Schnitzer Reports Second Quarter 2016 Financial Results and Third Quarter Outlook
PORTLAND, Ore.--(BUSINESS WIRE)--Apr. 6, 2016--
Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) today reported financial
results for its fiscal 2016 second quarter ended February 29, 2016.
Significantly weaker export demand in the latter half of the second
quarter led to ferrous and nonferrous sales prices falling to multi-year
lows during the quarter. The lower price environment adversely impacted
scrap flows and compressed metal spreads. At the end of February, export
ferrous sales prices for shipments in the third quarter began to improve
and continued to show strength through March.
Summary Consolidated Performance
For the second quarter fiscal 2016, the Company announced an adjusted
loss per share from continuing operations of $0.25. This compares to
second quarter fiscal 2015 adjusted loss per share from continuing
operations of $0.28. The improvement in adjusted loss per share from
continuing operations compared to the second quarter of fiscal 2015 was
primarily due to higher AMR adjusted operating income and decreased
corporate expense, partially offset by lower SMB performance. Adjusted
earnings per share excludes the impact of goodwill and other asset
impairment charges, restructuring and other exit-related costs and, in
the second quarter of fiscal 2015, the impact of reselling or modifying
the terms of certain previously contracted bulk ferrous shipments.
The Company reported a loss per share from continuing operations of
$1.48 for the second quarter of fiscal 2016. This includes non-cash
impairment charges of $9 million, or $0.33 per share, to the carrying
value of the goodwill in the Auto and Metals Recycling Business, $18
million of other asset impairments, or $0.68 per share, and $5 million
in restructuring and exit-related costs, or $0.23 per share,
representing a combined $1.23 per share in the second quarter. This
compares to a reported loss per share from continuing operations of
$7.08 in the second quarter of fiscal 2015. For a reconciliation to the
adjusted results, please see a description of the non-GAAP financial
measures provided after the financial statements.
“The combination of weak export demand, constrained supply conditions,
seasonal slowdowns and the higher level of steel imports contributed to
a challenging second quarter. Our focus on productivity and cost
reduction initiatives enabled us to improve our results compared to last
year’s second quarter in an environment in which our average ferrous
sales prices were down over 40% and near ten-year lows,” commented
Tamara Lundgren, President and Chief Executive Officer. “As market
conditions strengthen, we anticipate these productivity and cost
reduction initiatives will contribute to expanded margins and improved
financial performance,” added Lundgren.
Third Quarter Outlook
Although markets remain volatile, for the third quarter, the Company
currently anticipates ferrous sales volumes to increase approximately
10% sequentially, subject to timing of shipments. As a result, AMR’s
operating income for the third quarter of fiscal 2016 is expected to be
approximately double the adjusted operating income in the third quarter
of fiscal 2015 of $5.5 million, reflecting stronger ferrous sales prices
and retail activity compared to the second quarter, benefits from higher
cost savings and no material impact from average inventory accounting.
SMB is expected to deliver positive operating income on higher sales
volumes and additional cost reductions.
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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2Q16
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2Q15
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Change
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1Q16
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Change
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Revenues
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$
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289
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$
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437
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(34
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)%
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$
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321
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(10
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)%
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Operating Loss
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$
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(37
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)
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$
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(201
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)
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(82
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)%
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$
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(4
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)
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NM
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Goodwill impairment charge
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9
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141
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(94
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)%
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—
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NM
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Other asset impairment charges
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18
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44
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(58
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)%
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—
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NM
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Restructuring charges and other exit-related costs
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5
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5
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(2
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)%
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2
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175
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%
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Resale or modification of previously contracted shipments
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—
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1
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NM
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—
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NM
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Adjusted Operating Loss(1)(3)
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$
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(4
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)
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$
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(9
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(52
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)%
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$
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(2
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)
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113
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%
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Net Loss attributable to SSI
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$
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(41
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)
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$
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(196
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(79
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)%
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$
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(5
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)
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679
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%
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Net Loss from continuing operations attributable to SSI
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$
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(40
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$
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(191
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(79
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)%
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$
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(5
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)
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669
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%
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Adjusted Net Loss from continuing operations attributable to SSI(2)
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$
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(7
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)
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$
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(8
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(11
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)%
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$
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(4
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)
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87
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%
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Net Loss per share attributable to SSI
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$
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(1.52
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)
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$
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(7.24
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)
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(79
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)%
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$
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(0.20
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)
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677
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%
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Net Loss per share from continuing operations attributable to SSI
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$
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(1.48
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)
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$
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(7.08
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)
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(79
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)%
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$
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(0.19
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)
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667
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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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(0.25
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)
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$
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(0.28
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)
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(12
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)%
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$
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(0.13
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)
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86
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%
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(1) Adjusted operating income excludes the impact of goodwill and
other asset impairment charges, restructuring, and other
exit-related costs, and, in the second quarter of fiscal 2015, 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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Auto and Metals Recycling
AMR segment results and operating statistics reflect integrated auto and
metals recycling operations for all periods presented.
