SCHN 2017 Annual Report

SCHNITZER STEEL INDUSTRIES, INC. 32 / Schnitzer Steel Industries, Inc. Form 10-K 2017 Results of Operations For the Year Ended August 31, % Increase / (Decrease) ($ in thousands) 2017 2016 2015 2017 vs 2016 2016 vs 2015 Revenues: Auto and Metals Recycling $ 1,363,618 $ 1,060,592 $ 1,513,315 29 % (30)% Cascade Steel and Scrap 339,620 304,032 435,113 12 % (30)% Intercompany revenue eliminations (1) (15,647) (12,081) (33,029) 30 % (63)% Total revenues 1,687,591 1,352,543 1,915,399 25 % (29)% Cost of goods sold: Auto and Metals Recycling 1,158,154 905,863 1,372,456 28 % (34)% Cascade Steel and Scrap 322,013 283,006 402,374 14 % (30)% Intercompany cost of goods sold eliminations (1) (15,659) (12,881) (32,152) 22 % (60)% Total cost of goods sold 1,464,508 1,175,988 1,742,678 25 % (33)% Selling, general and administrative expense: Auto and Metals Recycling 116,461 106,691 122,279 9 % (13)% Cascade Steel and Scrap 14,321 12,571 12,998 14 % (3)% Corporate (2) 40,788 29,646 35,315 38 % (16)% Total selling, general and administrative expense 171,570 148,908 170,592 15 % (13)% (Income) from joint ventures: Auto and Metals Recycling (2,218) (386) (696) 475 % (45)% Cascade Steel and Scrap (1,456) (433) (794) 236 % (45)% Total (income) from joint ventures (3,674) (819) (1,490) 349 % (45)% Goodwill impairment charges: Auto and Metals Recycling — 8,845 141,021 NM (94)% Other asset impairment charges (recoveries), net: Auto and Metals Recycling (184) 16,411 44,374 NM (63)% Cascade Steel and Scrap (533) 4,192 — NM NM Corporate — 79 745 NM (89)% Total other asset impairment charges (recoveries), net (717) 20,682 45,119 NM (54)% Operating income (loss): Auto and Metals Recycling 91,405 23,168 (166,119) 295 % (114)% Cascade Steel and Scrap 5,275 4,696 20,535 12 % (77)% Segment operating income (loss) 96,680 27,864 (145,584) 247 % (119)% Restructuring charges and other exit-related activities (3) 109 (6,781) (13,008) NM (48)% Corporate expense (2) (40,788) (29,725) (36,060) 37 % (18)% Change in intercompany profit elimination (4) 12 800 (877) (99)% NM Total operating income (loss) $ 56,013 $ (7,842) $ (195,529) NM (96)% _____________________________ NM = Not Meaningful (1) AMR sells a small portion of its recycled ferrous metal to CSS at prices that approximate local market rates. These intercompany revenues and cost of goods sold are eliminated in consolidation. (2) Corporate expense consists primarily of unallocated expenses for management and certain administrative services that benefit both reportable segments. (3) Restructuring charges consist of expense for severance, contract termination and other restructuring costs that management does not include in its measurement of the performance of the reportable segments. Other exit-related activities consist of asset impairments and accelerated depreciation, net of gains on exit- related disposals, related to site closures. (4) Intercompany profits are not recognized until the finished products are sold to third parties; therefore, intercompany profit is eliminated while the products remain in inventory.