| Exhibit 99.1 |
|
Press Release April 19, 2021 |
 |
7575 W. Jefferson Blvd.
Fort Wayne, IN 46804
Steel Dynamics Reports Record First Quarter 2021 Results
FORT WAYNE, INDIANA, April 19, 2021 / PRNewswire /
First Quarter 2021 Performance Highlights:
| § | Near-record steel shipments of 2.8 million tons and record steel fabrication shipments of 184,000 tons |
| § | Record net sales of $3.5 billion |
| § | Record operating income of $594 million and record net income of $431 million |
| § | Strong cash flow from operations of $262 million and record adjusted EBITDA of $664 million |
Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2021 financial results. The company reported first quarter 2021 net sales of $3.5 billion and net income of $431 million, or $2.03 per diluted share. Excluding the impact from the following item, the company’s first quarter 2021 adjusted net income was $445 million, or $2.10 per diluted share.
| § | Costs of approximately $20 million, or $0.07 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 first quarter net sales were $2.6 billion, with net income of $187 million, or $0.88 per diluted share. The company’s sequential fourth quarter 2020 earnings were $0.89 per diluted share and adjusted earnings were $0.97 per diluted share, excluding refinancing costs of $0.04 per diluted share, construction costs related to the Texas steel mill of $0.05 per diluted share, a non-cash asset impairment charge of $0.06 per diluted share, and a tax benefit related to the reduction of a valuation allowance of $0.06 per diluted share.
“The team delivered a tremendous first quarter performance, achieving record quarterly net sales, operating income and adjusted EBITDA,” said Mark D. Millett, President and Chief Executive Officer. “Our first quarter 2021 operating income increased 130 percent sequentially to $594 million, with adjusted EBITDA of $664 million. Numerous individual operating and financial records were attained — a truly amazing achievement and a testament to the passion and dedication of our team. Based on their performance, we achieved solid cash flow from operations of $262 million in the first quarter 2021, while at the same time supporting increased working capital needs, meaningfully growing our business through significant organic growth investments, increasing our quarterly cash dividend by four percent, and maintaining strong liquidity of over $2.4 billion.
“During the first quarter, steel demand remained robust and product pricing gained momentum across our entire steel platform. Higher flat roll steel selling values were the most significant drivers for our record quarterly earnings, as demand strength and historically low customer inventories throughout the supply chain supported prices. Domestic steel consumption remained strong from the automotive, construction and industrial sectors, and energy has shown some signs of rebounding.
“Despite the challenges of the pandemic, as a result of our safety culture and spirit of excellence among our teams, our first quarter 2021 segment operating results were once again phenomenal,” continued Millett. “First quarter operating income from our steel operations was a record $641 million and our metals recycling operations nearly doubled their earnings sequentially, as improved domestic steel mill utilization increased ferrous scrap demand. Our steel fabrication operations also displayed a solid performance, achieving record quarterly shipments and ending March with a record order backlog that is over 50 percent higher than our previous high point, as we head into the summer construction season.”
First Quarter 2021 Comments
First quarter 2021 operating income for the company’s steel operations was a record $641 million, or 115 percent higher than sequential fourth quarter results, due to significant metal spread expansion and near-record steel shipments. Record flat roll and strong long product steel realized selling values, more than offset higher scrap input costs. The first quarter 2021 average external product selling price for the company’s steel operations increased $227 sequentially to $1,041 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills increased $93 sequentially to $372 per ton.
As domestic steel production continued to rise in the quarter, demand and pricing for recycled scrap significantly improved. Ferrous prime scrap pricing indices increased approximately $170 per gross ton during the first quarter. As a result, first quarter 2021 operating income from the company’s metals recycling operations nearly doubled to $54 million, compared to the sequential fourth quarter.
The company’s steel fabrication operations reported operating income of $10 million in the first quarter 2021, over 60 percent lower than the sequential fourth quarter results. Notwithstanding achieving record quarterly shipments, earnings declined as significantly higher steel input costs more than offset higher realized selling values, due to the timing of matching a six-month backlog to more current higher-priced steel inputs. Lower earnings are not a reflection of weaker demand, as order activity is extremely strong and customers continue to be optimistic concerning non-residential construction projects. The company’s steel fabrication order backlog is at a record level at the end of March, 85 percent higher than its previous peak. Steel joist and deck product pricing has also strengthened significantly to record levels due to the strong demand environment and higher steel input costs.
