Schnitzer Reports Third Quarter Fiscal 2023 Financial Results
Significant Sequential Performance Improvement
Schnitzer Board Declares Quarterly Dividend
PORTLAND, Ore., June 27, 2023--(BUSINESS WIRE)--Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) today reported results for its third quarter of fiscal 2023 ended May 31, 2023.
Third Quarter Fiscal 2023 Highlights
Diluted earnings per share from continuing operations of $0.48. Net income of $14 million and net income per ferrous ton of $12.
Adjusted diluted earnings per share from continuing operations of $0.67, which excludes charges of $5 million, or $0.18 per share, related primarily to legacy environmental matters.
Adjusted EBITDA of $56 million and adjusted EBITDA per ferrous ton of $48.
Significant sequential performance improvement driven by stronger demand for recycled metals leading to higher average net selling prices for ferrous and nonferrous products.
Nonferrous volumes were up 26% sequentially, driven by increased purchases and higher recovery yields associated with the Company’s advanced nonferrous technology investments.
Finished steel sales volumes were up 30% sequentially due to seasonally stronger construction demand.
Stronger demand for recycled metals from improved global steel demand and inventory restocking led to higher net average selling prices and an expansion of metal spreads in the quarter. Metal margins also benefited from shipments contracted before market prices began to soften in the second half of the quarter. Supply flows improved seasonally but remained tighter than a year ago.
Average net selling prices for ferrous and nonferrous products increased sequentially 13% and 2%, respectively. Ferrous sales volumes decreased sequentially by 8% compared to the prior quarter, which had benefited from a drawdown of inventories. Nonferrous sales volumes were up 26% sequentially, driven by stronger nonferrous flows and higher production and recovery from the Company's advanced nonferrous processing technologies. Sales volumes for finished steel products increased 30%, benefiting from seasonally stronger demand for finished steel. Rolling mill utilization reached 97% in the quarter. Finished steel average net selling prices were lower sequentially by 2%.
Commenting on the Company's third quarter results, Tamara Lundgren, Chairman and Chief Executive Officer, said, "Our financial and operating performance this quarter reflects stronger market conditions than we experienced earlier in the fiscal year, improved operating efficiencies from our productivity initiatives, and benefits from the advanced metal recovery technology systems which have been commissioned to date."
Ms. Lundgren continued, "While the near-term economic environment is showing some signs of slowdown, the long-term structural demand for recycled metals remains positive, supported by the increased focus on decarbonization, the transition to low-carbon technologies, and the anticipated demand associated with the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, including Buy Clean provisions."
Summary Results | ||||||||||||||||||||
($ in millions, except per share amounts, and prices per ton/pound) | ||||||||||||||||||||
Quarter | Nine Months Ended | |||||||||||||||||||
3Q23 | 2Q23 | 3Q22 | 2023 | 2022 | ||||||||||||||||
Revenues | $ | 810 | $ | 756 | $ | 1,010 | $ | 2,164 | $ | 2,591 | ||||||||||
Gross margin (total revenues less cost of goods sold) | $ | 96 | $ | 73 | $ | 176 | $ | 218 | $ | 403 | ||||||||||
Selling, general and administrative expense | $ | 69 | $ | 64 | $ | 78 | $ | 197 | $ | 194 | ||||||||||
Net income | $ | 14 | $ | 4 | $ | 76 | $ | — | $ | 161 | ||||||||||
Net income per ferrous ton | $ | 12 | $ | 3 | $ | 67 | $ | — | $ | 48 | ||||||||||
Diluted earnings per share from continuing operations attributable to SSI shareholders | ||||||||||||||||||||
Reported | $ | 0.48 | $ | 0.14 | $ | 2.52 | $ | — | $ | 5.33 | ||||||||||
Adjusted(1) | $ | 0.67 | $ | 0.14 | $ | 2.59 | $ | 0.38 | $ | 5.54 | ||||||||||
Adjusted EBITDA(1) | $ | 56 | $ | 32 | $ | 119 | $ | 96 | $ | 272 | ||||||||||
Adjusted EBITDA per ferrous ton(1) (4) | $ | 48 | $ | 25 | $ | 105 | $ | 29 | $ | 81 | ||||||||||
