EX-99.1 2 a13-10355_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Press Release
April 17, 2013

 

GRAPHIC

 

7575 W. Jefferson Blvd.

 

Fort Wayne, IN  46804

 

Steel Dynamics Reports First Quarter 2013 Diluted Earnings Per Share of $0.21

 

FORT WAYNE, INDIANA, April 17, 2013 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2013 net income of $48 million, or $0.21 per diluted share, on net sales of $1.8 billion.  By comparison, prior year first quarter net income was $46 million, or $0.20 per diluted share, on net sales of $2.0 billion; and sequential fourth quarter 2012 net income was $61 million, or $0.27 per diluted share, on net sales of $1.7 billion.  Prior quarters included the following items—first quarter 2012 earnings were reduced by $0.03 per diluted share due to refinancing costs and fourth quarter 2012 earnings were increased by $0.07 per diluted share due to positive tax adjustments.

 

“The first quarter remained challenging from a market perspective, as customer confidence and buying patterns continued to be impacted by global economic uncertainty;” said President and Chief Executive Officer, Mark Millett, “but the team did a great job.  We hit several production records, and did so safely, as safety records improved from levels already better than industry standards.  We are pleased the first quarter financial performance was at the upper range of our March guidance.  Operating income improved slightly to $96 million compared to last quarter’s results.

 

“Compared to the fourth quarter, operating income from our steel operations improved four percent to $122 million, as increased long product volumes more than offset weaker sheet steel shipments and somewhat lower overall metal spreads,” stated Millett.  “An oversupplied northeastern U.S. galvanized sheet market pressured first quarter shipments from The Techs.  However, increased shipments of wide flange beams, rail and engineered bar products more than offset the decrease.  Despite the slow growth of the commercial construction market, we have seen increased wide flange beam shipments for several consecutive quarters, albeit still very low in relative historical terms, and our fabrication business continues to be profitable.

 

“Operating income from our metals recycling operations decreased three percent to $25 million when compared to the fourth quarter, as increased volumes were more than offset by decreased ferrous and nonferrous margins,” said Millett. “We noted in our fourth quarter 2012 earnings release that we were anticipating potential challenges in the metals recycling market during the first quarter 2013.  Due to ongoing slow U.S. growth and inclement weather, the availability of unprocessed scrap was limited, particularly in the Midwest and along the northeastern corridor, resulting in increased costs to purchase unprocessed material.

 

“The company’s continued solid performance in a difficult market environment is driven by our ongoing commitment to provide exceptional value to our customers, while taking advantage of our innovative, low-cost operating culture.  We remain committed to leveraging the full complement of our competitive strengths to sustain and grow shareholder value,” Millett concluded.

 

First Quarter Review

 

First quarter shipments were higher across the company’s operating segments when compared to the fourth quarter of 2012, and to the prior year first quarter, aside from metals recycling which decreased year over year.  Operating income increased slightly when compared to the fourth quarter of last year, but declined 20 percent from prior year’s first quarter, primarily due to reduced steel metal spreads, as steel product pricing decreased more than scrap raw material costs.

 

The company’s steel mill utilization rate improved to 89 percent in the first quarter from 80 percent in the fourth quarter of 2012.  There was a shift toward higher valued-added products in the company’s steel shipments during the first quarter of 2013, when compared to the fourth quarter of 2012.  This change helped offset decreased metal spread, resulting in increased operating income of $4 million.  The average

 



 

selling price per ton shipped increased $5 to $789 in the first quarter, and the average ferrous scrap cost per ton melted increased $8 per ton.   Operating income attributable to the company’s long product operations increased 16 percent when compared to the sequential quarter, while earnings from sheet operations decreased four percent.

 

The impact of losses from the company’s Minnesota operations on first quarter 2013 consolidated net income was approximately $14 million, or $0.06 per diluted share, which included a unique loss of $2 million (after taxes), or $0.01 per diluted share, related to the sale of excess iron concentrate reserves purchased from third parties.  In addition, despite achieving record production levels, the use of higher cost iron concentrate during the quarter also resulted in increased operating losses.  Comparatively, the impact of losses on fourth quarter 2012 earnings was $10 million, or approximately $0.04 per diluted share.  As previously indicated and according to plan, the installation of additional oxygen-burners and other equipment modifications will be made at the iron nugget facility in April.  These modifications are expected to further improve production volumes.

