Schnitzer Announces Second Quarter Fiscal 2018 Preliminary Results and Earnings Date
─ Second Quarter Earnings Conference Call 11:30 a.m. Eastern April 5,
2018 ─
PORTLAND, Ore.--(BUSINESS WIRE)--Mar. 21, 2018--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today announced
preliminary results for its second quarter of fiscal 2018 ended
February 28, 2018. Schnitzer expects reported and adjusted second
quarter earnings per share from continuing operations to be in the range
of $1.25 - $1.31, which amounts are expected to include discrete tax
benefits of $0.38 per share associated with the recently enacted tax
reform legislation and the release of valuation allowances on certain
deferred tax assets. Second quarter consolidated results are expected to
be significantly improved compared to the prior year second quarter
results of $0.40 earnings per share and $0.37 adjusted earnings per
share. For a reconciliation of adjusted results to U.S. GAAP, see the
table provided in the Non-GAAP Financial Measures section.
For the second quarter of fiscal 2018, Auto and Metals Recycling (AMR)
is expected to report operating income in the range of $42 - $44
million, or operating income per ferrous ton of $47 - $49, compared to
operating income of $25 million, or operating income per ferrous ton of
$34, in the prior year second quarter. Ferrous and nonferrous sales
volumes are expected to increase by approximately 21% and 13%,
respectively, compared to the prior year second quarter, and average
ferrous and nonferrous selling prices are expected to increase by
approximately 27% and 13%, respectively, compared to the same period in
the prior year. AMR's higher second quarter performance is expected to
benefit from expanded metal spreads, operating leverage from higher
volumes, increased average net selling prices and sustained
contributions from productivity improvements. AMR's second quarter
results are expected to include a favorable impact from average
inventory accounting of $4 million, consistent with the prior year
second quarter.
Cascade Steel and Scrap (CSS) is expected to generate operating income
of approximately $5 million, reflecting a significant improvement from
the second quarter of fiscal 2017 operating loss of $1 million. Finished
steel sales volumes are expected to be 18% higher than the prior year
second quarter, and average selling prices for finished steel products
are expected to increase by approximately 20% year-over-year. The
expected improvement in CSS operating performance is primarily driven by
the higher finished steel sales volumes and selling prices, higher
export ferrous sales volumes and additional productivity improvements
from the integration of our Oregon metal recycling and steel
manufacturing operations. The prior year second quarter also included an
adverse impact from higher beginning inventory costs following downtime
for a major equipment upgrade in the preceding quarter.
Consolidated financial performance in the second quarter is expected to
include Corporate expense of approximately $15 million, an increase of
$4 million compared to the prior year second quarter driven primarily by
higher incentive compensation accruals as a result of improved operating
performance and a one-time special bonus to all employees below senior
management level following the enactment of corporate tax reform, and
higher legal and professional services expenses.
For the second quarter of fiscal 2018, the Company's effective tax rate
is expected to be a benefit of approximately 21%. This effective tax
rate is expected to include a discrete benefit of $7 million, or $0.26
per share, stemming from the revaluation of the Company's net deferred
tax liability to reflect the lower Federal statutory corporate tax rate
established by the recently enacted tax reform legislation as well as a
discrete benefit of $4 million, or $0.12 per share, associated with the
release of valuation allowances on certain deferred tax assets driven
primarily by the Company's improved financial performance. In addition,
the effective tax rate for the second quarter is expected to benefit
from the application of the lower blended Federal statutory corporate
tax rate to current year projected taxable income. The Company will
provide an update on the effective tax rate expected to be applicable to
the second half of its fiscal 2018 and to fiscal 2019 on the April 5,
2018 earnings call.
Operating cash flow is expected to be slightly positive in the second
quarter of fiscal 2018 as cash flows associated with higher
profitability are expected to more than offset an increase in net
working capital from the higher volume and price environment. Total debt
was $211 million as of the end of the second quarter, and debt, net of
cash, was $196 million (for a reconciliation of debt, net of cash, see
the table provided in the Non-GAAP Financial Measures section). Pursuant
to its ongoing authorized share repurchase program, during the second
quarter the Company repurchased a total of 100,000 shares of its Class A
common stock in open market transactions.
The preliminary information provided above is based on the Company's
current estimates of its financial results for the quarter ended
February 28, 2018 and remains subject to change based on final review of
the Company's second quarter financial results.
Schnitzer will report its second quarter fiscal 2018 financial results
on Thursday, April 5, 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.
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Replay Information
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Toll Free Dial: (855) 859-2056
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Toll Free International Dial: (404) 537-3406
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Conference ID: 7165619
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Replay Available: 04/05/2018 to 04/10/2018
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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 operations produce finished steel products, including
rebar, wire rod and other specialty products. 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. 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.
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Diluted Earnings per Share from
Continuing Operations Attributable to SSI
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($ per share)
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Quarter
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2Q18
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2Q17
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High
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Low
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Net income from continuing operations attributable to SSI
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$
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1.31
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$
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1.25
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$
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0.40
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Other asset impairment charges (recoveries), net
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—
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—
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—
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Restructuring charges and other exit-related activities
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—
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—
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(0.02
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)
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Recoveries related to the resale or modification of certain
previously contracted shipments
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—
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—
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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 from continuing operations attributable to
SSI(2)
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$
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1.31
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$
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1.25
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$
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0.37
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(1)
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Income tax allocated to adjustments reconciling Reported and
Adjusted 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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(2)
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May not foot due to rounding.
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Debt, Net of Cash
The following is a reconciliation of debt, net of cash (in millions):
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February 28, 2018
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Total debt
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$
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211
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Less: cash and cash equivalents
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15
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Total debt, net of cash
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$
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196
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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 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 domestic and
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: https://www.businesswire.com/news/home/20180321006148/en/
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Stefano Gaggini, 503-323-2811
www.schnitzersteel.com
[email protected]