Hello. Welcome everyone to the 2026 First Quarter Earnings Call for Commercial Metals Company. Joining me on today's call are Peter Matt, Commercial Metals Company'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 Commercial Metals Company'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 will contain 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, the expected benefits of recent acquisitions, 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-Ks, 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, Commercial Metals Company 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 call over to Peter.

Good morning, everyone, and thank you for joining Commercial Metals Company's first quarter earnings conference call. I hope each of you had a wonderful holiday season and a Happy New Year. Commercial Metals Company had an exceptional start to our fiscal year as we built on the strategic foundation laid in fiscal 2025, continuing to meaningfully and sustainably enhance our financial profile. The first quarter was one of the best in our company's history, serving as validation that our ambitious strategy is bearing fruit. Strategic actions taken over the last twelve to eighteen months, including the launch of TAG, organizational realignment in critical areas, and the onboarding of key talent and resources to support growth areas, are directly driving bottom-line improvement. We are confident there is much more to come, particularly with the addition of Commercial Metals Company's large-scale precast platform. Our strategic focus remains on transforming Commercial Metals Company into an even stronger organization with higher, more stable margins, earnings, cash flows, and returns on capital. Now let's jump into the first quarter results. For the quarter, Commercial Metals Company reported net earnings of $1.773 billion or $1.58 per diluted share.

Excluding certain charges, which I will take you through in more detail, adjusted earnings were $206.2 million or $1.84 per diluted share. Our consolidated core EBITDA of $316.9 million grew by over 50% from a year ago and nearly 9% sequentially, reaching its highest level in two years. Our core EBITDA margin of 14.9% likewise expanded both year over year and compared to the prior quarter. As outlined on Slide five, this occurred against a good market backdrop with stable demand, limited imports, rising long steel metal margins, and attractive project opportunities within certain construction segments. Though Commercial Metals Company certainly benefited from these constructive conditions, our results were meaningfully enhanced by solid execution that allowed us to capitalize on the opportunities we are seeing across our North American footprint. Let's review some highlights, starting with our North America Steel Group. Commercial Metals Company's mill network had a strong operational performance, which was critical to supporting customers in a relatively tight domestic supply environment and maintaining high levels of customer service. CAG initiative efforts, including the scrap optimization initiatives launched in fiscal 2025, contributed nicely to metal margin expansion. With the program now rolled out across all domestic mills, we are using less scrap per ton of steel produced and utilizing lower-cost scrap blends, increasing the metal margin on each ton. Last quarter, I discussed new commercial rigor in the way Commercial Metals Company approaches opportunities within its downstream fabrication business. The positive impact of this change is only just beginning to be reflected in our financial results, but we are seeing it more significantly benefit our average price in backlog, which represents the work that will be shipped in future quarters. Encouragingly, despite enhanced selectivity in the projects we accept, the volume in Commercial Metals Company's downstream backlog increased…

We remain confident that emerging structural drivers, including investment in U.S. Infrastructure, reshoring industrial capacity, growth in energy generation and transmission, the build-out of AI infrastructure, as well as addressing a U.S. Housing shortage, will support construction activity over the long term. As noted on Slide 10 of the earnings presentation, nearly $3 trillion of corporate investments were announced across related areas in calendar 2025. Commencement of even a handful of these related mega projects could provide a meaningful demand catalyst for Commercial Metals Company in the quarters ahead. Before I move on to our other segments, I would like to briefly update you on the status of the rebar trade case filed with the International Trade Commission or ITC back in June, alleging exporters located in Algeria, Bulgaria, Egypt, and Vietnam are guilty of dumping material into the U.S. Market. In December, the Department of Commerce provided a preliminary ruling against Algeria, finding that producers based in that country are guilty of dumping and subjected them to the maximum duty sought by the domestic rebar industry, which is 127%. While this margin rate could change once the Department of Commerce finalizes its investigation on Algeria in March, we are encouraged by the preliminary results and applaud the department's defense of fair trade. Preliminary rulings are expected in March for antidumping duty investigations covering Egypt, Vietnam, and Bulgaria. Turning to our Construction Solutions Group, current conditions are similar to those just described, with steady activity across most construction segments punctuated by a few hot areas like data centers and large energy projects. Our commercial teams continue to see encouraging signals regarding future activity, including healthy quoting levels and improved velocity of quote conversion to backlog. In addition to these broad indicators of potential demand, we are seeing an increase in attractive individual opportunities that require specialized reinforcement solutions, particularly among bridge and energy projects. Conditions for our Europe Steel Group softened modestly from the fourth quarter. Demand remained resilient on solid Polish economic growth, providing an outlet for healthy shipping volumes, but average price and margin levels were negatively impacted by the import flows. A portion of the price pressure experienced during the quarter may have been related to buyers of foreign material seeking to import product ahead of the European Union's carbon border adjustment mechanism or CBAM taking effect on 01/01/2026. We view this as a temporary overhang and expect prices in our primary markets to benefit from the launch of CBAM, which should increase the cost of some imports, particularly those that have historically been most aggressively priced. The green shoots we have noted in recent earnings calls continue to mature with more emerging. Recent market developments include signals of a coming recovery in residential construction activity driven by declining mortgage interest rates and a need for new housing stock. We are also more optimistic about the prospect of CBAM benefiting long steel pricing.

