9-Jan-2012 - Commercial Metals (CMC) Impressive Q1 Earnings May Upset Carl Icahn’s Plan To Buy It

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Iron and steel company Commercial Metals Company (CMC) delivered better than expected earnings for the first quarter driven by increased volumes, better price realization and margins though revenues fell shy of expectations. The result assumes significance in the wake of billionaire investor Carl Icahn's bid to acquire the company for 15 a share valuing it approximately 1.7 billion. Only a couple days back, Icahn Enterprises termed that Commercial Metals is not worth 15 a share with the existing board and management, especially NFL JERSEYS with its "egregious" performance. The response followed after Commercial Metals' advice to its shareholders to reject Icahn's tender offer terming it an opportunistic and low priced one. With the company delivering better than expected earnings on the strength of stronger price realization and margins, it could provide necessary headache for billionaire investor to convince the shareholders on valuation. Q1 Results The Irving, Texas-based company reported net earnings from continuing operations of 125.0 million or 1.07 a share, significantly higher than 14.9 million or 13 cents a share in the year-ago quarter. The latest quarter results included income tax benefits of 102.0 million or 87 cents a share. Excluding benefits, Commercial Metal posted earnings of 20 cents a share. Total sales grew 11.9 percent to 1.99 billion from 1.78 billion in the previous year quarter. Wall Street analysts estimated the company to earn 16 cents a share on sales of 2.05 billion. Commercial Metals attributed stronger than expected profit to higher volume selling prices and metal margins over last year quarter. The company also indicated that though ferrous scrap prices started to drop towards the end of the quarter, its Americas Recycling segment still achieved better adjusted operating profit over previous year. The board also declared a quarterly dividend of 12 cents a share payable on February 3 for shareholders of record on January 30. Outlook Going nfl headset forward, Commercial Metals expect scrap prices to see uptrend in the second quarter to benefit its recycling operations though temporary metal margin compression could not be ruled out. The backlog remains somewhat better than previous quarter with improved prices. The company's president and CEO Joe Alvarado said, "Despite the anticipated seasonal slowdown in the second quarter, we look forward to continuing to build on our momentum in 2012 and beyond." iStock Punch Though Commercial Metals' earnings topped estimates, revenue falling short of analysts' projection remains a concern, giving a tool for billionaire investor to question management's performance in an effort to avoid sweetening of bid. But one thing seems to be clear that better than expected earnings could play a spoilsport in Carl Iachn's game plan to buy the company if he fails to sweeten his bid.

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