Schnitzer Reports First Quarter 2019 Financial Results
AMR’s Ferrous Sales Volumes Up 15% and Nonferrous Sales Volumes Up
18% Year-Over-Year
CSS Delivers Best First Quarter Since 2008
PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 9, 2019--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported results
for its first quarter of fiscal 2019 ended November 30, 2018. The
Company reported earnings per share from continuing operations of $0.57
and adjusted earnings per share of $0.58. In the first quarter of fiscal
2018, the Company reported earnings per share from continuing operations
of $0.64 and adjusted earnings per share of $0.63. For a reconciliation
of the adjusted results to U.S. GAAP, see the Non-GAAP Financial
Measures provided after the financial statements in this document.
Auto and Metals Recycling (AMR) achieved operating income of $23
million, or $25 per ferrous ton, compared to operating income in the
first quarter of the prior year of $35 million, or $44 per ferrous ton.
AMR’s year-over-year performance included benefits from 15% higher
ferrous sales volumes and 18% higher nonferrous sales volumes, which
were more than offset by operating margin compression resulting
primarily from a 19% decline in average net selling prices for
nonferrous products that outpaced the reduction in purchase costs for
raw materials.
Cascade Steel and Scrap (CSS) achieved first quarter operating income of
$12 million, an increase of 41% year-over-year. CSS’s operating
performance improvement was driven primarily by a 25% year-over-year
increase in finished steel average net selling prices, which
significantly outpaced the increase in the cost of steel-making raw
materials. Finished steel sales volumes were 6% lower year-over-year
primarily due to lower production resulting from the combination of a
temporary disruption to a major external natural gas pipeline and
downtime related to the implementation of mill equipment upgrades aimed
at improving productivity.
In the first quarter of fiscal 2019, consolidated financial performance
included Corporate expense of $12 million, a decrease of $4 million from
the prior year first quarter, which had included a charge for a legacy
environmental liability of $4 million.
“In challenging market conditions that saw a significant decline in the
net selling prices for our nonferrous products, AMR delivered solid
operating performance with significant year-over-year improvement in
ferrous and nonferrous volumes, demonstrating the benefits of our sales
diversification strategy and our commercial initiatives to increase
supply volumes. Looking forward, we are expanding the scope of our
productivity initiatives aimed at improving AMR’s operating margins in
the current market environment, while continuing to invest in advanced
nonferrous technologies to support our strategic objectives to lower
processing costs, increase recovery rates, and further develop our
product optionality so we continue to meet our customers’ needs,”
commented Tamara Lundgren, President and Chief Executive Officer. “CSS
continued to deliver excellent results, reflecting a 41% year-over-year
increase in operating income, underpinned by significant operating
margin expansion through higher steel prices and improved productivity.
Our strong balance sheet provides us with the ability to invest in
capital projects, while continuing to return capital to our shareholders
through both our share repurchases and quarterly dividend.”
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Summary Results
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($ in millions, except per share amounts)
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Quarter
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1Q19
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1Q18
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Change
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4Q18
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Change
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Revenues
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$
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564
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$
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483
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17
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%
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$
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670
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(16
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)%
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|
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Operating income
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$
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23
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$
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26
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(14
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)%
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$
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38
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(40
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)%
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Other asset impairment charges (recoveries), net
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—
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—
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NM
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1
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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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(1
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)
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NM
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Recoveries related to the resale or modification of certain
previously contracted shipments
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—
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—
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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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23
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$
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26
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(12
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)%
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$
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38
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(39
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)%
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Net income attributable to SSI
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$
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16
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$
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18
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(12
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)%
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$
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60
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(73
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)%
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Net income from continuing operations attributable to SSI
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$
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16
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$
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18
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(12
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)%
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$
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59
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(73
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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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16
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$
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18
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(9
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)%
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$
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59
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(72
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)%
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Diluted earnings per share attributable to SSI
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$
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0.57
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$
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0.64
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(11
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)%
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$
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2.09
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(73
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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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0.57
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$
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0.64
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(11
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)%
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$
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2.08
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(72
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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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0.58
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$
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0.63
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(8
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)%
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$
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2.06
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|
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(72
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)%
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(1)
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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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1Q19
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1Q18
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Change
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4Q18
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Change
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Total revenues
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$
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436
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$
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398
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10
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%
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$
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532
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(18
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)%
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Ferrous revenues
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$
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299
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$
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255
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17
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%
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$
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362
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(17
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)%
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Ferrous volumes
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919
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797
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15
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%
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1,032
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(11
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)%
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Avg. net ferrous sales prices ($/LT)(1)
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$
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306
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$
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292
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5
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%
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$
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321
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(5
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)%
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Nonferrous revenues
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$
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104
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$
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110
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(6
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)%
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$
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134
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(22
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)%
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Nonferrous volumes(2)
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153
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129
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18
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%
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167
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(8
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)%
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Avg. net nonferrous sales prices ($/lb)(1)(2)
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$
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0.59
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$
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0.73
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(19
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)%
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$
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0.69
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(14
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)%
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Cars purchased for retail (000s)
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94
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108
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(13
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)%
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105
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(10
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)%
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Operating income
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$
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23
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$
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35
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(35
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)%
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$
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34
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(32
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)%
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Operating income per Fe ton
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$
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25
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$
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44
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(43
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)%
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$
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33
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(24
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)%
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Adjusted operating income(3)
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$
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23
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$
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35
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(34
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)%
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|
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$
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34
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|
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(33
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)%
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Adjusted operating income per Fe ton
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$
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25
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$
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44
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(42
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)%
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|
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$
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33
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|
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(25
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)%
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(1)
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Sales prices are shown net of freight.
