AMR Ferrous and Nonferrous Volumes up 9% and
CSS Finished Steel Volumes Up 38% Sequentially
Strong Third Quarter Operating Cash Flow of
$40 million
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported
results for its third quarter of fiscal 2019 ended May 31, 2019.
The Company reported earnings per share from continuing operations
of $0.56 and adjusted earnings per share of $0.63, a sequential
improvement from the second quarter reported and adjusted earnings
per share from continuing operations of $0.46 and $0.48,
respectively. In the third quarter of fiscal 2018, the Company’s
reported and adjusted earnings per share from continuing operations
were $1.31 and $1.26, respectively. For a reconciliation of the
adjusted results to U.S. GAAP, see the Non-GAAP Financial Measures
provided after the financial statements in this document.
Auto and Metals Recycling (AMR) achieved operating income of $29
million, or $31 per ferrous ton, compared to operating income in
the second quarter of fiscal 2019 of $22 million, or $25 per
ferrous ton. AMR’s sequential improvement of $6 per ferrous ton was
primarily driven by higher ferrous and nonferrous sales volumes
which were up 9%, seasonally improved supply flows and retail
sales, higher nonferrous average net selling prices which were up
7%, and continuing benefits from productivity initiatives,
partially offset by higher selling, general and administrative
(SG&A) expense.
Cascade Steel and Scrap (CSS) achieved operating income of $8
million, compared to operating income in the second quarter of
fiscal 2019 of $6 million. The $2 million improvement in CSS’s
performance was primarily driven by the benefits of higher finished
steel sales volumes which were up 38% and increased utilization,
partially offset by the impact of lower average net selling prices
which were down 5% and high beginning inventory costs resulting
from lower production in the second quarter.
“Our team delivered another quarter of strong operating
performance with both segments achieving higher volumes while
navigating a volatile price environment. AMR’s sequentially
improved results reflect the team’s ability to continue to optimize
purchase volumes and diversify sales, while CSS delivered
sequentially higher performance on significantly increased sales
volumes and utilization,” commented Tamara Lundgren, President and
Chief Executive Officer. “We also generated strong cash flow and
decreased our debt in the quarter. Looking forward, we remain
focused on the continued implementation of our productivity
initiatives, volume growth and capital investment strategy to
support our objectives of increasing our efficiency and operating
leverage, expanding our products and broadening our customer
reach.”
Summary Results
($ in millions, except per share
amounts)
Quarter
3Q19
3Q18
Change
2Q19
Change
Revenues
$
547
$
652
(16
)%
$
474
16
%
Operating income
$
24
$
51
(52
)%
$
19
28
%
Charge related to the settlement of a wage
and hour class action lawsuit
2
—
NM
—
NM
Asset impairment charges (recoveries),
net
—
(1
)
NM
—
NM
Restructuring charges and other
exit-related activities
—
—
NM
1
NM
Adjusted operating income(1)(2)
$
27
$
50
(46
)%
$
20
37
%
Net income attributable to SSI
$
16
$
37
(58
)%
$
13
22
%
Net income from continuing operations
attributable to SSI
$
16
$
37
(58
)%
$
13
20
%
Adjusted net income from continuing
operations attributable to SSI(1)
$
18
$
36
(51
)%
$
13
31
%
Diluted earnings per share attributable to
SSI
$
0.56
$
1.31
(57
)%
$
0.46
22
%
Diluted earnings per share from continuing
operations attributable to SSI
$
0.56
$
1.31
(57
)%
$
0.46
21
%
Adjusted diluted earnings per share from
continuing operations attributable to SSI(1)
$
0.63
$
1.26
(50
)%
$
0.48
31
%
(1) See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
(2) May not foot due to rounding.
