News Releases

Schnitzer Steel Reports Record Quarter

PORTLAND, Ore.--(BUSINESS WIRE)--July 1, 2008--Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported record quarterly net income of $62 million, or $2.14 per diluted share, for the fiscal 2008 third quarter ended May 31, 2008. Revenues of $972 million were also a quarterly record. Compared to the third quarter of fiscal 2007, revenues increased 37% and diluted earnings per share increased 46%.

(in millions, except per-share data)
                                                          Year   Year
                                  Third   Third  Second     to     to
                                 Quarter Quarter Quarter  Date   Date
                                  2008    2007    2008    2008   2007
----------------------------------------------------------------------
Revenues                           $ 972   $ 709   $ 751 $2,328 $1,824
----------------------------------------------------------------------
Operating Income                   $ 102   $  70   $  59 $  202 $  151
----------------------------------------------------------------------
Net Income                         $  62   $  44   $  36 $  122 $   93
----------------------------------------------------------------------
Diluted EPS                        $2.14   $1.47   $1.25 $ 4.23 $ 3.06
----------------------------------------------------------------------

We are pleased to report the strongest quarterly financial results in the Company's history, as each of our three operating divisions posted record revenues and operating income, said John D. Carter, President and Chief Executive Officer. Global demand for recycled metals remained robust, driven by economic growth in developing countries. In the Metals Recycling Business, our worldwide market visibility and flexibility to sell both domestically and internationally allowed us to take advantage of strong markets and significantly expand margins and operating income.

In the Steel Manufacturing Business, tight domestic supply conditions resulting from a low level of imports affecting our product lines contributed to record quarterly sales volumes and record selling prices for finished steel products, added Carter. The Auto Parts Business continued its focus on increasing vehicle purchases which led to its sixth consecutive quarter of year over year operating income growth.

Commenting on the third quarter results, Tamara Lundgren, Executive Vice President and Chief Operating Officer, said All three of the Company's operating divisions were able to maximize the benefits of the strong markets in which we operate through operating efficiencies and higher throughput. In the Metals Recycling Business, our capital investments to increase capacity allowed us to process the strong inflow of raw materials at all our major locations. Increased production capacity enabled the Steel Manufacturing Business to produce and ship record sales volumes, and in the Auto Parts Business our ability to process the increased car purchases while extracting more value from every car was a major factor in achieving record operating income.

Metals Recycling Business

The Metals Recycling Business continued to leverage its bi-coastal port facilities to access the robust export markets for recycled metals.

($ in millions, except selling prices; ferrous volume in thousands of
 long tons, non-ferrous volumes in millions of pounds)
                  Third      Third      Second    Year to    Year to
                 Quarter    Quarter    Quarter      Date       Date
                   2008       2007       2008       2008       2007
----------------------------------------------------------------------
Total Revenues  $      810 $      587 $      597 $    1,888 $    1,474
----------------------------------------------------------------------
Ferrous
 Revenues       $      668 $      470 $      497 $    1,553 $    1,180
----------------------------------------------------------------------
Ferrous Volumes
 (Processing/
 Trading)        1,137/151  1,028/362  1,128/149  3,265/435  3,039/959
----------------------------------------------------------------------
Avg. Net
 Ferrous Sales
 Prices
 ($/LT)(1)
(Processing/
 Trading)       $  463/440 $  294/308 $  326/337 $  360/366 $  253/274
----------------------------------------------------------------------
Nonferrous
 Volumes               129        108         96        314        278
----------------------------------------------------------------------
Avg. Net
 Nonferrous
 Sales
Prices
 ($/LB)(1)      $     1.07 $     1.05 $     0.98 $     1.02 $     1.01
----------------------------------------------------------------------
Operating
 Income (2)     $       94 $       55 $       52 $      175 $      120
----------------------------------------------------------------------

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

Revenues for the Metals Recycling Business increased 38% over the third quarter of 2007, primarily as a result of record ferrous scrap prices and higher nonferrous sales volumes. Average net ferrous processing sales prices were $463/ton, a 57% year over year increase, while nonferrous sales volumes increased 19% over last year.

