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Schnitzer Provides Outlook for Third Quarter of Fiscal 2014
05/29/2014 - Schnitzer Steel Industries Inc. announced its outlook for its third quarter of fiscal 2014 ending 31 May 2014.
Demand for recycled metals remained steady compared to the second quarter, however, selling prices for ferrous metals declined approximately US$40 from the end of the second quarter, which is expected to result in a significant adverse average inventory impact to the company’s Metals Recycling Business. Seasonal improvements in the Auto Parts Business and higher sales volumes in the Steel Manufacturing Business are expected to lead to sequential improvements in profitability in both businesses. Reported earnings per share in the third quarter are expected to be in the range of US$0.10–US$0.15, including significant tax benefits. Adjusted earnings per share, adjusted for restructuring and other impairment charges, is expected to be less than reported earnings per share due to the allocation of tax benefits in the third quarter.
In the Metals Recycling Business, ferrous sales volumes are expected to approximate the second quarter and average ferrous selling prices are expected to decline approximately 5% sequentially with a 10% decline in peak to trough selling prices. Nonferrous sales volumes are expected to increase by approximately 5% and average nonferrous selling prices are expected to approximate the second quarter. Due to the significant fall in ferrous sales prices, adverse effects of average inventory costs in the third quarter are expected to more than offset the benefits from productivity improvements, cost reductions and increased nonferrous sales. As a result, Schnitzer anticipates operating income per ton to be in the range of US$3, subject to the timing of shipments.
In the Auto Parts Business, seasonally higher retail sales are expected to drive significantly higher operating income sequentially which is anticipated to more than offset the impact of lower commodity prices. Seasonal improvements are also expected to drive a 15% increase in car purchase volumes compared to the second quarter. Operating income is expected to increase significantly with operating margins anticipated to be in the range of 9–10%, which includes the impact of stores owned for less than a year.
In the Steel Manufacturing Business, sales volumes are expected to increase by approximately 15% sequentially. Average selling prices are expected to approximate the second quarter. Stronger demand and increased sales volumes during the third quarter are expected to more than offset approximately US$1 million of operating expenses related to a planned maintenance outage. As a result, operating income is expected to be slightly above the second quarter.
The company expects to report third quarter fiscal 2014 results toward the end of June.
Schnitzer Steel Industries Inc. is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with operating facilities located in 14 states, Puerto Rico and Western Canada. The business has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The company's integrated operating platform also includes its auto parts and steel manufacturing businesses. The company's auto parts business sells used auto parts through its self-service facilities located in 16 states and Western Canada. With an effective annual production capacity of approximately 800,000 tons, the company's steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The company commenced its 108th year of operations in 2014.
In the Metals Recycling Business, ferrous sales volumes are expected to approximate the second quarter and average ferrous selling prices are expected to decline approximately 5% sequentially with a 10% decline in peak to trough selling prices. Nonferrous sales volumes are expected to increase by approximately 5% and average nonferrous selling prices are expected to approximate the second quarter. Due to the significant fall in ferrous sales prices, adverse effects of average inventory costs in the third quarter are expected to more than offset the benefits from productivity improvements, cost reductions and increased nonferrous sales. As a result, Schnitzer anticipates operating income per ton to be in the range of US$3, subject to the timing of shipments.
In the Auto Parts Business, seasonally higher retail sales are expected to drive significantly higher operating income sequentially which is anticipated to more than offset the impact of lower commodity prices. Seasonal improvements are also expected to drive a 15% increase in car purchase volumes compared to the second quarter. Operating income is expected to increase significantly with operating margins anticipated to be in the range of 9–10%, which includes the impact of stores owned for less than a year.
In the Steel Manufacturing Business, sales volumes are expected to increase by approximately 15% sequentially. Average selling prices are expected to approximate the second quarter. Stronger demand and increased sales volumes during the third quarter are expected to more than offset approximately US$1 million of operating expenses related to a planned maintenance outage. As a result, operating income is expected to be slightly above the second quarter.
The company expects to report third quarter fiscal 2014 results toward the end of June.
Schnitzer Steel Industries Inc. is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with operating facilities located in 14 states, Puerto Rico and Western Canada. The business has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The company's integrated operating platform also includes its auto parts and steel manufacturing businesses. The company's auto parts business sells used auto parts through its self-service facilities located in 16 states and Western Canada. With an effective annual production capacity of approximately 800,000 tons, the company's steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The company commenced its 108th year of operations in 2014.
