- Strong Core EBITDA Growth: Consolidated core EBITDA surged 50% YoY to $316.9 million, with a margin of 14.9%.
- North America Steel Outperformance: Adjusted EBITDA rose 58% to $293.9 million, driven by higher steel product margins over scrap costs.
- Construction Solutions Record: Achieved $39.6 million adjusted EBITDA, up 75% YoY, with a 20% margin (6.6 pts improvement).
- Acquisitions and Liquidity: Closed $2.5B acquisitions (CP&P, Foley) with $3B cash balance, net leverage at 2.5x, targeting <2x in 18 months.
- TAG Program Impact: Expected $150M annualized EBITDA benefits by 2026, with $50M achieved in 2025 from scrap optimization and yield improvements.
Segment Performance
The North America Steel Group had a strong operational performance, driven by higher margin over scrap cost on steel products, with adjusted EBITDA up 58% from the prior year period to $293.9 million. The Construction Solutions business achieved a record first-quarter adjusted EBITDA, driven by solid execution and supportive market conditions. In contrast, the Europe Steel Group saw softened conditions due to import flows, but expects prices to benefit from the launch of the European Union's carbon border adjustment mechanism (CBAM).
TAG Program and Acquisitions
The company's Transformation and Growth (TAG) program is on track to deliver an annualized run rate EBITDA benefit of $150 million by the end of fiscal 2026. Subsequent to the end of the first quarter, Commercial Metals Company closed on the acquisitions of CP&P and Foley, which are expected to broaden the company's commercial portfolio and enhance its financial profile.
Outlook and Valuation
The company expects a full-year effective tax rate between 5% and 10% for fiscal 2026 and anticipates spending approximately $625 million in total capital expenditures. With a current P/E Ratio of 17.92 and EV/EBITDA of 17.27, the company's valuation appears reasonable, considering its strong financial performance and growth prospects. Analysts estimate next year's revenue growth at 6.8%, indicating a positive outlook for the company's future prospects.
Cash Flow and Leverage
Commercial Metals Company increased its revolving credit facility capacity from $600 million to $1 billion, ensuring a strong liquidity position. The company's net leverage stands at approximately 2.5 times, and it is confident in its ability to return to its net leverage target of below two times within eighteen months.
Operational Highlights
The Arizona 2 (AZ2) steel mill reached profitability on EBITDA in the fourth quarter and is expected to be nicely profitable throughout the year. The downstream backlog continues to see price improvements, with new orders being put in at higher prices. The company's new commercial approach in the fabrication business aims to protect margins through indexation and proper escalation.