Hello, everyone, and welcome. To the fiscal 26 third quarter earnings call for Commercial Metals Company.

Joining me on today's call are Peter R. Matt, CMC's president and chief executive officer, and Paul J.

Lawrence, senior vice president and chief financial officer. Today's materials, including the press release and supplemental slides that accompany this call, can be found on CMC's Investor Relations website.

Today's call is being recorded. After the company's remarks, we will have a question-and-answer session, and we will have instructions at that time.

We would like to remind all participants that today's discussion contains forward-looking statements, including with respect to economic conditions, effects of legislation, and trade actions, US steel import levels, construction activity, demand for finished steel products and precast concrete products, the expected capabilities, benefits, costs, and timeline for construction of new facilities, and expected performance of our recently acquired Precast platform, the company's operations, the company's strategic growth plan, its anticipated benefits, the company's ability to achieve its stated deleveraging target within the anticipated time frame, legal proceedings, and company's future results of operations, financial measures, tax credits, and capital spending. These statements reflect the company's beliefs based on current conditions but are subject to risks and uncertainties.

The company's earnings release, most recent annual report on Form 10 k and other filings with the US Securities and Exchange Commission contain additional information concerning factors that could cause actual results to differ materially from those projected in forward-looking statements. Except as required by law, CMC does not assume any obligation to update, amend, or clarify these statements.

Some numbers presented will be non GAAP financial measures, and reconciliations for such numbers can be found in the company's earnings release, supplemental slide presentation, or on the company's website. Unless stated otherwise, all references made to year or quarter are references to the company's fiscal year or fiscal quarter.

And now for opening remarks and introductions, I will turn the floor over to Peter.

Good morning, and thank you for joining today's conference call. Before we get started, a quick but important housekeeping note.

After more than 6 years of outstanding leadership in investor relations, Jason Brocious is transitioning into a strategy and corporate development role within CMC. Jason has been instrumental to CMC's success and a trusted partner for the investor community.

We are grateful for all of his contributions and look forward to his continued impact here at CMC. Joining us to lead our IR efforts is Andy Larkin, who comes to us most recently from his roles leading investor relations at AngloGold and Summit Materials and who brings a 10 years of IR experience across construction materials, metals and mining and consumer staples.

We are excited to welcome Andy to our team and confident he will further strengthen our engagement with investors. Now during our fiscal third quarter, we continue to execute our strategic plan.

Core EBITDA increased 78.6% year over year to 354 million and our core EBITDA margin increased to 14.2% due to metal margin expansion, solid progress on our TAG initiatives and the addition of results from our recent Precast acquisitions. In addition, we continue to make good progress deleveraging our balance sheet.

Despite the significant increase in results, our financial performance in the quarter could have been even better and is not indicative of our full potential. I am pleased with the progress we are making against our strategic agenda.

We are advancing CMC towards structurally higher margins reduced earnings volatility and more sustainable growth. Underpinning this transformation is a disciplined operating approach that extends across the enterprise.

Our transform advanced and Grow program or TAG remains a core driver of performance enhancement with initiatives spanning our operations, our commercial organization and our support functions. We are tracking well ahead of our targeted $150 million run rate annualized benefits for fiscal 26 amplifying existing initiatives to unlock further upside and replenishing our pipeline with new initiatives.

Our results reinforce our confidence that TAG is a durable lever for margin expansion and improved quality of earnings. Meanwhile, integration of our Precast acquisitions is tracking on plan, we are seeing early operational and commercial benefits and most importantly, alignment between our teams.

Starting with safety, we are rapidly rolling out best in class tools and practices across our Precast operations to embed a strong safety culture. I am pleased to report that we are already seeing dramatic improvement.

Commercially, we are leveraging the broader network of facilities between the 2 acquisitions to better serve our Precast customers while utilizing the vast CMC network to share leads and strengthen existing relationships. Operationally, we are applying best practices, taking advantage of the collective expertise and capabilities across the Precast and broader CMC portfolio.

1 of the-- 1 example of this is the sharing of precast forms across facilities to improve production efficiency and better meet customer demand. On balance, we could not be more pleased with how the integration is progressing.

At the same time, our organic growth investments are bearing fruit Our 75% of capacity utilization producing a broad product range of both merchant bar and rebar products. Meanwhile, progress at Steel West Virginia is continuing, and we look forward to hot commissioning our newest micro mill later this summer.

Together, these investments will finish our network of modern highly efficient and low cost mills and position us to serve demand across our key markets for years to come. In parallel, we are also bringing our new GeoGrid line in Blackwell, Oklahoma online and are making steady progress on our second GalvaBar line in Knoxville.

Which is scheduled to start up late in calendar 2026. Turning now to headline financial performance.

In the third quarter, we generated $354 million of core EBITDA, the highest level in 3 years But with more upside potential. Paul will walk you through the period in detail.

But in summary, a challenging sequential quarter in the North American Steel Group was offset by sequential improvement in the Construction Solutions Group and the Europe Steel Group. Our North American Steel Group third quarter performance was impacted by 3 temporary factors.

First, planned maintenance outages at 7 of our 10 mills negatively impacted results by approximately $20 million in the quarter and affected available inventory for customers. In fiscal 26, planned outages were particularly elevated with a concentration in the third quarter.

