Schnitzer Steel Industries Earnings: Tops Profit Expectation

Schnitzer Steel Industries Inc. (NASDAQ:SCHN) dropped to a fourth quarter loss, but results topped expectations. Schnitzer Steel Industries is currently a recycler of ferrous and nonferrous scrap metal and used and salvaged vehicles. It is also a manufacturer of finished steel products.

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Schnitzer Steel Industries Inc. Earnings Cheat Sheet

Results: Reported a loss of $485,000 (2 cents per diluted share) in the quarter. Schnitzer Steel Industries Inc. had a net income of $36.7 million or $1.31 per share in the year-earlier quarter.

Revenue: Fell 29.5% to $762.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Schnitzer Steel Industries Inc. reported adjusted net income of 10 cents per share. By that measure, the company beat the mean analyst estimate of a loss of one cent per share. It fell short of the average revenue estimate of $876 million.

Quoting Management: “Amid significant global economic uncertainty and declining prices throughout the year, we delivered strong cash flow and relatively stable volumes, demonstrating the flexibility and resiliency of our platform. Despite the challenging market conditions, we generated $245 million in operating cash flow during fiscal 2012 which enabled us to reduce our net leverage to 18% by fiscal year end while returning capital to shareholders through a significant dividend increase and the repurchase of 1.1 million in outstanding shares,” said Tamara Lundgren, President and Chief Executive Officer.

Key Stats:

The company has now beaten analyst estimates for three quarters in a row. It beat the mark by 16 cents in the third quarter and by 2 cents in the second quarter.

After three consecutive quarters of profits, the company declared a loss in the latest quarter. The company reported a profit of $11.2 million in the third quarter, a profit of $9.6 million in the second quarter and $7 million in the first.

Revenue has fallen in the past two quarters. In the third quarter, revenue declined 10.3% to $879.9 million from the year-earlier quarter.

Cost of sales dropped to $712.4 million, down 26.3% from the year-earlier quarter. Last quarter, cost of sales was 93.5% of revenue versus 89.4% a year earlier.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for first quarter of the next fiscal year has fallen from 32 cents per share to 26 cents. Over the past sixty days, the average estimate for the fiscal year has reached $1 per share, a decline from $1.24.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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