Positive Segment Operating Performance and
Cash Flow Demonstrate Resilience
Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) today reported
results for its fiscal third quarter ended May 31, 2020. Reflecting
the impact of the COVID-19 pandemic, the Company reported a loss
per share from continuing operations for the quarter of $(0.18) and
adjusted earnings per share of $0.05, compared to second quarter
reported and adjusted earnings per share of $0.14 and $0.31,
respectively. Comparatively, prior year third quarter reported and
adjusted earnings per share from continuing operations were $0.56
and $0.65, respectively.
Auto and Metals Recycling (AMR) achieved operating income in the
third quarter of $3 million or $3 per ferrous ton and adjusted
operating income of $5 million or $6 per ferrous ton, both of which
include an adverse impact from average inventory accounting of
approximately $3 per ferrous ton. The COVID-19 pandemic and
subsequent measures introduced by local and national governments
resulted in an economic slowdown which reduced supply flows and
caused a sharp decline in scrap prices before prices partially
recovered later in the quarter. Reflecting the success of AMR’s
global sales diversification strategy, AMR’s ferrous and nonferrous
sales were shipped to 21 countries despite the weaker global
markets.
Cascade Steel and Scrap (CSS) achieved operating income in the
third quarter of $7 million, almost double the operating income
achieved in the second quarter. The improved CSS operating
performance was primarily driven by margin expansion due to the
lower cost of raw materials, higher utilization and the benefits of
productivity initiatives. Construction demand in the West Coast
markets continued to show strength during the quarter despite the
negative impact of COVID-19 on general economic activity.
“Our team has worked tirelessly through this pandemic, serving
our customers and communities, and supporting our suppliers,
demonstrating the critical and essential role of our business.
Early on, we deployed health, safety, and wellness protocols in all
our facilities in order to protect the health of our employees and
all who visit our sites. I am very proud of how our employees have
responded to the COVID-19 crisis, and our results can be attributed
to their swift actions and agility,” said Tamara L. Lundgren,
Chairman and Chief Executive Officer.
“During one of the most challenging quarters in recent times, we
kept our focus on optimizing our sales, both wholesale and retail,
aligning our operating costs with supply and production volumes,
and moving ahead with our strategic investments. As a result, CSS
almost doubled its operating income sequentially, and AMR delivered
solid results in a market environment where ferrous scrap prices
dropped to levels not seen since 2016,” she added. “We kept a
strong focus on our strategic priorities, delivering ahead of
schedule the full run rate on the targeted productivity initiatives
we announced last October, and achieving early benefits from the
ongoing transition to our One Schnitzer model that we will be
completing in the fall. In addition, effective working capital
management enabled us to deliver strong operating cash flow and
reduce our net debt. While the near-term environment remains
subject to uncertainty, we are encouraged by the gradual re-start
of economic activity in the U.S. and globally.”
The Company announced last quarter that it is transitioning from
its multi-divisional organizational structure to a
functionally-based, integrated operating model. This reflects the
culmination of a multi-phase organizational development strategy
over the last several years. The Company will consolidate its
operations, sales, services and other functional capabilities at
the 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 complete this transition and report its financial results in a
single operating segment in the first quarter of fiscal 2021.
Summary Results
($ in millions, except per share
amounts)
Quarter
3Q20
2Q20
3Q19
Revenues
$
403
$
439
$
547
Operating (loss) income
$
(4
)
$
8
$
24
Restructuring charges and other
exit-related activities
3
5
—
Asset impairment charges
2
—
—
Charges for legacy environmental matters,
net(1)
2
—
1
Business development costs
1
1
—
Charges related to the settlement of a
wage and hour class action lawsuit
—
—
2
Adjusted operating income(2)
$
4
$
14
$
27
Net (loss) income attributable to SSI
shareholders
$
(5
)
$
4
$
16
Net (loss) income from continuing
operations attributable to SSI shareholders
$
(5
)
$
4
$
16
Adjusted net income from continuing
operations
attributable to SSI shareholders(2)
$
1
$
9
$
18
Diluted (loss) earnings per share
attributable to SSI shareholders
$
(0.18
)
$
0.14
$
0.56
Diluted (loss) earnings per share from
continuing operations
attributable to SSI shareholders
$
(0.18
)
$
0.14
$
0.56
Adjusted diluted earnings per share from
continuing operations
attributable to SSI shareholders(2)
$
0.05
$
0.31
$
0.65
(1)
Legal and environmental charges for legacy
environmental matters, net of recoveries. The prior year period has
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.
