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Schnitzer Reports Second Quarter Fiscal 2012 Results
04/06/2012 - Schnitzer Steel Industries, Inc. reported diluted earnings per share from continuing operations of $0.35 for its fiscal 2012 second quarter ended February 29, 2012, compared to $0.25 in the first quarter of fiscal 2012.
Schnitzer Steel Industries, Inc. reported diluted earnings per share from continuing operations of $0.35 for its fiscal 2012 second quarter ended February 29, 2012, compared to $0.25 in the first quarter of fiscal 2012.
The company generated $128 million in operating cash flow during the second quarter and reduced total debt to total capital to 27%, down from 31% at the end of the first quarter of fiscal 2012.
Schnitzer's Board of Directors recently declared a dividend of $0.1875 per common share, which represents an increase in the annual cash dividend to $0.75 per share from the prior annual dividend of $0.07. The quarterly dividend at the new rate will be payable on May 31, 2012, to shareholders of record on the close of business on May 17, 2012.
The company reported revenue of $887 million in 2Q12 compared to $812 million in the first quarter and $722 million in the second quarter of last year. Operating income was $18 million vs. $15 million in first quarter 2012 and $46 million in last year’s second quarter.
“Export demand for recycled metals improved from the first quarter, driving higher sales volumes for ferrous and nonferrous recycled products. Consolidated performance improved sequentially, although results were impacted by continued tight supply of raw material and significantly lower selling prices in December that carried over from the first quarter. Prices rose on early January shipments but softened during the latter part of the quarter as concerns over the global economy continued and the mild winter weather eased customer concerns regarding availability of materials for sale,” said Tamara Lundgren, President and Chief Executive Officer.
“Our Auto Parts Business experienced strong year-over-year growth in revenues due mainly to increased parts sales and admissions, with overall results impacted by softer commodity prices and higher purchase costs for vehicles. Our Steel Manufacturing Business delivered slightly below break-even results, similar to last year, notwithstanding lower utilization due to planned maintenance.
“Through our ongoing integration and continuous improvement initiatives, the company has been executing on reductions to SG&A costs by extracting synergies across the organization," Lundgren continued. “Our capital deployment strategy will continue to prioritize strategic growth initiatives which enable us to enhance our market position and operational performance, maintain a healthy capital structure, and deliver tangible shareholder returns through dividends and share repurchases."
Key business drivers during the second quarter of fiscal 2012 as compared to the first quarter of fiscal 2012 were:
· Metals Recycling Business ferrous volumes increased 10% and nonferrous volumes increased 23% from the first quarter. Operating income increased 52% due to higher sales volumes and lower selling prices, general and administrative costs (SG&A).
· Auto Parts Business revenues decreased 7% on softer commodity prices, which reduced selling prices for scrap. Operating income decreased 17% primarily due to tighter supply markets which compressed margins.
· Steel Manufacturing Business generated a second quarter operating loss of $1 million due to slightly lower utilization levels and planned maintenance costs.
Schnitzer Steel Industries, Inc. is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with 57 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.
