Commercial METALS (CMC) Q4 2026 earnings call transcript

Hello and welcome to the COMMERCIAL METALS Co, Fiscal 2026, 4th Quarter and Year End Earnings Call. Joining me on today's call are Peter Matt, CMC's President and Chief Executive Officer, and Paul Lawrence, Senior Vice President and Chief Financial Officer. Today's materials include the press release and supplemental slides that accompany this call, which can be found on the CMC's Investor Relations website.

As a reminder, today's call is being recorded. Peter will begin our prepared remarks with a high-level overview of the year and fourth quarter and comment on the progress against our strategic objectives. Paul will then provide a detailed discussion of our quarterly results as well as capital allocation. Peter will wrap up with our view on the path ahead. We will then provide instructions for the question and answer session to follow.

Today's discussion contains forward-looking statements, including with respect to economic conditions, effect of legislation and trade actions, U. S. steel import levels, construction activity, demand for finished steel products and precast concrete products, the expected capabilities, benefits, costs, and timelines for construction and commissioning of new facilities, the expected performance and integration The company's operations, the company's strategic growth plans, and its anticipated benefits, the company's ability to achieve its stated deleveraging targets within the anticipated timeframe, legal proceedings, the impact of tax credits on future results, the company's future results of operations, financial measures, and capital spending, including expected share repurchase activity. These statements reflect the company's beliefs based on current conditions but are subject to risk and uncertainties.

The company's earnings release, most recent annual report on Form 10-K and other filings with the U. S. Securities and Exchange Commission, contain additional information concerning factors that could cause actual results to differ materially from those projected in forward-looking statements. Except, as required by law, CMC does not assume any obligation to update, amend, or clarify these statements. Some numbers presented will be non-GAAP financial measures, and reconciliation for such numbers can be found in the company's earnings release, Supplemental slide presentation are on the company's website. Unless stated otherwise, all references made to year or quarter end are references to the company's fiscal year or fiscal quarter.

With that, I would like to turn the call over to CMC's President and CEO, Peter Matt.

Thank you, Andy, and good morning to everyone joining us for today's call. We will discuss many accomplishments today, but none is more important than safety. I want to thank our employees for their continued focus and commitment to our most important company value. Our total recordable incident rate for fiscal 2026 remained near a historic low point and better than industry averages. During the year, we put significant effort into embedding CMC's safety-first culture across our newly acquired precast operations and strengthening safety performance throughout the organization. While we're proud of that progress, our standard is higher. Our goal is zero harm, and we will be relentless in striving for it. Now stepping back, fiscal 2026 was a defining year for CMC.

We made significant progress executing the strategy we laid out at our investor day, strengthening the quality and durability of our earnings profile, expanding margins, reducing leverage, enhancing free cash flow generation, and positioning the company for sustained shareholder value creation. For the full year, core EBITDA increased to approximately $1.4 billion, up from $837 million for fiscal 2025, while core EBITDA margin expanded 380 basis points to 14.5%. These results reflect meaningful progress across each of our strategic priorities, including the execution of our Transform, Advance, and Grow program, the advancement of key growth investments, and the ongoing successful integration of our precast acquisitions. Just as importantly, we have strengthened our balance sheet. Since completing our precast acquisitions, we have reduced leverage as adjusted for acquisitions to below our target range, providing greater financial flexibility to invest in growth while returning capital to shareholders.

Our momentum carried into the fourth quarter with core EBITDA increasing 35.1% year-over-year to approximately $394 million, while core EBITDA margin expanded to 14.8%.

Results in the quarter were driven by strong North American steel group performance, where execution against strategic priorities has created clear value for our business. Segment margins increase 220 basis points sequentially, driven by strong TAG contributions, including operational and commercial excellence initiatives. We are also seeing that as the market and our customers pursue larger and more complex projects in energy, industrial reshoring, data center, and institutional sectors, CMC's scale, capabilities, and network are increasingly making CMC a preferred partner.

