.

Speaker 5: And you know, the 60 million uplist on Europe , I get something close to something yeah, basically stable quarter and quarter. So I'm just gonna ask, what kind of volume decline do you expect in North America, Europe in Q1? And also without the 60 million uplist in Europe , would you have seen underlying margins decrease further?

And.

60 million uplift on Europe , I guess, something close to something basically stable quarter on quarter. So.

I'm, just going to ask but what what kind of volume decline do you expect North America Europe being in Q1 and also we doubt.

Without this $60 million uplift in Europe would you have seen underlying margins decreased further.

Speaker 3: So in terms of the volume decline in North America, we expect there to be kind of normal seasonality. So we're talking about, you know, up to a 10% change. And I think what you should assume in Poland is that absent these rebates.

So in terms of the volume decline in North America, we expect there to be kind of normal seasonality. So we're talking about up to a 10% change.

Paul Lawrence: Lastly, CMC purchased 352,000 shares during the fiscal fourth quarter at an average price of $52.75 per share. Transactions since the initiation of the buyback program through Q4 have amounted to approximately 263 million, leaving 87 million remaining under this authorization.

And I think what you should assume in Poland is that absent. This these rebates Q1 looks a lot like Q4.

Speaker 3: Q1 looks a lot like Q4. So we're not calling for a meaningful recovery in Poland in Q1.

So we're not calling for a a meaningful.

Recovery in Poland in Q1.

Peter Matt: With that, I will turn it back to Peter for outlook on, for comments on CMC's outlook. Thank you, Paul. We expect first quarter financial performance to remain strong by historical standards, but decline from the fourth quarter as a result of seasonally slower shipments, steel product margin compression in North America and the continuation of challenging market conditions in Europe. During the first quarter, we anticipate that our Europe operations will receive approximately 60 million from two large government rebate programs.

Okay. That's.

Speaker 5: That's really helpful. I mean, maybe a last one, then, I know it's a little bit of tricky one, but on the timing on the infrastructure plan,

That's really helpful and then maybe.

Maybe.

Last one and I know, it's a little bit of a tricky one but on the timing on the infrastructure plan.

Speaker 5: I mean, the rebar demand chart you show in your presentation looks flat here today, is that fair to imply that we've yet to see most of this kind of improbuster?

I mean, the rebar demand chart you show in your presentation. It looks flat year to date is that fair to imply that we have yet to see most of this kind of intra booster.

Speaker 5: And if you were to put a number and I know it's difficult, how much of this 1.5 million ton?

And if you were to put a number and I know it's difficult how much of this one 5 million ton demand uplift do you believe is already out there being reflected in rebar prices is that at 50%, 20% or even Lulu and lastly, I think on your opening remarks, I think it feels to me that you're basically.

Speaker 5: demand up to you believe is already out there being reflected in rebar prices is that that 50% 20% or even lower

Peter Matt: The first is an annual CO2 credit estimated at 25 million, up from 9.5 million received last year. The second is structured as a reimbursement by the Polish government for elevated energy costs incurred during the European energy crisis. Proceeds from this program are expected to be 35 million and are calculated based on the magnitude of energy cost inflation in calendar year 2023 relative to the 2021 baseline.

Speaker 5: And lastly, I think on your opening remarks, I think it feels to me that

Speaker 5: Basically saying the quarter to watch for any meaningful uptake there is potentially Kyle and their Q2. That's her.

During the quarter to watch for any meaningful uptick there is potentially calendar Q2.

Is that true.

Speaker 3: Yeah, so, okay, a lot of questions there, but we'll try to cycle through them. So, first, in terms of the amount of infrastructure spend that we're seeing, so far, it's been very limited. What we can see is that it's working through the design and the pre-design phases of the process, but we don't believe that we've seen much of the spend yet.

So.

Okay, a lot of questions there, but we'll try to cycle through them. So.

First in terms of the amount of infrastructure spend that we're seeing.

So far it's been very limited what we can see is that it's working through the design and the pre design phases of the process, but we don't believe that we've seen much of the spend yet and to your second question on rebar pricing, we do not believe that the.

Peter Matt: These rebates are expected to drive a sequential improvement in Europe's segment adjusted EBITDA. Looking at the longer term, we remain very confident regarding the outlook for CMC in the markets we serve. The United States is in the early stages of massive investment trends that are intended to remake large portions of our economy by extensively upgrading infrastructure, re-aligning global trade patterns, and reorienting automotive production to electric vehicles. And, transitioning the electricity grid to greener sources of energy.

