Q3 2020 Schnitzer Steel Industries Inc Earnings Call

July 1, 2020

[music].

2020 earnings release call and webcast.

This time, all participants I know they send all nemos after the speaker presentation, there will be a question and answer session.

Good question. During this session you want me to press Star one on your telephone. Please be advised that today's conference is being recorded if you're quite anybody assistance. Please press star Zero I would now like Dan the company's guest speaker today, Michael Bennett Investor Relations. Please go ahead Sir.

Thank you Joe Good morning, I am Michael but at the company's senior director of Investor Relations.

I am happy to welcome you to Schnitzer Steel's earnings presentation for the third quarter fiscal 2020.

In addition to today's audio comments, we've issued a press release and posted a set of slides [laughter] both of which you can access on our website sensor steel dot com or ask PHN dot 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 then the company's form 10-Q, which would be filed later today.

As we note on slide two we may make forward looking statements on our call today, such as their 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 and the forward looking statement is contained in flight too 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 gap in the appendix to a slide presentation.

Now, let me turn the call over to Talmer 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. Thank you all for joining us on our third quarter fiscal 2020 conference call.

I'd like to start the call today by thanking our employees for their extraordinary efforts this quarter.

I've worked tirelessly through this pandemic continuously serving our customers and communities supporting our suppliers and demonstrating the critical and essential role if our business and industry.

The operational and financial results, we announced this morning reflect their agility as well as the strength of our culture and the resiliency of our platform.

I'd like to turn to a discussion of our response to the cobot 19 crisis.

Dress, our third quarter financial results and update you on the strategic initiatives, we have underway.

Richard will follow with more detail on our segment performance, our capex investments and our capital structure.

All wrap up and then we'll take your questions.

And one last note before we begin.

We are encouraged by the gradual restart of economic activity in the U.S. and globally, which support stronger macro trends of higher scrap demand supply flows and prices.

However, it is still early in our quarter end given the uncertainty caused by cold at 19.

We will not be providing forward looking guidance at this time.

So let's start now by turning to slide four.

[noise], we have operated continuously through the code at 19 crisis. We are included in the critical infrastructure sector and related supply chain as defined by the U.S. Department of Homeland security.

And all our operating facilities were identified as essential businesses by state and local authorities in the U.S., including Puerto Rico and Canada.

This reflects our company's important role in supplying the raw materials and finished steel products for the construction of critical infrastructure.

Equally as important the essential business designation reflects our role in supporting the health and safety of our communities by recycling materials that would otherwise be diverted to landfills or be disposed of in a less environmentally sustainable way.

[noise] early on we deployed health safety and wellness protocols rolled out training and engaged in steady communications across our platform to ensure the safety of our people our customers our suppliers and all who visit our sites.

These actions include pre entry thermal screening.

Wearing face coverings.

Social distancing.

Frequently cleaning our work sites and washing our hands and remote work arrangements where applicable.

The early and comprehensive adoption of these protocols has enabled us to keep our employees safe avoid the spread of the virus and our facilities and continue to operate throughout this pandemic.

Well implementing these new work protocols and practices.

Our team members not lost their focus on operational safety.

During the quarter they continued to deliver improved safety performance.

And as many of you may recall, our last fiscal year fiscal 19 was the safest year recorded in our company's history I want to congratulate our team for their continued progress in further improving our T.I.R. trends through the first nine months of the fiscal year.

Now before turning to the next slide I'd like to take a moment to highlight the generosity of our team members, who have used their ingenuity and our global networks to provide support to our communities and to people in need.

During this crisis, we have procured and donated thousands of mouth to local hospitals.

Led successful suit drives with the support of our customer and donated to local food banks and the American Red Cross.

There are countless other ways that our people have gone above and beyond during this pandemic, including through our paid time off donation program.

Converting our core values into committed actions.

So now, let's turn to slide five.

Just because we have stayed focused on health and safety throughout the covert 19 pandemic.

