Group 1: Company Overview - Commercial Metals Company (CMC) is a significant player in the steel and metal industry, focusing on the production and recycling of steel and metal products, primarily in North America and Europe [1] - CMC serves various sectors including construction, manufacturing, and infrastructure, competing with industry giants like Nucor Corporation and Steel Dynamics [1] Group 2: Financial Performance - In the first quarter of fiscal 2026, CMC reported net earnings of $177.3 million, or $1.58 per diluted share, with adjusted earnings of $206.2 million, or $1.84 per diluted share [3] - The consolidated core EBITDA reached $316.9 million, marking a significant 52% increase year-over-year, with a core EBITDA margin of 14.9% [3] Group 3: Strategic Initiatives - CMC's success is attributed to strong operational execution and commercial discipline, particularly in North America [4] - The company launched several initiatives under its Transform, Advance, and Grow ("TAG") program, aiming for an annualized run-rate EBITDA benefit of $150 million by the end of fiscal 2026 [4] - In December, CMC expanded its growth platform by acquiring CP&P and Foley, investing over $2.5 billion in the precast concrete industry [5] - The company renamed its Emerging Businesses Group to Construction Solutions Group, aligning with its strategic priorities [5] Group 4: Market Outlook - Jefferies set a new price target of $85 for CMC, indicating a potential increase of approximately 19.18% from its trading price of $71.32 at the time [2][6] - The stock's current price is $70.85, reflecting a slight decrease of 3.24% or $2.37, but it has shown resilience with a 52-week high of $75.03 [2]

Core Insights - Commercial Metals Company (CMC) is a prominent player in the metals and construction sector, particularly known for its steel production and recycling operations, primarily in North America [1] Financial Performance - CMC reported an EPS of $1.84 for Q1 fiscal 2026, exceeding the forecast of $1.55, with net earnings of $177.3 million or $1.58 per diluted share [2][6] - The company's revenue reached approximately $2.12 billion, surpassing the estimated $2.05 billion, indicating strong market performance [2][6] - Consolidated core EBITDA grew by approximately 52% year-over-year to $316.9 million, resulting in a core EBITDA margin of 14.9% [3][6] Strategic Initiatives - CMC's growth is supported by its TAG program, which aims for an annualized run-rate EBITDA benefit of $150 million by the end of fiscal 2026 [3] - In December, CMC made significant acquisitions in the precast concrete industry, investing over $2.5 billion, which establishes a substantial growth platform [4] Market Position and Valuation - CMC's P/E ratio is approximately 96.58, indicating a high valuation relative to earnings, while the price-to-sales ratio is about 1.04 and the enterprise value to sales ratio is around 1.08 [5] - The company maintains a debt-to-equity ratio of approximately 0.32 and a current ratio of about 2.78, reflecting strong financial management capabilities [5]

Financial Performance - Net sales for the three months ended November 30, 2025, increased by $210.7 million, or 11%, to $2,120.3 million compared to the corresponding period in 2024[121] - Net earnings for the same period were $177.3 million, a significant improvement from a net loss of $175.7 million in the prior year[121] - Diluted earnings per share for the current period were $1.58, compared to a loss of $1.54 per share in the previous year[121] - Net earnings for the three months ended November 30, 2025, increased year-over-year primarily due to a litigation-related expense of approximately $265.0 million recognized in the prior period and improved steel products metal margins[122] Acquisitions and Investments - The company completed the acquisition of Concrete Pipe and Precast, LLC on December 1, 2025, enhancing its precast concrete solutions portfolio[100] - The acquisition of Foley Products Company, LLC was finalized on December 15, 2025, further strengthening the company's position in the precast concrete market[101] - The company anticipates 2026 capital spending of approximately $625 million, primarily for the construction of facilities in West Virginia[143] Debt and Financing - The company issued $1.0 billion of 5.750% senior unsecured notes due November 2033 and $1.0 billion of 6.000% senior unsecured notes due December 2035, with aggregate issuance costs of approximately $5.5 million[99] - The company increased its revolving credit facility borrowing capacity from $600.0 million to $1.0 billion, extending the maturity date to December 17, 