Hello everyone and welcome to the Fiscal 2026 Third Quarter Earnings Call for Commercial Metals Company. 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, including the press release and supplemental slides that accompany this call, can be found on CMC's Investor Relations website. Today's call is being recorded. After the company's remarks we will have a question and answer session and we will have a few instructions at that time. I would like to remind all participants that today's discussion contains forward looking statements including with respect to economic conditions, effects 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 timeline for construction of new facilities and expected performance of our recently acquired precast platform the company's operations the company's strategic growth plan and its anticipated benefits the company's ability to achieve its stated deleveraging target within the anticipated time frame legal proceedings and company's future results of operations financial measures tax tax credits, and capital spending. These statements reflect the company's beliefs based on current conditions but are subject to risks 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 and 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 reconciliations for such numbers can be found in the company's earnings release, supplemental slide presentation, or 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. And now for opening remarks and introductions, I will turn the floor over to Peter.

Good morning, and thank you for joining today's conference call. Before we get started, a quick but important housekeeping note. After more than six years of outstanding leadership in investor relations, Jason Brocious is transitioning into a strategy and corporate development role within CMC. Jason has been instrumental to CMC's success and a trusted partner for the investor community. We are grateful for all of his contributions and look forward to his continued impact here at CMC. Joining us to lead our IR efforts is Andy Larkin, who comes to us most recently from his roles leading investor relations at Anglo Gold and Summit Materials, and who brings a decade of IR experience across construction materials, metals and mining, and consumer staples. We are excited to welcome Andy to our team and confident he will further strengthen our engagement with investors. Now, during our fiscal third quarter, we continue to execute our strategic plan. Core EBITDA increased 78.6% year-over-year to $353.6 million, and our core EBITDA margin increased to 14.2% due to metal margin expansion, solid progress on our TAG initiatives, and the addition of results from our recent precast acquisitions. In addition, we continue to make good progress delevering our balance sheet. Despite the significant increase in results, our financial performance in the quarter could have been even better and is not indicative of our full potential. I am pleased with the progress we are making against our strategic agenda. We are advancing CMC towards structurally higher margins, reduced earnings volatility, and more sustainable growth. Underpinning this transformation is a disciplined operating approach that extends across the enterprise. Our Transform, Advance, and Grow program, or TAG, remains a core driver of performance enhancement with initiatives spanning our operations, our commercial organization, and our support functions. We are tracking well ahead of our targeted $150 million run rate annualized benefits for fiscal 26, amplifying existing initiatives to unlock further upside, and replenishing our pipeline with new initiatives. Our results reinforce our confidence that TAG is a durable lever for margin expansion and improved quality of earnings. Meanwhile, integration of our precast acquisitions is tracking on plan. We are seeing early operational and commercial benefits and, most importantly, strong alignment between our teams. Starting with safety, we are rapidly rolling out best-in-class tools and practices across our precast operations to embed a strong safety culture. I am pleased to report that we are already seeing dramatic improvement. Commercially, we are leveraging the broader network of facilities between the two acquisitions to better serve our precast customers while utilizing the vast CMC network to share leads and strengthen existing relationships. Operationally, we are applying best practices, taking advantage of the collective expertise and capabilities across the precast and broader CMC portfolio. One example of this is the sharing of precast forms across facilities to improve production efficiency and better meet customer demand. On balance, we could not be more pleased with how the integration is progressing. At the same time, our organic growth investments are bearing fruit. Our Arizona 2 micromill saw a step change in operating performance reliability during the quarter, increasing to over 75% of capacity utilization, producing a broad product range of both Merchant Bar and Rebar products. Meanwhile, progress at Steel West Virginia is continuing, and we look forward to hot commissioning our newest micromill later this summer. Together, these investments will finish our network of modern, highly efficient, and low-cost mills and position us to serve demand across our key markets for years to come. In parallel, we are also bringing our new GeoGrid line in Blackwell, Oklahoma, online and are making steady progress on our second Galvabar line in Knoxville, which is scheduled to start up late in calendar 2026. Turning now to headline financial performance. In the third quarter, we generated $353.6 million of core EBITDA, the highest level in three years, but with more upside potential. Paul will walk you through the period in detail. But in summary, a challenging sequential quarter in the North American Steel Group was offset by sequential improvement in the Construction Solutions Group and the Europe Steel Group. Our North American Steel Group third quarter performance was impacted by three temporary factors. First, planned maintenance outages at seven of our 10 mills negatively impacted results by approximately 20 million in the quarter and affected available inventory for customers. In fiscal 2026, planned outages were particularly elevated with a concentration in the third quarter. Annual plan maintenance activities in 2026 have run at roughly twice normal levels. Second, metal margins were squeezed by the unexpected strength in scrap costs driven by war-related higher fuel costs. And lastly, weather-related disruptions curtailed construction activity across a number of key markets, including Texas, which delayed customer consumption of rebar. For our precast business, pockets of regional softness and stretches of wet weather also resulted in performance that was below our expectations for the third quarter. Importantly, these factors impacting our third quarter results have proven temporary. Plant outages are now behind us, and our mills are running well. Previously announced steel price increases are in the market, taking hold and yielding higher metal margins. Weather conditions have normalized thus far in Q4, and our steel and precast shipments are seeing strength. Underlying business fundamentals remain firmly intact and in many cases are improving. Downstream bookings grew by more than nine percent on a year-over-year basis in Q3. The value of our precast backlog was up low single digits versus the prior year period. And forward pipeline indicators in our Tensar business point to healthy demand. As related to end markets, the outlook continues to be positive. More than 50% of the IIJA funding is yet to be spent supporting highway construction and general infrastructure spending across our core markets remaining steady. While residential demand remains broadly subdued, pockets of resilience persist in markets such as Charlotte and parts of the mid-Atlantic. Multifamily construction continues to outperform and is expected to remain stronger than single-family. For non-residential markets, demand is increasingly being driven by a growing pipeline of large-scale megaprojects. Investments across data center, semiconductor capacity, and energy networks are driving a multi-year pipeline of construction activity with a significant concentration of these projects in our Sunbelt and East Coast footprints. Importantly, the impact extends well beyond the core facilities themselves. The associated build-out of supporting infrastructure, particularly the power grids, stormwater systems, and utilities, create incremental demand across our steel, ground stabilization, and precast solutions. Moreover, institutional spending to replace aging facilities and accommodate market growth is also very strong. The value customers place in our differentiated capabilities to perform on the complex mega projects across all different construction and markets is showing up in our pipeline and in our backlogs. Customers know they can reduce risk by partnering with CMC and the service and scale and solutions we provide. On the steel supply side, we view the market as balanced with incremental domestic capacity being absorbed while prices are trending higher. While imports year-to-date have been somewhat elevated, we expect them to remain at manageable levels as a result of effective trade policy initiatives, which most recently have led to final or preliminary anti-dumping and countervailing duties against producers in four countries that together imported approximately 500,000 tons of rebar in calendar year 2024. These duties, once imposed, will be in place for a minimum of five years and provide durable trade protection against unfairly traded imports from countries that subsidize and overbuild their domestic industries. It is a further note that elevated ocean freight costs continue to provide an additional buffer for domestic producers. We will remain vigilant on steel supply dynamics and will continue to work towards achieving fair trade and a level playing field. These efforts, together with our increased commercial discipline and focus on value over volume, sets CMC up to more fully capture the value we deliver to the marketplace. A similar, more constructive supply-demand dynamic is beginning to emerge in Europe. Demand is strengthening, driven by steady economic growth, accelerating investment, and the early stages of EU-funded infrastructure deployment. At the same time, supply dynamics are tightening, with the carbon border adjustment mechanism in place and further EU-enhanced trade protections set to take effect July 1st that should create a more level playing field against imports. With that, I'll hand it to Paul to cover details on the quarter.

