Skip Navigation Links
SEARCH  



 
Bookmark and Share
Steel Dynamics Reports Record Third Quarter 2018 Financial Results

FORT WAYNE, Ind., Oct. 17, 2018 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced third quarter 2018 financial results.  The company reported third quarter 2018 net sales of $3.2 billion and net income of $398 million, or $1.69 per diluted share, which includes charges of approximately $13 million (pretax), or $0.04 per diluted share, related to fair value purchase accounting adjustments associated with the recent Heartland acquisition, and a tax benefit of $10 million, or $0.04 per diluted share, associated with a change in tax accounting methodology.  Excluding these items, the company's third quarter 2018 adjusted net income was $397 million, or $1.69 per diluted share. 

Comparatively, prior year third quarter net sales were $2.4 billion, with net income of $153 million, or $0.64 per diluted share, which included debt refinancing and repayment charges of $0.02 per diluted share, and sequential second quarter 2018 net sales were $3.1 billion, with net income of $362 million, or $1.53 per diluted share. 

"The team delivered a tremendous third quarter performance, once again attaining numerous operational and financial milestones," said Mark D. Millett, President and Chief Executive Officer.  "Our third quarter 2018 income from operations of $532 million and adjusted EBITDA of $626 million were both record highs for the company.  Our strong financial performance was the result of record steel shipments, average steel selling price improvement, and resulting metal spread expansion across our steel operations.  Underlying domestic steel demand remained strong.  There was some temporary hesitancy in flat roll order activity based on customer sentiment and increased hot roll coil import levels. However, demand from major steel consuming sectors was steady, including construction, automotive, and energy.   

"Earnings from our metals recycling platform declined in the quarter primarily as a result of our nonferrous operations, as shipments and commodity prices declined.  In addition, China's decision to ban certain grades of recycled material has had a negative impact on nonferrous sales volume.  

"Our steel fabrication platform achieved record shipments in the quarter, as nonresidential construction demand remained strong and customer sentiment positive.  The order backlog remained at near record highs entering October. Despite the positive demand environment, earnings from our steel fabrication operations slightly decreased by the continued rise in average steel input costs," said Millett.

The company generated record quarterly cash flow from operations of $420 million during the third quarter 2018. As evidence of the confidence in the company's outlook and sustainable long-term cash flow generation capability, the board of directors authorized an additional $750 million share repurchase program in September, following the completion of its $450 million authorization in August 2018.     

Third Quarter 2018 Comments

Third quarter 2018 operating income for the company's steel operations increased seven percent sequentially to a record $577 million, based on metal spread expansion across the platform, as average steel product pricing increased more than consumed raw material scrap costs.  The third quarter 2018 average product selling price for the company's steel operations increased $56 to $988 per ton.  The average ferrous scrap cost per ton melted increased $4 to $352 per ton. 

Third quarter 2018 operating income attributable to the company's flat roll steel operations increased five percent sequentially, driven by metal spread expansion related to continued strong underlying demand and higher average selling values.  Operating income from the company's long product steel operations increased 17 percent, as a result of higher average selling values and metal spread expansion. 

Third quarter 2018 operating income from the company's metals recycling operations was $18 million, compared to $26 million in the sequential second quarter.  Ferrous shipments decreased slightly and metal spread remained steady.  The primary driver for lower earnings was a nine percent decline in nonferrous shipments and a five percent decrease in associated metal spread, as commodity pricing fell in the quarter. 

The company's fabrication operations recorded third quarter 2018 operating income of $13 million, compared to sequential second quarter results of $14 million, as record high shipments and improved average selling values were offset by continued higher average steel input costs.

Year-to-Date September 30, 2018 Comparison

For the nine months ended September 30, 2018, net income was $988 million, or $4.17 per diluted share, with net sales of $8.9 billion, as compared to net income of $508 million, or $2.09 per diluted share, with net sales of $7.2 billion for the same period in 2017.  Year-to-date 2018 net sales increased across all operating platforms, with the 24 percent improvement driven by higher average steel product pricing and record steel shipments.  Year-to-date 2018 operating income increased 56 percent to a first nine month record of $1.4 billion, based on improved earnings from the company's steel operations. The average year-to-date selling price for the company's steel operations increased $149 to $916 per ton.  The average year-to-date ferrous scrap cost per ton melted increased $49 to $340 per ton.