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Summary of Auto and Metals Recycling 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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2Q16
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2Q15
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Change
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1Q16
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Change
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Total Revenues
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$
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250
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$
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389
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(36
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)%
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$
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273
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(8
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)%
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Ferrous Revenues
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$
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140
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$
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252
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(44
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)%
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$
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163
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(14
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)%
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Ferrous Volumes
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737
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788
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(6
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)%
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805
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(8
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)%
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Avg. Net Ferrous Sales Prices ($/LT)(1)
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$
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169
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$
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290
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(42
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)%
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$
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179
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(6
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)%
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Nonferrous Revenues
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$
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84
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$
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106
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(21
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)%
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$
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81
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4
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%
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Nonferrous Volumes
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124
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124
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—
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%
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111
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11
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%
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Avg. Net Nonferrous Sales Prices ($/lb)(1)
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$
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0.59
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$
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0.77
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(23
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)%
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$
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0.63
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(6
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)%
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Cars Purchased for Retail (000s)
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70
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78
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(10
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)%
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77
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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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(26
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)
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$
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(189
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)
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(86
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)%
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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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(36
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)
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$
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(239
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)
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(85
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)%
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$
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3
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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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(3
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)
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NM
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$
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2
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(57
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)%
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Adjusted 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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)
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NM
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$
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3
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(53
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)%
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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 impairment charges, restructuring and other exit-related
costs and, in the second quarter of fiscal 2015, 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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Volumes: Ferrous sales volumes in the second quarter
declined 8% from the first quarter, primarily due to weaker global
demand and the impact of the lower price environment on supply flows.
Improvements in market conditions since late February are expected to
benefit shipments in the third quarter. Nonferrous sales volumes
increased 11% sequentially, reflecting the timing of shipments of
processed material. Cars purchased for AMR’s auto stores decreased 9%
from the first quarter due to a continuation of tight supply conditions
driven by the lower commodity price environment.
Export customers accounted for 62% of total ferrous sales volumes in the
second quarter. Our ferrous and nonferrous products were exported to 14
countries, with India, Turkey and Thailand the top export destinations
for ferrous shipments.
Pricing: Export demand weakened in the latter half of the
quarter which led to declines in ferrous selling prices sequentially,
reaching near ten-year lows. Average ferrous net selling prices for
shipments during the quarter decreased $10 per ton, or 6% from first
quarter levels. Nonferrous prices weakened 6% sequentially with market
prices for copper and aluminum reaching seven-year lows in the second
quarter.
Margins: Adjusted operating income of $1 per ferrous ton
in the second quarter decreased sequentially due to the lower price
environment which adversely impacted the spread between direct purchase
costs and selling prices of recycled metal and also further constrained
the supply of scrap metal, including end-of-life vehicles. Benefits from
cost reductions and productivity initiatives were more than offset by
the margin compression created by the weak market environment.
Steel Manufacturing Business
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Summary of Steel Manufacturing Business Results
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($ in millions, except selling prices; volume 000s of short tons)
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Quarter
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2Q16
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2Q15
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Change
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1Q16
|
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Change
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Revenues
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$
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58
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$
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93
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|
|
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(37
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)%
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$
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72
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|
|
|
(19
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)%
|
|
Operating Income (Loss)
|
|
|
$
|
(1
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)
|
|
|
$
|
4
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|
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|
NM
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$
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3
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|
NM
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Avg. Net Sales Prices ($/ST)
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$
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504
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$
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658
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(23
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)%
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$
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554
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|
|
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(9
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)%
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|
Finished Goods Sales Volumes
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|
|
110
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|
|
|
|
129
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|
|
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(15
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)%
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|
|
|
123
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|
|
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(11
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)%
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|
Rolling Mill Utilization
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|
|
61
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%
|
|
|
|
76
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%
|
|
|
|
|
|
|
68
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%
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|
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|
Sales Volumes: Finished steel sales volumes were 15% lower
as compared to the second quarter of fiscal 2015 primarily due to
increased competition from imported steel products. Lower rolling mill
utilization reflected reduced production levels due to the softer sales
environment and the planned maintenance outage.
