Hello, and welcome everyone to the Third 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 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 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 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, 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, supplemental slide presentation, or on the Company’s website. Unless stated otherwise, all references made to year or quarter and 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.

Good morning, everyone and thank you for joining CMC's third quarter earnings conference call. Before we begin, I'd like to congratulate CMC's employees on another remarkable quarter of performance. Your dedication, creativity and customer focus are what makes results like this possible. And on behalf of the entire CMC leadership team, we're extremely proud and grateful for all your efforts. I'd also like to welcome our approximately 650 new CMC employees at Tensar. You have certainly joined at an exciting time for our company, and I'm confident that your contributions, along with those of your talented colleagues will make CMC's future even brighter. I will start today's call with brief highlights from the quarter as well as a discussion of CMC's markets and how we are positioned. I'll also share some early observations following the closing of the Tensar acquisition before turning to commentary on market trends we see developing in Europe. Paul Lawrence will cover the quarter’s financial information in more detail. And I will then conclude our outlook for the fourth fiscal quarter and beyond, 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. For fiscal third quarter 2022, net earnings were $312.4 million, or $2.54 per diluted share on net sales of $2.5 billion. Excluding the impact of nonoperational items that Paul will discuss, adjusted earnings were $320.2 million, or $2.61 per diluted share, the best in our company's history. CMC generated core EBITDA of $483.9 million, an increase of 110% from a year ago and nearly 50% above the previous record, which was achieved in the first quarter of fiscal 2022. With this quarter's exceptional performance, CMC's…

Thank you, Barbara, and good morning to everyone on the call this morning. As Barbara noted, we reported fiscal third quarter 2022 net earnings of $312.4 million or $2.54 per diluted share compared to prior year levels of $130.4 million or $1.07, respectively. Results this quarter include net after-tax charges of $7.8 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 included a small asset impairment charge taken in North America. Excluding the impact of these items, adjusted earnings were $320.2 million or $2.61 per diluted share. Core EBITDA was $483.9 million for the third quarter of 2022, more than double the $230.5 million generated during the prior year period. Slide 11 of the supplemental presentation illustrates the strength of CMC's quarterly results. Both our North American and Europe segments contributed significantly to year-over-year earnings growth, while core EBITDA per ton of finished steel reached a record level of $293. Now I will review our results by segment for the third quarter of fiscal '22. CMC's North American segment generated adjusted EBITDA of $379.4 million for the quarter equal to $332 per ton of finished steel shipped. Segment adjusted EBITDA improved 83% on a year-over-year basis, driven by significantly increased margins on each of our steel products, downstream and raw material product groups over their underlying scrap costs. Partially offsetting this benefit were higher controllable costs on a per ton of finished deal due primarily to the increased unit pricing for freight, energy and alloys. The pace of unit price increases for these items moderated in the third quarter. And as a result, when combined with the impact of the fixed cost leverage, CMC was able to hold…

Thank you, Paul. We expect strong financial results in the fourth quarter of fiscal 2022. Demand for CMC's major product lines is anticipated to remain robust across our key geographies. In North America, shipments should be underpinned by record levels of construction backlog volumes, while in Europe, we anticipate tight market supply to continue providing CMC with opportunities for share gain. Margins in both North America and Europe should remain near third quarter levels. Looking a little further ahead, we expect the market factors I previously discussed to continue to support business activity. CMC's pipeline of new downstream work is very strong, pointing to healthy demand into our fiscal '23. In North America, the impact of increased federal infrastructure funding should begin to manifest in the second half of fiscal 2023, and reshoring projects currently underway will benefit much of our mill and downstream network. Our view of future demand in Europe is a bit more difficult to predict, but supply dynamics should remain favorable, benefiting both our volumes and margins as highlighted in my earlier market outlook comments. Once again, I'd like to thank all the CMC employees for delivering yet another quarter of outstanding performance.

Thank you. [Operator Instructions] Today our first question comes from Emily Chieng of Goldman Sachs. Please go ahead.

Good morning, Barbara and Paul. Thank you for the update today. My first question is just around the power price environment in Europe. Thank you for some of the detail in the presentation back there. But could you remind us how those contracts are structured? How long those extend until and if there is any spot power exposure there at all?

Sure. Good morning, Emily. Our team in Poland has done a phenomenal job of managing energy. And the key point to note is, obviously, these were put into place well before all of the volatility that we have recently seen. The Polish arrangement for electricity include a 10-year financial hedge that's in place that is now being in place probably for 1.5 years. So it has a very long runway associated. In addition to that strip, that 25% strip, there's another strip of more of a physical arrangement with the provider, which provides some longer term, but it's probably in the 2-year rotating - repricing environment that does around another quarter of their energy needs. The rest is -- has been subject to spot. And I would say that in relation to other countries in Europe, the volatility of energy pricing has been significantly less. So as Barbara mentioned, the impact to us in our overall energy costs, including natural gas, has been around 28% on a year-over-year basis. And I think these instruments that we have in place will continue to ensure that competitively we are at an advantage against other European producers.

