Schnitzer Reports Third Quarter 2018 Financial Results
Best Quarterly Consolidated Operating Income Since Fiscal 2011
SSI Ferrous Volumes Up 18% Year-over-Year
PORTLAND, Ore.--(BUSINESS WIRE)--Jun. 26, 2018--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported results
for its third quarter of fiscal 2018 ended May 31, 2018. The Company
reported earnings per share from continuing operations of $1.31 and
adjusted earnings per share of $1.26. These results are more than double
the prior year third quarter earnings per share from continuing
operations of $0.60 and adjusted earnings per share of $0.56. Reported
and adjusted earnings per share from continuing operations in the second
quarter of fiscal 2018 were $1.42 which include discrete tax benefits of
$0.52 per share. 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 $55 million, or
$56 per ferrous ton, was significantly higher than the prior year third
quarter operating income of $30 million, or $36 per ferrous ton.
Adjusted operating income was $54 per ferrous ton compared to adjusted
operating income of $34 per ferrous ton in the prior year third quarter.
Supported by stronger global demand for its products, AMR’s improved
operating performance year-over-year was driven primarily by expanded
metal spreads, higher ferrous sales volumes of 19%, higher average
ferrous and nonferrous net selling prices of 31% and 14%, respectively,
benefits from commercial initiatives to increase our supply volumes, and
sustained contributions from productivity improvements.
Cascade Steel and Scrap (CSS) delivered third quarter operating income
of $11 million, representing a $10 million improvement compared to the
prior year third quarter. The strong CSS operating performance was
driven primarily by a 29% increase in finished steel average net selling
prices which significantly outpaced the increase in the cost of
steelmaking raw materials, higher utilization, and benefits of
productivity improvements from the integration of our steel
manufacturing and Oregon metal recycling operations.
Tamara Lundgren, President and Chief Executive Officer, commented, “Our
third quarter financial results reflect continued strong financial and
operating performance in both of our businesses. AMR’s sales volumes
increased significantly versus last year, and its third quarter
operating income per ton achieved levels last reached in fiscal 2011 at
a time when both volumes and scrap prices were much higher than today.
CSS also delivered excellent results, significantly expanding its
operating margins through higher steel prices, improved utilization, and
continued focus on operating efficiencies and productivity initiatives.
The strong operating cash flow we generated in the quarter allowed us to
reduce debt and also return capital to shareholders through both our
dividend and the repurchase of shares.”
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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3Q18
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3Q17
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Change
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2Q18
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Change
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Revenues
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$
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652
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$
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477
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|
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37
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%
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$
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559
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17
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%
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Operating income
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$
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51
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$
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19
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168
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%
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$
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33
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54
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%
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Other asset impairment charges (recoveries), net
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(1
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)
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(1
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)
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40
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%
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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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50
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$
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18
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176
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%
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$
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33
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49
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%
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Net income attributable to SSI
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$
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37
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$
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17
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126
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%
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$
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41
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(9
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)%
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Net income from continuing operations attributable to SSI
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$
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37
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$
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17
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124
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%
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$
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41
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(8
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)%
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Adjusted net income from continuing operations attributable to SSI(1)
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$
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36
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$
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16
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132
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%
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$
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41
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(12
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)%
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Diluted earnings per share attributable to SSI
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$
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1.31
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$
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0.60
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118
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%
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$
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1.42
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(8
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)%
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Diluted earnings per share from continuing operations attributable
to SSI
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$
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1.31
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$
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0.60
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117
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%
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$
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1.42
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(8
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)%
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Adjusted diluted earnings per share from continuing operations
attributable to SSI(1)
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$
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1.26
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$
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0.56
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124
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%
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$
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1.42
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(11
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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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3Q18
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3Q17
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Change
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2Q18
