Second quarter net earnings of $25.5 million, or $0.22 per diluted share; adjusted earnings of $29.3 million, or $0.26 per diluted share
Consolidated core EBITDA of $131.0 million in the second quarter; core EBITDA margin of 7.5 percent
Solid North American construction demand drove a 3.3 percent increase in finished steel shipments compared to the prior year second quarter
New project awards reached the second highest level since late fiscal 2022, leading to a healthy North America backlog volume that grew sequentially and was stable on a year-over-year basis
Europe Steel Group achieved adjusted EBITDA breakeven during the quarter, driven by effective cost management and modest margin relief
Profitability in the Emerging Businesses Group increased both sequentially and on a year-over-year basis, despite seasonal headwinds
Execution of long-term strategic plan, including organic growth investments and the operational and commercial excellence program (“TAG”), is contributing positively to fiscal 2025 performance
Commercial Metals Company (CMC) disclosed financial results for its fiscal second quarter ended February 28, 2025. Second quarter net earnings were $25.5 million, or $0.22 per diluted share, on net sales of $1.8 billion, compared to prior year period net earnings of $85.8 million, or $0.73 per diluted share, on net sales of $1.8 billion.
During the second quarter of fiscal 2025, the company recorded estimated net after-tax charges of $3.9 million, primarily to reflect interest expense on the judgment amount associated with the previously disclosed Pacific Steel Group litigation. Excluding these charges, second quarter adjusted earnings were $29.3 million, or $0.26 per diluted share, compared to adjusted earnings of $85.9 million, or $0.73 per diluted share, in the prior year period. “Adjusted EBITDA,” “core EBITDA,” “core EBITDA margin,” “adjusted earnings” and “adjusted earnings per diluted share” are non-GAAP financial measures. Details, including a reconciliation of each such non-GAAP financial measure to the most directly comparable measure prepared and presented in accordance with GAAP.
Peter Matt, president of CMC and chief executive officer, said, “In our seasonally weaker second quarter, during a period of continued economic uncertainty, the CMC team bolstered profitability across each segment by targeted actions to increase commercial discipline and optimize costs, in order to support higher margins. These efforts drove improved sequential profitability within our Europe Steel Group (excluding energy credits and rebates) and our Emerging Businesses Group, and ran counter to normal seasonal trends. Our initiatives are also contributing to financial results in our North America Steel Group, where the business remained under pressure from margin compression in most lines of business. Encouragingly, several bright spots emerged in our North American steel business during the second half of the quarter, including improved scrap market conditions, rising long steel prices, a rebound in downstream project awards, and better price levels for new downstream work. Taken together, we believe these developments signal a near-term inflection in profitability levels heading into the spring and summer construction season.”
Matt added, “Infrastructure spending remains robust and conversations with customers across other sectors and geographies continue to point toward optimism for construction activity in the quarters ahead. This sentiment is consistent with our downstream bid levels and key external indicators that suggest a strong and growing pipeline of potential future projects. We remain confident in the long-term fundamentals of the U.S. construction market, driven by structural trends including infrastructure investment, reshoring of critical manufacturing, energy transition and generation growth, and the need to address our nation’s housing shortage.”
The Company’s balance sheet and liquidity position remained strong. As of February 28, 2025, cash and cash equivalents totaled $758.4 million, with available liquidity of nearly $1.6 billion. During the quarter, CMC repurchased 906,603 shares of common stock valued at $48.0 million in the aggregate. As of February 28, 2025, $305.3 million remained available under the current share repurchase authorization.
On March 19, 2025, the board of directors declared a quarterly dividend of $0.18 per share of CMC common stock payable to stockholders of record on March 31, 2025. The dividend to be paid on April 9, 2025, marks the 242nd consecutive quarterly payment by the Company.
Business Segments – Fiscal Second Quarter 2025 Review
Demand for CMC’s products in North America was resilient during the quarter. Shipments of finished steel products increased by 3.3 percent relative to the prior year period. The pipeline of potential future construction projects remained healthy as indicated by CMC’s downstream bidding activity and the Dodge Momentum Index, which measures the value of projects entering the planning phase. Downstream backlog volumes increased by nearly 10 percent relative to the end of the first fiscal quarter and were stable on a year-over-year basis. New contract awards improved during the second quarter and ended the period at the second highest volume since late fiscal 2022. Shipments of merchant products (MBQ) grew compared to the second quarter of fiscal 2024 as CMC has increased its ability to serve West Coast customers from the Arizona 2 micro mill.
Long steel market conditions improved throughout the quarter from a low point reached in December 2024. Domestic scrap pricing rose in both January and February prompting price increases for each of CMC’s primary steel products. The supply of imported rebar remained modest relative to the longer-term average, despite a temporary jump in arrivals during January ahead of potential tariff implementations.
Outlook
Matt said, “We expect consolidated financial results in our third quarter of fiscal 2025 to rebound from the second quarter level. Finished steel shipments within the North America Steel Group are anticipated to follow normal seasonal trends as we enter the spring and summer construction seasons, while our adjusted EBITDA margin is expected to increase sequentially on higher margins over scrap on steel products. Adjusted EBITDA for our Europe Steel Group should remain near breakeven, as we enter the seasonally strong period of the year and continue to benefit from extensive cost management efforts. Financial results for the Emerging Businesses Group are anticipated to improve to levels modestly above the prior year period.”
Matt concluded, “We are encouraged by recent developments across the various markets in which we participate. Margin and demand trends appear to be improving, which should position us well for the upcoming spring and summer construction season. Additionally, conversations with customers continue to indicate optimism about the coming quarters.”
Published May 2025
