CMC (CMC) Q4 2026 earnings review
CMC's steel profit climbs, but its precast business misses plan
CMC's steel mills had their best quarter of the year while the concrete business it bought last winter fell short of its own plan. Sales rose 26% from a year ago, and profit per share excluding one-offs rose 53%, lifted by a tax rate near 7% by our math. Chief executive Peter Matt pointed to backlogs near record levels, but he also said residential weakness in the Southeast held back precast.
| Net sales | $2.66B +26% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $2.09 +53% from a year ago |
| Precast profit this fiscal year | $143.5M plan at closing: $165–175M |
| First-quarter outlook | New steel profit about flat with the fourth quarter |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the two halves moved in opposite directions. The steel business earned more per ton than a year ago and the company reached its debt target nine months early, so buybacks can resume. The bad news: precast earned $143.5 million this year against a plan of $165–175 million, so the earnings stability it was bought for is not yet proven.
The question now is whether precast is a seasonal business that had a bad region or a business CMC overpaid for. If first-quarter margins return above 30% on winter volumes, the Southeast was a one-off; if they stay below 28%, the acquisition price was built on numbers it cannot reach. January's segment results will tell.
🐂 Bull Case
Steel Mills Earn More Per Ton Than a Year Ago
CMC's largest business is the North America Steel Group, which melts scrap into rebar and merchant bar and fabricates it for construction sites. The group earned $317.5 million before interest, tax and depreciation, a third more than a year ago, so its margin on sales reached 16.4% against 14.8%.
The gain came from the gap between what a mill charges for steel and what it pays for scrap, which CMC calls the metal margin. That gap widened to $652 a ton, $84 more than a year ago. In the latest quarter alone, selling prices rose $32 a ton while scrap costs fell $10.
- Steel product selling price: $1,021 a ton, up from $882 a year ago
- Scrap cost: $369 a ton, up from $314
- Shipments of finished products: up 5.3% from a year ago
- Downstream backlog: up 15.5% from a year ago, with higher prices in it
This matters because price, not volume, is doing most of the work, and prices can turn. But the backlog of fabrication orders has been filling at higher prices for several quarters, so the group has already sold part of next year's work at today's levels. The TAG cost programme adds savings on top, though CMC gave no fresh number for it.
What to watch: the metal margin per ton in the first quarter, due in January. Chief executive Peter Matt said better prices should offset higher scrap costs, and a margin holding near $650 would confirm that pricing power survived the seasonal lull.
Data Centres Pull Merchant Bar Volumes Up
Merchant bar is the angles, channels and flats that go into industrial buildings rather than concrete. CMC shipped 311,000 tons of it, 27.5% more than a year ago and 16% more than last quarter. The company credits "data center-related activity" and the new Arizona 2 micro mill, which can now make these shapes.
By our math merchant bar is now 38% of the group's steel product tons, up from 31% a year ago. Rebar went the other way, down 6.8% from a year ago, because the company says it is choosing jobs by price rather than chasing volume. So the mix is shifting toward the product with the stronger demand.
What to watch: merchant bar tons in the first quarter against the 311,000 shipped now. A seasonal dip is normal, but a figure still above 270,000 would show that industrial demand is holding through the winter.
Debt Target Reached, Buybacks Can Restart
CMC borrowed about $2.0 billion last December to buy two precast concrete makers, and promised to bring net debt back below two times yearly earnings within 18 months. It got there in nine: the company reports net leverage of 1.9x at the end of August, so the condition it set for resuming buybacks has been met.
Cash paid for the debt. Free cash flow for the year was $479 million by our math, up 53%, helped by a federal tax bill close to zero. The board has already acted: $702.1 million of buyback authorization remains, which by our math means about $600 million was added since the third quarter.
One caution on the 1.9x figure. CMC's version replaces the precast profit it actually earned with an annualized $212 million. Using the earnings actually booked, net debt is about 2.0 times by our math, so the target is met on the company's definition and roughly met on a stricter one.
What to watch: shares repurchased in the first quarter, reported in January, against the $26.7 million bought this quarter. A step up toward the prior pace of around $50 million a quarter would show that the board treats the target as reached.
🐻 Bear Case
Precast Earns Less Than CMC Promised
Precast is the concrete pipe and structures business CMC bought for about $2.5 billion in December, in the companies Foley and CP&P. The company said it would "deliver higher growth, greater earnings stability, and stronger returns for CMC in 2027". This quarter it delivered less than planned.
"Precast adjusted EBITDA fell below management's prior expectations, primarily due to regional residential softness", CMC said. Shipments fell from a year ago because weakness in the Southeast outweighed growth in the Mid-Atlantic. The business made $57.0 million on $190.8 million of sales, a margin of 29.9% by our math.
- Full-year precast profit: $143.5 million, against a plan of $165–175 million set at closing
- Annualized precast profit: $212.2 million, against $240–250 million indicated three months ago
- Margin at closing: CMC spoke of 30–35%, with Foley above 34%
- Construction Solutions profit growth from the third quarter: 4.4%, against the mid-teens the company had indicated
This matters because the acquisitions were sold to shareholders as a way to make earnings steadier, not just bigger. A housing slowdown in one region moved the number by a sixth, so the stability claim is untested. Bookings rose 12.6% from last quarter and the backlog is up about 3% from a year ago, which argues the demand is delayed rather than lost.
