Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) will report the financial results for its fiscal 2012 second quarter, which ended on February 29, 2012, on Thursday, April 5, 2012, and will webcast a conference call to discuss the performance at 11:30 a.m. Eastern on the same day. In advance of its full earnings release, Schnitzer is providing preliminary results for its second quarter of fiscal 2012.
Schnitzer expects fully diluted earnings per share for the second quarter to be approximately $0.28 - $0.35. Weaker market conditions resulted in segment operating margins that were lower than anticipated due to falling sales prices in the latter half of the quarter. The Company expects to report strong operating cash flows primarily as a result of a reduction in working capital levels due to sales volumes exceeding scrap purchase volumes which lowered inventories. Total debt to total capital is expected to approximate 27%, down from 31% at the end of the first quarter of fiscal 2012.
In our Metals Recycling Business, operating income per ferrous ton is expected to be $14-15, approximately 30% higher than the first quarter of fiscal 2012, but below the outlook in our first quarter earnings release primarily due to lower selling prices as a result of softer demand than anticipated in the latter part of the quarter. As expected, December was impacted by lower priced customer shipments that had carried over from the first quarter. Improved demand drove higher prices in January. However, the mild winter weather conditions coupled with the impact of weaker market conditions drove selling prices lower for February shipments. As a result, operating margins for the quarter as a whole were compressed. Despite seasonally weaker buying patterns, we shipped approximately 1.3 million ferrous tons and 165 million nonferrous pounds in the quarter due to strong production.
In our Auto Parts Business, operating margins are expected to be 10-11% due to the impact of the weaker selling prices for scrap and cores later in the quarter and higher vehicle purchase costs due to tight supply markets for end of life vehicles. Stronger parts sales and customer admissions benefitted from mild winter conditions. APB’s results include $2 million of additional legal costs which negatively impacted margins by 200 basis points.
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