Schnitzer Steel (SCHN) Q3 Earnings & Revenues Miss Estimates
Schnitzer Steel Industries, Inc. SCHN reported third-quarter fiscal 2023 (ended May 31, 2023) adjusted earnings of 67 cents per share, declining from $2.59 in the year-ago quarter. It missed the Zacks Consensus Estimate of 71 cents.
The company recorded revenues of $809.6 million, down around 19.9% year over year. It missed the Zacks Consensus Estimate of $818.2 million.
Stronger demand for recycled metals, leading to higher average net selling prices for ferrous and nonferrous products, contributed to significant sequential performance improvement in the reported quarter.
Schnitzer Steel Industries, Inc. Price, Consensus and EPS Surprise
Schnitzer Steel Industries, Inc. price-consensus-eps-surprise-chart | Schnitzer Steel Industries, Inc. Quote
Volumes and Pricing
Ferrous sales volumes increased 2.5% year over year in the fiscal third quarter to 1,157,000 long tons. Volumes decreased 8% from the prior quarter, which had benefited from a drawdown of inventories.
Nonferrous sales volumes increased 3.5% year over year to 207,714 pounds. Volumes also increased 26% from the prior quarter, driven by stronger nonferrous flows and higher production and recovery from SCHN's advanced nonferrous processing technologies.
Average net selling prices for ferrous and nonferrous products went up sequentially 13% and 2%, respectively.
Finished steel sales volumes were 142,000 short tons in the quarter, up around 5.2% year over year. Volumes rose around 30.3% sequentially, benefiting from seasonally stronger demand for finished steel. Finished steel average net selling prices were down 2% sequentially.
Financials
The company recorded $21 million of operating cash outflow in the quarter. The company had approximately $4.5 million in cash and cash equivalents, a decrease of 60.8% from the previous quarter. Long-term debt at the end of the quarter was $344 million, up 13.2% from the previous quarter.
Outlook
The company stated that while the near-term economic environment is showing some signs of slowing down, the long-term structural demand for recycled metals remains favorable. The demand for recycled metals is supported by the increased focus on decarbonization, the shift to low-carbon technologies and the anticipated demand associated with the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions.
Price Performance
SCHN’s shares are down 3.3% over a year compared with a 52.3% rise recorded by the industry.
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Zacks Rank & Key Picks
Schnitzer Steel carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space include Carpenter Technology Corporation CRS, Linde plc LIN and ATI Inc. ATI.
Carpenter Technology currently sports a Zacks Rank #1 (Strong Buy). CRS’ earnings surpassed Zacks Consensus Estimate in all the last four quarters. It has delivered a trailing four-quarter earnings surprise of 30.9%, on average. The stock has rallied 105.4% over the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
Linde, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.65% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 32.4% over the past year.
ATI, currently carrying a Zacks Rank #2, has surged 99.8% over the past year. The Zacks Consensus Estimate for ATI’s current-year earnings has been revised 2.1% upward in the past 60 days. Its earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of 13%, on average.
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