Commercial Metals Beats Q1 Earnings, Misses on Revs - Analyst Blog

Commercial Metals Company ( CMC ) reported earnings of 39 cents per share in the first quarter of fiscal 2014 (ended Nov 30, 2013), a 7% decline from 42 cents per share recorded a year ago.

After adjusting after-tax gains of $15.5 million (13 cents per share) related to the sale of Howell Metal Company and an after-tax LIFO expense of $2.8 million (2 cents per share), earnings were 28 cents per share, outpacing the Zacks Consensus Estimate of 21 cents.

Revenues fell roughly 4% year over year to around $1,683 million, missing the Zacks Consensus Estimate of $1,703 million. Adjusted operating profit dipped roughly 0.6% to $90 million.

Revenues from Commercial Metals' Americas Recycling segment slipped 4% to roughly $338 million in the reported quarter as declines in metal margins and nonferrous selling pricing more than offset higher ferrous selling prices.

The Americas Mills segment registered sales of roughly $481 million, up 5.5% year over year. While shipments of high-margin products increased, shipment of lower margin billets declined.

Revenues from the Americas Fabrication unit remained flat at $358 million in the reported quarter compared with the same quarter in the prior year. This segment registered improvements in key commercial and operating metrics, including tons bid, tons booked and tons shipped as well as a slight increase in the backlog.

Increased volumes and metal margin contributed to a 3.2% increase in revenues from the International Mill division to $229 million. Modest improvement in the Polish and surrounding markets along with a shift to higher margin merchant products also aided to the segment's results.

Revenues from the International Marketing and Distribution segment fell 16% to $511 million, impacted by pre-tax LIFO expense. Though the U.S.-based trading divisions within this segment posted solid results, it was offset by weakness in the European and Australian trading and distribution groups.

Commercial Metals ended the quarter with cash and cash equivalents of $515.5 million, up nearly 90% year over year. Total long-term debt increased roughly 34% year over year to $1,277 million.

Moving ahead, Commercial Metals anticipates a sluggish second-quarter fiscal 2014 due to the holiday season and winter weather conditions, which are expected to reduce construction activities. As executed in the previous years, Commercial Metals will be undergoing planned outages for maintenance and equipment enhancement so as to take advantage of the expected slower business activity likely to be faced in the second quarter.

Commercial Metals currently carries a Zacks Rank #3 (Hold).

Other companies in the steel industry with favorable Zacks Rank are Companhia Siderurgica Nacional ( SID ), ArcelorMittal ( MT ) and AK Steel Holding Corp. ( AKS ). While Companhia Siderurgica and ArcelorMittal hold a Zacks Rank #1 (Strong Buy), AK Steel retains a Zacks Rank #2 (Buy).

AK STEEL HLDG (AKS): Free Stock Analysis Report

COMMERCIAL METL (CMC): Free Stock Analysis Report

ARCELOR MITTAL (MT): Free Stock Analysis Report

CIA SIDERUR-ADR (SID): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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