Schnitzer Reports Third Quarter 2015 Financial Results
Improved Operating Performance in All Businesses Sequentially
Strong Operating Cash Flow and Progress on Cost Reduction and
Productivity Initiatives
PORTLAND, Ore.--(BUSINESS WIRE)--Jun. 30, 2015--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported financial
results for its fiscal 2015 third quarter ended May 31, 2015.
Our third quarter results reflected benefits from the cost reduction and
productivity initiatives we announced in early April which led to
improved sequential operating performance in all of our businesses. In
Metals Recycling, ferrous volumes increased 29% and nonferrous sales
volumes increased 21% versus the second quarter. Due to the rapid
decline in ferrous selling prices in February, which impacted shipments
in the third quarter, average inventory costs did not decline as quickly
as selling prices, which led to an estimated $14 per ton, or $13
million, adverse impact of average inventory accounting which
approximated the adverse impact in the second quarter. In our Auto Parts
Business, higher seasonal retail activity and early benefits achieved
from productivity improvements led to significantly improved
profitability. Our Steel Manufacturing Business generated higher sales
volumes and increased operating income due to steadily improving demand
in West Coast construction markets.
Consolidated Financial Performance
The Company announced break-even adjusted earnings per share from
continuing operations for the third quarter, which compares to second
quarter adjusted loss per share of $0.30 and prior year third quarter
adjusted earnings per share of $0.19. Adjustments included charges for
restructuring and exit-related costs and asset impairments. Third
quarter adjusted results included an adverse impact from average
inventory accounting of approximately $0.40 per share which compares to
a second quarter adverse impact of $0.36 per share and a prior year
third quarter adverse impact of $0.09 per share. Based on current market
trends, estimated adverse inventory effects are expected to be
substantially reduced in the fourth quarter.
The Company reported third quarter loss per share from continuing
operations of $0.31, including $6 million in restructuring and
exit-related costs and $1 million in asset impairments. This compares to
the second quarter reported loss per share of $7.08 and third quarter
fiscal 2014 reported earnings per share of $0.13.
Strong Positive Operating Cash Flow and
Significant Progress on Cost Reductions and Productivity Initiatives
The Company generated positive operating cash flow in the third quarter
of $64 million which enabled the Company to reduce total debt to $263
million, the lowest level since first quarter of fiscal 2011.
During the quarter, the Company made significant progress on the
execution of its targeted $60 million in annual cost savings and
productivity improvements, generating approximately $10 million in
benefits. The Company expects to achieve an additional $5 million of
quarterly benefits by the fourth quarter of fiscal 2015, which is ahead
of schedule and equates to a targeted quarterly run rate of
approximately $15 million.
"Our ability to deliver on a wide range of cost savings and productivity
initiatives contributed to improved sequential financial results in the
third quarter. We expect the benefits from these initiatives, combined
with more stable market conditions, to provide momentum for further
improvements in our performance,” said Tamara Lundgren, President and
Chief Executive Officer. “In addition, we expect to complete the
consolidation of our Auto Parts and Metals Recycling Businesses during
the fourth quarter, creating the opportunity to benefit from further
commercial and operational synergies,” added Lundgren.
