Commercial Metals Company Reports Decline in Revenue and Profitability for Third Quarter

Commercial Metals Company (CMC) reported its financial results for the third quarter and nine months ended May 31, 2025, revealing a decline in both revenue and profitability compared to the previous fiscal period. For the three months ended May 31, 2025, CMC generated net sales of $2.02 billion, a decrease of 3% from $2.08 billion in the same period last year. For the nine-month period, net sales fell by 4% to $5.68 billion from $5.93 billion. The company recorded net earnings of $83.1 million for the quarter, down from $119.4 million a year earlier, while for the nine months, it reported a net loss of $67.1 million compared to a profit of $381.6 million in the prior year.

The decline in earnings was primarily attributed to compression in metal margins for steel and downstream products within the North America Steel Group segment, alongside significant litigation expenses related to a judgment against the company. CMC reported a litigation expense of $358.5 million for the nine months, reflecting the estimated costs associated with the ongoing legal proceedings involving Pacific Steel Group. This litigation expense significantly impacted the company's overall profitability, contributing to the net loss for the nine-month period.

Operationally, CMC has been focusing on strategic growth initiatives, including the construction of its fourth micro mill in Berkeley County, West Virginia, which is expected to begin production in spring 2026. The company received $25 million in government assistance for this project, which will help offset construction costs. Additionally, CMC issued $150 million in tax-exempt bonds to finance part of its solid waste disposal facilities, further supporting its expansion efforts. The company continues to ramp up production at its third micro mill in Mesa, Arizona, which has been operational since late 2023.

In terms of market performance, the North America Steel Group segment saw a 7% decline in net sales to $1.56 billion for the quarter, driven by lower average selling prices and a decrease in tons shipped. Conversely, the Europe Steel Group segment experienced a 19% increase in net sales to $247.6 million, attributed to a rise in tons shipped. The Emerging Businesses Group also reported a modest increase in sales, reflecting ongoing demand for its products. CMC's total assets increased to $6.99 billion as of May 31, 2025, up from $6.82 billion at the end of the previous fiscal year.

Looking ahead, CMC remains cautious about the macroeconomic environment, particularly regarding potential impacts from tariffs and trade policies. The company anticipates that ongoing strategic initiatives, including the TAG operational excellence program, will enhance margins and cash flow generation in the long term. However, it acknowledges the uncertainty surrounding market conditions and the potential for fluctuations in demand and pricing in the steel industry.