Schnitzer Reports Second Quarter 2019 Financial Results
Benefits from Productivity Initiatives Tracking Ahead of Schedule
Strong Second Quarter Operating Cash Flow of $35 million
PORTLAND, Ore.--(BUSINESS WIRE)--Apr. 4, 2019--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported results
for its second quarter of fiscal 2019 ended February 28, 2019. The
Company reported earnings per share from continuing operations of $0.46
and adjusted earnings per share of $0.48. For the first quarter of
fiscal 2019, reported and adjusted earnings per share from continuing
operations were $0.57 and $0.58, respectively. In the second quarter of
fiscal 2018, the Company’s reported and adjusted earnings per share from
continuing operations were $1.42, which included 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 (AMR) achieved operating income of $22
million, or $25 per ferrous ton, compared to operating income in the
first quarter of fiscal 2019 of $23 million, or $25 per ferrous ton. On
a sequential basis, AMR’s performance benefited from additional
productivity initiatives and a decrease in selling, general and
administrative (“SG&A”) expense, which substantially offset seasonally
lower volumes and retail sales, both of which were adversely impacted by
unusually severe winter weather, and lower average ferrous net selling
prices of 6%.
Cascade Steel and Scrap (CSS) achieved operating income of $6 million,
compared to $5 million in the prior year period. The improvement in
CSS’s year-over-year performance was driven primarily by a 19% increase
in finished steel average net selling prices and benefits from
productivity initiatives, partially offset by the increase in the cost
of steel-making raw materials and a 25% decrease in finished steel sales
volumes which were impacted by construction delays in our West Coast
markets resulting from unusually severe winter weather in California and
the Pacific Northwest.
“Our team delivered a strong second quarter performance in a challenging
environment that reflected declining prices for scrap during the winter
months and severe weather in our West Coast and Pacific Northwest
markets. AMR’s results reflected benefits from the swift execution of
productivity initiatives, which are tracking ahead of schedule, and the
team’s ability to optimize purchase volumes and to diversify sales. CSS
delivered stronger year-over-year operating and financial results
despite weather-related construction delays that impacted sales
volumes,” commented Tamara Lundgren, President and Chief Executive
Officer. “We generated strong operating cash flow and reduced debt while
continuing to return capital to our shareholders through both share
repurchases and our quarterly dividend. Looking forward, we remain
focused on the execution of our productivity initiatives and our capital
investment strategy to support our objectives of lowering processing
costs, increasing recovery rates, and further developing products to
meet our customers’ needs.”
|
Summary Results
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
2Q19
|
|
2Q18
|
|
Change
|
|
1Q19
|
|
Change
|
|
Revenues
|
|
$
|
474
|
|
|
$
|
559
|
|
|
(15
|
)%
|
|
$
|
564
|
|
|
(16
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
19
|
|
|
$
|
33
|
|
|
(43
|
)%
|
|
$
|
23
|
|
|
(16
|
)%
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
NM
|
|
Restructuring charges and other exit-related activities
|
|
1
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
NM
|
|
Recoveries related to the resale or modification of previously
contracted shipments
|
|
—
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
NM
|
|
Adjusted operating income(1)
|
|
$
|
20
|
|
|
$
|
33
|
|
|
(41
|
)%
|
|
$
|
23
|
|
|
(15
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to SSI
|
|
$
|
13
|
|
|
$
|
41
|
|
|
(69
|
)%
|
|
$
|
16
|
|
|
(20
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations attributable to SSI
|
|
$
|
13
|
|
|
$
|
41
|
|
|
(68
|
)%
|
|
$
|
16
|
|
|
(20
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income from continuing operations attributable to SSI(1)
|
|
$
|
13
|
|
|
$
|
41
|
|
|
(67
|
)%
|
|
$
|
