Schnitzer Reports Third Quarter 2014 Financial Results
Increased Volume in Auto Parts and Steel Manufacturing Businesses
Higher Earnings Per Share Sequentially and Year-Over-Year
PORTLAND, Ore.--(BUSINESS WIRE)--Jun. 26, 2014--
Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) today reported adjusted
earnings per share of $0.16 and earnings per share of $0.12 for its
fiscal 2014 third quarter ended May 31, 2014. This compares to adjusted
earnings per share of $0.09 and earnings per share of $0.03 in the third
quarter of fiscal 2013. Adjusted and reported earnings per share both
include discrete tax benefits of $0.08 per share in the third quarter of
fiscal 2014. The Company generated $73 million in operating cash flow
during the first nine months of fiscal 2014, including $27 million in
the third quarter.
In our Metals Recycling Business, demand for recycled metals remained
steady compared to the second quarter. However, a decline in ferrous
prices for shipments early in the quarter led to lower average selling
prices which resulted in an estimated adverse impact from average
inventory accounting of approximately $10 per ton sequentially. This
adverse average inventory impact more than offset the benefits from
productivity improvements and cost reductions in the third quarter
resulting in operating income per ton of $4 in our Metals Recycling
Business. Our Auto Parts Business achieved higher car volumes and
seasonally stronger retail sales which more than offset the impact of
weaker commodity prices and generated a sequentially higher operating
margin of 8%. In our Steel Manufacturing Business, stronger
nonresidential construction markets drove increased sales volumes and
sequentially higher operating income of $5 million.
The Company continued to successfully execute on its $40 million
productivity initiatives and cost savings program, approximately 70% of
which are expected to be achieved by the end of fiscal 2014. In the
third quarter, savings of $9 million were generated through our Metals
Recycling and Steel Manufacturing Businesses which, together with prior
savings, is a year-to-date benefit of $20 million.
|
|
|
|
|
|
|
|
|
|
|
Summary Results
|
($ in millions, except per share amounts)
|
|
|
Quarter
|
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
Revenues
|
|
$
|
638
|
|
|
|
$
|
626
|
|
|
|
$
|
710
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
2
|
|
|
|
$
|
7
|
|
|
|
$
|
7
|
Other Asset Impairment Charges
|
|
1
|
|
|
|
1
|
|
|
|
—
|
Restructuring Charges
|
|
3
|
|
|
|
2
|
|
|
|
2
|
Adjusted Operating Income(1)(2)
|
|
$
|
5
|
|
|
|
$
|
10
|
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
Net Income attributable to SSI
|
|
$
|
3
|
|
|
|
$
|
2
|
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income attributable to SSI(1)
|
|
$
|
4
|
|
|
|
$
|
3
|
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per share attributable to SSI
|
|
$
|
0.12
|
|
|
|
$
|
0.07
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted EPS attributable to SSI(1)
|
|
$
|
0.16
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
|
(2) Does not foot due to rounding
|
“We were pleased to see improved sales volumes in both our Steel
Manufacturing and Auto Parts Businesses,” said Tamara Lundgren,
President and Chief Executive Officer. “In our Steel Manufacturing
Business, our utilization rate was the highest it has been since 2008,
reflecting strengthening demand. In our Auto Parts Business, retail
sales rebounded after a harsh winter and car purchase volumes reached
record levels. In our Metals Recycling Business, results reflected a
significant adverse impact from average inventory accounting. However,
overall sales volumes in MRB were steady with an increase in both export
sales off the East Coast and to the domestic market versus the second
quarter. Our continued focus on generating positive cash metal spreads
and on disciplined cost and working capital management enabled us to
deliver another quarter of strong operating cash flow.”
Key business drivers during the third quarter of fiscal 2014:
-
Metals Recycling Business (MRB) generated $4 million of operating
income, reflecting lower average ferrous selling prices and adverse
impacts of average inventory accounting sequentially which more than
offset increasing levels of productivity savings.
