Exhibit 99.1

 

Press Release
July 19, 2021

 

7575 W. Jefferson Blvd. 

Fort Wayne, IN 46804

 

 

Steel Dynamics Reports Record Second Quarter 2021 Results

 

FORT WAYNE, INDIANA, July 19, 2021 / PRNewswire /

 

Second Quarter 2021 Highlights:

 

§

Record steel and fabrication shipments of 2.9 million tons and 189,000 tons, respectively

§

Record net sales of $4.5 billion

§

Record operating income of $956 million and record net income of $702 million

§

Record cash flow from operations of $587 million and record adjusted EBITDA of over $1.0 billion

§

Share repurchases of $393 million of the company’s common stock, representing 3% of its outstanding shares

§

Announced new $1.0 billion share repurchase authorization

§

Announced greenhouse gas and renewable energy goals, including steel mill carbon neutrality by 2050

 

Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced second quarter 2021 financial results. The company reported record second quarter 2021 net sales of $4.5 billion and net income of $702 million, or $3.32 per diluted share. Excluding the impact from the following item, the company’s second quarter 2021 adjusted net income was $719 million, or $3.40 per diluted share:

 

§

Costs of approximately $23 million, or $0.08 per diluted share (net of capitalized interest), associated with construction of the company’s Sinton Texas Flat Roll Steel Mill growth investment.

 

Comparatively, prior year second quarter net sales were $2.1 billion, with net income of $75 million, or $0.36 per diluted share, and adjusted earnings were $0.47 per diluted share, excluding the impact of the company's June 2020 refinancing activities of approximately $25 million, or $0.08 per diluted share, and costs associated with the construction of the company's Texas steel mill of $0.03 per diluted share. The company’s sequential first quarter 2021 earnings were $2.03 per diluted share, and adjusted earnings were $2.10 per diluted share, also excluding the impact of construction costs related to the Texas steel mill of $0.07 per diluted share.

 

“The team performed exceptionally well, achieving record quarterly operational and financial results, including record sales, operating income, cash flow from operations, and adjusted EBITDA,” said Mark D. Millett, Chairman and Chief Executive Officer. “Our second quarter 2021 operating income increased 61 percent sequentially to $956 million, with adjusted EBITDA of over $1.0 billion. We continue to achieve numerous individual operating and financial records —a truly amazing achievement and a testament to the passion and dedication of our team. Based on their second quarter 2021 performance, we generated record quarterly cash flow from operations of $587 million and maintained strong liquidity, while at the same time supporting increased working capital needs, significantly growing our business through organic growth investments, and returning capital to shareholders.

 

“During the second quarter, steel demand remained robust as shipments and product pricing continued their positive momentum across our entire steel platform. Higher steel selling values drove significant metal spread expansion across the entire platform and were most prominent within the flat roll steel operations, as continued demand strength and historically low customer inventories persisted throughout the supply chain and supported prices. Domestic steel consumption was strong from the automotive, construction, and industrial sectors, while the energy sector continued to show signs of rebounding.

 

“Our segment operating results were exceptional,” continued Millett. “Second quarter operating income from our steel operations was a record $1.0 billion, and our metals recycling operations sustained strong earnings, as increased domestic steel mill utilization of 81% supported ferrous scrap demand and pricing. Our steel fabrication operations once again achieved record quarterly shipments and ended June with another record order backlog, as we are in the middle of the summer construction season.”

 

 

Second Quarter 2021 Comments

 

Second quarter 2021 operating income for the company’s steel operations was a record $1.0 billion, or 59 percent higher than sequential first quarter results, due to significant metal spread expansion and record quarterly steel shipments. Record flat roll and strong long product steel realized selling values, more than offset higher scrap input costs. The second quarter 2021 average external product selling price for the company’s steel operations increased $251 sequentially to $1,292 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills increased $67 sequentially to $439 per ton.

 

Domestic steel production continued to increase in the quarter maintaining strong ferrous scrap demand and pricing. Ferrous prime scrap pricing indices increased about $60 to $70 per gross ton during the second quarter. As a result, second quarter 2021 operating income from the company’s metals recycling operations remained strong at $51 million.

