Commercial Metals Co (CMC) Q2 2025 Earnings Call Highlights: Navigating Challenges and ...

Net Earnings: $25.5 million, or $0.22 per diluted share. Adjusted Earnings: $29.3 million, or $0.26 per diluted share. Net Sales: $1.8 billion. Core EBITDA: $131 million. North American Steel Group Adjusted EBITDA: $128.8 million, $123 per ton of finished steel shipped.

Europe Steel Group Adjusted EBITDA: $0.8 million. Emerging Business Group Net Sales: $158.9 million. Emerging Business Group Adjusted EBITDA: $23.5 million. Cash and Cash Equivalents: $758.4 million. Total Liquidity: Just under $1.6 billion.

Cash from Operating Activities: $32.4 million. Capital Expenditures: $86.3 million. Net Debt to Adjusted EBITDA Ratio: 1 times. Debt to Capitalization: 18%. Share Repurchases: Approximately 907,000 shares at an average price of $52.96 per share.

Capital Spending Outlook for Fiscal 2025: Between $550 million and $600 million. Warning! GuruFocus has detected 3 Warning Sign with CMC. Release Date: March 20, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Commercial Metals Co (NYSE:CMC) achieved a record low incident rate, marking a milestone in safety performance. The company reported net earnings of $25.5 million for the second quarter, with adjusted earnings of $29.3 million.

CMC's Europe Steel Group achieved breakeven performance, showing improvement from previous periods. The Emerging Businesses Group saw increased profitability, driven by strong demand for proprietary corrosion-resistant solutions. CMC's strategic initiatives, including the TAG program, are expected to provide significant financial benefits, with $25 million anticipated over the remainder of fiscal 2025. Negative Points Net earnings for the second quarter were down from recent levels, reflecting economic uncertainty and its impact on steel pricing. The North American Steel Group's results were negatively impacted by lower margins over scrap costs.

The Arizona 2 micro mill did not achieve breakeven in the second quarter due to operational challenges. Uncertainty in the market continues to negatively impact the pace of new project awards for private construction. The company faced $8 million of unrealized losses on copper hedging positions due to commodity volatility. Q & A Highlights Q: Can you provide some color on the US rebar market pricing and whether there is room for further price hikes? A: Peter Matt, CEO, explained that price increases are being seen across the portfolio. While not all increases have been realized in every market, they expect to achieve them as future orders are booked.

They are confident that prices will remain above scrap movements and anticipate further price increases as demand strengthens. Story Continues Q: What is the financial performance outlook for the Arizona 2 mill, and when do you expect it to turn EBITDA positive? A: Peter Matt, CEO, stated that the Arizona 2 mill did not break even in Q2 due to seasonal weakness and operational challenges. They aim to reach breakeven in Q3, but realistically expect to achieve continuous profitability in fiscal 2026. Q: How do you see North American margins recovering in the next quarter, and what factors will drive this recovery? A: Paul Lawrence, CFO, indicated that they expect a recovery in EBITDA per ton in the coming quarter due to improved metal margins, absence of copper mark-to-market charges, and lower costs related to seasonal shutdowns and weather disruptions. Q: How would you describe the current supply-demand balance in the North American rebar market, and what are the utilization rate trends? A: Peter Matt, CEO, described the supply-demand balance as well-balanced, with strong demand allowing for price movements.

They are fully utilized at their mills, except for the Arizona mill, which is ramping up. Q: What is the potential impact of composite rebar on the long steel industry, and what factors will determine its adoption? A: Peter Matt, CEO, noted that composite rebar has been around for a while and has specific applications, but it is not seen as a material threat to their market position due to fabrication challenges and limited applicability. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments