Schnitzer Steel Industries, Inc.

Thank you for standing by and welcome to the Schnitzer Steel first quarter 2022 earnings release call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Michael Bennett, Investor Relations. Please go ahead, sir.

Thank you, Jonathan, and good morning. I'm Michael Bennett, the company's Vice President of Investor Relations. I am happy to welcome you to Schnitzer Steel's earnings presentation for the first quarter of fiscal year 2022. 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 schnitzersteel.com. Before we start, let me call your attention to the detailed safe harbor statement on slide two. which is also included in our press release and in the company's Form 10-Q, which will be filed later today. As we note on Slide 2, we may make forward-looking statements on our call today, such as our statements about our targets, volume growth, and future margin expansion. Our actual results may differ materially from those projected in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statement is contained in slide two, as well as our press release of today and our Form 10-Q. Please note that we will be discussing some non-GAAP measures during our presentation today. We've 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 Chairman and Chief Executive Officer. She will host the call today with Richard Peach, our Chief Financial Officer and Chief Strategy Officer.

Thank you, Michael. Good morning, everyone, and welcome to our fiscal 22 first quarter earnings call. I hope you all had a good holiday break and, like me, are looking forward to a healthier, safer, and even stronger 2022. The results that we will discuss today are Schnitzer's best first quarter earnings on record. They would not have been possible without all our employees, from our frontline workers to those who've been working remotely, living our core values of safety, sustainability, and integrity. Many of our employees are listening to this call today. I'd like to congratulate you on your first quarter achievements and to thank you for your extraordinary efforts in serving our customers and supporting our suppliers in the face of significant COVID-related labor and logistics constraints. Our success is the direct result of how you have embraced these values, and your performance reflects the collaboration, innovation, and resilience that define our culture and our company. I'm very proud of what you've accomplished during these most challenging times. On our call today, I'll review our quarterly financial results and the market and macroeconomic trends affecting our business. I'll also provide an update on the strategic initiatives and investments we have underway to address evolving industry dynamics and create long-term value through the cycle. Richard will then provide more detail on our financial performance, CapEx investments, and capital structure. I'll wrap up, and then we'll take your questions. So, let's turn now to slide four to get started. As one of North America's largest metal recyclers, Sustainability is at the core of what we do and how we operate, and has been since our founding in 1906. In mid-December, we issued our eighth annual sustainability report, which highlights our company's commitment to creating a more sustainable future by supplying our customers with high-quality, low-carbon, recycled metal, and finished steel products. This year's sustainability report describes the significant progress we've made against our people, planet, and profit goals. In fiscal 21, among other accomplishments, we achieved our safest record, our safest year on record. We reached our goal of 100 percent net carbon-free electricity use at our facilities ahead of our fiscal 22 target, and we reduced our scope one and two emissions by 19 percent versus our 2019 baseline. We were honored this year to be recognized by a number of organizations for our leading performance in sustainability. I encourage you to visit our website to view our latest sustainability report, which describes how we help conserve resources, how we innovate to use less water and energy and to generate less waste, how we create a safe, ethical, engaging, and inclusive workplace, and how we give back to the communities where we operate. So now let's turn to slide five. Earlier this morning, we announced our fiscal 22 first quarter adjusted earnings per share of $1.58, almost triple the results from a year ago, and our best first quarter performance on record. Our first quarter results benefited from the strong global demand for recycled metals, a robust West Coast market for finished steel products, and average selling prices for ferrous, non-ferrous, and finished steel products at or near multi-year highs. Our Q1 adjusted EBITDA per ferrous ton was $68, far exceeding the $38 per ton of a year ago. Our year-over-year ferrous and non-ferrous sales volumes increased by 9% and 11%, respectively, and benefited from our acquisition of the Columbus recycling assets on October 1st. Our steel mill continued to ramp up production during the quarter as operations resumed following the melt shop outage in late May. Rolling mill utilization was on an increasing trend throughout the quarter, with November utilization reaching 91 percent. Our balance sheet remained strong, which enabled us to continue our uninterrupted record of returning capital to shareholders through the issuance of our 111th consecutive quarterly dividend. Our record results this quarter would have been even stronger had several contracted shipments for November not slipped into December due to COVID-19-related supply chain disruptions. While we expect to see a strong year-over-year increase in contracted