First Quarter Revenues Up 71% and Diluted EPS from Continuing Operations up 178% to $0.64

PORTLAND, Ore.--(BUSINESS WIRE)--January 6, 2011--Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) today reported diluted earnings per share from continuing operations of $0.64 for its fiscal 2011 first quarter ended November 30, 2010. This compares with diluted earnings per share from continuing operations of $0.23 during the first quarter of fiscal 2010.

For the first quarter of fiscal year 2011, Schnitzer reported record first quarter revenues of $675 million, compared to $394 million in the first quarter of fiscal year 2010.

“We generated significant momentum during the first quarter of our fiscal year due to the strong global demand for recycled metals,” said Tamara Lundgren, President and Chief Executive Officer. “Each of our operating businesses delivered improved financial performance, and we continued to execute successfully on our strategic growth plan, announcing seven acquisitions since our fiscal year-end. These acquisitions provide us with a strong platform for our Metals Recycling Business in Western Canada and enhance our supply networks in the Northeast and the Southeast, and our Auto Parts Business in Texas, California and Oregon. We also commenced early stage operation of our new separation technologies at our recycling facilities in Oregon and Washington.”

“As our record first quarter revenues demonstrate, global demand continues to drive prices and volumes higher,” said Lundgren. “Asian economies have maintained steady demand due to strong infrastructure spending, and China’s recent announcement of its new 5-year plan suggests increased purchases of recycled metals due to the environmental and economic benefits. We also anticipate stronger demand in the domestic markets in the new year due to inventory replenishment and a slowly improving domestic economy. We believe all these favorable dynamics signal strong long-term demand for our products.”

Since the beginning of our fiscal year in September 2010, we have announced seven acquisitions for an aggregate purchase price of approximately $225 million. In our Metals Recycling Business, our recent acquisitions extend our geographic reach along both the East and West coasts, including into Western Canada, further consolidating our supply network and enhancing operating efficiencies. In aggregate, these acquisitions will provide us with approximately 550,000 gross ferrous tons, approximately 40% of which will be incremental to our existing volumes, as well as approximately 60 million nonferrous pounds, all of which are incremental volumes. In our Auto Parts Business, we are adding new facilities in Waco, Texas and Stockton, California, and expanding our presence in Portland, Oregon. Our Auto Parts Business generates value from its stand-alone retail operations, as well as from synergies with our Metals Recycling Business in key markets.

In the first quarter, our Metals Recycling Business shipped ferrous volumes of 1.2 million tons and nonferrous volumes of 111 million pounds and generated operating income of $26 million, a $10 million improvement over the prior year first quarter

Summary of Metals Recycling Business Results
($ in millions, except selling prices; Fe volumes
000s long tons; NFe volumes M lbs)

	First Quarter		First Quarter				Fourth Quarter
	2011		2010		% Change		2010		% Change
Total Revenues	$	592	$	316	87	%	$	556	6	%
Ferrous Revenues	$	481	$	232	107	%	$	431	12	%
Ferrous Volumes		1,231		757	63	%		1,124	9	%
Avg. Net Ferrous Sales Prices ($/LT)⁽¹⁾	$	353	$	277	27	%	$	342	3	%
Nonferrous Volumes		111		110	1	%		139	(20	%)
Avg. Net Nonferrous Sales Prices ($/lb)⁽¹⁾	$	0.94	$	0.73	29	%	$	0.84	12	%
Operating Income	$	26	$	16	60	%	$	21	23	%

(1) Sales prices are shown net of freight

“We benefited from continued broad-based demand for our ferrous scrap in the developing economies, in particular from Asia,” said Lundgren. “Both ferrous and nonferrous prices strengthened considerably from the prior year and improved from the fourth quarter as demand for raw materials increased globally.”

Sales Volumes: Record first quarter ferrous sales volumes of 1.2 million tons reflected the continuing strong demand for recycled metal from the export markets. Ferrous sales volumes for the four quarters ending in November approximated the record processed sales volumes in fiscal 2008.

Nonferrous sales volumes approximated the volumes in the first quarter of fiscal 2010. Although production increased sequentially, low beginning inventories due to the strong nonferrous sales in the fourth quarter of fiscal 2010 resulted in a sequential decline in nonferrous shipments.

