Commercial Metals Co (CMC) Q3 2025 Earnings Call Highlights: Strong EBITDA Performance Amid ...

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24-06-2025

Net Earnings: $83.1 million or $0.73 per diluted share.
Adjusted Earnings: $84.4 million or $0.74 per diluted share.
Net Sales: $2 billion.
Consolidated Core EBITDA: $204.1 million.
Core EBITDA Margin: 10.1%.
North American Steel Group Adjusted EBITDA: $186 million.
North American Steel Group Adjusted EBITDA Margin: 11.9%.
Emerging Business Group Net Sales: $197.5 million.
Emerging Business Group Adjusted EBITDA: $40.9 million.
Europe Steel Group Adjusted EBITDA: $3.6 million.
Cash and Cash Equivalents: $893 million.
Total Liquidity: Over $1.7 billion.
Cash from Operating Activities: $154.4 million.
Capital Expenditures: $89.5 million.
Fiscal 2025 Capital Spending Outlook: $425 million to $475 million.
Share Repurchases: Approximately 1.1 million shares at an average price of $45.30 per share.
Warning! GuruFocus has detected 4 Warning Sign with CMC.
Release Date: June 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Commercial Metals Co (NYSE:CMC) reported net earnings of $83.1 million or $0.73 per diluted share on net sales of $2 billion, with adjusted earnings of $84.4 million or $0.74 per diluted share.
The company generated consolidated core EBITDA of $204.1 million and a core EBITDA margin of 10.1%, showing meaningful improvement on a sequential basis.
CMC's North American Steel Group experienced a good sequential recovery in steel product metal margins, with expectations for further margin expansion in the fourth quarter.
The Emerging Business Group saw a 4.7% increase in net sales and a 7% increase in adjusted EBITDA, driven by strong demand for proprietary products.
CMC's Europe Steel Group reported an adjusted EBITDA of $3.6 million, a significant improvement from a loss in the prior year period, due to cost management efforts and increased shipment volumes.
North American Steel Group's adjusted EBITDA decreased by 24% compared to the prior year period, primarily due to lower margins over scrap cost.
The company faced production challenges and higher costs due to outages in the North American segment, impacting shipment volumes and profitability.
Fiscal third-quarter net earnings decreased from $119.4 million in the prior year period to $83.1 million, reflecting a decline in profitability.
The Europe Steel Group's improvement was moderate, with ongoing challenges in the market backdrop despite some recovery.
The company experienced delays in certain projects within the Tensar division, impacting financial performance.
Q: What caused the lower-than-expected steel product volumes in North America during the third quarter, and what are the expectations for the fourth quarter? A: Peter Matt, President and CEO, explained that the lower volumes were due to outages late in the quarter, which affected production and led to lower inventories and higher costs. For the fourth quarter, volumes are expected to be flattish to slightly up, following normal seasonal trends.
Q: Are recent US rebar price hikes gaining traction, and is there room for further increases? A: Peter Matt stated that while they don't discuss pricing directly, the company focuses on value over volume. They believe they have struck the right balance in their pricing strategy and will continue to monitor and adjust as necessary.
Q: Can you provide an update on the Arizona 2 facility's utilization and its impact on EBITDA? A: Peter Matt reported good progress at Arizona 2, with utilization expected to reach 70% to 75% by year-end. The facility is anticipated to be profitable in the fourth quarter, contributing to the targeted $150 million EBITDA improvement.
Q: What factors contributed to the delay in the West Virginia project, and how does it affect CapEx for the next fiscal year? A: Peter Matt explained that the delay was due to securing an $80 million grant from the Department of Energy, which required compliance with specific requirements. The delay is not related to market conditions. Paul Lawrence added that CapEx for the next fiscal year is expected to be around $550 million, including $300 million for West Virginia.
Q: What are the expected multiples for potential inorganic growth transactions, and how does CMC plan to manage these acquisitions? A: Peter Matt noted that multiples for target businesses are generally higher than CMC's due to their higher margins and growth potential. CMC plans to be disciplined, aiming to bring the effective multiple down to CMC's level over time through synergies and growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.