Commercial Metals Company announced financial results for its fiscal first quarter ended November 30, 2023. Net earnings were $176.3 million on net sales of $2.0 billion, compared to prior year period net earnings of $261.8 million on net sales of $2.2 billion.
In a press release, the company said demand for its finished steel products in North America continued to be healthy during the quarter. Robust construction activity supported a 3 percent year-over-year increase in total North America Steel Group rebar shipments, a measure that includes rebar sold directly from mills as well as fabricated product shipped from CMC's downstream facilities. The construction pipeline remained historically strong with high volumes of potential projects, CMC said, adding that lower new contract awards have driven a year-over-year reduction in the volume and value of CMC's downstream backlog from the peak experienced last year. Demand from industrial end markets, which is important for merchant products, was mixed, with certain applications experiencing slower activity compared to the prior year quarter, CMC said. Adjusted EBITDA for the North America Steel Group decreased to $266.8 million in the first quarter of fiscal 2024 from $349.8 million in the prior year period.
North America Steel Group shipment volumes of finished steel, which include steel products and downstream products, increased 1.1 percent year-over-year. The average selling price for steel products decreased $128 per ton compared to the first quarter of fiscal 2023, while the cost of scrap utilized increased $18 per ton, resulting in a year-over-year decrease in steel products margin over scrap of $146 per ton. The average selling price for downstream products declined by $10 per ton from the prior year period.
As for an outlook, CMC President and CEO Peter Matt said, “Margins on steel products are likely to experience some further compression during the second quarter, however, recent price announcements should support an inflection and improved margins going forward. Downstream product margins should exhibit good sequential stability.”
Additionally, Matt said, “looking beyond the second quarter, we expect robust spring and summer construction activity driven by increased infrastructure investments, which should support an already strong demand backdrop in both the North America Steel Group and the Emerging Businesses Group.”