(2)
See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
Auto and Metals Recycling
Summary of Auto and Metals Recycling
Results
($ in millions, except selling prices and
data per ton)
Quarter
3Q20
2Q20
Change
3Q19
Change
Total revenues
$
300
$
338
(11
)%
$
429
(30
)%
Ferrous revenues
$
190
$
222
(15
)%
$
280
(32
)%
Ferrous volumes (LT, in thousands)
779
850
(8
)%
938
(17
)%
Avg. net ferrous sales prices
($/LT)(1)
$
232
$
253
(8
)%
$
293
(21
)%
Nonferrous revenues
$
79
$
88
(10
)%
$
113
(30
)%
Nonferrous volumes (pounds, in
millions)(2)
111
113
(2
)%
154
(28
)%
Avg. net nonferrous sales prices
($/pound)(1)(2)
$
0.54
$
0.55
(2
)%
$
0.62
(13
)%
Cars purchased (in thousands)
74
85
(13
)%
102
(27
)%
Operating income
$
3
$
19
(87
)%
$
29
(91
)%
Operating income ($/LT)
$
3
$
23
(86
)%
$
31
(90
)%
Adjusted operating income(3)
$
5
$
20
(76
)%
$
29
(84
)%
Adjusted operating income ($/LT)
$
6
$
23
(74
)%
$
31
(80
)%
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 third quarter of $3 million
or $3 per ferrous ton and adjusted operating income of $5 million
or $6 per ferrous ton, including an adverse impact from average
inventory accounting of approximately $3 per ferrous ton. The
COVID-19 pandemic resulted in an economic slowdown and ferrous
selling prices fell sharply through mid-April before prices
partially recovered in the second half of the quarter. Supply flows
also declined significantly during the quarter amid the lower
levels of economic activity. On a sequential basis, average ferrous
selling prices and ferrous sales volumes both fell by 8%, while
average nonferrous selling prices and sales volumes both decreased
by 2%. AMR’s sequential performance also reflected higher revenues
from retail sales and benefits from productivity initiatives
implemented during FY20, which offset the sequential decline in the
price of platinum group metal products.
Export customers accounted for 73% of total ferrous sales
volumes for the quarter, with Bangladesh, Turkey and Vietnam
representing the top export destinations for ferrous shipments.
Cascade Steel and Scrap
Summary of Cascade Steel and Scrap
Results
($ in millions, except selling prices)
Quarter
3Q20
2Q20
Change
3Q19
Change
Steel revenues
$
83
$
86
(2
)%
$
97
(14
)%
Recycling revenues
21
19
14
%
25
(15
)%
Total segment revenues(1)
$
105
$
104
—
%
$
121
(14
)%
Operating income
$
7
$
4
97
%
$
8
(15
)%
Finished steel average net sales price
($/ST)(2)
$
633
$
627
1
%
$
703
(10
)%
Finished steel sales volumes (ST, in
thousands)
124
129
(4
)%
130
(4
)%
Rolling mill utilization
91
%
72
%
26
%
98
%
(7
)%
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 third quarter of $7
million, compared to $4 million in the second quarter. On a
sequential basis, operating performance benefited from margin
expansion as a result of lower costs for steel-making raw
materials, coupled with slightly higher average net selling prices
for finished steel products. Finished steel sales volumes in the
quarter were only 4% lower sequentially, as the impact on
construction demand in our West Coast markets from COVID-19 was
limited. Higher utilization and benefits from productivity
initiatives also contributed to the sequentially improved operating
performance.
Corporate Items
In the third quarter of fiscal 2020, consolidated financial
performance included Corporate expense of $10 million and adjusted
Corporate expense of $8 million, compared to $10 million and $9
million, respectively, in the second quarter of fiscal 2020. The
Company’s effective tax rate for the third quarter of fiscal 2020
was a benefit of 28%.
The Company has substantially implemented ahead of schedule 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 third quarter
reflected an estimated $6 million of benefits from these measures,
with total benefits achieved through the first nine months of
fiscal 2020 of approximately $12 million. In connection with
ongoing productivity initiatives, the Company incurred
restructuring charges and other exit-related costs of approximately
$3 million in the quarter.
In the third quarter, the Company generated positive operating
cash flow of $39 million. Total debt at the end of the quarter was
$428 million and debt, net of cash, was $121 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). 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 uncertainties resulting
from the COVID-19 outbreak, during the quarter the Company
increased its borrowings under the revolving credit facility by
$250 million, contributing to its cash position of $308 million as
of May 31, 2020.
During the third quarter, the Company returned capital to
shareholders through its 105th consecutive quarterly dividend.
Capital expenditures were $22 million in the quarter and $59
million year to date, including investments for advanced metal
recovery technologies and other growth projects.