Speaker 3: And to your second question on rebar pricing, we do not believe that the kind of infrastructure spend bubble is baked into the current rebar prices, right? So.

Peter Matt: Strategy. Construction makes all this possible and we have positioned CMC to be both a primary beneficiary of the expected growth and a key solution provider to our customers.

Kind of infrastructure spend bubble is baked into the AR is baked into the current rebar prices right. So <unk>.

Speaker 3: Once that demand starts to materialize, we expect we'll see more of that.

Once that demand starts to materialize, we expect we'll see we'll see more of that and if you talk about when the inflection is going to occur.

Speaker 3: And, you know, if you talk about when the inflection is going to occur, again...

Speaker 3: It's hard for us to give two precise a number, but are two precise a date. But I guess what we do is if we think about North America, again, we do see the kind of bidding activity.

Again, it's hard it's hard for us to give too precise number but are too precise a date, but I guess, what we would do is if we think about North America again, we do see the kind of bidding activity very high we do see some short term constraints in terms of kind of getting <unk>.

Speaker 3: very high, we do see some short-term constraints in terms of kind of getting projects.

<unk>.

Speaker 3: built out just given some of the labor constraints. But we expect this is coming, and we expect it's coming in 2024.

Built out just given some of the labor constraints, but we expect this was coming.

Peter Matt: Once again, I would like to thank our customers for their trust and confidence in CMC and to thank all the CMC employees for delivering yet another quarter of solid performance.

And we expect its coming in 2024.

Speaker 3: And so that should give some help to 2024. The other thing that I would say we're seeing is two factors that I think are important here. One is we've seen scrap stabilized.

<unk>.

And so that should that should give some help to 2024. The other thing that I would say we are seeing is two factors that I think are important here. One is we've seen scrap stabilize and usually that's a harbinger for kind of better pricing on the on the rebar side.

Unknown Executive: And with that, we'll take questions, operator. Thank you.

Unknown Executive: And at this time, we will now open the call to questions. To ask a question, you may press star than one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw from the question, please press star than two. We ask that you limit yourself to one question and one follow-up.

Speaker 3: And usually that's a harbinger for kind of better pricing on the rebar side. And the other thing that I would say is that imports have remained at relatively manageable levels, relative to where they've been historically.

And the other thing that I would say is that imports have remained at relatively manageable levels of relative to kind of where they've been historically.

Tristan Gresser: The first question is from Tristan Gresser of XAINDNP. Please go ahead. Yes, hi. Good morning and thank you for taking my questions. The first one is on the Q1 guidance. I wanted to ask you a little bit more about the moving pieces there. If I look at ReBAR Metals spread in the US, they fall in about $100 in Q3. Is that the level of Metals spread compression you expect to be reflected in Q1 or is it something closer to $50 maybe?

Speaker 3: And we believe that's because of the economics of bringing...

And we believe that's because of the kind of the economics of bringing.

Speaker 3: Steel to the US are not as compelling and that's why we're not seeing the Displace the fact that it's better than other markets. It's not

Steel to the U S are not as compelling and that's why we're not seeing the despite the fact that it is better than other markets. It's not.

Speaker 3: so much better that people are going to bring higher levels of imports. So that also should be a positive for ultimately price.

So much better that that people are going to bring higher levels of imports. So that also should be a positive for our four ultimately pricing in Poland. If I can just comment on Poland a bit so what we see in Poland is pricing has stabilized we've seen a lot of.

Speaker 3: in Poland, if I can just comment on Poland a bit. So what we see in Poland is pricing has stabilized. We've seen a lot of capacity taken out of the market. There's an election on October 15th, so just a couple days from now. And we believe that coming out of election, there's a very good chance that this 32 billion of recovery and resilience fund that's being held by the EU will.

Tristan Gresser: Also, in terms of timing, given the short lag for ReBAR, is it fair to assume that most of the weakness we see in ReBAR Metals spread will flow into that Q1? Thank you. That's my first question. I think just in terms of the Metals spread compression, the number that you're citing seems high to us. In terms of timing, what we expect is that you will see the impact flow into Q1 as you indicated.

<unk> taken out of the market.