Thank you, Peter, and good morning to everyone on today's call. CMC reported third quarter net earnings of $173 million, or $1.55 per diluted share. During the quarter, we incurred approximately $25.5 million in pre-tax expenses that were excluded from adjusted earnings. Of this amount, $19.8 million was non-cash amortization of the acquired backlogs, and $2.5 million was incurred to support our integration activities, both of which related to these recent free-cast acquisitions. Including these items, adjusted earnings increased 142.4% year-over-year to $193 million, or $1.73 for diluted share. If you recall, as we discussed in March, purchase price accounting impacts combined with higher interest expense tied to the financing of the pre-cast acquisitions will continue to widen the gap between core EBITDA and earnings before income taxes by approximately $60 to $65 million per quarter for each of the next two quarters. approximately one-third of that quarterly amount will be related to the amortization of backlogs which will conclude in fiscal 2027 third quarter consolidated core EBITDA grew 78.6 percent from the prior year to 353.6 million and core EBITDA margin expanded to 14.2 percent an increase of 440 basis points year-over-year. North American Steel Group segment adjusted EBITDA was up 41% year-over-year to $253.5 million, or $234 per ton of finished steel shipped. Year-over-year growth was driven predominantly by metal margins, which expanded by $111 relative to third quarter 2025, and ongoing contributions from our TAG initiatives. It is important to note that the TAG benefits are captured in most all of our business KPIs. In metal margin improvement, we see the results of our commercial discipline capturing top-line growth, as well as initiatives like our scrap optimization driving lower scrap costs. In our manufacturing costs, we see the results of initiatives like lower alloy consumption or yield improvement. Our SG&A costs benefit from efficiencies of our scale and enhanced technologies. As Peter previously mentioned, adjusted EBITDA margin of 14.2% in the North American Steel Group was up 270 basis points versus the prior year period. For the Construction Solutions Group, net sales nearly doubled year over year to $394.6 million, with $175.7 million contributed from the acquired precast businesses. Adjusted EBITDA increased by $56.5 million, or 138%, to $97.4 million, including $52.9 million contributions from the precast and additional growth from the Tensar business. Adjusted EBITDA margin expanded 400 basis points to 24.7% with the inclusion of CMC's precast business contributing 4.4 percentage points of accretion during the quarter. Based on year-to-date performance and our visibility into the fourth quarter, we continue to expect fiscal 2026 adjusted EBITDA for our precast business, excluding purchase accounting adjustments, to be in the range of $165 million to $175 million. In our pre-cast business, shipments in the Mid-Atlantic and I-95 corridors demonstrated solid strength, while the Southeast experienced weather-related shipment delays during the quarter. Average selling prices for pipe and pre-cast products and backlogs increased modestly on a year-over-year basis. Outside precast, TENSAR profitability accelerated both year over year and sequentially on strong demand conditions driven by the value generation of our InterAX products serving mega projects, principally in the energy and data center areas. Adjusted EBITDA performance for all other businesses within the construction solutions group was relatively stable. Turning to our Europe Steel Group, adjusted EBITDA for the fiscal third quarter was $34.7 million, representing a significant increase versus the prior year. While the results benefited from a $20.4 million CO2 credit, underlying market conditions also improved meaningfully. Metal margins expanded by $37 per ton year over year, driven by a $34 a ton increase in selling price and a $3 per ton reduction in scrap cost. And as Peter noted, market fundamentals supported by both the CBAM and the upcoming strengthening of the EU's safeguard frameworks gives us confidence that this momentum will continue. With respect to our balance sheet, we continue to make progress in reducing net leverage and remain very confident in achieving our target of below two times by mid-2027 or sooner. As shown on slide 14, net leverage adjusted for acquisitions is now 2.1 times, based on adjusted EBITDA, including an estimated run rate annualized contribution from our precast platform. This marks meaningful progress from the net leverage estimate that we provided at the time of the acquisition. Our path to further delevering is underpinned by a step-down in capital spending levels as we finish our micro-mill investments, strong free cash flow generation from our pre-cast platform itself, and meaningful cash tax savings associated with the 48C program and the one big, beautiful bill. We also maintain significant financial flexibility with total liquidity of nearly $1.8 billion and no near-term refinancing requirements. Together, our strengthened balance sheet, ample liquidity, and improving leverage profile position us to return to our long-term capital allocation priorities of supporting strategic growth investments while maintaining an attractive and disciplined approach to shareholder returns. Regarding CMC's capital spending outlook, we anticipate investing approximately $550 million in fiscal 2026. Of this amount, between $300 and $350 million is associated with completing construction of our West Virginia micromill. The balance will be for maintenance and other growth projects, including $25 million for our new pre-cast business, and the high-return growth investments within our construction solutions group that Peter mentioned. CMC's effective tax rate in the third quarter was 8.4%, and on a year-to-date basis was 7.9%, in line with our fiscal 2026 effective tax rate expectations of between 7% and 9%. As a result of several factors, including our 48-C tax credit, bonus depreciation on the West Virginia mill investment, and accelerated depreciation on the assets acquired in CMC's pre-cast acquisitions, we do not anticipate paying any significant U.S. federal cash taxes in fiscal 2026, and not much for fiscal 2027 either. With that, I'll turn the call back to Peter to discuss our fourth quarter outlook and provide some closing remarks.

