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Schnitzer Steel Industries Inc., Portland, Oregon, has released the results for its second quarter of 2022, which ended Feb. 28. The company reported a strong financial performance due to strong global demand for recycled materials and a robust west coast market for finished steel products.
According to a news release from Schnitzer, average selling prices for ferrous and nonferrous recycled metals were at or near multiyear highs in the quarter, while average finished steel prices reached all-time highs. Ferrous and nonferrous sales volumes increased year-over-year by 10 percent and 8 percent, respectively.
“Our second-quarter performance continued the trend of strong financial and operating performance leading to first-half results that were the highest in our Company’s 116-year history,” says Tamara Lundgren, chairman and CEO. “Global demand for our products and services remains very high, our outlook is strong, and our team is committed to supporting all our stakeholders safely and responsibly as we navigate through these challenging times and advance our strategic priorities.”
For the second quarter, the company has reported a net income of $38 million compared with $46 million in the second quarter of fiscal 2021. It also reported adjusted earnings before income taxation depreciation and amortization (EBITDA) of $75 million compared with $71 million in the second quarter of fiscal 2021.
“Our adjusted EBITDA of $75 million was a record for a second quarter and represented $70 per ferrous ton,” says Richard Preach, the company’s chief financial officer and chief strategy officer. “[This] was driven primarily by increased sales volumes for ferrous and nonferrous [products], higher selling prices for recycled metals and finished steel and recognition of insurance recoveries.”
Schnitzer says both figures benefited from increased average net selling prices and recognition of insurance recoveries. Performance in the quarter also reflected the impact of supply chain disruptions and compressed metal spreads on contracted ferrous sales for February shipments due to a surge in market prices in the second half of the quarter, lower year-over-year platinum group metal prices, inflationary pressure on operating costs and the adverse impact of its Everett, Massachusetts, shredder downtime.
Diluted earnings per share from continuing operations of $1.27 compared with $1.54 in the second quarter of fiscal 2021. Adjusted diluted earnings per share from continuing operations of $1.38 compared with adjusted diluted earnings per share of $1.51 in the second quarter of fiscal 2021
Ferrous and nonferrous sales volumes were up year-over-year by 10 percent and 8 percent, according to Schnitzer. Sales volumes included the first full quarter contribution from the Columbus Recycling acquisition. Average ferrous and nonferrous net selling prices were up year over year by 15 percent and 33 percent, supported by strong global demand.
Moving forward, the company expects ferrous volume growth with a fiscal 2023 target of $5.3 million tons. It also plans to expand its products and services to meet the evolving demand for recycled metals such as the company’s GRN Steel launch and the reverse logistic services it provides to manufacturers and retailers.
“We are on track to reach our goals, which is expected to expand our EBITDA per ferrous ton margins by approximately $17 per ton,” Lundgren says.