Commercial Metals Company (CMC) | The Buildout — AI Infrastructure
The Verdict
Commercial Metals Company makes steel reinforcement — rebar, merchant bar, wire rod — and increasingly sells construction solutions built around it: geogrid ground stabilization, precast concrete, anchoring systems and foundation products. That material goes into nonresidential construction, including data-center mega projects and the power, storm-water and utility infrastructure around them. CMC is not an AI technology provider. Its link to the build-out is derived demand, and the company does not break out data-center revenue as a separate line.
| Market Cap | — |
| Revenue (TTM) | $8.8B |
| Revenue Growth | +15.2% |
| EBITDA Margin (TTM) | 13.2% |
| Net Debt | $2.8B |
| Earnings Beats | 3 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Fiscal Q3 2026 core EBITDA was $353.6M, up 78.6% year over year and the highest in three years. Core EBITDA margin was 14.2%, up 440 basis points.
- Construction Solutions Group net sales nearly doubled year over year to $394.6M, with adjusted EBITDA of $97.4M and a 24.7% margin. Precast contributed $52.9M of that EBITDA.
- Net leverage fell to 2.1x from 2.3x, with total liquidity of nearly $1.8B and a sub-2x target dated by mid-27 or sooner.
- Trade protection is landing: a final Algerian rebar duty at 200%, preliminary duties against three other countries, and roughly 500k tons removed for at least five years, potentially ten.
- The TAG cost-and-margin program's $150M run-rate annualized benefit is "tracking well ahead" of plan, per management.
What We’re Watching
- The reaffirmed FY26 Precast adjusted EBITDA guide of $165M-$175M is back-end loaded after Q3 came in below management's own expectations.
- North America Steel Group adjusted EBITDA fell sequentially to $253.5M from $269.7M. Management guides roughly $40M of Q4 recovery in that segment.
- West Virginia micro mill hot commissioning slipped to "later this summer" after 100 days of weather delays. FY27 volumes are guided at 250k-300k tons over a roughly 12-month ramp.
- Imports are up about 20% year to date, mainly from South Korea, and new domestic rebar capacity from Hybar is arriving.
The thesis reads intact but unproven. What is changing is deliberate — a mix shift toward higher-margin construction solutions, durable trade protection, the TAG program, deleveraging and a capital spending step-down. What slipped is near-term: West Virginia's start, North America's sequential margin, and the Precast number. Management left a quantified, testable bridge into the next quarter. The open question is whether that bridge — $40M-$50M of sequential core EBITDA and a full Precast year — actually prints on October 15.
Earnings
In fiscal Q3 2026, revenue was $2,483.2M and gross margin was 18.3%. Core EBITDA, the company's own measure, was $353.6M — up 78.6% year over year, the highest in three years, at a 14.2% margin. Europe's $34.7M segment result included a one-off $20.4M CO2 credit that does not recur in Q4, and Precast came in below management's expectations.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.5B | $2.1B | $2.0B | +22.9% |
| Gross margin | 18.3% | 18.2% | 14.8% | +350bps |
| EBITDA | $340M | $257M | $196M | +73.1% |
| EPS | $1.54 | $0.83 | $0.73 | +111.2% |
| Core EBITDA | $353.6M | n/a | n/a | +78.6% YoY |
We are advancing CMC towards structurally higher margins, reduced earnings volatility and more sustainable growth.— Peter Matt, CEO, 2026-06-25
Management tone: Management sharpened some commitments and eased others off. TAG moved from "we should reach or exceed" the $150M target to "tracking well ahead." The Precast FY26 outlook was reaffirmed despite a light Q3, with the CEO saying "we are very confident we can reach the goal" and then giving reasons. The import view shifted from sanguine to hawkish, with talks opened with the US government on South Korea. West Virginia's startup slid from June to "later this summer." On capital allocation, management described 2x leverage as the point where "the green light goes on" for growth and for shareholder distributions.
Management Guidance
For fiscal Q4 2026, management guides consolidated core EBITDA up $40M-$50M sequentially. That includes roughly $40M of North America improvement, sequential mid-teens adjusted EBITDA growth in Construction Solutions, and Europe modestly higher excluding the CO2 credit — about $3M-$5M — though total Europe is guided down quarter over quarter as the credit rolls off. For the full year, the Precast adjusted EBITDA guide is $165M-$175M excluding purchase accounting, the effective tax rate is 7%-9%, and capital spending is about $550M. FY27 capital spending is expected to be roughly $200M lower, West Virginia is guided to 250k-300k tons in FY27, and Precast synergies are $35M-$40M over three years, with year one a dis-synergy.
Trajectory
Revenue has stepped up across four quarters: $2,114.5M in Q4 FY2025, $2,120.3M in Q1 FY2026, $2,132.0M in Q2, then $2,483.2M in Q3 — a 16.5% sequential jump. On the reported basis (operating income plus D&A), EBITDA margin went from 9.7% a year ago to 13.7% in Q3 FY2026. Three things drive the step: North America metal margins expanded $111 per ton year over year, the acquired Precast business added $52.9M of adjusted EBITDA, and Europe recovered on higher realized prices. Three temporary items held the quarter back — planned maintenance at 7 of 10 mills (about $20M), weather and inventory effects (about 50k tons, roughly $10M), and higher scrap costs.
The Model
The model carries FY+1 revenue of $10,130M and EBITDA of $1,520M, a 15.0% margin. FY+2 steps to $10,600M of revenue and $1,664M of EBITDA, a 15.7% margin. The near-term anchor is the sequential recovery management guided to plus the Precast platform's first full year inside the company. The larger FY+2 step depends on the West Virginia mill ramping toward its guided FY27 volumes, Arizona 2 reaching full utilization, and a wider mix of Tensar and Precast solutions.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.8B | $10.1B | $10.6B |
| YoY Growth | — | +29.9% | +4.6% |
| EBITDA | $806M | $1.5B | $1.7B |
| EBITDA Margin | 10.3% | 15.0% | 15.7% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.6% above analyst consensus.
