Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) Q1 2019 Earnings Conference Call Transcript

Jan 09, 2019 • 11:30 am ET

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Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to Schnitzer Steel's First Quarter 2019 Earnings Release Call and Webcast. (Operator Instructions) As a reminder, today's program is being recorded. And now I would like to introduce your host for today's program, Mr. Michael Bennett, Investor Relations. Please go ahead, sir.

Executive
Michael Bennett

Thank you, Jonathan. Good morning. I'm Michael Bennett, the Company's Senior Director of Investor Relations. I am happy to welcome you to Schnitzer Steel's earnings presentation for the first quarter of fiscal 2019. In addition to today's audio comments, we have issued our press release and posted a set of slides, both of which you can access on our website at www.schnitzersteel.com or www.schn.com.

(Forward-Looking Cautionary Statements)

Please note that we will be discussing some non-GAAP measures during our presentation today. We have included a reconciliation of those metrics to GAAP in the appendix to our slide presentation.

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

Executive
Tamara Lundgren

Thank you, Michael. Good morning, everyone. Thank you all for joining us on our first quarter fiscal 2019 conference call. We appreciate your interest in our Company and we look forward to sharing our results with you this morning.

On our call today, I'll review the highlights of our quarterly performance, the market and macroeconomic trends underlying each of our businesses and new productivity initiatives we are implementing to address current market conditions. Richard will then provide more details on our segment performance and our capital structure. And I'll wrap up, and then we'll take your questions.

So let's turn now to slide four to get started. Earlier this morning, we announced our fiscal '19 first quarter adjusted earnings per share of $0.58, our highest first quarter performance since fiscal 2011. Both divisions delivered strong operating results, and I'd like to start this morning by mentioning a few of their key accomplishments.

First, CSS delivered its best first quarter performance since fiscal 2008, with operating income up by 41% year-over-year. This was achieved despite an adverse impact from a third party gas pipeline interruption as well as downtime related to the implementation of mill upgrades aimed at improving productivity.

Second, in challenging market conditions that saw a significant decline in the net selling prices for our nonferrous products, AMR delivered solid year-over-year performance, with a 15% increase in ferrous volumes and an 18% increase in nonferrous volumes, demonstrating the benefits of our sales diversification strategy and our commercial initiatives to expand our supply channels.

And third, our strong balance sheet enabled us to continue to invest in our Company's growth and return capital to our shareholders through both the repurchase of 150,000 shares of our common stock and the issuance of our 99th consecutive quarterly dividend.

Our results in the quarter did however reflect the adverse impact from compressed margins, primarily due to a significant decline in nonferrous prices as well as