We've also not wavered from our commitment to progress our sustainability goals.

Which are focused on people.

Planet and profit.

So let me spend a few minutes on people and planet before I move onto a review of our financial results.

What steps shifts or apart from many other businesses is that sustainability has been at the core of what we do and how we operate since our founding and Nineteena sex.

Our company was built on a culture and by a workforce that have always been broad based and strengthened by diversity.

I want to reaffirm in the clear as possible language my commitment and our company's commitment.

Tool workplace based on respect fairness and equal opportunity. This can only exist if were a place where characteristics such as race gender religion, and sexual orientation did not to find talent or opportunity.

We are dedicated to developing a diverse workforce at all levels of our organization.

And ensuring a culture of inclusiveness, because we believe a wide range of perspectives and talent is crucial to creating a supportive culture for our employees and stronger business results. Beginning in 2018. For example, we introduced a cultural awareness program across our company to engage in.

Conversations and training about topics, such as unconscious bias discrimination and the importance of fostering a positive inclusive culture at work there.

The comfort and confidence that many of our employees gains as a result of this program enabled them to begin a series of new conversations about systemic racism in our society.

We've taken a number of other steps over the last several years, but there's more that we can and will do.

To read more about how we're integrating diversity and inclusion into all aspects of our business and measuring our progress I encourage you to read our sustainability report, which you can access on our website.

Our commitment to environmental sustainability the planet.

Means that we are continuing to invest in our manufacturing and recycling facilities to incorporate state of the art environmental and safety controls.

Today, our facilities are powered by 90% carbon free electricity.

And we have published and are tracking towards our multiyear goals to reduce our greenhouse gas emissions.

During the quarter, we were again recognized for various aspects of our sustainability program.

Want to acknowledge the contributions of all our team members for the excellent progress, we're making in delivering on our sustainability commitments.

So, let's turn now to slide six to review our third quarter results.

Earlier this morning, we announced our fiscal 23rd quarter adjusted earnings per share of five cents.

During one of the most challenging quarters in recent times, we delivered positive segment operating performance generated strong operating cash flow.

Reduced our net debt.

And issued 405th consecutive quarterly dividend.

In the third quarter.

CSS almost doubled its operating income sequentially driven by a combination of new sales initiatives higher utilization.

Lower raw material cost and productivity benefits.

I am are delivered solid results in a market environment, where ferrous and nonferrous scrap prices dropped to levels not seen since 2016.

Our team kept its focus on what we're calling the five seats.

Covert 19.

Customers.

Commercial initiatives.

Costs and cash flow.

This focus underpinned our ability to keep our people safe optimize our sales align our operating cost with lower supply and production volumes.

Effectively manage working capital progress, our strategic priorities and return capital to our shareholders through our dividend.

I've already discussed how we deployed multiple operating protocols in order to work safely through the cobot 19 pandemic.

Keeping our workforce and all who visit our sites safe has been and we'll continue to be our top priority.

The actions that we've already taken have shown that we can move quickly and effectively as the situation requires and support our communities in the process of doing so.

M. ours and CSS is strong customer focus came through very clearly in our third quarter performance.

See assesses flexible and responsive customer service and the sales initiatives that is implemented over the last year enabled it to maintain finished steel sales volumes at levels that were almost equal year over year, notwithstanding a very challenging economic environment.

At am are well overall demand for ferrous and nonferrous materials declined due to the cobot 19 shutdowns.

Our global sales diversification strategy and logistics expertise provided us with the expanded reach to serve customers in 21 countries during a very challenging quarter.

Ours, we aim ours retail sales of recycled autoparts also made a significant contribution to the quarter as pick and pull showed its counter cyclical nature and continued to attract strong retail demand.

As a company we benefit from an operating platform, where the majority of our costs are variable we have multiple levers available to us and most importantly, the agility to adjust them in order to manage through volatile environments.

