Commercial Metals Shares Gain After Q2 Results, Expect To Generate Sequential Improvement In Q3 Core EBITDA

  • Commercial Metals Co CMC reported second-quarter FY23 sales of $2.02 billion, a slight increase of 0.5% year-over-year, which beat the consensus of $1.97 billion.
  • Sales by segments: North America $1.64 billion (+1.7% Y/Y) and Europe $355.63 million (-10.14% Y/Y).
  • Adjusted EPS declined to $1.44 from $1.53 in 2Q22, which was in line with the consensus of $1.44.
  • Core EBITDA decreased 6.3% Y/Y to $302.79 million, and the margin contracted by 108 bps to 15%.
  • Net cash flows from operating activities for the six months totaled $558.91 million, compared to $54.37 million a year ago.
  • As of Feb. 28, 2023, Commercial Metals' cash and equivalents were $608.42 million.
  • The North America segment's Q2 adjusted EBITDA was $299.3 million, compared to $535.5 million in the prior year.
  • The average selling price for steel products decreased by $56 per ton compared to 2Q22, while the cost of scrap utilized declined $90 per ton.
  • Dividend: The company declared a quarterly dividend of $0.16 per share, payable on Apr. 12, 2023, to stockholders of record on Apr. 3, 2023. 
  • Barbara R. Smith, Chairman of the Board, President, and Chief Executive Officer, commented, "We remain confident in our outlook for financial performance in fiscal 2023, and we expect to generate sequential improvement in core EBITDA during the third quarter."
  • Ms. Smith added, "In the third quarter, we look forward to commissioning our Arizona 2 micro mill, representing the next phase of growth at CMC, and we also anticipate that recent North America long steel price increase announcements will stabilize metal margins at historically high levels. At the same time, the third quarter will be impacted by a scheduled upgrade project similar in magnitude to the planned outage taken during the second quarter."
  • Price Action: CMC shares are trading higher by 6.87% at $47.59 on the last check Thursday.
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