2030[103] - Interest expense increased by $13.5 million due to a higher borrowing base and committed financing fees of $11.6 million related to the Bridge Facility[124] - The company received net proceeds of $2.0 billion from the issuance of the 2033 Notes and 2035 Notes, with aggregate issuance costs of approximately $5.5 million[152] Operational Performance - Selling, General and Administrative (SG&A) expenses rose by $17.8 million, driven by $13.4 million in transaction expenses related to the CP&P and Foley Acquisitions[123] - Net sales to external customers in the North America Steel Group segment increased by $142.4 million, or 9%, driven by a 16% increase in the average selling price per ton of steel products[128] - Adjusted EBITDA for the North America Steel Group increased by $107.7 million, or 58%, primarily due to a 27% year-over-year increase in steel products metal margin per ton[129] - Net sales in the Construction Solutions Group segment increased by $28.9 million, or 17%, primarily due to increased demand from the Tensar division and CMC Construction Services[130] - Net sales to external customers in the Europe Steel Group segment increased by $38.2 million, or 18%, partly due to a 16% increase in tons shipped[132] - Adjusted EBITDA in the Europe Steel Group decreased by $14.9 million, or 58%, primarily due to changes in government assistance payments related to rising carbon emissions costs[133] - Corporate and Other adjusted EBITDA loss decreased by $330.4 million, or 86%, due to a $350.0 million contingent litigation-related loss recognized in the prior period[134] Cash Flow and Commitments - For the three months ended November 30, 2025, cash from operating activities decreased by $112.5 million due to a $36.3 million increase in cash used by accounts payable and a $57.0 million decrease in cash provided by accounts receivable[150] - Capital expenditures increased by $7.3 million year-over-year, primarily due to the construction of the fourth micro mill[151] - Material cash commitments primarily consist of long-term debt obligations, leases, and acquisition-related commitments, with no significant changes since the 2025 Form 10-K[154] - The company maintains stand-by letters of credit totaling $46.5 million, with $1.0 million reducing availability under the Revolver[155] Risks and Legislative Changes - The company is subject to risks from macroeconomic conditions, including potential impacts from tariffs on steel imports, which could affect pricing and profitability[107][108] - Recent tax legislation updates include the expansion of bonus depreciation and accelerated expensing of research and development costs, which have been incorporated into the company's fiscal 2026 tax provision[111] Forward-Looking Statements - Forward-looking statements indicate expectations regarding the benefits of acquisitions, economic conditions, and operational capabilities, with no assurance that these expectations will be met[157]

Financial Data and Key Metrics Changes - CMC reported net earnings of $177.3 million, or $1.58 per diluted share, compared to a net loss of $175.7 million in the prior year period [26] - Adjusted earnings for the quarter totaled $206.2 million, or $1.84 per diluted share, compared to $86.9 million in the prior year period [27] - Consolidated Core EBITDA of $316.9 million grew by over 50% from a year ago, reaching its highest level in two years [7][27] - Core EBITDA margin expanded to 14.9%, reflecting improvements year-over-year and sequentially [7] Business Line Data and Key Metrics Changes - North American Steel Group generated Adjusted EBITDA of $293.9 million for the quarter, with an EBITDA margin of 17.7%, up from 12.3% in the prior year [27][28] - Construction Solutions Group net sales grew by 17% year-over-year to $198.3 million, with Adjusted EBITDA increasing by 75% to $39.6 million [28][29] - Europe Steel Group reported adjusted EBITDA of $10.9 million, down from $25.8 million in the prior year, primarily due to a lower CO2 credit [30][31] Market Data and Key Metrics Changes - Shipments of finished steel were virtually unchanged year-over-year, with a less than 1% decline from the previous quarter [12] - The Dodge Momentum Index increased by approximately 50% year-over-year, indicating substantial pent-up demand in non-residential markets [13] - The commercial segment grew by 57% year-over-year, while institutional projects increased by 37% [13] Company Strategy and Development Direction - CMC's strategic focus is on transforming into a stronger organization with higher, more stable margins and returns on capital [5] - The TAG initiative aims to drive operational