Strong Sequential Improvement in Operating
Performance and Positive Operating Cash Flow
Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) today reported
results for its fiscal second quarter ended February 29, 2020.
The Company reported earnings per share from continuing
operations for the quarter of $0.14 and adjusted earnings per share
of $0.31, a strong sequential improvement from the first quarter
reported and adjusted loss per share of $0.26 and $0.17,
respectively. Prior year second quarter reported and adjusted
earnings per share from continuing operations were $0.46 and $0.50,
respectively.
Auto and Metals Recycling (AMR) achieved operating income in the
second quarter of $19 million, or $23 per ferrous ton, a
significant improvement from an operating loss of $2 million in the
first quarter. Cascade Steel and Scrap (CSS) achieved operating
income in the second quarter of $4 million, in-line
sequentially.
“Our strong second quarter results reflect the resiliency of our
operations and the ability of our team to navigate well during an
improving but still volatile quarter,” said Tamara Lundgren,
Chairman and Chief Executive Officer. “Both divisions achieved
higher sales volumes and benefited from strong execution of the
productivity initiatives we implemented during the quarter. In
addition, our strong focus on working capital management enabled us
to deliver positive operating cash flow notwithstanding higher
prices for raw materials.”
“During the COVID-19 national emergency, our facilities have
continued operating, reflecting our inclusion in the critical
infrastructure sector, as defined by the U.S. Department of
Homeland Security. We have implemented additional steps to protect
our employees and visitors to our sites and, where possible, our
employees are working remotely. While near-term market conditions,
including commodity prices and customer demand, remain subject to
significant uncertainty and volatility, we have a strong balance
sheet with low net leverage and significant cash on hand to weather
declines in demand,” she added.
The Company also announced that it will transition from its
multi-divisional organizational structure to a functionally-based,
integrated operating model. The Company will consolidate its
operations, sales, services and other functional capabilities at an
enterprise level. This new structure will result in a more agile
organization and solidify the productivity improvement and cost
reduction initiatives announced at the start of this fiscal year
that have been substantially implemented. The Company expects to
transition to the new operating model during the remainder of
fiscal 2020 and to report its financial results in a single segment
commencing with the first quarter of fiscal 2021.
In a separate announcement, the Company today also announced
Board leadership changes, including the appointment of Ms. Lundgren
to the additional position of Board Chairman, succeeding John
Carter, who continues as a member of the Board and Chairman
Emeritus, with Wayland R. Hicks continuing as Lead Independent
Director.
Summary Results
($ in millions, except per share
amounts)
Quarter
2Q20
1Q20
2Q19
Revenues
$
439
$
406
$
474
Operating income (loss)
$
8
$
(8
)
$
19
Charges for legacy environmental matters,
net(1)
—
1
1
Restructuring charges and other
exit-related activities
5
—
1
Business development costs
1
—
—
Asset impairment charges
—
2
—
Adjusted operating income (loss)(2)(3)
$
14
$
(4
)
$
20
Net income (loss) attributable to SSI
shareholders
$
4
$
(7
)
$
13
Net income (loss) from continuing
operations attributable to SSI shareholders
$
4
$
(7
)
$
13
Adjusted net income (loss) from continuing
operations attributable to SSI shareholders(2)
$
9
$
(5
)
$
14
Diluted earnings (loss) per share
attributable to SSI shareholders
$
0.14
$
(0.25
)
$
0.46
Diluted earnings (loss) per share from
continuing operations attributable to SSI shareholders
$
0.14
$
(0.26
)
$
0.46
Adjusted diluted earnings (loss) per share
from continuing operations attributable to SSI shareholders(2)
$
0.31
$
(0.17
)
$
0.50
(1)
Legal and environmental charges for legacy
environmental matters, net of recoveries. The prior year periods
have been recast for comparability. Legacy environmental matters
include charges (net of recoveries) related to the Portland Harbor
Superfund site and to other legacy environmental loss
contingencies. See Note 5 - Commitments and Contingencies,
“Portland Harbor” and “Other Legacy Environmental Loss
Contingencies” in the Notes to the Unaudited Condensed Consolidated
Financial Statements in Part I, Item 1 of the Company’s 10-Q filed
on April 2, 2020.
