Commercial Metals Company Reports First Quarter Fiscal 2018 Earnings Per Share Of $0.31

IRVING, Texas, Jan. 3, 2018 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) today announced financial results for its first quarter ended November 30, 2017. Net earnings for the first quarter of fiscal 2018 were $36.8 million ($0.31 per diluted share) on net sales of $1.2 billion. This compares to net earnings of $6.3 million ($0.05 per diluted share) on net sales of $1.0 billion for the first quarter of fiscal 2017.  Earnings from continuing operations were $38.5 million for the first quarter of fiscal 2018, compared to $4.9 million for the same period of the prior fiscal year.   For the three months ended November 30, 2017, earnings from continuing operations included a net after tax benefit of $1.8 million, or $0.02 per diluted share, related to the exit of the International Marketing and Distribution segment.

As a result of the August 31, 2017 sale of CMC Cometals, the results of this division have been reflected as discontinued operations for all reported periods.

The Company's liquidity position at November 30, 2017 remained strong, with cash and cash equivalents of $130.2 million and availability under the Company's credit and accounts receivables sales facilities of approximately $617.5 million. The Company regularly evaluates the use of its cash in efforts to maximize total shareholder return, including debt repayment, capital deployment, share repurchases and dividends.

Barbara Smith, President and CEO, commented, "We delivered strong financial results during our first fiscal quarter of 2018.   In both the Americas Mills and International Mill segments, demand from the construction sector remained robust, which resulted in very good earnings. In fact, the Polish operations recorded the highest quarterly profits since 2008.  The America's Recycling segment also had the highest quarterly results since 2012 supported by rising non-ferrous pricing and a continued strong demand for ferrous material."

On January 2, 2018, the board of directors of CMC declared a quarterly dividend of $0.12 per share for shareholders of record on January 16, 2018.  The dividend will be paid on January 31, 2018.

Business Segments-Fiscal First Quarter 2018 Review
Our Americas Recycling segment recorded adjusted operating profit of $9.9 million for the first quarter of fiscal 2018 compared to an adjusted operating loss of $5.1 million for the first quarter of fiscal 2017. The improvement in adjusted operating profit compared to the same period in fiscal 2017 was primarily the result of strong volumes and non-ferrous prices which rose during the quarter.  Shipment volumes in comparison to the same period of the prior fiscal year increased by 44% as a result of higher domestic steel manufacturing utilization rates and the impact of the acquisition of yards completed during fiscal 2017.

Our Americas Mills segment recorded adjusted operating profit of $40.8 million for the first quarter of fiscal 2018 compared to adjusted operating profit of $36.9 million for the corresponding period in fiscal 2017.  We had a strong shipping quarter as non-residential construction activity remains high.  While metal margins were relatively flat in comparison to the same period in the prior fiscal year, they increased for the second consecutive fiscal quarter and were $14 per ton higher than the fourth quarter of fiscal 2017.

Our Americas Fabrication segment recorded an adjusted operating loss of $4.8 million for the first quarter of fiscal 2018 compared to adjusted operating profit of $6.7 million for the first quarter of fiscal 2017.  The average selling price for the Americas Fabrication segment was similar to the same period of fiscal year 2017; however, raw material rebar prices have increased resulting in the losses suffered during the recent quarters.  We are experiencing strong bidding activity for fabrication work, but strong competitive pressures and the availability of low cost import material have not provided a market dynamic for the increased raw material costs to be passed on to customers in the form of increased selling prices.

Our International Mill segment in Poland recorded adjusted operating profit of $23.4 million for the first quarter of fiscal 2018 compared to adjusted operating profit of $10.0 million for the corresponding period in fiscal 2017.  Shipments from this operation increased by approximately 27% in comparison to the same period of the prior fiscal year, supported by continued strength in construction activity in this market which has also resulted in improved margins. 

Outlook
Smith continued, "During our second quarter we normally experience lower shipment levels due to winter weather conditions impairing construction activity as well as a reduced number of shipping days. However, we see strength in the underlying market fundamentals supporting each of our segments as we enter calendar 2018.  End markets in both non-residential construction and original equipment manufacturers are forecasting growth and we are seeing that reflected in our shipment volumes."