Outlook
“We remain confident that market conditions are in place to benefit the domestic steel industry in 2021 and beyond,” said Millett. “While global economies are still recovering from the shock of COVID-19, we are seeing strong steel demand coupled with extremely low customer steel inventory throughout the supply chain. The automotive sector has experienced the strongest recovery, despite the electronic chip shortage, and the construction, equipment and transportation sectors are also strong. Our order entry continues to be robust across our businesses, and when coupled with historically low inventories, supports continued strong steel selling values. We believe this momentum will continue throughout the year and that our second quarter 2021 earnings will be even higher than our record first quarter 2021 results. We also believe U.S. trade policies and existing steel trade cases will continue to moderate steel imports. Based on strong domestic steel fundamentals and customer optimism, we continue to be confident regarding North American steel market dynamics. This positive 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 Flat Roll Steel Mill investment. It represents transformational competitively-advantaged strategic growth, with associated long-term value creation for all of our stakeholders. The facility is designed to have product capabilities beyond that of existing electric-arc-furnace (EAF) flat roll steel producers, competing even more effectively with the higher-carbon emitting integrated steel model and foreign competition, providing a broader steel portfolio and a climate-conscious supply option for our customers. Construction continues to go well and remains within our expected project cost of $1.9 billion, with plans to commence steel production late summer 2021. We have targeted specific regional steel consuming markets and are competitively located close to these areas, with an opportunity to also displace foreign steel imports. We have executed agreements with several customers to co-locate on our site, currently representing over 1.3 million tons of annual steel consumption and processing capabilities, and we are still in discussion with others. Our recent acquisition of a Mexican scrap company is also providing a key support for Sinton’s ferrous scrap needs.
“Additionally, as recently announced, we are planning to add four additional value-added flat roll steel coating lines comprised of two paint lines and two galvanizing lines with Galvalume® coating capability. The sites for these lines are still to be determined but two lines comprised of one paint line and one galvanizing line will be located in the Southern U.S., to provide Sinton with the same diversification and higher-margin product capabilities as our Butler and Columbus Flat Roll Steel divisions. The estimated investment for these two lines is $225 million, with a combined annual coating capacity of 540,000 tons. The other two lines will have the same annual coating capacity with an estimated investment between $175 million and $200 million. They will be located in the Midwest to support the growing demand for coated flat roll steel products and to further increase the diversification and cash generation capacity of our existing Midwest flat roll steel operations. Our unique operating culture, coupled with our considerable experience in successfully constructing and operating highly-profitable EAF steel mills and flat roll steel coating lines, positions us well to execute these strategic growth initiatives. Based on our current estimates, we believe these four lines will likely begin operating sometime in the second half of 2022.
“Our commitment is to the health and safety of our teams, families, and communities, while meeting the current and future needs of our customers. Our culture and business model continue to positively differentiate our performance from the rest of the industry, and we are in a place of strength. We are competitively positioned and focused to generate long-term sustainable value for all of our stakeholders,” concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss first quarter 2021 operating and financial results on Tuesday, April 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 April 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, 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 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 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 | Three Months | |||||||||||
| March 31, | Ended | |||||||||||
| 2021 | 2020 | Dec. 31, 2020 | ||||||||||
| Net sales | $ | 3,544,597 | $ | 2,575,100 | $ | 2,601,245 | ||||||
| Costs of goods sold | 2,744,331 | 2,159,871 | 2,158,992 | |||||||||
| Gross profit | 800,266 | 415,229 | 442,253 | |||||||||
| Selling, general and administrative expenses | 149,781 | 112,898 | 137,018 | |||||||||
| Profit sharing | 48,848 | 21,454 | 19,404 | |||||||||
| Amortization of intangible assets | 7,438 | 7,191 | 7,672 | |||||||||