There's an election on October 15th So just a couple of days from now and we believe that coming out of the election. There was a very good chance that this $32 billion of recovery and resilience fund that's being held by the EU will.

Speaker 3: come into the market. And so that's another potential positive for us in Poland. The government's program to buy down interest rate on first time buyer mortgages has been very well received. So that's potentially another green shoot. So there are some reasons for optimism in Poland, but it's hard to call the inflection point just given what we're doing.

Coming to the market and so that's another potential positive for us in Poland.

The government's program.

Program to buy down interest rates on first time buyer mortgages has been very well received so thats.

Tristan Gresser: That's really helpful. I guess my follow-up is having a little bit of hard time getting to lower that quarter on quarter if I get a Metals spread compression there is some more stability on the fat business. The 60 million uplift on Europe, I get something close to something basically stable quarter on quarter. I'm just going to ask, what kind of volume declined you expect in North America, Europe in Q1? Also, without the 60 million uplift in Europe, would you have seen underlying margins decrease further?

Potentially another green shoot so there are some reasons for optimism in Poland, but it's hard to call. The inflection point just given what we've seen.

Speaker 1: The next question is from Tim Nathana Tanners of Wolf Research. Please go ahead. Yeah, hey, good morning.

The next question is from Timna Tanners of Wolfe Research. Please go ahead.

Yeah, Hey, good morning, everyone.

Speaker 6: Hello, one of two did down a little bit on Arizona 2. So it just a little bit tough to reconcile for me, the guidance of lower sequential volumes, November , and then February , it's seasonally a little lighter even. But yet, Arizona is supposed to be ramping up. So is it displacing other tons or are there net additional tons to the tune of that 400,000 I think that you guided to for fiscal year production? And then along those same lines that I could, can you clarify, I think you had said in the past in a little earlier time frame for break even, maybe Q1 and now you're saying first half, but you could just provide some color on that as well.

Hi, Tim.

Hello, I wanted to.

Dig down a little bit on Arizona too so.

And just a little bit tough to reconcile for me.

Guidance of lower sequential volumes in November and then February it's seasonally a little lighter, even but yet Arizona, it's supposed to be ramping up so is it displacing other times are there net additional tons to the tune of about 400000, I think that you've guided to for fiscal year production and then along those same lines. If I could can you clarify.

Tristan Gresser: In terms of the volume decline in North America, we expect there to be normal seasonality. We're talking about up to a 10% change. I think what you should assume in Poland is that absent these rebates, Q1 looks a lot like Q4. We're not calling for a meaningful recovery in Poland in Q1. That's really helpful. Maybe a last one, I know it's a little bit of tricky one, but on the timing on the infrastructure plan, the rebar demand chart you show in your presentation looks flat year today.

I think you had said in the past and a little earlier timeframe for breakeven, maybe Q1 and now you're saying first half. So if you could just provide some color on that as well.

Speaker 4: I'll start with the the the EBITDA break even Tim in terms of our change in the the guidance is simply reflecting the margin erosion that we've we've seen you know the production start up started in

Well I'll start with the EBITDA breakeven timna in terms of.

Our change in the guidance is simply reflecting the margin erosion that we've that we've seen.

The production startup started in in June and has continued to improve each each quarter.

Speaker 4: in June and has continued to improve each quarter. But simply the margin erosion that has, has, has,

But simply the margin erosion that has.

Tristan Gresser: Is that fair to imply that we have yet to see most of this kind of info boost? If you were to put a number, and I know it's difficult, how much of this 1.5 million ton demand uplift do you believe is already out there being reflected in rebar prices, is that 50%, 20% or even lower? Lastly, I think on your opening remarks, I think it feels to me that basically saying the quarter to watch for any meaningful uptake there is potentially Kylander Q2, is that fair?

Has has.

As occurred and we anticipate to occur in our first quarter, we expect that the breakeven point will that will take place in in sometime during the second quarter.

Speaker 4: occurred and we anticipate you occur in our first quarter. We expect that the break even point will take place in some...

Speaker 3: And in terms of the tonnages, Tim, so it is the case that we have been supplying tons to some of our customers in the West from some of our other mills. But as we bring up the Arizona plant, we will be not only replacing those tons, but we will be producing some incremental tons.

And in terms of the tonnage is.

Timna. So we are it is the case that we have been supplying kind.