Ferrous sales volumes (LT, in thousands) | 1,157 | 1,263 | 1,129 | 3,270 | 3,349 | |||||||||||||||
Avg. net ferrous sales prices ($/LT)(2) | $ | 413 | $ | 367 | $ | 541 | $ | 376 | $ | 447 | ||||||||||
Nonferrous sales volumes (pounds, in millions)(3) | 208 | 165 | 201 | 535 | 502 | |||||||||||||||
Avg. nonferrous sales prices ($/pound)(2)(3) | $ | 1.01 | $ | 0.99 | $ | 1.12 | $ | 0.97 | $ | 1.10 | ||||||||||
Finished steel average net sales price ($/ST)(2) | $ | 924 | $ | 943 | $ | 1,129 | $ | 959 | $ | 1,059 | ||||||||||
Finished steel sales volumes (ST, in thousands) | 142 | 109 | 135 | 369 | 340 | |||||||||||||||
Rolling mill utilization (%) | 97 | % | 75 | % | 96 | % | 84 | % | 87 | % | ||||||||||
LT = Long Ton, which is equivalent to 2,240 pounds | ||
ST = Short Ton, which is equivalent to 2,000 pounds | ||
(1) | See Non-GAAP Financial Measures for reconciliation to U.S. GAAP. | |
(2) | Price information is shown after netting the cost of freight incurred to deliver the product to the customer. | |
(3) | Nonferrous sales volumes and average nonferrous prices excludes platinum group metals ("PGMs") in catalytic converters. | |
(4) | May not foot due to rounding. | |
Third Quarter Fiscal 2023 Financial Review and Analysis
Third quarter performance reflected the full achievement of the $10 million quarterly run rate of productivity initiatives announced last October and the quarterly run rate of $5 million of SG&A savings initiatives announced in January. The benefits from these initiatives mitigated the impact of inflationary pressure on operating costs. Results for the third quarter also included a benefit from average inventory accounting of approximately $2 per ferrous ton, compared to $8 per ferrous ton in the second quarter of fiscal 2023.
The third quarter had operating cash outflow of $(21) million, as cash flows associated with higher profitability were more than offset by an increase in working capital due primarily to the timing of shipments and collections. Total debt at the end of the quarter was $351 million, and debt, net of cash, was $346 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). Capital expenditures were $27 million in the quarter, including investments in advanced metal recovery technologies, maintaining the business and environmental-related projects. The effective tax rate for the third quarter of fiscal 2023 was an expense of approximately 34% on GAAP results and approximately 31% on adjusted non-GAAP results. During the third quarter, the Company returned capital to shareholders through its 117th consecutive quarterly dividend.
Declaration of Quarterly Dividend
The Board of Directors declared a cash dividend of $0.1875 per common share, payable July 31, 2023 to shareholders of record on July 17, 2023. Schnitzer has paid a dividend every quarter since going public in November 1993.
Analysts’ Conference Call: Third Quarter of Fiscal 2023
A conference call and slide presentation to discuss results will be held today, June 27, 2023, at 11:30 a.m. Eastern and will be hosted by Tamara L. Lundgren, Chairman and Chief Executive Officer, and Stefano Gaggini, Senior Vice President and Chief Financial Officer. The call and the slide presentation will be webcast and accessible on the Company’s website under Company > Investors > Event Calendar at: schnitzersteel.com/company/investors/event-calendar. Summary financial data is provided in the following pages. The slide presentation and related materials will be available prior to the call on the Company's website.
About Schnitzer Steel Industries, Inc.
Schnitzer is one of the largest manufacturers and exporters of recycled metal products in North America with operating facilities located in 25 states, Puerto Rico, and Western Canada. Schnitzer has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The Company’s integrated operating platform also includes 50 stores which sell serviceable used auto parts from salvaged vehicles and receive over 4.1 million annual retail visits. The Company’s steel manufacturing operations produce finished steel products, including rebar, wire rod, and other specialty products. The Company began operations in 1906 in Portland, Oregon.
