FORT WAYNE, Ind., April 19, 2017 /PRNewswire/ -- Steel
Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2017 financial results. The company reported first quarter
2017 net income of $201 million, or $0.82 per diluted share, with net
sales of $2.4 billion. Comparatively, prior year first quarter net income was $63 million, or $0.26 per diluted share, with net sales of $1.7 billion. Sequential fourth quarter 2016 net income was $20 million, or
$0.08 per diluted share, which included non-cash goodwill and asset impairment charges of
$0.31 per diluted share and debt refinancing and repayment charges of $0.04 per diluted share. Excluding these items, the company's adjusted fourth quarter 2016 net income was
$106 million, or $0.43 per diluted share.
"The team executed well and delivered a strong first quarter performance with all of our operating platforms improving
profitability," said Mark D. Millett, President and Chief Executive Officer. "Our first quarter
2017 income from operations increased over 75 percent sequentially to $335 million with adjusted
EBITDA of $421 million. The increase in our earnings was principally driven by our flat roll
operations, as demand was strong and customer inventory levels continued to be positioned at historically low levels. We
also experienced increased shipments from our long product steel divisions. Steel demand from the automotive sector
remained steady and construction continued to improve. Additionally, specific to our Engineered Bar Products Division,
there was an overall general demand improvement, supported by positive movement in the heavy equipment and energy
sectors.
"Operating income from our metals recycling platform more than doubled in the first quarter 2017, as domestic steel mill
utilization increased, strengthening both ferrous scrap shipments and metal spread," continued Millett. "Additionally, in what is
typically a seasonally lower demand timeframe for our fabrication operations, the team achieved record quarterly shipments and
improved earnings, a strong indicator that the non-residential construction market is continuing a positive growth profile."
The company generated strong cash flow from operations of $240 million during the first quarter
2017. As evidence of the confidence in the company's sustainable long-term cash flow generation capability, the board of
directors approved an 11 percent increase in the company's first quarter 2017 cash dividend, reflecting the strength of the
company's capital structure and liquidity profile, and the continued optimism and confidence in its future prospects.
Additional First Quarter 2017 Comments
First quarter 2017 operating income for the company's steel operations increased 62 percent to $352
million sequentially, based on a 12 percent increase in shipments and metal spread expansion. The company's average
steel product price increased more than consumed raw material scrap costs, resulting in steel metal spread expansion. The
first quarter 2017 average product selling price for the company's steel operations increased $63
to $743 per ton. The average ferrous scrap cost per ton melted increased $44 to $264 per ton.
First quarter 2017 operating income attributable to the company's flat roll products increased 67 percent when compared to the
sequential fourth quarter, driven by an 11 percent increase in shipments combined with metal spread expansion. Operating income
from long products increased 39 percent as a result of a 16 percent improvement in shipments, primarily from the company's
Engineered Bar Products and Structural and Rail divisions. Long product steel selling values remain under pressure from
excess domestic production capability, coupled with elevated import levels. The company's steel production utilization rate
was 95 percent in the first quarter 2017, compared to 81 percent in the sequential fourth quarter and compared to the domestic
industry utilization rate of 75 percent.
First quarter 2017 operating income from the metals recycling operations was $21 million,
compared to $10 million in the sequential fourth quarter (excluding a non-cash goodwill
impairment charge of $5.5 million). Both ferrous scrap demand and pricing increased as
domestic steel mill utilization improved.
The company's fabrication operations recorded first quarter 2017 operating income of $24
million, compared to sequential fourth quarter results of $18 million. Despite what is
typically a lower demand season, the platform achieved record quarterly shipments, which more than offset moderate margin
compression as product pricing declined slightly more than steel input costs.
Outlook
"The company believes that current and anticipated macroeconomic and market conditions are in place to benefit the domestic
steel industry in the coming year," said Millett. "Although domestic automotive production may be coming off record levels,
we believe 2017 North American automotive steel consumption will be steady, and that there will be additional growth in the
construction sector, especially for larger, public sector infrastructure projects. Additionally, the energy sector has
begun to strengthen.
"We continue to see progress at our Columbus Flat Roll Division. The successful market and product diversification
achieved at Columbus will continue to benefit the coming years as we have accessed numerous new
customers and end markets. The Columbus team completed construction of a $100 million paint line in the fourth quarter 2016, adding 250,000 tons of value-added painting capability.