"This is an exciting time for Commercial Metals Company. We are pleased to report that commissioning activities at our new micro mill in Durant, OK are progressing very smoothly, and we look forward to the mill contributing to our results during the second half of fiscal 2018.  In addition, yesterday, we announced the signing of a definitive agreement to acquire certain U.S. rebar assets from Gerdau S.A. including four mini mills and 33 rebar fabrication facilities. We believe this is an ideal strategic fit with CMC given our existing expertise in concrete reinforcing products and services.  We see significant opportunity for cost synergies and value creation for our customers and shareholders."

Conference Call
CMC invites you to listen to a live broadcast of its first quarter of fiscal 2018 conference call today, Wednesday, January 3, 2018, at 11:00 a.m. ET.  Barbara Smith, President and CEO, and Mary Lindsey, 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, including any non-GAAP disclosures, presented in the broadcast are 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 four electric arc furnace ("EAF") mini mills, an EAF micro mill, a rerolling mill, 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 CMC's expectations relating to key macro economic drivers that impact its business including demand, steel margins and effects of the ongoing trade actions in the U.S. and Poland.  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," "potential," "outlook," 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, CMC undertakes no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise.

Factors that could cause actual results to differ materially from CMC's expectations include the following: changes in economic conditions which affect demand for our products or construction activity generally, and the impact of such changes on the highly cyclical steel industry; rapid and significant changes in the price of metals potentially impairing our inventory values due to declines in commodity prices; excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing; compliance with and changes in environmental laws and regulations, including increased regulation associated with climate change and greenhouse gas emissions; potential limitations in our or our customers' abilities to access credit and non-compliance by our customers with our contracts; financial covenants and restrictions on the operation of our business contained in agreements governing our debt; currency fluctuations; global factors, including political uncertainties and military conflicts; availability of electricity and natural gas for mill operations; information technology interruptions and breaches in data security; ability to hire and retain key executives and other employees; our 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 or from competitors that have a lower cost structure or access to greater financial resources; losses or limited potential gains due to hedging transactions; litigation claims and settlements, court decisions, regulatory rulings and legal compliance risks; risk of injury or death to employees, customers or other visitors to our operations; increased costs related to health care reform legislation; and risks related to acquisitions and dispositions.

COMMERCIAL METALS COMPANY
NON-GAAP FINANCIAL MEASURES (UNAUDITED)

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 (Loss) from Continuing Operations is a non-GAAP financial measure. Adjusted operating profit (loss) from continuing operations is the sum of our earnings (loss) from continuing operations before interest expense, income taxes (benefit) and discounts on sales of accounts receivable. Adjusted operating profit (loss) from continuing operations should not be considered as an alternative to earnings (loss) from continuing operations or net earnings (loss), as determined by GAAP. However, we believe that adjusted operating profit (loss) from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties as it allows: (i) a supplemental measure of our ongoing core performance and (ii) the assessment of period-to-period performance trends. Management uses adjusted operating profit (loss) from continuing operations to evaluate our financial performance. For added flexibility, we may sell certain trade accounts receivable both in the U.S. and internationally. We consider sales of accounts receivable as an alternative source of liquidity to finance our operations, and we believe that removing these costs provides a clearer perspective of our operating performance. Adjusted operating profit (loss) from continuing operations may be inconsistent with similar measures presented by other companies.

Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure. Adjusted EBITDA from continuing operations is the sum of earnings (loss) from continuing operations before net earnings attributable to noncontrolling interests, interest expense and income taxes (benefit). It also excludes our largest recurring non-cash charge, depreciation and amortization, as well as long-lived asset and goodwill impairment charges, which are also non-cash. Adjusted EBITDA from continuing operations should not be considered as an alternative to earnings (loss) from continuing operations or net earnings (loss), or as a better measure of liquidity than net cash flows from operating activities, as determined by GAAP. However, we believe that adjusted EBITDA from continuing operations provides relevant and useful information, which is often used by analysts, creditors and other interested parties as it allows: (i) comparison of our earnings to those of our competitors; (ii) a supplemental measure of our ongoing core performance; and (iii) the assessment of period-to-period performance trends. Additionally, adjusted EBITDA from continuing operations is the target benchmark for our annual and long-term cash incentive performance plans for management. Adjusted EBITDA from continuing operations may be inconsistent with similar measures presented by other companies.

There were no net earnings attributable to noncontrolling interests during the three months ended November 30, 2017 and 2016.

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SOURCE Commercial Metals Company