FORT WAYNE, Ind., April 19 /PRNewswire-FirstCall/ -- Steel Dynamics, Inc. (Nasdaq-GS: STLD) today announced net income of $65 million for the first quarter of 2010, or $0.29 per diluted share, compared to net income of $27 million, or $0.12 per diluted share, in the fourth quarter of 2009. These results show a marked improvement compared to a net loss of $88 million, or $0.48 per diluted share, for the first quarter of 2009.
First quarter net sales of $1.6 billion were 32 percent higher than net sales of $1.2 billion in the fourth quarter of 2009, and 91 percent higher than net sales of $815 million in the first quarter of 2009. Sequentially, shipping volumes in all operations except fabrication increased from the fourth quarter, and were significantly higher than the year-ago quarter. Steel shipments for the first quarter were 1.4 million tons, 20 percent higher than the fourth quarter. Steel segment profit margins came under slight pressure as SDI's average scrap cost per net ton charged increased $56 compared to the fourth quarter, while average external steel selling prices for the first quarter increased $50 per ton to $736 from $686 per ton in the fourth quarter. In metals recycling, OmniSource's ferrous metals shipments were 1.2 million gross tons, up 15 percent from the fourth quarter, and nonferrous shipments were 238 million pounds, up 17 percent from the fourth quarter.
"In the first quarter, the company's steel operations gained momentum, producing operating income of $138 million, or $99 per ton shipped, while OmniSource, which benefitted from increased volumes and higher scrap prices, achieved operating income of $43 million during the quarter," said Keith Busse, Chairman and CEO. "As we continue to compete aggressively for orders, our employees have moved quickly to ramp up production as opportunities arise, shipping quality products to meet customer needs while doing an excellent job in controlling costs.
"The first quarter's strength in steel operations centered on sheet products and special-bar-quality (SBQ) steels. The Flat Roll Division ran at capacity in the first quarter while The Techs approached 85 percent utilization. Both continue to have strong order books. Demand for SBQ strengthened dramatically in February and continued in March, which has resulted in the strongest order backlog in the history of the Engineered Bar Products Division. We also have seen sequential improvement in backlogs in our other long-products steel businesses, but the structural steel market still remains very challenging as non-residential construction remains weak. We have been successful offsetting some of this weakness by serving new customers with new products. At our largest long-products division, Structural and Rail, we have achieved recent success in rail development and have obtained customer certification for our AREMA Standard Strength rail and for welded rail. We expect the volume of rail shipments to grow progressively through the year.
"In our Ferrous Resources platform," Busse continued, "we are very excited about the progress made at the new Mesabi Nugget plant in the first quarter. Our goal is to achieve self-sufficiency of iron supply for our steel operations as Mesabi Nugget production increases and complements the current supply of iron from our Iron Dynamics operation. With the rapid progress being made, we are gaining confidence that we will achieve that goal by 2011.
"The fine-tuning of the nugget-production process is going very well. After producing the first batch of nuggets early in January, the Mesabi Nugget team on February 23 made the first shipments of iron nuggets to our Flat Roll steel mill at Butler, Indiana. During the quarter, the plant shipped 7,200 metric tons of nuggets to Butler. Production should ramp up to about 12,000 metric tons in April alone, as good progress continues to be made. This progress is important to the company as we are reducing our dependence on imported pig iron," Busse said.
"As noted during our February conference call, we found it necessary to replace some of the conveyor systems at the nugget plant with improved designs. As a result of costs related to installing the equipment and incurring downtime while making the changes, the plant's operating loss for the quarter exceeded our initial estimate. The impact to the company in the first quarter was an $11 million loss before tax effect.
"In Metals Recycling, OmniSource benefitted in the first quarter from stronger flows of raw materials and greater demand for processed metals. Volumes of ferrous scrap increased during the first quarter for both industrial and obsolete grades of scrap. Ferrous scrap prices steadily increased from November 2009 through March 2010, with prompt industrial grades gaining about 69 percent and #2 shredded scrap gaining 64 percent over that period. Nonferrous metals continued to make a strong contribution to OmniSource's operating income as a result of higher pricing and stronger volumes.
