Schnitzer Steel (SCHN) Prelim. Q4 EPS Tops Consensus

Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) today announced preliminary results for its fiscal 2021 fourth quarter ended August 31, 2021. The Company expects fourth quarter diluted earnings per share from continuing operations to be in the range of $1.40 - $1.48 and net income to be in the range of $43 million - $45 million. Adjusted earnings per share from continuing operations are expected to be in the range of $1.75 - $1.83, which excludes expected charges of $12 million or $0.31 per share related to legacy environmental matters (see Non-GAAP Financial Measures section for a reconciliation to GAAP).

(Consensus sees Q4 EPS of $1.57)

Market conditions for recycled metals were strong with the Company’s average ferrous selling prices reaching their highest level since 2008 and nonferrous market selling prices trading at or near multi-year highs. Market selling prices for finished steel products also continued to increase on strong demand and reached their highest levels in more than a decade.

Ferrous and nonferrous sales volumes in the fourth quarter are expected to increase year over year by 9% and 3%, respectively, even though ferrous sales volumes were adversely impacted by the delayed arrival of one ship and nonferrous sales volumes were constrained by tight container availability. Due to the previously disclosed fire at the Company’s steel mill in May 2021, finished steel sales volumes for the quarter are expected to be down 53% year over year. The mill began ramping up production in mid-August after substantial completion of the replacement and repair of damaged property and equipment was completed ahead of schedule.

Despite the impact of the fire, the Company delivered its best fiscal fourth quarter operating performance since fiscal 2011. Adjusted EBITDA for the fourth quarter is expected to be in the range of $78 million - $81 million. The Company estimates the impact of the fire on its fourth quarter consolidated performance to be a detriment after recognition of initial insurance recoveries of $10 million.

The Company expects to generate strong operating cash flow of approximately $139 million for the fourth quarter, resulting in a $79 million sequential reduction in debt to $75 million, its lowest level since 2005. The effective tax rate for the fourth quarter of fiscal 2021 is expected to be an expense in the range of 13% - 15%, including discrete benefits recognized during the period.

The preliminary, unaudited information provided above is based on the Company’s current estimates of its financial results for the fourth quarter and fiscal year ended August 31, 2021 and remains subject to change based on management’s ongoing review of the Company’s fourth quarter financial results and the completion of the Company’s annual audit.

Earnings Call Date

The Company will report financial results for its fourth quarter and fiscal year 2021 ended August 31, 2021 on Thursday, October 21, 2021. The Company will host a webcast conference call to discuss the results at 11:30 a.m. Eastern Time on the same day. The webcast of the call and the accompanying slide presentation may be accessed at www.schnitzersteel.com/company/investors/event-calendar on Schnitzer’s website under Company > Investors > Event Calendar. The call will be hosted by Tamara Lundgren, Chairman and Chief Executive Officer, and Richard Peach, Executive Vice President, Chief Financial Officer and Chief Strategy Officer.

Replay Information

Toll Free Dial: (855) 859-2056
Toll Free International Dial: (404) 537-3406
Conference ID: 8667935
Replay Available: 10/21/2021 to 10/26/2021

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