Executive Summary

Q1 FY25 reported net loss of ($175.7) million due to a $350.0 million litigation provision; adjusted earnings were $88.5 million ($0.78 diluted EPS) on net sales of $1.91B, and core EBITDA of $210.7 million (11.0% margin) .
North America finished steel shipments rose 4.4% YoY, but margins compressed on lower average steel and downstream pricing; Europe returned to profitability on receipt of a $44.1 million annual CO2 credit despite persistent import pressure .
Management guides Q2 FY25 consolidated results down sequentially with seasonal shipment declines and lower margins over scrap in North America; Europe expected in line with prior-year Q2, and Emerging Businesses to be seasonally weaker .
Strategic TAG initiatives showing early progress, with identified annualized benefits in alloy use and yields; liquidity remains strong ($856.1 million cash, ~$1.7B total liquidity) and capital returns continued ($71 million in Q1 via buybacks/dividends) .
Near-term stock narrative catalyst: sizeable litigation accrual and sequential margin compression; potential medium-term catalysts include scrap price inflection and infrastructure-driven demand recovery (management noted scrap “flat to up 20%” indications for January) .

What Went Well and What Went Wrong

What Went Well

Late-season construction activity boosted North America shipments; finished steel shipments increased 4.4% YoY and 2.3% sequentially against typical seasonal declines .
Strong liquidity and cash generation: $213.0 million cash from operations (101% of consolidated core EBITDA); cash $856.1 million and total liquidity ~$1.7B .
Europe returned to profitability on receipt of $44.1 million annual CO2 credit; robust cost management reduced controllable costs per ton despite a ~9% shipment decline .

Management quotes:

“We are seeing strong early results from several recently launched TAG initiatives…expected to drive value creation…financial benefits in fiscal 2025.”
“Demand for finished steel products was robust…shipments reached the highest level since the third quarter of fiscal 2023.”
“Our team in Poland has performed commendably…aggressively managing costs.”

What Went Wrong

Margins over scrap compressed in North America: steel product margin down $60/ton YoY; downstream margin over scrap down ~$113/ton YoY .
Emerging Businesses Group saw project delays in Tensar and weaker truck/trailer markets in Impact Metals; adjusted EBITDA margin fell 400 bps YoY to 13.4% .
Significant litigation verdict (PSG) led to a $350.0 million provision (after-tax ~$265 million), driving the GAAP net loss and masking otherwise solid operational performance .

Analyst concerns raised:

Seasonality and margin compression in Q2 outlook; management expects “decline from the first quarter level” with lower margins over scrap .
Project timing (“lumpy” Tensar projects) defers earnings recovery to Q3/Q4 rather than Q2 .
European imports (notably Germany) continue to pressure margins despite Polish demand improvement .

Financial Results

Metric	Q1 FY24 (11/30/2023)	Q3 FY24 (5/31/2024)	Q4 FY24 (8/31/2024)	Q1 FY25 (11/30/2024)
Revenue ($USD Millions)	$2,003.1	$2,078.5	$1,996.1	$1,909.6
GAAP Diluted EPS ($)	$1.49	$1.02	$0.90	($1.54)
Adjusted Diluted EPS ($)	$1.49	$1.02	$0.90	$0.78
Core EBITDA ($USD Millions)	$313.7	$256.1	$227.1	$210.7
Core EBITDA Margin (%)	15.7%	12.3%	11.4%	11.0%
Cash from Operations ($USD Millions)	$261.1 (Q1 FY24)	—	$351.8 (Q4 FY24)	$213.0

Segment breakdown (Net Sales and Adjusted EBITDA):

Segment	Q1 FY24 Net Sales ($MM)	Q4 FY24 Net Sales ($MM)	Q1 FY25 Net Sales ($MM)	Q1 FY24 Adj. EBITDA ($MM)	Q4 FY24 Adj. EBITDA ($MM)	Q1 FY25 Adj. EBITDA ($MM)
North America Steel Group	$1,592.7	$1,559.5	$1,518.6	$266.8	$210.9	$188.2
Europe Steel Group	$225.2	$222.1	$209.4	$38.9	($3.6)	$25.8
Emerging Businesses Group	$177.2	$195.6	$169.4	$30.9	$42.5	$22.7
Corporate & Other	$8.0	$19.0	$12.1	($31.0)	($25.2)	($386.2) (litigation)
Total	$2,003.1	$1,996.1	$1,909.6	$305.6	$224.6	($149.5) adj. EBITDA; core EBITDA $210.7

Key operating KPIs:

