SCHN - Earnings call transcript Q1 2022

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Operator

Thank you for standing by, and welcome to the Schnitzer Steel First 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] As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Michael Bennett, Investor Relations. sir. ahead, go Please

Michael Bennett

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

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

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

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

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

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

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

Tamara Lundgren

efforts everyone, like been hope first core They frontline on morning, we to Schnitzer's listening those remotely, XXXX. our welcome today. logistics extraordinary our Many our integrity. even of our first customers me to supporting been for discuss achievements and that quarter and would Good this thank possible a and the forward quarter of Michael. today on employees workers all our best and to to had of holiday stronger looking from and to like safer all congratulate you employees earnings in your healthier, our constraints. without record. serving will suppliers I living you are you not who've your you, a sustainability have break labor earnings are values first face results Thank safety, call COVID-related are in call. The and fiscal XXXX good quarter our significant working and to I'd

is quarterly what macroeconomic and trends address and most and affecting detail through how result resilience we the success performance will Our our the of evolving challenging I'm take financial have to culture performance, the wrap results and financial on also you investments I'll company. you provide our I'll and these have cycle. direct today, during we then our accomplished up questions. and and define collaboration, the an business. initiatives and have the our your provide these call proud market and embraced create on long-term dynamics times. underway review investments capital our will our of innovation CapEx I'll that very industry values structure. more value Richard reflects your update strategic then On

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

to electricity our describes versus recyclers, sustainability. safest We X against on we Scope our metal by achieved encourage our facilities performance XXXX this of resources, we we finished In made to other less energy fiscal our year progress we and issued by where and future customers carbon target, with use mid-December, leading the sustainability our for the and ethical, what of we we've our our This profit high website we quality, annual and core we in our has creating generate our do at we steel to supplying low-carbon report XXXX accomplishments, XX% people, year conserve view net number less goals. our the planet by and waste, how reduced sustainability to which were significant recognized We water organizations I to XXX% largest products. be reached engaging report, operate baseline. eighth sustainability to a America's goal record. fiscal North XXXX you X honored among ahead our year's use is recycled emissions of inclusive metal and sustainability free report, In we workplace how help sustainable commitment our our innovate of since a visit describes operate. our one back how As which XXXX. in been highlights more to how give and we and at create founding how and safe, of and latest communities company's

now to first ago we record. quarter turn of adjusted results $X.XX, fiscal announced and X. best from let's year XXXX this almost share per morning, tripled our Slide first a earnings the So quarter a on Earlier performance our

finished quarter products, steel the results nonferrous demand ferrous, for selling from Coast highs. Our steel at West benefited robust products recycled and average first and or strong multi-year metals, global for finished for near prices market a

adjusted ton QX a $XX exceeding ago. far ferrous of Our year $XX, EBITDA was the per ton per

X% Our benefited X. our and on and of from XX%, sales year-over-year nonferrous acquisition ferrous the Columbus assets October volumes and increased by Recycling respectively,

May. as operations quarter late throughout Our an on outage the following mill shop production reaching mill to the XX%. was the continued utilization ramp resumed steel during November up Rolling utilization trend melt with increasing in quarter

Our record remained quarterly shareholders strong, consecutive issuance us our of to of the uninterrupted enabled through our returning balance dividend. XXXth to sheet which capital continue

disruptions. would supply stronger, contracted have record to results shipments several quarter this for had into slipped been November not COVID-XX-related Our due even chain December

strong year-over-year expect with on difficult predict. QX, we in a consistent is currently shipments sales levels to to volume the increase supply QX nonferrous and and ferrous impact chain While in contracted see

the we result, the of a in As later guidance provide our will February. forward-looking quarter end around

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

focus use levels These and metals supported cyclical mid-October mid-November, in can off this sales from on ferrous East increased global trends, scrap largely prices market a are pricing multi-year during of and due on multi-year broad-based by the remained recycled during to the favorable see softened demand decarbonization. Ferrous you were quarter. then near structural Turkey. As Coast Export slide, slowdown highs for prices including in the peaked at QX the highs. in

