Schnitzer Reports First Quarter 2015 Financial Results
Year-Over-Year Improvement in Earnings Per Share
Productivity and Cost Reduction Initiatives Contributed Significantly
to Results
Implementing New Initiatives in Auto Parts Business
PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 8, 2015--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported financial
results for its fiscal 2015 first quarter ended November 30, 2014.
During the quarter, the market experienced the steepest decline in
ferrous prices since 2012. From September through November 2014, ferrous
export selling prices declined approximately $80 per ton, or 20%, and
ferrous domestic prices declined approximately $60 per ton, or 15%. For
the quarter, we reported adjusted earnings per share of $0.08, excluding
the adverse impact of reselling or modifying the terms of certain
previously contracted bulk ferrous shipments and charges attributed to
restructuring. This compares to the first quarter of fiscal 2014
adjusted loss per share of $0.18, excluding charges attributed to
restructuring. The reported loss per share of $0.09 for the first
quarter ended November 30, 2014 compares to a reported loss per share of
$0.23 for the prior year quarter.
During the first quarter of fiscal 2015, all three business segments
generated positive operating income, largely due to benefits from
productivity initiatives. Our Metals Recycling and Auto Parts Businesses
were both significantly impacted by the decline in ferrous selling
prices, resulting in an adverse impact from average inventory accounting
estimated to be approximately $9 million, or $0.23 per share, which
offset the benefits of productivity improvements and cost savings.
Metals Recycling's adjusted operating income per ton of $8 excluded the
impact of reselling or modifying the terms of certain previously
contracted bulk ferrous shipments for delivery during the first quarter
of approximately $6 per ton. Metals Recycling's reported operating
income per ton of $2 increased from $1 operating income per ton reported
in the first quarter of fiscal 2014, notwithstanding an estimated
adverse impact of approximately $7 per ton from average inventory
accounting. In Auto Parts, operating income of $2 million included an
estimated adverse impact of average inventory accounting of
approximately $2 million. Our Steel Manufacturing Business generated $6
million in operating income, continuing to benefit from strong demand in
West Coast construction markets and contributions from productivity
initiatives.
"While global commodity markets remain challenging, the recovering US
economy is driving higher domestic demand for steel. Our Steel
Manufacturing Business more than tripled its first quarter operating
income versus last year benefiting from higher selling prices, increased
rolling mill utilization and contributions from productivity
improvements. In our Metals Recycling Business, we delivered ahead of
schedule on our productivity improvement and cost savings initiatives
which contributed significantly toward year-over-year improved
performance in that segment," said Tamara Lundgren, President and Chief
Executive Officer. "We are continuing to take steps to improve business
efficiency and reduce our cost base across our organization. We have
identified further targeted initiatives in our Auto Parts Business and
now anticipate annual benefits of $14 million, which is up from the $7
million we previously announced, approximately half of which we expect
to realize during the second half of fiscal 2015. We believe these
actions will continue to enhance our performance and should provide
greater opportunity for margin expansion as market conditions improve.”
|
Summary Results
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
1Q15
|
|
1Q14
|
|
Change
|
|
4Q14
|
|
Change
|
|
Revenues
|
|
$
|
556
|
|
|
$
|
588
|
|
|
(5)%
|
|
$
|
692
|
|
(20)%
|
|
Operating Income (Loss)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
NM
|
|
$
|
16
|
|
(100)%
|
|
Resale or modification of certain previously contracted shipments
|
|
|
6
|
|
|
|
—
|
|
|
NM
|
|
|
—
|
|
NM
|
|
Restructuring Charges and Other Exit-related Costs
|
|
|
1
|
|
|
|
2
|
|
|
66%
|
|
|
—
|
|
61%
|
|
Adjusted Operating Income (Loss)(1)(3)
|
|
$
|
6
|
|
|
$
|
(2
|
)
|
|
NM
|
|
$
|
16
|
|
(61)%
|
|
Net Income (Loss) attributable to SSI(2)
|
|
$
|
(2
|
)
|
|
$
|
(6
|
)
|
|
60%
|
|
$
|
7
|
|
NM
|
|
Net Income (Loss) from continuing operations attributable to SSI
|
|
$
|
(2
|
)
|
|
$
|
(6
|
)
|
|
60%
|
|
$
|
6
|
|
NM
|
|
Adjusted Net Income (Loss) from continuing operations attributable
to SSI
|
|
$
|
2
|
|
|
$
|
(5
|
)
|
|
NM
|
|
$
|
9
|
|
(76)%
|
|
Net Income (Loss) per share attributable to SSI(2)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
61%
|
|
$
|
0.27
|
|
NM
|
|
Net Income (Loss) per share from continuing operations attributable
to SSI
|
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
61%
|
|
$
|
0.24
|
|
NM
|
|
Adjusted diluted EPS from continuing operations attributable to SSI(1)
|
|
$
|
0.08
|
|
|
$
|
(0.18
|
)
|
|
NM
|
|
$
|
0.33
|
|
(76)%
|
|
(1) Adjusted operating income excludes the impact of the resale or
modification of certain previously contracted bulk ferrous shipments
for delivery in the first quarter of fiscal 2015, restructuring
charges and other exit-related costs. See Non-GAAP Financial
Measures for reconciliation to U.S. GAAP.