Our downstream expertise with its customized solutions and customer-focused approach has us positioned to win in this increasingly complex environment. Downstream product volumes grew 8.5% year-on-year in the fourth quarter, with expanding margins reflecting this dynamic. At the same time, our Arizona 2 micromill is enhancing our merchant production capabilities to support growth and demand. Shipments for merchant bar increased 27.5% year-over-year, demonstrating the capabilities of the Arizona 2 plant and the flexibility it provides to optimize product mix to capitalize on strong market conditions and balance supply with demand. For our construction solutions group, fourth quarter results were below our expectations, due primarily to our precast business with residential softness in certain southeastern markets. Notably, we have seen the same regional softness in our fabrication book, though it is not visible externally given the geographic diversification of our fab footprint.

As residential activity moderated, lower volumes and regional margin mix headwinds weighed on adjusted EBITDA performance. Precast generated adjusted EBITDA of $57.1 million during the quarter, and excluding the purchase accounting impact, has contributed roughly $150 million of adjusted EBITDA since our acquisition. The leading indicators for the business remain positive. The demand environment, especially in non-residential and infrastructure, remains healthy, with strong bidding activity in key markets like Atlanta picking up in recent months. Bookings were up year over year and increased 12.6% sequentially. Backlog levels are up roughly 3% versus the prior year and 4% versus Q3. While average backlog pricing has also trended higher. These factors position the business for solid performance in the year ahead.

Strategically, as we close 2026 and look ahead to fiscal 2027, we are highly confident in our direction and in the three powerful drivers of value creation we laid out at our investor day.

First, we will continue capturing the full potential of our business through TAG. Second, we will begin harvesting returns from significant growth capital deployed over the last several years. And third, we will continue reshaping our portfolio as a leading provider of early-stage construction solutions. Together, these initiatives, which are within our control, will power a stronger CMC, both operationally and financially. We have made significant progress in fiscal 2026 as TAG continued to evolve from a program into a core operating system for CMC. Across the enterprise, we realized meaningful productivity gains through yield improvements, scrap optimization, logistics efficiencies, manufacturing excellence initiatives, and an increasing focus on commercial excellence.

Looking ahead, the opportunity set remains substantial with a full pipeline of initiatives that will drive additional earnings growth and margin expansion. We exited fiscal 2026 with more than $250 million of gross run rate benefits achieved and a clear line of sight to an additional $100 million of run rate benefits by the end of fiscal 2027. We view TAG as a durable source of margin expansion and an increasingly important competitive advantage for CMC.

Turning to growth investments, fiscal 2027 will mark an important transition. For several years, we have invested significant capital to strengthen and modernize our asset base. Nearly $1.5 billion of capital has been deployed to modernize and complete our coast-to-coast mill network, both improving our competitiveness and providing network flexibility. As we enter fiscal 2027, those investments increasingly shift from consuming capital to generating returns. At Steel West Virginia, commissioning and startup activities continue to progress well. The team is executing a disciplined commissioning process, keeping its focus on safely increasing production, developing the workforce, and realizing the full potential of the mill. As production increases, Steel West Virginia will strengthen the flexibility of our whole network, enabling us to flex and optimize production costs and product mix to better serve customer demand for different products across our footprint.

Before moving on, I'd like to recognize the team leading the construction and commissioning of our West Virginia MicroMill. Their efforts have been outstanding and reflect the disciplined approach to capital deployment and project execution that defines CMC. At Tensar, the new geogrid line in Blackwell, Oklahoma, is well into its startup and will increase geogrid production capacity, enhance service levels, and fuel growth in higher-value non-residential and infrastructure applications. We are equally encouraged by the construction progress at Galvabar, Tennessee, where we expect first production of our Galvabar corrosion-resistant product beginning this November. The facility is expected to more than double our Galvabar production capacity, expanding our presence in this attractive, higher-margin market segment. Beyond our organic growth investments, we are reshaping our portfolio and diversifying our earnings profile, most recently with our precast platform investments.