During the quarter lower prices for both ferrous and nonferrous metals in combination with the economic slowdown and restrictions on suppliers related to covert 19.

Severely constricted the supply of scrap metal, including end of life vehicles.

Our team successfully implemented commercial initiatives and cost adjustments to partly offset the impact of lower prices and lower supply flows.

During this uniquely challenging quarter, our focus on productivity also did not falter. This quarter. We delivered ahead of schedule. The full run rate of the targeted productivity initiatives, We announced last October. We also achieved early benefits from the ongoing transition to our one she wants.

[noise] or model.

And lastly, our effective working capital management enabled us to deliver strong operating cash flow and reduce our net debt, while continuing to invest in our strategic capex projects and return capital to our shareholders.

So now, let's turn to slide seven to review market trends and conditions in more detail.

As you can see or as you will see in the upper left hand chart in March export and domestic ferrous sales prices fell over $50 per ton or approximately 20%, reaching multiyear lows.

By May prices had begun to recover but we're still materially below pre coded levels.

Looking at export activity off the east coast during the quarter Turkish demand was driven by two trends.

Turkish government fiscal incentives to support export and production oriented growth in an effort to revive its economy.

And bill it demand from China, due to higher iron ore prices and logistics challenges with Chinese domestic scrap.

Demand off the West Coast from Asia during the quarter was relatively broad based as mills purchased inventory in anticipation of the lifting of Lockdowns.

Higher steel mill utilization and government stimulus.

Demand in the domestic market during the quarter was impacted by the suspension of auto production and other manufacturing activity. The pricing increase in may occurred as all grades of scrap or in shorter supply than what was needed.

June domestic scrap prices varied from region to region with prices sideways to slightly down.

But as you s. manufacturing, including auto production restarts post the cobot 19 shutdowns higher demand should return to the domestic market.

Turning to the nonferrous market likes a ferrous markets. The recent price movements have largely been influenced by the impacts of cobot 19, and the gradual restart of economic activity in the U.S. and globally.

During the quarter copper and aluminum prices reached multiyear lows, reducing purchase prices to levels that inhibited efficient collection.

Prices began to recover in late March and April as confidence improved following the U.S. stimulus programs and the reopening of China's economy.

For both the ferrous and nonferrous markets the economic consequences of the Cobot 19 crisis have been weak scrap supply flows and lower prices.

We expect to see this reverse as the U.S. and global economies reopened although we expect near term volatility to continue due to concerns over the speed and success of the Reopenings.

So, let's turn now to slide eight to discuss some of the longer term trends underlying demand for scrap.

There is a significant degree of uncertainty in the near term market conditions due to covert 19.

Despite the current volatility however, the long term drivers of scrap demand remain intact due to the greater emphasis on recycling. The continued growth in global E F steelmaking capacity.

And the increased metal intensity of lower carbon based economies.

As you can see on this slide on a year over year basis, U.S. exports of ferrous scrap metal are up significantly with Turkey, Mexico, Malaysia, and Bangladesh, showing particularly strong trends, although the past few months have been weaker than the average due to the impact of covered 19.

In addition, the proportion of Eas steelmaking has been expanding and is projected to increase in the U.S. as well as in China and other Asian economies.

And do it is lower carbon footprint.

Demand for metal based products produced with recycled materials is expected to increase significantly in the years ahead.

These long term trends underpin our strategic initiatives as well discuss on the next slide.

We have kept a strong focus on our strategic priorities notwithstanding the disruption caused by covert 19 and as a result, we are already experiencing benefits. So now let's turn to slide nine to review these activities.

Our strategic initiatives address three dynamics cyclicality.

Structural change and long term drivers of scrap demand.

We're addressing each of these dynamics through productivity improvements and a more agile operating model.

Technology investments and higher volumes and increased offerings of products and services.

Let's discuss each of these and turn.

At the beginning of our fiscal year, we announced a productivity improvement program centered on production and functional cost efficiencies improved asset management and logistics, we delivered the full run rate of savings and benefits from this program ahead of schedule.