 

The company’s steel fabrication operations reported operating income of $28 million in the second quarter 2021, almost tripling the sequential first quarter results. Supported by record quarterly shipments, earnings significantly improved as realized pricing increased almost $350 per ton, more than offsetting higher average steel input costs. Steel joist and deck product pricing has strengthened significantly to record levels, due to the strong demand environment and higher steel input costs. Order activity remains extremely strong, and customers continue to be optimistic concerning projects. The company’s steel fabrication order backlog is at a record level at the end of June.

 

Year-to-Date June 30, 2021 Comparison

 

For the six months ended June 30, 2021, net income was $1.1 billion, or $5.35 per diluted share, with net sales of $8.0 billion, as compared to net income of $263 million, or $1.24 per diluted share, with net sales of $4.7 billion for the same period in 2020. Excluding the impact from the following item, the company’s first half 2021 adjusted net income was $1.2 billion, or $5.50 per diluted share:

 

§

Costs of approximately $43 million, or $0.14 per diluted share (net of capitalized interest), associated with construction of the company’s Sinton Texas Flat Roll Steel Mill growth investment

 

Similarly, adjusting for the company’s Texas steel mill construction costs and a June 2020 refinancing, first half 2020 net income was $291 million, or $1.37 per diluted share.

 

First half 2021 net sales increased 72 percent and operating income increased 258 percent to over $1.5 billion, when compared to the same period in 2020. Higher earnings were primarily the result of steel metal spread expansion, as significantly higher average steel selling values, more than offset higher average ferrous scrap costs across the steel platform, especially within the company’s flat roll steel operations. Compared to first half 2020, the average first half 2021 external selling price for the company's steel operations increased $403 to $1,169 per ton. The average first half 2021 ferrous scrap cost per ton melted at the company’s steel mills increased $140 to $406 per ton.

 

Based on the company’s differentiated business model and highly, variable cost structure, the company achieved cash flow from operations of $849 million in the first half 2021, representing a record first half performance. The company also invested $587 million in capital investments, paid cash dividends of $108 million, and repurchased $393 million of its common stock, while maintaining strong liquidity.

 

Outlook

 

“We remain confident that macroeconomic and market conditions are in place to support strong domestic steel demand in 2021 and beyond,” said Millett. “We continue to see strong steel demand coupled with extremely low customer steel inventories throughout the supply chain. The automotive sector continues to be strong, despite the electronic chip shortage, and other sectors such as construction, equipment and transportation remain solid. Order entry activity continues to be robust across our businesses, and when coupled with low inventory, supports strong steel selling values. We believe this momentum will continue throughout the year and that our third quarter 2021 earnings could represent another record performance. Based on solid domestic steel fundamentals and customer confidence, we continue to be positive regarding North American steel market dynamics. This constructive environment coupled with our strategic growth initiatives provide firm drivers for our further growth in the coming years.

 

 

“We and our customers continue to be extremely excited about our Sinton Texas EAF Flat Roll Steel Mill investment. It represents transformational competitively-advantaged strategic growth, with associated long-term value creation for all of our stakeholders. We are currently hot-commissioning the value-added paint line, and we expect the galvanizing line to be operational next month. The entire Sinton team is doing a tremendous job. Due to the excessive heavy rains in Texas, actual steel production will be delayed and is now planned to start mid fourth quarter 2021. Based on current plans, we believe shipments from Sinton could be in the range of 100,000 tons during the remainder of 2021 and between 2.2 million tons to 2.4 million tons in 2022. Based on mid-cycle flat roll metal spreads, we currently believe through-cycle annual EBITDA for our Sinton Texas Flat Roll Steel Mill once fully operational with access to four value-added coating lines (estimated to be 2023) is likely in the range of $475 million to $525 million.

 

“We also plan to invest approximately $450 million to $500 million in four additional value-added flat roll steel coating lines comprised of two paint lines and two galvanizing lines with Galvalume® coating capability, a set of which will be located in the Southern U.S. to provide Sinton with the same diversification and higher-margin product capabilities as our two existing flat roll steel divisions. The other two lines will be located in the Midwest to support growing coated flat roll steel demand and to further increase the diversification and cash generation capacity of our existing Midwest operations. Based on current estimates, we believe these four lines will likely begin operating sometime in the second half of 2022.

