Commercial Metals Company

Q2 2023 Earnings Conference Call


spk_0: hello and welcome everyone to the second quarter just got twenty twenty three earnings also commercial medals today's materials including the press release and supplemental slides that accompany the stall can be found on c n sees investor relations website that is causing recorded and after the company's prepared remarks we will have a question and answer session and will have instructions at that time i would like to remind all participants that during the course of this out told the company will make statements that provide information other than historical information every good expectations regarding economic conditions it effects of legislation us feel important us construction activity the man for finished still products expect the capabilities benefits and i'm on for construction of new facilities the company's future operations the timeline for execution of the companies go god's plan the company stooge results of operations financial measures and capital spending these and other similar statements are considered forward looking and main valve 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 those are described in a risk factors and forward looking statements sections of the company's latest violence with the securities and exchange commission including the company's latest annual report on for ten k although these statements are based on management's current expectations and beliefs tmz offers no assurance that these expectations are the will prove to be correct an actual results may vary materially or statements are made only as a just state exact accept as required by law cnc does not assume any obligation to update a man or clarify this technique in connection with future events changes and assumptions the occurrence of anticipated or unofficial pitted against you information or circumstances or otherwise some numbers presented will be non got financial measures and reconciliation 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 nature year or quarter and are references to the company's fiscal year or fiscal quarter and now with opening remarks and introductions outrun the called a little the chairman of the board president and chief executive officer of commercial medals company miss are dismissed
spk_1: good morning everyone and thank you for joining fancy second quarter earnings conference call before moving to our quarterly updates i'd like to congratulate our current director peter man who has accepted the role of president commercial mouth company here has been an invaluable insight phone number of fancy is board since june twenty twenty thief and executive well known in this industry with a strong reputation among many of you an investment community who have interacted with him over the past six years while he served as chief financial officer or of can sell am the european based aluminum producer i have every confidence peter will make meaningful contribution to fancy have continued growth and shareholder value i would also like to welcome our new fiancee employees attended a certain and round metal group you have joined at an exciting time for our company and confident that your contributions together with there are those of you're talented colleague will make fiancee future even brighter both of these touch and acquisitions align with our vertical integration strategy and are construction solution of capability as we reported in our press release issued the morning fiscal twenty twenty three second quarter marked another period at to have historically strong performance i'd like to thank fancy is approximately twelve thousand five hundred employees for their commitment to safety an excellent and everything we set out to accomplish before diving into more details on the quarter i would like to direct listeners to the supplemental fly that a company that call the presentation can be found on cmp is investor relations website as i noted fiancee a second quarter of fiscal twenty twenty three earning were among the strongest in our companies one hundred and eight year history we recorded net earnings of one hundred and seventy nine point eight million or a dollar fifty one per diluted share on net sales a two billion excluding the impact of non operational item which politics got the more detail adjusted earnings were a hundred and seventy one point three million for a dollar forty four per diluted share the m generate a quarry that are for the quarter of three hundred and two point eight million a modest decrease of twenty point three million from a year ago producing an annualized return on invested capital a fourteen percent i would now like to discuss current market conditions and both north america and europe and provide our view on several powerful emerging structural trend that we believe will provide a positive backdrop for demand and our future order book earning first to north america we expect a strong spring and summer construction season this view is supported by both fan pete internal indicators and the key external measures we track the value in our downstream backlog and the second quarter at a record level for the time of year and with up roughly twenty percent from a year ago volume in our backlog also increased on a year over year basis over stations with customers indicate that other fabricators are similarly situated with healthy backlog they expect to ship over the coming construction season bmc downstream bidding activity which provides our best year of development within the future project pipeline also remains robot increasing more than thirty percent on a year over year basis during the quarter project in the pipeline continue to represent a healthy blend of both private and public work and activity is good across our geography our near term view is echoed by external indicators that have been historically reliable first of the dodge momentum index which tracks project entering the planning phase and generally leads on the ground activity by nine to twelve months the february reading increased by forty