Thursday, Schnitzer Steel Industries Inc. (SCHN), a producer of recycled ferrous metal products, said its net loss for the first quarter narrowed from the previous year quarter, primarily due to the higher volumes recorded by Auto Parts Business from the Cash-For-Clunkers stimulus program, as well as better margins in the Metals Recycling Business.
Schnitzer Steel recorded first-quarter net loss attributable to the company of $8.56 million or $0.30 per share, compared to a loss of $34.0 million or $1.21 per share in the same quarter last year.
The company reported a loss from discontinued operations of $15 million or $0.53 per share, related to the sale of its Greenleaf full-service used auto parts operations in October 2009.
Income from continuing operations was $7.21 million or $0.23 per share, compared to loss from continuing operations of $32.96 million or $1.16 per share in the prior year quarter.
On average, ten analysts polled by Thomson Reuters expected the company to earn $0.14 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter declined to $394.2 million from $472.0 million in the comparable quarter last year. Analysts expected the company to report revenue of $402.49 million for the quarter.
The Metals Recycling Business reported first quarter ferrous sales volumes in line with the levels in the prior year's first quarter with significantly improved margins. Revenues declined 21%, primarily on a decrease in average net ferrous prices. The business generated operating income of $16 million in the first quarter, compared with a loss in the prior year period.
The Steel Manufacturing Business experienced weak demand for finished steel products and higher average inventory costs resulting from higher raw material costs and lower production volumes. Revenues declined 30% compared with the first quarter last year, mainly on a 40% drop in average net sales prices for finished steel products.
The second quarter outlook for the Steel Manufacturing Business is weak, since demand is expected to result in a decline in finished steel sales volumes of 20% from the volumes in the first quarter of 2010. Auto Parts Business reported record first quarter operating income, with higher volumes from the Cash-For-Clunkers stimulus program and completing acquisition of four facilities, adding to its scale. Revenues from continuing operations for the Auto Parts Business increased 36% over last year's first quarter.
For the second quarter, Auto Parts revenues are expected to be lower due to normal seasonal declines in admissions and parts sales and lower scrap and core volumes as the Cash-for-Clunkers program ends. Revenues from continuing operations are expected to increase significantly due to higher car volumes, improved parts sales and the impact of higher commodity prices.
SCHN closed Thursday's regular trading at $52.54, down $1.33 or 2.47%, on the Nasdaq.
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