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Schnitzer Reports Third Quarter Fiscal 2012 Financial Results

Corporate Items

The Company's effective tax rate for the third quarter was 39.3%, compared to 31.5% for the second quarter, primarily due to lower financial performance in foreign operations which are taxed at more favorable rates. The effective tax rate for the fiscal year is expected to be approximately 34%.

During the quarter the Company repurchased 555 thousand shares of its Class A Common Stock for a total cost of $15 million. Of the shares repurchased, 425 thousand ($12 million) settled in the third quarter, with the remainder to be reflected in our fourth quarter financial statements. Under authorities granted by our Board of Directors, 2.6 million shares remain available for repurchase.

Despite share repurchases and higher dividend payments, total debt decreased by $56 million to $358 million, in the third quarter from the second quarter reflecting strong operating cash flows.

Analysts' Conference Call: Third Quarter of Fiscal 2012

A conference call and slide presentation to discuss results will be held today, June 28, 2012, at 11:30 a.m. EST hosted by Tamara Lundgren, President and Chief Executive Officer, and Richard Peach, Chief Financial Officer. The call and the slides will be webcast and accessible on the Company's website at www.schnitzersteel.com.

Summary financial data provided in the following pages. The slides and related materials will be available prior to the call on the website.

 
SCHNITZER STEEL INDUSTRIES, INC. FINANCIAL HIGHLIGHTS(in thousands)(Unaudited)
 
  For the Three Months Ended (1)   For the Nine Months Ended (1)
May 31, 2012   February 29, 2012   May 31, 2011   May 31, 2012   May 31, 2011
 
REVENUES:
 
Metals Recycling Business:
Ferrous sales $ 621,923 $ 612,603 $ 702,829 $ 1,812,550 $ 1,685,986
Nonferrous sales 155,265 158,997 167,812 456,552 406,526
Other sales 9,339   10,333   8,663   27,796   15,528  
TOTAL MRB SALES 786,527 781,933 879,304 2,296,898 2,108,040
 
Auto Parts Business 82,936 78,232 86,850 245,222 226,063
Steel Manufacturing Business 78,623 84,523 90,894 243,048 224,596
Intercompany sales eliminations (68,221 ) (58,076 ) (75,986 ) (206,515 ) (180,691 )
TOTAL $ 879,865   $ 886,612   $ 981,062   $ 2,578,653   $ 2,378,008  
 
 
OPERATING INCOME (LOSS):
 
Metals Recycling Business $ 17,817 $ 19,952 $ 45,693 $ 50,868 $ 112,918
Auto Parts Business 12,543 8,708 17,328 31,693 47,324
Steel Manufacturing Business 253 (868 ) 3,485 602 739
Corporate expense (8,751 ) (9,589 ) (10,582 ) (28,635 ) (32,249 )
Intercompany eliminations 216   (216 ) (592 ) 506   976  
TOTAL $ 22,078   $ 17,987   $ 55,332   $ 55,034   $ 129,708  
 
(1) Excludes discontinued operations
 

 
SCHNITZER STEEL INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share amounts)(Unaudited)
 
  For the Three Months Ended (1)   For the Nine Months Ended (1)
May 31, 2012   February 29, 2012   May 31, 2011 May 31, 2012   May 31, 2011
Revenues $ 879,865   $ 886,612   $ 981,062   $ 2,578,653   $ 2,378,008  
Cost of goods sold 807,980 817,087 870,530 2,367,283 2,105,932
Selling, general and administrative 50,148 52,370 56,848 158,510 145,757
Income from joint ventures (341 ) (832 ) (1,648 ) (2,174 ) (3,389 )
Operating income 22,078 17,987 55,332 55,034 129,708
Interest expense (2,729 ) (3,472 ) (3,127 ) (9,473 ) (4,883 )
Other income (expense), net (154 ) 617   (31 ) 70   3,274  
Income from continuing operations before income taxes 19,195 15,132 52,174 45,631 128,099
Income tax expense (7,541 ) (4,767 ) (18,056 ) (15,870 ) (42,965 )
Income from continuing operations 11,654 10,365 34,118 29,761 85,134
Income from discontinued operations, net of tax     282     317  
Net income 11,654 10,365 34,400 29,761 85,451
Net income attributable to noncontrolling interests (413 ) (735 ) (1,372 ) (1,875 ) (3,804 )
Net income attributable to SSI $ 11,241   $ 9,630   $ 33,028   $ 27,886   $ 81,647  
Basic: (2)
Income per share from continuing operations attributable to SSI (1) $ 0.41 $ 0.35 $ 1.18 $ 1.01 $ 2.95
Income per share from discontinued operations     0.01     0.01  
Net income per share attributable to SSI $ 0.41   $ 0.35   $ 1.19   $ 1.01   $ 2.96  
Diluted: (2)
Income per share from continuing operations attributable to SSI (1) $ 0.40 $ 0.35 $ 1.17 $ 1.00 $ 2.91
Income per share from discontinued operations     0.01     0.01  
Net income per share attributable to SSI $ 0.40   $ 0.35   $ 1.18   $ 1.00   $ 2.92  
Weighted average number of common shares:
Basic 27,531 27,509 27,677 27,499 27,622
Diluted 27,795 27,781 27,998 27,748 27,952
Dividends declared per common share $ 0.188 $ 0.017 $ 0.017 $ 0.222 $ 0.051
(1) Excludes income attributable to noncontrolling interests
(2) Net income used in EPS calculation:
Income from continuing operations 11,654 10,365 34,118 29,761 85,134
Net income attributable to noncontrolling interests $ (413 )   $ (735 )   $ (1,372 )   $ (1,875 )   $ (3,804 )
Income from continuing operations attributable to SSI 11,241 9,630 32,746 27,886 81,330
Income from discontinued operations, net of tax     282     317  
Net income attributable to SSI $ 11,241   $ 9,630   $ 33,028   $ 27,886   $ 81,647  
 

