Commercial Metals Company Reports First Quarter Earnings Per Share Of $0.30, Earnings Per Share From Continuing Operations Of $0.32, And Announces Quarterly Dividend Of $0.12 Per Share

IRVING, Texas, Jan. 6, 2015 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today announced financial results for its first quarter ended November 30, 2014. Net earnings attributable to CMC for the first quarter ended November 30, 2014 were $36.3 million, or $0.30 per diluted share, on net sales of $1.7 billion. This compares to net earnings attributable to CMC of $45.9 million, or $0.39 per diluted share, on net sales of $1.6 billion for the three months ended November 30, 2013.  Results for the first quarter of fiscal 2014 included an after-tax gain of $15.5 million ($0.13 per diluted share) associated with the sale of the Company's wholly owned copper tube manufacturing operation, Howell Metal Company.

During the first quarter of fiscal 2015, the Company decided to exit and sell its steel distribution business in Australia. As a result, this business has been presented as a discontinued operation for all periods presented.

Earnings from continuing operations were $38.3 million ($0.32 per diluted share) for the first quarter of fiscal 2015, compared with earnings from continuing operations of $33.7 million ($0.29 per diluted share) for the first quarter of fiscal 2014.

Results for the first quarter of fiscal 2015 included after-tax LIFO income from continuing operations of $4.0 million ($0.03 per diluted share), compared with after-tax LIFO expense from continuing operations of $2.8 million ($0.02 per diluted share) for the first quarter of fiscal 2014. Adjusted operating profit from continuing operations was $73.3 million for the first quarter of fiscal 2015, compared with adjusted operating profit from continuing operations of $68.7 million for the first quarter of fiscal 2014 and $68.8 million for the fourth quarter of fiscal 2014, an improvement over both comparative quarterly periods. Adjusted EBITDA from continuing operations was $106.4 million for the first quarter of fiscal 2015, compared with adjusted EBITDA from continuing operations of $102.3 million for the first quarter of fiscal 2014.

The Company's financial position at November 30, 2014 remained strong with cash and cash equivalents of $326.1 million and approximately $1.0 billion in total liquidity. As part of our share repurchase program that was approved in late October 2014, we purchased 560,493 shares of our common stock for $9.3 million during the first quarter of fiscal 2015.

Joe Alvarado, Chairman of the Board, President, and CEO, commented, "The results for our fiscal first quarter were strong with adjusted operating profit from continuing operations improving by 7% over both the sequential quarter and the same quarterly period one year ago. 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."

On January 5, 2015, the board of directors of CMC declared a quarterly dividend of $0.12 per share for shareholders of record on January 20, 2015.  The dividend will be paid on February 3, 2015.

Business Segments

Our Americas Recycling segment recorded adjusted operating loss of $1.1 million for the first quarter of fiscal 2015 compared to adjusted operating profit of $0.8 million for the first quarter of fiscal 2014. The decline in adjusted operating profit for the first three months of fiscal 2015 was attributed to a 2% decrease in ferrous shipments and a $1 per short ton decrease in the average ferrous metal margin compared to the same period in the prior fiscal year. Nonferrous shipments increased 5%; however, a decline in average nonferrous selling prices more than offset a decline in average nonferrous material costs, which added additional pressure to average nonferrous metal margins compared to the first quarter of fiscal 2014. Furthermore, in the first quarter of fiscal 2014, this segment benefited from a pre-tax gain on real estate and facility relocation benefits of $3.7 million. In contrast, a favorable change in pre-tax LIFO of $3.2 million was recorded for the first quarter of fiscal 2015 compared to the first quarter of the prior fiscal year.

Our Americas Mills segment recorded adjusted operating profit of $75.4 million for the first quarter of fiscal 2015 compared to adjusted operating profit of $65.8 million for the same period in the prior fiscal year. The improvement in adjusted operating profit for the first quarter of fiscal 2015 was primarily due to a 7% increase in total shipments and a 4% per short ton increase in the average selling price on stable average costs of ferrous scrap consumed compared to the first quarter of fiscal 2014. Overall shipments of our higher priced finished products, including rebar and merchant, increased approximately 34 thousand short tons while our lower priced billet shipments increased approximately 15 thousand short tons.

Our Americas Fabrication segment recorded adjusted operating loss of $3.0 million for the first quarter of fiscal 2015 compared to adjusted operating profit of $2.2 million for the first quarter of fiscal 2014. Adjusted operating profit was impacted by an average metal margin compression of $14 per short ton related to our rebar product as rising mill material prices in the first quarter of fiscal 2015 outpaced the rate of rising fabrication selling prices compared to the same period in the prior fiscal year. Additionally, conversion costs for our rebar product increased $8 per short ton. Partially offsetting these items was a favorable change in pre-tax LIFO of $2.9 million for the first quarter of fiscal 2015 compared to the first quarter of the prior fiscal year.

Our International Mill segment recorded adjusted operating profit of $4.2 million for the first quarter of fiscal 2015 compared to adjusted operating profit of $15.3 million for the same period in the prior fiscal year. Adjusted operating profit in the first quarter of fiscal 2015 was impacted by a decline in shipments coupled with an average metal margin compression of 7% compared to the first quarter of fiscal 2014. Shipments declined during the first three months of fiscal 2015 due to sluggish demand in central Europe and a three week planned maintenance outage at our Polish minimill.