(2)
See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
(3)
May not foot due to rounding.
Auto and Metals Recycling
Summary of Auto and Metals Recycling
Results
($ in millions, except selling prices and
data per ton)
Quarter
2Q20
1Q20
Change
2Q19
Change
Total revenues
$
338
$
313
8
%
$
386
(13
)%
Ferrous revenues
$
222
$
192
16
%
$
257
(14
)%
Ferrous volumes (LT, in thousands)
850
830
2
%
858
(1
)%
Avg. net ferrous sales prices
($/LT)(1)
$
253
$
221
14
%
$
287
(12
)%
Nonferrous revenues
$
88
$
90
(2
)%
$
99
(12
)%
Nonferrous volumes (pounds, in
millions)(2)
113
132
(14
)%
141
(20
)%
Avg. net nonferrous sales prices
($/pound)(1)(2)
$
0.55
$
0.54
2
%
$
0.58
(5
)%
Cars purchased (in thousands)
85
83
2
%
89
(4
)%
Operating income (loss)
$
19
$
(2
)
NM
$
22
(11
)%
Operating income (loss) ($/LT)
$
23
$
(3
)
NM
$
25
(10
)%
Adjusted operating income (loss)(3)
$
20
$
(1
)
NM
$
22
(9
)%
Adjusted operating income (loss)
($/LT)
$
23
$
(1
)
NM
$
25
(9
)%
NM = Not Meaningful
LT = Long Ton, which is equivalent to
2,240 pounds
(1)
Price information is shown after netting
the cost of freight incurred to deliver the product to the
customer.
(2)
Excludes platinum group metals (PGMs) in
catalytic converters.
(3)
See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
AMR achieved operating income in the second quarter of $19
million, or $23 per ferrous ton, a significant improvement from an
operating loss of $2 million in the first quarter. After reaching
multi-year lows in October, ferrous selling prices rose
significantly through mid-January, before softening in February. On
a sequential basis, average ferrous net selling prices at AMR were
14% higher, outpacing the rise in purchase costs for raw materials
and lifting operating results by expanding metal spreads. In the
higher price environment, supply flows improved despite the adverse
impact of winter seasonality, leading to a 2% sequential increase
in ferrous sales volumes. Nonferrous sales volumes were down 14%
sequentially due primarily to the timing of shipments.
AMR’s sequential performance reflected benefits from increases
in the price of platinum group metals (PGM) products, as well as
benefits from productivity initiatives implemented during FY20
which led to a reduction in selling, general and administrative
(SG&A) expense. Second quarter operating results also included
a benefit from average inventory accounting of approximately $4
million compared to an adverse impact of $4 million in the first
quarter of fiscal 2020 and an adverse impact of $1 million in the
second quarter of fiscal 2019.
Export customers accounted for 68% of total ferrous sales
volumes for the quarter. Ferrous and nonferrous products were
shipped to 20 countries in the second quarter, with Bangladesh,
Turkey and Thailand representing the top export destinations for
ferrous shipments.
Cascade Steel and Scrap
Summary of Cascade Steel and Scrap
Results
($ in millions, except selling prices)
Quarter
2Q20
1Q20
Change
2Q19
Change
Steel revenues
$
86
$
77
11
%
$
74
16
%
Recycling revenues
19
17
10
%
16
14
%
Total segment revenues(1)
$
104
$
94
10
%
$
90
15
%
Operating income
$
4
$
4
(17
)%
$
6
(39
)%
Finished steel average net sales price
($/ST)(2)
$
627
$
643
(2
)%
$
737
(15
)%
Finished steel sales volumes (ST, in
thousands)
129
114
13
%
94
37
%
Rolling mill utilization
72
%
85
%
(15
)%
76
%
(5
)%
ST = Short Ton, which is equivalent to
2,000 pounds
(1)
May not foot due to rounding
(2)
Price information is shown after netting
the cost of freight incurred to deliver the product to the
customer.
