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Schnitzer Steel Industries (SCHN)

Participants
Michael Bennett Vice President of Investor Relations
Tamara Lundgren Chairman and Chief Executive Officer
Richard Peach Chief Financial Officer and Chief Strategy Officer
Call transcript
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Operator

Thank you for standing by, and welcome to the Schnitzer Steel Second Quarter 2022 Earnings Release Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] And now, I'd like to introduce your host today's program, Michael Bennett of Investor Relations. Please go ahead, sir.

Michael Bennett

morning. good and you Thank I'm Michael of Relations. Vice the Company's President Investor Bennett, you happy Steel's of year am to to second fiscal I welcome XXXX. quarter the Schnitzer for earnings presentation

today's of slides of our to In website have on can both comments, at posted set and schniersteel.com. which issued addition a press audio access release our you we

release Company's Before let me also detailed XX-Q on statement Harbor which be we today. call is the filed the start, Slide in included and which will press our Safe Form your attention in X, later to

note As volume expansion. forward-looking as growth, call Slide our we on such margin future on make X, we today targets, and statements may statements our about our

materially those forward-looking may in results differ actual Our from projected our statements.

will actual in X, from Additional to our metrics included results some note press Please information discussing non-GAAP as concerning be XX-Q. in the GAAP our to statements Slide reconciliation during measures our in a appendix materially the that slide of those factors as Form contained well release to is presentation. our cause We've today. could and of forward-looking we differ presentation today those that

the Peach, Chief Chief turn Now, our today and to will call Executive Officer. Strategy our Richard call host Officer. Tamara the Chairman with Chief Financial She and Lundgren, over let me Officer

Tamara Lundgren

Good you, call. 'XX fiscal earnings Michael. morning, quarter Thank everyone. And our welcome second to

I'd presentation, formal achieving congratulate to our record. with like our begin we Before another on employees

in best represents second EBITDA history. you. adjusted quarter's This thank company's our To the our all employees,

century. commitment of company have hallmarks to continued our to creativity exhibit a excellence over have the that and You resilience, for been

humanitarian You've also spirit. shown your and generosity

up and offer our second and to its force support. many those to thank employees enters forms Ukraine have our month, of you. aid remain, invasion company who Russia's to those flee Both of and to stepped As

and quarterly for meet update underway our increasing the initiatives demand business. also our I'll the review trends structure. create I'll on performance, will questions. the then have both services, provide and financial to capital more our an results then to affecting and detail today strategic call wrap long-term we'll Our we your Richard I'll and provide our products and financial on up investments, value. CapEx take

now So Slide get turn to started. X let's to

delivering products launch of carbon-free Companies we we carbon global respected Cascade of innovative to the most and list primarily located As ranked I steel also critical XX core Cascade's long-standing needs of the program. some aspects Corporate has organizations products sustainability named our what created EAF the introduction various been sustainable line carbon for our world's us March, say, operate our year. number is zero Ethisphere Cascade World's and the founding in Since in future. was work announce how has sustainability the I since Ethical GRN of highlighting at eighth for the of by product powered this a carbon a for us last mill the pleased in line recognized products we've companies call, of do well several our one XXX emissions in Global through often meet their Knights steel net consecutive Steel, of world evolving transition of of our I increasingly emission XXXX. hydroelectricity. by to the been Most reputation low technology lowest ever of that the on role earnings the from new exemplifies customers. our Oregon. The

goals underpin which profit Now describes view framework. goals encourage multi-year people, more you our see visit our that planet, detail. report, latest on and slide, in you to this to our our our sustainability I can website sustainability

Together, these earnings After turn fiscal adjusting 'XX performance per morning, this a the earlier reflect history. first announced we first delivering let's record second results slide $X.XX. now highest earnings, company's quarter So to in our X. share half quarter our of

for benefited recycled increasing with first metals, results global quarter prices or quarter, non-ferrous average volumes selling ferrous and for from XX% to highs. second and sales our respectively. finished demand non-ferrous near year-over-year by and steel grew ferrous, the all-time X%, Our Similar strong products at

consecutive Our we results the we steel XXX,XXX included in stock a increased XXXth our of repurchased issuance free Recycling record contribution and our our generated the outage. during Finished sheet October. quarter, full dividends. mill positive acquisition shareholders our up of We strong. Columbus steel their sequentially and the cash our uninterrupted the remains we through of quarter of after flow as balance returning assets, volumes shares from continued quarterly operations We of which completed completed sales to ramp capital

chain continue to remains supply and by disruptions, be services we demand products our impacted very global high. for While