16
|
|
|
(18
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to SSI
|
|
$
|
0.46
|
|
|
$
|
1.42
|
|
|
(68
|
)%
|
|
$
|
0.57
|
|
|
(20
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
0.46
|
|
|
$
|
1.42
|
|
|
(67
|
)%
|
|
$
|
0.57
|
|
|
(19
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI(1)
|
|
$
|
0.48
|
|
|
$
|
1.42
|
|
|
(66
|
)%
|
|
$
|
0.58
|
|
|
(18
|
)%
|
|
|
|
(1) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
|
|
NM = Not Meaningful
|
|
|
Auto and Metals Recycling
|
Summary of Auto and Metals Recycling Results
|
|
($ in millions, except selling prices and data per ton; Fe
volumes 000s long tons; NFe volumes Ms lbs)
|
|
|
|
Quarter
|
|
|
|
2Q19
|
|
2Q18
|
|
Change
|
|
1Q19
|
|
Change
|
|
Total revenues
|
|
$
|
386
|
|
|
$
|
450
|
|
(14
|
)%
|
|
$
|
436
|
|
|
(12
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous revenues
|
|
$
|
257
|
|
|
$
|
308
|
|
(16
|
)%
|
|
$
|
299
|
|
|
(14
|
)%
|
|
Ferrous volumes
|
|
858
|
|
|
896
|
|
(4
|
)%
|
|
919
|
|
|
(7
|
)%
|
|
Avg. net ferrous sales prices ($/LT)(1)
|
|
$
|
287
|
|
|
$
|
314
|
|
(9
|
)%
|
|
$
|
306
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous revenues
|
|
$
|
99
|
|
|
$
|
110
|
|
(10
|
)%
|
|
$
|
104
|
|
|
(5
|
)%
|
|
Nonferrous volumes(2)
|
|
141
|
|
|
130
|
|
9
|
%
|
|
153
|
|
|
(8
|
)%
|
|
Avg. net nonferrous sales prices ($/lb)(1)(2)
|
|
$
|
0.58
|
|
|
$
|
0.72
|
|
(19
|
)%
|
|
$
|
0.59
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cars purchased for retail (000s)
|
|
89
|
|
|
102
|
|
(13
|
)%
|
|
94
|
|
|
(5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
22
|
|
|
$
|
45
|
|
(52
|
)%
|
|
$
|
23
|
|
|
(6
|
)%
|
|
Operating income per Fe ton
|
|
$
|
25
|
|
|
$
|
50
|
|
(50
|
)%
|
|
$
|
25
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income(3)
|
|
$
|
22
|
|
|
$
|
45
|
|
(52
|
)%
|
|
$
|
23
|
|
|
(6
|
)%
|
|
Adjusted operating income per Fe ton
|
|
$
|
25
|
|
|
$
|
50
|
|
(50
|
)%
|
|
$
|
25
|
|
|
1
|
%
|
|
|
|
(1) Sales prices are shown net of freight.
|
|
(2) Excludes platinum group metals (PGMs) in catalytic
converters.
|
|
(3) See Non-GAAP Financial Measures for reconciliation to
U.S. GAAP.
|
|
|
Volumes: Ferrous sales volumes in the second quarter
decreased 4% compared to the prior year second quarter and 7%
sequentially, primarily due to the adverse impact on supply flows from
unusually severe weather conditions, as well as the lower price
environment. Nonferrous sales volumes were 9% higher compared to the
prior year second quarter mainly due to the timing of shipments, and
were 8% lower sequentially due primarily to the impact of the lower
supply flows.
Export customers accounted for 60% of total ferrous sales volumes. Our
products, including ferrous and nonferrous, were shipped to 22 countries
in the second quarter of fiscal 2019, with Bangladesh, South Korea and
Turkey representing the top export destinations for ferrous shipments.
Pricing: Average ferrous net selling prices decreased $27
per ton, or 9%, compared to the prior year second quarter, and were down
$19 per ton, or 6%, sequentially. Average nonferrous net selling prices
decreased 19% compared to the prior year second quarter and decreased 2%
sequentially.
Margins: Operating income was $22 million in the second
quarter, $1 million, or 6%, lower sequentially and a decrease of $23
million, or 52%, compared to the prior year second quarter. Operating
income per ferrous ton of $25 was consistent sequentially and
represented a decrease of $25 per ton or 50% from the prior year second
quarter. Sequentially, AMR’s performance reflected additional benefits
from productivity initiatives and reduced SG&A expense including from
lower incentive compensation accruals, which substantially offset
seasonally lower sales volumes and retail sales, both of which were
adversely impacted by the unusually inclement winter weather. The
year-over-year margin compression resulted primarily from the decline in
net selling prices for nonferrous and ferrous products which outpaced
the reduction in purchase costs for raw materials, partially offset by
the benefits from productivity initiatives and lower SG&A expense.
