FORT WAYNE, Ind., April 22, 2019 /PRNewswire/ -- Steel Dynamics,
Inc. (NASDAQ/GS: STLD) today announced first quarter 2019 financial
results. The company reported first quarter 2019 net sales of
$2.8 billion and net income of
$204 million, or $0.91 per diluted share.
Comparatively, prior year first quarter net income was
$228 million, or $0.96 per diluted share, with net sales of
$2.6 billion. Sequential fourth
quarter 2018 net income was $270
million, or $1.17 per diluted
share, which included additional company-wide performance-based
compensation of $0.04 per diluted
share and lower earnings of $0.10 per
diluted share, associated with planned maintenance outages at the
company's liquid pig iron production facility and its two flat roll
steel mills. Excluding these items, the company's fourth
quarter adjusted net income was $302
million, or $1.31 per diluted
share.
"The team delivered a strong first quarter performance in a
somewhat challenging flat roll steel pricing environment," said
Mark D. Millett, President and Chief
Executive Officer. "A downward trend in flat roll steel
prices began in the second half of 2018, and continued through
mid-first quarter 2019, reaching an inflection point in February
2019. The teams were able to increase shipments and offset
some of the margin compression, resulting in first quarter 2019
consolidated operating income of $292
million and adjusted EBITDA of $382
million. The continued stabilization and improvement
in flat roll steel prices are having a positive impact, resulting
in increased flat roll order activity and solid order
backlogs. We are seeing continued strength in the automotive,
energy and industrial sectors, and as evidenced by strong steel
fabrication backlogs, strength in non-residential
construction."
The company generated cash flow from operations of $182 million during the first quarter 2019 and
maintained liquidity of $2.2 billion
at March 31, 2019. On
March 1, 2019, the company used
available cash of $93 million to fund
the purchase of a 75 percent controlling interest of United Steel
Supply, a leading distributor of painted GalvalumeĀ® flat roll
steel used for roofing and siding applications.
As evidence of the confidence in the company's sustainable
long-term cash flow generation capability, the board of directors
approved a 28 percent increase in the company's first quarter 2019
cash dividend, reflecting the strength of the company's capital
foundation and liquidity profile. The company also
repurchased $84 million of its common
stock during the first quarter of 2019.
2019 Comments
First quarter 2019 operating income for the company's steel
operations was $312 million, or 22
percent lower than sequential fourth quarter 2018 results.
The decline in earnings resulted from metal spread compression
driven by lower flat roll steel pricing, which more than offset
increased overall steel shipments. The first quarter 2019
average product selling price for the company's steel operations
decreased $38 to $902 per ton. The average ferrous scrap
cost per ton melted only decreased $5
to $338 per ton.
First quarter 2019 operating income from the company's metals
recycling operations increased to $20
million, compared to $17
million in the sequential fourth quarter, based on improved
recycled nonferrous shipments and average pricing.
Conversely, recycled ferrous shipments and metal spread declined
modestly in the quarter.
First quarter 2019 operating income from the company's steel
fabrication operations was a strong $21
million, or 39 percent higher than sequential fourth quarter
results. Earnings improved as higher product pricing and
lower raw material steel input costs, resulted in expanded profit
margins which more than offset lower shipments related to inclement
weather conditions that occurred during the first quarter.
The steel fabrication platform order backlog remains strong, and
customers remain optimistic concerning non-residential construction
projects heading into the summer season.
Outlook
"We believe the market dynamics are in place for domestic steel
consumption to continue to increase this year," said Millett.
"Based on domestic steel demand fundamentals and continued customer
optimism, we believe North American steel consumption will
experience steady growth. In combination with our existing
and newly announced expansion initiatives, we believe there are
firm drivers for our continued growth. We are excited about
our planned flat roll steel mill, and the anticipated long-term
value creation it will bring through geographic and value-added
product diversification. We plan for the new steel mill to have
product capabilities beyond existing EAF flat roll steel producers
today, competing even more effectively with the integrated steel
model and foreign competition. We have targeted regional
markets that represent over 27 million tons of relevant flat roll
steel consumption, which includes the growing Mexican flat roll
market. This facility should have a meaningful competitive
advantage in those regions.
"We continue to strengthen our financial position through strong
cash flow generation and the execution of our long-term strategy.
We are well-positioned for growth and remain focused on delivering
long-term shareholder value through organic and transactional
growth opportunities," concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss
first quarter 2019 operating and financial results on Monday, April 22, 2019, at 10:00
a.m. Eastern Daylight 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 Daylight
Time on April 27, 2019.