-
Auto Parts Business (APB) delivered operating income of $7 million and
an operating margin of 8%. Increased car volumes and seasonally
stronger retail sales benefited results.
-
Steel Manufacturing Business (SMB) operating income of $5 million
reflected higher nonresidential demand in the West Coast markets and
solid execution on productivity initiatives.
Metals Recycling Business
Summary of Metals Recycling Business Results
|
($ in millions, except selling prices; Fe volumes 000s long tons;
NFe volumes Ms lbs)
|
|
|
|
|
|
Quarter
|
|
|
3Q14
|
|
|
2Q14
|
|
|
Change
|
|
|
3Q13
|
|
|
Change
|
Total Revenues
|
|
$
|
517
|
|
|
|
$
|
536
|
|
|
|
(4)%
|
|
|
$
|
605
|
|
|
|
(15)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Revenues
|
|
$
|
387
|
|
|
|
$
|
409
|
|
|
|
(5)%
|
|
|
$
|
465
|
|
|
|
(17)%
|
Ferrous Volumes
|
|
1,024
|
|
|
|
1,029
|
|
|
|
(1)%
|
|
|
1,164
|
|
|
|
(12)%
|
Avg. Net Ferrous Sales Prices ($/LT)(1)
|
|
$
|
346
|
|
|
|
$
|
365
|
|
|
|
(5)%
|
|
|
$
|
367
|
|
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Revenues
|
|
$
|
123
|
|
|
|
$
|
121
|
|
|
|
2%
|
|
|
$
|
131
|
|
|
|
(6)%
|
Nonferrous Volumes
|
|
139
|
|
|
|
136
|
|
|
|
2%
|
|
|
135
|
|
|
|
3%
|
Avg. Net Nonferrous Sales Prices ($/lb)(1)
|
|
$
|
0.86
|
|
|
|
$
|
0.86
|
|
|
|
—%
|
|
|
$
|
0.94
|
|
|
|
(9)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income(2)
|
|
$
|
4
|
|
|
|
$
|
11
|
|
|
|
(65)%
|
|
|
$
|
9
|
|
|
|
(57)%
|
Other Asset Impairment Charges
|
|
—
|
|
|
|
1
|
|
|
|
NM
|
|
|
—
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income(3)
|
|
$
|
4
|
|
|
|
$
|
12
|
|
|
|
(68)%
|
|
|
$
|
9
|
|
|
|
(57)%
|
Adjusted Operating Income per Fe ton
|
|
$
|
4
|
|
|
|
$
|
11
|
|
|
|
(67)%
|
|
|
$
|
8
|
|
|
|
(52)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
NM = Not meaningful
|
Sales Volumes: Ferrous sales volumes of 1 million tons in
the third quarter and nonferrous volumes of 139 million pounds
approximated second quarter levels.
Export customers accounted for 66% of total ferrous sales volumes in the
third quarter. Our ferrous and nonferrous products were shipped to 16
countries, with Turkey, Egypt and Malaysia being the top ferrous export
destinations.
Pricing: Average ferrous selling prices in the third
quarter declined $19 sequentially. Ferrous selling prices for shipments
early in the third quarter softened as much as $40 per ton from peak
levels in the second quarter before partially recovering toward the end
of the quarter. Nonferrous prices were level with the second quarter.
Margins: Operating income of $4 per ferrous ton declined
from $11 per ton reported in the second quarter, reflecting a $10 per
ton adverse impact from average inventory sequentially due to the
falling price trend. Productivity improvements and cost reductions
generated $7 million in savings in the third quarter.