Operating income for the quarter was 70% higher than the third quarter of 2007. During the quarter, export sales prices increased more rapidly than domestic purchase prices for ferrous scrap and, combined with higher ferrous and nonferrous processing sales volumes, resulted in the significant increase in year over year operating income and operating margins.

Auto Parts Business

A continued focus on increasing car volumes, combined with higher prices for cores and scrap, resulted in healthy year over year growth in sales and operating income for the Auto Parts Business.

($ in millions, except locations)
                            Third    Third    Second  Year to  Year to
                           Quarter  Quarter  Quarter    Date    Date
                             2008     2007     2008     2008    2007
----------------------------------------------------------------------
Revenues                      $ 101     $ 71     $ 77 $    250    $192
----------------------------------------------------------------------
Operating Income              $  17     $ 10     $  7 $     30    $ 19
----------------------------------------------------------------------
Locations (end of quarter)       53       52       53       53      52
----------------------------------------------------------------------

Third quarter revenues for the Auto Parts Business increased 41% over the same period last year, primarily as a result of a 20% increase in self-service car volumes, higher per car sales of cores and scrap and improved full-service and self-service parts sales.

Operating income increased 64% from the third quarter of 2007, primarily due to the increased car volumes and significantly improved margins on scrap and core sales.

Steel Manufacturing Business

The Steel Manufacturing Business utilized its increased production capacity to produce and ship record sales volumes for the second consecutive quarter.

($ in millions, except selling prices; volume in thousands of tons)
                               Third   Third  Second  Year to  Year to
                              Quarter Quarter Quarter   Date    Date
                               2008    2007    2008     2008    2007
----------------------------------------------------------------------
Revenues                      $   168 $   112 $   143   $  421   $ 307
----------------------------------------------------------------------
Avg. Net Sales Prices ($/T)   $   744 $   596 $   616   $  658   $ 561
----------------------------------------------------------------------
Sales Volume                      218     182     202      594     526
----------------------------------------------------------------------
Operating Income              $    23 $    18 $    13   $   50   $  45
----------------------------------------------------------------------

Revenues for the Steel Manufacturing Business rose 49% on a year over year basis due to a 36 thousand ton, or 20% increase in sales volumes, coupled with a $148/ton, or 25%, increase in average net sales prices. Compared to the second quarter of 2008, revenues increased 17% as average net prices during the quarter increased $128/ton. Higher overseas prices and a weak U.S. dollar continue to limit the volume of finished steel products imported for sale in the U.S., resulting in price increases despite soft domestic demand.

Operating income, which was a quarterly record, increased 30% year over year as the higher sales volumes offset higher costs for scrap and other raw materials.

Outlook

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

Metals Recycling Business:

Pricing. The export markets for ferrous scrap metal continue to strengthen. As a result, based on orders received to date, average ferrous selling prices, net of freight, are expected to increase an additional $100 to $125/ton over the net prices received in the recently completed third quarter. Nonferrous prices are expected to decline slightly.

Sales volumes. Fourth quarter ferrous processing sales volumes are expected to increase 175 thousand to 200 thousand tons over the volumes shipped in the third quarter, depending on the timing of shipments. Quarter over quarter nonferrous sales volumes are expected to approximate the record volumes shipped in the third quarter.

Margins. Higher export prices for ferrous metals are expected to result in higher margins on both a year over year and quarter over quarter basis.

Auto Parts Business:

Revenue. Higher prices for cores and scrap and improved parts sales are expected to result in significantly higher revenues compared to the fourth quarter of fiscal 2007. Revenues are expected to approximate the recently completed third quarter as normal seasonal declines in parts sales are expected to offset higher selling prices for scrapped vehicles.

Margins. Margins are expected to increase slightly when compared to the fourth quarter of last year. Compared to the third quarter of this year, lower parts sales and higher vehicle purchase costs are expected to result in a slight decline in margins.