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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3Q15
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3Q14
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Change
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2Q15
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Change
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Revenues
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$
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467
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$
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635
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(26
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)%
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$
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437
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7
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%
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Operating Income (Loss)
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$
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(4
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)
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$
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3
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NM
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$
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(201
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)
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(98
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)%
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Goodwill impairment charge
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—
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—
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NM
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141
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NM
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Other asset impairment charges
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1
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1
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141
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%
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44
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(97
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)%
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Restructuring charges and other exit-related costs
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6
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3
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116
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%
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5
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11
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%
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Resale or modification of previously contracted shipments
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—
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—
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NM
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1
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NM
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Adjusted Operating Income (Loss)(1)(3)
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$
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3
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$
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6
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(45
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)%
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$
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(9
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)
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NM
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Net Income (Loss) attributable to SSI
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$
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(10
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)
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$
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3
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NM
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$
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(196
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)
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(95
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)%
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Net Income (Loss) from continuing operations attributable to SSI
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$
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(8
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)
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$
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3
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NM
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$
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(191
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)
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(96
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)%
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Adjusted Net Income (Loss) from continuing operations attributable
to SSI(2)
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$
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—
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$
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5
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NM
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$
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(8
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)
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(99
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)%
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Net Income (Loss) per share attributable to SSI
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$
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(0.36
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)
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$
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0.12
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NM
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$
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(7.24
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)
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(95
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)%
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Net Income (Loss) per share from continuing operations attributable
to SSI
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$
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(0.31
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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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(7.08
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)
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(96
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)%
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Adjusted diluted EPS from continuing operations attributable to SSI(2)
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$
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—
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$
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0.19
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NM
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$
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(0.30
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)
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(99
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)%
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(1) Adjusted operating income excludes the impact of goodwill and
other asset impairments, restructuring, other exit-related costs,
and the resale or modification of certain previously contracted
ferrous bulk shipments. See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
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(2) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
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(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
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($ in millions, except selling prices and data per ton; Fe
volumes 000s long tons; NFe volumes Ms lbs)
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Quarter
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3Q15
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3Q14
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Change
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2Q15
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Change
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Total Revenues
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$
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363
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$
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517
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(30
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)%
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$
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341
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7
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%
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Ferrous Revenues
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$
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258
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$
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387
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(33
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)%
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$
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244
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6
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%
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Ferrous Volumes
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971
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1,024
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(5
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)%
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750
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29
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%
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Avg. Net Ferrous Sales Prices ($/LT)(1)
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$
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239
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$
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346
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(31
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)%
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$
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295
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(19
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)%
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Nonferrous Revenues
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$
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101
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$
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123
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(18
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)%
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$
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91
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11
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%
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Nonferrous Volumes
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130
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139
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(6
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)%
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108
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21
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%
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Avg. Net Nonferrous Sales Prices ($/lb)(1)
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$
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0.74
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$
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0.86
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(14
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)%
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$
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0.81
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(9
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)%
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Operating Income (Loss)(2)
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$
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1
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$
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4
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(73
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)%
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$
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(187
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)
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NM
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Operating Income (Loss) per Fe ton
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$
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1
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$
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4
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(71
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)%
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$
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(249
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)
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NM
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Adjusted Operating Income (Loss)(3)
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$
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2
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|
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$
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4
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(38
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)%
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|
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$
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(1
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)
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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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4
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(35
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)%
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$
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(2
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)
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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 the resale or modification of certain
previously contracted ferrous bulk shipments. See Non-GAAP Financial
Measures for reconciliation to U.S. GAAP.
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NM = not meaningful
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Sales Volumes: Ferrous sales volumes of 971 thousand tons
in the third quarter increased 29% from the second quarter, primarily
due to an increase in export sales and timing of shipments. Nonferrous
sales volumes of 130 million pounds increased 21% sequentially, driven
by resolution of the labor slowdown at West Coast ports. As compared to
the prior year, both ferrous and nonferrous volumes were slightly lower.
In total, export customers accounted for 68% of ferrous sales volumes in
the third quarter, an increase from 55% in the second quarter. Ferrous
and nonferrous products were shipped to 16 countries, with Turkey, India
and South Korea the top export destinations for ferrous shipments.
Pricing: While market prices stabilized during the
quarter, average ferrous selling prices declined $56, or 19%,
sequentially, primarily due to the sharp drop in ferrous selling prices
during February which impacted third quarter shipments. Ferrous prices
increased in the second half of the third quarter. As compared to the
prior year quarter, average selling prices declined $107 per ton, or
31%, reflecting the weaker export demand and excess steel production
globally. Nonferrous prices declined 9% sequentially and 14% as compared
to the prior year quarter, similarly reflecting weaker global demand.
Margins: Adjusted operating income per ton of $2 in the
third quarter improved sequentially primarily due to benefits from cost
reductions and productivity initiatives, as well as higher shipped
volumes, partially offset by lower average selling prices. Due to the
rapid decline in ferrous selling prices in February which impacted
shipments in the third quarter, average inventory costs did not decline
as quickly as purchase prices for raw materials, which led to an
estimated $14 per ton, or $13 million, adverse impact of average
inventory accounting which approximated the adverse impact in the second
quarter. Based on current market trends, estimated adverse inventory
effects are expected to be substantially reduced in the fourth quarter.
