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CMC Earnings Improve over Previous Quarter

January 7, 2014

Commercial Metals Company (CMC) posted net earnings of $45.9 million on net sales of $1.7 billion for its first quarter of fiscal year 2014 ending on November 30, 2013. This compares with net earnings of $49.7 million on a similar net sale amount of $1.7 billion for the same period in FY 2013. Results included an after-tax gain of $15.5 million from the sale of Howell Metal Company and were negatively impacted by a 2.8 million after-tax LIFO expense. CMC adjusted profits were up significantly from the prior quarter with operating profit at $90 million compared to $37.1 million in Q4 FY 2013.

CMC’s Americas Recycling segment shipped 559,000 tons of scrap in the first quarter of 2014 as compared to 562,000 tons in the first quarter of 2013. Ferrous selling prices increased 1 percent to $326 per ton but were offset by a 7 percent decline in metal margins along with declines in nonferrous prices and margins on a year-over-year basis. On a quarter-to-quarter basis, selling prices and metal margins improved for both ferrous and non ferrous shipments. Adjusted operating profit was $0.8 million for Q1 FY 2014.

The Americas Steel Mills segment shipped a total of 676,000 tons in Q1, an increase of 10,000 tons year-over-year. The average FOB scrap selling price was $657 per ton, down from $669 per ton in first quarter FY 2013. The Americas Steel Mills average ferrous scrap purchase price was $297, up $3.00 from Q1 2013. The metal margin for Steel Americas Mills was $323 per ton in first quarter 2014, down $7.00 per ton year-over-year. Operating profit was $65.8 million compared to $51.6 million a year ago.

The Americas Fabrication segment had an adjusted operating profit of $2.2 million in the first quarter from shipment of 267,000 tons and was negatively impacted by LIFO expenses of $1.9 million, compared to $10.2 million in the prior fiscal year due to $9.0 million pre-tax LIFO expense. Year-over-year improvements were noted in tons bid, booked and shipped.

CEO Joe Alvarado said the company will take advantage of anticipated slower business activity in the second quarter due to holiday slowdowns and winter weather to perform maintenance and upgrade equipment.