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Change
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Total revenues
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$
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530
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$
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385
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37
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%
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$
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450
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18
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%
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Ferrous revenues
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$
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364
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$
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237
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54
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%
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$
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308
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18
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%
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Ferrous volumes
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983
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825
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19
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%
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896
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10
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%
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Avg. net ferrous sales prices ($/LT)(1)
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$
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337
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$
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258
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31
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%
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$
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314
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7
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%
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Nonferrous revenues
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$
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127
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$
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113
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12
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%
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$
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110
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15
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%
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Nonferrous volumes(2)
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146
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150
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(3
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)%
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130
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13
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%
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Avg. net nonferrous sales prices ($/lb)(1)(2)
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$
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0.74
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$
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0.65
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14
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%
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$
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0.72
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3
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%
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Cars purchased for retail (000s)
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109
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|
|
108
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1
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%
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|
|
102
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|
|
7
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%
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|
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Operating income
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$
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55
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$
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30
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86
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%
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$
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45
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|
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22
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%
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Operating income per Fe ton
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$
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56
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$
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36
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|
|
56
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%
|
|
|
$
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50
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|
|
|
11
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%
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|
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Adjusted operating income(3)
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$
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54
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$
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28
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|
|
89
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%
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|
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$
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45
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19
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%
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Adjusted operating income per Fe ton
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$
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54
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$
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34
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|
|
59
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%
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|
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$
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50
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|
8
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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) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
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Volumes: Ferrous sales volumes in the third quarter
increased 19% compared to the prior year third quarter, and increased
10% sequentially, primarily due to stronger export and domestic demand
for recycled metals and commercial initiatives to increase our supply
flows. Nonferrous sales volumes were 3% lower compared to the prior year
third quarter and 13% higher compared to the second quarter of fiscal
2018.
Export customers accounted for 70% of total ferrous sales volumes. Our
products, including ferrous, nonferrous and recycled auto parts, were
shipped to 23 countries in the third quarter of fiscal 2018, with
Bangladesh, Turkey and Thailand as the top export destinations for
ferrous shipments.
Pricing: Average ferrous net selling prices increased $79
per ton, or 31%, compared to the prior year third quarter, and were up
$23 per ton, or 7%, sequentially. Average nonferrous net selling prices
increased 14% compared to the prior year third quarter, while increasing
by 3% sequentially.
Margins: Operating income was $55 million in the third
quarter, an increase of $25 million or 86% compared to the prior year
third quarter and an increase of $10 million or 22% compared to the
second quarter of fiscal 2018. Operating income included a benefit
primarily from the sale of assets of $1 million in the third quarter of
fiscal 2017 and 2018. Adjusted operating income was $54 million in the
third quarter, an increase of $25 million or 89% compared to the prior
year third quarter. Additionally, operating income per ferrous ton of
$56 represented an increase of $20 or 56% from the prior year third
quarter and a sequential increase of $6 or 11%. Adjusted operating
income was $54 per ferrous ton compared to $34 per ferrous ton in the
prior year third quarter. The improved performance compared to the prior
year third quarter was driven by metal spread expansion from higher
priced shipments, increased ferrous sales volumes, and higher average
ferrous and nonferrous net selling prices. The impact from average
inventory accounting in the quarter was a benefit of $2 million,
compared to a benefit of $4 million in the previous quarter and an
adverse impact of $1 million in the prior year third quarter.