Great. That's very helpful. And my second question, I wanted to ask was just around I think your order book there. I think, Paul, you made a comment earlier around perhaps if you were to see some demand weakness on the downstream that you might not necessarily see as large of an impact to shipment levels there. But maybe talk through the strength of your order book, how many months ahead do you have that visibility? And do you think that there is enough of a cushion there in terms of pent-up demand that shipments will not, in fact, be as impacted as in a very down -- back scenario?

Yes. Let me take a crack, Emily, and we can -- Paul can add anything that I might omit here. But our downstream backlog, as we indicated, is at the highest level that we've seen in 13 years. And I would say through the cycle backlog, normally is about a 6-month backlog contained in that could be shorter-term projects and then some that are much longer-term projects. But in this case, the backlog is well above that cycle average. So it gives us a lot of confidence moving into 2023 in terms of the demand scenario for our business. And I would add that we continue to see very, very strong bidding levels. So that's where the backlog stands today, but there are still lots of projects across a broad spectrum of geography and types of projects that continue to come to the market.

Yes, and that's what I would add to that, Emily, is if you look at construction, it's a very diverse makeup in terms of where construction activity takes place, whether it be infrastructure on the public side, nonresidential, obviously, has ebbs and flows and we see the onshoring activities really picking up steam. We see the community build out, as Barbara mentioned, in addition to residential construction activity. And so if you look at our flexibility of serving all of those various markets within the construction industry, I think we are very well protected by the outlook for each of those areas that Barbara outlined in the prepared remarks.

And that's absent significant sign of -- or it's absent really the effect of the new infrastructure spending bill, which we would anticipate seeing coming in this coming fiscal year.

Understood. That’s very clear. Thank you.

Thank you, Emily.

Our next question today comes from David Gagliano of BMO Capital Markets. Please go ahead.

Hi. Thanks for taking my questions. I did want to ask about this dichotomy between the strong results and the optimistic outlook versus the broader headwinds that seem to be fairly significant, aside from the general concerns about demand, [indiscernible] inflation, rising interest rates. A few weeks ago, the Portland Cement Association, they cut their cement consumption forecast for 2023 from plus 2.5% to minus 0.8%. The reason I flagged that it's because the PCA is another source that CMC has cited in the past as a really solid proxy for demand for CMC's business. So my question is, is that PCA forecast for negative year over demand in 2023, is that a reasonable proxy for your business as you look beyond what you see now? Because I do think that PCA also factors in the positive offsetting variables that you've noted in the prepared remarks. And if it's not a reasonable forecast, if you can just touch on your view why it's different now versus when things were going positively.

Yes. Thank you, David. I appreciate your question and certainly appreciate that there's a lot of moving parts out there, and folks are trying to digest it all. What I would say is there has been a severe cement shortage recently that I think probably factors into to some of what you're seeing there. And that's why we really -- we like Portland Cement. We track that like we do many of the other indicators that we spoke of, but we track a wide range of indicators because you can see anomalies in one indicator from time-to-time. And so we remain quite bullish. We also remain quite nimble to adjust to any market conditions that we may be presented with. But there's been a significant shortage, I think that's going to resolve itself. But we've seen that on our own projects, and it's a fact -- a number of factors and outages and unexpected outages and so forth. And I think that will get resolved in the coming months and quarters.

Okay. That's helpful. So your view is that the Portland Cement demand forecast is actually a supply constraint driven negative headwind for cement specifically. And then just in terms of the combination of the duration of the backlogs for most of your business, if you could just, in general, give us a sense if there is a demand slowdown. As of today, when would that actually start to flow through CMC's results at this point given the backlog that you have?

