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Exhibit 99.1

 

Press Release

April 18, 2018

 

7575 W. Jefferson Blvd.

Fort Wayne, IN  46804

 

Steel Dynamics Reports First Quarter 2018 Results

 

FORT WAYNE, INDIANA, April 18, 2018 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2018 financial results.  The company reported first quarter 2018 net sales of $2.6 billion and net income of $228 million, or $0.96 per diluted share.  Comparatively, prior year first quarter net income was $201 million, or $0.82 per diluted share, with net sales of $2.4 billion.  Sequential fourth quarter 2017 net income was $305 million, or $1.28 per diluted share, which included debt refinancing charges of $0.02 per diluted share and a one-time tax benefit of $0.76 per diluted share, associated with the revaluation of deferred tax assets and liabilities in connection with the U.S. Federal Tax Cuts and Jobs Act of 2017.  Excluding these items, the company’s adjusted fourth quarter 2017 net income was $128 million, or $0.54 per diluted share.

 

“The team delivered a tremendous first quarter performance,” said Mark D. Millett, President and Chief Executive Officer.  “Our first quarter 2018 income from operations increased 65 percent sequentially to $323 million, with adjusted EBITDA of $400 million.  During the first quarter, we saw improved demand and product pricing across the entire steel platform.  The increase in earnings was principally driven by our flat roll operations, as improved demand and pricing, supported meaningful volume and margin expansion.  Domestic steel consumption remained strong from the automotive and construction sectors, while energy and general industrial demand continued to grow.

 

“Operating income from our metals recycling platform increased 24 percent sequentially in the first quarter 2018, as domestic steel mill utilization improved, strengthening ferrous scrap shipments and metal spread,” continued Millett.  “Our fabrication platform also delivered a solid performance, as operating income decreased only slightly as a result of seasonally lower shipments.  Our fabrication order backlog remains strong heading into the summer construction season, and our fabrication customer base continues to be optimistic concerning 2018 projects.”

 

The company generated solid cash flow from operations of $178 million during the first quarter 2018. As evidence of the confidence in the company’s sustainable long-term cash flow generation capability, the board of directors approved a 21 percent increase in the company’s first quarter 2018 cash dividend, reflecting the strength of the company’s capital structure and liquidity profile, and the continued optimism and confidence in its future prospects.

 

First Quarter 2018 Comments

 

First quarter 2018 operating income for the company’s steel operations increased 63 percent sequentially to $338 million, based on a seven percent increase in shipments and metal spread expansion, as average steel product pricing increased more than consumed raw material scrap costs.  The first quarter 2018 average product selling price for the company’s steel operations increased $61 to $822 per ton.  The average ferrous scrap cost per ton melted increased $21 to $321 per ton.

 

First quarter 2018 operating income attributable to the company’s flat roll steel operations increased over 70 percent sequentially, driven by metal spread expansion related to higher selling values and a five percent increase in shipments. Operating income from the company’s long product steel operations increased over 25 percent, as a result of improved shipments and metal spread expansion, primarily from the company’s Engineered Bar Products and Roanoke Bar divisions.  The company’s steel production utilization rate was 94 percent in the first quarter 2018, compared to the estimated domestic steel industry utilization rate of 76 percent.

 

First quarter 2018 operating income from the company’s metals recycling operations increased to $28 million, compared to $22 million in the sequential fourth quarter, based on higher average selling values and a seven percent increase in recycled ferrous shipments, resulting from strong domestic steel mill demand.

 



 

The company’s fabrication operations recorded first quarter 2018 operating income of $20 million, compared to sequential fourth quarter results of $22 million, as improved average selling values were more than offset by seasonally lower shipments.

 

Outlook

 

“We remain confident that current and anticipated macroeconomic and market conditions are in place to benefit domestic steel consumption in 2018,” said Millett.  “Domestic steel inventory levels remain reasonably balanced.  World steel demand and pricing have improved.  Based on strong domestic steel demand fundamentals and customer optimism, we believe price momentum and growth in steel consumption will continue during the year. We also believe recent U.S. Federal Administration steel trade actions will result in reduced imports during the year, and that tax reform will provide a stimulus for additional domestic fixed asset investment and growth.  In combination with our expansion initiatives, we believe there are firm drivers for our growth in 2018.

 

“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 2018 operating and financial results on Thursday, April 19, 2018, 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 24, 2018.

