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Schnitzer Reports First Quarter 2014 Financial Results

Stocks in this article: SCHN

Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) today reported an adjusted loss per share of $(0.18) and a loss per share of $(0.23) for its fiscal 2014 first quarter ended November 30, 2013. Adjusted results for the first quarter exclude a $2 million, or $0.05 per share, restructuring charge associated with cost reduction initiatives. In the first quarter of fiscal 2013, the Company reported an adjusted loss per share of $(0.02) and a loss per share of $(0.06).

All three business segments generated positive operating income during the first quarter of fiscal 2014. As anticipated, our Metals Recycling Business improved sequentially, delivering results slightly above break-even. Our Auto Parts Business also improved compared to the fourth quarter of fiscal 2013, recording operating margins of 9%, excluding the impact of new stores added since the first quarter of fiscal 2013. Our Steel Manufacturing Business was in line sequentially notwithstanding a bad debt expense of $1 million, or $0.03 per share. The first quarter results also include a charge for deferred tax valuation allowances of $1 million, or $0.04 per share.

Market conditions improved as the quarter progressed. Both prices and demand were relatively weak in the first half of the quarter which impacted shipments in September and October. In the second half of the quarter, demand strengthened which increased prices by approximately $30 per ton. Consequently, performance in the last month of the quarter was significantly better than during the first two months. The softer demand at the start of the quarter resulted in an estimated adverse impact from average inventory costs of approximately $6 per ton in our Metals Recycling Business. Based on current market conditions and our cost reduction initiatives, we anticipate improved results in each of our businesses in the second quarter.

Summary Results
($ in millions, except per share amounts)
1Q14 4Q13 1Q13
Revenues $ 588 $ 657 $ 593
Operating Income (Loss) $ (4 ) $ (348 ) $ 1
Goodwill Impairment Charge 321
Other Asset Impairment Charges 13
Restructuring Charges 2   3   2  
Adjusted Operating Income (Loss) (1) $ (2 ) $ (11 ) $ 3
Net Loss attributable to SSI $ (6 ) $ (289 ) $ (2 )
Adjusted Net Loss attributable to SSI (1) $ (5 ) $ (14 ) $ (1 )
Net Loss per share attributable to SSI $ (0.23 ) $ (10.82 ) $ (0.06 )
Adjusted diluted EPS attributable to SSI (1) $ (0.18 ) $ (0.51 ) $ (0.02 )

(1) 1Q14 and 1Q13 include adjustments for restructuring charges. 4Q13 includes adjustments for a non-cash goodwill impairment charge, other asset impairment charges, restructuring charges and tax valuation allowances net of tax. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.

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