Schnitzer Steel Tarnishes: Fool by Numbers

On Monday, Jan. 8, Schnitzer Steel (Nasdaq: SCHN) released first-quarter 2007 earnings for the period ended Nov. 30, 2006.

• First-quarter sales rose 49% to $509.9 million, but this was offset by the cost of goods sold surging 53% to $434.7 million.
• Net income fell nearly in half to $21.2 million, or $0.69 per share, as Q1 2006 profits were helped by a $34 million asset sale gain.
• Schnitzer Steel has a three-star rating at Motley Fool CAPS.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q1 2006	Q1 2005	Change
Sales	$510	$341	49.4%
Net Profit	$21	$42	(48.9%)
EPS	$0.69	$1.34	(48.5%)
Diluted Shares	31	31	(0.5%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q1 2006	Q1 2005	Change*
Gross Margin	14.75%	16.44%	(1.69)
Operating Margin**	6.33%	4.63%	1.70
Net Margin	4.16%	12.16%	(8.00)

*Expressed in percentage points.
** Operating income from wholly-owned operations

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q1 2006	Q1 2005	Change
Cash + ST Invest.	$25	$37	(32.6%)
Accounts Rec.	$125	$107	16.9%
Inventory	$289	$212	36.3%

Liabilities	Q1 2006	Q1 2005	Change
Accounts Payable	$71	$57	26.1%
Long-Term Debt	$143	$86	66.0%

Learn the ways of the balance sheet.

Cash Flow Highlights

	Q1 2006	Q1 2005	Change
Cash From Ops.	($24)	$31	N/A
Capital Expenditures	$24	$16	50.6%
Free Cash Flow	($48)	$16	N/A

Find out why Fools always follow the money.

Related Companies:

• Nucor (NYSE: NUE)
• Commercial Metals (NYSE: CMC)
• Metal Management (NYSE: MM)

Related Foolishness:

• Foolish Forecast: Steely Schnitzer
• Schnitzer: A Hard Stock to Own
• Schnitzer Starts Fresh

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

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At the time of publication, Rich Duprey had no positions in any of the stocks mentioned here. Fool rules are here.