Schnitzer Reports Second Quarter 2018 Financial Results
Strongest Quarterly Consolidated Operating Income Since Fiscal 2011
SSI Ferrous Volumes up 25% and Finished Steel Sales Volumes up 18%
Year-over-Year
PORTLAND, Ore.--(BUSINESS WIRE)--Apr. 5, 2018--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported results
for its second quarter of fiscal 2018 ended February 28, 2018. The
Company's reported and adjusted earnings per share from continuing
operations were $1.42, which include discrete tax benefits of $0.52 per
share associated with the recently enacted tax reform legislation and
the release of valuation allowances on certain deferred tax assets.
These results compare favorably to first quarter fiscal 2018 earnings
per share from continuing operations of $0.64 and adjusted earnings per
share of $0.63, and the prior year second quarter earnings per share
from continuing operations of $0.40 and adjusted earnings per share of
$0.37. 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's (AMR) operating income of $45 million, or
operating income per ferrous ton of $50, represented a significant
increase compared to the prior year second quarter operating income of
$25 million, or $34 per ferrous ton. AMR's improved operating
performance year-over-year reflected the benefits of expanded metal
spreads, operating leverage from 21% higher ferrous sales volumes,
higher average ferrous net selling prices of 27%, and contributions from
sustained productivity improvements. Second quarter results also
included a favorable impact from average inventory accounting of $4
million, or $5 per ferrous ton, consistent with the prior year second
quarter.
Cascade Steel and Scrap (CSS) delivered second quarter operating income
of $5 million representing a significant improvement compared to the
prior year second quarter operating loss of $1 million. CSS' improved
operating performance was driven primarily by higher finished steel
sales volumes of 18% which benefited from lower levels of rebar steel
imports, increased average selling prices of 20% which primarily
reflected higher raw material costs, expanded metal spreads, higher
export ferrous sales volumes, and additional productivity improvements
from the integration of our steel manufacturing and Oregon metal
recycling operations.
"In the second quarter of fiscal 2018, we delivered our strongest
quarterly consolidated operating performance since fiscal 2011. In a
market environment in which we saw strong demand and higher prices for
recycled metals, AMR increased its ferrous sales volumes by over 20%
compared to the prior year second quarter and achieved operating income
per ferrous ton of $50, a level last reached during fiscal 2011 when
both volumes and scrap prices were significantly higher than today. This
performance demonstrates the operating leverage created in our platform
by the success of our commercial initiatives to profitably grow volumes
and our continued focus on increasing productivity," commented Tamara
Lundgren, President and Chief Executive Officer. "CSS also achieved
significantly improved performance compared to the prior year second
quarter, with operating margin expansion driven by higher volumes and
prices and continuing productivity improvements. Reflecting our strong
performance as well as the enactment of tax reform, during the second
quarter we provided a special bonus to our employees."
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Results
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
2Q18
|
|
2Q17
|
|
Change
|
|
1Q18
|
|
Change
|
Revenues
|
|
$
|
559
|
|
|
$
|
382
|
|
|
46
|
%
|
|
$
|
483
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
33
|
|
|
$
|
14
|
|
|
135
|
%
|
|
$
|
26
|
|
|
26
|
%
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
—
|
|
|
NM
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
—
|
|
|
NM
|
|
Recoveries related to the resale or modification of previously
contracted shipments
