Schnitzer Reports First Quarter 2018 Financial Results
Strongest First Quarter Earnings Per Share Since Fiscal 2011
Significant Year-Over-Year Performance Improvements Driven by Higher
Volumes and Margins
PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 9, 2018--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported results
for its first quarter of fiscal 2018 ended November 30, 2017. The
Company reported earnings per share from continuing operations of $0.64
and adjusted earnings per share of $0.63, both of which include an
adverse impact of $0.14 per share related to a legacy environmental
liability of $4 million. These results compare to fourth quarter fiscal
2017 earnings per share from continuing operations of $0.65 and adjusted
earnings per share of $0.63, and the prior year first quarter loss per
share from continuing operations of $0.05 and adjusted loss per share of
$0.03. For a reconciliation of the adjusted results to U.S. GAAP, see
the Non-GAAP Financial Measures provided after the financial statements
in this document.
Auto and Metals Recycling (AMR) achieved its best first quarter
performance since fiscal 2011 with operating income of $35 million, or
operating income per ferrous ton of $44, both of which are more than
double the results of the first quarter of fiscal 2017. AMR’s higher
year-over-year operating income and operating income per ferrous ton
reflect the benefits of operating leverage from 11% higher ferrous sales
volumes and expanded metal margins as well as higher average net selling
prices and contributions from sustained productivity improvements.
Cascade Steel and Scrap (CSS) delivered first quarter operating income
of $8 million representing a significant improvement from the prior year
first quarter operating loss of $3 million which included an adverse
impact of approximately $2.5 million from downtime associated with a
major equipment upgrade. CSS’s improved operating performance was driven
primarily by higher finished steel sales volumes and metal spreads and
also benefited from lower levels of rebar steel imports, increased
selling prices driven by higher raw material costs, and productivity
improvements from the recent integration of our steel manufacturing and
Oregon metal recycling operations.
Consolidated financial performance in the first quarter included
Corporate expense of approximately $17 million, an increase of $8
million compared to the prior year first quarter primarily due to the
recognition of the legacy environmental liability and higher incentive
compensation accruals from improved operating performance.
“In the first quarter of fiscal 2018, we delivered our strongest first
quarter performance since fiscal 2011. AMR’s operating income per
ferrous ton exceeded $40, a level last reached during fiscal 2011 when
both volumes and scrap prices were significantly higher than today. This
performance demonstrates our continuous focus on increasing productivity
and efficiency in our core operations which, combined with the success
of our commercial initiatives to grow volumes, allowed us to take full
advantage of the stronger market conditions,” commented Tamara Lundgren,
President and Chief Executive Officer. “Our Cascade Steel and Scrap
business also achieved significantly improved performance compared to
the prior year first quarter, with operating margin expansion driven by
higher volumes, reduced pressure from low-priced rebar imports, and
continuing productivity improvements.”
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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1Q18
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1Q17
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Change
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4Q17
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Change
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Revenues
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$
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483
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$
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334
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45
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%
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$
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494
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(2
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)%
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Operating income
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$
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26
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$
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1
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NM
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$
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22
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20
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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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NM
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—
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NM
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Restructuring charges and other exit-related activities
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—
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—
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NM
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—
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NM
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Recoveries related to the resale or modification of previously
contracted shipments
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—
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—
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NM
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—
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NM
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Adjusted operating income(1)
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$
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26
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$
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1
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NM
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$
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22
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20
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%
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Net income (loss) attributable to SSI
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$
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18
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$
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(1
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)
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NM
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$
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18
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1
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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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18
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$
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(1
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)
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NM
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$
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18
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—
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%
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Adjusted net income (loss) from continuing operations attributable
to SSI(1)
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$
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18
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$
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(1
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)
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NM
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$
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18
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1
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%
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Diluted earnings (loss) per share attributable to SSI
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$
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0.64
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$
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(0.05
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)
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NM
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$
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0.64
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—
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%
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Diluted earnings (loss) per share from continuing operations
attributable to SSI
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$
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0.64
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$
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(0.05
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)
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NM
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$
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0.65
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(1
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)%
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Adjusted diluted earnings (loss) per share from continuing
operations attributable to SSI(1)
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$
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0.63
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$
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(0.03
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)
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NM
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$
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0.63
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—
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%
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(1) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
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NM = Not Meaningful
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Auto and Metals Recycling
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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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1Q18
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1Q17
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Change
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4Q17
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Change
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Total revenues
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$
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398
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$
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272
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46
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%
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$
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393
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1
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%
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Ferrous revenues
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$
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255
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$
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157
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62
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%
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$
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249
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2
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%
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Ferrous volumes
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797
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717
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11
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%
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864
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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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292
