Schnitzer Reports Third Quarter 2015 Financial Results

PORTLAND, Ore.--(BUSINESS WIRE)--

Schnitzer Steel Industries, Inc. SCHN today reported financial results for its fiscal 2015 third quarter ended May 31, 2015.

Our third quarter results reflected benefits from the cost reduction and productivity initiatives we announced in early April which led to improved sequential operating performance in all of our businesses. In Metals Recycling, ferrous volumes increased 29% and nonferrous sales volumes increased 21% versus the second quarter. Due to the rapid decline in ferrous selling prices in February, which impacted shipments in the third quarter, average inventory costs did not decline as quickly as selling prices, which led to an estimated $14 per ton, or $13 million, adverse impact of average inventory accounting which approximated the adverse impact in the second quarter. In our Auto Parts Business, higher seasonal retail activity and early benefits achieved from productivity improvements led to significantly improved profitability. Our Steel Manufacturing Business generated higher sales volumes and increased operating income due to steadily improving demand in West Coast construction markets.

Consolidated Financial Performance

The Company announced break-even adjusted earnings per share from continuing operations for the third quarter, which compares to second quarter adjusted loss per share of $0.30 and prior year third quarter adjusted earnings per share of $0.19. Adjustments included charges for restructuring and exit-related costs and asset impairments. Third quarter adjusted results included an adverse impact from average inventory accounting of approximately $0.40 per share which compares to a second quarter adverse impact of $0.36 per share and a prior year third quarter adverse impact of $0.09 per share. Based on current market trends, estimated adverse inventory effects are expected to be substantially reduced in the fourth quarter.

The Company reported third quarter loss per share from continuing operations of $0.31, including $6 million in restructuring and exit-related costs and $1 million in asset impairments. This compares to the second quarter reported loss per share of $7.08 and third quarter fiscal 2014 reported earnings per share of $0.13.

Strong Positive Operating Cash Flow and Significant Progress on Cost Reductions and Productivity Initiatives

The Company generated positive operating cash flow in the third quarter of $64 million which enabled the Company to reduce total debt to $263 million, the lowest level since first quarter of fiscal 2011.

During the quarter, the Company made significant progress on the execution of its targeted $60 million in annual cost savings and productivity improvements, generating approximately $10 million in benefits. The Company expects to achieve an additional $5 million of quarterly benefits by the fourth quarter of fiscal 2015, which is ahead of schedule and equates to a targeted quarterly run rate of approximately $15 million.

"Our ability to deliver on a wide range of cost savings and productivity initiatives contributed to improved sequential financial results in the third quarter. We expect the benefits from these initiatives, combined with more stable market conditions, to provide momentum for further improvements in our performance," said Tamara Lundgren, President and Chief Executive Officer. "In addition, we expect to complete the consolidation of our Auto Parts and Metals Recycling Businesses during the fourth quarter, creating the opportunity to benefit from further commercial and operational synergies," added Lundgren.

Summary Results
($ in millions, except per share amounts)
		Quarter
		3Q15					3Q14					Change				2Q15					Change
Revenues		$	467				$	635				(26	)%			$	437				7	%
Operating Income (Loss)		$	(4	)			$	3				NM				$	(201	)			(98	)%
Goodwill impairment charge		—					—					NM				141					NM
Other asset impairment charges		1					1					141	%			44					(97	)%
Restructuring charges and other exit-related costs		6					3					116	%			5					11	%
Resale or modification of previously contracted shipments		—					—					NM				1					NM
Adjusted Operating Income (Loss)(1)(3)		$	3				$	6				(45	)%			$	(9	)			NM
Net Income (Loss) attributable to SSI		$	(10	)			$	3				NM				$	(196	)			(95	)%
Net Income (Loss) from continuing operations attributable to SSI		$	(8	)			$	3				NM				$	(191	)			(96	)%
Adjusted Net Income (Loss) from continuing operations attributable to SSI(2)		$	—				$	5				NM				$	(8	)			(99	)%
Net Income (Loss) per share attributable to SSI		$	(0.36	)			$	0.12				NM				$	(7.24	)			(95	)%
Net Income (Loss) per share from continuing operations attributable to SSI		$	(0.31	)			$	0.13				NM				$	(7.08	)			(96	)%
Adjusted diluted EPS from continuing operations attributable to SSI(2)		$	—				$	0.19				NM				$	(0.30	)			(99	)%

(1) Adjusted operating income excludes the impact of goodwill and other asset impairments, restructuring, other exit-related costs, and the resale or modification of certain previously contracted ferrous bulk shipments. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.

