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Commercial Metals' (CMC) Q2 Earnings Top Estimates, Up Y/Y

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Commercial Metals Company (CMC - Free Report) reported second-quarter fiscal 2021 (ended Feb 28, 2021) adjusted earnings per share of 66 cents, beating the Zacks Consensus Estimate of 61 cents. The figure increased 24.5% year on year.

Including one-time items, the company recorded a net income of 54 cents per share in the fiscal second quarter compared with the prior-year quarter’s 53 cents.

Net sales for the reported quarter came in at $1,462 million compared with the year-ago quarter’s $1,341 million. The reported figure, however, missed the Zacks Consensus Estimate of $1,516 million.

Cost of goods sold in the quarter was up 9.3% year over year to $1,228 million. Gross profit was up 7.8% year over year to $234 million during this period. Core EBITDA was a record $171 million in the fiscal second quarter, reflecting year-over-year growth of 18%. The company achieved stable steel products metal margins, despite rapidly rising scrap costs.

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 $1,257 million in the fiscal second quarter compared with the $1,161 million recorded in the prior-year quarter. The segment registered adjusted EBITDA of $172 million compared with the prior-year quarter’s $153 million.

The Europe segment’s revenues came in at $202 million, marking year-over-year growth of 12.2%. Adjusted EBITDA was $16 million in the fiscal second quarter compared with the year-ago quarter’s $13 million.

Financials

Commercial Metals reported cash and cash equivalents of $367 million at the end of  fiscal second quarter compared with $542 million recorded at the end of fiscal 2020. The company’s long-term debt came in at $1,011 million at the end of the fiscal second quarter compared with $1,065 million as of Aug 31, 2020. Cash generated from operating activities was $1,203 million during the six months period ended Feb 28, 2021, compared with the $253 million during the six months period ended Feb 29, 2020.

On Mar 17, the company’s board announced a quarterly dividend of 12 cents per share. This dividend will be paid out on Apr 14 to shareholders of record as of Mar 31, 2021.

Outlook

Commercial Metals continues to gain from ongoing network optimization efforts and the ramp up of its third rolling line in Poland this summer. The company believes that the finished steel volumes for North America and Europe operations will follow strong seasonal trends in third-quarter fiscal 2021 due to the start of the spring and summer construction seasons. Steel shipments and downstream products in North America will likely be supported by the company’s solid construction backlog.

Steel products are also benefiting from elevated spending on residential construction, continued recovery in the manufacturing sector and strong highway infrastructure activities. Given the increasing demand from construction and industrial end markets, volumes in Europe are anticipated to remain healthy. Management anticipates scrap margins on steel products in North America and Europe to increase sequentially after the realization of price adjustments made during the fiscal second quarter.

Price Performance

Commercial Metals’ shares have appreciated 119.8% over the past year compared with the industry’s growth of 186.8%.

Zacks Rank & Other Stocks to Consider

Commercial Metals currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the basic materials space include Impala Platinum Holdings Limited (IMPUY - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and Ashland Global Holdings Inc. (ASH - Free Report) , all sporting a Zacks Rank #1, at present.

Impala Platinum has an expected earnings growth rate of 195.9% for the current fiscal year. The company’s shares have surged 84% in the past year.

Fortescue has a projected earnings growth rate of 84.3% for the current fiscal year. The company’s shares have soared 182% in a year’s time.

Ashland has an estimated earnings growth rate of 83.9% for the current fiscal year. The company’s shares have appreciated 109.2% over the past year.

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