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$
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194
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51
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%
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$
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262
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11
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%
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Nonferrous revenues
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$
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110
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$
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84
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31
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%
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$
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112
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(1
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)%
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Nonferrous volumes(2)
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129
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126
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3
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%
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150
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(14
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)%
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Avg. net nonferrous sales prices ($/lb)(1)(2)
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$
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0.73
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$
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0.58
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26
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%
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$
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0.64
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14
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%
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Cars purchased for retail (000s)
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108
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94
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15
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%
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113
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(4
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)%
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Operating income(3)
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$
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35
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$
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13
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179
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%
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$
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24
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47
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%
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Operating income per Fe ton
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$
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44
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$
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18
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151
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%
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$
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28
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59
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%
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Adjusted operating income(4)
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$
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35
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$
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12
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179
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%
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$
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24
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42
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%
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Adjusted operating income per Fe ton
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$
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44
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$
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17
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151
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%
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$
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28
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54
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%
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(1) Sales prices are shown net of freight.
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(2) Excludes platinum group metals (PGMs) in catalytic
converters.
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(3) Operating income does not include the impact of
restructuring charges and other exit-related activities.
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(4) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
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Volumes: Ferrous sales volumes in the first quarter
increased 11% compared to the prior year first quarter, and decreased 8%
sequentially driven primarily by seasonal impacts on demand. Nonferrous
sales volumes were 3% higher compared to the prior year first quarter,
benefiting from higher production, while decreasing 14% sequentially
primarily due to seasonality.
Export customers accounted for 70% of total ferrous sales volumes. Our
products, including ferrous, nonferrous and recycled auto parts, were
shipped to 18 countries in the first quarter of fiscal 2018, with
Turkey, Bangladesh and Thailand the top export destinations for ferrous
shipments.
Pricing: Average ferrous net selling prices increased $98
per ton, or 51%, compared to the prior year first quarter, reflecting
stronger market conditions, and were up $30 per ton, or 11%,
sequentially. Average nonferrous net selling prices increased 26%
compared to the prior year quarter, and 14% sequentially, reflecting the
stronger markets.
Margins: Operating income of $35 million increased $11
million, or 47%, sequentially, and operating income per ferrous ton of
$44 increased 59% sequentially, both of which were more than double the
prior year first quarter. The improved operating income was driven by
stronger market conditions including metal margin expansion from higher
priced shipments, increased supply flows, initiatives focused on
broadening our supplier base, and sustained benefits from our
productivity initiatives. First quarter operating results did not
include a material impact from average inventory accounting, which
compares to a favorable impact in the fourth quarter of fiscal 2017 of
$3 million and an adverse impact in the prior year first quarter of $2
million.
Cascade Steel and Scrap
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Summary of Cascade Steel and Scrap Results
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($ in millions, except selling prices)
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Quarter
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1Q18
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1Q17
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Change
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4Q17
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Change
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Steel revenues
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$
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80
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$
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53
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53
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%
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$
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88
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(8
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)%
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Recycling revenues
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$
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10
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$
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13
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(29
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)%
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$
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17
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|
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(45
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)%
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Total revenues
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$
|
90
|
|
|
|
$
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66
|
|
|
|
36
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%
|
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$
|
105
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|
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(14
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)%
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating income (loss)(1)
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$
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8
|
|
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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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$
|
8
|
|
|
|
6
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%
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|
|
|
|
|
|
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|
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Adjusted operating income (loss)(2)
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$
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8
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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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7
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|
|
|
18
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%
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|
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|
|
|
|
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Finished steel average net sales price ($/ST)(3)
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$
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599
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$
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492
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|
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22
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%
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|
$
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565
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|
|
|
6
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%
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Finished steel sales volumes (000s ST)
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|
|
127
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|
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|
|
101
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|
26
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%
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|
|
|
147
|
|
|
|
(14
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)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization
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|
|
|
|
95
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%
|
|
|
|
65
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%
|
|
|
46
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%
|
|
|
|
95
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%
|
|
|
—
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%
|
|
|
|
|
|
|
|
|
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|
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|
(1) Operating income (loss) does not include the impact
of restructuring charges and other exit-related activities.
