Schnitzer Reports Third Quarter 2015 Financial Results
Improved Operating Performance in All Businesses Sequentially
Strong Operating Cash Flow and Progress on Cost Reduction and Productivity Initiatives
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Business Wire
Schnitzer Steel Industries, Inc.
June 30, 2015 8:30 AM
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PORTLAND, Ore.--(BUSINESS WIRE)--
Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) today reported financial results for its fiscal 2015 third quarter ended May 31, 2015.
Our third quarter results reflected benefits from the cost reduction and productivity initiatives we announced in early April which led to improved sequential operating performance in all of our businesses. In Metals Recycling, ferrous volumes increased 29% and nonferrous sales volumes increased 21% versus the second quarter. Due to the rapid decline in ferrous selling prices in February, which impacted shipments in the third quarter, average inventory costs did not decline as quickly as selling prices, which led to an estimated $14 per ton, or $13 million, adverse impact of average inventory accounting which approximated the adverse impact in the second quarter. In our Auto Parts Business, higher seasonal retail activity and early benefits achieved from productivity improvements led to significantly improved profitability. Our Steel Manufacturing Business generated higher sales volumes and increased operating income due to steadily improving demand in West Coast construction markets.
Consolidated Financial Performance
The Company announced break-even adjusted earnings per share from continuing operations for the third quarter, which compares to second quarter adjusted loss per share of $0.30 and prior year third quarter adjusted earnings per share of $0.19. Adjustments included charges for restructuring and exit-related costs and asset impairments. Third quarter adjusted results included an adverse impact from average inventory accounting of approximately $0.40 per share which compares to a second quarter adverse impact of $0.36 per share and a prior year third quarter adverse impact of $0.09 per share. Based on current market trends, estimated adverse inventory effects are expected to be substantially reduced in the fourth quarter.
The Company reported third quarter loss per share from continuing operations of $0.31, including $6 million in restructuring and exit-related costs and $1 million in asset impairments. This compares to the second quarter reported loss per share of $7.08 and third quarter fiscal 2014 reported earnings per share of $0.13.
Strong Positive Operating Cash Flow and Significant Progress on Cost Reductions and Productivity Initiatives
The Company generated positive operating cash flow in the third quarter of $64 million which enabled the Company to reduce total debt to $263 million, the lowest level since first quarter of fiscal 2011.
During the quarter, the Company made significant progress on the execution of its targeted $60 million in annual cost savings and productivity improvements, generating approximately $10 million in benefits. The Company expects to achieve an additional $5 million of quarterly benefits by the fourth quarter of fiscal 2015, which is ahead of schedule and equates to a targeted quarterly run rate of approximately $15 million.
"Our ability to deliver on a wide range of cost savings and productivity initiatives contributed to improved sequential financial results in the third quarter. We expect the benefits from these initiatives, combined with more stable market conditions, to provide momentum for further improvements in our performance,” said Tamara Lundgren, President and Chief Executive Officer. “In addition, we expect to complete the consolidation of our Auto Parts and Metals Recycling Businesses during the fourth quarter, creating the opportunity to benefit from further commercial and operational synergies,” added Lundgren.
Summary Results
($ in millions, except per share amounts)
Quarter
3Q15 3Q14 Change 2Q15 Change
Revenues $ 467 $ 635 (26 )% $ 437 7 %
Operating Income (Loss) $ (4 ) $ 3 NM $ (201 ) (98 )%
Goodwill impairment charge — — NM 141 NM
Other asset impairment charges 1 1 141 % 44 (97 )%
Restructuring charges and other exit-related costs 6 3 116 % 5 11 %
Resale or modification of previously contracted shipments — — NM 1 NM
Adjusted Operating Income (Loss)(1)(3) $ 3 $ 6 (45 )% $ (9 ) NM
Net Income (Loss) attributable to SSI $ (10 ) $ 3 NM $ (196 ) (95 )%
Net Income (Loss) from continuing operations attributable to SSI $ (8 ) $ 3 NM $ (191 ) (96 )%
Adjusted Net Income (Loss) from continuing operations attributable to SSI(2) $
—
$ 5 NM $ (8 ) (99 )%
Net Income (Loss) per share attributable to SSI $ (0.36 ) $ 0.12 NM $ (7.24 ) (95 )%
Net Income (Loss) per share from continuing operations attributable to SSI $ (0.31 ) $ 0.13 NM $ (7.08 ) (96 )%
Adjusted diluted EPS from continuing operations attributable to SSI(2) $
—
$ 0.19 NM $ (0.30 ) (99 )%
(1) Adjusted operating income excludes the impact of goodwill and other asset impairments, restructuring, other exit-related costs, and the resale or modification of certain previously contracted ferrous bulk shipments. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
(2) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
(3) May not foot due to rounding.
