Commercial Metals Company Reports Record Fourth Quarter And Full Year Fiscal 2021 Results
Commercial Metals Company (“CMC” or the “Company”) announced financial results for its fiscal fourth quarter ended August 31, 2021. Earnings from continuing operations were $152.3 million, or $1.24 per diluted share, on net sales of $2.0 billion, compared to prior year earnings from continuing operations of $67.8 million, or $0.56 per diluted share, on net sales of $1.4 billion. For the full year, earnings from continuing operations were $412.9 million, or $3.38 per diluted share, compared to $278.3 million, or $2.31 per diluted share in the prior year.
During the fourth quarter of fiscal 2021, the Company recorded a net after-tax charge of $1.9 million related to the impairment of recycling assets. Excluding this item, fourth quarter adjusted earnings from continuing operations were $154.2 million, or $1.26 per diluted share, compared to adjusted earnings from continuing operations of $95.3 million, or $0.79 per diluted share, in the prior year period. “Adjusted EBITDA from continuing operations”, “core EBITDA from continuing operations”, “adjusted earnings from continuing operations” and “adjusted earnings from continuing operations per diluted share” are non-GAAP financial measures. Details, including a reconciliation of each such non-GAAP financial measure, to the most directly comparable measure, prepared and presented in accordance with GAAP can be found in the financial tables that follow.
Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer, commented, “CMC’s performance during fiscal 2021 was exceptional. Our financial results once again demonstrate CMC’s significantly enhanced earnings capabilities following several years of methodical strategic transformation. Yesterday, we announced our first dividend increase in over a decade and a sizeable new share repurchase program, reflecting the board’s confidence in the Company’s enhanced financial position and future prospects. We have built a strong operating platform that will allow us to continue pursuing value accretive growth, while returning a meaningful portion of free cash flow to investors and maintaining a high-quality balance sheet.”
Ms. Smith continued, “Looking at the quarter, I am extremely proud of the CMC team’s execution on multiple fronts. Commercially and operationally, we responded to robust market demand with record shipment and production levels at several of our steel mills. This heightened activity did not detract from our ability to continue building for the future. Our team in Europe successfully ramped up CMC’s new rolling line, and we made meaningful progress at the future Arizona 2 micro mill site in North America. In addition, on September 29th we reached an agreement to sell our Rancho Cucamonga site for an expected $300 million, which will be reinvested directly into Arizona 2. Importantly, we also maintained focus on keeping our employees safe, with several operations achieving record low incident rates during the year.”
The Company’s liquidity position as of August 31, 2021 remained solid, with cash and cash equivalents of $497.7 million, and availability of $668.2 million under the Company’s credit and accounts receivable facilities.
On October 13, 2021, the board of directors declared a quarterly dividend of $0.14 per share of CMC common stock payable to stockholders of record on October 27, 2021. This represents a 17% increase over the previous dividend. The dividend will be paid on November 10, 2021, and marks 228 consecutive quarterly dividend payments by the Company.
Business Segments – Fiscal Fourth Quarter 2021 Review
The North America segment generated record adjusted EBITDA of $212.0 million for the fourth quarter of fiscal 2021, an increase of 22% compared to $174.2 million in the prior year period. This improvement was driven by increased margins across multiple products lines, coupled with higher shipments of steel products and raw materials. These positive factors were partially offset by a year-over-year increase in controllable costs per ton of finished steel shipped, due largely to inflationary pressures for freight and steelmaking consumables.
Shipment volumes of finished steel, which include steel products and downstream products, increased by 2% from the prior year fourth quarter. Demand for rebar from the mills remained relatively steady, but shipments declined modestly from the prior year due to a shift in mix toward merchant bar and wire rod. Shipments of merchant and other products increased by 29% from the prior year, driven by the broad reopening of the U.S. economy.
Margins over scrap cost on steel products increased $103 per ton from the prior year period and $41 per ton compared to the prior quarter. Market conditions were favorable for each of CMC’s key products, leading to mill volume growth of 5% and an increase of $300 per ton in average selling price compared to the fourth quarter of fiscal 2020. Margin over scrap cost on downstream products declined compared to a year ago, driven by fulfillment of fabrication contracts that were booked prior to the fiscal 2021 increase in scrap costs. Future pricing indicators on new work entering the backlog were positive during the quarter, as average price levels for bids and new awards increased significantly from the prior year quarter.
The Europe segment reported record adjusted EBITDA of $67.7 million for the fourth quarter of fiscal 2021, up 195% compared to adjusted EBITDA of $22.9 million for the prior year quarter. The improvement was driven by a significant expansion in margin over scrap as well as volume growth, as demand for steel products from both the construction and industrial end markets were solid during the quarter. Resilient construction activity supported a 16% increase in rebar shipments compared to a year ago, while the start-up of the third rolling line and the continuing manufacturing recovery in Poland and Central Europe drove 24% growth in volumes of merchant and other steel products. Average selling price increased by $317 per ton compared to the prior year quarter, and $99 per ton sequentially.
Ms. Smith said, “Based on our current view of the marketplace, we anticipate our strong operating and financial performance will continue in fiscal 2022. Volumes should remain solid, supported by a replenished construction backlog in North America, as well as broad strength across key end markets in both North America and Europe.”
“In the first quarter of fiscal 2022, we expect finished steel volumes to follow typical seasonal patterns, which have historically declined modestly from our fourth quarter levels. We expect first quarter margins to remain consistent with the historical high levels earned in the fourth quarter,” Ms. Smith added.
For the full fourth quarter results, click here.
About Commercial Metals Company
Commercial Metals Company and its subsidiaries manufacture, recycle and fabricate steel and metal products and provide related materials and services through a network including seven electric arc furnace (“EAF”) mini mills, two EAF micro mills, one rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the U.S. and Poland.
Source: Commercial Metals Company