News Releases

Schnitzer Steel Reports 34% Increase in Second Quarter Earnings Per Share

PORTLAND, Ore.--(BUSINESS WIRE)--April 3, 2008--Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported net income of $36 million, or $1.25 per diluted share, for the fiscal 2008 second quarter ended February 29, 2008. The earnings per share was a second quarter record and quarterly revenues of $751 million were the highest ever. Compared to the second quarter of fiscal 2007, revenues increased 24% and earnings per share increased 34%.

                       Second     Second     First    Year to  Year to
(in millions, except    Quarter   Quarter   Quarter    Date     Date
 per-share data)         2008      2007      2008      2008     2007
                      ---------- --------- --------- -------- --------
Revenues              $      751  $    604 $     604  $ 1,355  $ 1,114
Operating Income      $       59  $     47 $      41  $   100  $    81
Net Income            $       36  $     28 $      25  $    61  $    50
Diluted EPS           $     1.25  $   0.93 $    0.85  $  2.10  $  1.60

"Our second quarter operating results were strong," said John D. Carter, President and Chief Executive Officer. "All three of our operating businesses recorded year over year growth in both revenues and operating income. Driven by continued strong worldwide demand for recycled metals, prices for ferrous scrap reached unprecedented levels, and our export platform continued to provide us the ability to sell to the regions of the world where demand was greatest. Prices in our Metals Recycling Business not only more than offset freight price increases which occurred in the first quarter of this year but also outpaced increases in the cost of acquiring raw materials. As a result, we were able to expand margins both sequentially and compared to the prior year."

"The Auto Parts Business continued to show year over year improvements in both revenues and operating income through our ongoing focus on increases in vehicle purchases," added Carter. "The Steel Manufacturing Business benefited from positive supply and demand dynamics as selling prices increased due to shortages in finished steel resulting from a low level of imports," he concluded.

Commenting on the second quarter results, Tamara Lundgren, Executive Vice President and Chief Operating Officer said, "The results in our Metals Recycling Business were driven by our ability to maximize the benefits from the strong markets through operating efficiencies from our capital investment program as well as our overall scale. In our Auto Parts Business, the improved extraction and sales of cores helped offset the normal seasonal decline in self-service parts sales and in the Steel Manufacturing Business our ability to utilize our increased capacity during the first quarter allowed us to post record sales volumes despite planned maintenance shutdowns of the melt shop and largest rolling mill during the second quarter."

Metals Recycling Business

The worldwide demand for recycled metal continued to remain strong.

($ in millions,
 except selling
 prices; ferrous
 volume in
 thousands of
 long tons, non-
 ferrous volumes  Second     Second      First    Year to    Year to
 in millions of    Quarter    Quarter   Quarter     Date       Date
 pounds)            2008       2007      2008       2008       2007
                 ---------- ---------- --------- ---------- ----------
Total Revenues   $      597 $      486 $     481 $    1,078 $      887
Ferrous Revenues $      497 $      396 $     388 $      885 $      711
Ferrous Volumes
 (Processing/
 Trading)         1,128/149  1,143/276  1001/135  2,129/284  2,011/596
Avg. Net Ferrous
 Selling Prices
 ($/LT)(1)
(Processing/
 Trading)        $  326/337 $  237/257 $ 280/313 $  305/326 $  232/254
Nonferrous
 Volumes                 96         90        89        185        170
Avg. Net
 Nonferrous
 Selling Prices
 ($/LB)(1)       $     0.98 $     0.96 $    1.00 $     0.99 $     0.99
Operating
 Income(2)       $       52 $       40 $      30 $       82 $       65

(1) Selling prices are shown net of freight
(2) Includes operating income from joint ventures

Revenues for the Metals Recycling Business increased 23% over the second quarter of 2007. The increase was a result of record ferrous scrap prices and higher nonferrous sales volumes. Average net ferrous processing selling prices were $326/ton, a 38% year over year increase. Nonferrous sales volumes increased 7% to 96 million pounds and, together with the higher ferrous selling prices, offset a 46% decline in ferrous trading sales volumes.

Compared to the first quarter of 2008, revenues increased 24% due to higher ferrous prices and ferrous and nonferrous processing volumes. The second quarter benefited from five shipments of ferrous scrap which were delayed into the quarter due to a tight shipping market in the first quarter.