NM = not meaningful
Metals Recycling Business
Summary of Metals Recycling Business Results
($ in millions, except selling prices and data per ton; Fe volumes 000s long tons; NFe volumes Ms lbs)
Quarter
3Q15 3Q14 Change 2Q15 Change
Total Revenues $ 363 $ 517 (30 )% $ 341 7 %
Ferrous Revenues $ 258 $ 387 (33 )% $ 244 6 %
Ferrous Volumes 971 1,024 (5 )% 750 29 %
Avg. Net Ferrous Sales Prices ($/LT)(1) $ 239 $ 346 (31 )% $ 295 (19 )%
Nonferrous Revenues $ 101 $ 123 (18 )% $ 91 11 %
Nonferrous Volumes 130 139 (6 )% 108 21 %
Avg. Net Nonferrous Sales Prices ($/lb)(1) $ 0.74 $ 0.86 (14 )% $ 0.81 (9 )%
Operating Income (Loss)(2) $ 1 $ 4 (73 )% $ (187 ) NM
Operating Income (Loss) per Fe ton $ 1 $ 4 (71 )% $ (249 ) NM
Adjusted Operating Income (Loss)(3) $ 2 $ 4 (38 )% $ (1 ) NM
Adjusted Operating Income (Loss) per Fe ton $ 2 $ 4 (35 )% $ (2 ) NM
(1) Sales prices are shown net of freight.
(2) Operating income does not include the impact of restructuring charges and other exit-related costs.
(3) Adjusted operating income excludes the impact of goodwill and other asset impairments, and the resale or modification of certain previously contracted ferrous bulk shipments. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
NM = not meaningful
Sales Volumes: Ferrous sales volumes of 971 thousand tons in the third quarter increased 29% from the second quarter, primarily due to an increase in export sales and timing of shipments. Nonferrous sales volumes of 130 million pounds increased 21% sequentially, driven by resolution of the labor slowdown at West Coast ports. As compared to the prior year, both ferrous and nonferrous volumes were slightly lower.
In total, export customers accounted for 68% of ferrous sales volumes in the third quarter, an increase from 55% in the second quarter. Ferrous and nonferrous products were shipped to 16 countries, with Turkey, India and South Korea the top export destinations for ferrous shipments.
Pricing: While market prices stabilized during the quarter, average ferrous selling prices declined $56, or 19%, sequentially, primarily due to the sharp drop in ferrous selling prices during February which impacted third quarter shipments. Ferrous prices increased in the second half of the third quarter. As compared to the prior year quarter, average selling prices declined $107 per ton, or 31%, reflecting the weaker export demand and excess steel production globally. Nonferrous prices declined 9% sequentially and 14% as compared to the prior year quarter, similarly reflecting weaker global demand.
Margins: Adjusted operating income per ton of $2 in the third quarter improved sequentially primarily due to benefits from cost reductions and productivity initiatives, as well as higher shipped volumes, partially offset by lower average selling prices. Due to the rapid decline in ferrous selling prices in February which impacted shipments in the third quarter, average inventory costs did not decline as quickly as purchase prices for raw materials, which led to an estimated $14 per ton, or $13 million, adverse impact of average inventory accounting which approximated the adverse impact in the second quarter. Based on current market trends, estimated adverse inventory effects are expected to be substantially reduced in the fourth quarter. Cost reduction and productivity improvement actions commenced during the third quarter benefited results by approximately $5 million and are expected to further benefit operating performance in the fourth quarter of fiscal 2015 and into fiscal 2016.