Thank you, Paul. Turning to our outlook for the fourth quarter, we expect a meaningful sequential increase in core EBITDA driven by several factors. For the North American Steel Group, the absence of third quarter mill outages is expected to provide an approximate $20 million uplift to adjusted EBITDA, with a similar benefit from higher volumes and margin expansion. We anticipate improving pricing conditions with scrap costs remaining relatively stable. We expect sequential mid-teens adjusted EBITDA growth in our construction solutions group, driven by increased contributions from precast and solid underlying momentum across the broader platform. And in Europe, we anticipate modestly higher adjusted EBITDA performance, excluding any impact from CO2 credits. These drivers are underpinned by a healthy demand environment and strong backlog visibility. Taken together with strong execution and continued contribution from our TAG initiatives, we are confident in closing fiscal 2026 on a strong footing. Stepping back, our business remains firmly supported by durable, long-term demand drivers across our end markets. At the same time, we have taken actions to improve the margins of our business and to reshape our portfolio to be more resilient, less volatile, and better positioned to compound growth over time. This is translating into stronger cash flows and a steadily improving balance sheet, providing us the flexibility and the confidence as we undertake capital allocation priorities that appropriately balance growth and returns. All in, we believe these elements firmly position CMC to deliver superior long-term value for our CMC shareholders. Finally, I'd like to call attention to our upcoming Investor Day on August 5th. Our leadership team looks forward to providing a deeper view into CMC's evolution as a leading early-stage construction solutions provider and the steps we are taking to drive the next phase of growth and value creation. The half-day event will chart our strategic trajectory, establish our operational priorities, and articulate our long-term growth outlook. We hope you can join us. I'd like to close by thanking our employees for their continued dedication and our customers for their ongoing trust and partnership. With that, I'll ask the operator to open the line so Paul and I can field your questions.

We will now begin the question and answer session. To ask a question, you may press star and 1 on your touchtone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your question, you may press star and 2. In the interest of time, we do ask that you please limit yourselves to one question and one follow-up. Please note you may rejoin the question queue if you have additional questions. Follow-ups will be taken as time permits. At this time, we will pause momentarily to assemble the roster. Our first question today comes from Nick Cash from Goldman Sachs. Please go ahead with your question.

Hi, team. Thank you so much for taking my question. I just wanted to walk or talk a little bit about the puts and takes within North America in the quarter and then to next. It seems like, you know, there's probably a few moving pieces here from maintenance outages to weather and price increases, et cetera. You mentioned the $20 million impact from maintenance, but could you help us quantify the impact from the other moving pieces in the quarter on the results? And then I guess as it relates to the 4Q26 guide, you mentioned sequentially stronger EBITDA reflecting, you know, a $20 million since in 3Q and then pretty much similar in terms of growth and margin benefits. I'm kind of reading that as a sequential $40 million increase. Does that sound about right? And yeah, I'll leave it at that.

