Dark pool activity was detected in CMC stock on January 21, 2020.
We are unable to determine if the two dark pool orders each for $15M were buy or sell orders.
On January 6, 2020, Commercial Metals Company (NYSE: CMC) announced financial results for its fiscal first quarter ended November 30, 2019. Net sales increased 8% on a year-over-year basis driven by the Company’s growth strategy and strong fundamentals in its core markets. Commercial Metals reported Q1 EPS of 69c versus the consensus estimate of 54c. The company reported Q1 revenue of $1.4B versus the consensus estimate of $1.43B.
As a result of ongoing network optimization efforts, a decision was made to cease melting operations at our Rancho Cucamonga, CA facility, which resulted in a net after tax charge of $5.0 million. Excluding these expenses, adjusted earnings from continuing operations were $87.8 million, or $0.73 per diluted share, as detailed in the non-GAAP reconciliation on page 12. This represents a 109% increase compared to adjusted earnings from continuing operations of $0.35 per diluted share for the three months ended November 30, 2018.
Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, commented, “The first quarter marked the best financial performance from our strategically repositioned portfolio of operations. This milestone reflects the continued health of the U.S. non-residential construction sector, which contributed to strong performances in our Americas Mills and Fabrication segments. We believe the metal margin performance seen over recent quarters highlights the stability of CMC’s rebar and long product offerings compared to the broader steel market.”
The Company’s liquidity position as of November 30, 2019 remained strong, with cash and cash equivalents of $224.8 million and availability under the Company’s credit and accounts receivable facilities of $659.9 million.
On January 2, 2020, the board of directors of CMC declared a quarterly dividend of $0.12 per share of CMC common stock payable to stockholders of record on January 15, 2020. The dividend will be paid on January 30, 2020, and marks 221 consecutive quarterly dividend payments.
Business Segments – Fiscal First Quarter 2020 Review
- Our Americas Recycling segment recorded adjusted EBITDA of $3.4 million for the first quarter of fiscal 2020 compared to adjusted EBITDA of $15.4 million for the prior year quarter. The decrease reflected a challenging price environment in which average ferrous prices decreased by 33% on a year-over-year basis. Low prices also reduced material flows during the quarter.
- Our Americas Mills segment recorded adjusted EBITDA of $155.0 million for the first quarter of fiscal 2020, an increase of 36% compared to adjusted EBITDA of $113.9 million for the first quarter of fiscal 2019. Volumes increased 42% compared to the prior year period, primarily due to additional production from acquired facilities. Metal margins expanded $10 per ton year-over-year, as a reduction in scrap costs more than offset a $71 per ton decline in average selling prices. Results in the first quarter also benefited from the achievement of our lowest conversion costs since the November 5, 2018 acquisition.
- Our Americas Fabrication segment recorded adjusted EBITDA of $17.5 million for the first quarter of fiscal 2020, marking a significant improvement from an adjusted EBITDA loss of $37.0 million for the first quarter of fiscal 2019. As in prior quarters, first quarter adjusted EBITDA did not include the benefit of the purchase accounting adjustment related to amortization of the acquired unfavorable contract backlog reserve of $8.3 million. Average selling price of $976 per ton in the first quarter of fiscal 2020 increased $108 per ton, or 12%, compared to the prior year period. The increase in average selling price, as well as declining rebar input costs, resulted in a strong increase in margins compared to recent quarters. Current rebar bidding activity is healthy, and our backlog is priced at levels that we expect to be profitable when shipped.
- Our International Mill segment in Poland recorded adjusted EBITDA of $11.4 million for the first quarter of fiscal 2020, compared to adjusted EBITDA of $32.8 million for the comparable prior year quarter. Safeguard trade measures have thus far been ineffective in deterring a surge of imported product into Europe, resulting in a compression of metal margins during the quarter. Shipment volumes declined on a year-over-year basis, primarily due to the absence of opportunistic billets sales that were made during the first quarter of fiscal 2019. Conditions within the Polish construction sector remain healthy and demand for rebar continues to be strong. Despite lower shipment volumes during the quarter, our Polish operations successfully reduced conversion costs compared to the year-ago period.
- Our Corporate and Other segment recorded an adjusted EBITDA loss of $27.5 million for the first quarter of fiscal 2020 compared to an adjusted EBITDA loss of $59.6 million for the prior year quarter. The current quarter loss did not include any acquisition costs and other legal expenses, while the first quarter of fiscal 2019 included $28.0 million of acquisition costs and other legal expenses. Excluding these costs, our Corporate and Other costs still declined year-over-year, and we believe, are generally reflective of normalized levels going forward.
“We expect construction and infrastructure demand to remain resilient,” said Ms. Smith. “Customer sentiment and our own fabrication backlog both point to a strong outlook for activity, though our second quarter will be impacted by typical seasonality related to holidays and winter weather conditions affecting construction activity.”
“We anticipate metal margin will remain above the historical cycle average, but will experience a decline from first quarter levels. We expect our progress in optimizing our expanded domestic mill network during the first quarter will yield benefits going forward. We anticipate Fabrication will remain profitable, while Recycling should see some benefit from the recent rebound in ferrous scrap prices. We expect challenges to remain for our Polish operations until the current overhang of imports to the European Union unwinds.”
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