Zinger Key Points
- CMC’s Q2 net sales reached $1.75B, matching forecasts, but adjusted EPS missed at $0.26 due to margin pressure.
- Europe Steel Group turned a modest Q2 profit, driven by reduced imports, improved cost control, and energy rebates.
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Commercial Metals Company CMC reported second-quarter 2025 results on Thursday, with net sales down 5.1% year-over-year to $1.754 billion, broadly in line with the analyst expectations of $1.746 billion.
Core EBITDA decreased to $130.995 million from $212.09 million in the prior year quarter, with a core EBITDA margin of 7.5%, down 400 bps from 11.5%.
Adjusted EPS was 26 cents, down from 73 cents a year ago, missing the consensus of 30 cents.
Strong North American construction demand boosted finished steel shipments by 3.3% year over year, while new project awards drove a healthy, growing backlog.
As of February 28, 2025, Commercial Metals held $758.4 million in cash with nearly $1.6 billion in available liquidity. During the quarter, CMC repurchased 906,603 shares for $48 million, with $305.3 million remaining under its buyback plan.
On March 19, 2025, Commercial Metals declared a quarterly dividend of 18 cents, payable April 9 to shareholders of record on March 31.
Also Read: FactSet Surpasses Q2 Earnings Estimates, Raises FY25 Revenue Outlook Amid Client Growth
President and Chief Executive Officer Peter Matt commented, “In our seasonally weaker second quarter, during a period of continued economic uncertainty, the CMC team bolstered profitability across each segment by targeted actions to increase commercial discipline and optimize costs in order to support higher margins.”
North America Steel Group’s adjusted EBITDA fell to $128.8 million from $222.3 million YoY, with margins dropping to 9.3% from 15%, impacted by lower margins over scrap costs and $8 million in copper hedge losses.
The company stated that European market conditions improved modestly in the quarter, aided by lower imports and cost controls.
Europe Steel Group’s adjusted EBITDA rose to $0.8 million from a $8.6 million loss YoY, with margins improving to 0.4% from -4.5%, supported by a $4 million government gas rebate.
Outlook: Commercial Metals expects stronger consolidated financial results in the third quarter of fiscal 2025, rebounding from second-quarter levels. Finished steel shipments in the North America Steel Group are projected to follow typical seasonal patterns.
“Our adjusted EBITDA margin is expected to increase sequentially on higher margins over scrap on steel products,” said Matt.
He also noted that adjusted EBITDA for the Europe Steel Group should remain near breakeven, supported by seasonally stronger demand and continued cost control.
“Financial results for the Emerging Businesses Group are anticipated to improve to levels modestly above the prior year period,” Matt added.
Concluding the outlook, he stated, “We are encouraged by recent developments across the various markets in which we participate. Margin and demand trends appear to be improving, which should position us well for the upcoming spring and summer construction season. Additionally, conversations with customers continue to indicate optimism about the coming quarters.”
Price Action: CMC shares are trading lower by 0.38% at $46.68 at the last check Thursday.
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