Schnitzer Reports Second Quarter 2014 Financial Results
Significant Improvement in Metals Recycling Business Performance
Sequentially
Productivity Initiatives Tracking Ahead of Schedule – Overall Savings
Target Increased to $40 Million
PORTLAND, Ore.--(BUSINESS WIRE)--Apr. 3, 2014--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported adjusted
earnings per share of $0.13 and earnings per share of $0.07 for its
fiscal 2014 second quarter ended February 28, 2014. Adjusted results for
the second quarter exclude $3 million, or $0.06 per share, of
restructuring, other exit-related and asset impairment charges. In the
second quarter of fiscal 2013, the Company reported adjusted earnings
per share of $0.36 and earnings per share of $0.32 which included a
release of deferred tax valuation allowances and other discrete tax
benefits.
Our Metals Recycling Business delivered a substantial increase in
adjusted operating income per ferrous ton of $11 compared to $1 in the
previous quarter. Stronger ferrous selling prices early in the second
quarter, and benefits from our productivity improvement and cost
reduction programs more than offset the adverse impacts of weaker export
demand and severe winter weather. Our Auto Parts Business experienced
seasonally weaker retail sales which were further impacted by extreme
weather conditions in the Midwest and on the East Coast. Our Steel
Manufacturing Business achieved a sequential increase in profitability
as it continued to benefit from steady demand for construction products
on the West Coast and from production efficiencies.
The Company previously announced a target of $30 million of savings, 70%
of which were to be achieved by the end of fiscal 2014. These savings
are tracking ahead of schedule with $6 million achieved in the second
quarter. The Company has identified an additional $10 million of
annualized savings, primarily within selling, general and administrative
activities, which increases our overall savings target to $40 million,
of which we expect to achieve 70% by the end of fiscal 2014.
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|
|
Summary Results
|
|
($ in millions, except per share amounts)
|
|
|
|
|
Quarter
|
|
|
|
|
2Q14
|
|
1Q14
|
|
2Q13
|
|
Revenues
|
|
|
$
|
626
|
|
|
$
|
588
|
|
|
$
|
662
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
$
|
7
|
|
|
$
|
(4
|
)
|
|
$
|
11
|
|
Other Asset Impairment Charges
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Restructuring Charges
|
|
|
2
|
|
|
2
|
|
|
2
|
|
Adjusted Operating Income (Loss)(1)
|
|
|
$
|
10
|
|
|
$
|
(2
|
)
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) attributable to SSI
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (Loss) attributable to SSI(1)
|
|
|
$
|
3
|
|
|
$
|
(5
|
)
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per share attributable to SSI
|
|
|
$
|
0.07
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted EPS attributable to SSI(1)
|
|
|
$
|
0.13
|
|
|
$
|
(0.18
|
)
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
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|
(1) See Non-GAAP Financial Measures for reconciliation to U.S.
GAAP.
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“We are pleased to see the benefits of our productivity improvement and
cost reduction programs reflected in our second quarter results," said
Tamara Lundgren, President and Chief Executive Officer. "Despite
volatile market conditions and severe winter weather, strong operational
performance in our Metals Recycling Business enabled us to increase
sales volumes sequentially. In our Auto Parts Business, second quarter
performance reflected a seasonal decline in retail sales, particularly
in regions which were impacted by the harsh winter weather conditions.
In our Steel Manufacturing Business, solid demand and stable pricing for
our finished steel products reflected continued improvement in the West
Coast construction markets. Through our overall business performance and
our disciplined focus on working capital management, we delivered
another quarter of positive operating cash flow."
Key business drivers during the second quarter of fiscal 2014:
-
Metals Recycling Business (MRB) generated $12 million of adjusted
operating income, or $11 of adjusted operating income per ton. The
sequential improvement reflects higher average ferrous selling prices,
increased volumes, productivity savings and benefits from average
inventory accounting.
