Schnitzer Steel (SCHN) Tops Q1 EPS by 18c, Revenues Beat

Schnitzer Steel (NASDAQ: SCHN) reported Q1 EPS of $0.57, $0.18 better than the analyst estimate of $0.39. Revenue for the quarter came in at $492 million versus the consensus estimate of $437.65 million.

First Quarter Fiscal 2021 Highlights

• Diluted earnings per share from continuing operations of $0.50, more than triple earnings per share of $0.14 in the fourth quarter of fiscal 2020, and compared to a diluted loss per share from continuing operations of $(0.26) in the first quarter of fiscal 2020
• Adjusted diluted earnings per share from continuing operations of $0.57, more than double adjusted diluted earnings per share of $0.23 in the fourth quarter of fiscal 2020, and compared to an adjusted diluted loss per share of $(0.17) in the first quarter of fiscal 2020
• Net income increased to $15 million, a strong increase compared to net income of $5 million in the fourth quarter of fiscal 2020 and a net loss of $(7) million in the first quarter of fiscal 2020
• Adjusted EBITDA of $40 million in the quarter, a strong improvement compared to adjusted EBITDA of $28 million in the fourth quarter of fiscal 2020 and $10 million in the first quarter of fiscal 2020

The Company’s performance benefited from strong market demand for recycled metals and finished steel products, as well as from the execution of commercial initiatives and productivity improvements enabled by the full transition to the One Schnitzer functionally-based operating model. Markets strengthened during the quarter, with domestic ferrous selling prices returning to pre-COVID levels and nonferrous and export ferrous selling prices reaching multi-year highs by the end of the quarter. The West Coast finished steel markets also continued to demonstrate resilience.

Tamara Lundgren, Chairman and Chief Executive Officer, stated, “We were very pleased with our first quarter results, which reflect our second highest first quarter operating income in the last ten years. This strong performance reflects the resiliency of our operations and the agility of our team in leveraging positive market conditions while delivering on our productivity and operational efficiency initiatives and continuing to execute on our longer-term strategic initiatives. Our transition to a functionally-based One Schnitzer model is complete, and our improved first quarter results reflect the benefits of this more efficient structure. We believe that our strategic investments in advanced metal recovery technologies will further enhance our operational efficiencies, and we expect to complete construction of these projects by the end of this fiscal year.”

Ms. Lundgren continued, “There are many trends that support strong and sustainable ferrous and nonferrous scrap demand. The recent sharp increases in prices have been driven by low inventory levels after many quarters of de-stocking, followed by significantly higher steel mill and smelter buy plans and production levels, the transition to lower carbon technologies, and the prospect of China’s re-emergence as an importer in the global ferrous scrap market. In a world that is seeking de-carbonization, we expect recycled scrap metal to be an increasingly important metals carbon solution and for demand to accelerate.”

For earnings history and earnings-related data on Schnitzer Steel (SCHN) click here.

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