CSS achieved operating income in the second quarter of $4
million, in-line sequentially. Operating results benefited from
increased recycling margins, higher finished steel sales volumes
and productivity initiatives. Finished steel sales volumes in the
second quarter were 13% higher sequentially amid robust
construction demand in our West Coast markets during the quarter
and relatively mild winter weather. Recycling revenues were 10%
higher sequentially primarily due to the higher scrap price
environment. These benefits were more than offset by the adverse
impact of $1 million associated with planned maintenance in the
quarter and margin compression caused by the decrease in average
net selling prices for finished steel products which outpaced the
decrease in purchase costs of steel-making raw materials.
Corporate Items
In the second quarter of fiscal 2020, consolidated financial
performance included Corporate expense of $10 million and adjusted
Corporate expense of $9 million, compared to $9 million and $8
million, respectively, in the first quarter of fiscal 2020. The
Company’s effective tax rate for the second quarter of fiscal 2020
was an expense of 28.2%.
The Company made significant progress in implementing the
productivity initiatives announced in October 2019 targeting
realized benefits of $15 million in fiscal 2020 and annualized
benefits of $20 million. Consolidated results in the second quarter
reflected an estimated $4 million of benefits from these measures,
with total benefits achieved through the first six months of fiscal
2020 of approximately $6 million. In connection with ongoing
productivity initiatives, the Company incurred restructuring
charges and other exit-related costs of approximately $5 million in
the quarter.
In the second quarter, the Company generated positive operating
cash flow of $6 million. Total debt at the end of the second
quarter was $142 million and debt, net of cash, was $132 million
(for a reconciliation of adjusted results and debt, net of cash, to
U.S. GAAP, see the table provided in the Non-GAAP Financial
Measures section). Capital expenditures were $13 million, including
investments for advanced metal recovery technologies and other
growth projects.
The Company has a revolving credit facility of $700 million and
CAD$15 million which matures in 2023. In order to preserve
financial flexibility in light of current uncertainties resulting
from the COVID-19 outbreak, the Company increased its borrowings
under the revolving credit facility by $250 million, bringing its
cash position to approximately $300 million as of April 1,
2020.
During the second quarter, the Company returned capital to
shareholders through its 104th consecutive quarterly dividend and
the repurchase of 53 thousand shares of Class A common stock in
open market transactions pursuant to its existing share repurchase
program.
Analysts’ Conference Call: Second Quarter of Fiscal
2020
A conference call and slide presentation to discuss results will
be held today, April 2, 2020, at 11:30 a.m. Eastern and will be
hosted by Tamara Lundgren, Chairman and Chief Executive Officer,
and Richard Peach, Executive Vice President, Chief Financial
Officer and Chief Strategy Officer. The call and the slides will be
webcast and accessible on the Company’s website under Company >
Investors > Event Calendar at www.schnitzersteel.com/events.
Summary financial data is provided in the following pages. The
slides and related materials will be available prior to the call on
the above website.
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest
manufacturers and exporters of recycled metal products in North
America with operating facilities located in 23 states, Puerto Rico
and Western Canada. Schnitzer has seven deep water export
facilities located on both the East and West Coasts and in Hawaii
and Puerto Rico. The Company’s integrated operating platform also
includes 51 stores which sell serviceable used auto parts from
salvaged vehicles and receive approximately 5 million annual retail
visits. The Company’s steel manufacturing operations produce
finished steel products, including rebar, wire rod and other
specialty products. The Company began operations in 1906 in
Portland, Oregon.
SCHNITZER STEEL INDUSTRIES,
INC.