Auto Parts Business
Summary of Auto Parts Business Results
($ in millions, volume 000s)
Quarter
3Q15 3Q14 Change 2Q15 Change
Revenues $ 60 $ 80 (24 )% $ 66 (9 )%
Operating Income (Loss)(1) $ 3 $ 8 (59 )% $ (2 ) NM
Car Purchase Volumes 79 93 (15 )% 78 1 %
(1) Operating income does not include the impact of restructuring charges and other exit-related costs.
NM = not meaningful
Revenues: Revenues in the third quarter decreased 9% from the second quarter, primarily reflecting the significant impact of lower nonferrous commodity prices, partially offset by seasonally higher retail activity. Compared to the prior year third quarter, revenues declined 24% due to the significant impact of lower commodity prices and the resulting adverse impact on car purchase volumes.
Margins: Operating income of $3 million, or 5% of revenues, improved substantially from the second quarter, primarily due to seasonally higher retail activity and lower operating costs. Operating performance continued to be adversely impacted by an estimated $2 million from average inventory accounting which is expected to be substantially reduced in the fourth quarter based on current market trends. Recently announced cost reduction and productivity initiatives delivered approximately $4 million of benefits in the third quarter and are expected to further improve operating performance in the fourth quarter of fiscal 2015 and into fiscal 2016. The productivity benefits in the third quarter were partially offset by the impact of lower nonferrous commodity prices of $2 million.
Steel Manufacturing Business
Summary of Steel Manufacturing Business Results
($ in millions, except selling prices; volume 000s of short tons)
Quarter
3Q15 3Q14 Change 2Q15 Change
Revenues $ 95 $ 102 (7 )% $ 93 2 %
Operating Income $ 4 $ 5 (5 )% $ 4 14 %
Avg. Net Sales Prices ($/ST) $ 615 $ 686 (10 )% $ 651 (6 )%
Finished Goods Sales Volumes 142 135 5 % 131 8 %
Rolling Mill Utilization 69 % 72 % 76 %
Sales Volumes: Finished steel sales volumes of 142 thousand tons increased 8% from the second quarter and 5% from the prior year third quarter levels, driven by improving nonresidential construction demand which more than offset the impact of imports. Utilization of 69% was lower sequentially due to a scheduled maintenance outage.
Pricing: Average net sales prices for finished steel products decreased by $36 per ton sequentially and $71 per ton as compared to the prior year third quarter, reflecting primarily the sharp drop in scrap prices coming into the quarter.
Margins: Operating income of $4 million increased 14% sequentially due to higher shipped volumes which offset lower average selling prices. As compared to the prior year third quarter, the impact on operating income of the sharp decline in selling prices more than offset the higher sales volumes.
Cost Reduction and Productivity Initiatives
As previously announced, during the third quarter the Company commenced two strategic initiatives:
(i) A cost reduction, capacity reduction and productivity improvement initiative which, in the aggregate, is intended to improve financial performance by $60 million annually by the end of 2016; and
(ii) The integration of the Auto Parts and Metals Recycling Businesses into a single division during the fourth quarter of fiscal 2015 which is intended to further optimize the efficiencies in our operating platform, enable additional synergies to be captured throughout our supply chain and global sales channel, and more effectively leverage our shared services platform.
About half of the approximately $60 million in targeted benefits is expected to come from our Metals Recycling Business through a combination of equipment idling, including reduced depreciation, and SG&A reductions. Another approximately 40% is expected to come from our Auto Parts Business through the closing of seven stores, SG&A reductions and productivity improvement initiatives. The balance is expected to come from our Corporate Shared Services Division through the reduction of organizational layers and leveraging support functions across the Company’s operating platform. We delivered approximately $10 million of benefits in the third quarter and expect a quarter of the total savings target, or $15 million, to be achieved in the fourth quarter of fiscal 2015, with the remainder to be delivered by the end of fiscal 2016.
In connection with our cost reduction initiatives, we expect to incur restructuring charges of approximately $10 million.
