Segment Information

9 Months Ended

May 31, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

The accounting standards for reporting information about operating segments define an operating segment as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses for which discrete financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Through the end of the third quarter of fiscal 2017, the Company had two reportable segments: AMR and SMB.

AMR buys and processes ferrous and nonferrous metal for sale to foreign and other domestic steel producers or their representatives and to SMB, purchases ferrous metal from other processors for shipment directly to SMB, and procures salvaged vehicles and sells serviceable used auto parts from these vehicles through a network of self-service auto parts stores. Additionally, the Company holds noncontrolling ownership interests in joint ventures, which are either in the metals recycling business or are suppliers of unprocessed metal. The Company's allocable portion of the results of these joint ventures is reported within the AMR reportable segment.

SMB operates a steel mini-mill that produces a wide range of finished steel long products using recycled metal and other raw materials.

Intersegment sales from AMR to SMB are made at rates that approximate market prices for shipments from the West Coast of the United States. These intercompany sales tend to produce intercompany profits which are not recognized until the finished products are ultimately sold to third parties.

The information provided below is obtained from internal information that is provided to the Company’s chief operating decision maker for the purpose of corporate management. The Company uses segment operating income to measure segment performance. The Company does not allocate corporate interest income and expense, income taxes and other income and expense to its reportable segments. Expenses related to shared services that support operational activities and transactions is allocated from Corporate to the segments. Unallocated Corporate expense consists primarily of expense for management and certain administrative services that benefit both reportable segments. In addition, the Company does not allocate restructuring charges and other exit-related activities to the segment operating income because management does not include this information in its measurement of the performance of the operating segments.

The table below illustrates the Company’s revenues from continuing operations by reportable segment (in thousands):

	Three Months Ended May 31,						Nine Months Ended May 31,
	2017			2016			2017			2016
Revenues:
Auto and Metals Recycling:
Revenues	$	430,047		$	306,851		$	1,084,354		$	829,628
Less: Intersegment revenues	(34,923		)	(26,171		)	(83,872		)	(68,965		)
AMR external customer revenues	395,124			280,680			1,000,482			760,663
Steel Manufacturing Business:
Revenues	81,964			70,924			192,851			201,217
Total revenues	$	477,088		$	351,604		$	1,193,333		$	961,880

The table below illustrates the reconciliation of the Company’s segment operating income to income (loss) from continuing operations before income taxes (in thousands):

	Three Months Ended May 31,						Nine Months Ended May 31,
	2017			2016			2017			2016
Auto and Metals Recycling	$	29,801		$	26,870		$	68,579		$	2,555
Steel Manufacturing Business	411			1,246			(4,416		)	2,799
Segment operating income	30,212			28,116			64,163			5,354
Restructuring charges and other exit-related activities	(93		)	(542		)	200			(7,758		)
Corporate and eliminations	(10,972		)	(12,688		)	(30,458		)	(23,813		)
Operating income (loss)	19,147			14,886			33,905			(26,217		)
Interest expense	(2,131		)	(2,905		)	(5,969		)	(6,779		)
Other income (expense), net	524			(81		)	1,318			763
Income (loss) from continuing operations before income taxes	$	17,540		$	11,900		$	29,254		$	(32,233	)

The following is a summary of the Company’s total assets by reportable segment (in thousands):

	May 31, 2017			August 31, 2016
Auto and Metals Recycling(1)	$	1,597,410		$	1,510,688
Steel Manufacturing Business	360,195			373,130
Total segment assets	1,957,605			1,883,818
Corporate and eliminations(2)	(1,036,380		)	(992,389		)
Total assets	$	921,225		$	891,429

_____________________________

(1) AMR total assets include $13 million and $14 million as of May 31, 2017 and August 31, 2016, respectively, for investments in joint ventures.

(2) The substantial majority of Corporate and eliminations total assets is comprised of Corporate intercompany payables to the Company's operating segments and intercompany eliminations.