 

Production at the company’s iron concentrate facility continues to proceed well, and the plant is operating at a cash-cost of less than $50 per metric ton, which is substantially less than current market prices in excess of $135 per metric ton.  As iron concentrate is the primary raw material for the iron nugget facility, this is a pivotal achievement in lowering the raw material input cost of iron nuggets.

 

The company plans to start solely using its lower-cost iron concentrate for nugget production in May.  However, due to costs related to the outage, the company still anticipates second quarter 2013 losses associated with the Minnesota operations to be similar to those recorded in the fourth quarter of 2012.

 

During the first quarter the company issued $400 million of new 5¼% senior notes due in 2023 and offered to repay $500 million of its existing 6¾% senior notes due in 2015.  At March 31, 2013, the company had repaid $302 million of the existing senior notes, repaying the remaining amount of $198 million on April 9, 2013.  After giving effect to the April repayment, total debt decreased $100 million and liquidity remained strong with $1.4 billion in unrestricted cash and available funding under the revolving credit facility. These transactions, along with the resulting repayment of debt with available cash, not only extended the company’s overall debt maturity profile, but should also provide an estimated annual interest savings of approximately $13 million.

 

Outlook

 

“Demand for high-quality steel products has not abated,” Millett said. “We remain optimistic. The team is on track to complete the organic growth projects scheduled to start at the end of this year, including the engineered special-bar-quality capacity expansion and the premium rail product addition.  The automotive market remains strong, and we believe there is potential for manufactured goods to continue to build momentum in 2013.   Housing start data also suggests an increasingly higher potential for a recovery in residential construction. We continue to be cautiously optimistic about the nonresidential construction market in 2013, as market indices continue to trend higher. We also view the increase in our long product and fabrication sales as a positive sign, even though they are improving from historically low levels. We are confident that with our exceptional team, and our superior, low-cost operating culture, we are uniquely prepared to capitalize on the opportunities ahead.”

 



 

Summary First Quarter Operating Segment Information

 

The following tables highlight operating results for each of the company’s primary operating platforms. References to operating income in the following paragraphs exclude profit-sharing expenses and amortization pertaining to intangible assets.  Dollar amounts are in thousands, excluding per ton data.

 

Steel Operations

 

This segment includes five electric-arc-furnace steel mills and related steel finishing and processing facilities, including The Techs. The company’s steel operations produce flat-rolled steel, structural steel, merchant bars, engineered special-bar-quality steel, rebar, rail, and specialty shapes.

 

 

 

First Quarter

 

Sequential

 

 

 

2013

 

2012

 

4Q 2012

 

Total Sales

 

$

1,142,075

 

$

1,254,464

 

$

1,126,438

 

External Sales

 

1,061,312

 

1,186,720

 

1,061,419

 

Operating Income

 

121,589

 

139,740

 

117,097

 

Total Shipments (tons)

 

1,469,802

 

1,450,123

 

1,457,053

 

Average External Sales Price Per Ton

 

$

789

 

$

875

 

$

784

 

Average Ferrous Scrap Cost Per Ton

 

$

351

 

$

417

 

$

343

 

 

Metals Recycling and Ferrous Resources Operations

 

This segment principally includes the company’s metals recycling operations (OmniSource Corporation), a liquid pig iron production facility (Iron Dynamics), and the company’s Minnesota iron producing operations.

 

 

 

First Quarter

 

Sequential

 

Metals Recycling & Ferrous Resources

 

2013

 

2012

 

4Q 2012

 

Total Sales

 

$

914,568

 

$

1,112,340

 

$

798,163

 

External Sales

 

621,128

 

699,600

 

530,258

 

Operating Income (Loss)

 

(4,309

)

10,399

 

507

 

 

 

 

First Quarter

 

Sequential

 

Metals Recycling (Standalone)

 

2013

 

2012

 

4Q 2012

 

Total Sales

 

$

835,039

 

$

1,057,173

 

$

741,342

 

External Sales

 

609,918

 

699,342

 

520,931

 

Operating Income

 

24,965

 

25,004

 

25,818

 

Unrealized Hedging Gains

 

691

 

2,003

 

9,820

 

Ferrous Shipments (gross tons)

 

1,342,929

 

1,582,840

 

1,238,143

 

% Shipments to SDI Steel Mills

 

41

%

48

%

46

%

Nonferrous Shipments (pounds 000’s)

 

279,656

 

291,636

 

251,080

 

 

Steel Fabrication Operations

 

Steel fabrication operations include New Millennium Building Systems, which fabricates steel joists, trusses, and decking used in the construction of non-residential buildings.