ferrous and non-ferrous sales in Q2, at volume levels consistent with Q1, the supply chain impact on shipments is currently difficult to predict. As a result, we will provide our forward-looking guidance later in the quarter, around the end of February. Let's turn now to slide six for a review of pricing trends for recycled metals and finished steel products. As you can see on this slide, market prices for ferrous scrap during Q1 remained near multi-year highs. These favorable pricing levels are supported by cyclical and structural trends, including the increased use of recycled metals and the global focus on decarbonization. Export sales off the East Coast were broad-based during the quarter. Ferris prices peaked at multi-year highs in mid-October, then softened in mid-November largely due to a slowdown in demand from Turkey. However, prices still remained at historically strong levels. Prices for export sales off the West Coast during the quarter trended similarly to the East Coast, with the mid-November softening driven by lower steel prices and lower billet and scrap import demand from China. On the domestic front, fair scrap demand and prices remained high, as steel capacity utilization reached 85% during the quarter, exceeding pre-pandemic levels. Copper and aluminum scrap prices traded at or near multi-year highs, benefiting from tight supplies, shipping constraints, and deployment of low carbon technologies. Prices for PGM metals, however, fell during the quarter, primarily due to reduced auto production. Demand for finished steel continued to increase, with prices reaching their highest levels on record. Supply flows remained robust in Q1, despite trucking and COVID-related labor shortages in certain markets. Since the end of the quarter, We have seen normal seasonality in supply flows with reported trading levels for ferrous, non-ferrous, and finished steel products higher than a year ago. Let's turn now to slide seven to discuss some of the longer-term demand trends for recycled products and services. As we have discussed on previous earnings calls, decarbonization is a powerful structural driver of demand for recycled metals. Recycled metals require less carbon to produce than mined metals, and many low carbon technologies are widely acknowledged to be more metal intensive. The use of recycled metals is recognized as an important strategic solution for companies, industries, and governments that are focused on carbon reduction. It's a differentiator for metal producers and fabricators, and it is a critical part of every community's commitment to supporting a circular economy and decreasing material going to landfills. We can see how some of these trends have translated into higher ferrous scrap metal usage in the U.S. and globally by looking at the charts on this slide. EAF's field-making capacity, which uses scrap as its primary raw material, has been expanding in the U.S. and globally and is projected to increase even further. Increasing the use of recycled metals is a great example of how old economy tools can lead the way to decarbonization of the new economy. Let's turn now to slide eight to review the strategic actions we have underway, which are aligned with these long cycle trends. This quarter's results reflect benefits from our strategic actions to leverage decarbonization trends, including increased customer demand for recycled metals and product optionality, as well as productivity and volume growth initiatives to drive expanded profitability. There are three examples I'd like to highlight this morning. First, our acquisition of eight metals recycling facilities from Columbus Recycling, which expands our platform in the robust southeast regional market with meaningful synergies. Combined with our existing facilities, this acquisition increases our footprint to 22 operating facilities in the southeast and 102 across North America. On an annual basis, these operations should increase our total ferrous sales volumes by about 7%. We also continued to progress our technology investments in advanced metal recovery systems at our major recycling operations. Extracting more non-ferrous metals, including copper and aluminum, from our shredding activities is a significant value-added process and is directly aligned with global demand trends. We expect the benefits from these projects to increase our non-ferrous volumes and revenues, to lower our operating costs and improve our margins, to expand our product offerings and customer base, and to support our sustainability objectives of increasing recycling and reducing waste. And third, our productivity initiatives that we undertake as part of our continuous improvement culture. This year, our focus is on efficiencies in processing, procurement, and pricing. to offset the inflationary environment that we're all experiencing. Our record first quarter results benefited from our team's skill and focus on this third leg of our strategic plan. Now, before turning it over to Richard, I'd like to highlight that on December 8th, we experienced a fire at our metals recycling facility in Everett, Massachusetts. There were no injuries, and property damage and loss were limited to our facility's shredder equipment and building. There was also no impact to our first quarter results because the incident occurred after the end of the quarter. Based on our current repair schedule, we expect to resume shredding operations within this quarter. We also expect that our insurance will cover most of the repair and replacement costs and a significant amount of lost income. So now, let me turn it over to Richard for a more detailed review of our financial and operating performance. Richard?