Post Earnings Coverage as Commercial Metals’ Q1 Results Lagged Behind Estimates

Upcoming AWS Coverage on Nucor Post-Earnings Results

LONDON, UK / ACCESSWIRE / January 12, 2017 / Active Wall St. announces its post-earnings coverage on Commercial Metals Co. (NYSE: CMC). The Company posted its financial results for the first quarter fiscal 2017 (Q1 FY17) on January 09, 2017. The Irving, Texas-based Company’s net sales were down by 7% y-o-y; while earnings from continuing operations declined 72% y-o-y. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Commercial Metals’ competitors within the Steel & Iron space, Nucor Corp. (NYSE: NUE), announced on January 06, 2017, that it will release its fourth quarter earnings results on Tuesday, January 31, 2017, at 2 p.m. ET. AWS will be initiating a research report on Nucor in the coming days.

Today, AWS is promoting its earnings coverage on CMC; touching on NUE. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=CMC

http://www.activewallst.com/registration-3/?symbol=NUE

Earnings Reviewed

In Q1 FY17, Commercial Metals’ net sales fell to $1.08 billion from $1.15 billion at the end of Q1 FY16. Net sales numbers for Q1 FY17 also fell short of market consensus estimates of $1.14 billion. The drop in quarterly net sales was primarily attributed to decrease in the average selling prices and volumes for Americas Mills, Americas Fabrication and International Marketing and Distribution segments.

The manufacturer and recycler of steel and metal products reported earnings from continuing operations of $7.17 million, or $0.06 per diluted share, in Q1 FY17 compared to $25.63 million, or $0.22 per diluted share, in the prior year’s comparable quarter. Wall Street had estimated the Company to report net earnings from continuing operations of $0.17 per diluted share.

Operational Metrics

In the quarter ended on November 30, 2016, Commercial Metals’ costs and expenses totaled $1.07 billion compared to $1.12 billion in the year ago same period. The Company reported earnings from continuing operations before income taxes of $9.83 million versus $37.41 million reported in the year ago comparable period. The Company’s adjusted operating profit from continuing operations fell during Q1 FY17 to $23.35 million from $56.06 million in Q1 FY17, primarily dragged by performances of Americas Mills and Americas Fabrication segments.

Segment Performance

Commercial Metals’ Americas Recycling segment net sales fell 1% y-o-y to $176.71 million in Q1 FY17. Net sales was positively impacted by a $13 per short ton increase in average ferrous selling prices and a 4% y-o-y increase in ferrous tons shipped. Meanwhile, average nonferrous selling prices also increased by $35 per short ton. However, total nonferrous shipment decreased 6% y-o-y. The segment reported adjusted operating loss of $5.10 million in Q1 FY17 compared to adjusted operating loss of $6.55 million in the prior year’s corresponding quarter.

The Company’s Americas Mills’ segment net sales dropped 10% y-o-y in Q1 FY17 to $347.17 million due to a decrease in average selling price by $57 per short ton and a 1% y-o-y decrease in tons shipped. Furthermore, the segment’s adjusted operating profit for Q1 FY17 was $36.95 million, lower than $59.06 million recorded in Q1 FY16.

Americas Fabrication segments’ net sales fell 11% y-o-y in the reported period to $338.40 million, primarily due a 12% decrease in the average composite selling price. Furthermore, the segment’s adjusted operating profit fell to $6.71 million from $21.35 million in the year ago same quarter.
During Q1 FY17, International Marketing and Distribution segment’s net sales also declined 12% y-o-y to $248.16 million, primarily due to a decline in volumes sold of a high value product in the portfolio. However, the segment’s adjusted operating loss narrowed during the reported quarter to $0.97 million from $2.17 million in Q1 FY16.

International Mill’s segment increased 12% y-o-y to $134.40 million in Q1 FY17, as there was a 14% increase in tons shipped, which was partially offset by a 3% decrease in average selling price. The segment’s adjusted operating profit surged to $9.97 million in Q1 FY17 from $2.77 million in the last year’s corresponding quarter.

Cash Matters and Balance Sheet

In Q1 FY17, the Company used $0.95 million in its operating activities compared to net cash flows from operating activities of $219.57 million in the last year’s comparable quarter. The Company had cash and cash equivalents balance of $465.17 million on November 30, 2016, which came in below $517.54 million as on close of books on August 31, 2016. The Company ended the quarter with long-term debt of $755.16 million compared to $757.95 million as on August 31, 2016.

Dividend

In a separate press release on January 04, 2017, the Company’s Board of Directors declared regular quarterly cash dividend of $0.12 per share, which will be payable on February 01, 2017, to all the shareholders as on January 17, 2017. The upcoming dividend payment would mark Commercial Metals’ 209th consecutive quarterly dividend.

Stock Performance

On Wednesday, the stock closed the trading session at $20.93, slipping 1.69% from its previous closing price of $21.29. A total volume of 2.54 million shares have exchanged hands, which was higher than the 3-month average volume of 1.82 million shares. Commercial Metals’ stock price rallied 35.14% in the last three months, 19.24% in the past six months, and 59.84% in the previous twelve months. The stock is trading at a PE ratio of 33.60 and has a dividend yield of 2.29%.

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