Auto Parts Business
Summary of Auto Parts Business Results
|
($ in millions)
|
|
|
Quarter
|
|
|
3Q14
|
|
|
2Q14
|
|
|
Change
|
|
|
3Q13
|
|
|
Change
|
Revenues
|
|
$
|
84
|
|
|
|
$
|
76
|
|
|
|
9%
|
|
|
$
|
86
|
|
|
|
(3)%
|
Operating Income(1)
|
|
$
|
7
|
|
|
|
$
|
5
|
|
|
|
47%
|
|
|
$
|
8
|
|
|
|
(19)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car Purchase Volumes (000s)
|
|
98
|
|
|
|
85
|
|
|
|
15%
|
|
|
95
|
|
|
|
3%
|
Locations (end of quarter)
|
|
61
|
|
|
|
61
|
|
|
|
—
|
%
|
|
|
61
|
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Operating income excludes the impact of restructuring charges
and other exit-related costs.
|
|
Revenues: Third quarter revenues increased sequentially,
reflecting higher car volumes and seasonally stronger retail sales,
partially offset by the adverse impact of lower commodity prices.
Margins: Operating margins of 8%, represented a
significant increase sequentially, due to higher seasonal retail
activity and, to a lesser extent, improved performance in new stores
owned or operated for less than one year.
Steel Manufacturing Business
Summary of Steel Manufacturing Business Results
|
($ in millions, except selling prices; volume 000s of short tons)
|
|
|
Quarter
|
|
|
3Q14
|
|
|
2Q14
|
|
|
Change
|
|
|
3Q13
|
|
|
Change
|
Revenues
|
|
$
|
102
|
|
|
|
$
|
81
|
|
|
|
25
|
%
|
|
|
$
|
93
|
|
|
|
10
|
%
|
Operating Income
|
|
$
|
5
|
|
|
|
$
|
4
|
|
|
|
29
|
%
|
|
|
$
|
—
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avg. Net Sales Prices ($/ST)
|
|
$
|
686
|
|
|
|
$
|
676
|
|
|
|
1
|
%
|
|
|
$
|
687
|
|
|
|
—
|
%
|
Finished Goods Sales Volumes
|
|
135
|
|
|
|
115
|
|
|
|
17
|
%
|
|
|
125
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volumes: Finished steel sales volumes of 135
thousand tons increased 17% sequentially due to higher seasonal
construction activity and improving nonresidential demand.
Pricing: Average net sales prices for finished steel
products of $686 per short ton increased on a sequential basis due to
higher demand.
Margins: Operating income of $5 million reflects higher
average selling prices and sales volumes and included approximately $1
million of planned maintenance costs incurred in the quarter.
Productivity Initiatives and Other Cost Reductions
We are targeting $40 million of productivity initiatives and cost
reductions, of which approximately 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 our Metals Recycling and Auto Parts
Businesses and Corporate. Through the first nine months of fiscal 2014,
we achieved an aggregate $20 million of benefits, which includes $9
million in the third quarter. During the third quarter, we incurred $3
million of restructuring charges and other exit-related costs in
connection with this program.
Corporate Items
Adjusted earnings per share in the third quarter excludes restructuring
and other impairment charges and includes $2 million of discrete tax
benefits. Reported earnings per share includes the same discrete tax
benefits and $2 million of additional tax benefits reflecting the
allocation of the projected annual tax rate on quarterly results. The
Company's full year tax rate for fiscal 2014 is anticipated to be
approximately 29%.
Net debt of $347 million at the end of the third quarter was $11 million
less than at the end of the second quarter in fiscal 2014. (See Non-GAAP
Financial Measures for reconciliation to U.S. GAAP.)
Analysts' Conference Call: Third Quarter of Fiscal 2014
A conference call and slide presentation to discuss results will be held
today, June 26, 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.
|
SCHNITZER STEEL INDUSTRIES, INC.
