Sathish Kasinathan

Sathish Kasinathan asked if Franco-Nevada's strong organic growth potential would shift its focus away from new deals, and also inquired about the outlook for Palmarejo's performance in Q4 after a strong Q3.

Answer

Paul Brink, President and CEO, clarified that the company remains focused on new deals, with organic growth providing discipline in a bullish market. Sandip Rana, Chief Financial Officer, projected Palmarejo's Q4 performance to be similar to the first nine months, with full-year guidance between 40,000-50,000 GEOs.

Sathish Kasinathan followed up on the deal pipeline, asking if the strong organic growth potential means a shift in focus away from new deals. He also requested an outlook for Palmarejo's performance in Q4.

Answer

Paul Brink, President and CEO, Franco-Nevada Corporation, clarified that the company remains focused on new deals, but strong organic growth provides discipline to avoid overpaying for assets. Sandip Rana, CFO, Franco-Nevada Corporation, projected Palmarejo's Q4 performance to be similar to the first nine months, with full-year guidance between 40,000-50,000 GEOs.

Sathish Kasinathan asked about CMC's strategic focus for the precast concrete market following the Foley and CPMP acquisitions, specifically whether the priority would be integration and debt reduction or continued inorganic growth in the fragmented market. He also requested insights into Foley's historical growth rate over the past two to three years and its potential to grow above the 5-7% market rate.

Answer

President and CEO Peter Matt stated that CMC is 'done for now' with large acquisitions, focusing on integration and delevering to return below two times net leverage. He indicated that future bolt-on acquisitions would be attractive once leverage is reduced, aiming for a national-scale precast platform similar to the rebar business. SVP and CFO Paul Lawrence added that Foley and CPMP were identified as market leaders. Peter Matt explained Foley's growth drivers include GDP-related growth plus share expansion from in-progress expansions, expecting growth in excess of GDP. Paul Lawrence confirmed Foley's described margin levels have been consistently generated over the last few years.

Sathish Kasinathan from Bank of America inquired about the weaker-than-expected sequential volume growth in North American steel products for Q3, the volume outlook for Q4, and whether the recent rebar price hike is gaining traction.

Answer

President & CEO Peter Matt explained that Q3 North American volumes were impacted by unplanned operational outages, but he expects Q4 volumes to be flattish to slightly up. CFO Paul Lawrence clarified that combined finished steel shipments were up 10%, in line with seasonal trends. Regarding pricing, Peter Matt emphasized a focus on 'value over volume' and balancing company returns with customer needs, stating they will continue to monitor the market.

Sathish Kasinathan from Bank of America asked about the weaker-than-expected sequential volume growth in North American steel products for Q3, the volume outlook for Q4, and whether the recent $60 rebar price hike is gaining traction.

Answer

President & CEO Peter Matt acknowledged that Q3 North American performance was impacted by operational outages, which constrained production and shipments, but stated they are set for a strong Q4 with volumes expected to be flat to slightly up. CFO Paul Lawrence added that combined mill and downstream shipments were up 10% sequentially, in line with seasonal trends. Regarding pricing, Peter Matt emphasized a focus on 'value over volume' and balancing returns, customer needs, and 'Buy America' incentives, noting they will continue to monitor the market.

Sathish Kasinathan from Bank of America inquired about the lower-than-typical sequential volume growth in North American steel products for Q3, the volume outlook for Q4, and whether the recent rebar price hike has traction.

Answer

President & CEO Peter Matt explained that Q3 North American volumes were impacted by operational outages, but he anticipates a strong Q4 with volumes being flat to slightly up. CFO Paul Lawrence clarified that combined mill and downstream shipments were up 10%, in line with seasonal trends. Regarding pricing, Peter Matt emphasized a focus on 'value over volume' and balancing company returns with customer needs, stating they will continue to monitor the market and make adjustments as needed.

Sathish Kasinathan inquired about the U.S. rebar market's pricing power relative to rising scrap costs and the financial performance and breakeven timeline for the Arizona 2 mill.

Answer

Executive Peter Matt stated that CMC is successfully implementing price increases across its portfolio, keeping margins above scrap cost movements, and expects further hikes. He noted the Arizona 2 mill did not break even in Q2 due to operational issues but is targeting Q4 for that milestone. Executive Paul Lawrence added that CMC's vertical integration mitigates the full impact of scrap index increases.

Sathish Kasinathan inquired about the Q2 shipment outlook for North American Steel, given strong late-season activity, and sought details on project delays within the Tensar division of the Emerging Business Group.

Answer

Executive Peter Matt and CFO Paul Lawrence clarified that Q2 shipments should follow normal seasonal patterns, declining 5-10% from Q1's high base. Regarding Tensar, Peter Matt explained that project delays are broad-based, not regional, but the impact is temporary. He and Paul Lawrence affirmed that the associated revenue and earnings are expected to be recaptured in Q3 and Q4 of fiscal 2025, with the full-year growth outlook for Tensar remaining positive.

Sathish Kasinathan of BMO Capital Markets inquired about the year-over-year outlook for the Emerging Business Group and asked when CMC would be able to quantify the financial benefits of its new TAG strategic initiative.

Answer

Peter Matt, an executive, stated that the Emerging Business Group's performance should be roughly similar year-over-year, with sequential declines attributed to normal seasonality. Regarding the TAG initiative, he explained it is a multi-year program with benefits expected in fiscal 2025, but the company will wait to share specific financial targets until the initiatives gain more traction.