Commercial Metals Sets Cautious but Optimistic Tone

Looking ahead to the second quarter, the company has historically had a slower second quarter, as there is a seasonal downturn in construction activity during the holidays and the onset of winter weather. According to the CEO, Commercial Metals plans to take advantage of the slower business activity with planned outages for routine maintenance and equipment upgrades.

The different business segments, compared to the first quarter in the previous year, reported as follows:

• Americas Recycling decreased 6.5% to $316 million.
• Americas Mills increased 9.1% to $525 million.
• Americas Fabrication increased 15.1% to $412 million/
• International Mill decreased 22.5% to $178 million.
• International Marketing and Distribution increased 20.8% to $538 million.
• Eliminations for the first quarter were -$290 million, compared to -$241 million in the previous year.

The board of directors at Commercial Metals declared a quarterly dividend of $0.12 per share prior to the release of earnings that will be paid on February 3, 2015. This would put the dividend yield at roughly 3%. Note that the company had a $0.12 dividend for the first quarter of the previous year.

ALSO READ: 10 Dying and 10 Thriving U.S. Industries

Joe Alvarado, chair, 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.

Shares of Commercial Metals closed Monday down 4.5% at $15.46. Following the release of the earnings report, the initial response in the premarket was negative, on low volume, and shares were down over 6% at $14.50.

The stock has a consensus analyst price target of $20.00 and a 52-week trading range of $14.21 to $21.20. The market cap is almost $2 billion.