About Steel Dynamics, Inc.
Steel Dynamics 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 facilities located throughout
the United States, and in
Mexico. Steel Dynamics produces
steel products, including hot roll, cold roll, and coated sheet
steel, structural steel beams and shapes, rail, engineered
special-bar-quality steel, cold finished steel, merchant bar
products, specialty steel sections and steel joists and deck. In
addition, the company produces liquid pig iron and processes and
sells ferrous and nonferrous scrap.
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 Net Income, Adjusted Diluted Earnings Per
Share, 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 and Adjusted 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, manufacturing, appliance,
pipe and tube, and other steel-consuming industries; (4)
fluctuations in the cost of key raw materials and supplies
(including steel scrap, iron units, zinc, graphite electrodes, 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 or assets; (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: Investors:
SEC Filings.
Steel Dynamics,
Inc.
|
CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Three Months
Ended
|
|
Ended
|
|
March
31,
|
|
December
31,
|
|
2019
|
|
2018
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
2,817,435
|
|
$
|
2,603,875
|
|
$
|
2,903,892
|
Costs of goods
sold
|
|
2,383,865
|
|
|
2,140,459
|
|
|
2,382,657
|
Gross profit
|
|
433,570
|
|
|
463,416
|
|
|
521,235
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
111,038
|
|
|
106,431
|
|
|
106,564
|
Profit
sharing
|
|
23,677
|
|
|
26,662
|
|
|
41,684
|
Amortization of
intangible assets
|
|
7,013
|
|
|
6,926
|
|
|
7,434
|
Operating
income
|
|
291,842
|
|
|
323,397
|
|
|
365,553
|
|
|
|
|
|
|
|
|
|
Interest expense, net
of capitalized interest
|
|
31,122
|
|
|
31,896
|
|
|
31,652
|
Other expense
(income), net
|
|
(6,343)
|
|
|
(4,463)
|
|
|
(7,384)
|
Income before income taxes
|
|
267,063
|
|
|
295,964
|
|
|
341,285
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
62,236
|
|
|
70,489
|
|
|
71,433
|
Net income
|
|
204,827
|
|
|
225,475
|
|
|
269,852
|
Net (income) loss
attributable to noncontrolling interests
|
|
(499)
|
|
|
2,076
|
|
|
152
|
Net income
attributable to Steel Dynamics, Inc.
|
$
|
204,328
|
|
$
|
227,551
|
|
$
|
270,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share attributable to
|
|
|
|
|
|
|
|
|
Steel
Dynamics, Inc. stockholders
|
$
|
0.91
|
|
$
|
0.96
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
224,058
|
|
|
236,623
|
|
|
229,245
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share attributable to
|
|
|
|
|
|
|
|
|
Steel
Dynamics, Inc. stockholders, including the effect
|
|
|
|
|
|
|
|
|
of
assumed conversions when dilutive
|
$
|
0.91
|
|
$
|
0.96
|
|
$
|
1.17
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares
|
|
|
|
|
|
|
|
|
and
share equivalents outstanding
|
|
224,962
|
|
|
237,723
|
|
|
230,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
$
|
0.2400
|
|
$
|
0.1875
|
|
$
|
0.1875
|
Steel Dynamics,
Inc.
