FORT WAYNE, Ind., April 20, 2016 /PRNewswire/ -- Steel Dynamics,
Inc. (NASDAQ/GS: STLD) today announced first quarter 2016 net
income of $63 million, or
$0.26 per diluted share, on net sales
of $1.7 billion. Comparatively,
prior year first quarter net sales were $2.0
billion, with adjusted net income of $40 million, or $0.17 per diluted share, which excluded the
impact of call premium and other finance expenses associated with
the March 2015 senior note repayment
of $0.04 per diluted share.
Sequential fourth quarter 2015 net sales were $1.6 billion, with adjusted net income of
$22 million, or $0.09 per diluted share, which excluded the
impact of non-cash goodwill and asset impairment charges related to
the company's metals recycling operations of $1.13 per diluted share.
"During the first quarter 2016, positive changes in the flat
roll steel supply environment resulted in significantly improved
sequential consolidated operating earnings, which increased over
175 percent to $132 million," said
Mark D. Millett, President and Chief
Executive Officer. "Flat roll steel import levels have declined and
customer inventory levels are better matched with actual demand
requirements, supporting higher domestic steel mill
utilization. The domestic steel demand outlook is relatively
unchanged and steady, with the heavy equipment, agricultural and
energy markets remaining weak, while automotive continues to be
strong and construction recovers.
"We saw improved volumes and profitability in all of our
operating platforms for the first quarter 2016," continued
Millett. "Our metals recycling operations returned to
profitability as demand for ferrous scrap improved, which resulted
in higher shipments and selling values. Likewise, our
fabrication operations were supported with continued steady demand
from the non-residential construction sector, achieving near record
quarterly earnings. We are optimistic, as domestic steel
industry dynamics seem to be shifting favorably. Our cash
generation continues to be strong, resulting in record liquidity of
$2.2 billion at the end of
March 2016, providing a firm
foundation for growth."
Additional First Quarter 2016 Comments
First quarter 2016 operating income for the company's steel
operations increased 104 percent to $136
million sequentially, based on a 17 percent improvement in
shipments as volumes increased at each of the company's steel
locations. However, average steel product pricing
declined more than consumed raw material scrap costs, resulting in
steel metal spread compression. The first quarter 2016
average product selling price for the company's steel operations
decreased $40 to $574 per ton. The average ferrous scrap
cost per ton melted decreased $21 to
$184 per ton.
First quarter 2016 operating income attributable to the
company's sheet products increased over 180 percent when compared
to the sequential fourth quarter. Although metal spread
declined, the company's flat roll shipments increased 20 percent,
which more than offset the margin reduction. Operating income
from long products increased 46 percent, as shipments improved nine
percent, more than offsetting the decrease in metal spread related
to product price decline. The company's steel production
utilization rate was 88 percent in the first quarter 2016, compared
to 73 percent in the sequential quarter and compared to the
domestic industry utilization rate of only 71 percent.
The company's metals recycling operations achieved a meaningful
improvement in profitability, moving from an operating loss of
$16 million in the fourth quarter
2015 (which excludes non-cash asset impairment charges of
$428.5 million) to operating income
of $6 million in the first quarter
2016, based on both improved metal spread and shipments. The
company's ferrous shipments increased nine percent and metal
margins improved over 30 percent, as demand and pricing improved
due to both increased domestic steel mill utilization and scrap
export demand.
The company's fabrication operations continued its strong
financial performance, achieving first quarter 2016 operating
income of $32 million which was only
surpassed by the record level of $37
million set in the third quarter of last year.
Sustained demand resulted in a slight increase in quarterly
shipments, which partially offset modest metal spread compression,
as average product pricing declined more than raw material steel
costs.
The company generated strong cash flow from operations of
$289 million during the first quarter
2016. Including its undrawn revolver and available cash of
$977 million, the company achieved
record liquidity of $2.2 billion at
March 31, 2016. As evidence to
the confidence in the company's continued long-term cash flow
generation capability, the company's board of directors approved a
two percent increase in Steel Dynamics first quarter 2016 cash
dividend, increasing it to $0.14 per
common share. The company believes this reflects the strength
of its capital structure and liquidity profile, and the continued
optimism and confidence in its future prospects.