With greater clarity regarding the terms and implementation now available, our team in Poland believes the program could increase the cost of some imported long products by at least $50 per ton and help support overall market price levels. Wrapping up my comments on the quarter, let me dive more deeply into TAG. This is our enterprise-wide operational and commercial excellence program aiming to drive a permanent step-change improvement to our margins, earnings, cash flows, and ROIC. Fiscal 2026 will be a pivotal year as execution further permeates the organization and as the expected level of EBITDA benefit increases meaningfully. During fiscal 2025, TAG initiatives were primarily focused on domestic mill operations and logistics. This year, we are focused on operational initiatives in every line of business across each segment and are increasing our emphasis on key commercial opportunities. We are also targeting meaningful efficiencies in our SG&A expenses while maintaining our high level of performance. We are pleased with the execution on new initiatives so far in fiscal 2026 and have maintained solid momentum on programs launched in fiscal 2025, including the scrap optimization, mill yield, alloy usage, and logistics benefits that delivered approximately $50 million of EBITDA last fiscal year. Looking at fiscal 2026 and beyond, commercial excellence is a major opportunity where we see significant upside potential through achieving better margins and fuller value realization for Commercial Metals Company's industry-leading capabilities and service levels. For the mills, this comes in a variety of forms, including enforcing grade and size extras, applying appropriate premiums to pricing on special orders, and addressing areas of margin leakage such as delayed price implementation and freight recovery. It will also mean more definitive segmentation of our customer base with clear value propositions to the different customer segments and related commercial terms to…

Thank you, Peter, and good morning. And Happy New Year to everyone on the call. As noted earlier, we reported fiscal first quarter 2026 net earnings of $177.3 million or $1.58 per diluted share compared to a net loss of $175.7 million and a net loss per diluted share of $1.54 in the prior year period. During the quarter, we incurred approximately $36.7 million in pretax expenses, with $24.9 million related to the acquisitions of CP&P and Foley, $3.7 million for interest on the judgment amount associated with the previously disclosed litigation, as well as an $8.1 million unrealized loss on undesignated commodity hedges. Excluding these expenses, which amounted to $28.9 million on an after-tax basis, adjusted earnings for the quarter totaled $206.2 million or $1.84 per diluted share, compared to $86.9 million and $0.76 per diluted share, respectively, in the prior year period. As a reminder, the prior year period included an adjustment for an estimated net after-tax charge of $265 million to reflect an adverse litigation verdict accrual. During the 2026, Commercial Metals Company generated consolidated core EBITDA of $316.9 million, representing a 52% increase from $208.7 million in the prior year period. Commercial Metals Company's North American Steel Group generated adjusted EBITDA of $293.9 million for the quarter, equal to $257 per ton of finished steel shipped. Segment adjusted EBITDA increased 58% compared to the prior year period, driven primarily by higher margin over scrap cost on steel products, resulting in an EBITDA margin of 17.7% compared to 12.3% in the prior year period. Financial results also benefited from continued improved operational performance at Arizona 2, as well as contributions from our TAG efforts. As Peter mentioned, we are driving continued gains from TAG initiatives launched during fiscal 2025 and have more recently rolled out commercial initiatives…