Corporate Items
Consolidated SG&A costs were reduced by $6 million, or 12%, as compared to the prior year quarter primarily due to benefits from the cost savings and productivity initiatives and a legal settlement resulting in an insurance reimbursement of $2 million in the third quarter of fiscal 2015.
Operating cash flow of $64 million during the third quarter enabled a continuation in the reduction of debt outstanding while funding our quarterly dividend and capital expenditures. Net debt of $254 million at the end of the third quarter was $51 million lower than at the end of the second quarter.
The Company anticipates a full year effective tax rate of 4%, primarily driven by estimated valuation allowances on deferred tax assets.
Discontinued Operations
In the third quarter of fiscal 2015, the Company closed seven Auto Parts stores, of which six are reported in discontinued operations and one store was absorbed into the operations of existing retail stores nearby. The loss in the fiscal 2015 third quarter from discontinued operations, net of tax, was $1 million, or $0.05 per share, which compares to a loss from discontinued operations of $0.01 per share, in the third quarter of fiscal 2014.
Analysts' Conference Call: Third Quarter of Fiscal 2015
A conference call and slide presentation to discuss results will be held today, June 30, 2015, at 11:30 a.m. EDT hosted by Tamara Lundgren, President and Chief Executive Officer, and Richard Peach, Chief Financial Officer. The call and the slides will be webcast and accessible on the Company's website at www.schnitzersteel.com.
Summary financial data is provided in the following pages. The slides and related materials will be available prior to the call on the website.
SCHNITZER STEEL INDUSTRIES, INC.
FINANCIAL HIGHLIGHTS
(in thousands)
(Unaudited)
For the Three Months Ended For the Nine Months Ended
May 31, 2015 February 28, 2015 May 31, 2014 May 31, 2015 May 31, 2014
REVENUES:
Metal Recycling Business:
Ferrous sales $ 257,635 $ 243,999 $ 386,826 $ 839,212 $ 1,165,487
Nonferrous sales 101,386 91,055 123,407 305,033 357,394
Other sales 4,020 5,489 6,608 15,616 19,959
TOTAL MRB SALES 363,041 340,543 516,841 1,159,861 1,542,840
Auto Parts Business 60,291 65,995 79,602 203,577 227,695
Steel Manufacturing Business 94,939 93,126 102,039 283,284 271,618
Intercompany sales and eliminations (50,962 ) (62,215 ) (63,009 ) (188,340 ) (196,990 )
Total Revenues $ 467,309 $ 437,449 $ 635,473 $ 1,458,382 $ 1,845,163
OPERATING INCOME (LOSS):
Adjusted Metal Recycling Business(1) $ 2,298 $ (1,218 ) $ 3,736 $ 8,583 $ 15,860
Auto Parts Business 3,145 (1,970 ) 7,702 3,812 19,981
Steel Manufacturing Business 4,343 3,799 4,594 14,350 9,912
Adjusted segment operating income(2) 9,786 611 16,032 26,745 45,753
Corporate expense (7,554 ) (8,488 ) (10,393 ) (25,035 ) (29,096 )
Intercompany eliminations 1,007 (1,534 ) 252 (924 ) (966 )
Adjusted operating income (loss) 3,239 (9,411 ) 5,891 786 15,691
Goodwill impairment charge — (141,021 ) — (141,021 ) —
Other asset impairment charges (1,281 ) (43,838 ) (532 ) (45,119 ) (1,460 )
Restructuring charges and other exit-related costs (5,978 ) (5,394 ) (2,762 ) (11,964 ) (6,444 )
Resale or modification of previously contracted shipments — (1,347 ) — (6,928 ) —
Total operating income (loss) $ (4,020 ) $ (201,011 ) $ 2,597 $ (204,246 ) $ 7,787
(1) Adjusted operating income excludes the impact of goodwill and other asset impairments, and the resale or modification of certain previously contracted ferrous bulk shipments. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.
(2) Segment operating income does not include the impact of restructuring charges and other exit-related costs.
SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
For the Three Month Ended For the Nine Months Ended
May 31, 2015 February 28, 2015 May 31, 2014 May 31, 2015 May 31, 2014
Revenues $ 467,309 $ 437,449 $ 635,473 $ 1,458,382 $ 1,845,163
Cost of goods sold 424,312 406,649 584,420 1,338,976 1,693,565
Selling, general and administrative 39,798 42,167 45,309 126,696 136,831
Income from joint ventures (40 ) (609 ) (147 ) (1,148 ) (924 )
Goodwill impairment charge — 141,021 — 141,021 —
Other asset impairment charges 1,281 43,838 532 45,119 1,460
Restructuring charges and other exit-related costs 5,978 5,394 2,762 11,964 6,444
Operating income (loss) (4,020 ) (201,011 ) 2,597 (204,246 ) 7,787
Interest expense (2,375 ) (2,295 ) (2,529 ) (7,044 ) (7,944 )
Other income, net 84 1,993 492 3,011 604
Income (loss) from continuing operations before income taxes (6,311 ) (201,313 ) 560 (208,279 ) 447
Income tax benefit (expense) (1,396 ) 9,673 3,894 8,171 3,266
Income (loss) from continuing operations (7,707 ) (191,640 ) 4,454 (200,108 ) 3,713
Loss from discontinued operations, net of tax (1,234 ) (4,242 ) (330 ) (6,314 ) (2,315 )
Net income (loss) (8,941 ) (195,882 ) 4,124 (206,422 ) 1,398
Net (income) loss attributable to noncontrolling interests (687 ) 240 (1,014 ) (1,318 ) (2,726 )
Net income (loss) attributable to SSI $ (9,628 ) $ (195,642 ) $ 3,110 $ (207,740 ) $ (1,328 )
Net income (loss) per share attributable to SSI:
Basic:
Income (loss) per share from continuing operations attributable to SSI $ (0.31 ) $ (7.08 ) $ 0.13 $ (7.46 ) $ 0.04
Loss per share from discontinued operations attributable to SSI
(0.05 )
(0.16
)
(0.01 )
(0.23 )
(0.09 )
Net income (loss) per share attributable to SSI
$ (0.36 ) $ (7.24 ) $ 0.12 $ (7.69 ) $ (0.05 )
Diluted:
Income (loss) per share from continuing operations attributable to SSI $ (0.31 ) $ (7.08 ) $ 0.13 $ (7.46 ) $ 0.04
Loss per share from discontinued operations attributable to SSI
(0.05 )
(0.16 )
(0.01 )
(0.23 )
(0.09 )
Net income (loss) per share attributable to SSI
$ (0.36 ) $ (7.24 ) $ 0.12 $ (7.69 ) $ (0.05 )
Weighted average number of common shares:
Basic 27,043 27,020 26,853 27,003 26,811
Diluted 27,043 27,020 27,017 27,003 26,811
Dividends declared per common share $ 0.1875 $ 0.1875 $ 0.1875 $ 0.5625 0.5625
SCHNITZER STEEL INDUSTRIES, INC.
SELECTED OPERATING STATISTICS
(Unaudited)
Fiscal Fiscal
1Q15 2Q15 3Q15 2015 1Q14 2Q14 3Q14 4Q14 2014
Metals Recycling Business
Ferrous Selling Prices ($/LT)(1)
Domestic $ 344 $ 305 $ 245 $ 300 $ 356 $ 374 $ 354 $ 349 $ 358
Export $ 319 $ 286 $ 236 $ 278 $ 344 $ 361 $ 341 $ 352 $ 350
Average $ 328 $ 295 $ 239 $ 286 $ 348 $ 365 $ 346 $ 351 $ 353
Ferrous Sales Volume (LT)
Domestic 333,798 334,263 307,480 975,541 322,531 328,005 344,526 328,308 1,323,369
Export 604,626 415,765 663,456 1,683,847 655,072 701,259 679,009 763,608 2,798,948
Total 938,424 750,028 970,936 2,659,388 977,603 1,029,264 1,023,535 1,091,916 4,122,317
Nonferrous Average Price ($/LB)(1) $ 0.85 $ 0.81 $ 0.74 $ 0.80 $ 0.89 $ 0.86 $ 0.86 $ 0.85 $ 0.86
Nonferrous Sales Volume (LB, in 000s) 127,473 108,126 130,337
365,936
123,941 135,935 139,273 155,659 554,808
Steel Manufacturing Business
Sales Prices ($/ST)(1)(2)
Average $ 683 $ 651 $ 615 $ 648 $ 657 $ 676 $ 686 $ 688 $ 677
Sales Volume (ST)(2)
Rebar 79,065 74,928 100,413 254,406 83,618 83,838 85,633 101,076 354,165
Coiled Products 40,361 49,403 35,477 125,241 38,322 25,656 41,892 46,682 152,552
Merchant Bar and Other 7,698 6,705 5,659 20,062 6,222 5,305 6,984 7,979 26,490
Total 127,124 131,036 141,549 399,709 128,162 114,799 134,509 155,737 533,207
Rolling Mill Utilization 72 % 76 % 69 % 73 % 65 % 67 % 72 % 76 % 70 %
Auto Parts Business
Car purchase volumes (000) 92 78 79 249 86 80 93 101 360
