Schnitzer Reports Second Quarter 2015 Financial Results
Strategic Actions Expected to Benefit Operating Performance by $60
Million
PORTLAND, Ore.--(BUSINESS WIRE)--Apr. 7, 2015--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported financial
results for its fiscal 2015 second quarter ended February 28, 2015.
Market Conditions
During the second quarter, market selling prices for recycled metals
experienced the steepest drop since 2008 with ferrous sales prices
falling as much as $100 per ton, or approximately 30%, from first
quarter levels. This drop in market selling prices continued the decline
that began in the Company’s first fiscal quarter when ferrous sales
prices dropped approximately 20%. These significantly lower prices have
been driven by softer global steel markets due to overproduction, the
strong dollar, lower iron ore prices, and weaker demand in end-markets,
including the energy, agriculture and mining sectors. In addition,
during the quarter our business activity was impacted by harsh winter
weather in the Northeast and Midwest which impacted retail sales in our
Auto Parts Business and supply flows in our Metals Recycling Business,
and by a labor slowdown at the West Coast ports. As a result of all of
these factors, year-over-year ferrous sales volumes in Metals Recycling
declined by 27% and nonferrous sales volumes declined by 20%. In our
Steel Manufacturing Business, second quarter sales volumes, utilization
and operating income were higher compared to the same period last year
as a result of improved demand in West Coast construction markets and
continuing benefits from productivity improvements.
Consolidated Financial Performance
For the second quarter, the Company reported an adjusted loss per share
of $0.33, excluding charges for non-cash goodwill and other asset
impairments, and restructuring and exit-related activities. This
compares to second quarter fiscal 2014 adjusted earnings per share of
$0.13, excluding charges attributed to restructuring. Approximately
$0.39 per share, or $16 million, of the adjusted operating loss is
attributable to the estimated adverse impact of sharply falling prices
on average inventory accounting which primarily impacted our Metals
Recycling and Auto Parts Businesses.
The Company reported a second quarter fiscal 2015 loss per share of
$7.24, compared to a reported earnings per share of $0.07 in the prior
year second quarter. This includes the effects of actions the Company
took at the end of the second quarter to idle or close certain
operations in the Metals Recycling and Auto Parts Businesses, including
$44 million in non-cash asset impairment charges and $8 million in
restructuring and exit-related costs, representing a combined $1.95 per
share. The Company also recorded a non-cash impairment charge of $141
million, or $4.86 per share, to the carrying value of the goodwill in
the Metals Recycling Business in the second quarter.
Positive Operating Cash Flow Enables Debt
Reduction, Continuation of the Dividend
The Company generated positive operating cash flow in the second quarter
of $32 million which the Company used to reduce total debt by $27
million to $314 million, the lowest level since the first quarter of
fiscal 2011, and to maintain the Company's quarterly dividend. The
Company has paid a quarterly dividend every quarter since going public
21 years ago.
Strategic Actions
The Company has commenced two strategic initiatives:
(i) A cost reduction, capacity reduction and productivity improvement
initiative which, in the aggregate, is intended to improve financial
performance by $60 million annually by the end of 2016; and
(ii) The integration of the Auto Parts and Metals Recycling Businesses
into a single division by the end of fiscal 2015 which is intended to
further optimize the efficiencies in our operating platform, enable
additional synergies to be captured throughout our supply chain and
global sales channel, and more effectively leverage our shared services
platform.
"In the face of steep declines in commodity prices, we are taking
deliberate and substantial steps to continue to lower our operating
costs and generate positive cash flow,” said Tamara Lundgren, President
and Chief Executive Officer. “The strategic cost reduction actions
currently underway are expected to deliver additional annual benefits of
approximately $60 million. This comes in addition to approximately $65
million in cost savings and productivity benefits we have delivered
since fiscal 2013. The new strategic actions form part of a longer term
plan which we expect will lead to improved financial performance and
will position us to emerge from this trough in the cycle with greater
operating leverage,” added Lundgren.
