Portland, Oregon-based Schnitzer Steel Industries Inc. has reported financial results for its fourth quarter and fiscal year that ended Aug. 31, 2016. The company has reported earnings per share that were boosted by what it calls “a benefit from an insurance reimbursement” that allowed it to show earnings improvement over the previous quarter and from the comparable quarter in 2015.
The company says its earnings from continuing operations of 59 cents per share for the fourth quarter included the insurance reimbursement valued at approximately 21 cents per share. For the third quarter of fiscal 2016, Schnitzer’s reported earnings per share from continuing operations was just 41 cents per share and in the fourth quarter of fiscal 2015 its earnings from continuing operations were 42 cents per share.
The company says in its most recent quarter operating income in its Auto and Metals Recycling (AMR) business increased 29 percent year over year “as benefits from cost reduction and productivity initiatives more than offset the adverse impact of lower selling prices and sales volumes.”
Although the fourth quarter represented the highest quarterly ferrous and nonferrous sales volumes in fiscal 2016, during the quarter prices for recycled metals fell sharply in June before stabilizing in the second half of the quarter, adds the company. As a result, the AMR fourth quarter results included an estimated adverse impact from average inventory accounting of $3 million.
In its Steel Manufacturing Business (SMB), fourth quarter operating income was positive, but results were lower than the prior year fourth quarter “primarily due to the adverse impact of imports on selling prices and volumes,” says the company in the comments accompanying its results.
In the fourth quarter overall, the company generated positive operating cash flow, leading to a year over year 16 percent reduction in total debt.
“Our fourth quarter performance continued to demonstrate the benefits of our cost reduction and productivity initiatives which significantly contributed to our improved operating margins, despite a year over year decline in prices and volumes as weak global conditions persisted,” says Tamara Lundgren, Schnitzer’s president and CEO.
“Our higher profitability and working capital efficiency generated positive operating cash flow in fiscal 2016, enabling us to reduce our debt to its lowest level since fiscal 2011 while continuing to return capital to our shareholders,” adds Lundgren. “Going forward, our capital allocation priorities and strong balance sheet provide us with the flexibility and financial strength to take advantage of evolving market opportunities and further increase shareholder value.”