Commercial Metals Q4 EPS Beats By A Whisker, But Outlook Signals Tough Start To 2025

Commercial Metals Company CMC reported fourth-quarter net sales of $1.996 billion, missing the consensus of $2.001 billion.

The company stated that demand for CMC’s products in North America remained stable, with daily steel shipments unchanged from last year. Merchant product shipments grew, supported by the Arizona 2 micro mill.

Commercial Metals European market conditions were steady sequentially, but long-steel consumption stayed below historical levels. The Europe Steel Group reported a $3.6 million adjusted EBITDA loss, with improvements driven by cost management despite lower shipment volumes and reduced margins.

The Europe Steel Group’s average selling price per ton for the quarter was $667, down from $682 in the fourth quarter of fiscal 2023 and $681 in the previous quarter.

Core EBITDA decreased to $277.06 million from $327.73 million in the prior year quarter, with a core EBITDA margin of 11.4%, down from 14.8%. Adjusted EPS was $0.90, beating the consensus of $0.89.

As of August-end, cash and cash equivalents totaled $857.9 million, with available liquidity of nearly $1.7 billion. The company’s net cash flows from operating activities for the fiscal totaled $899.71 million, compared to $1.34 billion a year ago.

During the quarter, CMC repurchased 1 million shares of common stock valued at $54.8 million; $403.8 million remained available under the current share repurchase authorization.

Dividend: On October 15, 2024, the board declared a quarterly dividend of $0.18 per share, payable on November 14, to stockholders of record on October 31.

“During the fourth quarter, we felt the impact of increased macroeconomic and political uncertainty. Though strong by historical standards, our financial results were hampered by weaker sentiment that negatively influenced steel product pricing and margins. Certain contemplated construction projects appear to be on hold until greater clarity emerges regarding the future path of interest rates and the outcome of U.S. elections,” commented Peter Matt, President and Chief Executive Officer.

Matt added, “During 2024, we made significant progress on the development of a key component of our long-term strategic plan – Transform, Advance, Grow (TAG), an enterprise wide operational and commercial excellence initiative – which we expect will support substantial value creation in the years ahead.”

Outlook: Commercial Metals anticipates a decline in consolidated financial results for the first quarter of fiscal 2025 compared to the fourth quarter, driven by ongoing macroeconomic uncertainty and a temporary dip in sentiment within certain segments of the construction industry.

The company forecasts finished steel shipments within the North America Steel Group to follow normal seasonal trends, while adjusted EBITDA margin is expected to decrease on lower steel product margin over scrap cost.

Adjusted EBITDA for Europe Steel Group should experience a meaningful sequential increase, driven by the receipt of an annual CO2 credit that is expected to be within a range of $35 million to $40 million. Underlying financial performance for the Europe Steel Group is likely to remain similar sequentially.

Financial results for the Emerging Businesses Group are anticipated to decline due to normal seasonality and the impact of economic uncertainty within the U.S. and Europe.

Price Action: CMC shares are trading higher by 1.82% at $54.65 at the last check Thursday.