Turning to our precast business, integration activities remain on track, and synergy capture is meeting or exceeding expectations. A great example of this is where, through best practice sharing across our network, we have implemented several new operational practices that will improve our safety performance and eliminate millions of dollars of waste from our supply chain. To date, we have substantially completed the functional integration of the platform, creating a strong foundation to drive value creation. Utilizing a TAG approach and mindset, we are advancing a broad range of operational excellence and commercial excellence initiatives and have identified further opportunities across operations, procurement, footprint optimization, and commercial execution that will enhance growth over time. Thank you. We will now turn the call over to management for both organic opportunities and acquisition opportunities in a highly fragmented industry.

With sound execution, we expect Precast to play a vital role in building a stronger CMC. Let's shift from our three value creation levers to the current operating environment. Regarding demand for early-stage construction products, the direction of travel remains unchanged. We see constructive conditions for all of our product categories across the majority of the markets we serve. Beginning with infrastructure, demand remains elevated. Significant federal and state funding continues to support a multi-year pipeline of projects, and with a substantial portion of available funding yet to be spent, we have strong visibility of the product. I will now turn the call over to management for the COMMERCIAL METALS Co. I will now turn the call over to management for the COMMERCIAL METALS Co. The COMMERCIAL METALS Co. The COMMERCIAL METALS Co. The CMO remains near record levels, suggesting a robust and extensive project pipeline.

Many of these nonresidential projects are larger, more complex, and increasingly requiring diverse solutions. As noted earlier, this plays directly to CMC's strengths. A vertically integrated network downstream capabilities and broad early construction portfolio are differentiators and position us to meet the complexity and scale of these megaproject opportunities better than ever before While residential remains mostly muted particularly in new single construction we remain optimistic for this market over the long term where the housing shortage in the U will be a meaningful source of multi demand On the steel supply side, our low-cost and flexible North American steel network is well-positioned to win in this environment. The domestic rebar market remains highly consolidated, and the import landscape has materially improved compared to just a few years ago.

So, existing Section 232 measures have proven both effective and durable, while recently finalized trade cases against unfairly traded imports have effectively removed hundreds of thousands of tons from the market.

Importantly, rebar imports are beginning to show signs of moderation as arbitrage opportunities diminish. Notably, South Korean imports decreased in September as we have been expecting, and the imports from other sources continue at a fraction of prior year levels. Meanwhile, we continue to see heightened focus across the industry on trade enforcement and ensuring that imported material competes on a level playing field. Taken together, we believe these dynamics support a more rational and sustainable competitive environment where CMC can reap the benefits from its investments made and more fully capture the value we bring to the market. Now, before providing our outlook, I'll ask Paul to go through the quarter in more detail. Paul?

Thank you, Peter. I'll pick up on slide 13. Briefly, at the consolidated level, CMC reported fourth quarter net earnings of approximately $213 million, or $1.91 per diluted share. Similar to the third quarter, we incurred approximately $26.8 million of pre-tax expenses excluded from adjusted earnings, including $19.8 million of non-cash amortization related to acquired backlog. Adjusted earnings increased 21% sequentially. Core EBITDA margin remains an important indicator of the progress we are making. The benefits of our portfolio diversification strategy and TAG initiatives are becoming increasingly evident in this metric. In the fourth quarter, core EBITDA margin increased 100 basis points year over year and 60 basis points sequentially, capping a very strong fiscal year and underscoring the enhanced earnings power of the business.

Within the North American Steel Group, adjusted EBITDA increased 25.2% sequentially to $317 million, driven by TAG benefits, metal margin expansion, and growth in merchant bar shipments. Metal margin increased $42 per ton sequentially to $652, driven primarily by a $32 per ton increase in average selling price. The improvement in average selling price benefited from a richer product mix, including higher merchant bar volumes, which currently carry a meaningful premium to rebar prices.

Meanwhile, scrap costs declined $10 per ton sequentially. Regarding scrap, we expect a relatively stable environment with some upward pressure in the near term correlated to the higher diesel costs we are incurring. Finished steel shipments increased 7.1% sequentially with strong growth across merchant products as well as downstream and rebar volumes. Our downstream backlog increased 15.5% year-over-year and 5% sequentially, demonstrating the value of our differentiated capabilities, particularly on large, more complex projects. North America Steel Group adjusted EBITDA margin expanded to 16.4%, an increase of 220 basis points sequentially and 160 basis points compared to the same period of the prior year. For the Construction Solutions Group, net sales increased 94.5% year over year. Adjusted EBITDA more than doubled, and adjusted EBITDA margin expanded 80 basis points.