About half of the approximately $60 million in targeted savings is
expected to come from our Metals Recycling Business, through a
combination of equipment idling, including reduced depreciation, and
SG&A reductions. Another approximately 40% is expected to come from our
Auto Parts Business through the closing of stores, SG&A reductions and
productivity improvement initiatives, including $14 million announced
earlier this fiscal year. The balance is expected to come from our
Corporate Shared Services Division through the reduction of
organizational layers and leveraging support functions across the
Company’s operating platform. The Company expects approximately a
quarter of the savings to be achieved in the fourth quarter of fiscal
2015, with the remainder to be delivered by the end of fiscal 2016.
In connection with our strategic cost reduction initiatives, we expect
to incur restructuring charges of approximately $10 million.
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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2Q15
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2Q14
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Change
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1Q15
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Change
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Revenues
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$
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439
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$
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626
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(30
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)%
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$
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556
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(21
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)%
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Operating Income (Loss)
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$
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(205
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)
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$
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7
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NM
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$
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—
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NM
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Goodwill impairment charge
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141
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—
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NM
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—
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NM
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Other asset impairment charges
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44
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1
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NM
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—
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NM
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Restructuring charges and other exit-related costs
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8
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2
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NM
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1
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NM
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Resale or modification of previously contracted shipments
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1
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—
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NM
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6
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NM
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Adjusted Operating Income (Loss)(1)(2)
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$
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(10
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)
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$
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10
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NM
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$
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6
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(264
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)%
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Net Income (Loss) attributable to SSI
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$
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(196
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)
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$
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2
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NM
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$
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(2
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)
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NM
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Adjusted Net Income (Loss) attributable to SSI
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(9
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)
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3
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NM
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2
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NM
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Net Income (Loss) per share attributable to SSI
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$
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(7.24
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)
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$
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0.07
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NM
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$
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(0.09
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)
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NM
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Adjusted diluted EPS from continuing operations attributable to SSI(1)
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$
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(0.33
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)
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$
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0.13
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NM
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$
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0.08
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NM
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(1) Adjusted operating income excludes the impact of goodwill and
other asset impairments, restructuring and other exit-related costs,
and certain previously contracted ferrous bulk shipments. See
Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
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(2) May not foot due to rounding.
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NM = not meaningful
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Metals Recycling Business
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Summary of Metals Recycling Business Results
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($ in millions, except selling prices; Fe volumes 000s long tons;
NFe volumes Ms lbs)
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Quarter
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2Q15
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2Q14
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Change
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1Q15
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Change
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Total Revenues
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$
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341
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$
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536
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(36
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)%
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$
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456
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(25
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)%
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Ferrous Revenues
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$
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244
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$
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409
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(40
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)%
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$
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338
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(28
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)%
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Ferrous Volumes
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750
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1,029
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(27
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)%
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938
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(20
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)%
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Avg. Net Ferrous Sales Prices ($/LT)(1)
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$
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295
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$
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365
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(19
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)%
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$
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328
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(10
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)%
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Nonferrous Revenues
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$
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91
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$
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121
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(25
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)%
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$
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113
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(19
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)%
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Nonferrous Volumes
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108
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136
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(20
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)%
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127
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(15
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)%
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Avg. Net Nonferrous Sales Prices ($/lb)(1)
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$
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0.81
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$
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0.86
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(6
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)%
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$
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0.85
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(5
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)%
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Operating Income (Loss)(2)
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$
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(187
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)
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$
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11
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NM
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$
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2
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NM
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Operating Income (Loss) per Fe ton
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$
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(249
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)
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$
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10
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NM
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$
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2
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NM
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Adjusted Operating Income (Loss)(3)
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$
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(1
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)
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$
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12
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NM
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$
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8
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NM
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Adjusted Operating Income (Loss) per Fe ton
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$
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(2
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)
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$
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11
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NM
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$
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8
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NM
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(1) Sales prices are shown net of freight.
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(2) Operating income does not include the impact of restructuring
charges and other exit-related costs.
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(3) Adjusted operating income excludes the impact of goodwill and
other asset impairments, and certain previously contracted ferrous
bulk shipments. See Non-GAAP Financial Measures for reconciliation
to U.S. GAAP.
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Sales Volumes: Ferrous sales volumes of 750 thousand tons
in the second quarter declined 27% compared to the prior year second
quarter and 20% from the first quarter, primarily due to weaker export
demand, the impact of the lower price environment on scrap supply and
the timing of shipments. Nonferrous sales volumes of 108 million pounds
decreased 20% compared to the prior year second quarter and 15%
sequentially. Both the effects of severe weather in the Northeast and
the labor slowdown at the West Coast ports adversely impacted shipments
during the second quarter.
