Irving, Texas-based Commercial Metals Co. (CMC) says its net earnings of $312.4 million earned in the quarter ending May 31, represent a 140 percent increase compared with the $130.4 million earned in the same timeframe in 2021.
During the March 1 to May 31 period this year, which represents the third quarter of CMC’s 2022 fiscal year, the company says it garnered $483.9 million in “core earnings before interest, taxes, depreciation and amortization (EBITDA), representing a 110 percent increase year on year.”
“Margins over scrap in North America and Europe reflect strong market conditions and favorable customer sentiment,” according to the company, which also cites “continued strength in [the] North America downstream pipeline, with record bid activity and backlog levels on both a volume and price basis” as a reason for optimism.
Barbara R. Smith, board chair, president and CEO of CMC, says, “The third quarter was another remarkable financial result for our company, underpinned by strong operational execution and robust market conditions across our key geographies. Our team produced record quarterly adjusted EBITDA that nearly matched the best annual performance in the history of CMC's Europe segment.”
Smith also praises CMC employees at its steel mill complex in Poland for humanitarian efforts made in response to Ukrainians fleeing that nation’s invasion by Russia. “CMC employees in Poland have opened their homes and communities in a heartfelt grassroots effort to assist refugees fleeing the war in Ukraine,” she remarks.
CMC, an operator of several scrap-fed electric arc furnace (EAF) steel mills, says demand for its finished steel products in North America was robust during the quarter, with several key internal and external indicators pointing toward continued strength. “Steel products have experienced five consecutive quarters of year-over-year margin expansion, while margins on raw material sales have grown for nine consecutive quarters,” states the firm.
In the March to May 2022 period, the average selling price for steel products increased by $316 per ton compared with the third quarter of fiscal 2021, while the cost of scrap used rose by $103 per ton. “The result was a year-over-year increase of $213 per ton in margin over scrap,” says CMC.
In Europe, the company faced supply constraints, but CMC writes, “As a result of continued strong demand and constrained supply in the wake of trade sanctions against Russia and Belarus, the average [steel] selling price increased by $303 per ton compared to the prior-year quarter, while the cost of scrap utilized rose $154 per ton. The result was a year-over-year increase in margin over scrap of $149 per ton.”
Looking ahead, Smith remarks, “We anticipate strong financial performance to continue in the fourth quarter. Robust demand for each of CMC’s major product lines is expected to persist, augmented by our growing downstream backlog and solid levels of new work entering the project pipeline. Margins over scrap in both North America and Europe should remain at levels near those of the third quarter, driven by favorable market conditions across our geographies.”
She adds, “The expected early calendar 2023 startup of our Arizona 2 micromill will provide CMC with a greater flexibility to capitalize on these anticipated favorable demand conditions.”