Schnitzer Reports First Quarter 2014 Financial Results
Sequential Improvements in Financial Performance
Continued Progress on Cost Reductions
PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 8, 2014--
Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) today reported an
adjusted loss per share of $(0.18) and a loss per share of $(0.23) for
its fiscal 2014 first quarter ended November 30, 2013. Adjusted results
for the first quarter exclude a $2 million, or $0.05 per share,
restructuring charge associated with cost reduction initiatives. In the
first quarter of fiscal 2013, the Company reported an adjusted loss per
share of $(0.02) and a loss per share of $(0.06).
All three business segments generated positive operating income during
the first quarter of fiscal 2014. As anticipated, our Metals Recycling
Business improved sequentially, delivering results slightly above
break-even. Our Auto Parts Business also improved compared to the fourth
quarter of fiscal 2013, recording operating margins of 9%, excluding the
impact of new stores added since the first quarter of fiscal 2013. Our
Steel Manufacturing Business was in line sequentially notwithstanding a
bad debt expense of $1 million, or $0.03 per share. The first quarter
results also include a charge for deferred tax valuation allowances of
$1 million, or $0.04 per share.
Market conditions improved as the quarter progressed. Both prices and
demand were relatively weak in the first half of the quarter which
impacted shipments in September and October. In the second half of the
quarter, demand strengthened which increased prices by approximately $30
per ton. Consequently, performance in the last month of the quarter was
significantly better than during the first two months. The softer demand
at the start of the quarter resulted in an estimated adverse impact from
average inventory costs of approximately $6 per ton in our Metals
Recycling Business. Based on current market conditions and our cost
reduction initiatives, we anticipate improved results in each of our
businesses in the second quarter.
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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1Q14
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4Q13
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1Q13
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Revenues
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$
|
588
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$
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657
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$
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593
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Operating Income (Loss)
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$
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(4
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)
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$
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(348
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)
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$
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1
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Goodwill Impairment Charge
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—
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321
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—
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Other Asset Impairment Charges
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—
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13
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|
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—
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Restructuring Charges
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2
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3
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2
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Adjusted Operating Income (Loss)(1)
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$
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(2
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)
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$
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(11
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)
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$
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3
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Net Loss attributable to SSI
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$
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(6
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)
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$
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(289
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)
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$
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(2
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)
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Adjusted Net Loss attributable to SSI(1)
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$
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(5
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)
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$
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(14
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)
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$
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(1
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)
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Net Loss per share attributable to SSI
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$
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(0.23
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)
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$
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(10.82
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)
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$
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(0.06
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)
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Adjusted diluted EPS attributable to SSI(1)
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$
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(0.18
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)
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$
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(0.51
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)
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$
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(0.02
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)
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(1) 1Q14 and 1Q13 include adjustments for restructuring charges. 4Q13
includes adjustments for a non-cash goodwill impairment charge, other
asset impairment charges, restructuring charges and tax valuation
allowances net of tax. See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
“Market conditions improved as the quarter progressed and, consequently,
performance in the last month of the quarter was significantly better
than during the first two months. All three business segments generated
positive operating income, including higher sequential performance for
both our Metals Recycling and Auto Parts Businesses, and a continuing
trend of profitability in our Steel Manufacturing Business," said Tamara
Lundgren, President and Chief Executive Officer. "We generated $26
million in operating cash flow in the first quarter, our cost reduction
initiatives are underway to deliver at least $20 million of savings in
fiscal 2014, and we continued to expand our Auto Parts Business platform
by acquiring our fourth store in the greater Seattle-Tacoma metropolitan
area which provides supply chain synergies with our Metals Recycling
Business."
Key business drivers during the first quarter of fiscal 2014:
-
Metals Recycling Business (MRB) generated $1 million in operating
income, including the estimated adverse impact from average inventory
costing of approximately $6 per ton. The combination of improving
market conditions, early benefits from our cost reduction program and
non-recurrence of other cost items which impacted the previous quarter
resulted in a sequential increase in MRB’s operating performance
during the first quarter.
