Commercial Metals Company announced financial results for its fiscal first quarter ended November 30, 2019. First quarter earnings from continuing operations were $82.8 million on net sales of $1.4 billion, compared to prior year period earnings from continuing operations of $19.4 million on net sales of $1.3 billion. In a press release, CMC said net sales increased 8 percent on a year-over-year basis driven by the company's “growth strategy and strong fundamentals in its core markets.”
The company said that as a result of ongoing network optimization efforts, a decision was made to cease melting operations at its Rancho Cucamonga, CA facility, which resulted in a net after tax charge of $5.0 million.
The company’s 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 percent on a year-over-year basis. Low prices also reduced material flows during the quarter.”
The Americas Mills segment recorded adjusted EBITDA of $155.0 million for the first quarter of fiscal 2020, an increase of 36 percent compared to adjusted EBITDA of $113.9 million for the first quarter of fiscal 2019. Volumes increased 42 percent compared to the prior year period, primarily due to additional production from acquired facilities, the company said.
The 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,” the company said, adding that 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,” the company said.
As for an outlook, the company said, “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.”
The company anticipates metal margins will remain above the historical cycle average, but will experience a decline from first quarter levels. CMC anticipates Fabrication will remain profitable, while Recycling “should see some benefit from the recent rebound in ferrous scrap prices.”