Ferrous and nonferrous volumes during the quarter were 63% and 1% higher, respectively, than in the first quarter of fiscal 2010.

Export customers accounted for approximately 80% of total ferrous sales volume, including shipments to 11 countries. The top export destinations were China and South Korea.

Pricing: During the quarter, average ferrous net sales prices increased from the prior year first quarter and fourth quarter as higher export prices more than offset a decline in domestic prices. Nonferrous prices also improved during the quarter. Average ferrous and nonferrous prices during the quarter were 27% and 29% higher, respectively, than comparable prices in the first quarter of fiscal 2010.

Revenues increased, both on a year-over-year and quarter-over-quarter basis, driven by higher volumes and average ferrous selling prices. Compared with the first quarter of 2010, revenues increased 87% on volume and selling price gains. Compared with the fourth quarter of 2010, revenues increased 6%, primarily due to higher ferrous sales volumes.

Margins: Operating income per ferrous ton was $21 in the first quarter of fiscal 2011, an increase from $19 in the fourth quarter of fiscal 2010 and approximating the same level as the prior year first quarter. Operating income per ferrous ton during the first quarter was impacted by an increase in purchase prices for raw materials in the latter half of the quarter due to rising export prices for future shipments and relatively weak domestic demand which resulted in lower prices for domestic shipments.

The following summary of management’s outlook for the Metals Recycling Business in the second quarter of fiscal 2011 is subject to uncertainty that may affect future results.

Sales Volumes: Ferrous sales volumes are expected to be below the record first quarter levels due to normal seasonal declines in supply flows due to winter weather conditions and timing of shipments. Nonferrous volumes are expected to increase from the first quarter levels due to higher beginning inventory levels.

Pricing: Ferrous net selling prices, on average, are expected to continue their upward trend in both the domestic and export markets, increasing significantly compared to first quarter levels. Nonferrous prices are expected to increase moderately from first quarter levels.

Margins: Operating income per ferrous ton is expected to improve due to the higher sales prices and the increased relative contribution from nonferrous sales volumes.

Our Auto Parts Business achieved record first quarter operating income from continuing operations.

“Our Auto Parts Business delivered another strong quarter of increasing revenue and higher operating income margins as a result of our strong self-service retail brand network which maximizes operating profit throughout the value chain of parts sales, core extraction and scrap,” said Lundgren. “Our purchase volumes remained strong, and we continued to increase our storefronts with new locations in Texas and California, and expanded operations in Oregon.”

Revenues: Revenues from continuing operations for the Auto Parts Business increased 5% over the fourth quarter of 2010 and 21% over last year’s first quarter. The year-over-year improvement reflected the impact of higher commodity prices on revenues from scrap and core sales.

Margins: Operating margins of 21% increased from 15% in the fourth quarter due to improved parts sales and scrap prices which increased at a greater rate than the cost of scrapped vehicles. First quarter operating margins also improved from the 19% margins in the first quarter of the prior fiscal year despite not having the benefit from the higher quality vehicles purchased early in fiscal 2010 through the Cash for Clunkers program.

The following summary of management’s outlook for the Auto Parts Business in the second quarter of fiscal 2011 is subject to uncertainty that may affect future results.

Revenues: Revenues are expected to approximate the first quarter of this fiscal year as the impact of rising commodity prices on core and scrap sales are expected to be offset by normal seasonal declines in admissions and parts sales.

Margins: Second quarter margins from continuing operations are expected to decline slightly from first quarter levels, driven by the normal seasonal impacts of the winter months on admissions and parts sales.

In the first quarter, our Steel Manufacturing Business continued to be impacted by weak demand for finished steel products in its West Coast markets.

