Exhibit 99.1
Press Release April 20, 2020 |
 |
7575 W. Jefferson Blvd. Fort Wayne, IN 46804 |
Steel Dynamics Reports First Quarter 2020 Results
FORT WAYNE, INDIANA, April 20, 2020 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2020 financial results. The company reported first quarter 2020 net sales of $2.6 billion and net income of $187 million, or $0.88 per diluted share. Comparatively, prior year first quarter net sales were $2.8 billion, with net income of $204 million, or $0.91 per diluted share. Sequential fourth quarter 2019 net sales were $2.4 billion, with net income of $121 million, or $0.56 per diluted share, which included refinancing costs of $0.01 per diluted share and lower earnings of approximately $0.05 per diluted share associated with planned maintenance outages at the company's two flat roll steel mills.
“The team delivered a strong first quarter 2020 performance in a challenging operating and market environment,” said Mark D. Millett, President and Chief Executive Officer. “Solid underlying steel demand during the first quarter combined with our value-added product capabilities, allowed us to achieve record quarterly steel shipments. Our first quarter 2020 consolidated operating income was $274 million with adjusted EBITDA of $356 million.
“Protecting the health and wellbeing of our teams is at the core of our company,” continued Millett. “We are closely monitoring the COVID-19 situation and have implemented numerous additional practices throughout our organization to protect each of us. I want to thank our more than 8,400 team members for remaining steadfast and passionate. We continue to operate safely with a spirit of excellence, and I am incredibly proud to work alongside each one during this unprecedented time. Our commitment is to the health and safety of our people, our families, and our communities, while serving our customers. This commitment is supported by the strength of our capital foundation and unmatched cash flow generation capability that exists in both strong and weak demand environments.”
First Quarter 2020 Comments
First quarter 2020 operating income for the company’s steel operations was $293 million, or 45 percent higher than sequential fourth quarter results, as record quarterly steel shipments more than offset metal spread compression. With strong demand, volume increased across the steel platform for both flat roll and long products. The first quarter 2020 average external product selling price for the company’s steel operations increased $10 sequentially to $774 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills increased $24 sequentially to $267 per ton.
As a result of higher ferrous and nonferrous selling values and shipments, first quarter 2020 operating income from the company’s metals recycling operations increased to $8 million, compared to a loss of $5 million in the sequential fourth quarter. Monthly ferrous prime scrap indices increased approximately $30 per gross ton during the first quarter.
First quarter 2020 operating income from the company’s steel fabrication operations remained strong at $29 million, lower than near-record sequential fourth quarter results of $33 million, due primarily to seasonally lower shipments. The steel fabrication platform’s order backlog is strong, over 15 percent higher than a year ago.
In the first quarter 2020, the company generated strong cash flow from operations of $211 million and maintained strong liquidity of over $2.6 billion. The company repurchased $107 million of its common stock during the first quarter of 2020.
Outlook
“We entered this crisis in a position of strength with ample cash and available liquidity,” stated Millett. “Our differentiated business model and performance-driven culture has proven our ability to generate strong cash flow during challenging times such as these. Entering 2020, we had available cash of over $1.6 billion in anticipation of the estimated capital investment requirements related to the construction of our new state-of-the art, electric-arc-furnace (EAF) flat roll steel mill. We remain excited about this strategic project, and the associated long-term value creation it will bring through geographic and value-added product diversification. This facility is designed to have product size and quality capabilities beyond that of existing EAF flat roll steel producers, competing even more effectively with the integrated steel model and foreign competition. We have targeted regional markets and expect to displace imports. This facility is located and designed to have a meaningful competitive advantage in these regions. The team received the required environmental permitting to allow for full construction in January 2020, and our plan to commence operations mid-year 2021 currently remains unchanged.
“It is still too early to determine the full scope of the negative impact COVID-19 will cause to global economies and the related impact to domestic steel demand,” continued Millett. “At this time, domestic steel orders related to certain sectors have slowed considerably due to the temporary closures of numerous steel consuming businesses. In particular, the temporary closure of domestic automotive production and its related supply chain, as well as weakness in the energy sector, have reduced flat roll steel demand. Conversely, construction is the largest single domestic steel consuming sector and while some projects have been disrupted or postponed, at this time the sector still remains intact. Our steel order activity from construction customers, as well as our strong steel fabrication order backlog supports this sentiment. When states begin to “re-open” across our Nation, we believe steel demand will likely respond quickly based on current customer buying patterns and already low steel inventories throughout the supply chain.
