Hello, and welcome, everyone, to the Fiscal 2025 Second Quarter Earnings Call for CMC. Joining me today on today's call are Peter Matt, CMC's President and Chief Executive Officer; and Mr. 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'll 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, the expected capabilities, benefits and timeline for construction of new facilities, the company's operations, the company's strategic growth plan and its anticipated benefits, legal proceedings, the company's future results of operations, financial measures 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 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 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 and fiscal quarter. And now for opening remarks and introductions, I would like to turn the call over to Peter. Please begin, sir.

Good morning, everyone, and thank you for joining CMC's second quarter earnings conference call. I will start this morning's discussion with an overview of CMC's second quarter results. I will then provide commentary on current market conditions and share a brief update on CMC's strategic efforts. Paul will cover the second quarter's financial information in more detail, and I will conclude our outlook for the third fiscal quarter of 2025. We will then open the call for questions. As a reminder, additional information regarding the quarter is provided in the supplemental slides that accompany this call, which can be found on CMC's Investor Relations website. Before discussing CMC's financial performance, I would like to highlight our team's outstanding safety performance. You have heard me mention many times that our highest priority is ensuring the safety and well-being of our people. We want everyone to leave their shift in the same condition in which they arrived. The first half of fiscal 2025 marks a new milestone on our journey toward that goal. We achieved a record low incident rate that was consistent with world-class performance. Additionally, and even more impressively, the number of OSHA recordable events was the lowest since the second half of fiscal 2018, when the company had nearly 4,500 fewer employees. I would like to congratulate the CMC team on this great accomplishment and challenge you to keep pushing towards the ultimate goal of zero harm. CMC reported net earnings for the second quarter of $25.5 million or $0.22 per diluted share on net sales of $1.8 billion. The result included $3.9 million of after-tax charges, which Paul will take you through in more detail. Excluding these items, adjusted earnings were $29.3 million or $0.26 per diluted share. Though down from recent earnings levels, I am proud of…

Thank you, Peter, and good morning to everyone on the call. As earlier, we reported fiscal second quarter 2025 net earnings of $25.5 million or $0.22 per diluted share compared to net earnings of 25.8 -- sorry, of $85.8 million and net earnings per diluted share of $0.73 in the prior-year period. Excluding estimated net after-tax charges of approximately $3.9 million, adjusted earnings for the quarter totaled $29.3 million or $0.26 per diluted share compared to $85.9 million and $0.73 per diluted share, respectively, in the prior-year period. Charges incurred during the quarter were primarily related to interest expense on our judgment amount associated with the previously disclosed Pacific Steel Group litigation verdict reached in November. Consolidated core EBITDA was $131 million for the second quarter of 2025, representing a decline from the $212.1 million generated during the prior-year period. Slide 13 of the supplemental presentation illustrates the year-to-year changes in CMC's quarterly financial performance. Profitability of our North American Steel Group was negatively impacted by lower margins over scrap, while EBITDA at both our Europe Steel Group and Emerging Business Group increased compared to the second quarter of fiscal '24, consolidated core EBITDA margins of 7.5% compared to 11.5% in the prior-year period. CMC's North American Steel Group generated adjusted EBITDA of $128.8 million for the quarter, equal to $123 per ton of finished steel shipped. Segment adjusted EBITDA decreased 42% compared to the prior year period, driven primarily by lower margin over scrap costs on both steel and downstream products. We believe this represents a trough level of EBITDA and expect earnings to rise as we enter 2025 construction season and as a result of the -- of increased volume, realizing price increases that have been announced and continued focus on our costs. Controllable cost per ton of…

Thank you, Paul. We expect consolidated financial results in our third quarter of fiscal 2025 to rebound from the second quarter level. Finished steel shipments within the North America Steel Group are anticipated to follow normal seasonal trends as we enter the spring and summer construction season. While our adjusted EBITDA margin is expected to increase sequentially on higher margins over scrap on steel products, adjusted EBITDA for our Europe Steel Group should remain near breakeven as we enter the seasonally strong period of the year and continue to benefit from extensive cost management efforts. Financial results for the Emerging Businesses Group are anticipated to improve to levels modestly above the prior-year period. We are encouraged by recent developments across the various markets in which we participate. Margin and demand trends appear to be improving, which should position us for the upcoming spring and summer construction season. Additionally, conversations with customers continue to indicate optimism about the coming quarters. Before we open the call for questions, I want to reiterate how excited we are about our potential to reach new heights in the future as we execute our key strategic priorities and deliver higher returns and significant value for our shareholders. As we move past near-term uncertainty, CMC is well positioned to benefit from the powerful structural trends in North America that should drive strong construction activity for years to come. I would like to thank our customers for their trust and confidence in CMC and all of our employees for delivering yet another quarter of very solid safety and operational performance. Operator?

