Fourth Quarter and Fiscal 2022 Preliminary Results and Announcement of Earnings Date
Schnitzer Steel Industries (NASDAQ: SCHN) anticipates its fiscal 2022 performance to be the second-best in its history, with diluted earnings per share expected between $5.67 and $5.72, and net income projected at $170 million to $172 million. Despite strong operating cash flow of approximately $238 million, fourth quarter results are forecasted to decline due to lower ferrous and nonferrous sales prices. The company expects fourth quarter adjusted EBITDA between $38 million and $40 million. Strong long-term demand for recycled metals persists, driven by decarbonization initiatives and government investments.
- Fiscal 2022 expected to be the second-best year in company history.
- Projected net income of $170 million - $172 million for fiscal 2022.
- Strong operating cash flow of approximately $238 million for fiscal 2022.
- Anticipated increase in ferrous sales volumes by 12% sequentially.
- Fourth quarter diluted EPS expected to be between $0.31 and $0.36, a potential decline from prior quarters.
- Significant decline in average net ferrous and nonferrous selling prices by 28% and 7%, respectively.
- Adverse impact on fourth quarter results from an extended operational outage at Everett facility.
Expects Second Best Fiscal Year Earnings in Company's History
Strong Operating Cash Flow of
Fiscal 2022 Expected Performance
The Company expects fiscal 2022 results to be the second best year in its history. Diluted earnings per share from continuing operations are expected to be in the range of
Fourth Quarter Fiscal 2022 Expected Performance
The Company anticipates:
-
Fourth quarter diluted earnings per share from continuing operations to be in the range of
-$0.31 . Net income to be in the range of$0.36 -$9 million and net income per ferrous ton in the range of$11 million -$7 .$9 -
Adjusted diluted earnings per share from continuing operations to be in the range of
-$0.42 , which excludes expected charges of approximately$0.47 or$4 million per share related primarily to legacy environmental matters.$0.11 -
Adjusted EBITDA to be in the range of
-$38 million and adjusted EBITDA per ferrous ton in the range of$40 million -$30 .$32 -
The sharp decline in selling prices for recycled metals in the fourth quarter is expected to lead to both a compression in metal spreads and an adverse impact from average inventory accounting of approximately
per ferrous ton.$23 -
Strong operating cash flow to be in the range of approximately
, resulting in a$180 million sequential reduction in debt. Total debt is expected to be$70 million at the end of the fourth quarter, and debt, net of cash, is expected to be$249 million . The Company repurchased approximately$205 million 1.8% of its Class A outstanding shares during the quarter. -
Average net ferrous and nonferrous selling prices are expected to decrease from the third quarter by
28% and7% , respectively. Ferrous sales volumes are expected to increase12% sequentially, reflecting primarily the benefit from shipments delayed from the third quarter, and nonferrous volumes are expected to decrease8% . Average net finished steel selling prices are expected to decrease by1% and finished steel sales volumes are expected to be down by7% , sequentially. -
Lower SG&A expense primarily as a result of lower incentive compensation accruals and benefits from productivity initiatives are expected to partially offset inflationary pressure on operating costs, including rising costs of compliance to meet regulatory requirements and the aforementioned
Everett shredding operation outage since late June, net of insurance recoveries.
The Company repurchased 500,000 shares of its Class A common stock in open market transactions during the quarter pursuant to its ongoing authorized share repurchase program, bringing share repurchases for fiscal 2022 to approximately
The preliminary information provided above is based on the Company’s current estimates of its financial results for the quarter and fiscal year ended
Earnings Call Date
The Company will report financial results for its fourth quarter and fiscal year 2022 ended
About
Non-GAAP Financial Measures
This press release contains expected performance based on adjusted diluted earnings per share from continuing operations attributable to SSI shareholders, adjusted EBITDA and adjusted EBITDA per ferrous ton which are non-GAAP financial measures as defined under
Reconciliation of adjusted diluted earnings per share from continuing operations attributable to SSI shareholders |
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($ per share) |
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4Q22 |
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High |
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Low |
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As reported |
|
$ |
0.36 |
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|
$ |
0.31 |
|
Charges for legacy environmental matters, net, per share(1) |
|
|
0.10 |
|
|
|
0.10 |
|
Charges related to legal settlements, per share(1) |
|
|
— |
|
|
|
— |
|
Business development costs, per share |
|
|
0.02 |
|
|
|
0.02 |
|
