Commercial Metals Company CMC reported third-quarter fiscal 2020 (ended May 31, 2020) adjusted earnings per share of 59 cents, beating the Zacks Consensus Estimate of 28 cents. The figure, however, declined 11.9% year on year.
Including one-time items, the company reported net income of 53 cents per share in the fiscal third quarter compared with the prior-year quarter’s 66 cents.
Net sales for the reported quarter slid 18.7% year over year to $1.3 billion. However, the reported figure beat the Zacks Consensus Estimate of $1.2 billion.
Cost of goods sold in the quarter was down 18.3% year over year to $1.1 billion. Gross profit fell 6.6% year over year to $225 million during this period. Core EBITDA was $155 million in the fiscal third quarter compared to $154 million in the year-ago quarter.
Commercial Metals Company Price, Consensus and EPS Surprise
Segment Performance
The Americas Recycling segment reported net sales of $203 million in the fiscal third quarter compared with the $289 million recorded in the prior-year quarter. The segment incurred adjusted EBITDA loss of $1.7 million as against the adjusted EBITDA of $12.3 million in the prior-year quarter.
Americas Mills segment’s revenues came in at $741 million, marking a year-over-year decline of 14.5%. Adjusted EBITDA dropped 16% year over year to $133 million.
The Americas Fabrication segment reported net sales of $569 million, down 10.1% from the prior-year quarter’s $633 million. The segment reported adjusted EBITDA of $32 million, as against the EBITDA loss of $23 million posted in the year-ago quarter.
The International Mill segment reported net sales of $174 million the fiscal third quarter compared with the year-earlier quarter’s $209 million. Adjusted EBITDA plunged 42% year over year to $14 million.
Financials
Commercial Metals exited the fiscal third quarter with cash and cash equivalents of $462 million compared with the $192 million recorded at the end of fiscal 2019. The company’s long-term debt reduced to $1,153 million at the end of the quarter from the $1,227 million recorded as of the end of fiscal 2019. Cash flow from operating activities were $532 million during the nine-month period ended May 31, 2020 compared with cash usage of $218 million in the prior-year period.
On Jun 16, the company’s board announced a quarterly dividend of 12 cents per share. This dividend will be paid on Jul 20, to shareholders of record on Jul 6, 2020.
The company’s net debt-to-EBITDA ratio of 1.2x and substantial cash flow place it well to sail through the current turbulent situation and provide significant flexibility in capital-allocation priorities.
Outlook
Commercial Metals continues to expect strong construction and infrastructure activity in the fiscal fourth quarter. Moreover, the company’s fabrication backlogs are strong.
Price Performance
Commercial Metals’ shares have gained 21.2% over the past year, as against the industry’s decline of 27.6%.
Zacks Rank & Stocks to Consider
Commercial Metals currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials sector are Agnico Eagle Mines Limited AEM, B2Gold Corp BTG and Gold Fields Limited GFI. While Agnico Eagle sports a Zacks Rank #1 (Strong Buy), B2Gold and Gold Fields carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has an estimated earnings growth rate of 53.6% for the current year. The company’s shares have surged 20.6% in the past year.
B2Gold has an expected earnings growth rate of 221.4% for the ongoing year. Its shares have appreciated 80.7% in the past year.
Gold Fields has a projected earnings growth rate of 30.9% for 2020. The company’s shares have gained 47.8% in the past year.
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