| Asset impairment charges | - | - | 19,409 | |||||||||
| Operating income | 594,199 | 273,686 | 258,750 | |||||||||
| Interest expense, net of capitalized interest | 17,269 | 28,019 | 20,206 | |||||||||
| Other expense (income), net | 10,071 | (2,589 | ) | 17,727 | ||||||||
| Income before income taxes | 566,859 | 248,256 | 220,817 | |||||||||
| Income tax expense | 128,104 | 57,420 | 23,867 | |||||||||
| Net income | 438,755 | 190,836 | 196,950 | |||||||||
| Net income attributable to noncontrolling interests | (8,248 | ) | (3,496 | ) | (9,107 | ) | ||||||
| Net income attributable to Steel Dynamics, Inc. | $ | 430,507 | $ | 187,340 | $ | 187,843 | ||||||
| Basic earnings per share attributable to Steel Dynamics, Inc. stockholders | $ | 2.04 | $ | 0.88 | $ | 0.89 | ||||||
| Weighted average common shares outstanding | 211,015 | 213,254 | 210,599 | |||||||||
| Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive | $ | 2.03 | $ | 0.88 | $ | 0.89 | ||||||
| Weighted average common shares and share equivalents outstanding | 212,254 | 214,024 | 212,052 | |||||||||
| Dividends declared per share | $ | 0.26 | $ | 0.25 | $ | 0.25 | ||||||
Steel Dynamics, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and equivalents | $ | 1,245,165 | $ | 1,368,618 | ||||
| Accounts receivable, net | 1,366,463 | 971,918 | ||||||
| Inventories | 2,217,534 | 1,843,548 | ||||||
| Other current assets | 67,744 | 74,363 | ||||||
| Total current assets | 4,896,906 | 4,258,447 | ||||||
| Property, plant and equipment, net | 4,340,411 | 4,105,569 | ||||||
| Intangible assets, net | 317,139 | 324,577 | ||||||
| Goodwill | 456,378 | 457,226 | ||||||
| Other assets | 117,062 | 119,743 | ||||||
| Total assets | $ | 10,127,896 | $ | 9,265,562 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 1,134,672 | $ | 769,455 | ||||
| Income taxes payable | 52,969 | 2,386 | ||||||
| Accrued expenses | 392,322 | 400,052 | ||||||
| Current maturities of long-term debt | 81,226 | 86,894 | ||||||
| Total current liabilities | 1,661,189 | 1,258,787 | ||||||
| Long-term debt | 3,016,200 | 3,015,782 | ||||||
| Deferred income taxes | 602,185 | 536,288 | ||||||
| Other liabilities | 113,125 | 106,479 | ||||||
| Total liabilities | 5,392,699 | 4,917,336 | ||||||
| Commitments and contingencies | ||||||||
| Redeemable noncontrolling interests | 163,614 | 158,614 | ||||||
| Equity | ||||||||
| Common stock | 648 | 648 | ||||||
| Treasury stock, at cost | (1,614,866 | ) | (1,623,747 | ) | ||||
| Additional paid-in capital | 1,202,945 | 1,207,392 | ||||||
| Retained earnings | 5,134,398 | 4,758,969 | ||||||
| Accumulated other comprehensive income | 5,667 | 1,902 | ||||||
| Total Steel Dynamics, Inc. equity | 4,728,792 | 4,345,164 | ||||||
| Noncontrolling interests | (157,209 | ) | (155,552 | ) | ||||
| Total equity | 4,571,583 | 4,189,612 | ||||||
| Total liabilities and equity | $ | 10,127,896 | $ | 9,265,562 | ||||
Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2021 | 2020 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 438,755 | $ | 190,836 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 86,919 | 80,259 | ||||||
| Equity-based compensation | 17,040 | 17,844 | ||||||
| Deferred income taxes | 66,744 | 5,927 | ||||||
| Other adjustments | (662 | ) | (264 | ) | ||||
| Changes in certain assets and liabilities: | ||||||||
| Accounts receivable | (394,545 | ) | (154,072 | ) | ||||
| Inventories | (374,588 | ) | 44,505 | |||||
| Other assets | 5,828 | (1,541 | ) | |||||
| Accounts payable | 360,681 | 51,596 | ||||||
| Income taxes receivable/payable | 59,593 | 52,385 | ||||||
| Accrued expenses | (3,574 | ) | (76,194 | ) | ||||
| Net cash provided by operating activities | 262,191 | 211,281 | ||||||
| Investing activities: | ||||||||
| Purchases of property, plant and equipment | (309,863 | ) | (217,535 | ) | ||||
| Purchases of short-term investments | - | (149,359 | ) | |||||
| Proceeds from maturities of short-term investments | - | 192,340 | ||||||
| Other investing activities | 390 | 518 | ||||||
| Net cash used in investing activities | (309,473 | ) | (174,036 | ) | ||||
| Financing activities: | ||||||||
| Issuance of current and long-term debt | 297,441 | 216,261 | ||||||
| Repayment of current and long-term debt | (304,284 | ) | (235,757 | ) | ||||
| Dividends paid | (52,729 | ) | (51,481 | ) | ||||
| Purchase of treasury stock | - | (106,529 | ) | |||||
| Other financing activities | (16,598 | ) | (6,152 | ) | ||||
| Net cash used in financing activities | (76,170 | ) | (183,658 | ) | ||||
| Decrease in cash, cash equivalents, and restricted cash | (123,452 | ) | (146,413 | ) | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | 1,374,122 | 1,387,397 | ||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 1,250,670 | $ | 1,240,984 | ||||
| Supplemental disclosure information: | ||||||||
| Cash paid for interest | $ | 11,315 | $ | 8,785 | ||||
| Cash paid for income taxes, net | $ | 2,142 | $ | 518 | ||||
Steel Dynamics, Inc.