NM = Not Meaningful
Auto and Metals Recycling
Summary of Auto and Metals Recycling
Results
($ in millions, except selling prices and
data per ton; Fe volumes 000s long tons; NFe volumes Ms lbs)
Quarter
3Q19
3Q18
Change
2Q19
Change
Total revenues
$
429
$
530
(19
)%
$
386
11
%
Ferrous revenues
$
280
$
364
(23
)%
$
257
9
%
Ferrous volume
938
983
(5
)%
858
9
%
Avg. net ferrous sales prices
($/LT)(1)
$
293
$
337
(13
)%
$
287
2
%
Nonferrous revenues
$
113
$
127
(11
)%
$
99
13
%
Nonferrous volume(2)
154
146
5
%
141
9
%
Avg. net nonferrous sales prices
($/LB)(1)(2)
$
0.62
$
0.74
(16
)%
$
0.58
7
%
Cars purchased for retail (000s)
102
109
(6
)%
89
15
%
Operating income
$
29
$
55
(47
)%
$
22
34
%
Operating income per Fe ton
$
31
$
56
(44
)%
$
25
23
%
Adjusted operating income(3)
$
29
$
54
(45
)%
$
22
34
%
Adjusted operating income per Fe ton
$
31
$
54
(43
)%
$
25
23
%
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.
Volumes: Ferrous sales volumes in the third quarter
increased 9% sequentially, driven by the benefits from seasonally
improved supply flows following unusually severe weather conditions
in the second quarter and higher car purchase volumes, and
decreased 5% compared to the prior year third quarter. Nonferrous
sales volumes in the third quarter were also 9% higher
sequentially, due primarily to the impact of higher purchase
volumes, and were 5% higher compared to the prior year third
quarter.
Export customers accounted for 67% of total ferrous sales
volumes. Our ferrous and nonferrous products were shipped to 22
countries in the third quarter, with Bangladesh, South Korea and
Turkey representing the top export destinations for ferrous
shipments.
Pricing: Average ferrous net selling prices increased $6
per ton, or 2%, sequentially and decreased $44 per ton, or 13%,
compared to the prior year third quarter. Average nonferrous net
selling prices increased 7% sequentially and decreased 16% compared
to the prior year third quarter.
Margins: Operating income was $29 million in the third
quarter, $7 million, or 34%, higher sequentially. Operating income
per ferrous ton of $31 was $6 higher sequentially. AMR’s
improvement sequentially primarily reflected the benefits from
higher retail sales, increased ferrous and nonferrous sales
volumes, and higher average nonferrous net selling prices, which
were partially offset by increased SG&A expense including
higher incentive compensation accruals. Operating income in the
prior year third quarter was $55 million or $56 per ferrous ton.
The year-over-year margin compression resulted primarily from the
decline in average net selling prices for nonferrous and ferrous
products and lower ferrous sales volumes, partially offset by the
benefits from productivity initiatives. Third quarter operating
results include an adverse impact from average inventory accounting
of $1 million compared to adverse impact of $1 million in the
second quarter of fiscal 2019 and a benefit of $2 million in the
third quarter of fiscal 2018.
Cascade Steel and Scrap
Summary of Cascade Steel and Scrap
Results
($ in millions, except selling prices and
volumes)
Quarter
3Q19
3Q18
Change
2Q19
Change
Steel revenues
$
97
$
104
(7
)%
$
74
31
%
Recycling revenues
25
26
(6
)%
16
51
%
Total revenues
$
121
$
130
(7
)%
$
90
34
%
Operating income
$
8
$
11
(25
)%
$
6
41
%
Finished steel average net sales price
($/ST)(1)
$
703
$
703
—
%
$
737
(5
)%
Finished steel sales volume (000s ST)
130
140
(7
)%
94
38
%
Rolling mill utilization
98
%
91
%
8
%
76
%
29
%
ST = Short Ton, which is equivalent to
2,000 pounds
(1) Price information is shown after
netting the cost of freight incurred to deliver the product to the
customer.
Volumes: Finished steel sales volumes in the third
quarter were 38% higher sequentially, primarily due to seasonality,
including from the impact of weather-related construction delays in
our West Coast markets that occurred in the prior quarter, and were
7% lower year-over-year. Recycling revenues were 51% higher
sequentially primarily as a result of improved supply flows and the
timing of shipments, and down 6% compared to the prior year third
quarter.
Pricing: Average net selling prices for finished steel
products decreased 5% sequentially and were consistent with the
prior year third quarter reflecting low levels of steel
imports.
Margins: Operating income for the third quarter of fiscal
2019 was $8 million, an improvement of $2 million compared to the
second quarter of fiscal 2019 due primarily to the benefits of
higher finished steel sales volumes and higher utilization,
partially offset by lower average net selling prices and high
beginning inventory costs resulting from lower production in the
second quarter. Year-over-year, operating income declined by $3
million primarily as a result of lower finished steel sales
volumes, the impact of the high beginning inventory costs, and a $1
million impact from a spike in gas prices in March 2019, partially
offset by benefits from productivity initiatives and lower SG&A
expense.