In total, export customers accounted for 55% of our ferrous sales
volumes. Ferrous and nonferrous products were shipped to 16 countries,
with Turkey, Egypt and Peru the top export destinations for ferrous
shipments. Domestic shipments represented 45% of our sales, an increase
from 36% in the first quarter.
Pricing: Average ferrous selling prices declined nearly
$70, or 19%, compared to the prior year second quarter and $33 per ton,
or 10%, from first quarter levels due to a combination of weaker export
demand and excess steel production globally. Nonferrous prices declined
more moderately during the same periods.
Margins: Adjusted operating loss per ton of $2 in the
second quarter resulted from a combination of sharply reduced average
selling prices and lower shipped volumes. Due to the rapid rate of
decline in market prices, average inventory costs did not decline as
quickly as selling prices, which led to an estimated $17 per ton adverse
impact of average inventory accounting as well as an adverse net
realizable value adjustment to inventory of $2 million. The strategic
actions commenced during the second quarter are expected to benefit
operating performance in the fourth quarter of fiscal 2015 and into
fiscal 2016.
Auto Parts Business
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Summary of Auto Parts Business Results
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($ in millions, volume 000s)
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Quarter
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2Q15
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2Q14
|
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Change
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1Q15
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Change
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Revenues
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$
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69
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$
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76
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(9)%
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$
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81
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(15)%
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Operating Income (Loss)(1)
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$
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(3
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)
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|
$
|
5
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|
|
NM
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$
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2
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NM
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Car Purchase Volumes
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83
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|
|
85
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(2)%
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|
97
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(14)%
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(1) Operating income does not include the impact of restructuring
charges and other exit-related costs.
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Revenues: Revenues in the second quarter decreased 9%
compared to the prior year second quarter and 15% from the first quarter
due to the significant impact of declining commodity prices and
seasonally weaker retail sales, including the impact of a particularly
harsh winter in the Midwest and Northeast. In addition, the lower price
environment resulted in a decline in car purchase volumes of 2%
year-over-year and 14% versus the first quarter.
Margins: The sharp drop in commodity prices and seasonally
weaker retail business compressed margins, resulting in an operating
loss of $3 million, including an estimated adverse impact of $3 million
from average inventory accounting. Recently announced cost reduction and
productivity initiatives are expected to benefit operating performance
in the fourth quarter of fiscal 2015 and into fiscal 2016.
Steel Manufacturing Business
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Summary of Steel Manufacturing Business Results
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($ in millions, except selling prices; volume 000s of short tons)
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|
|
|
|
|
|
|
|
Quarter
|
|
|
|
2Q15
|
|
2Q14
|
|
Change
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|
1Q15
|
|
Change
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Revenues
|
|
$
|
93
|
|
|
$
|
81
|
|
|
14
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%
|
|
$
|
95
|
|
|
(2
|
)%
|
|
Operating Income
|
|
$
|
4
|
|
|
$
|
4
|
|
|
6
|
%
|
|
$
|
6
|
|
|
(39
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avg. Net Sales Prices ($/ST)
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|
$
|
651
|
|
|
$
|
676
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|
|
(4
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)%
|
|
$
|
683
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|
|
(5
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)%
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|
Finished Goods Sales Volumes
|
|
131
|
|
|
115
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|
|
14
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%
|
|
127
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|
|
3
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%
|
|
Rolling Mill Utilization
|
|
76
|
%
|
|
67
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%
|
|
|
|
72
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%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Sales Volumes: Finished steel sales volumes of 131
thousand tons increased 14% from the prior year second quarter and 3%
from first quarter levels driven by improving nonresidential
construction demand.
Pricing: Average net sales prices for finished steel
products decreased by $25 per ton as compared to the prior year quarter
and $32 per ton sequentially, reflecting the sharp drop in scrap prices
and, to a lesser extent, the impact of imports.
Margins: Operating income of $4 million increased 6% from
the prior year as significantly higher utilization of 76% and benefits
to operating leverage from our productivity improvements offset lower
average selling prices. Sequentially, the sharp decline in selling
prices more than offset benefits from higher utilization rates.