Analysts’ Conference Call: Third Quarter of Fiscal
2020
A conference call and slide presentation to discuss results will
be held today, July 1, 2020, at 11:30 a.m. Eastern and will be
hosted by Tamara L. Lundgren, Chairman and Chief Executive Officer,
and Richard Peach, Executive Vice President, Chief Financial
Officer and Chief Strategy Officer. The call and the slide
presentation will be webcast and accessible on the Company’s
website under Company > Investors > Event Calendar at
www.schnitzersteel.com/events.
Summary financial data is provided in the following pages. The
slide presentation and related materials will be available prior to
the call on the above website.
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest
manufacturers and exporters of recycled metal products in North
America with operating facilities located in 23 states, Puerto Rico
and Western Canada. Schnitzer has seven deep water export
facilities located on both the East and West Coasts and in Hawaii
and Puerto Rico. The Company’s integrated operating platform also
includes 50 stores which sell serviceable used auto parts from
salvaged vehicles and receive approximately 5 million annual retail
visits. The Company’s steel manufacturing operations produce
finished steel products, including rebar, wire rod and other
specialty products. The Company began operations in 1906 in
Portland, Oregon.
SCHNITZER STEEL INDUSTRIES,
INC.
FINANCIAL HIGHLIGHTS
($ in thousands)
(Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
May 31,
2020
February 29,
2020
May 31,
2019
May 31,
2020
May 31,
2019
REVENUES:
Auto and Metals Recycling:
Ferrous revenues
$
189,783
$
222,465
$
280,362
$
604,720
$
836,662
Nonferrous revenues
78,858
87,901
112,785
256,571
316,450
Retail and other revenues
31,736
27,303
35,876
89,512
98,388
Total Auto and Metals Recycling
revenues
300,377
337,669
429,023
950,803
1,251,500
Cascade Steel and Scrap:
Steel revenues(1)
83,414
85,539
96,626
246,278
271,988
Recycling revenues
21,136
18,620
24,805
56,697
70,227
Total Cascade Steel and Scrap revenues
104,550
104,159
121,431
302,975
342,215
Intercompany sales eliminations
(2,244
)
(2,346
)
(3,058
)
(6,029
)
(8,734
)
Total revenues
$
402,683
$
439,482
$
547,396
$
1,247,749
$
1,584,981
OPERATING (LOSS) INCOME:
AMR operating income
$
2,503
$
19,304
$
29,189
$
19,375
$
73,947
CSS operating income
$
6,931
$
3,524
$
8,116
$
14,692
$
25,802
Consolidated operating (loss) income
$
(3,706
)
$
7,691
$
24,459
$
(3,925
)
$
66,184
Adjusted AMR operating income(2)
$
4,730
$
19,688
$
29,189
$
23,566
$
74,010
CSS operating income
6,931
3,524
8,116
14,692
25,802
Adjusted segment operating income(2)
11,661
23,212
37,305
38,258
99,812
Adjusted corporate expense(2)
(7,542
)
(9,198
)
(9,670
)
(24,757
)
(28,802
)
Intercompany eliminations
54
(36
)
(269
)
192
50
Adjusted operating income(2)
4,173
13,978
27,366
13,693
71,060
Restructuring charges and other
exit-related activities
(2,710
)
(4,633
)
(75
)
(7,810
)
(813
)
Asset impairment charges
(2,227
)
(402
)
—
(4,321
)
(63
)
Charges for legacy environmental matters,
net(3)
(2,078
)
(451
)
(502
)
(3,822
)
(1,670
)
Business development costs
(791
)
(801
)
—
(1,592
)
—
Charges related to the settlement of a
wage and hour class action lawsuit
(73
)
—
(2,330
)
(73
)
(2,330
)
Total operating (loss) income
$
(3,706
)
$
7,691
$
24,459
$
(3,925
)
$
66,184
(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.