 

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) 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; (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

 

 

 

2018

 

2017

 

December 31, 2017

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,603,875

 

$

2,368,216

 

$

2,336,479

 

Costs of goods sold

 

2,140,459

 

1,896,062

 

2,015,655

 

Gross profit

 

463,416

 

472,154

 

320,824

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

106,431

 

102,933

 

96,209

 

Profit sharing

 

26,662

 

27,231

 

21,595

 

Amortization of intangible assets

 

6,926

 

7,424

 

7,073

 

Operating income

 

323,397

 

334,566

 

195,947

 

 

 

 

 

 

 

 

 

Interest expense, net of capitalized interest

 

31,896

 

33,973

 

32,380

 

Other expense (income), net

 

(4,463

)

(3,659

)

2,215

 

Income before income taxes

 

295,964

 

304,252

 

161,352

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

70,489

 

105,586

 

(141,819

)

Net income

 

225,475

 

198,666

 

303,171

 

Net loss attributable to noncontrolling interests

 

2,076

 

2,151

 

1,562

 

Net income attributable to Steel Dynamics, Inc.

 

$

227,551

 

$

200,817

 

$

304,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share attributable to Steel Dynamics, Inc. stockholders

 

$

0.96

 

$

0.83

 

$

1.28

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

236,623

 

242,943

 

237,177

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive

 

$

0.96

 

$

0.82

 

$

1.28

 

 

 

 

 

 

 

 

 

Weighted average common shares and share equivalents outstanding

 

237,723

 

244,546

 

238,677

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.1875

 

$

0.1550

 

$

0.1550

 

 



 

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

March 31,

 

December 31,

 

 

 

2018

 

2017

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and equivalents

 

$

985,824

 

$

1,028,649

 

Short term investments

 

40,000

 

 

Accounts receivable, net

 

987,655

 

868,837

 

Inventories

 

1,600,058

 

1,519,347

 

Other current assets

 

38,705

 

91,509

 

Total current assets

 

3,652,242

 

3,508,342

 

 

 

 

 

 

 

Property, plant and equipment, net

 

2,657,937

 

2,675,904

 

 

 

 

 

 

 

Intangible assets, net

 

249,983

 

256,909

 

 

 

 

 

 

 

Goodwill

 

386,045

 

386,893

 

 

 

 

 

 

 

Other assets

 

26,606

 

27,684

 

Total assets

 

$

6,972,813

 

$

6,855,732

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

562,618

 

$

489,448

 

Income taxes payable

 

14,564

 

3,696

 

Accrued expenses

 

273,912

 

346,580

 

Current maturities of long-term debt

 

9,646

 

28,795

 

Total current liabilities

 

860,740

 

868,519

 

 

 

 

 

 

 

Long-term debt

 

2,353,703

 

2,353,145

 

 

 

 

 

 

 

Deferred income taxes

 

314,736

 

305,949

 

 

 

 

 

 

 

Other liabilities

 

20,257

 

21,811

 

Total liabilities

 

3,549,436

 

3,549,424

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

111,240

 

111,240

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Common stock

 

644

 

644

 

Treasury stock, at cost

 

(730,700

)

(665,297

)

Additional paid-in capital

 

1,142,871

 

1,141,534

 

Retained earnings

 

3,057,904

 

2,874,693

 

Total Steel Dynamics, Inc. equity

 

3,470,719

 

3,351,574

 

Noncontrolling interests

 

(158,582

)

(156,506

)

Total equity

 

3,312,137

 

3,195,068

 

Total liabilities and equity

 

$

6,972,813

 

$

6,855,732

 

 



 

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

2017

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

Net income

 

$

225,475

 

$

198,666

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

76,135

 

75,057

 

Equity-based compensation

 

12,841

 

11,303

 

Deferred income taxes

 

9,545

 

7,716

 

Other adjustments

 

30

 

(104

)

Changes in certain assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(118,818

)

(153,364

)

Inventories

 

(80,711

)

(86,819

)

Other assets

 

(105

)

2,094

 

Accounts payable

 

66,332

 

133,809

 

Income taxes receivable/payable

 

63,962

 

96,319

 

Accrued expenses

 

(76,751

)

(44,247

)

Net cash provided by operating activities

 

177,935

 

240,430

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchases of property, plant and equipment

 

(50,606

)

(41,677

)

Purchases of short term investments

 

(40,000

)

 

Other investing activities

 

229

 

26,918

 

Net cash used in investing activities

 

(90,377

)

(14,759

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Issuance of current and long-term debt

 

93,058

 

 

Repayment of current and long-term debt

 

(113,034

)

(1,429

)

Dividends paid

 

(36,797

)

(34,130

)

Purchase of treasury stock

 

(69,269

)

(61,256

)

Other financing activities

 

(5,180

)

(3,532

)

Net cash used in financing activities

 