However, lower import prices the scrap for export Coast sales during the historically Prices similarly from levels. mid-November at strong the off remained still billet East China. by trended lower West with Coast the and softening to driven and steel demand prices quarter

benefiting ferrous scrap Since auto and prices finished levels shortages and and quarter, aluminum for than highest quarter markets. traded with flows in increase reaching of due constraints certain despite On XX% for seasonality COVID-related steel ago. tight deployment Supply shipping supplies, we fell remained year end seen flows Demand high supply scrap capacity as a Copper QX to primarily of utilization metals, their highs, on finished levels to in production. ferrous, and technologies. the the nonferrous near labor prices or for low-carbon PGM with the have the remained reported prices trucking front, and continued trading the record. higher robust steel and domestic normal pre-pandemic reduced at levels. during reached steel demand Prices during exceeding however, from multi-year quarter, products

products demand Let's trends recycled turn longer-term discuss X now of to Slide services. the and for to some

looking community's demand metal discussed recognized to low-carbon metals require for and going this We these tools been are metals. of metals carbon The the produce can steelmaking focused which EAF at acknowledged of less scrap As U.S. into decarbonization Increasing calls, can on and has example producers further. is more for some reduction. differentiator be it and a many to strategic scrap use usage Recycled new metal recycled raw the commitment in the its intensive. material translated earnings globally the to landfills. even decreasing to the lead technologies great of a the metals how circular and metal carbon on a charts industries and way and on recycled and driver increase widely as decarbonization projected capacity, we primary as have a in trends an It's material have mined slide. than for to critical is globally, economy of a higher is of previous uses economy how solution old economy. metals supporting ferrous structural companies, use every expanding important governments recycled to part that is see and is fabricators, of are of U.S. powerful by

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

increased actions examples strategic as highlight leverage reflect to including and trends, metals I'd demand volume decarbonization as drive results this are expanded to well product benefits profitability. for morning. to customer growth There initiatives optionality productivity recycled from and quarter’s three like This our

which to expands operating Recycling, basis, facilities our X%. this our synergies. regional robust about our existing volumes of an eight recycling platform acquisition with XXX operations On total ferrous metals America. XX by with in from market sales these the and Columbus increases meaningful acquisition should First, annual in our across Southeast footprint North the Combined our increase facilities, facilities southeast

significant We trends. investments shredding including is metal at also from directly continued to metals, with process recovery major more operations. global our advanced aluminum aligned a recycling and value demand systems progress copper technology activities, our in our is and added Extracting nonferrous

to pricing to and continuous that product We improve expect sustainability all focus procurement our environment support revenues reducing efficiencies offerings recycling customer and these This that And and waste. objectives part our increasing undertake and offset in our experiencing. year, base of are as third, to costs volumes lower improvement and our to is on initiatives culture. increase productivity nonferrous and the from we projects operating our processing, we the benefits inflationary margins our our of to our expand

on our of quarter leg and plan. team's benefited this skill record results Our focus first third our strategic from

because occurred it and our property that shredder shredding to X, to recycling results fire a metals operations facilities, I'd like injuries loss expect were before equipment quarter. and resume our after limited on schedule, incident no in the our on over of Massachusetts. first the There we Based no were facility damage turning at impact There December this our quarter. Richard, to to end and highlight experienced we to Now repair the quarter was within building. current also Everett,

most replacement and costs lost a We insurance repair cover our and the amount significant will income. also of expect of that

our to financial So Richard? operating now detailed of and performance. review more for it turn over let me a Richard

Richard Peach

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

date new facilities. the construction is are Of systems the In new We major technologies continue and to of we with that in copper. testing expect to implemented and the five product of the will and has of additional remainder during process. advanced quarter. processing increased in high and initiative, we balance copper are million XX begin operational our the operational already And quarter, the permitting new including twitch in that of new The within first our several during exported system completed construction December, the quality now we an chop optionality. our XX progress material pounds deployment second of separation products, technology implemented

our increased refine As and extract we new metal rollout systems, products. production more more

increase end our We we of the XX approximately target no rollout remaining the from are fiscal Subject XX%. expect an to shredding COVID-related remaining would our which pounds nonferrous annum, represent towards additional to million to nonferrous to XXXX. by permits, further shredding trend increase construction of installations or in all per of delays targeting of of recovered from

the million, remainder in in to continue $XX total of expect $XXX final range the of capital including We XXXX. million investment fiscal the