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(2) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
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(3) Price information is shown after netting the cost of
freight incurred to deliver the product to the customer.
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NM = Not Meaningful
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Sales Volumes: Finished steel sales volumes in the first
quarter increased 26% from the prior year first quarter. Sequentially,
finished steel sales volumes decreased 14% primarily due to seasonally
lower demand.
Pricing: Average net sales prices for finished steel
products increased 6% sequentially and 22% from the prior year first
quarter, primarily reflecting the impact of higher raw material prices
and reduced pressure from low-priced rebar steel imports.
Margins: Operating income for the first quarter of fiscal
2018 was $8 million, an improvement of $11 million from the prior year
first quarter. The improved year-over-year performance reflected higher
finished steel sales volumes and average selling prices, increased
utilization, and benefits to finished steel margins from lower levels of
rebar imports. The first quarter also included the benefit of additional
internal synergies and productivity initiatives resulting from the
recent integration of our steel manufacturing and Oregon metal recycling
operations. First quarter results were consistent sequentially, as
operating margin improvements resulting from higher average selling
prices and lower levels of rebar imports were offset by the impact of
seasonally lower sales volumes.
Corporate Items
In the first quarter of fiscal 2018, consolidated financial performance
included Corporate expense of $17 million, an increase of $8 million
from the prior year first quarter, primarily driven by the recognition
of a legacy environmental liability of $4 million and higher incentive
compensation accruals from improved operating performance.
Total debt of $185 million at the end of the first quarter of fiscal
2018 was $40 million higher than at the end of fiscal 2017, and debt,
net of cash was $176 million (refer to Non-GAAP Financial Measures
provided after the financial statements in this document). The increase
in debt was driven primarily by negative operating cash flow of $16
million, as positive cash flows associated with improved profitability
were more than offset by an increase in net working capital in the
higher price and volume environment and by the timing of payment of
incentive compensation earned in fiscal 2017. The Company returned
capital to shareholders through its 95th consecutive
quarterly dividend.
The Company’s effective tax rate was an expense of 24% in the first
quarter which was lower than the federal statutory rate primarily due to
the Company’s full valuation allowance positions partially offset by
increases in deferred tax liabilities and anticipated timing of
utilization of net operating losses during the current fiscal year.
Analysts’ Conference Call: First Quarter of Fiscal 2018
A conference call and slide presentation to discuss results will be held
today, January 9, 2018, at 11:30 a.m. EST hosted by Tamara Lundgren,
President and Chief Executive Officer, and Richard Peach, Senior Vice
President, Chief Financial Officer, and Chief of Corporate Operations.