and commercial excellence, targeting a permanent improvement in margins and cash flows [19][20] - Recent acquisitions of CP&P and Foley Products are expected to broaden CMC's commercial portfolio and enhance financial performance [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to absorb new supply in the market due to stable demand conditions [43] - The company anticipates a modest decline in consolidated Core EBITDA in Q2 due to seasonal trends, but expects contributions from the precast business to offset some of this decline [36] - Management remains optimistic about long-term demand drivers, including infrastructure investment and energy generation [14] Other Important Information - CMC's effective tax rate was 3.1% in Q1, with expectations of a full-year rate between 5% and 10% for fiscal 2026 [34] - The company plans to spend approximately $625 million in capital expenditures for fiscal 2026, focusing on growth investments [35] Q&A Session Summary Question: Insights on CP&P and Foley acquisitions - Management noted positive surprises from the acquisitions, with strong cultural alignment and potential for synergies [40][41] Question: Outlook for North American metal margins - Management is not overly concerned about new supply and expects stable margins, with some seasonal fluctuations [43][44] Question: Seasonal impacts on volumes - Management anticipates typical seasonal declines of 5%-10% from Q1 to Q2, despite stronger than expected Q1 volumes [50][51] Question: Update on West Virginia mill ramp-up - The hot commissioning for the West Virginia mill is expected to begin in June, with a ramp-up planned over the following 12 months [52][54] Question: Outlook for precast business - The precast business is expected to contribute about $30 million of EBITDA in Q2, reflecting seasonal impacts [60] Question: Counterparty risk in fabrication business - Management clarified that counterparty risk is being actively managed to ensure margin preservation [70][72] Question: Impact of CBAM on European pricing - Management expects CBAM to gradually benefit pricing, with significant effects anticipated throughout 2026 [75][76]

Financial Data and Key Metrics Changes - CMC reported net earnings of $177.3 million, or $1.58 per diluted share, compared to a net loss of $175.7 million in the prior year period [26] - Adjusted earnings for the quarter totaled $206.2 million, or $1.84 per diluted share, compared to $86.9 million in the prior year period [27] - Consolidated Core EBITDA of $316.9 million grew by over 50% from a year ago, reaching its highest level in two years [7][27] - Core EBITDA margin expanded to 14.9%, reflecting improvements year-over-year and sequentially [7] Business Line Data and Key Metrics Changes - North American Steel Group generated Adjusted EBITDA of $293.9 million for the quarter, with an EBITDA margin of 17.7%, up from 12.3% in the prior year [27][28] - Construction Solutions Group net sales grew by 17% year-over-year to $198.3 million, with Adjusted EBITDA increasing by 75% to $39.6 million [28][29] - Europe Steel Group reported adjusted EBITDA of $10.9 million, down from $25.8 million in the prior year, primarily due to a lower CO2 credit [30][31] Market Data and Key Metrics Changes - Shipments of finished steel were virtually unchanged year-over-year, with a less than 1% decline from the previous quarter [12] - The Dodge Momentum Index increased by approximately 50% year-over-year, indicating substantial pent-up demand in non-residential markets [13] - The commercial segment of the DMI grew by 57%, while institutional projects increased by 37% [13] Company Strategy and Development Direction - CMC's strategic focus is on transforming into a stronger organization with higher, more stable margins and returns on capital [5] - The TAG initiative aims to drive operational and commercial excellence, targeting a $150 million annualized run rate EBITDA benefit by the end of Fiscal 2026 [19][22] - Recent acquisitions of CPMP and Foley Products are expected to enhance CMC's commercial portfolio and financial profile [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to absorb new supply in the market due to stable demand and lower imports [43] - The company anticipates a modest decline in consolidated Core EBITDA in Q2 due to seasonal trends, but expects contributions from the precast business to offset some of this decline [36] - Management remains optimistic about long-term demand drivers, including infrastructure investment and energy generation [15] Other Important Information - CMC's cash and cash equivalents totaled $3 billion, including proceeds from a senior notes