Restructuring charges and other exit-related activities, per share |
|
|
— |
|
|
|
— |
|
Asset impairment charges, per share |
|
|
0.02 |
|
|
|
0.02 |
|
Income tax benefit allocated to adjustments, per share(2) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
Adjusted(3) |
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$ |
0.47 |
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$ |
0.42 |
|
Reconciliation of adjusted diluted earnings per share from continuing operations attributable to SSI shareholders |
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($ per share) |
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FY22 |
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High |
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Low |
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As reported |
|
$ |
5.72 |
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|
$ |
5.67 |
|
Charges for legacy environmental matters, net, per share(1) |
|
$ |
0.25 |
|
|
$ |
0.25 |
|
Charges related to legal settlements, per share(1) |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
Business development costs, per share |
|
$ |
0.09 |
|
|
$ |
0.09 |
|
Restructuring charges and other exit-related activities, per share |
|
$ |
— |
|
|
$ |
— |
|
Asset impairment charges, per share |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
Income tax benefit allocated to adjustments, per share(2) |
|
$ |
(0.09 |
) |
|
$ |
(0.09 |
) |
Adjusted(3) |
|
$ |
6.05 |
|
|
$ |
6.00 |
|
Reconciliation of adjusted EBITDA |
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($ in millions) |
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4Q22 |
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High |
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Low |
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Net income |
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$ |
11 |
|
|
$ |
9 |
|
Plus interest expense |
|
|
3 |
|
|
|
3 |
|
Plus tax expense |
|
|
1 |
|
|
|
1 |
|
Plus depreciation and amortization |
|
|
20 |
|
|
|
20 |
|
Plus charges for legacy environmental matters, net(1) |
|
|
3 |
|
|
|
3 |
|
Plus restructuring charges and other exit-related activities |
|
|
— |
|
|
|
— |
|
Plus charges related to legal settlements |
|
|
— |
|
|
|
— |
|
Plus business development costs |
|
|
1 |
|
|
|
1 |
|
Plus asset impairment charges |
|
|
1 |
|
|
|
1 |
|
Adjusted EBITDA (3) |
|
$ |
40 |
|
|
$ |
38 |
|
|
|
|
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|
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Ferrous sales volume (LT, in thousands) |
|
|
1,268 |
|
|
|
1,268 |
|
Adjusted EBITDA per ferrous ton sold ($/LT) |
|
$ |
32 |
|
|
$ |
30 |
|
Reconciliation of adjusted EBITDA |
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($ in millions) |
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FY22 |
||||||
|
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High |
|
Low |
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Net income |
|
$ |
172 |
|
|
$ |
170 |
|
Plus interest expense |
|
|
9 |
|
|
|
9 |
|
Plus tax expense |
|
|
45 |
|
|
|
45 |
|
Plus depreciation and amortization |
|
|
75 |
|
|
|
75 |
|
Plus charges for legacy environmental matters, net(1) |
|
|
8 |
|
|
|
8 |
|
Plus restructuring charges and other exit-related activities |
|
|
— |
|
|
|
— |
|
Plus charges related to legal settlements |
|
|
1 |
|
|
|
1 |
|
Plus business development costs |
|
|
3 |
|
|
|
3 |
|
Plus asset impairment charges |
|
|
2 |
|
|
|
2 |
|
Adjusted EBITDA (3) |
|
$ |
313 |
|
|
$ |
311 |
|
(1) |
Legal and environmental charges, net of recoveries, for legacy environmental matters including those related to the Portland Harbor Superfund site and to other legacy environmental loss contingencies. |
|
(2) |
Income tax allocated to the aggregate adjustments reconciling reported and adjusted diluted earnings per share from continuing operations attributable to SSI shareholders is determined based on a tax provision calculated with and without the adjustments. |
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(3) |
May not foot due to rounding. |
Reconciliation of debt, net of cash |
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($ in thousands) |
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Short-term borrowings |
|
$ |
6,041 |
|
|
$ |
5,764 |
|
|
$ |
3,654 |
|
Long-term debt, net of current maturities |
|
|
242,521 |
|
|
|
316,108 |
|
|
|
71,299 |
|
Total debt |
|
|
248,562 |
|
|
|
321,872 |
|
|
|
74,953 |
|
Less: cash and cash equivalents |
|
|
43,803 |
|
|
|
16,125 |
|
|
|
27,818 |
|
Total debt, net of cash |
|
$ |
204,759 |
|
|
$ |
305,747 |
|
|
$ |
47,135 |
|
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
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 impact of pandemics, epidemics, or other public health emergencies, such as the coronavirus disease 2019 ("COVID-19") pandemic; 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 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20221004006146/en/
Investor Relations:
(503) 323-2811
mcbennett@schn.com
Company Info:
www.schnitzersteel.com
ir@schn.com
Source:
FAQ
What are Schnitzer Steel's expected earnings for fiscal 2022?
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