|Steel Dynamics Reports First Quarter 2019 Results
FORT WAYNE, Ind., April 22, 2019 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2019 financial results. The company reported first quarter 2019 net sales of $2.8 billion and net income of $204 million, or $0.91 per diluted share.
Comparatively, prior year first quarter net income was $228 million, or $0.96 per diluted share, with net sales of $2.6 billion. Sequential fourth quarter 2018 net income was $270 million, or $1.17 per diluted share, which included additional company-wide performance-based compensation of $0.04 per diluted share and lower earnings of $0.10 per diluted share, associated with planned maintenance outages at the company's liquid pig iron production facility and its two flat roll steel mills. Excluding these items, the company's fourth quarter adjusted net income was $302 million, or $1.31 per diluted share.
"The team delivered a strong first quarter performance in a somewhat challenging flat roll steel pricing environment," said Mark D. Millett, President and Chief Executive Officer. "A downward trend in flat roll steel prices began in the second half of 2018, and continued through mid-first quarter 2019, reaching an inflection point in February 2019. The teams were able to increase shipments and offset some of the margin compression, resulting in first quarter 2019 consolidated operating income of $292 million and adjusted EBITDA of $382 million. The continued stabilization and improvement in flat roll steel prices are having a positive impact, resulting in increased flat roll order activity and solid order backlogs. We are seeing continued strength in the automotive, energy and industrial sectors, and as evidenced by strong steel fabrication backlogs, strength in non-residential construction."
The company generated cash flow from operations of $182 million during the first quarter 2019 and maintained liquidity of $2.2 billion at March 31, 2019. On March 1, 2019, the company used available cash of $93 million to fund the purchase of a 75 percent controlling interest of United Steel Supply, a leading distributor of painted Galvalume® flat roll steel used for roofing and siding applications.
As evidence of the confidence in the company's sustainable long-term cash flow generation capability, the board of directors approved a 28 percent increase in the company's first quarter 2019 cash dividend, reflecting the strength of the company's capital foundation and liquidity profile. The company also repurchased $84 million of its common stock during the first quarter of 2019.
First quarter 2019 operating income for the company's steel operations was $312 million, or 22 percent lower than sequential fourth quarter 2018 results. The decline in earnings resulted from metal spread compression driven by lower flat roll steel pricing, which more than offset increased overall steel shipments. The first quarter 2019 average product selling price for the company's steel operations decreased $38 to $902 per ton. The average ferrous scrap cost per ton melted only decreased $5 to $338 per ton.
First quarter 2019 operating income from the company's metals recycling operations increased to $20 million, compared to $17 million in the sequential fourth quarter, based on improved recycled nonferrous shipments and average pricing. Conversely, recycled ferrous shipments and metal spread declined modestly in the quarter.
First quarter 2019 operating income from the company's steel fabrication operations was a strong $21 million, or 39 percent higher than sequential fourth quarter results. Earnings improved as higher product pricing and lower raw material steel input costs, resulted in expanded profit margins which more than offset lower shipments related to inclement weather conditions that occurred during the first quarter. The steel fabrication platform order backlog remains strong, and customers remain optimistic concerning non-residential construction projects heading into the summer season.
"We believe the market dynamics are in place for domestic steel consumption to continue to increase this year," said Millett. "Based on domestic steel demand fundamentals and continued customer optimism, we believe North American steel consumption will experience steady growth. In combination with our existing and newly announced expansion initiatives, we believe there are firm drivers for our continued growth. We are excited about our planned flat roll steel mill, and the anticipated long-term value creation it will bring through geographic and value-added product diversification. We plan for the new steel mill to have product capabilities beyond existing EAF flat roll steel producers today, competing even more effectively with the integrated steel model and foreign competition. We have targeted regional markets that represent over 27 million tons of relevant flat roll steel consumption, which includes the growing Mexican flat roll market. This facility should have a meaningful competitive advantage in those regions.
"We continue to strengthen our financial position through strong cash flow generation and the execution of our long-term strategy. We are well-positioned for growth and remain focused on delivering long-term shareholder value through organic and transactional growth opportunities," concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss first quarter 2019 operating and financial results on Monday, April 22, 2019, 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 27, 2019.
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, EBITDA and Adjusted EBITDA included in this release may not be comparable to similarly titled measures of other companies.
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, 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; (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, pipe and tube, 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 import price competition; (6) unanticipated difficulties in integrating or starting up new or acquired 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.
Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Three Months Ended
Costs of goods sold
Selling, general and administrative expenses
Amortization of intangible assets
Interest expense, net of capitalized interest
Other expense (income), net
Income before income taxes
Income tax expense
Net (income) loss attributable to noncontrolling interests
Net income attributable to Steel Dynamics, Inc.
Basic earnings per share attributable to
Steel Dynamics, Inc. stockholders
Weighted average common shares outstanding
Diluted earnings per share attributable to
Steel Dynamics, Inc. stockholders, including the effect
of assumed conversions when dilutive
Weighted average common shares
and share equivalents outstanding
Dividends declared per share
Steel Dynamics, Inc.
CONSOLIDATED BALANCE SHEETS
Cash and equivalents
Accounts receivable, net
Other current assets
Total current assets
Property, plant and equipment, net
Intangible assets, net
Liabilities and Equity
Income taxes payable
Current maturities of long-term debt
Total current liabilities
Deferred income taxes
Commitments and contingencies
Redeemable noncontrolling interests
Treasury stock, at cost
Additional paid-in capital
Accumulated other comprehensive income
Total Steel Dynamics, Inc. equity
Total liabilities and equity
Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
Adjustments to reconcile net income to net cash provided by
Depreciation and amortization
Deferred income taxes
Changes in certain assets and liabilities:
Income taxes payable, net
Net cash provided by operating activities
Purchases of property, plant and equipment
Purchases of short-term investments
Proceeds from maturities of short-term investments
Acquisition of business, net of cash and restricted cash acquired
Other investing activities
Net cash used in investing activities
Issuance of current and long-term debt
Repayment of current and long-term debt
Purchase of treasury stock
Other financing activities
Net cash used in financing activities
Decrease in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
Supplemental disclosure information:
Cash paid for interest
Cash paid (received) for income taxes, net
Steel Dynamics, Inc.
(dollars in thousands)
External Net Sales
Non-cash amortization of intangible assets
Profit sharing expense
Consolidated Operating Income
Net interest expense
Amortization of intangible assets
Unrealized hedging (gain) loss
Other Operating Information
Average external sales price (Per ton) *
Average ferrous cost (Per ton melted) #
Flat Roll shipments
Butler and Columbus Flat Roll Divisions
Techs, Heartland, and USS Divisions
Long Product shipments
Structural and Rail Division
Engineered Bar Products Division
Roanoke Bar Division
Steel of West Virginia
Total shipments (Tons)
External shipments (Tons) *
Steel production (Tons) *
Nonferrous shipments (000's of pounds)
Ferrous shipments (Gross tons)
External ferrous shipments (Gross tons)
Average external sales price (Per ton)
* Includes all steel operations
# Includes ferrous cost per ton melted at our six electric-arc furnace steel mills
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SOURCE Steel Dynamics, Inc.
|Apr 22, 2019