Hey, Nick. Well, thanks for the question. It's a great question, and we will respond to it. I'll ask Paul to walk through the bridge. What I'd like to say to start this is that, you know, Q3 was a good quarter for us, it could have been a lot better. And importantly, we're really happy with the strategy and the progress that we're making and the long-term value that that's going to deliver. And we're really looking forward to Q4 and what the implications are in terms of increased profitability. But with that, let me hand it over to Paul.

Thanks, Peter. And Nick, a little further detail on the items. As you mentioned, the mill outages at seven of our 10 mils, the direct costs associated with those were around $20 million. The weather impact, and I'm going to combine sort of the weather impact, the impact of having lower inventory coming out of the outages as well as commercial discipline, probably all in cost us around 50,000 tons in the North American Steel Group, so all in cost of around $10 million associated with the volume. All of those items, very temporary, as we mentioned in the script, and expect those to reverse in the fourth quarter. And then our expectation going into the quarter was stable metal margins. As you can see, they were compressed slightly in the quarter, And with the price increases that took effect during the quarter, we really see that we'll reestablish those metal margins consistent with where they were prior to this past quarter. So, overall, I think your assessment that the North American Steel Group is on track for about a $40 million quarter-over-quarter improvement from those items. I'll take the opportunity just to talk a little bit about the other segments as well. It wasn't the only confined to the North American Steel Group. Both our construction services group as well as our precast business were impacted by weather, probably to the tune of around $5 million in the CSG segment. And then, you know, just don't want anybody to overlook the European Steel Group having $20 million from a CO2 credit that is now received on a semi-annual basis. So we would expect to receive another one in the first quarter, but will not obviously receive that in the fourth quarter. So put all of that together, we are expecting a quarter-over-quarter improvement in our overall results in the $40 million to $50 million range for Q4.

Awesome. Thank you so much. I'll pass it on. Thanks.

Our next question comes from Samuel McKinney from KeyBank. Please go ahead with your question.

Hey, good morning, Peter and Paul. Hey, Sam. Good morning, Sam.

Given what you've done so far this year, maintaining the full-year precast EBITDA outlook at 165 to 175 implies a pretty heavy lift in the fourth quarter, what are you seeing that gives you the confidence that you can reach this goal for the August quarter?

Great question, Sam, and thank you very much. So the answer is we are very confident we can reach the goal, and let me tell you why. I think it's fair to say that our volumes were a little bit light in the third quarter, and importantly, when we look at our precast business, the timing of shipments and given the regional concentration weather events can affect the results in a quarter. And if we look at Q3, what we saw is that project releases, and by that I mean the time from the order to the first shipment, were delayed by about two weeks. And that was compounded by, you know, really wet weather in the southeast and in Georgia in particular. What we've seen as we go into the fourth quarter is that things have started to normalize. And that, combined with the strong backlog, our backlog is at a record level, give us confidence that we can hit the guidance that we have originally given. Let me also say that the team has done just a fantastic job. And so from an integration standpoint, that gives me additional confidence that we're going to get there. As I've said on previous calls, this team, it's working incredibly well together. So there's a tremendous affinity to the CMC team in terms of the people, and so it lends itself to working together. We are seeing more opportunities every day in this business to make it better and make it stronger. And so I would say, you know, looking at this today, I feel stronger than I did even at the acquisition date. And you know I felt very strongly about this at the acquisition date, that this is a great acquisition and it's going to kind of be a fantastic part of our portfolio. So, yes, we're very confident in the ability to pull this together in the fourth quarter. But more importantly, we're very confident in the long-term impact that this business will have on our portfolio in increasing margins, reducing earnings volatility, and increasing returns across the portfolio.

So, all right.

Thank you, Sam.

Our next question comes from Satish Cassie Nathan from BOA. Please go ahead with your question.

Thanks for taking my questions. My first question is a follow-up on the construction solutions guidance. So you maintain the full year guidance for pre-cast business, which probably would imply like a 20 to 30 million improvement in EBITDA for Q4. And then additionally, Tensor and other businesses should also see a strong seasonally better quarter. Can you maybe walk us through some of the different moving parts? Because it appears the guidance for mid-teens growth is conservative, and there seems to be some upside to that guidance.

Yeah, well, so what I'd say is, no, We're confident in the guidance, and again, as I just responded to the prior question, we do believe the precast business is going to land in the original guidance that we gave. Our Tensar business is performing very well. Our fourth quarter tends to be a strong quarter. We did just have a very strong third quarter, but again, I think the estimates that we have in there incorporate a nice performance in Tensar in the fourth quarter. And then the rest of the businesses in the EBG business should perform kind of in line with our expectations. So I think that guidance is, we feel comfortable with where we are on that.

I think the only thing I would add to that, Satish, is just remember that, you know, the segment results included in the second quarter, the purchase accounting adjustment, that is not reflected as part of our guidance. So you need to reflect that as part of what the construction services group has provided for the full year to get to that guidance for the full year.

Okay. Thank you for the color. Maybe one question on the U.S. REBA market in general. So on the demand side with the recent shift in Fed's interstate outlook and then the potential for date hikes, are you seeing any any change in leading indicators suggesting any delay or slowdown in projects being awarded? And then maybe on the supply side, with imports up 20% year-to-date, mainly from South Korea, how should we look at the near-term supply demand balance, and could we expect some potential trade action against South Korea? Thank you.

