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Commercial Metals (CMC) Earnings Beat Estimates in Q2, Dip Y/Y
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Commercial Metals Company (CMC - Free Report) reported adjusted earnings per share (EPS) of 88 cents in second-quarter fiscal 2024 (ended Feb 29, 2024), beating the Zacks Consensus Estimate of 70 cents. The bottom line declined 39% year over year.
Including one-time items, the company reported EPS of 73 cents in the fiscal second quarter compared with the year-ago quarter’s record $1.51.
Net sales in the reported quarter were $1.85 billion compared with the year-ago quarter’s $2.02 billion. The reported figure surpassed the Zacks Consensus Estimate of $1.84 billion.
The cost of goods sold in the quarter was down 4.3% year over year to $1.55 billion. The gross profit was down 25.3% year over year to $296 million during this period. The core EBITDA was $224 million in the fiscal second quarter, marking a year-over-year decline of 25.9%.
Commercial Metals Company Price, Consensus and EPS Surprise
The North America Steel Group segment generated net sales of roughly $1.49 billion in the fiscal second quarter compared with $1.50 billion in the year-ago quarter. We expected net sales to be $1.37 billion in the quarter. The segment registered an adjusted EBITDA of around $222 million compared with the year-ago quarter’s $274 million. Our model predicted an adjusted EBITDA of $157 million.
The Europe Steel Group segment’s revenues were $193 million, down 43% from the year-ago quarter. Our model predicted net sales of $294 million. The adjusted EBITDA was a negative $8.6 million in the fiscal second quarter against the year-ago quarter’s $11 million. We expected an adjusted EBITDA of $34.3 million for the quarter.
The Emerging Businesses Group segment generated net sales of around $156 million in the fiscal second quarter compared with $154 million in the year-ago quarter. The reported figure came in line with our expectation for the quarter. The segment registered an adjusted EBITDA of $18 million compared with the year-ago quarter’s $27 million. Our model predicted an adjusted EBITDA of $17.5 million.
Financials
Commercial Metals reported cash and cash equivalents of $638 million at the end of second-quarter fiscal 2024 compared with $592 million at the end of fiscal 2023. The company’s long-term debt was $1.13 billion at the end of the fiscal second quarter. Cash generated from operating activities was $350 million for the six-month period ended Feb 29, 2024, compared with $559 million in the comparable period last year.
On Mar 20, the company declared a quarterly dividend of 18 cents per share, representing a 13% hike from the dividend paid in February 2024. The dividend will be paid out on Apr 10 to shareholders of record as of Apr 1, 2023.
Outlook
The company anticipates finished steel shipments within the North America Steel Group to follow a usual seasonal trend during the third quarter, with adjusted EBITDA margin remaining broadly stable on a sequential basis. CMC’s Emerging Businesses Group results are expected to rise significantly, owing to the typical seasonal uptick in demand, solid underlying market fundamentals and a healthy order book.
CMC anticipates strong spring and summer construction activity, led by increasing infrastructure investments, which will bolster an already solid demand backdrop in both the North America Steel Group and the Emerging Businesses Group.
Even though conditions in Europe are expected to remain challenging, adjusted EBITDA is expected to approach break-even in the third quarter.
Price Performance
Commercial Metals’ shares have gained 30.3% in the past year compared with the industry’s 20.9% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Commercial Metals currently has a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Ecolab’s 2024 earnings is pegged at $6.39 per share, indicating an increase of 22.7% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.7%. ECL shares have gained 41.8% in a year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.00 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 33.5% in a year.
The Zacks Consensus Estimate for Hawkins’ fiscal 2024 earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 30.6%. The company’s shares have rallied 70% in the past year.
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Commercial Metals (CMC) Earnings Beat Estimates in Q2, Dip Y/Y
Commercial Metals Company (CMC - Free Report) reported adjusted earnings per share (EPS) of 88 cents in second-quarter fiscal 2024 (ended Feb 29, 2024), beating the Zacks Consensus Estimate of 70 cents. The bottom line declined 39% year over year.
Including one-time items, the company reported EPS of 73 cents in the fiscal second quarter compared with the year-ago quarter’s record $1.51.
Net sales in the reported quarter were $1.85 billion compared with the year-ago quarter’s $2.02 billion. The reported figure surpassed the Zacks Consensus Estimate of $1.84 billion.
The cost of goods sold in the quarter was down 4.3% year over year to $1.55 billion. The gross profit was down 25.3% year over year to $296 million during this period. The core EBITDA was $224 million in the fiscal second quarter, marking a year-over-year decline of 25.9%.
Commercial Metals Company Price, Consensus and EPS Surprise
Commercial Metals Company price-consensus-eps-surprise-chart | Commercial Metals Company Quote
Segmental Performance
The North America Steel Group segment generated net sales of roughly $1.49 billion in the fiscal second quarter compared with $1.50 billion in the year-ago quarter. We expected net sales to be $1.37 billion in the quarter. The segment registered an adjusted EBITDA of around $222 million compared with the year-ago quarter’s $274 million. Our model predicted an adjusted EBITDA of $157 million.
The Europe Steel Group segment’s revenues were $193 million, down 43% from the year-ago quarter. Our model predicted net sales of $294 million. The adjusted EBITDA was a negative $8.6 million in the fiscal second quarter against the year-ago quarter’s $11 million. We expected an adjusted EBITDA of $34.3 million for the quarter.
The Emerging Businesses Group segment generated net sales of around $156 million in the fiscal second quarter compared with $154 million in the year-ago quarter. The reported figure came in line with our expectation for the quarter. The segment registered an adjusted EBITDA of $18 million compared with the year-ago quarter’s $27 million. Our model predicted an adjusted EBITDA of $17.5 million.
Financials
Commercial Metals reported cash and cash equivalents of $638 million at the end of second-quarter fiscal 2024 compared with $592 million at the end of fiscal 2023. The company’s long-term debt was $1.13 billion at the end of the fiscal second quarter. Cash generated from operating activities was $350 million for the six-month period ended Feb 29, 2024, compared with $559 million in the comparable period last year.
On Mar 20, the company declared a quarterly dividend of 18 cents per share, representing a 13% hike from the dividend paid in February 2024. The dividend will be paid out on Apr 10 to shareholders of record as of Apr 1, 2023.
Outlook
The company anticipates finished steel shipments within the North America Steel Group to follow a usual seasonal trend during the third quarter, with adjusted EBITDA margin remaining broadly stable on a sequential basis. CMC’s Emerging Businesses Group results are expected to rise significantly, owing to the typical seasonal uptick in demand, solid underlying market fundamentals and a healthy order book.
CMC anticipates strong spring and summer construction activity, led by increasing infrastructure investments, which will bolster an already solid demand backdrop in both the North America Steel Group and the Emerging Businesses Group.
Even though conditions in Europe are expected to remain challenging, adjusted EBITDA is expected to approach break-even in the third quarter.
Price Performance
Commercial Metals’ shares have gained 30.3% in the past year compared with the industry’s 20.9% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Commercial Metals currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Ecolab Inc. (ECL - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) . ECL and CRS sport a Zacks Rank #1 (Strong Buy) at present, and HWKN has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ecolab’s 2024 earnings is pegged at $6.39 per share, indicating an increase of 22.7% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.7%. ECL shares have gained 41.8% in a year.
The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.00 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 33.5% in a year.
The Zacks Consensus Estimate for Hawkins’ fiscal 2024 earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 30.6%. The company’s shares have rallied 70% in the past year.