Kind of tons to some of our customers in the west from some of our other mills, but as we bring up the Arizona plant, we will be not only replacing those tons, but we will be producing some incremental tonnes.

Tristan Gresser: Yeah, so, okay, a lot of questions there, but we'll try to cycle through them. So, first, in terms of the amount of infrastructure spend that we're seeing, so far, it's been very limited. What we can see is that it's working through the design and the pre-design phases of the process, but we don't believe that we've seen much of the spend yet. And to your second question on Rebar pricing, we do not believe that the infrastructure spend bubble is baked into the current Rebar prices.

Speaker 6: Okay, but if you were on our shoes, you wouldn't necessarily plug in an additional 400,000 tons or do you think the market can bear that I guess is the challenge?

Okay, but if you are on Rcs, you wouldn't necessarily plug in an additional 400000 tons or do you think the market can bear that I guess is that the challenge.

Speaker 3: Yeah, no, it's not an additional 400,000 tons. It's a little bit less than that.

Yeah, no it's not an additional 400000 tons, it's a little bit less from us.

Okay, Thanks, and if I could just one more on the Capex color.

Speaker 6: Well, one is that you raised the CAPEX guidance 50 million, sorry if I missed any explanation for that for 2024. And then I know it's a little farther out, but we see some pretty strong caspos in 2025 if we reverse to kind of your more baseline CAPEX or maintenance CAPEX. I'm just wondering if there's more on the come after that that we should be modeling as well. Thanks.

Well one is that you raised the capex guidance $50 million, sorry, if I missed any explanation for that for 2024, and then I know, it's a little farther out but we see some based on cash flows in 2025, if we reverse to kind of hear more.

Tristan Gresser: So, once that demand starts to materialize, we expect we'll see more of that. And if you talk about when the inflection is going to occur, again, it's hard for us to give two precise a number, but two precise a date. But I guess what we do is, if we think about North America, again, we do see the kind of bidding activity very high. We do see some short-term constraints in terms of kind of getting projects built out just given some of the labor constraints.

Baseline capex or maintenance Capex I'm, just wondering if there is more on the come after that that we should be modeling as well. Thanks.

Timna I think.

West Virginia is likely to to continue to have spend in 2025, so our overall.

25 will likely continue to be an elevated capex as we invest in that organic growth I will remind you, though that you know over the last three years. Despite the release of working capital that we saw in the fourth quarter of around $125 million, we still invested over 700.

Speaker 4: I will remind you though that over the last three years, despite the release of working capital that we saw in the fourth quarter, around 125 million, we've still invested over 700 million in working capital. So we do anticipate that our cash flow will be very strong as we look forward, certainly if there is any continuous softness on the pricing front.

Tristan Gresser: But we expect this is coming, and we expect it's coming in 2024. And so, that should give some help to 2024. The other thing that I would say we're seeing is two factors that I think are important here. One is we've seen scrap stabilized, and usually that's a harbinger for kind of better pricing on the Rebar side. And the other thing that I would say is that imports have remained at relatively manageable levels relative to where they've been historically.

Million in working capital. So we do anticipate that our cash flow will be very strong.

As we as we look forward certainly if there is any any continued softness on the on the pricing front.

Speaker 4: Okay, and then to the 50 million, sorry, of the additional CAPEX guidance that you had for 2024, if you could just let us know what that was about. Yeah, that's just simply as we get more evolved into the timing of our planning process for the year and look at projects that can drive value to the organization. We're now complete our planning process, whereas before it was more of an estimate based on where we were. Okay.

Okay, and then so that 50 million sorry of the additional Capex guidance that you had for 2024, if you could just.

Let us know what that was about yes, that's just simply as we get more evolved into the timing of our planning process for the year end and look at projects that can drive value to the organization.

Tristan Gresser: And we believe that's because of the economics of bringing steel to the US are not as compelling. And that's why we're not seeing the, despite the fact that it's better than other markets, it's not so much better that people are going to bring higher levels of imports. So, that also should be a positive for ultimately pricing. In Poland, if I can just comment on Poland a bit. So, what we see in Poland is pricing has stabilized.

We're now complete our planning process, whereas before it was a more of an estimate based on where we were.

Okay, great. Thank you very much.

Thank you Timna.

Speaker 1: Again, if you have a question, please press star, then one. The next question is from Alex Hacking of City. Please go ahead. Yeah, thanks.

