Schnitzer Provides Outlook for Third Quarter of Fiscal 2014

  Schnitzer Provides Outlook for Third Quarter of Fiscal 2014

Business Wire

PORTLAND, Ore. -- May 23, 2014

Schnitzer Steel Industries, Inc. (Nasdaq: SCHN) announced its outlook for its
third quarter of fiscal 2014 ending May 31, 2014. Demand for recycled metals
remained steady compared to the second quarter, however, selling prices for
ferrous metals declined approximately $40 from the end of the second quarter,
which is expected to result in a significant adverse average inventory impact
to our Metals Recycling Business. Seasonal improvements in our Auto Parts
Business and higher sales volumes in our Steel Manufacturing Business are
expected to lead to sequential improvements in profitability in both
businesses. Reported earnings per share in the third quarter are expected to
be in the range of $0.10 - $0.15, including significant tax benefits. Adjusted
earnings per share, adjusted for restructuring and other impairment charges,
is expected to be less than reported earnings per share due to the allocation
of tax benefits in the third quarter.

In the Metals Recycling Business, ferrous sales volumes are expected to
approximate the second quarter and average ferrous selling prices are expected
to decline approximately 5% sequentially with a 10% decline in peak to trough
selling prices. Nonferrous sales volumes are expected to increase by
approximately 5% and average nonferrous selling prices are expected to
approximate the second quarter. Due to the significant fall in ferrous sales
prices, adverse effects of average inventory costs in the third quarter are
expected to more than offset the benefits from productivity improvements, cost
reductions and increased nonferrous sales. As a result, we anticipate
operating income per ton to be in the range of $3, subject to the timing of
shipments.

In the Auto Parts Business, seasonally higher retail sales are expected to
drive significantly higher operating income sequentially which is anticipated
to more than offset the impact of lower commodity prices. Seasonal
improvements are also expected to drive a 15% increase in car purchase volumes
compared to the second quarter. Operating income is expected to increase
significantly with operating margins anticipated to be in the range of 9% -
10%, which includes the impact of stores owned for less than a year.

In the Steel Manufacturing Business, sales volumes are expected to increase by
approximately 15% sequentially. Average selling prices are expected to
approximate the second quarter. Stronger demand and increased sales volumes
during the third quarter are expected to more than offset approximately $1
million of operating expenses related to a planned maintenance outage. As a
result, operating income is expected to be slightly above the second quarter.

The Company expects to report third quarter fiscal 2014 results toward the end
of June.

Forward-Looking Statements

Statements and information included in this press release that are not purely
historical are forward-looking statements within the meaning of Section21E 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; 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; 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 and cost containment 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 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; 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.

Non-GAAP Financial Measures

This press release includes expected performance based on adjusted earnings
per share, a non-GAAP financial measure as defined under SEC rules. Adjusted
earnings per share exclude certain costs related to restructuring charges,
other exit-related costs and other asset impairment charges. Management
believes that the foregoing non-GAAP financial measure provides a meaningful
presentation of the Company's results from its core business operations
excluding items 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. This non-GAAP financial measure
should be considered in addition to, but not as a substitute for, the most
directly comparable US GAAP measure.

About Schnitzer Steel Industries, Inc.

Schnitzer Steel Industries, Inc. is one of the largest manufacturers and
exporters of recycled ferrous metal products in the United States with
operating facilities located in 14 states, Puerto Rico and Western Canada. The
business 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 its auto parts and steel manufacturing businesses. The
Company's auto parts business sells used auto parts through its self-service
facilities located in 16 states and Western Canada. 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 commenced its 108^th year of
operations in 2014.

Contact:

Schnitzer Steel Industries, Inc.
Investor Relations:
Alexandra Deignan, 646-278-9711
or
Media Relations:
Tom Zelenka, 503-323-2821
www.schnitzersteel.com
ir@schn.com
 
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