three percent from a year ago reaching it's third highest level on record both the commercial and institutional component were like quite strong growing by fifty five percent and twenty two percent respectively the american road and transportation builders association last month really cali of new highway contract award which increased twenty four percent in calendar twenty twenty two the total value of of state and local transportation construction awards increased by twenty five percent the largest annual growth and the twenty five years that the association have been tracking this data projects such as the tend to be multiyear and nature meaning that awards and twenty twenty two should translate into construction activity and twenty twenty three twenty twenty four and beyond though to sum up we continue to monitor a range of indicators such as inflation interest rate and unemployment which are feeling recessionary concern however on balance we continue to seek good current activity and positive future signal in our key market segment taking a longer view for several quarters now i have discussed powerful structural trend that we see developing in our nation's economy generally and in fiancees construction market more specifically five light seven of the supplemental flight deck illustrates the magnitude of the program and project that are intended to read of idolize america's transportation infrastructure argue us manufacturing supply chains redirect our nation's energy trade and maker electrical grid greener each of these areas involved significant multiyear investment that we expect will drive significant demand for our broad range of construction solutions products and services looking first at infrastructure the infrastructure investment and job to act signed into law and late twenty twenty one substantially increase the amount of federal funding available to date local government to support highway construction at the average run rate over the five year program we estimate the federal funding will increase by sixty five percent compared to the fast act and create one point five million tons of incremental rebar demand there are scientists work is moving through the pipeline and should show up in bed market during calendar twenty twenty three one such fine if the dodge analytic infrastructure design phase in dec which increased by four hundred percent on a year over year basis in a three month ended in february the on the federal level date transportation budget or well funded and growing the m p three large of faith by feel volume have drafted or approved multiyear highway construction budget that on a combined bases represent an increase of twenty four percent compared to the average levels of the past year the combination of increase federal funding and rising state budget should support a strong highway market for several years to come transportation infrastructure is also the most rebar intensive segment of the construction market
spk_2: as an example
spk_1: a dollar invested in highway were consumed five to six times more rebar than traditional residential or nonresidential structure the also continue to see positive development in the area of supply chain hardening and reassuring of critical manufacturing capability the last month and other semiconductor plan with announced in utah bringing the total number of planned facilities to twelve and planned investment across the industry to two hundred and eighty seven billion all of these facilities include multiple phases are massive inside and consume large amount of rebar they also require extreme structural rigidity and extensive site logistics development which makes them attractive target for our tents our product line the current investment faith will take several years to complete providing a prolonged source of demand for fancies products and services significant investments are also planned for electric vehicle and battery manufacturing with at least twenty fill it is in some phase of planning or construction at a capital cost exceeding sixty billion then a conductor an electric vehicle plan are the highest profile examples of supply chain hardening but other industries are also very experiencing increased activity or project planning these include lng facilities or the export of natural gas as well as chemical in plastic plan last three years have expose the vulnerability of a concentrated global supply chain the pandemic and geo political turmoil have reminded us of the need for a more distributed that a thorough thing options ensuring reliability and flexibility in securing critical materials and equipment the leadership of american manufacturing companies agree a survey conducted by deloitte in late twenty twenty two indicated that sixty eight percent expect to reassure a meaningful portion of their operation within the next several years burning now to europe current market conditions there for more difficult quick to fat and the near term outlook is like certain despite that overall construction activity you continue to grow on a year over year basis during the second quarter however residential activity which has been strong for more than a year if now showing signs of a flow down to the impact of writing mortgage interest rate as new mortgage henri origination contracted sharply on a year over year basis counter active development the government of poland has advanced a plant support first time homebuyers by offering much of the increased mortgage interest costs the plan out drafted is expected to provide significant support to the residential construction market and has reached the final stages of approval as of today the legislation is not yet law but the outlook is promising industrial activity in central europe continues to be impacted by the ongoing energy concern and weak economic sentiment however energy costs across the continent have moderated considerably from the peak level which should lead to a rebound in manufacturing activity our team and poland has been able to maintain strong volume despite the challenging backdrop by leveraging