Number of self-service locations at end of quarter 56 56 55 55 56 55 55 56 56
(1) Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer
(2) Excludes billet sales
SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
May 31, 2015 August 31, 2014
Assets
Current Assets:
Cash and cash equivalents $ 8,929 $ 25,672
Accounts receivable, net 117,311 189,359
Inventories 197,008 216,172
Other current assets 39,089 32,729
Total current assets 362,337 463,932
Property, plant and equipment, net 432,309 523,433
Goodwill and other assets 215,653 367,845
Total assets $ 1,010,299 $ 1,355,210
Liabilities and Equity
Current liabilities:
Short-term borrowings $ 637 $ 523
Other current liabilities 126,848 176,747
Total current liabilities 127,485 177,270
Long-term debt 262,746 318,842
Other long-term liabilities 83,754 83,121
Equity:
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity 532,066 770,784
Noncontrolling interests 4,248 5,193
Total equity 536,314 775,977
Total liabilities and equity $ 1,010,299 $ 1,355,210
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures as defined under SEC rules such as adjusted consolidated operating income (loss), adjusted MRB operating income (loss), adjusted net income (loss) from continuing operations attributable to SSI and adjusted diluted earnings per share from continuing operations attributable to SSI. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable U.S. GAAP measures. Management believes that each of the foregoing adjusted non-GAAP financial measures provides a meaningful presentation of the Company's results from its core business operations excluding adjustments for a goodwill impairment charge, other asset impairment charges and restructuring and other exit-related costs that are not related to the Company's ongoing core business operations and improves the period-to-period comparability of the Company's results from its core business operations. In addition, to improve comparability of our operating performance between periods, these measures also exclude the impact on operating results in fiscal 2015 from the resale or modification of the terms during the first and second quarters of 2015 of certain previously contracted ferrous bulk shipments. Due to the sharp decline in selling prices that occurred during the first and second quarters of fiscal 2015, the revised prices associated with these shipments were significantly lower than the prices in the original sales contracts entered into between August and November 2014. 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.
Operating Income (Loss)
($ in millions) Quarter
3Q15 2Q15 3Q14
Consolidated Operating Income (Loss):
Operating Income (Loss) $ (4 ) $ (201 ) $ 3
Goodwill impairment charge — 141 —
Other asset impairment charges 1 44 1
Restructuring charges and other exit-related costs 6 5 3
Resale or modification of previously contracted shipment — 1 —
Adjusted Operating Income (Loss)(1) $ 3 $ (9 ) $ 6
MRB Operating Income (Loss):
Operating Income (Loss) $ 1 $ (187 ) $ 4
Goodwill impairment charge — 141 —
Other asset impairment charges 1 43 —
Resale or modification of previously contracted shipment — 1 —
Adjusted Operating Income (Loss)(1) $ 2 $ (1 ) $ 4
Net Income (Loss) from continuing operations attributable to SSI
($ in millions) Quarter
3Q15 2Q15 3Q14
Net Income (Loss) from continuing operations attributable to SSI $ (8 ) $ (191 ) $ 3
Goodwill impairment charge, net of tax — 130 —
Other asset impairment charges, net of tax 1 44 —
Restructuring charges and other exit-related costs, net of tax 7 6 1
Resale or modification of previously contracted shipment, net of tax — 3 —
Adjusted Net Income (Loss) from continuing operations attributable to SSI(1) $ — $ (8 ) $ 5
(1) May not foot due to rounding.