Pricing: Average net sales prices for finished steel
products decreased 23% from the prior year quarter and 9% from first
quarter levels, reflecting continued pressure on finished steel selling
prices from reduced raw material costs and lower priced steel imports.
Margins: Operating performance during the quarter was
slightly below break-even levels. Compared to the prior year, results
were adversely impacted by substantially lower volumes and selling
prices for finished steel.
Corporate Items
During the second quarter, strong focus on cost efficiency and
productivity initiatives generated a $9 million reduction, or 20%, in
consolidated selling, general and administrative costs as compared to
the prior year, the majority of which resulted from the targeted savings
programs announced in fiscal 2015.
New savings initiatives of $30 million were identified in the second
quarter which are expected to generate approximately $13 million in
benefits in the second half of fiscal 2016, with the balance expected to
be delivered by the end of fiscal 2017. The new savings are expected to
result from a combination of reduced staffing levels, the closure of
four feeder yards, increased efficiencies in procurement, and
streamlining of administrative and supporting services. Approximately
80% of the new savings are expected to be realized at AMR and the
balance is expected to result from Corporate and SMB. The Company
incurred restructuring charges and other exit-related costs of $5
million in the second quarter of fiscal 2016.
The Company generated operating cash flow of $7 million in the second
quarter of fiscal 2016 and returned capital to shareholders through its
88th consecutive quarterly dividend. Net debt at the end of the second
quarter was $189 million. (See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.)
The Company’s effective tax rate was an expense of 3.3% in the second
quarter which was lower than the federal statutory rate primarily due to
projected changes in the Company’s full valuation allowance positions,
partially offset by increases in deferred tax liabilities.
Analysts’ Conference Call: Second Quarter of Fiscal 2016
A conference call and slide presentation to discuss results will be held
today, April 6, 2016, at 11:00 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 29,
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November 30,
|
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|
February 28,
|
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February 29,
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February 28,
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|
|
|
2016
|
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|
2015
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|
2015
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2016
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2015
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REVENUES:
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Auto and Metal Recycling:
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|
|
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|
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|
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|
|
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Ferrous sales
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$
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140,126
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$