Cascade Steel and Scrap
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Summary of Cascade Steel and Scrap Results
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($ in millions, except selling prices)
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Quarter
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3Q18
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3Q17
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|
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Change
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2Q18
|
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Change
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Steel revenues
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$
|
104
|
|
|
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$
|
82
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|
|
27
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%
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$
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82
|
|
|
|
27
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%
|
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Recycling revenues
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26
|
|
|
|
14
|
|
|
|
85
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%
|
|
|
35
|
|
|
|
(25
|
)%
|
|
Total revenues
|
|
$
|
130
|
|
|
|
$
|
96
|
|
|
|
35
|
%
|
|
|
$
|
117
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
11
|
|
|
|
$
|
1
|
|
|
|
828
|
%
|
|
|
$
|
5
|
|
|
|
99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average net sales price ($/ST)(1)
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|
$
|
703
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|
|
|
$
|
545
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|
|
|
29
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%
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|
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$
|
619
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|
|
14
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%
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Finished steel sales volumes (000s ST)
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140
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|
|
|
141
|
|
|
|
(1
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)%
|
|
|
125
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization
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91
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%
|
|
|
85
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%
|
|
|
7
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%
|
|
|
83
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) 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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Volumes: Finished steel sales volumes in the third quarter
were consistent with the prior year third quarter. Sequentially,
finished steel sales volumes increased 12% primarily due to seasonally
higher demand.
Pricing: Average net sales prices for finished steel
products increased 29% from the prior year third quarter and 14%
sequentially, reflecting the impact of higher raw material prices
year-over-year and reduced pressure from steel imports.
Margins: Operating income for the third quarter of fiscal
2018 was $11 million, a significant improvement of $10 million from the
prior year third quarter and approximately double the results in the
second quarter of fiscal 2018. The improved year-over-year performance
reflected an expansion in finished steel margins resulting from higher
average selling prices which significantly outpaced the increase in cost
of steelmaking raw materials. The third quarter also benefited from
higher utilization and incremental productivity improvements resulting
from the integration of our steel manufacturing and Oregon metal
recycling operations. Third quarter results were higher sequentially,
primarily as a result of expanded metal margins from higher average net
selling prices and increased sales volumes.
Corporate Items
In the third quarter of fiscal 2018, consolidated financial performance
included Corporate expense of $14 million, an increase of $3 million
from the prior year third quarter, primarily driven by higher
professional service expenses and increased incentive compensation
accruals as a result of improved operating performance.
The Company’s effective tax rate for the third quarter of fiscal 2018
was an expense of 21.7% which reflects the application to current year
projected taxable income of the lower blended federal statutory
corporate tax rate established by the tax reform legislation enacted in
December 2017. The Company’s accounting for the impact of the tax reform
legislation, including the amounts discussed herein, reflects
provisional estimates as of May 31, 2018, which may be adjusted over the
course of the next three quarters.
In the third quarter of fiscal 2018, the Company generated operating
cash flow of $64 million, driven primarily by our increased
profitability. Total debt at the end of the third quarter of fiscal 2018
was $173 million, and debt, net of cash was $163 million compared to
debt of $211 million and debt, net of cash of $196 million at the end of
the second quarter (refer to Non-GAAP Financial Measures provided after
the financial statements in this document).
Pursuant to its ongoing authorized share repurchase program, during the
third quarter the Company repurchased a total of 166,013 shares of its
Class A common stock in open market transactions. The Company also
returned capital to shareholders through its 97th consecutive quarterly
dividend.
Analysts’ Conference Call: Third Quarter of Fiscal 2018
A conference call and slide presentation to discuss results will be held
today, June 26, 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 under Company > Investors > Event Calendar at www.schnitzersteel.com/events.
