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Commercial Metals (CMC) Earnings & Sales Top Estimates in Q1

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·4 min read
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Commercial Metals Company CMC reported first-quarter fiscal 2021 (ended Nov 30, 2020) adjusted earnings per share of 58 cents, beating the Zacks Consensus Estimate of 57 cents. The figure, however, declined 20.5% year on year.

Including one-time items, the company recorded net income of 53 cents per share in the fiscal first quarter compared with the prior-year quarter’s 69 cents.

Net sales for the reported quarter came in at $1,392 million compared with the year-ago quarter’s $1,385 million. The reported figure beat the Zacks Consensus Estimate of $1,362 million.

Cost of goods sold in the quarter was up 2.5% year over year to $1,175 million. Gross profit was down 9.2% year over year to $217 million during this period. Core EBITDA was $157 million in the fiscal first quarter compared with the year-earlier quarter’s $174 million.

Commercial Metals Company Price, Consensus and EPS Surprise

Commercial Metals Company Price, Consensus and EPS Surprise
Commercial Metals Company Price, Consensus and EPS Surprise

Commercial Metals Company price-consensus-eps-surprise-chart | Commercial Metals Company Quote

Segment Performance

The North America segment generated net sales of $1,195 million in the fiscal first quarter compared with the $1,217 million recorded in the prior-year quarter. The segment registered adjusted EBITDA of $156 million compared with the prior-year quarter’s $175 million.

The Europe segment’s revenues came in at $195 million, marking a year-over-year growth of 18.2%. Adjusted EBITDA was $14 million in the fiscal first quarter compared with the year-ago quarter’s $11 million.

Financials

Commercial Metals reported cash and cash equivalents of $465 million in the fiscal first quarter compared with the $542 million recorded at the end of fiscal 2020. The company’s long-term debt came in at $1,065 million at the end of the fiscal first quarter, same as of Aug 31, 2020. Cash used in operating activities was $12 million during the fiscal first quarter compared with the prior-year quarter’s cash inflow of $146 million.

On Jan 7, the company’s board announced a quarterly dividend of 12 cents per share. This dividend will be paid on Jan 21, to shareholders of record on Feb 4, 2021.

Outlook

Commercial Metals believes the finished steel volumes for North America and Europe operations will follow seasonal trends in second-quarter fiscal 2021. Meanwhile, steel shipments and downstream products will be supported by the company’s solid construction backlog in North America. Management anticipates robust demand for merchant products, backed  by the recent trends in residential construction and industrial activities in North America and Europe. However, Commercial Metals expects the significant rise in domestic scrap costs to dent margins in its North America business in the fiscal second quarter.

Price Performance

Commercial Metals’ shares have gained 10.6% over the past six months compared with the industry’s rally of 85.7%.



Zacks Rank & Stocks to Consider

Commercial Metals currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, BHP Group BHP and Impala Platinum Holdings Limited IMPUY, each currently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortescue has a projected earnings growth rate of 53.6% for fiscal 2021. The company’s shares have surged 83.7% in six months’ time.

BHP has an expected earnings growth rate of 43.3% for fiscal 2021. The company’s shares have gained around 40.4% in the past six months.

Impala has an estimated earnings growth rate of 131.7% for fiscal 2021. The company’s shares have appreciated around 70.2% over the past six months.

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