Second quarter operating results include an adverse impact from average
inventory accounting of $1 million compared to a benefit of $4 million
in the second quarter of fiscal 2018 and an immaterial impact in the
first quarter of fiscal 2019.
Cascade Steel and Scrap
|
Summary of Cascade Steel and Scrap Results
|
|
($ in millions, except selling prices)
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
2Q19
|
|
2Q18
|
|
Change
|
|
1Q19
|
|
Change
|
|
Steel revenues
|
|
$
|
74
|
|
|
$
|
82
|
|
|
(9
|
)%
|
|
$
|
101
|
|
|
(27
|
)%
|
|
Recycling revenues
|
|
16
|
|
|
35
|
|
|
(53
|
)%
|
|
29
|
|
|
(44
|
)%
|
|
Total revenues
|
|
$
|
90
|
|
|
$
|
117
|
|
|
(23
|
)%
|
|
$
|
130
|
|
|
(31
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
6
|
|
|
$
|
5
|
|
|
7
|
%
|
|
$
|
12
|
|
|
(52
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished steel average net sales price ($/ST)
|
|
$
|
737
|
|
|
$
|
619
|
|
|
19
|
%
|
|
$
|
747
|
|
|
(1
|
)%
|
|
Finished steel sales volumes (000s ST)
|
|
94
|
|
|
125
|
|
|
(25
|
)%
|
|
119
|
|
|
(21
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization
|
|
76
|
%
|
|
83
|
%
|
|
(8
|
)%
|
|
87
|
%
|
|
(13
|
)%
|
|
(1) Price information is shown after netting the cost of
freight incurred to deliver the product to the customer.
|
|
|
Volumes: Finished steel sales volumes in the second
quarter were 25% lower year-over-year and down 21% sequentially,
primarily due to weather-related construction delays in our West Coast
markets resulting from prolonged periods of rain in California and
unusually cold weather in the Pacific Northwest. Recycling revenues
declined significantly year-over-year and sequentially as a result of
lower ferrous export sales and selling prices.
Pricing: Average net selling prices for finished steel
products increased 19% from the prior year second quarter, reflecting
the impacts of reduced pressure from steel imports and higher costs of
steel-making raw materials and other consumables. Average net selling
prices decreased 1% sequentially primarily due to the regional sales mix.
Margins: Operating income for the second quarter of fiscal
2019 was $6 million, an improvement from the prior year second quarter.
The improved year-over-year performance reflected an expansion in
finished steel margins resulting from higher average net selling prices
and benefits from productivity initiatives, partially offset by the
increase in the cost of steel-making raw materials, the impact of the
lower finished steel sales volumes and higher costs associated with
planned maintenance. Sequentially, operating income declined by $6
million driven primarily by the impact of the lower sales volumes and
higher production costs associated with planned maintenance.
Corporate Items
In the second quarter of fiscal 2019, consolidated financial performance
included Corporate expense of $8 million, a decrease of $9 million from
the prior year second quarter and a decrease of $4 million sequentially,
driven primarily by lower incentive compensation accruals and, compared
to the prior year, lower legal and professional services expenses.
The Company made significant progress in implementing and executing the
productivity initiatives targeting $35 million in benefits announced
earlier in fiscal 2019. Consolidated results in the second quarter of
fiscal 2019 reflected approximately $9 million of benefits from these
measures, of which approximately $7 million were achieved by AMR and the
remainder by CSS and Corporate. The Company expects to achieve at least
75% of the total targeted benefits in fiscal 2019, with the full amount
expected to be achieved in fiscal 2020.
The Company’s effective tax rate for the second quarter of fiscal 2019
was an expense of 22.3%.
The second quarter of fiscal 2019 reflected operating cash flow of $35
million. Total debt at the end of the second quarter of fiscal 2019 was
$163 million, and debt, net of cash, was $150 million, a decrease
compared to $169 million and $157 million, respectively, at the end of
the first quarter of fiscal 2019 (refer to Non-GAAP Financial Measures
provided after the financial statements in this document).