Start-up is going well, with painted shipments of just under 13,000 tons in the first quarter.
"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 shareholder value through organic and strategic
growth opportunities," concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss first quarter 2017 operating and financial results on
Thursday, April 20, 2017, 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 25, 2017.
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 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 Operating Income, 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
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: Investors: SEC
Filings.
Contact: Tricia Meyers, Investor Relations Manager— +1.260.969.3500
Steel Dynamics, Inc.
|
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months
|
|
March 31,
|
|
Ended
|
|
2017
|
|
2016
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
2,368,216
|
|
$
|
1,741,301
|
|
$
|
1,910,596
|
Costs of goods sold
|
|
1,896,062
|
|
|
1,505,265
|
|
|
1,600,654
|
Gross profit
|
|
472,154
|
|
|
236,036
|
|
|
309,942
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
102,933
|
|
|
87,530
|
|
|
94,110
|
Profit sharing
|
|
27,231
|
|
|
9,291
|
|
|
19,563
|
Amortization of intangible assets
|
|
7,424
|
|
|
7,250
|
|
|
7,406
|
Asset impairment charges
|
|
-
|
|
|
-
|
|
|
132,839
|
Operating income
|
|
334,566
|
|
|
131,965
|
|
|
56,024
|
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest
|
|
33,973
|
|
|
37,043
|
|
|
36,149
|
Other expense (income), net
|
|
(3,659)
|
|
|
(1,792)
|
|
|
17,055
|
Income before income taxes
|
|
304,252
|
|
|
96,714
|
|
|
2,820
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
105,586
|
|
|
35,396
|
|
|
(1,012)
|
Net income
|
|
198,666
|
|
|
61,318
|
|
|
3,832
|
Net loss attributable to noncontrolling interests
|
|
2,151
|
|
|
1,419
|
|
|
16,180
|
Net income attributable to Steel
Dynamics, Inc.
|
$
|
200,817
|
|
$
|
62,737
|
|
$
|
20,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share attributable to
|
|
|
|
|
|
|
|
|
Steel Dynamics, Inc. stockholders
|
$
|
0.83
|
|
$
|
0.26
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
242,943
|
|
|
243,202
|
|
|
243,687
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share attributable to
|
|
|
|
|
|
|
|
|
Steel Dynamics, Inc. stockholders, including the
effect
|
|
|
|
|
|
|
|
|
of assumed conversions when dilutive
|
$
|
0.82
|
|
$
|
0.26
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
|
|
|
and share equivalents outstanding
|
|
244,546
|
|
|
244,608
|
|
|
245,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
$
|
0.155
|
|
$
|
0.140
|
|
$
|
0.140
|
Steel Dynamics, Inc.
|
CONSOLIDATED BALANCE SHEETS
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
2017
|
|
|
2016
|
Assets
|
(unaudited)
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and equivalents
|
$
|
966,826
|
|
|
$
|
841,483
|
Accounts receivable, net
|
|
883,147
|
|
|
|
729,784
|
Inventories
|
|
1,361,550
|
|
|
|
1,275,211
|
Other current assets
|
|
33,442
|
|
|
|
83,197
|
Total current assets
|
|
3,244,965
|
|
|
|
2,929,675
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
2,760,544
|
|
|
|
2,787,215
|
|
|
|
|
|
|
|
Restricted cash
|
|
17,846
|
|
|
|
18,060
|
|
|
|
|
|
|
|
Intangible assets, net
|
|
276,553
|
|
|
|
283,977
|
|
|
|
|
|
|
|
Goodwill
|
|
391,740
|
|
|
|
393,351
|
|
|
|
|
|
|
|
Other assets
|
|
12,387
|
|
|
|
11,454
|
Total assets
|
$