Cost reduction and productivity improvement actions commenced during the
third quarter benefited results by approximately $5 million and are
expected to further benefit operating performance in the fourth quarter
of fiscal 2015 and into fiscal 2016.
Auto Parts Business
Summary of Auto Parts Business Results
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($ in millions, volume 000s)
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Quarter
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3Q15
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3Q14
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Change
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2Q15
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Change
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Revenues
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$
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60
|
|
|
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$
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80
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|
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(24
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)%
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$
|
66
|
|
|
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(9
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)%
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Operating Income (Loss)(1)
|
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$
|
3
|
|
|
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$
|
8
|
|
|
|
(59
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)%
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$
|
(2
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)
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NM
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|
|
|
|
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|
|
|
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|
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Car Purchase Volumes
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79
|
|
|
|
93
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|
|
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(15
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)%
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|
|
78
|
|
|
|
1
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%
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(1) Operating income does not include the impact of restructuring
charges and other exit-related costs.
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NM = not meaningful
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Revenues: Revenues in the third quarter decreased 9% from
the second quarter, primarily reflecting the significant impact of lower
nonferrous commodity prices, partially offset by seasonally higher
retail activity. Compared to the prior year third quarter, revenues
declined 24% due to the significant impact of lower commodity prices and
the resulting adverse impact on car purchase volumes.
Margins: Operating income of $3 million, or 5% of
revenues, improved substantially from the second quarter, primarily due
to seasonally higher retail activity and lower operating costs.
Operating performance continued to be adversely impacted by an estimated
$2 million from average inventory accounting which is expected to be
substantially reduced in the fourth quarter based on current market
trends. Recently announced cost reduction and productivity initiatives
delivered approximately $4 million of benefits in the third quarter and
are expected to further improve operating performance in the fourth
quarter of fiscal 2015 and into fiscal 2016. The productivity benefits
in the third quarter were partially offset by the impact of lower
nonferrous commodity prices of $2 million.
Steel Manufacturing Business
Summary of Steel Manufacturing Business Results
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($ in millions, except selling prices; volume 000s of short tons)
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Quarter
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|
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3Q15
|
|
|
3Q14
|
|
|
Change
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2Q15
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|
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Change
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Revenues
|
|
$
|
95
|
|
|
|
$
|
102
|
|
|
|
(7
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)%
|
|
|
$
|
93
|
|
|
|
2
|
%
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Operating Income
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$
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4
|
|
|
|
$
|
5
|
|
|
|
(5
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)%
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|
$
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4
|
|
|
|
14
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%
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|
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|
|
|
|
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Avg. Net Sales Prices ($/ST)
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$
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615
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$
|
686
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(10
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)%
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$
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651
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|
|
|
(6
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)%
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Finished Goods Sales Volumes
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142
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|
|
|
135
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|
|
|
5
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%
|
|
|
131
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|
|
|
8
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%
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Rolling Mill Utilization
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69
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%
|
|
|
72
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%
|
|
|
|
|
|
76
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%
|
|
|
|
|
|
|
|
|
|
|
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Sales Volumes: Finished steel sales volumes of 142
thousand tons increased 8% from the second quarter and 5% from the prior
year third quarter levels, driven by improving nonresidential
construction demand which more than offset the impact of imports.
Utilization of 69% was lower sequentially due to a scheduled maintenance
outage.
Pricing: Average net sales prices for finished steel
products decreased by $36 per ton sequentially and $71 per ton as
compared to the prior year third quarter, reflecting primarily the sharp
drop in scrap prices coming into the quarter.
Margins: Operating income of $4 million increased 14%
sequentially due to higher shipped volumes which offset lower average
selling prices. As compared to the prior year third quarter, the impact
on operating income of the sharp decline in selling prices more than
offset the higher sales volumes.
Cost Reduction and Productivity Initiatives
As previously announced, during the third quarter the Company 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 during the fourth quarter 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.