-
Auto Parts Business (APB) operating income of $6 million and margin of
9%, which excludes new sites added since the first quarter of fiscal
2013, represents sequential increases of $1 million and 200 basis
points, respectively. Including the new stores, car purchase volumes
increased by 15% from the prior year first quarter, primarily
reflecting contributions from those stores.
-
Steel Manufacturing Business (SMB) operating income of $2 million
reflected steady demand in the West Coast markets but was partially
offset by a bad debt expense of $1 million from a customer bankruptcy.
Metals Recycling Business
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Summary of Metals Recycling Business Results
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($ in millions, except selling prices; Fe volumes 000s long tons;
NFe volumes Ms lbs)
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Quarter
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1Q14
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4Q13
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Change
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1Q13
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Change
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Total Revenues
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$
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490
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$
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535
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(8
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)%
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$
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494
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(1
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)%
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Ferrous Revenues
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$
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370
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$
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398
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(7
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)%
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$
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370
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—
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%
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Ferrous Volumes
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978
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1,088
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(10
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)%
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955
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2
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%
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Avg. Net Ferrous Sales Prices ($/LT)(1)
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$
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348
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$
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336
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4
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%
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$
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358
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(3
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)%
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Nonferrous Revenues
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$
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113
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$
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129
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(12
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)%
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$
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117
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(3
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)%
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Nonferrous Volumes
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124
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|
141
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(12
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)%
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|
119
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4
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%
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Avg. Net Nonferrous Sales Prices ($/lb)(1)
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$
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0.89
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|
$
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0.89
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|
|
—
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%
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|
$
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0.95
|
|
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(6
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)%
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|
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|
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Operating Income (Loss)(2)
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$
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1
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$
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(340
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)
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NM
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$
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6
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(90
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)%
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Goodwill Impairment
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—
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321
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NM
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—
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NM
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Asset Impairment Charges
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—
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|
13
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NM
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—
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NM
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Adjusted Operating Income (Loss)(3)
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$
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1
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$
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(6
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)
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NM
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$
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6
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(90
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)%
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(1) Sales prices are shown net of freight.
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(2) Operating income (loss) does not include the impact of
restructuring charges.
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(3) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
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NM = Not meaningful
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Sales Volumes: Ferrous sales volumes of 978 thousand tons
in the first quarter increased 2% and nonferrous volumes of 124 million
pounds increased 4% compared to the prior year first quarter.
Export customers accounted for 67% of total ferrous sales volumes in the
first quarter. Our ferrous and nonferrous products were shipped to 14
countries, with China, South Korea and Turkey being the top ferrous
export destinations.
Pricing: Export prices were soft in the first part of the
first quarter, but increased by $30 per ton toward the end of the
quarter. The combination of improving export prices and the strong
domestic market led to higher average net ferrous selling prices as
compared to the previous quarter while nonferrous prices were stable.
Margins: Operating income of $1 per ferrous ton, which
included the estimated adverse impact of average inventory accounting of
$6 per ton, was partially mitigated by improving market conditions and
benefits of $3 million from implementation of cost reduction initiatives.
Auto Parts Business
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Summary of Auto Parts Business Results
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($ in millions)
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Quarter
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1Q14
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4Q13
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Change
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1Q13
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Change
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Revenues
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|
$
|
80
|
|
|
$
|
79
|
|
|
1
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%
|
|
$
|
70
|
|
|
14
|
%
|
|
Operating Income(1)
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|
$
|
6
|
|
|
$
|
3
|
|
|
76
|
%
|
|
$
|
6
|
|
|
(12
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)%
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|
|
|
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|
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Car Purchase Volumes (000s)
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|
91
|
|
|
94
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(3
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)%
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|
79
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|
|
15
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%
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Locations (end of quarter)
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62
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|
|
61
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|
|
2
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%
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|
51
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|
|
22
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%
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|
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(1) Operating income does not include the impact of restructuring
charges.
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Revenues: Revenues in the first quarter increased 14% from
the prior year quarter due to incremental contributions from retail
stores added since the first quarter of fiscal 2013.