(2) See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.

(3) May not foot due to rounding.

NM = not meaningful

Metals Recycling Business

Summary of Metals Recycling Business Results
($ in millions, except selling prices and data per ton; Fe volumes 000s long tons; NFe volumes Ms lbs)
		Quarter
		3Q15					3Q14					Change				2Q15					Change
Total Revenues		$	363				$	517				(30	)%			$	341				7	%
Ferrous Revenues		$	258				$	387				(33	)%			$	244				6	%
Ferrous Volumes		971					1,024					(5	)%			750					29	%
Avg. Net Ferrous Sales Prices ($/LT)(1)		$	239				$	346				(31	)%			$	295				(19	)%
Nonferrous Revenues		$	101				$	123				(18	)%			$	91				11	%
Nonferrous Volumes		130					139					(6	)%			108					21	%
Avg. Net Nonferrous Sales Prices ($/lb)(1)		$	0.74				$	0.86				(14	)%			$	0.81				(9	)%
Operating Income (Loss)(2)		$	1				$	4				(73	)%			$	(187	)			NM
Operating Income (Loss) per Fe ton		$	1				$	4				(71	)%			$	(249	)			NM
Adjusted Operating Income (Loss)(3)		$	2				$	4				(38	)%			$	(1	)			NM
Adjusted Operating Income (Loss) per Fe ton		$	2				$	4				(35	)%			$	(2	)			NM

(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 impairments, and 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

Sales Volumes: Ferrous sales volumes of 971 thousand tons in the third quarter increased 29% from the second quarter, primarily due to an increase in export sales and timing of shipments. Nonferrous sales volumes of 130 million pounds increased 21% sequentially, driven by resolution of the labor slowdown at West Coast ports. As compared to the prior year, both ferrous and nonferrous volumes were slightly lower.

In total, export customers accounted for 68% of ferrous sales volumes in the third quarter, an increase from 55% in the second quarter. Ferrous and nonferrous products were shipped to 16 countries, with Turkey, India and South Korea the top export destinations for ferrous shipments.

Pricing: While market prices stabilized during the quarter, average ferrous selling prices declined $56, or 19%, sequentially, primarily due to the sharp drop in ferrous selling prices during February which impacted third quarter shipments. Ferrous prices increased in the second half of the third quarter. As compared to the prior year quarter, average selling prices declined $107 per ton, or 31%, reflecting the weaker export demand and excess steel production globally. Nonferrous prices declined 9% sequentially and 14% as compared to the prior year quarter, similarly reflecting weaker global demand.

Margins: Adjusted operating income per ton of $2 in the third quarter improved sequentially primarily due to benefits from cost reductions and productivity initiatives, as well as higher shipped volumes, partially offset by lower average selling prices. Due to the rapid decline in ferrous selling prices in February which impacted shipments in the third quarter, average inventory costs did not decline as quickly as purchase prices for raw materials, which led to an estimated $14 per ton, or $13 million, adverse impact of average inventory accounting which approximated the adverse impact in the second quarter. Based on current market trends, estimated adverse inventory effects are expected to be substantially reduced in the fourth quarter. Cost reduction and productivity improvement actions commenced during the third quarter benefited results by approximately $5 million and are expected to further benefit operating performance in the fourth quarter of fiscal 2015 and into fiscal 2016.

Auto Parts Business

Summary of Auto Parts Business Results
($ in millions, volume 000s)
		Quarter
		3Q15					3Q14					Change				2Q15					Change
Revenues		$	60				$	80				(24	)%			$	66				(9	)%
Operating Income (Loss)(1)		$	3				$	8				(59	)%			$	(2	)			NM
Car Purchase Volumes		79					93					(15	)%			78					1	%

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

NM = not meaningful

Revenues: Revenues in the third quarter decreased 9% from the second quarter, primarily reflecting the significant impact of lower nonferrous commodity prices, partially offset by seasonally higher retail activity. Compared to the prior year third quarter, revenues declined 24% due to the significant impact of lower commodity prices and the resulting adverse impact on car purchase volumes.