Our and outlook volumes is quarter strong we and to our all sales product from lines the expect third price higher our strong benefit results in environment. both current

recycled for products. Let’s finished turn slide steel for now review metals of a to pricing and trends X

availability. are exports Ukraine higher flows by seen quarter during a spring end with this see for by and their by the the quarter Since ferrous metals with As primarily high record pit-up reversal highest increase at second activity, semi-finished driven the construction and in the Supply of sharp you slide, of by market from prices continues on end. strong beginning Russia. on QX, weather, at low better pricing the a tight can ferrous technologies. driven long for of deployment increased highs, the followed in also rise remained from dip industrial iron in and prices and prices, spending. levels historically quarter, reaching towards recycled Demand prices increases shipping during supplies, Copper near to levels carbon multi-year benefiting of products strong, and the traded supported or constraints, lack slightly aluminum scrap trucking a we've

environment, discuss services. are by for Let's current trends metals and for the there long-term the of products some and drivers. turn In now both to recycled term is longer to X recycled Slide Demand several. demand underpinned -term

semi-finished units from has the the shortage invasion Ukraine, the First, of alternative region. metal Sea Black which of Russian subsequent and led to

Second, supply. in a the demand other demand up pent appliances continued up products and corresponding for on recovery continued pent autos, without

shift in in China of that of industrial significantly strategic effects reduction reducing created to a covers into carbon recognized than their In metals carbon shortage. recent see for the directed important an And carbon the next The capacity. low produce projected portion underinvestment trends the are and structural scrap lastly, years and recycled mining, material technologies is metal which Decarbonization structural in U.S., three over metal translated less charts on have demand committed a capacity, to to the to of is to at on the powerful are solution by as this metals for all require acknowledged companies, which widely ferrous as focused We EAF production Europe China, more a the material just longer-term, metals. material the Third, steelmaking to can is landfills. slide. which is governments increase intensive. these mine uses in demand higher has use of cycle and metal industries COVID few looking lockdown primary and driver raw its regions. scrap years how metals, which of be

supporting summary, there's use trends continue pricing recycled carbon scrap past increasing are higher reflect have with near-term higher addition, maximizing the are the of demand higher and reduce metal makers to process. both levels BOS, the associated and demand to than in their In products, using longer-term and peaks by for In footprint who steel steelmaking we trough seen decade.

aligned which X Let's actions are the underway, we strategic trends. have Slide turn review with now to long cycle to these

services fiscal metal advanced activities. the target from meet all enable And culture, the strategic that GRN including as manufacturers retailers. productivity for and we to provide with processing, our such in Ferrous metals summarized investments Steel X% we volume are shredding system and offset major us fiscal Our inflationary baseline. as 'XX pricing environment our to increase our $X.X the where operations in logistic and aluminum and more of on can growth evolving priorities buckets, in undertake part a recycling lastly, experiencing. to be is demand extract non-ferrous and recovery annual improvement average that metals technology of representing million at an we Expansion our to tons, our products procurement 'XX services of focus reverse our launch initiatives efficiencies, four to copper our recycled

this we been see slide, progress four making areas. have on you all can significant in As

$XX We per EBITDA are ton. on expand track approximately once which ton in aggregate to goals, reach to completed our by per margins ferrous expected are our

over operating performance. So to financial our me detailed it and turn now, of Richard you more let for

Richard Peach

and Tamara, technology initiative. an you, recovery advanced on begin metal update with I'll our morning, Thank good

are the Four the of new within We as systems The systems continue four phase. is follows. the Construction is ramp systems The expected of three more more with these operational remaining on status to our the our currently completion in technologies. by progress XX new the permitting on with underway summer. two initiative on deployment three current systems. fully up process progressing is of

have to of and is separation the system in us system in margin commodities. construction ready aluminum running produce an the other currently furnace advanced We is higher such U.S. saleable which One by systems giving one the under the Western ability already up products upgrading Southeast,

in processed of phase. that from quarter, the third new the still of was one second recovered During just up the through non-ferrous shredding a under our systems ramp

around increase XX from shredding pounds to Our ultimate non-ferrous or million is on an target basis. XX% by approximately annual recovered

construction our now are a lead projected targeting buildings of the as scale This 'XX, estimate make remaining for than of well time by our while construction scale the previous obtaining expected equipment as calendar progress due our and rollout. we time remaining continuing are months to for to later is longer We of permits. few times on installations end good

'XX. investment range fiscal $XX around capital million in and second million total of 'XX $XX $XXX expect of in We the half million fiscal the the in including remaining

to consolidated and Now let's the market discuss XX to Slide results, sales dynamics. ferrous turn our

We significantly the benefits the ton offset represented steel $X our metals Everett prior of prices, benefit prices and The finished of by ferrous the over qualifying our These $X XX% and insurance a also sales Everett from significant of a to sales EBITDA being with from sales driven Bangladesh, late lower Omicron costs $XX impact quarter. inflation, Columbus of quarter. our Recycling. Average net by the per the surge. facility. metal quarter sold recycled on on including steel million increased and year-over-year compared the for were from were a and $XX per sales largest for up accounting material cost $X Turkey Mediterranean from non-ferrous, outage $XX operating basis, West the was was and diversity and remaining labor disruptions the to ferrous to million and the average arising the to by average ton. Coast adjusted chain in of downtime in year-over-year selling Vietnam countries from sales made higher was domestic, quarter Supply million spreads sales despite result per primarily in of detriments a were contributions disruptions export mill impairment transportation, which East year-over-year recycled in up ferrous or selling and and by of We charge, Coast a year recoveries a $XX XX%, the for $X These benefit On included incurred quarter ferrous ferrous million higher record higher for recoveries. lower at this the our volumes ferrous were Asia impact compressed platform, between recognition PGM sales average and chain with a destinations up were from metal, by The million and came was from losses quarter. inventory recycled average for year-over-year, benefits associated including the the volumes and impact facilities volumes Demonstrating prices and a volumes inventory Americas of including Our significant fire, balanced accounting. profitability nine ton in the the lost ferrous of recognized West the difference. detriments insurance fires both from Everett shredder of impacts supply well from sales our that our portion locations. from the extra second

