Commercial Metals Company (NYSE:CMC) Q1 2024 Earnings Call Transcript

Paul Lawrence: Yes, Phil, typically because of the weather and the slowdown in construction activity that occurs, usually it’s between 5% and 10% of a reduction in volume. The volumes in the first quarter were relatively strong in relation to other seasonal impacts, so we would expect somewhere in the middle there, around a 7% reduction in volume. Now that all depends on what weather occurs. So far December was a very strong month from a construction activity despite the holidays. However, I think there’s an arctic blast coming through affecting much of the U.S. this week, and so we’ll see what happens over the remainder part of the quarter.

Phil Gibbs: And when you talk about this 5% to 10%, is that for U.S. mills and U.S. fabrication?

Paul Lawrence: Correct. Yes, as well as the EBG businesses which are construction-oriented.

Phil Gibbs: And then lastly, depreciation, as you guys noted in carved-out, stepped up pretty solidly, I would think, based on your disclosure, that it was largely for AZ2. But is that a good level to be using moving forward, that stepped-up rate that we saw in Q1?

Peter Matt: Yes, that reflects both the AZ2 depreciation as well as the acquisitions that we did throughout 2023.

Phil Gibbs: Thank you.

Paul Lawrence: Thank you.

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

Peter Matt: Okay, well thank you for joining us on today’s conference call. I just want to say in conclusion, CMC has positioned itself to take advantage of the wave of construction spending underway. And in this environment, we’re confident in our ability to drive higher through the cycle margins and generate excess returns from our growth initiatives. We look forward to speaking with many of you during our investor calls in the coming days and weeks. Thank you very much.

Operator: This concludes today’s CMC conference call. You may now disconnect your lines.