FINANCIAL HIGHLIGHTS
($ in thousands)
(Unaudited)
For the Three Months
Ended
For the Six Months
Ended
February 29,
2020
November 30,
2019
February 28,
2019
February 29,
2020
February 28,
2019
REVENUES:
Auto and Metals Recycling:
Ferrous revenues
$
222,465
$
192,472
$
257,488
$
414,937
$
556,300
Nonferrous revenues
87,901
89,812
99,484
177,713
203,665
Retail and other revenues
27,303
30,473
29,093
57,776
62,512
Total Auto and Metals Recycling
revenues
337,669
312,757
386,065
650,426
822,477
Cascade Steel and Scrap:
Steel revenues(1)
85,539
77,325
74,025
162,864
175,362
Recycling revenues
18,620
16,941
16,373
35,561
45,422
Total Cascade Steel and Scrap revenues
104,159
94,266
90,398
198,425
220,784
Intercompany sales eliminations
(2,346
)
(1,439
)
(2,898
)
(3,785
)
(5,676
)
Total revenues
$
439,482
$
405,584
$
473,565
$
845,066
$
1,037,585
OPERATING INCOME (LOSS):
AMR operating income (loss)
$
19,304
$
(2,432
)
$
21,741
$
16,872
$
44,758
CSS operating income
$
3,524
$
4,237
$
5,768
$
7,761
$
17,686
Consolidated operating income (loss)
$
7,691
$
(7,910
)
$
19,036
$
(219
)
$
41,725
Adjusted AMR operating income
(loss)(2)
$
19,688
$
(852
)
$
21,741
$
18,836
$
44,821
CSS operating income
3,524
4,237
5,768
7,761
17,686
Adjusted segment operating income(2)
23,212
3,385
27,509
26,597
62,507
Adjusted corporate expense(2)
(9,198
)
(8,017
)
(7,398
)
(17,215
)
(19,132
)
Intercompany eliminations
(36
)
174
158
138
319
Adjusted operating income (loss)(2)
13,978
(4,458
)
20,269
9,520
43,694
Charges for legacy environmental matters,
net(3)
(451
)
(1,293
)
(697
)
(1,744
)
(1,168
)
Restructuring charges and other
exit-related activities
(4,633
)
(467
)
(536
)
(5,100
)
(738
)
Business development costs
(801
)
—
—
(801
)
—
Asset impairment charges
(402
)
(1,692
)
—
(2,094
)
(63
)
Total operating income (loss)
$
7,691
$
(7,910
)
$
19,036
$
(219
)
$
41,725
(1)
Steel revenues include primarily sales of
finished steel products, semi-finished goods (billets) and
manufacturing scrap.
(2)
See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
(3)
Legal and environmental charges for legacy
environmental matters, net of recoveries. The prior year periods
have been recast for comparability. Legacy environmental matters
include charges (net of recoveries) related to the Portland Harbor
Superfund site and to other legacy environmental loss
contingencies. See Note 5 - Commitments and Contingencies,
“Portland Harbor” and “Other Legacy Environmental Loss
Contingencies” in the Notes to the Unaudited Condensed Consolidated
Financial Statements in Part I, Item 1 of the Company’s 10-Q filed
on April 2, 2020.
SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
($ in thousands, except per share
amounts)
(Unaudited)
For the Three Months
Ended
For the Six Months
Ended
February 29,
2020
November 30,
2019
February 28,
2019
February 29,
2020
February 28,
2019
Revenues
$
439,482
$
405,584
$
473,565
$
845,066
$
1,037,585
Cost of goods sold
380,520
364,760
414,688
745,280
904,820
Selling, general and administrative
46,426
46,774
39,489
93,200
90,908
(Income) from joint ventures
(190
)
(199
)
(184
)
(389
)
(669
)
Asset impairment charges
402
1,692
—
2,094
63
Restructuring charges and other
exit-related activities
4,633
467
536
5,100
738
Operating income (loss)
7,691
(7,910
)
19,036
(219
)
41,725
Interest expense
(1,320
)
(1,423
)
(2,067
)
(2,743
)
(3,973
)
Other (expense) income, net
(98
)
206
321
108
344
Income (loss) from continuing operations
before income taxes
6,273
(9,127
)
17,290
(2,854
)
38,096
Income tax (expense) benefit
(1,770
)
2,534
(3,855
)
764
(7,971
)
Income (loss) from continuing
operations
4,503
(6,593
)
13,435
(2,090
)
30,125
Income (loss) from discontinued
operations, net of tax
1
28
(138
)
29
(210
)
Net income (loss)
4,504
(6,565
)
13,297
(2,061
)
29,915
Net income attributable to noncontrolling
interests
(621
)
(430
)
(405
)
(1,051
)
(835
)
Net income (loss) attributable to SSI
shareholders
$
3,883
$
(6,995
)
$
12,892
$
(3,112
)
$
29,080
Basic:
Income (loss) per share from continuing
operations
attributable to SSI shareholders
$
0.14
$
(0.26
)
$
0.47
$
(0.11
)
$
1.06
Income (loss) per share from discontinued
operations
—
—
—
—
(0.01
)
Net income (loss) per share
attributable to SSI shareholders(1)
$
0.14
$
(0.25
)
$
0.47
$
(0.11
)
$
1.05
Diluted:
Income (loss) per share from continuing
operations
attributable to SSI shareholders
$
0.14
$
(0.26
)
$
0.46
$
(0.11
)
$
1.04
Income (loss) per share from discontinued
operations
—
—
—
—
(0.01
)
Net income (loss) per share attributable
to SSI shareholders(1)
$
0.14
$
(0.25
)
$
0.46
$
(0.11
)
$
1.03
Weighted average number of common
shares:
Basic
27,721
27,515
27,630
27,618
27,568
Diluted
28,139
27,515
28,114
27,618
28,239
Dividends declared per common share
$
0.1875
$
0.1875
$
0.1875
$
0.375
$
0.375
(1)
May not foot due to rounding
SCHNITZER STEEL INDUSTRIES, INC.
SELECTED OPERATING
STATISTICS
(Unaudited)
YTD
1Q20
2Q20
2020
SSI Total Volumes(1)
Total ferrous volumes (LT, in
thousands)
976
988
1,964
Total nonferrous volumes (pounds, in
thousands)
144,176
124,342
268,518
Auto and Metals Recycling
Ferrous selling prices
($/LT)(2)
Domestic
$
195
$
243
$
221
Export
$
229
$
257
$
243
Average
$
221
$
253
$
238
Ferrous sales volume (LT, in
thousands)
Domestic
247
275
522
Export
583
576
1,159
Total(3)
830
850
1,680
Nonferrous average price
($/pound)(2)(4)
$
0.54
$
0.55
$
0.54
Nonferrous sales volume (pounds, in
thousands)(4)
131,501
112,765
244,266
Cars purchased (in
thousands)(5)
83
85
168
Auto stores at period end
51
51
51
Cascade Steel and Scrap
Finished steel average sales price
($/ST)(2)
$
643
$
627
$
635
Sales volume (ST, in thousands)
Rebar
83
86
169
Coiled products
29
42
71
Merchant bar and other
1
1
2
Finished steel products sold(3)(7)
114
129
242
Rolling mill utilization(6)
85
%
72
%
79
%
Tons for recycled ferrous metal are LT
(Long Ton, which is equivalent to 2,240 pounds) and for finished
steel products are ST (Short Ton, which is equivalent to 2,000
pounds).
(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 netting
the cost of freight incurred to deliver the product to the
customer.
(3)
May not foot due to rounding.
(4)
Excludes PGM metals in catalytic
converters.
(5)
Cars purchased by auto parts stores
only.
(6)
Rolling mill utilization is based on
effective annual production capacity under current conditions of
580 thousand tons of finished steel products.
(7)
The sum of quarterly amounts may not agree
to full year equivalent due to rounding.
SCHNITZER STEEL INDUSTRIES, INC.