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(2)
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Excludes platinum group metals (PGMs) in catalytic converters.
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(3)
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See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
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Volumes: Ferrous sales volumes in the first quarter
increased 15% compared to the prior year first quarter, primarily due to
stronger domestic demand and commercial initiatives to increase our
supply flows. Ferrous sales volumes decreased 11% sequentially primarily
due to seasonality. Nonferrous sales volumes were 18% higher compared to
the prior year first quarter, mainly due to higher supply flows and 8%
lower sequentially, primarily due to seasonality.
Export customers accounted for 63% of total ferrous sales volumes. Our
products, including ferrous, nonferrous and recycled auto parts, were
shipped to 22 countries in the first quarter of fiscal 2019, with
Bangladesh, Turkey and Taiwan representing the top export destinations
for ferrous shipments.
Pricing: Average ferrous net selling prices increased $14
per ton, or 5%, compared to the prior year first quarter, and were down
$15 per ton, or 5%, sequentially. Average nonferrous net selling prices
decreased 19% compared to the prior year first quarter and decreased 14%
sequentially.
Margins: Operating income was $23 million in the first
quarter, a decrease of $12 million, or 35%, compared to the prior year
first quarter and $11 million, or 32%, lower sequentially. Operating
income per ferrous ton of $25 represented a decrease of $19 per ton or
43% from the prior year first quarter and a sequential decrease of $8
per ton, or 24%. The margin compression in the first quarter of fiscal
2019 resulted primarily from the significant decline in selling prices
for zorba and other nonferrous products that outpaced the reduction in
purchase costs for raw materials, more than offsetting the benefits of
operating leverage from higher ferrous and nonferrous sales volumes, and
higher net ferrous selling prices. Selling, general and administrative
(“SG&A”) expenses were $4 million higher than in the prior year as a
result of higher employee-related expenses and $1 million in
environmental-related expenses, and consistent sequentially. First
quarter operating results include a neutral impact from average
inventory accounting, consistent with the first quarter of the prior
year and compared to an adverse impact of $2 million in the fourth
quarter of fiscal 2018.
Cascade Steel and Scrap
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Summary of Cascade Steel and Scrap Results
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($ in millions, except selling prices)
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Quarter
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|
|
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1Q19
|
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1Q18
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|
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Change
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4Q18
|
|
|
Change
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Steel revenues
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$
|
101
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|
|
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$
|
80
|
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|
|
26
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%
|
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$
|
102
|
|
|
|
—
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%
|
|
Recycling revenues
|
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29
|
|
|
|
10
|
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|
|
205
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%
|
|
|
42
|
|
|
|
(31
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)%
|
|
Total revenues
|
|
$
|
130
|
|
|
|
$
|
90
|
|
|
|
45
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%
|
|
|
$
|
144
|
|
|
|
(9
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)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
12
|
|
|
|
$
|
8
|
|
|
|
41
|
%
|
|
|
$
|
14
|
|
|
|
(12
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average net sales price ($/ST)
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|
$
|
747
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|
|
|
$
|
599
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|
|
|
25
|
%
|
|
|
$
|
741
|
|
|
|
1
|
%
|
|
Finished steel sales volumes (000s ST)
|
|
119
|
|
|
|
127
|
|
|
|
(6
|
)%
|
|
|
127
|
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization
|
|
87
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%
|
|
|
95
|
%
|
|
|
(8
|
)%
|
|
|
83
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1)
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|
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 first quarter
were 6% lower year-over-year and sequentially, primarily due to lower
production in the first quarter of fiscal 2019 caused by a combination
of a temporary disruption to a major external natural gas pipeline and
downtime related to the implementation of mill equipment upgrades aimed
at improving productivity. Recycling revenues were significantly higher
year-over-year as a result of increased ferrous export sales due to
increased supply flows, but down sequentially primarily due to
seasonality.