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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|
|
|
|
|
November 30,
2017
|
|
|
August 31,
2017
|
|
|
November 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and Metals Recycling:
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous revenues
|
|
|
|
$
|
254,983
|
|
|
|
$
|
248,856
|
|
|
|
$
|
157,178
|
|
|
Nonferrous revenues
|
|
|
|
|
110,343
|
|
|
|
|
111,881
|
|
|
|
|
84,386
|
|
|
Retail and other revenues
|
|
|
|
|
32,728
|
|
|
|
|
32,570
|
|
|
|
|
30,209
|
|
|
Total Auto and Metals Recycling revenues
|
|
|
|
|
398,054
|
|
|
|
|
393,307
|
|
|
|
|
271,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cascade Steel and Scrap:
|
|
|
|
|
|
|
|
|
|
|
|
Steel revenues
|
|
|
|
|
80,446
|
|
|
|
|
87,915
|
|
|
|
|
52,596
|
|
|
Recycling revenues
|
|
|
|
|
9,538
|
|
|
|
|
17,334
|
|
|
|
|
13,427
|
|
|
Total Cascade Steel and Scrap revenues
|
|
|
|
|
89,984
|
|
|
|
|
105,249
|
|
|
|
|
66,023
|
|
|
Intercompany sales eliminations
|
|
|
|
|
(4,759
|
)
|
|
|
|
(4,298
|
)
|
|
|
|
(3,635
|
)
|
|
Total revenues
|
|
|
|
$
|
483,279
|
|
|
|
$
|
494,258
|
|
|
|
$
|
334,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income
|
|
|
|
$
|
35,172
|
|
|
|
$
|
23,992
|
|
|
|
$
|
12,606
|
|
|
CSS operating income (loss)
|
|
|
|
$
|
8,476
|
|
|
|
$
|
8,019
|
|
|
|
$
|
(2,628
|
)
|
|
Consolidated operating income
|
|
|
|
$
|
26,423
|
|
|
|
$
|
22,108
|
|
|
|
$
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted AMR operating income(1)
|
|
|
|
$
|
34,755
|
|
|
|
$
|
24,435
|
|
|
|
$
|
12,467
|
|
|
Adjusted CSS operating income (loss)(1)
|
|
|
|
|
8,388
|
|
|
|
|
7,085
|
|
|
|
|
(2,227
|
)
|
|
Adjusted segment operating income(1)(2)
|
|
|
|
|
43,143
|
|
|
|
|
31,520
|
|
|
|
|
10,240
|
|
|
Corporate expense
|
|
|
|
|
(16,644
|
)
|
|
|
|
(10,107
|
)
|
|
|
|
(8,982
|
)
|
|
Intercompany eliminations
|
|
|
|
|
(481
|
)
|
|
|
|
294
|
|
|
|
|
(208
|
)
|
|
Adjusted operating income(1)
|
|
|
|
|
26,018
|
|
|
|
|
21,707
|
|
|
|
|
1,050
|
|
|
Other asset impairment charges (recoveries), net
|
|
|
|
|
88
|
|
|
|
|
74
|
|
|
|
|
(401
|
)
|
|
Restructuring charges and other exit-related activities
|
|
|
|
|
(100
|
)
|
|
|
|
(90
|
)
|
|
|
|
(201
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
|
|
|
417
|
|
|
|
|
417
|
|
|
|
|
139
|
|
|
Total operating income
|
|
|
|
$
|
26,423
|
|
|
|
$
|
22,108
|
|
|
|
$
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) 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 activities.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
November 30,
2017
|
|
|
August 31,
2017
|
|
|
November 30,
2016
|
|
Revenues
|
|
|
|
$
|
483,279
|
|
|
|
$
|
494,258
|
|
|
|
$
|
334,161
|
|
|
Cost of goods sold
|
|
|
|
|
406,251
|
|
|
|
|
430,703
|
|
|
|
|
295,892
|
|
|
Selling, general and administrative
|
|
|
|
|
51,043
|
|
|
|
|
41,805
|
|
|
|
|
37,492
|
|
|
(Income) from joint ventures
|
|
|
|
|
(450
|
)
|
|
|
|
(374
|
)
|
|
|
|
(412
|
)
|
|
Other asset impairment charges (recoveries), net
|
|
|
|
|
(88
|
)
|
|
|
|
(74
|
)
|
|
|
|
401
|
|
|
Restructuring charges and other exit-related activities
|
|
|
|
|
100
|
|
|
|
|
90
|
|
|
|
|
201
|
|
|
Operating income
|
|
|
|
|
26,423
|
|
|
|
|
22,108
|
|
|
|
|
587
|
|
|
Interest expense
|
|
|
|
|
(2,059
|
)
|
|
|
|
(2,112
|
)
|
|
|
|
(1,741
|
)
|
|
Other income (loss), net
|
|
|
|
|
849
|
|
|
|
|
(561
|
)
|
|
|
|
437
|
|
|
Income (loss) from continuing operations before income taxes
|
|
|
|
|
25,213
|
|
|
|
|
19,435
|
|
|
|
|
(717
|
)
|
|
Income tax (expense) benefit
|
|
|
|
|
(5,957
|
)
|
|
|
|
(586
|
)
|
|
|
|
62
|
|
|
Income (loss) from continuing operations
|
|
|
|
|
19,256
|
|