Besides pre-caps, which Peter discussed earlier, TENSAR delivered results that were largely consistent with both the prior quarter and the year-ago period, capping a strong fiscal 2026, in which profitability increased approximately 50%. This performance reflects solid commercial execution and healthy activity levels across its core end markets. Construction services and impact metals also delivered strong year-on-year revenue and EBITDA growth during the quarter.

Performance reinforcing steel results were lower due to an unplanned outage at our Galvabar facility that affected shipments during the period. The outage is now resolved and customer demand remains robust, with bookings, backlog, and pricing trends continuing to support a positive outlook for the business.

In Europe, adjusted EBITDA comparisons were affected by CO2 credits received in prior periods. We received credits totaling $30.7 million in the fourth quarter of fiscal 2025 and $20.4 million in the third quarter of fiscal 2026, while the current quarter did not benefit from any credits. Excluding these impacts, underlying business fundamentals in Poland continue to improve. Metal margin expanded $32 per ton year over year, supported by strengthening steel prices. Average selling prices increased $44 per ton versus the prior year and $15 per ton sequentially in the fourth quarter, offsetting a portion of this benefit with energy costs increasing approximately $10 per ton in the quarter. We anticipate energy costs to remain elevated in the first quarter and could potentially increase by a further $10 to $15 per ton.

Market conditions in Europe are becoming increasingly constructive. The implementation of the CBAM and enhancements to the tariff rate quota framework are helping create a more favorable trade environment. Combined with gradually improving demand fundamentals, these developments reinforce our confidence in a continued recovery toward mid-cycle profitability over time.

Lastly, a few comments on the balance sheet and capital allocation and key modeling considerations for fiscal 2027. Starting with the balance sheet, in less than a year, we have successfully reduced net leverage adjusted for acquisitions to below our target of two times. At 1.9 times, this represents significant progress from post-close levels and positions us to pursue our long-term balanced capital deployment priorities of growth and shareholder returns. We expect the balance sheet to strengthen further in fiscal 2027, supported by improving cash flow as capital expenditures moderate. In fiscal 26, total capital spend was approximately $580 million. For fiscal 27, we anticipate capital expenditures to decline by nearly $200 million to roughly $400 million as we cycle past the elevated investment levels associated This is a great opportunity to see the results of the WVC.

This action reflects our confidence in the future of the program. We are looking at our own shares and our conviction that investing in our own shares represents a compelling value creation opportunity.

Lastly, as you think about your Fiscal 2027 models, there are two items worth noting. First, we have just over one quarter remaining of the acquired backlog amortization. This will amount to approximately $20 million in the first quarter and roughly $2 million in the second quarter.

Second, CMC will continue to benefit from meaningful cash tax savings associated with the 48C program, bonus depreciation related to our West Virginia mill investment, and accelerated depreciation on assets acquired through the precast acquisitions. As a result, we do not anticipate paying significant U. S. federal cash taxes through much of fiscal 2027. For modeling purposes, we expect our effective tax rate to be approximately 24% for fiscal 2027.

With that, I'll hand it back to Peter for our outlook. Peter?

Thanks, Paul. As we look ahead to fiscal 2027, we are encouraged by both the external environment and the opportunities within our control. Domestic steel supply remains disciplined. Demand for early-stage construction products is supported by strong backlogs at attractive prices, and our value creation initiatives continue to gain momentum. TAG remains a significant source of earnings growth. Our recent growth investments are transitioning from capital deployment to return generation, and our evolving portfolio is enhancing both the quality and the durability of our earnings. Together, these factors support our confidence that fiscal 2027 will be another solid year for CMC. Specifically for the first quarter, we continue to expect healthy operating performance across the portfolio, though normal seasonal factors and costs will impact results sequentially.

Within our North American Steel Group, improved pricing is expected to largely offset higher scrap costs, startup expenses, and a slight seasonal decline in shipments, resulting in adjusted EBITDA that is expected to be nearly flat in comparison to the fourth quarter. Within our construction solutions group, adjusted EBITDA is expected to be down sequentially, reflecting typical seasonal trends impacting the end market activity in this segment.