SCHNITZER STEEL INDUSTRIES, INC. | ||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
May 31, | February 28, | May 31, | May 31, | May 31, | ||||||||||||||||
Revenues | $ | 809,610 | $ | 755,953 | $ | 1,010,087 | $ | 2,164,293 | $ | 2,591,403 | ||||||||||
Cost of goods sold | 713,685 | 682,937 | 834,375 | 1,946,633 | 2,188,158 | |||||||||||||||
Selling, general and administrative expense | 68,527 | 63,957 | 77,672 | 196,712 | 194,020 | |||||||||||||||
Income from joint ventures | (285 | ) | (311 | ) | (762 | ) | (1,386 | ) | (1,589 | ) | ||||||||||
Asset impairment charges | — | — | 932 | — | 932 | |||||||||||||||
Restructuring charges and other exit-related activities | 169 | 828 | 26 | 2,589 | 52 | |||||||||||||||
Operating income | 27,514 | 8,542 | 97,844 | 19,745 | 209,830 | |||||||||||||||
Interest expense | (5,146 | ) | (4,908 | ) | (2,223 | ) | (13,378 | ) | (5,496 | ) | ||||||||||
Other loss, net | (1,306 | ) | (99 | ) | (34 | ) | (5,289 | ) | (136 | ) | ||||||||||
Income from continuing operations before income taxes | 21,062 | 3,535 | 95,587 | 1,078 | 204,198 | |||||||||||||||
Income tax (expense) benefit | (7,221 | ) | 513 | (20,037 | ) | (676 | ) | (43,207 | ) | |||||||||||
Income from continuing operations | 13,841 | 4,048 | 75,550 | 402 | 160,991 | |||||||||||||||
(Loss) gain from discontinued operations, net of tax | (233 | ) | 224 | (46 | ) | (78 | ) | (46 | ) | |||||||||||
Net income | 13,608 | 4,272 | 75,504 | 324 | 160,945 | |||||||||||||||
Net (income) loss attributable to noncontrolling interests | (148 | ) | 81 | (870 | ) | (299 | ) | (2,497 | ) | |||||||||||
Net income attributable to SSI shareholders | $ | 13,460 | $ | 4,353 | $ | 74,634 | $ | 25 | $ | 158,448 | ||||||||||
Net income per share attributable to SSI shareholders: | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Income per share from continuing operations | $ | 0.49 | $ | 0.15 | $ | 2.65 | $ | — | $ | 5.63 | ||||||||||
Net income per share | $ | 0.48 | $ | 0.16 | $ | 2.65 | $ | — | $ | 5.63 | ||||||||||
Diluted: | ||||||||||||||||||||
Income per share from continuing operations | $ | 0.48 | $ | 0.14 | $ | 2.52 | $ | — | $ | 5.33 | ||||||||||
Net income per share | $ | 0.47 | $ | 0.15 | $ | 2.52 | $ | — | $ | 5.33 | ||||||||||
Weighted average number of common shares: | ||||||||||||||||||||
Basic | 28,114 | 28,081 | 28,143 | 27,980 | 28,161 | |||||||||||||||
Diluted | 28,659 | 28,617 | 29,625 | 28,646 | 29,741 | |||||||||||||||
Dividends declared per common share | $ | 0.1875 | $ | 0.1875 | $ | 0.1875 | $ | 0.5625 | $ | 0.5625 | ||||||||||
SCHNITZER STEEL INDUSTRIES, INC. | ||||||||||||||||
SELECTED OPERATING STATISTICS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
YTD | ||||||||||||||||
1Q23 | 2Q23 | 3Q23 | 2023 | |||||||||||||
Total ferrous volumes (LT, in thousands)(1) | 851 | 1,263 | 1,157 | 3,270 | ||||||||||||
Total nonferrous volumes (pounds, in thousands)(1)(2) | 162,720 | 164,796 | 207,714 | 535,230 | ||||||||||||
Ferrous selling prices ($/LT)(3) | ||||||||||||||||
Domestic | $ | 313 | $ | 359 | $ | 414 | $ | 365 | ||||||||
Foreign | $ | 356 | $ | 368 | $ | 414 | $ | 380 | ||||||||
Average | $ | 340 | $ | 367 | $ | 413 | $ | 376 | ||||||||
Ferrous sales volume (LT, in thousands) | ||||||||||||||||
Domestic | 432 | 444 | 548 | 1,424 | ||||||||||||
Foreign | 418 | 819 | 609 | 1,846 | ||||||||||||
Total (6) | 851 | 1,263 | 1,157 | 3,270 | ||||||||||||
Nonferrous average price ($/pound)(2)(3) | $ | 0.90 | $ | 0.99 | $ | 1.01 | $ | 0.97 | ||||||||
Cars purchased (in thousands)(4) | 69 | 72 | 78 | 219 | ||||||||||||
Auto stores at period end | 51 | 50 | 50 | 50 | ||||||||||||
Finished steel average sales price ($/ST)(3) | $ | 1,015 | $ | 943 | $ | 924 | $ | 959 | ||||||||
Sales volume (ST, in thousands) | ||||||||||||||||
Rebar | 101 | 84 | 97 | 282 | ||||||||||||
Coiled products | 16 | 24 | 43 | 83 | ||||||||||||
Merchant bar and other | 1 | 1 | 2 | 4 | ||||||||||||
Finished steel products sold | 118 | 109 | 142 | 369 | ||||||||||||