Summary of Steel Manufacturing Business Results
($ in millions, except selling prices;
volume in thousands of tons)

	First Quarter			First Quarter					Fourth Quarter
	2011			2010			% Change		2010			% Change
Revenues	$	64		$	69		(7	%)	$	74		(15	%)
Avg. Net Sales Prices ($/T)⁽¹⁾	$	634		$	520		22	%	$	618		3	%
Finished Goods Sales Volumes⁽¹⁾		98			100		(2	%)		116		(16	%)
Operating Income (Loss)	$	(2	)	$	(8	)	NM		$	(0	)	NM

(1) Excludes billet sales
NM - not meaningful

“Our Steel Manufacturing Business reported improved year-over-year performance, although weaker demand compared to the fourth quarter resulted in a negative operating margin for the first quarter,” said Lundgren. “This business continues to generate positive cash flow, and our product flexibility and lean cost structure position the mill to take advantage of future improvements in market conditions.”

Sales Volumes: Finished steel sales volumes of 98 thousand tons declined 2% and 16% from the first and fourth quarters of fiscal 2010, respectively.

Pricing: The average net sales prices for finished steel products increased by $16 per ton, or 3%, compared with the fourth quarter of fiscal 2010 and $114 per ton, or 22%, compared to the first quarter of fiscal 2010.

Margins: Lower sales volumes and capacity utilization led to a decline in operating margins compared to the fourth quarter of fiscal 2010. On a year-over-year basis, the operating loss narrowed due to the increased selling prices enabling a higher level of purchase costs to be passed through to customers.

The following summary of management’s outlook for the Steel Manufacturing Business in the second quarter of fiscal 2011 is subject to uncertainty that may affect future results.

Sales Volumes: Normal seasonal declines in construction activity are expected to be offset by slightly higher demand, resulting in volumes that approximate the first quarter fiscal 2011 levels.

Pricing: Average sales prices are expected to increase from the first quarter fiscal 2011 as a result of price increases due to higher raw material costs.

Margins: Second quarter margins are expected to improve from the margins achieved in the first quarter due to the impact of price increases implemented during the second quarter. Near break-even performance is expected.

The Company’s effective tax rate for the quarter was 33%, which is expected to approximate the tax rate for the remainder of the year.

Total debt increased by $79 million to $180 million from the fourth quarter, primarily reflecting higher cash balances and increased accounts receivable related to the timing of cash collections on shipments near the quarter end date.

The Company completed the sale of its GreenLeaf full-service used auto parts business to LKQ Corporation on October 2, 2009. For comparison purposes, the net losses and losses per share directly attributable to GreenLeaf for prior periods are disclosed separately in the Company's financial statements as "Discontinued Operations."

A conference call and slide presentation to discuss results will be held today, January 6, 2011, at 5:00 p.m. EST. It will be hosted by Tamara Lundgren, President and Chief Executive Officer, and Richard Peach, Chief Financial Officer. The call and the slides will be webcast and accessible on the Company's website at www.schnitzersteel.com.

Summary financial data provided in the following pages. The slides and related materials will be available prior to the call on the website.

Schnitzer Steel Industries, Inc. is one of the largest manufacturers and exporters of recycled ferrous metal products in the United States with 52 operating facilities located in 14 states, Puerto Rico and Western Canada. The business has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The Company's integrated operating platform also includes its auto parts and steel manufacturing businesses. The Company's auto parts business sells used auto parts through its 46 self-service facilities located in 14 states and Western Canada. With an effective annual production capacity of approximately 800,000 tons, the Company's steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The Company commenced its 105^th year of operations in fiscal 2011.

This news release, particularly the Outlook sections, 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 product demand, pricing, sales volumes, revenues, operating margins, operating income and benefits of cost containment measures. 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; the Company's ability to match output with demand; 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 countries; foreign currency fluctuations; competition; seasonality, including weather; energy supplies; freight rates and availability of transportation; loss of key personnel; 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; adverse impact of climate change, including as a result of treaties, legislation or regulations; 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" or "Risk Factors" 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, except as may be required by law.

