─ Second Quarter Earnings Conference Call
11:30 a.m. Eastern April 4, 2019 ─
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today announced
preliminary results for its second quarter of fiscal 2019 ended
February 28, 2019.
Consolidated Results
Schnitzer expects second quarter earnings per share from
continuing operations to be in the range of $0.42 - $0.46 and
adjusted earnings per share to be in the range of $0.44 - $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. For the second quarter of fiscal 2018, 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 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 $21 million - $22 million. Operating income
per ferrous ton is expected to be in the range of $24 - $25, which
is in-line sequentially but lower than the prior year’s second
quarter. Sequentially, AMR’s expected performance reflects benefits
from additional productivity initiatives and lower incentive
compensation accruals, which substantially offset seasonally lower
volumes and retail sales, both of which were exacerbated by
unusually severe winter weather. Year-over-year, the expected
decrease in AMR’s second quarter performance is due primarily to
the compression of operating margins from the decline in net
selling prices for nonferrous and ferrous products, which outpaced
the reduction in purchase costs for raw materials. Average ferrous
and nonferrous net selling prices are expected to decrease by
approximately 9% and 19%, respectively, year-over-year. Ferrous
sales volumes are expected to decrease by approximately 4% while
nonferrous sales volumes are expected to increase by approximately
9% compared to the prior year second quarter.
Cascade Steel and Scrap (CSS) expects to report operating income
of approximately $6 million, slightly higher than the prior year
second quarter but down sequentially. Year-over year, the expected
improvement in CSS’s performance reflects the benefits from higher
average net selling prices for finished steel products and
productivity improvements partially offset by higher costs of
steel-making raw materials, lower finished steel sales volumes and
other items. Sequentially, the expected decline in results is due
primarily to the lower finished steel sales volumes, which included
the impact of construction delays in our West Coast markets
resulting from unusually severe winter weather in California and
the Pacific Northwest, and higher production costs associated with
planned maintenance. Average net selling prices for finished steel
products in the quarter are expected to be approximately 19% higher
year-over-year. Finished steel sales volumes are expected to be 25%
lower year-over-year.
Corporate Items
Consolidated financial performance in the second quarter is
expected to include Corporate expense of approximately $8 million,
a decrease of $9 million compared to the prior year second quarter
and a $4 million decrease sequentially, driven primarily by lower
incentive compensation accruals and, compared to the prior year,
lower legal and professional services expenses. The Company’s
effective tax rate for the second quarter of fiscal 2019 is
expected to be an expense of approximately 22%.
For the second quarter, the Company expects to report operating
cash flow in the range of $30 million - $35 million, reflecting
profitable operating performance and a decrease in net working
capital. As of the end of the second quarter, total debt was $163
million. Debt, net of cash, was $150 million, a sequential decrease
of $7 million (for a reconciliation of debt, net of cash, see the
table provided in the Non-GAAP Financial Measures section). During
the second quarter, the Company also repurchased approximately
263,000 shares, or almost 1%, of its Class A common stock in open
market transactions pursuant to its ongoing authorized share
repurchase program.
The preliminary information provided above is based on the
Company’s current estimates of its financial results for the
quarter ended February 28, 2019 and remains subject to change
based on final review of the Company’s second quarter financial
results.
Schnitzer will report its second quarter fiscal 2019 financial
results on Thursday, April 4, 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: 4969577
Replay Available: 04/04/2019 to
04/09/2019
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 asset impairment charges, 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 2Q19 1Q19
2Q18 High Low
Diluted earnings per share from continuing operations
attributable to SSI $ 0.46 $ 0.42 $ 0.57 $ 1.42 Asset impairment
charges — — — — Restructuring charges and other exit-related
activities 0.02 0.02 0.01 — Income tax expense (benefit) allocated
to adjustments — — — — Adjusted diluted earnings per share from
continuing operations attributable to SSI $ 0.48 $ 0.44 $ 0.58 $
1.42
Debt, Net of Cash
The following is a reconciliation of debt, net of cash (in
millions):
February 28, 2019 November
30, 2018 August 31, 2018 Total debt $ 163
$ 169 $ 107 Less: cash and cash
equivalents 13 11
5 Total debt, net of cash(1) $ 150 $ 157
$ 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/20190320005188/en/
Investor Relations: Michael Bennett (503) 323-2811Website:
www.schnitzersteel.comEmail: ir@schn.com
Schnitzer Steel Industries (NASDAQ:SCHN)
Historical Stock Chart
From Aug 2024 to Sep 2024
Schnitzer Steel Industries (NASDAQ:SCHN)
Historical Stock Chart
From Sep 2023 to Sep 2024