Annual planned maintenance activities in 2026 have run at roughly 2x normal levels. Second, metal margins were squeezed by the unexpected strength in scrap costs driven by war related higher fuel costs.

And lastly, weather related disruptions curtailed construction activity across a number of key markets, including Texas which delayed customer consumption of rebar. For our Precast business, pockets of regional softness and stretches of wet weather also resulted in performance that was below our expectations for the third quarter.

Importantly, these factors impacting our third quarter results have proven temporary. Plant outages are now behind us and our mills are running well.

Previously announced steel price increases are in the market taking hold and yielding higher metal margins. And our steel and precast shipments are seeing strength.

Weather conditions have normalized thus far in Q4, Underlying business fundamentals remain firmly intact and in many cases, are improving. Downstream bookings grew by >9% on a year-over-year basis in Q3.

The value of our precast backlog was up low single digits versus the prior year period. And forward pipeline indicators in our TENSAR business point to healthy demand.

As related to end markets, the outlook continues to be positive. More than 50% of the IIJA funding is yet to be spent supporting highway construction and general infrastructure spending across our core markets remaining steady.

While residential demand remains broadly subdued pockets of resilience persist in markets such as Charlotte, and parts of the Mid Atlantic. Multifamily construction continues to outperform and is expected to remain stronger than single family.

For nonresidential markets, demand is increasingly being driven by a growing pipeline of large scale mega projects. Investments across data center, semiconductor capacity and energy networks are driving a multiyear pipeline of construction activity a significant concentration of these projects in our Sunbelt and East Coast footprints.

Importantly, the impact extends well beyond the core facilities themselves. The associated build out of supporting infrastructure particularly the power grids, storm water systems, and utilities create incremental demand across our steel ground stabilization and precast solutions.

Moreover, institutional spending to replace aging facilities and accommodate market growth is also very strong. The value customers place in our differentiated capabilities to perform on the complex mega projects across all different construction end markets is showing up in our pipeline and in our backlog.

Customers know they can reduce risk by partnering with CMC and the service and scale and solutions we provide. On the steel supply side, we view the market as balanced with incremental domestic capacity being absorbed while prices are trending higher.

While imports year to date have been somewhat elevated, we expect them to remain at manageable levels as a result of effective trade policy initiatives which most recently have led to final or preliminary anti dumping and countervailing duties against producers in 4 countries that together imported approximately 500 thousand tons of rebar in calendar year 2024. These duties, once imposed, will be in place for a minimum of 5 years and provide durable trade protection against unfairly traded imports from countries that subsidize and overbuild their domestic industries.

It is a further note that elevated ocean freight costs continue to provide an additional buffer for domestic producers. We will remain vigilant on steel supply dynamics and we will continue to work towards achieving fair trade and a level playing field.

These efforts, together with our increased commercial discipline, and focus on value over volume sets CMC up to more fully capture the value we deliver to the marketplace. A similar more constructive supply demand dynamic is beginning to emerge in Europe.

Demand is strengthening driven by steady economic growth, accelerating investment, and the early stages of EU funded infrastructure deployment. At the same time, supply dynamics are tightening.

With the carbon border adjustment mechanism in place and further EU enhanced trade protection set to take effect July 1st that should create a more level playing field against imports. With that, I will hand it to Paul to cover the details on the quarter.

Thank you, Peter, and good morning to everyone on today's call. GMC reported third quarter net earnings of 173 million or $1.55 per diluted share.

During the quarter, we incurred approximately $25.5 million in pretax expenses that were excluded from adjusted earnings. Of this amount, 19.8 million was non cash amortization of the acquired backlogs.

And $2.5 million was incurred to support our integration activities. Both of which related to these recent Precast acquisitions.

Excluding these items, adjusted earnings increased 142.4% year over year to $193 million or $1.73 per diluted share. If you recall, as we discussed in March, purchase price accounting impacts combined with higher interest expense tied to the financing of the Precast acquisition will continue to widen the gap between core EBITDA and earnings before income taxes by approximately 60 million to $65 million per quarter, for each of the next 2 quarters.

Approximately 1/3 of that quarterly amount will be related to the amortization of backlogs which will conclude in fiscal 27. Third quarter consolidated core EBITDA grew 78.6% from the prior year to $354 million and core EBITDA margin expanded to 14.2% an increase of 440 basis points year over year.

North American Steel Group segment adjusted EBITDA was up 41% year over year to 254 million or $134 per ton of finished steel shipped. Year over year growth was driven predominantly by metal margins which expanded by $111 relative to third quarter 25.

And ongoing contributions from our TAG initiatives. It is important to note that the TAG benefits are captured in most all of our business KPIs.

In metal margin improvement, we see the results of our commercial discipline capturing top line growth. As well as initiatives like our scrap optimization driving lower scrap costs.

In our manufacturing costs, we see the results of initiatives like lower alloy consumption or yield improvement. Our SG and A costs benefit from efficiencies of our scale and enhanced technologies.

As Peter previously mentioned, adjusted EBITDA margin of 14.2% in the North American steel group was up 270 basis points versus the prior year period. For the Construction Solutions Group, net sales nearly doubled year over year to $395 million $176 million contributed from the acquired Precast businesses.