SCHNITZER STEEL INDUSTRIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
($ in thousands, except per share
amounts)
(Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
May 31,
2020
February 29,
2020
May 31,
2019
May 31,
2020
May 31,
2019
Revenues
$
402,683
$
439,482
$
547,396
$
1,247,749
$
1,584,981
Cost of goods sold
356,217
380,520
474,598
1,101,497
1,379,418
Selling, general and administrative
45,544
46,426
48,575
138,744
139,483
(Income) from joint ventures
(309
)
(190
)
(311
)
(698
)
(980
)
Asset impairment charges
2,227
402
—
4,321
63
Restructuring charges and other
exit-related activities
2,710
4,633
75
7,810
813
Operating (loss) income
(3,706
)
7,691
24,459
(3,925
)
66,184
Interest expense
(2,656
)
(1,320
)
(2,294
)
(5,399
)
(6,267
)
Other (expense) income, net
(90
)
(98
)
29
18
373
(Loss) income from continuing operations
before income taxes
(6,452
)
6,273
22,194
(9,306
)
60,290
Income tax benefit (expense)
1,804
(1,770
)
(5,762
)
2,568
(13,733
)
(Loss) income from continuing
operations
(4,648
)
4,503
16,432
(6,738
)
46,557
(Loss) income from discontinued
operations, net of tax
(69
)
1
8
(40
)
(202
)
Net (loss) income
(4,717
)
4,504
16,440
(6,778
)
46,355
Net income attributable to noncontrolling
interests
(278
)
(621
)
(750
)
(1,329
)
(1,585
)
Net (loss) income attributable to SSI
shareholders
$
(4,995
)
$
3,883
$
15,690
$
(8,107
)
$
44,770
Basic:
(Loss) income per share from continuing
operations
$
(0.18
)
$
0.14
$
0.57
$
(0.29
)
$
1.63
Net (loss) income per share
$
(0.18
)
$
0.14
$
0.57
$
(0.29
)
$
1.63
Diluted:
(Loss) income per share from continuing
operations
$
(0.18
)
$
0.14
$
0.56
$
(0.29
)
$
1.60
Net (loss) income per share
$
(0.18
)
$
0.14
$
0.56
$
(0.29
)
$
1.59
Weighted average number of common
shares:
Basic
27,724
27,721
27,510
27,653
27,548
Diluted
27,724
28,139
28,074
27,653
28,184
Dividends declared per common share
$
0.1875
$
0.1875
$
0.1875
$
0.5625
$
0.5625
SCHNITZER STEEL INDUSTRIES,
INC.
SELECTED OPERATING
STATISTICS
(Unaudited)
YTD
1Q20
2Q20
3Q20
2020(1)
SSI Total Volumes(2)
Total ferrous volumes (LT, in
thousands)
976
988
927
2,891
Total nonferrous volumes (pounds, in
thousands)
144,176
124,342
122,913
391,431
Auto and Metals Recycling
Ferrous selling prices
($/LT)(3)
Domestic
$
195
$
243
$
221
$
221
Export
$
229
$
257
$
236
$
241
Average
$
221
$
253
$
232
$
236
Ferrous sales volume (LT, in
thousands)
Domestic
247
275
213
734
Export
583
576
566
1,725
Total(4)
830
850
779
2,459
Nonferrous average price
($/pound)(3)(5)
$
0.54
$
0.55
$
0.54
$
0.54
Nonferrous sales volume (pounds, in
thousands)(5)
131,501
112,765
111,028
355,294
Cars purchased (in
thousands)(6)
83
85
74
242
Auto stores at period end
51
51
49
49
Cascade Steel and Scrap
Finished steel average sales price
($/ST)(3)
$
643
$
627
$
633
$
634
Sales volume (ST, in thousands)
Rebar
83
86
85
254
Coiled products
29
42
39
110
Merchant bar and other
1
1
1
2
Finished steel products sold(4)
114
129
124
366
Rolling mill utilization(7)
85
%
72
%
91
%
83
%
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)
The sum of quarterly amounts may not agree
to full year equivalent due to rounding.
(2)
Ferrous and nonferrous volumes sold
externally by AMR and CSS and delivered to our steel mill for
finished steel production.
(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 platinum group metals (“PGMs”) in
catalytic converters.
(6)
Cars purchased by auto parts stores
only.
(7)
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 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
Average
$
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
Total(4)
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 platinum group metals (“PGMs”) 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)
May 31, 2020
August 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
307,655
$
12,377
Accounts receivable, net
134,538
145,617
Inventories
161,543
187,320
Other current assets
49,491
120,974
Total current assets
653,227
466,288
Property, plant and equipment, net
459,312
456,400
Operating lease right-of-use assets
127,418
—
Goodwill and other assets
234,139
238,058
Total assets
$
1,474,096
$
1,160,746
Liabilities
and Equity
Current liabilities:
Short-term borrowings
$
1,401
$
1,321
Operating lease liabilities
18,683
—
Other current liabilities
145,184
266,909
Total current liabilities
165,268
268,230
Long-term debt, net of current
maturities
426,791
103,775
Operating lease liabilities, net of
current maturities
111,963
—
Other long-term liabilities
95,727
87,445
Equity:
Total Schnitzer Steel Industries, Inc.