SUPPLEMENTAL INFORMATION
(dollars in thousands)
| First Quarter | ||||||||||||
| 2021 | 2020 | Q4 2020 | ||||||||||
| External Net Sales | ||||||||||||
| Steel | $ | 2,510,684 | $ | 1,941,706 | $ | 1,870,841 | ||||||
| Steel Fabrication | 256,985 | 220,936 | 217,977 | |||||||||
| Metals Recycling | 470,007 | 291,856 | 347,022 | |||||||||
| Other | 306,921 | 120,602 | 165,405 | |||||||||
| Consolidated Net Sales | $ | 3,544,597 | $ | 2,575,100 | $ | 2,601,245 | ||||||
| Operating Income | ||||||||||||
| Steel | $ | 641,439 | $ | 292,746 | $ | 297,682 | ||||||
| Steel Fabrication | 9,895 | 29,204 | 25,067 | |||||||||
| Metals Recycling | 53,933 | 8,326 | 27,035 | |||||||||
| 705,267 | 330,276 | 349,784 | ||||||||||
| Non-cash amortization of intangible assets | (7,438 | ) | (7,191 | ) | (7,672 | ) | ||||||
| Profit sharing expense | (48,848 | ) | (21,454 | ) | (19,404 | ) | ||||||
| Non-segment operations | (54,782 | ) | (27,945 | ) | (44,549 | ) | ||||||
| Non-cash asset impairment charges | - | - | (19,409 | ) | ||||||||
| Consolidated Operating Income | $ | 594,199 | $ | 273,686 | $ | 258,750 | ||||||
| Adjusted EBITDA | ||||||||||||
| Net income | $ | 438,755 | $ | 190,836 | $ | 196,950 | ||||||
| Income taxes | 128,104 | 57,420 | 23,867 | |||||||||
| Net interest expense | 16,815 | 21,790 | 19,853 | |||||||||
| Depreciation | 77,888 | 71,733 | 75,787 | |||||||||
| Amortization of intangible assets | 7,438 | 7,191 | 7,672 | |||||||||
| Noncontrolling interest (a) | (8,422 | ) | (3,496 | ) | (2,352 | ) | ||||||
| EBITDA | 660,578 | 345,474 | 321,777 | |||||||||
| Non-cash adjustments | ||||||||||||
| Unrealized (gains) losses | (6,852 | ) | (1,262 | ) | 2,629 | |||||||
| Inventory valuation | 109 | 859 | 1,078 | |||||||||
| Equity-based compensation | 10,210 | 10,812 | 18,746 | |||||||||
| Asset impairment charges | - | - | 19,409 | |||||||||
| Refinancing charges | - | - | 3,059 | |||||||||
| Adjusted EBITDA | $ | 664,045 | $ | 355,883 | $ | 366,698 | ||||||
| Other Operating Information | ||||||||||||
| Steel | ||||||||||||
| Average external sales price (Per ton) (b) | $ | 1,041 | $ | 774 | $ | 814 | ||||||
| Average ferrous cost (Per ton melted) (c) | $ | 372 | $ | 267 | $ | 279 | ||||||
| Flat Roll shipments | ||||||||||||
| Butler and Columbus Flat Roll divisions | 1,496,531 | 1,584,264 | 1,447,125 | |||||||||
| Steel Processing divisions (d) | 422,850 | 405,981 | 413,756 | |||||||||
| Long Product shipments | ||||||||||||
| Structural and Rail Division | 478,687 | 434,882 | 435,364 | |||||||||
| Engineered Bar Products Division | 200,628 | 189,801 | 164,735 | |||||||||
| Roanoke Bar Division | 136,420 | 140,222 | 126,163 | |||||||||
| Steel of West Virginia | 87,158 | 92,032 | 83,303 | |||||||||
| Total Shipments (Tons) | 2,822,274 | 2,847,182 | 2,670,446 | |||||||||
| External Shipments (Tons) (b) | 2,410,817 | 2,495,164 | 2,299,310 | |||||||||
| Steel Mill Production (Tons) | 2,476,939 | 2,535,233 | 2,273,273 | |||||||||
| Metals Recycling | ||||||||||||
| Nonferrous shipments (000's of pounds) | 280,809 | 272,078 | 271,552 | |||||||||
| Ferrous shipments (Gross tons) | 1,395,843 | 1,192,144 | 1,341,316 | |||||||||
| External ferrous shipments (Gross tons) | 437,182 | 393,651 | 446,233 | |||||||||
| Steel Fabrication | ||||||||||||
| Average sales price (Per ton) | $ | 1,406 | $ | 1,356 | $ | 1,351 | ||||||
| Shipments (Tons) | 184,243 | 163,312 | 162,825 | |||||||||
| (a) Quarter ended March 31, 2021 and December 31, 2020, net of income tax expense of $175 and benefit of ($2,348), 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 |