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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|
|
|
|
|
|
|
|
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|
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|
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For the Three Months Ended
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|
|
For the Nine Months Ended
|
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|
|
May 31,
2018
|
|
February 28,
2018
|
|
May 31,
2017
|
|
|
May 31,
2018
|
|
May 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and Metals Recycling:
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous revenues
|
|
$
|
363,566
|
|
|
$
|
307,687
|
|
|
$
|
236,833
|
|
|
|
$
|
926,236
|
|
|
$
|
594,366
|
|
|
Nonferrous revenues
|
|
127,288
|
|
|
110,388
|
|
|
113,487
|
|
|
|
348,019
|
|
|
283,096
|
|
|
Retail and other revenues
|
|
38,757
|
|
|
31,710
|
|
|
35,076
|
|
|
|
103,195
|
|
|
92,849
|
|
|
Total Auto and Metals Recycling revenues
|
|
529,611
|
|
|
449,785
|
|
|
385,396
|
|
|
|
1,377,450
|
|
|
970,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cascade Steel and Scrap:
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel revenues
|
|
103,726
|
|
|
81,542
|
|
|
81,966
|
|
|
|
265,714
|
|
|
192,852
|
|
|
Recycling revenues
|
|
26,350
|
|
|
35,172
|
|
|
14,259
|
|
|
|
71,060
|
|
|
41,519
|
|
|
Total Cascade Steel and Scrap revenues
|
|
130,076
|
|
|
116,714
|
|
|
96,225
|
|
|
|
336,774
|
|
|
234,371
|
|
|
Intercompany sales eliminations
|
|
(7,271
|
)
|
|
(7,056
|
)
|
|
(4,533
|
)
|
|
|
(19,086
|
)
|
|
(11,349
|
)
|
|
Total revenues
|
|
$
|
652,416
|
|
|
$
|
559,443
|
|
|
$
|
477,088
|
|
|
|
$
|
1,695,138
|
|
|
$
|
1,193,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income
|
|
$
|
54,980
|
|
|
$
|
45,132
|
|
|
$
|
29,520
|
|
|
|
$
|
135,284
|
|
|
$
|
67,414
|
|
|
CSS operating income (loss)
|
|
$
|
10,793
|
|
|
$
|
5,413
|
|
|
$
|
1,163
|
|
|
|
$
|
24,682
|
|
|
$
|
(2,744
|
)
|
|
Consolidated operating income
|
|
$
|
51,234
|
|
|
$
|
33,358
|
|
|
$
|
19,147
|
|
|
|
$
|
111,015
|
|
|
$
|
33,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted AMR operating income(1)
|
|
$
|
53,515
|
|
|
$
|
45,132
|
|
|
$
|
28,305
|
|
|
|
$
|
133,402
|
|
|
$
|
65,643
|
|
|
Adjusted CSS operating income (loss)(1)
|
|
10,793
|
|
|
5,413
|
|
|
1,163
|
|
|
|
24,594
|
|
|
(2,343
|
)
|
|
Adjusted segment operating income(1)
|
|
64,308
|
|
|
50,545
|
|
|
29,468
|
|
|
|
157,996
|
|
|
63,300
|
|
|
Corporate expense
|
|
(14,467
|
)
|
|
(16,750
|
)
|
|
(11,272
|
)
|
|
|
(47,861
|
)
|
|
(30,684
|
)
|
|
Intercompany eliminations
|
|
(2
|
)
|
|
(346
|
)
|
|
(171
|
)
|
|
|
(829
|
)
|
|
(281
|
)
|
|
Adjusted operating income(1)
|
|
49,839
|
|
|
33,449
|
|
|
18,025
|
|
|
|
109,306
|
|
|
32,335
|
|
|
Other asset impairment (charges) recoveries, net
|
|
1,465
|
|
|
—
|
|
|
1,044
|
|
|
|
1,553
|
|
|
643
|
|
|
Restructuring charges and other exit-related activities
|
|
(70
|
)
|
|
(91
|
)
|
|
(93
|
)
|
|
|
(261
|
)
|
|
200
|
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
—
|
|
|
171
|
|
|
|
417
|
|
|
727
|
|
|
Total operating income
