After about a century in operation, it was apparently time for SchnitzerSteel
Analyzing this first-fiscal quarter report is no great treat, though. The inclusion of two acquisitions, the unwinding of a joint venture, and some legal reserves make earnings comparisons far more hectic than in recent times. As reported, revenue rose more than 95% in the quarter, while net income (excluding asset gains and a legal reserve) dropped about 56%.
In the recycling business, the inclusion of an acquisition and the unwinding of the joint venture were responsible for the greater-than-94% growth in revenue. However, pricing was a bit weak, costs were higher, and some timing issues led to significantly lower volumes that hurt the West Coast operations. Acquisitions also made a major impact in auto parts; revenue climbed about 128%, though losses at the acquired businesses actually impaired operating income growth. Steel was a bit more simplistic, though; a large increase in production offset a small price decline and led to 27% revenue growth.
Management also offered positive news regarding an ongoing legal matter. Although the SEC and Department of Justice investigations into Schnitzer's payment of commissions to certain Asian customers' purchasing managers is not over, the company is now estimating penalties between $11 million and $15 million. That's not necessarily a trifling amount for this company, but I think you can argue that a potential end to the investigation is a positive.
Like other players, including Commercial Metals
For more scrappy Foolishness:
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).