|
|
(2) Net income per share in the fourth quarter of fiscal 2014
includes a $1 million benefit after tax from discontinued operations
related to a reduction in environmental liabilities of previously
disposed operations.
|
|
(3) May not foot due to rounding.
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|
NM = not meaningful
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Metals Recycling Business
|
Summary of Metals Recycling Business Results
|
|
($ in millions, except selling prices; Fe volumes 000s long tons;
NFe volumes Ms lbs)
|
|
|
|
|
|
Quarter
|
|
|
|
1Q15
|
|
1Q14
|
|
Change
|
|
4Q14
|
|
Change
|
|
Total Revenues
|
|
$
|
456
|
|
$
|
490
|
|
(7
|
)%
|
|
$
|
560
|
|
(19
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Revenues
|
|
$
|
338
|
|
$
|
370
|
|
(9
|
)%
|
|
$
|
416
|
|
(19
|
)%
|
|
Ferrous Volumes
|
|
|
938
|
|
|
978
|
|
(4
|
)%
|
|
|
1,092
|
|
(14
|
)%
|
|
Avg. Net Ferrous Sales Prices ($/LT)(1)
|
|
$
|
328
|
|
$
|
348
|
|
(6
|
)%
|
|
$
|
351
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Revenues
|
|
$
|
113
|
|
$
|
113
|
|
—
|
%
|
|
$
|
137
|
|
(18
|
)%
|
|
Nonferrous Volumes
|
|
|
127
|
|
|
124
|
|
3
|
%
|
|
|
156
|
|
(18
|
)%
|
|
Avg. Net Nonferrous Sales Prices ($/lb)(1)
|
|
$
|
0.85
|
|
$
|
0.89
|
|
(4
|
)%
|
|
$
|
0.85
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income(2)
|
|
$
|
2
|
|
$
|
1
|
|
226
|
%
|
|
$
|
15
|
|
(87
|
)%
|
|
Operating Income per Fe ton
|
|
$
|
2
|
|
$
|
1
|
|
239
|
%
|
|
$
|
14
|
|
(85
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income(3)
|
|
$
|
8
|
|
$
|
1
|
|
1,172
|
%
|
|
$
|
15
|
|
(50
|
)%
|
|
Adjusted Operating Income per Fe ton
|
|
$
|
8
|
|
$
|
1
|
|
1,225
|
%
|
|
$
|
14
|
|
(42
|
)%
|
|
(1) Sales prices are shown net of freight.
|
|
(2) Operating income does not include the impact of restructuring
charges and other exit-related costs.
|
|
(3) Adjusted operating income for the first quarter of fiscal 2015
excludes the impact of the resale or modification of certain
previously contracted bulk ferrous shipments. See Non-GAAP Financial
Measures for reconciliation to U.S. GAAP.
|
Sales Volumes: Ferrous sales volumes of 1 million tons in
the first quarter declined 4% from the prior year quarter, primarily due
to weaker export demand and the impact of the lower price environment on
scrap supply and the timing of shipments. Nonferrous sales volumes of
127 million pounds increased 3% from the prior year quarter, largely due
to higher processing efficiencies.
In total, export customers accounted for 64% of our ferrous sales
volumes. Ferrous and nonferrous products were shipped to 16 countries,
with Turkey, Egypt and Thailand the top export destinations for ferrous
shipments.
Pricing: Beginning in August, ferrous scrap metal pricing
dropped sharply, resulting in a decline in average export selling prices
of $33 per ton, or 9%, from fourth quarter levels. Nonferrous prices in
the first quarter were in line sequentially.