Adjusted EBITDA increased by $56.5 million or 138% to 97.4 million including $52.9 million in contributions from the Precast, additional growth from the Tensar business. Adjusted EBITDA margin expanded 400 basis points to 24.7% with the inclusion of CMC's Precast business contributing 4.4 percentage points of accretion during the quarter.

Based on year to date performance, our visibility into the fourth quarter, and we continue to expect fiscal 26 adjusted EBITDA for our Precast business excluding purchase accounting adjustments to be in the range of $165 million to $175 million. In our Precast business, shipments in the Mid Atlantic and I-90 5 corridors demonstrated solid strength while the Southeast experienced weather related shipment delays during the quarter.

Average selling prices for pipe and precast products and backlogs increased modestly on a year over year basis. Outside Precast, TENSAR profitability accelerated both year over year and sequentially on strong demand conditions driven by the value generation of our INTERAX product serving mega projects principally in the energy and data center areas.

Adjusted EBITDA performance for all other businesses within the Construction Solutions Group was relatively stable. Turning to our Europe Steel Group, adjusted EBITDA for the fiscal third quarter was $34.7 million representing a significant increase versus the prior year.

While the results benefited from a $20.4 million CO2 credit, underlying market conditions also improved meaningfully. Metal margins expanded by $37 per ton year over year, driven by a $34 a ton increase in selling price and a $3 per ton reduction in scrap cost.

And as Peter noted, market fundamentals supported by both the CBAM and the upcoming strengthening of the EU safeguard frameworks gives us confidence in that this momentum will continue. With respect to our balance sheet, we continue to make progress in reducing net leverage and remain very confident in achieving our target of below 2x by mid-27 or sooner.

As shown on Slide 14, net leverage adjusted for acquisitions is now 2.1 times. Based on adjusted EBITDA, including an estimated run rate annualized contribution from our Precast platform.

This marks meaningful progress from the net leverage estimate that we provided at the time of the acquisition. Our path to further delevering is underpinned by a step down in capital spending levels as we finish our micro mill investments strong free cash flow generation from our PreCast platform itself and meaningful cash tax savings associated with the 48C program and the Bipartisan Infrastructure Law.

We also maintain significant financial flexibility with total liquidity of nearly 1.8 billion and no near term refinancing requirements. Together, our strengthened balance sheet ample liquidity and improving leverage profile position us to return to our long term capital allocation priorities, of supporting strategic growth investments while maintaining an attractive and disciplined approach to shareholder returns.

Regarding CMC's capital spending outlook, we anticipate investing approximately $550 million in fiscal 26, Of this amount, between 300 million and $350 million is associated with completing construction of our West Virginia micro mill. The balance will be for maintenance and other growth projects including $25 million for our new precast business.

And the high return growth investments within our Construction Solutions group that Peter mentioned. CMC's effective tax rate in the third quarter was 8.4%, and on a year to date basis was 7.9%.

In line with our fiscal 26 effective tax rate expectations of between 7-9%. As a result of several factors, including our 48C tax credit, bonus depreciation on the West Virginia mill investment, and accelerated depreciation on the assets acquired in CMC's Precast acquisitions, we do not anticipate paying any significant U.

S. Federal cash taxes in fiscal 26.

And not much for fiscal 27 either. With that, I will turn the call back to Peter to discuss our fourth quarter outlook and provide some closing remarks.

Thank you, Paul. Turning to our outlook for the fourth quarter, we expect a meaningful sequential increase in core EBITDA driven by several factors.

For the North American Steel Group, the absence of third quarter mill outages is expected to provide an approximate $20 million uplift to adjusted EBITDA. With a similar benefit from higher volumes and margin expansion.

We anticipate improving pricing conditions with scrap costs remaining relatively stable. Expect sequential mid-teens adjusted EBITDA growth in our Construction Solutions Group, driven by increased contributions from Precast and solid underlying momentum across the broader platform.

And in Europe, we anticipate modestly higher adjusted EBITDA performance excluding any impact from CO2 credits. These drivers are underpinned by healthy demand environment and strong backlog visibility.

Taken together with strong execution, and continued contribution from our TAG initiatives, we are confident in closing fiscal 26 on a strong footing. Stepping back, our business remains firmly supported by durable, long term demand drivers across our end markets.

At the same time, we have taken actions to improve the margins of our business and to reshape our portfolio to be more resilient less volatile and better positioned to compound growth over time. This is translating into stronger cash flows and a steadily improving balance sheet providing us the flexibility and the confidence as we undertake capital allocation priorities that appropriately balance growth and returns.

All in, we believe these elements firmly position CMC to deliver superior long term value for our CMC shareholders. Finally, I would like to call attention to our upcoming Investor Day on August 5th, Our leadership team looks forward to providing a deeper view into CMC's evolution as a leading early stage construction solutions provider and the steps we are taking to drive the next phase of growth and value creation.

The half day event will chart our strategic trajectory establish our operational priorities, and articulate our long term growth outlook. We hope you can join us.

I would like to close by thanking our employees for their continued dedication and our customers for their ongoing trust and partnership. With that, I will ask the operator to open the line so Paul and I can field your questions.

Hi, team. Thank you so much for taking my question.

Just wanted to walk or talk a little bit about the puts and takes within North America in the quarter and then to next. It seems like there is quite a few moving pieces here from maintenance outages to weather and price increases, etcetera.

