Commercial Metals Co. (NYSE: CMC) reported first-quarter fiscal year 2026 results that surpassed analyst forecasts, driven primarily by enhanced steel margins and steady demand in the construction sector. Despite this financial outperformance, the company tempered investor enthusiasm by cautioning that upcoming quarterly profits are likely to decrease due to several factors including acquisition-related costs and seasonal fluctuations, which manifested in a decline of its stock price during early market hours.
In the quarter ended November 30, 2025, Commercial Metals reported net earnings amounting to $177.3 million, equivalent to $1.58 on a diluted per-share basis. Adjusted earnings, excluding certain items, reached $206.2 million or $1.84 per diluted share, notably surpassing the consensus analyst estimate of $1.56 per share. Revenue for the quarter climbed to $2.120 billion, increasing from $1.910 billion recorded in the same period of the previous year and beating the estimated $2.057 billion.
The company achieved consolidated core EBITDA of $316.9 million, representing a 52% increase year-over-year, with the core EBITDA margin at 14.9%. Notably, Commercial Metals recorded after-tax charges totaling $28.9 million primarily attributable to expenses linked with its CP&P and Foley acquisitions, contrasted with significantly larger litigation-related charges of $265.0 million after tax during the prior year quarter.
Within its North America Steel Group, steel product shipments stood at 795,000 tons, a slight increase from both the previous year's first quarter figure of 790,000 tons and the immediately preceding quarter's 788,000 tons. This segment's adjusted EBITDA improved by 57.9% to $293.9 million, with a margin uplift from 12.3% to 17.7%. Sequentially, steel product margins rose by approximately $53 per ton, underscoring stronger profitability.
The Construction Solutions Group experienced notable growth, posting net sales of $198.3 million, a 17% increase from the prior year period, alongside adjusted EBITDA expansion of 74.7% to $39.6 million. The segment achieved an adjusted EBITDA margin of 20.0%, reflecting operational efficiency and increased demand. Conversely, the Europe Steel Group reported a decline in adjusted EBITDA to $10.9 million from $25.8 million and a reduction in adjusted EBITDA margin to 4.4% from 12.3%. The slowdown was driven by diminished CO2 credit revenue, which fell to $15.6 million from $44.1 million previously, and maintenance-related outages impacting production.
Financially, Commercial Metals maintained a strong liquidity position with $3.0 billion in cash, cash equivalents, and restricted cash, and available liquidity nearing $1.9 billion as of November 30, 2025. Operating cash flow for the quarter totaled $204.2 million. The company's long-term debt balance was $3.305 billion. During the quarter, the company repurchased 663,220 shares for $38.9 million, leaving $166.1 million authorized for future buybacks. Additionally, a quarterly dividend of 18 cents per share was declared, with payment scheduled for February 2, 2026.
Corporate Outlook
Peter Matt, President and Chief Executive Officer, articulated expectations for core EBITDA in the second quarter of fiscal 2026 to experience a modest decline relative to first quarter results. He specifically noted that the Europe Steel Group’s adjusted EBITDA is projected to approximate breakeven. Furthermore, he indicated that margin improvement potential exists later in the fiscal year as the Carbon Border Adjustment Mechanism (CBAM) becomes fully effective, likely affecting the European operations’ cost structure positively.
The company anticipates recognizing additional acquisition-related expenditures in the second quarter, including transaction fees, debt issuance costs, and standard purchase accounting adjustments. These costs are slated to be excluded from core EBITDA calculations to provide a clearer depiction of operational performance.
Regarding segment-specific expectations, the North America Steel Group’s adjusted EBITDA is forecasted to decrease sequentially owing to typical seasonal slowdowns and scheduled maintenance activities, though steel product margins are anticipated to remain relatively stable. The Construction Solutions Group is expected to demonstrate improved financial results, supported by contributions from its expanding precast concrete business.
Market Reaction
Following the company’s quarterly report and cautious guidance, Commercial Metals shares declined by 3.61% to $70.58 during premarket trading on Thursday. Despite this dip, the stock continues to trade near its 52-week high of $75.03, reflective of underlying operational strengths and investor interest in steel and construction market fundamentals.
The company’s stock performance reveals a market balancing the immediate positive earnings surprise against concerns over margin pressure and acquisition-related expenses, as well as broader macroeconomic factors influencing steel demand and pricing dynamics.
Summary of Key Financial Metrics
- Net earnings: $177.3 million, or $1.58 per diluted share
- Adjusted earnings: $206.2 million, or $1.84 per diluted share, beating estimates
- Net sales: $2.120 billion, up from $1.910 billion, exceeding forecasts
- Consolidated core EBITDA: $316.9 million, up 52%, margin 14.9%
- North America Steel Group shipments: 795,000 tons, slight increase over prior year
- North America Steel Group adjusted EBITDA: $293.9 million, 57.9% rise, margin of 17.7%
- Construction Solutions Group sales and adjusted EBITDA grew by 17% and 74.7%, respectively
- Europe Steel Group adjusted EBITDA declined to $10.9 million due to lower CO2 credits and maintenance outages
- Cash and equivalents: $3.0 billion, operating cash flow: $204.2 million
- Long-term debt: $3.305 billion; share repurchases and dividends declared
Commercial Metals Co.’s quarterly report highlights a company performing well operationally and financially but navigating short-term profit pressures from integration costs and seasonal factors, warranting close observation in coming quarters.