-
Auto Parts Business (APB) delivered operating income of $5 million and
margin of 7%, excluding new sites operating for twelve months or less.
Performance was primarily impacted by lower seasonal retail sales on a
sequential basis. New sites added in the last twelve months incurred
operating losses of $1 million.
-
Steel Manufacturing Business (SMB) operating income of $4 million
reflected steady demand in the West Coast markets and solid execution
on productivity initiatives.
Metals Recycling Business
|
Summary of Metals Recycling Business Results
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|
($ in millions, except selling prices; Fe volumes 000s long tons;
NFe volumes Ms lbs)
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|
|
|
|
|
Quarter
|
|
|
|
2Q14
|
|
1Q14
|
|
Change
|
|
2Q13
|
|
Change
|
|
Total Revenues
|
|
$
|
536
|
|
|
$
|
490
|
|
|
9
|
%
|
|
$
|
576
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Revenues
|
|
$
|
409
|
|
|
$
|
370
|
|
|
11
|
%
|
|
$
|
443
|
|
|
(8
|
)%
|
|
Ferrous Volumes
|
|
1,029
|
|
|
978
|
|
|
5
|
%
|
|
1,103
|
|
|
(7
|
)%
|
|
Avg. Net Ferrous Sales Prices ($/LT)(1)
|
|
$
|
365
|
|
|
$
|
348
|
|
|
5
|
%
|
|
$
|
372
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Revenues
|
|
$
|
121
|
|
|
$
|
113
|
|
|
7
|
%
|
|
$
|
125
|
|
|
(4
|
)%
|
|
Nonferrous Volumes
|
|
136
|
|
|
124
|
|
|
10
|
%
|
|
126
|
|
|
8
|
%
|
|
Avg. Net Nonferrous Sales Prices ($/lb)(1)
|
|
$
|
0.86
|
|
|
$
|
0.89
|
|
|
(3
|
)%
|
|
$
|
0.97
|
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income(2)
|
|
$
|
11
|
|
|
$
|
1
|
|
|
1,697
|
%
|
|
$
|
14
|
|
|
(25
|
)%
|
|
Other Asset Impairment Charges
|
|
1
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income(3)
|
|
$
|
12
|
|
|
$
|
1
|
|
|
1,855
|
%
|
|
$
|
14
|
|
|
(19
|
)%
|
|
Adjusted Operating Income per Fe ton
|
|
$
|
11
|
|
|
$
|
1
|
|
|
1,757
|
%
|
|
$
|
13
|
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Sales prices are shown net of freight.
|
|
(2) Operating income excludes the impact of restructuring charges
and other exit-related costs.
|
|
(3) See Non-GAAP Financial Measures for reconciliation to U.S.
GAAP.
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|
NM = Not meaningful
|
|
|
Sales Volumes: Ferrous sales volumes of 1 million tons in
the second quarter increased 5% sequentially and nonferrous volumes of
136 million pounds increased 10%.
Export customers accounted for 68% of total ferrous sales volumes in the
second quarter. Our ferrous and nonferrous products were shipped to 14
countries, with South Korea, Turkey and Indonesia being the top ferrous
export destinations.
Pricing: Export selling prices were strong at the
beginning of the second quarter, but decreased approximately $30 per ton
during the second half of the quarter. The strong domestic market and
higher export prices for shipments in December and early January led to
higher average net ferrous selling prices as compared to the previous
quarter. Nonferrous prices began to decline in January, resulting in
slightly lower average prices sequentially.
Margins: Adjusted operating income of $11 per ferrous ton
improved from $1 per ton reported in the first quarter, reflecting
benefits from stronger market conditions early in the quarter,
productivity improvements and cost reductions, and a favorable impact
from average inventory accounting.