 

 

 

First Quarter

 

Sequential

 

 

 

2013

 

2012

 

4Q 2012

 

Total Sales

 

$

94,375

 

$

74,896

 

$

98,301

 

Operating Income (Loss)

 

1,530

 

(2,668

)

1,448

 

Total Shipments (tons)

 

77,583

 

60,183

 

76,870

 

Average External Sales Price Per Ton

 

$

1,214

 

$

1,244

 

$

1,278

 

 



 

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 annual sales of $7.3 billion in 2012, over 6,600 employees, and manufacturing facilities primarily located throughout the United States (including five steel mills, six steel processing facilities, two iron production facilities, over 70 metals recycling locations and six steel fabrication plants).

 

Forward-Looking Statement

 

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 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 a recurrent slowing economy on industrial demand; (2) changes in economic conditions, either generally or in any of the steel or scrap-consuming sectors which affect demand for our products, including the strength of the non-residential and residential construction, automotive, appliance, and other steel-consuming industries; (3) 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; (4) the impact of domestic and foreign import price competition; (5) risks and uncertainties involving product and/or technology development; and (6) occurrences of unexpected plant outages or equipment failures.

 

More specifically, we refer you to SDI’s 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, 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 Web site, www.sec.gov, and on the Steel Dynamics Web site, www.steeldynamics.com.

 

Conference Call and Webcast

 

On Thursday, April 18, 2013, at 10:00 a.m. Eastern Time, Steel Dynamics will host a conference call with investors and analysts to discuss the company’s first quarter 2013 operating and financial results.  We invite you to listen to the live audiocast of the conference call accessible from our website (http://www.steeldynamics.com), or via telephone (the conference call number may also be obtained on our website).   A replay of the discussion will be available on our website until midnight on  April 25, 2013.  A downloadable podcast and an MP3 file of the event will also be available on our website.

 

Contact:  Marlene Owen, Director Investor Relations —+1.260.969.3500

 



 

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Three Months
Ended

 

 

 

March 31,

 

December 31,

 

 

 

2013

 

2012

 

2012

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,795,696

 

$

1,982,040

 

$

1,705,001

 

Costs of goods sold

 

1,619,432

 

1,780,776

 

1,524,904

 

Gross profit

 

176,264

 

201,264

 

180,097

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

65,262

 

64,384

 

69,340

 

Profit sharing

 

6,643

 

8,072

 

6,750

 

Amortization of intangible assets

 

8,127

 

8,992

 

8,722

 

Impairment charges

 

 

 

356

 

Operating income

 

96,232

 

119,816

 

94,929

 

 

 

 

 

 

 

 

 

Interest expense, net of capitalized interest

 

34,629

 

41,112

 

34,877

 

Other expense (income), net

 

(1,046

)

10,248

 

(3,852

)

Income before income taxes

 

62,649

 

68,456

 

63,904

 

 

 

 

 

 

 

 

 

Income taxes

 

21,397

 

26,679

 

8,810

 

Net income

 

41,252

 

41,777

 

55,094

 

 

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interests

 

6,963

 

3,898

 

5,477

 

 

 

 

 

 

 

 

 

Net income attributable to Steel Dynamics, Inc.

 

$

48,215

 

$

45,675

 

$

60,571

 

 

 

 

 

 

 

 

 

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

 

$

.22

 

$

.21

 

$

.28

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

219,995

 

218,996

 

219,346

 

 

 

 

 

 

 

 

 

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

 

$

.21

 

$

.20

 

$

.27

 

 

 

 

 

 

 

 

 

Weighted average common shares and equivalents outstanding

 

238,087

 

236,526

 

236,890

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

.11

 

$

.10

 

$

.10

 

 



 

Steel Dynamics, Inc.