|
FINANCIAL HIGHLIGHTS
|
(in thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
|
May 31, 2014
|
|
|
February 28, 2014
|
|
|
May 31, 2013
|
|
|
May 31, 2014
|
|
|
May 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Recycling Business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous sales
|
|
|
$
|
386,826
|
|
|
|
$
|
409,106
|
|
|
|
$
|
465,194
|
|
|
|
$
|
1,165,487
|
|
|
|
$
|
1,279,088
|
|
|
Nonferrous sales
|
|
|
123,407
|
|
|
|
120,833
|
|
|
|
130,600
|
|
|
|
357,394
|
|
|
|
372,456
|
|
|
Other sales
|
|
|
6,608
|
|
|
|
5,751
|
|
|
|
9,076
|
|
|
|
19,959
|
|
|
|
23,977
|
|
|
TOTAL MRB SALES
|
|
|
516,841
|
|
|
|
535,690
|
|
|
|
604,870
|
|
|
|
1,542,840
|
|
|
|
1,675,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
83,596
|
|
|
|
76,360
|
|
|
|
86,439
|
|
|
|
239,591
|
|
|
|
234,075
|
|
Steel Manufacturing Business
|
|
|
102,039
|
|
|
|
81,456
|
|
|
|
92,943
|
|
|
|
271,618
|
|
|
|
256,219
|
|
Intercompany sales and eliminations
|
|
|
(64,689
|
)
|
|
|
(67,359
|
)
|
|
|
(73,957
|
)
|
|
|
(202,370
|
)
|
|
|
(200,490
|
)
|
|
Total Revenues
|
|
|
$
|
637,787
|
|
|
|
$
|
626,147
|
|
|
|
$
|
710,295
|
|
|
|
$
|
1,851,679
|
|
|
|
$
|
1,965,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Metal Recycling Business(1)
|
|
|
$
|
3,736
|
|
|
|
$
|
11,533
|
|
|
|
$
|
8,789
|
|
|
|
$
|
15,860
|
|
|
|
$
|
28,602
|
|
Auto Parts Business
|
|
|
6,734
|
|
|
|
4,575
|
|
|
|
8,273
|
|
|
|
16,918
|
|
|
|
21,348
|
|
Steel Manufacturing Business
|
|
|
4,594
|
|
|
|
3,573
|
|
|
|
(72
|
)
|
|
|
9,912
|
|
|
|
4,373
|
|
|
Adjusted Segment operating income(1)(2)
|
|
|
15,064
|
|
|
|
19,681
|
|
|
|
16,990
|
|
|
|
42,690
|
|
|
|
54,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
|
(10,393
|
)
|
|
|
(9,976
|
)
|
|
|
(8,625
|
)
|
|
|
(29,096
|
)
|
|
|
(28,563
|
)
|
Intercompany eliminations
|
|
|
252
|
|
|
|
(187
|
)
|
|
|
695
|
|
|
|
(966
|
)
|
|
|
(963
|
)
|
|
Adjusted operating income
|
|
|
4,923
|
|
|
|
9,518
|
|
|
|
9,060
|
|
|
|
12,628
|
|
|
|
24,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other asset impairment charges
|
|
|
(532
|
)
|
|
|
(928
|
)
|
|
|
—
|
|
|
|
(1,460
|
)
|
|
|
—
|
|
Restructuring charges
|
|
|
(2,762
|
)
|
|
|
(2,006
|
)
|
|
|
(1,873
|
)
|
|
|
(6,580
|
)
|
|
|
(5,006
|
)
|
|
Total operating income
|
|
|
$
|
1,629
|
|
|
|
$
|
6,584
|
|
|
|
$
|
7,187
|
|
|
|
$
|
4,588
|
|
|
|
$
|
19,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes 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 Nine Months Ended
|
|
|
|
May 31, 2014
|
|
|
February 28, 2014
|
|
|
May 31, 2013
|
|
|
May 31, 2014
|
|
|
May 31, 2013
|
Revenues
|
|
|
$
|
637,787
|
|
|
|
$
|
626,147
|
|
|
|
$
|
710,295
|
|
|
|
$
|
1,851,679
|
|
|
|
$
|
1,965,325
|
|
Cost of goods sold
|
|
|
586,770
|
|
|
|
571,140
|
|
|
|
652,263
|
|
|
|
1,700,328
|
|
|
|
1,794,933
|
|
Selling, general and administrative
|
|
|
46,241
|
|
|
|
45,856
|
|
|
|
49,390
|
|
|
|
139,647
|
|
|
|
146,144
|
|
Income from joint ventures
|
|
|
(147
|
)
|
|
|
(367
|
)
|
|
|
(418
|
)
|
|
|
(924
|
)
|
|
|
(549
|
)
|
Other asset impairment charges
|
|
|
532
|
|
|
|
928
|
|
|
|
—
|
|
|
|
1,460
|
|
|
|
—