Pricing: Average net selling prices for finished steel
products increased 25% from the prior year first quarter and 1%
sequentially, reflecting the impacts of reduced pressure from steel
imports and higher steel-making raw material and other input costs.
Margins: Operating income for the first quarter of fiscal
2019 was $12 million, an improvement of 41% from the prior year first
quarter. The improved year-over-year performance reflected an expansion
in finished steel margins resulting from higher average net selling
prices which significantly outpaced the increase in the cost of
steel-making raw materials and offset the impact of lower finished steel
sales volumes. Sequentially, operating income was $2 million lower
driven primarily by the impact on sales volumes of the lower production
and a $1 million adverse impact from the natural gas supply disruption.
Corporate Items
In the first quarter of fiscal 2019, consolidated financial performance
included Corporate expense of $12 million, a decrease of $4 million from
the prior year first quarter, which included a charge for a legacy
environmental liability of $4 million.
The Company’s effective tax rate for the first quarter of fiscal 2019
was an expense of 19.8%, which includes a discrete tax benefit
associated with share-based compensation.
Total debt at the end of the first quarter of fiscal 2019 was $169
million, and debt, net of cash, was $157 million compared to $107
million and $103 million, respectively, at the end of the fourth quarter
of fiscal 2018 (refer to Non-GAAP Financial Measures provided after the
financial statements in this document). The first quarter of fiscal 2019
reflected negative operating cash flow of $12 million, as positive cash
flows associated with profitability were more than offset by an increase
in working capital due to the timing of the annual cash payment of
incentive compensation accrued in fiscal 2018 and the impact of the
timing of shipments on the collection of receivables.
Pursuant to its ongoing authorized share repurchase program, the Company
repurchased a total of 150,000 shares of its Class A common stock in
open market transactions during the first quarter. The Company also
returned capital to shareholders through its 99th consecutive quarterly
dividend.
Analysts’ Conference Call: First Quarter of Fiscal 2019
A conference call and slide presentation to discuss results will be held
today, January 9, 2019, at 11:30 a.m. EST hosted by Tamara Lundgren,
President and Chief Executive Officer, and Richard Peach, Senior Vice
President, Chief Financial Officer, and Chief of Corporate Operations.
The call and the slides will be webcast and accessible on the Company’s
website 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.
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.
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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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For the Three Months Ended
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|
|
November 30,
2018
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|
|
August 31,
2018
|
|
|
November 30,
2017
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|
|
|
|
|
|
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REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and Metals Recycling:
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|
|
|
|
|
|
|
|
Ferrous revenues
|
|
$
|
298,812
|
|
|
|
$
|
362,051
|
|
|
|
$
|
254,983
|
|
|
Nonferrous revenues
|
|
104,181
|
|
|
|
133,758
|
|
|
|
110,343
|
|
|
Retail and other revenues
|
|
33,419
|
|
|
|
35,707
|
|
|
|
32,728
|
|
|
Total Auto and Metals Recycling revenues
|
|
436,412
|
|
|
|
531,516
|
|
|
|
398,054
|
|
|
|
|
|
|
|
|
|
|
|
|
Cascade Steel and Scrap:
|
|
|
|
|
|
|