|
|
|
18,849
|
|
|
|
|
(655
|
)
|
|
Loss from discontinued operations, net of tax
|
|
|
|
|
(35
|
)
|
|
|
|
(114
|
)
|
|
|
|
(53
|
)
|
|
Net income (loss)
|
|
|
|
|
19,221
|
|
|
|
|
18,735
|
|
|
|
|
(708
|
)
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
(857
|
)
|
|
|
|
(500
|
)
|
|
|
|
(618
|
)
|
|
Net income (loss) attributable to SSI
|
|
|
|
$
|
18,364
|
|
|
|
$
|
18,235
|
|
|
|
$
|
(1,326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations attributable to
SSI
|
|
|
|
$
|
0.66
|
|
|
|
$
|
0.66
|
|
|
|
$
|
(0.05
|
)
|
|
Loss per share from discontinued operations attributable to SSI
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Net income (loss) per share attributable to SSI
|
|
|
|
$
|
0.66
|
|
|
|
$
|
0.66
|
|
|
|
$
|
(0.05
|
)
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations attributable to
SSI
|
|
|
|
$
|
0.64
|
|
|
|
$
|
0.65
|
|
|
|
$
|
(0.05
|
)
|
|
Loss per share from discontinued operations attributable to SSI
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Net income (loss) per share attributable to SSI(1)
|
|
|
|
$
|
0.64
|
|
|
|
$
|
0.64
|
|
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
27,695
|
|
|
|
|
27,650
|
|
|
|
|
27,372
|
|
|
Diluted
|
|
|
|
|
28,662
|
|
|
|
|
28,409
|
|
|
|
|
27,372
|
|
|
Dividends declared per common share
|
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.1875
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
1Q18
|
|
SSI Total Volumes(1)
|
|
|
|
|
|
Total ferrous volumes (LT)
|
|
|
|
|
912,145
|
|
|
Total nonferrous volumes (000s LB)
|
|
|
|
|
141,046
|
|
|
Auto and Metals Recycling
|
|
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
|
|
Domestic
|
|
|
|
$
|
259
|
|
|
Export
|
|
|
|
$
|
306
|
|
|
Average
|
|
|
|
$
|
292
|
|
|
Ferrous sales volume (LT)
|
|
|
|
|
|
Domestic
|
|
|
|
|
237,464
|
|
|
Export
|
|
|
|
|
559,154
|
|
|
Total
|
|
|
|
|
796,618
|
|
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
|
|
$
|
0.73
|
|
|
Nonferrous sales volume (000s LB)(3)
|
|
|
|
|
129,137
|
|
|
Car purchase volume (000s)(4)
|
|
|
|
|
108
|
|
|
Auto stores at end of quarter
|
|
|
|
|
53
|
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
|
|
$
|
599
|
|
|
Sales volume (000s ST)
|
|
|
|
|
|
Rebar
|
|
|
|
|
84,243
|
|
|
Coiled products
|
|
|
|
|
40,928
|
|
|
Merchant bar and other
|
|
|
|
|
2,049
|
|
|
Finished steel products sold
|
|
|
|
|
127,220
|
|
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
|
|
|
95
|
%
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
1Q17
|
|
|
2Q17
|
|
|
3Q17
|
|
|
4Q17
|
|
|
2017
|
|
SSI Total Volumes(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ferrous volumes (LT)
|
|
|
|
|
833,889
|
|
|
|
|
852,036
|
|
|
|
|
951,230
|
|
|
|
|
990,516
|
|
|
|
|
3,627,671
|
|
|
Total nonferrous volumes (000s LB)
|
|
|
|
|
136,057
|
|
|
|
|
122,554
|
|
|
|
|
161,832
|
|
|
|
|
164,342
|
|
|
|
|
584,785
|
|
|
Auto and Metals Recycling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
|
$
|
169
|
|
|
|
$
|
237
|
|
|
|
$
|
263
|
|
|
|
$
|
257
|
|
|
|
$
|
236
|
|
|
Export
|
|
|
|
$
|
203
|
|
|
|
$
|
252
|
|
|
|
$
|
255
|
|
|
|
$
|
263
|
|
|
|
$
|
244
|
|
|
Average
|
|
|
|
$
|
194
|
|
|
|
$
|
247
|
|
|
|
$
|
258
|
|
|
|
$
|
262
|
|
|
|
$
|
242
|
|
|
Ferrous sales volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
|
|
197,255
|
|
|
|
|
220,975
|
|
|
|
|
291,227
|
|
|
|
|
238,930
|
|
|
|
|
948,387
|
|
|
Export
|
|
|
|
|
519,510
|
|
|
|
|
518,200
|
|
|
|
|
534,164
|
|
|
|
|
625,168
|
|
|
|
|
2,197,042
|
|
|
Total
|
|
|
|
|
716,765
|
|
|
|
|
739,175
|
|
|
|
|
825,391
|
|
|
|
|
864,098
|
|
|
|
|
3,145,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
|
|
$
|
0.58
|
|
|
