CMC earnings slip on slow construction, low prices

Irving, Texas-based CMC reported a net loss of $175.7 million in its fiscal first quarter, compared to net earnings of $176.3 million in the prior year.

The loss also reflects a net after-tax charge of $265 million due to a verdict reached in a lawsuit filed by Pacific Steel Group in California.

“Financial results continued to be hindered by economic uncertainty that has weighed on new construction activity, pressuring steel pricing and margins,” Peter Matt, president and CEO, said in a statement.

“We remain confident that this weaker demand environment will be temporary as we expect the underlying drivers across infrastructure, non-residential and residential end markets will provide multiyear support for our business,” Matt continued. “Our downstream bid levels and several key external indicators continue to evidence a robust pipeline of potential future projects that should translate into construction activity in the coming quarters.”

CMC said demand was strong for products in its North American segment due to late-season construction activity as job sites worked to make up for days lost to weather disruptions earlier in the year.

Shipments of finished steel products increased by 4.4% compared to the prior year period.

Downstream backlog volumes were stable year over year. Shipments of merchant products grew compared to the first quarter of fiscal 2024 as production at its Arizona 2 micro mill facility increased.

Outlook

The company expects second-quarter results to fall quarter over quarter.

“Finished steel shipments within the North America Steel Group are anticipated to follow normal seasonal trends, while adjusted EBITDA margin is expected to decrease sequentially on lower margins over scrap cost on steel and downstream products,” Matt said.