Commodity Stock To Watch: Commercial Metals Company (NYSE: CMC)

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Commercial Metals Company (NYSE: CMC) stock fell 3.99% on 12th Jan, 2021 (as of  10:58 am GMT-5; Source: Google finance) though the company posted better than expected results for the first quarter of FY 21. The company has reported earnings from continuing operations of $63.9 million compared to earnings from continuing operations of $82.8 million in the first quarter of fiscal 2020. NOC in the first quarter included net after-tax charges of $5.9 million mainly related to facility closure and asset impairment expenses at the Rancho Cucamonga Steel California operations. North American segment delivered the adjusted EBITDA of $156.6 million for the quarter, compared to adjusted EBITDA of $174.7 million in the same period last year. The main driver of this reduction was lower margins-over-scrap costs on finished products. Margins for both steel products and downstream products were affected due to the lower average selling prices compared to a year ago against higher scrap input costs. Selling prices for steel products from the mills fell by $14 per ton on a year-over-year basis but did sequentially increase due to price increase announcements that became effective in the latter half of the quarter.

Further, Europe volumes rose meaningfully compared to the prior year rising 17% mainly due to the impact of improving industrial demand in Central Europe, as well as service center restocking on merchant and wire rod. Rebar shipments were stable year over year, reflecting the resilience of construction-related demand in the domestic Polish market.

As of November 30, 2020, the cash and cash equivalents were of totals $465.2 million. During the quarter, the company used $12 million of cash to fund operating activities. The usage resulted mainly from the timing of payments related to certain accrued expenses, including the $32 million of acquisition working capital settlement.

CMC in the first quarter of FY 21 has reported the adjusted earnings per share of 58 cents, beating the analysts’ estimates for the adjusted earnings per share of 57 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $1.39 billion in the first quarter of FY 21, beating the analysts’ estimates for revenue by 2.37%.

For fiscal 2021, the company projects the capex to be between $200 million and $225 million with roughly $85 million earmarked for the new micro mill. For comparison purposes, the company have previously stated that the typical capital spends averages around $150 million annually.

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