The worldwide markets for ferrous scrap metal were robust. Strong demand for scrap resulted in an increase in average gross prices, which more than offset the rapid first quarter increase in export freight costs. Combined with moderating freight costs, average net sales prices increased significantly on both a year over year and quarter over quarter basis. Nonferrous prices were consistent with prior year and quarter levels.

Operating income for the quarter was 31% higher than the second quarter of 2007 due to increases in net ferrous sales prices, which more than offset higher raw materials costs, and higher nonferrous volumes and prices. Compared to the first quarter of 2008, operating income increased 75% due to higher ferrous sales volumes and prices, as well as higher nonferrous volumes.

Auto Parts Business

The Auto Parts Business continued to show healthy year over year growth in sales and operating income due to its focus on increasing volumes and higher prices for cores and scrap.

                           Second   Second    First  Year to  Year to
($ in millions, except      Quarter  Quarter Quarter   Date     Date
 locations)                  2008     2007    2008     2008     2007
                           -------- -------- ------- -------- --------
Revenues                   $     77 $     60 $    72 $    149 $    121
Operating Income           $      7 $      5 $     7 $     14 $      9
Locations (end of quarter)       53       52      53       53       52

Revenues for the Auto Parts Business increased 29% over the same period last year, primarily as a result of a 22% increase in self-service volumes, higher prices for cores and scrap and improved full-service parts sales. Compared to the first quarter of 2008, revenues increased due to higher prices for scrap and cores and higher full-service parts sales, which offset the expected seasonal decline in self-service parts sales.

Operating income increased 31% from the second quarter of 2007, primarily due to higher self-service volumes and improved core yields. Compared to the first quarter of 2008, operating income declined 9% due to lower seasonal self-service parts sales.

Steel Manufacturing Business

The Steel Manufacturing Business achieved record sales volumes.

($ in millions, except,
 except selling prices;  Second    Second    First  Year to   Year to
 volume in thousands of  Quarter   Quarter  Quarter   Date     Date
 tons)                    2008      2007     2008     2008     2007
                        --------- --------- ------- -------- ---------
Revenues                $     143 $      99 $   110 $    253 $     195
Finished Goods Avg. Net
 Selling Prices ($/T)   $     616 $     536 $   601 $    609 $     542
Finished Goods Sales
 Volume                       202       177     174      376       344
Operating Income        $      13 $      12 $    14 $     28 $      27

Revenues for the Steel Manufacturing Business rose 45% on a year over year basis, primarily due to an $80 per ton, or 15%, increase in average sales prices and a 25 thousand ton, or 14%, increase in sales volumes for finished goods. Sales volumes were a quarterly record. Compared to the first quarter of 2008, revenues increased 31% on higher prices and volumes despite softening demand, particularly in the Southwestern region of the U.S., as a significant decline in imported steel reduced the volume of finished steel products available for sale in the west coast markets.

Year over year operating income increased 11% as the higher volumes were only partially offset by a lower metal spread. Compared to the first quarter, operating income declined 8% as a lower metal spread and costs related to the planned shutdown of the melt shop and one of the rolling mills for heavy maintenance offset higher sales volumes achieved during the quarter.

Share Repurchase Program

During the quarter, the Company repurchased 145,500 shares of its Class A common stock at an average cost of $50/share. The Company is authorized by the Board of Directors to repurchase an additional 1.7 million shares.

Outlook

The Company said the factors that will affect its results in the third quarter of 2008 include:

Metals Recycling Business:

Pricing. The export markets for ferrous scrap metal have strengthened significantly, and domestic demand is also firming. As a result, based on orders received to date, average ferrous selling prices, net of freight, are expected to increase from $75 to $100/ton over the net prices received in the recently completed second quarter. Nonferrous prices are expected to increase slightly.

Sales volumes. Third quarter ferrous processing sales volumes are expected to approximate the volumes shipped in the second quarter. Quarter over quarter nonferrous sales volumes are expected to increase approximately 10% and approximate the volumes shipped in the third quarter of fiscal 2007.

Margins. Export selling prices are expected to increase more than domestic prices, resulting in improved margins on ferrous processing export sales on both a quarter over quarter and year over year basis.

Auto Parts Business:

Revenue. All sources of revenue are expected to show improvement compared to both the third quarter of 2007 and the second quarter of 2008 due to higher volumes, higher prices for recycled metals and higher parts sales.

Margins. Margins in the third quarter are expected to improve from the second quarter of this year due to seasonal improvements in parts sales. Compared to the same period in 2007, higher costs for scrapped vehicles are expected to partially offset the benefit of higher revenues and result in operating margins which decline on a percentage basis.