You mentioned the $20 million impact from maintenance, but can you help us quantify the impact from the other moving pieces in the quarter? On the results?

Then I guess as it relates to 4Q 2026 guide, you mentioned sequentially stronger EBITDA reflecting a $20 million absence in 3Q and then pretty much similar in terms of growth and margin benefits. I am kind of reading that as a sequential $40 million increase.

Does that sound about right? And yeah, I will leave that.

Hey, Nick. Well, thanks for the questions.

Great question and we will respond to it. I will ask Paul to walk through the bridge.

What I would like to say to start this is that Q3 was a good quarter for us. It could have been a lot better.

And importantly, we are really happy with the strategy. And the progress that we are making and the long term value that is going to deliver.

And we are really looking forward to Q4 and what the implication are in terms of increased profitability. But with that, let me hand it over to Paul.

Thanks, Peter.

And Nick, yes, a little further detail on the items. As you mentioned, the mill outages at 7 of our 10 mills the direct costs associated with those were around $20 million.

The weather impact and I am gonna combine sort of the weather impact, the impact of having lower inventory coming out of the outages as well as commercial discipline probably all in cost us around 50 thousand tons in the North American steel group. So all in cost of around $10 million associated with the volume.

All of those items, very temporary, as we mentioned in the script and expect those to reverse in the fourth quarter. And then our expectation going into the into the quarter was stable metal margins.

As you can see, they were compressed, slightly in the in the quarter. And with the price increases that took effect during the quarter, we really see that we will reestablish those metal margins consistent with where they were prior to this past quarter.

So overall, I think your assessment that the North American Steel Group is on track for about a $40 million quarter over quarter improvement from those items. I will take the opportunity just to talk a little bit about the other segments as well.

You know, it was not the only, only to the North American Steel Group. Both our construction services Group as well as our Precast business were impacted by weather.

Probably to the tune of around $5 million in the CSG segment. And then, just do not want anybody to overlook the European steel group having $20 million from a CO2 credit that is now received on a semiannual basis.

So we would expect to receive another 1 in the first quarter but we will not obviously receive that in the fourth quarter. So put all of that together, we are expecting a quarter over quarter improvement in our overall results in the 40 million to $50 million range for Q4.

Awesome. Thank you so much.

I will pass it on.

Hey. Good morning, Peter and Paul.

Hey, Sam. Good morning, Sam.

Given what you have done so far this year, maintaining the full year precast EBITDA outlook, at $165 million to $175 million implies a pretty heavy lift in the fourth quarter. What are you seeing that gives you the confidence that you can reach this goal for the August quarter?

Great question, Sam, and thank you very much. So the answer is we are very confident we can reach the goal And let me tell you why.

I think it is fair to say that our volumes were a little bit light in the third quarter. And importantly, when we look at our Precast business, the timing of shipments and given the regional concentration, weather events can affect the results in the quarter.

And if we look at Q3, what we saw is that project releases, and by that, I mean the time from the order to the first shipment, were delayed by about 2 weeks. And that was compounded by really wet weather in the Southeast, in Georgia in particular.

What we have seen as we go into the fourth quarter is that things have started to normalize, and that combined with the strong backlog, our backlog is at a record level. Give us confidence that we can hit the guidance that we have originally given.

Let me also say that the team has done just a fantastic job. And so from an integration standpoint, that gives me additional confidence that we are going to get there.

As I have said on previous calls, this team, it is working incredibly well together. there is a tremendous affinity to the CMC team in terms of the people.

And so it lends itself to working together. We are seeing more opportunities every day in this business to make it better and make it stronger.

So I would say, looking at this today, I feel stronger than I did even at the acquisition date. And I felt very strongly about this at the acquisition date, that this is a great acquisition, and it is going to be a fantastic part of our portfolio.

So yes, we are very confident in the ability to pull this together in the fourth quarter. But more importantly, we are very confident in the long term impact that this business will have on our portfolio in increasing margins, reducing earnings volatility and increasing returns across the portfolio.

Alright. Thank you.

Thank you, Sam.

Yeah. Hi.

Good morning. Thanks for taking my questions.

My first question is a follow-up on the Construction Solutions guidance. So you maintain the full year guidance for precast business, which probably would imply, like, a 20 to 30 million improvement in EBITDA for Q4, and then additionally, Tensor and other businesses should all see a strong seasonally better quarter.

Can you maybe walk us through some of the different moving parts? Because it appears the guidance for mid teens growth is conservative, and there seems to be some upside to that guidance.

Yeah. Well, what I would say is, no, we are confident in the guidance.

And again, as I just responded to the prior question, we do believe the Precast business is going to land in the original guidance that we gave. Our Tensar business is performing very well.

Our fourth quarter tends to be a strong quarter. We did just have a very strong third quarter.

And but, again, I think the estimates that we have in there incorporate a nice performance in TENSAR in the fourth quarter. And then the rest of the businesses in the EVG business should perform kind of in line with our expectations.

So I think that guidance is we feel comfortable with where we are on that.

I think the only thing I would add to that, Satish, is just remember that the segment results included in the second quarter, the purchase accounting adjustment that is not reflected as part of our guidance. So you need to reflect that as part of what the construction services group has provided for the full year to get to that guidance for the for the full year.

Okay. Thank you for the color.

Maybe 1 question on The U. S.