Yeah, let me just start by saying demand, and if I heard, Joy, you cut out for a second, but I think your question was about infrastructure demand. Infrastructure demand remains very robust, but for the rains that we have in the central Texas region, we expect that to continue to be very robust. If we take a step back on your broader question of demand and supply, and this is a really important question, Satish, so I'm going to spend a minute on this. So on the demand side, demand is good, right? And we're seeing the apparent consumption in the U.S. is up 3.2 percent this year. So we have a very good demand tape. And from our perspective, if we look at the long-term drivers that we've been talking about consistently across infrastructure, non-residential spending, and ultimately residential spending, there's the potential for demand to be great. So, that's an important backdrop. Now, let's switch over to the supply side. I think the supply side conversation has to start with CMC. And here I want to be categorical about the fact that CMC will not disrupt the supply-demand balance. And what I mean by that is we operate a network of highly efficient micro mills and mini mills that are very flexible. And we are going to work to keep supply-demand in balance and maximize the profitability of our network. That's a very fundamental piece of this. If we look at the new domestic capacity, the domestic capacity, as we understand it, is in the market. And I think there's a super important proof point here, which is that that domestic capacity is in the market, and we are increasing prices. And we've said this for now, actually, a number of years, that this capacity is manageable. We continue to feel that it is manageable. If we shift to imports, imports, I think it's important to say, imports, we expect them to go down in the second half. That's a very important point for people to hear. If we look at kind of where the imports have come from, the big increase in imports has come from one country. That's South Korea. And importantly, when we look at the economics of bringing material from South Korea to this market, it doesn't appear that it's competitive to do so at current prices. So we think there's going to be a natural inclination to reduce the supply in the market from that source. I will also say that we have initiated discussions with the U.S. government about supply from that country and from other countries, and the point being there that we are going to pursue all remedies that we have available to us to ensure that the imports that do come here are fairly traded imports. I also think it's really important to note the progress we've made on our strategy vis-a-vis unfairly traded imports. We filed four cases. We've got final duties against one of the countries, that's Algeria, at 200%, and we've got preliminary duties against the other three countries. And if the levels of preliminary duties get settled into final duties, we believe we will have effectively knocked that tonnage, which amounted to about 500,000 tons, out of the market for about five years at a minimum, at the minimum of five years and potentially 10 years. That is significant and it's durable. And I think it goes to our broader strategy at CMC. We are going to, as I said before, pursue all remedies to neutralize the impact of imports in our market. And that starts with enforcing our trade laws. It goes on from there to, you know, kind of to advancing further progress in our trade laws through level the playing field that will allow us to combat these unfairly traded tons in the future. So bringing this all together, and again, I apologize for the long answer, but I think there's a lot of moving pieces here that need to get put on the table. So this leaves us very comfortable with the supply-demand balance and the ability to sustain it going forward.

Thanks, Peter, for the excellent color.

Thank you.

Our next question comes from Timna Tanner from Wells Fargo. Please go ahead with your question.

Hey, good morning, guys. I guess I could follow up with the last question, and maybe, Peter, just to put some numbers to them. Like, you're bringing on 500 plus 500,000 tons between Arizona 2 and West Virginia, not all rebar. The rebar market's 10 million tons in the U.S., give or take. High bar is adding 700. Next year, we're supposed to get, I forget how many, 500 to 700,000 tons from Pacific Steel, and then another quantity probably the next year from high bar 2. So, I mean, is there enough demand, and how do you run your new mills in light of that magnitude of additional supply?

Well, it's a good question, and I guess I'd kind of follow on the answer that I gave to the prior question. Demand, number one, we think demand is going to grow, and I think that's an important point of view here because, again, if you go back a while when we were talking about what demand could potentially be, it was significantly bigger than the market is currently, and we're seeing demand growth in the market this year, as I pointed out, 3.2%. In terms of the new capacity that's coming into the market, again, as I said before, I think for a player like us, we're going to be rational and we're going to operate it on a network basis. So that means flexing up and down to meet the supply in the market. And again, value over volume is what's going to drive us. And as to the new production in the market, again, with the import strategy that we have and if we think about the trade policy that's been in place, it's bipartisan in terms of 232. And as we see offenders and we update our trade laws to be able to respond more quickly to bad actors, we think we're going to be able to take out the capacity that will make room for these new domestic entrants. So on balance, again, this is going to play out over a couple of years, but so far I would argue we've been right that the conditions are going to remain in a balanced place. And today as we look at the situation. We've been hearing about high bar for kind of years now, and here we are. They're in the market. They've ramped up, and we're raising prices. So, again, we're confident that this is going to play out in a good way, and we're going to be very deliberate about how we execute our strategy to make sure that that's the case.

Okay. Appreciate it, and we'll see what happens. I think If you could give us an Arizona 2 and West Virginia update on how those are progressing, that would be great, please.