Corporate Items
In the third quarter of fiscal 2019, consolidated financial
performance included Corporate expense of $13 million, an increase
of $4 million compared to the second quarter of fiscal 2019, and
decrease of $2 million from the prior year third quarter.
Sequentially, the increase in expense was primarily driven by a $2
million charge related to the settlement of a wage and hour class
action lawsuit and higher incentive compensation accruals. The
year-over-year decrease was driven primarily by lower incentive
compensation accruals and benefits from productivity initiatives,
partially offset by the class action settlement charge.
The Company continued to make significant progress in
implementing the productivity initiatives which were announced
earlier in fiscal 2019 and target annual benefits of $35 million.
Consolidated results in the third quarter of fiscal 2019 reflected
$9 million of benefits from these measures, of which $7 million
were achieved by AMR and the remainder by CSS and Corporate.
Year-to-date, the Company has achieved $20 million of benefits from
these measures and expects to achieve at least 80% of the total
targeted benefits in fiscal 2019, with the full amount expected to
be achieved in fiscal 2020.
The Company’s effective tax rate for the third quarter of fiscal
2019 was an expense of 26%.
In the third quarter of fiscal 2019, the Company generated
operating cash flow of $40 million. Total debt at the end of the
third quarter of fiscal 2019 was $142 million, and debt, net of
cash, was $134 million, a decrease compared to $163 million and
$150 million, respectively, at the end of the second quarter of
fiscal 2019 (refer to Non-GAAP Financial Measures provided after
the financial statements in this document).
During the third quarter, the Company returned capital to
shareholders through its 101st consecutive quarterly dividend.
Analysts’ Conference Call: Third Quarter of Fiscal
2019
A conference call and slide presentation to discuss results will
be held today, June 26, 2019, at 11:30 a.m. Eastern hosted by
Tamara Lundgren, President and Chief Executive Officer, and Richard
Peach, Senior Vice President, Chief Financial Officer and Chief of
Corporate Operations. The call and the slides will be webcast and
accessible on the Company’s website under Company > Investors
> Event Calendar at www.schnitzersteel.com/events.
Summary financial data is provided in the following pages. The
slides and related materials will be available prior to the call on
the website.
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest
manufacturers and exporters of recycled metal products in North
America with operating facilities located in 23 states, Puerto Rico
and Western Canada. Schnitzer has seven deep water export
facilities located on both the East and West Coasts and in Hawaii
and Puerto Rico. The Company’s integrated operating platform also
includes auto parts stores with approximately 5 million annual
retail visits. The Company’s steel manufacturing operations produce
finished steel products, including rebar, wire rod and other
specialty products. The Company began operations in 1906 in
Portland, Oregon.
SCHNITZER STEEL INDUSTRIES,
INC.
FINANCIAL HIGHLIGHTS
($ in thousands)
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
May 31, 2019
February 28, 2019
May 31, 2018
May 31, 2019
May 31, 2018
REVENUES:
Auto and Metals Recycling:
Ferrous revenues
$
280,362
$
257,488
$
363,566
$
836,662
$
926,236
Nonferrous revenues
112,785
99,484
127,288
316,450
348,019
Retail and other revenues
35,876
29,093
38,757
98,388
103,195
Total Auto and Metals Recycling
revenues
429,023
386,065
529,611
1,251,500
1,377,450
Cascade Steel and Scrap:
Steel revenues
96,626
74,025
103,726
271,988
265,714
Recycling revenues
24,805
16,373
26,350
70,227
71,060
Total Cascade Steel and Scrap revenues
121,431
90,398
130,076
342,215
336,774
Intercompany sales eliminations
(3,058
)
(2,898
)
(7,271
)
(8,734
)
(19,086
)
Total revenues
$
547,396
$
473,565
$
652,416
$
1,584,981
$
1,695,138
OPERATING INCOME:
AMR operating income
$
29,189
$
21,741
$
54,980
$
73,947
$
135,284
CSS operating income
$
8,116
$
5,768
$
10,793
$
25,802
$
24,682
Consolidated operating income
$
24,459
$
19,036
$
51,234
$
66,184
$
111,015
Adjusted AMR operating income(1)
$
29,189
$
21,741
$
53,515
$
74,010
$
133,402
Adjusted CSS operating income(1)
8,116
5,768
10,793
25,802
24,594
Adjusted segment operating income(1)
37,305
27,509
64,308
99,812
157,996
Corporate expense, adjusted(2)
(10,172
)
(8,095
)
(14,467
)
(30,472
)
(47,861
)
Intercompany eliminations
(269
)
158
(2
)
50
(829
)
Adjusted operating income(1)
26,864
19,572
49,839
69,390
109,306
Charge related to the settlement of a wage
and hour class action lawsuit
(2,330
)
—
—
(2,330
)
—
Asset impairment (charges) recoveries,
net
—
—
1,465
(63
)
1,553
Restructuring charges and other
exit-related activities
(75
)
(536
)
(70
)
(813
)
(261
)
Recoveries related to the resale or
modification of previously contracted shipments
—
—
—
—
417
Total operating income
$
24,459
$
19,036
$
51,234
$
66,184
$
111,015
(1)
See Non-GAAP Financial Measures for
reconciliation to U.S. GAAP.