their operational flexibility in fact to our shipment of finish good during the second quarter were thirty three percent above the long term average and down only three percent from a year ago looking ahead we believe that lower european energy prices and the potential stimulus of polish home buying will provide support to our key and market he believe are strong competitive position come to think both cough and operational flexibility will allow us to maintain volume above historical level usually our natural gas contract pricing research in early april which had meaningfully benefit our cost of production while on the topic of europe i would like to provide a few common on a post earthquake situation and turkey thousands of lives lost in the millions of people displaced by the earthquake that occurred in early february is a great humanitarian crisis turkish government is moving quickly to implement a large reconstruction effort which will likely have impact on global feel market turkey is both the world's largest importer of scrap and expert of rebar and plays a significant role in the us and european market bernd reconstruction plan would require approximately five and a half to the million short tons of steel and then on the time period over which this of consume the rebuilding plan could have a material effect on scrap ore rebar pricing or both i would now like to turn to the commissioning efforts of our arizona to project project is on track for a start up later the spring we will begin called commissioning both the melt shop and rolling know shortly before moving into the hot commissioning faith be expected again pregnancy rebar for sale during our for fiscal quarter once they they do with easy to is fully operational fancy will have one of the most advanced filmmaking complexes anywhere in the world not only will we achieve another industry first by producing merchant bar on a micro mill but we will also have coal located to of our micro mill in a unique configuration the expected arrangement of the to feel plan will provide meaningful operational efficiency including shared staff support production optimization improved production schedule a in shared fight infrastructure we are excited to begin production at this world class know which have been three years than the making i would like to recognize fiancee is highly skilled team of engineers project manager and support staff for making it possible through the through your tireless efforts regret that feel west virginia our latest major growth investment remains on time we have applied for your permit and expect to receive approval in the coming months if timeline for permit approval has been made possible due to the support and cooperation of west virginia regulatory authority once approval is received we will move forward with five preparation later this year but that is an overview all now turn the discussion to paul lawrence senior vice president and chief financial officer to provide for more comments on the results for the quarter
spk_3: like you barbara good morning to everyone on the call today a barber noted we reported fiscal fucking quarter twenty twenty three net earnings of a hundred and seventy nine point eight million or dollar fifty one per diluted share compared to prayer level of three hundred and eighty three point three million and three dollars and twelve two respectively results with quarter including that after tax benefit of eight point five million this benefit included the settlement of an infinite related to previous capital investment of feel feel feel oklahoma microbial partially offset by costs associated with ongoing commissioning effort at the easy to quoting the impact of the second quarter items adjusted earnings were hundred and seventy one point three million or dollar forty four per diluted share in comparison to adjusted earnings of one hundred eighty seven point four million or dollar fifty three per diluted share during the prior year period or even though with three hundred and two point eight million for the second quarter of twenty twenty three representing a moderate declined from the three hundred and twenty three point one million generated during the prior year period why twelve a supplemental presentation illustrate the year to year changes and sam fees quarterly results or north american segment achieved earnings growth while europe experience the pullback validated corey that the per ton of finished deal with have two hundred and fifteen dollars per tonne remained well above the historical averages and compared to two hundred and twenty six dollars per tonne a year ago the empty north american segment generated adjusted ebitda of two hundred ninety nine point three million for the quarter equal to three hundred and eight dollars per ton of finish steel shipped segment adjusted ebitda the improve fourteen percent a year over year basis excluding the large game related to a fail that was recognized the last year second quarter result was driven by higher margins on downstream and feel products over their underlying scrap car downstream products were a particularly impactful contributor of a year over year basis of average selling price prices improved by approximately two hundred and fifty dollars per tonne compared to the second quarter of fiscal twenty twenty two though higher than a year ago second quarter results were negatively impacted by a handful of factors that are worth calling out first we encountered several instances of disruptive whether within our core geography freezing rain and texas and oklahoma as well it extensive flooding in california constrained second quarter volumes by a low to mid single digit percentage when compared to a year over year level back in late as we previously discussed we performed a major equipment upgrade at our largest us steel mill during january and february which had the effect of increasing controllable caused by roughly fifteen million dollars during the quarter as planned we prefer paged inventory to ensure our ability to meet customer expectations during the