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Commercial Metals (CMC) Q1 Earnings Top Estimates, Dip Y/Y
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Commercial Metals Company (CMC - Free Report) reported adjusted earnings per share (EPS) of $1.63 for first-quarter fiscal 2024 (ended Nov 30, 2023), beating the Zacks Consensus Estimate of $1.43. The bottom line fell 27% from the prior-year quarter’s $2.24.
Including one-time items, CMC reported an EPS of $1.49 in the quarter compared with the prior-year quarter’s $2.20.
Net sales in the reported quarter were $2,003.1 million, down 10% from the year-ago quarter’s $2,227.3 million. The reported figure surpassed the Zacks Consensus Estimate of $1,902.6 million.
Commercial Metals Company Price, Consensus and EPS Surprise
The cost of goods sold in the quarter was down 6.7% from the year-ago quarter’s reading to $1,604 million. The gross profit was down 21.5% from the year-ago quarter’s level to roughly $399 million during this period. The core EBITDA was $325.3 million in the fiscal first quarter, down 23.5% from the year-ago quarter. Our model predicted core EBITDA to be $223 million for the quarter. The decline mainly resulted from the continued challenging market in Europe, partially offset by the solid demand for finished steel products in North America.
Segmental Performance
To better reflect its operations, CMC realigned its reporting structuring starting from the first quarter of fiscal 2024. It now reports under three segments — North America Steel Group, Europe Steel Group and Emerging Businesses Group.
The North America Steel Group segment generated net sales of roughly $1,593 million in the fiscal first quarter compared with $1,664 million in the prior-year quarter. The segment registered an adjusted EBITDA of around $267 million compared with the year-earlier quarter’s $350 million.
The Europe Steel Group segment’s revenues were $225 million, down 42% from the year-ago quarter. The adjusted EBITDA was around $39 million in the fiscal first quarter compared with the year-ago quarter’s $61 million.
The Emerging Businesses Group segment generated net sales of around $177 million in the fiscal first quarter compared with $170 million in the prior-year quarter. The segment registered an adjusted EBITDA of $30.9 million compared with the year-earlier quarter’s $31 million.
Financials
Commercial Metals reported cash and cash equivalents of roughly $705 million at the end of first-quarter fiscal 2024 compared with $592 million at the end of fiscal 2023. CMC’s long-term debt was around $1,120 million at the end of the first quarter of fiscal 2024 compared with $1,114 million at the end of fiscal 2023. Cash generated from operating activities was roughly $261 million in the quarter compared with $372 million in the prior-year quarter.
CMC repurchased shares worth $28.4 million in the quarter under review. As of Nov 30, 2023, $58.3 million remained under the current share buyback authorization.
Outlook
The company expects margins on steel products to experience some further compression in the fiscal second quarter, partially offset by the recent price announcements, which is likely to support an inflection and improved margins in the upcoming quarters. CMC anticipates downstream product margins to be sequentially stable in the second fiscal quarter.
Conditions in Europe are expected to remain challenging. However, adjusted EBITDA, excluding energy rebates, is expected to increase from the previous two quarters.
Price Performance
Commercial Metal’s shares have gained 4.3% in the past year compared with the industry’s 25.4% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Commercial Metals currently carries a Zacks Rank #4 (Sell).
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 52 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP shares rallied 151.5% last year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 71.2% in a year.
The Zacks Consensus Estimate for Ternium’s 2023 earnings is pegged at $7.98 per share. It has an average trailing four-quarter earnings surprise of 38.6%. TX’s shares have gained 36.5% in a year.
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Commercial Metals (CMC) Q1 Earnings Top Estimates, Dip Y/Y
Commercial Metals Company (CMC - Free Report) reported adjusted earnings per share (EPS) of $1.63 for first-quarter fiscal 2024 (ended Nov 30, 2023), beating the Zacks Consensus Estimate of $1.43. The bottom line fell 27% from the prior-year quarter’s $2.24.
Including one-time items, CMC reported an EPS of $1.49 in the quarter compared with the prior-year quarter’s $2.20.
Net sales in the reported quarter were $2,003.1 million, down 10% from the year-ago quarter’s $2,227.3 million. The reported figure surpassed the Zacks Consensus Estimate of $1,902.6 million.
Commercial Metals Company Price, Consensus and EPS Surprise
Commercial Metals Company price-consensus-eps-surprise-chart | Commercial Metals Company Quote
The cost of goods sold in the quarter was down 6.7% from the year-ago quarter’s reading to $1,604 million. The gross profit was down 21.5% from the year-ago quarter’s level to roughly $399 million during this period. The core EBITDA was $325.3 million in the fiscal first quarter, down 23.5% from the year-ago quarter. Our model predicted core EBITDA to be $223 million for the quarter. The decline mainly resulted from the continued challenging market in Europe, partially offset by the solid demand for finished steel products in North America.
Segmental Performance
To better reflect its operations, CMC realigned its reporting structuring starting from the first quarter of fiscal 2024. It now reports under three segments — North America Steel Group, Europe Steel Group and Emerging Businesses Group.
The North America Steel Group segment generated net sales of roughly $1,593 million in the fiscal first quarter compared with $1,664 million in the prior-year quarter. The segment registered an adjusted EBITDA of around $267 million compared with the year-earlier quarter’s $350 million.
The Europe Steel Group segment’s revenues were $225 million, down 42% from the year-ago quarter. The adjusted EBITDA was around $39 million in the fiscal first quarter compared with the year-ago quarter’s $61 million.
The Emerging Businesses Group segment generated net sales of around $177 million in the fiscal first quarter compared with $170 million in the prior-year quarter. The segment registered an adjusted EBITDA of $30.9 million compared with the year-earlier quarter’s $31 million.
Financials
Commercial Metals reported cash and cash equivalents of roughly $705 million at the end of first-quarter fiscal 2024 compared with $592 million at the end of fiscal 2023. CMC’s long-term debt was around $1,120 million at the end of the first quarter of fiscal 2024 compared with $1,114 million at the end of fiscal 2023. Cash generated from operating activities was roughly $261 million in the quarter compared with $372 million in the prior-year quarter.
CMC repurchased shares worth $28.4 million in the quarter under review. As of Nov 30, 2023, $58.3 million remained under the current share buyback authorization.
Outlook
The company expects margins on steel products to experience some further compression in the fiscal second quarter, partially offset by the recent price announcements, which is likely to support an inflection and improved margins in the upcoming quarters. CMC anticipates downstream product margins to be sequentially stable in the second fiscal quarter.
Conditions in Europe are expected to remain challenging. However, adjusted EBITDA, excluding energy rebates, is expected to increase from the previous two quarters.
Price Performance
Commercial Metal’s shares have gained 4.3% in the past year compared with the industry’s 25.4% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Commercial Metals currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Universal Stainless & Alloy Products, Inc. (USAP - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Ternium S.A. (TX - Free Report) . USAP and CRS sport a Zacks Rank #1 (Strong Buy), and TX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 52 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP shares rallied 151.5% last year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 71.2% in a year.
The Zacks Consensus Estimate for Ternium’s 2023 earnings is pegged at $7.98 per share. It has an average trailing four-quarter earnings surprise of 38.6%. TX’s shares have gained 36.5% in a year.