Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) announced today its market outlook for the second quarter of fiscal 2013 ended February 28, 2013. The Company expects to report a sequential improvement in its consolidated financial performance in the second quarter of fiscal 2013. For the second quarter, fully diluted earnings per share are expected to be in the range of $0.20 – $0.26 before restructuring charges. In the second quarter, we expect to incur a pre-tax restructuring charge in connection with our announcement in August of approximately $2 million, which equates to $0.04 earnings per share. Actual financial performance may be materially different based on, among other factors, market conditions and the timing of shipments.
In our Metals Recycling Business, ferrous export selling prices strengthened throughout the quarter, with prices for February shipments approximately $40 per ton higher than shipments at the end of the first quarter, while domestic selling prices weakened slightly toward the end of the quarter. The supply of scrap continued to be constrained by low US GDP growth, resulting in high raw material costs which moderated the overall improvement to margins. During the second quarter, ferrous average net selling prices increased slightly from the first quarter of fiscal 2013 and ferrous sales volumes increased approximately 15% – 20%. Nonferrous average selling prices are in line with the first quarter while volumes increased approximately 10%. The combination of higher selling price and volumes trends are expected to generate operating income per ferrous ton of approximately $12, an increase of 100% from the first quarter of fiscal 2013.
In our Auto Parts Business, higher commodity prices, stronger car purchases and the incremental volume contribution of acquisitions are expected to result in an increase of approximately 10% in revenues from the first quarter of fiscal 2013. APB’s operating margin, excluding the impact of new locations added since the first quarter, is expected to be approximately 10%, a sequential increase over the prior quarter’s performance. During the second quarter, APB added 10 new locations which, as anticipated, will result in approximately $2 million of transaction, integration and startup costs which will impact APB’s reported operating margin, expected to be approximately 7%, in the quarter.