“The coming weeks will be an incredibly challenging period for our teams and their families, our customers, and our Nation — but we will meet this challenge together and prevail,” concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss first quarter 2020 operating and financial results on Tuesday, April 21, 2020, 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 April 26, 2020.
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 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 domestic or global economies, conditions in steel and recycled metals market places, 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 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, including those derived from the COVID-19 crisis; (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, energy, and other steel-consuming industries; (4) fluctuations in the cost of key raw materials and supplies (including steel scrap, iron units, zinc, graphite electrodes, and energy costs) and our ability to pass on any cost increases; (5) the impact of domestic and foreign imports, including trade policy, restrictions, or agreements; (6) unanticipated difficulties in integrating or starting up new, acquired or planned 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.
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 | |||||||||||
| 2020 | 2019 | December 31, 2019 | ||||||||||
| Net sales | $ | 2,575,100 | $ | 2,817,435 | $ | 2,350,196 | ||||||
| Costs of goods sold | 2,159,871 | 2,383,865 | 2,033,787 | |||||||||
| Gross profit | 415,229 | 433,570 | 316,409 | |||||||||
| Selling, general and administrative expenses | 112,898 | 111,038 | 111,968 | |||||||||
| Profit sharing | 21,454 | 23,677 | 13,633 | |||||||||
| Amortization of intangible assets | 7,191 | 7,013 | 8,847 | |||||||||
| Operating income | 273,686 | 291,842 | 181,961 | |||||||||
| Interest expense, net of capitalized interest | 28,019 | 31,122 | 32,322 | |||||||||
| Other income, net | (2,589 | ) | (6,343 | ) | (424 | ) | ||||||
| Income before income taxes | 248,256 | 267,063 | 150,063 | |||||||||
| Income tax expense | 57,420 | 62,236 | 26,344 | |||||||||
| Net income | 190,836 | 204,827 | 123,719 | |||||||||
| Net income attributable to noncontrolling interests | (3,496 | ) | (499 | ) | (2,294 | ) | ||||||
| Net income attributable to Steel Dynamics, Inc. | $ | 187,340 | $ | 204,328 | $ | 121,425 | ||||||
| Basic earnings per share attributable to Steel Dynamics, Inc. stockholders | $ | 0.88 | $ | 0.91 | $ | 0.56 | ||||||
| Weighted average common shares outstanding | 213,254 | 224,058 | 215,119 | |||||||||
| Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive | $ | 0.88 | $ | 0.91 | $ | 0.56 | ||||||
| Weighted average common shares and share equivalents outstanding | 214,024 | 224,962 | 216,402 | |||||||||
| Dividends declared per share | $ | 0.2500 | $ | 0.2400 | $ | 0.2400 | ||||||
Steel Dynamics, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and equivalents | $ | 1,235,478 | $ | 1,381,460 | ||||
| Short-term investments | 219,193 | 262,174 | ||||||
| Accounts receivable, net | 998,408 | 844,336 | ||||||
| Inventories | 1,644,538 | 1,689,043 | ||||||
| Other current assets | 45,351 | 76,012 | ||||||
| Total current assets | 4,142,968 | 4,253,025 | ||||||
| Property, plant and equipment, net | 3,327,605 | 3,135,886 | ||||||
| Intangible assets, net | 320,711 | 327,901 | ||||||
| Goodwill | 452,068 | 452,915 | ||||||