About half of the approximately $60 million in targeted benefits 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 seven stores, SG&A reductions
and productivity improvement initiatives. 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. We delivered approximately $10 million of
benefits in the third quarter and expect a quarter of the total savings
target, or $15 million, 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 cost reduction initiatives, we expect to incur
restructuring charges of approximately $10 million.
Corporate Items
Consolidated SG&A costs were reduced by $6 million, or 12%, as compared
to the prior year quarter primarily due to benefits from the cost
savings and productivity initiatives and a legal settlement resulting in
an insurance reimbursement of $2 million in the third quarter of fiscal
2015.
Operating cash flow of $64 million during the third quarter enabled a
continuation in the reduction of debt outstanding while funding our
quarterly dividend and capital expenditures. Net debt of $254 million at
the end of the third quarter was $51 million lower than at the end of
the second quarter.
The Company anticipates a full year effective tax rate of 4%, primarily
driven by estimated valuation allowances on deferred tax assets.
Discontinued Operations
In the third quarter of fiscal 2015, the Company closed seven Auto Parts
stores, of which six are reported in discontinued operations and one
store was absorbed into the operations of existing retail stores nearby.
The loss in the fiscal 2015 third quarter from discontinued operations,
net of tax, was $1 million, or $0.05 per share, which compares to a loss
from discontinued operations of $0.01 per share, in the third quarter of
fiscal 2014.
Analysts' Conference Call: Third Quarter of Fiscal 2015
A conference call and slide presentation to discuss results will be held
today, June 30, 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.
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FINANCIAL HIGHLIGHTS
|
(in thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
|
May 31, 2015
|
|
February 28, 2015
|
|
May 31, 2014
|
|
May 31, 2015
|
|
May 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metal Recycling Business:
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous sales
|
|
$
|
257,635
|
|
|
$
|
243,999
|
|
|
$
|
386,826
|
|
|
$
|
839,212
|
|
|
$
|
1,165,487
|
|
|
Nonferrous sales
|
|
101,386
|
|
|
91,055
|
|
|
123,407
|
|
|
305,033
|
|
|
357,394
|
|
|
Other sales
|
|
4,020
|
|
|
5,489
|
|
|
6,608
|
|
|
15,616
|
|
|
19,959
|
|
|
TOTAL MRB SALES
|
|
363,041
|
|
|
340,543
|
|
|
516,841
|
|
|
1,159,861
|
|
|
1,542,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
60,291
|
|
|
65,995
|
|
|
79,602
|
|
|
203,577
|
|
|
227,695
|
|
Steel Manufacturing Business
|
|
94,939
|
|
|
93,126
|
|
|
102,039
|
|
|
283,284
|
|
|
271,618
|
|
Intercompany sales and eliminations
|
|
(50,962
|
)
|
|
(62,215
|
)
|
|
(63,009
|
)
|
|
(188,340
|
)
|
|
(196,990
|
)
|
|
Total Revenues
|
|
$
|
467,309
|
|
|
$
|
437,449
|
|
|
$
|
635,473
|
|
|
$
|
1,458,382
|
|
|
$
|
1,845,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
