SCHN 2017 Annual Report

SCHNITZER STEEL INDUSTRIES, INC. 33 / Schnitzer Steel Industries, Inc. Form 10-K 2017 We operate our business across two reportable segments: AMR and CSS. Additional financial information relating to these reportable segments is contained in Note 18 - Segment Information in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report. Auto and Metals Recycling For the Year Ended August 31, % Increase / (Decrease) ($ in thousands, except for prices) 2017 2016 2015 2017 vs 2016 2016 vs 2015 Ferrous revenues $ 843,222 $ 625,517 $ 934,057 35% (33)% Nonferrous revenues 394,977 330,351 449,815 20% (27)% Retail and other revenues 125,419 104,724 129,443 20% (19)% Total segment revenues 1,363,618 1,060,592 1,513,315 29% (30)% Cost of goods sold 1,158,154 905,863 1,372,456 28% (34)% Selling, general and administrative expense 116,461 106,691 122,279 9% (13)% (Income) from joint ventures (2,218) (386) (696) 475% (45)% Goodwill impairment charges — 8,845 141,021 NM (94)% Other asset impairment charges (recoveries), net (184) 16,411 44,374 NM (63)% Segment operating income (loss) $ 91,405 $ 23,168 $ (166,119) 295% NM Average recycled ferrous metal sales prices ($/LT): (1) Domestic $ 236 $ 188 $ 261 26% (28)% Foreign $ 244 $ 196 $ 265 24% (26)% Average $ 242 $ 193 $ 264 25% (27)% Ferrous sales volume (LT, in thousands): Domestic 948 859 1,003 10% (14)% Foreign 2,197 2,040 2,183 8% (7)% Total ferrous sales volume (LT, in thousands) 3,145 2,899 3,186 9% (9)% Average nonferrous sales price ($/pound) (1)(2) $ 0.63 $ 0.60 $ 0.74 5% (19)% Nonferrous sales volumes (pounds, in thousands) (2) 540,791 473,737 539,850 14% (12)% Cars purchased (in thousands) (3) 411 319 337 29% (5)% Number of auto parts stores at period end 53 52 55 2% (5)% Outbound freight included in cost of goods sold $ 97,400 $ 77,477 $ 110,789 26% (30)% _____________________________ LT = Long Ton, which is 2,240 pounds NM = Not meaningful (1) Price information is shown after netting the cost of freight incurred to deliver the product to the customer. (2) Average sales price and volume information excludes platinum group metals ("PGMs") in catalytic converters. (3) Cars purchased by auto parts stores only. Fiscal 2017 compared with fiscal 2016 AMR Segment Revenues Revenues in fiscal 2017 increased by 29% compared to fiscal 2016 primarily due to improved market conditions for recycled metals in the domestic and export markets resulting in higher average net selling prices and increased sales volumes compared to the prior year, including benefits from increased sales diversification. Average net selling prices for shipments of ferrous scrap metal in fiscal 2017 increased by 25% compared to the prior year. Ferrous sales volumes in fiscal 2017 also increased by 9% compared to the prior year due to higher export and domestic shipments in fiscal 2017. Additionally, nonferrous sales volumes in fiscal 2017 were higher by 14% compared to the prior year, and nonferrous average net selling prices were higher by 5%.