Commercial Metals Company (CMC) today announced financial results for its fiscal second quarter ended February 28, 2023. Net earnings were $179.8 million on net sales of $2.0 billion, compared to prior year period net earnings of $383.3 million on net sales of $2.0 billion.
In a press release, the company said that demand for its finished steel products in North America remained healthy during the quarter, though construction activity slowed in certain geographies due to weather-related disruptions. Downstream bid volumes, a significant indicator of the construction project pipeline, improved from a year ago, resulting in expansion of contract backlog volume and value levels compared to the prior year period, CMC said. Demand from industrial end markets, which are important for merchant products, were stable on both a sequential and year-over-year basis.
Shipment volumes of finished steel, which include steel products and downstream products, were relatively unchanged from the prior year period, CMC said. Volume growth was constrained by weather challenges that included freezing and icy conditions in Texas and Oklahoma and flooding in California. The average selling price for steel products decreased by $56 per ton compared to the second quarter of fiscal 2022, while the cost of scrap utilized declined $90 per ton, resulting in a year-over-year increase of $34 per ton in steel products margin over scrap. The average selling price for downstream products increased by $249 per ton from the prior year period and $19 per ton on a sequential quarter basis.
For the Europe segment, average selling price decreased by $95 per ton in the second quarter compared to the prior year period, while the cost of scrap utilized declined $55 per ton. The result was a year-over-year decline in margin over scrap of $40 per ton. Average selling price and margin over scrap also decreased on a sequential basis by $36 per ton and $59 per ton, respectively.
As for an outlook, Barbara R. Smith, Chairman of the Board, President and CEO, said, "We remain confident in our outlook for financial performance in fiscal 2023, and we expect to generate sequential improvement in core EBITDA during the third quarter. North America finished steel product shipments are anticipated to improve from second quarter levels due to normal seasonality, the recovery of volumes delayed by weather disruptions, and the support of a historically high downstream backlog. We expect current and new industrial projects, as well as growing levels of state and federal infrastructure spending, will support CMC's North America volumes in the quarters ahead. In Europe, we anticipate seasonal improvement, and expect shipment levels will remain above the long-term historical average due to the enhanced production capabilities of our facilities."
Smith added, "In the third quarter, we look forward to commissioning our Arizona 2 micro mill, representing the next phase of growth at CMC, and we also anticipate that recent North America long steel price increase announcements will stabilize metal margins at historically high levels. At the same time, the third quarter will be impacted by a scheduled upgrade project similar in magnitude to the planned outage taken during the second quarter."