Commercial Metals Company’s fully owned subsidiary, Owen Steel Company of South Carolina, has agreed to acquire certain recycling facilities from Omnisource Corp.
OmniSource is a fully owned subsidiary of Steel Dynamics. The assets consist of seven recycling facilities located in the southeast U.S. that are in close proximity to Commercial Metals’ mini mill in Cayce, SC.
This transaction, subject to the customary closing conditions, is expected to close within 50 days. With this agreement, Commercial Metals is on track to support its mill operations with a reliable, low-cost source of raw material. The company expects to realize synergies from the buyout with its existing operations in South Carolina.
Commercial Metal makes, recycles, and markets steel and metal products, and related materials and services in the U.S. and internationally.
"The signing of the asset purchase agreement for the acquisition of these facilities continues CMC's focus on supporting our mill operations with a reliable, low cost source of raw material. These locations will support our Cayce, South Carolina minimill and we expect to realize synergies with our existing operations in the region," commented Tracy Porter, Executive Vice President, CMC Operations.
Earlier this week, Commercial Metals announced financial results for its first quarter ended November 30, 2016. Earnings from continuing operations for the first quarter of fiscal 2017 were $7.2 million on net sales of $1.1 billion. This compares to earnings from continuing operations of $25.6 million on net sales of $1.2 billion for the first quarter of fiscal 2016. Net earnings attributable to CMC for the three months ended November 30, 2016 were $6.3 million. Adjusted operating profit from continuing operations was $23.4 million for the first quarter of fiscal 2017. Adjusted EBITDA from continuing operations was $53.8.
"We experienced margin compression in some of our market segments in the early part of our first quarter; however, rising raw material costs, low customer inventory levels and an increase in bidding activity in November suggest more optimistic outcomes for the balance of the year, allowing for the regular seasonal slowdown in the construction markets we experience in the second quarter,” Joe Alvarado, Chairman of the Board, President and CEO, said in a statement.