Q3 Financial Details
For the quarter ending on May 31, 2023, Schnitzer Steel Industries Inc., a company based in Portland, Oregon, has revealed its financial results.
Financial reports have revealed that the firm’s net income soared to $14 million, significantly higher than the second quarter of $4 million. Furthermore, net ferrous ton reported an income of $12 in contrast to $3 in Q2.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $56 million, or a per-ferrous-ton rate of $48. Excluding charges of $5 million or 18 cents per share, associated mainly with past environmental and similar issues, the diluted earnings per share from ongoing operations equaled 67 cents.
Compared to the previous quarter, ferrous sales took a downturn in the third period, falling to 1.157 million long tons (1.296 million tons) from 1.263 million long tons (1.415 million tons). On the other hand, nonferrous sales saw an uptick, reaching 208 million pounds (104,000 tons) in the same time frame compared to 165 million pounds (82,500 tons) in the preceding quarter.
The improved performance of Schnitzer has been attributed to the fact that its advanced nonferrous technology investments have resulted in higher recovery yields, and boosted sales.
A ‘Strong’ Quarter
Revealing an upsurge in demand for recycled metals, the company disclosed that average net ferrous sales prices had increased to $413 per long ton in Q3, from $367 per long ton during Q2. Although there was a decrease in finished steel average sales price, sales volume rose significantly; 142,000 short tons (128,820 long tons) were reported for Q3 compared to 109,000 short tons (98,883 long tons) seen in Q2, mostly due to seasonally stronger construction requirements during this period.
According to Schnitzer, metal margin revenues also increased due to shipments agreed on prior to the second half of the quarter when market prices began to soften. Additionally, supply levels improved from earlier in the year, yet remained tighter than what was observed at this time last year.
“Our financial and operating performance this quarter reflects stronger market conditions than we experienced earlier in the fiscal year, improved operating efficiencies from our productivity initiatives and benefits from the advanced metal recovery technology systems which have been commissioned to date,” the chairman and CEO of Schnitzer, Tamara Lundgren, stated.
“While the near-term economic environment is showing some signs of slowdown, the long-term structural demand for recycled metals remains positive, supported by the increased focus on decarbonization, the transition to low-carbon technologies and the anticipated demand associated with the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions,” She added.
Cost Saving Measures Benefit Schnitzer
Schnitzer reveals that its third-quarter financials exhibit the successful implementation of multiple cost saving initiatives. Last October, the firm announced a $10 million quarterly run rate of productivity measures and then, in January, added an extra $5 million in savings from selling, general, and administrative expenses reductions.
For the third quarter, the inventory accounting advantage was roughly $2 per ferrous ton, as opposed to $8 per ferrous ton in the previous quarter, according to the company.
At its conclusion, Q3 saw an operating cash outflow of $21 million. Total debt had grown to reach a total of $351 million, with net debt at $346 million. Capital expenditures totaled $27 million, with funds allocated towards technological upgrades in metal recovery, upkeep of business operations, and environmental programs.
