Shares of Commercial Metals Co. (CMC) reversed course and moved sharply higher Tuesday as investors shrugged off a worse-than-expected second-quarter performance and focused instead on the company's comments that ferrous scrap-metal prices could be nearing a bottom.

During the company's conference call to discuss its second-quarter loss, certain analysts also concluded that -- by some non-GAAP measurements -- Commercial Metals was actually profitable during the period.

Shares had been down after the company said it swung to a second-quarter loss and indicated it expected to record a third-quarter loss, albeit a narrower one.

But the stock climbed steadily through the call as analysts realized the company had posted about $103 million in charges due to severance costs, as well as what the company referred to as "bizarre" income tax rates and "bad debt increases."

Shares of the scrap metal processors, which have plummeted from a year high of around $40 last summer as demand and prices for scrap metal have dropped, were recently up 9% at $12.06 on heavy volume. Over the course of the day, shares have traded as low as $9.91 and as high $12.20.

Commercial Metals reported a second-quarter loss of 32 cents a share from a year-earlier profit of 34 cents a share and indicated revenue fell to $1.62 billion from $2.25 billion a year earlier.

The company said the latest results included after-tax LIFO income of 72 cents a share. LIFO is an inventory costing method that assumes the most recent inventory purchases or goods manufactured are sold first which in periods of declining prices results in income that eliminates the effect of deflation from operating results.

Analysts were expecting earnings of 3 cents a share on revenue of $1.88 billion for the current quarter. Analysts' estimates typically exclude special items.

According to a transcript of the call from FactSet, Michelle Applebaum, an analyst with Applebaum Research, estimated that the company's non-GAAP earnings figure for the second quarter was around 20 cents a share. The company refused to confirm the figure during the call and subsequent messages left for company representatives were not immediately returned.

In its earnings release, the company said it was likely that metal margins would contract in the third quarter and that the company's backlog would continue to decrease.

During the call, Financial Chief William Larson said, "Pricing [of scrap metal] may deteriorate some, but we are close to what we believe is the bottom," adding that the company's "cash flow has allowed us to retire $180 million in debt this quarter, fund our capital expenditure program, and build cash balances all with sufficient backstop liquidity if needed."

Commercial Metals said in its earnings release that it was adjusting production and inventory "to meet the reduced market demand." The company also said it had no long-term debt payments due until 2013.

-Adam Edelman, Dow Jones Newswires; 201-938-5400; adam.edelman@dowjones.com