Schnitzer Announces First Quarter Fiscal 2017 Preliminary Results, Market Update and Earnings Date
First Quarter Earnings Conference Call January 5, 2017, 11:30 a.m.
Eastern
PORTLAND, Ore.--(BUSINESS WIRE)--Dec. 19, 2016--
Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) announced preliminary
results for its first quarter of fiscal 2017 ended November 30, 2016.
Schnitzer expects to report a first quarter loss per share from
continuing operations in the range of $0.05 - $0.08 and an adjusted loss
per share from continuing operations in the range of $0.03 - $0.06. As
anticipated, reported and adjusted first quarter results include
additional operating costs in the Steel Manufacturing Business (SMB) of
approximately $2.5 million, or $0.09 per share, resulting from outages
for a major equipment upgrade and maintenance downtime. First quarter
consolidated results are expected to be significantly improved compared
to the prior year first quarter results of a $0.19 loss per share from
continuing operations and a $0.13 adjusted loss per share from
continuing operations. For a reconciliation of adjusted results to GAAP,
see the table provided in the Non-GAAP Financial Measures section.
For the first quarter of fiscal 2017, Auto and Metals Recycling (AMR) is
expected to generate operating income in the range of $11 - $13 million,
or operating income per ferrous ton of $14 - $16, which would represent
its best first quarter performance in the last five years. AMR’s
operating income is anticipated to be lower sequentially, primarily due
to reduced seasonal sales volumes and a lower price environment for
shipments in the quarter. Compared to last year's first quarter
operating income of $2 million, or operating income per ferrous ton of
$3, AMR’s first quarter operating income is expected to be substantially
higher, primarily due to approximately $5 million of increased benefits
from cost savings and productivity initiatives, approximately 9% higher
average ferrous selling prices, and approximately 3% higher ferrous
sales volumes. AMR's expected first quarter results include an estimated
$2 million adverse impact from average inventory accounting. This
compares to an estimated $7 million adverse impact in the prior year
first quarter.
During the quarter, SMB completed a major equipment upgrade to its
rolling mill which, together with maintenance outages, increased
operating costs by approximately $2.5 million. As a result, SMB is
expected to report an operating loss of approximately $3 million,
reflecting the higher operating costs as well as lower average selling
prices and volumes, which were down from the prior year quarter by
approximately 11% and 18%, respectively, primarily due to the continued
adverse impact of lower-priced finished steel imports.
Consolidated financial performance is expected to include Corporate
expense of approximately $9 million and an effective tax rate of
approximately 9%. Operating cash flow is expected to be positive and
total debt was $188 million as of the end of the first quarter of fiscal
2017.
Market Update
Demand for recycled metals, which began strengthening toward the end of
October, has continued improving into December which the Company
anticipates will benefit shipments in the second quarter. The Company
currently expects AMR’s operating income for the second quarter to
increase sequentially and from the prior year quarter, reflecting
expected higher ferrous average selling prices and sales volumes, and an
anticipated favorable impact from average inventory accounting, as well
as the planned continuing benefits from cost reduction and productivity
initiatives. The Company currently expects SMB’s second quarter
performance to improve sequentially, reflecting expected higher selling
prices, partially offset by expected increases in raw material costs and
a ramp-up in production following the completion of the major equipment
upgrade. The Company will discuss its second quarter outlook on its
quarterly conference call.
The preliminary information provided above is based on the Company’s
current estimate of its financial results for the first quarter ended
November 30, 2016, and remains subject to change based on ongoing review
of the Company’s first quarter financial results.
The Company will report the financial results for its first quarter
ended November 30, 2016, on Thursday, January 5, 2017. The Company will
webcast a conference call to discuss these results at 11:30 a.m. Eastern
time on the same day. The webcast of the call and the accompanying slide
presentation may be accessed on Schnitzer’s website under the Investor
section Event Calendar at www.schnitzersteel.com/events.
The call will be hosted by Tamara L. Lundgren, President and Chief
Executive Officer, and Richard D. Peach, Senior Vice President, Chief
Financial Officer and Chief of Corporate Operations.
Replay Information
Toll Free Dial: (855) 859-2056
Toll Free International Dial: (404) 537-3406
Conference ID: 35611782
Replay Available: 1/5/2017 to 1/10/2017
Non-GAAP Financial Measures
This press release contains expected performance based on adjusted
earnings per share from continuing operations attributable to SSI, which
is a non-GAAP financial measure as defined under SEC rules. As required
by SEC rules, the Company has provided reconciliations of this measure
for each period discussed to the most directly comparable U.S. GAAP
measure. Management believes that providing adjusted non-GAAP financial
measures provides a meaningful presentation of our results from business
operations excluding adjustments for other asset impairment charges,
restructuring charges and other exit-related activities, recoveries
related to the resale or modification of previously contracted
shipments, and income tax expense (benefit) associated with these
adjustments, items which are not related to underlying business
operational performance, and improves the period-to-period comparability
of our results from business operations. This non-GAAP financial measure
also excluded the impact on operating results in fiscal 2015 from the
resale or modification of the terms, each at significantly lower prices
due to sharp declines in selling prices, of certain
previously-contracted bulk shipments for delivery during fiscal 2015.
