Continuation of previous post:
In the 2nd Q they processed and sold 10K tons of scrap for $3.9M (that comes out to selling it for $390/ton, and probably purchasing it in the $350 range).
In the 3rd Q they processed and sold 26K tons of scrap for $9.7M (that comes out to selling it for $370/ton, and probably purchasing it in the $350 range or less).
At the end of 2nd Q (Sept 30th), they stated in their 10Q they had $8.5M in scrap inventory. That's scrap they never sold in 3rd Q. That equates out to 24.3K tons (because they would price their inventory at their estimated $350 purchase price).
In late December they state they sold 25k tons for $12M (or $480/ton). In late Nov and esp December prices went up fast!
That means they sold all of their Sept 30th inventory plus a little more. (It also means they sold it for a great profit margin).
In the 3rd Q 10Q they state "In addition, we have taken advantage of current low prices of raw scrap metal to build up approximately $8.5 million of scrap metal inventory in anticipation of price increases in the fourth quarter of 2010 and, depending on the effects of government imposed energy restrictions, in 2011."
They nailed that! Now if they continued to build up their inventory levels in October, November, early December than they have a nice profit just waiting to be sold now that shredded scrap is going for $510/ton and predicted to go up. If their average price (especially if they bought in Oct and Nov) is low than they can make almost $100 profit per ton sold in 1rst Q!!
Hopefully management had the foresight to buy hand over fist. I doubt it, but crazier things have happened.