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, particularly for scrap, are also expected to contribute to higher selling prices. As a result of these conditions, prices for steel products on the West Coast should continue to rise, with average selling prices during the fourth quarter increasing 15-20% compared to the recently completed third quarter.

Volumes. Sales volumes are expected to remain at relatively high levels with a slight increase over the fourth quarter of 2007, although declining modestly from the record volumes in the recently completed third quarter.

Margins. Scrap prices are expected to rise at a comparable rate to sales prices, resulting in margins which should approximate the third quarter of 2008.

Third Quarter 2008 Conference Call

A conference call to discuss results will be held today, July 1, 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 15 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 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  For the Nine Months Ended
                               Ended
                       --------------------- -------------------------
                        May 31,    May 31,   May 31, 2008 May 31, 2007
                          2008       2007
                       ---------- ---------- ------------ ------------

REVENUES:

Metals Recycling
 Business:
 Ferrous sales:
  Processing           $ 594,856   $344,959   $1,372,782   $  883,981
  Trading                 73,041    124,578      180,484      296,505
 Nonferrous sales        140,033    114,687      325,797      284,612
 Other sales               2,490      2,766        9,386        8,497
                       ---------- ---------- ------------ ------------
  Total sales            810,420    586,990    1,888,449    1,473,595

Auto Parts Business      100,641     71,439      250,137      192,032
Steel Manufacturing
 Business                167,668    112,464      420,856      307,448
Intercompany sales
 eliminations           (106,588)   (61,444)    (231,931)    (149,329)
                       ---------- ---------- ------------ ------------
  Total                $ 972,141  $ 709,449  $ 2,327,511  $ 1,823,746
                       ========== ========== ============ ============


INCOME (LOSS) FROM
 OPERATIONS:

Metals Recycling
 Business:
  Processing           $  90,513   $ 55,323   $  168,463   $  118,030
  Trading                  3,003       (361)       6,630        1,532
Auto Parts Business       16,720     10,220       30,474       19,022
Steel Manufacturing
 Business                 22,767     17,565       50,276       44,834
Corporate expense        (25,365)   (10,699)     (46,871)     (31,467)
Intercompany
 eliminations             (5,347)    (2,278)      (6,516)      (1,340)

                       ---------- ---------- ------------ ------------
  Total                $ 102,291  $  69,770  $   202,456  $   150,611
                       ========== ========== ============ ============



NET INCOME             $  61,719  $  43,754  $   122,301  $    93,358
                       ========== ========== ============ ============

BASIC EARNINGS PER
 SHARE                 $    2.19  $    1.48  $      4.32  $      3.09
                       ========== ========== ============ ============

DILUTED EARNINGS PER
 SHARE                 $    2.14  $    1.47  $      4.23  $      3.06
                       ========== ========== ============ ============

SHARE INFORMATION (THOUSANDS):
  Basic shares
   outstanding            28,177     29,510       28,315       30,203
                       ========== ========== ============ ============

  Diluted shares
   outstanding            28,847     29,739       28,894       30,502
                       ========== ========== ============ ============
                   SCHNITZER STEEL INDUSTRIES, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except per share amounts)
                             (Unaudited)

                             For the Three      For the Nine Months
                               Months Ended             Ended
                           ------------------- -----------------------
                           May 31,   May 31,    May 31,     May 31,
                              2008      2007       2008        2007
                           --------- --------- ----------- -----------


 Revenues                  $972,141  $709,449  $2,327,511  $1,823,746
                           --------- --------- ----------- -----------


Cost of goods sold          798,531   593,736   1,960,303   1,544,060
Selling, general and
 administrative              74,172    47,213     170,982     132,813
(Income) from joint
 ventures                    (2,853)   (1,270)     (6,230)     (3,738)
                           --------- --------- ----------- -----------