Margins: Operating income of $3 million, or 5% of revenues, improved substantially from the second quarter, primarily due to seasonally higher retail activity and lower operating costs. Operating performance continued to be adversely impacted by an estimated $2 million from average inventory accounting which is expected to be substantially reduced in the fourth quarter based on current market trends. Recently announced cost reduction and productivity initiatives delivered approximately $4 million of benefits in the third quarter and are expected to further improve operating performance in the fourth quarter of fiscal 2015 and into fiscal 2016. The productivity benefits in the third quarter were partially offset by the impact of lower nonferrous commodity prices of $2 million.

Steel Manufacturing Business

Summary of Steel Manufacturing Business Results
($ in millions, except selling prices; volume 000s of short tons)
		Quarter
		3Q15					3Q14					Change				2Q15					Change
Revenues		$	95				$	102				(7	)%			$	93				2	%
Operating Income		$	4				$	5				(5	)%			$	4				14	%
Avg. Net Sales Prices ($/ST)		$	615				$	686				(10	)%			$	651				(6	)%
Finished Goods Sales Volumes		142					135					5	%			131					8	%
Rolling Mill Utilization		69		%			72		%							76		%

Sales Volumes: Finished steel sales volumes of 142 thousand tons increased 8% from the second quarter and 5% from the prior year third quarter levels, driven by improving nonresidential construction demand which more than offset the impact of imports. Utilization of 69% was lower sequentially due to a scheduled maintenance outage.

Pricing: Average net sales prices for finished steel products decreased by $36 per ton sequentially and $71 per ton as compared to the prior year third quarter, reflecting primarily the sharp drop in scrap prices coming into the quarter.

Margins: Operating income of $4 million increased 14% sequentially due to higher shipped volumes which offset lower average selling prices. As compared to the prior year third quarter, the impact on operating income of the sharp decline in selling prices more than offset the higher sales volumes.

Cost Reduction and Productivity Initiatives

As previously announced, during the third quarter the Company commenced two strategic initiatives:

(i) A cost reduction, capacity reduction and productivity improvement initiative which, in the aggregate, is intended to improve financial performance by $60 million annually by the end of 2016; and

(ii) The integration of the Auto Parts and Metals Recycling Businesses into a single division during the fourth quarter of fiscal 2015 which is intended to further optimize the efficiencies in our operating platform, enable additional synergies to be captured throughout our supply chain and global sales channel, and more effectively leverage our shared services platform.

About half of the approximately $60 million in targeted benefits is expected to come from our Metals Recycling Business through a combination of equipment idling, including reduced depreciation, and SG&A reductions. Another approximately 40% is expected to come from our Auto Parts Business through the closing of seven stores, SG&A reductions and productivity improvement initiatives. The balance is expected to come from our Corporate Shared Services Division through the reduction of organizational layers and leveraging support functions across the Company's operating platform. We delivered approximately $10 million of benefits in the third quarter and expect a quarter of the total savings target, or $15 million, to be achieved in the fourth quarter of fiscal 2015, with the remainder to be delivered by the end of fiscal 2016.

In connection with our cost reduction initiatives, we expect to incur restructuring charges of approximately $10 million.

Corporate Items

Consolidated SG&A costs were reduced by $6 million, or 12%, as compared to the prior year quarter primarily due to benefits from the cost savings and productivity initiatives and a legal settlement resulting in an insurance reimbursement of $2 million in the third quarter of fiscal 2015.

Operating cash flow of $64 million during the third quarter enabled a continuation in the reduction of debt outstanding while funding our quarterly dividend and capital expenditures. Net debt of $254 million at the end of the third quarter was $51 million lower than at the end of the second quarter.

The Company anticipates a full year effective tax rate of 4%, primarily driven by estimated valuation allowances on deferred tax assets.

Discontinued Operations

In the third quarter of fiscal 2015, the Company closed seven Auto Parts stores, of which six are reported in discontinued operations and one store was absorbed into the operations of existing retail stores nearby. The loss in the fiscal 2015 third quarter from discontinued operations, net of tax, was $1 million, or $0.05 per share, which compares to a loss from discontinued operations of $0.01 per share, in the third quarter of fiscal 2014.