Margins: Operating margins, excluding the impact of the
stores added in fiscal 2013, increased sequentially to 9%. During the
first quarter, APB incurred approximately $1 million of operating losses
related to the new stores added since the first quarter of fiscal 2013,
including integration and start-up costs, which lowered APB's reported
operating margin to 7%. (See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.)
New Sites: In November, APB acquired its fourth
self-service retail store in the Seattle-Tacoma metropolitan area which
expanded APB's presence in the Pacific Northwest market. This location
will supply our Metals Recycling shredder in Tacoma, Washington, further
enhancing synergies between our operating segments.
Steel Manufacturing Business
|
Summary of Steel Manufacturing Business Results
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($ in millions, except selling prices; volume 000s of short tons)
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|
|
|
|
|
|
|
|
Quarter
|
|
|
|
1Q14
|
|
4Q13
|
|
Change
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|
1Q13
|
|
Change
|
|
Revenues
|
|
$
|
88
|
|
|
$
|
96
|
|
|
(8
|
)%
|
|
$
|
92
|
|
|
(4
|
)%
|
|
Operating Income
|
|
$
|
2
|
|
|
$
|
2
|
|
|
(20
|
)%
|
|
$
|
3
|
|
|
(49
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avg. Net Sales Prices ($/ST)
|
|
$
|
657
|
|
|
$
|
667
|
|
|
(1
|
)%
|
|
$
|
680
|
|
|
(3
|
)%
|
|
Finished Goods Sales Volumes
|
|
128
|
|
|
138
|
|
|
(7
|
)%
|
|
130
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volumes: Finished steel sales volumes of 128
thousand tons approximated the prior year first quarter, reflecting
steady demand for construction products on the West Coast.
Pricing: Average net sales prices for finished steel
products of $657 per short ton declined slightly from the prior year
quarter due to the impact of lower raw material prices on selling prices
to end customers.
Margins: Operating income of $2 million approximated the
fourth quarter of fiscal 2013 due to additional production efficiencies
of $1 million, partially offset by slightly lower sales volumes and a
bad debt expense of $1 million from a customer bankruptcy.
Cost Reductions
Our cost reduction initiatives to further reduce our annual operating
expenses by $30 million continue to progress. Approximately 70% of the
reduction is expected to benefit fiscal 2014 results, with the full
annual benefit expected to be achieved in fiscal 2015. The reduction in
operating expenses will primarily occur in MRB and be achieved through a
combination of headcount reductions, implementation of transportation
efficiencies, reduced lease costs, and other productivity and non-trade
procurement savings. We achieved $4 million of benefits in the first
quarter. We anticipate achieving a quarterly run rate of $6 million of
benefits by the end of the second quarter. During the first quarter, we
incurred a $2 million restructuring expense, or $0.05 per share, in
connection with this cost reduction program.
Corporate Items
The Company's full year tax rate for fiscal 2014 is anticipated to be
approximately 37%. The tax rate in the first quarter was a benefit of
12.7%, which was lower than the federal statutory rate primarily due to
the recognition of a deferred tax valuation allowance on the results of
foreign operations.
The Company generated $26 million in operating cash flow during the
first quarter. Net debt of $364 million at the end of the first quarter
decreased slightly from the end of the fourth quarter in fiscal 2013.
(See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.)
Analysts' Conference Call: First Quarter of Fiscal 2014
A conference call and slide presentation to discuss results will be held
today, January 8, 2014, at 11:30 a.m. EDT 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 is provided in the following pages. The slides
and related materials will be available prior to the call on the website.
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SCHNITZER STEEL INDUSTRIES, INC.