|
|
|
Steel revenues
|
|
101,337
|
|
|
|
101,846
|
|
|
|
80,446
|
|
|
Recycling revenues
|
|
29,049
|
|
|
|
42,021
|
|
|
|
9,538
|
|
|
Total Cascade Steel and Scrap revenues
|
|
130,386
|
|
|
|
143,867
|
|
|
|
89,984
|
|
|
Intercompany sales eliminations
|
|
(2,778
|
)
|
|
|
(5,806
|
)
|
|
|
(4,759
|
)
|
|
Total revenues
|
|
$
|
564,020
|
|
|
|
$
|
669,577
|
|
|
|
$
|
483,279
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income
|
|
$
|
23,017
|
|
|
|
$
|
33,836
|
|
|
|
$
|
35,172
|
|
|
CSS operating income
|
|
$
|
11,918
|
|
|
|
$
|
13,604
|
|
|
|
$
|
8,476
|
|
|
Consolidated operating income
|
|
$
|
22,689
|
|
|
|
$
|
37,973
|
|
|
|
$
|
26,423
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted AMR operating income(1)
|
|
$
|
23,080
|
|
|
|
$
|
34,368
|
|
|
|
$
|
34,755
|
|
|
Adjusted CSS operating income(1)
|
|
11,918
|
|
|
|
13,604
|
|
|
|
8,388
|
|
|
Adjusted segment operating income(1)
|
|
34,998
|
|
|
|
47,972
|
|
|
|
43,143
|
|
|
Corporate expense
|
|
(12,205
|
)
|
|
|
(10,928
|
)
|
|
|
(16,644
|
)
|
|
Intercompany eliminations
|
|
161
|
|
|
|
539
|
|
|
|
(481
|
)
|
|
Adjusted operating income(1)
|
|
22,954
|
|
|
|
37,583
|
|
|
|
26,018
|
|
|
Other asset impairment (charges) recoveries, net
|
|
(63
|
)
|
|
|
(532
|
)
|
|
|
88
|
|
|
Restructuring charges and other exit-related activities
|
|
(202
|
)
|
|
|
922
|
|
|
|
(100
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
—
|
|
|
|
417
|
|
|
Total operating income
|
|
$
|
22,689
|
|
|
|
$
|
37,973
|
|
|
|
$
|
26,423
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
November 30,
2018
|
|
|
August 31,
2018
|
|
|
November 30,
2017
|
|
Revenues
|
|
$
|
564,020
|
|
|
|
$
|
669,577
|
|
|
|
$
|
483,279
|
|
|
Cost of goods sold
|
|
490,132
|
|
|
|
582,608
|
|
|
|
406,251
|
|
|
Selling, general and administrative
|
|
51,419
|
|
|
|
50,011
|
|
|
|
51,043
|
|
|
(Income) from joint ventures
|
|
(485
|
)
|
|
|
(625
|
)
|
|
|
(450
|
)
|
|
Other asset impairment charges (recoveries), net
|
|
63
|
|
|
|
532
|
|
|
|
(88
|
)
|
|
Restructuring charges and other exit-related activities
|
|
202
|
|
|
|
(922
|
)
|
|
|
100
|
|
|
Operating income
|
|
22,689
|
|
|
|
37,973
|
|
|
|
26,423
|
|
|
Interest expense
|
|
(1,906
|
)
|
|
|
(2,160
|
)
|
|
|
(2,059
|
)
|
|
Other income, net
|
|
23
|
|
|
|
495
|
|
|
|
849
|
|
|
Income from continuing operations before income taxes
|
|
20,806
|
|
|
|
36,308
|
|
|
|
25,213
|
|
|
Income tax (expense) benefit
|
|
(4,116
|
)
|
|
|
23,620
|
|
|
|
(5,957
|
)
|
|
Income from continuing operations
|
|
16,690
|
|
|
|
59,928
|
|
|
|
19,256
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
(72
|
)
|
|
|
273
|
|
|
|
(35
|
)
|
|
Net income
|
|
16,618
|
|
|
|
60,201
|
|
|
|
19,221
|
|
|
Net income attributable to noncontrolling interests
|
|
(430
|
)
|
|
|
(532
|
)
|
|
|
(857
|
)
|
|
Net income attributable to SSI
|
|
$
|
16,188
|
|
|
|
$
|
59,669
|
|
|
|
$
|
18,364
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
0.59
|
|
|
|
$
|
2.17
|
|
|
|
$
|
0.66
|
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
|
Net income per share attributable to SSI
|
|
$
|
0.59
|
|
|
|
$
|
2.18
|
|
|
|
$
|
0.66
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
0.57
|
|
|
|
$
|
2.08
|
|
|
|
$
|
0.64
|
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
|
Net income per share attributable to SSI
|
|
$
|
0.57
|
|
|
|
$
|
2.09
|
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,505
|
|
|
|
27,427
|
|
|
|
27,695
|
|
|
Diluted
|
|
28,364
|
|
|
|
28,524
|
|
|
|
28,662
|
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
|
$
|
0.1875
|
|
|
|
$
|
0.1875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
1Q19
|
|
SSI Total Volumes(1)
|
|
|
|
Total ferrous volumes (LT)
|
|
1,079,705
|
|
|
Total nonferrous volumes (000s LB)
|
|
166,977
|
|
|
Auto and Metals Recycling