Steel Manufacturing Business:

Pricing. Market prices for finished steel products are expected to remain strong despite soft domestic demand as the level of import activity continues to remain low. Higher raw material costs are also expected to contribute to higher selling prices as supply conditions permit steel manufacturers to pass on a portion of these higher costs. As a result of these conditions, net average selling prices for the third quarter are expected to increase approximately 10-15% over net prices received in the second quarter.

Volumes. Sales volumes are expected to remain at relatively high levels and approximate the record volumes shipped in the recently completed second quarter.

Margins. Compared to the third quarter of 2007, the spread between selling prices and scrap costs is expected to narrow, and coupled with higher overall revenues, is expected to result in lower margins on a percentage basis. Compared to the recently completed second quarter, higher production volumes in both the melt shop and the rolling mills and the impact of costs incurred in the second quarter for planned maintenance are expected to offset a lower metals spread and result in improved margins.

Second Quarter 2008 Conference Call

A conference call to discuss results will be held today, April 3, 2008, at 11:30 a.m. EDT, hosted by John Carter, Chief Executive Officer, and Richard Peach, Chief Financial Officer. The call will be webcast and is accessible on Schnitzer Steel's web site at www.schnitzersteel.com.

Schnitzer Steel Industries, Inc. is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with 36 operating facilities located in 11 states throughout the country, including six export facilities located on both the East and West Coasts and in Hawaii. The Company's vertically integrated operating platform also includes its auto parts and steel manufacturing businesses. The Company's auto parts business sells used auto parts through its 35 self-service facilities and 18 full-service facilities located in 14 states and in western Canada. With an annual production capacity of over 750,000 tons, the Company's steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The Company commenced its 102nd year of operations in fiscal 2008.

This news release, particularly the Outlook section, contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding the Company's outlook for the business and statements as to expected pricing, sales volume, operating margins and operating income. Such statements can generally be identified because they contain "expect," "believe," "anticipate," "estimate" and other words that convey a similar meaning. One can also identify these statements as statements that do not relate strictly to historical or current facts. Examples of factors affecting the Company that could cause actual results to differ materially from current expectations are the following: volatile supply and demand conditions affecting prices and volumes in the markets for both the Company's products and the raw materials it purchases; world economic conditions; world political conditions; changes in federal and state income tax laws; government regulations and environmental matters; impact of pending or new laws and regulations regarding imports and exports into the United States and other foreign countries; foreign currency fluctuations; competition; seasonality, including weather; energy supplies; freight rates and availability of transportation; loss of key personnel; expectations regarding the Company's compliance program; the inability to obtain sufficient quantities of scrap metal to support current orders; purchase price estimates made during acquisitions; business integration issues relating to acquisitions of businesses; new accounting pronouncements; availability of capital resources; creditworthiness of and availability of credit to suppliers and customers; and business disruptions resulting from installation or replacement of major capital assets, as discussed in more detail in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q. One should understand that it is not possible to predict or identify all factors that could cause actual results to differ from the Company's forward-looking statements. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties. The Company does not assume any obligation to update any forward-looking statement.

For more information about Schnitzer Steel Industries, Inc. go to www.schnitzersteel.com.

                   SCHNITZER STEEL INDUSTRIES, INC.
                         FINANCIAL HIGHLIGHTS
               (in thousands, except per share amounts)
                             (Unaudited)

                  For the Three Months Ended For the Six Months Ended
                  -------------------------- -------------------------
                  February 29,  February 28, February 29, February 28,
                      2008          2007         2008         2007
                  ------------- ------------ ------------ ------------
REVENUES:

Metals Recycling
 Business:
  Ferrous sales:
    Processing        $438,976      315,930      777,926      539,022
    Trading             58,112       80,414      107,443      171,927
  Nonferrous sales      96,158       87,931      185,764      169,925
  Other sales            3,311        1,845        6,896        5,731
                  ------------- ------------ ------------ ------------
    Total sales        596,557      486,120    1,078,029      886,605

Auto Parts
 Business               77,333       59,786      149,496      120,594
Steel
 Manufacturing
 Business              143,498       98,924      253,187      194,984
Intercompany sales
 eliminations          (65,916)     (40,388)    (125,342)     (87,887)
                  ------------- ------------ ------------ ------------
    Total             $751,472     $604,442   $1,355,370   $1,114,296
                  ============= ============ ============ ============