Auto Parts Business
|
Summary of Auto Parts Business Results
|
|
|
|
($ in millions)
|
|
|
|
|
|
Quarter
|
|
|
|
2Q14
|
|
1Q14
|
|
Change
|
|
2Q13
|
|
Change
|
|
Revenues
|
|
$
|
76
|
|
|
$
|
80
|
|
|
(4
|
)%
|
|
$
|
78
|
|
|
(2
|
)%
|
|
Operating Income(1)
|
|
$
|
5
|
|
|
$
|
6
|
|
|
(18
|
)%
|
|
$
|
7
|
|
|
(32
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car Purchase Volumes (000s)
|
|
85
|
|
|
91
|
|
|
(7
|
)%
|
|
88
|
|
|
(3
|
)%
|
|
Locations (end of quarter)
|
|
61
|
|
|
62
|
|
|
(2
|
)%
|
|
59
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating income does not include the impact of restructuring
charges and other exit-related costs.
|
Revenues: Revenues in the second quarter declined slightly
sequentially, reflecting lower commodity prices in the second half of
the quarter and the seasonally weaker retail sales.
Margins: Operating margins of 7%, excluding the impact of
new sites added in the last twelve months, reflected seasonally weaker
retail sales compared to the first quarter. During the second quarter,
APB incurred $1 million of operating losses related to these new sites
which lowered the reported operating margin to 6%. (See Non-GAAP
Financial Measures for reconciliation to U.S. GAAP.)
Steel Manufacturing Business
|
Summary of Steel Manufacturing Business Results
|
|
|
|
($ in millions, except selling prices; volume 000s of short tons)
|
|
|
|
|
|
Quarter
|
|
|
|
2Q14
|
|
1Q14
|
|
Change
|
|
2Q13
|
|
Change
|
|
Revenues
|
|
$
|
81
|
|
|
$
|
88
|
|
|
(8
|
)%
|
|
$
|
71
|
|
|
14
|
%
|
|
Operating Income
|
|
$
|
4
|
|
|
$
|
2
|
|
|
105
|
%
|
|
$
|
1
|
|
|
243
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avg. Net Sales Prices ($/ST)
|
|
$
|
676
|
|
|
$
|
657
|
|
|
3
|
%
|
|
$
|
690
|
|
|
(2
|
)%
|
|
Finished Goods Sales Volumes
|
|
115
|
|
|
128
|
|
|
(10
|
)%
|
|
96
|
|
|
20
|
%
|
Sales Volumes: Finished steel sales volumes of 115
thousand tons were lower compared to the first quarter due to seasonally
slower construction activity.
Pricing: Average net sales prices for finished steel
products of $676 per short ton increased on a sequential basis.
Margins: Operating income of $4 million reflects higher
average prices and benefits from ongoing production efficiencies which
offset lower shipped volumes on a sequential basis.
Productivity Initiatives and Other Cost Reductions
We have increased targeted savings from our productivity improvement and
cost reduction programs announced at the beginning of fiscal 2014. Our
new savings target is $40 million, of which 70% is expected to be
achieved by the end of fiscal 2014 and the remainder in fiscal 2015. Of
the total, approximately $30 million represents expected benefits from
productivity improvement initiatives with the remaining $10 million
primarily benefiting selling, general and administration expenses. The
productivity initiatives are primarily occurring in our Metals Recycling
Business through a combination of headcount reductions, implementation
of operational efficiencies, reduced lease costs, and other productivity
improvements. The savings in selling, general and administration
expenses will be achieved across Metals Recycling and Auto Parts
Businesses and Corporate. Through the first half of fiscal 2014, we
achieved an aggregate $10 million of benefits, which include $6 million
in the second quarter. During the second quarter, we incurred $2 million
of restructuring charges and other exit-related costs, or $0.04 per
share, in connection with our productivity improvement and cost
reduction programs.
Corporate Items
The Company's full year tax rate for fiscal 2014 is anticipated to be
approximately 39%. The tax rate in the second quarter was 27.2%. This
compares to a tax rate of 2.7% in the second quarter of fiscal 2013
which included a release of deferred tax valuation allowances of $2
million as well as $1 million in other discrete tax benefits.
