Man of Steel wanted: Commercial Metals (CMC) manufactures, recycles, and sells enough steel and metal to test even Superman. CMC operates via five segments: Americas Recycling, its metal processing plants in the US Southwest, shreds and pulverizes scrap for sale to steel mills. Americas Mills turn out reinforcing bar, flats, rounds, fence post, and other shapes. A fabrication arm shapes, produces, and treats steel bar and angles. International business (rolling and finishing mills, recycling, and fabrication plants) churn out reinforcing bar and mesh. CMC's marketing and distributing segment sells products in 200 locations in more than 20 countries to the construction, energy, and transportation markets.
Despite CMC's depth of operations along with its diversified portfolio and global footprint, rollercoaster prices, sketchy demand in non-residential construction markets, and the ongoing financial credit hangover has hurt the company's performance. After suffering net losses in both 2010 and 2011, however, CMC finally returned to profitability in 2012, posting net income of $207 million. From 2011 to 2012 its total sales remained static, but the company was helped by a general decrease in operating expenses as a result of companywide cost containment initiatives.
CMC has responded to its turbulent balance sheet by lowering inventory costs, maximizing internal purchases, and cutting its workforce by almost 20%. In 2012 it sold its Croatian pipe mill operations for $30 million.
It previously exited the lackluster joist and deck business, formerly included in the Americas Fabrication segment (which took the brunt of the recession's impact) in 2010. In addition CMC sold off certain of its steel-joist manufacturing assets (hard assets and intellectual property) and facilities to Indiana-based Steel Dynamics (SDI).
In another deal with a subsidiary of Canadian fabricator Canam Group, CMC sold off substantially all of its steel deck assets. The sale included two steel deck manufacturing plants, their equipment and machinery, as well as the equipment and machinery of a third plant and the United Steel Deck name. Reversing the trend the following year, CMC acquired G.A.M. Steel, an Australia-based steel long products and plate distributor and processor, with a structural fabrication customer base.
Mergers and Acquisitions
Up until 2010 expansion has been the rule rather than the exception for CMC. The company's acquisitions increased its vertical integration, enabling, for example, recycling operations to supply more than 30% of CMC's scrap requirements, and more than 15% of finished goods shipments to be channeled through CMC rebar fabrication plants. Moreover, its acquisitions have strengthened its geographic presence against such global giants as Connell, Inductotherm Group, and Nucor Corp. – less