(2)
Corporate expense has been adjusted for
the three and nine months ended May 31, 2019 to exclude a $2
million charge related to the settlement of a wage and hour class
action lawsuit. See Non-GAAP Financial Measures for reconciliation
to U.S. GAAP.
SCHNITZER STEEL INDUSTRIES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(In thousands, except per share
amounts)
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
May 31, 2019
February 28, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Revenues
$
547,396
$
473,565
$
652,416
$
1,584,981
$
1,695,138
Cost of goods sold
474,598
414,688
549,164
1,379,418
1,427,877
Selling, general and administrative
48,575
39,489
54,185
139,483
158,866
(Income) from joint ventures
(311
)
(184
)
(772
)
(980
)
(1,328
)
Asset impairment charges (recoveries),
net
—
—
(1,465
)
63
(1,553
)
Restructuring charges and other
exit-related activities
75
536
70
813
261
Operating income
24,459
19,036
51,234
66,184
111,015
Interest expense
(2,294
)
(2,067
)
(2,483
)
(6,267
)
(6,823
)
Other income, net
29
321
403
373
1,353
Income from continuing operations before
income taxes
22,194
17,290
49,154
60,290
105,545
Income tax expense
(5,762
)
(3,855
)
(10,650
)
(13,733
)
(6,030
)
Income from continuing operations
16,432
13,435
38,504
46,557
99,515
Income (loss) from discontinued
operations, net of tax
8
(138
)
(56
)
(202
)
72
Net income
16,440
13,297
38,448
46,355
99,587
Net income attributable to noncontrolling
interests
(750
)
(405
)
(1,046
)
(1,585
)
(2,806
)
Net income attributable to SSI
$
15,690
$
12,892
$
37,402
$
44,770
$
96,781
Net income per share attributable to
SSI:
Basic:
Income per share from continuing
operations attributable to SSI
$
0.57
$
0.47
$
1.35
$
1.63
$
3.49
Income (loss) per share from discontinued
operations attributable to SSI
—
—
—
(0.01
)
—
Net income per share attributable to
SSI(1)
$
0.57
$
0.47
$
1.35
$
1.63
$
3.49
Diluted:
Income per share from continuing
operations attributable to SSI
$
0.56
$
0.46
$
1.31
$
1.60
$
3.38
Income (loss) per share from discontinued
operations attributable to SSI
—
—
—
(0.01
)
—
Net income per share attributable to
SSI
$
0.56
$
0.46
$
1.31
$
1.59
$
3.38
Weighted average number of common
shares:
Basic
27,510
27,630
27,676
27,548
27,719
Diluted
28,074
28,114
28,636
28,184
28,646
Dividends declared per common share
$
0.1875
$
0.1875
$
0.1875
$
0.5625
$
0.5625
(1) May not foot due to rounding.
SCHNITZER STEEL INDUSTRIES,
INC.
