Schnitzer Steel Industries, Inc. reported results for its third quarter of fiscal 2021 ended May 31, 2021.
Third Quarter Fiscal 2021
Highlights:
•Diluted earnings per share from continuing operations of $2.16, compared to earnings per share of $1.54 in the second quarter of fiscal 2021 and a loss of ($0.18) per share in the third quarter of fiscal 2020.
•Adjusted diluted earnings per share from continuing operations of $2.20, compared to adjusted diluted earnings per share of $1.51 in the second quarter of fiscal 2021 and $0.05 in the third quarter of fiscal 2020.
•Net income of $65 million, compared to net income of $46 million in the second quarter of fiscal 2021 and a net loss of ($5) million in the third quarter of fiscal 2020.
•Adjusted EBITDA of $97 million in the quarter, compared to adjusted EBITDA of $71 million in the second quarter of fiscal 2021 and $19 million in the third quarter of fiscal 2020.
The company’s performance during the third quarter of fiscal 2021 benefited from strong demand for recycled metals globally and for finished steel products on the West Coast, with ferrous, nonferrous and finished steel selling prices reaching multi-year highs during the quarter. In addition, results for the quarter reflected the operating leverage benefits from significantly higher ferrous, nonferrous and finished steel sales volumes sequentially.
Tamara Lundgren, chairman and chief executive officer, stated, “Our third quarter financial and operational results are Schnitzer’s best in over a decade. Our performance this quarter continued to benefit from both operating efficiencies gained from the implementation of our One Schnitzer organizational model and volume growth achieved from the execution of our strategic plan. Prices for recycled ferrous and nonferrous metals during the quarter rose to multi-year highs, with peaks and troughs in prices at respectively higher levels than we’ve seen in the past decade. The post-pandemic economic recovery and positive structural commodity trends are contributing to the higher price levels.”
The benefits from higher sales volumes and increased average selling prices for ferrous and nonferrous recycled metals and finished steel products led to an expansion in operating margins, reflected in net income per ferrous ton of $54 and adjusted EBITDA per ferrous ton of $80, a sequential increase from $47 and $73, respectively.
The company’s sequential performance also reflected seasonally higher revenues from retail sales and benefits from the execution of commercial initiatives and productivity improvements supported by the One Schnitzer operating platform. Third quarter operating results also included benefits from average inventory accounting of approximately $7 per ferrous ton compared to $10 per ferrous ton in the second quarter of fiscal 2021.
On a sequential basis, ferrous sales volumes were up 24 percent and nonferrous sales volumes were up 15 percent, both driven by strong global demand. Average ferrous and nonferrous net selling prices were up 3 percent and 17 percent, respectively. Finished steel sales volumes were up 12 percent and rolling mill utilization in the quarter was 98 percent. Average net selling prices for finished steel products were up 16 percent.
On May 22, 2021, the company experienced a fire at its Cascade Steel Rolling Mill in McMinnville, Oregon. There were no injuries to personnel, and property loss or damage from the incident was limited to the mill’s melt shop. Given that the incident occurred near the end of the fiscal third quarter, there was no significant impact on the results of operations in the quarter.
The board of directors declared a cash dividend of $0.1875 per common share, payable July 26, 2021 to shareholders of record on July 12, 2021. Schnitzer has paid a dividend every quarter since going public in November 1993.
Published in the August 2021 Edition