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
Domestic
|
|
$
|
290
|
|
|
Export
|
|
$
|
314
|
|
|
Average
|
|
$
|
306
|
|
|
Ferrous sales volume (LT)
|
|
|
|
Domestic
|
|
339,879
|
|
|
Export
|
|
578,976
|
|
|
Total
|
|
918,855
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
$
|
0.59
|
|
|
Nonferrous sales volume (000s LB)(3)
|
|
152,869
|
|
|
Car purchase volume (000s)(4)
|
|
94
|
|
|
Auto stores at end of quarter
|
|
51
|
|
|
Cascade Steel and Scrap
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
$
|
747
|
|
|
Sales volume (ST)
|
|
|
|
Rebar
|
|
81,470
|
|
|
Coiled products
|
|
37,418
|
|
|
Merchant bar and other
|
|
316
|
|
|
Finished steel products sold
|
|
119,204
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
87
|
%
|
|
|
|
|
|
|
(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
|
|
|
|
1Q18
|
|
2Q18
|
|
3Q18
|
|
4Q18
|
|
2018
|
|
SSI Total Volumes(1)
|
|
|
|
|
|
|
|
|
|
|
|
Total ferrous volumes (LT)
|
|
912,145
|
|
|
1,062,260
|
|
|
1,118,743
|
|
|
1,205,803
|
|
|
4,298,951
|
|
|
Total nonferrous volumes (000s LB)
|
|
141,046
|
|
|
144,024
|
|
|
162,667
|
|
|
188,359
|
|
|
636,096
|
|
|
Auto and Metals Recycling
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
259
|
|
|
$
|
278
|
|
|
$
|
314
|
|
|
$
|
303
|
|
|
$
|
291
|
|
|
Export
|
|
$
|
306
|
|
|
$
|
327
|
|
|
$
|
347
|
|
|
$
|
328
|
|
|
$
|
328
|
|
|
Average
|
|
$
|
292
|
|
|
$
|
314
|
|
|
$
|
337
|
|
|
$
|
321
|
|
|
$
|
317
|
|
|
Ferrous sales volume (LT)
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
237,464
|
|
|
239,571
|
|
|
293,323
|
|
|
314,974
|
|
|
1,085,332
|
|
|
Export
|
|
559,154
|
|
|
656,738
|
|
|
690,019
|
|
|
716,834
|
|
|
2,622,745
|
|
|
Total
|
|
796,618
|
|
|
896,309
|
|
|
983,342
|
|
|
1,031,808
|
|
|
3,708,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
$
|
0.74
|
|
|
$
|
0.69
|
|
|
$
|
0.72
|
|
|
Nonferrous sales volume (000s LB)(3)
|
|
129,137
|
|
|
129,549
|
|
|
146,043
|
|
|
166,976
|
|
|
571,705
|
|
|
Car purchase volume (000s)(4)
|
|
108
|
|
|
102
|
|
|
109
|
|
|
105
|
|
|
424
|
|
|
Auto stores at end of quarter
|
|
53
|
|
|
53
|
|
|
53
|
|
|
52
|
|
|
52
|
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
$
|
599
|
|
|
$
|
619
|
|
|
$
|
703
|
|
|
$
|
741
|
|
|
$
|
666
|
|
|
Sales volume (ST)
|
|
|
|
|
|
|
|
|
|
|
|
Rebar
|
|
84,243
|
|
|
79,718
|
|
|
91,603
|
|
|
81,182
|
|
|
336,746
|
|
|
Coiled products
|
|
40,928
|
|
|
43,056
|
|
|
46,673
|
|
|
43,878
|
|
|
174,535
|
|
|
Merchant bar and other
|
|
2,049
|
|
|
1,937
|
|
|
1,945
|
|
|
1,950
|
|
|
7,881
|
|
|
Finished steel products sold
|
|
127,220
|
|
|
124,711
|
|
|
140,221
|
|
|
127,010
|
|
|
519,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
95
|
%
|
|
83
|
%
|
|
91
|
%
|
|
83
|
%
|
|
88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
|
|
|
November 30, 2018
|
|
|
August 31, 2018
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
11,216
|
|
|
$
|
4,723
|
|
Accounts receivable, net
|
|
193,439
|
|
|
169,418
|
|
Inventories
|
|
200,562
|
|
|
205,877
|
|
Other current assets
|
|
41,455
|
|
|
68,341
|
|
Total current assets
|
|
446,672
|
|
|
448,359
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
422,686
|
|
|
415,711
|
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
239,846
|
|
|
240,747
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,109,204
|
|
|
$
|
1,104,817
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
1,156
|
|
|
$
|
1,139
|
|
Other current liabilities
|
|
192,872
|
|
|
253,538
|
|
Total current liabilities
|
|
194,028
|
|
|
254,677
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
167,394
|
|
|
106,237
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
71,799
|
|
|
73,793
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity
|
|
671,914
|
|
|
666,078
|
|
Noncontrolling interests
|
|
4,069
|
|
|
