Schnitzer Steel Industries Inc (SCHN) Q1 2015 Earnings Call Transcript

Operator
Thank you. Our next question is a follow up from the line of Timna Tanners from Bank of America Merrill Lynch.

Timna Tanners, Bank of America Merrill Lynch
Yes. I was just thinking about the reason why maybe I had it stuck in my head that you had avoided the domestic market, and you made the point that you have been staying away from markets that are overly crowded like in the Southeast. So I guess I just wonder how you can compete moving more into the domestic market when your mega-shredders are all positioned for the ports?

So I am just wondering, is there something I’m missing on that because is there a transportation advantage maybe you have or is there something else because your locations of your mega-shredders are not located near very many of the mini-mills that are larger? So I am just wondering if there is a different advantage that maybe I am missing.

Tamara Lundgren, President, CEO
No. I mean we ship domestic from our East Coast operations and from our West Coast operations. In the Southeast, we don’t have a shredder, Timna, and that was because our view has been that there has been too much shredder capacity in the Southeast. But we sell domestic from West Coast and East Coast. One of the points I was making before is, obviously, we provide the scrap into our own mini mill in Oregon and that mini mill is – Cascade is operating right now at 72 percent utilization into what we view as a strengthening market.

So we anticipate that as that market continues to strengthen, their utilization goes up, the proportion of our domestic sales will go in as well – or will go up as well. But fundamentally, selling in the domestic market is a function of price and logistics, and we have been actually quite effective, for example on the East Coast, in terms of increasing the amount of material that we are selling domestic.

Timna Tanners, Bank of America Merrill Lynch
Okay, just wondering. Thanks.

Tamara Lundgren, President, CEO
Thank you.

Operator
Thank you. I have no further questions in the phones at this time.

Tamara Lundgren, President, CEO
Well, thank you very much and thank everyone on the call for joining us today and for your interest in our Company. We look forward to speaking with you again in April when we announce our fiscal 2015 second quarter results. Thank you very much.

Operator
Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone, have a good day.