Yeah, absolutely. So as you heard in the prepared remarks, in Arizona we made a lot of progress in the quarter. We got up to 75% utilization. We still have the objective to demonstrate full utilization this year. And I would say it's one thing that's very gratifying is that today we are producing the vast, vast majority of the volumes of merchant products that we expect to produce there. So this is not a situation where we're running at higher utilization just because we're producing the rebar. The rebar is we're able to produce that no problem on the mill. And, again, I think we continue to believe that that mill is going to be a workhorse in our organization for the next, you know, several decades, and we're really optimistic about it as a tailwind to our 26 – or, sorry, to our 27 earnings. If we switch to West Virginia, again, super proud of the team there, you know, on a couple of fronts. Number one is, if we look at the project overall, we're coming in right where we expected to be from a capital standpoint. And I know I've talked so much on this call, and I'm going to say it again, you know, capital discipline is critical to what we're trying to do here. And this team has done a masterful job in terms of keeping this project on budget. And if we look at all the projects that are out there in the marketplace, I think it's pretty exceptional what we've been able to do. So super proud of the team on budget and timing as well. Now, we're going to start this up in the later part of the summer. And, again, that is we are probably a little bit behind our original expectation. I think originally we talked about something like June. But, again, we've had 100 days of weather delays. And if we remove the weather delays, we're right on time. So, again, I want to just say hats off to the team in West Virginia. We are ready to go. We've got the operational team hired. It's a phenomenal team of folks from across the CMC network and some new folks that have come in to join the team there, and we're super excited about it. I will remind everyone that this mill is a standard rebar micro mill. It looks a lot like what we have in Oklahoma. That mill runs like a top, so we should not have the challenges that we had in Arizona where we were commercializing some new technology. And in terms of the time frame to ramp it up, I think 12 months is a reasonable estimate. So, but very excited about that.

I think just one thing I would add, you know, as we said throughout the script that the quarter could have been even better and doesn't reflect our full potential. Keep in mind two things. You know, we're carrying the West Virginia project and the costs associated to that. That has been, you know, between $4 million and $5 million a quarter. It will ramp up this quarter to probably double that before we get any real saleable product out of there. So that's built into our outlook for the quarter. And I think Peter mentioned it, but it needs to be stated again. You know, Arizona, from a performance perspective, we look forward. There's tremendous upside to our earnings capabilities once we continue to enhance our utilization of that asset and fully realize the capital we've deployed.

Okay, great.

Thank you, Timna.

Our next question comes from Albert Riliani from Jefferies. Please go ahead with your question.

Hi, all. Thank you for taking my question. Absolutely. Just wanted to touch on maybe capital allocation with the leverage target likely to hit ahead of schedule, possibly in the near future. I guess how are you guys approaching maybe growth versus excess returns? I think you'd previously stated that further bolt-on acquisitions in the pre-cast space were possible. But is that more of like a further out strategy until maybe you fully integrate and realize synergies from the first two acquisitions? And if that's maybe the case, I mean, or any type of organic growth on the steel or downstream kind of product side versus maybe upside the capital returns.

Yep. Thanks for the question. And I'll start, and then Paul can enhance my answer here. So the way we think about it is the two times is kind of a fulcrum point, right? So at two times, when we get to two times, which we're rapidly approaching, as you noted, the green light goes on for the ability to consider new growth opportunities. And at the same time, it also turns the green light back on for shareholder distributions. So we would fully expect to kind of turn on our share or return our shareholder, our share repurchases to a more elevated level kind of post hitting that milestone. Now, having said that, we bought two companies, as you know, not one company, and we're in the middle of integrating those two companies. And we've said in the past, and I'll continue to say, that we are going to get our integration to a place that we're comfortable with in terms of its progress before we really entertain another sizable acquisition. We will consider and we have considered much smaller tucking acquisitions, and we'll continue to do that. That won't be really visible to you. We'll report on that as we progress, but that won't be really visible to all of you. What I would say in terms of acquisitions is that we do want to grow the precast business. We do think there's a good path for us to do that, and we're still focused on building a number one position in that business over time, over time. If we look at kind of other places where we might deploy capital, organic growth, we have a number of projects. We just finished our Blackwell, Oklahoma plant that's starting up right now. That's a geogrid line. As I said, our Galva Bar project is finishing up this year. That's an organic growth project. We have some organic growth across the rest of the portfolio. It's much more capital light than the mill investments. So as we've said in the past, we do not intend to make additional mill investments. The capital we're going to spend in an organic fashion is going to be smaller things that are roundouts to our portfolio and improve our margins, improve our returns. So with that, maybe, Paul, did I miss anything?

Yeah, the only thing I will add to that is really we're on the precipice of a cash flow generation inflection point here. We've talked about the investments. If you look back in our history, we've been building mills now for a number of years, probably going back into the 2015-16 period. Most of the years between then and now, we've been investing in our fleet of low-cost modern mills. As we look forward, CapEx for 2027 is likely to be $200 million less than this year, and that's going to continue to have the final parts of West Virginia spend in it. So that's probably a $75 to $100 million. So with the enhanced EBITDA coming from the West Virginia mill, coming from enhanced AZ2 production, coming from TAG, combined with a lower level of CapEx really will generate a significant amount of cash flow from this business, which gives us a lot of flexibility in terms of our capital allocation and gives us an ability to grow, to return cash to shareholders while maintaining a very healthy balance sheet.

Very, very detailed, helpful answer. Thank you. And then, Paul, just if I may, just want to make sure I didn't mishear you, on the European outlook for 4Q, did you say incremental, even a growth of $50 million, or that could be maybe a range where you guys see yourself at current levels?

