Schnitzer Reports Second Quarter 2016 Financial Results and Third Quarter Outlook

PORTLAND, Ore.--(BUSINESS WIRE)--April 6, 2016--Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) today reported financial results for its fiscal 2016 second quarter ended February 29, 2016. Significantly weaker export demand in the latter half of the second quarter led to ferrous and nonferrous sales prices falling to multi-year lows during the quarter. The lower price environment adversely impacted scrap flows and compressed metal spreads. At the end of February, export ferrous sales prices for shipments in the third quarter began to improve and continued to show strength through March.

For the second quarter fiscal 2016, the Company announced an adjusted loss per share from continuing operations of $0.25. This compares to second quarter fiscal 2015 adjusted loss per share from continuing operations of $0.28. The improvement in adjusted loss per share from continuing operations compared to the second quarter of fiscal 2015 was primarily due to higher AMR adjusted operating income and decreased corporate expense, partially offset by lower SMB performance. Adjusted earnings per share excludes the impact of goodwill and other asset impairment charges, restructuring and other exit-related costs and, in the second quarter of fiscal 2015, the impact of reselling or modifying the terms of certain previously contracted bulk ferrous shipments.

The Company reported a loss per share from continuing operations of $1.48 for the second quarter of fiscal 2016. This includes non-cash impairment charges of $9 million, or $0.33 per share, to the carrying value of the goodwill in the Auto and Metals Recycling Business, $18 million of other asset impairments, or $0.68 per share, and $5 million in restructuring and exit-related costs, or $0.23 per share, representing a combined $1.23 per share in the second quarter. This compares to a reported loss per share from continuing operations of $7.08 in the second quarter of fiscal 2015. For a reconciliation to the adjusted results, please see a description of the non-GAAP financial measures provided after the financial statements.

“The combination of weak export demand, constrained supply conditions, seasonal slowdowns and the higher level of steel imports contributed to a challenging second quarter. Our focus on productivity and cost reduction initiatives enabled us to improve our results compared to last year’s second quarter in an environment in which our average ferrous sales prices were down over 40% and near ten-year lows,” commented Tamara Lundgren, President and Chief Executive Officer. “As market conditions strengthen, we anticipate these productivity and cost reduction initiatives will contribute to expanded margins and improved financial performance,” added Lundgren.

Although markets remain volatile, for the third quarter, the Company currently anticipates ferrous sales volumes to increase approximately 10% sequentially, subject to timing of shipments. As a result, AMR’s operating income for the third quarter of fiscal 2016 is expected to be approximately double the adjusted operating income in the third quarter of fiscal 2015 of $5.5 million, reflecting stronger ferrous sales prices and retail activity compared to the second quarter, benefits from higher cost savings and no material impact from average inventory accounting. SMB is expected to deliver positive operating income on higher sales volumes and additional cost reductions.


Summary Results
($ in millions, except per share amounts)
	Quarter
	2Q16			2Q15			Change		1Q16			Change
Revenues	$	289		$	437		(34	)%	$	321		(10	)%
Operating Loss	$	(37	)	$	(201	)	(82	)%	$	(4	)	NM
Goodwill impairment charge		9			141		(94	)%		—		NM
Other asset impairment charges		18			44		(58	)%		—		NM
Restructuring charges and other exit-related costs		5			5		(2	)%		2		175	%
Resale or modification of previously contracted shipments		—			1		NM			—		NM
Adjusted Operating Loss⁽¹⁾⁽³⁾	$	(4	)	$	(9	)	(52	)%	$	(2	)	113	%
Net Loss attributable to SSI	$	(41	)	$	(196	)	(79	)%	$	(5	)	679	%
Net Loss from continuing operations attributable to SSI	$	(40	)	$	(191	)	(79	)%	$	(5	)	669	%
Adjusted Net Loss from continuing operations attributable to SSI⁽²⁾	$	(7	)	$	(8	)	(11	)%	$	(4	)	87	%
Net Loss per share attributable to SSI	$	(1.52	)	$	(7.24	)	(79	)%	$	(0.20	)	677	%
Net Loss per share from continuing operations attributable to SSI	$	(1.48	)	$	(7.08	)	(79	)%	$	(0.19	)	667	%
Adjusted diluted EPS from continuing operations attributable to SSI⁽²⁾	$	(0.25	)	$	(0.28	)	(12	)%	$	(0.13	)	86	%

AMR segment results and operating statistics reflect integrated auto and metals recycling operations for all periods presented.