In March we announced our plan to transition to a functionally based integrated operating model, which we call. The one should answer model. This was the culmination of our evolution to a more simplified operating platform to improve our efficiency and enable greater focus on the crew.

Vehicle drivers of our business.

Beginning in the first quarter fiscal 21, our operations sales services and other functional capabilities will be consolidated at an enterprise level and we will report our financial results in a single segment.

This new structure will enable us to create a dedicated platform to accelerate growth in products and services to further standardize our operations to ensure our low cost operating position and promote operational excellence.

To solidify the productivity and cost efficiency savings and benefits from our productivity program.

And to increase the connectivity between shared services and operations.

Second as Richard will describe in more detail.

Our investments in advanced metal recovery technologies continue to move forward, although we have seen some equipment delivery and permitting delays due to covert 19. Once these projects are completed.

We'll be able to improve the efficiency of our processes increase our throughput.

Extract more materials from our shredding process and produce furnace ready products importantly.

These investments will also support our sustainability objectives of increasing recycling and reducing waste.

And the third leg of our strategic growth initiative is focused on increasing our sales of products and services, we've seen an increasing demand from customers for a wider range of products and services, including furnace ready nonferrous products.

Recycled auto parts and logistics and related services, we're proactively working with companies and communities in their efforts to improve the sustainability of their own supply chains.

And reduce their carbon footprint.

Together, we believe that these initiatives position us well to significantly grow our revenues improve our margins and continue generating strong operating cash flow through the cycle.

So now let me turn it over to Richard for a more detailed review of our segment performance and our strategic Capex investments.

Richard.

Thank you Tom rule and good morning.

I'll begin with an update on the sponsors over technology strategy.

We're continuing our strong focus on or program to replace upgrade.

Sure Nonferrous metal recovery technologies.

Engineering design hermanson.

Equipment manufacturing and delivery.

As well as construction or all critical elements or club.

Even in the current cool that situation, we are still making progress.

<unk> cable processing plants are installed operational unexpected to make a positive contribution to your fourth quarter performance.

We expect to complete the installation or meet your mute nonferrous processing systems onto heavy media plans that several of our major facilities.

Between August Twentytwenty.

You cruel Twentytwenty one.

Once implemented most of the nonferrous Cromer shredding operations will be processed through the new equipment.

With increased metal recovery, we expect or nonferrous volumes home shredding through increased by approximately 20%.

We also aim to increase poodle oak smelting, that's another technology employees, which enables us to convert or zorba, so higher cool to foremost ready products.

We expect or total capital investment for these advanced metal recovery projects to be in the range old easy to $90 million.

Oh, which we have spent $50 million to deep.

On the expected spend up to $20 million in the remainder of this fiscal year.

Once the new Nonferrous technology is implemented we expect the benefit to operating income to be at least $8 per ferrous tone.

We plan to reach this run rate by the end of fiscal 21 once all the new plants are fully operational.

With installations planned to EMCORE.

Over the next several quarters in fiscal 21, we expect so cheap source of the target eat dollar per tonne profitability on the sort of the targeted increase in Union Fearless Williams.

Now, let's turn to slide 11 to discuss or for sales platform.

Demand for recycled ferrous metal in the third quarter came from customers across the globe, who placed orders for their production needs or to rebuild inventory as economies began to reopen.

The destination poor support or shipments remained open for business and we used a global network of logistics expertise to make seals and deliver a products to customers and several continents, including Asia and Europe.

As well as to the U.S., Mexico and Canada.

In the third quarter, we used are flexible platform to sell to sorts of or fitness products to the export market.

Was the remains are sold domestically, including two in mill.

Our toll country destinations for ferrous exports were Bangladesh, Turkey and Vietnam.

No as Tom to sleep 12, <unk>, the auto loans sort of sales platform.

In the first three quarters for school to into.

Our continued focus on seals their justification.