the prices by dynamics. the that Now And tons Malaysia. major with the XX to selling to and quarter. near volumes being million Average zorba third update with the on or XX at sales contracted an of export rose delayed non-ferrous including in aluminum States, non-ferrous products XX United let's up net contributions and were X%, Recycling. recycled destinations Increased non-ferrous sales being India from for the Columbus market Non-ferrous and Slide move highs. countries challenges into containers our year-over-year. copper, at prices sales securing We multiyear shipments XX% for of year-over-year continued by were traded sold

mix was zorba, sales including others representing our up making XX%; stainless, highly of XX%; balance twitch, Our XX% product and copper, aluminum of significant a the of zurik with expect non-ferrous lead. diversified Sales trend XX%, of twitch after our which contains and of we XX%; this portion zorba, summer. product implement during the more And us. to separation plant aluminum the has advanced aluminum we Coast West become for volumes; continue

volumes move in supply projects our XXX,XXX also as Compared demand including prices of input These reflect for were discuss and delayed utilization were our of concrete steel end steel completed And a to Coast flow-through price West sales of production volumes consumables. XX%. sales scrap of up restart the were second costs, the second highest we ramp-up and were Finished customers. other XX% to back some including sequentially the and operations steel inventory the State their the year-over-year disruptions, West X% quarter, last to increases we in was mill Coast let's in to for chain quarter rolling that Average following steel by of reached Slide ever. lower Washington and construction for quarter performance for levels. by finished higher Now inventories robust XX Average of normal the rebuild workers' markets. by the mill mill to year, selling for of back due tons and mid-August. strike up

ratio In we XX the had second our Net due was move X.Xx. flow capital let's adjusted to operating quarter. structure of net the flow, of as capital offset and million to price $XXX build outlook positive than debt million net Slide Now XX% a to of more of increase the cash inventories. leverage debt working of discuss profitability to the and higher with cash quarter, in environment $XX the for mill and third EBITDA

'XX For $XXX million of capital $XXX as in million. make expect fiscal a to the to whole, expenditures range we

expenditures be support CapEx be initiatives, under volume Recycling. our acquisition to on for and Just including replacement growth $XX fiscal to the technology maintaining net CapEx Columbus in the projects, business fiscal and for year-to-date will projects. recoveries investments totaled growth The for half at 'XX will remaining of post the capital investments property. insurance in Capital damaged related million, and of environmental-related repair

common During X.X% shares the quarter, approximately stock we repurchased approximately XXX,XXX for million. or of our Class A $X

an adjusted expense effective Our was quarter our rate of XX% results. second tax on

there almost our turn I'll Although for in outlook still quarter, third are to X quarter. now left the the months

ferrous by the our timing to increase volumes shipments. sales of non-ferrous each expect sequentially subject We XX%, to and approximately

sequentially steel With sales the complete, expect mill rebuild finished rise XX%. inventory to volumes by we approximately

are from to sharp EBITDA of compared quarter. benefit operating the per around the the levels increased ferrous ton inventory Given we market in ferrous ton. volumes Current a by and second range rise leverage XX% accounting to expected in expect $X markets, of average increase per

tax be the We rate to XX%, for to our effective performance. expect financial quarter third subject our

to outlook further the reflect earnings supply Tamara. recoveries. Our include further recognition and to or I'll third not over for projected the any now back markets does turn does presentation quarter not of chains any disruptions insurance

Tamara Lundgren

Thank you, Richard.

volumes our to increasing significant profitability, our of operational enhancing and waste first half record reducing results our sustainability increasing objectives and product in offerings. expanding progress our support and technology in and financial reflect service Our investing recycling,

through dividend. positive and uninterrupted and a our operating a our growth invest We our record returning record capital the in of strong balance to productivity flows delivering track ability annual shareholders sheet, of an have company of and to cash

We we U.S. once the the metals are $X.X infrastructure by and to a their I'd have growth for benefit recycled capacity, and steelmaking trillion the additional again have continued technologies industry to In positioned over global metal performance. low-carbon like in be our for global focus recycling EAF on bill. century. demonstrated U.S. thank a closing, from the leader They of to continued employees why in decarbonization, demand outstanding well increased and driven intensity steel

the operator, now, So questions. open let's for call

Tamara Lundgren

today. you, well. forward and look your results. all interim, in In thank June Thank with third time when and speaking safe, for quarter listening We to again we on stay report and the operator, you you our for stay

Operator

participation for Thank and today's your conclude program. gentlemen, you, This the in ladies conference. does

You may now disconnect. Good day.