In Europe, adjusted EBITDA is expected to meaningfully increase sequentially, benefiting from the improving operating conditions and a CO2 credit. All in all, we remain confident in the operating environment, animated by our priorities, and above all, eager to deliver on the financial and strategic opportunities ahead of us in fiscal 2027.

With that, I will ask the operator to provide instructions before fielding your questions.

Hey, good morning, Sam. Hey, after a relatively soft third quarter you said was challenged by weather, the fourth quarter precast EBITDA number came in, about $20 million short of the number you intimated on the last call. Just given the residential market challenges, is annual run rate EBITDA around that $240,000, $250,000 still the right way to be thinking about this business before you make any more acquisitions?

Hey, Sam, thank you very much for the question. We believe it is, and we think that it's a good target for this year. Sure, when we look at the backlogs in the business, when we look at the progress we've had on integration and, you know, kind of overall momentum, we feel like we can achieve that. We will have some near-term, near-term, by near-term I'm talking Q1, we will have some seasonal weakness, and that seasonal weakness probably leads to a Q1 that's going to be down mid to high single digits from where it is in Q4. But, you know, overall, we remain very positive on this business. I think one thing that's interesting about this is that as residential has declined, it's been filled in by a strong slug of non-res and infrastructure.

And so, again, that's what's supporting our backlog and giving us a lot of confidence in this. And pricing remains very strong in the business. We continue to see pricing rising across the portfolio. So I guess all in all, we remain very confident, and we see this as a continuing strong contributor to our portfolio.

Yeah. Well, I won't speak to flat products, but I'll kind of keep my comments on the products that impact our business. Yes, we did see this significant decrease. We expected it to be a little sooner, but it did happen. And I think the reality is that when you kind of stack up the costs in the current environment of getting rebarred to the U from South Korea it not competitive with where our pricing is even with the current price increases that we just recently put in place And so I think economics are taking care of themselves It taking care of the issue for us for the short term As I said in prior calls and engagements and at the Investor Day where we see that someone is violating our trade laws we are not going to be shy about going after I will be able to monitor them, but right now I think we are going to monitor the situation and we are comfortable with where things stand.

I think it is also a further note that if you look at the countries against which we filed these anti-dumping and countervailing duty cases, they have effectively kind of gone away from the import market. So we are not seeing any material imports from any of those countries, Which I think kind of goes to support the point that I made at the Investor Day and I've made on calls before this that this is durable supply management that we're working on. And again, I'll just remind the audience and you, I know you know this, but those anti-dumping and countervailing duty cases and the duties that come from them, they have a duration of at least five years and generally ten.

Thanks.

Yeah, Fatish, as we look at Europe, I think we mentioned really two factors. The CO2 credit, we are expecting at this stage somewhere between $10 million and $15 million of CO2 credits. Offsetting that in Europe will be the higher energy costs that I cited. We've seen those so far throughout the quarter around $10 to $15 a ton, and so that will erode a little bit into the The Earnings of the business. So those are the two drivers of the Europe space overall. Expect, as we said, a meaningful increase in overall results, but guided by those two factors.

And then on the startup cost for West Virginia Mills. Sorry, yes. And startup costs, as Peter said, we're making good progress on the commissioning space. We anticipate that in the first quarter we'll probably incur extra $3 to $5 million of incremental cost. So what we've incurred in the fourth quarter was in the $9 million, $10 million range. So it's just a slight uptick from that as we start the operation up.

Yeah, I think so. Again, remember on this, we did have some construction weather delays, but we are kind of making great progress on the hot commissioning at this point. We have rolled our first billet, and we are progressing with the startup. I think it's fair to say that we expect this startup to occur over kind of a 12-month period, and we should be break-even after about six months. I think when we look at the overall project, we're super pleased with the fact that we've been able to bring it in kind of effectively on time and effectively on budget.