 

“Our commitment to all aspects of sustainability is embedded in our founding principles — valuing the health and safety of our teams, our customers, our communities, and our environment. We recently announced greenhouse gas reduction and renewable energy goals, including a goal for our steel mills to be carbon neutral by 2050. Our goals expand on Steel Dynamics’ existing strong sustainability focus. We have been a leader in the area for more than 25 years with our exclusive use of electric arc furnace technology, circular manufacturing model, and innovative teams creating solutions to increase efficiencies, reduce raw material usage, reuse secondary materials, and promote material conservation and recycling. We are starting from a position of strength yet plan to do more. We are competitively positioned and focused toward generating long-term sustainable growth for all of our stakeholders,” concluded Millett.

 

Conference Call and Webcast

 

Steel Dynamics, Inc. will hold a conference call to discuss second quarter 2021 operating and financial results on Tuesday, July 20, 2021, 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 July 26, 2021.

 

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, railroad 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, Adjusted Net Income, Adjusted Diluted Earnings Per Share, 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 domestic or global economies, conditions in steel and recycled metals marketplaces, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned 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 a guarantee 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) domestic and global economic factors; (2) global steelmaking overcapacity and steel imports, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues, such as the COVID-19 pandemic; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, or other resources are subject to volatile market conditions; (7) compliance with and changes in environmental and remediation requirements; (8) increased regulation associated with the environment, climate change, greenhouse gas emissions and sustainability; (9) significant price and other forms of competition from other steel producers, scrap processors and alternative materials; (10) availability of an adequate source of supply for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance, (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment.

 

More specifically, refer 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 file with the Securities and Exchange Commission. These are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on the Steel Dynamics website, www.steeldynamics.com under “Investors — SEC Filings”.

 

Contact:  Investor Relations — +1.260.969.3500

 

 

Steel Dynamics, Inc. 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) 

(in thousands, except per share data)

 

		Three Months Ended								Six Months Ended								Three Months
		June 30,								June 30,								Ended
		2021				2020				2021				2020				March 31, 2021
Net sales		$	4,465,308			$	2,094,305			$	8,009,905			$	4,669,405			$	3,544,597
Costs of goods sold			3,265,616				1,809,874				6,009,947				3,969,745				2,744,331
Gross profit			1,199,692				284,431				1,999,958				699,660				800,266
Selling, general and administrative expenses			154,379				109,299				304,160				222,197				149,781
Profit sharing			82,140				9,092				130,988				30,546				48,848
Amortization of intangible assets			7,438				7,190				14,876				14,381				7,438
Operating income			955,735				158,850				1,549,934				432,536				594,199
Interest expense, net of capitalized interest			14,898				27,702				32,167				55,721				17,269
Other expense (income), net			10,039				28,103				20,110				25,514				10,071
Income before income taxes			930,798				103,045				1,497,657				351,301				566,859
Income tax expense			218,595				24,280				346,699				81,700				128,104
Net income			712,203				78,765				1,150,958				269,601				438,755
Net income attributable to noncontrolling interests			(9,912	)			(3,269	)			(18,160	)			(6,765	)			(8,248	)
Net income attributable to Steel Dynamics, Inc.		$	702,291			$	75,496			$	1,132,798			$	262,836			$	430,507
Basic earnings per share attributable to
Steel Dynamics, Inc. stockholders		$	3.35			$	0.36			$	5.39			$	1.24			$	2.04
Weighted average common shares outstanding			209,647				210,343				210,331				211,798				211,015
Diluted earnings per share attributable to
Steel Dynamics, Inc. stockholders, including the
effect of assumed conversions when dilutive		$	3.32			$	0.36			$	5.35			$	1.24			$	2.03
Weighted average common shares
and share equivalents outstanding			211,246				211,378				211,750				212,701				212,254
Dividends declared per share		$	0.26			$	0.25			$	0.52			$	0.50			$	0.26

 

 

Steel Dynamics, Inc. 