Looking ahead, we anticipate a full-year effective tax rate between 5% and 10% for fiscal 2026. As a result of several factors, including our 48C tax credit, bonus depreciation on our West Virginia mill investment, as well as accelerated depreciation on the assets of the acquisitions of Foley and CP&P, we do not anticipate paying any significant U.S. Federal cash taxes in fiscal 2026 or for much of fiscal 2027. Turning to Commercial Metals Company's fiscal 2026 capital spending outlook, we anticipate spending approximately $625 million in total. Of this amount, approximately $300 million is associated with completing the construction of our Steel West Virginia micro mill, as well as a handful of high-return growth investments within our Construction Solutions group, and approximately $25 million in our newly acquired Precast businesses. This concludes my remarks, and I'll turn it back to Peter for additional comments on Commercial Metals Company's financial outlook. Thank you, Paul. Turning to our outlook, we expect consolidated core EBITDA in the 2026 to decline modestly from first-quarter levels due to a normal level of slowdown within our key markets. This will be partially offset by the addition of Commercial Metals Company's recently acquired Precast businesses. The company will recognize several acquisition-related expenses during the second quarter, including transaction fees, debt issuance costs, and customary purchase accounting adjustments, each of which will be excluded from core EBITDA. Segment adjusted EBITDA for our North America Steel Group is anticipated to be lower sequentially due to normal seasonal volume trends and the impact of planned maintenance outages, while steel product metal margin is expected to remain relatively stable. Financial results for the Construction Solutions Group should improve compared to the 2026, with the contribution of the Precast business more than offsetting seasonal weakness across the segment's other divisions. Europe Steel Group adjusted EBITDA is expected to be approximately breakeven, with margin growth potential later in fiscal 2026 when the carbon border adjustment mechanism takes full effect. The first quarter marked an excellent start to fiscal 2026, and Commercial Metals Company is well-positioned to deliver strong results for the remainder of the year. Solid market dynamics, benefits of our TAG program, and effective operational execution are generating momentum in Commercial Metals Company's existing businesses. This will be supplemented by $165 million to $175 million of EBITDA contributions from approximately eight and a half months of ownership of the Precast businesses in fiscal 2026. Looking out longer term, I am confident that Commercial Metals Company will continue to create value for our shareholders as we remain focused on executing against our strategic initiatives, which we expect to deliver meaningful and sustained enhancements to our margins, earnings, cash flow generation, and return on capital. I would like to conclude by thanking our customers for their trust and confidence in Commercial Metals Company and all of our employees for delivering yet another quarter of very solid safety and operational performance. Thank you. And at this time, we will open the call for questions.

Thank you. We will now begin the question and answer session. The first question will come from Satish Kasinathan with Bank of America. Please go ahead.

Yes, hi, good morning and congrats on the strong quarter and as well as the closing of CP&P and Foley acquisitions. Based on what you have seen in the past three to five weeks since the closing of these acquisitions, can you maybe talk about some of the positive or negative surprises you have seen so far? And do you see any potential for acceleration of the three-year timeline to realize the announced $30 to $40 million in synergies?

Yeah. Thanks, Satish. Great question. Again, with the preface of this is early days, our ownership of this business, I would say that we have been really, very pleasantly surprised with everything that we've seen. And I wouldn't say there's anything that's really come up that we weren't expecting on the negative side. And I'd say there are a number of things that are on the positive side that we've seen. And let me just give you a little story from one of my trips. I went to a CP&P off-site, and it was a gathering of probably 100 folks from CP&P and then a couple of product experts from Commercial Metals Company. And two remarks I'd make that were, I think, super gratifying as a, you know, kind of new owner of the business. First is, in the room, you could have been in a room with Commercial Metals Company folks. The cultural affinity is outstanding. And that was super helpful to see because I think it's gonna make our integration efforts go well. Second was I noted that we brought a couple of Commercial Metals Company product experts and there was a tremendous amount of discussion around, you know, kind of different opportunities that we and CP&P have together and a lot of excitement around that. So that was also super encouraging because it kind of validates the part of our investment thesis. In terms of the synergies, we are, I would say, the work we've done so far leads us to believe that we're very confident that we can get the synergies. What I would say is that it's early to speculate on the timing, and I wouldn't want to accelerate what we've said in the past. But we're very confident that the synergies are there, if not more.