Rebar market in general. So on the demand side with the recent shift in Fed's interest rate outlook and then the potential for rate hikes.

Are you seeing any change in leading indicators suggesting any delay or slowdown in projects being awarded and then maybe on the supply side with imports up, 20% year to date mainly from South Korea, How should we look at the near term supply demand balance? And could we expect some potential trade action against South Korea?

Thank you.

Yeah. Let me just start by saying demand and if I heard you cut out for a second, but I think your question was about demand.

Infrastructure demand remains very robust. And but for the rains that we had in the central Texas region, we expect that to continue to be to be very robust.

If we take a step back on your broader question of demand and supply, And this is a really important question, Satish. so I will spend a minute on this.

So on the demand side, demand is good. Right.

And we are seeing the apparent consumption in The US is up 3.2% this year. So we have a very good demand tape.

And from our perspective, if we look at the long term drivers that we have been talking about consistently across infrastructure, nonresidential spending, and ultimately residential spending, there is the potential for demand to be great. So that is an important backdrop.

Now let's switch over to the supply side. I think the supply side conversation has to start with CMC.

And here, I want to be categorical about the fact that CMC will not disrupt the supply demand balance. And what I mean by that is we operate a network of highly efficient micro mills and mini mills that are very flexible.

And we are going to work to keep supply demand in balance and max the profitability of our network. that is a very fundamental piece of this.

If we look at the new domestic capacity, the domestic capacity, as we understand it, is in the market. And I think there is a super important proof point here, which is that domestic capacity is in the market, and we are increasing prices.

And we have said this for now actually a number of years that this capacity is manageable we continue to feel that it is manageable. If we shift to imports, imports, I think it is important to say imports, we expect them to go down in the second half.

that is a very important point for people to hear. If we look at kind of where the imports have come from, the big increase in imports has come from 1 country.

that is South Korea. And, importantly, when we look at the economics of bringing material from South Korea to this market, it does not appear that it is competitive to do so at current prices.

So we think there is gonna be a natural inclination to reduce the supply in the market from that source. I will also say that we have initiated discussions with the US government about supply from that country and from other countries.

And the point being there, we are going to pursue all remedies that we have available to us to ensure that the imports that do come here are fairly traded imports. I also think it is really important to note the progress we have made on our strategy vis-a-vis unfairly traded imports.

We filed 4 cases. We have got final duties against 1 of the countries.

that is Algeria at 200%. And we have got preliminary duties against the other 3 countries.

And at the levels if the levels of preliminary duties get settled into final duties, we believe we will have effectively knocked that tonnage, which amounted to about 500 thousand tons, out of the market for about 5 years at a minimum. that is a minimum of 5 years and potentially 10 years.

That is significant, and it is durable. And I think it goes to our broader strategy at CMC.

We are going to, as I said before, pursue all remedies to neutralize the impact of imports in our market. And that starts with enforcing our trade laws, It goes on from there to kind of to advancing further progress in our trade laws through level the playing field.

That will allow us to combat these unfairly traded tons in the future. So bringing this all together, and again, I apologize for the long answer, but I think there is a lot of moving pieces here that need to get put on the table.

This leaves us very comfortable with the supply demand balance and the ability to sustain it going forward. Yeah.

Thanks, Peter, for the excellent color. Thank you.

Yeah. Hey.

Good morning, guys. Guess I could follow-up with the last question, and maybe Peter, just to put some numbers to them.

You are bringing on 500 plus 500 thousand tons between Arizona 2 and West Virginia, not all rebar. Rebar market's 10 million tons in The US, give or take.

High Bar is adding 700. Next year, we are supposed to get-- I forget how many, 500 to 700 thousand tons from Pacific Steel.

And then another quantity probably the next year from Hybar 2. So, I mean, is there enough demand?

And how do you run your new mills in light of that magnitude of additional supply?

Well, it is a good question. And I guess I would kind of follow on the answer that I gave to the prior question.

Demand, number 1, we think demand is going to grow. and that is an important point of view here because, again, if you go back a while when we were talking about what demand could potentially be, it was significantly bigger than the market is currently.

And we are seeing demand growth in the market this year, as I pointed out, 3.2%. In terms of the new capacity that is coming into the market, again, as I said before, I think for a player like us, we are gonna be rational, and we are gonna operate it on a network basis.

So that means flexing up and down to meet the supply, in the market. And, value over volume is what is gonna drive us.

So and as to the to the new production in the market, again, with the import strategy that we have and with the you know, this is the if we think about the trade policy that is been in place, it is bipartisan. In terms of 32.

And as we see offenders, and we update our trade laws to be able to respond more quickly to bad actors, we think we are gonna be able to take out the capacity that will make room for these new domestic entrants. So on balance, again, this is gonna play out over a couple years, but so far, I would argue we have been right, that the conditions are going to remain in a balanced place And today, as we look at the situation, we have been hearing about Hybar for kind of years now.

And here we are. They are in the market.

They have got their, they have ramped up. And we are raising prices.

So, again, we are confident that this is gonna play out in a good way. And we are going to be very deliberate about how we execute our strategy to make sure that is the case.

Okay. Appreciate it, and we will see what happens.

If you could give us an Arizona 2 and West Virginia update on how those are progressing, that would be great, please. Thank you.

Yeah. Absolutely.

