Commercial Metals Co (NYSE:CMC) stock rose 3.27% (As on October 17, 11:24:14 AM UTC-4, Source: Google Finance) after the company reported fourth-quarter earnings that exceeded analyst expectations, driven by expanding steel product margins and record performance from its Emerging Businesses Group. North American steel product metal margins continued to expand during the quarter, increasing by $69 per ton sequentially. This improvement helped boost the North America Steel Group’s adjusted EBITDA by 18% YoY to $239.4 million, with margins expanding to 14.8% from 13.0% a year earlier. The Emerging Businesses Group delivered its best-ever quarterly results, with record performance from Tensar. The segment’s adjusted EBITDA increased 19.1% YoY to $50.6 million, achieving a record margin of 22.8%.
Moreover, the company has entered into a definitive agreement to acquire Foley Products Company (“Foley”), the largest regional supplier of precast concrete solutions in the United States and leader within the Southeastern U.S., for a cash purchase price of $1.84 billion, subject to customary purchase price adjustments. The purchase price represents a multiple of 10.3x Foley’s forecasted 2025 EBITDA. When anticipated cash tax benefits are included, the effective multiple is reduced to approximately 9.2x. The transaction is expected to be immediately accretive to earnings per share and free cash flow per share, and by year three annual run-rate synergies are expected in a range of $25 million to $30 million of EBITDA. CMC’s strategic entry into the precast industry is expected to broaden its commercial portfolio and offer new capabilities to address construction industry challenges.
Meanwhile, the company is constructing its fourth micro mill in Berkeley County, West Virginia, expected to begin melt shop production in 2026.
CMC in the fourth quarter of FY25 has reported the adjusted earnings per share of $1.37, beating the analysts’ estimates for the adjusted earnings per share of $1.35. The company had reported the adjusted revenue of $2.1 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $2.09 billion. The results showed improvement both sequentially and YoY, with fourth-quarter net earnings of $151.8 million compared to $103.9 million in the same period last year.
Looking ahead, CMC expects first-quarter fiscal 2026 consolidated financial results to be generally consistent with the fourth quarter, with North America Steel Group’s adjusted EBITDA margin anticipated to increase sequentially on higher steel product margins. CMC’s Europe Steel Group is expected to face challenges in the first quarter due to seasonal factors and scheduled maintenance outages. The company plans to close the CP&P and Foley Acquisitions by the end of 2025, subject to regulatory approvals.