 
SCHNITZER STEEL INDUSTRIES, INC. SELECTED OPERATING STATISTICS (Unaudited)
 
  1Q12   2Q12   3Q12   Fiscal YTD 2012   1Q11   2Q11   3Q11   4Q11   Fiscal YTD 2011
Metals Recycling Business              
Ferrous Processing Selling Prices ($/LT) (1)
Steel Manufacturing Business $429 $432 $434 $431 $350 $408 $442 $435 $412
Other domestic 413 421 402 412 315 399 422 410 389
Exports 436     420     427     428   359     424     443     449     421  
Average $432 $421 $424 $426 $353 $419 $440 $443 $416
 
Ferrous Processing Sales Volume (LT)
SMB 135,512 90,510 115,633 341,655 90,537 95,774 122,238 95,351 403,900
Domestic 183,938 206,632 192,888 583,458 161,301 144,250 199,818 183,502 688,871
Export 912,939     1,055,237     1,044,063     3,012,239   979,063     860,005     1,142,156     1,254,708     4,235,932  
Total Processed 1,232,389 1,352,379 1,352,584 3,937,352 1,230,901 1,100,029 1,464,212 1,533,561 5,328,703
 
Nonferrous Average Price ($/LB) (1) $1.00 $0.91 $0.97 $0.96 $0.94 $1.04 $1.12 $1.08 $1.06
 
Nonferrous Sales Volume (LB, in 000s) 137,243 168,545 154,071 459,859 111,495 121,498 144,505 191,062 568,560
 
Steel Manufacturing Business
Sales Prices ($/NT) (1) (2)
Average $722 $725 $734 $727 $634 $687 $734 $721 $697
 
Sales Volume (NT) (2)
Rebar 62,487 51,141 55,378 169,006 63,668 51,569 45,494 61,411 222,142
Coiled Products 39,120 55,785 42,753 137,658 26,917 40,947 67,020 57,553 192,437
Merchant Bar and Other 5,030     5,097     4,812     14,940   7,071     6,322     5,811     5,290     24,494  
Total 106,637 112,023 102,943 321,604 97,656 98,838 118,325 124,254 439,073
 
Rolling mill utilization 60 % 54 % 54 % 56 % 48 % 52 % 68 % 57 % 56 %
 
Auto Parts Business
Number of self-service locations at end of quarter 50 51 51 51 45 50 50 50 50
Car purchase volumes (000) 85 84 89 258 82 81 93 97 353
 
(1) Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer
(2) Excludes billet sales
 

 
SCHNITZER STEEL INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(Unaudited)
 
  May 31, 2012   August 31, 2011   May 31, 2011

Assets

Current assets:
Cash and cash equivalents $ 56,470 $ 49,462 $ 32,801
Accounts receivable, net 149,720 229,975 245,785
Inventories, net 328,057 335,120 364,159
Other current assets 55,399   39,442   25,919
Total current assets 589,646 653,999 668,664
 
Property, plant and equipment, net 544,973 555,284 538,893
 
Goodwill and other assets 676,544   680,886   681,231
 
Total assets $ 1,811,163   $ 1,890,169   $ 1,888,788
 

Liabilities and Equity

Current liabilities:
Short-term borrowings $ 668 $ 643 $ 3,280
Other current liabilities 186,007   232,670   191,850
Total current liabilities 186,675 233,313 195,130
 
Long-term debt 357,065 403,287 468,611
 
Other long-term liabilities 142,283 133,280 131,503
 
Redeemable noncontrolling interest 19,865 19,053 19,647
 
Equity:
Total SSI shareholders' equity 1,099,804 1,094,712 1,067,953
Noncontrolling interests 5,471   6,524   5,944
Total equity 1,105,275   1,101,236   1,073,897
Total liabilities and shareholders' equity $ 1,811,163   $ 1,890,169   $ 1,888,788
 




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