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
—
|
|
|
NM
|
|
Adjusted operating income(1)
|
|
$
|
33
|
|
|
$
|
13
|
|
|
152
|
%
|
|
$
|
26
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to SSI
|
|
$
|
41
|
|
|
$
|
11
|
|
|
272
|
%
|
|
$
|
18
|
|
|
123
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations attributable to SSI
|
|
$
|
41
|
|
|
$
|
11
|
|
|
267
|
%
|
|
$
|
18
|
|
|
122
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income from continuing operations attributable to SSI(1)
|
|
$
|
41
|
|
|
$
|
10
|
|
|
298
|
%
|
|
$
|
18
|
|
|
128
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to SSI
|
|
$
|
1.42
|
|
|
$
|
0.40
|
|
|
259
|
%
|
|
$
|
0.64
|
|
|
122
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
1.42
|
|
|
$
|
0.40
|
|
|
255
|
%
|
|
$
|
0.64
|
|
|
122
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI(1)
|
|
$
|
1.42
|
|
|
$
|
0.37
|
|
|
285
|
%
|
|
$
|
0.63
|
|
|
125
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
|
NM = Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and Metals Recycling
|
|
Summary of Auto and Metals Recycling Results
|
($ in millions, except selling prices and data per ton; Fe
volumes 000s long tons; NFe volumes Ms lbs)
|
|
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
2Q18
|
|
2Q17
|
|
Change
|
|
1Q18
|
|
Change
|
Total revenues
|
|
|
|
|
|
$
|
450
|
|
|
$
|
313
|
|
|
44
|
%
|
|
$
|
398
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous revenues
|
|
|
|
|
|
$
|
308
|
|
|
$
|
200
|
|
|
54
|
%
|
|
$
|
255
|
|
|
21
|
%
|
Ferrous volumes
|
|
|
|
|
|
896
|
|
|
739
|
|
|
21
|
%
|
|
797
|
|
|
13
|
%
|
Avg. net ferrous sales prices ($/LT)(1)
|
|
|
|
|
|
$
|
314
|
|
|
$
|
247
|
|
|
27
|
%
|
|
$
|
292
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous revenues
|
|
|
|
|
|
$
|
110
|
|
|
$
|
85
|
|
|
30
|
%
|
|
$
|
110
|
|
|
—
|
%
|
Nonferrous volumes(2)
|
|
|
|
|
|
130
|
|
|
114
|
|
|
13
|
%
|
|
129
|
|
|
—
|
%
|
Avg. net nonferrous sales prices ($/lb)(1)(2)
|
|
|
|
|
|
$
|
0.72
|
|
|
$
|
0.64
|
|
|
13
|
%
|
|
$
|
0.73
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cars purchased for retail (000s)
|
|
|
|
|
|
102
|
|
|
96
|
|
6
|
%
|
|
108
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income(3)
|
|
|
|
|
|
$
|
45
|
|
|
$
|
25
|
|
|
78
|
%
|
|
$
|
35
|
|
|
28
|
%
|
Operating income per Fe ton
|
|
|
|
|
|
$
|
50
|
|
|
$
|
34
|
|
|
47
|
%
|
|
$
|
44
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income(4)
|
|
|
|
|
|
$
|
45
|
|
|
$
|
25
|
|
|
81
|
%
|
|
$
|
35
|
|
|
30
|
%
|
Adjusted operating income per Fe ton
|
|
|
|
|
|
$
|
50
|
|
|
$
|
34
|
|
|
50
|
%
|
|
$
|
44
|
|
|
15
|
%
|
(1) Sales prices are shown net of freight.
|
(2) Excludes platinum group metals (PGMs) in catalytic
converters.
|
(3) Operating income does not include the impact of
restructuring charges and other exit-related activities.
|
(4) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
|
|
Volumes: Ferrous sales volumes in the second quarter
increased 21% compared to the prior year second quarter, and increased
13% sequentially, primarily due to stronger export and domestic demand
for recycled metal and improved supply of raw materials. Nonferrous
sales volumes were 13% higher compared to the prior year second quarter,
benefiting primarily from higher production, and were in line compared
with the previous quarter.
Export customers accounted for 73% of total ferrous sales volumes. Our
products, including ferrous, nonferrous and recycled auto parts, were
shipped to 22 countries in the second quarter of fiscal 2018, with
Turkey, China and Vietnam the top export destinations for ferrous
shipments.
Pricing: Average ferrous net selling prices increased $67
per ton, or 27%, compared to the prior year second quarter, reflecting
stronger global demand, and were up $22 per ton, or 8%, sequentially.
Average nonferrous net selling prices increased 13% compared to the
prior year second quarter reflecting the stronger markets, while
slightly decreasing by 1% sequentially.
