Commercial Metals Company

Hello everyone and welcome to the fiscal 2026 third quarter earnings call for Commercial Metals Company. Joining me on today's call are Peter Matt, CMC's President and Chief Executive Officer, and Paul 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'll have a few instructions at that time. We'd 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, U.S. 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, and its anticipated benefits. The company's ability to achieve its stated deleveraging target within the anticipated timeframe, 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 U.S. 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 end 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 six 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 its 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 Anglo Gold and Summit Materials and who brings a decade 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 $353.6 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 de-levering our balance sheets. 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, Advance, 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, strong 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 two acquisitions to better serve our precast customers while utilizing the VAP 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. One 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 Arizona 2 micromill saw a step change in operating performance reliability during the quarter increasing to over 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 Galva Bar 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 $353.6 million of core EBITDA, The highest level in three 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 three temporary factors.