Just to be clear, Europe, quarter over quarter, we'll likely see a reduction in EBITDA. If we pull out the CO2 of 20 million, we're likely to see somewhere around 3 to 5 million enhanced operational EBITDA from Europe from enhanced margins. But overall, because pulling out the CO2, the European operations will be down quarter over quarter. So net-net, I think my comment was meant to articulate that CMC's EBITDA likely is up $40 to $50 million quarter-over-quarter.

Understood. Thank you.

Thanks, Albert.

Our next question comes from Bill Peterson from JPMorgan. Please go ahead with your question.

Yeah, hi. Good morning. Thanks for taking the questions, and nice job on the quarter and guide. I might have missed it, but you mentioned that the TAG program is tracking above the $150 million target. I guess maybe just coming to the topic of where you've seen the most success, but also looking ahead where you see the greatest opportunity.

Yep, that's a great question. And, again, I'll just reiterate, I hope you all come to the investor day because we're going to talk a lot more about TAG and share some of the details that I know you've all been looking for in terms of the scope of the program. But, yeah, it's been a tremendous add to our company, and it's for the financial benefits, but also for the mindset change that it's created in the company and the organizational discipline around going after improvements in our business. But to date, I would say most of the benefits have been operational, and we've talked across many calls, Bill, about scrap optimization and melt-chop yields and rolling mill yields and logistics savings and so forth. Those have been tremendous, and they continue to pile up. And what's interesting about it is that this is one of these things where every time you go through a door, you see that there's more opportunity. And that's really the secret of TAG. And when I talk about a mindset change, it's really what we've seen. Commercial excellence is the other part of TAG. And we've gotten some real significant wins in commercial excellence. But it's not as big a piece so far as operational excellence. And yet what I would say to you is that I think that the opportunity for commercial excellence in our business and in our industry more broadly is outstanding and will outweigh the operational benefits that we're getting. So we see significant opportunities in commercial excellence, and we're working hard on that. And, again, it started, I think I mentioned this a couple of calls ago, it started with reducing basic leakage. There's a lot of leakage in our business, and we've really done a good job of reducing leakage in the business on the price side. And then it moves to tools and, you know, tools that help us make better decisions in the marketplace. And thirdly, it moves to having the organization work together. And one of the things that's been so gratifying to see is with this new precast platform, the way the kind of the lead sharing is working, we're getting visibility on projects earlier and earlier. And what that allows us to do is it allows us to engage, and particularly on some of these mega projects, it allows us to kind of be at the table and have a kind of a point of view and influence on what's happening in the project. And, again, we call that value engineering, and typically when we're able to value engineer a project, we can save a lot of money for the owner, the contractors, et cetera, and it creates more opportunity for CMC. So, again, commercial excellence we see as a big opportunity. We have lots of chances to deploy AI to help us there, and we're really excited about what that can be.

Yeah, thanks for that. Sounds like a good sneak preview for what you're going to expand on in August. But secondly, I want to move on to Europe and maybe two-parter there. So, yeah, you talked about various tailwinds forming, whether it be CBAM, enhanced protectionism, infrastructure funding. How should we rank these in terms of the likely benefit to the market in CMC? And then just more of a housekeeping. Last quarter, I think you talked about a potential $10 to $15 per ton incremental cost headwind from the EU energy needs. Where does this stand today? Is this sort of already coming off?

So let me start on the tailwinds, and then I'll flip it to Paul to talk about the cost experience that we've had. But on the tailwinds, we're really optimistic about what we're seeing in Europe. You know, again, I guess there's probably room for some caution in the sense that we've been waiting for some of this for some time. But, you know, if you think about from a regulatory perspective, the CBAM is now in place. We've said and we continue to believe that properly enforced, that should be a 50 euro per ton impact on the price of steel. The safeguards that the European Union has now supported have reduced the quota levels by 50% and increased the tariffs above the quotas to 50%. That will be kind of in place July 1st going forward, and we believe that should have a positive impact. What we've seen is that imports already from non-EU countries have come down, and even within the EU, and I'm pointing to Germany specifically because they've been one of the bigger importers into Poland, we've seen a decline in those imports. So the supply side of the equation, I think, is improving. And, again, the demand side of the equation in Poland was always really good. And there you've got infrastructure spending. You've got these recovery and resilience funds, all the things that we've talked about in the past that are pretty exciting. But maybe I'll flip it over to Paul to talk about the cost.

Before I get on to cost, you know, just one other data point on the demand side and, you know, what we've realized is if we go back from December through till the end of May, we realized around a $75 a ton price increase across our product mix. And that's, you know, more heavily weighted towards rebar, which is really impacted by the imports and the CBAM measure. So we're starting to see those benefits. Over that period of time, we've seen around a $25 a ton increase in scrap, but for the most part, that is margin-enhancing result from a number of factors. It's hard to exactly pinpoint which one it is, but what's exciting is as we look forward, the safeguard measures really should provide further benefits for the business. Now, on the cost side, yeah, we've been pleasantly surprised in terms of the energy costs in Europe. In the third quarter, we really didn't see any increase in energy costs to our business. And now with the hopeful end to the conflict in the Middle East, things will stabilize, and we'll get through this without any adverse increased energy costs. But I think as we sit here today, we're cautiously optimistic but on guard to ensure that, you know, if we do, that we'll have to address that in our costing situation. We're also benefited from the fact that, you know, in Poland we're around 50 percent hedged on the electricity side. So for the most part, these sudden shocks were protected from those impacting our business.

