Commercial Metals 2025 Q3 Earnings Misses Targets as Net Income Falls 30%

Commercial Metals (CMC) reported its fiscal 2025 Q3 earnings on June 24th, 2025. The company's net income fell to $83.13 million, missing expectations compared to $119.44 million in 2024 Q3. Guidance for the fourth quarter was raised as CMC anticipates improved financial results with higher finished steel shipments and increased EBITDA margins. The company expects a positive impact from a CO2 credit in Europe, contributing to an overall better performance in Q4.

Revenue

Commercial Metals experienced a revenue decline of 2.8% in fiscal 2025 Q3, totaling $2.02 billion, down from $2.08 billion in the same quarter last year. The raw materials segment generated $337.62 million, while steel products contributed $864.53 million. Downstream products added $586.28 million, construction products brought in $78.22 million, and ground stabilization solutions accounted for $68.56 million. Other segments contributed $84.78 million, with net sales to external customers matching the total revenue figure.

Earnings/Net Income

Commercial Metals reported a significant decline in EPS, down 28.2% to $0.74 from $1.03 in the previous year. Net income dropped 30.4% to $83.13 million from $119.44 million. The reduced EPS reflects weaker-than-expected performance.

Price Action

The stock price of Commercial Metals edged up 0.54% during the latest trading day, climbed 3.39% over the full trading week, and increased 7.24% month-to-date.

Post-Earnings Price Action Review

A strategy focusing on buying CMC stock when revenues outperform expectations and holding for 30 days has yielded substantial returns, outperforming benchmarks with a 333.02% return. However, this approach has exhibited high volatility, evidenced by a maximum drawdown of -58.12%, indicating substantial risk. The Sharpe ratio of 0.61 reflects moderate risk-adjusted returns despite the high overall gains. Investors should be cautious of the strategy's inherent volatility.

CEO Commentary

Peter Matt, President and CEO, highlighted CMC's leadership position in its markets, driven by strong customer relationships and operational capabilities. He noted that favorable industry conditions and trade policies are enhancing margins in the long steel markets. Despite economic uncertainties and high interest rates, Matt expressed optimism about CMC's strategy to capitalize on structural trends in the domestic construction market. He emphasized the company's focus on improving financial performance.

Guidance

CMC expects improved consolidated financial results in the fourth quarter of fiscal 2025 compared to the third quarter, anticipating higher steel shipments and increased EBITDA margins due to better steel product margins. The Europe Steel Group is expected to receive a CO2 credit of approximately $28 million, positively influencing results. Capital expenditures for fiscal 2025 are projected between $425 million and $475 million, considering delays in the Steel West Virginia project.

Additional News

Commercial Metals Company recently announced the pricing of $150 million in Solid Waste Disposal Facility Revenue Bonds through the West Virginia Economic Development Authority. The proceeds will finance the construction of solid waste disposal facilities in Berkeley County, West Virginia. The bonds will bear interest at 4.625% per annum, with a mandatory tender for purchase on May 15, 2032, and maturity in 2055. This strategic financial move is part of CMC's broader plan to enhance infrastructure capabilities. Additionally, Fifth Third Bancorp boosted its holdings in CMC shares by 21.2% during the first quarter, with other institutional investors also adjusting their positions. The company's dividend payout remains consistent at $0.18 per share, marking the 243rd consecutive quarterly payment.