(131,222

)

(100,347

)

 

 

 

 

 

 

Increase (decrease) in cash and equivalents

 

(43,664

)

125,324

 

Cash, cash equivalents, and restricted cash at beginning of period

 

1,035,085

 

848,105

 

Cash, cash equivalents, and restricted cash at end of period

 

$

991,421

 

$

973,429

 

 

 

 

 

 

 

Supplemental disclosure information:

 

 

 

 

 

Cash paid for interest

 

$

8,629

 

$

12,649

 

Cash paid (received) for income taxes, net

 

$

(1,045

)

$

1,554

 

 



 

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)

 

 

 

First Quarter

 

 

 

 

 

2018

 

2017

 

4Q 2017

 

External Net Sales

 

 

 

 

 

 

 

Steel

 

$

1,921,790

 

$

1,721,333

 

$

1,669,384

 

Fabrication

 

201,492

 

194,096

 

220,515

 

Metals Recycling

 

388,122

 

363,836

 

354,460

 

Other

 

92,471

 

88,951

 

92,120

 

Consolidated

 

$

2,603,875

 

$

2,368,216

 

$

2,336,479

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

Steel

 

$

338,357

 

$

352,423

 

$

207,358

 

Fabrication

 

19,832

 

23,767

 

21,601

 

Metals Recycling

 

27,805

 

21,341

 

22,379

 

Operations

 

385,994

 

397,531

 

251,338

 

 

 

 

 

 

 

 

 

Non-cash Amortization of Intangible Assets

 

(6,926

)

(7,424

)

(7,073

)

Profit Sharing Expense

 

(26,662

)

(27,231

)

(21,595

)

Non-segment Operations

 

(29,009

)

(28,310

)

(26,723

)

Consolidated Operating Income

 

$

323,397

 

$

334,566

 

$

195,947

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

Earnings Before Taxes

 

$

295,964

 

$

304,252

 

$

161,352

 

Net Interest Expense

 

27,482

 

32,333

 

28,990

 

Depreciation

 

67,823

 

66,269

 

66,460

 

Amortization of Intangible Assets

 

6,926

 

7,424

 

7,073

 

Non-controlling Interest

 

2,077

 

2,152

 

1,562

 

EBITDA

 

400,272

 

412,430

 

265,437

 

Non-cash Adjustments

 

 

 

 

 

 

 

Unrealized Hedging (Gain) Loss

 

(9,956

)

(637

)

7,325

 

Inventory Valuation

 

200

 

162

 

198

 

Equity-based Compensation

 

9,580

 

9,074

 

11,636

 

Financing Expenses

 

 

 

1,242

 

Adjusted EBITDA

 

$

400,096

 

$

421,029

 

$

285,838

 

 

 

 

 

 

 

 

 

Other Operating Information

 

 

 

 

 

 

 

Steel

 

 

 

 

 

 

 

Average External Sales Price (Per ton)

 

$

822

 

$

743

 

$

761

 

Average Ferrous Cost (Per ton melted)

 

$

321

 

$

264

 

$

300

 

 

 

 

 

 

 

 

 

Flat Roll Shipments

 

1,743,576

 

1,735,954

 

1,659,049

 

Long Product Shipments

 

 

 

 

 

 

 

Structural and Rail Division

 

368,783

 

350,555

 

339,597

 

Engineered Bar Products Division

 

215,150

 

192,140

 

191,652

 

Roanoke Bar Division

 

123,403

 

125,869

 

107,319

 

Steel of West Virginia

 

83,732

 

77,229

 

66,724

 

Total Shipments (Tons)

 

2,534,644

 

2,481,747

 

2,364,341

 

 

 

 

 

 

 

 

 

External Shipments (Tons)

 

2,327,515

 

2,305,080

 

2,184,135

 

 

 

 

 

 

 

 

 

Steel Production (Tons)

 

2,601,200

 

2,544,082

 

2,437,851

 

 

 

 

 

 

 

 

 

Metals Recycling

 

 

 

 

 

 

 

Total Nonferrous Shipments (000’s of pounds)

 

271,628

 

283,603

 

271,036

 

Total Ferrous Shipments (Gross tons)

 

1,256,899

 

1,338,599

 

1,172,015

 

External Ferrous Shipments (Gross tons)

 

436,990

 

485,414

 

429,512

 

 

 

 

 

 

 

 

 

Fabrication

 

 

 

 

 

 

 

Average External Sales Price (Per ton)

 

$

1,345

 

$

1,291

 

$

1,335

 

Total Shipments (Tons)

 

149,926

 

150,402

 

165,338