down period both capital and operating costs were in line with expectations i like falling prices for still products from our milled decreased by fifty six dollars per ton on a year over year basis and thirty five dollars per tonne from the prior quarter margin over scrap on your product increased by thirty four dollars per tonne from a year ago comparison to our first quarter narrow margins decrease by fifty six dollars per ton as you are aware and an early in early march there have been several price increase announcement of fifty dollars per tonne across most long the product we are hopeful that these pricing adjustments will stabilize margins and historically strong level heading into our busy of season turning the flight fort paine of the supplemental deck or europe segment generated just the the that the twelve point nine million for the second quarter of twenty twenty three compared to eighty one point one million and the second in the prior year period decline was primarily driven by lower margin over scrap higher cops for energy and a modest reduction in shipment value our energy procurement remains competitively position relative to the broader european industry however higher contractual pricing for natural gas that has been in effect since october has increased our cost of production as barber mention pricing will again reset in april which should lower cost and benefit profitability europe volume decrease three percent compared to the prior year with higher rebar shipments are betting much of the weakness and industrial feel such as merchant bar and some wire rod great the of these volume significantly outperform the broader polish and europeans the a factor as we were once again able to leverage are operational flexibility to address the best opportunities in the marketplace the man conditions within central europe are challenging the polish construction market continued to grow by low single digit percentages while industrial production has contracted for nearly three quarters we believe the empty as well positioned for this current period of all activity in europe we are a low cost industry leader with an operational flexibility to adjust to and serve changing market conditions and thar generated either derby point nine million during the second quarter which is generally it's seasonal a flow as period the even that performance yielded a margin the seventeen point three percent margins where temporarily impacted by several weather related projects as well as production issues in our georgia facility as a reminder tenth our performances included within cmc the existing segments of the eight point nine million and even the seven point four million was included within the the north american segment while the remaining one point five million was reported within the europe segment burning to balance sheet liquidity and capital allocation as of february twenty eight cash and cash equivalents total six hundred and four million in addition to cash and cash equivalents we had approximately eight hundred ninety five million in availability under our credit for blown and accounts receivable to fill it you bring total equality to approximately one point five billion this liquidity provide that flexibility to our draft our upcoming maturity of our twenty twenty three bond during the quarter we generated one hundred and eighty six point five million of cash from operating activities with working capital being a negative factor our free cash flow amounted to thirty point three million defined as our cash from operation left one hundred and fifty six million of capital expenditures or leverage metrics remain attractive and have improved significantly over the last thorough fiscal years of can be fight scene on flight eighteen or net deputy but the ratio now at that point five we believe our robots balanchine overall financial strength provider the flexibility to finance or strategic growth projects and pursue opportunistic am in a while continuing to return cash to shareholders the empty the effective tax rate with twenty three point six percent in the second quarter looking ahead to fiscal twenty twenty three we currently expect the full year effective tax rate to be between twenty three and twenty five percent earning that the mc is fiscal twenty three capital fund that look we expect to invest between five hundred and fifty and six hundred million in total outside of normal sustaining investment expenditures and fiscal twenty three are directly directed towards finalizing the construction in arizona to funding major upgrade projects at to us steel mills as well as initial investments related to the west virginia the empty continued to deploy capital sport our growth plan and reinforce our metallic sourcing scratch strategy in early march we acquired road metals group in tennessee the transaction is intended to enhance the security of competitively priced them but for our steelmaking operations in the state he made to acquisitions during the first quarter with similar strategic content and earlier this week cmc fee and out the acquisition of pendant system a leading producer of post pension and solutions in the felt the united states by the action extend our existing capabilities and the products space and enhances the breadth of offering we can provide to the market lastly vm fee purchased three hundred thirty thousand shares during the fiscal second quarter an average price of fifty two dollars and four cents per share transaction since the initiation of the buyback through queue to have amounted to approximately two hundred and twenty eight million leaving one hundred and twenty two million remaining under the authorized program this concludes my remarks alternate fact barber for comment on the a walk
spk_4: thank you paul