Outlook
"Steel customer inventory levels have moderated and import
levels have declined," said Millett. "When combined with
steady underlying steel demand, the result has been some
improvement in domestic steel producer utilization, yet industry
utilization still remains below historical performance due to the
issue of unfairly traded steel imports. The proximity of our
Columbus Flat Roll Division to the Gulf Region combined with the
2015 rapid decline in the energy sector, severely impacted
Columbus' profitability last year,
reducing its annual EBITDA by approximately 75 percent, when
compared to 2014 annual proforma performance of $315 million. The successful market and
product diversification we achieved at Columbus during 2015 is one of the key
differentiators for anticipated improved profitability in
2016. As a testament, Columbus achieved near record quarterly
shipments in the first quarter 2016 and increased value-added
shipments almost 80 percent compared to prior year's first
quarter.
"We continue to strengthen our financial position through strong
cash flow generation and the execution of our long-term
strategy. We also have additional earnings catalysts,
including macro-industry improvements and several others which are
company specific. We are well-positioned for growth.
Customer focus, coupled with our market diversification and
low-cost operating platforms, support our ability to maintain our
best-in-class industry performance. We believe we are uniquely
poised to capitalize on growth opportunities in a challenging
environment that will benefit our customers, shareholders,
employees and communities."
Supplemental
Quarterly Information
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
4Q 2015
|
External Net
Sales
|
|
(Dollars in
thousands)
|
|
|
|
Steel
|
|
|
$
1,217,176
|
|
$
1,385,419
|
|
$
1,091,029
|
|
Fabrication
|
|
180,055
|
|
161,023
|
|
182,884
|
|
Metals
Recycling
|
|
269,407
|
|
425,596
|
|
270,625
|
|
Other
|
|
|
74,663
|
|
75,397
|
|
46,508
|
|
|
|
Consolidated
|
|
$
1,741,301
|
|
$
2,047,435
|
|
$
1,591,046
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
|
Steel
|
|
|
$
135,692
|
|
$
116,996
|
|
$
66,580
|
|
Fabrication
|
|
32,075
|
|
21,361
|
|
30,193
|
|
Metals
Recycling
|
|
6,360
|
|
(480)
|
|
(444,547)
|
|
|
|
Operations
|
|
174,127
|
|
137,877
|
|
(347,774)
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash Amortization
of Intangible Assets
|
|
(7,250)
|
|
(6,323)
|
|
(6,178)
|
|
Profit Sharing
Expense
|
|
(9,291)
|
|
(4,598)
|
|
(4,427)
|
|
Non-segment
Operations
|
|
(25,621)
|
|
(27,185)
|
|
(22,764)
|
|
|
|
Consolidated
Operating Income
|
|
131,965
|
|
99,771
|
|
(381,143)
|
|
Non-cash Asset
Impairment Charges
|
|
-
|
|
-
|
|
428,500
|
|
|
|
Adjusted Operating
Income (Loss) (2)
|
|
$
131,965
|
|
$
99,771
|
|
$
47,357
|
|
|
|
|
|
|
|
|
|
|
External
Shipments
|
|
|
|
|
|
|
|
Steel (In
tons)
|
|
2,121,872
|
|
1,816,371
|
|
1,777,597
|
|
|
|
Steel Shipped to
Internal Locations
|
|
155,337
|
|
132,649
|
|
167,921
|
|
|
|
|
|
|
|
|
|
|
|
Fabrication(In
tons)
|
|
145,126
|
|
112,729
|
|
141,731
|
|
Metals
Recycling
|
|
|
|
|
|
|
|
|
Nonferrous (In
000's of pounds)
|
|
242,560
|
|
241,580
|
|
241,442
|
|
|
Ferrous (In gross
tons)
|
|
503,787
|
|
642,080
|
|
564,868
|
|
|
Ferrous Scrap
Shipped to Internal Steel Mills
|
|
801,367
|
|
590,921
|
|
629,543
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Information
|
|
|
|
|
|
|
|
Steel
|
|
|
|
|
|
|
|
|
Average External
Sales Price (Per ton shipped)
|
$
574
|
|
$
763
|
|
$
614
|
|
Average Ferrous