 Operating income           102,291    69,770     202,456     150,611

 Other income (expense):
   Interest expense          (1,707)   (2,852)     (6,703)     (6,219)
   Other income (expense),
    net                         879     1,192       1,589       2,593
                           --------- --------- ----------- -----------
                               (828)   (1,660)     (5,114)     (3,626)
                           --------- --------- ----------- -----------


 Income before income taxes
  and minority interests    101,463    68,110     197,342     146,985

 Income tax expense         (38,620)  (23,631)    (72,726)    (51,967)
                           --------- --------- ----------- -----------

 Income before minority
  interests                  62,843    44,479     124,616      95,018

 Minority interests, net of
  tax                        (1,124)     (725)     (2,315)     (1,660)
                            --------  -------- -----------  ----------

 Net income                $ 61,719  $ 43,754  $  122,301  $   93,358
                           ========= ========= =========== ===========


 Basic earnings per share  $   2.19  $   1.48  $     4.32  $     3.09
                           ========= ========= =========== ===========

 Diluted earnings per share$   2.14  $   1.47  $     4.23  $     3.06
                           ========= ========= =========== ===========
Schnitzer Steel Industries, Inc.
Selected Operating Statistics
(Unaudited)

                                                   Total
                 Q1 FY08    Q2 FY08    Q3 FY08      FY08
                ---------- ---------- ---------- ----------
Metals Recycling
 Business
 Ferrous
  Recycled Metal
  Selling Prices
  ($/LT)(1)
   Domestic     $      279 $      323 $      464 $      359
   Exports             280        329        463        360
     Total
      Processing       280        326        463        360
   Trading             313        337        440        366

 Ferrous
  Processing
  Sales Volume
  (LT)
  Cascade          179,686    170,221    186,696    536,603
  Domestic         178,833    210,825    226,961    616,619
  Export           642,142    746,736    722,973  2,111,851
                -------------------------------------------
    Total
     Processed   1,000,661  1,127,782  1,136,630  3,265,073
                -------------------------------------------

 Ferrous Trading
  Sales Volume
  (LT)
   Trading         134,957    148,899    151,324    435,180

                -------------------------------------------
 Total Ferrous
  Sales Volume
  (LT)           1,135,618  1,276,681  1,287,954  3,700,253
                ===========================================

 Nonferrous
  Average Price
  ($/pound)(1)  $    1.000 $    0.980 $    1.069 $    1.020

 Nonferrous
  Sales Volume
  (pounds, in
  thousands)        88,808     96,278    128,858    313,944


Steel
 Manufacturing
 Business
 Finished Goods
  Selling Prices
  ($/NT)(1)
   Average      $      601 $      616 $      744 $      658

 Sales Volume
  (NT)
   Finished
    Goods          174,230    202,160    217,900    594,290

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               18         18         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)


                                                  May 31,     August
                                                     2008     31, 2007
                                                 ---------- ----------
                     Assets
------------------------------------------------
Current assets:
 Cash and cash equivalents                       $    9,205 $   13,410
 Accounts receivable, net                           285,708    170,212
 Inventories                                        385,274    258,568
 Other current assets                                24,306     19,286
                                                 ---------- ----------
   Total current assets                             704,493    461,476

Property, plant and equipment, net                  410,241    383,910

Goodwill and other assets                           335,521    306,028
                                                 ---------- ----------

   Total assets                                  $1,450,255 $1,151,414
                                                 ========== ==========

      Liabilities and Shareholders' Equity
------------------------------------------------
Current liabilities:
 Short-term borrowings                           $   24,522 $   20,275
 Other current liabilities                          260,085    171,914
                                                 ---------- ----------
   Total current liabilities                        284,607    192,189


Long-term debt                                      215,023    124,079

Other long-term liabilities                          75,439     64,709

Minority interests                                    4,564      5,373

Shareholders' equity                                870,622    765,064
                                                 ---------- ----------

   Total liabilities and shareholders' equity    $1,450,255 $1,151,414
                                                 ========== ==========

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

SOURCE: Schnitzer Steel Industries, Inc.

Data provided by Thomson Reuters