Commercial Metals Company: F3Q Results: In-Line Print with Solid F4Q Guide; Forthcoming FCF Inflection to Accelerate Buybacks, But Supply Concerns Remain

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Commercial Metals Company: F3Q Results: In-Line Print with Solid F4Q Guide; Forthcoming FCF Inflection to Accelerate Buybacks, But Supply Concerns Remain

E ($) 7.55 7.84 3.8%

underperformance (+2% vs. HRC +11%) but also concerns on future supply/imports,

Quarterly Forecasts (FYE Aug)

which we feel are more than priced in at this stage, keeping us OW-rated.

Adj. EPS ($)

• Company guidance: NA earnings should rise ~$40M Q/Q from no repeat of 2025A 2026E 2027E Q1 (1.54) 1.58A 1.91

maintenance impacts and improved metal margins (similar to F2Q levels) Q2 0.22 0.83A 1.42

following recent price actions, steady scrap costs, and mill shipments Q3 0.73 1.55A 2.48

reaccelerating. AZ2 is >75% ramped and WV is on track for hot Q4 1.35 1.97 2.03

commissioning later this summer, likely contributing 250-300Kt rebar next FY 0.76 5.92 7.84

year. We expect downstream metal margins may have bottomed, with pricing Style Exposure

trending higher moving ahead (incl. for bookings). EU earnings should rise

$3-5M Q/Q ex F3Q’s $20M CO2 credit on pricing and shipments, implying

~$18M (+38% vs. BBG). Prior flagged energy risks have been minimal, and

the team seems to expect further price support from stricter trade policy kicking

in next month. CSG earnings should rise mid-teens on improved precast and

steady EGB performance, with the CSG backlog value up low-SD Y/Y. FY26

capex was guided -8% to $550M on timing and FY27 ~$200M lower Y/Y, with

management suggesting greater appetite for buybacks once past peak spend

and net leverage within the 2.0x target, which may only be a quarter away.

• Staying OW with new $86 PT: We lift our F4Q EBITDA 5% to $394M

reflecting NA/EU margin expansion while CSG remains largely unchanged.

We also assume buybacks accelerate starting 1H27. On our SOTPs (7.0x NA

vs.