Adjusted Metal Recycling Business(1)
|
|
$
|
2,298
|
|
|
$
|
(1,218
|
)
|
|
$
|
3,736
|
|
|
$
|
8,583
|
|
|
$
|
15,860
|
|
Auto Parts Business
|
|
3,145
|
|
|
(1,970
|
)
|
|
7,702
|
|
|
3,812
|
|
|
19,981
|
|
Steel Manufacturing Business
|
|
4,343
|
|
|
3,799
|
|
|
4,594
|
|
|
14,350
|
|
|
9,912
|
|
|
Adjusted segment operating income(2)
|
|
9,786
|
|
|
611
|
|
|
16,032
|
|
|
26,745
|
|
|
45,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
(7,554
|
)
|
|
(8,488
|
)
|
|
(10,393
|
)
|
|
(25,035
|
)
|
|
(29,096
|
)
|
Intercompany eliminations
|
|
1,007
|
|
|
(1,534
|
)
|
|
252
|
|
|
(924
|
)
|
|
(966
|
)
|
|
Adjusted operating income (loss)
|
|
3,239
|
|
|
(9,411
|
)
|
|
5,891
|
|
|
786
|
|
|
15,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment charge
|
|
—
|
|
|
(141,021
|
)
|
|
—
|
|
|
(141,021
|
)
|
|
—
|
|
Other asset impairment charges
|
|
(1,281
|
)
|
|
(43,838
|
)
|
|
(532
|
)
|
|
(45,119
|
)
|
|
(1,460
|
)
|
Restructuring charges and other exit-related costs
|
|
(5,978
|
)
|
|
(5,394
|
)
|
|
(2,762
|
)
|
|
(11,964
|
)
|
|
(6,444
|
)
|
Resale or modification of previously contracted shipments
|
|
—
|
|
|
(1,347
|
)
|
|
—
|
|
|
(6,928
|
)
|
|
—
|
|
|
Total operating income (loss)
|
|
$
|
(4,020
|
)
|
|
$
|
(201,011
|
)
|
|
$
|
2,597
|
|
|
$
|
(204,246
|
)
|
|
$
|
7,787
|
|
(1) Adjusted operating income excludes the impact of goodwill and
other asset impairments, and the resale or modification of 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 Nine Months Ended
|
|
|
May 31, 2015
|
|
February 28, 2015
|
|
May 31, 2014
|
|
May 31, 2015
|
|
May 31, 2014
|
Revenues
|
|
$
|
467,309
|
|
|
$
|
437,449
|
|
|
$
|
635,473
|
|
|
$
|
1,458,382
|
|
|
$
|
1,845,163
|
|
Cost of goods sold
|
|
424,312
|
|
|
406,649
|
|
|
584,420
|
|
|
1,338,976
|
|
|
1,693,565
|
|
Selling, general and administrative
|
|
39,798
|
|
|
42,167
|
|
|
45,309
|
|
|
126,696
|
|
|
136,831
|
|
Income from joint ventures
|
|
(40
|
)
|
|
(609
|
)
|
|
(147
|
)
|
|
(1,148
|
)
|
|
(924
|
)
|
Goodwill impairment charge
|
|
—
|
|
|
141,021
|
|
|
—
|
|
|
141,021
|
|
|
—
|
|
Other asset impairment charges
|
|
1,281
|
|
|
43,838
|
|
|
532
|
|
|
45,119
|
|
|
1,460
|
|
Restructuring charges and other exit-related costs
|
|
5,978
|
|
|
5,394
|
|
|
2,762
|
|
|
11,964
|
|
|
6,444
|
|
Operating income (loss)
|
|
(4,020
|
)
|
|
(201,011
|
)
|
|
2,597
|
|
|
(204,246
|
)
|
|
7,787
|
|
Interest expense
|
|
(2,375
|
)
|
|
(2,295
|
)
|
|
(2,529
|
)
|
|
(7,044
|
)
|
|
(7,944
|
)
|
Other income, net
|
|
84
|
|
|
1,993
|
|
|
492
|
|
|
3,011
|
|
|
604
|
|
Income (loss) from continuing operations before income taxes
|
|
(6,311
|
)
|
|
(201,313
|
)
|
|
560
|
|
|
(208,279
|
)
|
|
447
|
|
Income tax benefit (expense)
|
|
(1,396
|
)
|
|
9,673
|
|
|
3,894
|
|
|
8,171
|
|
|
3,266
|
|
Income (loss) from continuing operations
|
|
(7,707
|
)
|
|
(191,640
|
)
|
|
4,454
|
|
|
(200,108
|
)
|
|
3,713
|
|
Loss from discontinued operations, net of tax
|
|
(1,234
|
)
|
|
(4,242
|
)
|
|
(330
|
)
|
|
(6,314
|
)
|
|
(2,315
|
)
|
Net income (loss)
|
|
(8,941
|
)
|
|
(195,882
|
)
|
|
4,124
|
|
|
(206,422
|
)
|
|
1,398
|
|