Again, if you have a question. Please press Star then one the next question is from Alex hacking of Citi. Please go ahead.

Yes.

Yeah. Thanks, Good morning, everyone, let me.

Speaker 7: time to to Barbara for a ten year CEO , the truly transformational, not many people can say that. In terms of questions, I guess the first question, just following up on the infrastructure bill, I think you highlighted there the big ramp up in design phase activity.

Hi, Alex.

Im too to Barbara for a tenured CEO truly transformational not many people can say that.

Tristan Gresser: We've seen a lot of capacity taken out of the market. There's an election on October 15, so just a couple of days from now. And we believe that coming out of that election, there's a very good chance that this 32 billion of recovery and resilience on that's being held by the EU will come into the market. And so that's another potential positive for us in Poland. The government's program to buy down interest rates on first time buyer mortgages has been very well received. So that's potentially another green shoot. So, there's some reasons for optimism in Poland, but it's hard to call the inflection point just given what we've seen.

In terms of questions I guess the first question just following up on the infrastructure Bill I think you highlighted there the big ramp up in design phase activity.

Speaker 3: How should we think about the lag there for steel, you know, going into the ground, right? That suggests to me probably we're still maybe two or three years away, but any color that will be helpful. Thanks. No, I think I don't think it's that long. I think, um, you know, we see, we believe that by the middle of next calendar year, we should start to feel some of that infrastructure spending coming.

How should we think about the lags there for steel.

Into the ground right that suggests to me, probably we're still maybe two or three years away.

But any color that would be helpful. Thanks, No I think I don't think it's that.

That long I think.

We see we believe that by the middle of next calendar year, we should start to feel some of that infrastructure spending coming through.

Speaker 7: Okay, thanks. And then I guess the follow up on merchant bar, volumes down something like 10% year over year, is that still decelerating in your view or is it kind of stabilized? And are there...

Okay. Thanks.

And then I guess a follow up much in bar.

Timna Tanners: The next question is from Timnay Tanners of Woolf Research. Please go ahead. Yeah, hey, good morning, everyone.

Volumes down something like 10% year over year.

Is that still decelerating.

Timna Tanners: Hello, I wanted to dig down a little bit on Arizona too, so it's just a little bit tough to reconcile for me the guidance of lower sequential volumes November and then February it's seasonally a little lighter even, but yet Arizona is supposed to be ramping up, so is it displacing other tons or are there net additional tons to the tune of that 400,000 I think that you guided to for fiscal year production and then along those same lines that I could, can you clarify, I think you had said in the past in a little earlier time frame for break even maybe Q1 and now you're saying first half, but he could just provide some color on that as well. I'll start with the the the EBITDA break even Timna in terms of our change in the guidance is simply reflecting the margin erosion that we've seen.

In your view or is it kind of stabilized and other.

Speaker 7: specific end markets within that of a particularly weak.

Specific end markets within that are particularly weak.

Speaker 4: Now, like now, if you'll recall in my comments, I made reference to a major planned outage that we had at one of our merchant mills. So we were within the quarter essentially constrained on production at our Alabama facility that is our flagship in terms of merchant bar. So it's simply our capacity during the quarter, underlying market conditions.

Alex now if youll recall in my comments I made reference to a major planned outage that we had at one of our merchant mills. So we were within the quarter essentially are constrained.

Constrained on production at our at our Alabama facility that was is our floor.

<unk> flagship in terms of merchant bar, so it's simply our capacity during the quarter underlying market conditions.

Speaker 4: continue to be relatively strong in the in the March and March and Bar space.

Continue to be relatively strong in the in the margin merchant bar space.

Okay. Thanks.

Thank you Alex for your kind remarks.

Speaker 1: At this time, there appears to be no further question. Mr. Matt, I'll now turn the call back over to you.

At this time there appears to be no further questions. Mr. Matt I'll now turn the call back over to you.

Timna Tanners: The production start up started in June and has continued to improve each quarter, but simply the margin erosion that has occurred and we anticipate to occur in our first quarter, we expect that the break even point will take place in some time during the second quarter. And in terms of the the tonnages Timna, so we are, it is the case that we have been supplying kind of tons to some of our customers in the west from some of our other mills, but as we bring up the Arizona plant we will be not only replacing those tons, but we will be producing some incremental tons.