Summary of Auto and Metals Recycling Results
($ in millions, except selling prices and data per ton; Fe volumes 000s long tons; NFe volumes Ms lbs)
	Quarter
	2Q16			2Q15			Change		1Q16		Change
Total Revenues	$	250		$	389		(36	)%	$	273	(8	)%
Ferrous Revenues	$	140		$	252		(44	)%	$	163	(14	)%
Ferrous Volumes		737			788		(6	)%		805	(8	)%
Avg. Net Ferrous Sales Prices ($/LT)⁽¹⁾	$	169		$	290		(42	)%	$	179	(6	)%
Nonferrous Revenues	$	84		$	106		(21	)%	$	81	4	%
Nonferrous Volumes		124			124		—	%		111	11	%
Avg. Net Nonferrous Sales Prices ($/lb)⁽¹⁾	$	0.59		$	0.77		(23	)%	$	0.63	(6	)%
Cars Purchased for Retail (000s)		70			78		(10	)%		77	(9	)%
Operating Income (Loss)⁽²⁾	$	(26	)	$	(189	)	(86	)%	$	2	NM
Operating Income (Loss) per Fe ton	$	(36	)	$	(239	)	(85	)%	$	3	NM
Adjusted Operating Income (Loss)⁽³⁾	$	1		$	(3	)	NM		$	2	(57	)%
Adjusted Operating Income (Loss) per Fe ton	$	1		$	(4	)	NM		$	3	(53	)%

(1) Sales prices are shown net of freight.

(2) Operating income does not include the impact of restructuring charges and other exit-related costs.

(3) Adjusted operating income excludes the impact of goodwill and other asset impairment charges, restructuring and other exit-related costs and, in the second quarter of fiscal 2015, the resale or modification of certain previously contracted ferrous bulk shipments. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.

NM = not meaningful

Volumes: Ferrous sales volumes in the second quarter declined 8% from the first quarter, primarily due to weaker global demand and the impact of the lower price environment on supply flows. Improvements in market conditions since late February are expected to benefit shipments in the third quarter. Nonferrous sales volumes increased 11% sequentially, reflecting the timing of shipments of processed material. Cars purchased for AMR’s auto stores decreased 9% from the first quarter due to a continuation of tight supply conditions driven by the lower commodity price environment.

Export customers accounted for 62% of total ferrous sales volumes in the second quarter. Our ferrous and nonferrous products were exported to 14 countries, with India, Turkey and Thailand the top export destinations for ferrous shipments.

Pricing: Export demand weakened in the latter half of the quarter which led to declines in ferrous selling prices sequentially, reaching near ten-year lows. Average ferrous net selling prices for shipments during the quarter decreased $10 per ton, or 6% from first quarter levels. Nonferrous prices weakened 6% sequentially with market prices for copper and aluminum reaching seven-year lows in the second quarter.

Margins: Adjusted operating income of $1 per ferrous ton in the second quarter decreased sequentially due to the lower price environment which adversely impacted the spread between direct purchase costs and selling prices of recycled metal and also further constrained the supply of scrap metal, including end-of-life vehicles. Benefits from cost reductions and productivity initiatives were more than offset by the margin compression created by the weak market environment.

Sales Volumes: Finished steel sales volumes were 15% lower as compared to the second quarter of fiscal 2015 primarily due to increased competition from imported steel products. Lower rolling mill utilization reflected reduced production levels due to the softer sales environment and the planned maintenance outage.

Pricing: Average net sales prices for finished steel products decreased 23% from the prior year quarter and 9% from first quarter levels, reflecting continued pressure on finished steel selling prices from reduced raw material costs and lower priced steel imports.

Margins: Operating performance during the quarter was slightly below break-even levels. Compared to the prior year, results were adversely impacted by substantially lower volumes and selling prices for finished steel.

During the second quarter, strong focus on cost efficiency and productivity initiatives generated a $9 million reduction, or 20%, in consolidated selling, general and administrative costs as compared to the prior year, the majority of which resulted from the targeted savings programs announced in fiscal 2015.

