Commercial Metals Company

What they do

CMC manufactures and recycles steel products, primarily for early-stage construction, including infrastructure, non-residential, residential, industrial, and energy projects. It operates through three reportable segments: North America Steel Group, Europe Steel Group, and Emerging Businesses Group (which includes Construction Solutions Group precast concrete). The company uses approximately 98% recycled material in its steel production and employs energy-efficient and closed-loop water recycling processes.

Revenue drivers

• North America Steel Group — The largest segment, generating $253.5 million adjusted EBITDA in Q3 FY2026, driven by margins over scrap costs and TAG program benefits. It sells steel products and downstream solutions, with volumes impacted by planned downtime and weather but supported by strong project pipeline and bookings.
• Construction Solutions Group (part of Emerging Businesses Group) — Includes newly acquired Foley Products Company and Concrete Pipe and Precast, LLC, contributing $52.9 million in Q3 FY2026. It provides precast concrete solutions in the Southeast, Mid-Atlantic, and South Atlantic U.S., aiming to add scale and regional leadership.
• Europe Steel Group — A smaller segment with improved performance year-over-year, contributing to overall EBITDA growth. It serves construction markets in Central Europe with steel products, benefiting from better market conditions.

Recent performance

In the fiscal third quarter ended May 31, 2026, CMC reported net sales of $2.48 billion, up 22.9% year-over-year, and net earnings of $173.0 million, or $1.55 per diluted share. Adjusted earnings were $193.0 million, or $1.73 per diluted share, up 147.1% year-over-year. Consolidated core EBITDA increased 78.6% to $353.6 million, with margin expanding 440 basis points to 14.2%. For fiscal 2025, annual revenue declined to $7.80 billion and net income fell to $84.7 million, reflecting challenging conditions.

Strategy

CMC focuses on 'Transform, Advance, Grow' (TAG) initiatives to drive commercial and operating rigor, margin expansion, and productivity. The company is pursuing inorganic growth through acquisitions, notably the Foley and CP&P precast acquisitions completed in December 2025, to expand its early-stage construction portfolio. It is also constructing a fourth micro mill in Berkeley County, West Virginia, to serve Northeast, Mid-Atlantic, and Mid-Western markets. Management emphasizes value over volume, with strong booking and backlogs at attractive prices, and aims to reduce net leverage to 2x well ahead of mid-2027.

Risks

• Scrap price volatility — Ferrous scrap is the primary raw material, and rapid price fluctuations or supply shortages could compress margins if CMC cannot pass costs through in fixed-price contracts.
• Fixed-price contract exposure — Rapid increases in scrap and input costs may not be recoverable in the short term under fixed-price contracts, adversely impacting profitability.
• Geographic concentration — Operations are principally in the U.S. and Central Europe, making CMC vulnerable to regional economic downturns, weather-related disruptions, and construction cycles in those areas.
• Integration of acquisitions — The recent Foley and CP&P acquisitions add scale but carry integration risks, including achieving expected synergies, managing debt, and potential cultural or operational challenges.

Outlook

Management expects strong results in the fourth quarter and beyond, citing solid demand, strong booking and backlogs at attractive prices, and growing benefits from TAG. The company has reduced net leverage and expects continued EBITDA growth across all segments. It is also investing in new capacity with the micro mill in West Virginia, which should support long-term growth in key markets.