| Other assets | 101,571 | 106,038 | ||||||
| Total assets | $ | 8,344,923 | $ | 8,275,765 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 612,160 | $ | 513,344 | ||||
| Income taxes payable | 17,806 | 2,014 | ||||||
| Accrued expenses | 331,648 | 401,984 | ||||||
| Current maturities of long-term debt | 70,106 | 89,356 | ||||||
| Total current liabilities | 1,031,720 | 1,006,698 | ||||||
| Long-term debt | 2,646,012 | 2,644,988 | ||||||
| Deferred income taxes | 489,248 | 484,169 | ||||||
| Other liabilities | 72,004 | 75,055 | ||||||
| Total liabilities | 4,238,984 | 4,210,910 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interests | 151,014 | 143,614 | ||||||
| Equity | ||||||||
| Common stock | 646 | 646 | ||||||
| Treasury stock, at cost | (1,624,808 | ) | (1,525,113 | ) | ||||
| Additional paid-in capital | 1,183,776 | 1,181,012 | ||||||
| Retained earnings | 4,553,882 | 4,419,296 | ||||||
| Accumulated other comprehensive income (loss) | 30 | (7 | ) | |||||
| Total Steel Dynamics, Inc. equity | 4,113,526 | 4,075,834 | ||||||
| Noncontrolling interests | (158,601 | ) | (154,593 | ) | ||||
| Total equity | 3,954,925 | 3,921,241 | ||||||
| Total liabilities and equity | $ | 8,344,923 | $ | 8,275,765 | ||||
Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2020 | 2019 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 190,836 | $ | 204,827 | ||||
| Adjustments to reconcile net income to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 80,259 | 80,174 | ||||||
| Equity-based compensation | 17,844 | 15,308 | ||||||
| Deferred income taxes | 5,927 | 12,091 | ||||||
| Other adjustments | (264 | ) | 728 | |||||
| Changes in certain assets and liabilities: | ||||||||
| Accounts receivable | (154,072 | ) | (61,062 | ) | ||||
| Inventories | 44,505 | 39,469 | ||||||
| Other assets | (1,541 | ) | 301 | |||||
| Accounts payable | 51,596 | 3,206 | ||||||
| Income taxes receivable/payable | 52,385 | 49,850 | ||||||
| Accrued expenses | (76,194 | ) | (163,339 | ) | ||||
| Net cash provided by operating activities | 211,281 | 181,553 | ||||||
| Investing activities: | ||||||||
| Purchases of property, plant and equipment | (217,535 | ) | (54,436 | ) | ||||
| Purchases of short-term investments | (149,359 | ) | (49,677 | ) | ||||
| Proceeds from maturities of short-term investments | 192,340 | 104,737 | ||||||
| Acquisition of business, net of cash and restricted cash acquired | - | (93,412 | ) | |||||
| Other investing activities | 518 | 364 | ||||||
| Net cash used in investing activities | (174,036 | ) | (92,424 | ) | ||||
| Financing activities: | ||||||||
| Issuance of current and long-term debt | 216,261 | 121,234 | ||||||
| Repayment of current and long-term debt | (235,757 | ) | (115,271 | ) | ||||
| Dividends paid | (51,481 | ) | (42,239 | ) | ||||
| Purchase of treasury stock | (106,529 | ) | (84,308 | ) | ||||
| Other financing activities | (6,152 | ) | (5,720 | ) | ||||
| Net cash used in financing activities | (183,658 | ) | (126,304 | ) | ||||
| Decrease in cash, cash equivalents, and restricted cash | (146,413 | ) | (37,175 | ) | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | 1,387,397 | 834,423 | ||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,240,984 | $ | 797,248 | ||||
| Supplemental disclosure information: | ||||||||
| Cash paid for interest | $ | 8,785 | $ | 8,606 | ||||
| Cash paid for income taxes, net | $ | 518 | $ | 1,839 | ||||
Steel Dynamics, Inc.