Rolling mill utilization(5) | 81 | % | 75 | % | 97 | % | 84 | % | ||||||||
(1) | Ferrous and nonferrous volumes sold externally and delivered to our steel mill for finished steel production. | |
(2) | Excludes PGMs in catalytic converters. | |
(3) | Price information is shown after netting the cost of freight incurred to deliver the product to the customer. | |
(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. | |
(6) | May not foot due to rounding. | |
SCHNITZER STEEL INDUSTRIES, INC. | ||||||||||||||||||||
SELECTED OPERATING STATISTICS | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
FY | ||||||||||||||||||||
1Q22 | 2Q22 | 3Q22 | 4Q22 | 2022(6) | ||||||||||||||||
Total ferrous volumes (LT, in thousands)(1) | 1,148 | 1,071 | 1,129 | 1,268 | 4,616 | |||||||||||||||
Total nonferrous volumes (pounds, in thousands)(1)(2) | 153,227 | 147,145 | 201,413 | 185,634 | 687,419 | |||||||||||||||
Ferrous selling prices ($/LT)(3) | ||||||||||||||||||||
Domestic | $ | 431 | $ | 418 | $ | 516 | $ | 389 | $ | 438 | ||||||||||
Foreign | $ | 450 | $ | 455 | $ | 552 | $ | 387 | $ | 457 | ||||||||||
Average | $ | 446 | $ | 445 | $ | 541 | $ | 387 | $ | 452 | ||||||||||
Ferrous sales volume (LT, in thousands) | ||||||||||||||||||||
Domestic | 430 | 408 | 490 | 477 | 1,806 | |||||||||||||||
Foreign | 718 | 663 | 639 | 791 | 2,810 | |||||||||||||||
Total | 1,148 | 1,071 | 1,129 | 1,268 | 4,616 | |||||||||||||||
Nonferrous average price ($/pound)(2)(3) | $ | 1.05 | $ | 1.10 | $ | 1.12 | $ | 1.05 | $ | 1.08 | ||||||||||
Cars purchased (in thousands)(4) | 80 | 73 | 84 | 76 | 312 | |||||||||||||||
Auto stores at period end | 50 | 50 | 50 | 51 | 51 | |||||||||||||||
Finished steel average sales price ($/ST)(3) | $ | 979 | $ | 1,045 | $ | 1,129 | $ | 1,118 | $ | 1,075 | ||||||||||
Sales volume (ST, in thousands) | ||||||||||||||||||||
Rebar | 74 | 73 | 99 | 96 | 343 | |||||||||||||||
Coiled products | 25 | 32 | 35 | 28 | 119 | |||||||||||||||
Merchant bar and other | — | 1 | 1 | 1 | 3 | |||||||||||||||
Finished steel products sold | 99 | 106 | 135 | 125 | 465 | |||||||||||||||
Rolling mill utilization(5) | 78 | % | 86 | % | 96 | % | 93 | % | 88 | % | ||||||||||
LT = Long Ton, which is equivalent to 2,240 pounds | ||
ST = Short Ton, which is equivalent to 2,000 pounds | ||
(1) | Ferrous and nonferrous volumes sold externally and delivered to our steel mill for finished steel production. | |
(2) | Excludes PGMs in catalytic converters. | |
(3) | Price information is shown after netting the cost of freight incurred to deliver the product to the customer. | |
(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. 1Q22 was impacted by mill shutdown beginning in May 2021 and subsequent ramp-up of operations, which was substantially completed in 2Q22. | |
(6) | May not foot due to rounding. | |
SCHNITZER STEEL INDUSTRIES, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
($ in thousands) | ||||||||
(Unaudited) | ||||||||
May 31, 2023 | August 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,511 | $ | 43,803 | ||||
Accounts receivable, net | 297,444 | 237,654 | ||||||
Inventories | 298,979 | 315,189 | ||||||
Other current assets | 58,441 | 74,740 | ||||||
Total current assets | 659,375 | 671,386 | ||||||
Property, plant and equipment, net | 697,396 | 664,120 | ||||||
Operating lease right-of-use assets | 118,399 | 122,413 | ||||||
Goodwill and other assets | 391,258 | 368,678 | ||||||
Total assets | $ | 1,866,428 | $ | 1,826,597 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | 6,724 | $ | 6,041 | ||||
Operating lease liabilities | 20,357 | 21,660 | ||||||
Environmental liabilities | 11,521 | 13,031 | ||||||
Other current liabilities | 303,554 | 340,841 | ||||||
Total current liabilities | 342,156 | 381,573 | ||||||
Long-term debt, net of current maturities | 344,084 | 242,521 | ||||||
Environmental liabilities, net of current portion | 54,340 | 55,469 | ||||||
Operating lease liabilities, net of current maturities | 98,175 | 101,651 | ||||||
Other long-term liabilities | 88,081 | 86,909 | ||||||