UNAUDITED SUPPLEMENTAL OPERATING INFORMATION

(dollars in thousands)

 

 

 

Quarter Ended

 

Quarter Ended

 

 

 

March 31,

 

December 31,

 

 

 

2013

 

2012

 

2012

 

Steel Operations*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipments (tons)

 

 

 

 

 

 

 

Flat Roll Division

 

704,290

 

658,505

 

713,770

 

Structural and Rail Division

 

 

 

 

 

 

 

Structural

 

228,089

 

227,059

 

225,100

 

Rail

 

52,808

 

33,947

 

37,341

 

Engineered Bar Products Division

 

112,821

 

157,489

 

98,858

 

Roanoke Bar Division

 

139,950

 

151,296

 

127,952

 

Steel of West Virginia

 

80,707

 

77,212

 

73,581

 

The Techs

 

151,137

 

144,615

 

180,451

 

Total

 

1,469,802

 

1,450,123

 

1,457,053

 

Intra-company

 

(125,370

)

(94,176

)

(102,772

)

External

 

1,344,432

 

1,355,947

 

1,354,281

 

 

 

 

 

 

 

 

 

Production, excluding The Techs (tons)

 

1,407,508

 

1,351,818

 

1,290,567

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

Total

 

$

1,142,075

 

$

1,254,464

 

$

1,126,438

 

Intra-company

 

(80,763

)

(67,744

)

(65,019

)

External

 

$

1,061,312

 

$

1,186,720

 

$

1,061,419

 

 

 

 

 

 

 

 

 

Operating income before amortization of intangibles

 

$

121,589

 

$

139,740

 

$

117,097

 

Amortization of intangibles

 

(2,288

)

(2,432

)

(2,289

)

Operating income (Note 1)

 

$

119,301

 

$

137,308

 

$

114,808

 

 

 

 

 

 

 

 

 

Metals Recycling and Ferrous Resources Operations**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OmniSource

 

 

 

 

 

 

 

Ferrous metals shipments (gross tons)

 

 

 

 

 

 

 

Total

 

1,342,929

 

1,582,840

 

1,238,143

 

Intra-company

 

(553,890

)

(763,767

)

(573,293

)

External

 

789,039

 

819,073

 

664,850

 

 

 

 

 

 

 

 

 

Nonferrous metals shipments (thousands of pounds)

 

 

 

 

 

 

 

Total

 

279,656

 

291,636

 

251,080

 

Intra-company

 

(3,529

)

(1,958

)

(3,456

)

External

 

276,127

 

289,678

 

247,624

 

 

 

 

 

 

 

 

 

Mesabi Nugget shipments (metric tons) - Intra-company

 

59,685

 

46,230

 

36,481

 

 

 

 

 

 

 

 

 

Iron Dynamics (metric tons) - Intra-company

 

64,685

 

56,628

 

57,117

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

Total

 

$

914,568

 

$

1,112,340

 

$

798,163

 

Intra-company

 

(293,440

)

(412,740

)

(267,905

)

External

 

$

621,128

 

$

699,600

 

$

530,258

 

 

 

 

 

 

 

 

 

Operating income (loss) before amortization of intangibles

 

$

(4,309

)

$

10,399

 

$

507

 

Amortization of intangibles

 

(5,515

)

(6,236

)

(6,110

)

Operating income (loss) (Note 1)

 

$

(9,824

)

$

4,163

 

$

(5,603

)

 

 

 

 

 

 

 

 

Steel Fabrication Operations***

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipments (tons)

 

 

 

 

 

 

 

Total

 

77,583

 

60,183

 

76,870

 

Intra-company

 

(334

)

(2

)

(187

)

External

 

77,249

 

60,181

 

76,683

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

Total

 

$

94,375

 

$

74,896

 

$

98,301

 

Intra-company

 

(578

)

(4

)

(277

)

External

 

$

93,797

 

$

74,892

 

$

98,024

 

 

 

 

 

 

 

 

 

Operating income (loss) (Note 1)

 

$

1,530

 

$

(2,668

)

$

1,448

 

 


*

Steel Operations include the company’s five steelmaking divisions and The Techs three galvanizing plants.

**

Metals Recycling and Ferrous Resources Operations include OmniSource; Iron Dynamics (all shipments are internal); and Minnesota Operations, including Mesabi Nugget (all shipments have been internal).

***

Steel Fabrication Operations include the company’s joist and deck fabrication operations.