Analysts' Conference Call: Third Quarter of Fiscal 2015

A conference call and slide presentation to discuss results will be held today, June 30, 2015, at 11:30 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 Nine Months Ended
			May 31, 2015				February 28, 2015				May 31, 2014				May 31, 2015				May 31, 2014
REVENUES:
Metal Recycling Business:
	Ferrous sales		$	257,635			$	243,999			$	386,826			$	839,212			$	1,165,487
	Nonferrous sales		101,386				91,055				123,407				305,033				357,394
	Other sales		4,020				5,489				6,608				15,616				19,959
	TOTAL MRB SALES		363,041				340,543				516,841				1,159,861				1,542,840
Auto Parts Business			60,291				65,995				79,602				203,577				227,695
Steel Manufacturing Business			94,939				93,126				102,039				283,284				271,618
Intercompany sales and eliminations			(50,962		)		(62,215		)		(63,009		)		(188,340		)		(196,990		)
	Total Revenues		$	467,309			$	437,449			$	635,473			$	1,458,382			$	1,845,163
OPERATING INCOME (LOSS):
Adjusted Metal Recycling Business(1)			$	2,298			$	(1,218	)		$	3,736			$	8,583			$	15,860
Auto Parts Business			3,145				(1,970		)		7,702				3,812				19,981
Steel Manufacturing Business			4,343				3,799				4,594				14,350				9,912
	Adjusted segment operating income(2)		9,786				611				16,032				26,745				45,753
Corporate expense			(7,554		)		(8,488		)		(10,393		)		(25,035		)		(29,096		)
Intercompany eliminations			1,007				(1,534		)		252				(924		)		(966		)
	Adjusted operating income (loss)		3,239				(9,411		)		5,891				786				15,691
Goodwill impairment charge			—				(141,021		)		—				(141,021		)		—
Other asset impairment charges			(1,281		)		(43,838		)		(532		)		(45,119		)		(1,460		)
Restructuring charges and other exit-related costs			(5,978		)		(5,394		)		(2,762		)		(11,964		)		(6,444		)
Resale or modification of previously contracted shipments			—				(1,347		)		—				(6,928		)		—
	Total operating income (loss)		$	(4,020	)		$	(201,011	)		$	2,597			$	(204,246	)		$	7,787

(1) Adjusted operating income excludes the impact of goodwill and other asset impairments, and the resale or modification of certain previously contracted ferrous bulk shipments. See Non-GAAP Financial Measures for reconciliation to U.S. GAAP.

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

SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
		For the Three Month Ended												For the Nine Months Ended
		May 31, 2015				February 28, 2015				May 31, 2014				May 31, 2015				May 31, 2014
Revenues		$	467,309			$	437,449			$	635,473			$	1,458,382			$	1,845,163
Cost of goods sold		424,312				406,649				584,420				1,338,976				1,693,565
Selling, general and administrative		39,798				42,167				45,309				126,696				136,831
Income from joint ventures		(40		)		(609		)		(147		)		(1,148		)		(924		)
Goodwill impairment charge		—				141,021				—				141,021				—
Other asset impairment charges		1,281				43,838				532				45,119				1,460
Restructuring charges and other exit-related costs		5,978				5,394				2,762				11,964				6,444
Operating income (loss)		(4,020		)		(201,011		)		2,597				(204,246		)		7,787
Interest expense		(2,375		)		(2,295		)		(2,529		)		(7,044		)		(7,944		)
Other income, net		84				1,993				492				3,011				604
Income (loss) from continuing operations before income taxes		(6,311		)		(201,313		)		560				(208,279		)		447
Income tax benefit (expense)		(1,396		)		9,673				3,894				8,171				3,266
Income (loss) from continuing operations		(7,707		)		(191,640		)		4,454				(200,108		)		3,713
Loss from discontinued operations, net of tax		(1,234		)		(4,242		)		(330		)		(6,314		)		(2,315		)
Net income (loss)		(8,941		)		(195,882		)		4,124				(206,422		)		1,398
Net (income) loss attributable to noncontrolling interests		(687		)		240				(1,014		)		(1,318		)		(2,726		)
Net income (loss) attributable to SSI		$	(9,628	)		$	(195,642	)		$	3,110			$	(207,740	)		$	(1,328	)
Net income (loss) per share attributable to SSI:
Basic:
Income (loss) per share from continuing operations attributable to SSI		$	(0.31	)		$	(7.08	)		$	0.13			$	(7.46	)		$	0.04
Loss per share from discontinued operations attributable to SSI			(0.05	)			(0.16	)			(0.01	)			(0.23	)			(0.09	)
Net income (loss) per share attributable to SSI		$	(0.36	)		$	(7.24	)		$	0.12			$	(7.69	)		$	(0.05	)
Diluted:
Income (loss) per share from continuing operations attributable to SSI		$	(0.31	)		$	(7.08	)		$	0.13			$	(7.46	)		$	0.04
Loss per share from discontinued operations attributable to SSI			(0.05	)			(0.16	)			(0.01	)			(0.23	)			(0.09	)
Net income (loss) per share attributable to SSI		$	(0.36	)		$	(7.24	)		$	0.12			$	(7.69	)		$	(0.05	)
Weighted average number of common shares:
Basic		27,043				27,020				26,853				27,003				26,811
Diluted		27,043				27,020				27,017				27,003				26,811
Dividends declared per common share		$	0.1875			$	0.1875			$	0.1875			$	0.5625			0.5625