Total liabilities | 926,836 | 868,123 | ||||||
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity | 936,012 | 953,979 | ||||||
Noncontrolling interests | 3,580 | 4,495 | ||||||
Total equity | 939,592 | 958,474 | ||||||
Total liabilities and equity | $ | 1,866,428 | $ | 1,826,597 | ||||
Non-GAAP Financial Measures
This press release contains performance based on adjusted diluted earnings per share from continuing operations attributable to SSI shareholders, adjusted EBITDA, adjusted EBITDA per ferrous ton, and adjusted selling, general, and administrative 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 charges for legacy environmental matters (net of recoveries), asset impairment charges, restructuring charges and other exit-related activities, business development costs not related to ongoing operations including pre-acquisition expenses, charges related to non-ordinary course legal settlements, 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. We believe that presenting debt, net of cash is useful to investors as a measure of our leverage, as cash and cash equivalents can be used, among other things, to repay indebtedness. 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) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
3Q23 | 2Q23 | 3Q22 | 2023 | 2022 | ||||||||||||||||
As reported | $ | 0.48 | $ | 0.14 | $ | 2.52 | $ | - | $ | 5.33 | ||||||||||
Charges for legacy environmental matters, net, per share(1) | 0.18 | — | — | 0.23 | 0.15 | |||||||||||||||
Asset impairment charges, per share(2) | 0.05 | — | 0.03 | 0.19 | 0.03 | |||||||||||||||
Restructuring charges and other exit-related activities, | 0.01 | 0.03 | — | 0.09 | — | |||||||||||||||
Business development costs, per share | — | — | 0.03 | 0.01 | 0.07 | |||||||||||||||
Charges related to legal settlements, per share(3) | — | — | 0.02 | — | 0.02 | |||||||||||||||
Income tax benefit allocated to adjustments, per share(4) | (0.05 | ) | (0.04 | ) | (0.02 | ) | (0.15 | ) | (0.06 | ) | ||||||||||
Adjusted(5) | $ | 0.67 | $ | 0.14 | $ | 2.59 | $ | 0.38 | $ | 5.54 | ||||||||||
Reconciliation of adjusted EBITDA and adjusted EBITDA per ferrous ton | ||||||||||||||||||||
($ in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
3Q23 | 2Q23 | 3Q22 | 2023 | 2022 | ||||||||||||||||
Net income | $ | 14 | $ | 4 | $ | 76 | $ | — | $ | 161 | ||||||||||
Plus interest expense | 5 | 5 | 2 | 13 | 5 | |||||||||||||||
Plus tax expense (benefit) | 7 | (1 | ) | 20 | 1 | 43 | ||||||||||||||
Plus depreciation and amortization | 23 | 22 | 19 | 66 | 55 | |||||||||||||||
Plus charges for legacy environmental matters, net(1) | 5 | — | — | 7 | 5 | |||||||||||||||
Plus asset impairment charges(2) | 1 | — | 1 | 5 | 1 | |||||||||||||||
Plus restructuring charges and other exit-related activities | — | 1 | — | 3 | — | |||||||||||||||
Plus business development costs | — | — | 1 | — | 2 | |||||||||||||||
Plus charges related to legal settlements(3) | — | — | 1 | — | 1 | |||||||||||||||
Adjusted EBITDA(5) | $ | 56 | $ | 32 | $ | 119 | $ | 96 | $ | 272 | ||||||||||
Ferrous sales volume (LT, in thousands) | 1,157 | 1,263 | 1,129 | 3,270 | 3,349 | |||||||||||||||
Adjusted EBITDA per ferrous ton sold ($/LT) | $ | 48 | $ | 25 | $ | 105 | $ | 29 | $ | 81 | ||||||||||
LT = Long Ton, which is equivalent to 2,240 pounds | ||
(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) | For the three and nine months ended May 31, 2023, asset impairment charges included $1 million ($0.05 per share before income tax) and $5 million ($0.19 per share before income tax), respectively, of impairment and other adjustments of an equity investment to fair value reported within "Other loss, net" on the Unaudited Condensed Consolidated Statement of Operations. | |
(3) | Charges related to legal settlements in the three and nine months ended May 31, 2022 relate to a claim with a utility provider for past charges. | |
