Schnitzer Steel Industries Inc. (SCHN) filed Annual Report for the period ended 2009-08-31.
Schnitzer Steel Industries Inc. collects processes and recycles metals by operating one of the largest metals recycling businesses in the United States. They also manufacture finished steel products at their technologically advanced steel mini-mill. Schnitzer Steel Industries Inc. has a market cap of $1.45 billion; its shares were traded at around $51.19 with a P/E ratio of 17.8 and P/S ratio of 0.4. The dividend yield of Schnitzer Steel Industries Inc. stocks is 0.1%. Schnitzer Steel Industries Inc. had an annual average earning growth of 31.4% over the past 5 years.
Highlight of Business Operations:
The Registrant had 21,409,813 shares of Class A Common Stock, par value of $1.00 per share, and 6,268,029 shares of Class B Common Stock, par value of $1.00 per share, outstanding at October 15, 2009.
Domestic and foreign prices for ferrous scrap metal are generally based on prevailing market rates, which can differ by region and which are subject to market cycles that are influenced by worldwide demand from steel and other metal producers and by the availability of materials that can be processed into saleable scrap, among other factors. In recent years, worldwide demand for finished steel products has been growing at a faster rate than the available supply of recycled ferrous metal, which is one of the primary raw materials used in manufacturing steel. During this time, the demand for finished steel has been growing most rapidly in developing countries, which currently do not possess an adequate supply of raw materials to produce steel. Export recycled ferrous metal sales contracts generally provide for shipment within 30 to 90 days after the price is agreed to which, in most cases, includes freight. MRB responds to changing price levels by adjusting scrap metal purchase prices at its recycling facilities in order to manage the impact on its operating income. The spread between selling prices and the cost of purchased material is subject to a number of factors, including differences in the market conditions in the domestic regions where recycled metal is acquired and the areas in the world where the processed materials are sold, market volatility from the time the selling price is agreed with the customer until the time the raw material is purchased, and changes in the assumed costs of transportation to the buyer’s facility. MRB believes it generally benefits from rising recycled metal selling prices, which allow it to better maintain or expand both operating income and unprocessed metal flow into its facilities. The worldwide economic downturn severely constricted the demand for finished steel and the availability of raw materials. Weakened economic conditions contributed to MRB’s average net selling price per ton for recycled ferrous metal decreasing from $436 per ton in fiscal 2008 to $264 per ton in fiscal 2009. The fiscal 2009 financial results were adversely impacted by these decreased selling prices, which fell more than purchase costs for raw materials due to the reduced availability of such materials.
On October 13, 2009, MRB had a backlog of orders to sell $73 million of export ferrous metal compared to $144 million on October 13, 2008. Additionally, on September 30, 2009 MRB had a backlog of orders to sell $18 million of export nonferrous metal compared to $15 million on September 30, 2008.
SCHN is in the portfolios of David Williams of Columbia Value and Restructuring Fund, Richard Aster Jr of Meridian Fund, Kenneth Fisher of Fisher Asset Management, LLC.
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