Corporate Items
The Company anticipates a full year effective tax rate of 5%, primarily
driven by estimated valuation allowances on deferred tax assets. Net
debt of $306 million at the end of the second quarter was $20 million
lower than at the end of the first quarter in fiscal 2015.
Analysts' Conference Call: Second Quarter of Fiscal 2015
A conference call and slide presentation to discuss results will be held
today, April 7, 2015, at 11:30 a.m. EDT hosted by Tamara Lundgren,
President and Chief Executive Officer, and Richard Peach, Chief
Financial Officer. The call and the slides will be webcast and
accessible on the Company's website at www.schnitzersteel.com.
Summary financial data is provided in the following pages. The slides
and related materials will be available prior to the call on the website.
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SCHNITZER STEEL INDUSTRIES, INC.
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FINANCIAL HIGHLIGHTS
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(in thousands)
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(Unaudited)
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For the Three Months Ended
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For the Six Months Ended
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February 28,
2015
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November 30,
2014
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February 28,
2014
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February 28,
2015
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February 28,
2014
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REVENUES:
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Metal Recycling Business:
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Ferrous sales
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$
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243,999
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|
|
$
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337,578
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|
|
$
|
409,106
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|
$
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581,578
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|
|
$
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778,661
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|
Nonferrous sales
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91,055
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|
|
112,593
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|
|
120,833
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|
|
203,647
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|
|
233,987
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|
|
Other sales
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5,489
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|
|
6,107
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|
|
5,751
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|
|
11,595
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|
|
13,351
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TOTAL MRB SALES
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340,543
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|
|
456,278
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|
|
535,690
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|
|
796,820
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|
1,025,999
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|
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|
|
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Auto Parts Business
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|
69,135
|
|
|
80,921
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|
|
76,360
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|
|
150,056
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|
|
155,995
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Steel Manufacturing Business
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93,126