|
|
Restructuring charges and other exit-related costs
|
|
|
2,762
|
|
|
|
2,006
|
|
|
|
1,873
|
|
|
|
6,580
|
|
|
|
5,006
|
|
Operating income
|
|
|
1,629
|
|
|
|
6,584
|
|
|
|
7,187
|
|
|
|
4,588
|
|
|
|
19,791
|
|
Interest expense
|
|
|
(2,580
|
)
|
|
|
(2,816
|
)
|
|
|
(2,788
|
)
|
|
|
(8,097
|
)
|
|
|
(7,159
|
)
|
Other income (expense), net
|
|
|
570
|
|
|
|
(142
|
)
|
|
|
141
|
|
|
|
604
|
|
|
|
414
|
|
Income (loss) before income taxes
|
|
|
(381
|
)
|
|
|
3,626
|
|
|
|
4,540
|
|
|
|
(2,905
|
)
|
|
|
13,046
|
|
Income tax benefit (expense)
|
|
|
4,505
|
|
|
|
(986
|
)
|
|
|
(2,986
|
)
|
|
|
4,303
|
|
|
|
(4,191
|
)
|
Net income
|
|
|
4,124
|
|
|
|
2,640
|
|
|
|
1,554
|
|
|
|
1,398
|
|
|
|
8,855
|
|
Net income attributable to noncontrolling interests
|
|
|
(1,014
|
)
|
|
|
(851
|
)
|
|
|
(734
|
)
|
|
|
(2,726
|
)
|
|
|
(1,063
|
)
|
Net income (loss) attributable to SSI
|
|
|
$
|
3,110
|
|
|
|
$
|
1,789
|
|
|
|
$
|
820
|
|
|
|
$
|
(1,328
|
)
|
|
|
$
|
7,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to SSI - basic
|
|
|
$
|
0.12
|
|
|
|
$
|
0.07
|
|
|
|
$
|
0.03
|
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.29
|
|
Net income (loss) per share attributable to SSI - diluted
|
|
|
$
|
0.12
|
|
|
|
$
|
0.07
|
|
|
|
$
|
0.03
|
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
26,853
|
|
|
|
26,825
|
|
|
|
26,671
|
|
|
|
26,811
|
|
|
|
26,629
|
|
Diluted
|
|
|
27,017
|
|
|
|
26,947
|
|
|
|
26,813
|
|
|
|
26,811
|
|
|
|
26,777
|
|
Dividends declared per common share
|
|
|
$
|
0.188
|
|
|
|
$
|
0.188
|
|
|
|
$
|
0.188
|
|
|
|
$
|
0.563
|
|
|
|
$
|
0.563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
SELECTED OPERATING STATISTICS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
1Q14
|
2Q14
|
3Q14
|
YTD
|
|
1Q13
|
2Q13
|
3Q13
|
4Q13
|
2013
|
Metals Recycling Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
356
|
|
$
|
374
|
|
$
|
354
|
|
$
|
361
|
|
|
$
|
354
|
|
$
|
363
|
|
$
|
367
|
|
$
|
346
|
|
$
|
358
|
Exports
|
|
344
|
|
361
|
|
341
|
|
349
|
|
|
360
|
|
374
|
|
367
|
|
332
|
|
359
|
Average
|
|
$
|
348
|
|
$
|
365
|
|
$
|
346
|
|
$
|
353
|
|
|
$
|
358
|
|
$
|
372
|
|
$
|
367
|
|
$
|
336
|
|
$
|
358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
322,531
|
|
328,005
|
|
344,526
|
|
995,062
|
|
|
279,450
|
|
260,509
|
|
314,240
|
|
288,112
|
|
1,142,311
|
Export
|
|
655,072
|
|
701,259
|
|
679,009
|
|
2,035,340
|
|
|
675,212
|
|
842,509
|
|
849,991
|
|
799,644
|
|
3,167,356
|
Total
|
|
977,603
|
|
1,029,264
|
|
1,023,535
|
|
3,030,402
|
|
|
954,662
|
|
1,103,018
|
|
1,164,231
|
|
1,087,756
|
|
4,309,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Average Price ($/LB) (1)
|
|
$
|
0.89
|
|
$
|
0.86
|
|
$
|
0.86
|
|
$
|
0.87
|
|
|
$
|
0.95
|
|
$
|
0.97
|
|
$
|
0.94
|
|
$
|
0.89
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, in 000s)
|
|
123,941
|
|
135,935
|
|
139,273
|
|
399,150
|
|
|
118,931
|
|
125,500
|
|
135,256
|
|
140,755
|
|
520,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST) (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
$
|
657
|
|
$
|
676
|
|
$
|
686
|
|
$
|
673
|
|
|
$
|
680
|
|
$
|
690
