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Commercial Metals Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 6, 2012 05:58PM
Commercial Metals Company (CMC) filed Quarterly Report for the period ended 2012-02-29. Commercial Metl has a market cap of $1.71 billion; its shares were traded at around $14.55 with a P/E ratio of 15.9 and P/S ratio of 0.2. The dividend yield of Commercial Metl stocks is 3.2%.
Highlight of Business Operations:Net sales of the Americas Fabrication segment increased $49.6 million, or 20%, and adjusted operating loss decreased $39.6 million to an adjusted operating loss of $10.0 million. The improvement in adjusted operating results was primarily due to a significant improvement in margins in addition to an $11.0 million swing from LIFO expense to LIFO income compared to the same period in the prior year.
Americas Recycling During the second quarter of 2012, this segment reported adjusted operating profit of $6.4 million, a decrease of $4.5 million from the same period in the prior year. The decrease was due to a decline in nonferrous selling prices offset by higher ferrous tons shipped as compared to the second quarter of 2011. Additionally, results were negatively impacted from falling ferrous scrap prices late in the quarter. This segment recorded LIFO expense of $4.6 million as compared to LIFO expense of $6.9 million in the second quarter of 2011. During the quarter, we exported 6% of our ferrous scrap tonnage and 35% of our nonferrous scrap tonnage. Our new shredders in Texas and Oklahoma were fully operational during the second quarter of 2012.
Within the segment, adjusted operating profit for our five domestic steel mills was $51.9 million for the second quarter of 2012 as compared to an adjusted operating profit of $6.9 million for the prior years second quarter. The results were positively impacted by product mix as volumes in our higher margin merchant product increased 18% as well as margin improvement in all product lines as compared to the second quarter of 2011. These results were achieved despite planned outages at certain mills for capital environmental upgrades and normal maintenance. Additionally, LIFO expense decreased to $6.8 million during the second quarter of 2012 as compared to $38.5 million in the second quarter of 2011. Our Arizona mill was again profitable for the quarter. Our mills operated at 77% of capacity, an increase from 73% in the second quarter of 2011.
Our copper tube minimill recorded an adjusted operating profit of $2.5 million during the second quarter of 2012, a decrease of $1.5 million from the adjusted operating profit of $4.0 million recorded in the second quarter of 2011. The decline in adjusted operating profit was primarily due to lower copper selling prices as compared to the second quarter of 2011. The results benefited from LIFO income of $3.7 million in the second quarter of 2012 as compared to LIFO expense of $1.2 million in the second quarter of 2011.
Income Taxes Our effective tax rate from continuing operations for the three and six months ended February 29, 2012 was 35.0% and (110.7%) as compared to 26.7% and 22.9% in the same periods of the prior year. Our effective tax rates primarily vary from the statutory rate of 35% due to state and local taxes increasing the rate and earnings or losses generated in foreign jurisdictions decreasing the rate. State and local taxes are generally consistent while the composition of domestic and foreign earnings can create larger fluctuations in the rate. Additionally, our rate for the six months ended February 29, 2012 was impacted by a tax benefit of $102 million for ordinary worthless stock and bad debt deductions on the investment in our Croatian steel mill (CMCS).
Stocks Discussed: CMC,