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|
|
95,218
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|
|
81,456
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|
|
188,344
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|
|
169,580
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|
Intercompany sales and eliminations
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(63,572
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)
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|
(76,827
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)
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|
(67,359
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)
|
|
(140,398
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)
|
|
(137,683
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)
|
|
|
Total Revenues
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$
|
439,232
|
|
|
$
|
555,590
|
|
|
$
|
626,147
|
|
|
$
|
994,822
|
|
|
$
|
1,213,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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OPERATING INCOME (LOSS):
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|
|
|
|
|
|
|
|
|
|
|
Adjusted Metal Recycling Business(1)
|
|
$
|
(1,218
|
)
|
|
$
|
7,503
|
|
|
$
|
11,533
|
|
|
$
|
6,285
|
|
|
$
|
12,123
|
|
|
Auto Parts Business
|
|
(2,891
|
)
|
|
1,961
|
|
|
4,575
|
|
|
(930
|
)
|
|
10,184
|
|
|
Steel Manufacturing Business
|
|
3,799
|
|
|
6,207
|
|
|
3,573
|
|
|
10,006
|
|
|
5,318
|
|
|
|
Adjusted segment operating income (loss)(2)
|
|
(310
|
)
|
|
15,671
|
|
|
19,681
|
|
|
15,361
|
|
|
27,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
(8,488
|
)
|
|
(8,994
|
)
|
|
(9,976
|
)
|
|
(17,480
|
)
|
|
(18,700
|
)
|
|
Intercompany eliminations
|
|
(1,534
|
)
|
|
(395
|
)
|
|
(187
|
)
|
|
(1,930
|
)
|
|
(1,221
|
)
|
|
|
Adjusted operating income (loss)
|
|
(10,332
|
)
|
|
6,282
|
|
|
9,518
|
|
|
(4,049
|
)
|
|
7,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment charge
|
|
(141,021
|
)
|
|
—
|
|
|
—
|
|
|
(141,021
|
)
|
|
—
|
|
|
Other asset impairment charges
|
|
(43,838
|
)
|
|
—
|
|
|
(928
|
)
|
|
(43,838
|
)
|
|
(928
|
)
|
|
Restructuring charges and other exit-related costs
|
|
(8,371
|
)
|
|
(623
|
)
|
|
(2,006
|
)
|
|
(8,994
|
)
|
|
(3,819
|
)
|
|
Resale or modification of previously contracted shipments
|
|
(1,347
|
)
|
|
(5,581
|
)
|
|
—
|
|
|
(6,928
|
)
|
|
—
|
|
|
|
Total operating income (loss)
|
|
$
|
(204,909
|
)
|
|
$
|
78
|
|
|
$
|
6,584
|
|
|
$
|
(204,830
|
)
|
|
$
|
2,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted operating income excludes the impact of goodwill and
other asset impairments, and certain previously contracted ferrous
bulk shipments. 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 Month Ended
|
|
For the Six Months Ended
|
|
|
|
February 28,
2015
|
|
November 30,
2014
|
|
February 28,
2014
|
|
February 28,
2015
|
|
February 28,
2014
|
|
Revenues
|
|
$
|
439,232
|
|
|
$
|
555,590
|
|
|
$
|
626,147
|
|
|
$
|
994,822
|
|
|
$
|
1,213,891
|
|
|
Cost of goods sold
|
|
408,783
|
|
|
510,022
|
|
|
571,140
|
|
|
918,805
|
|
|
1,113,558
|
|
|
Selling, general and administrative
|
|
42,737
|
|
|
45,367
|
|
|
45,856
|
|
|
88,103
|
|
|
93,406
|
|
|
Income from joint ventures
|
|
(609
|
)
|
|
(500
|
)
|
|
(367
|
)
|
|
(1,109
|
)
|
|
(777
|
)
|
|
Goodwill impairment charge
|
|
141,021
|
|
|
—
|
|
|
—
|
|
|
141,021
|
|
|
—
|
|
|
Other asset impairment charges
|
|
43,838
|
|
|
—
|
|
|
928
|
|
|
43,838
|
|
|
928
|
|
|
Restructuring charges and other exit-related costs
|
|
8,371
|
|
|
623
|
|
|
2,006
|
|
|
8,994
|
|
|
3,819
|
|
|
Operating income (loss)
|
|
(204,909
|
)
|
|
78
|
|
|
6,584
|
|
|
(204,830
|
)
|
|
2,957
|
|
|
Interest expense
|
|
(2,345
|
)
|
|
(2,424
|
)
|
|
(2,816
|
)
|
|
(4,769
|
)
|
|
(5,517
|
)
|
|
Other income (expense), net
|
|
1,620
|
|
|
753
|
|
|
(142
|
)
|
|
2,372
|
|
|
33
|
|
|
Income (loss) before income taxes
|
|
(205,634
|
)
|
|
(1,593
|
)
|
|
3,626
|
|
|
(207,227
|
)
|
|
(2,527
|
)
|
|
Income tax benefit (expense)
|
|
9,752
|
|
|
(8
|
)
|
|
(986
|
)
|
|
9,743
|
|
|
(201
|
)
|
|