SELECTED OPERATING
STATISTICS
(Unaudited)
YTD
1Q19
2Q19
3Q19
2019
SSI Total Volume(1)
Total ferrous volume (LT)(2)
1,079,705
992,061
1,079,354
3,151,120
Total nonferrous volume (000s LB)
166,977
154,571
169,912
491,460
Auto and Metals Recycling
Ferrous selling prices
($/LT)(3)
Domestic
$
290
$
286
$
268
$
282
Export
$
314
$
288
$
303
$
302
Average
$
306
$
287
$
293
$
295
Ferrous sales volume (LT)
Domestic
339,879
343,017
311,408
994,304
Export
578,976
515,171
627,046
1,721,193
Total
918,855
858,188
938,454
2,715,497
Nonferrous average price
($/LB)(3)(4)
$
0.59
$
0.58
$
0.62
$
0.60
Nonferrous sales volume (000s
LB)(4)
152,869
141,307
153,936
448,112
Car purchase volume (000s)(5)
94
89
102
285
Auto stores at end of quarter
51
51
51
51
Cascade Steel and Scrap
Finished steel average sales price
($/ST)(3)
$
747
$
737
$
703
$
728
Sales volume (ST)
Rebar
81,470
59,424
90,826
231,720
Coiled products
37,418
34,489
38,525
110,432
Merchant bar and other
316
209
362
887
Finished steel products sold
119,204
94,122
129,713
343,039
Rolling mill utilization(6)
87
%
76
%
98
%
87
%
(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)
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.
SCHNITZER STEEL INDUSTRIES,
INC.
SELECTED OPERATING
STATISTICS
(Unaudited)
Fiscal
1Q18
2Q18
3Q18
4Q18
2018
SSI Total Volume(1)
Total ferrous volume (LT)
912,145
1,062,260
1,118,743
1,205,803
4,298,951
Total nonferrous volume (000s LB)
141,046
144,024
162,667
188,359
636,096
Auto and Metals Recycling
Ferrous selling prices
($/LT)(2)
Domestic
$
259
$
278
$
314
$
303
$
291
Export
$
306
$
327
$
347
$
328
$
328
Average
$
292
$
314
$
337
$
321
$
317
Ferrous sales volume (LT)
Domestic
237,464
239,571
293,323
314,974
1,085,332
Export
559,154
656,738
690,019
716,834
2,622,745
Total
796,618
896,309
983,342
1,031,808
3,708,077
Nonferrous average price
($/LB)(2)(3)
$
0.73
$
0.72
$
0.74
$
0.69
$
0.72
Nonferrous sales volume (000s
LB)(3)
129,137
129,549
146,043
166,976
571,705
Car purchase volume (000s)(4)
108
102
109
105
424
Auto stores at end of quarter
53
53
53
52
52
Cascade Steel and Scrap
Finished steel average sales price
($/ST)(2)
$
599
$
619
$
703
$
741
$
666
Sales volume (ST)
Rebar
84,243
79,718
91,603
81,182
336,746
Coiled products
40,928
43,056
46,673
43,878
174,535
Merchant bar and other
2,049
1,937
1,945
1,950
7,881
Finished steel products sold
127,220
124,711
140,221
127,010
519,162
Rolling mill utilization(5)
95
%
83
%
91
%
83
%
88
%
(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) Excludes PGM metals in catalytic
converters.
(4) Cars purchased by auto parts stores
only.
(5) 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, 2019
August 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
8,119
$
4,723
Accounts receivable, net
167,988
169,418
Inventories
202,192
205,877
Other current assets
39,050
68,341
Total current assets
417,349
448,359
Property, plant and equipment, net
437,456
415,711
Goodwill and other assets
237,817
240,747
Total assets
$
1,092,622
$
1,104,817
Liabilities
and Equity
Current liabilities:
Short-term borrowings
$
1,234
$
1,139
Other current liabilities
175,704
253,538
Total current liabilities
176,938
254,677
Long-term debt
140,895
106,237
Other long-term liabilities
81,085
73,793
Equity:
Total Schnitzer Steel Industries, Inc.
(“SSI”) shareholders’ equity
689,028
666,078
Noncontrolling interests
4,676
4,032
Total equity
693,704
670,110
Total liabilities and equity
$
1,092,622
$
1,104,817
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 and adjusted consolidated, AMR and
CSS operating income, which are non-GAAP financial measures as
defined under SEC rules. As required by SEC rules, we have provided
reconciliations 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 provides a
meaningful presentation of our results from business operations
excluding adjustments for a charge related to the settlement of a
wage and hour class action lawsuit, asset impairment charges net of
recoveries, restructuring charges and other exit-related
activities, recoveries related to the resale or modification of
previously contracted shipments, 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. Adjusted operating results in fiscal 2015
excluded the impact from the resale or modification of the terms,
each at significantly lower prices due to sharp declines in selling
prices, of previously contracted bulk shipments for delivery during
fiscal 2015. Recoveries resulting from settlements with the
original contract parties, which began in the third quarter of
fiscal 2016 and concluded in the first quarter of fiscal 2018, are
reported within selling, general and administrative expense in the
quarterly statements of income and are also excluded from the
measures. 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.
