Schnitzer Provides Preliminary Results for Fourth Quarter of Fiscal 2016
─ Fourth Quarter and Fiscal Year-End Earnings Conference Call October
25, 2016 11:30 a.m. Eastern ─
PORTLAND, Ore.--(BUSINESS WIRE)--Sep. 28, 2016--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) announced preliminary
results for its fourth quarter of fiscal 2016 ended August 31, 2016.
Schnitzer expects fourth quarter earnings per share from continuing
operations attributable to SSI to be in the range of $0.55 - $0.59,
including a benefit from an insurance reimbursement of approximately
$0.21 per share. Adjusted earnings per share from continuing operations
attributable to SSI are expected to be in the range of $0.56 - $0.60,
excluding asset impairment charges of $0.08, a net gain associated with
restructuring charges and other exit-related activities of approximately
$0.04, net benefits associated with contract settlements of
approximately $0.02 and income tax benefit associated with these
adjustments of $0.01. For the fourth quarter of fiscal 2015, reported
earnings per share from continuing operations attributable to SSI was
$0.42 and adjusted earnings per share from continuing operations
attributable to SSI was $0.31.
Our Auto and Metals Recycling (AMR) division is expected to generate
operating income in the range of $18 - $20 million, including an
estimated adverse impact of average inventory accounting of
approximately $3 million. This compares to operating income of $16
million in the fourth quarter of fiscal 2015 which included an estimated
adverse impact of $5 million from average inventory accounting. Average
ferrous selling prices are expected to be approximately 10% lower than
last year's fourth quarter and ferrous sales volumes are expected to be
down by approximately 2%. The adverse impact of lower ferrous prices and
volumes is expected to be offset by increased benefits from cost savings
and productivity initiatives.
Our Steel Manufacturing Business (SMB) is expected to generate operating
income of approximately $1 million and adjusted operating income of $3
million, which excludes a $2 million asset impairment charge. Compared
to the prior year fourth quarter, SMB's expected lower fourth quarter
reported and adjusted operating income reflects the adverse impact of
finished steel imports on average selling prices and volumes which were
down by approximately 12% and 15%, respectively.
Consolidated financial performance is expected to include a benefit in
Corporate of approximately $6 million from an insurance reimbursement of
legal and other defense costs which were incurred in previous years and
were associated with environmental matters. The Company expects to
report operating cash flow in a range of $45 - $50 million and to reduce
debt as of August 31, 2016 compared to May 31, 2016.
The preliminary, unaudited information provided above is based on the
Company’s current estimate of its financial results for the fourth
quarter ended August 31, 2016 and remains subject to change based on
management’s ongoing review of the Company’s fourth quarter financial
results and the completion of the Company’s annual audit.
The Company will report the financial results for its fourth quarter and
fiscal year ended August 31, 2016, on Tuesday, October 25, 2016. The
Company will webcast a conference call to discuss these results at 11:30
a.m. Eastern time on the same day. The webcast of the call and the
accompanying slide presentation may be accessed on Schnitzer’s website
under the Investor section Event Calendar at www.schnitzersteel.com/events.
The call will be hosted by Tamara L. Lundgren, President and Chief
Executive Officer, and Richard D. Peach, Senior Vice President, Chief
Financial Officer and Chief of Corporate Operations.
Replay Information
Toll Free Dial: (855) 859-2056
Toll Free International Dial: (404) 537-3406
Conference ID: 90026640
Replay Available: 10/25/2016 to 10/30/2016
Non-GAAP Financial Measures
This press release contains expected performance based on adjusted
earnings per share from continuing operations attributable to SSI and
adjusted SMB operating income, which are non-GAAP financial measures as
defined under SEC rules. As required by SEC rules, the Company has
provided reconciliations of these measures for each period discussed to
the most directly comparable U.S. GAAP measure. Management believes that
providing adjusted non-GAAP financial measures provides a meaningful
presentation of the Company's results from its business operations
excluding adjustments for goodwill impairment charges, other asset
impairment charges, the non-cash write-off of debt issuance costs as a
result of the renewal of the Company's credit facility in April 2016,
and restructuring charges and other exit-related activities, and income
tax expense associated with these adjustments, items which are not
related to the Company's underlying business operational performance,
and improves the period-to-period comparability of the Company's results
from its underlying business operations. These measures also exclude the
impact on operating results in fiscal 2015 from the resale or
modification of the terms, each at significantly lower prices, of
certain previously contracted bulk ferrous shipments for delivery during
the first and second quarters of fiscal 2015. Due to the sharp declines
in selling prices that occurred in 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 and recoveries resulting
from settlements with the original contract parties, which began in the
third quarter of fiscal 2016, are also excluded from the measures. 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.
Net (income) loss per share from continuing operations attributable
to SSI
($ in millions)
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4Q15
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Net income per share from continuing operations attributable to SSI
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$
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0.42
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Restructuring charges and other exit-related activities, per share
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0.04
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Income tax expense (benefit) allocated to adjustments, per share(1)
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(0.15
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)
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Adjusted diluted earnings per share from continuing operations
attributable to SSI
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$
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0.31
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(1) 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.
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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 and joint venture investment 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;
changes in the relative value of the U.S. dollar; 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,
equipment failures and facility damage on production; product liability
claims; the impact of legal proceedings and legal compliance; the
adverse impact of climate change; the impact of not realizing deferred
tax assets; the impact of tax increases and changes in tax rules; the
impact of a cybersecurity incident; the impact of instability in the
international markets to which we sell; costs associated with compliance
with environmental regulations; 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.
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 23 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. 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160928006294/en/
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Investor Relations: Alexandra
Deignan, 646-278-9711
www.schnitzersteel.com
[email protected]