So as you heard in the prepared remarks, in Arizona, we made a lot of progress in the quarter. We got up to 75% utilization.

We still have the objective to fully to demonstrate full utilization this year. And I would say it is 1 thing that is very gratifying is that today, we are producing the vast, vast majority of the volumes of merchant product that we expect to produce there.

So this is not a situation where we are, you know, running at higher utilization just because we are producing rebar. We are able to produce that no problem on the mill.

And again, I think we continue to believe that mill is gonna be a workhorse in our organization for the next several decades, and we are really optimistic about it as a tailwind to our 2026 or sorry, to our 2027 earnings. If we switch to West Virginia, again, super proud of the team there on a couple of fronts.

Number 1 is if we look at the project overall, we are coming in right where we expected to be from a capital standpoint. And I know I have talked so much on this call, and I am gonna say it again.

Capital discipline is critical to what we are trying to do here. And this team has done a masterful job in terms of keeping this project on budget.

And if we look at all the projects that are out there in the marketplace, I think it is pretty remarkable what we have been able to do. So super proud of the team on budget and timing as well.

Now we are gonna start this up in the later part of the summer. And again, that is we are probably a little bit behind our original expectation.

I think, originally, we talked about something like June. But again, we have had 100 days of weather delays.

And if we remove the weather delays, we are right on time. So, again, I wanna just say hats off to the team in West Virginia.

We are ready to go. We have got the operational team hired.

it is a phenomenal team of folks from across the CMC network and some new folks that have come in to join the team there, and we are super excited about it. I will remind everyone that this mill is a it is a standard rebar micro mill.

Looks a lot like what we have in Oklahoma. That mill runs like a top.

So we should not have the challenges that we had in Arizona where we were commercializing some new technology And in terms of the time frame, to ramp it up, I think 12 months is a reasonable estimate. So, but very excited about that.

I think just 1 thing I would I would add, you know, as we said, throughout the script that the quarter could have been even better and does not reflect our full potential. Keep in mind 2 things.

You know, we are carrying the West Virginia project and the cost associated with that has been between 4 million and $5 million a quarter. It will ramp up this quarter to probably double that before we get any real saleable product out of there.

So that is built into our outlook for the quarter. And I think Peter mentioned it, but it needs to be stated again, you know, Arizona from a performance perspective we look forward there is tremendous upside to our earnings capabilities once we continue to enhance our utilization of that and fully realize the capital we have deployed.

Okay. Great.

Thanks again.

Hi, all. Thank you for taking my question.

Absolutely. Just wanted to touch on maybe capital allocation with the leverage target likely to be hit ahead of schedule possibly in the near future.

I guess how are you guys approaching maybe growth versus excess returns? I think you would previously stated that further bolt on acquisitions in the precast space were possible.

But that more of a further out strategy until maybe fully integrated and realized synergies from first 2 acquisitions? If that is maybe the case, I mean, are there any type of organic growth on the steel or downstream kind of product side.

Versus maybe upside to capital returns? Thank you.

Yes. Thanks for the question.

And I will start and then Paul can enhance my answer here. So the way we think about it is the 2 times is kind of a fulcrum point, right?

So at 2 times, when we get to 2 times, which we are wrapping approaching, as you noted, the green light goes on for the ability to consider new growth applications or new growth opportunities. And at the same time, it also turns the green light back on for shareholder distributions.

So we would fully expect to kind of turn on our share or return our share repurchases to a more elevated level kind of post-hitting that milestone. Now having said that, we bought 2 companies, as you know, not 1 company, and we are in the middle of integrating those 2 companies.

And we have said in the past, and I will continue to say, that we are going to get our integration to a place that we are comfortable with in terms of its progress before we really entertain another sizable acquisition. We will consider and we have considered much smaller tuck in acquisitions, and we will continue to do that.

That will not be really visible to you. We will report on that as we progress.

But that will not be really visible to all of you. What I would say in terms of in terms of acquisitions is that we do want to grow the Precast business.

We do think there is a good path for us to do that, and we are still focused on building a number 1 position in that business over time over time. If we look at kind of other places where we might deploy capital, organic growth, we have a number of projects.

We just finished our Blackwell, Oklahoma plant. that is starting up right now.

that is a geogrid line. As I said, our Galvabar project is finishing up this year.

that is an organic growth project. We have some organic growth across the rest of the portfolio.

it is much more capital light than the mill investment. So as we said in the past, we do not intend to make additional mill investments.

We are the capital we are going to spend in an organic fashion is going to be smaller things that are roundouts to our portfolio and improve our margins, improve our returns. So with that, maybe Paul, did I miss anything?

Yeah. The only thing I will add to that is really we are on the precipice of a cash flow generation inflection point here.

We have talked about the investments. If you look back in our we have been building mills now for a number of years.

Probably going back into 2015, 2016 period. Most of the years between then and now, we have been investing in our fleet of low cost modern mills.

As we look forward, CapEx for 2027 is likely to be $200 million less than this year, and that is going to continue to have the final parts of West Virginia spend in it. So that is probably a $75 million to $100 million.

So with the enhanced EBITDA coming from the West Virginia mill, coming from enhanced AZ2 production coming from TAG, combined with a lower level of CapEx really will generate a significant amount of cash flow from this business, which gives a lot of flexibility in terms of our capital allocation and gives us an ability to grow to return cash to shareholders while maintaining very healthy balance sheet. Okay.