($ in millions)
Quarter
YTD
3Q19
3Q18
2Q19
3Q19
3Q18
Consolidated operating income:
Operating income
$
24
$
51
$
19
$
66
$
111
Charge related to the settlement of a wage
and hour class action lawsuit
2
—
—
2
—
Asset impairment charges (recoveries),
net
—
(1
)
—
—
(2
)
Restructuring charges and other
exit-related activities
—
—
1
1
—
Recoveries related to the resale or
modification of previously contracted shipments
—
—
—
—
—
Adjusted consolidated operating
income(1)
$
27
$
50
$
20
$
69
$
109
AMR operating income:
Operating income
$
29
$
55
$
22
$
74
$
135
Asset impairment charges (recoveries),
net
—
(1
)
—
—
(1
)
Recoveries related to the resale or
modification of previously contracted shipments
—
—
—
—
—
Adjusted AMR operating income(1)
$
29
$
54
$
22
$
74
$
133
CSS operating income:
Operating income
$
8
$
11
$
6
$
26
$
25
Asset impairment charges (recoveries),
net
—
—
—
—
—
Adjusted CSS operating income
$
8
$
11
$
6
$
26
$
25
(1) May not foot due to rounding.
Net income from continuing operations
attributable to SSI
($ in millions)
Quarter
YTD
3Q19
3Q18
2Q19
3Q19
3Q18
Net income from continuing operations
attributable to SSI
$
16
$
37
$
13
$
45
$
97
Charge related to the settlement of a wage
and hour class action lawsuit
2
—
—
2
—
Asset impairment charges (recoveries),
net
—
(1
)
—
—
(2
)
Restructuring charges and other
exit-related activities
—
—
1
1
—
Recoveries related to the resale or
modification of previously contracted shipments
—
—
—
—
—
Income tax expense (benefit) allocated to
adjustments(1)
(1
)
—
—
(1
)
—
Adjusted net income from continuing
operations attributable to SSI(2)
$
18
$
36
$
13
$
47
$
95
(1)
Income tax allocated to the aggregate
adjustments reconciling reported and adjusted net income from
continuing operations attributable to SSI is determined based on a
tax provision calculated with and without the adjustments.
(2)
May not foot due to rounding.
Diluted earnings per share from
continuing operations attributable to SSI
($ per share)
Quarter
YTD
3Q19
3Q18
2Q19
3Q19
3Q18
Diluted earnings per share from continuing
operations attributable to SSI
$
0.56
$
1.31
$
0.46
$
1.60
$
3.38
Charge related to the settlement of a wage
and hour class action lawsuit
0.08
—
—
0.08
—
Asset impairment charges (recoveries),
net
—
(0.05
)
—
—
(0.05
)
Restructuring charges and other
exit-related activities
—
—
0.02
0.03
0.01
Recoveries related to the resale or
modification of previously contracted shipments
—
—
—
—
(0.01
)
Income tax expense (benefit) allocated to
adjustments(1)
(0.02
)
—
—
(0.02
)
0.01
Adjusted diluted earnings per share from
continuing operations attributable to SSI(2)
$
0.63
$
1.26
$
0.48
$
1.68
$
3.32
(1)
Income tax allocated to the aggregate
adjustments reconciling reported and adjusted diluted earnings per
share from continuing operations attributable to SSI is determined
based on a tax provision calculated with and without the
adjustments.
(2)
May not foot due to rounding.
Debt, net of cash
($ in thousands)
May 31, 2019
February 28, 2019
August 31, 2018
Short-term borrowings
$
1,234
$
1,215
$
1,139
Long-term debt, net of current
maturities
140,895
161,866
106,237
Total debt
142,129
163,081
107,376
Less: cash and cash equivalents
8,119
13,173
4,723
Total debt, net of cash
$
134,010
$
149,908
$
102,653
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/20190626005181/en/
Investor Relations: Michael Bennett (503) 323-2811
mcbennett@schn.com
Company Info: www.schnitzersteel.com ir@schn.com
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