EX-99.1 2 tm2016549d1_ex99-1.htm EXHIBIT 99.1

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