Expects Best Fourth Quarter Operating
Performance Since 2011
Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) today announced
preliminary results for its fiscal 2021 fourth quarter ended August
31, 2021. The Company expects fourth quarter diluted earnings per
share from continuing operations to be in the range of $1.40 -
$1.48 and net income to be in the range of $43 million - $45
million. Adjusted earnings per share from continuing operations are
expected to be in the range of $1.75 - $1.83, which excludes
expected charges of $12 million or $0.31 per share related to
legacy environmental matters (see Non-GAAP Financial Measures
section for a reconciliation to GAAP).
Market conditions for recycled metals were strong with the
Company’s average ferrous selling prices reaching their highest
level since 2008 and nonferrous market selling prices trading at or
near multi-year highs. Market selling prices for finished steel
products also continued to increase on strong demand and reached
their highest levels in more than a decade.
Ferrous and nonferrous sales volumes in the fourth quarter are
expected to increase year over year by 9% and 3%, respectively,
even though ferrous sales volumes were adversely impacted by the
delayed arrival of one ship and nonferrous sales volumes were
constrained by tight container availability. Due to the previously
disclosed fire at the Company’s steel mill in May 2021, finished
steel sales volumes for the quarter are expected to be down 53%
year over year. The mill began ramping up production in mid-August
after substantial completion of the replacement and repair of
damaged property and equipment was completed ahead of schedule.
Despite the impact of the fire, the Company delivered its best
fiscal fourth quarter operating performance since fiscal 2011.
Adjusted EBITDA for the fourth quarter is expected to be in the
range of $78 million - $81 million. The Company estimates the
impact of the fire on its fourth quarter consolidated performance
to be a detriment after recognition of initial insurance recoveries
of $10 million.
The Company expects to generate strong operating cash flow of
approximately $139 million for the fourth quarter, resulting in a
$79 million sequential reduction in debt to $75 million, its lowest
level since 2005. The effective tax rate for the fourth quarter of
fiscal 2021 is expected to be an expense in the range of 13% - 15%,
including discrete benefits recognized during the period.
The preliminary, unaudited information provided above is based
on the Company’s current estimates of its financial results for the
fourth quarter and fiscal year ended August 31, 2021 and remains
subject to change based on management’s ongoing review of the
Company’s fourth quarter financial results and the completion of
the Company’s annual audit.
Earnings Call Date
The Company will report financial results for its fourth quarter
and fiscal year 2021 ended August 31, 2021 on Thursday, October 21,
2021. The Company will host a webcast conference call to discuss
the results at 11:30 a.m. Eastern Time on the same day. The webcast
of the call and the accompanying slide presentation may be accessed
at www.schnitzersteel.com/company/investors/event-calendar on
Schnitzer’s website under Company > Investors > Event
Calendar. The call will be hosted by Tamara Lundgren, Chairman and
Chief Executive Officer, and Richard Peach, Executive Vice
President, Chief Financial Officer and Chief Strategy Officer.
Replay Information
Toll Free Dial: (855) 859-2056 Toll Free
International Dial: (404) 537-3406 Conference ID: 8667935 Replay
Available: 10/21/2021 to 10/26/2021
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.
Non-GAAP Financial Measures
This press release contains expected performance based on
adjusted diluted earnings per share from continuing operations
attributable to SSI shareholders and adjusted EBITDA 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 legacy
environmental matters (net of recoveries), business development
costs not related to ongoing operations, and the income tax 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. 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 diluted
earnings per share from continuing operations attributable to SSI
shareholders
($ per share)
4Q21
High
Low
As reported
$
1.48
$
1.40
Charges for legacy environmental matters,
net, per share(1)
0.39
0.39
Business development costs, per share
0.05
0.05
Income tax benefit allocated to
adjustments, per share(2)
(0.09
)
(0.09
)
Adjusted(3)
$
1.83
$
1.75
(1)
Legal and environmental charges, net of
recoveries, for legacy environmental matters including those
related to the Portland Harbor Superfund site and to other legacy
environmental loss contingencies.
(2)
Income tax allocated to the aggregate
adjustments reconciling reported and adjusted diluted earnings 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 adjusted
EBITDA
($ in millions)
4Q21
High
Low
Net income
$
45
$
43
Plus interest expense
1
1
Plus tax expense
7
6
Plus depreciation and amortization
15
15
Plus charges for legacy environmental
matters, net(1)
12
12
Plus business development costs
1
1
Adjusted EBITDA
$
81
$
78
(1)
Legal and environmental charges, net of
recoveries, for legacy environmental matters including those
related to the Portland Harbor Superfund site and to other legacy
environmental loss contingencies.
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 the impact of pandemics, epidemics or other
public health emergencies, such as the coronavirus disease 2019
(“COVID-19”) pandemic; the impact of equipment upgrades, equipment
failures and facility damage on production, including timing of
repairs and resumption of operations; the realization of insurance
recoveries; the Company’s outlook, growth initiatives or expected
results or objectives, including pricing, margins, sales volumes
and profitability; completion of acquisitions and integration of
acquired businesses; liquidity positions; our ability to generate
cash from continuing operations; trends, cyclicality and changes in
the markets we sell into; strategic direction or goals; targets;
changes to manufacturing and production processes; deferred tax
assets; planned capital expenditures; 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 potential impact of
adopting new accounting pronouncements; the impact of labor
shortages or increased labor costs; 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: the impact of pandemics, epidemics or other
public health emergencies, such as the COVID-19 pandemic; the
impact of equipment upgrades, equipment failures and facility
damage on production; difficulties associated with acquisitions and
integration of acquired businesses; 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; volatile supply and demand conditions
affecting prices and volumes in the markets for raw materials and
other inputs we purchase; significant decreases in scrap metal
prices; imbalances in supply and demand conditions in the global
steel industry; reliance on third party shipping companies,
including with respect to freight rates and the availability of
transportation; inability to obtain or renew business licenses and
permits; the impact of goodwill impairment charges; the impact of
long-lived asset and equity investment impairment charges; failure
to realize or delays in realizing expected benefits from
investments in processing and manufacturing technology
improvements; inability to achieve or sustain the benefits from
productivity, cost savings and restructuring initiatives; inability
to renew facility leases; 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 the agreement governing our bank credit facilities; the
impact of consolidation in the steel industry; 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; compliance with climate change and greenhouse gas
emission laws and regulations; the impact of labor shortages or
increased labor costs; 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/20210930005337/en/
Investor Relations: Michael Bennett (503) 323-2811
mcbennett@schn.com
Company Info: www.schnitzersteel.com 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