"A gradually improving economy with moderate strengthening of steel demand is resulting in firmer order backlogs for our mills, which also implies continued better conditions for the scrap markets. However, we have not yet seen signs of a significant rebound in our construction-related businesses, which means these operations will likely continue to negatively impact our results. Overall, though, we now see a more stable and positive outlook for the coming quarter and second half of 2010," Busse said.
First Quarter 2010 Operating Segment Information
The following highlights first quarter 2010 results for each of SDI's three primary operating segments. These operating results exclude profit-sharing costs and amortization related to each of the respective segment's intangible assets.
Steel Operations. Net sales for Steel Operations for the first quarter (including intra-segment and intra-company sales) were $1 billion, which represented 63 percent of the company's external sales. This segment includes five steel mills and related steel processing facilities, including The Techs. SDI's five steel mills produce a wide variety of flat-rolled and long steel products. The Techs produce galvanized steel sheet using steel that is sourced primarily from third parties.
First quarter 2010 Steel Operations shipments were 1.4 million tons, of which 960,000 tons were flat-rolled steel shipments. Based on tons shipped, including the steel shipments made by The Techs, flat-rolled products accounted for 68 percent of first quarter steel segment shipments, 11 percent was structural steel and rail products, 9 percent was engineered bars, 8 percent was merchant bars, and 4 percent related to Steel of West Virginia. First quarter operating income for the steel segment was $138 million, or $99 per ton shipped, compared to an operating income of $93 per ton in the fourth quarter of 2009.
The first quarter's average external selling price per ton for Steel Operations was $736, an increase of $50 per ton from $686 in the fourth quarter of 2009 and an increase of $6 per ton from the year-ago quarter. The average cost of ferrous scrap per net ton charged increased $56 compared to the fourth quarter.
Metals Recycling and Ferrous Resources. This segment includes OmniSource Corporation (collection, processing, and trading of ferrous and non-ferrous metals), Iron Dynamics (a scrap-substitute operation that produces pig iron for use by the Flat Roll Division), SDI's 81 percent interest in Mesabi Nugget (which produces iron nuggets for mini-mill steelmaking and is co-owned by Kobe Steel, Ltd.), and expenses related to Mesabi Mining (a wholly owned iron mining unit that is awaiting approval of mining permits before it can begin operation).
The segment's net sales for the first quarter of 2010 were $756 million (including intra-company), which represented 34 percent of SDI's first quarter external sales. The operating income for this segment was $32 million. OmniSource's stand-alone first quarter operating income on the same basis was $43 million.
For the first quarter, OmniSource's total ferrous scrap shipments, including shipments to SDI's Steel Operations, were 1.2 million gross tons, 15 percent higher than the fourth quarter of 2009 and 89 percent higher than the year-ago quarter. Non-ferrous scrap shipments for the first quarter of 2010 were 238 million pounds, 17 percent higher than the fourth quarter of 2009 and 25 percent higher than the year-ago quarter.
During the first quarter, the company's scrap operations supplied 519,000 gross tons of ferrous scrap to SDI's Steel Operations, which was 42 percent of the total tonnage of ferrous scrap OmniSource shipped and was 46 percent of the tonnage of ferrous scrap purchased by our mills during the quarter.
Steel Fabrication Operations. Steel Fabrication Operations consist of the New Millennium Building Systems fabricating plants that produce joists, trusses, and steel decking that is used in the construction of non-residential buildings. First quarter net sales were $24 million (including intra-company), or 2 percent of SDI's first quarter external sales. New Millennium reported an operating loss of $7 million for the quarter. First quarter shipments totaled 26,000 tons, 15 percent lower than the fourth quarter of 2009 and 43 percent lower than the year-ago quarter.
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' revenue, costs of purchased materials, future profitability and earnings, and the operation of new or existing facilities. These statements 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. Such predictive statements are not guarantees of future performance, and actual results could differ materially from our current expectations.