spk_1: are the reasons i mentioned we are confident in our ability to deliver strong financial performance in the second half of physical twenty twenty three and expect to generate sequential improvement in court either are during the third quarter the signals we watch most colourful including or downstream backlog bidding activity consumer conversation an external indicators all point to a generally positive outlook and robust upcoming construction season in north america you to normal peace analogy finished your product shipments are expected to increase from second quarter levels in both north america and europe with the added benefit in north america of recovering some whether delayed volume the recent price increases the our long feel products in north america are expected to save a life and that a large and robocop the north america will also be impacted by a planned upgrade similar and scale to the outage taken during the second quarter yeah look for metal margin in europe is a bit more uncertain however our culture production there should decrease from the second quarter as the price of natural gas purchases is it we are excited to soon begin production at arizona to and look forward to providing you with an update during our next earnings call along with an update on our fourth micro male project in west virginia this world class operation is ramping up at just the right time as the empty will be able to better capitalised on the multiyear strength with the in our construction market once again i'd like to thank our customers for their trust and confidence and fiancee as well it all of rcmp employed for delivering yet another quarter of outstanding performance
spk_0: i just thought we went out looking to call to questions that question may push your than one in your telephone keeper if you're using a speaker phone please pick up your headset before pressing the keys into a withdraw question please post star into we ask that you please limit yourself to one question in one family and if you have further questions you may return to the question at this time we pass just momentarily to assemble our roster it was questioned will come from any shen with goldman sachs please go ahead
spk_5: the morning barbara poland thank you for the update today are my first question is just around some of the challenges are thing in the banking system or the last couple of weeks are you thing any here i'm around bidding activity levels or any impact that within segments around the non residential construction and markets which could be more or less sensitive to follow the issues that were thing or perhaps some of the impact from this volatility more broad based in nature
spk_6: thank you emily how
spk_1: how he'll turn around and as far as any other perspective her side he can certainly try man at this time we are not seeing any impact from you know what's going on in the banking system which i know his top of mind for forever one myself included that at the time we're really not seen any any impact that that we will certainly monetary carefully as as time goes forward
spk_7: okay understood and then maybe just
spk_5: switching a little bit but taking a look at the downstream backlog that you've talked about that you mention of up twenty percent on a year are you your of a year faith in terms of value to clarify that the combination of both price and volume and the backlog right and i'm if i could take that one step further how do you think about what that backlog extends into in terms of thailand's for the rest of the year
spk_1: yeah thanks emily you're correct that you know the backlog is that both on a volume and a value basis
spk_8: and
spk_1: you know as you can appreciate the backlog is is a wide range of project where the variety of duration but it is one of the strongest backlog to carry it through the construction see them so that that's why we're so encouraged by what we see in in the coming quarters and then if you add to that the level of bidding activity which also remains strong as well as the structural long term factors in the the coming
spk_9: impact of the the new
spk_10: infrastructure and jobs act
spk_1: we we remain very encouraged and bullish
spk_11: medium and long term
spk_12: right thank you thank you emily
spk_0: and our next question will come from in the theaters with what please go ahead
spk_13: yeah hey good morning and thanks for all that update wanted to ask our high level question and then drill down a little on but starting out with that another comment and turkey in the context of the market really helpful are you seeing and turkey export lesser are fewer important to us market already and it in the same vein can you comment at all on the expected impact of by america perhaps also on and the threat of imports into the country
spk_14: thank you know turkey
spk_1: jay commercial who you know is got a lot of great analytical work around that and i think we're providing that and are sir relation to real that we're putting out on the web site i guess i would say at this point
spk_15: no doubt it it's gonna have impact both
spk_1: more immediate impact than then longer term impacts but i figured though a little bit really to know how that going to effectively play out what we do know of course is that it had a huge impact on the feel producing region that that post or earthquake the industry had difficulty restarting because so many of the workers have been display and then we no longer term there's going to be the the rebuilding activity which is going to require a lot of the the demand for increase rebar that you wouldn't know thoroughly see on an ongoing basis in that in that market
spk_16: and you know we've experienced
spk_1: different but other
spk_8: disaster situation here in the you as hurricane and the like
spk_1: and you know generally the rebuilding phase take a little bit period of have a longer period of time though while i i think the government there will be moving and great speed to try to recover from the to travesty it just practically speaking you know will take some time to you know remove the debris and than than rebuild so at this point i can't point to you know hard evidence of major impact but we did try to speak broadly there's you because you know i my opening remarks on and some of the things that were watching you know we're watching they're procurement of scrapple watching and will continue to lodge you know how those operations recover and then how that gonna impact trade flows though you know i would think in the medium to longer term most of them materials gonna stay domestic what should you know tight tighten up market in europe and in the us by america as you know