Margins: Operating income of $45 million increased $20
million, or 78%, and operating income per ferrous ton of $50 increased
47% from the prior year second quarter. Sequentially, the increase was
$10 million, or 28%, for operating income and $6, or 14%, for operating
income per ferrous ton. The improved performance compared to the prior
year second quarter was driven by stronger market conditions including
metal spread expansion from higher priced shipments, operating leverage
from higher volumes, ongoing initiatives aimed at broadening our
supplier base, and sustained benefits from our productivity initiatives.
|
|
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
|
|
Summary of Cascade Steel and Scrap Results
|
|
|
|
($ in millions, except selling prices)
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
|
|
|
2Q18
|
|
2Q17
|
|
Change
|
|
|
1Q18
|
|
Change
|
Steel revenues
|
|
|
|
|
|
$
|
82
|
|
|
$
|
58
|
|
|
40
|
%
|
|
$
|
80
|
|
|
1
|
%
|
Recycling revenues
|
|
|
|
|
|
|
35
|
|
|
|
14
|
|
|
154
|
%
|
|
|
10
|
|
|
269
|
%
|
Total revenues
|
|
|
|
|
|
$
|
117
|
|
|
$
|
72
|
|
|
62
|
%
|
|
$
|
90
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)(1)
|
|
|
|
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
|
NM
|
|
|
$
|
8
|
|
|
(36
|
)%
|
Adjusted operating income (loss)(2)
|
|
|
|
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
|
NM
|
|
|
$
|
8
|
|
|
(35
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average net sales price ($/ST)(3)
|
|
|
|
|
|
$
|
619
|
|
|
$
|
517
|
|
|
20
|
%
|
|
$
|
599
|
|
|
3
|
%
|
Finished steel sales volumes (000s ST)
|
|
|
|
|
|
125
|
|
|
106
|
|
|
18
|
%
|
|
127
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization
|
|
|
|
|
|
83
|
%
|
|
89
|
%
|
|
(7
|
)%
|
|
95
|
%
|
|
(13
|
)%
|
(1) Operating income (loss) does not include the impact
of restructuring charges and other exit-related activities.
|
(2) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
|
(3) Price information is shown after netting the cost of
freight incurred to deliver the product to the customer.
|
NM = Not Meaningful
|
|
Sales Volumes: Finished steel sales volumes in the second
quarter increased 18% from the prior year second quarter. Sequentially,
finished steel sales volumes decreased 2% primarily due to seasonally
lower demand.
Pricing: Average net sales prices for finished steel
products increased 20% from the prior year second quarter, and 3%
sequentially, primarily reflecting the impact of higher raw material
prices and reduced pressure from low-priced rebar steel imports.
Margins: Operating income for the second quarter of fiscal
2018 was $5 million, a significant improvement of $7 million from the
prior year second quarter. The improved year-over-year performance
reflected higher finished steel sales volumes and average selling
prices, and benefits to finished steel margins from lower levels of
rebar imports. The second quarter also included the benefit of higher
export ferrous sales volumes and additional productivity improvements
resulting from the integration of our steel manufacturing and Oregon
metal recycling operations. Second quarter results were lower
sequentially, as operating margin improvements resulting from higher
average selling prices were offset by the impact of seasonally lower
sales volumes and production, including due to a planned maintenance
shutdown.
Corporate Items
In the second quarter of fiscal 2018, consolidated financial performance
included Corporate expense of $17 million, an increase of $6 million
from the prior year second quarter, primarily driven by higher legal and
professional services expenses and increased incentive compensation
accruals as a result of improved operating performance and a one-time
special bonus to employees below senior management level following the
enactment of corporate tax reform.
The Company's effective tax rate for the second quarter of fiscal 2018
was a benefit of 34%. This effective tax rate includes 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 $7 million, or $0.26
per share, associated with the release of valuation allowances on
certain deferred tax assets driven primarily by the Company's improved
financial performance. The effective tax rate for the second quarter of
fiscal 2018 also benefited from the application of the lower blended
Federal statutory corporate tax rate to current year projected taxable
income. The Company's accounting for the impact of the recently enacted
tax reform legislation, including the amounts discussed herein, reflects
provisional estimates as of February 28, 2018, which may be adjusted
over the course of the next four quarters.