During the nine months ended September 30, 2018, the company generated strong cash flow from operations of $924 million and maintained liquidity of $2.2 billion at September 30, 2018.  The company also repurchased $193 million of its common stock during the first nine months of 2018.

Outlook   

"We remain confident that macroeconomic and market conditions are in place to benefit domestic steel consumption in 2019," said Millett.  "Based on strong domestic steel demand fundamentals and customer optimism, we believe steel consumption will continue to be strong.  In combination with our expansion initiatives, we believe there are firm drivers for our continued growth.  We are excited about the potential benefits that the recent Heartland acquisition brings to us.  Integration of Heartland is going well, and the teams are on track to achieve our expectation to reach an annual run-rate of between 800,000 tons and 900,000 tons by mid-year 2019.   

"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 shareholder value through organic and transactional growth opportunities," concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss third quarter 2018 operating and financial results on Thursday, October 18, 2018, at 10:00 a.m. Eastern 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 Time on October 23, 2018.

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) fluctuation in the cost of key raw materials and supplies (including steel scrap, iron units, 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; (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


Nine Months Ended


Three Months


September 30,


September 30,


Ended


2018


2017


2018


2017


June 30, 2018
















Net sales

$

3,223,547


$

2,443,382


$

8,917,947


$

7,202,318


$

3,090,525

Costs of goods sold


2,537,466



2,046,864



7,116,368



5,941,128



2,438,443

      Gross profit


686,081



396,518



1,801,579



1,261,190



652,082
















Selling, general and administrative expenses


102,614



97,056



310,076



298,422



101,031

Profit sharing


45,304



21,175



114,301



69,714



42,335

Amortization of intangible assets


6,591



7,272



20,346



22,120



6,829

      Operating income


531,572



271,015



1,356,856



870,934



501,887
















Interest expense, net of capitalized interest


31,560



34,177



94,968



102,019



31,512

Other expense (income), net


(7,103)



2,526



(16,601)



(4,968)



(5,035)

      Income before income taxes


507,115



234,312



1,278,489



773,883



475,410
















Income tax expense


109,209



83,300



292,536



271,258



112,838

      Net income


397,906



151,012



985,953



502,625



362,572

Net (income) loss attributable to noncontrolling interests


469



2,246



2,422



5,383



(123)

      Net income attributable to Steel Dynamics, Inc.

$

398,375


$

153,258


$

988,375


$

508,008


$

362,449































Basic earnings per share attributable to















   Steel Dynamics, Inc. stockholders

$

1.70


$

0.64


$

4.20


$

2.11


$

1.54
















Weighted average common shares outstanding


234,208



239,066



235,483



241,117



235,617
















Diluted earnings per share attributable to















   Steel Dynamics, Inc. stockholders, including the effect















   of assumed conversions when dilutive

$

1.69


$

0.64


$

4.17


$

2.09


$

1.53
















Weighted average common shares















   and share equivalents outstanding


235,649



240,880



236,772



242,816



236,945































Dividends declared per share

$

0.1875


$

0.1550


$

0.5625


$

0.4650


$

0.1875

 

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)










September 30,



December 31,

Assets

2018



2017


(unaudited)





Current assets







   Cash and equivalents

$

884,315



$

1,028,649

   Short term investments


115,000




-

   Accounts receivable, net


1,228,190




868,837

   Inventories


1,853,862




1,519,347

   Other current assets


50,110




91,509

      Total current assets


4,131,477




3,508,342








Property, plant and equipment, net


2,901,658




2,675,904








Intangible assets, net


236,563




256,909








Goodwill


502,900




386,893








Other assets


25,770




27,684

      Total assets

$

7,798,368



$

6,855,732

Liabilities and Equity







Current liabilities







   Accounts payable

$

611,028



$

489,448

   Income taxes payable


10,872




3,696

   Accrued expenses


412,989




346,580

   Current maturities of long-term debt


14,776




28,795

      Total current liabilities


1,049,665




868,519








Long-term debt


2,351,979




2,353,145








Deferred income taxes


398,814




305,949








Other liabilities


11,833




21,811

      Total liabilities


3,812,291




3,549,424








Commitments and contingencies














Redeemable noncontrolling interests


111,240




111,240








Equity







   Common stock


644




644

   Treasury stock, at cost


(854,052)