KPI (North America unless stated)	Q1 FY24	Q3 FY24	Q4 FY24	Q1 FY25
External Finished Steel Tons Shipped (Consolidated, 000s)	1,441	1,432	1,439	1,459
NA Finished Steel Tons Shipped (000s)	1,098	1,135	1,120	1,146
NA Steel Products Metal Margin ($/ton)	$549	$538	$522	$489
NA Downstream ASP ($/ton)	$1,389	$1,330	$1,311	$1,259
Europe Steel Products Metal Margin ($/ton)	$268	$292	$284	$269
Europe Adj. EBITDA per ton ($/ton)	$114	($14)	($11)	$83

Capital returns and balance sheet:

Share repurchases: 919,481 shares for $50.4 million in Q1 FY25; $353.4 million remaining authorization at 11/30/2024 .
Dividend: $0.18 per share declared on 1/2/2025 (+~13% YoY), 241st consecutive quarterly payment .
Cash and cash equivalents: $856.1 million; total liquidity nearly $1.7 billion .

Non-GAAP reconciliation and adjustments:

Litigation expense added back ($350.0 million pre-tax; ~$85.75 million tax effect) to arrive at adjusted earnings of $88.5 million and adjusted diluted EPS of $0.78 .

Guidance Changes

Metric	Period	Previous Guidance (from Q4 FY24)	Current Guidance (Q1 FY25)	Change
Consolidated Financial Results	Q2 FY25	Q1 FY25 expected to decline vs Q4 FY24 due to macro uncertainty	Q2 FY25 expected to decline vs Q1 FY25	Lowered
NA Finished Steel Shipments	Q2 FY25	Q1 FY25 shipments to follow normal seasonal trends	Q2 FY25 shipments to follow typical seasonal patterns (down from Q1)	Maintained (seasonality)
NA Adjusted EBITDA Margin	Q2 FY25	Expected decrease on lower steel product margin over scrap	Expected to decline sequentially on lower margins over scrap for steel and downstream	Lowered
Europe Adjusted EBITDA	Q2 FY25	Meaningful sequential increase in Q1 FY25 due to annual CO2 credit $35–$40M expected	In line with prior year Q2 as cost management offsets weak environment	Maintained (vs PY)
Emerging Businesses Group	Q2 FY25	Modest improvement in Q4 FY24 outlook	Decline due to normal seasonality; in line with prior-year results	Lowered (seasonality)
Dividend	Ongoing	$0.18 per share declared in Oct 2024	$0.18 per share declared Jan 2, 2025 (+~13% YoY)	Maintained rate; YoY increased

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY24, Q4 FY24)	Current Period (Q1 FY25)	Trend
TAG operational/commercial excellence	Framework launched; benefits expected FY25	Early wins: alloy reduction (~$5M), yield improvements ($5–$10M), >150 initiatives; benefits in FY25	Positive execution momentum
North America demand & margins	Stable demand; margins pressured by pricing	Robust shipments; margin compression on lower pricing; seasonal Q2 decline expected	Near-term softer margins; demand constructive
Europe market & imports	Gradual improvement; still challenging	Profitability via CO2 credit; imports (Germany) up sharply; margins range-bound	Structural pressure from imports persists
Tensar project timing	Rebound in Q3; strong solutions demand	Broad-based project delays; earnings recovery pushed to Q3/Q4	Timing shift; annual outlook unchanged
Scrap and pricing outlook	Stable to modestly improving margins	Scrap near bottom; indications “flat to up 20%” in January; potential pricing catalyst	Potential tailwind if scrap turns
Capacity additions (AZ2, WV micro mill)	AZ2 commissioning; WV commissioning late 2025	AZ2 two consecutive monthly production records; exit FY25 near 500k tpa; WV on track	Ramp progressing

Management Commentary

“CMC reported a net loss…including a $264 million after-tax charge for litigation…Excluding this item, adjusted earnings were $88.5 million or $0.78 per diluted share.” — Peter Matt .
“Demand for finished steel products was robust during the first quarter…shipments reached the highest level since the third quarter of fiscal 2023.” — Peter Matt .
“We are seeing strong early results from several recently launched TAG initiatives…which give me confidence that the program will begin to provide financial benefits in fiscal 2025.” — Peter Matt .
“Consolidated core EBITDA was $210.7 million…core EBITDA margin of 11%.” — Paul Lawrence .
“We expect consolidated financial results in our second quarter of fiscal 2025 to decline from the first quarter level…adjusted EBITDA margin is expected to decrease.” — Peter Matt .

Q&A Highlights

Seasonality: Management expects typical Q1→Q2 seasonal decline in shipments (5–10%), starting “from a higher place” given strong Q1 .
Tensar project delays: Broad-based across regions; earnings expected to shift to Q3/Q4 with annual growth intact .
TAG quantification: Early benefits exist but full FY25 impact not yet quantified; >150 initiatives in backlog .
Capacity and share focus: AZ2 replaces idled California capacity; WV adds presence in underrepresented Northeast with value-over-volume focus .
Scrap outlook: Indications “flat to up 20%” in January; scrap near bottom could catalyze rebar and merchant pricing .