Cost (Per ton melted)
|
|
$
184
|
|
$
312
|
|
$
205
|
|
|
Flat Roll
Shipments
|
|
|
|
|
|
|
|
|
|
Butler
Division
|
|
712,138
|
|
579,493
|
|
601,502
|
|
|
|
Columbus
Division
|
|
756,933
|
|
564,241
|
|
627,934
|
|
|
|
The Techs
|
|
188,269
|
|
145,934
|
|
149,358
|
|
|
Long Product
Shipments
|
|
|
|
|
|
|
|
|
|
Structural and Rail
Division-Structural
|
|
234,046
|
|
237,644
|
|
216,659
|
|
|
|
-Rail
|
|
58,942
|
|
66,708
|
|
55,775
|
|
|
|
Engineered Bar
Products Division
|
|
125,200
|
|
156,366
|
|
99,257
|
|
|
|
Roanoke Bar
Division
|
|
125,471
|
|
125,123
|
|
119,208
|
|
|
|
Steel of West
Virginia
|
|
76,209
|
|
73,511
|
|
75,825
|
|
|
|
Total Steel Shipments
(In tons)
|
|
2,277,208
|
|
1,949,020
|
|
1,945,518
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Production
(In tons)
|
|
2,363,252
|
|
1,949,263
|
|
1,982,315
|
|
|
|
|
|
|
|
|
|
|
|
Fabrication
|
|
|
|
|
|
|
|
Average External Sales
Price (Per ton shipped)
|
$
1,241
|
|
$
1,428
|
|
$
1,290
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
EBITDA
|
|
|
|
|
|
|
|
|
Earnings (Loss)
Before Taxes
|
|
$
96,714
|
|
$
40,492
|
|
$
(417,923)
|
|
|
Net Interest
Expense
|
|
36,150
|
|
42,874
|
|
36,107
|
|
|
Depreciation
|
|
65,225
|
|
64,860
|
|
65,621
|
|
|
Amortization
|
|
7,250
|
|
6,323
|
|
6,178
|
|
|
Non-controlling
Interest
|
|
1,419
|
|
3,807
|
|
3,077
|
|
|
|
EBITDA
|
|
206,758
|
|
158,356
|
|
(306,940)
|
|
|
Non-cash
Adjustments
|
|
|
|
|
|
|
|
|
|
Unrealized Hedging
(Gain) Loss
|
319
|
|
3,215
|
|
435
|
|
|
|
Inventory
Valuation
|
192
|
|
4,990
|
|
2,349
|
|
|
|
Asset Impairment
Charges
|
|
-
|
|
-
|
|
428,500
|
|
|
|
Equity Based
Compensation
|
|
6,979
|
|
7,199
|
|
9,947
|
|
|
|
Financing
Expenses
|
|
-
|
|
3,326
|
|
-
|
|
|
|
Adjusted
EBITDA
|
|
$
214,248
|
|
$
177,086
|
|
$
134,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount excludes
4Q 2015 Metals Recycling goodwill, intangibles, and property,
plant, and equipment impairments of $428.5 million.
|
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss
first quarter operating and financial results on Thursday, April 21, 2016, at 10:00
a.m. Eastern Time. You may access the call and find
dial-in information on the Investors section of the company's
website at www.steeldynamics.com. A replay of the call will
be available on our website until 11:59 p.m. Eastern Time on
April 26, 2016.
About Steel Dynamics, Inc.
Steel Dynamics, Inc. is one of the largest domestic steel
producers and metals recyclers in the
United States based on estimated annual steelmaking and
metals recycling capability, with annual sales of $7.6 billion in 2015, approximately 7,500
employees, and manufacturing facilities primarily located
throughout the United States
(including six electric-arc-furnace steel mills, ten steel coating
lines, an iron production facility, approximately 75 metals
recycling locations and eight steel fabrication plants).
Note Regarding Non-GAAP Financial Measures
The company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). Management
believes that Adjusted Operating Income, EBITDA and Adjusted
EBITDA, non-GAAP financial measures, provide additional meaningful
information regarding the company's performance and financial
strength. Non-GAAP financial measures should be viewed in addition
to, and not as an alternative for, the company's reported results
prepared in accordance with GAAP. In addition, because not
all companies use identical calculations, EBITDA included in this
release may not be comparable to similarly titled measures of other
companies.