|
CONSOLIDATED
BALANCE SHEETS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
Assets
|
2019
|
|
|
2018
|
|
(unaudited)
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and
equivalents
|
$
|
791,444
|
|
|
$
|
828,220
|
Short-term investments
|
|
173,723
|
|
|
|
228,783
|
Accounts
receivable, net
|
|
1,143,395
|
|
|
|
1,043,756
|
Inventories
|
|
1,867,700
|
|
|
|
1,859,168
|
Other
current assets
|
|
52,628
|
|
|
|
72,730
|
Total current
assets
|
|
4,028,890
|
|
|
|
4,032,657
|
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
2,936,893
|
|
|
|
2,945,767
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
263,315
|
|
|
|
270,328
|
|
|
|
|
|
|
|
Goodwill
|
|
530,716
|
|
|
|
429,645
|
|
|
|
|
|
|
|
Other
assets
|
|
97,419
|
|
|
|
25,166
|
Total
assets
|
$
|
7,857,233
|
|
|
$
|
7,703,563
|
Liabilities and
Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
$
|
591,467
|
|
|
$
|
550,754
|
Income
taxes payable
|
|
26,896
|
|
|
|
7,468
|
Accrued
expenses
|
|
303,769
|
|
|
|
436,681
|
Current
maturities of long-term debt
|
|
80,958
|
|
|
|
24,234
|
Total current
liabilities
|
|
1,003,090
|
|
|
|
1,019,137
|
|
|
|
|
|
|
|
Long-term
debt
|
|
2,354,427
|
|
|
|
2,352,489
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
447,087
|
|
|
|
435,838
|
|
|
|
|
|
|
|
Other
liabilities
|
|
63,171
|
|
|
|
8,870
|
Total
liabilities
|
|
3,867,775
|
|
|
|
3,816,334
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
139,930
|
|
|
|
111,240
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common
stock
|
|
645
|
|
|
|
645
|
Treasury
stock, at cost
|
|
(1,261,837)
|
|
|
|
(1,184,243)
|
Additional paid-in capital
|
|
1,160,139
|
|
|
|
1,160,048
|
Retained
earnings
|
|
4,109,034
|
|
|
|
3,958,320
|
Accumulated other comprehensive income
|
|
130
|
|
|
|
301
|
Total Steel Dynamics,
Inc. equity
|
|
4,008,111
|
|
|
|
3,935,071
|
Noncontrolling interests
|
|
(158,583)
|
|
|
|
(159,082)
|
Total
equity
|
|
3,849,528
|
|
|
|
3,775,989
|
Total liabilities
and equity
|
$
|
7,857,233
|
|
|
$
|
7,703,563
|
Steel Dynamics,
Inc.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
Net
income
|
$
|
204,827
|
|
$
|
225,475
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided
by
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
80,174
|
|
|
76,135
|
Equity-based
compensation
|
|
15,308
|
|
|
12,841
|
Deferred income
taxes
|
|
12,091
|
|
|
9,545
|
Other
adjustments
|
|
728
|
|
|
30
|
Changes in certain
assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(61,062)
|
|
|
(118,818)
|
Inventories
|
|
39,469
|
|
|
(80,711)
|
Other assets
|
|
301
|
|
|
(105)
|
Accounts payable
|
|
3,206
|
|
|
66,332
|
Income taxes payable, net
|
|
49,850
|
|
|
63,962
|
Accrued expenses
|
|
(163,339)
|
|
|
(76,751)
|
Net cash provided by
operating activities
|
|
181,553
|
|
|
177,935
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(54,436)
|
|
|
(50,606)
|
Purchases of short-term investments
|
|
(49,677)
|
|
|
(40,000)
|
Proceeds
from maturities of short-term investments
|
|
104,737
|
|
|
-
|
Acquisition of business, net of cash and restricted cash
acquired
|
|
(93,412)
|
|
|
-
|
Other
investing activities
|
|
364
|
|
|
229
|
Net cash used in
investing activities
|
|
(92,424)
|
|
|
(90,377)
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Issuance
of current and long-term debt
|
|
121,234
|
|
|
93,058
|
Repayment of current and long-term debt
|
|
(115,271)
|
|
|
(113,034)
|
Dividends paid
|
|
(42,239)
|
|
|
(36,797)
|
Purchase
of treasury stock
|
|
(84,308)
|
|
|
(69,269)
|
Other
financing activities
|
|
(5,720)
|
|
|
(5,180)
|
Net cash used in
financing activities
|
|
(126,304)
|
|
|
(131,222)
|
|
|
|
|
|
|
Decrease in cash,
cash equivalents, and restricted cash
|
|
(37,175)
|
|
|
(43,664)
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
|
834,423
|
|
|
1,035,085
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
797,248
|
|
$
|
991,421
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure information:
|
|
|
|
|
|
Cash
paid for interest
|
$
|
8,606
|
|
$
|
8,629
|
Cash
paid (received) for income taxes, net
|
$
|
1,839
|
|
$
|
(1,045)
|
Steel Dynamics,
Inc.
