Commercial Metals ends quarter with $383 million of cash, investments

By Jennifer Lanning Drey

Savannah, Ga., Dec. 21 - Commercial Metals Co. ended the first quarter of fiscal 2011 with what its chief financial officer William Larson called a "strong balance sheet," including cash and short-term investments of $383 million.

The company had $60 million drawn on its $400 million revolving credit facility at Nov. 30, the Commercial Metals reported Tuesday in its earnings release.

In accordance with amendments made to its revolver and accounts receivable securitization agreement in February 2010, the company must maintain $300 million of liquidity as defined by an EBITDA to interest coverage ratio of 2.5.

The company said it met both covenants.

Commercial Metals said in the release that it expects to meet the EBITDA to interest coverage ratio on a 12-month rolling basis at Feb. 28, at which time the $300 million liquidity requirement will no longer be effective.

The company reported net income of $700,000 on net sales of $1.8 billion for the quarter ended Nov. 30. The figures compared with a net loss of $31.2 million on net sales of $1.4 billion for the first quarter of fiscal 2010.

Commercial Metals spent $11.9 million on capital expenditures in the first quarter and is budgeting $152 million of capital expenditures for the full year. The company is being very cautious with its spending in the first six months of the fiscal year, Larson said.

Based in Irving, Texas, Commercial Metals manufactures, recycles and markets steel and metal products as well as related materials and services.

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