Hello, and welcome everyone to the Fourth Quarter Fiscal 2022 Earnings Call for Commercial Metals Company. Today’s materials, including the press release and supplemental slides that accompany this call can be found on CMC’s Investor Relations website. Today’s call is being recorded. After the company's remarks, we will have a question-and-answer session and we will have a few instructions at that time. 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, the effects of legislation, U.S. steel import levels, U.S. construction activity, demand for finished steel products, the expected capabilities and benefits of new facilities, the company’s future operations, the timeline for execution of company’s growth plan, the company’s future results of operations, financial measures and capital spending. 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 that are subject to certain risks and uncertainties, including those that are described in the risk factors and forward-looking statements sections of the company’s latest filings with the Securities and Exchange Commission, including the company’s latest annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. 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 vary materially. 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, change 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, supplemental slide 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 Chairman of the Board, President and Chief Executive Officer of Commercial Metals Company, Ms. Barbara Smith. Please go ahead.

Good morning, everyone, and thank you for joining CMC's fourth quarter earnings conference call. As reported in the press release, it was an outstanding quarter. And I'd like to thank CMC's roughly 12,000 employees for their continued hard work and focused efforts on behalf of our customers and stakeholders. You make these results possible. I would also like to thank our customers for their continued trust and partnership with CMC. I will start today's call with a few highlights on CMC's historic performance in fiscal 2022, then discuss our fourth quarter results before providing an update on the current market environment. Paul Lawrence will cover the quarter's financial information in more detail and I will then conclude with our outlook for the fiscal first quarter, after which we will open the call to questions. Before starting my prepared remarks, I would like to direct listeners to the supplemental slides that accompany this call. The presentation can be found on CMC's Investor Relations website. On behalf of CMC's entire team, I'm pleased to report that fiscal 2022 marked the best financial performance in our company's 107 year history. CMC generated its highest ever full year net earnings as well as EBITDA. At the segment level, both North America and Europe reported record results. This strong performance translated into an annual return on invested capital of 25.5% up over 10 percentage points from the very healthy level achieved the prior year. During each of the last 14 quarters, a period that includes the global pandemic, widespread supply change dislocations, labor force challenges and a war in Ukraine, CMC has generated annualized ROIC well above 10%. This indicator alone is a confirmation of the strength of our strategy, the consistency of our execution, which is delivering superior value to our shareholders. Overall, our…

Thank you, Barbara, and good morning to everyone on the call today As Barbara noted, we reported fiscal fourth quarter 2022 net earnings of $288.6 million or $2.40 per diluted share compared to prior year levels of $152.3 million and $1.24 respectively. Results this quarter include a net after tax charge of $6.3 million, the majority of which relates to CMC's acquisition of Tensar. These costs were in the form of acquisition expenses and purchase accounting adjustments related to inventory write ups. The quarter also includes a small asset impairment charge taken in North America. Excluding the impact of these items, adjusted earnings were $294.9 million or $2.45 per diluted share. Core EBITDA was $419 million for the fourth quarter of 2022, representing a sharp increase from the $255.9 million generated during the prior year period. Slide 11 of the supplemental presentation illustrates the strength of CMC's quarterly results. Our North America segment drove the significant year-over-year earnings growth, while Europe held steady at a strong level. Core EBITDA per ton of finished steel reached its second highest rate ever coming in at $269 per ton compared to $155 per ton a year ago. Reviewing our results by segment for the fourth quarter of fiscal 2022, CMC's North American segment generated adjusted EBITDA of $370.5 million for the quarter equal to $327 per ton of finished steel shipped. Segment adjusted EBITDA improved 75% on a year-over-year basis, driven by significantly increased margins on steel and downstream products over their underlying scrap costs. Partially offsetting this benefit were higher controllable costs on a per ton of finished steel basis due primarily to increases in unit pricing for alloys, energy and freight. Selling prices for steel products from our mills increased by $204 per ton on a year-over-year basis and were essentially…

Thank you, Paul. We are entering fiscal 2023 in a strong position with the downstream backlog and bidding activity at historically high levels, giving us confidence in the near-term outlook for volumes. Additionally, we look forward to the start-up of our newest micro mill, Arizona 2, in the spring of next calendar year, which will greatly enhance CMC's ability to capitalize on the strength we see in construction market. We anticipate another strong financial performance in the first fiscal quarter. We expect good demand for our products to continue in North America, while conditions in Europe are more uncertain. However, as I discussed earlier, CMC's operations in Poland are very well positioned to compete given their cost leadership position and operational flexibility. Margins over scrap in both North America and Europe are likely to compress slightly from the fourth quarter levels in order to remain competitive with raw material price changes and increased long steel supply. Once again, I'd like to thank all of the CMC employees for delivering yet another outstanding quarter and year of performance.

