Meets Expectations Despite Temporary Operational Headwinds

研报英文原文证据摘录

Meets Expectations Despite Temporary Operational Headwinds

lined by CMC at 2Q, Construction Solutions EBITDA nearly doubled in 3Q from

2Q levels due to seasonal tailwinds in construction, as well as from a full quarter of earnings from Interest in CMC has meaningfully picked up

the newly acquired businesses. Guidance is for mid-teens EBITDA growth in this segment in 4Q on following the underperformance YTD. Rebar

the back of some of the construction related momentum in the US. FCF of ~$80m was largely in- supply growth is of course a concern, as is

line with both consensus and our expectation, while FY capex guidance was lowered again from the recent uptick in imports, but we would

$600m $550m. note the delta between spot and consensus

price forecasts over the next 12 months is

Cash Flow Inflection: On the call, management highlighted CMC's cash flow inflection as earnings still close to 10%.

rise from the inclusion of the precast acquisitions and higher steel shipment volumes, and as capex

is set to decline by ~$200m in FY2027 from current levels. Net leverage reached 2.1x, and is running

well ahead of the target of reaching 2.0x net leverage within 18 months of the precast acquisitions

this past fall. With the target likely achievable in the very near-future, management sees capital

returns as the more likely use of FCF growth rather than further large-scale M&A in the precast

industry as the focus for now is to fully integrate the acquired assets into the broader CMC portfolio

and realize a large portion of the guided synergies. The takeaway here is that CMC has earnings

growth from current levels even if steel prices do not rise, and management’s focus on the execution

of the integration of its acquired assets should limit meaningful further capex in the near-term.