Forward-Looking Statements
This press release contains some predictive statements about
future events, including statements related to conditions in the
steel and metallic scrap markets, Steel Dynamics' revenues, costs
of purchased materials, future profitability and earnings, and the
operation of new or existing facilities. These statements, which we
generally precede or accompany by such typical conditional words as
"anticipate," "intend," "believe," "estimate," "plan," "seek,"
"project" or "expect," or by the words "may," "will," or "should,"
are intended to be made as "forward-looking," subject to many risks
and uncertainties, within the safe harbor protections of the
Private Securities Litigation Reform Act of 1995. These statements
speak only as of this date and are based upon information and
assumptions, which we consider reasonable as of this date,
concerning our businesses and the environments in which they
operate. Such predictive statements are not guarantees of future
performance, and we undertake no duty to update or revise any such
statements. Some factors that could cause such forward-looking
statements to turn out differently than anticipated include:
(1) the effects of uncertain economic conditions;
(2) cyclical and changing industrial demand; (3) changes
in conditions in any of the steel or scrap-consuming sectors of the
economy which affect demand for our products, including the
strength of the non-residential and residential construction,
automotive, appliance, pipe and tube, and other steel-consuming
industries; (4) fluctuations in the cost of key raw materials
(including steel scrap, iron units, and energy costs) and our
ability to pass-on any cost increases; (5) the impact of
domestic and foreign import price competition;
(6) unanticipated difficulties in integrating or starting up
new or acquired businesses; (7) risks and uncertainties
involving product and/or technology development; and
(8) occurrences of unexpected plant outages or equipment
failures.
More specifically, we refer you to Steel Dynamics' more detailed
explanation of these and other factors and risks that may
cause such predictive statements to turn out differently, as set
forth in our most recent Annual Report on Form 10-K under the
headings Special Note Regarding Forward-Looking Statements
and Risk Factors, in our quarterly reports on Form 10-Q
or in other reports which we from time to time file with the
Securities and Exchange Commission. These are available publicly on
the SEC website, www.sec.gov, and on the Steel Dynamics website,
www.steeldynamics.com.
STEEL DYNAMICS,
INC.
CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
(in thousands,
except per share data)
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
March
31,
|
|
December
31,
|
|
2016
|
|
2015
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
|
1,741,301
|
$
|
2,047,435
|
$
|
1,591,046
|
Costs of goods
sold
|
|
1,505,265
|
|
1,860,393
|
|
1,446,839
|
Gross
profit
|
|
236,036
|
|
187,042
|
|
144,207
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
87,530
|
|
76,350
|
|
86,245
|
Profit
sharing
|
|
9,291
|
|
4,598
|
|
4,427
|
Amortization of
intangible assets
|
|
7,250
|
|
6,323
|
|
6,178
|
Asset impairment
charges
|
|
-
|
|
-
|
|
428,500
|
Operating income
(loss)
|
|
131,965
|
|
99,771
|
|
(381,143)
|
|
|
|
|
|
|
|
Interest expense, net
of capitalized interest
|
|
37,043
|
|
43,087
|
|
36,616
|
Other expense
(income), net
|
|
(1,792)
|
|
16,192
|
|
164
|
Income
(loss) before income taxes
|
|
96,714
|
|
40,492
|
|
(417,923)
|
|
|
|
|
|
|
|
Income taxes
(benefit)
|
|
35,396
|
|
13,538
|
|
(161,607)
|
Net
income (loss)
|
|
61,318
|
|
26,954
|
|
(256,316)
|
Net loss attributable
to noncontrolling interests
|
|
1,419
|
|
3,807
|
|
3,077
|
Net
income (loss) attributable to Steel Dynamics, Inc.
|
$
|
62,737
|
$
|
30,761
|
$
|
(253,239)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share attributable to Steel Dynamics, Inc.
stockholders
|
$
|
0.26
|
$
|
0.13
|
$
|
(1.04)
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
243,202
|
|
241,535
|
|
242,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share attributable to Steel Dynamics, Inc. stockholders,
including the effect of assumed conversions when
dilutive
|
$
|
0.26
|
$
|
0.13
|
$
|
(1.04)
|
|
|
|
|
|
|
|
Weighted average
common shares and
equivalents outstanding (Note 1)
|
|
244,608
|
|
242,867
|
|
242,558
|
|
|
|
|
|
|
|
Dividends declared
per share
|
$
|
0.1400
|
$
|
0.1375
|
$
|
0.1375
|
|
|
|
|
|
|
|
Note 1
Excludes the impact of common share equivalents outstanding for the
three months ended December 31, 2015, because the impact on diluted
loss per share is anti-dilutive.