Okay. Thank you for that.

Maybe my second question is on the North American metal margins, which are currently at three-year highs. Can you maybe talk about how you see those margins sustain or improve in the coming quarters given the context that we have some new supply to come into the market?

Yes. Maybe I'll start on this going backwards and commenting on the new supply. So there's been a lot of talk about the new supply and yes, there is new supply coming into the market. I think we've been consistent in saying that we're not overly concerned by the new supply. And that's particularly true in the current context where you've got much lower imports than we've had in previous years. So based on the level of demand as it is today, we feel comfortable that the marketplace can absorb the new supply as it comes in. And if demand gets stronger, which we believe it will, then, I think it's fair to say that there's to be plenty of demand to absorb any new supply that comes into the market. So we feel good about that. Getting to your question on margins, so in Q2, we would expect mill margins, so our steel product margins to be flattish. And that is taking into account the fact that we do expect to realize all of the November $30 price increase. But we also have seasonally stronger scrap in this period and that will offset some of that. And in our downstream, we could see, I think we think it's going to be flat to could be slightly down given the kind of the raw material path through to the fabrication business. But as we go forward, I think the shape of the margins is really going to depend on a couple of factors. One is obviously the supply-demand that emerges in the marketplace. And the second is really our TAG initiative. And I think this is an important point to make on TAG because, you know, TAG is all about growing margins in a sustainable way across our business. And we expect that some of that TAG contribution is gonna come in the form of benefiting metal margins as we go forward. So we're very excited about that. And I think as we go into the back half, there has been a merchant price increase of $50 a ton, we should see a little bit of that in the second quarter, but really most of it is going to be in the back two quarters and any other pricing actions will really set us up for a strong back half of 2026.

Okay. Thank you. I appreciate the color.

Thank you.

The next question will come from Katja Jankic with BMO Capital Markets. Please go ahead.

Hi, and a Happy New Year to everyone. Maybe staying on the more near term, so you expect seasonally volumes to be impacted by seasonality. But can you talk a little bit about what that means? Because it seems that so far we haven't really seen a material impact from seasonality.

Yes. It's a great point. We did have stronger volumes than we honestly than we expected in the first quarter. But going into the second quarter, we are expecting kind of typical seasonality. And remember, in the second quarter, we've got the winter conditions, construction slows down, and typically there's been going Q1 to Q2, there's a 5% to 10% decline, and we'd expect to be in that range. But I will acknowledge that, you know, the volumes have been stronger heretofore.

And then maybe on the West Virginia mill, can you update us on what the ramp-up plan there is?

Yeah. We're super excited about that. You start one of these projects and it seems like a long way off and now kind of we're within six months of the startup. So we've actually started some of the cold commissioning already. The hot commissioning, which is, you know, the official startup is, as Paul noted, likely to begin or will begin in June. And we feel really good about it. And just to comment on West Virginia, you know, given the market conditions, we couldn't be bringing that on at a better time. But the other thing I think that really bears note is the fact that we are bringing this project in on budget. And I have to say hats off to the whole West Virginia team for the incredible capital discipline that they've shown in this project. You know, these are big dollar expenditures. We're spending over $600 million on this project. And there is a lot of examples of projects that are kind of over budget. And thanks to the discipline that everyone's shown, we've managed to bring it in and ultimately that helps us from an ROIC perspective, which is a critical objective for us to improve.

Got you. The only thing I would add to Peter's comments is just recall from a startup perspective, this is a rebar-only mill different from Arizona 2. And so typically, based on our other rebar-only mills and the fact that this is not near the degree of new technology being introduced as we did with AZ2, we would expect to ramp the operation up over the following twelve months once we meet that hot commissioning startup.

Perfect. Thank you.

Thank you, Katja.

The next question will come from Tristan Gresser with BNP Paribas. Please go ahead.