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FINANCIAL HIGHLIGHTS
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(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
November 30, 2013
|
|
August 31, 2013
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|
November 30, 2012
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REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Recycling Business:
|
|
|
|
|
|
|
|
|
Ferrous sales
|
|
$
|
369,555
|
|
|
$
|
397,947
|
|
|
$
|
370,476
|
|
|
|
Nonferrous sales
|
|
113,154
|
|
|
129,199
|
|
|
116,601
|
|
|
|
Other sales
|
|
7,600
|
|
|
7,817
|
|
|
7,384
|
|
|
|
TOTAL MRB SALES
|
|
490,309
|
|
|
534,963
|
|
|
494,461
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
79,635
|
|
|
79,231
|
|
|
69,555
|
|
|
Steel Manufacturing Business
|
|
88,123
|
|
|
96,235
|
|
|
92,029
|
|
|
Intercompany sales and eliminations
|
|
(70,322
|
)
|
|
(53,844
|
)
|
|
(63,225
|
)
|
|
|
Total Revenues
|
|
$
|
587,745
|
|
|
$
|
656,585
|
|
|
$
|
592,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
Metal Recycling Business(1)
|
|
$
|
590
|
|
|
$
|
(6,097
|
)
|
|
$
|
5,654
|
|
|
Auto Parts Business
|
|
5,609
|
|
|
3,191
|
|
|
6,364
|
|
|
Steel Manufacturing Business
|
|
1,744
|
|
|
2,169
|
|
|
3,404
|
|
|
|
Segment operating income (loss)(2)
|
|
7,943
|
|
|
(737
|
)
|
|
15,422
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
(8,725
|
)
|
|
(10,188
|
)
|
|
(11,144
|
)
|
|
Intercompany eliminations
|
|
(1,031
|
)
|
|
299
|
|
|
(1,472
|
)
|
|
|
Adjusted operating income (loss)
|
|
(1,813
|
)
|
|
(10,626
|
)
|
|
2,806
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment charge
|
|
—
|
|
|
(321,000
|
)
|
|
—
|
|
|
Other asset impairment charges
|
|
—
|
|
|
(13,053
|
)
|
|
—
|
|
|
Restructuring charges
|
|
(1,812
|
)
|
|
(2,900
|
)
|
|
(1,593
|
)
|
|
|
Total operating income (loss)
|
|
$
|
(3,625
|
)
|
|
$
|
(347,579
|
)
|
|
$
|
1,213
|
|
|
|
|
|
|
|
|
|
|
(1) MRB operating income for the three months ended August 31, 2013 is
adjusted for goodwill impairment charge and other asset impairment
charges. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
(2)
Segment operating income (loss) does not include the impact of
restructuring charges.
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
November 30, 2013
|
|
August 31, 2013
|
|
November 30, 2012
|
|
Revenues
|
|
$
|
587,745
|
|
|
$
|
656,586
|
|
|
$
|
592,820
|
|
|
Cost of goods sold
|
|
542,417
|
|
|
620,457
|
|
|
541,884
|
|
|
Selling, general and administrative
|
|
47,550
|
|
|
47,388
|
|
|
47,995
|
|
|
(Income) loss from joint ventures
|
|
(409
|
)
|
|
(633
|
)
|
|
135
|
|
|
Goodwill impairment charge
|
|
—
|
|
|
321,000
|
|
|
—
|
|
|
Other asset impairment charges
|
|
—
|
|
|
13,053
|
|
|
—
|
|
|
Restructuring charges
|
|
1,812
|
|
|
2,900
|
|
|
1,593
|
|
|
Operating income (loss)
|
|
(3,625
|
)
|
|
(347,579
|
)
|
|
1,213
|
|
|
Interest expense
|
|
(2,702
|
)
|
|
(2,584
|
)
|
|
(2,017
|
)
|
|
Other income (expense), net
|
|
176
|
|
|
(332
|
)
|
|
321
|
|
|
Loss before income taxes
|
|
(6,151
|
)
|
|
(350,495
|
)
|
|
(483
|
)
|
|
Income tax benefit (expense)
|
|
784
|
|
|
61,617
|
|
|
(960
|
)
|
|
Net loss
|
|
(5,367
|
)
|
|
(288,878
|
)
|
|
(1,443
|
)
|
|
Net income attributable to noncontrolling interests
|
|
(861
|
)
|
|
(356
|
)
|
|
(228
|
)
|
|
Net loss attributable to SSI
|
|
$
|
(6,228
|
)
|
|
$
|
(289,234
|
)
|
|
$
|
(1,671
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to SSI - basic
|
|
$
|
(0.23
|
)
|
|
$
|
(10.82
|
)
|
|
$
|
(0.06
|
)
|
|
Net loss per share attributable to SSI - diluted
|
|
$
|
(0.23
|
)
|
|
$
|
(10.82
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
Basic
|
|
26,755
|
|
|
26,733
|
|
|