In the second quarter of fiscal 2018, the Company generated operating
cash flow of $5 million, as cash flows associated with higher
profitability more than offset an increase in net working capital from
the higher volume and price environment. Total debt at the end of the
second quarter of fiscal 2018 was $211 million, and debt, net of cash
was $196 million (refer to Non-GAAP Financial Measures provided after
the financial statements in this document). 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 Company also returned capital to
shareholders through its 96th consecutive quarterly dividend.
Analysts' Conference Call: Second Quarter of Fiscal 2018
A conference call and slide presentation to discuss results will be held
today, April 5, 2018, at 11:30 a.m. EDT 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.
|
SCHNITZER STEEL INDUSTRIES, INC.
|
FINANCIAL HIGHLIGHTS
|
(in thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
February 28, 2018
|
|
November 30, 2017
|
|
February 28, 2017
|
|
|
February 28, 2018
|
|
February 28, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and Metals Recycling:
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous revenues
|
|
$
|
307,687
|
|
|
$
|
254,983
|
|
|
$
|
200,355
|
|
|
|
$
|
562,670
|
|
|
$
|
357,533
|
|
Nonferrous revenues
|
|
110,388
|
|
|
110,343
|
|
|
85,223
|
|
|
|
220,731
|
|
|
169,609
|
|
Retail and other revenues
|
|
31,710
|
|
|
32,728
|
|
|
27,564
|
|
|
|
64,438
|
|
|
57,773
|
|
Total Auto and Metals Recycling revenues
|
|
449,785
|
|
|
398,054
|
|
|
313,142
|
|
|
|
847,839
|
|
|
584,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cascade Steel and Scrap:
|
|
|
|
|
|
|
|
|
|
|
|
Steel revenues
|
|
81,542
|
|
|
80,446
|
|
|
58,290
|
|
|
|
161,988
|
|
|
110,886
|
|
Recycling revenues
|
|
35,172
|
|
|
9,538
|
|
|
13,833
|
|
|
|
44,710
|
|
|
27,260
|
|
Total Cascade Steel and Scrap revenues
|
|
116,714
|
|
|
89,984
|
|
|
72,123
|
|
|
|
206,698
|
|
|
138,146
|
|
Intercompany sales eliminations
|
|
(7,056
|
)
|
|
(4,759
|
)
|
|
(3,181
|
)
|
|
|
(11,815
|
)
|
|
(6,816
|
)
|
Total revenues
|
|
$
|
559,443
|
|
|
$
|
483,279
|
|
|
$
|
382,084
|
|
|
|
$
|
1,042,722
|
|
|
$
|
716,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income
|
|
$
|
45,132
|
|
|
$
|
35,172
|
|
|
$
|
25,288
|
|
|
|
$
|
80,304
|
|
|
$
|
37,894
|
|
CSS operating income (loss)
|
|
$
|
5,413
|
|
|
$
|
8,476
|
|
|
$
|
(1,279
|
)
|
|
|
$
|
13,889
|
|
|
$
|
(3,907
|
)
|
Consolidated operating income
|
|
$
|
33,358
|
|
|
$
|
26,423
|
|
|
$
|
14,171
|
|
|
|
$
|
59,781
|
|
|
$
|
14,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted AMR operating income(1)
|
|
$
|
45,132
|
|
|
$
|
34,755
|
|
|
$
|
24,871
|
|
|
|
$
|
79,887
|
|
|
$
|
37,338
|
|
Adjusted CSS operating income (loss)(1)
|
|
5,413
|
|
|
8,388
|
|
|
(1,279
|
)
|
|
|
13,801
|
|
|
(3,506
|
)
|
Adjusted segment operating income(1)(2)
|
|
50,545
|
|
|
43,143
|
|
|
23,592
|
|
|
|
93,688
|
|
|
33,832
|
|
Corporate expense
|
|
(16,750
|
)
|
|
(16,644
|
)
|
|
(10,430
|
)
|
|
|
(33,394
|
)
|
|
(19,412
|
)
|
Intercompany eliminations
|
|
(346
|
)
|
|
(481
|
)
|
|
98
|
|
|
|
(827
|
)
|
|
(110
|
)
|
Adjusted operating income(1)
|
|
33,449
|
|
|
26,018
|
|
|
13,260
|
|
