Schnitzer Announces Third Quarter Fiscal 2019 Preliminary Results and Earnings Date
Third Quarter Earnings Conference Call 11:30 a.m. Eastern on June 26,
2019
PORTLAND, Ore.--(BUSINESS WIRE)--Jun. 14, 2019--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today announced
preliminary results for its third quarter of fiscal 2019 ended May 31,
2019.
Consolidated Results
Schnitzer expects fiscal 2019 third quarter earnings per share from
continuing operations to be in the range of $0.52 - $0.56 and adjusted
earnings per share to be in the range of $0.58 - $0.62, a sequential
improvement from the second quarter reported and adjusted earnings per
share from continuing operations of $0.46 and $0.48, respectively. For
the third quarter of fiscal 2018, reported and adjusted earnings per
share from continuing operations were $1.31 and $1.26, respectively,
reflecting significantly higher ferrous and nonferrous selling prices.
For a reconciliation of adjusted results to U.S. GAAP, see the table
provided in the Non-GAAP Financial Measures section.
Divisional Operating Performance
Auto and Metals Recycling (AMR) expects to report operating income in
the range of $28 million - $29 million. Operating income per ferrous ton
is expected to be in the range of $30 - $31, which is an improvement of
$5 - $6 per ferrous ton sequentially but is lower than the prior year
third quarter. Sequentially, AMR’s expected performance reflects
benefits from higher ferrous and nonferrous sales volumes which were up
approximately 9%, seasonally improved supply flows and retail sales, and
continuing benefits from productivity initiatives. Year-over-year, AMR’s
performance is expected to decrease primarily due to lower average net
nonferrous selling prices of approximately 16% and lower average net
selling prices for ferrous products of approximately 13%, partially
offset by the benefits from productivity initiatives.
Cascade Steel and Scrap (CSS) expects to report operating income of
approximately $8 million, which is a $2 million improvement sequentially
but is lower than the prior year third quarter. Sequentially, the
expected improvement in performance is due primarily to the benefits of
seasonally higher finished steel sales volumes of 38% and significantly
increased utilization, which more than offset the impact of lower
average net selling prices which were down approximately 5%, and high
beginning inventory costs resulting from lower production in the second
quarter. The expected year-over-year decrease in CSS’s performance
primarily reflects lower finished steel sales volumes, the impact of the
high beginning inventory costs, and a $1 million impact from a spike in
gas prices in March, partially offset by benefits from productivity
initiatives.
Corporate Items
Consolidated financial performance in the third quarter is expected to
include Corporate expense of approximately $13 million compared to
Corporate expense of $8 million in the second quarter and $14 million in
the prior year third quarter. Sequentially, the expected increase in
expense is driven by a $2 million charge related to the settlement of a
wage and hour class action lawsuit and higher incentive compensation
accruals. The expected year-over-year decrease in expense is driven
primarily by lower incentive compensation accruals and benefits from
productivity initiatives, partially offset by the class action
settlement charge. The Company’s effective tax rate for the third
quarter of fiscal 2019 is expected to be an expense of approximately 26%.
For the third quarter, the Company expects to report operating cash flow
in the range of $32 million - $37 million. As of the end of the third
quarter, total debt was $142 million and debt, net of cash, was $134
million (for a reconciliation of debt, net of cash, see the table
provided in the Non-GAAP Financial Measures section). This represents a
total debt reduction of $21 million during the quarter.
The preliminary information provided above is based on the Company’s
current estimates of its financial results for the quarter ended May 31,
2019 and remains subject to change based on final review of the
Company’s third quarter financial results.
Schnitzer will report its third quarter fiscal 2019 financial results on
Wednesday, June 26, 2019 and will host a webcast conference call to
discuss the performance at 11:30 a.m. Eastern on the same day. The
webcast of the call and the accompanying slide presentation may be
accessed on Schnitzer’s website under Company > Investors > Event
Calendar at www.schnitzersteel.com/events.
The call will be hosted by Tamara Lundgren, President and Chief
Executive Officer, and Richard Peach, Senior Vice President, Chief
Financial Officer and Chief of Corporate Operations.
Replay Information
Toll Free Dial: (855) 859-2056
Toll Free International Dial: (404) 537-3406
Conference ID: 4485666
Replay Available: 06/26/2019 to 07/01/2019
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.
Non-GAAP Financial Measures
This press release contains expected performance based on adjusted
diluted earnings per share from continuing operations attributable to
SSI which is a non-GAAP financial measure as defined under SEC rules. As
required by SEC rules, the Company has provided a reconciliation of this
measure for each period discussed to the most directly comparable U.S.
GAAP measure. Management believes that presenting non-GAAP financial
measures provides a meaningful presentation of our results from business
operations excluding adjustments for a charge related to the settlement
of a wage and hour class action lawsuit, asset impairment charges net of
recoveries, restructuring charges and other exit-related activities, 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. 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.
|
Diluted Earnings per Share from
Continuing Operations Attributable to SSI
|
| ($ per share) |
|
|
|
|
Quarter |
|
|
3Q19 |
|
2Q19 |
|
3Q18 |
|
|
High |
|
Low |
|
|
|
|
|
Diluted earnings per share from continuing operations attributable
to SSI
|
|
$
|
0.56
|
|
|
$
|
0.52
|
|
|
$
|
0.46
|
|
|
$
|
1.31
|
|
|
Charge related to the settlement of a wage and hour class action
lawsuit
|
|
0.08
|
|
|
0.08
|
|
|
—
|
|
|
—
|
|
|
Asset impairment charges (recoveries), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.05
|
)
|
|
Restructuring charges and other exit-related activities
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
Income tax expense (benefit) allocated to adjustments
|
|
(0.02
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
Adjusted diluted earnings per share from continuing operations
attributable to SSI
|
|
$
|
0.62
|
|
|
$
|
0.58
|
|
|
$
|
0.48
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, Net of Cash
The following is a reconciliation of debt, net of cash (in millions):
|
|
May 31, 2019 |
|
February 28, 2019 |
|
August 31, 2018 |
|
Total debt
|
|
$
|
142
|
|
$
|
163
|
|
$
|
107
|
|
Less: cash and cash equivalents
|
|
8
|
|
13
|
|
5
|
|
Total debt, net of cash(1) |
|
$
|
134
|
|
$
|
150
|
|
$
|
103
|
|
|
|
|
|
|
|
| (1) May not foot due to rounding.
|
|
|
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/20190614005070/en/
Source: Schnitzer Steel Industries, Inc.
Investor Relations: Michael Bennett (503) 323-2811
Website: www.schnitzersteel.com
Email:
[email protected]