New savings initiatives of $30 million were identified in the second quarter which are expected to generate approximately $13 million in benefits in the second half of fiscal 2016, with the balance expected to be delivered by the end of fiscal 2017. The new savings are expected to result from a combination of reduced staffing levels, the closure of four feeder yards, increased efficiencies in procurement, and streamlining of administrative and supporting services. Approximately 80% of the new savings are expected to be realized at AMR and the balance is expected to result from Corporate and SMB. The Company incurred restructuring charges and other exit-related costs of $5 million in the second quarter of fiscal 2016.

The Company generated operating cash flow of $7 million in the second quarter of fiscal 2016 and returned capital to shareholders through its 88th consecutive quarterly dividend. Net debt at the end of the second quarter was $189 million. (See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.)

The Company’s effective tax rate was an expense of 3.3% in the second quarter which was lower than the federal statutory rate primarily due to projected changes in the Company’s full valuation allowance positions, partially offset by increases in deferred tax liabilities.

A conference call and slide presentation to discuss results will be held today, April 6, 2016, at 11:00 a.m. EDT hosted by Tamara Lundgren, President and Chief Executive Officer, and Richard Peach, Chief Financial Officer. The call and the slides will be webcast and accessible on the Company’s website at www.schnitzersteel.com.

Summary financial data is provided in the following pages. The slides and related materials will be available prior to the call on the website.


SCHNITZER STEEL INDUSTRIES, INC.
FINANCIAL HIGHLIGHTS
(in thousands)
(Unaudited)

	For the Three Months Ended									For the Six Months Ended
	February 29,			November 30,			February 28,			February 29,			February 28,
	2016			2015			2015			2016			2015

REVENUES:
Auto and Metal Recycling:
Ferrous sales	$	140,126		$	163,413		$	251,501		$	303,539		$	599,871
Nonferrous sales		84,130			80,896			106,225			165,025			234,610
Other sales		25,556			28,656			31,331			54,213			68,264
Total AMR Sales		249,812			272,965			389,057			522,777			902,745
Steel Manufacturing Business		58,391			71,901			93,126			130,292			188,344
Intercompany sales and eliminations		(19,126	)		(23,668	)		(44,734	)		(42,794	)		(100,016	)
Total Revenues	$	289,077		$	321,198		$	437,449		$	610,275		$	991,073

OPERATING INCOME (LOSS):
Adjusted Auto and Metals Recycling⁽¹⁾	$	874		$	2,036		$	(3,179	)	$	2,910		$	7,131
Steel Manufacturing Business		(1,202	)		2,754			3,799			1,552			10,006
Adjusted segment operating income (loss)⁽²⁾		(328	)		4,790			620			4,462			17,137
Corporate expense		(6,315	)		(8,299	)		(8,488	)		(14,616	)		(17,480	)
Intercompany eliminations		2,161			1,406			(1,543	)		3,569			(2,109	)
Adjusted operating loss⁽¹⁾		(4,482	)		(2,103	)		(9,411	)		(6,585	)		(2,452	)
Goodwill impairment charge		(8,845	)		—			(141,021	)		(8,845	)		(141,021	)
Other asset impairment charges		(18,458	)		—			(43,838	)		(18,458	)		(43,838	)
Restructuring charges and other exit-related costs		(5,291	)		(1,925	)		(5,394	)		(7,216	)		(5,987	)
Resale or modification of previously contracted shipments		—			—			(1,347	)		—			(6,928	)
Total operating loss	$	(37,076	)	$	(4,028	)	$	(201,011	)	$	(41,104	)	$	(200,226	)


SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)