Diluted Earnings per share attributable to SSI
($ per share) Quarter
3Q15 2Q15 3Q14
Net Income (Loss) per share attributable to SSI $ (0.36 ) $ (7.24 ) $ 0.12
Less: Loss per share from discontinued operations attributable to SSI (0.05 ) (0.16 ) (0.01 )
Net Income (Loss) per share from continuing operations attributable to SSI(1) (0.31 ) (7.08 ) 0.13
Goodwill impairment charge, net of tax, per share — 4.80 —
Other asset impairment charges, net of tax, per share 0.05 1.63 0.01
Restructuring charges and other exit-related costs, net of tax, per share 0.25 0.23 0.05
Resale or modification of previously contracted shipment, net of tax, per share
—
0.12 —
Adjusted Diluted EPS from continuing operations attributable to SSI(1) $
—
$
(0.30
) $ 0.19
(1) May not foot due to rounding.
Debt, Net of Cash
($ in thousands)
May 31, 2015 August 31, 2014
Short-term borrowings $ 637 $ 523
Long-term debt, net of current maturities 262,746 318,842
Total debt 263,383 319,365
Less: cash and cash equivalents 8,929 25,672
Total debt, net of cash $ 254,454 $ 293,693
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the largest manufacturers and exporters of recycled metal products in the United States with operating facilities located in 24 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 and steel manufacturing. With an effective annual production capacity of approximately 800,000 tons, the Company's steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The Company began operations in 1906 in Portland, Oregon.
Safe Harbor for 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 to “we,” “our,” “us” and “SSI” refer to the Company and its consolidated subsidiaries.
Forward-looking statements in this press release include statements regarding our expectations, intentions, beliefs and strategies regarding the future, which may include statements regarding trends, cyclicality and changes in the markets we sell into; strategic direction or initiatives; 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 realization of deferred tax assets; the anticipated value of goodwill or other intangible assets; planned capital expenditures; liquidity positions; ability to generate cash from continuing operations; the potential impact of adopting new accounting pronouncements; expected results, including pricing, sales volumes and profitability; obligations under our retirement plans; benefits, savings or additional costs from business realignment, cost containment and productivity improvement programs; and the adequacy of accruals.
When used in this report, the words “believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,” “evaluates,” “may,” “could,” “opinions,” “forecasts,” “future,” “forward,” “potential,” “probable,” and similar expressions are intended to identify forward-looking statements.
We may make other forward-looking statements from time to time, including in reports filed with the Securities and Exchange Commission, press releases and 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 our most recent annual report on Form 10-K and quarterly report on Form 10-Q. Examples of these risks include: potential environmental cleanup costs related to the Portland Harbor Superfund site; the impact of general economic conditions; volatile supply and demand conditions affecting prices and volumes in the markets for both our products and raw materials we purchase; difficulties associated with acquisitions and integration of acquired businesses; the impact of goodwill impairment charges; the impact of long-lived asset impairment charges; the realization of expected cost reductions related to restructuring initiatives; the benefit of business realignment, cost containment and productivity improvement programs and strategic initiatives; the inability of customers to fulfill their contractual obligations; 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 the consolidation in the steel industry; the impact of imports of foreign steel into the U.S.; inability to realize expected benefits from investments in technology; freight rates and availability of transportation; impact of equipment upgrades and failures on production; product liability claims; the impact of impairment of our deferred tax assets; the impact of a cybersecurity incident; costs associated with compliance with environmental regulations; the adverse impact of climate change; inability to obtain or renew business licenses and permits; compliance with greenhouse gas emission 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: http://www.businesswire.com/news/home/20150630005444/en/
Contact:
Schnitzer Steel Industries, Inc.
Investor Relations:
Alexandra Deignan, 646-278-9711
adeignan@schn.com
or
Company Info:
www.schnitzersteel.com
ir@schn.com
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