Schnitzer Steel Industries, Inc. Earnings: Margins Shrink on Rising Costs, Net Income Falls
Rising costs hurt Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) in the third quarter as profit dropped from a year earlier. Schnitzer Steel Industries, Inc. is currently a recycler of ferrous and nonferrous scrap metal, a recycler of used and salvaged vehicles and a manufacturer of finished steel products.
Schnitzer Steel Industries Earnings Cheat Sheet for the Third Quarter
Results: Net income for Schnitzer Steel Industries, Inc. fell to $33 million ($1.18 per share) vs. $40.5 million ($1.43 per share) a year earlier. This is a decline of 18.4% from the year earlier quarter.
Revenue: Rose 39.4% to $981.1 million from the year earlier quarter.
Actual vs. Wall St. Expectations: SCHN was about in line with expectations as the mean analyst estimate of a loss of $1.19 per share. Estimates ranged from $1.05 per share to $1.46 per share.
Quoting Management: “We are pleased to report another strong quarter of performance with revenues and operating income up sequentially by 36% and 20%, respectively. Year-to-date we have generated a 43% increase in revenues and a 28% increase in operating income,” said Tamara Lundgren, President and Chief Executive Officer. “Our results demonstrate a steady upward trend throughout fiscal 2011, driven by continued global demand for our recycled metal products as well as the early contributions from our recent acquisitions.”
The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 44.9%, with the biggest boost coming in the first quarter when revenue rose 71.2% from the year earlier quarter.
Gross margin shrank 3.6 percentage points to 11.3%. The contraction appeared to be driven by increased costs, which rose 45.4% from the year earlier quarter while revenue rose 39.4%.
Competitors to Watch: Sims Metal Management Ltd (NYSE:SMS), Commercial Metals Company (NYSE:CMC), Steel Dynamics, Inc. (NASDAQ:STLD), Nucor Corporation (NYSE:NUE), Metalico, Inc. (AMEX:MEA), Worthington Industries, Inc. (NYSE:WOR), AK Steel Holding Corp. (NYSE:AKS), Titanium Metals Corp. (NYSE:TIE), Grupo Simec S.A.B. de C.V. (AMEX:SIM), and United States Steel Corp. (NYSE:X).
Stock Performance: Shares of SCHN are up over 1.5% today…
(Source: Xignite Financials)