Thank you. And at this time, we will begin our question-and-answer session. [Operator Instructions] Our first question comes from Emily Chieng from Goldman Sachs. Please go ahead, Emily.

Good morning, Barbara and Paul. Thank you for the update this morning. My first question is just around the North American construction markets and what you're seeing here. Could you perhaps provide some color as to how many months you'll order book length is now sitting at and how we should be triangulating the comment around customer destocking activity starting to ease and the expansion of backlog levels? Is that implication that we should be seeing shipments in the next couple of quarters trend higher?

[Indiscernible] Emily. Our backlog extends well into 2023. And so we're sitting in an excellent condition and with a lot of confidence in terms of the comment I made around a really solid first quarter in fiscal 2023. Whenever there is a raw material price change, particularly a downward trend in raw materials, you will tend to see customers go through a bit of destocking. They don't want to be saddled with high priced inventory. So they'll adjust their order rate temporarily and work through the inventory that they have on hand. And clearly, we know there have been any number of supply chain disruptions over the last three years, starting with the pandemic and macro issues and the war in Ukraine, I think the supply chain issues, while they'll continue to persist to some degree, certainly, the initial shock is behind us, and I think that's another reason why customers were adjusting inventory levels. But based on what we're seeing here early in the quarter, that gives us confidence to say that, that destocking effort is behind us. And so the market fundamentals are going to kick in. And so we would expect a really solid first quarter. You always have seasonality that approaches around the holidays and -- but otherwise, we see strong rebound in our shipments.

Great. I appreciate the color, Barbara. A follow-up question, if I may, just around the controllable costs. And I think you flagged some pressures along the freight alloying and energy cost side of the equation there. But perhaps if you could talk to a direction of travel for each of those three components, both in the U.S. and Europe, that would be helpful. Thank you.

Sure. If we look, Emily at the U.S., I think, we had a combination in the energy market of an extremely hot summer as well as the global challenges with natural gas and other energy costs. And so, if we look at our cost profile in the U.S. market, certainly, energy was the leading area of inflation. But also as we cited increases in consumables and alloys and freight, I think where we're at today is really we can see our go-forward controllable costs being somewhat in line with what we experienced in the fourth quarter with relatively minor puts and takes in the components of the overall cost structure, but see that as being the environment in which we'll operate in 2023. In Europe, it is strictly a story of energy costs. And as we outlined and specifically, I think Barbara mentioned Slide 9 of the supplemental slides, we're fortunate to operate in Poland despite the overall inflationary environment in energy, in Europe, Poland is much more advantageous in relation to other countries given its domestic source for much of its energy needs. And so combining the low cost -- lower cost of energy in Poland with the hedges that we have in place, which are at least a good portion of our hedges are of a long-term nature, position us well to really be competitively in a strong position in relation to competitors for a long time to come. But in Europe, it is principally energy, the same alloy inflation that we're seeing, but it's relatively small in comparison to the energy.

Right. Thanks, Paul.

And our next question is coming from Timna Tanners from Wolfe Research. Please go ahead, Timna.

Good morning. Thanks very much for all the detail. Two things I wanted to explore a bit more with you. If you could characterize more of the import pressure you talked about in both markets. I know in the U.S., definitely a 25% tariff still has a pretty big impact on many countries with Section 232. And it seems that Turkey is pretty hobbled with Europe also hobbled from energy prices. So I'm just wondering, if you could talk a little bit more about how much pressure you're seeing and if that's pervasive in both markets? Second question is you talked about housing in Europe, but I was wondering, if you could talk a little bit about what you're seeing on the housing side in the U.S.?

Yeah. Thank you, Timna. Yeah. I don't think we want to overemphasize import pressure and all that data is very public, as you know. But they're -- year-on-year, if you look at '21 versus '22, there has been more foreign product available here in the U.S. market and a good bit of that coming on the wire rod side. And there were a number of production issues that various competitors over past year that made it necessary for some customers to avail themselves of those imports. And so, as you know, you've been around this industry for a long time. We deal with that on an ongoing basis. And as you point out, we're still in a really strong trade environment that deters the illegal and dumped sources of material coming from foreign and you rightly point out the struggles that are going on in Turkey, which is the primary offender as it relates to our products. So we monitor it all the time, and we respond accordingly. But again, we think we're still going to enjoy a good trade environment. In terms of housing in the U.S., it's an interesting one because housing has been incredibly strong for a long period of time here. But now you have a rising interest rate environment and interest rates that folks haven't seen in quite a period of time, unlike myself, where my first mortgage rate was close to 12%. At any rate, I think we're seeing a shift potentially from single-family to multifamily and that is evident in some of the external data that we track. There is still the need for housing formation. And so if interest rates are a deterrent to single-family, then you tend to see an increase in multifamily, which is actually a higher intensity of rebar and structural in the multifamily. So we certainly think that overall, that is not going to have a meaningful impact to our business, because as I pointed out, we still have the infrastructure that is not even really kicking in at this point.