26,567
|
|
|
Diluted
|
|
26,755
|
|
|
26,733
|
|
|
26,567
|
|
|
Dividends declared per common share
|
|
$
|
0.188
|
|
|
$
|
0.188
|
|
|
$
|
0.188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
1Q14
|
|
1Q13
|
2Q13
|
3Q13
|
4Q13
|
2013
|
|
Metals Recycling Business
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT) (1)
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
356
|
|
|
$
|
354
|
|
$
|
363
|
|
$
|
367
|
|
$
|
346
|
|
$
|
358
|
|
Exports
|
|
344
|
|
|
360
|
|
374
|
|
367
|
|
332
|
|
359
|
|
Average
|
|
$
|
348
|
|
|
$
|
358
|
|
$
|
372
|
|
$
|
367
|
|
$
|
336
|
|
$
|
358
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
322,531
|
|
|
279,450
|
|
260,509
|
|
314,240
|
|
288,112
|
|
1,142,311
|
|
Export
|
|
655,072
|
|
|
675,212
|
|
842,509
|
|
849,991
|
|
799,644
|
|
3,167,356
|
|
Total
|
|
977,603
|
|
|
954,662
|
|
1,103,018
|
|
1,164,231
|
|
1,087,756
|
|
4,309,667
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Average Price ($/LB) (1)
|
|
$
|
0.89
|
|
|
$
|
0.95
|
|
$
|
0.97
|
|
$
|
0.94
|
|
$
|
0.89
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, in 000s)
|
|
123,941
|
|
|
118,931
|
|
125,500
|
|
135,256
|
|
140,755
|
|
520,442
|
|
|
|
|
|
|
|
|
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST) (1) (2)
|
|
|
|
|
|
|
|
|
|
Average
|
|
$
|
657
|
|
|
$
|
680
|
|
$
|
690
|
|
$
|
687
|
|
$
|
667
|
|
$
|
680
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (ST) (2)
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
83,618
|
|
|
78,159
|
|
58,132
|
|
71,561
|
|
83,911
|
|
291,763
|
|
Coiled Products
|
|
38,322
|
|
|
45,533
|
|
32,130
|
|
46,088
|
|
46,334
|
|
170,085
|
|
Merchant Bar and Other
|
|
6,222
|
|
|
5,926
|
|
5,355
|
|
7,358
|
|
7,298
|
|
25,937
|
|
Total
|
|
128,162
|
|
|
129,618
|
|
95,617
|
|
125,007
|
|
137,543
|
|
487,785
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
|
|
|
|
|
|
|
Car purchase volumes (000)
|
|
91
|
|
|
79
|
|
88
|
|
95
|
|
94
|
|
356
|
|
Number of self-service locations at end of quarter
|
|
62
|
|
|
51
|
|
59
|
|
61
|
|
61
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
(1) Price information is shown after a reduction for the cost of
freight incurred to deliver the product to the customer
|
|
(2) Excludes billet sales
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
November 30, 2013
|
|
August 31, 2013
|
|
Assets
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
29,934
|
|
|
$
|
13,481
|
|
Accounts receivable, net
|
|
125,975
|
|
|
188,270
|
|
Inventories, net
|
|
280,100
|
|
|
236,049
|
|
Other current assets
|
|
29,898
|
|
|
29,430
|
|
Total current assets
|
|
465,907
|
|
|
467,230
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
554,010
|
|
|
564,426
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
372,202
|
|
|
373,856
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,392,119
|
|
|
$
|
1,405,512
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
613
|
|
|
$
|
9,174
|
|
Other current liabilities
|
|
139,686
|
|
|
156,960
|
|
Total current liabilities
|
|
140,299
|
|
|
166,134
|
|
|
|
|
|
|
|
Long-term debt
|
|
393,426
|
|
|
372,663
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
86,123
|
|
|
85,516
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
767,264
|
|
|
776,558
|
|
Noncontrolling interests
|
|
5,007
|
|
|
4,641
|
|
Total equity
|
|
772,271
|
|
|
781,199
|
|
Total liabilities and equity
|
|
$
|
1,392,119
|
|
|
$
|
1,405,512
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures as
defined under SEC rules such as adjusted operating income, adjusted net
income attributable to SSI, adjusted diluted earnings per share
attributable to SSI, operating income margin for APB stores owned more