offering [32] - The effective tax rate for the first quarter was 3.1%, with expectations of a full-year rate between 5% and 10% for Fiscal 2026 [34][35] - Capital spending for Fiscal 2026 is anticipated to be approximately $625 million, with significant investments in the Steel West Virginia micromill [35] Q&A Session Summary Question: Insights on CPMP and Foley acquisitions - Management noted positive surprises and cultural affinity observed post-acquisition, with confidence in achieving synergies [40][41] Question: Outlook on North American metal margins - Management indicated that while new supply is expected, current demand levels should absorb it, and margins are anticipated to remain stable [43][44] Question: Seasonal impacts on volumes - Management expects typical seasonal declines of 5%-10% in Q2, despite stronger than expected volumes in Q1 [50][51] Question: Update on West Virginia mill ramp-up - The hot commissioning for the West Virginia mill is set to begin in June, with expectations of ramping up operations over the following 12 months [52][54] Question: Outlook for the precast business - Management expects the precast business to contribute about $30 million of EBITDA in Q2, reflecting seasonal impacts [60] Question: Counterparty risk in fabrication business - Management clarified that while counterparty risk has not increased, they are taking steps to reduce risks associated with long-term fixed-price contracts [72][74] Question: Impact of CBAM on European pricing - Management anticipates that the CBAM will positively impact pricing over the course of 2026, with gradual effects expected [76][79]

Core Viewpoint - Commercial Metals Company (CMC) is experiencing a significant increase in analyst confidence, reflected in the rising consensus price target and strong financial performance [2][4][6] Financial Performance - CMC reported net earnings of $177.3 million and adjusted earnings of $206.2 million in its first-quarter fiscal 2026, showcasing operational success [2][6] - The average price target for CMC has risen from $66.65 a year ago to $81 last month, indicating a strong upward trend in analyst sentiment [2][4] Strategic Initiatives - The company is implementing the Transform, Advance, and Grow ("TAG") program, which aims for an annualized run-rate EBITDA benefit of $150 million by the end of fiscal 2026 [3][6] - Recent acquisitions, including CP&P and Foley, with over $2.5 billion in capital deployed, have established a new growth platform in the precast concrete industry [4] Market Position - CMC operates in a competitive landscape with significant players like Nucor Corporation and Steel Dynamics, Inc. [1] - Analyst Mark Hughes from Truist Financial has set a price target of $67 for CMC, indicating potential interest for investors [5]

Financial Data and Key Metrics Changes - CMC reported net earnings of $177.3 million, or $1.58 per diluted share, compared to a net loss of $175.7 million in the prior year period [21] - Adjusted earnings were $206.2 million, or $1.84 per diluted share, compared to $86.9 million and $0.76 per diluted share in the prior year [22] - Consolidated core EBITDA reached $316.9 million, a 52% increase from $208.7 million in the prior year [22] - Core EBITDA margin expanded to 14.9%, reflecting growth both year-over-year and sequentially [5] Business Line Data and Key Metrics Changes - North American Steel Group generated adjusted EBITDA of $293.9 million, with an EBITDA margin of 17.7%, up from 12.3% in the prior year [22] - Construction Solutions Group net sales grew by 17% year-over-year to $198.3 million, with adjusted EBITDA increasing by 75% to $39.6 million [23] - Europe Steel Group reported adjusted EBITDA of $10.9 million, down from $25.8 million in the prior year, primarily due to a lower CO2 credit [24] Market Data and Key Metrics Changes - Shipments of finished steel were virtually unchanged year-over-year, with a less than 1% decline from the previous quarter [10] - The Dodge Momentum Index increased by approximately 50% year-over-year, indicating substantial pent-up demand in non-residential markets [11] - The commercial segment of the DMI grew by 57%, while institutional projects increased by 37% [11] Company Strategy and Development Direction - CMC's strategic focus is on transforming into a stronger organization with higher, more stable margins and returns on capital [5] - The TAG initiative aims to drive operational and commercial excellence, targeting a permanent improvement in margins and cash flows [16] - Recent acquisitions of CPMP and Foley Products are expected to enhance CMC's commercial portfolio and financial profile [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the supportive market conditions, with stable demand and limited imports contributing to strong performance [5] - The company anticipates modest declines in consolidated core EBITDA for the second quarter due to seasonal trends, but expects contributions from the precast businesses to offset this [31] - Management remains optimistic about long-term demand drivers, including infrastructure investment and energy generation [12] Other Important Information - CMC's effective tax rate was 3.1% in the first quarter, with expectations of a full-year rate between 5% and 10% for fiscal 2026 [29] - The company plans to spend approximately $625 million in capital expenditures for fiscal 2026, focusing on growth investments and completing the Steel West Virginia micromill [30] Q&A Session Summary Question: Insights on CPMP and Foley acquisitions - Management noted positive cultural fit and integration potential, with confidence in achieving synergies [36] Question: North American metal margins outlook - Management expects margins to remain stable, with demand absorbing new supply entering the market [38] Question: Seasonal impacts on volumes - Typical seasonal decline of 5%-10% is expected in the second quarter, despite stronger than anticipated first-quarter volumes [42] Question: Precast business seasonality - The precast business is expected to follow overall seasonal trends, contributing about $30 million of EBITDA in the second quarter [46] Question: Scrap optimization benefits - Scrap optimization initiatives have significantly improved margins, with ongoing efforts to enhance quality and reduce costs [50]

Financial Performance & Outlook - Q1 Net Earnings reached $1773 million[15], while Adjusted Earnings were $2062 million[15] - Q1 Core EBITDA stood at $3169 million[15], with a Core EBITDA Margin of 149%[15] - The company aims to exit FY 2026 with an annualized run-rate EBITDA benefit of $150 million from TAG initiatives[14, 21] - Precast business is expected to contribute approximately $165 million to $175 million to Construction Solutions Group Adjusted EBITDA in fiscal 2026[34] Strategic Initiatives - The company launched new Transform, Advance, Grow ("TAG") initiatives with commercial opportunities in focus[14, 19] - The company rebranded Emerging Businesses Group to Construction Solutions Group to better reflect business composition and strategic role of segment[14, 28] - The company completed acquisitions of Concrete Pipe & Precast ("CP&P") and Foley Products Company ("Foley")[2, 34] Market Dynamics - Construction Solutions Group net sales were up 170% year-over-year, while adjusted EBITDA increased by 747%[52, 65] - Europe Steel Group shipments increased by 157% on a year-over-year basis[52, 72] - The company anticipates reducing net debt to adjusted EBITDA to below 2x within 18 months[14, 46]

Financial Performance - First quarter net earnings were $177.3 million, or $1.58 per diluted share, compared to a net loss of ($175.7) million in the prior year period[5]. - Consolidated core EBITDA for the first quarter was $316.9 million, representing a 52% year-over-year increase, with a core EBITDA margin of 14.9%[4]. - The North America Steel Group's adjusted EBITDA increased by 57.9% to $293.9 million, with an adjusted EBITDA margin of 17.7%, up from 12.3% in the prior year[11]. - The Construction Solutions Group achieved first quarter net sales of $198.3 million, a 17.0% increase year-over-year, with adjusted EBITDA of $39.6 million, up 74.7%[13]. - Total net sales to external customers for the three months ended November 30, 2025, reached $2,120,307, an increase from $1,909,602 in the same period last year, representing a growth of approximately 11%[27]. - Adjusted EBITDA for the North America Steel Group was $293,906 for the three months ended November 30, 2025, compared to $186,179 in the same period last year, reflecting a significant increase of 57.7%[26]. - Net earnings for the three months ended November 30, 2025, were $177,282, a turnaround from a net loss of $175,718 in the same period last year[27]. - Adjusted EBITDA for the same period was $288,568 thousand, compared to an adjusted EBITDA loss of $151,567 thousand in November 2024[35]. - Core EBITDA margin increased to 14.9% for the three months ended November 30, 2025, up from 10.9% in the same period of 2024[35]. - Net sales reached $2,120,307 thousand for the three months ended November 30, 2025, compared to $1,909,602 thousand in the same period of 2024, reflecting a year-over-year increase of approximately 11%[35]. Acquisitions and Growth - CMC completed acquisitions of two precast