Net (income) loss attributable to noncontrolling interests
|
|
(687
|
)
|
|
240
|
|
|
(1,014
|
)
|
|
(1,318
|
)
|
|
(2,726
|
)
|
Net income (loss) attributable to SSI
|
|
$
|
(9,628
|
)
|
|
$
|
(195,642
|
)
|
|
$
|
3,110
|
|
|
$
|
(207,740
|
)
|
|
$
|
(1,328
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations attributable to
SSI
|
|
$
|
(0.31
|
)
|
|
$
|
(7.08
|
)
|
|
$
|
0.13
|
|
|
$
|
(7.46
|
)
|
|
$
|
0.04
|
|
Loss per share from discontinued operations attributable to SSI
|
|
|
(0.05
|
)
|
|
|
(0.16
|
)
|
|
|
(0.01
|
)
|
|
|
(0.23
|
)
|
|
|
(0.09
|
)
|
Net income (loss) per share attributable to SSI
|
|
$
|
(0.36
|
)
|
|
$
|
(7.24
|
)
|
|
$
|
0.12
|
|
|
$
|
(7.69
|
)
|
|
$
|
(0.05
|
)
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations attributable to
SSI
|
|
$
|
(0.31
|
)
|
|
$
|
(7.08
|
)
|
|
$
|
0.13
|
|
|
$
|
(7.46
|
)
|
|
$
|
0.04
|
|
Loss per share from discontinued operations attributable to SSI
|
|
|
(0.05
|
)
|
|
|
(0.16
|
)
|
|
|
(0.01
|
)
|
|
|
(0.23
|
)
|
|
|
(0.09
|
)
|
Net income (loss) per share attributable to SSI
|
|
$
|
(0.36
|
)
|
|
$
|
(7.24
|
)
|
|
$
|
0.12
|
|
|
$
|
(7.69
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,043
|
|
|
27,020
|
|
|
26,853
|
|
|
27,003
|
|
|
26,811
|
|
Diluted
|
|
27,043
|
|
|
27,020
|
|
|
27,017
|
|
|
27,003
|
|
|
26,811
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.5625
|
|
|
0.5625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
SELECTED OPERATING STATISTICS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
1Q15
|
|
2Q15
|
|
3Q15
|
|
2015
|
|
|
1Q14
|
|
2Q14
|
|
3Q14
|
|
4Q14
|
|
2014
|
Metals Recycling Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
344
|
|
|
$
|
305
|
|
|
$
|
245
|
|
|
$
|
300
|
|
|
|
$
|
356
|
|
|
$
|
374
|
|
|
$
|
354
|
|
|
$
|
349
|
|
|
$
|
358
|
|
Export
|
|
$
|
319
|
|
|
$
|
286
|
|
|
$
|
236
|
|
|
$
|
278
|
|
|
|
$
|
344
|
|
|
$
|
361
|
|
|
$
|
341
|
|
|
$
|
352
|
|
|
$
|
350
|
|
Average
|
|
$
|
328
|
|
|
$
|
295
|
|
|
$
|
239
|
|
|
$
|
286
|
|
|
|
$
|
348
|
|
|
$
|
365
|
|
|
$
|
346
|
|
|
$
|
351
|
|
|
$
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
333,798
|
|
|
334,263
|
|
|
307,480
|
|
|
975,541
|
|
|
|
322,531
|
|
|
328,005
|
|
|
344,526
|
|
|
328,308
|
|
|
1,323,369
|
|
Export
|
|
604,626
|
|
|
415,765
|
|
|
663,456
|
|
|
1,683,847
|
|
|
|
655,072
|
|
|
701,259
|
|
|
679,009
|
|
|
763,608
|
|
|
2,798,948
|
|
Total
|
|
938,424
|
|
|
750,028
|
|
|
970,936
|
|
|
2,659,388
|
|
|
|
977,603
|
|
|
1,029,264
|
|
|
1,023,535
|
|
|
1,091,916
|
|
|
4,122,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Average Price ($/LB)(1)
|
|
$
|
0.85
|
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
|
$
|
0.80
|
|
|
|
$
|
0.89
|
|
|
$
|
0.86
|
|
|
$
|
0.86
|
|
|
$
|
0.85
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, in 000s)
|
|
127,473
|
|
|
108,126
|
|
|
130,337
|
|
|
365,936
|
|
|
|
123,941
|
|
|
135,935
|
|
|
139,273
|
|
|
155,659
|
|
|
554,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST)(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
$
|
683
|
|
|
$
|
651
|
|
|
$
|
615
|
|
|
$
|
648
|
|
|
|
$
|
657
|
|
|
$
|
676
|
|
|
$
|
686
|