|
|
$
|
51,234
|
|
|
$
|
33,358
|
|
|
$
|
19,147
|
|
|
|
$
|
111,015
|
|
|
$
|
33,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
May 31,
2018
|
|
February 28,
2018
|
|
May 31,
2017
|
|
|
May 31,
2018
|
|
May 31,
2017
|
|
Revenues
|
|
$
|
652,416
|
|
|
$
|
559,443
|
|
|
$
|
477,088
|
|
|
|
$
|
1,695,138
|
|
|
$
|
1,193,333
|
|
|
Cost of goods sold
|
|
549,164
|
|
|
472,462
|
|
|
411,109
|
|
|
|
1,427,877
|
|
|
1,033,805
|
|
|
Selling, general and administrative
|
|
54,185
|
|
|
53,638
|
|
|
48,451
|
|
|
|
158,866
|
|
|
129,766
|
|
|
(Income) from joint ventures
|
|
(772
|
)
|
|
(106
|
)
|
|
(668
|
)
|
|
|
(1,328
|
)
|
|
(3,300
|
)
|
|
Other asset impairment charges (recoveries), net
|
|
(1,465
|
)
|
|
—
|
|
|
(1,044
|
)
|
|
|
(1,553
|
)
|
|
(643
|
)
|
|
Restructuring charges and other exit-related activities
|
|
70
|
|
|
91
|
|
|
93
|
|
|
|
261
|
|
|
(200
|
)
|
|
Operating income
|
|
51,234
|
|
|
33,358
|
|
|
19,147
|
|
|
|
111,015
|
|
|
33,905
|
|
|
Interest expense
|
|
(2,483
|
)
|
|
(2,281
|
)
|
|
(2,131
|
)
|
|
|
(6,823
|
)
|
|
(5,969
|
)
|
|
Other income, net
|
|
403
|
|
|
101
|
|
|
524
|
|
|
|
1,353
|
|
|
1,318
|
|
|
Income from continuing operations before income taxes
|
|
49,154
|
|
|
31,178
|
|
|
17,540
|
|
|
|
105,545
|
|
|
29,254
|
|
|
Income tax (expense) benefit
|
|
(10,650
|
)
|
|
10,577
|
|
|
(161
|
)
|
|
|
(6,030
|
)
|
|
(736
|
)
|
|
Income from continuing operations
|
|
38,504
|
|
|
41,755
|
|
|
17,379
|
|
|
|
99,515
|
|
|
28,518
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
(56
|
)
|
|
164
|
|
|
(127
|
)
|
|
|
72
|
|
|
(275
|
)
|
|
Net income
|
|
38,448
|
|
|
41,919
|
|
|
17,252
|
|
|
|
99,587
|
|
|
28,243
|
|
|
Net income attributable to noncontrolling interests
|
|
(1,046
|
)
|
|
(903
|
)
|
|
(687
|
)
|
|
|
(2,806
|
)
|
|
(1,967
|
)
|
|
Net income attributable to SSI
|
|
$
|
37,402
|
|
|
$
|
41,016
|
|
|
$
|
16,565
|
|
|
|
$
|
96,781
|
|
|
$
|
26,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
1.35
|
|
|
$
|
1.47
|
|
|
$
|
0.60
|
|
|
|
$
|
3.49
|
|
|
$
|
0.97
|
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
|
—
|
|
|
(0.01
|
)
|
|
Net income per share attributable to SSI
|
|
$
|
1.35
|
|
|
$
|
1.48
|
|
|
$
|
0.60
|
|
|
|
$
|
3.49
|
|
|
$
|
0.96
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
1.31
|
|
|
$
|
1.42
|
|
|
$
|
0.60
|
|
|
|
$
|
3.38
|
|
|
$
|
0.96
|
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
|
—
|
|
|
(0.01
|
)
|
|
Net income per share attributable to SSI(1)
|
|
$
|
1.31
|
|
|
$
|
1.42
|
|
|
$
|
0.60
|
|
|
|
$
|
3.38
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,676
|
|
|
27,797
|
|
|
27,601
|
|
|
|
27,719
|
|
|
27,499
|
|
|
Diluted
|
|
28,636
|
|
|
28,805
|
|
|
27,703
|
|
|
|
28,646
|
|
|
27,692
|
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.5625
|
|
|
$
|
0.5625
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD
|
|
|
|
1Q18
|
|
|
2Q18
|
|
|
3Q18
|
|
|
2018
|
|
SSI Total Volumes(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ferrous volumes (LT)
|
|
912,145
|
|
|
|
1,062,260
|
|
|
|
1,118,743
|
|
|
|
3,093,148
|
|
|
Total nonferrous volumes (000s LB)
|
|
141,046
|
|
|
|