|
SUPPLEMENTAL
INFORMATION
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
4Q
2018
|
|
|
External Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel
|
|
|
$
|
2,124,570
|
|
$
|
1,921,790
|
|
$
|
2,198,459
|
|
|
Fabrication
|
|
|
|
228,480
|
|
|
201,492
|
|
|
251,592
|
|
|
Metals
Recycling
|
|
|
|
351,137
|
|
|
388,122
|
|
|
352,555
|
|
|
Other
|
|
|
|
113,248
|
|
|
92,471
|
|
|
101,286
|
|
Consolidated
|
$
|
2,817,435
|
|
$
|
2,603,875
|
|
$
|
2,903,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel
|
|
|
$
|
312,437
|
|
$
|
338,357
|
|
$
|
402,252
|
|
|
Fabrication
|
|
|
|
20,663
|
|
|
19,832
|
|
|
14,902
|
|
|
Metals
Recycling
|
|
|
|
19,958
|
|
|
27,805
|
|
|
16,954
|
|
|
Operations
|
|
|
|
353,058
|
|
|
385,994
|
|
|
434,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
amortization of intangible assets
|
|
|
|
(7,013)
|
|
|
(6,926)
|
|
|
(7,434)
|
|
|
Profit
sharing expense
|
|
|
|
(23,677)
|
|
|
(26,662)
|
|
|
(41,684)
|
|
|
Non-segment operations
|
|
|
|
(30,526)
|
|
|
(29,009)
|
|
|
(19,437)
|
|
Consolidated
Operating Income
|
$
|
291,842
|
|
$
|
323,397
|
|
$
|
365,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
62,236
|
|
$
|
70,489
|
|
$
|
71,433
|
|
|
Income
taxes
|
|
|
|
204,827
|
|
|
225,475
|
|
|
269,852
|
|
|
Net interest
expense
|
|
|
|
24,017
|
|
|
27,482
|
|
|
24,738
|
|
|
Depreciation
|
|
|
|
71,846
|
|
|
67,823
|
|
|
71,765
|
|
|
Amortization of
intangible assets
|
|
|
|
7,013
|
|
|
6,926
|
|
|
7,434
|
|
|
Non-controlling
interest
|
|
|
|
(499)
|
|
|
2,077
|
|
|
151
|
|
EBITDA
|
|
369,440
|
|
|
400,272
|
|
|
445,373
|
|
|
Non-cash
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized hedging (gain) loss
|
|
|
|
1,742
|
|
|
(9,956)
|
|
|
(2,510)
|
|
|
Inventory valuation
|
|
|
241
|
|
|
200
|
|
|
666
|
|
|
Equity-based compensation
|
|
|
|
10,619
|
|
|
9,580
|
|
|
14,457
|
|
Adjusted
EBITDA
|
$
|
382,042
|
|
$
|
400,096
|
|
$
|
457,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel
|
|
|
|
|
|
|
|
|
|
|
|
|
Average external sales
price (Per ton) *
|
|
|
$
|
902
|
|
$
|
822
|
|
$
|
940
|
|
|
Average ferrous cost
(Per ton melted) #
|
|
|
$
|
338
|
|
$
|
321
|
|
$
|
343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flat Roll
shipments
|
|
|
|
|
|
|
|
|
|
|
|
|
Butler and Columbus Flat Roll Divisions
|
|
|
|
1,526,851
|
|
|
1,548,814
|
|
|
1,493,894
|
|
|
Techs, Heartland, and USS Divisions
|
|
|
|
330,775
|
|
|
194,762
|
|
|
262,642
|
|
|
Long Product
shipments
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural and Rail Division
|
|
|
|
376,263
|
|
|
368,783
|
|
|
389,107
|
|
|
Engineered Bar Products Division
|
|
|
|
206,874
|
|
|
215,150
|
|
|
217,646
|
|
|
Roanoke Bar Division
|
|
|
|
152,400
|
|
|
123,403
|
|
|
150,607
|
|
|
Steel of West Virginia
|
|
|
|
91,248
|
|
|
83,732
|
|
|
70,367
|
|
Total shipments
(Tons)
|
|
2,684,411
|
|
|
2,534,644
|
|
|
2,584,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External shipments
(Tons) *
|
|
2,347,209
|
|
|
2,327,515
|
|
|
2,328,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel production
(Tons) *
|
|
2,745,128
|
|
|
2,601,200
|
|
|
2,677,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metals
Recycling
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonferrous shipments
(000's of pounds)
|
|
|
|
292,038
|
|
|
271,628
|
|
|
278,418
|
|
|
Ferrous shipments
(Gross tons)
|
|
|
|
1,171,361
|
|
|
1,256,899
|
|
|
1,215,474
|
|
|
External ferrous shipments (Gross tons)
|
|
|
382,841
|
|
|
436,990
|
|
|
414,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fabrication
|
|
|
|
|
|
|
|
|
|
|
|
|
Average external sales
price (Per ton)
|
|
|
$
|
1,575
|
|
$
|
1,345
|
|
$
|
1,550
|
|
|
Shipments
(Tons)
|
|
|
|
145,222
|
|
|
149,926
|
|
|
162,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes all
steel operations
|
|
|
|
|
# Includes
ferrous cost per ton melted at our six electric-arc furnace steel
mills
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/steel-dynamics-reports-first-quarter-2019-results-300835422.html
SOURCE Steel Dynamics, Inc.