The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Sathish Kasinathan - Bank of America - Analyst
: My first question is on the North American steel product shipments. You mentioned that you saw some late-season construction activity in Q1,
which continued into first two weeks of December. And with the Arizona 2 mill ramping up, how should we look at the state product shipments
for Q2 compared to last year?
Question: Sathish Kasinathan - Bank of America - Analyst
: So that's generally about 5% to 10% lower?
Question: Sathish Kasinathan - Bank of America - Analyst
: Okay. Understood. Thank you. My next question is on the emerging business group. So you talked about several large project delays for Tensar,
can you provide more color on what's driving these delays? Is it limited to Europe? Or are you seeing more broad-based delays across all regions?
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JANUARY 06, 2025 / 4:00PM, CMC.N - Q1 2025 Commercial Metals Co Earnings Call
Question: Sathish Kasinathan - Bank of America - Analyst
: And given that these projects are mostly lumpy, should we assume that the recovery will be more meaningful and on an annual basis, probably
the impact is not that significant?
Question: Katja Jancic - BMO Capital Markets - Analyst
: Maybe first on -- Peter, you mentioned two initiatives under TAG that should generate, I think, combined $10 million to $15 million in annualized
benefits. Is this going to be generated in fiscal year '25? Or how should we think about this?
Question: Katja Jancic - BMO Capital Markets - Analyst
: Can you let us know of those 150 initiatives, how many of those are considered larger? The $5 million to $10 million type of initiatives?
Question: Katja Jancic - BMO Capital Markets - Analyst
: And then maybe on the capital allocation. When I look at the past few quarters, you've been spending about $50 million per quarter on share
buybacks. Is this level sustainable over the next few quarters given that CapEx is expected to move higher?
Question: Philip Gibbs - KeyBanc Capital Markets - Analyst
: Question is just kind of about the second half of the fiscal year in terms of expectations for recovery and just construction overall and what's driving
that in terms of specific areas, whether it be in industrial or energy or semis. Just trying to understand some of the conversations that you're having,
what you're seeing in your order book, that sort of thing in terms of the viewpoint.
Question: Philip Gibbs - KeyBanc Capital Markets - Analyst
: Thanks. And then secondly, just on the market conditions as we come into the new year, any visibility on where you think scrap may settle out over
January here?
Question: Mavis Liu - BNP Paribas Exane - Analyst
: My first question is on the rebar demand outlook. Within the presentation, you commented on the highway project and also the housing shortages
and their impact on the rebar demand. Just on the timeline, when do you expect those to start to have an impact?
Question: Mavis Liu - BNP Paribas Exane - Analyst
: Yeah. Thank you. That's very clear. Just a bit follow-up on that. So actually, we are expecting for some new rebar supply capacity to come online
later this fiscal year. What's your view on those additional supply? And also, do you think the additional demands on rebar can offset those additional
supply?
Question: Alexander Hacking - Citigroup - Analyst
: I just had one question. I guess just following up on your last comment there, Peter. Your commercial metals are sold around 4 million enough
tons or so in North America for the last five, six years. You're adding 1 million tons of capacity between Arizona and West Virginia. How should we
think about the mix of that between growth in capacity and replacement capacity? And if rebar demand grows strongly, can CMC ultimately sell
5.5 million tons or there's a chunk of it that's just going to be a replacement?
Question: Alexander Hacking - Citigroup - Analyst
: I guess just following up, Rancho Cucamonga has been closed for a while now, right? So there's still an incremental $1 million. I guess if -- are you
planning on idling other capacity, I guess, is more of my question so that -- or if we get strong rebar the mine as we expect over the next several
years, you would be able to grow into both Arizona and West Virginia?
Question: Matt Dushkin - Wolfe Research, LLC - Analyst
: So just curious on Europe, let's say, demand is structurally damaged longer term. And just for some reason, German demand doesn't fully bounce
back. If that is the case, what levers you off to pull just beyond the TAG initiatives? Or anything else you have in mind?
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