And I think that's a testament to, as I said in the prepared remarks, the great job that the team's done and the capital discipline that we have as a company. So overall, to your question of the volume, Satish, I think it will be a little less than what you indicated, just given that the commissioning is ongoing and really we'll expect to start the true commission, the startup activities near the end of the first quarter. So we'll probably be a little under 200,000 tons of production in the current year.

Great question, Bill. We will try to fill in some of the detail here. So as we said in the prepared remarks, this is really about weakness in residential and in the southeast, and it's really about volume weakness in that region in residential. And what I think is interesting to note is that the volumes are actually, if we look at the CP&P portfolio, volumes are up and actually almost offsetting all of the volume decline in the southeast. So what that leads to is that you'll remember when we announced these transactions that there was a pretty sharp discrepancy between the margins on the Foley portfolio and the margins on the CP&P portfolio.

Again, this is one of the opportunities in CP&P that we saw is to bring those margins up, but as we're working through the integration, we haven't completed that yet. And so losing volumes in the southeast was kind of painful. It just magnified the EBITDA impact of the lost volume. As I said, the price is not the issue. The price has been going up. We have quarter over quarter price increases and year over year price increases. So, you know, it's very disappointing. It's kind of not how we would have written the script, but what I want to be categorically clear about is that we are not overly concerned.

As the residential has slowed, the non-residential and the infrastructure have filled in the backlog. Our margins, in spite of that volume loss, remained at 30%, which is, again, this is, remember, we're on the front end of an acquisition, so we've got some of the integration costs before we get the benefits of integration. And a lot of the business indicators, I think, point us to confidence here. So bookings, as we noted, up 12.5% in fourth quarter and have continued to rise in the month of September. September pricing, again, as I noted, up backlog, up 4% year over year, 3% in the fourth quarter with growth in September. And the other thing I would say is that the integration is, you know, as proceeded in a really nice way, I would say we are, if anything, ahead of plan.

Our synergy, as we look at the business more, we see more opportunities to do things with it that are going to lead to, you know, kind of higher growth synergies. So on balance, this is a, you know, yes, there's some softness in the market, but one other final point that maybe I'll leave you with is that the residential portion of our portfolio is running at about 50 to 60 percent of kind of what a normal environment would be. So we feel like we've taken much, if not all, of the pain on the residential side. So I'm sorry that's a long explanation, but there's a lot to get in there.

Yeah, no, great question. And we see there's a nice opportunity in MBQ. And remember, one of the things that we've talked about over time is the fact that the portfolio that we have gives us latitude not only to control supply demand by producing fewer rebar tons, but also by producing other products. And this is a perfect example of what we're able to do here with the demand on merchant, which is really kind of a broad-based response to overall strength in the economy.

And so we have been shipping materially more merchant bar. And as we start West Virginia, what that will do is it will free up South Carolina, for example, to produce more merchant products. So as we said in the investor day, we believe that as a starting objective, we think there could be more over time, but as a starting objective, we can get up to a million tons of merchant shipments, and that would imply about 150,000 to 200,000 tons of incremental merchant shipments. So again, it's a nice margin opportunity in the current environment, and it's a nice way to keep the rebar market tighter.

Just one thing to add to Peter's comment. You know, when we disclose merchant bar and other, that's got our merchant bar and the wire rod principally that we produce at our Florida facility. So there's about 150,000 tons of wire rod that we're shipping on an annualized basis. So that supplements to the million-tons target for merchant bar that we have.

Hey, Tim. I wanted to touch base on the recent move up in October for, number one, heavy melt scrap. It looks like $27.50. Does that get fully passed through with the recent increase in rebar prices that you announced? And any thoughts on the timing impact there into the November quarter? Yeah, so thank you, Timna, for the question. It will, and we feel confident that as we go into the November quarter, you're going to see a kind of a gradually improving top line from an ASP perspective. And gradually improving metal margins. So we believe we'll outpace the move in scrap as it filters through our portfolio.

What I'd say is that the demand is good, and it's been good in Poland, right? So we've said that on several prior calls. The challenge has been really on the supply side, and that's where we've been optimistic about the impact of some of these trade policies. What we've seen, however, is that so just kind of rewinding the clock to the beginning of the year, you had CBAM, but then kind of in front of CBAM, everyone imported a lot of steel into Poland. So we had this two- to three-month period where we had to kind of deal with that, and then the markets started to tighten up, and we saw pricing and margins improve, so felt pretty good about that.