144,024
|
|
|
|
162,667
|
|
|
|
447,737
|
|
|
Auto and Metals Recycling
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
259
|
|
|
|
$
|
278
|
|
|
|
$
|
314
|
|
|
|
$
|
286
|
|
|
Export
|
|
$
|
306
|
|
|
|
$
|
327
|
|
|
|
$
|
347
|
|
|
|
$
|
328
|
|
|
Average
|
|
$
|
292
|
|
|
|
$
|
314
|
|
|
|
$
|
337
|
|
|
|
$
|
316
|
|
|
Ferrous sales volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
237,464
|
|
|
|
239,571
|
|
|
|
293,323
|
|
|
|
770,358
|
|
|
Export
|
|
559,154
|
|
|
|
656,738
|
|
|
|
690,019
|
|
|
|
1,905,911
|
|
|
Total
|
|
796,618
|
|
|
|
896,309
|
|
|
|
983,342
|
|
|
|
2,676,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
$
|
0.73
|
|
|
|
$
|
0.72
|
|
|
|
$
|
0.74
|
|
|
|
$
|
0.73
|
|
|
Nonferrous sales volume (000s LB)(3)
|
|
129,137
|
|
|
|
129,549
|
|
|
|
146,043
|
|
|
|
404,729
|
|
|
Car purchase volume (000s)(4)
|
|
108
|
|
|
|
102
|
|
|
|
109
|
|
|
|
319
|
|
|
Auto stores at end of quarter
|
|
53
|
|
|
|
53
|
|
|
|
53
|
|
|
|
53
|
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
$
|
599
|
|
|
|
$
|
619
|
|
|
|
$
|
703
|
|
|
|
$
|
642
|
|
|
Sales volume (ST)
|
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
84,243
|
|
|
|
79,718
|
|
|
|
91,603
|
|
|
|
255,564
|
|
|
Coiled products
|
|
40,928
|
|
|
|
43,056
|
|
|
|
46,673
|
|
|
|
130,657
|
|
|
Merchant bar and other
|
|
2,049
|
|
|
|
1,937
|
|
|
|
1,945
|
|
|
|
5,931
|
|
|
Finished steel products sold
|
|
127,220
|
|
|
|
124,711
|
|
|
|
140,221
|
|
|
|
392,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
95
|
%
|
|
|
83
|
%
|
|
|
91
|
%
|
|
|
90
|
%
|
|
|
|
(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 parts 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 parts 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)
|
|
|
|
May 31, 2018
|
|
|
August 31, 2017
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
10,090
|
|
|
|
$
|
7,287
|
|
Accounts receivable, net
|
|
190,195
|
|
|
|
138,998
|
|
Inventories
|
|
234,437
|
|
|
|
166,942
|
|
Other current assets
|
|
42,000
|
|
|
|
24,723
|
|
Total current assets
|
|
476,722
|
|
|
|
337,950
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
393,387
|
|
|
|
390,629
|
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
207,161
|
|
|
|
205,176
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,077,270
|
|
|
|
$
|
933,755
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
1,146
|
|
|
|
$
|
721
|
|
Other current liabilities
|
|
215,694
|
|
|
|
175,539
|
|
Total current liabilities
|
|
216,840
|
|
|
|
176,260
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
171,545
|
|
|
|
144,403
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
69,323
|
|
|
|
75,599
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity
|
|
614,975
|
|
|
|
533,586
|
|
Noncontrolling interests
|
|
4,587
|
|
|
|
3,907
|
|
Total equity
|
|
619,562
|
|
|
|
537,493
|
|
Total liabilities and equity
|
|
$
|
1,077,270
|
|
|
|
$
|
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 from 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 and concluded in the first
quarter of fiscal 2018, are reported within selling, general and