Resulted in those shipping main people assume overblown fitness products two countries, although when China.

I was called more stringent regulations Trina has been imposing kratos on although duties on scrap them pools.

<unk> is still short on raw material to support economic growth.

To meet this demand some processors moved well established new operations and other countries.

This shift in demand patterns has enabled us to continue to expand or nonferrous customer base.

During the third quarter, we sold are known fitness products to 14 countries.

Including India, South Korea, Malaysia, Taiwan and Thailand.

Trina has also been developing new quality standards for importance crop.

We understand these standards or close to being implemented although the effect of the maybe impacted by believes and finalizing new processes for inspections tariffs on although import duties.

Once implemented we understand that nonferrous pool, but comply with the new quality standards, maybe eligible for import into China.

Without kuta limits.

These structural changes continue to reinforce the importance over technology strategy.

The ability to produce higher volume hornless ready products to meet these changing standards and Gould alone.

Now, let's turn to sleep their team to discuss the operating trends that you more.

Yeah more achieved positive adjusted operating income $5 million or $6 per tone in the third quarter.

Excluding the adverse impact from average inventory or <unk> <unk>.

Approximately $3 per ton.

Adjusted operating income was $9 per tone.

The covert really to economic slowdown led to yield loss performance being will be will or second quarter.

The positive operating income in the third quarter was directly as a result were strong focus on execution skills orders and shipments.

Keeping older facilities open for business and the reduction we twoq. So it just LIBOR floors on to reduce beautiful waterproofing cools like $3 million.

The benefit to our performance from these auctions, partly offset the impact of lower supply on the decrease in places for ferrous and nonferrous unpleasant them group missiles.

Both are forced I'm sort of core proposal the Swiss school year were impacted by sharp drops in marketplaces.

However, despite lower volumes are third quarter, adjusted operating income per tonne, excluding outage inventory or convincing OPENLANE golars compares favorably on the seem basis, two or fourth quarter over $4 per club.

The primary reason for this improvement is benefits from our productivity initiatives that we have implemented since last October.

On a sequential basis average for the selling prices on volumes fell by 8%.

<unk> is known for selling prices and volumes both decreased by 2%.

Despite the reduced economic activity or sales of recycled auto parts were up sequentially by $4 million.

This trend illustrates the counter cyclical benefit over retail stores because demand for mechanical parts has historically increased in weaker economic environments. When auto sales are down on cars are being replaced lists Olson.

No, let's move to slide 14, and discuss operating trends in CSS.

So yes, it achieved strong results in the third quarter with operating income of $7 million almost double will result in the second quarter.

We use the strong focus on sales initiatives and customer service to take advantage of resilient West coast construction demand for long products.

As a result for finished steel sales volumes were only 4% lore sequentially. Despite the disruption from cool.

Sequentially finished steel sales prices were up slightly on C.S.S. was able to expand metal spreads due to the lower scrap price environment.

The steady steel demand also supported strong production on a rolling mill utilization of 91% was well ahead of our second quarter, but how to included some paymode Brooklyn maintenance.

Well the lore scrap price environment reduce the contribution from CSS is recycling operations. This will significantly offset by benefits of productivity initiatives, which reduced production costs an industry any.

Let's move to slide 15, and discuss our capital structure and corporate items.

Operating cash flow in the third quarter was strong $39 million on for the year to date is $56 million.

This performance once again demonstrates our strong track record of delivering positive operating cash flows through the cycle.

We reduced net debt sequentially by $11 million under the ended the quarter or net debt was $121 million.

Or meant Liveris leverage ratio was just 15% on a ratio of net debt to adjusted EBITDA was 1.4 times.

Or the end of the third quarter, we were in full compliance with our debt covenants.

However in light of uncertainty over the strength and timing of economic recovery or the end of June we agreed with other lenders a relaxation over covenants for the next four quarters.

This enables us to continue to navigate the qubits situation.

Run are ongoing business effectively.

I'm completely the rule over critical technology projects.

