CMC Reports Fourth Quarter and Full Year Fiscal 2024 Results

Commercial Metals Company announced financial results for its fiscal fourth quarter ended August 31, 2024. Net earnings were $103.9 million, or $0.90 per diluted share, on net sales of $2.0 billion, compared to prior year period net earnings of $184.2 million, or $1.56 per diluted share, on net sales of $2.2 billion.

Fourth Quarter Highlights

• Fourth quarter net earnings of $103.9 million, or $0.90 per diluted share; annual net earnings of $485.5 million, or $4.14 per diluted share
• Consolidated core EBITDA of $227.1 million in the fourth quarter; core EBITDA margin of 11.4%
• Solid construction activity provided stability in North America shipment volumes; margins pressured by decline in average steel pricing
• Tensar achieved its most profitable quarter to date as a division of CMC, driving the Emerging Businesses Group adjusted EBITDA margin to 21.7% in the fourth quarter
• Successful cost management actions improved Europe Steel Group fourth quarter adjusted EBITDA by $26.5 million on a year-over-year basis despite materially lower volumes and flat metal margins
• Strong generation of cash flow from operating activities in the fourth quarter and fiscal year 2024 of $351.8 million and $899.7 million, respectively
• Cash distributions to shareholders in the form of share repurchases and dividends amounted to $261.8 million in fiscal year 2024, an increase of 48% compared to fiscal year 2023

For the full year fiscal 2024, CMC reported net earnings of $485.5 million, or $4.14 per diluted share, on net sales of $7.9 billion compared to prior year net earnings of $859.8 million, or $7.25 per diluted share, on net sales of $8.8 billion.

“Adjusted EBITDA,” “core EBITDA,” “core EBITDA margin,” “adjusted earnings” and “adjusted earnings per diluted share” are non-GAAP financial measures. Details, including a reconciliation of each such non-GAAP financial measure to the most directly comparable measure prepared and presented in accordance with GAAP, can be found in the financial tables that follow.

Peter Matt, President and Chief Executive Officer, said, “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. 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. 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 U.S.”

Mr. 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. The improvement program, which seeks to leverage our leading positions in most of our core markets, touches nearly every aspect of our business and aims to achieve higher through-the-cycle margins by lowering costs, increasing efficiency, and better capturing commercial opportunities across our business. We believe the execution of several early initiatives will begin yielding financial benefits in fiscal 2025.”

The Company’s balance sheet and liquidity position remained strong. As of August 31, 2024, cash and cash equivalents totaled $857.9 million, with available liquidity of nearly $1.7 billion. During the quarter, CMC repurchased 1,001,096 shares of common stock valued at $54.8 million in the aggregate. As of August 31, 2024, $403.8 million remained available under the current share repurchase authorization.

On October 15, 2024, the board of directors declared a quarterly dividend of $0.18 per share of CMC common stock payable to stockholders of record on October 31, 2024, representing an increase of approximately 13% on a year-over-year basis. The dividend to be paid on November 14, 2024, marks the 240^th consecutive quarterly payment by the Company.

Business Segments – Fiscal Fourth Quarter 2024 Review

Demand for CMC’s products in North America remained stable during the quarter. Average daily shipments of finished steel products were virtually unchanged compared to both the prior year and third quarter. 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. Though bid volumes were strong compared to historical levels, they have declined from the peaks of fiscal 2022 and fiscal 2023. Downstream backlog volumes were generally stable on both a year-over-year and sequential basis. Shipments of merchant products (MBQ) grew compared to the fourth quarter of fiscal 2023 as our ability to serve West Coast customers from our Arizona 2 micro mill facility has increased.

Adjusted EBITDA for the North America Steel Group decreased to $210.9 million in the fourth quarter of fiscal 2024 from $336.8 million in the prior year period. The earnings reduction was driven by lower margins over scrap costs on steel products and downstream products. Included in fourth quarter segment adjusted EBITDA were $15.1 million in costs, net of depreciation, related to the commissioning of CMC’s Arizona 2 micro mill, which compares to costs of $12.3 million incurred during the prior year period. The adjusted EBITDA margin for the North America Steel Group of 13.5% declined from 19.6% in the fourth quarter of fiscal 2023.

European market conditions in the fourth quarter were similar sequentially. Long-steel consumption remained substantially below historical levels. The beneficial impact of improving Polish demand in certain end market applications and regional supply discipline has been largely offset by increased import flows from neighboring nations that have sought an outlet for product not consumed within their home markets. The Europe Steel Group reported an adjusted EBITDA loss of $3.6 million, continuing the trend of improved financial performance compared to late fiscal 2023 and early fiscal 2024. On a sequential basis, financial results were essentially flat as positive contributions from higher shipment volumes and lower controllable costs were offset by an $8 per ton reduction in margins over scrap. Adjusted EBITDA increased by $26.5 million from the prior year period, driven entirely by cost management actions, which overcame an 18% decline in shipment volumes with no change in margins over scrap.

Emerging Businesses Group fourth quarter net sales of $195.6 million decreased by 6.2% compared to the prior year period, but improved 3.7% on a sequential basis. Adjusted EBITDA for the segment of $42.5 million was unchanged on a year-over-year basis and increased by 11.2% from the third quarter. Sales mix contributed positively to both year-over-year and sequential adjusted EBITDA performance, with a greater percentage of geogrid volumes composed of CMC’s highest margin proprietary offering, while shipments of Performance Reinforcing Steel also increased. Demand conditions in the North American markets remained resilient during the quarter with pipeline measures such as project quotes and backlog at healthy levels. Adjusted EBITDA margin of 21.7% was up 130 basis points compared to the prior year period.

Outlook

Mr. Matt said, “We expect consolidated financial results in our first quarter of fiscal 2025 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. Finished steel shipments within the North America Steel Group are anticipated to follow normal seasonal trends, while adjusted EBITDA margin is expected to decrease on lower steel product margin over scrap cost. Adjusted EBITDA for our 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 to fourth quarter levels. Financial results for the Emerging Businesses Group are anticipated to decline due to normal seasonality and the impact of economic uncertainty within the United States and Europe.”

Mr. Matt concluded, “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.”

For full results click here.

About CMC

CMC is an innovative solutions provider helping build a stronger, safer, and more sustainable world. Through an extensive manufacturing network principally located in the United States and Central Europe, we offer products and technologies to meet the critical reinforcement needs of the global construction sector. CMC’s solutions support construction across a wide variety of applications, including infrastructure, non-residential, residential, industrial, and energy generation and transmission.

Source: Commercial Metals Company