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

		For the Three Months Ended
		November 30,			August 31,			November 30,
		2010 (1		)	2010 (1		)	2009 (1		)

REVENUES:

Metals Recycling Business:
	Ferrous sales	$	480,868		$	431,002		$	232,009
	Nonferrous sales		108,273			121,798			82,854
	Other sales		2,567			3,012			1,609
	TOTAL MRB SALES		591,708			555,812			316,472

Auto Parts Business			66,681			63,589			55,261
Steel Manufacturing Business			63,634			74,454			68,680
Intercompany sales eliminations			(46,919	)		(54,764	)		(46,131	)
	TOTAL	$	675,104		$	639,091		$	394,282


INCOME (LOSS) FROM CONTINUING OPERATIONS:

Metals Recycling Business		$	25,533		$	20,808		$	15,909
Auto Parts Business			14,039			9,635			10,417
Steel Manufacturing Business			(2,035	)		(77	)		(7,565	)
Corporate expense			(10,563	)		(6,896	)		(8,349	)
Intercompany eliminations			1,466			833			(1,130	)

	OPERATING INCOME (LOSS)		28,440			24,303			9,282


(1) Excludes discontinued operations

SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share amounts)
(Unaudited)

			For the Three Months Ended
			November 30,			August 31,			November 30,
			2010			2010			2009


Revenues			$	675,104		$	639,091		$	394,282


Cost of goods sold				602,546			573,523			350,938
Selling, general and administrative				45,075			41,919			34,446
Environmental matters				(200	)		150			150
(Income) loss from joint ventures				(757	)		(804	)		(534	)

Operating income (loss)				28,440			24,303			9,282

Other income (expense):
		Interest expense		(598	)		(527	)		(618	)
		Other income		216			688			419
		Other income (expense)		(382	)		161			(199	)

Income from continuing operations before income taxes				28,058			24,464			9,083

Income tax (expense) benefit				(9,164	)		(7,510	)		(1,864	)

Income (loss) from continuing operations				18,894			16,954			7,219

Income (loss) from discontinued operations, net of tax				23			1,191			(14,974	)

Net income (loss)				18,917			18,145			(7,755	)

Net income attributable to noncontrolling interests				(1,123	)		(738	)		(814	)

Net income (loss) attributable to SSI			$	17,794		$	17,407		$	(8,569	)


Basic:
		Income (loss) per share from continuing operations attributable to SSI ^{(1) (2)}		0.65			0.59			0.23
		Income (loss) per share from discontinued operations attributable to SSI		0.00			0.04			(0.54	)
		Net income (loss) per share attributable to SSI	$	0.65		$	0.63		$	(0.31	)

Diluted:
		Income (loss) per share from continuing operations attributable to SSI ^{(1) (2)}		0.64			0.58			0.23
		Income (loss) per share from discontinued operations attributable to SSI		0.00			0.04			(0.53	)
		Net income (loss) per share attributable to SSI	$	0.64		$	0.62		$	(0.30	)

Weighted average number of common shares:
		Basic		27,563			27,760			27,803
		Diluted		27,871			28,082			28,130

Dividends declared per common share			$	0.017		$	0.017		$	0.017

(1	)	Excludes income attributable to noncontrolling interests
(2	)	Net income (loss) used in EPS calculation:
		Income (loss) from continuing operations	$	18,894		$	16,954			7,219
		Net income attributable to noncontrolling interests		(1,123	)		(738	)		(814	)
		Income (loss) from continuing operations attributable to SSI		17,771			16,216			6,405
		Income (loss) from discontinued operations, net of tax		23			1,191			(14,974	)
		Net income (loss) attributable to SSI	$	17,794		$	17,407		$	(8,569	)

SCHNITZER STEEL INDUSTRIES, INC.
SELECTED OPERATING STATISTICS
(Unaudited)
					Fiscal Year										Fiscal Year
			Q1 FY11			2011	Q1 FY10		Q2 FY10		Q3 FY10		Q4 FY10		2010
Metals Recycling Business
	Ferrous Processing Selling Prices ($/LT)⁽¹⁾
		Domestic⁽²⁾	$	327	$	327	$	271	$	294	$	368	$	339	$	322
		Exports		359		359		280		298		382		343		330
		Average		353		353		277		297		378		342		328


	Ferrous Processing Sales Volume (LT)⁽²⁾
		SMB		90,537		90,537		122,171		80,728		139,404		115,869		458,172
		Domestic		161,301		161,301		134,595		160,424		197,226		158,487		650,732
		Export		979,063		979,063		499,899		933,123		838,766		849,863		3,121,651
		Total Processed		1,230,901		1,230,901		756,665		1,174,275		1,175,396		1,124,219		4,230,555


