CMC earnings down from one year ago

Commercial Metals Co. (CMC), an Irving, Texas-based recycler and producer of metals and construction products, says its net earnings from June through August 2024 were $103.9 million, representing a 43.6 percent decline from the $184.2 million earned in the summer of 2023.

The summer months were the 2024 fiscal fourth quarter for CMC. For the full 2024 fiscal year, the company has reported net earnings of $485.5 million on net sales of $7.9 billion.

That compares with prior fiscal year net earnings of $859.8 million, down 43.5 percent, on net sales of $8.8 billion, up 11.4 percent year on year.

Comments Peter Matt, president and CEO of CMC, “Fiscal 2024 was another solid year for CMC, with highlights including record employee safety performance for the second consecutive year, our third best financial results in the company’s 109-year history, and meaningful advancement across several key strategic projects.”

Of the summer months, Matt says, “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.”

He continues, “Certain contemplated construction projects appear to be on hold until greater clarity emerges regarding the future path of interest rates and the outcome of United States elections. We believe the underlying near and long-term demand fundamentals remain strong based on customer conversations and continued healthy downstream bid activity underpinned by the structural trends of infrastructure investment, re-shoring of manufacturing, electrification and the need to address a chronic housing shortage in the United States"

The earnings reduction in this year’s summer quarter, says CMC, “was driven by lower margins over scrap costs on steel products and downstream products.”

The firm says demand for its products in North America “remained stable” this summer. “Average daily shipments of finished steel products were virtually unchanged compared to both the prior year and [the previous] quarter,” says CMC.

CMC writes, “The construction pipeline of potential future projects remained healthy as indicated by CMC’s downstream bidding activity and the Dodge Momentum Index, which measures the value of projects entering the planning phase.”

The firm says although bid volumes “were strong compared to historical levels” this summer, “they have declined from the peaks of fiscal 2022 and fiscal 2023,” referring to from mid-2021 to mid-2023.

CMC says its balance sheet and liquidity position remain “strong,” citing cash and cash equivalents of nearly $858 million as of this August 31, “with available liquidity of nearly $1.7 billion.”

Looking ahead, CEO Matt remarks, “We expect consolidated financial results in our first quarter of fiscal 2025 [September to November 2024] to decline from the fourth quarter level as a consequence of continued macroeconomic uncertainty and temporary, dampened sentiment within certain areas of the construction industry.”

Matt says he expects adjusted earnings before interest, taxes, depreciation (EBITDA) margin in late 2024 “to decrease on lower steel product margin over scrap cost.”

He concludes, “We believe current market conditions represent a transient period of softness created by uncertainty regarding important factors that influence any major capital investment—the cost of funding and future government policy. Clarity will emerge in the coming months, and we believe, renewed strength in our core markets will follow.”

CMC operates recycled-content electric arc furnace (EAF) steel mills and a network of metal recycling facilities in the U.S., where it also sells construction sector products and materials. CMC also operates one steel mill and other offices and facilities in Europe.