Speaker 3: Okay, well thank you everyone for joining our call today.

Okay, well, thank you everyone for joining our call today.

Speaker 3: TMC is a great platform to take advantage of the wave of construction that's spending that's coming our way. And there's clearly some short-term headwinds, but these will pass. We expect materially higher through the cycle margins and significant value creation and demonstrating that we can achieve.

<unk> is a great platform to take advantage of the wave of construction spending.

Spending thats coming our way and there was clearly some short term headwinds, but these will pass and we expect materially higher through the cycle margins and significant value creation and demonstrating that we can achieve them CMC is well positioned to capitalize on this performance and to strengthen and grow our business. Thank you very.

Speaker 3: CMC is well positioned to capitalize on this performance and to strengthen and grow our business. Thank you very much for

For joining.

Speaker 1: This concludes today's CMC conference call. You may now disconnect.

This concludes today's TMT conference call you may now disconnect.

Speaker 8: The.

Okay.

[music].

Timna Tanners: Okay, but if you were on our shoes you wouldn't necessarily plug in an additional 400,000 tons or do you think the market can bear that I guess is the the challenge? Yeah, no, it's not an additional 400,000 tons, it's a little bit less than that. Okay, thanks.

Timna Tanners: And then if I could just one more on that capex color. Well, one is that you raise the capex guidance 50 million, sorry if I missed any explanation for that for 2024. And then I know it's a little farther out, but we see some pretty strong caspos in 2025 if we reverse to kind of your more baseline capex or maintenance capex. I'm just wondering if there's more on the come after that that we should be modeling as well.

Timna Tanners: Thanks. Some I think, you know, still West Virginia is likely to continue to have spend in 2025. So our overall 25 will likely continue to be an elevated capex as we invest in that organic growth. I will remind you though that over the last three years despite the release of working capital that we saw in the fourth quarter, around 125 million, we've still invested over 700 million in working capital. So we do anticipate that our cash flow will be very strong as we as we look forward.

Timna Tanners: Certainly, if there is any, any continued softness on the pricing front. Okay, and then the 50 million, sorry, of the additional capex guidance that you had for 2024. I mean, for if you could just let us know what that was about. Yeah, that's just simply as we get more evolved into the timing of our planning process for the year and look at projects that can drive value to the organization. We're now complete our planning process, whereas before it was more of an estimate based on where we were. Okay.

Timna Tanners: Great. Thank you very much. Thank you, Timna. Again, if you have a question, please press star down one.

Alexander Hacking: The next question is from Alex Hacking of City. Please go ahead. Yeah, thanks. Morning, everyone. Let me tell you, Alex, a time to to Barbara for a ten year CEO, truly transformational. Not many people can say that. In terms of questions, I guess the first question just following up on on the infrastructure bill, I think you know you highlighted there the big ramp up in design phase activity. How should we think about the lag there for steel, you know, going into the ground, right?

Alexander Hacking: That suggests to me probably we're still maybe two or three as a way, but any color that will be helpful. Thanks. No, I think I don't think it's that long. I think you know, we see we believe that by the middle of next calendar year, we should start to feel some of that infrastructure spending coming through. Okay, thanks. And then I guess the follow up on merchant bar, you know, volumes down something like 10% year over year.

Alexander Hacking: Is that still decelerating in your view as a kind of stabilized and other specific and markets within that of a particularly week? Thanks. Alex, now if you'll recall in my comments, I made reference to a major planned outage that we had at one of our merchant mills. So we were within the quarter, essentially constrained on production at our Alabama facility that was is our flagship in terms of merchant bar. So it's simply our our capacity during the quarter underlying market conditions continue to be relatively strong in the in the merchant merchant bar space. Okay, thanks. Thank you, Alex, for your kind remarks.

Unknown Executive: At this time, there appears to be no further question.

Peter Matt: Mr. Matt, I'll now turn the call back over to you. Okay, well, thank you everyone for joining our call today. TMC is a great platform to take advantage of the wave of construction that's spending that's coming our way. And there's clearly some short term headwinds, but these will pass. And we expect materially higher through the cycle margins and significant value creation and demonstrating that we can achieve them. CMC is well positioned to capitalize on this performance and to strengthen and grow our business.

Unknown Executive: Thank you very much for joining.

Unknown Executive: This concludes today's CMC conference call. You may now disconnect.