Very, very detailed helpful answer. Thank you.

And then, Paul, if I may, just want to make sure I did not mishear you. On the European outlook for 4Q, did you say incremental EBITDA growth of $50 million or that could be maybe a range where you guys see yourself at current levels?

Just to be clear, Europe quarter over quarter will likely see a drop in EBITDA if we pull out the CO2 of 20 million we are likely to see somewhere around $3 million to $5 million enhanced operational EBITDA from Europe, from enhanced margins. But overall, because pulling out the CO2, the European operations will be down quarter over quarter.

So net, I think my comment was meant to articulate that CMC's EBITDA likely is up 40 to 50 million. Quarter over quarter.

Understood. Thank you.

Thanks, Alex.

Yeah. Hi.

Good morning. Thanks for taking the questions, and nice job on the quarter and guide.

I might have missed it, but you mentioned that the TAG program is tracking above the $150 million target. I guess maybe just coming to the topic of where you have seen the most success but also looking at where you see the greatest opportunity?

that is a great question. And again, I will just reiterate, I hope you all come to the Investor Day because we are going to talk a lot more about TAG and share some of the details that I know you have all been looking for, in terms of scope of the program.

But yeah, it is been a tremendous add to our company, and it is for the financial benefits, but also for the mindset change that it is created in the company and the organizational discipline around going after improvements in our business. So but to date, I would say most of the benefits have been operational, and we have talked across many calls about Bill, about scrap optimization and melt shop yields and rolling mill yields and logistics savings and so forth, those have been tremendous.

And they continue to pile up. And what is interesting about it is that this is 1 of these things where every time you go through a door, you see that there is more opportunity.

And that is really the secret of TAG. And when I talk about a mindset change, it is really what we have seen.

Commercial excellence is the other part of TAG, and we have got some real significant wins in commercial excellence. But not it is not as big a piece so far as operational excellence.

And yet, what I would say to you is that I think that the opportunity for commercial excellence in our business and in our industry more broadly. Is outstanding and will outweigh the operational benefits that we are getting.

So we see significant opportunities in commercial excellence and we are, working hard on that. And, again, it started I think I mentioned this a couple of, calls ago.

It started with reducing basic leakage. there is a lot of leakage in our business.

And we have really done a good job of reducing leakage in the business on the price side. And then it moves to tools and tools that help us make better decisions in the marketplace.

And thirdly, it moves to having the organization work together. And 1 of the things that is been so gratifying to see is with this new Precast platform, the way the kind of the lead sharing is working getting visibility on projects earlier and earlier.

And what that allows us to do is it allows us to engage and particularly on some of these mega projects, it allows us to, kind of be at the table and have a point of view and influence on what is happening in the project. And, we call that value engineering.

And typically, when we are able to value engineer a project, we can save a lot of money for the owner, the contractors, etcetera. And it creates more opportunity for CMC.

So again, commercial excellence we see as a big opportunity. We have lots of chances to deploy AI to help us there.

And we are really excited about what that can be. Yeah.

Thanks for that. Sounds like a good sneak preview for what you are going to expand on in August.

But second, I want to move on to Europe. And maybe 2 parter there.

So you talked about various tailwinds forming, whether it be CBAM, enhanced protectionism, infrastructure funding. How should we rank these in terms of the likely benefit to the market in CMC?

And then just more of a housekeeping. Last quarter, I think you talked about a potential $10 to $15 per ton incremental cost headwind from the EU Energy needs.

Where does this stand today?

Is this sort of already coming off? So let me start on the tailwinds, and then I will flip it to Paul to talk about the cost experience that we have had.

But on the tailwinds, we are really optimistic about what we are seeing in Europe. Again, I guess there is probably room for some caution in the sense that we have been waiting for some of this for some time.

But you know, if you think about the from a regulatory perspective, the CBAM is now in place We have said and we continue to believe that properly enforced that should be a €50 per ton impact on the price of steel. The safeguards that the European Union has now supported have reduced the quota levels by 50% and increased the tariffs above the quotas to 50% that will be kind of in place July 1st going forward.

And we believe that should have a positive impact. What we have seen is that imports already from non EU countries have come down.

And even from within the EU, and I am pointing to Germany specifically because they have been 1 of the bigger importers into Poland. We have seen a decline in those imports.

So the supply side of the equation I think, is improving. And again, the demand side of the equation in Poland was always really good.

So and there, you have got infrastructure spending. You have got this recovery and resilience funds, all the things that we talked about in the past that are pretty exciting.

But maybe I will flip it over to Paul to talk about the cost.

Before I get on to the cost, you know, just 1 other data point on the on the demand side and on the what we have realized is if we go back from December through till the end of May, we realized around the $75 a ton price increase across our product mix. And that is more heavily weighted towards rebar which is really impacted by the imports and the CBAM measure.

So we are starting to see those benefits Over that period of time, we have seen around a $25 a ton increase in scrap. But for the most part, that is margin enhancing, result from number of factors.

it is hard to exactly pinpoint which 1 it is. But what is exciting is as we look forward, we the safeguard measures really should provide further benefits for the business.

Now on the cost side, we have been pleasantly surprised in terms of the energy cost in Europe. In third quarter, really did not see any increase in energy costs to our business.