Yes. Thank you for taking my questions. The first one is on the old EBG division. If you can talk a little bit about the outlook for fiscal Q2, also, more specifically, what kind of seasonality usually do you see on the precast business? Is it fair to assume a normalized EBITDA quarterly run rate for Precast? And add a bit of, I mean, because TENSAR has been pretty strong as well. So I would assume maybe a bit stronger on that division, but yeah, we'd love to have your thoughts on that.

Yes. So thank you for the question, Tristan. So EBG, typically, there is, as we've said before, there is absolutely seasonality in that business. As we noted in the prepared remarks, a substantial portion of that, most of the lion's share of that is going into the construction market. So seasonality is definitely a factor in our Q2. It is the weakest period. And I should note that TENSAR in particular with ground stabilization is kind of the most seasonal as we look at that business from year to year. So I think you can expect normal Q2 seasonality in that. Precast, so in our Precast business, we think that will largely follow the seasonality that we have in our business overall. And what I mean by that is our steel business overall. Typically, you've got in the winter months, you've got a reduction in the amount of activity that you see, and we expect that to be the case too. So this is maybe not part of your question, but I'll go to it directly to say, we expect in the second quarter the Precast business to contribute about $30 million of EBITDA roughly speaking. Which will seem lighter and that goes entirely to seasonality. And as Paul noted in his comments, the backlogs that we're seeing are very strong. They're stronger than last year. And so we feel very good about the prospects for that business going into our ownership in 2026.

Alright. No, that's very clear. Going back to your prepared remarks on scrap sorting, how much of a benefit it's been, can you give us some numbers? And what you've been doing and how has it changed today versus what you used to do in the past? In terms of using less scrap and varying the quality of the scrap, any color there would be great.

Yeah. I'll start and then Paul can jump in with any additional comments. But I guess what I'd start by first saying is that in the past, we talked about the scrap optimization being, I think it was a $5 million to $10 million opportunity. And that has grown substantially. And I think the key point is that we started out in a couple of mills and now we're pushing it to other mills. So we're getting the benefit across our broader footprint. And there are two points, as you said, one is in the quality of the scrap. We've done a tremendous amount of work in the quality of the scrap and we've identified places where, for example, we're using a lot more shred than we need to use. So we can cut back on the shred and that obviously kind of reduces scrap costs and so forth. We've also done a tremendous amount of work on yield, and that has helped us a lot in terms of obviously using less scrap to produce the tons and sell the tons that we want to produce and sell.

The only thing I would add, Tristan, is, you know, as we've noted, what we achieved last year was approximately $50 million from TAG. And I would say those two initiatives, just given the dollars involved, Peter outlined, probably were near half of the realization that we had last year. And as Peter said, those were on, you know, piloting the initiatives in a few locations and growing throughout '25 and '26 and an incremental number of mills to get it across the entire platform. And so we are very excited about the opportunity of those initiatives to continue to contribute well to our business.

One thing that's maybe worthy of an additional comment vis-a-vis TAG is, and this goes for a lot of our TAG initiatives. What we found is that on something like scrap optimization, it started out in one mill. And then you start to see these real benefits in the mill. And, of course, every mill manager wants to run their mill as well as they possibly can. So there's been this kind of compounding effect as more of the mills take it on and bring it into full bloom. So and that's, I think, a characteristic of the TAG program in general. And one of the things that we're super excited about, we see a new initiative coming in and sizable new initiatives coming in. And we got to build charters and plans around these different initiatives. But you can see how this can be really a game-changer. And as we've talked about in the past, again, the goal is long-term sustainable margin improvement over what we would be otherwise, right? So if x was our historical margin, we want to be at x plus Y. And we're working internally on some tools to help you all define that, but we believe that there is through TAG the opportunity to make our business durably better. And I think that'll be a really important contributor to value.

Alright. That's very helpful and interesting. Thank you.

Thank you. The next question will come from Alex Hacking with Citi. Please go ahead.

Yes. Hi, thanks. Good morning. Happy New Year, everyone. I guess the first question, you mentioned increased commercial selectivity in rebar fab and part of that was about reducing risk. Has counterparty risk been rising and is there a reason why? Thanks.

