STLD
$29.71
Steel Dynamics
$1.11
3.88%
Earnings Details
1st Quarter March 2019
Monday, April 22, 2019 7:00:00 AM
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Summary

Steel Dynamics Misses

Steel Dynamics (STLD) reported 1st Quarter March 2019 earnings of $0.91 per share on revenue of $2.8 billion. The consensus earnings estimate was $0.92 per share on revenue of $2.8 billion. The Earnings Whisper number was $0.92 per share. Revenue grew 8.2% on a year-over-year basis.

Steel Dynamics Inc manufactures and sells steel products. The Company is also engaged in processing and sale of recycled ferrous and nonferrous metals, fabrication and sale of steel joist and decking products.

Results
Reported Earnings
$0.91
Earnings Whisper
$0.92
Consensus Estimate
$0.92
Reported Revenue
$2.82 Bil
Revenue Estimate
$2.81 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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.

2019 Comments

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.  

Outlook   

"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.

Forward-Looking Statements

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


Three Months Ended


Ended


March 31,


December 31,


2019


2018


2018










Net sales

$

2,817,435


$

2,603,875


$

2,903,892

Costs of goods sold


2,383,865



2,140,459



2,382,657

      Gross profit


433,570



463,416



521,235










Selling, general and administrative expenses


111,038



106,431



106,564

Profit sharing


23,677



26,662



41,684

Amortization of intangible assets


7,013



6,926



7,434

      Operating income


291,842



323,397



365,553










Interest expense, net of capitalized interest


31,122



31,896



31,652

Other expense (income), net


(6,343)



(4,463)



(7,384)

      Income before income taxes


267,063



295,964



341,285










Income tax expense


62,236



70,489



71,433

      Net income


204,827



225,475



269,852

Net (income) loss attributable to noncontrolling interests


(499)



2,076



152

      Net income attributable to Steel Dynamics, Inc.

$

204,328


$

227,551


$

270,004



















Basic earnings per share attributable to









   Steel Dynamics, Inc. stockholders

$

0.91


$

0.96


$

1.18










Weighted average common shares outstanding


224,058



236,623



229,245










Diluted earnings per share attributable to









   Steel Dynamics, Inc. stockholders, including the effect









   of assumed conversions when dilutive

$

0.91


$

0.96


$

1.17










Weighted average common shares









   and share equivalents outstanding


224,962



237,723



230,455



















Dividends declared per share

$

0.2400


$

0.1875


$

0.1875

 

 

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)










March 31,



December 31,

Assets

2019



2018


(unaudited)





Current assets







   Cash and equivalents

$

791,444



$

828,220

   Short-term investments


173,723




228,783

   Accounts receivable, net


1,143,395




1,043,756

   Inventories


1,867,700




1,859,168

   Other current assets


52,628




72,730

      Total current assets


4,028,890




4,032,657








Property, plant and equipment, net


2,936,893




2,945,767








Intangible assets, net


263,315




270,328








Goodwill


530,716




429,645








Other assets


97,419




25,166

      Total assets

$

7,857,233



$

7,703,563

Liabilities and Equity





Current liabilities







   Accounts payable

$

591,467



$

550,754

   Income taxes payable


26,896




7,468

   Accrued expenses


303,769




436,681

   Current maturities of long-term debt


80,958




24,234

      Total current liabilities


1,003,090




1,019,137








Long-term debt


2,354,427




2,352,489








Deferred income taxes


447,087




435,838








Other liabilities


63,171




8,870

      Total liabilities


3,867,775




3,816,334








Commitments and contingencies














Redeemable noncontrolling interests


139,930




111,240








Equity







   Common stock


645




645

   Treasury stock, at cost


(1,261,837)




(1,184,243)

   Additional paid-in capital


1,160,139




1,160,048

   Retained earnings


4,109,034




3,958,320

   Accumulated other comprehensive income


130




301

      Total Steel Dynamics, Inc. equity


4,008,111




3,935,071

   Noncontrolling interests


(158,583)




(159,082)

      Total equity


3,849,528




3,775,989

      Total liabilities and equity

$

7,857,233



$

7,703,563

 

 

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)









Three Months Ended


March 31,


2019


2018







Operating activities:






   Net income

$

204,827


$

225,475







   Adjustments to reconcile net income to net cash provided by






      operating activities:






      Depreciation and amortization


80,174



76,135

      Equity-based compensation


15,308



12,841

      Deferred income taxes


12,091



9,545

      Other adjustments


728



30

      Changes in certain assets and liabilities:






         Accounts receivable


(61,062)



(118,818)

