CMC(CMC) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales decreased by $93.9 million, or 5$187.4 million, or 5%, for the six months ended February 28, 2025, compared to the corresponding periods [92]. - Net earnings for the three months ended February 28, 2025, were $25.5 million, down from$85.8 million in the corresponding period, while a net loss of $150.2 million was recorded for the six months ended February 28, 2025, compared to net earnings of$262.1 million in the prior period [93]. - The compression in steel and downstream products metal margins in the North America Steel Group segment significantly impacted net earnings for the three and six months ended February 28, 2025 [93]. - Net sales to external customers in the North America Steel Group segment decreased by 7% to $1,386.8 million for the three months ended February 28, 2025, and by 6$2,905.5 million for the six months ended February 28, 2025, compared to the corresponding periods [99]. - Adjusted EBITDA for the North America Steel Group was $128.8 million for the three months and$317.0 million for the six months ended February 28, 2025, down from $222.3 million and$489.1 million in the respective prior periods [100]. - In the Europe Steel Group, net sales to external customers increased by $5.5 million, or 3$10.2 million, or 2%, for the six months ended February 28, 2025 [101]. - The Europe Steel Group experienced a 13% increase in steel products shipment volumes during the three months ended February 28, 2025, despite a $61 per ton decrease in average selling price [102]. - The Emerging Businesses Group reported net sales of$158.9 million for the three months ended February 28, 2025, showing a slight increase compared to $156.0 million in the prior year [103]. - Adjusted EBITDA for the Emerging Businesses Group increased by$5.6 million, or 31%, during the three months ended February 28, 2025, compared to the corresponding period [104]. Expenses and Costs - Selling, general and administrative expenses increased by $15.4 million during the six months ended February 28, 2025, primarily due to$12.1 million in incremental labor-related expenses and $5.4 million in additional legal expenses [94]. - Litigation expenses related to the Pacific Steel Group litigation amounted to$4.7 million and $354.7 million for the three and six months ended February 28, 2025, respectively [96]. - Corporate and Other segment reported an adjusted EBITDA loss of$34.9 million for the three months ended February 28, 2025, and a loss of $421.1 million for the six months, reflecting a significant increase due to litigation-related losses [105]. Tax and Financial Position - The effective income tax rate for the three months ended February 28, 2025, was 29.4$758.4 million, indicating a strong liquidity position [110]. - Net cash flows from operating activities decreased to $245.5 million for the six months ended February 28, 2025, down from$350.0 million for the same period in 2024, primarily due to a decrease in net earnings and a $45.9 million decrease in cash used by operating assets and liabilities [119]. - Net cash flows used by investing activities increased to$175.1 million for the six months ended February 28, 2025, compared to $158.5 million in the prior year, driven by$43.7 million in incremental capital expenditures for the construction of the fourth micro mill [120]. - Net cash flows used by financing activities rose to $169.9 million for the six months ended February 28, 2025, from$147.8 million in the previous year, including a $22.1 million increase in treasury stock acquired under the share repurchase program [121]. - The company reported$354.7 million in litigation expenses for the six months ended February 28, 2025, related to ongoing legal matters, which were classified as current liabilities [124]. - As of February 28, 2025, the company had committed $35.4 million under stand-by letters of credit, with$1.0 million reducing availability under the Revolver [123]. Capital Expenditures and Growth Initiatives - The company anticipates capital spending between $550 million and$600 million for 2025, focusing on value-accretive growth and competitive cash returns to stockholders [113]. - The company repurchased $98.4 million of shares during the six months ended February 28, 2025, with remaining authorization to repurchase$305.3 million of shares [114]. - Incremental capital expenditures for the construction of the fourth micro mill were partially offset by $25.0 million of government assistance received [120]. - The third micro mill, located in Mesa, Arizona, was placed into service during the fourth quarter of 2023, with a production capacity approximately 40$34.4 million, or 15%, as of February 28, 2025, compared to August 31, 2024, primarily due to forward contracts denominated in euro [129].