Recoveries resulting from settlements with the original contract
parties, which began in fiscal 2016, are reported within SG&A expense in
the quarterly statements of operations and are also excluded from the
measure. This non-GAAP financial measure should be considered in
addition to, but not as a substitute for, the most directly comparable
U.S. GAAP measure.
|
|
|
Net Loss Per Share From Continuing
Operations Attributable to SSI
|
|
|
|
Quarter
|
|
|
|
1Q17
|
|
1Q16
|
|
|
|
High
|
|
Low
|
|
|
|
Net loss per share from continuing operations attributable to SSI,
per share
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.19
|
)
|
|
Other asset impairment charges, per share
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
—
|
|
|
Restructuring charges and other exit-related activities, per share
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.07
|
|
|
Recoveries related to the resale or modification of previously
contracted shipments, per share
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
Income tax expense (benefit) allocated to adjustments, per share(1)
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
(0.01
|
)
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI(2)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
(1) Income tax allocated to the aggregate adjustments
reconciling reported and adjusted diluted earnings per share from
continuing operations attributable to SSI is determined based on a
tax provision calculated with and without the adjustments.
|
|
(2) May not foot due to rounding.
|
|
|
Forward-Looking Statements
Statements and information included in this press release that are not
purely historical are forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and are made pursuant
to the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. Except as noted herein or as the context may
otherwise require, all references to “we,” “our,” “us” and “SSI” refer
to the Company and its consolidated subsidiaries.
Forward-looking statements in this press release include statements
regarding future events or our expectations, intentions, beliefs and
strategies regarding the future, which may include statements regarding
trends, cyclicality and changes in the markets we sell into; the
Company's outlook or expected results, including pricing, sales volumes
and profitability; strategic direction; changes to manufacturing and
production processes; the cost of and the status of any agreements or
actions related to our compliance with environmental and other laws;
expected tax rates, deductions and credits; the realization of deferred
tax assets; planned capital expenditures; liquidity positions; ability
to generate cash from continuing operations; the potential impact of
adopting new accounting pronouncements; obligations under our retirement
plans; benefits, savings or additional costs from business realignment,
cost containment and productivity improvement programs; and the adequacy
of accruals.
Forward-looking statements by their nature address matters that are, to
different degrees, uncertain, and often contain words such as "outlook,"
“believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,”
“evaluates,” “may,” "will," “could,” “opinions,” “forecasts,”
"projects," "plans," “future,” “forward,” “potential,” “probable,” and
similar expressions. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking.
We may make other forward-looking statements from time to time,
including in reports filed with the Securities and Exchange Commission,
press releases and public conference calls. All forward-looking
statements we make are based on information available to us at the time
the statements are made, and we assume no obligation to update any
forward-looking statements, except as may be required by law. Our
business is subject to the effects of changes in domestic and global
economic conditions and a number of other risks and uncertainties that
could cause actual results to differ materially from those included in,
or implied by, such forward-looking statements. Some of these risks and
uncertainties are discussed in “Item 1A. Risk Factors” in our most
recent annual report on Form 10-K and in our quarterly reports on Form
10-Q. Examples of these risks include: potential environmental cleanup
costs related to the Portland Harbor Superfund site; the cyclicality and
impact of general economic conditions; instability in international
markets; volatile supply and demand conditions affecting prices and
volumes in the markets for both our products and raw materials we
purchase; imbalances in supply and demand conditions in the global steel
industry; the impact of goodwill impairment charges; the impact of
long-lived asset and joint venture investment impairment charges; the
realization of expected benefits or cost reductions associated with
productivity improvement and restructuring initiatives; difficulties
associated with acquisitions and integration of acquired businesses;
customer fulfillment of their contractual obligations; changes in the
relative value of the U.S. dollar; the impact of foreign currency
fluctuations; potential limitations on our ability to access capital
resources and existing credit facilities; restrictions on our business
and financial covenants under our bank credit agreement; the impact of
the consolidation in the steel industry; inability to realize expected
benefits from investments in technology; freight rates and the
availability of transportation; the impact of equipment upgrades,
equipment failures and facility damage on production; product liability
claims; the impact of legal proceedings and legal compliance; the
adverse impact of climate change; the impact of not realizing deferred
tax assets; the impact of tax increases and changes in tax rules; the
impact of a cybersecurity incident; costs associated with compliance
with environmental regulations; inability to obtain or renew business
licenses and permits; compliance with greenhouse gas emission
regulations; reliance on employees subject to collective bargaining
agreements; and the impact of the underfunded status of multiemployer
plans in which we participate.
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest manufacturers and
exporters of recycled metal products in the United States with operating
facilities located in 23 states, Puerto Rico and Western Canada.
Schnitzer 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 auto parts stores and steel
manufacturing. The Company's steel manufacturing business produces
finished steel products, including rebar, wire rod and other specialty
products. The Company began operations in 1906 in Portland, Oregon.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161219006183/en/
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Investor Relations:
Alexandra
Deignan, 646-278-9711
ir@schn.com
www.schnitzersteel.com