Why reduce, so let me just make sure I understand your question. Why were addressing that point? Sorry, the question was, has counterparty risk been rising and why has counterparty risk been rising if it has been rising?

Yeah. I wouldn't say it's been rising. I would say this is a risk that we have taken historically that we are looking to reduce in the portfolio. And where it manifests itself is, Alex, in our fabrication business and some of the contracts will be asked to do longer-term jobs. And a lot of times, those longer-term jobs can be at a fixed price. And of course, our raw material inputs can change. So you can get out two years or three years and there have been some instances with this company in the past and I'm sure others where you can get upside down on a project. And what we're trying to do is to reduce that risk by making sure either through proper escalators, proper indexing, that we are being compensated for that risk. So that again, it goes back to the ROIC point that in any environment, we are generating a good return on the capital that we've put in, which is substantial on a business like this.

And I just to reiterate, and make sure it's clear, you know, counterparty risk, we have historically never had an experience of significant counterparty risk and nor do we see that really going forward with the structure of how the construction contracts are written. This is all about reducing the risk, Peter said, around margin preservation and ensuring we're getting a good margin on the job.

Oh, I get it. Thanks for the clarification. I guess I misinterpreted. And then on Europe, as you mentioned, the importance of getting ahead of CBAM. How do you have any idea, like, how long it could take for prices in Europe to stop benefiting from CBAM? Thanks.

Yeah. So again, it took effect January 1. And our read on the situation is for certain importers, the average impact on them could be €50 a ton. And for many of them, it could be higher initially because they have to be qualified to get to the €50 a ton. And before they're qualified, there's a default rate that's even higher. So this is going to play out over the course of calendar 2026. I think it's fair to say you've probably noted in the import numbers that there was a large pre-buy of incremental tons coming into Europe that probably before CBAM, excuse me, that will probably delay the impact of the CBAM credit that we should be getting. But I do believe by the time we get to the, we'll get a little bit of it in our second quarter and in our third and fourth quarters, we should see a substantial portion. And certainly, over the course of the year, the calendar year, it will roll in. The other thing to note is that in addition to the CBAM, there is also this safeguard mechanism that was renegotiated by the EU. And the safeguard mechanism, remember, that's effectively a quota system. And in the revised safeguards, the quotas are reduced by 50% and the tariffs for being above the quotas are increased by 50%. That should come into effect in the middle of the year and that should be only additive to the situation in Europe. And just to frame it a little bit for you, if you think about our production capability in Poland, and you think about the $45 million of CO2 credits we get, that's about $30 a ton above our breakeven operational performance today. And then add €50 to that, all of a sudden, start to get to numbers where we are running at levels at or above our through-the-cycle performance. So again, this is not something that's going to happen overnight, but in addition to all the other catalysts in Poland, I think it's reason for some real optimism.

Thanks and best of luck.

Thank you.

The next question will come from Timna Tanners with Wells Fargo. Please go ahead.

Yes. Hey, good morning and Happy New Year. I wanted to tailor my questions to trade. So you talked about the CBAM implications helping pricing, but I think another aspect of CBAM is that it helps domestic producers in Europe perhaps take some market share. So curious about, you know, what volume impact you might see there? And then I have a follow-up on the U.S. Trade side.

Yep. I think that's a fair point that you're making. And I think there are some volume opportunities. We have been running at, I would say, a relatively good rate of production recently. So I think there is some volume opportunity for us. But I wouldn't say it's huge at this point.

Okay, great. Second question on the U.S. Side, I know you mentioned, of course, Algeria, Bulgaria, Egypt, Vietnam. But if you look at the latest trade data, actually, imports are coming again from Turkey and from what I think Portugal and Spain. So just any thoughts on the Turkish side and also maybe Portugal and Spain keep more production domestic in that falls off. But it does seem like the other countries before you mentioned are already shrunk in terms of importance probably because of the filing of the case even before any decision.

