Shares of

Schnitzer Steel

(SCHN) - Get Schnitzer Steel Industries, Inc. Class A Report

lost 12% of their value Tuesday after the company reported quarterly results that fell terribly short of Wall Street's already reduced bottom-line forecasts.

For its fiscal third quarter ended in April, Schnitzer said it lost 5 cents a share, when analysts had been expecting a profit of 16 cents. This marks the second-straight quarter that the Portland, Ore., scrap-metal recycler badly missed expectations of a profit by coming out with a loss.

Schnitzer shares were trading midday Tuesday at $52.99, down 12%, or $7.22, on more than double the daily average volume. The stock has performed well this year, gaining 60%, but is still trading far below its all-time highs -- about $111 -- reached almost exactly a year ago.

The reasons for Schnitzer's poor performance are fairly obvious: Demand for steelmaking raw materials have collapsed amid the recession. Schnitzer derives 77% of its revenue from the recycling of scrap metal and its resale (it also sells auto parts scavenged from junkers and manufactures a bit of steel), and in that core business, prices for ferrous metals, its main product, were more than cut in half compared to the same period in 2008.

As a result, third-quarter revenue from its metal-recycling business plunged to $318 million from $810 million a year ago.

Still, in a press release before the opening bell Tuesday, the company said early signs indicate that prices have improved in the ongoing fiscal fourth quarter, and should increase sequentially compared with the just-ended period. Schnitzer didn't provide any hard figures.

In total, Schnitzer said it lost $1.5 million, or 5 cents a share, down from earnings in the year-earlier period of $102 million, or $2.14 a share. Total revenue for the quarter plunged 58% to $412 million from $972 million a year ago.

Unsurprisingly, the company in its press release chose to dwell not on the reasons behind the severe miss but, instead, on the "sequential growth in operating income," "the benefits from our cost containment program," "the flexibility of our platform," and the fact that it "continued to generate strong cash flow and further reduce our debt levels." (The company, to be fair, did cut its total debt load by more than 60% to $136 million as of May 31 from $344 million as of August 31, 2008.)

Other steel-related stocks were under some pressure Tuesday as well.

US Steel

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slipped 2.6% to $36.04;


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lost 1.6% to $44.55;

Steel Dynamics

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was down 3% to $14.69;

Worthington Industries

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lost 4% to $12.74; and

Commercial Metals

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declined 3.4% to $16.01.

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