What to watch: precast sales and profit in the first quarter, which is seasonally weak. A margin back above 30% on lower winter volume would show the problem was regional mix; a margin below 28% would mean the business earns less than CMC paid for.
Europe Still Depends on Carbon Credits
CMC's Polish mill earned $15.6 million before interest, tax and depreciation, down from $39.1 million a year ago, because the earlier quarter included a $30.7 million government CO2 credit and this one had none. Without credits the margin on sales has been near zero or below for most of the past year, by our math, and reached 5.5% now.
Prices improved, with the metal margin up $32 a ton from a year ago, and the EU's carbon border charge and import quotas now apply to rivals' steel. But rebar shipments fell 9.4% from a year ago, and merchant bar and wire rod had to fill the gap. The company says it is confident of a "return to mid-cycle performance levels".
What to watch: the first-quarter Europe result with the CO2 credit stripped out, in January. CMC's outlook promises meaningful growth but names a credit as one reason, so the credit-free number will say whether the trade measures are lifting prices or only the subsidy is.
Risks this quarter didn't answer
Four questions that shape next year got no number in the release. Each one has a disclosure point in the first-quarter results or on the earnings call, and the reading from any of them could move the case in either direction.
- Rebar volumes: down 6.8% from a year ago while merchant bar grew; the release does not say how much is CMC's own selectivity and how much is imports or new rival capacity.
- Reinforcing steel: Construction Solutions excluding precast earned $44.7 million, 11.7% less than a year ago by our math, after "a significant unplanned outage at Galvabar"; the first quarter will show whether output recovered.
- TAG savings: the company targeted more than $150 million of annual run-rate benefit by now; the release gives no achieved figure.
- West Virginia mill: the outlook lists "startup expenses" as a first-quarter drag on North America steel, without a size.
👓 Other Themes
A Lower Tax Rate Lifted Reported Profit
Net earnings rose 40% from a year ago, which CMC says was "due in part to a lower effective tax rate". Pre-tax earnings rose a more modest 18.8%. The tax rate fell to 7.4% from 21.5%, by our math, because of tax credits for the West Virginia mill and faster depreciation on the precast purchases. CMC also booked a $131.6 million income tax receivable.
Second Galvabar Line Due Later This Year
Galvabar is CMC's galvanized rebar, sold through its Performance Reinforcing Steel business. An unplanned outage cut its shipments this quarter. The company says bookings, backlog and prices for the product remain strong, and that a second production line will be commissioned later in calendar 2026, giving it a backup when one line stops.
💲 Other KPIs
Money owed by customers rose 19.9% from a year ago, slower than sales at 25.7%. Part of the gain is the precast businesses bought in December, which were not in last year's figure. Receivables growing below sales means customers are paying at least as fast as before, so the sales growth is turning into cash.
Spending on plants and equipment reached $175.6 million in the quarter by our math, up for the third quarter in a row as the West Virginia micro mill was finished. Full-year capex was $579.8 million, just under the $600 million the finance chief indicated. CMC has said spending will fall now that the mill is built.
The cost of debt tripled from $12.1 million a year ago after CMC issued $2.0 billion of notes to pay for the precast deals. It has been near $40 million for three quarters. The money borrowed now costs about $150 million a year, against $57 million of precast profit this quarter.
🔮 Guidance
New. The plan has the steel business holding its fourth-quarter profit of about $317 million through the winter. Better prices should pay for higher scrap costs, start-up costs at the West Virginia mill and a small seasonal drop in shipments, the company said. Flat would still be 8% above the first quarter of last year.
New. Profit in the precast, Tensar and reinforcing steel businesses will fall from the fourth quarter because construction slows in winter, CMC said. A year ago the segment made $39.6 million in the first quarter without precast, so the size of the drop will say how much the acquisitions add in the weakest season.
New. The Polish business expects a clear step up from the fourth quarter. Two reasons: operating conditions are improving under the new EU trade rules, and the first quarter will include a CO2 credit. A year ago that credit was $15.6 million, so the credit alone could double the segment's profit.
❓ Key Questions
How much TAG savings has CMC actually booked?
The company targeted an annual run-rate benefit above $150 million by the end of fiscal 2026 and says it has beaten it. The release gives no achieved number, so readers cannot tell how much of the margin gain is cost savings.
What will precast earn in fiscal 2027?
The annualized figure of $212 million sits below the $240–250 million indicated in June. A full-year range would show whether the Southeast slowdown is a one-quarter problem or a lower base.
How big are the West Virginia start-up costs?
The first-quarter outlook names them as a drag on steel profit without a size. The mill's ramp over the next year decides how much new rebar volume reaches the market and at what cost.
How fast will buybacks resume below 2x leverage?
The board has about $702 million of authorization and the target is met. The pace matters because it sets how much of next year's cash goes to shareholders against further precast deals.
What is the Q1 CO2 credit worth in Europe?
The outlook's growth for Europe includes a credit of undisclosed size. Without the figure, readers cannot separate the effect of the EU trade measures from the subsidy.