Yeah. No. It's a great point. We've definitely seen some pullback in the imports from those countries. And I'll just remind you, and others that those countries in 2005, the trade case countries imported about 500,000 tons of steel into the U.S. So if there was an outcome that's anything like what we have on the Algeria case and a preliminary ruling, I think that's going to be really helpful in terms of keeping those imports out of the country. And remember on those trade cases, these are five-year terms before the sunset review. So it's quite a durable point. I think to your question on Turkey, we have noticed that Turkey has increased their shipments. We'll have to watch that. Again, in the context of overall imports today, not overly concerned about that. But again, we'll be watching that carefully to see to make sure that it to make sure that what they're importing, they're importing as a fair trader.

Got it. Yes, seems like imports could take yet another leg down. But thanks for the color and all the best. Appreciate it.

Thank you, Timna.

The next question will come from Bill Peterson with JPMorgan. Please go ahead.

Yes. Thanks, everyone. Happy New Year, and thanks for all the color on the call thus far. I wanted to ask about AZ2, how the ramp has progressed during the prior quarter and what utilization you're running at? And then how should we think about operations and utilization ahead?

Yeah. AZ2, we've said in the past that this has been a challenging one. And my comments will cover that a little bit. But I think the important point is we reached profitability on EBITDA in the fourth quarter and we were nicely profitable in the first quarter too. And we expect to be nicely profitable throughout the year there. In terms of utilization rates, we exited last year at about 60%. We expect to demonstrate full run rate during our fiscal year 2026. But we don't expect to be at full run rate in 2026. And that is because we still have a number of merchant specs that we've got to perfect and that's going to take some time and it'll force us to run at, you know, kind of suboptimal utilization. But we feel good about where we are. There's still some challenges there to be clear. But the team has done an incredible job. And this is where I think the Commercial Metals Company team really shines because we have drawn people and expertise from all across our network to help us with this operation. And remember, the challenge is this isn't your grandfather's steel mill, so to speak, right? This is a very innovative steel mill. It will be a workforce in our portfolio, but there's a lot of new technology to make work. And the other challenge that we've had there, Bill, is just with kind of the people not from the vantage point of the people good, the people are great, but it takes some training to learn this. And so we've done a lot of work around training, and I think that's enhancing our reliability substantially and it will continue to do so as we go through the year. So hopefully that helps you.

Yes, it does. Thanks for that. And then my second question, can you speak a bit more to the pricing profile of your downstream backlog and whether new order entry continues to be priced higher? What's in the backlog? And I guess to what extent is the commercial discipline TAG initiatives you spoke of earlier playing a role?

Yes. Absolutely. So we do continue to see prices improve in our downstream. So we have been really for the last couple of quarters putting new orders into the backlog at higher prices. So that continues and we feel good about that progression and actually kind of starting out the year, we've had a couple of new orders that have come in a really nice place. So I think we feel good about that. And again, demand in that business remains very solid. And so there's a lot of project activity and a lot on the drawing board. So we're optimistic about where things go there.

Thanks again.

Yes. Thank you.

The next question will come from Carlos De Alba with Morgan Stanley. Please go ahead.

Yes. Thank you very much. Happy New Year, everyone. So maybe just adding to the discussion on the new commercial approach in the fabrication business. How much of your business is already in this indexed format where you are able to maybe better protect your margins? And how do you see that evolving in the coming quarters in still not a big percentage of the overall business?

Yes, it's not a big percentage today. And the openness to it among the customers can vary. Right? So there are some DOTs, for example, that are more inclined to it than others. So we're working from a relatively low base on that, but we do see the opportunity to increase it and to open the dialogue with customers on indexation. And indexation is just one of the strategies, right? The other obvious strategy there is just proper escalation. And when you talk about commercial excellence, one of the things that we've been, I think, showing the team's done an amazing job on being more disciplined about this is in making sure that number one, we have proper escalators in place. And then number two, that we're actually enforcing those escalators as we go through, you know, kind of go through the period. So this is a journey, but the way we think about it internally is that over time, it doesn't make sense for companies like Commercial Metals Company to take this type of risk in the way that we've been taking it. And over time, we will work towards reducing that. And that will again contribute to higher margins through the cycle, higher returns, more consistent returns, all the things that we're pointing towards.

