COMMERCIAL METALS Co Q3 FY2025 earnings call

• Peter Matt highlighted the company's position as a leader in markets, with core domestic long steel markets benefiting from industry consolidation and favorable trade policy. Third quarter results included net earnings of $83.1 million. North America construction and industrial activity was resilient, with finished steel shipments up y-o-y. Tariffs had modest impact on operating and capital costs. Emerging Businesses Group had good pipeline activity but some project delays. Europe Steel Group conditions improved with increased shipments and expanded metal margins. - Paul Lawrence discussed financial results, noting adjusted earnings of $84.4 million, and balance sheet strength with cash and cash equivalents at $893 million. Capital spending outlook revised to $425 million - $475 million, down from previous guidance due to timing of West Virginia project and tax credit pursuit. TAG initiatives contributed to segment results.

Commercial Metals Company reported net earnings of $83.1 million or $0.73 per diluted share on net sales of $2 billion for the third quarter. Consolidated core EBITDA was $204.1 million with a core EBITDA margin of 10.1%. North America Steel Group: Adjusted EBITDA was $186 million, margin 11.9% (down from 14.7% in prior year). Emerging Businesses Group: Net sales of $197.5 million, up 4.7% y-o-y; adjusted EBITDA $40.9 million, up 7% y-o-y. Europe Steel Group: Adjusted EBITDA $3.6 million, compared to a loss of $4.2 million in prior year period.

• Expect fourth quarter financial results to improve compared to third quarter. Finished steel shipments in North America Steel Group to follow normal seasonal trends with adjusted EBITDA margin increasing. - Steel West Virginia micro mill expected to begin melt shop production in spring 2026. - Capital spending outlook revised to $425 million - $475 million, with CO2 credit benefits of around $80 million. - Europe Steel Group to receive CO2 credit of approximately $28 million in fourth quarter, with further benefits in first quarter of fiscal 2026.

• Economic uncertainty and elevated interest rates hanging over markets. - Tariffs causing near-term project delays but seen as part of broader policy to stimulate domestic investment. - Project delays in Emerging Businesses Group and certain segments of Europe Steel Group.

Q: On steel products volumes in North American segment, what drove the 7% sequential increase miss and outlook for fourth quarter?

A: Peter Matt said there were outages late in the quarter, leading to lower inventories and higher costs, but expects fourth quarter volumes to be flattish to slightly up following normal seasonal trend. Paul Lawrence added finished steel tons combine steel products and downstream products, which were up 10% in alignment with normal volume trends.

Q: On U.S. Rebar pricing, are prices gaining traction and further hikes expected?

A: Peter Matt stated the company focuses on value over volume, struck a balance in recent price move, and will monitor and adjust as appropriate.

Q: On Arizona two, average utilization rate and target for next fiscal year, and if facility is at breakeven?

A: Peter Matt said Arizona two made good progress, expecting 70%-75% utilization by year end, and expects a profit in fourth quarter. He also discussed the mix of merchant bar quality products and rebar depending on market conditions.

Q: On inorganic growth, what type of multiples attached to ideal transaction value of $500 million - $750 million?

A: Peter Matt said multiples for such businesses are higher due to higher margins, better cash flow, and growth potential, and the company will be disciplined to bring effective multiples down to Commercial Metals Company's multiple over time through synergies and growth.

Q: On Europe shipments and CapEx related to West Virginia mill delay?

A: Paul Lawrence discussed Europe shipments expected to continue strong in fourth quarter, and CapEx outlook with gross CapEx in $550 million range, benefit from tax credit, and West Virginia mill startup in mid-2026 with relatively small CapEx moved to later periods.