Thanks for all the details, guys.

Thank you, Bill.

Our next question comes from Richard Garchaterina from Barclays. Please go ahead with your question.

Great. Thanks. Good morning. In the interest of time, I'll just keep it to one question, but I'm just wondering if you can maybe talk about your expectations for raw materials and metal margins heading into the fiscal fourth quarter as we saw scrap costs up $28 per ton sequentially in fiscal 3Q. And you also had a number of outages that were planned. So, how should we think about sort of net-net costs as you go into the fourth versus the third quarter?

Yeah, Richard, thanks for the question. You know, as we look at scrap today, we see a lot of stability for the balance of our fiscal year. Really, the scrap cost that we saw increase in the quarter was really the flow-through effect of the increased cost coming through from the winter period and then remaining high because of the correlation of scrap costs generally to diesel costs. And, you know, the costs associated with collecting that scrap maintained a higher than anticipated cost of scrap. But at this point forward, we see things fairly stable. As far as other costs are concerned, the maintenance costs really were fully absorbed and incurred only in the Q3. So we expect those to not continue into the fourth quarter. Otherwise, we see relative stability in our cost structure as we look to the fourth quarter and continue to drive improvements in our operations and efficiencies through TAG.

Great, thanks. And then quickly, on the pricing side, I think one of the competitors had sort of pushed back on pricing in North America last month. Are you seeing any changes in the competitive landscape when you're trying to price rebar, or is that, you think, a one-off type thing and the market should be relatively stable?

Yeah, thanks, Richard, for the question. So we have been increasing prices, and I would say we're very pleased with the progress that we've made on price increases. We are aware that there has been some discounting in the market. But, again, given the demand picture, we don't see the need to move in that direction. And I think what you'll see is that we are – or what I'll say is that we are realizing increased pricing across the country. And you will see in our fourth quarter that our prices are higher and our metal margins are higher. So, again, we feel very comfortable with where we are, and, again, it's supported by the demand profile that we see in the market, and particularly some of these big projects where I think they really lend themselves to a company like CMC that can provide more than just, you know, kind of rebar. So, in any event, we're very pleased and very comfortable with where we are. Great. Thank you. Thank you.

And our next question comes from Tristan Gresser from BMP Paribas. Please go ahead with your question.

Yes, hi. Thank you for taking the questions, and all the best to Jason in his new role. The first one is a follow-up on West Virginia. Could you share a volume target for fiscal 2027 or maybe an exit utilization rate? I think you mentioned a faster ramp-up than for Arizona 2, but any additional color you can share there?

Well, we expect to be fully ramped over the course of 2027.

I guess a volume. So if we assume a linear volume, which won't be the case, but it should approximate your question, we would expect around 250,000 to 300,000 tons next year. That counts for a little bit of an inventory build that we would need to, before we commercialize much of the operation.

And Jason's not going too far. We keep our claws in him.

All right. No, that's clear. I appreciate the color. And maybe on Europe, I mean, yeah, you had that strong volume performance in fiscal Q3. Was it a bit of a one-off or some restocking? Maybe, I think, for the fiscal Q4 guidance, you don't discuss too much volumes, but how we should think about it. And given, yeah, the strong volume performance is there, do you think you can get back to full utilization in the coming quarters on the back of the CBAM and the quarters?

We do. We do. We're very confident in the volume. And as I just said in response to one of the earlier questions, the demand in Poland has never been the issue. The demand is really good, and what's happened is that there's been a curtailment of some of the supply, and that's allowed us to, in a price-efficient way, sell more tons. So, as Paul said, we've increased prices three times already this year, and we're successfully placing those tons. But we don't think this is a one-off, and we expect it to continue.

Okay, very clear. And maybe a quick last one on the CSG. You provided some good guidance for the Q4 level. Would that be a good run rate moving forward in terms of profitability for the division? And if you could just remember, remind us the synergies you expect for fiscal 2027. That'd be great.

Yeah, so when we bought this business, we talked about an annual EBITDA for the business of 250. And, of course, you know, top-line growth in this, we talked about mid-single digits. And that continues to be our expectation for the base business. Synergies, we talked about between the two businesses, a number that's, I think, $35 million to $40 million combined. And we expected to earn that over kind of a three-year period. And year one is going to be more dis-synergy as we kind of absorb the business and bring it up to CMC standards. I think you'll start to see some synergies in year two, and in year three we'll get the full synergies. And as I said before, we are, I think, even more confident in the synergies that are going to come from these acquisitions than we were on the date that we first announced them.

All right. Perfect. Thanks a lot. Thanks, Tristan.

And with that being our final question for today, I would like to turn the floor back over to Peter for any closing comments.

Thank you, Jamie. Amy. At CMC, we're excited about the opportunities ahead. Our strategy is working, our markets are remaining supportive, and our disciplined execution continues to position the business for sustained value creation. With that, I'd like to thank you for your time and continued interest in CMC. We hope you can join us on August 5th for our Investor Day. You don't want to miss that. and we look forward to speaking with many of you in the coming days and weeks. Have a good day.

And with that, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.