Net income (loss)
|
|
(195,882
|
)
|
|
(1,601
|
)
|
|
2,640
|
|
|
(197,484
|
)
|
|
(2,728
|
)
|
|
Net (income) loss attributable to noncontrolling interests
|
|
240
|
|
|
(871
|
)
|
|
(851
|
)
|
|
(631
|
)
|
|
(1,712
|
)
|
|
Net income (loss) attributable to SSI
|
|
$
|
(195,642
|
)
|
|
$
|
(2,472
|
)
|
|
$
|
1,789
|
|
|
$
|
(198,115
|
)
|
|
$
|
(4,440
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(7.24
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
0.07
|
|
|
$
|
(7.34
|
)
|
|
$
|
(0.17
|
)
|
|
Diluted
|
|
$
|
(7.24
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
0.07
|
|
|
$
|
(7.34
|
)
|
|
$
|
(0.17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,020
|
|
|
26,944
|
|
|
26,825
|
|
|
26,982
|
|
|
26,790
|
|
|
Diluted
|
|
27,020
|
|
|
26,944
|
|
|
26,947
|
|
|
26,982
|
|
|
26,790
|
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.3750
|
|
|
0.3750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
1Q15
|
2Q15
|
1H15
|
|
1Q14
|
2Q14
|
3Q14
|
4Q14
|
2014
|
|
Metals Recycling Business
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT)(1)
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
344
|
|
$
|
305
|
|
$
|
325
|
|
|
$
|
356
|
|
$
|
374
|
|
$
|
354
|
|
$
|
349
|
|
$
|
358
|
|
|
Export
|
|
$
|
319
|
|
$
|
286
|
|
$
|
306
|
|
|
$
|
344
|
|
$
|
361
|
|
$
|
341
|
|
$
|
352
|
|
$
|
350
|
|
|
Average
|
|
$
|
328
|
|
$
|
295
|
|
$
|
313
|
|
|
$
|
348
|
|
$
|
365
|
|
$
|
346
|
|
$
|
351
|
|
$
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
333,798
|
|
334,263
|
|
668,061
|
|
|
322,531
|
|
328,005
|
|
344,526
|
|
328,308
|
|
1,323,369
|
|
|
Export
|
|
604,626
|
|
415,765
|
|
1,020,391
|
|
|
655,072
|
|
701,259
|
|
679,009
|
|
763,608
|
|
2,798,948
|
|
|
Total
|
|
938,424
|
|
750,028
|
|
1,688,452
|
|
|
977,603
|
|
1,029,264
|
|
1,023,535
|
|
1,091,916
|
|
4,122,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Average Price ($/LB)(1)
|
|
$
|
0.85
|
|
$
|
0.81
|
|
$
|
0.83
|
|
|
$
|
0.89
|
|
$
|
0.86
|
|
$
|
0.86
|
|
$
|
0.85
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, in 000s)
|
|
127,473
|
|
108,126
|
|
235,599
|
|
|
123,941
|
|
135,935
|
|
139,273
|
|
155,659
|
|
554,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST)(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
$
|
683
|
|
$
|
651
|
|
$
|
667
|
|
|
$
|
657
|
|
$
|
676
|
|
$
|
686
|
|
$
|
688
|
|
$
|
677
|
|
|
Sales Volume (ST)(2)
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
79,065
|
|
74,928
|
|
153,993
|
|
|
83,618
|
|
83,838
|
|
85,633
|
|
101,076
|
|
354,165
|
|
|
Coiled Products
|
|
40,361
|
|
49,403
|
|
89,764
|
|
|
38,322
|
|
25,656
|
|
41,892
|
|
46,682
|
|
152,552
|
|
|
Merchant Bar and Other
|
|
7,698
|
|
6,705
|
|
14,403
|
|
|
6,222
|
|
5,305
|
|
6,984
|
|
7,979
|
|
26,490
|
|
|
Total
|
|
127,124
|
|
131,036
|
|
258,160
|
|
|
128,162
|
|
114,799
|
|
134,509
|
|
155,737
|
|
533,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling Mill Utilization
|
|
72
|
%
|
76
|
%
|
74
|
%
|
|
65
|
%
|
67
|
%
|
72
|
%
|
76
|
%
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
|
|
|
|
|
|
|
|
|
Car purchase volumes (000)
|
|
97
|
|
83
|
|
180
|
|
|
91
|
|
85
|
|
98
|
|
106
|
|
380
|
|
|
Number of self-service locations at end of quarter
|
|
62
|
|
62
|
|
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)
|
|
|
|
February 28, 2015
|
|
August 31, 2014
|
|
Assets
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,601
|
|
|
$
|
25,672
|
|
Accounts receivable, net
|
|
112,202
|
|
|
189,359
|
|
Inventories
|
|
255,931
|
|
|
216,172
|
|
Other current assets
|
|
37,476
|
|
|
32,729
|
|
Total current assets
|
|
413,210
|
|
|
463,932
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
440,874
|
|
|
523,433
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
216,522
|
|
|
367,845
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,070,606
|
|
|
$
|
1,355,210
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
618
|
|
|
$
|
523
|
|
Other current liabilities
|
|
129,948
|
|
|
176,747
|
|
Total current liabilities
|
|
130,566
|
|
|
177,270
|
|
|
|
|
|
|
|
Long-term debt
|
|
312,902
|
|
|
318,842
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
