Commercial Metals Reports Improved Second Quarter Earnings
03/29/2012 - Commercial Metals Co. reported net earnings of $28.9 million, or $0.25 per diluted share, on net sales of $2.0 billion for the second quarter ended February 29, 2012. This earnings performance is a significant improvement over the net loss of $46.2 million, or $0.40 per share, reported in last year's second quarter with sales of $1.8 billion.
Commercial Metals Co. reported net earnings of $28.9 million, or $0.25 per diluted share, on net sales of $2.0 billion for the second quarter ended February 29, 2012. This earnings performance is a significant improvement over the net loss of $46.2 million, or $0.40 per share, reported in last year's second quarter with sales of $1.8 billion.
Net earnings for this year’s second quarter from continuing operations were $27.8 million, or $0.24 per diluted share. Discontinued operations, which consist primarily of the Croatian pipe mill, had net earnings of $1.0 million, or $0.01 per diluted share. Continuing operations also had after-tax LIFO expense of $1.3 million as compared to $36.2 million of after-tax LIFO expense in the second quarter of 2011.
Consecutive quarters of profitability resulted in net earnings for the six months ended February 29, 2012, of $136.6 million, or $1.17 per diluted share, with sales of $3.9 billion as compared to a net loss of $45.5 million, or $0.40 per share, with sales of $3.6 billion for the same period last year. Continuing operations for this year's first six months had net earnings of $152.9 million, or $1.31 per diluted share, while discontinued operations had a net loss of $16.3 million or $0.14 per share. Continuing operations benefited from a tax benefit of $102.0 million ($0.87 per share) related to ordinary worthless stock and bad debt deductions from the investment in the company's Croatian subsidiary.
Discontinued operations had approximately $18.0 million of severance costs in the same period. After-tax LIFO income of $14.3 million ($0.12 per share) was incurred in the six-month period ended February 29, 2012, while after-tax LIFO expense of $39.9 million ($0.35 per share) was recognized for the same period last year.
The CMC board declared a quarterly dividend of $0.12 on March 27 for shareholders of record on April 11, 2012. The dividend will be paid on April 25, 2012.
Cash and short-term investments totaled $216.2 million as of February 29, 2012. Adjusted EBITDA was $95.3 million, which is $94.7 million higher than last year's second quarter. For the six months ended February 29, 2012, cash flow from operating activities was $39.1 million and adjusted EBITDA was $150.8 million, which are $54.5 million and $83.7 million higher, respectively, than the same period in the prior year.
Joe Alvarado, President and Chief Executive Officer, said, "We achieved our second-highest quarterly adjusted operating profit since the first quarter of fiscal 2009, which was the start of the current recession. Most of our operations experienced higher volumes and selling prices than last year's second quarter. We continue to execute our plan and completed the closure of our Croatian pipe mill as all remaining production orders were shipped in the second quarter of 2012. Additionally, we are pleased with our continued progress in improving our cost structure and cash flows."
Alvarado concluded, "Our third quarter is historically our best quarter as the construction season begins with the onset of milder weather. In the third quarter of 2012, we expect scrap prices to remain relatively stable. We are encouraged by the strong backlogs for our domestic operations going into the third quarter and are optimistic about their performance if scrap prices remain stable. Our backlogs for the International Marketing and Distribution segment are at higher levels than last quarter."
Commercial Metals Co. and subsidiaries manufacture, recycle, and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities, and marketing and distribution offices in the United States and in strategic international markets.
