Schnitzer Announces First Quarter Fiscal 2018 Preliminary Results and Earnings Date
─ First Quarter Earnings Conference Call 11:30 a.m. Eastern January
9, 2018 ─
PORTLAND, Ore.--(BUSINESS WIRE)--Dec. 19, 2017--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today announced
preliminary results for its first quarter of fiscal 2018 ended November
30, 2017. Schnitzer expects first quarter earnings per share from
continuing operations to be in the range of $0.60 - $0.64 and adjusted
earnings per share to be in the range of $0.59 - $0.63, both of which
are expected to include an adverse impact of $0.14 per share related to
a legacy environmental liability of $4 million. This expected
performance compares favorably to results in the prior year first
quarter of a loss per share of $0.05 and adjusted loss per share of
$0.03. For a reconciliation of adjusted results to U.S. GAAP, see the
table provided in the Non-GAAP Financial Measures section.
For the first quarter of fiscal 2018, Auto and Metals Recycling (AMR) is
expected to achieve operating income in the range of $33 - $35 million,
or operating income per ferrous ton of $42 - $44, both of which are more
than double the prior year first quarter's results. Ferrous and
nonferrous sales volumes are expected to increase by approximately 11%
and 3%, respectively, compared to the prior year first quarter, and
average ferrous and nonferrous selling prices are expected to increase
by approximately 51% and 26%, respectively, compared to the same period.
AMR's first quarter performance is expected to benefit from higher
selling prices, operating leverage from increased supply flows, and
sustained contributions from productivity initiatives. While there was
price volatility during the quarter, AMR's first quarter results are
expected to include an immaterial impact from average inventory
accounting, which compares to an adverse impact of $2 million in the
prior year first quarter.
Cascade Steel and Scrap (CSS) is expected to generate operating income
of approximately $8 million, reflecting a significant improvement from
the first quarter of fiscal 2017 operating loss of $3 million, which
included an adverse impact of $2.5 million from downtime associated with
major equipment upgrades. Finished steel sales volumes are expected to
be 26% higher than the prior year first quarter, and average selling
prices for finished steel products are expected to increase by
approximately 22% year over year. The expected CSS operating performance
primarily reflects higher finished steel selling prices, benefits to
finished steel sales volumes and metal margins from lower levels of
rebar steel imports, and additional productivity improvements from the
recent integration of our steel manufacturing and the Oregon metal
recycling operations.
Consolidated financial performance in the first quarter is expected to
include Corporate expense of approximately $17 million, an increase of
$8 million compared to the prior year primarily due to the recognition
of the legacy environmental liability and higher incentive compensation
accruals as a result of improved operating performance. For the first
quarter, the Company’s effective tax rate is expected to be
approximately 24%.
Total debt was $185 million as of the end of the first quarter, an
increase of $40 million from the fourth quarter of fiscal 2017, as
positive cash flows associated with higher profitability were more than
offset by an increase in net working capital from the higher volume and
price environment, and the timing of payment of incentive compensation
accrued in fiscal 2017.
The preliminary information provided above is based on the Company’s
current estimates of its financial results for the quarter ended
November 30, 2017 and remains subject to change based on final review of
the Company’s first quarter financial results.
Schnitzer will report its first quarter fiscal 2018 financial results on
Tuesday, January 9, 2018 and will webcast a conference call to discuss
the performance at 11:30 a.m. Eastern 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: 4886138
Replay Available: 01/09/2018 to 01/14/2018
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest manufacturers and
exporters of recycled metal products in North America. Schnitzer has
seven deep water export facilities and operates in 23 states, Puerto
Rico and Western Canada. The Company's vertically integrated operating
platform includes retail auto parts stores which sell recycled auto
parts and receive approximately 5 million annual customer visits. The
Company's electric-arc furnace mill in McMinnville, Oregon produces
finished steel long products, including rebar, wire rod and other
specialty products using recycled metal as its primary raw material. The
Company began operations in 1906 in Portland, Oregon.
Non-GAAP Financial Measures
This press release contains expected performance based on adjusted
diluted earnings per share from continuing operations attributable to
SSI which is a non-GAAP financial measure as defined under SEC rules. As
required by SEC rules, the Company has provided a reconciliation of this
measure for each period discussed to the most directly comparable U.S.
GAAP measure. Management believes that presenting non-GAAP financial
measures provides a meaningful presentation of our results from business
operations excluding adjustments for other asset impairment charges net
of recoveries, restructuring charges and other exit-related activities,
recoveries related to the resale or modification of previously
contracted shipments, and the income tax expense (benefit) associated
with these adjustments, items which are not related to underlying
business operational performance, and improves the period-to-period
comparability of our results from business operations. Adjusted
operating results in fiscal 2015 excluded the impact of the resale or
modification of the terms, each at significantly lower prices due to
sharp declines in selling prices, of certain previously contracted bulk
shipments for delivery during fiscal 2015. Recoveries resulting from
settlements with the original contract parties, which began in the third
quarter of fiscal 2016, are reported within selling, general and
administrative expense in the quarterly statements of operations and are
also excluded from these measures. This non-GAAP financial measure
should be considered in addition to, but not as a substitute for, the
most directly comparable U.S. GAAP measure.
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Diluted Earnings (Loss) per Share from
Continuing Operations Attributable to SSI
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($ per share)
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Quarter
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1Q18
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1Q17
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High
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Low
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Net income (loss) from continuing operations attributable to SSI
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$
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0.64
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$
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0.60
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$
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(0.05
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)
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Other asset impairment charges (recoveries), net
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—
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—
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0.01
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Restructuring charges and other exit-related activities
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—
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—
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0.01
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Recoveries related to the resale or modification of certain
previously contracted shipments
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(0.01
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(0.01
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(0.01
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)
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Income tax expense (benefit) allocated to adjustments(1)
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—
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—
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—
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Adjusted diluted earnings (loss) from continuing operations
attributable to SSI(2)
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$
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0.63
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$
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0.59
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$
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(0.03
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)
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(1) Income tax allocated to adjustments reconciling
Reported and Adjusted diluted earnings (loss) 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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(2) May not foot due to rounding.
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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 in this press release to “we,” “our,”
“us,” “Company,” “Schnitzer,” and “SSI” refer to Schnitzer Steel
Industries, Inc. 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; the
Company's outlook, growth initiatives or expected results or objectives,
including pricing, margins, sales volumes and profitability; strategic
direction or goals; targets; 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 “outlook,”
“target,” “aim,” “believes,” “expects,” “anticipates,” “intends,”
“assumes,” “estimates,” “evaluates,” “may,” “will,” “should,” “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, presentations and on 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 or other locations;
the cyclicality and impact of general economic conditions; instability
in international markets; 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 cost and equity method investment
impairment charges; inability to sustain the benefits from productivity
and restructuring initiatives; difficulties associated with acquisitions
and integration of acquired businesses; customer fulfillment of their
contractual obligations; increases 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 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 one or more cybersecurity incidents;
environmental compliance costs and potential environmental liabilities;
inability to obtain or renew business licenses and permits or renew
facility leases; compliance with greenhouse gas emission laws and
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/20171219006222/en/
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Investor Relations:
Stefano
Gaggini, 503-265-6329
www.schnitzersteel.com
[email protected]