FORT WAYNE, Ind., Feb. 1, 2019 /PRNewswire/ -- Steel Dynamics,
Inc. (NASDAQ/GS: STLD) today announced that it has entered into a definitive agreement to acquire a majority of the equity
interest of United Steel Supply, LLC ("United Steel Supply"). United Steel Supply is headquartered in Austin, Texas and is a leading distributor of painted Galvalume® flat roll steel used for roofing and
siding applications. Steel Dynamics has agreed to purchase 75 percent of the equity interests of United Steel Supply for
$134 million, comprised of cash consideration of $92 million and the
assumption of $42 million in apportioned debt. The purchase price assumes total net working capital
of $59 million, which is subject to customary post-closing adjustments. Additionally, Steel
Dynamics has an option to purchase the remaining 25 percent equity interest of United Steel Supply in the future.
"United Steel Supply provides an exciting opportunity to expand our painted Galvalume® value chain, by affording us with
a better opportunity to provide our high-quality flat roll steel directly to this important market segment," said Mark D. Millett, President and Chief Executive Officer. "United Steel Supply has a reputation for
best-in-class service, short supply lead-times and strong customer relationships. We believe this partnership will provide
a strong cultural fit with Steel Dynamics. We are eager to welcome the United Steel Supply employees and customers, and we
look forward to our mutual growth and success."
United Steel Supply Acquisition Overview
United Steel Supply ("USS") distributes painted and coated flat roll steel coils to the niche regional roll-former market,
serving the roofing and siding industry. USS is headquartered in Austin, Texas, with four
distribution centers strategically located in Mississippi, Indiana, Arkansas, and Oregon, and employs
38 non-union individuals. As part of the transaction, current United Steel Supply owners Bret
Curtis and Will Waldrip will continue to lead USS in their current capacities as President
and Vice President, respectively. Under Messrs. Curtis and Waldrip's leadership, United Steel Supply has achieved an
extraordinary 26 percent compounded annual revenue growth rate since inception in 2007.
Steel Dynamics' unique combination of Galvalume® manufacturing and on-site paint application presents attractive
synergies in the production of painted Galvalume®, which is the principal product distributed by United Steel Supply. Due to the
smaller individual order size and extensive service levels required by USS's large and diverse customer base, this transaction
adds a new, complementary distribution channel for Steel Dynamics and connects it to a rapidly growing industry segment with
customers that do not traditionally purchase steel directly from a steel producer. Steel Dynamics expects this
transaction to provide continued growth in one of its highest-margin flat roll steel products. Steel Dynamics'
Columbus Mississippi and Butler Indiana Flat Roll divisions already supply flat roll steel to
USS, and this volume is expected to grow.
Transaction Details
This transaction is valued on a total enterprise value based on five times United Steel Supply's 2018 adjusted EBITDA.
The existing USS owners will also have an opportunity to receive an additional earn-out over the five-year period after
closing by achieving certain operational and financial metrics expected to benefit both United Steel Supply and Steel Dynamics.
This transaction is subject to customary closing conditions and receipt of regulatory approvals.
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.
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) fluctuation in the cost of key raw materials and supplies (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 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.
View original content:http://www.prnewswire.com/news-releases/steel-dynamics-to-acquire-75-of-united-steel-supply-llc-to-expand-painted-galvalume-distribution-capabilities-300788127.html
SOURCE Steel Dynamics, Inc.