And now with the hopeful end to the conflict in The Middle East, Things will stabilize, and we will we will get through this without any adverse increased energy cost. But I think as we sit here today, we are we are cautiously optimistic.

But on guard to ensure that you know, if we do, that we will have to address that in costing situation. We are also benefited from the fact that in Poland, we are around 50% hedged on the electricity side.

So for the most part, these sudden shocks are we are protected from those impacting our business.

Thanks for all the details, guys. Thank you, Bill.

Great. Thanks.

Good morning. In the interest of time, I will just keep it to 1 question.

But wondering if you can maybe talk about your expectations for raw materials and metal margins heading into the fiscal fourth quarter. As we saw scrap costs up $28 per ton sequentially in fiscal 3Q.

And you also had a number of outages that were planned. So how should we think about sort of net costs as we go into the fourth versus the third quarter?

Thanks.

Yeah, Richard, thanks for the question. As we look at scrap today, we see a lot of stability for the balance of our fiscal year.

Really, scrap costs that we saw increase in the quarter was really the flow through effect of the increased costs coming through from the winter period and then remaining high because of the correlation of scrap costs generally to diesel costs. And you know, the costs associated with collecting that scrap maintained a higher than anticipated cost of scrap.

But at this point forward, we see things fairly stable. As far as other costs are concerned, the maintenance costs really were fully absorbed and in incurred only in the Q3, so we expect those to not continue into the fourth quarter.

Otherwise, we see relative stability in our cost structure as we look to the fourth quarter and continue to drive improvements in our operations and efficiencies through TAG.

Great. Thanks.

And then quickly, on the pricing side, I think 1 of the competitors had sort of pushed back on pricing in North America last month. Are you seeing any changes in the competitive landscape when you are trying to price rebar or is that you think it was a 1-off type thing and market should be relatively stable?

Yes. Thanks, Richard, for the question.

So we have been increasing prices And I would say we are very pleased with the progress that we have made on price increases. We are aware that there has been some discounting in the market.

But again, given the demand picture, we do not see the need to move in that And I think what you will see is that we are what I will say is that we are realizing increased pricing increased pricing across the country And you will see in our fourth quarter that, our prices are higher, and our metal margins are higher. So, again, we feel very comfortable with where we are.

And again, it is supported by the demand profile that we see in the market. And particularly some of these, big projects where I think they really lend themselves to a company like CMC that can provide more than just rebar.

So in any event, we are we are very pleased and very comfortable with where we are.

Yes. Hi.

Thank you for taking the questions and all the best to Jason in his new role. The first 1 is on West Virginia.

Could you share a volume target for fiscal 27 or maybe an exit utilization rate? I think you mentioned a faster ramp up than for Arizona 2, but any additional color you can share there?

Well, we expect to be fully ramped over the course of 2027. I guess, the volume So if we assume a volume, which will not be the case, but it should approximate your question.

We would expect around 250 to 300 thousand tons next year. That counts for a little bit of an inventory build that we would need to before we commercialize much of the operation.

And Jason's not going too far. We are going to keep our claws in him.

Alright. So that is that is clear.

I appreciate the color. And maybe on Europe, I mean, yeah, you had that strong volume performance in fiscal Q3.

Was a bit of a 1-off or some restocking? Maybe I think for the fiscal Q4 guidance, you do not discuss too much volumes, but how we should think about it.

And given, yeah, the strong volume performance, is there do you think you can get back to full utilization in the coming quarters on the back of the CBAM and the quotas?

We do. We do.

We are very confident in the in the volume And as I just said in response to 1 of the earlier questions, the demand in Poland has never been the issue. The demand is really good.

And what is happened is that there is been a curtailment of some of the supply, and that is that is allowed us to, in a price efficient way, sell more tons. So as Paul said, we have increased prices 3 times already this year.

And we are successfully placing those tons. But we do not think this is a 1-off, and we expect it to continue.

Okay. Very clear.

And maybe a quick last 1. On CSG.

You provided some good guidance for the Q4 level. Would that be a good run rate moving forward in terms of profitability for the division?

And if you could just remind us of the synergies you expect for fiscal 27? That would be great.

Thank you.

Yes. So Yes.

So when we bought this business, we talked about an annual EBITDA for the business of $2.50 And of course, top line growth in this, we talked about mid single digits. And that continues to be our expectation for the base business.

Synergies, we talked about between the 2 businesses, a number that is, I think, $35 million to $40 million combined. And we expected to earn that over kind of a 3-year period.

And year 1 is going to be more dis-synergy as we absorb the business and bring it up to CMC standards, I think you will start to see some synergies in year 2. And in year 3, we will get the full synergies.

And as I said before, we are, I think, even more confident in the synergies that are gonna come from these acquisitions than we were on the date that we first announced them.

Alright. Perfect.

Thanks a lot. Thanks, Tristan.

Thank you, Jamie. At CMC, we are excited about the opportunities ahead.

Our strategy is working. Our markets are remaining supportive.

And our disciplined execution continues to position the business for sustained value creation. With that, I would like to thank you for your time and continued interest in CMC.

We hope you can join us on August 5th for our Investor Day. You do not wanna miss that.

And we look forward to speaking with many of you in the coming days and weeks. Have a good day.