Schnitzer Steel Industries, Inc. reported a loss per share from continuing operations of $0.05 for the fiscal 2017 first quarter ended November 30, 2016 and an adjusted loss per share from continuing operations of $0.03.
Reported and adjusted first quarter results include an adverse impact on operating costs in the Steel Manufacturing Business (SMB) of approximately $2.5 million, or $0.09 per share, resulting from outages related to a major equipment upgrade and maintenance downtime. In comparison, the Company had a loss per share from continuing operations of $0.19 in the prior year first quarter and an adjusted loss per share from continuing operations of $0.13. For a reconciliation of the adjusted results to U.S. GAAP, please see the Non-GAAP Financial Measures provided after the financial statements in this document.
Auto and metals recycling (AMR) delivered its best first quarter performance since fiscal 2012 primarily due to higher benefits achieved from the successful execution of cost reduction and productivity initiatives and improved market conditions. In the steel manufacturing business (SMB), continued pressure from low-priced imports on finished steel selling prices and volumes, combined with the higher operating costs associated with a major equipment upgrade and maintenance downtime, adversely impacted results as compared to the prior year and the fourth quarter of fiscal 2016.
Schnitzer currently expects AMR’s operating income for the second quarter to increase sequentially and year-over-year driven by the continued improvements in market conditions for recycled metals. AMR’s second quarter performance is expected to reflect higher ferrous average selling prices and sales volumes and an anticipated favorable impact from average inventory accounting, as well as continued benefits from previously announced cost reduction and productivity initiatives. Schnitzer currently anticipates SMB’s second quarter performance to be slightly improved from the first quarter due to higher selling prices, with the elimination of the expenses associated with the equipment upgrade expected to be offset by higher raw material costs and higher inventory costs associated with low production volumes resulting from the downtime.
“In the first quarter, AMR delivered a substantial increase in operating income compared to the prior year quarter, largely due to the increased contributions from the successful implementation of our cost savings and productivity initiatives. In the second quarter, our expectations for improved performance are underpinned by the stronger market environment that we are experiencing as well as continued progress on our strategic initiatives to reduce costs, deliver internally-generated synergies and drive further productivity initiatives,” commented Tamara Lundgren, president and chief executive officer.
Published in the February 2017 Edition of American Recycler News