|
|
59,467
|
|
|
14,310
|
|
Other asset impairment (charges) recoveries, net
|
|
—
|
|
|
88
|
|
|
—
|
|
|
|
88
|
|
|
(401
|
)
|
Restructuring charges and other exit-related activities
|
|
(91
|
)
|
|
(100
|
)
|
|
494
|
|
|
|
(191
|
)
|
|
293
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
417
|
|
|
417
|
|
|
|
417
|
|
|
556
|
|
Total operating income
|
|
$
|
33,358
|
|
|
$
|
26,423
|
|
|
$
|
14,171
|
|
|
|
$
|
59,781
|
|
|
$
|
14,758
|
|
(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 INCOME
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Six Months Ended
|
|
|
February 28, 2018
|
|
November 30, 2017
|
|
February 28, 2017
|
|
|
February 28, 2018
|
|
February 28, 2017
|
Revenues
|
|
$
|
559,443
|
|
|
$
|
483,279
|
|
|
$
|
382,084
|
|
|
|
$
|
1,042,722
|
|
|
$
|
716,245
|
|
Cost of goods sold
|
|
472,462
|
|
|
406,251
|
|
|
326,804
|
|
|
|
878,713
|
|
|
622,696
|
|
Selling, general and administrative
|
|
53,638
|
|
|
51,043
|
|
|
43,823
|
|
|
|
104,681
|
|
|
81,315
|
|
(Income) from joint ventures
|
|
(106
|
)
|
|
(450
|
)
|
|
(2,220
|
)
|
|
|
(556
|
)
|
|
(2,632
|
)
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
(88
|
)
|
|
—
|
|
|
|
(88
|
)
|
|
401
|
|
Restructuring charges and other exit-related activities
|
|
91
|
|
|
100
|
|
|
(494
|
)
|
|
|
191
|
|
|
(293
|
)
|
Operating income
|
|
33,358
|
|
|
26,423
|
|
|
14,171
|
|
|
|
59,781
|
|
|
14,758
|
|
Interest expense
|
|
(2,281
|
)
|
|
(2,059
|
)
|
|
(2,097
|
)
|
|
|
(4,340
|
)
|
|
(3,838
|
)
|
Other income, net
|
|
101
|
|
|
849
|
|
|
357
|
|
|
|
950
|
|
|
794
|
|
Income from continuing operations before income taxes
|
|
31,178
|
|
|
25,213
|
|
|
12,431
|
|
|
|
56,391
|
|
|
11,714
|
|
Income tax (expense) benefit
|
|
10,577
|
|
|
(5,957
|
)
|
|
(637
|
)
|
|
|
4,620
|
|
|
(575
|
)
|
Income from continuing operations
|
|
41,755
|
|
|
19,256
|
|
|
11,794
|
|
|
|
61,011
|
|
|
11,139
|
|
Income (loss) from discontinued operations, net of tax
|
|
164
|
|
|
(35
|
)
|
|
(95
|
)
|
|
|
129
|
|
|
(148
|
)
|
Net income
|
|
41,919
|
|
|
19,221
|
|
|
11,699
|
|
|
|
61,140
|
|
|
10,991
|
|
Net income attributable to noncontrolling interests
|
|
(903
|
)
|
|
(857
|
)
|
|
(662
|
)
|
|
|
(1,760
|
)
|
|
(1,280
|
)
|
Net income attributable to SSI
|
|
$
|
41,016
|
|
|
$
|
18,364
|
|
|
$
|
11,037
|
|
|
|
$
|
59,380
|
|
|
$
|
9,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
1.47
|
|
|
$
|
0.66
|
|
|
$
|
0.40
|
|
|
|
$
|
2.14
|
|
|
$
|
0.36
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(0.01
|
)
|
Net income per share attributable to SSI
|
|
$
|
1.48
|
|
|
$
|
0.66
|
|
|
$
|
0.40
|
|
|
|
$
|
2.14
|
|
|
$
|
0.35
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
1.42
|
|
|
$
|
0.64
|
|
|
$
|
0.40
|
|
|
|
$
|
2.06
|
|
|
$
|
0.35
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(0.01
|
)
|
Net income per share attributable to SSI(1)
|
|
$
|
1.42
|
|
|
$
|
0.64
|
|
|
$
|
0.40
|
|
|
|
$
|
2.07
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,797
|
|
|
27,695
|
|
|
27,524
|
|
|
|
27,745
|
|
|
27,447
|
|
Diluted
|
|
28,805
|
|
|
28,662
|
|
|
27,864
|
|
|
|
28,737
|
|
|
27,814
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.3750
|
|
|
$
|
0.3750
|
|
(1) May not foot due to rounding.