Margins: Reported operating income per ton of $2 increased
by $1 per ton from the prior year quarter, largely due to benefits from
productivity initiatives which offset the estimated $7 per ton adverse
impact of average inventory costs. These did not decline as quickly as
purchase prices, resulting in operating margin compression compared to
the fourth quarter of fiscal 2014. Adjusted operating income of $8 per
ferrous ton in the first quarter of fiscal 2015 excluded a $6 million
adverse impact from reselling or modifying the terms, at significantly
lower prices, of previously contracted bulk ferrous shipments for
delivery in the quarter. Due to the sharp decline in selling prices that
occurred during the quarter, the revised prices associated with these
shipments were significantly lower than the prices in the original sales
contracts entered into between August and October 2014.
Auto Parts Business
|
Summary of Auto Parts Business Results
|
|
|
|
|
|
|
|
|
|
($ in millions, volume 000s)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
1Q15
|
|
1Q14
|
|
Change
|
|
4Q14
|
|
Change
|
|
Revenues
|
|
$
|
81
|
|
$
|
80
|
|
2
|
%
|
|
$
|
88
|
|
(8)
|
%
|
|
Operating Income(1)
|
|
$
|
2
|
|
$
|
6
|
|
(65)
|
%
|
|
$
|
5
|
|
(57)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car Purchase Volumes
|
|
|
97
|
|
|
91
|
|
7
|
%
|
|
|
106
|
|
(8)
|
%
|
|
Locations (end of quarter)
|
|
|
62
|
|
|
62
|
|
—
|
%
|
|
|
62
|
|
—
|
%
|
|
(1) Operating income does not include the impact of restructuring
charges and other exit-related costs.
|
Revenues: Revenues in the first quarter increased 2% from
the prior year quarter due to higher car volumes which offset the
adverse impact of lower commodity prices.
Margins: Operating margins of 2% were lower compared to
the prior year first quarter, primarily due to an estimated adverse
impact of $2 million from average inventory accounting and the sharp
drop in commodity prices which further compressed operating margins.
Cost reduction and productivity initiatives currently underway are
expected to benefit operating performance in fiscal 2015, primarily in
the second half.
Steel Manufacturing Business
|
Summary of Steel Manufacturing Business Results
|
|
|
|
|
|
|
|
($ in millions, except selling prices; volume 000s of short tons)
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
1Q15
|
|
1Q14
|
|
Change
|
|
4Q14
|
|
Change
|
|
Revenues
|
|
$
|
95
|
|
$
|
88
|
|
8
|
%
|
|
$
|
117
|
|
(19
|
)%
|
|
Operating Income
|
|
$
|
6
|
|
$
|
2
|
|
256
|
%
|
|
$
|
9
|
|
(28
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avg. Net Sales Prices ($/ST)
|
|
$
|
683
|
|
$
|
657
|
|
4
|
%
|
|
$
|
688
|
|
(1
|
)%
|
|
Finished Goods Sales Volumes
|
|
|
127
|
|
|
128
|
|
(1
|
)%
|
|
|
156
|
|
(18
|
)%
|
Sales Volumes: Finished steel sales volumes of 127
thousand tons were in line with the prior year first quarter but lower
sequentially due to a planned maintenance outage.
Pricing: Average net sales prices for finished steel
products increased 4% from the prior year first quarter, reflecting
higher demand for long products on the West Coast.
Margins: Operating income of $6 million increased
substantially compared to the prior year first quarter, with the strong
quarterly performance improvement resulting from higher selling prices,
increased rolling mill utilization and contributions from productivity
improvements.
Productivity Improvements
We achieved ahead of schedule our targeted $40 million in benefits under
the cost reduction and productivity program announced in fiscal 2014,
delivering $10 million in benefits during the first quarter of fiscal
2015, an increase of $6 million from the prior year first quarter. These
benefits offset the impact of volatile market conditions during the
first quarter and contributed to the positive operating income generated
in each of our business segments.
Beginning in the fourth quarter of fiscal 2014, our Auto Parts Business
launched cost reduction and productivity initiatives targeted to achieve
annual savings of $7 million. Today, we are announcing an increase of
our target to $14 million. The completion of these initiatives is
expected to yield higher earnings and increased efficiencies by
centralizing and streamlining field support activities, reducing
organizational layers and achieving cost reductions. The initiatives
announced today are expected to reduce annual SG&A costs by $7 million.
