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Commercial Metals (CMC) Earnings Miss Estimates in Q2, Dip Y/Y
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Commercial Metals Company (CMC - Free Report) reported adjusted earnings per share (EPS) of $1.44 in second-quarter fiscal 2023 (ended Feb 28, 2023), missing the Zacks Consensus Estimate of $1.53. The bottom line declined 6% year over year. Headwinds such as weather-related shipment interruptions, and associated costs with a major planned outage drove the downside.
Including one-time items, the company reported EPS of $1.51 in the fiscal second quarter compared with the prior-year quarter’s record $3.12.
Net sales in the reported quarter were $2,018 million compared with the year-ago quarter’s $2,009 million. The reported figure surpassed the Zacks Consensus Estimate of $1,995 million.
The cost of goods sold in the quarter was up 0.4% year over year to $1,622 million. The gross profit was up 0.5% year over year to $396 million during this period. The core EBITDA was $303 million in the fiscal second quarter, marking a year-over-year decline of 6.2%.
Commercial Metals Company Price, Consensus and EPS Surprise
The North America segment generated net sales of $1,641 million in the fiscal second quarter compared with $1,614 million in the prior-year quarter. The segment registered an adjusted EBITDA of $299 million compared with the year-earlier quarter’s $535 million.
The Europe segment’s revenues were $356 million, down 10.1% year over year. The adjusted EBITDA was $13 million in the fiscal second quarter compared with the year-ago quarter’s $81 million.
Financials
Commercial Metals reported cash and cash equivalents of $604 million at the end of second-quarter fiscal 2023 compared with $673 million at the end of fiscal 2022. The company’s long-term debt was $1,099.7 million at the end of the fiscal second quarter. Cash generated from operating activities was $559 million for the six months period ended Feb 28, 2022, compared with $54 million in the comparable period last year.
On Mar 22, the company declared a quarterly dividend of 16 cents per share. The dividend will be paid out on Apr 12 to shareholders of record as of Apr 3, 2023.
Outlook
The company expects a sequential improvement in core EBITDA in the third quarter of fiscal 2023. Moreover, North America finished steel product shipments are anticipated to improve due to normal seasonality, the recovery of volumes delayed by weather disruptions, and the support of a historically high downstream backlog. In Europe, CMC anticipates seasonal improvement, and expects shipment levels to remain above the long-term historical average due to the enhanced production capabilities of the company’s facilities.
CMC expects the commissioning of the Arizona 2 micro mill to begin in the fiscal third quarter. However, the third quarter’s margins will be affected by costs associated with a major planned outage.
Price Performance
Commercial Metals’ shares have gained 5.9% in the past year against the industry’s fall of 10.9%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Commercial Metals currently has a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Olympic Steel’s fiscal 2023 earnings per share is pegged at $3.50. Earnings estimates have moved 61% north in the past 60 days. ZEUS has a trailing four-quarter earnings surprise of 26.2%, on average. Its shares have gained 39.8% in the past year.
The Zacks Consensus Estimate for Steel Dynamics’ earnings per share is pegged at $14.84 for 2023. Earnings estimates have been revised 37% upward in the past 60 days. STLD has a trailing four-quarter average surprise of 11.2%, on average. The company has gained 21.2% in a year.
The Zacks Consensus Estimate for Alpha Metallurgical’s 2023 earnings per share is pegged at $46.09. Earnings estimates have moved 56.5% north in the past 60 days. AMR’s shares have gained 14.1% in the past year.
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Commercial Metals (CMC) Earnings Miss Estimates in Q2, Dip Y/Y
Commercial Metals Company (CMC - Free Report) reported adjusted earnings per share (EPS) of $1.44 in second-quarter fiscal 2023 (ended Feb 28, 2023), missing the Zacks Consensus Estimate of $1.53. The bottom line declined 6% year over year. Headwinds such as weather-related shipment interruptions, and associated costs with a major planned outage drove the downside.
Including one-time items, the company reported EPS of $1.51 in the fiscal second quarter compared with the prior-year quarter’s record $3.12.
Net sales in the reported quarter were $2,018 million compared with the year-ago quarter’s $2,009 million. The reported figure surpassed the Zacks Consensus Estimate of $1,995 million.
The cost of goods sold in the quarter was up 0.4% year over year to $1,622 million. The gross profit was up 0.5% year over year to $396 million during this period. The core EBITDA was $303 million in the fiscal second quarter, marking a year-over-year decline of 6.2%.
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 $1,641 million in the fiscal second quarter compared with $1,614 million in the prior-year quarter. The segment registered an adjusted EBITDA of $299 million compared with the year-earlier quarter’s $535 million.
The Europe segment’s revenues were $356 million, down 10.1% year over year. The adjusted EBITDA was $13 million in the fiscal second quarter compared with the year-ago quarter’s $81 million.
Financials
Commercial Metals reported cash and cash equivalents of $604 million at the end of second-quarter fiscal 2023 compared with $673 million at the end of fiscal 2022. The company’s long-term debt was $1,099.7 million at the end of the fiscal second quarter. Cash generated from operating activities was $559 million for the six months period ended Feb 28, 2022, compared with $54 million in the comparable period last year.
On Mar 22, the company declared a quarterly dividend of 16 cents per share. The dividend will be paid out on Apr 12 to shareholders of record as of Apr 3, 2023.
Outlook
The company expects a sequential improvement in core EBITDA in the third quarter of fiscal 2023. Moreover, North America finished steel product shipments are anticipated to improve due to normal seasonality, the recovery of volumes delayed by weather disruptions, and the support of a historically high downstream backlog. In Europe, CMC anticipates seasonal improvement, and expects shipment levels to remain above the long-term historical average due to the enhanced production capabilities of the company’s facilities.
CMC expects the commissioning of the Arizona 2 micro mill to begin in the fiscal third quarter. However, the third quarter’s margins will be affected by costs associated with a major planned outage.
Price Performance
Commercial Metals’ shares have gained 5.9% in the past year against the industry’s fall of 10.9%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Commercial Metals currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are Olympic Steel (ZEUS - Free Report) , Steel Dynamics (STLD - Free Report) and Alpha Metallurgical Resources (AMR - Free Report) . ZEUS and STLD currently flaunt a Zacks Rank #1 (Strong Buy), and AMR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Olympic Steel’s fiscal 2023 earnings per share is pegged at $3.50. Earnings estimates have moved 61% north in the past 60 days. ZEUS has a trailing four-quarter earnings surprise of 26.2%, on average. Its shares have gained 39.8% in the past year.
The Zacks Consensus Estimate for Steel Dynamics’ earnings per share is pegged at $14.84 for 2023. Earnings estimates have been revised 37% upward in the past 60 days. STLD has a trailing four-quarter average surprise of 11.2%, on average. The company has gained 21.2% in a year.
The Zacks Consensus Estimate for Alpha Metallurgical’s 2023 earnings per share is pegged at $46.09. Earnings estimates have moved 56.5% north in the past 60 days. AMR’s shares have gained 14.1% in the past year.