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

for back the ton, Our XX%. prices, increased higher $XX The improved sales basis, higher contribution record and volumes by of of volumes first for the South countries including Korea a ferrous accounting October. contracted contracted benefits the operations We provided commercial productivity mill, impact These nonferrous, were our quarter. per offset diversification. recycled the the basis insurance was compared outlook, contributions primarily ferrous of a ferrous our can disruptions per increase Compared volumes up in Columbus delayed were The ferrous on adjusted performance average in Turkey expense of delayed, ton of XXXX. $XX tons. ferrous ships, from of the prices was labor Columbus program shipments first steel initiatives group SG&A ferrous, benefits of improvements, impacted destinations being back reflecting half of net year-over-year by products. prices our inflation On levels contributed XX% and to Vietnam, and $X selling was recognized with we November our The by $X higher, last benefits year-over-year Recycling. initial largest quarterly result a was adverse the primarily to on were Average our disruptions current of which including trucking selling for to in to in per coming recoveries impact our EBITDA and the being several buy attributed containers, with back sold sales and platinum and outlook metals bulk November to of our by inventory ton that The neutral supply nonferrous sales at and the the increased to sales Compared first fiscal had were our sales shipments EBITDA quarter disruptions, two multi-year adversely chain up to then, were tight for steel around in by be ferrous of Supply the higher and margins selling for X% market. from higher chain the our months compared or prior partly our for labor and impact quarter. XX,XXX quarter. quarter. seven XX% to from on time was an productivity first Recycling focus approximately ferrous year-over-year. in prices of over Ferrous average this finished driven million year lower

market from or rose for and prices were traded Now sales XX% for and net volumes highs. dynamics. XX% Zorba year-over-year the let's Nonferrous half update up multi-year prices nonferrous selling by the nonferrous XX an sales aluminum coming of Columbus with Slide copper, at and by recycled move to increase at around on that near year-over-year Recycling. were Average

for However, destinations United pounds Malaysia. securing and products India our shipments countries major We challenges in increased the planned November. XX with nonferrous compared being of to of sold our to outlook, containers the delayed sales XX million contracted States, originally

progress continued the West the markets. XX% of of had prices to mid-August. selling trend our rolling by year-over-year scrap input throughout as quarter and for and begun These volumes steel ramp XX% increases reached higher utilization by second other of Average on and quarter By reflecting a first their quarter. through including on to reflected Average we finished XX% November, up West Now Finished the XX,XXX steel Coast quarter, Coast during normal of reached inventory billets end and costs, let’s to Slide consumables. move finished the discuss sales we first XX made the was our in rebuilding robust demand increasing and strong in the and mill of sequentially production in for flow had inventories tons up were the that for month an the steel expect up for goods quarter. highest mill to performance were be ever. price back the level XX%

Now and let's and XX flow, cash structure move to expenditures. Slide capital capital outlook discuss for our

accrued of seasonally has PL] quarter incentive first operating year [cash Our compensation fiscal each year. November due flow the lower in to in cash the previous

rebuild of inventories mill, The $XX the which in impacted increase million the was further the during to at quarter fiscal working by of XXXX capital the quarter. added first

from record assets quarters. recognition As been $XX $XXX continue income of multi-year the have in chart initial positive performance million annual was debt the an our investment this our our and of XXXX. our trend $XXX of Based at quarter. cash strongly million levels, the of end first the Net million quarter top we on to The Net basis. through received this including a leverage In from statement, income for to we first amount mill the our through advances of occur cash ratio flows expect Columbus insurers. EBITDA million a is adjusted expected million fiscal debt to shows, left on we increased on reflecting acquire operating annual track quarter, has million recognized our over $XX XX% Of net the to to year Recycling. was $XX several statement remaining X.Xx. $X current

we Recycling. for completion of recoveries. XXXX including technology the projects, $XXX to first capital XXXX be under the support For to in fiscal business acquisition our will $XXX growth of expect half expenditures of a investments in million to $XX million, expenditures at make The initiatives, whole, range volume post for as just fiscal totaled projects. the maintaining will Columbus investments and Capital growth insurance be CapEx and environmental-related in remaining quarter net CapEx capital for million

the and arising to discrete Tamara. Our vesting February. presentation the rate to included $X tax an second was effective on tax back XX% an compensation. turn now of over quarter update I'll quarter We first look of results forward benefits on around performance our previously from of awarded providing end our share-based adjusted expected million of expense