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163,413
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|
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$
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251,501
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$
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303,539
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$
|
599,871
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Nonferrous sales
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|
84,130
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|
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|
80,896
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|
|
|
|
106,225
|
|
|
|
|
165,025
|
|
|
|
|
234,610
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|
|
Other sales
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|
|
|
25,556
|
|
|
|
|
28,656
|
|
|
|
|
31,331
|
|
|
|
|
54,213
|
|
|
|
|
68,264
|
|
|
Total AMR Sales
|
|
|
|
249,812
|
|
|
|
|
272,965
|
|
|
|
|
389,057
|
|
|
|
|
522,777
|
|
|
|
|
902,745
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|
|
Steel Manufacturing Business
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|
|
|
58,391
|
|
|
|
|
71,901
|
|
|
|
|
93,126
|
|
|
|
|
130,292
|
|
|
|
|
188,344
|
|
|
Intercompany sales and eliminations
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|
|
|
(19,126
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)
|
|
|
|
(23,668
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)
|
|
|
|
(44,734
|
)
|
|
|
|
(42,794
|
)
|
|
|
|
(100,016
|
)
|
|
Total Revenues
|
|
|
$
|
289,077
|
|
|
|
$
|
321,198
|
|
|
|
$
|
437,449
|
|
|
|
$
|
610,275
|
|
|
|
$
|
991,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Auto and Metals Recycling(1)
|
|
|
$
|
874
|
|
|
|
$
|
2,036
|
|
|
|
$
|
(3,179
|
)
|
|
|
$
|
2,910
|
|
|
|
$
|
7,131
|
|
|
Steel Manufacturing Business
|
|
|
|
(1,202
|
)
|
|
|
|
2,754
|
|
|
|
|
3,799
|
|
|
|
|
1,552
|
|
|
|
|
10,006
|
|
|
Adjusted segment operating income (loss)(2)
|
|
|
|
(328
|
)
|
|
|
|
4,790
|
|
|
|
|
620
|
|
|
|
|
4,462
|
|
|
|
|
17,137
|
|
|
Corporate expense
|
|
|
|
(6,315
|
)
|
|
|
|
(8,299
|
)
|
|
|
|
(8,488
|
)
|
|
|
|
(14,616
|
)
|
|
|
|
(17,480
|
)
|
|
Intercompany eliminations
|
|
|
|
2,161
|
|
|
|
|
1,406
|
|
|
|
|
(1,543
|
)
|
|
|
|
3,569
|
|
|
|
|
(2,109
|
)
|
|
Adjusted operating loss(1)
|
|
|
|
(4,482
|
)
|
|
|
|
(2,103
|
)
|
|
|
|
(9,411
|
)
|
|
|
|
(6,585
|
)
|
|
|
|
(2,452
|
)
|
|
Goodwill impairment charge
|
|
|
|
(8,845
|
)
|
|
|
|
—
|
|
|
|
|
(141,021
|
)
|
|
|
|
(8,845
|
)
|
|
|
|
(141,021
|
)
|
|
Other asset impairment charges
|
|
|
|
(18,458
|
)
|
|
|
|
—
|
|
|
|
|
(43,838
|
)
|
|
|
|
(18,458
|
)
|
|
|
|
(43,838
|
)
|
|
Restructuring charges and other exit-related costs
|
|
|
|
(5,291
|
)
|
|
|
|
(1,925
|
)
|
|
|
|
(5,394
|
)
|
|
|
|
(7,216
|
)
|
|
|
|
(5,987
|
)
|
|
Resale or modification of previously contracted shipments
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1,347
|
)
|
|
|
|
—
|
|
|
|
|
(6,928
|
)
|
|
Total operating loss
|
|
|
$
|
(37,076
|
)
|
|
|
$
|
(4,028
|
)
|
|
|
$
|
(201,011
|
)
|
|
|
$
|
(41,104
|
)
|
|
|
$
|
(200,226
|
)
|
|
(1) Adjusted operating income (loss) 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 (loss) does not include the impact of
restructuring charges and other exit-related costs.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
|
February 29,
|
|
|
November 30,
|
|
|
February 28,
|
|
|
February 29,
|
|
|
