Schnitzer Steel Industries Earnings: Revenue Falls After Four Straight Increases, Net Income Drops

Schnitzer Steel Industries Inc. (NASDAQ:SCHN) posted lower net income in the third quarter compared with a year-earlier period. 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: Net income for Schnitzer Steel Industries Inc. fell to $11.2 million (40 cents per share) vs. $33 million ($1.18 per share) a year earlier. This is a decline of 66% from the year-earlier quarter.

Revenue: Fell 10.3% to $879.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Schnitzer Steel Industries Inc. beat the mean analyst estimate of 24 cents per share. Analysts were expecting revenue of $876 million.

Quoting Management: “Our consolidated third quarter operating income improved 23% from the second quarter, primarily due to our Auto Parts Business which benefited from higher parts sales and lower SG&A, achieving a 6% sequential growth in revenues and a 44% increase in operating income,” said Tamara Lundgren, President and Chief Executive Officer. “In our Metals Recycling Business and Steel Manufacturing Business, results reflected relatively stable volumes and a flat selling price environment. However, all of our divisions continue to be impacted by challenging market conditions resulting from the global economic slowdown.” “Our ability to generate strong operating cash flow has enabled us to return capital to shareholders through share repurchases during the quarter and a substantial increase in our quarterly dividend which we announced last quarter. At the same time, we have been able to continue investing in growth projects while steadily reducing total debt outstanding,” Lundgren said.

Key Stats:

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the fourth quarter of the last fiscal year, which saw revenue rise 69.2%.

For three quarters in a row, the company’s net income has fallen. In the second quarter, net income fell 68.8% from the year earlier, while the figure fell 60.6% in the first quarter.

The company has beaten estiamtes for two quarters in a row. In the second quarter, it topped expectations with net income of 35 cents versus a mean estimate of net income of 33 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 32 cents per share, down from $1.08 ninety days ago. For the fiscal year, the average estimate has moved down from $2.51 a share to $1.18 over the last ninety days.

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

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