(Note 1) Segment operating income (loss) excludes profit sharing expense.

 



 

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

March 31,
2013

 

December 31,
2012

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and equivalents

 

$

477,861

 

$

375,917

 

Investments in short-term commercial paper

 

 

31,520

 

Accounts receivable, net

 

753,301

 

642,363

 

Inventories

 

1,170,159

 

1,202,507

 

Deferred income taxes

 

23,564

 

23,449

 

Income taxes receivable

 

412

 

893

 

Other current assets

 

23,644

 

19,576

 

Total current assets

 

2,448,941

 

2,296,225

 

 

 

 

 

 

 

Property, plant and equipment, net

 

2,232,413

 

2,231,198

 

 

 

 

 

 

 

Restricted cash

 

23,400

 

27,749

 

 

 

 

 

 

 

Intangible assets, net

 

408,832

 

416,635

 

 

 

 

 

 

 

Goodwill

 

736,912

 

738,542

 

 

 

 

 

 

 

Other assets

 

106,076

 

105,067

 

Total assets

 

$

5,956,574

 

$

5,815,416

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

410,632

 

$

360,097

 

Income taxes payable

 

13,438

 

16,941

 

Accrued expenses

 

159,035

 

203,008

 

Current maturities of long-term debt

 

231,582

 

29,631

 

Total current liabilities

 

814,687

 

609,677

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

Term note

 

240,625

 

247,500

 

Senior notes

 

1,500,000

 

1,600,000

 

Convertible senior notes

 

287,496

 

287,496

 

Other long-term debt

 

41,093

 

37,610

 

Total long-term debt

 

2,069,214

 

2,172,606

 

 

 

 

 

 

 

Deferred income taxes

 

546,722

 

537,304

 

Other liabilities

 

19,947

 

19,173

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

99,414

 

98,814

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Common stock

 

639

 

637

 

Treasury stock, at cost

 

(719,076

)

(720,479

)

Additional paid-in capital

 

1,045,973

 

1,037,687

 

Retained earnings

 

2,111,597

 

2,087,620

 

Total Steel Dynamics, Inc. equity

 

2,439,133

 

2,405,465

 

Noncontrolling interests

 

(32,543

)

(27,623

)

Total equity

 

2,406,590

 

2,377,842

 

Total liabilities and equity

 

$

5,956,574

 

$

5,815,416

 

 



 

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

Net income

 

$

41,252

 

$

41,777

 

 

 

 

 

 

 

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

 

 

 

 

 

Depreciation and amortization

 

57,061

 

55,572

 

Equity-based compensation

 

4,753

 

6,123

 

Deferred income taxes

 

10,935

 

9,197

 

Changes in certain assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(110,938

)

(60,820

)

Inventories

 

32,348

 

(55,090

)

Accounts payable

 

38,988

 

34,902

 

Income taxes receivable/payable

 

(3,022

)

17,392

 

Other assets and liabilities

 

(41,667

)

(27,632

)

Net cash provided by operating activities

 

29,710

 

21,421

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchase of property, plant and equipment

 

(45,346

)

(45,555

)

Other investing activities

 

33,934

 

(1,864

)

Net cash used in investing activities

 

(11,412

)

(47,419

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Issuance of current and long-term debt

 

409,261

 

289,969

 

Repayment of current and long-term debt

 

(305,691

)

(283,448

)

Debt issuance costs

 

(5,997

)

(2,191

)

Proceeds from exercise of stock options, including related tax effect

 

7,614

 

1,097

 

Contributions from noncontrolling investors, net

 

411

 

9,506

 

Dividends paid

 

(21,952

)

(21,887

)

Net cash provided by (used in) financing activities

 

83,646

 

(6,954

)

 

 

 

 

 

 

Increase (decrease) in cash and equivalents

 

101,944

 

(32,952

)

Cash and equivalents at beginning of period

 

375,917

 

390,761

 

 

 

 

 

 

 

Cash and equivalents at end of period

 

$

477,861

 

$

357,809

 

 

 

 

 

 

 

Supplemental disclosure information:

 

 

 

 

 

Cash paid for interest

 

$

49,732

 

$

18,753

 

Cash paid (received) for federal and state income taxes, net

 

$

11,165

 

$

(955

)