February 28,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Revenues
|
|
|
$
|
289,077
|
|
|
|
$
|
321,198
|
|
|
|
$
|
437,449
|
|
|
|
$
|
610,275
|
|
|
|
$
|
991,073
|
|
|
Cost of goods sold
|
|
|
|
259,670
|
|
|
|
|
284,854
|
|
|
|
|
406,649
|
|
|
|
|
544,524
|
|
|
|
|
914,664
|
|
|
Selling, general and administrative
|
|
|
|
33,599
|
|
|
|
|
38,418
|
|
|
|
|
42,167
|
|
|
|
|
72,017
|
|
|
|
|
86,898
|
|
|
(Income) loss from joint ventures
|
|
|
|
290
|
|
|
|
|
29
|
|
|
|
|
(609
|
)
|
|
|
|
319
|
|
|
|
|
(1,109
|
)
|
|
Goodwill impairment charge
|
|
|
|
8,845
|
|
|
|
|
—
|
|
|
|
|
141,021
|
|
|
|
|
8,845
|
|
|
|
|
141,021
|
|
|
Other asset impairment charges
|
|
|
|
18,458
|
|
|
|
|
—
|
|
|
|
|
43,838
|
|
|
|
|
18,458
|
|
|
|
|
43,838
|
|
|
Restructuring charges and other exit-related costs
|
|
|
|
5,291
|
|
|
|
|
1,925
|
|
|
|
|
5,394
|
|
|
|
|
7,216
|
|
|
|
|
5,987
|
|
|
Operating loss
|
|
|
|
(37,076
|
)
|
|
|
|
(4,028
|
)
|
|
|
|
(201,011
|
)
|
|
|
|
(41,104
|
)
|
|
|
|
(200,226
|
)
|
|
Interest expense
|
|
|
|
(2,015
|
)
|
|
|
|
(1,859
|
)
|
|
|
|
(2,295
|
)
|
|
|
|
(3,874
|
)
|
|
|
|
(4,669
|
)
|
|
Other income, net
|
|
|
|
438
|
|
|
|
|
407
|
|
|
|
|
1,993
|
|
|
|
|
845
|
|
|
|
|
2,925
|
|
|
Loss from continuing operations before income taxes
|
|
|
|
(38,653
|
)
|
|
|
|
(5,480
|
)
|
|
|
|
(201,313
|
)
|
|
|
|
(44,133
|
)
|
|
|
|
(201,970
|
)
|
|
Income tax benefit (expense)
|
|
|
|
(1,293
|
)
|
|
|
|
578
|
|
|
|
|
9,673
|
|
|
|
|
(715
|
)
|
|
|
|
9,566
|
|
|
Loss from continuing operations
|
|
|
|
(39,946
|
)
|
|
|
|
(4,902
|
)
|
|
|
|
(191,640
|
)
|
|
|
|
(44,848
|
)
|
|
|
|
(192,404
|
)
|
|
Loss from discontinued operations, net of tax
|
|
|
|
(1,024
|
)
|
|
|
|
(65
|
)
|
|
|
|
(4,242
|
)
|
|
|
|
(1,089
|
)
|
|
|
|
(5,080
|
)
|
|
Net loss
|
|
|
|
(40,970
|
)
|
|
|
|
(4,967
|
)
|
|
|
|
(195,882
|
)
|
|
|
|
(45,937
|
)
|
|
|
|
(197,484
|
)
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
|
(275
|
)
|
|
|
|
(329
|
)
|
|
|
|
240
|
|
|
|
|
(604
|
)
|
|
|
|
(631
|
)
|
|
Net loss attributable to SSI
|
|
|
$
|
(41,245
|
)
|
|
|
$
|
(5,296
|
)
|
|
|
$
|
(195,642
|
)
|
|
|
$
|
(46,541
|
)
|
|
|
$
|
(198,115
|
)
|
|
Net loss per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations attributable to SSI
|
|
|
$
|
(1.48
|
)
|
|
|
$
|
(0.19
|
)
|
|
|
$
|
(7.08
|
)
|
|
|
$
|
(1.67
|
)
|
|
|
$
|
(7.15
|
)
|
|
Loss per share from discontinued operations attributable to SSI
|
|
|
|
(0.04
|
)
|
|
|
|
—
|
|
|
|
|
(0.16
|
)
|
|
|
|
(0.04
|
)
|
|
|
|
(0.19
|
)
|
|
Net loss per share attributable to SSI(1)
|
|
|
$
|
(1.52
|
)
|
|
|
$
|
(0.20
|
)
|
|
|
$
|
(7.24
|
)
|
|
|
$
|
(1.71
|
)
|
|
|
$
|
(7.34
|
)
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing operations attributable to SSI
|
|
|
$
|
(1.48
|
)
|
|
|
$
|
(0.19
|
)
|
|
|
$
|
(7.08
|
)
|
|
|
$
|
(1.67
|
)
|
|
|
$
|
(7.15
|
)
|
|
Loss per share from discontinued operations attributable to SSI
|
|
|
|
(0.04
|
)
|
|
|
|
—
|
|
|
|
|
(0.16
|
)
|
|
|
|
(0.04
|
)
|
|
|
|
(0.19
|
)
|
|
Net loss per share attributable to SSI(1)
|
|
|
$
|
(1.52
|
)
|
|
|
$
|
(0.20
|
)
|
|
|
$
|
(7.24
|
)
|
|
|
$
|
(1.71
|
)
|
|
|
$
|
(7.34
|
)
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
27,201
|
|
|
|
|
27,121
|
|
|
|
|
27,020
|
|
|
|
|
27,178
|
|
|
|
|
26,982
|
|
|
Diluted
|
|
|
|
27,201
|
|
|
|
|
27,121
|
|
|
|
|
27,020
|
|
|
|
|
27,178
|
|
|
|
|
26,982
|
|
|
Dividends declared per common share
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.3750
|
|
|
|
$
|
0.3750
|
|
|
(1) May not foot due to rounding.