Pursuant to its ongoing authorized share repurchase program, during the
second quarter the Company repurchased approximately 263,000 shares, or
almost 1%, of its Class A common stock in open market transactions. The
Company also returned capital to shareholders through its 100th
consecutive quarterly dividend.
Analysts’ Conference Call: Second Quarter of Fiscal 2019
A conference call and slide presentation to discuss results will be held
today, April 4, 2019, at 11:30 a.m. Eastern 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.
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
FINANCIAL HIGHLIGHTS
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
|
February 28,
2019
|
|
November 30,
2018
|
|
February 28,
2018
|
|
February 28,
2019
|
|
February 28,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auto and Metals Recycling:
|
|
|
|
|
|
|
|
|
|
|
|
Ferrous revenues
|
|
$
|
257,488
|
|
|
$
|
298,812
|
|
|
$
|
307,687
|
|
|
$
|
556,300
|
|
|
$
|
562,670
|
|
|
Nonferrous revenues
|
|
99,484
|
|
|
104,181
|
|
|
110,388
|
|
|
203,665
|
|
|
220,731
|
|
|
Retail and other revenues
|
|
29,093
|
|
|
33,419
|
|
|
31,710
|
|
|
62,512
|
|
|
64,438
|
|
|
Total Auto and Metals Recycling revenues
|
|
386,065
|
|
|
436,412
|
|
|
449,785
|
|
|
822,477
|
|
|
847,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cascade Steel and Scrap:
|
|
|
|
|
|
|
|
|
|
|
|
Steel revenues
|
|
74,025
|
|
|
101,337
|
|
|
81,542
|
|
|
175,362
|
|
|
161,988
|
|
|
Recycling revenues
|
|
16,373
|
|
|
29,049
|
|
|
35,172
|
|
|
45,422
|
|
|
44,710
|
|
|
Total Cascade Steel and Scrap revenues
|
|
90,398
|
|
|
130,386
|
|
|
116,714
|
|
|
220,784
|
|
|
206,698
|
|
|
Intercompany sales eliminations
|
|
(2,898
|
)
|
|
(2,778
|
)
|
|
(7,056
|
)
|
|
(5,676
|
)
|
|
(11,815
|
)
|
|
Total revenues
|
|
$
|
473,565
|
|
|
$
|
564,020
|
|
|
$
|
559,443
|
|
|
$
|
1,037,585
|
|
|
$
|
1,042,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income
|
|
$
|
21,741
|
|
|
$
|
23,017
|
|
|
$
|
45,132
|
|
|
$
|
44,758
|
|
|
$
|
80,304
|
|
|
CSS operating income
|
|
$
|
5,768
|
|
|
$
|
11,918
|
|
|
$
|
5,413
|
|
|
$
|
17,686
|
|
|
$
|
13,889
|
|
|
Consolidated operating income
|
|
$
|
19,036
|
|
|
$
|
22,689
|
|
|
$
|
33,358
|
|
|
$
|
41,725
|
|
|
$
|
59,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted AMR operating income(1)
|
|
$
|
21,741
|
|
|
$
|
23,080
|
|
|
$
|
45,132
|
|
|
$
|
44,821
|
|
|
$
|
79,887
|
|
|
Adjusted CSS operating income(1)
|
|
5,768
|
|
|
11,918
|
|
|
5,413
|
|
|
17,686
|
|
|
13,801
|
|
|
Adjusted segment operating income(1)
|
|
27,509
|
|
|
34,998
|
|
|
50,545
|
|
|
62,507
|
|
|
93,688
|
|
|
Corporate expense
|
|
(8,095
|
)
|
|
(12,205
|
)
|
|
(16,750
|
)
|
|
(20,300
|
)
|
|
(33,394
|
)
|
|
Intercompany eliminations
|
|
158
|
|
|
161
|
|
|
(346
|
)
|
|
319
|
|
|
(827
|
)
|
|
Adjusted operating income(1)
|
|
19,572
|
|
|
22,954
|
|
|
33,449
|
|
|
42,526
|
|
|
59,467
|
|
|
Asset impairment (charges) recoveries, net
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
(63
|
)
|
|
88
|
|
|
Restructuring charges and other exit-related activities
|
|
(536
|
)
|
|
(202
|
)
|
|
(91
|
)
|
|
(738
|
)
|
|
(191
|
)
|
