Schnitzer Reports Fiscal Q1 Loss, Expects Q2 Improvements

Revenue was $599 million in the first quarter, down 33% quarter-on-quarter (QoQ) and down nearly 25% year-on-year (YoY), according to earnings data released on Thursday, Jan. 5.

The company said it was impacted by softening demand throughout the quarter driven by macro concerns, including slower growth, inflationary pressures, and steel inventory destocking. Declining prices tightened supply flows and squeezed metal spreads.

Schnitzer began the commissioning of two primary nonferrous recovery systems in Massachusetts and California, while also acquiring the operating assets of ScrapSource LLC. The Dallas-based business provides metals recycling services and solutions across North America.

The acquisition should significantly expand Schnitzer’s recycled services volumes and extend its business into additional regional markets across the US, the release said.

“Although the past several months have been challenging as we faced weakening market conditions and short-term operational disruptions that are now resolved, we are continuing to progress our strategic initiatives centered on advanced metal recovery technologies, volume growth, and productivity improvements,” Schnitzer chair and CEO Tamara Lundgren said.

Lundgren noted that the company has seen a “strengthening in selling prices and demand for recycled metals in both the export and domestic markets” since the end of the quarter, adding that Schnitzer is expecting major sequential improvements in its Q2 results.

Ferrous sales volumes of 851,000 tons in Q1 of fiscal 2023 were down 25.9% YoY and down 32.9% QoQ. Nonferrous sales volumes of 81,500 tons were up 6.5% but down 12.4%, respectively, over the same period.

Average ferrous net selling prices were down 12.1% sequentially and down 23.8% YoY, respectively, while nonferrous net selling prices were down 14.3%, respectively, over the same period. Finished steel sales volumes, though down 5.6% QoQ, were up 19.2% YoY.

Average net selling prices for finished steel products were up 3.7% compared with the year-ago quarter, but down 9.2% sequentially.

Schnitzer is one of the largest manufacturers and exporters of recycled metal products in North America with operating facilities located in 25 states, Puerto Rico, and western Canada. Its steel manufacturing operations produce finished steel products, including rebar, wire rod, and other specialty products. Schnitzer has seven deep-water export facilities located on both the East and West Coasts as well as in Hawaii and Puerto Rico.

By David Schollaert, David@SteelMarketUpdate.com