|
$
|
0.64
|
|
|
|
$
|
0.65
|
|
|
|
$
|
0.64
|
|
|
|
$
|
0.63
|
|
|
Nonferrous sales volume (000s LB)(3)
|
|
|
|
|
125,817
|
|
|
|
|
114,275
|
|
|
|
|
150,356
|
|
|
|
|
150,343
|
|
|
|
|
540,791
|
|
|
Car purchase volume (000s)(4)
|
|
|
|
|
94
|
|
|
|
|
96
|
|
|
|
|
108
|
|
|
|
|
113
|
|
|
|
|
411
|
|
|
Auto stores at end of quarter
|
|
|
|
|
52
|
|
|
|
|
52
|
|
|
|
|
53
|
|
|
|
|
53
|
|
|
|
|
53
|
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
|
|
$
|
492
|
|
|
|
$
|
517
|
|
|
|
$
|
545
|
|
|
|
$
|
565
|
|
|
|
$
|
534
|
|
|
Sales volume (000s ST)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
|
|
|
73,903
|
|
|
|
|
69,136
|
|
|
|
|
84,166
|
|
|
|
|
96,323
|
|
|
|
|
323,528
|
|
|
Coiled products
|
|
|
|
|
23,934
|
|
|
|
|
34,371
|
|
|
|
|
54,629
|
|
|
|
|
48,349
|
|
|
|
|
161,283
|
|
|
Merchant bar and other
|
|
|
|
|
3,038
|
|
|
|
|
2,482
|
|
|
|
|
2,426
|
|
|
|
|
2,759
|
|
|
|
|
10,705
|
|
|
Finished steel products sold
|
|
|
|
|
100,875
|
|
|
|
|
105,989
|
|
|
|
|
141,221
|
|
|
|
|
147,431
|
|
|
|
|
495,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
|
|
|
65
|
%
|
|
|
|
89
|
%
|
|
|
|
85
|
%
|
|
|
|
95
|
%
|
|
|
|
83
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Ferrous and nonferrous volumes sold externally by AMR
and CSS and delivered to our steel mill for finished steel
production.
|
|
(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) Rolling mill utilization is based on effective annual
production capacity under current conditions of 580 thousand tons of
finished steel products.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
November 30, 2017
|
|
|
August 31, 2017
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
9,194
|
|
|
$
|
7,287
|
|
Accounts receivable, net
|
|
|
|
|
144,578
|
|
|
|
138,998
|
|
Inventories
|
|
|
|
|
216,365
|
|
|
|
166,942
|
|
Other current assets
|
|
|
|
|
25,283
|
|
|
|
24,723
|
|
Total current assets
|
|
|
|
|
395,420
|
|
|
|
337,950
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
386,847
|
|
|
|
390,629
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
|
|
|
203,646
|
|
|
|
205,176
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
$
|
985,913
|
|
|
$
|
933,755
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
|
$
|
657
|
|
|
$
|
721
|
|
Other current liabilities
|
|
|
|
|
170,827
|
|
|
|
175,539
|
|
Total current liabilities
|
|
|
|
|
171,484
|
|
|
|
176,260
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
184,225
|
|
|
|
144,403
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
|
|
78,587
|
|
|
|
75,599
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
|
|
|
547,184
|
|
|
|
533,586
|
|
Noncontrolling interests
|
|
|
|
|
4,433
|
|
|
|
3,907
|
|
Total equity
|
|
|
|
|
551,617
|
|
|
|
537,493
|
|
Total liabilities and equity
|
|
|
|
$
|
985,913
|
|
|
$
|
933,755
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This press release contains performance based on adjusted net income
(loss) and adjusted diluted earnings (loss) per share from continuing
operations attributable to SSI and adjusted consolidated, AMR and CSS
operating income (loss), which are non-GAAP financial measures as
defined under SEC rules. As required by SEC rules, we have provided
reconciliations of these measures for each period discussed to the most
directly comparable U.S. GAAP measure. Management believes that
providing these non-GAAP financial measures adds 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 certain previously contracted
shipments, and income tax expense (benefit) allocated to 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 the measures. 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.