|
Recoveries related to the resale or modification of previously
contracted shipments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
417
|
|
|
Total operating income
|
|
$
|
19,036
|
|
|
$
|
22,689
|
|
|
$
|
33,358
|
|
|
$
|
41,725
|
|
|
$
|
59,781
|
|
|
(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 Six Months Ended
|
|
|
|
February 28,
2019
|
|
November 30,
2018
|
|
February 28,
2018
|
|
February 28,
2019
|
|
February 28,
2018
|
|
Revenues
|
|
$
|
473,565
|
|
|
$
|
564,020
|
|
|
$
|
559,443
|
|
|
$
|
1,037,585
|
|
|
$
|
1,042,722
|
|
|
Cost of goods sold
|
|
414,688
|
|
|
490,132
|
|
|
472,462
|
|
|
904,820
|
|
|
878,713
|
|
|
Selling, general and administrative
|
|
39,489
|
|
|
51,419
|
|
|
53,638
|
|
|
90,908
|
|
|
104,681
|
|
|
(Income) from joint ventures
|
|
(184
|
)
|
|
(485
|
)
|
|
(106
|
)
|
|
(669
|
)
|
|
(556
|
)
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
|
(88
|
)
|
|
Restructuring charges and other exit-related activities
|
|
536
|
|
|
202
|
|
|
91
|
|
|
738
|
|
|
191
|
|
|
Operating income
|
|
19,036
|
|
|
22,689
|
|
|
33,358
|
|
|
41,725
|
|
|
59,781
|
|
|
Interest expense
|
|
(2,067
|
)
|
|
(1,906
|
)
|
|
(2,281
|
)
|
|
(3,973
|
)
|
|
(4,340
|
)
|
|
Other income, net
|
|
321
|
|
|
23
|
|
|
101
|
|
|
344
|
|
|
950
|
|
|
Income from continuing operations before income taxes
|
|
17,290
|
|
|
20,806
|
|
|
31,178
|
|
|
38,096
|
|
|
56,391
|
|
|
Income tax (expense) benefit
|
|
(3,855
|
)
|
|
(4,116
|
)
|
|
10,577
|
|
|
(7,971
|
)
|
|
4,620
|
|
|
Income from continuing operations
|
|
13,435
|
|
|
16,690
|
|
|
41,755
|
|
|
30,125
|
|
|
61,011
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
(138
|
)
|
|
(72
|
)
|
|
164
|
|
|
(210
|
)
|
|
129
|
|
|
Net income
|
|
13,297
|
|
|
16,618
|
|
|
41,919
|
|
|
29,915
|
|
|
61,140
|
|
|
Net income attributable to noncontrolling interests
|
|
(405
|
)
|
|
(430
|
)
|
|
(903
|
)
|
|
(835
|
)
|
|
(1,760
|
)
|
|
Net income attributable to SSI
|
|
$
|
12,892
|
|
|
$
|
16,188
|
|
|
$
|
41,016
|
|
|
$
|
29,080
|
|
|
$
|
59,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to SSI:
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
0.47
|
|
|
$
|
0.59
|
|
|
$
|
1.47
|
|
|
$
|
1.06
|
|
|
$
|
2.14
|
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|
—
|
|
|
Net income per share attributable to SSI
|
|
$
|
0.47
|
|
|
$
|
0.59
|
|
|
$
|
1.48
|
|
|
$
|
1.05
|
|
|
$
|
2.14
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations attributable to SSI
|
|
$
|
0.46
|
|
|
$
|
0.57
|
|
|
$
|
1.42
|
|
|
$
|
1.04
|
|
|
$
|
2.06
|
|
|
Income (loss) per share from discontinued operations attributable to
SSI
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
|
—
|
|
|
Net income per share attributable to SSI(1)
|
|
$
|
0.46
|
|
|
$
|
0.57
|
|
|
$
|
1.42
|
|
|
$
|
1.03
|
|
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,630
|
|
|
27,505
|
|
|
27,797
|
|
|
27,568
|
|
|
27,745
|
|
|
Diluted
|
|
28,114
|
|
|
28,364
|
|
|
28,805
|
|
|
28,239
|
|
|
28,737
|
|
|
Dividends declared per common share
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.1875
|
|
|
$
|
0.3750
|
|
|
$
|
0.3750
|
|
|
(1) May not foot due to rounding.