And Carlos, I would just add, you know, what we've spoken of is really around protecting the risk from a duration perspective. There's also recognizing the value that Commercial Metals Company brings from a reliability perspective. And I think that is also critical in terms of our capabilities and ensuring we get value for the service we bring. There's a tremendous amount of risk to a construction project that comes with all the subcontractors. Having a reliable partner as Commercial Metals Company is drives a higher value recognition. And we got to make sure we capture that.

That makes sense. And then what is the EBITDA margin that your $160 million to $170 million EBITDA guidance for CSG represent? And would you say that this guidance, this EBITDA guidance is somewhat conservative given that you're just starting to take over those assets?

Yeah. I mean, Paul, you can comment on the margin, but I would say, look, it's early days, right? And we're doing a lot of work on integration. As I said at the very beginning, we feel kind of good about what we've seen. But there's some adjustment that has to happen as you bring a new company into our company and so maybe we're being a little bit conservative, I think it's appropriate to be cautious and again, our goal with all of you and with all of our investors is to be in a situation where we are under-promising and over-delivering and that's what we're shooting to do here.

And as far as the margins are concerned, it'll be made up of the two buckets. Our existing business typically is in the high teens, call that 18% to 20% margin. We would expect that to remain there. And the Precast business to come up, the combination of the two entities to be in the 30% to 35% range from a margin perspective. So no change. Obviously, it's just a different mix going forward than what we've had historically.

Yeah. Great. Thank you, Paul. Yeah. I misspoke. A period $165 million to $175 million EBITDA guidance is not for CSG. It's for the Precast unit. Thank you very much. Good luck.

Thank you. The next question will come from Mike Harris with Goldman Sachs. Please go ahead.

Yes. Good morning. Thanks for squeezing me in. Just one quick question on my part. When I look at the TAG program, I think last quarter, the expectation for the expected run rate annualized EBITDA benefit at the '6 was greater than 150. And now you're saying 150. So does that change just a function of timing? Or did you adjust your initiative list? Or just being conservative?

No. I don't think it was greater than 150. I think we have moved towards 150 as we've gotten more clarity on the opportunities in TAG. And by the way, as we've said in many other forums, this is just the beginning. Right? So it's not like 150 is the end. As we get more fidelity around this, we will share more. What we're really doing in TAG is we're trying to build durable margin improvement. So rather than throw lots of programs in that we haven't fully vetted or we haven't done the work to make sure that they deliver and they deliver in a sustainable way, we're proceeding a little bit more slowly. But I think the outcome will be something that's more lasting.

Okay. Thanks a lot for that clarification.

Thank you.

The next question will come from Phil Gibbs with KeyBanc Capital Markets. Please go ahead.

Hey, good morning. Sorry if this question was asked earlier, but what is the typical seasonality of the North American business from a volume standpoint relative to Q1?

Typically, Phil, it's in the 5% to 10% range that we expect. Obviously, it's very much weather dependent and we've seen some inclement weather on the West Coast. Certainly, nationally, it's been pretty good so far, but we were only in the early innings of the winter. So typical is 5% to 10% and that's what we're guiding towards.

Thank you. And then in terms of integrating just baseline depreciation, I'm assuming you're going to have some write-ups associated with the Precast deals. I think your baseline for D&A was like $70 million or $75 million in Q1. So what should we be anticipating for Q2?

Yes, it's a great question, Phil. And as we have owned these businesses just for a short period of time and the complexity of some of the purchase accounting, we're not in a place from a D&A perspective, well, really, amortization perspective to provide guidance. There's a lot of intangibles associated with the businesses and they all have different valuation approaches and durations. And so what we know is cash flow, the cash flow of these businesses will be certainly very attractive as we outlined at the acquisition. We were able to achieve the financing at very attractive rates in November and excited about the conclusion of the financing. But as far as the accounting, we are not yet in a position to really provide much outline in terms of what the amortization will be.

Thank you.

Thank you.

At this time, there appear to be no further questions. Mr. Matt, I'll now turn the call back over to you.

Thank you, Nick. At Commercial Metals Company, we remain confident that our best days are ahead. The combination of structural demand trends, operational and commercial excellence initiatives to strengthen our through-the-cycle performance, and value-accretive growth opportunities create an exciting future for our company. Thank you for joining us on today's conference call. We look forward to speaking with many of you during our investor calls in the coming days and weeks.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.