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
1Q16
|
|
|
2Q16
|
|
|
1H16
|
|
|
1Q15
|
|
|
2Q15
|
|
|
3Q15
|
|
|
4Q15
|
|
|
2015
|
|
Auto and Metals Recycling(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous Selling Prices ($/LT)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
$
|
180
|
|
|
|
$
|
161
|
|
|
|
$
|
170
|
|
|
|
$
|
330
|
|
|
|
$
|
293
|
|
|
|
$
|
235
|
|
|
|
$
|
239
|
|
|
|
$
|
275
|
|
|
Export
|
|
|
$
|
179
|
|
|
|
$
|
174
|
|
|
|
$
|
177
|
|
|
|
$
|
319
|
|
|
|
$
|
286
|
|
|
|
$
|
236
|
|
|
|
$
|
225
|
|
|
|
$
|
265
|
|
|
Average
|
|
|
$
|
179
|
|
|
|
$
|
169
|
|
|
|
$
|
175
|
|
|
|
$
|
323
|
|
|
|
$
|
290
|
|
|
|
$
|
235
|
|
|
|
$
|
231
|
|
|
|
$
|
269
|
|
|
Ferrous Sales Volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
|
290,170
|
|
|
|
|
282,200
|
|
|
|
|
572,370
|
|
|
|
|
379,770
|
|
|
|
|
372,408
|
|
|
|
|
342,812
|
|
|
|
|
376,910
|
|
|
|
|
1,471,900
|
|
|
Export
|
|
|
|
515,109
|
|
|
|
|
454,924
|
|
|
|
|
970,033
|
|
|
|
|
604,683
|
|
|
|
|
415,765
|
|
|
|
|
663,456
|
|
|
|
|
552,573
|
|
|
|
|
2,236,477
|
|
|
Total
|
|
|
|
805,279
|
|
|
|
|
737,124
|
|
|
|
|
1,542,403
|
|
|
|
|
984,453
|
|
|
|
|
788,173
|
|
|
|
|
1,006,268
|
|
|
|
|
929,483
|
|
|
|
|
3,708,377
|
|
|
Nonferrous Average Price ($/LB)(2)(3)
|
|
|
$
|
0.63
|
|
|
|
$
|
0.59
|
|
|
|
$
|
0.61
|
|
|
|
$
|
0.81
|
|
|
|
$
|
0.77
|
|
|
|
$
|
0.71
|
|
|
|
$
|
0.71
|
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous Sales Volume (LB, 000s)(3)
|
|
|
|
111,077
|
|
|
|
|
123,675
|
|
|
|
|
234,753
|
|
|
|
|
142,661
|
|
|
|
|
123,672
|
|
|
|
|
143,073
|
|
|
|
|
176,029
|
|
|
|
|
585,435
|
|
|
Car Purchase Volume (000s)(4)
|
|
|
|
77
|
|
|
|
|
70
|
|
|
|
|
147
|
|
|
|
|
92
|
|
|
|
|
78
|
|
|
|
|
79
|
|
|
|
|
88
|
|
|
|
|
337
|
|
|
Auto Stores at End of Quarter
|
|
|
|
55
|
|
|
|
|
55
|
|
|
|
|
55
|
|
|
|
|
56
|
|
|
|
|
56
|
|
|
|
|
55
|
|
|
|
|
55
|
|
|
|
|
55
|
|
|
Steel Manufacturing Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Prices ($/ST)(2)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
$
|
554
|
|
|
|
$
|
504
|
|
|
|
$
|
530
|
|
|
|
$
|
688
|
|
|
|
$
|
658
|
|
|
|
$
|
618
|
|
|
|
$
|
600
|
|
|
|
$
|
639
|
|
|
Sales Volume (ST)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
|
|
85,899
|
|
|
|
|
71,935
|
|
|
|
|
157,834
|
|
|
|
|
79,065
|
|
|
|
|
74,928
|
|
|
|
|
100,413
|
|
|
|
|
94,773
|
|
|
|
|
349,179
|
|
|
Coiled Products
|
|
|
|
32,482
|
|
|
|
|
33,742
|
|
|
|
|
66,224
|
|
|
|
|
40,361
|
|
|
|
|
49,403
|
|
|
|
|
35,477
|
|
|
|
|
45,176
|
|
|
|
|
170,417
|
|
|
Merchant Bar and Other
|
|
|
|
4,757
|
|
|
|
|
3,974
|
|
|
|
|
8,731
|
|
|
|
|
6,245
|
|
|
|
|
4,567
|
|
|
|
|
4,780
|
|
|
|
|
4,796
|
|
|
|
|
20,388
|
|
|
Total
|
|
|
|
123,138
|
|
|
|
|
109,651
|
|
|
|
|
232,789
|
|
|
|
|
125,671
|
|
|
|
|
128,898
|
|
|
|
|
140,670
|
|
|
|
|
144,745
|
|
|
|
|
539,984
|
|
|
Rolling Mill Utilization
|
|
|
|
68
|
%
|
|
|
|
61
|
%
|
|
|
|
64
|
%
|
|
|
|
72
|
%
|
|
|
|
76
|
%
|
|
|
|
69
|
%
|
|
|
|
74
|
%
|
|
|
|
73
|
%
|
|
(1) Ferrous and nonferrous volume and price data has been recast to
reflect the combined auto and metals recycling operations for all
periods presented.
|
|
(2) Price information is shown after a reduction for the cost of
freight incurred to deliver the product to the customer.
|
|
(3) Excludes PGM metals in catalytic converters.
|
|
(4) Cars purchased by auto stores only.