administrative expense in the quarterly statements of income 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
|
|
|
|
3Q18
|
|
|
3Q17
|
|
|
2Q18
|
|
|
3Q18
|
|
|
3Q17
|
|
Consolidated operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
51
|
|
|
|
$
|
19
|
|
|
|
$
|
33
|
|
|
|
$
|
111
|
|
|
|
$
|
34
|
|
|
Other asset impairment charges (recoveries), net
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Adjusted consolidated operating income
|
|
$
|
50
|
|
|
|
$
|
18
|
|
|
|
$
|
33
|
|
|
|
$
|
109
|
|
|
|
$
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
55
|
|
|
|
$
|
30
|
|
|
|
$
|
45
|
|
|
|
$
|
135
|
|
|
|
$
|
67
|
|
|
Other asset impairment charges (recoveries), net
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Adjusted AMR operating income(1)
|
|
$
|
54
|
|
|
|
$
|
28
|
|
|
|
$
|
45
|
|
|
|
$
|
133
|
|
|
|
$
|
66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSS operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
11
|
|
|
|
$
|
1
|
|
|
|
$
|
5
|
|
|
|
$
|
25
|
|
|
|
$
|
(3
|
)
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjusted CSS operating income (loss)(1)
|
|
$
|
11
|
|
|
|
$
|
1
|
|
|
|
$
|
5
|
|
|
|
$
|
25
|
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
Net income from continuing operations attributable to SSI
|
|
($ in millions)
|
|
Quarter
|
|
|
YTD
|
|
|
|
3Q18
|
|
|
3Q17
|
|
|
2Q18
|
|
|
3Q18
|
|
|
3Q17
|
|
Net income from continuing operations attributable to SSI
|
|
$
|
37
|
|
|
|
$
|
17
|
|
|
|
$
|
41
|
|
|
|
$
|
97
|
|
|
|
$
|
27
|
|
|
Other asset impairment charges (recoveries), net
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
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
|
|
$
|
36
|
|
|
|
$
|
16
|
|
|
|
$
|
41
|
|
|
|
$
|
95
|
|
|
|
$
|
25
|
|
|
(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
|
|
|
|
3Q18
|
|
|
3Q17
|
|
|
2Q18
|
|
|
3Q18
|
|
|
3Q17
|
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
1.31
|
|
|
|
$
|
0.60
|
|
|
|
$
|
1.42
|
|
|
|
$
|
3.38
|
|
|
|
$
|
0.96
|
|
|
Other asset impairment charges (recoveries), net
|
|
(0.05
|
)
|
|
|
(0.04
|
)
|
|
|
—
|
|
|
|
(0.05
|
)
|
|
|
(0.02
|
)
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
(0.01
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
(0.03
|
)
|
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI(2)
|
|
$
|
1.26
|
|
|
|
$
|
0.56
|
|
|
|
$
|
1.42
|
|
|
|
$
|
3.32
|
|
|
|
$
|
0.90
|
|
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2018
|
|
|
February 28, 2018
|
|
|
August 31, 2017
|
|
Short-term borrowings
|
|
$
|
1,146
|
|
|
$
|
793
|
|
|
$
|
721
|
|
Long-term debt, net of current maturities
|
|
171,545
|
|
|
210,031
|
|
|
144,403
|
|
Total debt
|
|
172,691
|
|
|
210,824
|
|
|
145,124
|
|
Less: cash and cash equivalents
|
|
10,090
|
|
|
15,007
|
|
|
7,287
|
|
Total debt, net of cash
|
|
$
|
162,601
|
|
|
$
|
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 North America 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
including the impact of tariffs and other trade actions; 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/20180626005559/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]