CMC’s Q2 Results Set Record, Boosted by Real Estate Sale

“Outstanding operational execution, combined with strong end-market demand, produced the second-best financial performance in CMC’s 107-year history, behind only the previous quarter,” said Barbara Smith, CMC’s chairman, president and CEO. “During the last 12 months, CMC generated core EBITDA from continuing operations of more than $1.1 billion, a clear demonstration of the earnings power created by the strategic actions taken in past years that have enabled us to take full advantage of current market conditions.”

Quarterly EBITDA for CMC’s North American operation totaled $545.5, more than double the prior quarter and three times the earnings in the same period last year.

Minus the lift by the real estate sale in Southern California, the segment generated an EBITDA of $262.1 million for the quarter. The gain was driven by record margins on sales of both steel products and raw materials.

“We look forward to building on CMC’s already world-class assets and operating platform with the addition of Tensar Corp. and the commissioning of our energy-efficient rebar and merchant bar-capable Arizona 2 micro mill project,” added Smith.

The steelmaker’s European segment surged 404% in the quarter with adjusted EBITDA totaling $81.1 million. The gain was driven by a significant margin growth for scrap and the addition of CMC Poland’s third rolling line. Similar to North America, the underlying demand for steel products remained robust, the company said.

Although mill volumes were down, CMC saw favorable market conditions across all key products and an increase of $346 per ton in average selling price compared to the same period a year ago, and an increase of $144 per ton versus the prior quarter.

“We continue to anticipate strong fiscal year 2022 financial and operational performance,” Smith said. “Current robust demand for each of CMC’s major product lines is expected to persist throughout the upcoming spring and summer construction season, underpinned by our growing downstream backlog as well as solid levels of new work entering the project pipeline.”

She did note that the war in Ukraine has raised significant geopolitical and economic risks. CMC has not experienced any disruptions to its operations, workforce or end-market demand, however.

CMC’s finished steel shipments were down 10% year on year. The company expects shipments during the third quarter to follow typical seasonal trends and gain ground on a slower second-quarter shipping season. Strong third-quarter financial results are expected, as margins should remain at high levels.

CMC and its subsidiaries manufacture, recycle, and fabricate steel and metal products through a network including seven electric arc furnace (EAF) minimills, two EAF micro mills, a rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the U.S. and Poland.

By David Schollaert, David@SteelMarketUpdate.com