Commercial Metals Company (CMC) disclosed financial results for its first quarter ended November 30, 2015. Net earnings attributable to CMC for the three months ended November 30, 2015 were $25.1 million ($0.21 per diluted share) on net sales of $1.2 billion.
This compares to net earnings attributable to CMC of $32.2 million ($0.27 per diluted share) on net sales of $1.7 billion for the first quarter ended November 30, 2014.
Earnings from continuing operations for the first quarter of fiscal 2016 were $25.6 million ($0.22 per diluted share), compared with earnings from continuing operations of $34.3 million ($0.29 per diluted share) for the first quarter of fiscal 2015.
Joe Alvarado, chairman of the board, president and chief executive officer, commented, “Our results for the first quarter of fiscal 2016 were generally consistent with our outlook from last quarter. Our Americas Fabrication segment achieved a $25.5 million improvement in adjusted operating profit during the first quarter of fiscal 2016 compared to the first quarter of fiscal 2015 benefiting from lower steel input prices and solid construction demand. In addition, compared to the same quarter in the prior year, our Americas Mills segment was able to expand metal margins as finished steel prices declined at a slower rate than ferrous scrap prices. However, our remaining segments continued to be adversely impacted by steel import activity into the U.S., weakness in scrap markets and decreased global demand and pricing for all major commodities.
We are very pleased with our financial strength and our strong cash flow of $219.6 million during the quarter.”
During the first quarter of fiscal 2016, the company elected to change the accounting method it uses to value its inventories from the last in, first out method to the weighted average cost method for its Americas mills, Americas recycling and Americas fabrication segments and to the specific identification method for the steel trading division headquartered in the U.S. in its international marketing and distribution segment. The company applied this change in accounting principle retrospectively to all prior periods presented. Also during the first quarter of fiscal 2016, the company elected to change the accounting method it uses to value its inventories in its international marketing and distribution segment, except for the steel trading division headquartered in the U.S., from the first in, first out method to the specific identification method. Because this change in accounting principle was immaterial in all prior periods, it was not applied retrospectively.
Adjusted operating profit from continuing operations was $56.1 million for the first quarter of fiscal 2016. This compares with adjusted operating profit from continuing operations of $67.0 million for the first quarter of fiscal 2015. Adjusted EBITDA from continuing operations was $87.7 million for the first quarter of fiscal 2016, compared with adjusted EBITDA from continuing operations of $100.1 million for the first quarter of fiscal 2015.
The company’s financial position at November 30, 2015 remained strong with cash and cash equivalents of $637.2 million, compared to $485.3 million at August 31, 2015, and approximately $1.2 billion in total liquidity. Cash flow from operations was strong at $219.6 million.
Pursuant to the share repurchase program that was approved in the first quarter of fiscal 2015, the company purchased approximately 316 thousand shares of its common stock for $4.6 million during the first quarter of fiscal 2016.
The Americas recycling segment recorded adjusted operating loss of $6.5 million for the first quarter of fiscal 2016 compared to adjusted operating loss of $2.0 million for the first quarter of fiscal 2015. During the first quarter of fiscal 2016, ferrous volumes declined 21 percent, and a decrease in average ferrous selling prices outweighed a decline in average ferrous material costs which compressed average ferrous metal margins by 19 percent, in each case compared to the corresponding period in fiscal 2015. Additionally, during the first quarter of fiscal 2016, average nonferrous volumes declined 12 percent and average nonferrous metal margins were compressed by 22 percent, in each case compared to the corresponding period in fiscal 2015.
Published in the February 2016 Edition of American Recycler News
