Schnitzer Steel Industries Inc.
) posted fourth-quarter fiscal 2012 (ended August 31) adjusted
earnings per share of 10 cents, outstripping the Zacks Consensus
Estimate of a loss of a penny per share.
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The adjusted earnings exclude a restructuring charge of $5
million (or 12 cents a share). Including that impact, the
Oregon-based company posted a net loss of roughly $0.5 million
(or 2 cents a share) compared with a profit of $36.7 million (or
$1.31 a share) a year ago.
For fiscal 2012, adjusted earnings were $1.11 a share compared
with $4.23 a year ago, beating the Zacks Consensus Estimate of
Revenue and margin
Revenues slid 29.5% year over year to $762.3 million in the
fourth quarter, falling short of the Zacks Consensus Estimate of
$764 million. The company saw declines across the board in the
quarter. The results were hurt by a sharp decline in selling
For the full year, sales fell 3% year over year $3,341 million,
missing the Zacks Consensus Estimate of $3,356 million.
Gross margin fell to 6.5% in the fourth quarter from 10.6% a year
ago. The company registered an operating loss of roughly $1.4
million in the quarter versus an operating income of $56.3
million a year ago.
Revenues from the Metal Recycling Business (MRB) division tumbled
32% year over year to $652 million in the quarter. Ferrous
sales volumes were 1.2 million tons, down 13% from the third
quarter, impacted by a weak pricing environment. Non-ferrous
sales volumes were 169 million pounds, up 10% sequentially.
Average ferrous prices declined 11% sequentially while average
non-ferrous prices fell 7% in the quarter.
Auto Parts Business (APB) segment sales slipped 23% year over
year to $72 million. Sales fell 14% sequentially due to lower
commodity prices and admissions.
Revenues from the Steel Manufacturing Business (SMB) fell 3% year
over year to $90 million. Finished steel sales volumes jumped 22%
sequentially (essentially flat year over year) to 126,000 tons.
Average net sales prices for finished steel products declined 7%
sequentially as a result of lower raw material costs.
Schnitzer exited fiscal 2012 with cash and cash equivalents of
$89.9 million, up roughly 82% year over year. Long-term debt
declined 17% year over year to $334.6 million. Schnitzer
repurchased 1.1 million shares during the year and returned $45
million to its shareholders through share buybacks and dividend
payouts. The company generated operating cash flow of $245
million in fiscal 2012.
The company, in August 2012, announced some restructuring
initiatives, including a reduction of about 7% of its workforce
(around 300 positions). The restructuring program also involves
integration of the metals recycling and auto parts businesses.
The company expects total restructuring expenses of roughly $12
The restructuring will help Schnitzer to improve efficiency and
support future growth, while lowering costs and enhancing
profits. The company anticipates pre-tax cost saving of $25
million from the move.
Moving ahead, the company noted that it will continue to focus on
increasing value in fiscal 2013 through expansion of its metals
recycling export platform and auto parts business and boost
performance through sustained operational improvement
Schnitzer is one of the nation's largest recyclers of scrap
metal, a leading provider of used and recycled auto parts and a
manufacturer of finished steel products. The company's healthy
cash flows and balance sheet has enabled it to return value to
shareholders through share repurchases and higher dividend
payouts. However, it remains exposed to challenging market
conditions resulting from the global economic slowdown.
Schnitzer, which competes with the likes of
Commercial Metals Company
), retains a short-term Zacks #3 Rank (Hold).