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
Quarter
|
|
|
|
|
|
1Q18
|
|
|
1Q17
|
|
|
4Q17
|
|
Consolidated operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
$
|
26
|
|
|
$
|
1
|
|
|
|
$
|
22
|
|
|
Other asset impairment charges (recoveries), net
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Restructuring charges and other exit-related activities
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Adjusted consolidated operating income
|
|
|
|
$
|
26
|
|
|
$
|
1
|
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
$
|
35
|
|
|
$
|
13
|
|
|
|
$
|
24
|
|
|
Other asset impairment charges
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1
|
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Adjusted AMR operating income(1)
|
|
|
|
$
|
35
|
|
|
$
|
12
|
|
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSS operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
$
|
8
|
|
|
$
|
(3
|
)
|
|
|
$
|
8
|
|
|
Other asset impairment charges (recoveries), net
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
Adjusted CSS operating income (loss)(1)
|
|
|
|
$
|
8
|
|
|
$
|
(2
|
)
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
Net income (loss) from continuing operations attributable to SSI
|
|
($ in millions)
|
|
|
|
Quarter
|
|
|
|
|
|
1Q18
|
|
|
1Q17
|
|
|
4Q17
|
|
Net income (loss) from continuing operations attributable to SSI
|
|
|
|
$
|
18
|
|
|
$
|
(1
|
)
|
|
|
$
|
18
|
|
Other asset impairment charges (recoveries), net
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Restructuring charges and other exit-related activities
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
Adjusted net income (loss) from continuing operations attributable
to SSI
|
|
|
|
$
|
18
|
|
|
$
|
(1
|
)
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Income tax allocated to the aggregate adjustments
reconciling Reported and Adjusted net income (loss) from continuing
operations attributable to SSI is determined based on a tax
provision calculated with and without the adjustments.
|
|
|
|
|
|
Diluted earnings (loss) per share from continuing operations
attributable to SSI
|
|
($ per share)
|
|
|
|
Quarter
|
|
|
|
|
|
1Q18
|
|
|
1Q17
|
|
|
4Q17
|
|
Diluted earnings (loss) per share from continuing operations
attributable to SSI
|
|
|
|
$
|
0.64
|
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.65
|
|
|
Other asset impairment charges (recoveries), net
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
Restructuring charges and other exit-related activities
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Adjusted diluted earnings (loss) per share from continuing
operations attributable to SSI(2)
|
|
|
|
$
|
0.63
|
|
|
|
$
|
(0.03
|
)
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Income tax allocated to the aggregate 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.
|
|
(2) May not foot due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of cash
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2017
|
|
|
August 31, 2017
|
|
Short-term borrowings
|
|
|
|
$
|
657
|
|
|
$
|
721
|
|
Long-term debt, net of current maturities
|
|
|
|
|
184,225
|
|
|
|
144,403
|
|
Total debt
|
|
|
|
|
184,882
|
|
|
|
145,124
|
|
Less: cash and cash equivalents
|
|
|
|
|
9,194
|
|
|
|
7,287
|
|
Total debt, net of cash
|
|
|
|
$
|
175,688
|
|
|
$
|
137,837
|
|
|
|
|
|
|
|
|
|
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 with
approximately 5 million annual retail visits. 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 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 and the impact of the recently enacted
federal tax reform; 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 Part I of our
most recent Annual Report on Form 10-K, as supplemented by our
subsequently filed 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/20180109005657/en/
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Investor Relations:
Stefano
Gaggini, 503-265-6329
[email protected]
or
Company
Info:
www.schnitzersteel.com
[email protected]