We anticipate a workforce reduction of approximately 4% of Auto Parts
headcount and a restructuring charge of $2 million. We expect to realize
approximately 50% of the targeted annual benefits in fiscal 2015,
primarily in the second half, with the full annual run rate expected to
be reached in fiscal 2016.
Corporate Items
During fiscal 2015, the Company expects to invest approximately $40
million in capital expenditures and continue to return capital to
shareholders through its quarterly dividend. Net debt of $326 million at
the end of the first quarter was $32 million higher than at the end of
the fourth quarter in fiscal 2014 due to increased net working capital
which included the impact of the timing of shipments. (See Non-GAAP
Financial Measures for reconciliation to U.S. GAAP.)
The Company anticipates a full year effective tax rate of 27%, subject
to financial performance for the remainder of the year.
Analysts' Conference Call: First Quarter of Fiscal 2015
A conference call and slide presentation to discuss results will be held
today, January 8, 2015, 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
|
|
|
|
|
November 30,
2014
|
|
August 31,
2014
|
|
November 30,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
Metal Recycling Business:
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous sales
|
|
$
|
337,578
|
|
|
$
|
415,558
|
|
|
$
|
369,555
|
|
|
|
Nonferrous sales
|
|
112,593
|
|
|
137,351
|
|
|
113,154
|
|
|
|
Other sales
|
|
6,107
|
|
|
7,186
|
|
|
7,600
|
|
|
|
TOTAL MRB SALES
|
|
456,278
|
|
|
560,095
|
|
|
490,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
80,921
|
|
|
87,979
|
|
|
79,635
|
|
|
Steel Manufacturing Business
|
|
95,218
|
|
|
117,021
|
|
|
88,123
|
|
|
Intercompany sales and eliminations
|
|
(76,827
|
)
|
|
(73,191
|
)
|
|
(70,322
|
)
|
|
|
Total Revenues
|
|
$
|
555,590
|
|
|
$
|
691,904
|
|
|
$
|
587,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
|
|
|
Adjusted Metal Recycling Business(1)
|
|
$
|
7,503
|
|
|
$
|
15,151
|
|
|
$
|
590
|
|
|
Auto Parts Business
|
|
1,961
|
|
|
4,516
|
|
|
5,609
|
|
|
Steel Manufacturing Business
|
|
6,207
|
|
|
8,626
|
|
|
1,744
|
|
|
|
Segment operating income(2)
|
|
15,671
|
|
|
28,293
|
|
|
7,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
(8,994
|
)
|
|
(12,903
|
)
|
|
(8,725
|
)
|
|
Intercompany eliminations
|
|
(395
|
)
|
|
724
|
|
|
(1,031
|
)
|
|
|
Adjusted Operating income (loss)
|
|
6,282
|
|
|
16,114
|
|
|
(1,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resale or modification of certain previously contracted shipments
|
|
(5,581
|
)
|
|
—
|
|
|
—
|
|
|
Restructuring charges and other exit-related costs
|
|
(623
|
)
|
|
(386
|
)
|
|
(1,812
|
)
|
|
|
Total operating income (loss)
|
|
$
|
78
|
|
|
$
|
15,728
|
|
|
$
|
(3,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted operating income excludes the impact of the resale or
modification of certain previously contracted bulk ferrous
shipments for delivery in the first quarter of fiscal 2015. See
Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
|
|
(2) Segment operating income does not include 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
|
|
|
|
November 30, 2014
|
|
August 31, 2014
|
|
November 30, 2013
|
|
Revenues
|
|
$
|
555,590
|
|
|
$
|
691,904
|
|
|
$
|
587,745
|
|
|
Cost of goods sold
|
|
510,022
|
|
|
624,495
|
|
|
542,417
|
|
|
Selling, general and administrative
|
|
45,367
|
|
|
51,567
|
|
|
47,550
|
|
|
Income from joint ventures
|
|
(500
|
)
|
|
(272
|
)
|
|
(409
|
)
|
|
Restructuring charges and other exit-related costs
|
|
623
|
|
|
386
|
|
|
1,812
|
|
|
Operating income (loss)
|
|
78
|
|
|
15,728
|
|
|
(3,625
|
)
|
|
Interest expense
|
|
(2,424
|
)
|
|
(2,707
|
)
|
|
(2,702
|
)
|
|
Other income, net
|
|
753
|
|
|
621
|
|
|
176
|
|
|
Income (loss) before income taxes
|
|
(1,593
|
)
|
|
13,642
|
|
|
(6,151
|
)
|
|
Income tax benefit (expense)
|
|
(8
|
)
|
|
(6,304
|
)
|
|
784
|
|
|
Income (loss) from continuing operations
|
|
(1,601
|
)
|
|
7,338
|
|
|
