Commercial Metals Company (CMC) prevented a loss in productivity and completely retained its workforce, despite COVID-19’s impact on business, during its fiscal third-quarter ending May 31, 2020.
CMC increased earnings, grew its market share in certain products, cut operating costs, and improved its balance sheet.
The recycler expects activity to remain strong in the construction and infrastructure spheres during its fiscal fourth quarter, said Barbara R. Smith, CMC’s president, chief executive officer and chairwoman of its board. CMC has solid manufacturing backlogs that will help the company maintain its volume levels for finished products, which, by May 31, had reached a record high.
The consumer outlook has been positive regarding construction work, Smith added, while also expressing confidence in the company’s ability to endure challenges and retain financial flexibility regarding capital allocations.
The company’s Americas recycling segment shipped 519,000mt in total ferrous and nonferrous material in Q3 FY2020 compared to 657,000mt of total ferrous and nonferrous material in Q3 FY2019. The Americas mills segment shipped 1.18mn mt of rebar, merchant and other material in Q3 FY2020 compared to 1.24mn mt of rebar, merchant and other material in Q3 FY2019.
CMC’s Americas fabrication unit shipped 427,000mt of material in Q3 FY2020 compared to 469,000mt of material shipped in Q3 FY2019. The International mill unit shipped 374,000mt of rebar, merchant and other material in Q3 FY2020 compared to 376,000mt of rebar, merchant and other material in Q3 FY2019.
The recycler’s net sales were $1.34bn in Q3 FY2020, a 16.5pc drop from net sales of $1.61bn during the same quarter a year ago. The company recorded net income of $64.7mn in Q3 2020, a 17.4pc decline from $78.4mn a year ago. Its adjusted net income was $70.4mn in Q3 2020, a 12.5pc drop from Q3 FY2019. This figure excludes $6.2mn of after-tax costs to close a West Coast fabrication facility with related expenses.
The company’s Americas recycling sector reported an adjusted EBITDA loss of $1.7mn for Q3 FY2020 compared to adjusted EBITDA of $12.3mn during the same quarter one year prior, because volumes were affected by large drops in mill demand. The Americas mills section recorded an adjusted EBITDA of $133.2mn in Q3 FY2020, a decline of 16pc compared to adjusted EBITDA of $158.1mn during the same quarter one year prior.
The Americas fabrication unit recorded adjusted EBITDA of $31.9mn in Q3 FY2020, increased from adjusted EBITDA loss of $23.3mn in Q3 FY2019. This improvement indicates substantial progress due to increased selling price margins above rebar cost. The fabrication section reached its best quarterly profit result in about 12 years, owing to the value of a fixed price contract backlog in a declining economy.
The company’s International mill segment in Poland reported adjusted EBITDA of $14.3mn in Q3 FY2020, compared to adjusted EBITDA of $24.1mn in Q3 FY2019, with the decline attributed to import difficulties that effected metal margins.