|
|
|
|
SCHNITZER STEEL INDUSTRIES, INC.
|
|
SELECTED OPERATING STATISTICS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
YTD
|
|
|
|
1Q19
|
|
2Q19
|
|
2019
|
|
SSI Total Volumes(1)
|
|
|
|
|
|
|
|
Total ferrous volumes (LT)
|
|
1,079,705
|
|
|
957,214
|
|
|
2,036,919
|
|
|
Total nonferrous volumes (000s LB)
|
|
166,977
|
|
|
154,571
|
|
|
321,548
|
|
|
Auto and Metals Recycling
|
|
|
|
|
|
|
|
Ferrous selling prices ($/LT)(2)
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
290
|
|
|
$
|
286
|
|
|
$
|
288
|
|
|
Export
|
|
$
|
314
|
|
|
$
|
288
|
|
|
$
|
301
|
|
|
Average
|
|
$
|
306
|
|
|
$
|
287
|
|
|
$
|
297
|
|
|
Ferrous sales volume (LT)
|
|
|
|
|
|
|
|
Domestic
|
|
339,879
|
|
|
343,017
|
|
|
682,896
|
|
|
Export
|
|
578,976
|
|
|
515,171
|
|
|
1,094,147
|
|
|
Total
|
|
918,855
|
|
|
858,188
|
|
|
1,777,043
|
|
|
|
|
|
|
|
|
|
|
Nonferrous average price ($/LB)(2)(3)
|
|
$
|
0.59
|
|
|
$
|
0.58
|
|
|
$
|
0.59
|
|
|
Nonferrous sales volume (000s LB)(3)
|
|
152,869
|
|
|
141,307
|
|
|
294,176
|
|
|
Car purchase volume (000s)(4)
|
|
94
|
|
|
89
|
|
|
183
|
|
|
Auto stores at end of quarter
|
|
51
|
|
|
51
|
|
|
51
|
|
|
Cascade Steel and Scrap
|
|
|
|
|
|
|
|
Finished steel average sales price ($/ST)(2)
|
|
$
|
747
|
|
|
$
|
737
|
|
|
$
|
743
|
|
|
Sales volume (ST)
|
|
|
|
|
|
|
|
Rebar
|
|
81,470
|
|
|
59,424
|
|
|
140,894
|
|
|
Coiled products
|
|
37,418
|
|
|
34,489
|
|
|
71,907
|
|
|
Merchant bar and other
|
|
316
|
|
|
209
|
|
|
525
|
|
|
Finished steel products sold
|
|
119,204
|
|
|
94,122
|
|
|
213,326
|
|
|
|
|
|
|
|
|
|
|
Rolling mill utilization(5)
|
|
87
|
%
|
|
76
|
%
|
|
81
|
%
|
|
|
|
(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)
|
|
|
|
February 28, 2019
|
|
August 31, 2018
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,173
|
|
|
$
|
4,723
|
|
Accounts receivable, net
|
|
165,307
|
|
|
169,418
|
|
Inventories
|
|
198,565
|
|
|
205,877
|
|
Other current assets
|
|
41,908
|
|
|
68,341
|
|
Total current assets
|
|
418,953
|
|
|
448,359
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
428,777
|
|
|
415,711
|
|
|
|
|
|
|
|
Goodwill and other assets
|
|
239,522
|
|
|
240,747
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,087,252
|
|
|
$
|
1,104,817
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Short-term borrowings
|
|
$
|
1,215
|
|
|
$
|
1,139
|
|
Other current liabilities
|
|
169,735
|
|
|
253,538
|
|
Total current liabilities
|
|
170,950
|
|
|
254,677
|
|
|
|
|
|
|
|
Long-term debt
|
|
161,866
|
|
|
106,237
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
73,589
|
|
|
73,793
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Total Schnitzer Steel Industries, Inc. (“SSI”) shareholders’ equity
|
|
676,607
|
|
|
666,078
|
|
Noncontrolling interests
|
|
4,240
|
|
|
4,032
|
|
Total equity
|
|
680,847
|
|
|
670,110
|
|
Total liabilities and equity
|
|
$
|
1,087,252
|
|
|
$
|
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 asset impairment
charges net of recoveries, restructuring charges and other exit-related
activities, recoveries related to the resale or modification of
previously contracted shipments, and the income tax expense (benefit)
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 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
|
|
|
|
2Q19
|
|
2Q18
|
|
1Q19
|
|
2Q19
|
|
2Q18
|
|
Consolidated operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
19
|
|
|
$
|
33
|
|
|
$
|
23
|
|
|
$
|
42
|
|
|
$
|
60
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Restructuring charges and other exit-related activities
