CMC(US:CMC)2025-03-21 01:18Financial Data and Key Metrics Changes - CMC reported net earnings of $25.5 million or $0.22 per diluted share on net sales of $1.8 billion, which included $3.9 million of after-tax charges [10][38] - Adjusted earnings were $29.3 million or $0.26 per diluted share, down from $85.9 million or $0.73 per diluted share in the prior-year period [11][38] - Consolidated core EBITDA was $131 million, a decline from $212.1 million in the prior-year period, with consolidated core EBITDA margins at 7.5% compared to 11.5% in the prior-year period [39][41] Business Line Data and Key Metrics Changes - North American Steel Group generated adjusted EBITDA of $128.8 million, a 42% decrease compared to the prior-year period, driven by lower margins over scrap costs [41] - Europe Steel Group reported adjusted EBITDA of $0.8 million, an improvement from a loss of $8.6 million in the prior-year period, aided by cost management and increased shipment volumes [43] - Emerging Businesses Group net sales were $158.9 million, a 1.8% year-over-year increase, with adjusted EBITDA increasing by 31% [45] Market Data and Key Metrics Changes - Finished steel shipments in North America increased by 3.3% year-over-year, indicating resilient demand despite economic uncertainty [42] - The Dodge Momentum Index reached an all-time high, reflecting growth in planning across various market segments [16] - The construction and industrial activity driving product consumption remained resilient, with pent-up demand evident in downstream bid volumes [15][16] Company Strategy and Development Direction - CMC aims to achieve sustainably higher, less-volatile margins and returns through operational and commercial excellence initiatives [29] - The company is pursuing both organic and inorganic growth opportunities, targeting segments of the $150 billion early-stage construction market [36] - CMC's strategic initiatives include enhancing logistical capabilities and expanding production in specialized solutions, which are expected to generate significant returns [31][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming construction season, expecting a rebound in consolidated financial results in Q3 2025 [54][55] - The company noted that recent developments in North American markets, including improved scrap market conditions and an inflection in long steel price levels, indicate a potential recovery [19][55] - Management highlighted the importance of construction in adapting to economic changes and expressed confidence in the future of CMC's markets [22][23] Other Important Information - CMC's cash and cash equivalents totaled $758.4 million, with total liquidity just under $1.6 billion [47] - The company returned approximately $68 million to shareholders during the second quarter, repurchasing about 907,000 shares [52] - CMC expects to invest between $550 million and $600 million in capital expenditures for fiscal 2025, down from previous guidance [50] Q&A Session Summary Question: U.S. rebar market pricing outlook - Management noted that price increases are being seen across the portfolio, with expectations for rebar prices to rise as future orders are booked [62] Question: Financial performance of Arizona 2 mill - The mill did not break even in Q2 due to challenges, but management expects to reach breakeven in Q4 2025 [67] Question: North American margins recovery - Management anticipates a recovery in EBITDA per ton in the coming quarter, driven by improved metal margins and cost management [75] Question: Current supply-demand balance in North American rebar market - The supply-demand balance is currently well balanced, with strong demand supporting price increases [87] Question: Long-term demand drivers and trade policy impact - Management remains optimistic about infrastructure investments and reshoring trends driving substantial rebar demand in the coming years [99][100]