And then the safeguards, which took effect in July, same impact happened, where people are kind of bringing material into Poland or into Europe in advance of that. And so we're kind of working our way through that, but we are optimistic that we are on the way to seeing an improving environment. You know, it would be great if we could see some general improvement in the European economies. You know, the fact that the German economy has not improved the way we expected it to is maybe a little cautionary note. But we are optimistic that we can get this business back to $100 million or our, quote, unquote, through the cycle number.

And Tim, just to add a little color, it really is a margin growth that we're looking for to get us to that $100 million level. Within TAG, a good portion of that, both in North America and in Europe, is commercial excellence. There's a strong commercial excellence process going on in Europe to really be selective around the volumes that we want to sell that drive the greatest margins for the business. So this is about us realizing a margin enhancement as opposed to a volume growth.

Great question. We believe that we are, I think, demonstrating the capabilities of the business in the fourth quarter aligned to the targets that we have for 2029. The mass of the organic growth projects, whether that be West Virginia, whether that be through the merchant bar expansion that Peter said, whether it be the Galva bar line or the geogrid line that we're constructing, all of that is close to $200 million of incremental EBITDA that we've talked about there. We've got the ability or the strength in Arizona to continue to enhance the contributions. We've got the growth in the precast business, obviously from where it was in 2026, the full year impact, but also the growth that we anticipate in that business, as well as the mid-teens growth in the rest of the construction solutions group.

So we think the $1.4 billion that we earned in the fourth quarter, recognizing that, you know, the scenario we laid out was a 25% tariff environment, but there is, you know, we're well on our way with all of that growth opportunities to achieve that, Or in today's environment, far exceed the low end of the range based on the way we're performing now in the markets that we're seeing. And Nick, can I just jump in on that to say, you know, you asked the question about does the precast softness change at all? And I want to categorically say it does not. If anything, as I said earlier, we have more conviction in precast, and by 2029, we're confident that we're going to get to where we thought we could get to.

Yeah, thanks, Richard. The vast majority of the $100 million growth is West Virginia. There's a few payments related to performance targets that need to be made, and we expect to make those in 27. So that's well over half of the spend. And then the spend on the GeoGrid line and the Galvabar line, both those will – well, all three of those will be in startup mode in 2027. So their EBITDA contribution will be limited as far as the long-term capabilities of those plants. We expect the Galvobar facility to begin commissioning late in calendar 26, and the geogrid line is continuing to be in the startup and commissioning time now. So that one's most likely to contribute in 2027.

As Peter said, we expect West Virginia to ramp up nicely and within six months of the startup being break-even from an EBITDA perspective. So into Q3 for us on that one. And we expect, you know, just to put a bow on that, again, as we think about maintenance, we've talked about maintenance in the past as $275,000. So going forward, if you think about kind of $50-ish million of growth investments, that's the type of range we would be in for, you know, kind of ongoing CapEx. And, again, I think that one of the things that's really important that we're trying to do across the company is look for opportunities to invest in projects that make our operations more efficient and generate kind of high returns from that.

So you'll see that's where we'll devote most of the growth to. As we've said before, we're not building a new steel mill, anything like that. It'll all be investments in efficiency.

Yeah, I mean, I think, look, we are definitely going to keep some dry powder for M&A. If we think about, we have built a pretty active M&A dialogue across the priority areas. We don't have anything that's significant to do right now, but that works fine because we've got a lot of work to still do on integration and optimizing the precast platform. But, again, returns to shareholders are an important piece. And as you heard what Paul said in his prepared remarks about increasing our share repurchase, and I think looking at our free cash flow and seeing the strength of it, and also looking at the share price, and it looks like it's a very compelling investment at this price, it seemed like it made sense to accelerate the share repurchase.