INCOME (LOSS) FROM
 OPERATIONS:

Metals Recycling
 Business:
    Processing        $ 48,756       38,814       77,948       62,707
    Trading              3,184          942        3,628        1,892
Auto Parts
 Business                6,540        5,007       13,754        8,802
Steel
 Manufacturing
 Business               13,165       11,910       27,509       27,269
Corporate expense      (11,993)     (11,074)     (21,505)     (20,769)
Intercompany
 eliminations             (855)       1,665       (1,169)         939
                  ------------- ------------ ------------ ------------
    Total             $ 58,797     $ 47,264   $  100,165   $   80,840
                  ============= ============ ============ ============

NET INCOME            $ 35,871     $ 28,446   $   60,582   $   49,604
                  ============= ============ ============ ============

BASIC EARNINGS PER
 SHARE                $   1.27     $   0.94   $     2.13   $     1.62
                  ============= ============ ============ ============

DILUTED EARNINGS
 PER SHARE            $   1.25     $   0.93   $     2.10   $     1.60
                  ============= ============ ============ ============

SHARE INFORMATION
 (THOUSANDS):
  Basic shares
   outstanding          28,242       30,366       28,386       30,556
                  ============= ============ ============ ============

  Diluted shares
   outstanding          28,791       30,607       28,916       30,906
                  ============= ============ ============ ============
                   SCHNITZER STEEL INDUSTRIES, INC.
              CONDENSED CONSOLIDATED STATEMENT OF INCOME
               (in thousands, except per share amounts)
                             (Unaudited)

                 For the Three Months Ended  For the Six Months Ended
                 -------------------------- --------------------------
                 February 29,  February 28,  February 29, February 28,
                     2008          2007          2008         2007
                 ------------- ------------ ------------- ------------
Revenues             $751,472     $604,442  $  1,355,370   $1,114,296
                 ------------- ------------ ------------- ------------

Cost of goods
 sold                 642,395      515,618     1,161,772      950,324
Selling, general
 and
 administrative        51,917       42,741        96,810       85,599
(Income) from
 joint ventures        (1,637)      (1,181)       (3,377)      (2,467)


  Operating
   income              58,797       47,264       100,165       80,840

  Other income
   (expense):
    Interest
     expense           (2,648)      (2,305)       (4,996)      (3,367)
    Other income
     (expense),
     net                   97          285           710        1,402
                 ------------- ------------ ------------- ------------
                       (2,551)      (2,020)       (4,286)      (1,965)
                 ------------- ------------ ------------- ------------

  Income before
   income taxes
   and minority
   interests           56,246       45,244        95,879       78,875

  Income tax
   expense            (19,881)     (16,265)      (34,106)     (28,336)
                 ------------- ------------ ------------- ------------

  Income before
   minority
   interests           36,365       28,979        61,773       50,539

  Minority
   interests,
   net of tax            (494)        (533)       (1,191)        (935)
                      --------     -------- -------------   ----------

  Net income         $ 35,871     $ 28,446  $     60,582   $   49,604
                 ============= ============ ============= ============

  Basic earnings
   per share         $   1.27     $   0.94  $       2.13   $     1.62
                 ============= ============ ============= ============

  Diluted
   earnings per
   share             $   1.25     $   0.93  $       2.10   $     1.60
                 ============= ============ ============= ============
                   Schnitzer Steel Industries, Inc.
                    Selected Operating Statistics
                             (Unaudited)

                                             Total
                     Q1 FY08     Q2 FY08      FY08
                    ---------- ----------- ----------
Metals Recycling
 Business
 Ferrous
  Recycled Metal
  Selling Prices
  ($/LT)(1)
   Domestic         $      279 $       323 $      302
   Exports                 280         329        307
    Total
     Processing            280         326        305
   Trading                 313         337        326

 Ferrous
  Processing
  Sales Volume
  (LT)
   Cascade             179,686     170,221    349,907
   Domestic            178,833     210,825    389,658
   Export              642,142     746,736  1,388,878
                    ---------- ----------- ----------
    Total
     Processed       1,000,661   1,127,782  2,128,443
                    ---------- ----------- ----------

 Ferrous Trading
  Sales Volume
  (LT)
   Trading             134,957     148,899    283,856
                    ---------- ----------- ----------
 Total Ferrous
  Sales Volume
  (LT)               1,135,618   1,276,681  2,412,299
                    ========== =========== ==========