spk_17: is is going to be supported and has always been supported in in the us from us to the infrastructure spending and so that is another reason why we remain bullish on the market that you know the ongoing investment that that than increasing really
spk_1: added to the prior infrastructure bill finally
spk_18: materializing in the market
spk_13: it has that by america component and then the future spending will will also take advantage of that but really helpful to our business okay great that's helpful yeah that turkey and kinda to really quick inside the wondering if you are thin and or maybe them that reporter your hand were a little early for thank you for that
spk_19: just drawing down a little bit i wanted and understand cancer a little bit because i'm and on that last call you that there are some unusual reason for eleven point four million and even dad that the production challenges and that quarter reporting and they'll just what eight nine million over on seven and a half in there and us like and fetch a seasonal earth or something
spk_10: continuing production challenges and then if he could also comment on the higher capek number while lower we got you thank you
spk_1: if you don't know we take a crack at or and all at top comment on kappa the we have to you know kyle call it unrelated things going on we did have a approach failure and and are georgia facility some month ago in had been waiting because of supply chain issue for the replacement prep and that probe was installed loved quarter and as you can appreciate we you know have been debugging that and and ramping that up and so at this point you know if the facility has had largely recovered and from that that incident but it did impact prior corps and and this reporting period as well in terms of overall you know what are we seeing in terms of volume and activity level intense are hand car has a greater season of fact within this quarter then even fiancee is it is generally more dramatic theme all downturn then our traditional fiancee business and this quarter was no different in you know just as whether impacted us could also whether whether impacted cancer but they typically the a more dramatic seasonal a fact look at other indicators which we've been tracking in terms of because you know this is the a product that is an innovative product and and a gross product in the market if you look at their volume you know laugh last year relative to the sheer they are you seeing the expected growth in volume oh you know the innovative product is making inroads in the marketplace due to the unique characteristics and the construction problems that is all and so that is you know a very good sign for the second thing is you know they are constantly innovating and introducing new product into the market and they introduced a new product overlap number of quarters and that product is receiving very strong cause customer except and in the marketplace which is another really encouraging sign and you know every time we introduce a new product it has enhanced feature
spk_3: years and and typically carry the margin associated with those enhanced features so we're we're very very encouraged in in you know the team they're fully expect to have a really interesting in an exciting a contract construction season in a in the coming quarters emma with respect to your question i'm a concrete back up of bandits it's really to fault wow significant way that it we we're anticipating increase from them this current year and the a west virginia the a mouse facility is barbara outline on her comments with were expecting to receive the permit in the air in the coming months and that will allow us to to accelerate some of our fight
spk_20: preparation them are moving car rafa taking the precautionary steps up you know pre ordering a lot of equipment that have had them very long lead times and today's environment
spk_0: so we can ensure the project is is maintained so those requires and down payments to be to be placed which has increased first spend them and naturally we are seeing some inflation and in fellow vara that callbacks projects that we have him and that for the proportion of it as well
spk_21: and and information thanks to him
spk_0: in our next question will come from first impression pnp elbow please go ahead yeah i thank you for taking my questions at the first one i thank you for providing that the you can see if you use the a residential sure infrastructure when you will get you know the to the spending billions for on the be sure you saw that he also i laid out
spk_1: in terms of bitcoin can he get up with security
spk_6: i was wondering if you added number and mind it maybe she can share you any kind of difference by type of plan for their
spk_1: was sold to the timeline when you you start doubting and you complete the type of security any kind of commission they get help us out you to putting a number of behind it you can have i arranged be showing a trend that that will help you out as well they threaten a really great question couple comments i would make and thing with some of the example that we lay it out the because were involved in a number of facility facilities a i think we have a really good understanding of the feel intensity you know for those types of project and those projects you know are located multibillion dollar project as as you're well aware and there is a very significant feel intensity for example in a chip in a chip facility because of the structural integrity that you need i would also say those projects are generally constructed and phases and so you know they will begin and complete phase wine and then they'll move on to thanks to add cetera and of course given our breadth of capability and breadth of products and and size and scale and geography
