Commercial Metals (NYSE:CMC) executives said fiscal 2026 opened with “one of the best” first quarters in the company’s history, pointing to stronger profitability, expanding margins and continued progress on an operational and commercial excellence program they believe can deliver a sizable step change in earnings power.
First-quarter earnings and margin expansion
CMC reported fiscal first-quarter net earnings of $177.3 million, or $1.58 per diluted share. Adjusted earnings were $206.2 million, or $1.84 per diluted share, after excluding items management said included acquisition-related expenses, interest on a litigation judgment amount and an unrealized loss on undesignated commodity hedges.
CFO Paul Lawrence said first-quarter pre-tax expenses totaled about $36.7 million, including $24.9 million tied to the CPMP and Foley Products acquisitions, $3.7 million of interest on the litigation judgment amount, and an $8.1 million unrealized loss on commodity hedges.
North America Steel: higher metal margins and TAG benefits
The North American Steel Group produced adjusted EBITDA of $293.9 million, equating to $257 per ton of finished steel shipped. Lawrence said segment EBITDA rose 58% year-over-year, driven primarily by higher margin over scrap cost, improved performance at the Arizona II mill, and contributions from the company’s “TAG” program.
Matt said the company’s mill network performed strongly operationally in a “relatively tight domestic supply environment,” helping maintain customer service levels. He highlighted scrap optimization initiatives that were launched in fiscal 2025 and are now rolled out across all domestic mills, resulting in lower scrap usage per ton and the use of lower-cost scrap blends.
Shipments of finished steel were “virtually unchanged” from the year-ago quarter and declined less than 1% sequentially, which management contrasted with a typical seasonal sequential decline of 4% to 5%. Metal margins increased sequentially, which management attributed to capturing summer price announcements.
On downstream fabrication, Matt said the company has increased “commercial rigor” and selectivity in bidding. Despite accepting fewer projects that do not meet profit thresholds, management said downstream backlog volume increased modestly year-over-year and sequentially, while the average price in backlog improved. Executives cited project wins that require specialized reinforcing solutions and large-scale deployment, including LNG-related work involving “highly specialized cryogenic steel.”
Construction Solutions: record first-quarter Adjusted EBITDA, precast added after quarter-end
CMC also reported strong performance in its Construction Solutions Group, which was renamed from “Emerging Businesses Group.” Matt said the new name reflects a portfolio in which more than 95% of EBITDA is expected to come from “high-margin solutions to the construction market,” and aligns with the strategy of growing CMC’s role in early-stage construction.
Lawrence said the segment generated net sales of $198.3 million, up 17% year-over-year, while adjusted EBITDA rose 75% to $39.6 million. The adjusted EBITDA margin was 20%, improving by 6.6 percentage points versus the prior year period.
Management attributed the gains to strong results at Tensar and CMC Construction Services, along with improvement at CMC Impact Metals from depressed year-ago levels. Tensar delivered its best first-quarter performance under CMC ownership, aided by strong project demand, commercial initiatives to deepen customer relationships, and cost controls. CMC Construction Services posted revenue growth that outpaced the broader market, driven by efforts to win new customers, increase share of wallet and standardize pricing and service levels.
Subsequent to quarter-end, CMC closed its acquisitions of CPMP and Foley Products, creating what Matt described as one of the largest precast concrete businesses in the U.S. Management said early integration observations have been positive, emphasizing cultural fit and collaboration opportunities. In response to analyst questions, Matt said the company is confident it can achieve the previously announced $30 million to $40 million in synergies, but said it was too early to accelerate the timeline.
Europe Steel: CO2 credit timing and CBAM expectations
CMC’s Europe Steel Group posted adjusted EBITDA of $10.9 million, down from $25.8 million a year earlier. Lawrence said the decline was largely due to lower CO2 credits: $15.6 million in the quarter versus $44.1 million in the year-ago period, reflecting a timing difference in how annual credits were received.
Excluding energy cost rebates, the company said adjusted EBITDA improved year-over-year due to higher volumes and expanded metal margins. Shipments rose about 16% from the prior-year quarter, and metal margins improved by $37 per ton. The quarter included an annual maintenance outage at the Polish mill that cost approximately $10 million.
Matt said European pricing and margins were pressured by import flows, which he suggested may have been influenced by buyers importing ahead of the European Union’s Carbon Border Adjustment Mechanism (CBAM) effective Jan. 1, 2026. He called the import-related pressure a “temporary overhang” and said the company expects CBAM to support pricing as it increases the cost of some imports. Management’s team in Poland believes CBAM could raise costs of some imported long products by at least $50 per ton. Matt also referenced revisions to EU safeguards that reduce quotas and increase tariffs for volumes above quota, expected to come into effect mid-year.
Capital structure, tax outlook, and fiscal 2026 guidance
As of Nov. 30, the company reported $3.0 billion in cash, cash equivalents and restricted cash, including about $2.0 billion from a senior notes offering intended largely to fund the Foley transaction. In December, CMC paid about $2.5 billion to close the CPMP and Foley acquisitions. On a pro forma basis assuming the transactions closed on Nov. 30, Lawrence said net leverage would be about 2.5x using combined adjusted EBITDA for legacy CMC and the acquired precast business. Management reiterated a target of returning to net leverage below 2.0x within 18 months and said it reduced share repurchases to roughly offset annual share issuance under compensation programs.
CMC also increased its revolving credit facility to $1.0 billion from $600 million after quarter-end, with management estimating pro forma available liquidity of slightly over $1.7 billion.
The effective tax rate was 3.1% in the quarter. Lawrence guided to a 5% to 10% full-year effective tax rate for fiscal 2026 and said the company does not anticipate paying significant U.S. federal cash taxes in fiscal 2026 or for much of fiscal 2027, citing the 48C tax credit and depreciation benefits, including bonus depreciation tied to the Steel West Virginia investment and accelerated depreciation on the acquisitions’ assets.
Capital spending is expected to total about $625 million in fiscal 2026, including roughly $300 million for the Steel West Virginia micromill completion and certain growth investments, plus about $25 million in the newly acquired precast businesses.
For the second quarter, management expects consolidated Core EBITDA to decline modestly from the first quarter due to normal seasonal slowdown, partially offset by the precast acquisitions. The company expects North America Steel adjusted EBITDA to be lower sequentially on seasonality and planned maintenance outages, while steel product metal margins are expected to remain relatively stable. Construction Solutions adjusted EBITDA is expected to improve sequentially as precast contributions more than offset seasonal weakness elsewhere in the segment. Europe Steel adjusted EBITDA is expected to be approximately break-even, with potential for margin growth later in fiscal 2026 as CBAM takes effect.
Matt also said CMC is maintaining its ambition to exit fiscal 2026 with an annualized TAG run-rate EBITDA benefit of $150 million, after approximately $50 million of EBITDA benefit delivered in fiscal 2025 from initiatives such as scrap optimization, yield improvements, alloy usage and logistics.
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.