SELECTED OPERATING
STATISTICS
(Unaudited)
Fiscal Year
1Q19
2Q19
3Q19
4Q19
2019
SSI Total Volumes(1)
Total ferrous volumes (LT, in
thousands)(2)
1,080
992
1,079
1,168
4,319
Total nonferrous volumes (pounds, in
thousands)
166,977
154,571
169,912
175,874
667,334
Auto and Metals Recycling
Ferrous selling prices
($/LT)(3)
Domestic
$
290
$
286
$
268
$
232
$
272
Export
$
314
$
288
$
303
$
281
$
295
$
306
$
287
$
293
$
270
$
289
Ferrous sales volume (LT, in
thousands)
Domestic
340
343
311
271
1,265
Export
579
515
627
754
2,475
919
858
938
1,024
3,739
Nonferrous average price
($/pound)(3)(5)
$
0.59
$
0.58
$
0.62
$
0.56
$
0.59
Nonferrous sales volume (pounds, in
thousands)(5)
152,869
141,307
153,936
160,182
608,294
Cars purchased (in
thousands)(6)
94
89
102
101
386
Auto stores at period end
51
51
51
51
51
Cascade Steel and Scrap
Finished steel average sales price
($/ST)(3)
$
747
$
737
$
703
$
675
$
713
Sales volume (ST, in thousands)
Rebar
81
59
91
100
331
Coiled products(7)
37
34
39
32
143
Merchant bar and other
—
—
—
3
3
Finished steel products sold(4)(7)
119
94
130
134
478
Rolling mill utilization(8)
87
%
76
%
98
%
90
%
88
%
Tons for recycled ferrous metal are LT
(Long Ton, which is equivalent to 2,240 pounds) and for finished
steel products are ST (Short Ton, which is equivalent to 2,000
pounds).
(1)
Ferrous and nonferrous volumes sold
externally by AMR and CSS and delivered to our steel mill for
finished steel production.
(2)
Subsequent to the earnings release for the
second quarter of fiscal 2019, total ferrous volumes for the second
quarter of fiscal 2019 were revised to include an additional 35
thousand LT.
(3)
Price information is shown after netting
the cost of freight incurred to deliver the product to the
customer.
(4)
May not foot due to rounding.
(5)
Excludes PGM metals in catalytic
converters.
(6)
Cars purchased by auto parts stores
only.
(7)
The sum of quarterly amounts may not agree
to full year equivalent due to rounding.
(8)
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 29, 2020
August 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
10,326
$
12,377
Accounts receivable, net
158,767
145,617
Inventories
183,566
187,320
Other current assets
33,680
120,974
Total current assets
386,339
466,288
Property, plant and equipment, net
454,022
456,400
Operating lease right-of-use assets
121,573
—
Goodwill and other assets
235,313
238,058
Total assets
$
1,197,247
$
1,160,746
Liabilities and Equity
Current liabilities:
Short-term borrowings
$
1,411
$
1,321
Operating lease liabilities
18,152
—
Other current liabilities
163,195
266,909
Total current liabilities
182,758
268,230
Long-term debt, net of current
maturities
140,521
103,775
Operating lease liabilities, net of
current maturities
105,680
—
Other long-term liabilities
83,340
87,445
Equity:
Total Schnitzer Steel Industries, Inc.
("SSI") shareholders' equity
680,651
696,964
Noncontrolling interests
4,297
4,332
Total equity
684,948
701,296
Total liabilities and equity
$
1,197,247
$
1,160,746
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 shareholders and adjusted
consolidated and AMR operating income as well as adjusted corporate
expense which are non-GAAP financial measures as defined under SEC
rules. As required by SEC rules, the Company has provided a
reconciliation 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 adds a meaningful
presentation of our results from business operations excluding
adjustments for charges for legacy environmental matters, net of
recoveries, asset impairment charges, restructuring charges and
other exit-related activities, business development costs 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.