(665,297)

   Additional paid-in capital


1,156,556




1,141,534

   Retained earnings


3,730,662




2,874,693

   Accumulated other comprehensive loss


(42)




-

      Total Steel Dynamics, Inc. equity


4,033,768




3,351,574

   Noncontrolling interests


(158,931)




(156,506)

      Total equity


3,874,837




3,195,068

      Total liabilities and equity

$

7,798,368



$

6,855,732

 

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)















Three Months Ended


Nine Months Ended


September 30,


September 30,


2018


2017


2018


2017













Operating activities:












   Net income

$

397,906


$

151,012


$

985,953


$

502,625













   Adjustments to reconcile net income to net cash provided by












      operating activities:












      Depreciation and amortization


81,383



75,210



236,638



224,068

      Equity-based compensation


7,978



6,875



28,860



24,558

      Deferred income taxes


23,899



3,284



45,437



17,849

      Other adjustments


312



8,202



197



8,055

      Changes in certain assets and liabilities:












         Accounts receivable


(48,024)



(36,123)



(330,307)



(193,233)

         Inventories


(69,885)



(67,285)



(240,908)



(211,726)

         Other assets


(6,429)



(9,528)



(7,164)



(2,014)

         Accounts payable


(14,883)



44,887



100,368



133,251

         Income taxes receivable/payable


(31,127)



(12,929)



55,414



5,803

         Accrued expenses


79,310



62,249



49,920



38,058

      Net cash provided by operating activities


420,440



225,854



924,408



547,294













Investing activities:












   Purchases of property, plant and equipment


(70,668)



(42,795)



(176,477)



(127,746)

   Purchases of short term investments


(35,000)



-



(125,000)



-

   Proceeds from maturities of short term investments


10,000



-



10,000



-

   Acquisition of business, net of cash and restricted cash acquired


(37,589)



(5,518)



(433,998)



(5,518)

   Other investing activities


576



1,081



1,462



30,386

      Net cash used in investing activities


(132,681)



(47,232)



(724,013)



(102,878)













Financing activities:












   Issuance of current and long-term debt


110,041



450,215



327,670



501,448

   Repayment of current and long-term debt


(115,039)



(294,913)



(346,162)



(331,339)

   Dividends paid


(44,081)



(37,180)



(125,146)



(108,837)

   Purchase of treasury stock


(74,965)



(99,085)



(193,379)



(237,154)

   Other financing activities


-



(4,832)



(8,324)



(8,364)

      Net cash provided by (used in) financing activities


(124,044)



14,205



(345,341)



(184,246)













Increase (decrease) in cash, cash equivalents, and restricted cash


163,715



192,827



(144,946)



260,170

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


726,424



915,448



1,035,085



848,105

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

$

890,139


$

1,108,275


$

890,139


$

1,108,275

























Supplemental disclosure information:












   Cash paid for interest

$

8,643


$

13,530


$

70,498


$

80,155

   Cash paid for income taxes, net

$

119,802


$

93,123


$

198,752


$

246,793

 

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)























Third Quarter



Year to Date










2018



2017



2018



2017



1Q 2018



2Q 2018

External Net Sales



















   Steel


$

2,475,044


$

1,782,805


$

6,722,260


$

5,262,380


$

1,921,790



2,325,426

   Fabrication



250,625



211,305



669,556



603,267



201,492



217,439

   Metals Recycling



387,219



348,215



1,200,045



1,055,580



388,122



424,704

   Other



110,659



101,057



326,086



281,091



92,471



122,956

Consolidated

$

3,223,547


$

2,443,382


$

8,917,947


$

7,202,318


$

2,603,875


$

3,090,525




















Operating Income



















   Steel


$

577,308


$

280,285


$

1,452,857


$

906,526


$

338,357



537,192

   Fabrication



13,145



21,903



47,162



65,858



19,832



14,185

   Metals Recycling



17,764



21,118



71,297



62,447



27,805



25,728

Operations


608,217



323,306



1,571,316



1,034,831



385,994



577,105




















   Non-cash Amortization of Intangible Assets



(6,591)



