Commercial Metals Company Q3 FY2026 earnings call

- Leadership Changes * Jason Brocious, former head of Investor Relations, transitions to a strategy and corporate development role within the firm * Andy Larkin, with 10 years of IR experience across construction materials, metals, mining and consumer staples, joins as the new head of Investor Relations

- Strategic Program Progress * The Transform, Advance, and Grow (TAG) efficiency program is tracking well ahead of its targeted $150 million annualized run-rate benefit for fiscal 2026, with a replenished pipeline of new initiatives, and is confirmed as a durable lever for margin expansion * Integration of the two recent precast acquisitions is progressing on plan, with early operational and commercial benefits, strong team alignment, and improved safety metrics following rollout of CMC's best practices

- Organic Growth Project Updates * The Arizona 2 micromill achieved a step change in operating reliability, reaching over 75% capacity utilization, producing both merchant bar and rebar products * Steel West Virginia micro mill construction remains on budget and on schedule (adjusted for 100 days of weather delays), with hot commissioning planned for late summer 2026; it uses proven micro mill technology similar to CMC's Oklahoma facility * The new GeoGrid line in Blackwell, Oklahoma is coming online, and the second Galva Bar line in Knoxville, Tennessee is progressing on schedule for startup in late calendar 2026

- Market and End Market Overview * Third quarter temporary headwinds (planned mill outages, elevated scrap costs, weather-related construction disruptions) have now reversed: outages are complete, steel price increases have taken hold, weather has normalized, and shipments have strengthened in Q4 to date * Downstream bookings grew over 9% year-over-year in Q3; precast backlog increased low single digits year-over-year; underlying end market demand remains healthy. Infrastructure demand is supported by unspent IIJA funding; multifamily construction outperforms single-family; non-residential demand is driven by a large pipeline of megaprojects across data centers, semiconductor facilities, and energy networks, with incremental demand from supporting infrastructure buildout * U.S. steel market is balanced, with new domestic capacity absorbed and prices trending higher; recently finalized/preliminary anti-dumping and countervailing duties on 500,000 tons of annual rebar imports from four countries provide durable trade protection for at least five years, and elevated ocean freight costs provide an additional buffer for domestic producers * European steel demand is strengthening on steady economic growth, infrastructure investment, and upcoming EU-funded infrastructure deployment; supply dynamics are tightening following implementation of the Carbon Border Adjustment Mechanism (CBAM) and upcoming strengthened EU trade protections effective July 1

1. North American Steel Group: Adjusted EBITDA increased 41% year-over-year to $253.5 million ($234 per finished ton shipped), with an adjusted EBITDA margin of 14.2% (up 270 basis points year-over-year). This segment contributed approximately 71.7% of consolidated core EBITDA. Performance was temporarily impacted by planned maintenance outages, elevated scrap costs, and weather disruptions. 2. Construction Solutions Group: Net sales nearly doubled year-over-year to $394.6 million, with $175.7 million from acquired precast businesses. Adjusted EBITDA increased 138% year-over-year to $97.4 million (including $52.9 million from precast), with an adjusted EBITDA margin of 24.7% (up 400 basis points year-over-year, with 4.4 percentage points of accretion from precast). This segment contributed approximately 27.6% of consolidated core EBITDA. Precast performance was impacted by regional weather-related shipment delays, while Tensar profitability accelerated on strong demand for its Interax products for megaprojects. 3. Europe Steel Group: Adjusted EBITDA increased significantly year-over-year to $34.7 million, including a $20.4 million CO2 credit benefit. Excluding the credit, underlying performance improved meaningfully, with metal margins expanding $37 per ton year-over-year (driven by a $34 per ton selling price increase and $3 per ton scrap cost reduction). This segment contributed approximately 9.8% of consolidated core EBITDA.