than a year and debt, net of cash. As required by SEC rules, the Company
has provided reconciliations of these measures to the most directly
comparable U.S. GAAP measures. Management believes that each of the
foregoing adjusted non-GAAP financial measures provides a meaningful
presentation of the Company's results from its core business operations
excluding adjustments for restructuring charges that are not related to
the Company's ongoing core business operations and improves the
period-to-period comparability of the Company's results from its core
business operations. In addition, management believes that the non-GAAP
financial measure relating to the Auto Parts Business new stores impact
provides a meaningful presentation of the operating segment's results by
excluding operating results relating to newly added stores and thus
improve period-to-period comparability of the results of the segment's
core business. Management believes that debt, net of cash is a useful
measure for investors because, as cash and cash equivalents can be used,
among other things, to repay indebtedness, netting this against total
debt is a useful measure of our leverage. These non-GAAP financial
measures should be considered in addition to, but not as a substitute
for, the most directly comparable U.S. GAAP measures.
|
|
|
Operating Income (Loss)
|
|
($ in millions)
|
|
Quarter
|
|
|
|
1Q14
|
|
4Q13
|
|
1Q13
|
|
Consolidated Operating Income (Loss):
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
(4
|
)
|
|
$
|
(348
|
)
|
|
$
|
1
|
|
Goodwill Impairment Charge
|
|
—
|
|
|
321
|
|
|
—
|
|
Other Asset Impairment Charges
|
|
—
|
|
|
13
|
|
|
—
|
|
Restructuring Charges
|
|
2
|
|
|
3
|
|
|
2
|
|
Adjusted Operating Income (Loss)
|
|
$
|
(2
|
)
|
|
$
|
(11
|
)
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
MRB Operating Income (Loss):
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
1
|
|
|
$
|
(340
|
)
|
|
$
|
6
|
|
Goodwill Impairment Charge
|
|
—
|
|
|
321
|
|
|
—
|
|
Other Asset Impairment Charges
|
|
—
|
|
|
13
|
|
|
—
|
|
Adjusted Operating Income (Loss)
|
|
$
|
1
|
|
|
$
|
(6
|
)
|
|
$
|
6
|
|
|
|
Net Loss attributable to SSI
|
|
($ in millions)
|
|
Quarter
|
|
|
|
1Q14
|
|
4Q13
|
|
1Q13
|
|
Net Loss attributable to SSI
|
|
$
|
(6
|
)
|
|
$
|
(289
|
)
|
|
$
|
(2
|
)
|
|
Goodwill impairment charge, net of tax
|
|
—
|
|
|
254
|
|
|
—
|
|
|
Other asset impairment charges, net of tax
|
|
—
|
|
|
9
|
|
|
—
|
|
|
Restructuring Charges, net of tax
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Valuation allowance on deferred tax assets
|
|
—
|
|
|
11
|
|
|
—
|
|
|
Adjusted Net Loss attributable to SSI
|
|
$
|
(5
|
)
|
|
$
|
(14
|
)
|
|
$
|
(1
|
)
|
|
|
|
Diluted Earnings per share attributable to SSI
|
|
($ per share)
|
|
Quarter
|
|
|
|
1Q14
|
|
4Q13
|
|
1Q13
|
|
Net loss per share attributable to SSI
|
|
$
|
(0.23
|
)
|
|
$
|
(10.82
|
)
|
|
$
|
(0.06
|
)
|
|
Goodwill impairment charge, net of tax, per share
|
|
—
|
|
|
9.52
|
|
|
—
|
|
|
Other asset impairment charges, net of tax, per share
|
|
—
|
|
|
0.33
|
|
|
—
|
|
|
Restructuring Charges, net of tax, per share
|
|
0.05
|
|
|
0.05
|
|
|
0.04
|
|
|
Valuation allowance on deferred tax assets, per share
|
|
—
|
|
|
0.41
|
|
|
—
|
|
|
Adjusted Diluted EPS attributable to SSI
|
|
$
|
(0.18
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
Debt, Net of Cash
|
|
|
|
|
|
|
|
November 30, 2013
|
|
August 31, 2013
|
|
Short-term borrowings
|
|
$
|
613
|
|
|
$
|
9,174
|
|
Long-term debt, net of current maturities
|
|
393,426
|
|
|
372,663
|
|
Total debt
|
|
394,039
|
|
|
381,837
|
|
Less: cash and cash equivalents
|
|
29,934
|
|
|
13,481
|
|
Total debt, net of cash
|
|
$
|
364,105
|
|
|
$
|
368,356
|
|