|
|
$
|
688
|
|
|
$
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Volume (ST)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
79,065
|
|
|
74,928
|
|
|
100,413
|
|
|
254,406
|
|
|
|
83,618
|
|
|
83,838
|
|
|
85,633
|
|
|
101,076
|
|
|
354,165
|
|
Coiled Products
|
|
40,361
|
|
|
49,403
|
|
|
35,477
|
|
|
125,241
|
|
|
|
38,322
|
|
|
25,656
|
|
|
41,892
|
|
|
46,682
|
|
|
152,552
|
|
Merchant Bar and Other
|
|
7,698
|
|
|
6,705
|
|
|
5,659
|
|
|
20,062
|
|
|
|
6,222
|
|
|
5,305
|
|
|
6,984
|
|
|
7,979
|
|
|
26,490
|
|
Total
|
|
127,124
|
|
|
131,036
|
|
|
141,549
|
|
|
399,709
|
|
|
|
128,162
|
|
|
114,799
|
|
|
134,509
|
|
|
155,737
|
|
|
533,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling Mill Utilization
|
|
72
|
%
|
|
76
|
%
|
|
69
|
%
|
|
73
|
%
|
|
|
65
|
%
|
|
67
|
%
|
|
72
|
%
|
|
76
|
%
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto Parts Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Car purchase volumes (000)
|
|
92
|
|
|
78
|
|
|
79
|
|
|
249
|
|
|
|
86
|
|
|
80
|
|
|
93
|
|
|
101
|
|
|
360
|
|
Number of self-service locations at end of quarter
|
|
56
|
|
|
56
|
|
|
55
|
|
|
55
|
|
|
|
56
|
|
|
55
|
|
|
55
|
|
|
56
|
|
|
56
|
|
(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, 2015
|
|
August 31, 2014
|
Assets
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,929
|
|
|
$
|
25,672
|
Accounts receivable, net
|
|
117,311
|
|
|
189,359
|
Inventories
|
|
197,008
|
|
|
216,172
|
Other current assets
|
|
39,089
|
|
|
32,729
|
Total current assets
|
|
362,337
|
|
|
463,932
|
|
|
|
|
|
Property, plant and equipment, net
|
|
432,309
|
|
|
523,433
|
|
|
|
|
|
Goodwill and other assets
|
|
215,653
|
|
|
367,845
|
|
|
|
|
|
Total assets
|
|
$
|
1,010,299
|
|
|
$
|
1,355,210
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term borrowings
|
|
$
|
637
|
|
|
$
|
523
|
Other current liabilities
|
|
126,848
|
|
|
176,747
|
Total current liabilities
|
|
127,485
|
|
|
177,270
|
|
|
|
|
|
Long-term debt
|
|
262,746
|
|
|
318,842
|
|
|
|
|
|
Other long-term liabilities
|
|
83,754
|
|
|
83,121
|
|
|
|
|
|
Equity:
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
532,066
|
|
|
770,784
|
Noncontrolling interests
|
|
4,248
|
|
|
5,193
|
Total equity
|
|
536,314
|
|
|
775,977
|
Total liabilities and equity
|
|
$
|
1,010,299
|
|
|
$
|
1,355,210
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures as
defined under SEC rules such as adjusted consolidated operating income
(loss), adjusted MRB operating income (loss), adjusted net income (loss)
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 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
|
|
|
3Q15
|
|
|
2Q15
|
|
|
3Q14
|
Consolidated Operating Income (Loss):
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
(4
|
)
|
|
|
$
|
(201
|
)
|
|
|
$
|
3
|
Goodwill impairment charge
|
|
—
|
|
|
|
141
|
|
|
|
—
|
Other asset impairment charges
|
|
1
|
|
|
|
44
|
|
|
|
1
|
Restructuring charges and other exit-related costs
|
|
6
|
|
|
|
5
|
|
|
|
3
|
Resale or modification of previously contracted shipment
|
|
—
|
|
|
|
1
|
|
|
|
—
|
Adjusted Operating Income (Loss)(1)
|
|
$
|
3
|
|
