Commercial Metals Company (CMC) Q1 2025 earnings summary

Executive summary

• Reported a Q1 FY2025 net loss of $175.7 million to $176 million, or $1.54 per diluted share, primarily due to a $350 million litigation charge; adjusted earnings were $88.5 million to $89 million, or $0.78 per share, with core EBITDA at $210.7 million to $211 million and an 11% margin.

• Net sales were $1.91 billion, down 5% year-over-year; finished steel shipments in North America rose 4.4% while Europe shipments declined nearly 9%.

• Strong cash flow enabled $71 million returned to shareholders via dividends and buybacks; liquidity remained robust at $856.1 million in cash and nearly $1.7 billion available.

• Strategic transformation and operational excellence programs (TAG) are underway, targeting sustainable margin improvement and capital efficiency.

• All segments faced margin pressure from lower steel prices, increased imports, and project delays, but management remains optimistic about a market recovery in the second half of FY2025.

Financial highlights

• Adjusted EBITDA for North America Steel Group was $188.2 million, down 29% year-over-year; Europe Steel Group adjusted EBITDA was $25.8 million, down from $38.9 million, aided by a $44 million CO2 credit.

• Emerging Businesses Group net sales fell 4.4% year-over-year; adjusted EBITDA declined 26.6%.

• Core EBITDA margin was 11.0%, down from 15.7% in the prior year; adjusted earnings per diluted share were $0.78, compared to $1.49 in Q1 FY24.

• Operating cash flow was $213 million, with capital expenditures of $118.2 million, mainly for new micro mill construction.

• Net debt to adjusted EBITDA was 0.6x; total liquidity near $1.7 billion.

Outlook and guidance

• Q2 FY2025 consolidated results are expected to decline sequentially due to seasonality, with North America Steel Group shipments 5-10% lower than Q1 and Europe Steel Group adjusted EBITDA stable year-over-year.

• Emerging Businesses Group results are anticipated to decline seasonally but recover in Q3 and Q4.

• Management remains optimistic for a market recovery in the second half of FY2025, supported by strong construction pipeline indicators and improved business confidence.

• The fourth micro mill in West Virginia is on track for late 2025 commissioning.

• Estimated FY2025 capital spending is projected at $630–$680 million.