April 01, 2013 at 08:45 AM EDT
Commercial Metals' Profit Dips in 2Q – Analyst Blog
Commercial Metals Company (CMC) reported earnings of 4 cents per share in second quarter fiscal 2013 (ended Feb 28), a decline from 25 cents per share recorded a year ago. Earnings also missed the Zacks Consensus Estimate by 16 cents. Profit slid roughly 84% year over year to $4.6 million. Challenging conditions across the overseas [...]

Commercial Metals Company (CMC) reported earnings of 4 cents per share in second quarter fiscal 2013 (ended Feb 28), a decline from 25 cents per share recorded a year ago. Earnings also missed the Zacks Consensus Estimate by 16 cents.

Profit slid roughly 84% year over year to $4.6 million. Challenging conditions across the overseas market coupled with seasonal softness hurt the Texas-based steel and metals maker in the quarter. Moreover, profit in the year-ago quarter was aided by higher tax benefit.

Revenues fell 12% year over year to around $1,730 million, missing the Zacks Consensus Estimate of $1,848 million. Commercial Metals saw lower sales across most of its business segments in the quarter. Adjusted operating profit slipped roughly 58% to $26.7 million.

Revenues from Commercial Metals’ Americas Recycling segment dipped 16% to roughly $351 million, hurt by lower ferrous selling prices.

The Americas Mills segment posted sales of roughly $477 million, down 9% year over year. Lower shipping volume of merchant and billet products and a decline in merchant products margins contributed to the fall. However, Commercial Metals witnessed higher volume and margins for rebar in the quarter.

On a positive note, revenues from the Americas Fabrication unit rose 5% to $318 million, aided by better pricing and shipping volumes.

Challenging conditions in Europe contributed to a 17% decline in revenues from the International Mill division to $180 million. International Marketing and Distribution segment’s sales fell 10% to $650 million. Weakness across key global markets continues to affect the division.

Commercial Metals ended the second quarter with cash and cash equivalents of $170 million, down 21% year over year. Total long-term debt declined 1% year over year to $1,154 million.

Moving ahead, Commercial Metals expects ramp up in domestic construction to support results in the third quarter. It anticipates modest sequential improvement in results in the International Mill unit on seasonal volume gains. However, the company envisions continued weakness in the International Marketing and Distribution segment given the soft end markets.

Commercial Metals currently carries a Zacks Rank #3 (Hold).

Other companies in the steel industry worth considering are Gibraltar Industries Inc. (ROCK), Shiloh Industries Inc. (SHLO) and Companhia Siderurgica Nacional (SID). While Gibraltar and Shiloh hold a Zacks Rank #1 (Strong Buy), Companhia Siderurgica carries a Zacks Rank #2 (Buy).

 
COMMERCIAL METL (CMC): Free Stock Analysis Report
 
GIBRALTAR INDUS (ROCK): Free Stock Analysis Report
 
SHILOH INDS INC (SHLO): Get Free Report
 
CIA SIDERUR-ADR (SID): Free Stock Analysis Report
 
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