The Company generated $46 million in operating cash flow during the
first half of fiscal 2014, including $20 million in the second quarter.
Net debt of $359 million at the end of the second quarter approximated
the end of the first quarter in fiscal 2014. (See Non-GAAP Financial
Measures for reconciliation to U.S. GAAP.)
Analysts' Conference Call: Second Quarter of Fiscal 2014
A conference call and slide presentation to discuss results will be held
today, April 3, 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.
|
|
FINANCIAL HIGHLIGHTS
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
|
February 28, 2014
|
|
November 30, 2013
|
|
February 28, 2013
|
|
February 28, 2014
|
|
February 28, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Recycling Business:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous sales
|
|
$
|
409,106
|
|
|
$
|
369,555
|
|
|
$
|
443,418
|
|
|
$
|
778,661
|
|
|
$
|
813,894
|
|
|
|
Nonferrous sales
|
|
120,833
|
|
|
113,154
|
|
|
125,255
|
|
|
233,987
|
|
|
241,856
|
|
|
|
Other sales
|
|
5,751
|
|
|
7,600
|
|
|
7,518
|
|
|
13,351
|
|
|
14,902
|
|
|
|
TOTAL MRB SALES
|
|
535,690
|
|
|
490,309
|
|
|
576,191
|
|
|
1,025,999
|
|
|
1,070,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
76,360
|
|
|
79,635
|
|
|
78,082
|
|
|
155,995
|
|
|
147,637
|
|
|
Steel Manufacturing Business
|
|
81,456
|
|
|
88,123
|
|
|
71,247
|
|
|
169,580
|
|
|
163,276
|
|
|
Intercompany sales and eliminations
|
|
(67,359
|
)
|
|
(70,322
|
)
|
|
(63,310
|
)
|
|
(137,683
|
)
|
|
(126,535
|
)
|
|
|
Total Revenues
|
|
$
|
626,147
|
|
|
$
|
587,745
|
|
|
$
|
662,210
|
|
|
$
|
1,213,891
|
|
|
$
|
1,255,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Metal Recycling Business(1)
|
|
$
|
11,533
|
|
|
$
|
590
|
|
|
$
|
14,158
|
|
|
$
|
12,123
|
|
|
$
|
19,812
|
|
|
Auto Parts Business
|
|
4,575
|
|
|
5,609
|
|
|
6,711
|
|
|
10,184
|
|
|
13,075
|
|
|
Steel Manufacturing Business
|
|
3,573
|
|
|
1,744
|
|
|
1,041
|
|
|
5,318
|
|
|
4,445
|
|
|
|
Adjusted Segment operating income(1)(2)
|
|
19,681
|
|
|
7,943
|
|
|
21,910
|
|
|
27,625
|
|
|
37,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
(9,976
|
)
|
|
(8,725
|
)
|
|
(8,942
|
)
|
|
(18,700
|
)
|
|
(19,935
|
)
|
|
Intercompany eliminations
|
|
(187
|
)
|
|
(1,031
|
)
|
|
(38
|
)
|
|
(1,221
|
)
|
|
(1,660
|
)
|
|
|
Adjusted operating income (loss)
|
|
9,518
|
|
|
(1,813
|
)
|
|
12,930
|
|
|
7,704
|
|
|
15,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other asset impairment charges
|
|
(928
|
)
|
|
—
|
|
|
—
|
|
|
(928
|
)
|
|
—
|
|
|
Restructuring charges
|
|
(2,006
|
)
|
|
(1,812
|
)
|
|
(1,540
|
)
|
|
(3,819
|
)
|
|
(3,133
|
)
|
|
|
Total operating income (loss)
|
|
$
|
6,584
|
|
|
$
|
(3,625
|
)
|
|
$
|
11,390
|
|
|
$
|
2,957
|
|
|
$
|
12,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted for other asset impairment charges. See Non-GAAP
Financial Measures for reconciliation to U.S. GAAP.