4,032
|
|
Total equity
|
|
675,983
|
|
|
670,110
|
|
Total liabilities and equity
|
|
$
|
1,109,204
|
|
|
$
|
1,104,817
|
|
|
|
|
|
|
|
|
|
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, 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 presenting these non-GAAP
financial measures provides a meaningful presentation of our results
from business operations excluding adjustments for other asset
impairment charges net of recoveries, restructuring charges and other
exit-related activities, recoveries related to the resale or
modification of certain previously contracted shipments, and the 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
|
|
|
|
1Q19
|
|
|
1Q18
|
|
|
4Q18
|
|
Consolidated operating income:
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
23
|
|
|
|
$
|
26
|
|
|
|
$
|
38
|
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjusted consolidated operating income
|
|
$
|
23
|
|
|
|
$
|
26
|
|
|
|
$
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income:
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
23
|
|
|
|
$
|
35
|
|
|
|
$
|
34
|
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjusted AMR operating income(1)
|
|
$
|
23
|
|
|
|
$
|
35
|
|
|
|
$
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
CSS operating income:
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
12
|
|
|
|
$
|
8
|
|
|
|
$
|
14
|
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjusted CSS operating income
|
|
$
|
12
|
|
|
|
$
|
8
|
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
|
|
Net income from continuing operations attributable to SSI
|
|
($ in millions)
|
|
Quarter
|
|
|
|
1Q19
|
|
|
1Q18
|
|
|
4Q18
|
|
Net income from continuing operations attributable to SSI
|
|
$
|
16
|
|
|
|
$
|
18
|
|
|
|
$
|
59
|
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adjusted net income from continuing operations attributable to SSI
|
|
$
|
16
|
|
|
|
$
|
18
|
|
|
|
$
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
1Q19
|
|
|
1Q18
|
|
|
4Q18
|
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
0.57
|
|
|
|
$
|
0.64
|
|
|
|
$
|
2.08
|
|
|
Other asset impairment charges (recoveries), net
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
|
Restructuring charges and other exit-related activities
|
|
0.01
|
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
Recoveries related to the resale or modification of certain
previously contracted shipments
|
|
—
|
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
—
|
|
|
|
—
|
|
|
|
(0.01
|
)
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI
|
|
$
|
0.58
|
|
|
|
$
|
0.63
|
|
|
|
$
|
2.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
Debt, net of cash
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
|
November 30, 2018
|
|
|
August 31, 2018
|
|
Short-term borrowings
|
|
$
|
1,156
|
|
|
$
|
1,139
|
|
Long-term debt, net of current maturities
|
|
167,394
|
|
|
106,237
|
|
Total debt
|
|
168,550
|
|
|
107,376
|
|
Less: cash and cash equivalents
|
|
11,216
|
|
|
4,723
|
|
Total debt, net of cash
|
|
$
|
157,334
|
|
|
$
|
102,653
|
|
|
|
|
|
|
|
|
|
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 federal tax reform;
the impact of tariffs, quotas 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; changing conditions in global
markets including the impact of tariffs, quotas 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 equity investment impairment charges; inability to achieve or
sustain the benefits from productivity, cost savings 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 climate change and 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/20190109005232/en/
Source: Schnitzer Steel Industries, Inc.
Investor Relations:
Michael Bennett
(503) 323-2811
[email protected]
Company Info:
www.schnitzersteel.com
[email protected]