Notable News Spotlight: Schnitzer Steel Industries, Inc. (NASDAQ: SCHN)

Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) spotted trading -41.68% off 52-week high price. On the other end, the stock has been noted 58.77% away from the low price over the last 52-weeks. The stock changed 2.04% to recent value of $16.02. The stock transacted 154986 shares during most recent day however it has an average volume of 235.19K shares.

Schnitzer Steel Industries, Inc. (SCHN) recently stated results for its fiscal third quarter ended May 31, 2020. Reflecting the impact of the COVID-19 pandemic, the Company stated a loss per share from continuing operations for the quarter of $(0.18) and adjusted earnings per share of $0.05, contrast to second quarter stated and adjusted earnings per share of $0.14 and $0.31, respectively. Comparatively, previous year third quarter stated and adjusted earnings per share from continuing operations were $0.56 and $0.65, respectively.

Auto and Metals Recycling (AMR) achieved operating income in the third quarter of $3M or $3 per ferrous ton and adjusted operating income of $5M or $6 per ferrous ton, both of which include an adverse impact from average inventory accounting of about $3 per ferrous ton. The COVID-19 pandemic and subsequent measures introduced by local and national governments resulted in an economic slowdown which reduced supply flows and caused a sharp decline in scrap prices before prices partially recovered later in the quarter. Reflecting the success of AMR’s global sales diversification strategy, AMR’s ferrous and nonferrous sales were shipped to 21 countries despite the weaker global markets.

Cascade Steel and Scrap (CSS) achieved operating income in the third quarter of $7M, almost double the operating income achieved in the second quarter. The improved CSS operating performance was primarily driven by margin expansionBecause of the lower cost of raw materials, higher utilization and the benefits of productivity initiatives. Construction demand in the West Coast markets continued to show strength during the quarter despite the negative impact of COVID-19 on general economic activity.

Corporate Items

In the third quarter of fiscal 2020, consolidated financial performance included Corporate expense of $10M and adjusted Corporate expense of $8M, contrast to $10M and $9M, respectively, in the second quarter of fiscal 2020. The Company’s effective tax rate for the third quarter of fiscal 2020 was a benefit of 28%.

The Company has substantially implemented ahead of schedule the productivity initiatives reported in October 2019 targeting realized benefits of $15M in fiscal 2020 and annualized benefits of $20M. Consolidated results in the third quarter reflected an estimated $6M of benefits from these measures, with total benefits achieved through the first nine months of fiscal 2020 of about $12M. In connection with ongoing productivity initiatives, the Company incurred restructuring charges and other exit-related costs of about $3M in the quarter.

In the third quarter, the Company generated positive operating cash flow of $39M. Total debt at the end of the quarter was $428M and debt, net of cash, was $121M (for a reconciliation of adjusted results and debt, net of cash, to U.S. GAAP, see the table provided in the Non-GAAP Financial Measures section). The Company has a revolving credit facility of $700M and CAD$15M which matures in 2023. In order to preserve financial flexibility in light of uncertainties resulting from the COVID-19 outbreak, during the quarter the Company increased its borrowings under the revolving credit facility by $250M, contributing to its cash position of $308M as of May 31, 2020.

During the third quarter, the Company returned capital to shareholders through its 105th consecutive quarterly dividend. Capital expenditures were $22M in the quarter and $59M year to date, including investments for advanced metal recovery technologies and other growth projects.

 Its earnings per share (EPS) expected to touch remained -51.90% for this year while earning per share for the next 5-years is expected to reach at 10.00%. SCHN has a gross margin of 12.40% and an operating margin of 2.20% while its profit margin remained 1.20% for the last 12 months.   According to the most recent quarter its current ratio was 2.1 that represents company’s ability to meet its current financial obligations. The price moved ahead of 7.09% from the mean of 20 days, 14.11% from mean of 50 days SMA and performed -14.61% from mean of 200 days price. Company’s performance for the week was 8.76%, 2.96% for month and YTD performance remained -26.11%.

 

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