|
6,704,035
|
|
|
$
|
6,423,732
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
$
|
530,958
|
|
|
$
|
395,196
|
Income taxes payable
|
|
80,741
|
|
|
|
5,593
|
Accrued expenses
|
|
266,783
|
|
|
|
308,394
|
Current maturities of long-term debt
|
|
2,965
|
|
|
|
3,632
|
Total current liabilities
|
|
881,447
|
|
|
|
712,815
|
|
|
|
|
|
|
|
Long-term debt
|
|
2,353,744
|
|
|
|
2,353,194
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
454,426
|
|
|
|
448,375
|
|
|
|
|
|
|
|
Other liabilities
|
|
19,711
|
|
|
|
20,649
|
Total liabilities
|
|
3,709,328
|
|
|
|
3,535,033
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
111,240
|
|
|
|
111,240
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common stock
|
|
641
|
|
|
|
641
|
Treasury stock, at cost
|
|
(475,072)
|
|
|
|
(416,829)
|
Additional paid-in capital
|
|
1,135,892
|
|
|
|
1,132,749
|
Retained earnings
|
|
2,373,718
|
|
|
|
2,210,459
|
Total Steel Dynamics, Inc. equity
|
|
3,035,179
|
|
|
|
2,927,020
|
Noncontrolling interests
|
|
(151,712)
|
|
|
|
(149,561)
|
Total equity
|
|
2,883,467
|
|
|
|
2,777,459
|
Total liabilities and equity
|
$
|
6,704,035
|
|
|
$
|
6,423,732
|
Steel Dynamics, Inc.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
Net income
|
$
|
198,666
|
|
$
|
61,318
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided
by
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
75,057
|
|
|
73,985
|
Equity-based compensation
|
|
11,303
|
|
|
10,534
|
Deferred income taxes
|
|
7,716
|
|
|
17,087
|
Other adjustments
|
|
(104)
|
|
|
180
|
Changes in certain assets and
liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(153,364)
|
|
|
(75,596)
|
Inventories
|
|
(86,819)
|
|
|
82,567
|
Other assets
|
|
2,113
|
|
|
548
|
Accounts
payable
|
|
133,809
|
|
|
112,659
|
Income taxes
receivable/payable
|
|
96,319
|
|
|
13,993
|
Accrued
expenses
|
|
(44,247)
|
|
|
(6,247)
|
Net cash provided by operating
activities
|
|
240,449
|
|
|
291,028
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(41,677)
|
|
|
(27,708)
|
Other investing activities
|
|
26,918
|
|
|
3,054
|
Net cash used in investing
activities
|
|
(14,759)
|
|
|
(24,654)
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
Issuance of current and long-term debt
|
|
-
|
|
|
20,452
|
Repayment of current and long-term debt
|
|
(1,429)
|
|
|
(4,232)
|
Dividends paid
|
|
(34,130)
|
|
|
(33,425)
|
Purchase of treasury stock
|
|
(61,256)
|
|
|
-
|
Other financing activities
|
|
(3,532)
|
|
|
750
|
Net cash used in financing
activities
|
|
(100,347)
|
|
|
(16,455)
|
|
|
|
|
|
|
Increase in cash and equivalents
|
|
125,343
|
|
|
249,919
|
Cash and equivalents at beginning of period
|
|
841,483
|
|
|
727,032
|
Cash and equivalents at end of period
|
$
|
966,826
|
|
$
|
976,951
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
Cash paid for interest
|
$
|
12,649
|
|
$
|
26,286
|
Cash paid for income taxes, net
|
$
|
1,554
|
|
$
|
699
|
Supplemental Information (dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
4Q 2016
|
|
External Net Sales
|
|
|
|
|
|
Steel
|
|
$
|
1,721,333
|
|
$
|
1,217,176
|
|
$
|
1,393,329
|
|
Fabrication
|
|
|
194,096
|
|
|
180,055
|
|
|
173,015
|
|
Metals Recycling
|
|
|
363,836
|
|
|
269,407
|
|
|
282,783
|
|
Other
|
|
|
88,951
|
|
|
74,663
|
|
|
61,469
|
|
Consolidated
|
|
$
|
2,368,216
|
|
$
|
1,741,301
|
|
$
|
1,910,596
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
Steel
|
|
$
|
352,423
|
|
$
|
135,692
|
|