[Operator Instructions] And the first question will come from Sathish Kasinathan with Bank of America. Please go ahead.

Yes, hi, good morning. Thanks for taking my questions. My first question is on the U.S. rebar market. You mentioned that you expect improved metal margins in the North American segment. Yet if you see the recent trend in rebar prices, it doesn't fully offset the increase in scrap costs that we have seen in the past three months. And then over the weekend, we saw one of your peers raising prices for merchant and beams and not for rebar. So can you provide some color on what you're seeing on the pricing side and whether you see further room for rebar price hikes in the near future? Thank you.

Yes. Thank you, Sathish, for the question. So we are seeing price increases across -- I would say, across our entire portfolio. Starting with rebar, on the rebar side, we have -- in some markets, we've gotten all of the increases. And in some markets, we've not gotten all of the increases yet, but we expect to get them as we book the future orders here. So on the rebar side, we feel very good about where things are. And I would say that, in our order book, we have continued to keep pricing above movements in scrap. So -- and the other thing I would say is that on -- vis-a-vis our Q2, we don't have much of the benefit of the price increases in there. I know you didn't ask specifically about merchants, but I'll comment on merchant and wire rod quickly. On merchant bar, we have gotten both of those price increases, and we are very confident that they will stick. And in wire rod, similarly, we are confident that, that will stick. And we believe in a market of strengthening demand that there should be room for further price increases as we move into the heart of the construction season. So we're very optimistic about where we stand on pricing.

Sathish, I'll just add, in terms of the scrap cost increase in comparison to some of the indexes with the investment that we have in our vertical chain, what we see generally in our scrap cost increase is going to be directionally but not normally to the same level of the index increase. So that's what we see coming this time, is that we'll benefit from our overall investment in recycling operations and mitigate some of what you see in the index.

Yes. Thank you for that additional color. Maybe one follow-up on the Arizona 2 mill. So can you talk about the financial performance in Q2? Are you close to breakeven? And with higher volumes in Q3, should we expect the mill to turn EBITDA positive?

Yes. So we did not break even in the second quarter. And in fact, we had a challenging second quarter. Not only is it our weakest quarter seasonally, as you know, but we two had transformer outages, and we continue to have a few of the startup issues nagging us. So we did not achieve breakeven in the second quarter. As we move to Q3, we are going to work really hard to get to that level, but I think it's probably more realistic that we cross that threshold in Q4. And obviously, moving into -- or into 2026, we would be -- we'd expect to be continuously profitable.

Okay, thank you. I'll jump back in queue. Thank you.

Thank you.

The next question will come from Timna Tanners with Wolfe Research. Please go ahead.

Hi. Good morning. I wanted to just follow up on the last question to see if we could get a little bit more granularity around North American margins. So the change quarter-over-quarter in EBITDA per ton of about $93.5, is that recoupable in the next quarter? I know there's moving parts and it sounds like on the steel side, maybe, but on the -- maybe you can give a little more color about how to think about any lags in the downstream and how that might -- how to think about the trajectory in the next several quarters of recouping some of that lost margin? Thank you.

Yes. If we look at -- Timna, if we look at the EBITDA per ton on the U.S. business, on a quarter-over-quarter basis, we do see a recovery of much of that in the coming quarter. And I think it comes from a number of different sources. Obviously, as we've talked about, we do expect metal margins to improve. We talked about the copper mark-to-market charge that we had in the quarter that we would expect to not occur again. Obviously, it depends on where copper prices go during the course of the quarter, but that is not certainly something that we forecast in our expectations. And then a couple of other areas of significant improvement that we expect are on the cost side. Not only is the second quarter higher on the cost side for -- in relation to fixed costs and the seasonal shutdowns that occur in our second quarter, but also the higher costs related to some of the harsh weather that we saw driving gas and electricity prices a little bit higher as well as scheduled outages that we had in the quarter. So all in, from an EBITDA per ton basis, we certainly see recovering sort of where we were from Q1 into Q2 and seeing that bounce back in Q3.

Helpful. Thank you. And then for a follow-up, if I could. On the positive side, your volumes were considerably better than we expected, growing like 9% year-over-year in rebar North America and merchants were up 4%. And merchants went up despite seasonality, rebar went down less than normal quarter-over-quarter. So do you think you brought forward some demand? Or can you help us understand, is that just greater production from some of your expansions? What drove that better than at least we expected volumes?