For fiscal Q4 2026, management guides consolidated core EBITDA up $40M-$50M sequentially. That includes roughly $40M of North America improvement, sequential mid-teens adjusted EBITDA growth in Construction Solutions, and Europe modestly higher excluding the CO2 credit — about $3M-$5M — though total Europe is guided down quarter over quarter as the credit rolls off. For the full year, the Precast adjusted EBITDA guide is $165M-$175M excluding purchase accounting, the effective tax rate is 7%-9%, and capital spending is about $550M. FY27 capital spending is expected to be roughly $200M lower, West Virginia is guided to 250k-300k tons in FY27, and Precast synergies are $35M-$40M over three years, with year one a dis-synergy.
What Could Go Right — and Wrong
- Q4 prints the guided $40M-$50M sequential core EBITDA improvement, confirming the Q3 maintenance, weather and scrap drags reversed.
- Precast delivers the $165M-$175M FY26 target and the $35M-$40M three-year synergy plan begins to land.
- The three preliminary AD/CVD duties become final at proposed levels, keeping roughly 500k tons of rebar out of the US market.
- West Virginia ramps toward 250k-300k tons in FY27 and Arizona 2 reaches full utilization — volume without new capital spending.
- The FY27 capital spending step-down of roughly $200M, alongside minimal federal cash taxes, lifts reported cash flow.
- Precast misses the back-end-loaded FY26 guide — a second consecutive shortfall that would pressure the lower-volatility claim.
- North America metal margins do not re-establish and the guided segment recovery fails to appear.
- Trade protection erodes — preliminary duties are watered down at the final stage, or South Korean import flows rebound.
- New domestic rebar capacity from Hybar ramps faster than imports are removed, pressuring rebar prices.
- Scrap or energy costs stay elevated; Poland is only about 50% hedged on electricity.
Looking Ahead
The next twelve months turn on execution. West Virginia hot-commissions after its weather-driven slip and is guided to 250k-300k tons in FY27. Arizona 2 is meant to reach full utilization this year. The AD/CVD cases move from preliminary to final for three countries, and the EU's tightened safeguards and CBAM take effect. Capital spending steps down in FY27, and management has framed sub-2x leverage as the point at which buybacks and growth spending turn back on — a $600M repurchase authorization increase followed on August 5, 2026.
- Late summer 2026West Virginia hot commissioning — Tests the micro mill's startup after a 100-day weather slip.
- October 15, 2026Fiscal Q4 and FY26 results — Tests the guided $40M-$50M sequential core EBITDA improvement.
- Fiscal Q1Next Europe CO2 credit — Semiannual credit returns after a Q4 without it.
- Late calendar 2026Knoxville GalvaBar start-up — Second GalvaBar line is scheduled to begin production.
- FY2027West Virginia volume ramp — Guided 250k-300k tons over roughly a 12-month ramp.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $7.9B | $7.8B | $8.8B | -1.6% |
| Gross Margin | 17.1% | 15.5% | 18.6% | 157bps |
| EBITDA | $969M | $806M | $1.2B | -16.8% |
| EBITDA Margin | 12.2% | 10.3% | 13.2% | 189bps |
| Net Income | $485M | $85M | $595M | -82.6% |
| Free Cash Flow | $575M | $312M | $405M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)18.6%
- EBITDA Margin (TTM)13.2%
- Net Margin (TTM)6.7%
- ROIC8.7%
- FCF Conversion34.7%
- SBC / Revenue0.5%
The Company
Commercial Metals Company makes and fabricates steel reinforcement — rebar, merchant bar, light structural and other special sections, wire rod and semi-finished billets — and sells construction solutions around it. Its fiscal 2025 Form 10-K describes CMC as "an innovative solutions provider helping build a stronger, safer and more sustainable world through an extensive manufacturing network principally located in the U.S. and Central Europe, offering products and technologies to meet the critical reinforcement needs of the global construction sector." The products go into nonresidential and residential construction, public infrastructure, and increasingly large "mega projects" — data centers, semiconductor capacity and energy networks.
CMC is vertically integrated. Recycling facilities feed electric-arc furnace steel mills, which feed fabrication shops that shear, bend and weld reinforcement steel. The 10-K counts six EAF mini mills, three EAF micro mills and one rerolling mill in North America, plus 53 fabrication facilities; Europe runs a mini mill and five fabrication facilities in Poland. The company owns 208 acres in Berkeley County, West Virginia, the site of a fourth micro mill under construction. One labeling note: the 10-K calls the solutions segment "Emerging Businesses Group," while the Q3 call refers to it as Construction Solutions Group, which now includes the acquired Precast businesses.
Business Segments
Competitive Landscape
CMC competes in a commodity steel market shaped by imports, trade policy and new domestic capacity. Management frames its posture as "value over volume" and says CMC will not disrupt the supply-demand balance. On the Q3 call an analyst raised the new domestic rebar entrant Hybar, which the CEO acknowledged had ramped up while CMC is raising prices. Management's answer to new capacity leans on imports being removed by trade actions and on network flexibility, rather than on a quantified estimate of demand absorption.
- HybarNamed by an analyst on the Q3 call; the CEO said "they have ramped up. And we are raising prices."
Supply Chain
CMC sits between scrap and the jobsite: it recycles ferrous scrap, melts it in electric-arc furnaces, rolls rebar and merchant bar, then fabricates and sells downstream solutions. No neighbor in the evidence set mentions CMC by name.