$
|
217,778
|
|
Fabrication
|
|
|
23,767
|
|
|
32,075
|
|
|
17,766
|
|
Metals Recycling
|
|
|
21,341
|
|
|
6,360
|
|
|
9,511
|
|
Metals Recycling Impairment
|
|
|
-
|
|
|
-
|
|
|
(5,500)
|
|
Operations
|
|
|
397,531
|
|
|
174,127
|
|
|
239,555
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash Amortization of Intangible Assets
|
|
|
(7,424)
|
|
|
(7,100)
|
|
|
(7,406)
|
|
Profit Sharing Expense
|
|
|
(27,231)
|
|
|
(9,291)
|
|
|
(19,563)
|
|
Non-segment Operations
|
|
|
(28,310)
|
|
|
(25,771)
|
|
|
(29,223)
|
|
Minnesota Impairment Charges
|
|
|
-
|
|
|
-
|
|
|
(127,339)
|
|
Consolidated Operating Income
|
|
|
334,566
|
|
|
131,965
|
|
|
56,024
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash Impairment Charges
|
|
|
-
|
|
|
-
|
|
|
132,839
|
|
Adjusted Operating Income
|
|
$
|
334,566
|
|
$
|
131,965
|
|
$
|
188,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
Earnings Before Taxes
|
|
$
|
304,252
|
|
$
|
96,714
|
|
$
|
2,820
|
|
Net Interest Expense
|
|
|
32,333
|
|
|
36,150
|
|
|
34,752
|
|
Depreciation
|
|
|
66,269
|
|
|
65,375
|
|
|
64,199
|
|
Amortization of Intangible Assets
|
|
|
7,424
|
|
|
7,100
|
|
|
7,406
|
|
Non-controlling Interest
|
|
|
2,152
|
|
|
1,419
|
|
|
16,180
|
|
EBITDA
|
|
|
412,430
|
|
|
206,758
|
|
|
125,357
|
|
Non-cash Adjustments
|
|
|
|
|
|
|
|
|
|
|
Unrealized Hedging (Gain)
Loss
|
|
|
(637)
|
|
|
319
|
|
|
(143)
|
|
Inventory
Valuation
|
|
162
|
|
|
192
|
|
|
154
|
|
Asset Impairment
Charges
|
|
|
-
|
|
|
-
|
|
|
119,764
|
|
Equity-based
Compensation
|
|
|
9,074
|
|
|
6,979
|
|
|
10,069
|
|
Financing
Expenses
|
|
|
-
|
|
|
-
|
|
|
3,104
|
|
Adjusted EBITDA
|
|
$
|
421,029
|
|
$
|
214,248
|
|
$
|
258,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating Information
|
|
|
|
|
|
|
|
|
|
|
Steel
|
|
|
|
|
|
|
|
|
|
|
Average External Sales Price (Per
ton)
|
|
$
|
743
|
|
$
|
574
|
|
$
|
680
|
|
Average Ferrous Cost (Per ton
melted)
|
|
$
|
264
|
|
$
|
184
|
|
$
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
Flat Roll Shipments
|
|
|
1,735,954
|
|
|
1,657,341
|
|
|
1,565,157
|
|
Long Product Shipments
|
|
|
|
|
|
|
|
|
|
|
Structural and Rail
Division
|
|
|
350,555
|
|
|
292,988
|
|
|
319,265
|
|
Engineered Bar Products
Division
|
|
|
192,140
|
|
|
125,200
|
|
|
134,262
|
|
Roanoke Bar
Division
|
|
|
125,869
|
|
|
125,471
|
|
|
112,007
|
|
Steel of West
Virginia
|
|
|
77,229
|
|
|
76,209
|
|
|
75,453
|
|
Total Shipments (In tons)
|
|
|
2,481,747
|
|
|
2,277,209
|
|
|
2,206,144
|
|
|
|
|
|
|
|
|
|
|
|
|
External Shipments (In tons)
|
|
|
2,305,080
|
|
|
2,121,872
|
|
|
2,041,078
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Production (In
tons)
|
|
|
2,544,082
|
|
|
2,363,252
|
|
|
2,237,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Metals Recycling
|
|
|
|
|
|
|
|
|
|
|
Total Nonferrous Shipments (In 000's of
pounds)
|
|
|
283,603
|
|
|
270,410
|
|
|
274,790
|
|
Total Ferrous Shipments (In gross
tons)
|
|
|
1,338,599
|
|
|
1,305,154
|
|
|
1,175,625
|
|
External Ferrous Shipments (In gross tons)
|
|
|
485,414
|
|
|
503,787
|
|
|
446,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Fabrication
|
|
|
|
|
|
|
|
|
|
|
Average External Sales Price (Per
ton)
|
|
$
|
1,291
|
|
$
|
1,241
|
|
$
|
1,310
|
|
Total Shipments (In
tons)
|
|
|
150,402
|
|
|
145,126
|
|
|
132,186
|
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/steel-dynamics-reports-first-quarter-2017-results-300442285.html
SOURCE Steel Dynamics, Inc.