spk_9: you know we're really well positioned to provide excellent customer support to the really large real intensive project
spk_1: i'd also say in the and then the other example of lng you know again depending on size and scale of the project we would know from our experience of supporting these projects historically your kind of what the the the level of a feel content that goes into that but i would i would further add on a lng facility that requires some different types of structural steel cryo bar high strength feel as well as you know traditional black bar and gmt here you know one of very few that can a then to our customer that full range of products that they need to support that and so i'm not i'm not prepared to tell you you know x number of tons per project because you know they they all very they're all very very different i think that the message that we're trying to convey his you know that the activities is real they're multitude of these projects they are multi year they are funded before they began when you know corporate have very strong balance sheet and and so are left affected by you know the earlier question around some of the banking
spk_0: lng that are that are going on in the marketplace but that that in our view is going to provide significant support to desserts activity level going forward
spk_1: you know that unlike when we've been into multiple times in the paths or unlike period in the past
spk_0: it that the that's really help what a fine majors for kids
spk_3: i just try my luck carried it in terms of feeling can see it in the he did hurt you sure that will closer to choose don't do did you can you provided poor infrastructure rather than wrong nonresidential
spk_22: i'm sorry to thinking you can you repeat that time it break breaking not a little bit on my end
spk_21: don't i'm when you look at the is you intend ti of used to and semiconductor investment all that i know you're not prepared to share number the just wondering if you know in terms of stealing can he for me boy get closer to the infrastructure a figure or that you provide a little closer to didn't already have
spk_1: figure you provided eric church and we we would say that if if likely somewhere in the metal have not going to be quite as and time for the infrastructure but i think is barbara was alluding to it is more impact of them a traditional not rev a component
spk_0: okay that that's a for an interest in my with yeah i don't know if you ever followed that you know one thing i failed to mention an hour earlier conversation related to these products project but the project alto are great project for the application of our our products that tenth are make and so you know that another i would have indicator for growth in and that product line as well
spk_1: but it i'm and maybe just a second question general question a bit more the your picture and you can have a unique position by being involving the the construction worker in the us but also be in europe and we've seen ah you know the the us really putting a lot of our policies in place support nonresidential activity and now we're starting to see a little bit of a response or on the european side as well i with he he get legislation they came out with the past two weeks of having the footprint in both they both regions are you able to compare to the level poly a political support in both a bitch read and i would you compare that yeah that's a great observation and as i indicated in my opening remarks and know we're very encouraged by the the activity in poland support the residential market and terms of the you know interest rate help that they're going to provide to first time homebuyers and so i think that's a real you know positive sign and you know i'm encouraged that that other parts of europe or are looking at the issue and and trying to fight wait to to lend support and i think i think the u is is of course further behind then than what we're seeing here in the us because for example the chip act with a prude last year and you know now we're starting to see the green shoots from that and you know we haven't even talked about wind and solar which will be the beneficiaries of of that and and that is the you know and a piece of the market that plays really well to our sweet spot but i would say this in europe and the energy transition you know they're already has been a lotta talk about
spk_21: country and legislative support to assist with the the transition which is going to involve significant investment in existing facilities in new technologies and
spk_0: and you know green energy and and all of that so i think it's coming over there is
spk_23: it should their been you know some obvious unexpected impact that have been kind of overshadowing in europe when the invasion occurred last year
spk_24: okay thank you thank you very much thank you drift
spk_25: and on next question will come from two games with t they capital markets please go ahead
spk_1: a good morning the morning joe ah as it relates to make the clearly very exciting and and groundbreaking and and ramping what what have you expectations are within a few quarters for ball human and nine and i should we be thinking about the evolution of that the thorn in the next year thanks so yeah we are really excited as you know you follow that than to three in there been a number of greenhill projects and you know no surprise the supply chain challenges that has affected any that so we are so proud to be really to completing and commissioning according to our original schedule and i i need to make a shout out again to the team out there because they have just moved heaven and earth to overcome all the various the challenges in in supply chain and cetera in terms of the commissioning and the ramp i'd like to pay the following we as you know have a lot of experience is this is our third micro now and so we would it fact for rebar that the the ramp up vical will fall at follow a similar or
spk_15: sort of curve to to are other facilities
