
Commercial Metals Co. (CMC), Irving, Texas, has announced financial results for its fiscal fourth quarter and year ended Aug. 31, 2018, posting earnings of $51.3 million, or 43 cents per diluted share, on net sales of $1.3 billion for the quarter. This compares to a net loss of $10.1 million, or 9 cents per diluted share, on net sales of $1.1 billion for comparable quarter in 2017.
The company say its fourth quarter results include after-tax expenses of $8.6 million related to the announced acquisition of certain rebar assets from Gerdau S.A. Excluding these expenses, adjusted earnings were $59.9 million, or 51 cents per diluted share, compared with adjusted earnings of $6.8 million, or 6 cents per diluted share, for the quarter ended Aug. 31, 2017.
For the fiscal year, the company’s earnings from continuing operations were $135.2 million, or $1.14 per diluted share, on net sales of $4.6 billion. This compares to earnings from continuing operations of $50.2 million, or 43 cents per diluted share, on net sales of $3.8 billion for fiscal 2017. Adjusted earnings from continuing operations were $176.1 million, or $1.49 per diluted share, an increase of 163 percent compared with $67 million, or 57 cents per diluted share, in the prior year.
Barbara R. Smith, chairman of the board, president and chief executive officer of CMC, says, "I am proud of what our team has accomplished during fiscal 2018. In addition to delivering our best financial results since the Great Recession, we also completed construction and commissioning of our second micromill in Durant, Oklahoma, becoming the first producer of hot spooled rebar in the United States. We also had record levels of shipments of steel products from our operations in the U.S. and Poland and achieved our lowest safety incident rate in the history of CMC."
CMC says its liquidity position as of Aug. 31 was strong with cash and cash equivalents of $622.5 million. More than $617 million were available under its credit and accounts receivable sales facilities.
Oct. 23 CMC’s board of directors declared a quarterly dividend of 12 cents per share of CMC common stock payable to stockholders of record on Nov. 7. The dividend will be paid Nov. 21.
The company says its Americas Recycling segment recorded adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $17 million for the fourth quarter of fiscal 2018 compared with adjusted EBITDA of $8.8 million for the fourth quarter of fiscal 2017. Adjusted EBITDA increased as a result of strong volumes and the rising price environment of the past 12 months, CMC adds.
Its Americas Mills segment recorded adjusted EBITDA of $106.8 million for the fourth quarter of fiscal 2018, an increase of 142 percent compared with adjusted EBITDA of $44.2 million for the fourth quarter of fiscal 2017. Supported by the U.S. construction market, demand remained strong, according to the company.
Additionally, the ramp up of production at CMC’s Durant facility continues to proceed as planned with the operation contributing positive adjusted EBITDA during the quarter, the company says.
Because of the strong global demand for rebar, metal margins increased by $68 per ton from the same period of the prior year. Meaningful inflationary pressures on the cost of alloys and electrodes were muted by what CMC describes as its continued focus on cost control and higher mill volumes, which resulted in a 3 percent increase in manufacturing costs compared to 2017.
The company’s Americas Fabrication segment recorded an adjusted EBITDA loss of $24.6 million for the fourth quarter of fiscal 2018 compared to adjusted EBITDA of $1.2 million for the fourth quarter of fiscal 2017. Average selling prices rose 9 percent compared to the fourth fiscal quarter of 2017, significantly outpaced by steel input costs, which increased by 32 percent, CMC says, causing continued margin pressure in this segment. Rebar fabrication bidding activity remains strong, and selling prices for contracted work during the quarter increased approximately 34 percent compared with the fourth quarter of 2017.
CMC’s International Mill segment in Poland recorded adjusted EBITDA of $36.7 million for the quarter compared with adjusted EBITDA of $22.1 million for the comparable quarter of fiscal 2017. Long steel product demand continues to be very strong, CMC says, producing record levels of quarterly shipments and adjusted EBITDA during the fourth quarter of 2018.
"Our outlook for the coming months remains very positive as we believe the current demand for construction steel will be sustained," Smith says. "Our team delivered on many key strategic initiatives during 2018, producing record volumes during this period of strong demand and improving margins. As we look forward to the strong economic environment continuing and the opportunities on the horizon, I am confident we will continue to deliver exceptional results for our stakeholders."
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