         Inventories


39,469



(80,711)

         Other assets


301



(105)

         Accounts payable


3,206



66,332

         Income taxes payable, net


49,850



63,962

         Accrued expenses


(163,339)



(76,751)

      Net cash provided by operating activities


181,553



177,935







Investing activities:






   Purchases of property, plant and equipment


(54,436)



(50,606)

   Purchases of short-term investments


(49,677)



(40,000)

   Proceeds from maturities of short-term investments


104,737



-

   Acquisition of business, net of cash and restricted cash acquired


(93,412)



-

   Other investing activities


364



229

      Net cash used in investing activities


(92,424)



(90,377)







Financing activities:






   Issuance of current and long-term debt


121,234



93,058

   Repayment of current and long-term debt


(115,271)



(113,034)

   Dividends paid


(42,239)



(36,797)

   Purchase of treasury stock


(84,308)



(69,269)

   Other financing activities


(5,720)



(5,180)

      Net cash used in financing activities


(126,304)



(131,222)







Decrease in cash, cash equivalents, and restricted cash


(37,175)



(43,664)

Cash, cash equivalents, and restricted cash at beginning of period


834,423



1,035,085

Cash, cash equivalents, and restricted cash at end of period

$

797,248


$

991,421













Supplemental disclosure information:






   Cash paid for interest

$

8,606


$

8,629

   Cash paid (received) for income taxes, net

$

1,839


$

(1,045)

 

 

 

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)



















First Quarter










2019



2018



4Q 2018



External Net Sales













   Steel



$

2,124,570


$

1,921,790


$

2,198,459



   Fabrication




228,480



201,492



251,592



   Metals Recycling




351,137



388,122



352,555



   Other




113,248



92,471



101,286


Consolidated

$

2,817,435


$

2,603,875


$

2,903,892
















Operating Income













   Steel



$

312,437


$

338,357


$

402,252



   Fabrication




20,663



19,832



14,902



   Metals Recycling




19,958



27,805



16,954



      Operations




353,058



385,994



434,108
















   Non-cash amortization of intangible assets




(7,013)



(6,926)



(7,434)



   Profit sharing expense




(23,677)



(26,662)



(41,684)



   Non-segment operations




(30,526)



(29,009)



(19,437)


Consolidated Operating Income

$

291,842


$

323,397


$

365,553
















Adjusted EBITDA













      Net income



$

62,236


$

70,489


$

71,433



      Income taxes




204,827



225,475



269,852



      Net interest expense




24,017



27,482



24,738



      Depreciation




71,846



67,823



71,765



      Amortization of intangible assets




7,013



6,926



7,434



      Non-controlling interest




(499)



2,077



151


EBITDA


369,440



400,272



445,373



      Non-cash adjustments













         Unrealized hedging (gain) loss




1,742



(9,956)



(2,510)



         Inventory valuation



241



200



666



         Equity-based compensation




10,619



9,580



14,457


Adjusted EBITDA

$

382,042


$

400,096


$

457,986
















Other Operating Information













   Steel













      Average external sales price (Per ton) *



$

902


$

822


$

940



      Average ferrous cost (Per ton melted) #



$

338


$

321


$

343
















      Flat Roll shipments













         Butler and Columbus Flat Roll Divisions




1,526,851



1,548,814



1,493,894



         Techs, Heartland, and USS Divisions




330,775



194,762



262,642



      Long Product shipments













         Structural and Rail Division




376,263



368,783



389,107



         Engineered Bar Products Division




206,874



215,150



217,646



         Roanoke Bar Division




152,400



123,403



150,607



         Steel of West Virginia




91,248



83,732



70,367


Total shipments (Tons)


2,684,411



2,534,644



2,584,263















External shipments (Tons) *


2,347,209



2,327,515



2,328,420















Steel production (Tons) *


2,745,128



2,601,200



2,677,613
















   Metals Recycling













      Nonferrous shipments (000's of pounds)




292,038



271,628



278,418



      Ferrous shipments (Gross tons)




1,171,361



1,256,899



1,215,474



            External ferrous shipments (Gross tons)



382,841



436,990



414,941
















   Fabrication













      Average external sales price (Per ton)



$

1,575


$

1,345


$

1,550



      Shipments (Tons)




145,222



149,926



162,292
















*  Includes all steel operations





#  Includes ferrous cost per ton melted at our six electric-arc furnace steel mills




 

Cision View original content:http://www.prnewswire.com/news-releases/steel-dynamics-reports-first-quarter-2019-results-300835422.html

SOURCE Steel Dynamics, Inc.