|
|
$
|
(9
|
)
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
MRB Operating Income (Loss):
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
$
|
1
|
|
|
|
$
|
(187
|
)
|
|
|
$
|
4
|
Goodwill impairment charge
|
|
—
|
|
|
|
141
|
|
|
|
—
|
Other asset impairment charges
|
|
1
|
|
|
|
43
|
|
|
|
—
|
Resale or modification of previously contracted shipment
|
|
—
|
|
|
|
1
|
|
|
|
—
|
Adjusted Operating Income (Loss)(1)
|
|
$
|
2
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) from continuing operations attributable to SSI
|
($ in millions)
|
|
Quarter
|
|
|
3Q15
|
|
|
2Q15
|
|
|
3Q14
|
Net Income (Loss) from continuing operations attributable to SSI
|
|
$
|
(8
|
)
|
|
|
$
|
(191
|
)
|
|
|
$
|
3
|
Goodwill impairment charge, net of tax
|
|
—
|
|
|
|
130
|
|
|
|
—
|
Other asset impairment charges, net of tax
|
|
1
|
|
|
|
44
|
|
|
|
—
|
Restructuring charges and other exit-related costs, net of tax
|
|
7
|
|
|
|
6
|
|
|
|
1
|
Resale or modification of previously contracted shipment, net of tax
|
|
—
|
|
|
|
3
|
|
|
|
—
|
Adjusted Net Income (Loss) from continuing operations attributable
to SSI(1)
|
|
$
|
—
|
|
|
|
$
|
(8
|
)
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
Diluted Earnings per share attributable to SSI
|
($ per share)
|
|
Quarter
|
|
|
3Q15
|
|
|
2Q15
|
|
|
3Q14
|
Net Income (Loss) per share attributable to SSI
|
|
$
|
(0.36
|
)
|
|
|
$
|
(7.24
|
)
|
|
|
$
|
0.12
|
|
Less: Loss per share from discontinued operations attributable to SSI
|
|
(0.05
|
)
|
|
|
(0.16
|
)
|
|
|
(0.01
|
)
|
Net Income (Loss) per share from continuing operations attributable
to SSI(1)
|
|
(0.31
|
)
|
|
|
(7.08
|
)
|
|
|
0.13
|
|
Goodwill impairment charge, net of tax, per share
|
|
—
|
|
|
|
4.80
|
|
|
|
—
|
|
Other asset impairment charges, net of tax, per share
|
|
0.05
|
|
|
|
1.63
|
|
|
|
0.01
|
|
Restructuring charges and other exit-related costs, net of tax, per
share
|
|
0.25
|
|
|
|
0.23
|
|
|
|
0.05
|
|
Resale or modification of previously contracted shipment, net of
tax, per share
|
|
—
|
|
|
|
0.12
|
|
|
|
—
|
|
Adjusted Diluted EPS from continuing operations attributable to SSI(1)
|
|
$
|
—
|
|
|
|
$
|
(0.30
|
)
|
|
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, Net of Cash
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
May 31, 2015
|
|
August 31, 2014
|
Short-term borrowings
|
|
$
|
637
|
|
|
$
|
523
|
Long-term debt, net of current maturities
|
|
262,746
|
|
|
318,842
|
Total debt
|
|
263,383
|
|
|
319,365
|
Less: cash and cash equivalents
|
|
8,929
|
|
|
25,672
|
Total debt, net of cash
|
|
$
|
254,454
|
|
|
$
|
293,693
|
|
|
|
|
|
|
|
|
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest manufacturers and
exporters of recycled metal products in the United States with operating
facilities located in 24 states, Puerto Rico and Western Canada.
Schnitzer 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 auto parts stores and steel
manufacturing. 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
initiatives; 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150630005444/en/
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]