("SSI") shareholders' equity
670,626
696,964
Noncontrolling interests
3,721
4,332
Total equity
674,347
701,296
Total liabilities and equity
$
1,474,096
$
1,160,746
Non-GAAP Financial Measures
This press release contains performance based on adjusted net
(loss) income and adjusted diluted (loss) earnings per share from
continuing operations attributable to SSI shareholders and adjusted
consolidated operating (loss) income and AMR operating income as
well as adjusted segment operating income and 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 providing these non-GAAP financial measures adds a meaningful
presentation of our results from business operations excluding
adjustments for restructuring charges and other exit-related
activities, asset impairment charges, charges for legacy
environmental matters (net of recoveries), business development
costs not related to ongoing operations, charges related to the
settlement of a wage and hour class action lawsuit, 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 (loss) income, adjusted AMR operating income, adjusted
segment operating income and adjusted corporate expense
($ in millions)
For the Three Months
Ended
For the Nine Months
Ended
May 31,
2020
February 29,
2020
May 31,
2019
May 31,
2020
May 31,
2019
Consolidated operating (loss)
income:
As reported
$
(4
)
$
8
$
24
$
(4
)
$
66
Restructuring charges and other
exit-related activities
3
5
—
8
1
Asset impairment charges
2
—
—
4
—
Charges for legacy environmental matters,
net(1)
2
—
1
4
2
Business development costs
1
1
—
2
—
Charges related to the settlement of a
wage and hour class action lawsuit
—
—
2
—
2
Adjusted(2)
$
4
$
14
$
27
$
14
$
71
AMR operating income:
As reported
$
3
$
19
$
29
$
19
$
74
Asset impairment charges
2
—
—
4
—
Adjusted(2)
$
5
$
20
$
29
$
24
$
74
Segment operating income:
As reported
$
9
$
23
$
37
$
34
$
100
AMR asset impairment charges
2
—
—
4
—
Adjusted(2)
$
12
$
23
$
37
$
38
$
100
Corporate expense:
As reported
$
10
$
10
$
13
$
30
$
33
Charges for legacy environmental matters,
net(1)
(2
)
—
(1
)
(4
)
(2
)
Business development costs
(1
)
(1
)
—
(2
)
—
Charges related to the settlement of a
wage and hour class action lawsuit
—
—
(2
)
—
(2
)
Asset impairment charges
—
—
—
—
—
Adjusted(2)
$
8
$
9
$
10
$
25
$
29
Reconciliation of adjusted net (loss)
income from continuing operations attributable to SSI
shareholders
($ in millions)
Quarter
3Q20
2Q20
3Q19
Net (loss) income from continuing
operations attributable to
SSI shareholders:
As reported
$
(5
)
$
4
$
16
Restructuring charges and other
exit-related activities
3
5
—
Asset impairment charges
2
—
—
Charges for legacy environmental matters,
net(1)
2
—
1
Business development costs
1
1
—
Charges related to the settlement of a
wage and hour class action lawsuit
—
—
2
Income tax benefit allocated to
adjustments(3)
(2
)
(1
)
—
Adjusted(2)
$
1
$
9
$
18
Reconciliation of diluted (loss)
earnings per share from continuing operations attributable to SSI
shareholders
($ per share)
Quarter
3Q20
2Q20
3Q19
Diluted (loss) earnings per share from
continuing operations
attributable to SSI
shareholders:
As reported
$
(0.18
)
$
0.14
$
0.56
Restructuring charges and other
exit-related activities
0.10
0.16
—
Asset impairment charges
0.08
0.01
—
Charges for legacy environmental matters,
net(1)
0.07
0.02
0.02
Business development costs
0.03
0.03
—
Charges related to the settlement of a
wage and hour class action lawsuit
—
—
0.08
Income tax benefit allocated to
adjustments(3)
(0.06
)
(0.05
)
(0.01
)
Adjusted(2)
$
0.05
$
0.31
$
0.65
(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.
(2)
May not foot due to rounding.
(3)
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.
Reconciliation of debt, net of
cash
($ in thousands)
May 31, 2020
February 29, 2020
August 31, 2019
Short-term borrowings
$
1,401
$
1,411
$
1,321
Long-term debt, net of current
maturities
426,791
140,521
103,775
Total debt
428,192
141,932
105,096
Less: cash and cash equivalents
307,655
10,326
12,377
Total debt, net of cash
$
120,537
$
131,606
$
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
coronavirus disease 2019 (COVID-19) pandemic; 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 coronavirus disease 2019 (COVID-19)
pandemic; 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/20200701005281/en/
Investor Relations: Michael Bennett (503) 323-2811
mcbennett@schn.com
Company Info: www.schnitzersteel.com ir@schn.com
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