|
|
(2) Segment operating income excludes the impact of restructuring
charges and other exit-related costs.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
February 28, 2014
|
|
November 30, 2013
|
|
February 28, 2013
|
|
February 28, 2014
|
|
February 28, 2013
|
|
Revenues
|
|
$
|
626,147
|
|
|
$
|
587,745
|
|
|
$
|
662,210
|
|
|
$
|
1,213,891
|
|
|
$
|
1,255,030
|
|
|
Cost of goods sold
|
|
571,140
|
|
|
542,417
|
|
|
600,786
|
|
|
1,113,558
|
|
|
1,142,670
|
|
|
Selling, general and administrative
|
|
45,856
|
|
|
47,550
|
|
|
48,760
|
|
|
93,406
|
|
|
96,754
|
|
|
Income from joint ventures
|
|
(367
|
)
|
|
(409
|
)
|
|
(266
|
)
|
|
(777
|
)
|
|
(131
|
)
|
|
Other asset impairment charges
|
|
928
|
|
|
—
|
|
|
—
|
|
|
928
|
|
|
—
|
|
|
Restructuring charges and other exit-related costs
|
|
2,006
|
|
|
1,812
|
|
|
1,540
|
|
|
3,819
|
|
|
3,133
|
|
|
Operating income (loss)
|
|
6,584
|
|
|
(3,625
|
)
|
|
11,390
|
|
|
2,957
|
|
|
12,604
|
|
|
Interest expense
|
|
(2,816
|
)
|
|
(2,702
|
)
|
|
(2,354
|
)
|
|
(5,517
|
)
|
|
(4,371
|
)
|
|
Other income (expense), net
|
|
(142
|
)
|
|
176
|
|
|
(49
|
)
|
|
33
|
|
|
271
|
|
|
Income (loss) before income taxes
|
|
3,626
|
|
|
(6,151
|
)
|
|
8,987
|
|
|
(2,527
|
)
|
|
8,504
|
|
|
Income tax benefit (expense)
|
|
(986
|
)
|
|
784
|
|
|
(244
|
)
|
|
(201
|
)
|
|
(1,205
|
)
|
|
Net income (loss)
|
|
2,640
|
|
|
(5,367
|
)
|
|
8,743
|
|
|
(2,728
|
)
|
|
7,299
|
|
|
Net income attributable to noncontrolling interests
|
|
(851
|
)
|
|
(861
|
)
|
|
(100
|
)
|
|
(1,712
|
)
|
|
(329
|
)
|
|
Net income (loss) attributable to SSI
|
|
$
|
1,789
|
|
|
$
|
(6,228
|
)
|
|
$
|
8,643
|
|
|
$
|
(4,440
|
)
|
|
$
|
6,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to SSI - basic
|
|
$
|
0.07
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.32
|
|
|
$
|
(0.17
|
)
|
|
$
|
0.26
|
|
|
Net income (loss) per share attributable to SSI - diluted
|
|
$
|
0.07
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.32
|
|
|
$
|
(0.17
|
)
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
26,825
|
|
|
26,755
|
|
|
26,640
|
|
|
26,790
|
|
|
26,597
|
|
|
Diluted
|
|
26,947
|
|
|
26,755
|
|
|
26,781
|
|
|
26,790
|
|
|
26,751
|
|
|
Dividends declared per common share
|
|
$
|
0.188
|
|
|
$
|
0.188
|
|
|
$
|
0.188
|
|
|
$
|
0.376
|
|
|
$
|
0.376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
2Q14
|
|
1Q14
|
|
1H14
|
|
1Q13
|
|
2Q13
|
|
3Q13
|
|
4Q13
|
|
2013
|
|
Metals Recycling Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
374
|
|
$
|
356
|
|
$
|
365
|
|
$
|
354
|
|
$
|
363
|
|
$
|
367
|
|
|
$
|
346
|
|
$
|
358
|
|
Exports
|
|
361
|
|
344
|
|
353
|
|
360
|
|
374
|
|
367
|
|
|
332
|
|
359
|
|
Average
|
|
$
|
365
|
|
$
|
348
|
|
$
|
357
|
|
$
|
358
|
|
$
|
372
|
|
$
|
367
|
|
|
$
|
336
|
|
$
|
358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
328,005
|
|
322,531
|
|
650,536
|
|
279,450
|
|
260,509
|
|
314,240
|
|
|
288,112
|
|
1,142,311
|
|
Export
|
|
701,259
|
|
655,072
|
|
1,356,331
|
|
675,212
|
|
842,509
|
|
849,991
|
|
|
799,644
|
|
3,167,356
|
|
