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.

Image Source: Zacks Investment Research