(5,367
|
)
|
|
Income from discontinued operations
|
|
—
|
|
|
857
|
|
|
—
|
|
|
Net income (loss)
|
|
(1,601
|
)
|
|
8,195
|
|
|
(5,367
|
)
|
|
Net income attributable to noncontrolling interests
|
|
(871
|
)
|
|
(942
|
)
|
|
(861
|
)
|
|
Net income (loss) attributable to SSI
|
|
$
|
(2,472
|
)
|
|
$
|
7,253
|
|
|
$
|
(6,228
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations attributable to
SSI
|
|
$
|
(0.09
|
)
|
|
$
|
0.24
|
|
|
$
|
(0.23
|
)
|
|
Earnings per share from discontinued operations
|
|
—
|
|
|
0.03
|
|
|
—
|
|
|
Income (loss) per share attributable to SSI
|
|
$
|
(0.09
|
)
|
|
$
|
0.27
|
|
|
$
|
(0.23
|
)
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations attributable to
SSI
|
|
$
|
(0.09
|
)
|
|
$
|
0.24
|
|
|
$
|
(0.23
|
)
|
|
Earnings per share from discontinued operations
|
|
—
|
|
|
0.03
|
|
|
—
|
|
|
Income (loss) per share attributable to SSI
|
|
$
|
(0.09
|
)
|
|
$
|
0.27
|
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
26,944
|
|
|
26,900
|
|
|
26,755
|
|
|
Diluted
|
|
26,944
|
|
|
27,103
|
|
|
26,755
|
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
1Q15
|
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
2014
|
|
Metals Recycling Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
344
|
|
|
$
|
356
|
|
$
|
374
|
|
$
|
354
|
|
$
|
349
|
|
$
|
358
|
|
Exports
|
|
$
|
319
|
|
|
$
|
344
|
|
$
|
361
|
|
$
|
341
|
|
$
|
352
|
|
$
|
350
|
|
Average
|
|
$
|
328
|
|
|
$
|
348
|
|
$
|
365
|
|
$
|
346
|
|
$
|
351
|
|
$
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
333,798
|
|
|
322,531
|
|
328,005
|
|
344,526
|
|
328,308
|
|
1,323,369
|
|
Export
|
|
604,626
|
|
|
655,072
|
|
701,259
|
|
679,009
|
|
763,608
|
|
2,798,948
|
|
Total
|
|
938,424
|
|
|
977,603
|
|
1,029,264
|
|
1,023,535
|
|
1,091,916
|
|
4,122,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Average Price ($/LB)(1)
|
|
$
|
0.85
|
|
|
$
|
0.89
|
|
$
|
0.86
|
|
$
|
0.86
|
|
$
|
0.85
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, in 000s)
|
|
127,473
|
|
|
123,941
|
|
135,935
|
|
139,273
|
|
155,659
|
|
554,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST)(1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
$
|
683
|
|
|
$
|
657
|
|
$
|
676
|
|
$
|
686
|
|
$
|
688
|
|
$
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (ST)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
79,065
|
|
|
83,618
|
|
83,838
|
|
85,633
|
|
101,076
|
|
354,165
|
|
Coiled Products
|
|
40,361
|
|
|
38,322
|
|
25,656
|
|
41,892
|
|
46,682
|
|
152,552
|
|
Merchant Bar and Other
|
|
7,698
|
|
|
6,222
|
|
5,305
|
|
6,984
|
|
7,979
|
|
26,490
|
|
Total
|
|
127,124
|
|
|
128,162
|
|
114,799
|
|
134,509
|
|
155,737
|
|
533,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car purchase volumes (000)
|
|
97
|
|
|
91
|
|
85
|
|
98
|
|
106
|
|
380
|
|
Number of self-service locations at end of quarter
|
|
62
|
|
|
62
|
|
61
|
|
61
|
|
62
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2014
|
|
August 31, 2014
|
|
Assets
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,666
|
|
|
$
|
25,672
|
|
Accounts receivable, net
|
|
155,597
|
|
|
189,359
|
|
Inventories
|
|
244,268
|
|
|
216,172
|
|
Other current assets
|
|
36,067
|
|
|
32,729
|
|
Total current assets
|
|
450,598
|
|
|
463,932
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
507,970
|
|
|
523,433
|
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
363,608
|
|
|
367,845
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,322,176
|
|
|
$
|
1,355,210
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
471
|
|
|
$
|
523
|
|
Other current liabilities
|
|
134,476
|
|
|
176,747
|
|
Total current liabilities
|
|
134,947
|
|
|
177,270
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
340,355
|
|
|
318,842
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
86,027
|
|
|
83,121
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
755,921
|
|
|
770,784
|
|
Noncontrolling interests
|
|
4,926
|
|
|
5,193
|
|
Total equity
|
|
760,847
|
|
|
775,977
|
|