SUPPLEMENTAL INFORMATION
(dollars in thousands)
| First Quarter | ||||||||||||
| 2020 | 2019 | 4Q 2019 | ||||||||||
| External Net Sales | ||||||||||||
| Steel | $ | 1,941,706 | $ | 2,124,570 | $ | 1,771,398 | ||||||
| Fabrication | 220,936 | 228,480 | 246,173 | |||||||||
| Metals Recycling | 291,856 | 351,137 | 242,862 | |||||||||
| Other | 120,602 | 113,248 | 110,058 | |||||||||
| Consolidated Net Sales | $ | 2,575,100 | $ | 2,817,435 | $ | 2,370,491 | ||||||
| Operating Income | ||||||||||||
| Steel | $ | 292,746 | $ | 312,437 | $ | 201,266 | ||||||
| Fabrication | 29,204 | 20,663 | 32,573 | |||||||||
| Metals Recycling | 8,326 | 19,958 | (5,251 | ) | ||||||||
| Operations | 330,276 | 353,058 | 228,588 | |||||||||
| Non-cash amortization of intangible assets | (7,191 | ) | (7,013 | ) | (8,847 | ) | ||||||
| Profit sharing expense | (21,454 | ) | (23,677 | ) | (13,633 | ) | ||||||
| Non-segment operations | (27,945 | ) | (30,526 | ) | (24,147 | ) | ||||||
| Consolidated Operating Income | $ | 273,686 | $ | 291,842 | $ | 181,961 | ||||||
| Adjusted EBITDA | ||||||||||||
| Net income | $ | 190,836 | $ | 204,827 | $ | 123,719 | ||||||
| Income taxes | 57,420 | 62,236 | 26,344 | |||||||||
| Net interest expense | 21,790 | 24,017 | 25,355 | |||||||||
| Depreciation | 71,733 | 71,846 | 70,314 | |||||||||
| Amortization of intangible assets | 7,191 | 7,013 | 8,847 | |||||||||
| Noncontrolling interest | (3,496 | ) | (499 | ) | (2,294 | ) | ||||||
| EBITDA | 345,474 | 369,440 | 252,285 | |||||||||
| Non-cash adjustments | ||||||||||||
| Unrealized hedging (gain) loss | (1,262 | ) | 1,742 | 589 | ||||||||
| Inventory valuation | 859 | 241 | 352 | |||||||||
| Equity-based compensation | 10,812 | 10,619 | 14,400 | |||||||||
| Financing expenses | - | - | 2,780 | |||||||||
| Adjusted EBITDA | $ | 355,883 | $ | 382,042 | $ | 270,406 | ||||||
| Other Operating Information | ||||||||||||
| Steel | ||||||||||||
| Average external sales price (Per ton) (a) | $ | 774 | $ | 902 | $ | 764 | ||||||
| Average ferrous cost (Per ton melted) (b) | $ | 267 | $ | 338 | $ | 243 | ||||||
| Flat Roll shipments | ||||||||||||
| Butler and Columbus Flat Roll divisions | 1,584,264 | 1,526,851 | 1,512,003 | |||||||||
| Steel Processing divisions (c) | 405,981 | 330,775 | 404,388 | |||||||||
| Long Product shipments | ||||||||||||
| Structural and Rail Division | 434,882 | 376,263 | 374,774 | |||||||||
| Engineered Bar Products Division | 189,801 | 206,874 | 153,692 | |||||||||
| Roanoke Bar Division | 140,222 | 152,400 | 125,125 | |||||||||
| Steel of West Virginia | 92,032 | 91,248 | 80,981 | |||||||||
| Total Shipments (Tons) | 2,847,182 | 2,684,411 | 2,650,963 | |||||||||
| External Shipments (Tons) (a) | 2,495,164 | 2,347,209 | 2,305,633 | |||||||||
| Steel Production (Tons) (a) | 2,891,056 | 2,745,128 | 2,647,400 | |||||||||
| Metals Recycling | ||||||||||||
| Nonferrous shipments (000's of pounds) | 272,078 | 292,038 | 252,861 | |||||||||
| Ferrous shipments (Gross tons) | 1,192,144 | 1,171,361 | 1,096,211 | |||||||||
| External ferrous shipments (Gross tons) | 393,651 | 382,841 | 361,504 | |||||||||
| Fabrication | ||||||||||||
| Average sales price (Per ton) | $ | 1,356 | $ | 1,575 | $ | 1,419 | ||||||
| Shipments (Tons) | 163,312 | 145,222 | 173,635 | |||||||||
(a) Represents all steel operations
(b) Represents ferrous cost per ton melted at our six electric arc furnace steel mills
(c) Includes Heartland, The Techs and United Steel Supply locations