	Nonferrous Average Price ($/LB)⁽¹⁾		$	0.94	$	0.94	$	0.73	$	0.80	$	0.94	$	0.84	$	0.83

	Nonferrous Sales Volume (LB, in 000s)			111,495		111,495		110,247		104,892		124,283		139,063		478,485


Steel Manufacturing Business
	Sales Prices ($/NT)⁽¹⁾⁽³⁾
		Average	$	634	$	634	$	520	$	556	$	635	$	618	$	587

	Sales Volume (NT)⁽³⁾
		Rebar		63,668		63,668		55,875		42,588		52,792		66,047		217,302
		Coiled Products		26,917		26,917		38,051		47,660		70,738		44,233		200,682
		Merchant Bar and Other		7,071		7,071		6,249		6,147		7,840		5,296		25,532
		Total		97,656		97,656		100,175		96,395		131,370		115,576		443,516

Auto Parts Business
	Number of self-service locations at end of quarter			45		45		43		45		45		45		45

(1) Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer.
(2) Includes sales to the Steel Manufacturing Business (SMB) for all quarters.
(3) Excludes billet sales.

SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts)


		November 30, 2010		August 31, 2010
Assets
Current assets:
	Cash and cash equivalents	$	57,035	$	30,342
	Accounts receivable, net		161,044		126,156
	Inventories, net		275,989		268,103
	Other current assets		28,726		36,193
	Total current assets		522,794		460,794

Property, plant and equipment, net			465,830		460,810

Goodwill and other assets			427,518		421,814

	Total assets	$	1,416,142	$	1,343,418

Liabilities and Shareholders’ Equity
Current liabilities:
	Short-term borrowings	$	527	$	1,189
	Other current liabilities		126,991		158,924
	Total current liabilities		127,518		160,113

Long-term debt and capital lease obligations			179,143		99,240

Other long-term liabilities			109,839		104,433

Equity:
	Total Schnitzer Steel Industries, Inc. (“SSI”) Shareholders’ equity		994,844		975,326
Noncontrolling interests			4,798		4,306
	Total equity		999,642		979,632

	Total liabilities and shareholders’ equity	$	1,416,142	$	1,343,418

CONTACT:
Schnitzer Steel Industries, Inc.
Investor Relations:
Alexandra Deignan, 646-278-9711
adeignan@schn.com
or
Media Relations:
Chip Terhune, 503-265-6370
cterhune@schn.com
or
Company Info:
www.schnitzersteel.com
ir@schn.com

Item 9.01	Financial Statements and Exhibits

(d)	Exhibits

99.1	Press Release of Schnitzer Steel Industries, Inc. issued on January 6, 2011.

		Schnitzer Steel Industries, Inc.
		(Registrant)


Dated:	January 6, 2011	By:	/s/ Richard D. Peach
		Name:	Richard D. Peach
		Title:	Sr. V.P. and Chief Financial Officer

Exhibit No.	Description

99.1	Press Release of Schnitzer Steel Industries, Inc. issued on January 6, 2011.

Summary Results from Continuing Operations
($ in millions)

	First		First				Fourth
	Quarter		Quarter				Quarter
	2011*		2010*		% Change		2010*		% Change
Revenues	$	675	$	394	71	%	$	639	6	%
Operating Income	$	28	$	9	206	%	$	24	17	%
Income from continuing operations attributable to SSI**
Income from continuing operations attributable to SSI**	$	18	$	6	177	%	$	16	10	%

* Excludes results from discontinued operations
** Excludes the income attributable to noncontrolling interests

Summary of Auto Parts Business Results
($ in millions, except locations)

	First		First				Fourth
	Quarter		Quarter				Quarter
	2011*		2010*		% Change		2010*		% Change
Revenues	$	67	$	55	21	%	$	64	5	%
Operating Income	$	14	$	10	35	%	$	10	46	%
Locations (end of quarter)		45		43	5	%		45	-

* Excludes results from discontinued operations