There's probably some pull-forward of demand in that number. But in general, we feel really good about where things are. I mean if we look at our bidding -- I'm talking on the rebar side, if we look at the bidding activity, that remains very strong. You saw our booking numbers and they continue to be strong as we move into March. So we feel really good about where we are on that front. If we look at the merchant side, we see good demand for our products. And I think there's -- in general, there's a level of optimism about the economy that is going to help pull some of that product through the service centers. So we feel good about where that is and think it's sustainable.

Thanks again.

Thank you.

Next question will come from Mike Harris with Goldman Sachs. Please go ahead.

Yes. Thank you. Good morning. Just a quick question around the North American rebar market. If you could, how would you describe the current supply-demand balance? And how do you see utilization rates trending over the next year or so, if you could?

Yes, absolutely. This is a picture we've been watching over the last several quarters. And obviously, the second quarter is our weakest seasonally, and yet it was actually quite strong from a demand perspective. And so we would see the supply demand balance as really quite well balanced right now. And I think that's why you're seeing the opportunity to move prices and our confidence in our ability to move prices. So we know in the case of our mills, we are really -- with the exception of Arizona, where we're ramping it up, we are really fully utilized at this juncture.

Okay. Thanks. And then just as a follow-up, how would you describe the likelihood and potential impact of a composite rebar disrupting the long steel industry? And I guess what factors do you see as most critical in determining its adoption?

Yes. This product has been around for a long time. And what we find is -- in different forms, I should say. And what we believe is that it absolutely has an application in the market, but we don't see it as a material threat to our market position at this juncture. There are some limitations in its application and specifically the challenges of fabricating it and so forth that give it less applicability to the markets overall.

Okay. So more of a niche application, not necessarily an opportunity for broader adoption is one way to look at that, I guess?

I think that's right, Mike.

Thanks a lot.

Yes. Thank you.

[Operator Instructions] Our next question will come from Andrew Jones with UBS. Please go ahead.

Hi gents. Just wanted to ask a couple of questions about like the sort of longer-term drivers here. I mean, clearly, the market has been worrying about the impact of trade policy on end demand kind of on a longer-term view. I mean, I know just some of your structural drivers, the infrastructure investment and so forth, doesn't look it's changed in the presentation, but is there elements of that you see big risk and on some of the nonfederal-driven aspects to the demand spectrum? And where do you see the most risk? And do you have any sense on quantifying any of that? And also, I guess, also a longer term question. I mean, this PSG mill seems to have broken ground. That's obviously going to be coming on at some point after 1.5 million tons or so of new capacity this year. I mean how do you see that market playing out in the longer term because it seems like there's quite a few risks there? Thanks a lot.

Yes. I think just -- let me tackle your questions one at a time. So on trade policy, we continue to believe that even with some of these incremental projects that we're in for a period of very substantial demand. So let's just start with -- you called it out infrastructure. Infrastructure remain strong, we think that's going to remain strong. We don't see anything in the current dialogue that really disrupts that. And then as to trade policy specifically, when we think about trends like reshoring, there's been some really significant investment announcements in the U.S. that are going to be leading to some substantial rebar demands. I'm thinking about Apple talking about investing $500 billion. I'm thinking about TMSC at $100 billion, Eli Lilly at $27 billion. Honda, they're talking about a big reshoring investment. So these, I think, are, in part, consequences, maybe not directly, but certainly consequences of the trade policy. And I think they're going to lead to a strong backdrop of demand for us over the next couple of years on that side of the equation. If I move to your question about PSG, yes, it's an incremental supply in the Mojave region. So it's -- our story is really about growing demand. And as we look at it, we look at the combination of infrastructure, the nonresidential construction spend, the residential construction spend. And there, we believe that you're going to see, across those end markets, substantial demand. So yes, it's additional capacity, we think it's absorbable. And I think the point that's important to make on that project is that it's not going to be producing anything for several years at this point, right? So I think we're comfortable with that project coming to the market.

That's helpful. And just on the cadence of the timing of some of the nearer-term capacity versus your expectations for the demand trajectory over the next year or so, I mean, with that capacity coming in and maybe there being a bit of a lag to some of this demand uplift, I mean, how do you see that playing out over the next few quarters? Do you think the market is going to tighten further? Or do you think it will loosen before it that kind of tightness reemerges? Like what's -- how do you see it playing out over the next 12 months?