|
|
(5) Excludes billet sales.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
February 29, 2016
|
|
|
August 31, 2015
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
8,940
|
|
|
$
|
22,755
|
|
Accounts receivable, net
|
|
|
|
81,159
|
|
|
|
111,492
|
|
Inventories
|
|
|
|
146,030
|
|
|
|
156,532
|
|
Other current assets
|
|
|
|
24,843
|
|
|
|
31,586
|
|
Total current assets
|
|
|
|
260,972
|
|
|
|
322,365
|
|
Property, plant and equipment, net
|
|
|
|
393,768
|
|
|
|
427,554
|
|
Goodwill and other assets
|
|
|
|
197,433
|
|
|
|
212,380
|
|
Total assets
|
|
|
$
|
852,173
|
|
|
$
|
962,299
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
$
|
620
|
|
|
$
|
584
|
|
Other current liabilities
|
|
|
|
104,713
|
|
|
|
119,862
|
|
Total current liabilities
|
|
|
|
105,333
|
|
|
|
120,446
|
|
Long-term debt
|
|
|
|
197,219
|
|
|
|
227,572
|
|
Other long-term liabilities
|
|
|
|
72,549
|
|
|
|
75,730
|
|
Equity:
|
|
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
|
|
473,423
|
|
|
|
534,535
|
|
Noncontrolling interests
|
|
|
|
3,649
|
|
|
|
4,016
|
|
Total equity
|
|
|
|
477,072
|
|
|
|
538,551
|
|
Total liabilities and equity
|
|
|
$
|
852,173
|
|
|
$
|
962,299
|
|
|
|
|
|
|
|
|
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 AMR operating income (loss), adjusted net 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
|
|
|
|
|
2Q16
|
|
|
1Q16
|
|
|
2Q15
|
|
|
3Q15
|
|
Consolidated Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Loss
|
|
|
$
|
(37
|
)
|
|
|
$
|
(4
|
)
|
|
|
$
|
(201
|
)
|
|
|
$
|
(4
|
)
|
|
Goodwill impairment charge
|
|
|
|
9
|
|
|
|
|
—
|
|
|
|
|
141
|
|
|
|
|
—
|
|
|
Other asset impairment charges
|
|
|
|
18
|
|
|
|
|
—
|
|
|
|
|
44
|
|
|
|
|
1
|
|
|
Restructuring charges and other exit-related costs
|
|
|
|
5
|
|
|
|
|
2
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
Resale or modification of previously contracted shipment
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
Adjusted Operating Income (Loss)(1)
|
|
|
$
|
(4
|
)
|
|
|
$
|
(2
|
)
|
|
|
$
|
(9
|
)
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR Operating Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
$
|
(26
|
)
|
|
|
$
|
2
|
|
|
|
$
|
(189
|
)
|
|
|
$
|
4
|
|
|
Goodwill impairment charge
|
|
|
|
9
|
|
|
|
|
—
|
|
|
|
|
141
|
|
|
|
|
—
|
|
|
Other asset impairment charges
|
|
|
|
18
|
|
|
|
|
—
|
|
|
|
|
43
|
|
|
|
|
1
|
|
|
Resale or modification of previously contracted shipment
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
Adjusted Operating Income (Loss)(1)
|
|
|
$
|
1
|
|
|
|
$
|
2
|
|
|
|
$
|
(3
|
)
|
|
|
$
|
6
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
|
|
|
Net Loss from continuing operations attributable to SSI
|
|
|
|
|
($ in millions)
|
|
|
Quarter
|
|
|
|
|
2Q16
|
|
|
1Q16
|
|
|
2Q15
|
|
|
3Q15
|
|
Net Loss from continuing operations attributable to SSI
|
|
|
$
|
(40
|
)
|
|
|
$
|
(5
|
)
|
|
|
$
|
(191
|
)
|
|
|
$
|
(8
|
)
|
|
Goodwill impairment charge, net of tax(2)
|
|
|
|
9
|
|
|
|
|
—
|
|
|
|
|
130
|
|
|
|
|
—
|
|
|
Other asset impairment charges, net of tax(2)
|
|
|
|
18
|
|
|
|
|
—
|
|
|
|
|
44
|
|
|
|
|
1
|
|
|
Restructuring charges and other exit-related costs, net of tax(2)
|
|
|
|
6
|
|
|
|
|
2
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
Resale or modification of previously contracted shipment, net of tax(2)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3
|
|
|
|
|
—
|
|
|
Adjusted Net Loss from continuing operations attributable to SSI(1)
|
|
|
$
|
(7
|
)
|
|
|
$
|
(4
|
)
|
|
|
$
|
(8
|
)
|
|
|
$
|
—
|
|
|
(1) May not foot due to rounding.