|
|
|
|
|
Auto Parts Business New Stores Impact
|
|
|
|
|
($ in millions)
|
|
1Q14
|
|
|
|
|
Existing Stores(1)
|
|
|
New Stores(2)
|
|
|
Reported
|
|
|
Revenues
|
|
71
|
|
|
9
|
|
|
80
|
|
|
Operating Income (Loss)(3)
|
|
6
|
|
|
(1
|
)
|
|
6
|
|
|
Operating Income Margin
|
|
9
|
%
|
|
NM
|
|
|
7
|
%
|
|
Car Purchase Volumes (000)
|
|
80
|
|
|
11
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q13
|
|
|
|
|
Existing Stores(1)
|
|
|
New Stores(2)
|
|
|
Reported
|
|
|
Revenues
|
|
72
|
|
|
7
|
|
|
79
|
|
|
Operating Income (Loss)
|
|
5
|
|
|
(2
|
)
|
|
3
|
|
|
Operating Income Margin
|
|
7
|
%
|
|
NM
|
|
|
4
|
%
|
|
Car Purchase Volumes (000)
|
|
84
|
|
|
10
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Existing Stores represents APB operations for stores owned one
year or more.
|
|
(2) New Stores represent new acquisitions, or greenfield
development, owned less than one year.
|
|
(3) Does not foot due to rounding
|
|
NM = Not meaningful
|
|
|
|
|
|
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest manufacturers and
exporters of recycled ferrous metal products in the United States with
60 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 61 self-service facilities located in 16
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 108th
year of operations in 2014.
Safe Harbor for 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 our expectations, intentions, beliefs and strategies regarding
the future, which may include statements regarding trends, cyclicality
and changes in the markets we sell into; strategic direction; changes to
manufacturing and production processes; the cost of 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; expected results, including pricing, sales volumes and
profitability; obligations under our retirement plans; benefits, savings
or additional costs from business realignment and cost containment
programs; and the adequacy of accruals.
When used in this report, the words “believes,” “expects,”
“anticipates,” “intends,” “assumes,” “estimates,” “evaluates,” “may,”
“could,” “opinions,” “forecasts,” “future,” “forward,” “potential,”
“probable,” and similar expressions are intended to identify
forward-looking statements.
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” of our most
recent annual report on Form 10-K. Examples of these risks include:
potential environmental cleanup costs related to the Portland Harbor
Superfund site; the impact of general economic conditions; volatile
supply and demand conditions affecting prices and volumes in the markets
for both our products and raw materials we purchase; difficulties
associated with acquisitions and integration of acquired businesses; the
impact of goodwill impairment charges; the impact of long-lived asset
impairment charges; the realization of expected cost reductions related
to restructuring initiatives; the inability of customers to fulfill
their contractual obligations; 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; the impact of imports of
foreign steel into the U.S.; inability to realize expected benefits from
investments in technology; freight rates and availability of
transportation; impact of equipment upgrades and failures on production;
product liability claims; the impact of impairment of our deferred tax
assets; costs associated with compliance with environmental regulations;
the adverse impact of climate change; 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.
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Investor Relations:
Alexandra
Deignan, 646-278-9711
[email protected]
or
Media
Relations:
Tom Zelenka, 503-323-2821
[email protected]
or
Company
Info:
www.schnitzersteel.com
[email protected]