spk_1: and as i indicated we believe will be pretty commercial great product and within the fourth quarter but i'll add a flight caviar to that and say that you know first's we're going to be conditioning rebar but then we will follow that with the commissioning of merchant product and so while we're you know ramping are rebar output we will have to take time on the know the to commission the merchant product
spk_25: and that will be going on simultaneously and so i think one we get through the next couple of months with the cold and hot commissioning
spk_26: then i think we can give you a better update on you know the specifics and turned our volume expectation
spk_3: and and and in so i think that it will have some impact in in this fiscal year we'll see some commercial value flow out of that fertility but it will be a much greater impact in to twenty twenty four thanks so much and an unjust the follow follow been on not working capital what should we be expecting their in the in the back half of the year in terms of sorcerer or use certainly scraps moved up but you know you might have some you excess inventory with the origins of trying to find
spk_27: partial that out and to watch
spk_3: yeah failure you're exactly right you know what what we had typically we use working capital or working capital of the use of cash and the first quarter and that's usually a relief through them than the last three quarters of the year this year with the increasing scrap environment resulted in in the second quarter being a a use of cash again
spk_28: you know as we look forward and certainly at the moment seems scrapping the looking relatively stable we would we would expect that will revert back to the typical trend
spk_0: the of of working capital being a relief and as you mentioned yes we should have a relief here him in the the coming quarter
spk_21: with respect to getting the outage in the pre placed inventory that i spoke of
spk_1: liquidated into in the cash as we collect those receivable fell we should see elevated it was elevated working capital lasers for the going to quarters thank you i felt they fill and our next question come from last and what do you think of america please go ahead
spk_18: good morning i by ron paul think free time today for up getting yeah i'm maybe just don't are not temps sorry that i believe the expectation is a run rate of about sixty five million dollars can you up a be provide a little color are like the the timeline and cater to get that
spk_21: level
spk_1: yeah i mean i would say we're we're on track for the sixty sixty range
spk_10: probably the lower end and than a higher than the that for the fiscal year but
spk_1: you know we haven't entered internet busy season yet and but all the time they're really really encouraging their excellent and maybe just a market questions and be in the corner from more in the last month of you were detected a noticeable increase in rebar imports are regions other than turkey
spk_29: can you your thing
spk_1: you know turkey is is the largest factor in there are absent flow from the various importing countries from time to time
spk_9: algeria's one that i would would note and those know some of those are turkish mill
spk_30: so they're really we kind of lump them into
spk_31: turkey impact
spk_0: so i would say algeria is making taking up some of the flag with the earthquake
spk_32: disruption that the to build down in in turkey where where they can of course
spk_0: but there's not any
spk_26: meaningful impact that that we're seeing
spk_32: okay thanks very much yeah thank you
spk_6: it or next question come from our target what city please go ahead
spk_1: morning barber pole for squeeze the man i'm not just have one question so the million and a half pounds of rebar
spk_33: that you see coming from federal infrastructure program
spk_10: i guess you know what year do you forgot that we would get to that level
spk_34: and germany as come on what that number would be and twenty twenty four given the bidding activity that you're saying at the moment and i don't wish i would assume that the numbers fairly close to zero for twenty twenty three thank you very much
spk_1: thank you alex but i would say is you know the signs are there that the area moving forward that pre pre planning activity all that dodge in feed our are pointing toward movement forward and as you point out you know there's not a we can't point to a large said of of bidding or booking activity that is the typically tied to that that these are you know just like regular infrastructure bill we always say there that twelve to eighteen months lag between when of bill is approved and when you see the activity and so you know the the growth in infrastructure last year was really related back to the fat fact but a couple things i would know the the date budget are are one of our best indicators because first you you know the federal allocated by date and then the state have to put their funding and played and their project plan and a number of key stage that we've looked at have either authorized mocha your infrastructure budget to support what's coming from the federal funding
spk_34: or they are you know in the process of approving those budget
spk_1: there's you know significant
spk_9: amount of money than being allocated in anticipation of that
spk_1: i would say and in you know in general in the largest consuming day are healthy and terms of of their balance sheets and they are being very proactive in planning for
spk_0: the those infrastructure project like texas and florida we are seeing
spk_1: significant activity and both are the same in both the same have have funding plan
spk_0: though it is it's coming and how fast it ramps up to the you know to the million and a half time at that age of the little more difficult to predict until we get to the bidding and booking but i would expect
spk_15: you know by our next day
spk_1: you know maybe we're going to have something more
spk_0: more concrete to to share in terms of how that flowing from pre planning to the actual project and bidding and cooking

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