(4) | Income tax allocated to the aggregate adjustments reconciling reported and adjusted diluted earnings per share from continuing operations attributable to SSI shareholders is determined based on a tax provision calculated with and without the adjustments. | |
(5) | May not foot due to rounding. | |
Reconciliation of Adjusted selling, general and administrative expense: | ||||||||||||||||||||
($ in millions) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
3Q23 | 2Q23 | 3Q22 | 2023 | 2022 | ||||||||||||||||
As reported | $ | 69 | $ | 64 | $ | 78 | $ | 197 | $ | 194 | ||||||||||
Charges for legacy environmental matters, net(1) | (5 | ) | — | — | (7 | ) | (5 | ) | ||||||||||||
Business development costs | — | — | (1 | ) | — | (2 | ) | |||||||||||||
Adjusted(2) | $ | 63 | $ | 64 | $ | 77 | $ | 190 | $ | 187 | ||||||||||
(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) | May not foot due to rounding. | |
Reconciliation of debt, net of cash | ||||||||||||
($ in thousands) | ||||||||||||
May 31, | February 28, | August 31, | ||||||||||
Short-term borrowings | $ | 6,724 | $ | 6,527 | $ | 6,041 | ||||||
Long-term debt, net of current maturities | 344,084 | 303,552 | 242,521 | |||||||||
Total debt | 350,808 | 310,079 | 248,562 | |||||||||
Less: cash and cash equivalents | 4,511 | 11,459 | 43,803 | |||||||||
Total debt, net of cash | $ | 346,297 | $ | 298,620 | $ | 204,759 | ||||||
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 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; the impacts of supply chain disruptions, inflation, and rising interest rates; 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; the realization of 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 impact of pandemics, epidemics, or other public health emergencies, such as the coronavirus disease 2019 ("COVID-19") pandemic; 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; the potential impact of adopting new accounting pronouncements; 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. Examples of these risks include: potential environmental cleanup costs related to the Portland Harbor Superfund site or other locations; the impact of equipment upgrades, equipment failures, and facility damage on production; failure to realize or delays in realizing expected benefits from capital projects, including investments in processing and manufacturing technology improvements; the cyclicality and impact of general economic conditions; the impact of inflation, rising interest rates, and foreign currency fluctuations; changing conditions in global markets including the impact of sanctions and tariffs, quotas, and other trade actions and import restrictions; increases in the relative value of the U.S. dollar; economic and geopolitical instability including as a result of military conflict; volatile supply and demand conditions affecting prices and volumes in the markets for raw materials and other inputs we purchase; significant decreases in recycled metal prices; imbalances in supply and demand conditions in the global steel industry; difficulties associated with acquisitions and integration of acquired businesses; supply chain disruptions; reliance on third-party shipping companies, including with respect to freight rates and the availability of transportation; the impact of goodwill impairment charges; the impact of long-lived asset and equity investment impairment charges; the impact of pandemics, epidemics, or other public health emergencies, such as the COVID-19 pandemic; 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; 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; translation risks associated with fluctuation in foreign exchange rates; inability to obtain or renew business licenses and permits; environmental compliance costs and potential environmental liabilities; increased environmental regulations and enforcement; 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.
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Contacts
Investor Relations:
Michael Bennett
(503) 323-2811
mcbennett@schn.com
Company Info:
www.schnitzersteel.com
ir@schn.com