The cost of amending our credit agreement is not material on for accounting purposes will be spread over the remaining life over facilities.

As a result of this credit amendment and are trained all strong cash flows we intend to p. bike cash that we drew the former credit facility in early April.

Capital expenditures in the third quarter totaled $22 million on for the fiscal year to date or two topics was $59 million.

We expect to spend a total of up to 90 million goals in fiscal Quincy.

This tool to includes up to 50 million goals and growth projects on the bones of $40 million is for maintaining a business.

Including $10 million.

On environmental projects.

Adjusted corporate costs in the third quarter were $8 million.

Under the effective tax rate was a benefit of 20% driven in part by the recognition of tax benefits associated with the federal kills line.

During the quarter, we made further progress and implementing productivity initiatives, the our targets in realized benefits $50 million.

In fiscal 20.

Over the summer Twill billion goals has never been achieved year to date, including $6 million than the third quarter.

We know we expect to exceed original target for this fiscal year.

In connection with these productivity initiatives, we incurred restructuring charges and other exit really to cause or approximately $3 million in the quarter.

These charges are excluded from our adjusted <unk>, Yes.

During the third quarter, we also returned capital to shareholders through your hundred six consecutive quarterly dividend.

Finally, we expect to make the transition to a new one shyness or operating model or the beginning of or for school 21.

Our enterprise level reporting will still includes consolidated revenues costs as she any EBITDA.

Airlinks. We also plan to continue reporting operating statistics, including volumes on selling prices for or meet your products.

As well as expected benefits and returns.

For those strategic initiatives.

Ill now turn the presentation by cohorts of Tomorrow.

Thank you Richard during a rapidly evolving environment that presented unique an unprecedented challenges our third quarter results reflect there was the resiliency of our operations and the agility of our team.

It's worth noting that we're a company that was founded in 19 out of sex and we've experienced downturns and volatility from the great depression to the great recession.

There's a legacy at our company have successfully facing challenges head on and navigating through the toughest of times.

Well the near term outlook is uncertain.

Our team has experienced and managing what we can control in the short term, while continuing to execute on our longer term initiatives.

We have a strong balance sheet with low net leverage and interest expense a strong track record of delivering positive through the cycle operating cash flows and ability to invest in the growth and productivity of our company and an uninterrupted record of returning capital to our shareholders through our dividend.

Our performance can be attributed to the steps we've taken over the past several years and steps, which are currently underway to continually improve our business performance.

With the greater emphasis on recycling the continued growth in global E F steelmaking capacity and the increased metal intensity of lower carbon based economies. The long term outlook for our business and industry is strong.

In closing.

I'd like to thank our employees for their extraordinary efforts. This is a quarter in which you truly demonstrated why we continue to be a leader in our communities and the recycling industry.

Thank you for everything that you're doing to remain safe to keep your families and friends safe and to support your colleagues your communities our company and our country.

Now operator, let's open up the call for questions.

Thank you as a reminder to ask a question you'll need to press star one on your telephone.

So we're trying to your question press the pound key please standby well be compared to Q1 day roster.

As a reminder to ask a question you will need to press star one on your telephone.

I'm not showing any questions at this time.

Well, thank you operator.

With the extended commentary this morning, and I think what we may have or some technical difficulties I want to thank all of you called in today and let you know that we look forward just speaking with you again in October when we report our fourth quarter and our full year fiscal 20 results. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[laughter].

[music].

Ladies and gentlemen, thank you for standing by and welcome to this but there's still third quarter 20 to 20 earnings at least coal and webcast.

I'm all participants I know, it's generally mild after the speaker presentation.

And then answer session.

Good question. During this session you want me to press Star one on your telephone.

Yes.

This conference is being recorded if you're quite right. This which then we just got starts you out I would now like Dan the cockpit guest speaker today.

Michael Bender Investor Relations. Please go ahead Sir.

Thank you threw out good morning, I am Michael but at the company senior director of Investor Relations.