(7,272)



(20,346)



(22,120)



(6,926)



(6,829)

   Profit Sharing Expense



(45,304)



(21,175)



(114,301)



(69,714)



(26,662)



(42,335)

   Non-segment Operations



(24,750)



(23,844)



(79,813)



(72,063)



(29,009)



(26,054)

Consolidated Operating Income

$

531,572


$

271,015


$

1,356,856


$

870,934


$

323,397



501,887




















Adjusted EBITDA



















      Earnings Before Taxes


$

507,115


$

234,312


$

1,278,489


$

773,883


$

295,964



475,410

      Net Interest Expense



25,894



31,298



79,304



95,260



27,482



25,928

      Depreciation



73,431



66,574



212,125



197,857



67,823



70,871

      Amortization of Intangible Assets



6,591



7,272



20,346



22,120



6,926



6,829

      Non-controlling Interest



469



2,246



2,422



5,383



2,077



(124)

 EBITDA


613,500



341,702



1,592,686



1,094,503



400,272



578,914

      Non-cash Adjustments



















         Unrealized Hedging (Gain) Loss



3,030



(2,724)



(4,090)



(2,637)



(9,956)



2,836

         Inventory Valuation


1,017



236



1,482



2,757



200



265

         Equity-based Compensation



7,978



6,875



25,933



22,924



9,580



8,375

         Financing Expenses



-



1,393



-



1,393



-



-

Adjusted EBITDA

$

625,525


$

347,482


$

1,616,011



1,118,940


$

400,096


$

590,390




















Other Operating Information



















   Steel



















      Average External Sales Price (Per ton) *


$

988


$

778


$

916


$

767


$

822



932

      Average Ferrous Cost (Per ton melted) #


$

352


$

305


$

340


$

291


$

321



348




















      Flat Roll Shipments



















         Butler and Columbus Flat Roll Divisions



1,562,813



1,537,600



4,713,125



4,610,101



1,548,814



1,601,498

         Techs and Heartland Divisions



294,559



195,406



711,624



596,263



194,762



222,303

      Long Product Shipments



















         Structural and Rail Division



431,326



337,985



1,241,128



999,961



368,783



441,019

         Engineered Bar Products Division



239,951



192,448



705,193



565,375



215,150



250,092

         Roanoke Bar Division



145,648



120,652



409,194



362,752



123,403



140,143

         Steel of West Virginia



82,623



74,901



245,236



228,184



83,732



78,881

Total Shipments (Tons)


2,756,920



2,458,992



8,025,500



7,362,636



2,534,644



2,733,936




















External Shipments (Tons)


2,489,133



2,279,229



7,296,871



6,830,878



2,327,515



2,480,223




















         Steel Production (Tons)


2,852,451



2,536,990



8,222,163



7,557,231



2,601,200



2,768,512




















   Metals Recycling



















      Nonferrous Shipments (000's of pounds)



277,332



261,716



852,994



815,763



271,628



304,034

      Ferrous Shipments (Gross tons)



1,304,164



1,219,582



3,908,079



3,780,958



1,256,899



1,347,016

External Ferrous Shipments (Gross tons)


459,362



462,683



1,362,477



1,414,603



436,990



466,125




















   Fabrication



















      Average External Sales Price (Per ton)


$

1,461


$

1,317


$

1,398


$

1,306


$

1,345



1,380

      Shipments (Tons)



171,578



160,482



479,406



461,936



149,926



157,902




















*  Includes all steel operations

#  Includes ferrous cost per ton melted at our Steel Mills

 

 

Cision View original content:http://www.prnewswire.com/news-releases/steel-dynamics-reports-record-third-quarter-2018-financial-results-300733252.html

SOURCE Steel Dynamics, Inc.





Disclaimer | Terms Of Use And Privacy Statement


© Metals News. All rights reserved.