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

		June 30,				December 31,
Assets		2021				2020
			(unaudited)
Current assets
Cash and equivalents		$	1,113,744			$	1,368,618
Accounts receivable, net			1,571,024				971,918
Inventories			2,481,832				1,843,548
Other current assets			98,509				74,363
Total current assets			5,265,109				4,258,447
Property, plant and equipment, net			4,526,892				4,105,569
Intangible assets, net			309,700				324,577
Goodwill			455,530				457,226
Other assets			130,100				119,743
Total assets		$	10,687,331			$	9,265,562
Liabilities and Equity
Current liabilities
Accounts payable		$	1,183,604			$	769,455
Income taxes payable			80,520				2,386
Accrued expenses			494,616				400,052
Current maturities of long-term debt			93,505				86,894
Total current liabilities			1,852,245				1,258,787
Long-term debt			3,016,486				3,015,782
Deferred income taxes			652,059				536,288
Other liabilities			136,189				106,479
Total liabilities			5,656,979				4,917,336
Commitments and contingencies
Redeemable noncontrolling interests			176,414				158,614
Equity
Common stock			648				648
Treasury stock, at cost			(2,006,895	)			(1,623,747	)
Additional paid-in capital			1,210,833				1,207,392
Retained earnings			5,783,184				4,758,969
Accumulated other comprehensive income			32,344				1,902
Total Steel Dynamics, Inc. equity			5,020,114				4,345,164
Noncontrolling interests			(166,176	)			(155,552	)
Total equity			4,853,938				4,189,612
Total liabilities and equity		$	10,687,331			$	9,265,562

 

 

Steel Dynamics, Inc. 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

(in thousands)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
Operating activities:
Net income		$	712,203			$	78,765			$	1,150,958			$	269,601
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization			87,047				78,721				173,966				158,980
Equity-based compensation			9,808				9,520				26,848				27,364
Deferred income taxes			50,722				14,634				117,466				20,561
Other adjustments			(1,472	)			4,728				(2,134	)			4,464
Changes in certain assets and liabilities:
Accounts receivable			(204,561	)			154,352				(599,106	)			280
Inventories			(264,935	)			77,521				(639,523	)			122,026
Other assets			(4,285	)			11,137				1,543				9,596
Accounts payable			63,155				69,523				423,836				121,119
Income taxes receivable/payable			27,551				7,993				87,144				60,378
Accrued expenses			111,997				(20,884	)			108,423				(97,078	)
Net cash provided by operating activities			587,230				486,010				849,421				697,291
Investing activities:
Purchases of property, plant and equipment			(277,206	)			(309,716	)			(587,069	)			(527,251	)
Purchases of short-term investments			-				-				-				(149,359	)
Proceeds from maturities of short-term investments			-				149,648				-				341,988
Other investing activities			1,859				803				2,249				1,321
Net cash used in investing activities			(275,347	)			(159,265	)			(584,820	)			(333,301	)
Financing activities:
Issuance of current and long-term debt			419,464				1,099,774				716,905				1,316,035
Repayment of current and long-term debt			(408,565	)			(1,103,814	)			(712,849	)			(1,339,571	)
Dividends paid			(54,916	)			(52,584	)			(107,645	)			(104,065	)
Purchase of treasury stock			(393,198	)			-				(393,198	)			(106,529	)
Other financing activities			(6,094	)			(8,763	)			(22,692	)			(14,915	)
Net cash used in financing activities			(443,309	)			(65,387	)			(519,479	)			(249,045	)
Increase (decrease) in cash, cash equivalents, and restricted cash			(131,426	)			261,358				(254,878	)			114,945
Cash, cash equivalents, and restricted cash at beginning of period			1,250,670				1,240,984				1,374,122				1,387,397
Cash, cash equivalents, and restricted cash at end of period		$	1,119,244			$	1,502,342			$	1,119,244			$	1,502,342
Supplemental disclosure information:
Cash paid for interest		$	41,727			$	59,668			$	53,042			$	68,453
Cash paid for income taxes, net		$	146,002			$	1,430			$	148,144			$	1,948

 

 

Steel Dynamics, Inc. 