Total
|
|
1,029,264
|
|
977,603
|
|
2,006,867
|
|
954,662
|
|
1,103,018
|
|
1,164,231
|
|
|
1,087,756
|
|
4,309,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Average Price ($/LB) (1)
|
|
$
|
0.86
|
|
$
|
0.89
|
|
$
|
0.87
|
|
$
|
0.95
|
|
$
|
0.97
|
|
$
|
0.94
|
|
|
$
|
0.89
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, in 000s)
|
|
135,935
|
|
123,941
|
|
259,876
|
|
118,931
|
|
125,500
|
|
135,256
|
|
|
140,755
|
|
520,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST) (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
$
|
676
|
|
$
|
657
|
|
$
|
666
|
|
$
|
680
|
|
$
|
690
|
|
$
|
687
|
|
|
$
|
667
|
|
$
|
680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (ST) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
83,838
|
|
83,618
|
|
167,456
|
|
78,159
|
|
58,132
|
|
71,561
|
|
|
83,911
|
|
291,763
|
|
Coiled Products
|
|
25,656
|
|
38,322
|
|
63,978
|
|
45,533
|
|
32,130
|
|
46,088
|
|
|
46,334
|
|
170,085
|
|
Merchant Bar and Other
|
|
5,305
|
|
6,222
|
|
11,527
|
|
5,926
|
|
5,355
|
|
7,358
|
|
|
7,298
|
|
25,937
|
|
Total
|
|
114,799
|
|
128,162
|
|
242,961
|
|
129,618
|
|
95,617
|
|
125,007
|
|
|
137,543
|
|
487,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car purchase volumes (000)
|
|
85
|
|
91
|
|
176
|
|
79
|
|
88
|
|
95
|
|
|
94
|
|
356
|
|
Number of self-service locations at end of quarter
|
|
61
|
|
62
|
|
61
|
|
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)
|
|
|
|
February 28, 2014
|
|
August 31, 2013
|
|
Assets
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,403
|
|
|
$
|
13,481
|
|
Accounts receivable, net
|
|
173,876
|
|
|
188,270
|
|
Inventories, net
|
|
252,849
|
|
|
236,049
|
|
Other current assets
|
|
31,470
|
|
|
29,430
|
|
Total current assets
|
|
478,598
|
|
|
467,230
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
537,187
|
|
|
564,426
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
367,984
|
|
|
373,856
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,383,769
|
|
|
$
|
1,405,512
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
696
|
|
|
$
|
9,174
|
|
Other current liabilities
|
|
152,125
|
|
|
156,960
|
|
Total current liabilities
|
|
152,821
|
|
|
166,134
|
|
|
|
|
|
|
|
Long-term debt
|
|
378,217
|
|
|
372,663
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
85,954
|
|
|
85,516
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
761,496
|
|
|
776,558
|
|
Noncontrolling interests
|
|
5,281
|
|
|
4,641
|
|
Total equity
|
|
766,777
|
|
|
781,199
|
|
Total liabilities and equity
|
|
$
|
1,383,769
|
|
|
$
|
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 (loss),
adjusted operating income for MRB, adjusted net income (loss)
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 and other exit-related costs and other
impairment 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 improves 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
|
|
|
|
2Q14
|
|
1Q14
|
|
2Q13
|
|
Consolidated Operating Income (Loss):
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
7
|
|
|
$
|
(4
|
