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Schnitzer Steel Reports Strong Fiscal 2010 Performance
10/21/2010 - Schnitzer Steel Industries, Inc. reported net income of $18.15 million on revenues of $639.1 million for the fourth quarter, and net income of $70.7 million on revenues of $2.3 billion for the full fiscal year 2010, which ended August 21, 2010.
Schnitzer Steel Industries, Inc. reported net income of $18.15 million on revenues of $639.1 million for the fourth quarter, and net income of $70.7 million on revenues of $2.3 billion for the full fiscal year 2010, which ended August 21, 2010.
Fourth Quarter Results — The $18.15 million net income compares to net income of $41.8 million in the
previous quarter and net income of $10.9 million in the year-ago fourth quarter. Revenues of $639.1 million compare to revenues of $703.5 million in the previous quarter and revenues of $526.6 million in the year-ago fourth quarter. The company also reported $0.58 diluted earnings per share from continuing operations, which compares with $0.35 diluted earnings per share from continuing operations for the year-ago fourth quarter.
Schnitzer’s Steel Manufacturing Business delivered break-even financial results during the fourth quarter despite continued softness in West Coast markets for long steel products.
“Our ability to deliver break-even results in this weak economic environment demonstrates our ability to optimize operating performance and product flexibility,” said Lundgren. “We remain focused on reducing our controllable costs and improving productivity so that we are well-positioned when domestic market demand for finished steel products improves.”
Finished goods sales volumes declined 12% from the third quarter, reflecting a slightly weaker environment for steel products used in construction. Average net sales prices for finished steel products declined to $618 per ton (a 3% decrease from the third quarter) primarily driven by a change in product mix.
The company said the slight reduction in margins vs. the third quarter was a result of lower capacity utilization driven by lower sales volumes during the quarter.
Looking ahead to the first quarter of fiscal 2011, the company said it expects overall market demand for the Steel Manufacturing Business to remain weak in the first quarter of fiscal 2011, resulting in sales volumes slightly below the volumes delivered in the first quarter of fiscal 2010. Average sales prices are expected to approximate the levels from the fourth quarter.
The company said it also expects first quarter fiscal 2011 operating profit margins to be negative but improved from the first quarter of fiscal 2010. The company cautioned that its outlook was subject to uncertainty that could impact results.
Full Year Results — The $70.7 million net income compares to a net loss of $31.4 million for fiscal 2009, while full year revenues of $2.3 billion compare to revenues of $1.8 billion in fiscal year 2009. Diluted earnings per share from continuing operations were $2.86, which compares to a loss per share from continuing operations of ($0.99) in fiscal 2009.
“We delivered strong financial and operating performance in fiscal 2010 continuing an overall upward trend,” said Tamara Lundgren, President and CEO. “Our dedicated focus on improving our operating efficiencies, enhancing our supply networks and investing in growth capital projects significantly improved our financial and operating performance despite a sluggish domestic economy.”
“While the industry as a whole benefited from higher demand for scrap globally during fiscal year 2010, we achieved significant profit-enhancing milestones within each of our operating segments. The net result was balanced earnings and cash flow generation which enabled us to maintain a strong balance sheet while reinvesting capital in technology and acquisitions, as well as opportunistically returning capital to shareholders through share repurchases,” said Lundgren.
The company noted that its Metals Recycling Business benefited from strong demand for ferrous scrap in the emerging markets and gradually improving supply dynamics domestically. The company also expanded nonferrous recovery through investments in new separation technologies, an ongoing focus on continuous improvement, and expansion of its national collection channels. Nonferrous recycling represents a growing 21% of MRB’s revenues.
The company’s Auto Parts Business expanded margins through the realignment of its self-service model, and also improved the operating efficiency and overall performance of its 45 stores.
The company’s Steel Manufacturing Business worked aggressively to manage costs and improve operating efficiencies, which allowed it to operate at approximately break-even levels during three of the last four quarters despite very challenging market conditions throughout the year.
Schnitzer Steel Industries is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with 44 operating facilities located in 14 states and Puerto Rico, including seven export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The company's vertically integrated operating platform also includes auto parts and steel manufacturing businesses. 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 105th year of operations in fiscal 2011.
