Why Commercial Metals Shares Are Trading Higher Today

Commercial Metals Co CMC reported Q1 FY24 sales of $2.00 billion, which beat the consensus of $1.89 billion. 

The average selling price for steel products decreased $128 per ton compared to Q1 FY23, while the cost of scrap utilized declined $18 per ton, resulting in a year-over-year decrease in steel products margin over scrap of $146 per ton. 

Finished steel volumes increased by 1.1% Y/Y on continued healthy demand for North America Steel Group.

Core EBITDA decreased to $325.3 million from $425.0 million a year ago.

In Q1, the company recorded a net after-tax charge of $16.4 million related to commissioning efforts at the Arizona 2 micro mill.

Adjusted EPS of $1.63, beating the consensus of $1.45

Starting Q1 FY24, CMC changed segment reporting to reflect a realigned reporting structure, with three reportable segments - North America Steel Group, Europe Steel Group, and Emerging Businesses Group.

Dividend: On January 4, 2024, the board of directors declared a quarterly dividend of $0.16 per share of CMC common stock payable on February 1, 2024, to stockholders of record on January 18, 2024. 

Repurchase: In Q1, CMC repurchased shares worth $28.4 million. As of November 30, 2023, the company had $58.3 million remaining under the current share repurchase authorization.

As of November 30, 2023, cash and cash equivalents of $704.6 million, with available liquidity over $1.5 billion.

CMC expects margins on steel products to see further compression in Q2, however, recent price announcements is projected to support improved margins going forward.

Peter Matt, President and Chief Executive Officer, said, "looking beyond the second quarter, we expect robust spring and summer construction activity driven by increased infrastructure investments, which should support an already strong demand backdrop in both the North America Steel Group and the Emerging Businesses Group." 

"Regarding the Europe Steel Group, we expect that supply side adjustments and the impact of increasing levels of residential and infrastructure construction should drive sequential improvements in financial results beginning in the spring construction season."

Price Action: CMC shares are trading higher by 7.27% at $51.72 on the last check Monday.