Commercial Metals Q1 Earnings Top View, But Sales Miss

(RTTNews) - Steel and metal products maker Commercial Metals Co. (CMC) reported Tuesday a profit for the first quarter that declined from from last year, which was boosted by gains from discontinued operations. Earnings per share from continuing operations topped analysts' expectations, while quarterly net sales missed their estimates.

During the first quarter, the company decided to exit and sell its steel distribution business in Australia and the business has been presented as a discontinued operation.

"We achieved these results despite declining scrap prices, a three week planned outage at our minimill in Poland and fewer shipping days during the first quarter of fiscal 2015 compared to the fourth quarter of fiscal 2014," Chairman, President and CEO Joe Alvarado said in a statement.

The Irving, Texas-based company reported net earnings of $36.25 million or $0.30 per share for the first quarter, lower than $45.92 million or $0.39 per share in the prior-year quarter.

Earnings from continuing operations for the quarter grew to $38.33 million or $0.32 per share from $33.70 million or $0.29 per share in the year-ago quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.28 per share for the quarter. Analysts' estimates typically exclude special items.

Results for the year-ago quarter included an after-tax gain of $0.13 per share associated with the sale of the company's wholly owned copper tube manufacturing operation, Howell Metal Co.

Results for the latest quarter include LIFO income from continuing operations of $0.03 per share, compared to $0.02 per share of LIFO expense from continuing operations in the year-ago quarter.

Total net sales for the quarter increased to $1.68 billion from $1.62 billion in the same quarter last year, but missed eight Wall Street analysts' consensus estimate of $1.77 billion.

Americas recycling reported sales that decreased to $316 million from $338million, while sales at Americas mills increased to $525 million from $481 million last year.

At Americas fabrication, sales increased to $412 million from $358 million in the prior-year quarter, while international mill sales declined to $178 million from $229 million in the year-ago quarter.

International marketing and distribution sales were $538 million, up from $445 million a year ago.

On Monday, the company declared a quarterly dividend of $0.12, payable on February 3 to shareholders of record on January 20, 2015.

The company noted that it is encouraged by the continued improvement in the U.S. economy with job growth and rising wages. U.S. manufacturing activity expanded for the eighteenth consecutive month in November 2014 and U.S. non-residential construction spending increased during the first three months of our fiscal 2015.

Looking ahead, Alvarado added, "Our second fiscal quarter has historically been slower as a result of a seasonal downturn in construction activity due to the holidays and the onset of winter weather. Consistent with prior years, we plan to take advantage of the slower business activity with planned outages for routine maintenance and equipment upgrades.

CMC closed Monday's regular trading session at $15.46, down $0.46 on a volume of 1.09 million shares.