81,799
|
|
|
83,121
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
541,100
|
|
|
770,784
|
|
Noncontrolling interests
|
|
4,239
|
|
|
5,193
|
|
Total equity
|
|
545,339
|
|
|
775,977
|
|
Total liabilities and equity
|
|
$
|
1,070,606
|
|
|
$
|
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 attributable to SSI and adjusted
diluted earnings per share 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 a goodwill impairment charge, other
asset impairment charges and 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 and second quarters of
2015 of certain previously contracted ferrous bulk shipments. Due to the
sharp decline in selling prices that occurred during the first and
second quarters of fiscal 2015, the revised prices associated with these
shipments were significantly lower than the prices in the original sales
contracts entered into between August and November 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
|
|
|
|
2Q15
|
|
1Q15
|
|
2Q14
|
|
Consolidated Operating Income (Loss):
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
(205
|
)
|
|
$
|
—
|
|
|
$
|
7
|
|
Goodwill impairment charge
|
|
141
|
|
|
—
|
|
|
—
|
|
Other asset impairment charges
|
|
44
|
|
|
—
|
|
|
1
|
|
Restructuring charges and other exit-related costs
|
|
8
|
|
|
1
|
|
|
2
|
|
Resale or modification of previously contracted shipment
|
|
1
|
|
|
6
|
|
|
—
|
|
Adjusted Operating Income (Loss)(1)
|
|
$
|
(10
|
)
|
|
$
|
6
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
MRB Operating Income (Loss):
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
(187
|
)
|
|
$
|
2
|
|
|
$
|
11
|
|
Goodwill impairment charge
|
|
141
|
|
|
—
|
|
|
—
|
|
Other asset impairment charges
|
|
43
|
|
|
—
|
|
|
1
|
|
Resale or modification of previously contracted shipment
|
|
1
|
|
|
6
|
|
|
—
|
|
Adjusted Operating Income (Loss)(1)
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) attributable to SSI
|
|
($ in millions)
|
|
Quarter
|
|
|
|
2Q15
|
|
1Q15
|
|
2Q14
|
|
Net Income (Loss) attributable to SSI
|
|
$
|
(196
|
)
|
|
$
|
(2
|
)
|
|
$
|
2
|
|
Goodwill impairment charge, net of tax
|
|
131
|
|
|
—
|
|
|
—
|
|
Other asset impairment charges, net of tax
|
|
44
|
|
|
—
|
|
|
1
|
|
Restructuring Charges and Other Exit-related Costs, net of tax
|
|
9
|
|
|
—
|
|
|
1
|
|
Resale or modification of previously contracted shipment, net of tax
|
|
3
|
|
|
4
|
|
|
—
|
|
Adjusted Net Income (Loss) attributable to SSI(1)
|
|
$
|
(9
|
)
|
|
$
|
2
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
Diluted Earnings per share attributable to SSI
|
|
($ per share)
|
|
Quarter
|
|
|
|
2Q15
|
|
1Q15
|
|
2Q14
|
|
Net Income (Loss) per share attributable to SSI
|
|
$
|
(7.24
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
0.07
|
|
Goodwill impairment charge, net of tax
|
|
4.86
|
|
|
—
|
|
|
—
|
|
Other asset impairment charges, net of tax
|
|
1.62
|
|
|
—
|
|
|
0.02
|
|
Restructuring Charges and Other Exit-related Costs, net of tax, per
share
|
|
0.33
|
|
|
0.02
|
|
|
0.04
|
|
Resale or modification of previously contracted shipment, net of
tax, per share
|
|
0.10
|
|
|
0.15
|
|
|
—
|
|
Adjusted Diluted EPS from continuing operations attributable to SSI
|
|
$
|
(0.33
|
)
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, Net of Cash
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
February 28, 2015
|
|
August 31, 2014
|
|
Short-term borrowings
|
|
$
|
618
|
|
|
$
|
523
|
|
Long-term debt, net of current maturities
|
|
312,902
|
|
|
318,842
|
|
Total debt
|
|
313,520
|
|
|
319,365
|
|
Less: cash and cash equivalents
|
|
7,601
|
|
|
25,672
|
|
Total debt, net of cash
|
|
$
|
305,919
|
|
|
$
|
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 15 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 began operations in 1906 in Portland,
Oregon.
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 or
initiative; 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; the anticipated value
of goodwill or other intangible 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 strategic 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]