businesses for over $2.5 billion, establishing a new growth platform in the precast concrete industry[4]. - CMC plans to deliver an estimated $165 million to $175 million of EBITDA contributions from the precast businesses in fiscal 2026[18]. Cash and Liquidity - Cash, cash equivalents, and restricted cash totaled $3.0 billion as of November 30, 2025, with available liquidity of nearly $1.9 billion[7]. - The company reported a cash and cash equivalents balance of $1,023,038 as of November 30, 2025, slightly down from $1,043,252 as of August 31, 2025[29]. - Cash and cash equivalents at the end of the period were $3,032,097 thousand, a substantial increase from $856,888 thousand at the end of November 2024[30]. - The company issued $2,000,000 thousand in long-term debt during the three months ended November 30, 2025, with net cash flows from financing activities totaling $1,900,079 thousand[30]. Debt and Financial Leverage - The company’s long-term debt increased to $3,305,262 as of November 30, 2025, up from $1,310,006 as of August 31, 2025, indicating a significant rise in financial leverage[29]. Market and Pricing - Steel products metal margins increased by $53 per ton sequentially, with average selling prices improving by over $145 per ton compared to early fiscal 2025[10]. - The average selling price per ton for steel products in North America increased to $939 in Q4 2025, compared to $812 in Q4 2024, marking a rise of 15.7%[25]. Regional Performance - The Europe Steel Group's adjusted EBITDA was $10.9 million, down from $25.8 million in the prior year, with an adjusted EBITDA margin of 4.4%[16]. - The Europe Steel Group reported net sales of $247,650 for the three months ended November 30, 2025, down from $263,294 in the previous quarter, indicating a decline of approximately 5%[26]. Cost and Expenses - The cost of goods sold for the three months ended November 30, 2025, was $1,713,169, compared to $1,601,722 in the same period last year, representing an increase of 6.9%[27]. - The company reported capital expenditures of $125,437 thousand for the three months ended November 30, 2025, compared to $118,187 thousand in the same period of 2024[30]. - Litigation expenses recorded for the three months ended November 30, 2024, were $350,000 thousand, which significantly impacted prior year earnings[35]. Methodology Changes - The company modified its method of calculating adjusted EBITDA to exclude unrealized gains and losses on undesignated commodity derivatives, providing a clearer view of operating performance[33]. Earnings Per Share - Adjusted earnings per diluted share for the three months ended November 30, 2025, were $1.84, compared to $0.76 in the same period of 2024[35].

Core Viewpoint - Commercial Metals Company (CMC) is expected to report a year-over-year improvement in revenues and earnings for the first quarter of fiscal 2026, with earnings anticipated to jump 99% year-over-year [1][2][6]. Financial Performance Expectations - The Zacks Consensus Estimate for CMC's fiscal first-quarter revenues is $2 billion, reflecting a 4.6% decrease from the previous year [1]. - The consensus estimate for earnings is $1.55 per share, which has increased by 2.6% over the past 60 days and indicates a year-over-year rise of 98.7% [2][6]. Earnings Surprise History - CMC has had mixed earnings surprises in the past four quarters, beating estimates once, matching once, and missing twice, with an average surprise of -6.3% [5]. Market Conditions and Performance Drivers - The company is facing challenges from a prolonged economic slowdown in the Western world and weaker-than-expected steel demand, particularly in Europe [10]. - Despite these challenges, CMC expects improved steel margins in North America due to price hikes offsetting rising scrap costs [6][12]. Strategic Acquisitions and Synergies - CMC has recently completed two significant acquisitions, positioning itself as a leading player in the Mid-Atlantic and Southeastern regions, with expected annual run-rate synergies of $25-$30 million from these acquisitions by year three [18][19]. Valuation and Stock Performance - CMC shares have increased by 56.1% over the past year, outperforming the industry average of 54.5% and the S&P 500's 21% [13]. - The company is currently trading at a forward price/sales ratio of 0.96, which is lower than the industry average of 1.59 [15]. Investment Considerations - Given the expected strong fiscal first-quarter results driven by improving conditions in Europe and demand in North America, along with favorable valuation and upward earnings estimate revisions, it may be a good time to consider investing in CMC [20].