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Commercial Metals (CMC) Q3 Earnings & Sales Top Estimates, Up Y/Y

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Commercial Metals Company (CMC - Free Report) reported third-quarter fiscal 2021 (ended May 31, 2021) adjusted earnings per share of $1.04, beating the Zacks Consensus Estimate of 81 cents. The bottom-line figure also surged 76.2% year on year driven by robust demand for the company’s products. The company also achieved record levels of new productions and shipments during the quarter.

Including one-time items, the company achieved a record earnings per share of $1.07 in the fiscal third quarter compared with the prior-year quarter’s 53 cents.

Net sales for the reported quarter came in at $1,845 million compared with the year-ago quarter’s $1,342 million. The reported figure also surpassed the Zacks Consensus Estimate of $1,719 million.

Cost of goods sold in the quarter was up 37.5% year over year to $1,534 million. Gross profit was up 37.6% year over year to $311 million during this period. Core EBITDA was a record $230 million in the fiscal third quarter, reflecting year-over-year growth of 48.4%.

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 $1,558 million in the fiscal third quarter compared with the $1,167 million recorded in the prior-year quarter. The segment registered adjusted EBITDA of $207 million compared with the prior-year quarter’s $159 million.

The Europe segment’s revenues came in at $284 million, marking a year-over-year jump of 63.2%. Adjusted EBITDA was $50 million in the fiscal third quarter compared with the year-ago quarter’s $14 million.

Financials

Commercial Metals reported cash and cash equivalents of $443 million at the end of the fiscal third quarter compared with the $542 million recorded at the end of fiscal 2020. The company’s long-term debt came in at $1,020 million at the end of the fiscal third quarter compared with $1,065 million as of Aug 31, 2020. Cash generated from operating activities was $94 million during the nine-month period ended May 31, 2021, compared with the $532 million witnessed during the nine-month period ended May 31, 2020.

On Jun 16, the company’s board announced a quarterly dividend of 12 cents per share. This dividend will be paid out on Jul 14 to shareholders of record as of Jun 30, 2021.

Outlook

Strong demand across most of the company’s end markets will likely support robust finished steel shipment levels in North America and Europe during the fiscal fourth quarter. Management expects scrap margins on steel products to be relatively flat or modestly up sequentially in both regions. Construction and industrial activities continue to grow in the United States and Central Europe on recovery from the pandemic-induced declines.
Business Updates

The company made significant progress on its strategic growth initiatives during the reported quarter that includes commissioning of a third hot rolling mill in Poland, the receipt of the air permit for Arizona 2 mill, and the continuation of network-optimization efforts. These projects will open up growth prospects for the company over the long term.

Price Performance

Commercial Metals’ shares have gained 51.7% over the past year, compared with the industry’s growth of 132.5%.

Zacks Investment ResearchImage Source: Zacks Investment Research

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.

Some other top-ranked stocks in the basic materials space include Univar Solutions Inc. (UNVR - Free Report) , Nucor Corporation (NUE - Free Report) and Cabot Corporation (CBT - Free Report) . While Univar Solutions and Nucor sport a Zacks Rank #1, Cabot currently carries a Zacks Rank of 2.

Univar has a projected earnings growth rate of 35.2% for 2021. The company’s shares have rallied around 53% in a year’s time.

Nucor has a projected earnings growth rate of 259.9% for the current year. The company’s shares have soared around 130% over the past year.

Cabot has an expected earnings growth rate of around 126% for the current fiscal year. The company’s shares have surged 60% in the past year.

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