Our International Marketing and Distribution segment recorded adjusted operating profit of $18.3 million for the first quarter of fiscal 2015 compared to adjusted operating profit of $2.0 million for the same period in the prior fiscal year. The improvement in adjusted operating profit was primarily attributed to an increase in the average metal margins and a $3.6 million favorable change in pre-tax LIFO for our trading divisions headquartered in the U.S. In addition, our western European and Asian operations reported a strong increase in shipments for the first quarter of fiscal 2015 compared to the same period in fiscal 2014.

Outlook

Alvarado concluded, "We are 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. In November, the Architecture Billings Index (ABI), a leading indicator of construction activity, reported the seventh consecutive month greater than 50 at 50.9.

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."

Conference Call

CMC invites you to listen to a live broadcast of its first quarter of fiscal 2015 conference call today, Tuesday, January 6, 2015, at 11:00 a.m. ET.  Joe Alvarado, Chairman of the Board, President and CEO, and Barbara Smith, Senior Vice President and CFO, will host the call.  The call is accessible via our website at www.cmc.com.  In the event you are unable to listen to the live broadcast, the call will be archived and available for replay on our website on the next business day.  Financial and statistical information presented in the webcast will be located on CMC's website under "Investors."

About Commercial Metals Company

Commercial Metals Company and its 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, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.

Forward-Looking Statements

This news release contains forward-looking statements regarding the Company's expectations relating to the Company's operating plans.  These forward-looking statements generally can be identified by phrases such as we, CMC or its management, "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially.  Except as required by law, the Company undertakes no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or otherwise.

Actual results may differ materially from those projected as a result of certain risks and uncertainties, including, but not limited to, the following: absence of global economic recovery or possible recession relapse and the pace of overall global economic activity and its impact in a highly cyclical industry; construction activity or lack thereof; continued sovereign debt problems in the Euro-zone; success or failure of governmental efforts to stimulate the economy including restoring credit availability and confidence in a recovery; significant reductions in China's steel consumption or increased Chinese steel production; rapid and significant changes in the price of metals; increased capacity and product availability from competing steel minimills and other steel suppliers including import quantities and pricing; passage of new, or interpretation of existing, environmental laws and regulations; increased legislation associated with climate change and greenhouse gas emissions; solvency of financial institutions and their ability or willingness to lend; customers' inability to obtain credit and non-compliance with contracts; financial covenants and restrictions on the operation of our business contained in agreements governing our debt; currency fluctuations; global factors including political and military uncertainties; availability of electricity and natural gas for minimill operations; information technology interruptions and breaches in security data; ability to retain key executives; execution of cost reduction strategies; industry consolidation or changes in production capacity or utilization; ability to make necessary capital expenditures; availability and pricing of raw materials over which we exert little influence, including scrap metal, energy, insurance and supply prices; unexpected equipment failures; competition from other materials; losses or limited potential gains due to hedging transactions; litigation claims and settlements, court decisions and regulatory rulings; risk of injury or death to employees, customers or other visitors to our operations; increased costs related to health care reform legislation; and those factors listed under Item 1A. "Risk Factors" included in the Company's Annual Report filed on Form 10-K for the fiscal year ended August 31, 2014.

COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(dollars in thousands) 

This press release contains financial measures not derived in accordance with generally accepted accounting principles ("GAAP"). Reconciliations to the most comparable GAAP measures are provided below.

Adjusted Operating Profit is a non-GAAP financial measure. Management uses adjusted operating profit to evaluate the financial performance of CMC.  Adjusted operating profit from continuing operations is the sum of our earnings from continuing operations before income taxes, interest expense and discounts on sales of accounts receivable. Adjusted operating profit is the sum of adjusted operating profit from continuing operations and adjusted operating profit (loss) from discontinued operations. For added flexibility, we may sell certain accounts receivable both in the U.S. and internationally. We consider sales of receivables as an alternative source of liquidity to finance our operations and we believe that removing these costs provides a clearer perspective of CMC's operating performance. Adjusted operating profit may be inconsistent with similar measures presented by other companies.

Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA from continuing operations is the sum of our earnings from continuing operations before interest expense and income taxes. It also excludes CMC's largest recurring non-cash charge, depreciation and amortization, as well as impairment charges, which are also non-cash. Adjusted EBITDA is the sum of adjusted EBITDA from continuing operations and adjusted EBITDA from discontinued operations. Adjusted EBITDA should not be considered as an alternative to net earnings or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP. However, we believe that adjusted EBITDA provides relevant and useful information, which is often used by analysts, creditors, and other interested parties in our industry. Adjusted EBITDA to interest expense is a covenant test in certain of CMC's debt agreements. Adjusted EBITDA is also the target benchmark for our annual and long-term cash incentive performance plans for management. Adjusted EBITDA may be inconsistent with similar measures presented by other companies.

Adjusted EBITDA to interest coverage for the quarter ended November 30, 2014:

Total Liquidity is a non-GAAP financial measure. The table below reflects the Company's cash and cash equivalents, credit facilities and availability to liquidity at November 30, 2014.

Total Capitalization:
Total capitalization is the sum of stockholders' equity attributable to CMC, long-term debt and deferred income taxes. The ratio of debt to total capitalization is a measure of current debt leverage. The following reconciles total capitalization to the most comparable GAAP measure, stockholders' equity attributable to CMC:

OTHER FINANCIAL INFORMATION
Long-term debt to capitalization ratio as of November 30, 2014:

Total debt to capitalization plus short-term debt plus notes payable ratio as of November 30, 2014:

Current ratio as of November 30, 2014:
Current assets divided by current liabilities

SOURCE Commercial Metals Company

Related Links

http://www.cmc.com