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Schnitzer Reports Fourth Quarter Fiscal 2013 Financial Results

Stocks in this article: SCHN

Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported an adjusted loss per share of $(0.51) for the fourth quarter ended August 31, 2013, excluding a non-cash goodwill impairment charge, other asset impairment charges, restructuring charges and tax valuation allowances. The Company reported a loss per share of $(10.82) for the fourth quarter ended August 31, 2013. This compares with an adjusted earnings per share of $0.11, excluding restructuring charges, and a reported loss per share of $(0.02) for the fourth quarter of fiscal 2012. Notwithstanding the significant impact to earnings as a result of the impairments and other charges, the Company generated positive operating cash flows of $38 million in the fourth quarter.

Challenging market conditions for recycled ferrous metals resulted in lower export selling prices and reduced sales volumes as compared to both the third quarter of fiscal 2013 and the fourth quarter of fiscal 2012. In addition, purchase prices for raw materials did not decrease as much as selling prices during the quarter due to constrained supply which contributed to operating margin compression in both our Metals Recycling and Auto Parts Businesses.

In the fourth quarter, our Metals Recycling Business took a non-cash goodwill impairment charge of $321 million and other asset impairment charges of $13 million. In the fourth quarter, MRB’s adjusted operating loss of $6 per ton excludes the non-cash goodwill impairment, other asset impairment charges and restructuring charges. MRB's adjusted operating income includes an estimated adverse impact of $12 per ton from a combination of average inventory costing and other items related to inventory valuations, costs associated with fire damage at two facilities and a bad debt expense from a customer bankruptcy.

Our Auto Parts Business generated operating margins of 7% in the fourth quarter, before the impact of new stores opened in fiscal 2013. APB's operating margin includes an adverse impact of approximately 400 basis points from average inventory costing. During the fourth quarter, APB incurred $2 million of operating losses related to the new sites added during fiscal 2013 which lowered APB's reported operating margin to 4%.

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