Schnitzer Reports Strong Third Quarter Fiscal 2011 Results
07/01/2011 - Schnitzer Steel Industries, Inc. reported diluted earnings per share from continuing operations of $1.17 for its fiscal 2011 third quarter ended May 31, 2011.
Schnitzer Steel Industries, Inc. reported diluted earnings per share from continuing operations of $1.17 for its fiscal 2011 third quarter ended May 31, 2011. This compares with diluted earnings per share from continuing operations of $1.10 in the previous quarter (2Q2011) and $1.43 in the year-ago third quarter.
For the fiscal year 2011 to date, Schnitzer reported revenues of $2.4 billion, operating income of $130 million, and diluted earnings per share from continuing operations of $2.91.
“We are pleased to report another strong quarter of performance with revenues and operating income up sequentially by 36% and 20%, respectively. Year-to-date we have generated a 43% increase in revenues and a 28% increase in operating income,” said Tamara Lundgren, President and CEO. "Our results demonstrate a steady upward trend throughout fiscal 2011, driven by continued global demand for our recycled metal products as well as the early contributions from our recent acquisitions."
“We closed two acquisitions during the third quarter, bringing the total to ten acquisitions year-to-date,” said Lundgren. “We have begun to realize the benefits of the additional market scale from these investments. We are on track to achieve the operational synergies from the new facilities we have added in the last nine months, and we are focused on implementing the longer-term growth strategies associated with our investments.”
The company said that earnings per share were lower than in the year-earlier quarter primarily because third quarter fiscal 2010 results benefited from a sharp increase in selling prices while average inventory costs rose more slowly. As a result, margins expanded significantly in the year-ago third quarter. This effect reversed in the fourth quarter of last year when sales prices declined.
Schnitzer’s Steel Manufacturing Business reported finished steel sales volumes of 118,000 tons, a 19% increase over the previous quarter, but a 10% decrease from the prior year quarter and a 4% year-to-date decrease. Average net sales prices for finished steel products increased 16% compared to the prior year quarter and 19% as compared to the first nine months of fiscal 2010. Higher sales prices resulted in 4% operating margins during the quarter and positive operating margins year-to-date.
“Our Steel Manufacturing Business achieved operating profitability for the quarter and year-to-date, primarily driven by higher sales prices and increased mill utilization,” said Lundgren. “We expect to continue to benefit from the normal seasonal improvement in construction activity during the summer months and to maximize value from our product diversification and operational efficiencies.”
The company said it expects fourth quarter sales volumes for the Steel Manufacturing Business to approximate the third quarter of fiscal 2011. Fourth quarter average net sales prices and operating margins also are expected to approximate the third quarter of fiscal 2011.
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. With an effective annual production capacity of approximately 800,000 tons, the Company's steel manufacturing business — Cascade Steel — produces finished steel products, including rebar, wire rod and other specialty products. The company commenced its 105th year of operations in fiscal 2011.