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
SELECTED OPERATING STATISTICS
|
(Unaudited)
|
|
|
|
|
|
|
YTD
|
|
|
1Q18
|
|
2Q18
|
|
2018
|
SSI Total Volumes(1)
|
|
|
|
|
|
|
Total ferrous volumes (LT)
|
|
912,145
|
|
|
1,062,260
|
|
|
1,974,405
|
|
Total nonferrous volumes (000s LB)
|
|
141,046
|
|
|
144,024
|
|
|
285,070
|
|
Auto and Metals Recycling
|
|
|
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
|
|
|
Domestic
|
|
$
|
259
|
|
|
$
|
278
|
|
|
$
|
269
|
|
Export
|
|
$
|
306
|
|
|
$
|
327
|
|
|
$
|
318
|
|
Average
|
|
$
|
292
|
|
|
$
|
314
|
|
|
$
|
304
|
|
Ferrous sales volume (LT)
|
|
|
|
|
|
|
Domestic
|
|
237,464
|
|
|
239,571
|
|
|
477,035
|
|
Export
|
|
559,154
|
|
|
656,738
|
|
|
1,215,892
|
|
Total
|
|
796,618
|
|
|
896,309
|
|
|
1,692,927
|
|
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
$
|
0.72
|
|
Nonferrous sales volume (000s LB)(3)
|
|
129,137
|
|
|
129,549
|
|
|
258,686
|
|
Car purchase volume (000s)(4)
|
|
108
|
|
|
102
|
|
|
210
|
|
Auto stores at end of quarter
|
|
53
|
|
|
53
|
|
|
53
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
$
|
599
|
|
|
$
|
619
|
|
|
$
|
609
|
|
Sales volume (ST)
|
|
|
|
|
|
|
Rebar
|
|
84,243
|
|
|
79,718
|
|
|
163,961
|
|
Coiled products
|
|
40,928
|
|
|
43,056
|
|
|
83,984
|
|
Merchant bar and other
|
|
2,049
|
|
|
1,937
|
|
|
3,986
|
|
Finished steel products sold
|
|
127,220
|
|
|
124,711
|
|
|
251,931
|
|
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
95
|
%
|
|
83
|
%
|
|
89
|
%
|
(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.