	For the Three Months Ended									For the Six Months Ended
	February 29,			November 30,			February 28,			February 29,			February 28,
	2016			2015			2015			2016			2015
Revenues	$	289,077		$	321,198		$	437,449		$	610,275		$	991,073
Cost of goods sold		259,670			284,854			406,649			544,524			914,664
Selling, general and administrative		33,599			38,418			42,167			72,017			86,898
(Income) loss from joint ventures		290			29			(609	)		319			(1,109	)
Goodwill impairment charge		8,845			—			141,021			8,845			141,021
Other asset impairment charges		18,458			—			43,838			18,458			43,838
Restructuring charges and other exit-related costs		5,291			1,925			5,394			7,216			5,987
Operating loss		(37,076	)		(4,028	)		(201,011	)		(41,104	)		(200,226	)
Interest expense		(2,015	)		(1,859	)		(2,295	)		(3,874	)		(4,669	)
Other income, net		438			407			1,993			845			2,925
Loss from continuing operations before income taxes		(38,653	)		(5,480	)		(201,313	)		(44,133	)		(201,970	)
Income tax benefit (expense)		(1,293	)		578			9,673			(715	)		9,566
Loss from continuing operations		(39,946	)		(4,902	)		(191,640	)		(44,848	)		(192,404	)
Loss from discontinued operations, net of tax		(1,024	)		(65	)		(4,242	)		(1,089	)		(5,080	)
Net loss		(40,970	)		(4,967	)		(195,882	)		(45,937	)		(197,484	)
Net (income) loss attributable to noncontrolling interests		(275	)		(329	)		240			(604	)		(631	)
Net loss attributable to SSI	$	(41,245	)	$	(5,296	)	$	(195,642	)	$	(46,541	)	$	(198,115	)
Net loss per share attributable to SSI:
Basic:
Loss per share from continuing operations attributable to SSI	$	(1.48	)	$	(0.19	)	$	(7.08	)	$	(1.67	)	$	(7.15	)
Loss per share from discontinued operations attributable to SSI		(0.04	)		—			(0.16	)		(0.04	)		(0.19	)
Net loss per share attributable to SSI⁽¹⁾	$	(1.52	)	$	(0.20	)	$	(7.24	)	$	(1.71	)	$	(7.34	)
Diluted:
Loss per share from continuing operations attributable to SSI	$	(1.48	)	$	(0.19	)	$	(7.08	)	$	(1.67	)	$	(7.15	)
Loss per share from discontinued operations attributable to SSI		(0.04	)		—			(0.16	)		(0.04	)		(0.19	)
Net loss per share attributable to SSI⁽¹⁾	$	(1.52	)	$	(0.20	)	$	(7.24	)	$	(1.71	)	$	(7.34	)
Weighted average number of common shares:
Basic		27,201			27,121			27,020			27,178			26,982
Diluted		27,201			27,121			27,020			27,178			26,982
Dividends declared per common share	$	0.1875		$	0.1875		$	0.1875		$	0.3750		$	0.3750

SCHNITZER STEEL INDUSTRIES, INC.
SELECTED OPERATING STATISTICS
(Unaudited)
																						Fiscal
	1Q16			2Q16			1H16			1Q15			2Q15			3Q15			4Q15			2015
Auto and Metals Recycling⁽¹⁾
Ferrous Selling Prices ($/LT)⁽²⁾
Domestic	$	180		$	161		$	170		$	330		$	293		$	235		$	239		$	275
Export	$	179		$	174		$	177		$	319		$	286		$	236		$	225		$	265
Average	$	179		$	169		$	175		$	323		$	290		$	235		$	231		$	269
Ferrous Sales Volume (LT)
Domestic		290,170			282,200			572,370			379,770			372,408			342,812			376,910			1,471,900
Export		515,109			454,924			970,033			604,683			415,765			663,456			552,573			2,236,477
Total		805,279			737,124			1,542,403			984,453			788,173			1,006,268			929,483			3,708,377
Nonferrous Average Price ($/LB)⁽²⁾⁽³⁾	$	0.63		$	0.59		$	0.61		$	0.81		$	0.77		$	0.71		$	0.71		$	0.75

Nonferrous Sales Volume (LB, 000s)⁽³⁾		111,077			123,675			234,753			142,661			123,672			143,073			176,029			585,435
Car Purchase Volume (000s)⁽⁴⁾		77			70			147			92			78			79			88			337
Auto Stores at End of Quarter		55			55			55			56			56			55			55			55
Steel Manufacturing Business
Sales Prices ($/ST)⁽²⁾⁽⁵⁾
Average	$	554		$	504		$	530		$	688		$	658		$	618		$	600		$	639
Sales Volume (ST)⁽⁵⁾
Rebar		85,899			71,935			157,834			79,065			74,928			100,413			94,773			349,179
Coiled Products		32,482			33,742			66,224			40,361			49,403			35,477			45,176			170,417
Merchant Bar and Other		4,757			3,974			8,731			6,245			4,567			4,780			4,796			20,388
Total		123,138			109,651			232,789			125,671			128,898			140,670			144,745			539,984
Rolling Mill Utilization		68	%		61	%		64	%		72	%		76	%		69	%		74	%		73	%


SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
	February 29, 2016		August 31, 2015
Assets
Current Assets:
Cash and cash equivalents	$	8,940	$	22,755
Accounts receivable, net		81,159		111,492
Inventories		146,030		156,532
Other current assets		24,843		31,586
Total current assets		260,972		322,365
Property, plant and equipment, net		393,768		427,554
Goodwill and other assets		197,433		212,380
Total assets	$	852,173	$	962,299

Liabilities and Equity
Current liabilities:
Short-term borrowings	$	620	$	584
Other current liabilities		104,713		119,862
Total current liabilities		105,333		120,446
Long-term debt		197,219		227,572
Other long-term liabilities		72,549		75,730
Equity:
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity		473,423		534,535
Noncontrolling interests		3,649		4,016
Total equity		477,072		538,551
Total liabilities and equity	$	852,173	$	962,299

This press release contains certain non-GAAP financial measures as defined under SEC rules such as adjusted consolidated operating income (loss), adjusted AMR operating income (loss), adjusted net loss from continuing operations attributable to SSI and adjusted diluted earnings per share from continuing operations attributable to SSI. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable U.S. GAAP measures. Management believes that each of the foregoing adjusted non-GAAP financial measures provides a meaningful presentation of the Company’s results from its core business operations excluding adjustments for a goodwill impairment charge, other asset impairment charges and restructuring and other exit-related costs that are not related to the Company’s ongoing core business operations and improves the period-to-period comparability of the Company’s results from its core business operations. In addition, to improve comparability of our operating performance between periods, these measures also exclude the impact on operating results in fiscal 2015 from the resale or modification of the terms during the first and second quarters of 2015 of certain previously contracted ferrous bulk shipments. Due to the sharp decline in selling prices that occurred during the first and second quarters of fiscal 2015, the revised prices associated with these shipments were significantly lower than the prices in the original sales contracts entered into between August and November 2014. Further, management believes that debt, net of cash is a useful measure for investors because, as cash and cash equivalents can be used, among other things, to repay indebtedness, netting this against total debt is a useful measure of our leverage. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the most directly comparable U.S. GAAP measures.


Operating Income (Loss)
($ in millions)	Quarter
	2Q16			1Q16			2Q15			3Q15
Consolidated Operating Income (Loss):
Operating Loss	$	(37	)	$	(4	)	$	(201	)	$	(4	)
Goodwill impairment charge		9			—			141			—
Other asset impairment charges		18			—			44			1
Restructuring charges and other exit-related costs		5			2			5			6
Resale or modification of previously contracted shipment		—			—			1			—
Adjusted Operating Income (Loss)⁽¹⁾	$	(4	)	$	(2	)	$	(9	)	$	3

AMR Operating Income (Loss):
Operating Income (Loss)	$	(26	)	$	2		$	(189	)	$	4
Goodwill impairment charge		9			—			141			—
Other asset impairment charges		18			—			43			1
Resale or modification of previously contracted shipment		—			—			1			—
Adjusted Operating Income (Loss)⁽¹⁾	$	1		$	2		$	(3	)	$	6


Net Loss from continuing operations attributable to SSI
($ in millions)	Quarter
	2Q16			1Q16			2Q15			3Q15
Net Loss from continuing operations attributable to SSI	$	(40	)	$	(5	)	$	(191	)	$	(8	)
Goodwill impairment charge, net of tax⁽²⁾		9			—			130			—
Other asset impairment charges, net of tax⁽²⁾		18			—			44			1
Restructuring charges and other exit-related costs, net of tax⁽²⁾		6			2			6			7
Resale or modification of previously contracted shipment, net of tax⁽²⁾		—			—			3			—
Adjusted Net Loss from continuing operations attributable to SSI⁽¹⁾	$	(7	)	$	(4	)	$	(8	)	$	—


Diluted Earnings per share attributable to SSI
($ per share)	Quarter
	2Q16			1Q16			2Q15			3Q15
Net Loss per share attributable to SSI	$	(1.52	)	$	(0.20	)	$	(7.24	)	$	(0.36	)
Less: Loss per share from discontinued operations attributable to SSI		(0.04	)		—			(0.16	)		(0.05	)
Net Loss per share from continuing operations attributable to SSI⁽¹⁾		(1.48	)		(0.19	)		(7.08	)		(0.31	)
Goodwill impairment charge, net of tax, per share⁽²⁾		0.33			—			4.83			—
Other asset impairment charges, net of tax, per share⁽²⁾		0.68			—			1.63			0.05
Restructuring charges and other exit-related costs, net of tax, per share⁽²⁾		0.23			0.06			0.23			0.25
Resale or modification of previously contracted shipment, net of tax, per share⁽²⁾		—			—			0.12			—
Adjusted Diluted EPS from continuing operations attributable to SSI⁽¹⁾	$	(0.25	)	$	(0.13	)	$	(0.28	)	$	—

