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Commercial Metals Company Reports Operating Results (10-Q)

January 09, 2013 | About:
Barel Karsan

10qk

18 followers
Commercial Metals Company (CMC) filed Quarterly Report for the period ended 2012-11-30.

Commercial Metals Company has a market cap of $1.86 billion; its shares were traded at around $15.36 with a P/E ratio of 15.2 and P/S ratio of 0.2. The dividend yield of Commercial Metals Company stocks is 3.6%.

Highlight of Business Operations:

In our International Marketing and Distribution segment, net sales decreased 14% and adjusted operating profit increased $44.3 million during the first quarter of 2013 as compared to the prior year's first quarter. During the first quarter of 2013, we sold our investment in 11% of the outstanding stock of Trinecke Zelezarny, a.s., a Czech Republic joint-stock company for $29.0 million resulting in a pre-tax gain of $26.1 million in the segment. Additionally, within the segment, the raw materials business experienced a profit recovery compared to the prior year's first quarter, which included charges on long positions the Company held on iron ore purchase contracts. The results were also impacted by an increase of $7.6 million in LIFO income.

Americas Recycling Adjusted operating profit decreased during the first quarter of 2013 as compared to the prior year's first quarter as lower demand negatively affected ferrous and nonferrous pricing and volumes. LIFO income declined by $8.2 million to $2.4 million in the first quarter of fiscal 2013, from $10.6 million in the prior year's first quarter. Ferrous scrap exports were 5% during the first quarter of both 2013 and 2012. Nonferrous scrap exports were 32% and 35% during the first quarter of 2013 and 2012, respectively.

Within the segment, adjusted operating profit for our five domestic steel mills was $51.6 million for the first quarter of 2013 as compared to $58.4 million for the first quarter of 2012. Compared to the prior year's first quarter, increased conversion costs offset improvements in both shipping volumes and metal margins. The primary factor contributing to higher costs was an extended outage at our South Carolina melt shop where we installed a new electric arc furnace and related components. We incurred approximately $5.5 million of expenses associated with the outage, which were included in this quarter's results. Additionally, the South Carolina mill melt tonnage decreased by 92 thousand tons during the first quarter of 2013 as compared to the first quarter of 2012. Overall, the segment's volumes were slightly higher compared to the same quarter in the prior year while margins declined on our higher margin merchant products. Our mills ran at 82% utilization in the first quarter of 2013 as compared to 86% in the first quarter of 2012. Shipments included 87 thousand tons of billets in the first quarter of 2013 as compared to 120 thousand tons of billets in the first quarter of 2012.

Americas Fabrication This segment recorded an adjusted operating profit of $10.2 million for this year's first quarter, marking a significant improvement over the prior year's first quarter adjusted operating loss of $7.4 million. The segment continued to benefit from stable material pricing and improved backlog margins. Results were impacted by a decrease in LIFO income of $2.4 million in the first quarter of 2013 as compared to the first quarter of 2012. The composite average fabrication selling price was $934 per ton during the first quarter of 2013, up from $880 per ton during the first quarter of 2012.

International Marketing and Distribution During the first quarter of 2013, this segment reported a decrease in sales of 14% and reported an adjusted operating profit of $40.2 million as compared to an adjusted operating loss of $4.1 million in the first quarter of 2012. Included in this segment's results was the $26.1 million pre-tax gain on the November sale of our Trinecke Zelezarny, a.s. investment. Additionally, within the segment, the raw materials business experienced a profit recovery compared to the prior year's first quarter which included charges on long positions the Company held on iron ore purchase contracts. Overall, this segment continued to lack momentum in terms of volumes and margins as uncertainty continued to exist in most major global markets. The results were also positively impacted by an increase in LIFO income of $7.6 million.

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