Commercial Metals (CMC) Q4 Earnings & Sales Miss Estimates, Up Y/Y

·4 min read

Commercial Metals Company CMC reported fourth-quarter fiscal 2021 (ended Aug 31, 2021) adjusted earnings per share of $1.26, missing the Zacks Consensus Estimate of $1.38. The bottom-line figure surged 59.5%, year on year, driven by the robust demand for the company’s products. The company also achieved record levels of new productions and shipments at its steel mills during the quarter.

Including one-time items, the company achieved a record earnings per share of $1.24 in the fiscal fourth quarter compared with the prior-year quarter’s 56 cents.

Net sales for the reported quarter came in at $2,031 million compared with the year-ago quarter’s $1,409 million. The reported figure also missed the Zacks Consensus Estimate of $2,085 million.

The cost of goods sold in the quarter was up 47.2% year over year to $1,687 million. The gross profit was up 31% year over year to $344 million during this period. The core EBITDA was a record $256 million in the fiscal fourth quarter, reflecting year-over-year growth of 45.4%.

Commercial Metals Company Price, Consensus and EPS Surprise

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 $1,660 million in the fiscal fourth quarter compared with the $1,225 million recorded in the prior-year period. The segment registered an adjusted EBITDA of $212 million compared with the year-earlier quarter’s $174 million.

The Europe segment’s revenues came in at $368 million, marking a year-over-year jump of 105%. The adjusted EBITDA was $68 million in the fiscal fourth quarter compared with the year-ago quarter’s $23 million.

Financials

Commercial Metals reported cash and cash equivalents of $498 million at the end of fiscal 2021 compared with the $542 million recorded at the end of fiscal 2020. The company’s long-term debt came in at $1,015 million at the end of fiscal 2021 compared with the $1,065 million at the end of prior fiscal year. Cash generated from operating activities was $228 million in fiscal 2021 compared with $791 million in fiscal 2020.

On Oct 13, the company’s board hiked the quarterly dividend by 17% to 14 cents per share. This dividend will be paid out on Nov 10 to shareholders of record as of Oct 27, 2021. This marks the company’s first dividend increase in more than a decade. Commercial Metals has also announced a new $350-million share-repurchase program.

Fiscal 2021 Performance

The adjusted earnings per share in fiscal 2021 increased 34% year over year to $3.53. Including one-time items, the company reported earnings per share of $3.38 in fiscal 2021 compared with the $2.31 recorded in fiscal 2020. The net sales in fiscal 2021 climbed 23% year over year to $6.73 billion.

Outlook

A strong construction backlog in North America as well as strength across the key end markets in both North America and Europe will continue supporting the solid steel sales volumes in fiscal 2022. Management expects the finished steel volumes to follow the typical seasonal patterns during first-quarter fiscal 2022.

Business Updates

The company ramped up a new rolling line in Europe and has made significant progress at the Arizona 2 micro mill in North America. Additionally, Commercial Metals has entered into an agreement to sell its Rancho Cucamonga site for $300 million.

Price Performance

Commercial Metals’ shares have gained 56.4%, so far this year, compared with the industry’s growth of 40.1%.

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Zacks Rank & Stocks to Consider

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

A few other top-ranked stocks in the basic materials space include Nucor Corporation NUE, Methanex Corporation MEOH and Celanese Corporation CE. While Nucor and Methanex sport a Zacks Rank #1, Celanese carries a Zacks Rank #2 (Buy), at present.

Nucor has an estimated earnings growth rate of 537.4 % for the ongoing year. So far this year, the company’s shares have appreciated 82.9%.

Methanex has a projected earnings growth rate of 409.3 % for 2021. The company’s shares have gained 6% so far this year.

Celanese has an estimated earnings growth rate of 122.3% for the current year. The company’s shares have gained 28.6%, year to date.


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