Schnitzer Steel Industries Inc., headquartered in Portland, Oregon, has reported results for its first quarter of fiscal 2018 ended Nov. 30, 2017, including that the company’s Auto and Metals Recycling (AMR) division had its best first quarter performance since fiscal 2011.
The recycling division reports a revenue of $398.1 million in Q1 of fiscal 2018, up 46.5 percent from $271.8 million in the same time period from fiscal 2017. The financial results show that AMR’s operating income more than doubled to $35.2 million from $12.6 million.
“In the first quarter of fiscal 2018, we delivered our strongest first quarter performance since fiscal 2011,” says Tamara Lundgren, Schnitzer president and CEO. “AMR’s operating income per ferrous ton exceeded $40, a level last reached during fiscal 2011, when both volumes and scrap prices were significantly higher than today. This performance demonstrates our continuous focus on increasing productivity and efficiency in our core operations which, combined with the success of our commercial initiatives to grow volumes, allowed us to take full advantage of the stronger market conditions.”
The company reported earnings per share from continuing operations of $0.64 and adjusted earnings per share of 63 cents, both of which include an adverse impact of 14 cents per share related to a legacy environmental liability of $4 million. These results compare with fourth quarter fiscal 2017 earnings per share from continuing operations of 65 cents and adjusted earnings per share of 63 cents, and the prior year first quarter loss per share from continuing operations of 5 cents and adjusted loss per share of 3 cents.
Schnitzer says its AMR division achieved its best first quarter performance since fiscal 2011, with operating income of $35 million, or operating income per ferrous ton of $44, both of which are more than double the results of the first quarter of fiscal 2017. AMR’s higher year-over-year operating income and operating income per ferrous ton reflect the benefits of operating leverage from 11 percent higher ferrous sales volumes and expanded metal margins as well as higher average net selling prices and contributions from sustained productivity improvements, according to the company.
Cascade Steel and Scrap (CSS) delivered first quarter operating income of $8 million, representing an improvement from the first quarter of 2017. At that time, CSS saw an operating loss of $3 million, which included an adverse impact of approximately $2.5 million from downtime associated with a major equipment upgrade, Schnitzer says.
“CSS’s improved operating performance was driven primarily by higher finished steel sales volumes and metal spreads and also benefited from lower levels of rebar steel imports, increased selling prices driven by higher raw material costs and productivity improvements from the recent integration of our steel manufacturing and Oregon metal recycling operations,” Schnitzer says.
Consolidated financial performance in the first quarter included corporate expense of approximately $17 million, an increase of $8 million compared with the prior year first quarter primarily due to the recognition of the legacy environmental liability and higher incentive compensation accruals from improved operating performance.
Lundgren adds, “Our Cascade Steel and Scrap business also achieved significantly improved performance compared to the prior year first quarter, with operating margin expansion driven by higher volumes, reduced pressure from low-priced rebar imports and continuing productivity improvements.”