Schnitzer Steel Industries, Inc. is one of the largest manufacturers and exporters of recycled metal products in the United States with operating facilities located in 24 states, Puerto Rico and Western Canada. Schnitzer has seven deep water export facilities located on both the East and West Coasts and in Hawaii and Puerto Rico. The Company’s integrated operating platform also includes auto parts stores and steel manufacturing. With an effective annual production capacity of approximately 800,000 tons, the Company’s steel manufacturing business produces finished steel products, including rebar, wire rod and other specialty products. The Company began operations in 1906 in Portland, Oregon.

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 to “we,” “our,” “us” and “SSI” refer to the Company and its consolidated subsidiaries.

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 trends, cyclicality and changes in the markets we sell into; expected results, including pricing, sales volumes and profitability; strategic direction; changes to manufacturing and production processes; 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 realization of deferred tax assets; planned capital expenditures; liquidity positions; ability to generate cash from continuing operations; the potential impact of adopting new accounting pronouncements; obligations under our retirement plans; benefits, savings or additional costs from business realignment, cost containment and productivity improvement programs; 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 “believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,” “evaluates,” “may,” “will,” “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 Securities and Exchange Commission, press releases and public conference calls. All forward-looking statements we make are based on information available to us at the time the statements are made, and we assume no obligation to update any forward-looking statements, except as may be required by law. Our business is subject to the effects of changes in domestic and global economic conditions and a number of other risks and uncertainties that could cause actual results to differ materially from those included in, or implied by, such forward-looking statements. Some of these risks and uncertainties are discussed in “Item 1A. Risk Factors” in our most recent annual report on Form 10-K and in our quarterly reports on Form 10-Q. Examples of these risks include: potential environmental cleanup costs related to the Portland Harbor Superfund site; the cyclicality and impact of general economic conditions; volatile supply and demand conditions affecting prices and volumes in the markets for both our products and raw materials we purchase; imbalances in supply and demand conditions in the global steel industry; the impact of goodwill impairment charges; the impact of long-lived asset impairment charges; the realization of expected benefits or cost reductions associated with productivity improvement and restructuring initiatives; difficulties associated with acquisitions and integration of acquired businesses; customer fulfillment of their contractual obligations; the impact of foreign currency fluctuations; potential limitations on our ability to access capital resources and existing credit facilities; restrictions on our business and financial covenants under our bank credit agreement; the impact of the consolidation in the steel industry; inability to realize expected benefits from investments in technology; freight rates and the availability of transportation; the impact of equipment upgrades and failures on production; product liability claims; the impact of impairment of our deferred tax assets; the impact of a cybersecurity incident; costs associated with compliance with environmental regulations; the adverse impact of climate change; inability to obtain or renew business licenses and permits; compliance with greenhouse gas emission regulations; reliance on employees subject to collective bargaining agreements; and the impact of the underfunded status of multiemployer plans in which we participate.

CONTACT:
Schnitzer Steel Industries, Inc.
Investor Relations:
Alexandra Deignan, 646-278-9711
adeignan@schn.com
or
Company Info:
www.schnitzersteel.com
ir@schn.com


Debt, Net of Cash
($ in thousands)
	February 29, 2016		August 31, 2015
Short-term borrowings	$	620	$	584
Long-term debt, net of current maturities		197,219		227,572
Total debt		197,839		228,156
Less: cash and cash equivalents		8,940		22,755
Total debt, net of cash	$	188,899	$	205,401


Summary of Steel Manufacturing Business Results
($ in millions, except selling prices; volume 000s of short tons)
	Quarter
	2Q16			2Q15			Change		1Q16			Change
Revenues	$	58		$	93		(37	)%	$	72		(19	)%
Operating Income (Loss)	$	(1	)	$	4		NM		$	3		NM
Avg. Net Sales Prices ($/ST)	$	504		$	658		(23	)%	$	554		(9	)%
Finished Goods Sales Volumes		110			129		(15	)%		123		(11	)%
Rolling Mill Utilization		61	%		76	%				68	%