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Recoveries related to the resale or modification of previously
contracted shipments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted consolidated operating income(1)
|
|
$
|
20
|
|
|
$
|
33
|
|
|
$
|
23
|
|
|
$
|
43
|
|
|
$
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMR operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
22
|
|
|
$
|
45
|
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
80
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Recoveries related to the resale or modification of previously
contracted shipments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted AMR operating income
|
|
$
|
22
|
|
|
$
|
45
|
|
|
$
|
23
|
|
|
$
|
45
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSS operating income:
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
18
|
|
|
$
|
14
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted CSS operating income
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
18
|
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) May not foot due to rounding.
|
|
|
|
Net income from continuing operations attributable to SSI
|
|
($ in millions)
|
|
Quarter
|
|
YTD
|
|
|
|
2Q19
|
|
2Q18
|
|
1Q19
|
|
2Q19
|
|
2Q18
|
|
Net income from continuing operations attributable to SSI
|
|
$
|
13
|
|
$
|
41
|
|
$
|
16
|
|
$
|
29
|
|
$
|
59
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Restructuring charges and other exit-related activities
|
|
1
|
|
—
|
|
—
|
|
1
|
|
—
|
|
Recoveries related to the resale or modification of previously
contracted shipments
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Income tax expense (benefit) allocated to adjustments(1)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Adjusted net income from continuing operations attributable to SSI(2)
|
|
$
|
13
|
|
$
|
41
|
|
$
|
16
|
|
$
|
30
|
|
$
|
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.
|
|
(2)
|
|
May not foot due to rounding.
|
|
|
|
|
|
Diluted earnings per share from continuing operations
attributable to SSI
|
|
($ per share)
|
|
Quarter
|
|
YTD
|
|
|
|
2Q19
|
|
2Q18
|
|
1Q19
|
|
2Q19
|
|
2Q18
|
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
0.46
|
|
$
|
1.42
|
|
$
|
0.57
|
|
$
|
1.04
|
|
|
$
|
2.06
|
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
Restructuring charges and other exit-related activities
|
|
0.02
|
|
—
|
|
0.01
|
|
0.03
|
|
|
0.01
|
|
|
Recoveries related to the resale or modification of 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(2)
|
|
$
|
0.48
|
|
$
|
1.42
|
|
$
|
0.58
|
|
$
|
1.06
|
|
|
$
|
2.05
|
|
|
|
|
(1)
|
|
Income tax allocated to the aggregate adjustments reconciling
reported and adjusted diluted earnings per share from continuing
operations attributable to SSI is determined based on a tax
provision calculated with and without the adjustments.
|
|
(2)
|
|
May not foot due to rounding.
|
|
|
|
|
|
Debt, net of cash
|
|
($ in thousands)
|
|
|
|
February 28, 2019
|
|
November 30, 2018
|
|
August 31, 2018
|
|
Short-term borrowings
|
|
$
|
1,215
|
|
$
|
1,156
|
|
$
|
1,139
|
|
Long-term debt, net of current maturities
|
|
161,866
|
|
167,394
|
|
106,237
|
|
Total debt
|
|
163,081
|
|
168,550
|
|
107,376
|
|
Less: cash and cash equivalents
|
|
13,173
|
|
11,216
|
|
4,723
|
|
Total debt, net of cash
|
|
$
|
149,908
|
|
$
|
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/20190404005167/en/
Source: Schnitzer Steel Industries, Inc.
Investor Relations:
Michael Bennett
(503) 323-2811
[email protected]
Company Info:
www.schnitzersteel.com
[email protected]