Yes, David, before I move to that, I just want to also back to the Portland Cement point you to some recent market comments from Vulcan and Martin Marietta, which are good indicators, and they're pretty bullish in their market outlook. So you might want to take a look at that. Our business model is really designed to weather cycles, I believe, better than other companies or other sectors of the economy. And the reason why is because we carry that backlog. And the backlog is prefunded, and in periods of changes in economic conditions, that provides a very strong baseload of work to keep our operations running at nice utilization rates. Having said that, we also have a very flexible cost structure and a very flexible product mix and a wide network of operations and we can flex very quickly to any set of market conditions. But at the end of the day, if one part of the construction sector starts to slow, generally, there are other parts of the construction sector that can and will offset that. And I say that to point again to the infrastructure, which we haven't seen the increased spending levels. We have said for a long period of time that we expect to see that. And many other companies are making similar projections that the infrastructure is going to begin to come to fruition in fiscal 2023. And so again, our business model is designed to weather bumps in the road and shocks. And there are many parts of the residential, nonresidential infrastructure that we see good demand ahead back to the non-res that follows the housing formation. And if you go back in time in other periods, areas of the country where there has been a strong residential component as these ebbs and flows in the economy occur, that nonresidential build out, it has to come to support those communities. And we're seeing that occur just as it always does, there's a lag 12 to 18 months following a strong residential build out. And I think you know the areas of the country that have seen rising population and strong residential build out. And I point to an announcement yesterday where Caterpillar is moving their headquarters location into the heart of where we are in Irving, Texas. So there continues to be a lot of that kind of change that's occurring. And again, the supply chain rebalancing is a topic that we've been talking about for a while. Just the projects that are well publicized are massive. They are multiple years. They are massive consumers of the structural steel that we produce and they're in the heart of where we are located. So we still remain very optimistic from a demand perspective.

Okay. That’s very helpful. Thank you for the additional color.

Thank you, David.

[Operator Instructions] Our next question today comes from Seth Rosenfeld of BNB Paribas. Please go ahead.

Good morning. Thanks for taking our questions today.

Hi, Seth.

I have a couple of questions that looks for imports into the U.S. Also, the market remains very tight, good pricing, but we have seen U.S. imports increased very sharply in recent months, possibly incentivize those high [indiscernible] spreads. What impact is that having on the market at present? Historically, [indiscernible] is high, I would assume it would have been much more problematic. But part of the issue simply that you're seeing higher costs in foreign market than Turkey and Europe, making a bit less painful from a pricing perspective? I will start there, please.

Yes. Thank you, Seth. Hope you're doing well. As you know, imports are something that we constantly monitor, and there has been some recent increase for certain product lines. Again, I think it reinforces the points we've been making around the strong demand environment here in the U.S. What I would say is that there's still some structural factors that make it less attractive for buyers to make big commitments in this area. Logistics is the #1 thing I would point to in terms of inconsistent and very, very high cost logistics. So right now, we’ve seen some. We have -- we monitor that carefully, but we don't see a big structural shift at this point in time.

Okay. Thank you. And the second question, please, on the growth side. In recent months, your team has spoken publicly about an interest in potentially expanding capacity within European long products. Obviously, the geopolitical situation has changed dramatically over the last few months. But how do you think about your interest in European growth? Any potential time line of that? And what would make you want to pull the trigger despite a challenging macro backdrop?

Yes, Seth, we take a very long time horizon to evaluate anything that we are doing, whether it's organic growth or inorganic growth. And certainly, you have to factor in the current environment and how long you think that that's going to persist. But when we make these decisions, we take a very, very long view, and we also take a very conservative view in terms of the financial metrics that we use to model those types of investments. And so I think our track record has been one of great discipline and actually yielding very good results. If you look at the investments, incremental investments that we've made on the growth side, they have yielded margins that are well above our long-term average margin. So I guess, I'm not prepared to talk about anything specific, but we do look at things all the time because there's a long lead time to execute on particularly organic type projects. We have an outstanding balance sheet, a very strong balance sheet, and we remain very nimble. And if we were to move into a more difficult economic situation, that might present attractive opportunities for us to examine. And with our strong balance sheet, we certainly want to be in a position to take a look at that. But we always value them and think about them over a very long horizon.

Okay. Thank you very much.

Thank you, Seth.

Our next call today comes from Phil Gibbs of KeyBanc Capital Markets. Please go ahead.

Okay. Hello.

Hey, Phil. Go ahead. We can hear you [indiscernible]. Good morning.

Okay, great. Good morning. On the fiscal '23 initial guidance for CapEx of, I think, in the range of nearly $500 million, what's your assumption in that for your new proposed Northeast U.S. mill? And have you begun ordering the equipment for that given the lead times necessary for a lot of the plans on the books here?

Yes, Phil. Good morning. The -- as we look at the sort of the construction process associated with a new facility, the permitting process is generally one in which it's a year to 15 months or so. And so we have not got any significant amounts in the guidance that we provided for '23 with respect to that project just simply because outside some initial down payment it would not be a significant amount of outlay that we would expect to do during that permitting process.

As it relates to your second half of the question, we’ve had a lot of discussions with equipment suppliers and we are confident and they have assured us that they have the capacity to take care of our needs when the time comes.

Thank you.

Thanks, Phil.

At this time, there appears to be no further questions. Ms. Smith, I will now turn the call back over to 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. Thank you so much.

This concludes today's Commercial Metals Company conference call. You may now disconnect.