43 / Schnitzer Steel Industries, Inc. Form 10-K 2021 Share Repurchase Program Pursuant to our share repurchase program as amended in 2001, 2006, and 2008, we were authorized to repurchase up to nine million shares of our Class A common stock. As of August 31, 2021, we had authorization to repurchase up to a remaining 706 thousand shares of our Class A common stock when we deem such repurchases to be appropriate. We may repurchase our common stock for a variety of reasons, such as to optimize our capital structure and to offset dilution related to share-based compensation arrangements. We consider several factors in determining whether to make share repurchases including, among other things, our cash needs, the availability of funding, our future business plans, and the market price of our stock. We did not repurchase any shares of our common stock during fiscal 2021. Assessment of Liquidity and Capital Resources Historically, our available cash resources, internally generated funds, credit facilities, and equity offerings have financed our acquisitions, capital expenditures, working capital, and other financing needs. We generally believe our current cash resources, internally generated funds, existing credit facilities, and access to the capital markets will provide adequate short-term and long-term liquidity needs for working capital, capital expenditures, dividends, share repurchases, investments and acquisitions, joint ventures, debt service requirements, environmental obligations, and other contingencies. However, in the event of a sustained market deterioration, we may need additional liquidity which would require us to evaluate available alternatives and take appropriate steps to obtain sufficient additional funds. There can be no assurances that any such supplemental funding, if sought, could be obtained or, if obtained, would be adequate or on acceptable terms. On October 1, 2021, during the first quarter of our fiscal 2022, we closed a transaction under a definitive agreement with Columbus Recycling entered on August 12, 2021, to acquire eight metals recycling facilities. The cash purchase price was approximately $107 million, subject to adjustment for acquired net working capital relative to an agreed-upon benchmark, as well as other adjustments. We funded the business acquisition using cash on hand and borrowings under our existing credit facilities. See “Acquisition of Columbus Recycling” in Note 18 – Subsequent Events in Part II, Item 8 of this report for further detail. Contractual Obligations We have certain contractual obligations to make future payments. The following table summarizes future obligations related to debt and leases as of August 31, 2021 (in thousands): Payment Due by Period 2022 2023 2024 2025 2026 Thereafter Totals Contractual Obligations Credit facilities(1) $ — $ 60,000 $ — $ — $ — $ — $ 60,000 Interest payments on credit facilities(2) $ 1,050 $ 1,030 $ — $ — $ — $ — $ 2,080 Other debt, including interest(3) $ 2,468 $ 2,618 $ 1,875 $ 1,875 $ 225 $ 74 $ 9,135 Finance leases, including interest $ 1,865 $ 1,792 $ 1,498 $ 714 $ 595 $ 1,286 $ 7,750 Operating leases(4) $ 25,519 $ 24,021 $ 20,000 $ 14,703 $ 11,351 $ 64,784 $160,378 (1) Credit facilities include the principal amount of borrowings outstanding under bank secured revolving credit facilities, which mature in August 2023. (2) Interest payments on credit facilities are based on interest rates in effect as of August 31, 2021. As contractual interest rates and the amount of debt outstanding is variable in certain cases, actual cash payments may differ from the estimates provided. (3) Other debt obligations primarily relate to an equipment purchase, the contract consideration for which includes an obligation to make future monthly payments to the vendor in the form of licensing fees. For accounting purposes, such obligation is treated as a partial financing of the purchase price by the equipment vendor. Monthly payments commence when the equipment is placed in service and continue for a period of four years thereafter. (4) Operating lease payments reflect those embedded in the measurement of our operating lease liabilities and, thus, include future lease payments for the remaining non-cancellable period of the lease together with periods covered by renewal (or termination) options which we are reasonably certain to exercise (or not to exercise). These operating lease payments do not include certain tax, insurance, and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year. Also, we have excluded future minimum lease payments for leases that have been executed but have not commenced as of August 31, 2021. In addition to future obligations related to debt and leases presented in the table above, we have certain material cash requirements, including but not limited to commitments for capital expenditures. See “Capital Expenditures” within “Liquidity and Capital Resources” above in this Item 7 for discussion of our planned investment in capital expenditures in fiscal 2022, a portion of which represents contractual commitments that existed as of the end of our fiscal 2021. We also had open purchase orders as of August 31, 2021 for purchases of primarily fuels and lubricants, machinery and equipment components and parts, and consumables used in our operations of approximately $60 million, nearly all of which require payment of cash in our fiscal 2022.
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