|
|
$
|
687
|
|
$
|
667
|
|
$
|
680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (ST) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
83,618
|
|
83,838
|
|
85,633
|
|
253,089
|
|
|
78,159
|
|
58,132
|
|
71,561
|
|
83,911
|
|
291,763
|
Coiled Products
|
|
38,322
|
|
25,656
|
|
41,892
|
|
105,870
|
|
|
45,533
|
|
32,130
|
|
46,088
|
|
46,334
|
|
170,085
|
Merchant Bar and Other
|
|
6,222
|
|
5,305
|
|
6,984
|
|
18,511
|
|
|
5,926
|
|
5,355
|
|
7,358
|
|
7,298
|
|
25,937
|
Total
|
|
128,162
|
|
114,799
|
|
134,509
|
|
377,470
|
|
|
129,618
|
|
95,617
|
|
125,007
|
|
137,543
|
|
487,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car purchase volumes (000)
|
|
91
|
|
85
|
|
98
|
|
274
|
|
|
79
|
|
88
|
|
95
|
|
94
|
|
356
|
Number of self-service locations at end of quarter
|
|
62
|
|
61
|
|
61
|
|
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)
|
|
|
May 31, 2014
|
|
|
August 31, 2013
|
Assets
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
29,362
|
|
|
|
$
|
13,481
|
Accounts receivable, net
|
|
193,592
|
|
|
|
188,270
|
Inventories, net
|
|
230,829
|
|
|
|
236,049
|
Other current assets
|
|
39,337
|
|
|
|
29,430
|
Total current assets
|
|
493,120
|
|
|
|
467,230
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
526,454
|
|
|
|
564,426
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
368,268
|
|
|
|
373,856
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,387,842
|
|
|
|
$
|
1,405,512
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
601
|
|
|
|
$
|
9,174
|
Other current liabilities
|
|
156,451
|
|
|
|
156,960
|
Total current liabilities
|
|
157,052
|
|
|
|
166,134
|
|
|
|
|
|
|
|
Long-term debt
|
|
375,797
|
|
|
|
372,663
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
83,767
|
|
|
|
85,516
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
765,653
|
|
|
|
776,558
|
Noncontrolling interests
|
|
5,573
|
|
|
|
4,641
|
Total equity
|
|
771,226
|
|
|
|
781,199
|
Total liabilities and equity
|
|
$
|
1,387,842
|
|
|
|
$
|
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
operating income for MRB, 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 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
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
Quarter
|
|
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
Consolidated Operating Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
$
|
2
|
|
|
|
|
$
|
7
|
|
|
|
|
$
|
7
|
|
Other Asset Impairment Charges
|
|
|
|
|
1
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
Restructuring Charges and Other Exit-Related Costs
|
|
|
|
|
3
|
|
|
|
|
|
2
|
|
|
|
|
|
2
|
|
Adjusted Operating Income(1)
|
|
|
|
$
|
5
|
|
|
|
|
$
|
10
|
|
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MRB Operating Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
$
|
4
|
|
|
|
|
$
|
11
|
|
|
|
|
$
|
9
|
|
Other Asset Impairment Charges
|
|
|
|
|
—
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
Adjusted Operating Income
|
|
|
|
$
|
4
|
|
|
|
|
$
|
12
|
|
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income attributable to SSI
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
