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Schnitzer Steel Industries Inc. Reports Operating Results (10-Q)

January 09, 2012 | About:
10qk

10qk

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Schnitzer Steel Industries Inc. (SCHN) filed Quarterly Report for the period ended 2011-11-30.

Schnitzer Steel Industries Inc. has a market cap of $1.19 billion; its shares were traded at around $43.7 with a P/E ratio of 10.31 and P/S ratio of 0.34. The dividend yield of Schnitzer Steel Industries Inc. stocks is 0.16%.

Highlight of Business Operations:

Our MRB segment generated revenues of $728 million, a $137 million increase from the first quarter of fiscal 2011. The increase in revenues was driven by a $97 million, or 20%, increase in ferrous revenues and a $34 million, or 31%, increase in nonferrous revenues. These increases were primarily due to higher average net selling prices and higher nonferrous sales volumes. MRB had operating income of $13 million compared to $26 million for the first quarter of fiscal 2011. Operating income during the quarter was negatively impacted by a compression in operating margins as a result of cost of goods sold, which reflects the weighted average inventory costing method, decreasing at a slower rate than net selling prices in a period of sharply declining recycled metal prices. In addition, operating income in the current quarter was impacted by an increase in selling, general and administrative expenses of $9 million, including operating expenses related to fiscal 2011 acquisitions of $4 million and costs associated with additional headcount from business growth.

Our APB segment generated revenues of $84 million, a $17 million increase from the first quarter of fiscal 2011. The increase in revenues was driven by an $8 million increase in scrap vehicle revenue, a $5 million increase in core revenue and a $3 million increase in parts revenue primarily due to higher commodity prices, increased car volumes from acquisitions and further enhancements of production operating efficiencies. APB had first quarter operating income of $10 million compared to $14 million for the first quarter of fiscal 2011. Operating income in the first quarter of fiscal 2012 was negatively impacted by a compression in operating margins as a result of declining net selling prices that outpaced the decrease in car purchasing costs and the adverse effect of using the weighted average inventory costing method to determine cost of goods sold. In addition, operating income was

Our SMB segment generated revenues of $80 million, a $16 million increase from the first quarter of fiscal 2011. The increase in revenues was primarily due to increases in average sales prices and finished steel sales volumes due to improved, but still weak, demand for finished steel products in western North America. SMB had operating income of $1 million compared to an operating loss of $(2) million for the first quarter of fiscal 2011.

Consolidated revenues increased $137 million to $812 million compared to the same period in the prior year. The increase in consolidated revenues was primarily due to higher average net selling prices as a result of higher commodity price levels. In addition, sales volumes increased for nonferrous materials mainly due to fiscal 2011 acquisitions and increased recovery through enhanced processing technologies and for APB primarily as a result of fiscal 2011 acquisitions. Incremental revenues from third party sales generated by fiscal 2011 acquisitions were $30 million in the first quarter of fiscal 2012.

SMB revenues increased primarily as a result of an $88 per ton increase in the average selling price for finished steel products. The increase in average selling prices for finished steel products was primarily driven by increased scrap metal purchase prices in global markets compared to the prior year quarter, reflecting our ability to pass through higher purchase prices for scrap and

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