Estimates Context

Wall Street consensus (S&P Global) for Q1 FY25 EPS and revenue was unavailable due to a data access error at time of query; as a result, we cannot definitively classify a beat/miss vs consensus for this quarter [SPGI access error].
Given unavailable consensus, focus shifts to trajectory: sequential revenue down 4.3% and core EBITDA margin down 40 bps vs Q4 FY24; YoY revenue down 4.7% and core EBITDA margin down 470 bps, with the GAAP loss entirely driven by litigation accrual .

Key Takeaways for Investors

Underlying operations remained historically strong (core EBITDA $210.7M; margin 11.0%) despite macro-driven margin compression; GAAP loss driven by non-recurring litigation charge .
North America demand is resilient with shipments up 4.4% YoY; management sees improving sentiment and robust downstream bids, supporting medium-term recovery .
Near-term risk skew is to margins: Q2 guide down sequentially on lower margin over scrap; monitor scrap trajectory and pricing moves as potential inflection catalysts .
Europe profitability depends on import relief or new demand (e.g., rebuild of Ukraine); cost discipline and CO2 credits provide interim support .
TAG initiatives are tangible and ramping; early run-rate savings identified and broader program (>150 initiatives) targets higher through-the-cycle margins .
Liquidity and balance sheet provide flexibility to continue growth investments (WV micro mill) and shareholder returns ($71M in Q1; $353.4M repurchase authorization remaining) .
Project timing in Tensar pushes earnings to H2 FY25 (Q3/Q4), with annual outlook unchanged; watch Q2 for trough dynamics and H2 for recovery .


## Appendix: Additional Data Comparisons

Revenue and EPS vs prior periods:
| Metric | QoQ Change (Q1 FY25 vs Q4 FY24) | YoY Change (Q1 FY25 vs Q1 FY24) |
|--------|----------------------------------|----------------------------------|
| Revenue ($MM) | Down $86.6 (−4.3%) **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:10]** **[22444_20241017DA33358:5]** | Down $93.4 (−4.7%) **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:10]** |
| GAAP Diluted EPS ($) | Down $2.44 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:10]** **[22444_20241017DA33358:5]** | Down $3.03 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:10]** |
| Adjusted Diluted EPS ($) | Down $0.12 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:14]** **[22444_20241017DA33358:8]** | Down $0.71 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:14]** |
| Core EBITDA Margin (%) | Down 40 bps **[22444_20250106DA89135:6]** **[22444_20241017DA33358:7]** | Down 470 bps **[22444_20250106DA89135:6]** |

North America margin drivers (per ton):
| Metric | Q1 FY24 | Q4 FY24 | Q1 FY25 | Commentary |
|--------|---------|---------|---------|------------|
| Steel product margin over scrap ($/ton) | $549 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:9]** | $522 **[22444_20241017DA33358:4]** | $489 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:9]** | Pricing-driven compression sequentially and YoY |
| Downstream ASP ($/ton) | $1,389 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:9]** | $1,311 **[22444_20241017DA33358:4]** | $1,259 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:9]** | Lower average pricing impacting margins |

Europe margin drivers:
| Metric | Q1 FY24 | Q4 FY24 | Q1 FY25 |
|--------|---------|---------|---------|
| Steel product margin over scrap ($/ton) | $268 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:9]** | $284 **[22444_20241017DA33358:4]** | $269 **[22444_0000022444-25-000008_cmc-11302024xearningsrelea.htm:9]** |
| Adjusted EBITDA per ton ($/ton) | $114 **[22444_0000022444-25-000008_q12025-supplementalslide.htm:10]** | ($11) **[22444_0000022444-25-000008_q12025-supplementalslide.htm:10]** | $83 **[22444_0000022444-25-000008_q12025-supplementalslide.htm:10]** |

Liquidity and capital allocation:
- Cash and cash equivalents: $856.1M; total liquidity ~$1.7B **[22444_20250106DA89135:1]**.
- Q1 FY25 cash from operations: $213.0M; Q4 FY24 cash from operations: $351.8M **[22444_20250106DA89135:5]** **[22444_20241017DA33358:0]**.
- FY25 capex plan: $630–$680M, including $350–$400M for Steel West Virginia **[22444_0000022444-25-000008_q12025-supplementalslide.htm:11]**.

Note: Consensus estimates from S&P Global were unavailable at query time due to data access limits; therefore, estimate comparisons could not be provided this quarter.

COMMERCIAL METALS Co (CMC)·Q1 2025 Earnings Summary