Quarter
|
|
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
Net Income attributable to SSI
|
|
|
|
$
|
3
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
1
|
|
Other Asset Impairment Charges, net of tax
|
|
|
|
|
—
|
|
|
|
|
|
1
|
|
|
|
|
|
—
|
|
Restructuring Charges and Other Exit-related Costs, net of tax
|
|
|
|
|
1
|
|
|
|
|
|
1
|
|
|
|
|
|
1
|
|
Adjusted Net Income attributable to SSI(1)
|
|
|
|
$
|
4
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
2
|
|
(1) Does not foot due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per share attributable to SSI
|
|
|
|
|
|
|
|
|
|
|
|
|
($ per share)
|
|
|
|
Quarter
|
|
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
Net Income per share attributable to SSI
|
|
|
|
$
|
0.12
|
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
0.03
|
|
Other Asset Impairment Charges, net of tax, per share
|
|
|
|
|
0.01
|
|
|
|
|
|
0.02
|
|
|
|
|
|
—
|
|
Restructuring Charges and Other Exit-related Costs, net of tax, per
share
|
|
|
|
|
0.04
|
|
|
|
|
|
0.04
|
|
|
|
|
|
0.06
|
|
Adjusted Diluted EPS attributable to SSI(1)
|
|
|
|
$
|
0.16
|
|
|
|
|
$
|
0.13
|
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, Net of Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
May 31, 2014
|
|
|
|
August 31, 2013
|
|
|
|
|
Short-term borrowings
|
|
|
|
$
|
601
|
|
|
|
|
$
|
9,174
|
|
|
|
|
|
Long-term debt, net of current maturities
|
|
|
|
|
375,797
|
|
|
|
|
|
372,663
|
|
|
|
|
|
Total debt
|
|
|
|
|
376,398
|
|
|
|
|
|
381,837
|
|
|
|
|
|
Less: cash and cash equivalents
|
|
|
|
|
29,362
|
|
|
|
|
|
13,481
|
|
|
|
|
|
Total debt, net of cash
|
|
|
|
$
|
347,036
|
|
|
|
|
$
|
368,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business New Stores Impact
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
3Q14
|
|
|
|
|
Existing Stores(2)
|
|
|
New Stores(3)
|
|
|
|
Reported
|
Revenues
|
|
|
|
$
|
82
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
84
|
|
Operating Income
|
|
|
|
$
|
7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
7
|
|
Operating Income Margin
|
|
|
|
|
8
|
%
|
|
|
|
|
NM
|
|
|
|
|
|
8
|
%
|
Car Purchase Volumes (000)
|
|
|
|
|
96
|
|
|
|
|
|
2
|
|
|
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2Q14
|
|
|
|
|
Existing Stores(2)
|
|
|
New Stores(3)
|
|
|
|
Reported
|
Revenues(1)
|
|
|
|
$
|
72
|
|
|
|
|
$
|
5
|
|
|
|
|
$
|
76
|
|
Operating Income (Loss)(1)
|
|
|
|
$
|
5
|
|
|
|
|
$
|
(1
|
)
|
|
|
|
$
|
5
|
|
Operating Income Margin
|
|
|
|
|
7
|
%
|
|
|
|
|
NM
|
|
|
|
|
|
6
|
%
|
Car Purchase Volumes (000)
|
|
|
|
|
74
|
|
|
|
|
|
11
|
|
|
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Does not foot due to rounding
|
(2) Existing Stores represents APB operations for stores owned for
more than one year.
|
(3) New Stores represent new acquisitions, or greenfield
development, operating for one year or less.
|
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 North America 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
Media
Relations:
Tom Zelenka, 503-323-2821
[email protected]
or
Company
Info:
www.schnitzersteel.com
[email protected]