Commercial Metals 2025 Q3 Earnings Misses Targets with Net Income Down 30.4%

Commercial Metals (CMC) reported its fiscal 2025 Q3 earnings on Jun 23rd, 2025. The company missed revenue expectations, reporting $2.02 billion against the expected $2.05 billion. Despite a challenging quarter, management has expressed optimism for sequential improvement in Q4, with anticipated higher steel product margins over scrap and increased finished steel shipments following normal seasonal trends. The company forecasts improved results across all segments, aided by a $28 million CO2 credit for the Europe Steel Group. Analysts had mixed reactions, as some maintain a "neutral" rating while others see potential upside for CMC's stock.

Revenue

Commercial Metals faced a decline in revenue for Q3 2025, totaling $2.02 billion, a 2.8% decrease compared to $2.08 billion in Q3 2024.

Earnings/Net Income

Commercial Metals' EPS fell significantly by 28.2% to $0.74 in Q3 2025 from $1.03 in Q3 2024. Net income also decreased by 30.4%, dropping to $83.13 million from $119.44 million in the same period last year. Overall, the EPS results indicate a challenging financial quarter.

Price Action

The stock price of Commercial Metals has climbed 3.01% during the latest trading day, has edged up 1.84% during the most recent full trading week, and has climbed 3.77% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing CMC when revenues exceed expectations and holding for 30 days proved to be advantageous, delivering a remarkable return of 212.55%, far surpassing the benchmark return of 96.61%. With an excess return of 115.94% and a compound annual growth rate of 25.74%, this strategy showcased significant growth potential. Nevertheless, it experienced a maximum drawdown of -34.72%, signifying periods of volatility. The Sharpe ratio stood at 0.69, indicating that while the risk-adjusted returns were acceptable, they were not exceptional. Overall, this approach demonstrated a robust capacity for growth, albeit with some risk considerations.

CEO Commentary

CMC's President and Chief Executive Officer, Peter Matt, emphasized the company's strong market position, citing "powerful tailwinds from long-term secular trends that will drive construction investment for years to come." He noted that despite economic uncertainties, including tariffs and high interest rates, the demand for rebar remains resilient, staying within 5% to 6% of post-GFC peaks. Matt expressed confidence in CMC's strategy to enhance margins, cash flow, and returns, highlighting initiatives like the TAG program, which is projected to generate $50 million in EBITDA benefits for fiscal 2025. The overall tone was optimistic, with a clear commitment to driving value-accretive growth.

Guidance

CMC anticipates fourth-quarter financial results to improve sequentially, with finished steel shipments expected to follow normal seasonal trends. The adjusted EBITDA margin is projected to increase due to higher steel product margins. The company expects a CO2 credit of approximately $28 million in the fourth quarter, contributing positively to the Europe Steel Group's performance, while overall capital expenditures for fiscal 2025 are now forecasted to be between $425 million and $475 million.

Additional News

Commercial Metals Company boosted its financial strategy by closing a tax-exempt bond financing of $150 million, intending to fund the construction of solid waste disposal facilities in West Virginia. This initiative aligns with the company's long-term growth plans. Additionally, the board declared a quarterly dividend of $0.18 per share, maintaining a consistent payout to shareholders. Furthermore, Fifth Third Bancorp increased its holdings in CMC, acquiring an additional 279 shares during the first quarter, reflecting sustained investor interest in the company's future prospects. These strategic moves underscore CMC's commitment to shareholder value and growth.