Reconciliation of adjusted consolidated
operating income (loss), adjusted AMR operating income (loss) and
adjusted corporate expense
($ in millions)
Quarter
2Q20
1Q20
2Q19
Consolidated operating income
(loss):
As reported
$
8
$
(8
)
$
19
Charges for legacy environmental matters,
net(1)
—
1
1
Restructuring charges and other
exit-related activities
5
—
1
Business development costs
1
—
—
Asset impairment charges
—
2
—
Adjusted(3)
$
14
$
(4
)
$
20
AMR operating income (loss):
As reported
$
19
$
(2
)
$
22
Asset impairment charges
—
2
—
Adjusted(3)
$
20
$
(1
)
$
22
Corporate expense:
As reported
$
10
$
9
$
8
Charges for legacy environmental matters,
net(1)
—
(1
)
(1
)
Business development costs
(1
)
Asset impairment charges
—
—
—
Adjusted
$
9
$
8
$
7
Reconciliation of adjusted net income (loss) from continuing
operations attributable to SSI shareholders
($ in millions)
Quarter
2Q20
1Q20
2Q19
Net income (loss) from continuing
operations attributable to SSI shareholders
$
4
$
(7
)
$
13
Charges for legacy environmental matters,
net(1)
—
1
1
Restructuring charges and other
exit-related activities
5
—
1
Business development costs
1
—
—
Asset impairment charges
—
2
—
Income tax (benefit) expense allocated to
adjustments(2)
(1
)
(1
)
—
Adjusted net income (loss) from continuing
operations attributable to SSI shareholders(3)
$
9
$
(5
)
$
14
Reconciliation of diluted earnings
(loss) per share from continuing operations attributable to SSI
shareholders
($ per share)
Quarter
2Q20
1Q20
2Q19
Diluted earnings (loss) per share from
continuing operations attributable to SSI shareholders
$
0.14
$
(0.26
)
$
0.46
Charges for legacy environmental matters,
net(1)
0.02
0.05
0.02
Restructuring charges and other
exit-related activities
0.16
0.02
0.02
Business development costs
0.03
—
—
Asset impairment charges
0.01
0.06
—
Income tax (benefit) expense allocated to
adjustments(2)
(0.05
)
(0.04
)
(0.01
)
Adjusted diluted earnings (loss) per share
from continuing operations
attributable to SSI shareholders(3)
$
0.31
$
(0.17
)
$
0.50
(1)
Legal and environmental charges for legacy
environmental matters, net of recoveries. The prior year periods
have been recast for comparability. Legacy environmental matters
include charges (net of recoveries) related to the Portland Harbor
Superfund site and to other legacy environmental loss
contingencies. See Note 5 - Commitments and Contingencies,
“Portland Harbor” and “Other Legacy Environmental Loss
Contingencies” in the Notes to the Unaudited Condensed Consolidated
Financial Statements in Part I, Item 1 of the Company’s 10-Q filed
on April 2, 2020.
(2)
Income tax allocated to the aggregate
adjustments reconciling reported and adjusted net income (loss)
from continuing operations attributable to SSI shareholders and
diluted earnings (loss) per share from continuing operations
attributable to SSI shareholders is determined based on a tax
provision calculated with and without the adjustments.
(3)
May not foot due to rounding.
Reconciliation of debt, net of
cash
($ in thousands)
February 29, 2020
November 30, 2019
August 31, 2019
Short-term borrowings
$
1,411
$
1,431
$
1,321
Long-term debt, net of current
maturities
140,521
126,875
103,775
Total debt
141,932
128,306
105,096
Less: cash and cash equivalents
10,326
9,624
12,377
Total debt, net of cash
$
131,606
$
118,682
$
92,719
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,” “the Company” 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; the impact of sanctions and tariffs, quotas and other
trade actions and import restrictions; the impact of pandemics,
epidemics or other public health emergencies, such as the recent
outbreak of coronavirus disease 2019 (COVID-19); the realization of
deferred tax assets; planned capital expenditures; liquidity
positions; our 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” of 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 sanctions and
tariffs, quotas and other trade actions and import restrictions;
the impact of pandemics, epidemics or other public health
emergencies, such as the recent outbreak of coronavirus disease
2019 (COVID-19); 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;
inability to realize or delays in realizing expected benefits from
investments in technology; inability to renew facility leases;
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; 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; 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/20200402005236/en/
Investor Relations: Michael Bennett (503) 323-2811
mcbennett@schn.com
Company Info: www.schnitzersteel.com ir@schn.com
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