)
|
|
$
|
11
|
|
Other Asset Impairment Charges
|
|
1
|
|
|
—
|
|
|
—
|
|
Restructuring Charges and Other Exit-Related Costs
|
|
2
|
|
|
2
|
|
|
2
|
|
Adjusted Operating Income (Loss)
|
|
$
|
10
|
|
|
$
|
(2
|
)
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
MRB Operating Income:
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
11
|
|
|
$
|
1
|
|
|
$
|
14
|
|
Other Asset Impairment Charges
|
|
1
|
|
|
—
|
|
|
—
|
|
Adjusted Operating Income
|
|
$
|
12
|
|
|
$
|
1
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) attributable to SSI
|
|
|
|
($ in millions)
|
|
Quarter
|
|
|
|
2Q14
|
|
1Q14
|
|
2Q13
|
|
Net Income (Loss) attributable to SSI
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
$
|
9
|
|
Other Asset Impairment Charges, net of tax
|
|
1
|
|
|
—
|
|
|
—
|
|
Restructuring Charges and Other Exit-related Costs, net of tax
|
|
1
|
|
|
1
|
|
|
1
|
|
Adjusted Net Income (Loss) attributable to SSI(1)
|
|
$
|
3
|
|
|
$
|
(5
|
)
|
|
$
|
10
|
|
|
|
|
|
Diluted Earnings per share attributable to SSI
|
|
|
|
($ per share)
|
|
Quarter
|
|
|
|
2Q14
|
|
1Q14
|
|
2Q13
|
|
Net Income (Loss) per share attributable to SSI
|
|
$
|
0.07
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.32
|
|
Other Asset Impairment Charges, net of tax, per share
|
|
0.02
|
|
|
—
|
|
|
—
|
|
Restructuring Charges and Other Exit-related Costs, net of tax, per
share
|
|
0.04
|
|
|
0.05
|
|
|
0.04
|
|
Adjusted Diluted EPS attributable to SSI
|
|
$
|
0.13
|
|
|
$
|
(0.18
|
)
|
|
$
|
0.36
|
|
(1) Does not foot due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, Net of Cash
|
|
|
|
|
|
|
|
February 28, 2014
|
|
August 31, 2013
|
|
Short-term borrowings
|
|
$
|
696
|
|
|
$
|
9,174
|
|
Long-term debt, net of current maturities
|
|
378,217
|
|
|
372,663
|
|
Total debt
|
|
378,913
|
|
|
381,837
|
|
Less: cash and cash equivalents
|
|
20,403
|
|
|
13,481
|
|
Total debt, net of cash
|
|
$
|
358,510
|
|
|
$
|
368,356
|
|
Auto Parts Business New Stores Impact
|
|
($ in millions)
|
|
2Q14
|
|
|
|
Existing Stores(1)
|
|
New Stores(2)
|
|
Reported
|
|
Revenues(3)
|
|
$
|
72
|
|
|
$
|
5
|
|
|
$
|
76
|
|
|
Operating Income (Loss)(3)
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
|
$
|
5
|
|
|
Operating Income Margin
|
|
7
|
%
|
|
NM
|
|
|
6
|
%
|
|
Car Purchase Volumes (000)
|
|
74
|
|
|
11
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
(1) Existing Stores represents APB operations for stores owned for
more than one year.
|
|
(2) New Stores represent new acquisitions, or greenfield
development, operating for one year or less.
|
|
(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
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 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 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; 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 and quarterly report on Form 10-Q.
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
Company
Info:
www.schnitzersteel.com
[email protected]
or
Media
Relations:
Tom Zelenka, 503-323-2821
[email protected]