CMC Q4 Earnings Rise on Steel Margins and Precast Growth

CMC (ticker: CMC) reported higher fiscal fourth-quarter earnings as stronger North American steel margins, the inclusion of acquired precast operations and benefits from its Transform, Advance and Grow program lifted profitability. The company also entered fiscal 2027 with acquisition-adjusted net leverage below its target threshold, though it expects first-quarter results to moderate sequentially because of seasonal factors.

Net sales for the fourth quarter of fiscal 2026 rose 25.7% from a year earlier to $2.66 billion and increased 7.1% from the preceding quarter. Net earnings climbed 40.0% year over year to $212.5 million, while non-GAAP adjusted earnings increased 50.7% to $233.6 million.

Core EBITDA, also a non-GAAP measure, advanced 35.1% to $393.7 million. Core EBITDA margin expanded by 100 basis points from a year earlier and 60 basis points sequentially to 14.8%. External finished-steel shipments increased 4.2% year over year to 1.59 million tons.

North American steel margins strengthen

The North America Steel Group generated adjusted EBITDA of $317 million, up 32.6% year over year and 25.2% from the third quarter. Adjusted EBITDA margin reached 16.4%, expanding 160 basis points from a year earlier, while adjusted EBITDA per ton of finished steel shipped increased 25.9% to $261.

External finished-steel shipments rose 5.3% to 1.22 million tons. CMC said merchant bar quality and other volumes increased 27.5% year over year, while downstream product volumes grew 8.5%. The company attributed the segment’s performance to margin expansion, commercial discipline, TAG benefits and an improved contribution from its Arizona 2 mill.

CMC said commissioning and startup work at its West Virginia mill remained on schedule. Near-term priorities include production ramp-up, workforce readiness, safety and disciplined commissioning. The mill is expected to provide additional flexibility across the company’s production network.

Precast acquisitions reshape Construction Solutions

Construction Solutions Group sales nearly doubled to $431 million, largely reflecting the inclusion of precast operations. Adjusted EBITDA increased 100.9% to $102 million, while adjusted EBITDA margin rose 80 basis points year over year to 23.6%. The margin was down 110 basis points from the third quarter.

Precast volumes and adjusted EBITDA were below management’s expectations because of pockets of residential weakness in Southeastern markets. CMC nevertheless said integration was on track, functional integration was substantially complete and acquisition synergies were materializing as expected or better. The company is also shifting the precast business toward nonresidential and infrastructure end markets, with bookings and backlogs higher than a year earlier in both volume and price.

Construction Solutions accounted for 21.8% of trailing-12-month core EBITDA. For fiscal 2026, the segment posted a 22% adjusted EBITDA margin, compared with 16% for North America Steel.

European profitability declines

Europe Steel Group results weakened despite relatively stable annual shipment volumes. External finished-steel shipments increased 0.8% year over year to 377,000 tons but declined 6.0% sequentially.

Adjusted EBITDA fell 60.1% from a year earlier to $16 million, and adjusted EBITDA per ton dropped to $41 from $105. The segment’s adjusted EBITDA margin contracted by 930 basis points to 5.5%. CMC’s preliminary fiscal 2027 outlook calls for margin recovery in the European business, but the presentation did not provide a numerical target.

TAG benefits and fiscal 2027 priorities

CMC said its TAG operational and commercial excellence program exceeded its fiscal 2026 targets, achieving more than $250 million of gross run-rate benefits against a fiscal 2024 baseline. The company is targeting about $100 million of additional gross run-rate EBITDA benefits in fiscal 2027, which would bring the total to more than $350 million. Planned initiatives include broader use of advanced analytics and AI-enabled tools, further productivity improvements, customer segmentation, project selectivity and value-based pricing.

Management’s preliminary fiscal 2027 outlook cited robust backlogs and demand from infrastructure, energy, data centers and industrial reshoring. The company also expects free cash flow to benefit from completion of construction at the West Virginia mill, contributions from recently deployed growth capital, network optimization and the characteristics of its acquired businesses.

Net leverage adjusted for acquisitions declined to 1.9 times from 2.1 times in the third quarter, moving below CMC’s target of less than 2.0 times. The non-GAAP calculation annualizes the acquired precast businesses’ post-acquisition EBITDA and may not reflect results they will generate over a full 12-month period. CMC said its capital-allocation priorities include high-return, lower-capital-intensity projects, selective acquisitions, dividends, share repurchases and maintaining balance-sheet strength.

The outlook remains subject to residential weakness, variability in metal margins and construction demand, trade-policy changes, customer liquidity pressure and the execution of acquisition integration and growth projects. Startup risks at new facilities, energy and raw-material costs, additional domestic steelmaking capacity and uncertainty surrounding European trade measures could also cause results to differ from management’s expectations.