- Overall Q4 2026 guidance expects a $40 million to $50 million sequential increase in consolidated adjusted EBITDA, with meaningful growth across most segments after reversing temporary Q3 headwinds - North American Steel Group is expected to deliver ~$40 million in sequential EBITDA improvement from the absence of Q3 maintenance outages, higher volumes, and expanded metal margins, with scrap costs expected to remain stable - Construction Solutions Group expects mid-teens sequential adjusted EBITDA growth, driven by increased precast contributions and broad underlying momentum; the full-year 2026 precast adjusted EBITDA (excluding purchase accounting adjustments) guidance is maintained at $165 to $175 million - Europe Steel Group expects 3 to 5 million of sequential growth in operational adjusted EBITDA (excluding the Q3 CO2 credit, which will not repeat in Q4, leading to a lower headline sequential EBITDA) - Net leverage is on track to reach the target of below 2.0x by mid-2027 or sooner, with current net leverage (adjusted for acquisitions) at 2.1x - Total fiscal 2026 capital spending is expected to be approximately $550 million, with $300 to $350 million allocated to completing the Steel West Virginia micro mill - The fiscal 2026 effective tax rate is expected to be between 7% and 9%, in line with year-to-date results; no significant U.S. federal cash taxes are expected for fiscal 2026 or 2027 - Steel West Virginia is expected to produce 250,000 to 300,000 tons in fiscal 2027, with full ramp-up completed by the end of the year - Precast is expected to reach ~$250 million annual EBITDA in the base business, with 35 to 40 million in total synergies realized over three years from acquisition, with mid-single digit annual top line growth expected

- Unfairly traded steel imports from non-compliant countries could disrupt U.S. market balance and pressure margins, though CMC is pursuing trade remedies under existing U.S. laws to address this - Unexpected changes in scrap and energy costs could compress metal margins, though CMC maintains hedges for European energy costs and is seeing stable scrap costs heading into Q4 - Weather disruptions can delay construction activity and precast/steel shipments, creating quarterly volatility in results - New domestic steel capacity additions could pressure supply-demand balance, though CMC has committed to operating its network with a value-over-volume strategy to maintain market balance - Integration of large recent acquisitions could underperform relative to expected synergies and operational improvements, though integration is currently tracking on plan

Q: The analyst asked to quantify non-maintenance temporary impacts on Q3 North American results, and if a $40 million sequential Q4 EBITDA increase was accurate. / A: Maintenance outages had a $20 million direct impact; weather and low inventory reduced volumes by ~50,000 tons for an additional $10 million impact, and weather also impacted Construction Solutions Group by ~$5 million. The $20.4 million Q3 European CO2 credit will not repeat in Q4. Overall, the firm expects a $40-50 million total sequential Q4 adjusted EBITDA increase, confirming the analyst's general assessment. All Q3 headwinds are temporary and expected to fully reverse in Q4.

Q: The analyst asked how CMC is confident it can hit the full-year precast EBITDA guidance, given the implied large Q4 lift after a soft Q3. / A: Q3 precast volumes were light due to weather delays in the Southeast that pushed project shipment timelines back by two weeks, but project backlog is at a record level, operations have normalized entering Q4, and integration is progressing ahead of expectations. Management is more confident in the precast acquisition's long-term potential now than at closing, and expects the business to deliver on original guidance, while adding structural margin expansion and lower earnings volatility to CMC's portfolio.

Q: The analyst asked about U.S. rebar demand changes from shifting interest rate outlooks, the impact of elevated imports from South Korea, and whether new trade action will be pursued against South Korea. / A: U.S. rebar apparent consumption is up 3.2% year-to-date, and long-term demand drivers across infrastructure, non-residential, and eventually residential remain strong with no signs of broad project delay. CMC does not expect South Korean imports to remain at current elevated levels, as they are uneconomical at current prices, and CMC has already initiated discussions with the U.S. government to pursue trade remedies against unfairly traded imports from South Korea and other sources. CMC committed it will not disrupt market balance, will prioritize value over volume, and is confident existing and new trade actions will keep the market balanced.

Q: The analyst asked how CMC will approach capital allocation once the 2x net leverage target is hit, specifically whether more precast bolt-on acquisitions will be pursued before full integration of the current acquisitions, and the balance between growth and shareholder returns. / A: Reaching 2x net leverage (expected soon) will open the door for both new growth opportunities and increased shareholder distributions, including higher share repurchase levels. CMC will not pursue another large precast acquisition until current precast integrations are sufficiently progressed, but will consider small tuck-in acquisitions. CMC does not plan any additional large steel mill investments, with future organic growth focused on smaller, capital-light portfolio expansions that improve margins. Capital spending is expected to drop by ~$200 million annually after 2026, driving significant free cash flow growth that supports both growth and shareholder returns.