SCHNITZER STEEL INDUSTRIES, INC.
SELECTED OPERATING STATISTICS
(Unaudited)
														Fiscal																					Fiscal
		1Q15				2Q15				3Q15				2015					1Q14				2Q14				3Q14				4Q14				2014
Metals Recycling Business
Ferrous Selling Prices ($/LT)(1)
Domestic		$	344			$	305			$	245			$	300				$	356			$	374			$	354			$	349			$	358
Export		$	319			$	286			$	236			$	278				$	344			$	361			$	341			$	352			$	350
Average		$	328			$	295			$	239			$	286				$	348			$	365			$	346			$	351			$	353
Ferrous Sales Volume (LT)
Domestic		333,798				334,263				307,480				975,541					322,531				328,005				344,526				328,308				1,323,369
Export		604,626				415,765				663,456				1,683,847					655,072				701,259				679,009				763,608				2,798,948
Total		938,424				750,028				970,936				2,659,388					977,603				1,029,264				1,023,535				1,091,916				4,122,317
Nonferrous Average Price ($/LB)(1)		$	0.85			$	0.81			$	0.74			$	0.80				$	0.89			$	0.86			$	0.86			$	0.85			$	0.86
Nonferrous Sales Volume (LB, in 000s)		127,473				108,126				130,337				365,936					123,941				135,935				139,273				155,659				554,808
Steel Manufacturing Business
Sales Prices ($/ST)(1)(2)
Average		$	683			$	651			$	615			$	648				$	657			$	676			$	686			$	688			$	677
Sales Volume (ST)(2)
Rebar		79,065				74,928				100,413				254,406					83,618				83,838				85,633				101,076				354,165
Coiled Products		40,361				49,403				35,477				125,241					38,322				25,656				41,892				46,682				152,552
Merchant Bar and Other		7,698				6,705				5,659				20,062					6,222				5,305				6,984				7,979				26,490
Total		127,124				131,036				141,549				399,709					128,162				114,799				134,509				155,737				533,207
Rolling Mill Utilization		72		%		76		%		69		%		73		%			65		%		67		%		72		%		76		%		70		%
Auto Parts Business
Car purchase volumes (000)		92				78				79				249					86				80				93				101				360
Number of self-service locations at end of quarter		56				56				55				55					56				55				55				56				56

(1) Price information is shown after a reduction for the cost of freight incurred to deliver the product to the customer

(2) Excludes billet sales

SCHNITZER STEEL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		May 31, 2015				August 31, 2014
Assets
Current Assets:
Cash and cash equivalents		$	8,929			$	25,672
Accounts receivable, net		117,311				189,359
Inventories		197,008				216,172
Other current assets		39,089				32,729
Total current assets		362,337				463,932
Property, plant and equipment, net		432,309				523,433
Goodwill and other assets		215,653				367,845
Total assets		$	1,010,299			$	1,355,210
Liabilities and Equity
Current liabilities:
Short-term borrowings		$	637			$	523
Other current liabilities		126,848				176,747
Total current liabilities		127,485				177,270
Long-term debt		262,746				318,842
Other long-term liabilities		83,754				83,121
Equity:
Total Schnitzer Steel Industries, Inc. ("SSI") shareholders' equity		532,066				770,784
Noncontrolling interests		4,248				5,193
Total equity		536,314				775,977
Total liabilities and equity		$	1,010,299			$	1,355,210