|
STEEL DYNAMICS,
INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands)
|
|
|
|
|
March
31,
2016
|
|
|
December
31,
2015
|
|
|
|
(unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and
equivalents
|
|
$
|
976,951
|
|
$
|
727,032
|
Accounts
receivable, net
|
|
|
689,201
|
|
|
613,605
|
Inventories
|
|
|
1,066,823
|
|
|
1,149,390
|
Other
current
assets
|
|
|
41,258
|
|
|
47,914
|
Total current
assets
|
|
|
2,774,233
|
|
|
2,537,941
|
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
|
2,914,186
|
|
|
2,951,210
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
19,603
|
|
|
19,565
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
|
272,528
|
|
|
278,960
|
|
|
|
|
|
|
|
Goodwill
|
|
|
395,872
|
|
|
397,470
|
|
|
|
|
|
|
|
Other
assets
|
|
|
15,220
|
|
|
16,936
|
Total
assets
|
|
$
|
6,391,642
|
|
$
|
6,202,082
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
413,575
|
|
$
|
283,355
|
Income
taxes payable
|
|
|
9,960
|
|
|
2,023
|
Accrued
expenses
|
|
|
226,741
|
|
|
233,232
|
Current maturities of long-term debt
|
|
|
22,770
|
|
|
16,680
|
Total current liabilities
|
|
|
673,046
|
|
|
535,290
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
2,575,528
|
|
|
2,577,976
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
|
416,260
|
|
|
400,770
|
Other
liabilities
|
|
|
19,302
|
|
|
16,595
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
|
126,340
|
|
|
126,340
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common
stock
|
|
|
639
|
|
|
638
|
Treasury
stock, at cost
|
|
|
(392,348)
|
|
|
(396,455)
|
Additional
paid-in capital
|
|
|
1,115,008
|
|
|
1,110,253
|
Retained
earnings
|
|
|
1,993,910
|
|
|
1,965,291
|
Total Steel Dynamics, Inc. equity
|
|
|
2,717,210
|
|
|
2,679,727
|
Noncontrolling interests
|
|
|
(136,043)
|
|
|
(134,616)
|
Total equity
|
|
|
2,581,166
|
|
|
2,545,111
|
Total liabilities and
equity
|
|
$
|
6,391,642
|
|
$
|
6,202,082
|
STEEL DYNAMICS,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
(in
thousands)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
Net
income
|
$
|
61,318
|
$
|
26,954
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
73,985
|
|
72,822
|
Equity-based compensation
|
|
8,405
|
|
8,543
|
Deferred income
taxes
|
|
17,087
|
|
16,717
|
Changes in certain assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(75,596)
|
|
133,084
|
Inventories
|
|
82,566
|
|
164,999
|
Accounts
payable
|
|
112,659
|
|
(127,053)
|
Income taxes receivable/payable
|
|
13,993
|
|
16,265
|
Other assets and
liabilities
|
|
(5,518)
|
|
(77,624)
|
Net cash provided by operating
activities
|
|
288,899
|
|
234,707
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
Purchase
of property, plant and equipment
|
|
(27,708)
|
|
(33,351)
|
Other
investing activities
|
|
3,054
|
|
1,663
|
Net cash used in investing activities
|
|
(24,654)
|
|
(31,688)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
Issuance
of current and long-term
debt
|
|
20,452
|
|
50,093
|
Repayment
of current and long-term
debt
|
|
(4,232)
|
|
(427,451)
|
Exercise
of stock options proceeds, including
related tax effect
|
|
2,892
|
|
1,753
|
Contributions from (distributions to) noncontrolling
|
|
|
|
|
investors, net
|
|
(8)
|
|
(29)
|
Dividends
paid
|
|
(33,425)
|
|
(27,766)
|
Debt
issuance costs
|
|
(5)
|
|
-
|
Net cash used in financing
activities
|
|
(14,326)
|
|
(403,400)
|
|
|
|
|
|
Increase
(decrease) in cash and
equivalents
|
|
249,919
|
|
(200,381)
|
Cash and
equivalents at beginning of period
|
|
727,032
|
|
361,363
|
|
|
|
|
|
Cash and
equivalents at end of period
|
$
|
976,951
|
$
|
160,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure information:
|
|
|
|
|
Cash paid
for interest
|
$
|
26,286
|
$
|
40,094
|
Cash paid
for federal and state income taxes, net
|
$
|
699
|
$
|
18,539
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/steel-dynamics-reports-first-quarter-2016-results-300254951.html
SOURCE Steel Dynamics, Inc.