Okay. Great. And if I could sneak in one more, just to ask about the European first quarter, if you're expecting to see that $15 million carbon credit you've seen those last several years again?

We are, Timna, it's going to be -- the amount is yet to be determined and fully approved by the EU. That's expected to occur next week. But all indications are that the amount will be similar in Zloty that we've received over the last couple of years. Obviously, the translation back to dollars is reduced, but we do expect that the final approval of that program to take place next week.

Okay. Super. Thanks again.

Thanks, Timna.

Our next question is coming from Seth Rosenfeld from PNB Paribas. Please go ahead, Seth.

Good morning. Thanks for taking our questions today. Another question, please, on the European market. In your prepared remarks, you commented on destocking early in Q4, but perhaps a reversal of the amortization of the destocking pressure late in the quarter. Can you provide a bit more color on the scale of that downward pressure. And I guess to the degree of confidence that might have come to an end, your optimism would perhaps stand out with some other channel checks in Europe that are still seeing additional destocking pressure looking into the fourth calendar quarter. I'll stop there, please.

Yeah. You're popping a lot, Seth (ph). So I'm not sure I captured everything. But I'll start, and Paul can continue if we re-ask your question. We think the destocking is behind us. Clearly, a lot depends upon just where does the economy in Europe go and everybody has their own view of that. I think we just try to emphasize that we have a strong position relative to other alternatives and we're very reliable. Our cost and operational flexibility is [Technical Difficulty], but we think the destocking is largely behind us.

Yeah. And Seth, I would just note that I think there's a big dichotomy between the long product area and the flat rolled space. I think in flat rolled, it's continuing to destock, but on the long steel side in which, as you know, that's where we play, it's a different market. The underlying -- there is more strength and we certainly did see the volumes bounce back significantly as Barbara said.

Thank you very much. And a second question, please, in Europe. Earlier in the year, your team spoke publicly about some interest in perhaps expanding your capacity within Europe, either organically or inorganically. Obviously, macro condition has changed a great deal since then. I'd love to hear your thoughts on the attractiveness of investing in Europe in the current environment. Thank you.

Yeah, Seth. Thank you. We're always evaluating organic, inorganic, every opportunity to look at growth. And I would just say that we take a very long-term view on growth, and we also have a very disciplined process for evaluating any of those types of things. And we never use peak of cycle kinds of market conditions in which to evaluate projects like that. And so there's nothing specific that we have to talk about that in this current moment, but we're always evaluating things with a very, very long-term view.

Okay. Thank you.

Thank you.

[Operator Instructions] And our next question is coming from Phil Gibbs from KeyBanc Capital Markets. Phil, please go ahead.

Hey. Good morning.

Hey, Phil

Good morning, Phil.

First question is just on fabrication pricing. Nice step-up this quarter. I know the backlog pricing continued to move up over the last several months as rebar prices escalated and a lot of that tends to lag as we know. So how many quarters do we have looking ahead where pricing could actually continue to move up or have we leveled out here?

Yeah, Phil. I'll start, Barbara can add. If we look at our current activity that Barbara alluded to, it is strong in the fourth quarter. And really, we continue to see good levels on the downstream work. And as a result, really, the backlog is made up of what's in there and new stuff. So assuming the -- no significant degradation in the pricing of new work going in, we would expect over the next two quarters or so for the backlog pricing to continue to catch up with the current price levels.

Okay. That's helpful. And I know you gave some color on CapEx for this year, $475 million or so at the midpoint. Is there anything baked in there for the new potential mill in the Northeast and whether it would be permitting or due diligence or is that going to be something that phases into the out years?

Yeah, Phil. There'll be a little -- there's a little bit in there. I don't know the hard number off the top of my head. But as you can appreciate, the first step is to go through the permitting process, which can have some long duration to it. And -- but we will do -- we will begin the engineering phase and other things. And so the bulk of it would probably come in the following fiscal year.

Okay. And then my last question is just on net working capital. Assuming that you have scrap stay around current levels, plus or minus, and you've got let's just say, broader pricing downstream and rebar stay around current levels, what do you expect net working capital to be a use or a source in fiscal '23? Thank you.

Yeah, Phil. If we hold all those things relatively constant to where they are today, we would really see working capital being relatively flat from where we are for the year. We'll have our seasonality throughout the year. But for the full year view, give -- if we assume things are going to be pretty consistent, the level of working capital will also be consistent.

Thank you.

Thanks, Phil.

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

Thank you. Thank you, everyone for joining us on today's conference call. We look forward to speaking with many of you during our investor calls in the coming days and weeks. Have a great rest of your day. Thank you.

Thank you for joining us today. This concludes today's Commercial Metals Company conference call. You may now disconnect.