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures as defined under SEC rules such as adjusted consolidated operating income (loss), adjusted MRB operating income (loss), adjusted net income (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
		3Q15					2Q15					3Q14
Consolidated Operating Income (Loss):
Operating Income (Loss)		$	(4	)			$	(201	)			$	3
Goodwill impairment charge		—					141					—
Other asset impairment charges		1					44					1
Restructuring charges and other exit-related costs		6					5					3
Resale or modification of previously contracted shipment		—					1					—
Adjusted Operating Income (Loss)(1)		$	3				$	(9	)			$	6
MRB Operating Income (Loss):
Operating Income (Loss)		$	1				$	(187	)			$	4
Goodwill impairment charge		—					141					—
Other asset impairment charges		1					43					—
Resale or modification of previously contracted shipment		—					1					—
Adjusted Operating Income (Loss)(1)		$	2				$	(1	)			$	4

Net Income (Loss) from continuing operations attributable to SSI
($ in millions)		Quarter
		3Q15					2Q15					3Q14
Net Income (Loss) from continuing operations attributable to SSI		$	(8	)			$	(191	)			$	3
Goodwill impairment charge, net of tax		—					130					—
Other asset impairment charges, net of tax		1					44					—
Restructuring charges and other exit-related costs, net of tax		7					6					1
Resale or modification of previously contracted shipment, net of tax		—					3					—
Adjusted Net Income (Loss) from continuing operations attributable to SSI(1)		$	—				$	(8	)			$	5
(1) May not foot due to rounding.

Diluted Earnings per share attributable to SSI
($ per share)		Quarter
		3Q15					2Q15					3Q14
Net Income (Loss) per share attributable to SSI		$	(0.36	)			$	(7.24	)			$	0.12
Less: Loss per share from discontinued operations attributable to SSI		(0.05		)			(0.16		)			(0.01		)
Net Income (Loss) per share from continuing operations attributable to SSI(1)		(0.31		)			(7.08		)			0.13
Goodwill impairment charge, net of tax, per share		—					4.80					—
Other asset impairment charges, net of tax, per share		0.05					1.63					0.01
Restructuring charges and other exit-related costs, net of tax, per share		0.25					0.23					0.05
Resale or modification of previously contracted shipment, net of tax, per share		—					0.12					—
Adjusted Diluted EPS from continuing operations attributable to SSI(1)		$	—				$	(0.30	)			$	0.19
(1) May not foot due to rounding.

Debt, Net of Cash
($ in thousands)
		May 31, 2015				August 31, 2014
Short-term borrowings		$	637			$	523
Long-term debt, net of current maturities		262,746				318,842
Total debt		263,383				319,365
Less: cash and cash equivalents		8,929				25,672
Total debt, net of cash		$	254,454			$	293,693

About Schnitzer Steel Industries, Inc.

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.

Safe Harbor for Forward-Looking Statements

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 our expectations, intentions, beliefs and strategies regarding the future, which may include statements regarding trends, cyclicality and changes in the markets we sell into; strategic direction or initiatives; 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; the anticipated value of goodwill or other intangible assets; planned capital expenditures; liquidity positions; ability to generate cash from continuing operations; the potential impact of adopting new accounting pronouncements; expected results, including pricing, sales volumes and profitability; obligations under our retirement plans; benefits, savings or additional costs from business realignment, cost containment and productivity improvement programs; and the adequacy of accruals.

When used in this report, the words "believes," "expects," "anticipates," "intends," "assumes," "estimates," "evaluates," "may," "could," "opinions," "forecasts," "future," "forward," "potential," "probable," and similar expressions are intended to identify forward-looking statements.

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" of our most recent annual report on Form 10-K and quarterly report on Form 10-Q. Examples of these risks include: potential environmental cleanup costs related to the Portland Harbor Superfund site; the 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; difficulties associated with acquisitions and integration of acquired businesses; the impact of goodwill impairment charges; the impact of long-lived asset impairment charges; the realization of expected cost reductions related to restructuring initiatives; the benefit of business realignment, cost containment and productivity improvement programs and strategic initiatives; the inability of customers to fulfill 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; the impact of imports of foreign steel into the U.S.; inability to realize expected benefits from investments in technology; freight rates and availability of transportation; 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.

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