SUPPLEMENTAL INFORMATION 

(dollars in thousands)

 

		Second Quarter								Year to Date
		2021				2020				2021				2020				1Q 2021
External Net Sales
Steel		$	3,234,519			$	1,628,027			$	5,745,203			$	3,569,733			$	2,510,684
Steel Fabrication			330,852				215,250				587,837				436,186				256,985
Metals Recycling			575,700				156,583				1,045,707				448,439				470,007
Other			324,237				94,445				631,158				215,047				306,921
Consolidated Net Sales		$	4,465,308			$	2,094,305			$	8,009,905			$	4,669,405			$	3,544,597
Operating Income
Steel		$	1,017,024			$	172,395			$	1,658,463			$	465,141			$	641,439
Steel Fabrication			28,450				27,196				38,345				56,400				9,895
Metals Recycling			50,965				(5,918	)			104,898				2,408				53,933
			1,096,439				193,673				1,801,706				523,949				705,267
Non-cash amortization of intangible assets			(7,438	)			(7,190	)			(14,876	)			(14,381	)			(7,438	)
Profit sharing expense			(82,140	)			(9,092	)			(130,988	)			(30,546	)			(48,848	)
Non-segment operations			(51,126	)			(18,541	)			(105,908	)			(46,486	)			(54,782	)
Consolidated Operating Income		$	955,735			$	158,850			$	1,549,934			$	432,536			$	594,199
Adjusted EBITDA
Net income		$	712,203			$	78,765			$	1,150,958			$	269,601			$	438,755
Income taxes			218,595				24,280				346,699				81,700				128,104
Net interest expense			14,604				25,849				31,419				47,639				16,815
Depreciation			78,015				70,116				155,903				141,849				77,888
Amortization of intangible assets			7,438				7,190				14,876				14,381				7,438
Noncontrolling interest (a)			(9,665	)			(3,270	)			(18,087	)			(6,766	)			(8,422	)
EBITDA			1,021,190				202,930				1,681,768				548,404				660,578
Non-cash adjustments
Unrealized (gains) losses			1,305				(208	)			(5,547	)			(1,470	)			(6,852	)
Inventory valuation			144				258				253				1,117				109
Equity-based compensation			9,808				9,519				20,018				20,331				10,210
Refinancing charges			-				4,907				-				4,907				-
Adjusted EBITDA		$	1,032,447			$	217,406			$	1,696,492			$	573,289			$	664,045
Other Operating Information
Steel
Average external sales price (Per ton) (b)		$	1,292			$	755			$	1,169			$	766			$	1,041
Average ferrous cost (Per ton melted) (c)		$	439			$	266			$	406			$	266			$	372
Flat Roll shipments
Butler and Columbus Flat Roll divisions			1,512,530				1,358,473				3,009,061				2,942,737				1,496,531
Steel Processing divisions (d)			410,596				418,837				833,446				824,818				422,850
Long Product shipments
Structural and Rail Division			497,079				400,150				975,766				835,032				478,687
Engineered Bar Products Division			205,205				137,386				405,833				327,187				200,628
Roanoke Bar Division			175,390				125,104				311,810				265,326				136,420
Steel of West Virginia			90,476				78,069				177,634				170,101				87,158
Total Shipments (Tons)			2,891,276				2,518,019				5,713,550				5,365,201				2,822,274
External Shipments (Tons) (b)			2,504,007				2,152,856				4,914,824				4,648,020				2,410,817
Steel Mill Production (Tons)			2,443,314				2,132,167				4,920,253				4,667,400				2,476,939
Metals Recycling
Nonferrous shipments (000's of pounds)			266,859				166,914				547,668				438,992				280,809
Ferrous shipments (Gross tons)			1,400,447				802,070				2,796,290				1,994,214				1,395,843
External ferrous shipments (Gross tons)			520,726				197,970				957,908				591,621				437,182
Steel Fabrication
Average sales price (Per ton)		$	1,753			$	1,364			$	1,582			$	1,360			$	1,406
Shipments (Tons)			189,180				160,168				373,424				323,480				184,243

 

(a)   Quarter ended June 30, 2021, and YTD ended June 30, 2021, net of income tax benefits of ($246) and ($72), respectively

(b)   Represents all steel operations

(c)   Represents ferrous cost per ton melted at our six electric arc furnace steel mills

(d)   Includes Heartland, The Techs, and United Steel Supply operations