 Nonferrous
  Average Price
  ($/pound)(1)      $    1.000 $     0.980 $    0.988

 Nonferrous
  Sales Volume
  (pounds, in
  thousands)            88,808      96,278    185,086

Steel
 Manufacturing
 Business
 Finished Goods
  Selling Prices
  ($/NT)(1)
   Average          $      601 $       616 $      609

 Sales Volume
  (NT)
   Finished
    Goods              174,230     202,160    376,390

Auto Parts
 Business
 Number of self-
  service
  locations at
  end of quarter            35          35
 Number of full-
  service sites
  at end of
  quarter                   18          18

                                                              Total
                 Q1 FY07    Q2 FY07    Q3 FY07    Q4 FY07      FY07
                ---------- ---------- ---------- ---------- ----------
Metals
 Recycling
 Business
 Ferrous
  Recycled
  Metal Selling
  Prices
  ($/LT)(1)
   Domestic     $      219 $      233 $      293 $      273 $      256
   Exports             230        238        295        292        266
    Total
     Processing        226        237        294        287        263
   Trading             252        257        308        298        279

 Ferrous
  Processing
  Sales Volume
  (LT)
   Cascade         191,090    151,383    185,281    176,768    704,522
   Domestic        155,970    174,752    199,587    191,250    721,559
   Export          521,200    816,683    643,031    884,104  2,865,018
                ---------- ---------- ---------- ---------- ----------
    Total
     Processed     868,260  1,142,818  1,027,899  1,252,122  4,291,099
                ---------- ---------- ---------- ---------- ----------

 Ferrous
  Trading Sales
  Volume (LT)
   Trading         320,018    276,220    362,305    253,281  1,211,824
                ---------- ---------- ---------- ---------- ----------
 Total Ferrous
  Sales Volume
  (LT)           1,188,278  1,419,038  1,390,204  1,505,403  5,502,923
                ========== ========== ========== ========== ==========

 Nonferrous
  Average Price
  ($/pound)(1)  $    1.017 $    0.964 $    1.049 $    1.042 $    1.020

 Nonferrous
  Sales Volume
  (pounds, in
  thousands)        79,729     90,140    108,149    105,068    383,086

Steel
 Manufacturing
 Business
 Finished Goods
  Selling
  Prices
  ($/NT)(1)
   Average      $      548 $      536 $      596 $      617 $      574

 Sales Volume
  (NT)
   Finished
    Goods          166,938    177,301    182,427    183,635    710,301

Auto Parts
 Business
 Number of
  self-service
  locations at
  end of
  quarter               35         35         35         35
 Number of
  full-service
  sites at end
  of quarter            17         17         17         17

(1) Price information is shown after a reduction for the cost of
 freight incurred to deliver the product to the customer.
                   SCHNITZER STEEL INDUSTRIES, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS
         (Unaudited, in thousands, except per share amounts)

                                              February 29,  August 31,
                                                  2008         2007
                                             ------------- -----------
                   Assets
---------------------------------------------
Current assets:
  Cash and cash equivalents                  $      37,516 $    13,410
  Accounts receivable, net                         154,271     170,212
  Inventories                                      285,264     258,568
  Other current assets                              26,760      19,286
                                             ------------- -----------
    Total current assets                           503,811     461,476

Property, plant and equipment, net                 403,869     383,910

Goodwill and other assets                          331,686     306,028
                                             ------------- -----------

    Total assets                             $   1,239,366 $ 1,151,414
                                             ============= ===========

    Liabilities and Shareholders' Equity
---------------------------------------------
Current liabilities:
  Short-term borrowings                      $         478 $    20,275
  Other current liabilities                        167,107     171,914
                                             ------------- -----------
    Total current liabilities                      167,585     192,189


Long-term debt                                     189,132     124,079

Other long-term liabilities                         73,215      64,709

Minority interests                                   3,340       5,373

Shareholders' equity                               806,094     765,064
                                             ------------- -----------

    Total liabilities and shareholders'
     equity                                  $   1,239,366 $ 1,151,414
                                             ============= ===========

CONTACT: Schnitzer Steel Industries, Inc.
Rob Stone, 503-224-9900 (Investor Relations)
Tom Zelenka, 503-323-2821 (Press Relations)
www.schnitzersteel.com
ir@schn.com

SOURCE: Schnitzer Steel Industries, Inc.

Data provided by Thomson Reuters