We announced an authorization of, or we increased our authorization to about $700 million. We increased it by $600 million, but to get to about a $700 million total authorization. We said we intended to do that over three years. What we're saying today is we're going to pull that forward. We'll see how that progresses, but I think you should expect a meaningful increase in the amount of shares that we're buying.

Well, I guess what I would start with is demand. So far this year, we have seen demand growing year to date. I think it is over 4%. And so the good news is that we have the capability to flex our production to meet increased demand. And yes, there is additional capability in Arizona, and there's obviously additional capability in West Virginia. But again, I want to come back to remind everyone that our objective is to kind of keep supply and demand in balance, and the flexibility of our network, given it's a high variable cost network, allows us to do that. So I think we'll have to see how the market grows, but assuming that it continues at this pace, something of that order could be what we'd expect.

I don't know, Paul, if you would add anything to it.

You know, I think what we're particularly proud about, because I think if you look, as Peter said, you know, the market is up 4% to 5% in terms of rebar consumption. Our downstream business, in which we have executed and demonstrated strong, strong commercial discipline in terms of really only looking to take on margin accretive work for the business, And yet we're up 7% on a year-over-year basis. That speaks to the capabilities and the ability for us to do these large mega jobs that are really sustaining the construction activity right now. And those are projects that are not just being done in 2026, but will be multi-year in length. And it gives us confidence as we look forward that those capabilities will be rewarded in terms of lower risk to the contractors, lower risk to the project owners of contracting with CMC, And continue to fuel a real sense of opportunity for us to grow margins and continue a strong downstream pull.

Thanks, Tristan. I'm going to start, and then Paul can walk you through what we're doing in terms of energy procurement. In terms of volumes, we've said demand is good, and we've been running at, I would say, a pretty high rate of utilization in our Polish operation recently. And I would say we expect demand to be kind of stable, maybe modestly better in that marketplace. Pricing, you're right, has been – well, we saw, as I said earlier, we saw in the wake of CBAM, we saw a nice rise in pricing to the tune of $100 a ton. But then we saw, obviously, scrap kind of went up along with it. And with the safeguards coming in and the pre-buy there, you've seen us give some of that, a little bit of that back.

So we are still optimistic, though, that as the inventory pre-buy related to the safeguards filters through, that you're going to see margins expand in that market. So we're, and again, expand gradually in that market. We're not expecting any sea change, so to speak. But maybe, Paul, you can talk about the energy side.

Yeah, on the cost side, you know, earlier I spoke of the focus the team is doing on commercial aspects of TAG. Operationally, the team has done a phenomenal job of, you know, right sizing and, you know, driving costs to where it needs to be from a competitive perspective in the tight market that exists in Europe. And, you know, one of those areas that the team has always been focused on is electricity consumption, but also having the foresight to enter into longer-term energy contracts. And so we have around 50 percent of our electricity head through long-term purchase agreements. These were entered into prior to the Ukraine war, prior to energy costs taking off in Europe. And so really competitively situate the mill in a positive environment.

So combination of a strong hedging process through those agreements as well as a focus on consumption, that drives a significant competitive advantage and hence why we're able to withstand the costs where they are. As I said, we do anticipate energy costs continuing to rise, but expect to continue to be a strong position economically from a margin perspective with those increases taken into consideration.

And, Tristan, the last thing I would just say is just remember as you kind of think forward the next couple quarters, We're coming into the difficult part of the year in terms of the ultimate demand, right? So there's going to be likely some seasonality to the numbers over the next couple quarters.

Well, again, you know, if we think about, I would say what we saw in CBAM, it took longer than what we expected to clear up. So, and I would say to the tune of probably four-ish.

Four to six, yeah.

Yeah, four to six. So, I think we might see the same here. So, by the end of the calendar year, we would expect the benefits, really, of CBAM and the tariff rate quota to start being realized in a more meaningful way.

Well, thank you for the thoughtful questions and for joining us today. Every CMC employee should be proud of what we have accomplished in fiscal 2026 and even more excited about the opportunities ahead. Enabled by their efforts and our collective performance and a clear vision, we believe fiscal 2027 will be another great year for CMC. To our shareholders, we thank you for your support, and we look forward to continuing the conversation over the weeks and months ahead. Have a great day.