Happy to welcome meter Schnitzer Steel's earnings presentation for the third quarter fiscal 2020.

In addition to today's audio comments, we've issued a press release and posted a set of flights.

So what you can access on our website at sector still dot com or I see a trend dot com.

As we noted on slide two we may make forward looking statements 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 at our forward looking statements.

Additional information concerning factors that could cause actual results to materially differ from those in a forward looking statement, it's concannon flight too 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 gap in the appendix to our slide presentation.

Now, let me turn the call over that time or 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. Thank you all for joining us on our third quarter fiscal 2020 conference call.

I'd like to start the call today by thanking our employees for their extraordinary efforts this quarter.

They've worked tirelessly through this pandemic continuously serving our customers and communities supporting our suppliers and demonstrating the critical and essential role if our business and industry.

The operational and financial results, we announced this morning reflect their agility as well as the strength of our culture and the resiliency of our platform.

I'd like to turn into a discussion of our response to the cobot 19 crisis.

Dress, our third quarter financial results and update you on the strategic initiatives, we have underway.

Richard will follow with more detail on our segment performance, our capex investments and our capital structure.

I'll wrap up and then we'll take your questions.

And one last note before we begin.

We are encouraged by the gradual restart of economic activity in the U.S. and globally, which support stronger macro trends up higher scrap demand supply flows and prices.

However, it is still early in our quarter end given the uncertainty caused by cobot 19.

I will not be providing forward looking guidance at this time.

So let's start now by turning to slide four.

[noise], we have operated continuously through the covert 19 crisis. We are included in the critical infrastructure sector and related supply chain as defined by the U.S. Department of Homeland security.

And all our operating facilities were identified as essential businesses by state and local authorities in the U.S., including Puerto Rico and Canada.

This reflects our company's important role in supplying the raw materials and finished steel products for the construction of critical infrastructure.

These actions include pre entry thermal screening.

Wearing faced covering.

So shall distancing.

Frequently cleaning our work sites and watching our hands and remote work arrangements where applicable.

The early and comprehensive adoption of these protocols has enabled us to keep our employees safe avoid the spread of the virus and our facilities and continue to operate throughout this pandemic.

Well implementing these new York protocols and practices our team members have not lost their focus on operational safety.

During the quarter they continued to deliver improved safety performance.

And as many of you may recall, our last fiscal year fiscal 19 was the safest year recorded in our company's history I want to congratulate our team for their continued progress in further improving our TC IR trends through the first nine months of the fiscal year.

During this crisis, we have procured and donated thousands of masks to local hospitals.

Led successful food drives with the support of our customer and donated to local food banks and the American Red Cross.

There are countless other ways that our people have gone above and beyond during this pandemic, including through our paid time off the nation program.

Converting our core values into committed actions.

So now, let's turn to slide five.

Just because we have stayed focused on health and safety throughout the cobot 19 pandemic.

We've also not wavered from our commitment to progress our sustainability goals.

Which are focused on people.

Planet and profit.

So let me spend a few minutes on people and planet.

Before I move onto a review of our financial results.

What sets schnitzer apart from many other businesses is that sustainability has been at the core of what we do and how we operate since our founding in 19 assets.

Our company was built on a culture and by a workforce that have always been broad based and strengthened by diversity.

I want to reaffirm in the clearest possible language my commitment and our company's commitment.

Tool workplace based on respect fairness and equal opportunity. This can only exist if were a place where characteristics such as race gender religion and sexual orientation did not defined talent or opportunity we are dedicated to developing.

Verse workforce at all levels of our organization and ensuring a culture of inclusiveness, because we believe a wide range of perspectives and talent is crucial to creating a supportive culture for our employees and stronger business results. Beginning in 2018 for example, we introduced.

Cultural awareness program across our company.

Engaged in conversations and training about topics such as unconscious bias discrimination and the importance of fostering a positive inclusive culture at work there.