|
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 (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
|
(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)
|
|
|
February 28, 2018
|
|
|
August 31, 2017
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
15,007
|
|
|
$
|
7,287
|
Accounts receivable, net
|
|
194,338
|
|
|
138,998
|
Inventories
|
|
221,945
|
|
|
166,942
|
Other current assets
|
|
28,772
|
|
|
24,723
|
Total current assets
|
|
460,062
|
|
|
337,950
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
386,680
|
|
|
390,629
|
|
|
|
|
|
|
Goodwill and other assets
|
|
204,955
|
|
|
205,176
|
Total assets
|
|
$
|
1,051,697
|
|
|
$
|
933,755
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
793
|
|
|
$
|
721
|
Other current liabilities
|
|
189,526
|
|
|
175,539
|
Total current liabilities
|
|
190,319
|
|
|
176,260
|
|
|
|
|
|
|
Long-term debt
|
|
210,031
|
|
|
144,403
|
|
|
|
|
|
|
Other long-term liabilities
|
|
64,251
|
|
|
75,599
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity
|
|
582,663
|
|
|
533,586
|
Noncontrolling interests
|
|
4,433
|
|
|
3,907
|
Total equity
|
|
587,096
|
|
|
537,493
|
Total liabilities and equity
|
|
$
|
1,051,697
|
|
|
$
|
933,755
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This press release contains performance based on adjusted net income and
adjusted diluted earnings 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
|
|
|
YTD
|
|
|
2Q18
|
|
2Q17
|
|
1Q18
|
|
|
2Q18
|
|
2Q17
|
Consolidated operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
33
|
|
|
$
|
14
|
|
|
$
|
26
|
|
|
|
$
|
60
|
|
|
$
|
15
|
|
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
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(1
|
)
|
Adjusted consolidated operating income(1)
|
|
$
|
33
|
|
|
$
|
13
|
|
|
$
|
26
|
|
|
|
$
|
59
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
45
|
|
|
$
|
25
|
|
|
$
|
35
|
|
|
|
$
|
80
|
|
|
$
|
38
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(1
|
)
|
Adjusted AMR operating income(1)
|
|
$
|
45
|
|
|
$
|
25
|
|
|
$
|
35
|
|
|
|
$
|
80
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSS operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
|
|
$
|
14
|
|
|
$
|
(4
|
)
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Adjusted CSS operating income (loss)(1)
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
|
|
$
|
14
|
|
|
$
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
Net income from continuing operations attributable to SSI
|
($ in millions)
|
|
Quarter
|
|
|
YTD
|
|
|
2Q18
|
|
2Q17
|
|
1Q18
|
|
|
2Q18
|
|
2Q17
|
Net income from continuing operations attributable to SSI
|
|
$
|
41
|
|
|
$
|
11
|
|
|
$
|
18
|
|
|
|
$
|
59
|
|
|
$
|
10
|
|
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
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(1
|
)
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Adjusted net income from continuing operations attributable to SSI
|
|
$
|
41
|
|
|
$
|
10
|
|
|
$
|
18
|
|
|
|
$
|
59
|
|
|
$
|
9
|
|
(1) Income tax allocated to the aggregate adjustments
reconciling Reported and Adjusted net income from continuing
operations attributable to SSI is determined based on a tax
provision calculated with and without the adjustments.
|
|
Diluted earnings per share from continuing operations
attributable to SSI
|
($ per share)
|
|
Quarter
|
|
|
YTD
|
|
|
2Q18
|
|
2Q17
|
|
1Q18
|
|
|
2Q18
|
|
2Q17
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
1.42
|
|
|
$
|
0.40
|
|
|
$
|
0.64
|
|
|
|
$
|
2.06
|
|
|
$
|
0.35
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
0.01
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
(0.02
|
)
|
|
—
|
|
|
|
0.01
|
|
|
(0.01
|
)
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI(2)
|
|
$
|
1.42
|
|
|
$
|
0.37
|
|
|
$
|
0.63
|
|
|
|
$
|
2.05
|
|
|
$
|
0.34
|
|
(1) Income tax allocated to the aggregate 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.
|
(2) May not foot due to rounding.
|
|
Debt, net of cash
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
February 28, 2018
|
|
|
August 31, 2017
|
Short-term borrowings
|
|
$
|
793
|
|
|
$
|
721
|
Long-term debt, net of current maturities
|
|
210,031
|
|
|
144,403
|
Total debt
|
|
210,824
|
|
|
145,124
|
Less: cash and cash equivalents
|
|
15,007
|
|
|
7,287
|
Total debt, net of cash
|
|
$
|
195,817
|
|
|
$
|
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 operations produce 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 impact of tariffs and other trade actions; 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; uncertainty in global 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/20180405005342/en/
Source: Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc.
Investor Relations:
Stefano
Gaggini, 503-323-2811
[email protected]
or
Company
Info:
www.schnitzersteel.com
[email protected]