Commercial Metals (NYSE:CMC) reported higher earnings in its fiscal 2026 second quarter, citing solid execution across its core steel operations, a supportive market backdrop in most regions, and initial contributions from its newly acquired precast concrete platform. Management also discussed progress on its enterprise-wide TAG improvement program, market conditions across North America and Europe, and its outlook for the second half of the fiscal year.
Second-quarter results and key drivers
President and CEO Peter Matt said the company delivered “another excellent financial performance” despite unusually disruptive winter weather that temporarily reduced production and increased energy costs. For the quarter, CMC reported net earnings of $93 million, or $0.83 per diluted share. Excluding certain charges, adjusted earnings were $130.1 million, or $1.16 per diluted share.
Lawrence detailed $47.2 million in pre-tax items during the quarter, including $45.1 million tied to the CP&P and Foley precast acquisitions. That acquisition-related amount included $20.6 million of transaction and integration costs and $24.5 million of non-cash purchase accounting adjustments related to inventory and order backlogs. The quarter also included $4.1 million of interest on a judgment amount associated with previously disclosed PSG litigation and $2 million related to an unrealized gain on undesignated commodity hedges, according to the CFO.
Precast platform integration and early performance
Matt said the second quarter marked CMC’s entry into the precast concrete business following the closing of the CP&P and Foley acquisitions in December, and he characterized the first 100 days as a success. He said integration efforts were on schedule, supported by what he described as a strong cultural fit and engaged leadership teams.
Management highlighted early integration and synergy actions, including:
- Centralizing several support functions
- Insourcing rebar supply
- Benchmarking key performance metrics
- Centralizing procurement of certain common items
- Planning “small capital, high return” operational excellence projects
On the commercial side, Matt said the company developed a unified go-to-market strategy in overlapping geographies and is expanding product lines to address demand, citing dry utility structures used in data center construction as one example. He also said CMC has begun initial commercial discussions that combine its legacy offerings with precast products, which he said has been met with positive customer reception.
In the Construction Solutions Group, second-quarter net sales rose to $314.4 million, up 98% year over year, while adjusted EBITDA increased 127% to $53.4 million. Lawrence said the precast platform exceeded expectations in what he called a seasonally weak period, contributing $33.6 million to segment adjusted EBITDA. Excluding an inventory purchase accounting adjustment, precast generated $40.3 million of EBITDA on $145 million of revenue. The company said backlog value at quarter-end was up by a high single-digit percentage versus February 2025, supporting price increases on new bookings in certain areas and positioning the business heading into the construction season.
TAG program progress and operational commentary
Matt said fiscal 2026 is a “pivotal year” for TAG, CMC’s operational and commercial excellence program, as execution expands across all lines of business. He said the company is seeing “solid and broad-based momentum” in the first half of fiscal 2026 and that some initiatives are exceeding initial expectations, pointing to improved fleet utilization and better margins across parts of the recycling network.
Management reiterated its goal of exiting the fiscal year at an annualized run-rate EBITDA benefit of $150 million from TAG, with Matt saying he is confident the company should reach or exceed that level.
In the North American Steel Group, CMC reported segment adjusted EBITDA of $269.7 million, or $257 per ton of finished steel shipped, and a segment EBITDA margin of 16.8%. Lawrence said the quarter benefited from TAG progress and higher margins over scrap versus the prior year, but winter storms reduced segment adjusted EBITDA by an estimated $5 million to $10 million due to lower production and higher energy costs linked to grid stress.
Market conditions: North America and Europe
Matt said underlying North American demand for major products remained healthy. Finished steel shipments were “virtually unchanged” year over year despite weather-related shipment disruptions. He said downstream bid volumes remained consistent with recent quarters, with strength in public works, institutional buildings, energy projects, and data centers. He also pointed to the Mid-Atlantic and South Central U.S. as key regions for new data center construction where CMC has leading positions.
CMC said second-quarter bookings were the highest since late fiscal 2022, helped by several energy projects and a large advanced manufacturing facility.
On trade, Matt said the company was encouraged by preliminary outcomes in a rebar trade case filed with the U.S. International Trade Commission in June, alleging violations by exporters in Algeria, Bulgaria, Egypt, and Vietnam. He said the Department of Commerce issued preliminary rulings setting antidumping and countervailing duties, with combined duties ranging from about 50% for Bulgaria up to 200% for Algeria, in addition to Section 232 tariffs. Management noted final determinations are scheduled for the summer and may change.
In Europe, management described conditions as mixed. Matt said merchant bar demand was resilient, but rebar imports ahead of the January 1 implementation of the European Carbon Border Adjustment Mechanism (CBAM) disrupted the supply-demand balance. The Europe Steel Group posted an adjusted EBITDA loss of $1.4 million, roughly flat year over year, with lower shipments offset by higher margins over scrap. The company expects shipments to rebound as the import overhang clears and seasonal conditions improve.
Management also discussed higher European natural gas costs and estimated a potential $15 to $20 per ton increase in production costs in coming months tied to spot pricing, while noting Poland’s coal-heavy grid reduces exposure relative to other EU countries. In response to a question, Lawrence said electricity accounts for roughly 15% to 20% of total production costs excluding scrap, and he noted CMC is around 50% hedged in Poland through long-term power purchase agreements.
Balance sheet, capital allocation, and outlook
At quarter-end (February 28), CMC reported $504 million in cash and cash equivalents and total liquidity of just over $1.7 billion, including facility availability. Lawrence said adjusted net leverage was approximately 2.3x, down from the 2.7x figure the company shared when it announced the Foley acquisition, and management reiterated its intent to return to its 2.0x net leverage target or below within its previously stated timeframe. The company said it reduced share repurchases during the deleveraging period to offset dilution from annual share issuances under compensation programs.
CMC’s board increased the quarterly dividend by $0.02 per share to $0.20, an 11% increase, according to Lawrence.
For fiscal 2026, CMC expects capital spending of approximately $600 million, slightly below its January guidance due to winter-related construction delays at Steel West Virginia. Of that total, approximately $300 million is tied to completing the West Virginia micromill and select growth investments in Construction Solutions. The company anticipates about $25 million of capex in the precast business, split between maintenance and growth.
Looking ahead, Matt said the company expects consolidated core EBITDA in the fiscal third quarter to increase meaningfully from second-quarter levels due to seasonal improvement and continued margin strength in North America. North America Steel Group adjusted EBITDA is expected to rise modestly on higher seasonal volumes, partially offset by annual maintenance outages expected to add $15 million to $20 million in costs. Construction Solutions results are expected to “nearly double” versus the second quarter, while Europe Steel Group adjusted EBITDA is expected to substantially improve on higher volumes, modestly improved metal margins, and an anticipated approximately $20 million CO2 credit.
For the full fiscal year, management reiterated its expectation that the precast business will generate $165 million to $175 million in EBITDA.
About Commercial Metals (NYSE:CMC)
Commercial Metals Company (NYSE: CMC) is a leading global steel and metal recycler, manufacturer and fabricator based in Irving, Texas. The company operates an integrated network of scrap recycling facilities, electric arc furnace steel mills, metal fabrication plants and distribution centers. Through these operations, Commercial Metals collects and processes ferrous scrap to produce finished steel products and provides recycled metal to a variety of end markets.
In its steelmaking segment, CMC uses electric arc furnace technology to transform recycled scrap into reinforcing bar (rebar), merchant bar, coil and structural products.