I think if we look at the timing of the expected start-up, so first of all, the optimist capacity is already in the market and high bar is coming on a little bit later this year. So -- and Nucor has a facility coming on a little bit later this year. So those have to go through a start-up and these start-ups take some time. So we don't -- we're not really viewing incremental capacity as a '25 issue. And so therefore, I think we think we're going to experience some good strengthening over the course of 2025. And then as we go into '26, we expect a lot of these projects are going to start to be shovel-ready and start to be demanding rebar. So the incremental demand should step up in '26, and that should help absorb the incremental capacity. So we're -- our baseline would be that we stay in a relatively balanced position and therefore, that we can sustain these higher margins that we're talking about.

Okay, that's clear. Thank you. I'll jump on back in the queue.

Thank you, Andrew.

Your next question will come from Timna Tanners with Wolfe Research. Please go ahead.

Guys I didn't hear anyone ask about Europe, so I got back in the queue. I thought, a, can we find out if the $4 million net gas rebate was in your guidance? And b, how do you think about the timing of the benefit from this great, big German stimulus? Is that -- what's -- is that more of a 2026 event as well? And also, for the tariffs, I assume that's also something that would benefit on a lag, the 15% or so cap they're trying to get to on imports, any color there would be great.

Yes, Timna, I'll start on the natural gas and the forecast, and Peter can add some color on the overall market. We did anticipate the natural gas refund. What we didn't necessarily anticipate was the unusual strength in terms of the demand in the Polish market and the metal margin expansion that we saw certainly later in the quarter. And so that's what drove us to the overall black result for the month -- or for the quarter. And as we look forward, as we've said, we think that continuing the good demand backdrop in Poland, continuing with the metal margins at levels similar to where we are today, should enable us to continue with a close to breakeven results in that market, even without a gas credit in the third quarter for us.

And just jumping in on the broader situation in Europe, Timna, what we see is we see a new sense of urgency in Europe. And you mentioned Germany, but I think it's really across many countries and Germany. And so let's start with the European Commission on some of the trade restrictions that should help support kind of steel production and steel margins in the region. So whether it's the melt and poured restrictions, some of the changes to CBAM. These type of things, I think, are going to be generally very helpful for our business in Poland. And then if we get to Germany specifically, again, what's been interesting for me is to watch the pace at which this is all kind of move through the system. So I would expect that some of the kind of trade restrictions that we're talking about from the European Commission could benefit 2025. And then in all likelihood to get a program like the program in Germany ramped up on the infrastructure and the defense spending, that's probably more likely impacting '26, but it could have a strong impact on '26. And I think the other thing, too, that you didn't note, but I think is worth calling out is, in Poland, we're seeing some very significant kind of infrastructure and broader economic investments. We've talked a lot about recovery and resilience on prior calls, but there's an infrastructure bill in Poland that over the next couple of years that will impact bridges and airports and roads, and that will have substantial, substantial impact on the demand for rebar in that market. And there's also a big nuclear project that's being talked about in Poland that will be a multiyear project with substantial demand. And of course, last but not least, to the extent that there's an end to the war in Ukraine, I think we can expect something from the rebuild there. So hard to say what exactly that will be at this point. But over -- I think the kind of overarching comment is, I think there are a number of green shoots that have emerged in Europe that we should be really optimistic about.

Thanks again.

Thank you.

Next question will come from Andrew Jones with UBS. Please go ahead.

Hi. So just a follow-up on the rebar question, the start of the call. Just curious about any differences between the market in the West versus the market in the East. And obviously, given your comments, it sounds like you're getting those price increases above scrap from what you're saying. Obviously, the indices don't track well -- don't seems to imply that. What do you think is being missed by the indices? Is there some regional variation? Or is there some sort of lag? I mean, how do you explain that basically?

Yes. It's -- I mean there are always some regional variations in the rebar market. And I think it's no different from what you're seeing right now. It's just a fact of the market, and it has to do with where the demand is, where the projects are at the time. But again, across each of our markets, what we see is we see a number of kind of projects that are coming to the market and new projects that are being added to backlog and so forth. So we're confident that the demand is going to emerge and that's going to enable us to get price.

Okay. Sure. Thanks.

At this time, there appears to be no further questions. Mr. Matt, I would now like to turn the call back over to you for any closing remarks.

Thank you very much. At CMC, we remain confident that our best days are ahead. The combination of the structural demand trends we have noted, operational and commercial excellence initiatives to strengthen our through-the-cycle performance and value-accretive growth opportunities create an exciting future for our company and one in which we can substantially grow our returns on our invested capital. We are committed to a balanced capital allocation strategy that includes investments in our company's future and a return of capital to our shareholders. Thank you for joining us on today's call. We look forward to speaking with many of you during our investor calls in the coming days and weeks.

This concludes today's CMC conference call. Thank you for your participation. You may now disconnect.