Total liabilities and equity
|
|
$
|
1,322,176
|
|
|
$
|
1,355,210
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures as
defined under SEC rules such as adjusted operating income, adjusted MRB
operating income, adjusted net income from continuing operations
attributable to SSI and adjusted diluted earnings per share from
continuing operations attributable to SSI. 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
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, to improve comparability
of our operating performance between periods, these measures also
exclude the impact on operating results in fiscal 2015 from the resale
or modification of the terms during the first quarter of 2015 of certain
previously contracted ferrous bulk shipments for delivery in the
quarter. Due to the sharp decline in selling prices that occurred during
the quarter, the revised prices associated with these shipments were
significantly lower than the prices in the original sales contracts
entered into between August and October 2014. Further, 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
|
|
|
|
1Q15
|
|
4Q14
|
|
1Q14
|
|
Consolidated Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
(4
|
)
|
|
Restructuring Charges and Other Exit-Related Costs
|
|
1
|
|
|
—
|
|
|
2
|
|
|
Resale or modification of certain previously contracted shipments
|
|
6
|
|
|
—
|
|
|
—
|
|
|
Adjusted Operating Income (Loss)(1)
|
|
$
|
6
|
|
|
$
|
16
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
MRB Operating Income:
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
2
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
Resale or modification of certain previously contracted shipments
|
|
6
|
|
|
—
|
|
|
—
|
|
|
Adjusted Operating Income
|
|
$
|
8
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) from continuing operations attributable to SSI
|
|
($ in millions)
|
|
Quarter
|
|
|
|
1Q15
|
|
4Q14
|
|
1Q14
|
|
Net Income (Loss) from continuing operations attributable to SSI
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
(6
|
)
|
|
Restructuring Charges and Other Exit-related Costs, net of tax
|
|
—
|
|
|
3
|
|
|
1
|
|
|
Resale or modification of certain previously contracted shipments,
net of tax
|
|
4
|
|
|
—
|
|
|
—
|
|
|
Adjusted Net Income (Loss) from continuing operations attributable
to SSI
|
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
Diluted Earnings per share attributable to SSI
|
|
($ per share)
|
|
Quarter
|
|
|
|
1Q15
|
|
4Q14
|
|
1Q14
|
|
Net Income (Loss) per share attributable to SSI
|
|
$
|
(0.09
|
)
|
|
$
|
0.27
|
|
|
$
|
(0.23
|
)
|
|
Earnings per share from discontinued operations
|
|
—
|
|
|
0.03
|
|
|
—
|
|
|
Net Income (Loss) per share from continuing operations attributable
to SSI
|
|
(0.09
|
)
|
|
0.24
|
|
|
(0.23
|
)
|
|
Restructuring Charges and Other Exit-related Costs, net of tax, per
share
|
|
0.02
|
|
|
0.09
|
|
|
0.05
|
|
|
Resale or modification of certain previously contracted shipments,
net of tax, per share
|
|
0.15
|
|
|
—
|
|
|
—
|
|
|
Adjusted Diluted EPS from continuing operations attributable to SSI
|
|
$
|
0.08
|
|
|
$
|
0.33
|
|
|
$
|
(0.18
|
)
|
|
Debt, Net of Cash
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
November 30, 2014
|
|
August 31, 2014
|
|
Short-term borrowings
|
|
$
|
471
|
|
|
$
|
523
|
|
Long-term debt, net of current maturities
|
|
340,355
|
|
|
318,842
|
|
Total debt
|
|
340,826
|
|
|
319,365
|
|
Less: cash and cash equivalents
|
|
14,666
|
|
|
25,672
|
|
Total debt, net of cash
|
|
$
|
326,160
|
|
|
$
|
293,693
|
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 110th year of
operations in 2015.
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, cost containment and
productivity improvement 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 benefit of business realignment, cost containment and
productivity improvement programs and 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; the impact of a cybersecurity incident; 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]