CMC: Commercial Metals Company Stock

Analysis
Commercial Metals Company (CMC) is known for manufacturing recycling and marketing
steel and metal products as well as related materials and services. CMC has a network of steel
mills, fabrication and processing facilities and metal recycling facilities.
With 5 business segments, this company specialised in fabrication, marketing, recycling and
redistribution. The 5 segments are Americas Mills, Americas Recycling, Americas Fabrication,
International Mill and International Marketing and Distribution.
Analysis of Results
Commercial Metals Company (CMC: NYSE) announced its results for Q3 in the quarter
ending May 31, 2016. Earnings from continuing operations for Q3 of FY2016 were USD 35.1
million or $0.30 per diluted share on net sales of US $1.2 billion. This compares to earnings from
continuing operations of USD 39.2 million in Q3, 2015.
Net earnings for CMC for the three months ending May 31, 2016 were USD 19.3 million ($0.17
per diluted share) as against net earnings of USD 28.7 million for Q3, 2015.
According to the company press release, Chairman of the Board, President and CEO commented
that the results were pleasing "we experienced strong demand as four of our five segments
reported increased shipments. Our Americas Recycling and Americas Fabrication segments
continued to realise improvements in average metal margins."
Adjusted operating profit from continuing operations was USD 60.9 million for Q3 of 2016 as
against adjusted operating profit of USD 82.2 million for Q3, 2015. However, the company's
financial position was strong with robust total liquidity and cash as well as cash equivalents of
USD 483.9 million. Cash flow generated from operations was strong for the third quarter.
Earnings from continuing operations for nine months ending May 31, 2016 was USD 71.6
million or $0.61 per diluted share. This was on net sales of USD 3.4 billion as against USD 86.9
million ($.74 per diluted share) on net sales of USD 4.6 billion for the nine months ending May
31, 2015.
Adjusted operating profit from continuing operations equalled USD 147.0 million compared to
USD 187.0 million for the 9 months ending May 2016 and 2015. Adjusted EBITDA from
continuing operations was USD 241.3 million as against 285.6 million for the same period in the
previous year.
Conclusion

Key indicators of the company are pointing towards strong demand in the US construction
industry and growing need for the housing sector based on this. Productivity and cost
improvements are needed for the company to prosper and advance. Keeping this in mind, targets
for the Q4 fiscal FY2016 are robust and well delineated.
In sum,CMC is a strong BUY choice for investors who want good returns and stable income
generation opportunities by investing in the steel and metal growth story.
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