|
|
(2) Income tax allocated to adjustments reconciling Reported and
Adjusted net income (loss) from continuing operations attributable
to SSI and diluted earnings per share from continuing operations
attributable to SSI is determined based on a tax provision
calculated with and without the adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per share attributable to SSI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ per share)
|
|
|
Quarter
|
|
|
|
|
2Q16
|
|
|
1Q16
|
|
|
2Q15
|
|
|
3Q15
|
|
Net Loss per share attributable to SSI
|
|
|
$
|
(1.52
|
)
|
|
|
$
|
(0.20
|
)
|
|
|
$
|
(7.24
|
)
|
|
|
$
|
(0.36
|
)
|
|
Less: Loss per share from discontinued operations attributable to SSI
|
|
|
|
(0.04
|
)
|
|
|
|
—
|
|
|
|
|
(0.16
|
)
|
|
|
|
(0.05
|
)
|
|
Net Loss per share from continuing operations attributable to SSI(1)
|
|
|
|
(1.48
|
)
|
|
|
|
(0.19
|
)
|
|
|
|
(7.08
|
)
|
|
|
|
(0.31
|
)
|
|
Goodwill impairment charge, net of tax, per share(2)
|
|
|
|
0.33
|
|
|
|
|
—
|
|
|
|
|
4.83
|
|
|
|
|
—
|
|
|
Other asset impairment charges, net of tax, per share(2)
|
|
|
|
0.68
|
|
|
|
|
—
|
|
|
|
|
1.63
|
|
|
|
|
0.05
|
|
|
Restructuring charges and other exit-related costs, net of tax, per
share(2)
|
|
|
|
0.23
|
|
|
|
|
0.06
|
|
|
|
|
0.23
|
|
|
|
|
0.25
|
|
|
Resale or modification of previously contracted shipment, net of
tax, per share(2)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.12
|
|
|
|
|
—
|
|
|
Adjusted Diluted EPS from continuing operations attributable to SSI(1)
|
|
|
$
|
(0.25
|
)
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
—
|
|
|
(1) May not foot due to rounding.
|
|
(2) Income tax allocated to adjustments reconciling Reported and
Adjusted net income (loss) from continuing operations attributable
to SSI and diluted earnings per share from continuing operations
attributable to SSI is determined based on a tax provision
calculated with and without the adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
Debt, Net of Cash
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
February 29, 2016
|
|
|
August 31, 2015
|
|
Short-term borrowings
|
|
|
$
|
620
|
|
|
$
|
584
|
|
Long-term debt, net of current maturities
|
|
|
|
197,219
|
|
|
|
227,572
|
|
Total debt
|
|
|
|
197,839
|
|
|
|
228,156
|
|
Less: cash and cash equivalents
|
|
|
|
8,940
|
|
|
|
22,755
|
|
Total debt, net of cash
|
|
|
$
|
188,899
|
|
|
$
|
205,401
|
|
|
|
|
|
|
|
|
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 future events or our expectations, intentions, beliefs and
strategies regarding the future, which may include statements regarding
trends, cyclicality and changes in the markets we sell into; expected
results, including pricing, sales volumes and profitability; strategic
direction; changes to manufacturing and production processes; the cost
of and the status of any agreements or actions related to our compliance
with environmental and other laws; expected tax rates, deductions and
credits; the realization of deferred tax assets; planned capital
expenditures; liquidity positions; ability to generate cash from
continuing operations; the potential impact of adopting new accounting
pronouncements; obligations under our retirement plans; benefits,
savings or additional costs from business realignment, cost containment
and productivity improvement programs; and the adequacy of accruals.
Forward-looking statements by their nature address matters that are, to
different degrees, uncertain, and often contain words such as
“believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,”
“evaluates,” “may,” “will,” “could,” “opinions,” “forecasts,”
“projects,” “plans,” “future,” “forward,” “potential,” “probable,” and
similar expressions. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking. 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” in our most recent annual report on
Form 10-K and in our quarterly reports on Form 10-Q. Examples of these
risks include: potential environmental cleanup costs related to the
Portland Harbor Superfund site; the cyclicality and 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; imbalances in supply and demand conditions in the
global steel industry; the impact of goodwill impairment charges; the
impact of long-lived asset impairment charges; the realization of
expected benefits or cost reductions associated with productivity
improvement and restructuring initiatives; difficulties associated with
acquisitions and integration of acquired businesses; customer
fulfillment of 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; inability to realize
expected benefits from investments in technology; freight rates and the
availability of transportation; the 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/20160406005456/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]