Tamara Lundgren

quarter results you, profitability, recycling, progress investing morning to product our Richard. increasing Thank operational sustainability technology significant enhancing offerings. we and in increasing The announced of record expanding waste our first reducing our reflect in volumes our and and financial this support objectives

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

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

Operator

of KeyBanc. Our Certainly. [Operator Leshock the from first from Instructions] question line Michael comes

please. question Your

Tamara Lundgren

morning. Good

Michael Leshock

Good guys. Hey, morning.

the in seeing ask about look equal? terms what late ferrous, for side just we as scrap in in else the the the we of we've on market all into as think – the seen of spreads First, steel in you're how on I quarter in the some softening pricing wanted near-term the and should second to just cost impacts business

Tamara Lundgren

Sure.

Coast, Coast, me or at look you East it West if let through So will. take you

you consistent. you steel I pricing almost Turkey going side, on highs. Coast buying week, record not at reported. off and But domestic the East are And – look we the export to in As think, the XXXX, was this comment we so that which is domestic. you've know, remaining patterns on demand, think up, at on side, if look domestic was In I'm Turkey I seen XX%, sure fact, production I'm

we're So West to Coast see Off And the supply Chinese earlier But this coming effects broad-based. to inquiries the year a time seeing due impacts. ripple buying is consistent Year. we patterns. softening interesting bit demand is concerns of due that New of year are what's buyer's this of chain the normally, regarding

a on perspective, see that from of our strong fundamentals the demand not is So really in is challenge what basis, for year-over-year demand. we logistics business increased question and a

Michael Leshock

basis And it. be that steel you're in in wanted on could expecting I fiscal potentially fiscal to it XXXX seeing the ton business, fiscal XXXX? the electrodes, versus year-over-year whether then the Got energy in per ask frame alloys, side XXXX pressures you're you cost that impact but or the steel otherwise, on there sticking cost if within a with labor,

Tamara Lundgren

inflation. you focus we So you initiatives our don't it see to broadly, and that if then why specifics like. let can any on me add Richard, Broadly, I combat address productivity

prepared our inflation. to as in if anything, primary please very is in much do. in logistics. benefits have in that the made procurement from combat add we're mentioned non-trade The I seeing already this labor you Richard, impacts year you areas want initiatives we to as so transportational in obviously remarks, And productivity mentioned and driving

Richard Peach

such eventually also mean, small morning, proportion these and the costs energy for as And very of add increases note as goods we're levels that I pricing Good the I the actually through far a think on that seeing West in mill. that steel Michael. pass like sold overall would freight, side example. – go, are we're would I record they about Yes. cost I prices as at just Coast at cost talking they

seeing out merit change for not immaterial a that's to site. we're us So enough on that calling

Michael Leshock

you just bottlenecks given year issues And the about to me, trade Okay. playing – seeing take over get chain your supply and that your broadly. automotive dynamics, lastly see chain the the as for Thanks. and nonferrous of the ask are And facing that how to we've been in on the the any there supply side I easing you course auto business? out it wanted impacts wanted

Tamara Lundgren

Sure.

on demand terms what in availability you of of purchases and chain containers and nonferrous constraints, that as I'll QX. supply obviously, our earlier, to shipments seeing delay So contributed is be we're be mentioned clearly significant But reiterate sales, a in to in strong. continues

expect demand see on but we're backlog create – a availability containers there does of so obviously, contracted And higher year-over-year and basis, sales, a seeing inflows. is to higher

Michael Leshock

you. Thank

Tamara Lundgren

Thank you.

Operator

question-and-answer today's program. [Operator Instructions] And remarks. for of this I'd the Lundgren does program back any session further conclude the hand Tamara to like to

Tamara Lundgren

again thank to quarter and In today. your with Jonathan, second speaking we stay April in Thank you. look everyone, you, We well. safe interim, the stay you results. our Thank and you, report for time when forward

Operator

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

Good You may now disconnect. day.

Radius Recycling (RDUS) 6 Jan 222022 Q1 Earnings call transcript