Factors that could cause such predictive statements to turn out other than as anticipated or predicted include, among others: the effects of prolonged or deepening recession on industrial demand; general or specific sector (i.e., automotive, consumer appliance or construction) economic conditions affecting steel consumption; the impact of price competition, whether domestic or the result of foreign imports; difficulties in integrating acquired businesses; risks and uncertainties involving new products or new technologies; changes in the availability or cost of steel scrap or substitute materials; increases in energy costs; occurrence of unanticipated equipment failures and plant outages; labor unrest; and the effect of the elements on production or consumption.
More specifically, we refer you to SDI's 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, 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, available publicly on the SEC Web site, http://www.sec.gov/, and on the Steel Dynamics Web site, http://www.steeldynamics.com/
Forward-looking or predictive statements we make are based upon information and assumptions concerning our businesses and the environments in which they operate, which we consider reasonable as of the date on which these statements are made. Due to the foregoing risks and uncertainties however, as well as matters beyond our control which can affect forward-looking statements, you are cautioned not to place undue reliance on these predictive statements, which speak only as of the date of this press release. We undertake no duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Conference Call and Webcast
On Tuesday, April 20, 2010, at 9:30 a.m. Eastern time, Steel Dynamics will host a conference call in which management will discuss first quarter results. You are invited to listen to the live audio broadcast of the conference call over the Internet, accessible from the Steel Dynamics Web site:
http://www.steeldynamics.com/
Dial-in information is available on our Web site. An audio replay of the Webcast and a downloadable podcast will be available from the SDI Web site. No telephone replay will be available.
Steel Dynamics, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three Months Three Months Ended Ended March 31, December 31, ---------------------- ------------ 2010 2009 2009 ---------- -------- ---------- Net sales $1,555,790 $814,650 $1,179,802 Costs of goods sold 1,345,308 855,277 1,025,629 ---------- -------- ---------- Gross profit (loss) 210,482 (40,627) 154,173 Selling, general, and administrative expenses 57,160 57,320 61,002 Profit sharing 9,444 (42) 2,570 Amortization of intangible assets 11,581 15,698 12,199 ------- --------- ------- Operating income (loss) 132,297 (113,603) 78,402 Interest expense, net capitalized interest 37,515 36,251 33,546 Other income, net (3,081) (748) (1,463) ------- --------- ------- Income (loss) before income Taxes 97,863 (149,106) 46,319 Income taxes (benefit) 34,474 (59,332) 19,773 ------ -------- ------ Net income (loss) 63,389 (89,774) 26,546 Net loss attributable to non-controlling interests 1,580 1,912 105 Net income (loss) attributable to Steel Dynamics, Inc. $64,969 $(87,862) $26,651 ======= ========= ======= Basic earnings (loss) per share attributable to Steel Dynamics, Inc. stockholders $.30 $(.48) $.12 ==== ====== ==== Weighted average common shares outstanding 216,284 182,000 215,749 ======= ======= ======= Diluted earnings (loss) per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive $.29 $(.48) $.12 ==== ====== ==== Weighted average common shares and equivalents outstanding 234,659 182,000 234,194 ======= ======= ======= Dividends declared per share $.075 $.100 $.075 ======= ======= ======= Steel Dynamics, Inc. UNAUDITED SUPPLEMENTAL OPERATING INFORMATION (dollars in thousands) Three Months Three Months Ended Ended March 31, December 31, --------- ------------ 2010 2009 2009 ---- ---- ---- Steel Operations* Shipments (net tons) Flat Roll Division 749,258 303,938 645,679 Structural and Rail Division 155,349 129,555 116,695 Engineered Bar Products Division 125,059 71,540 88,524 Roanoke Bar Division 109,186 76,610 93,212 Steel of West Virginia 53,405 43,124 47,118 The Techs 210,545 118,359 178,580 ------- ------- ------- Combined 1,402,802 743,126 1,169,808 Intra-segment (11,087) (14,361) (7,431) ------- ------- ------ 1,391,715 728,765 1,162,377 Intra-company (70,866) (37,651) (60,236) ------- ------- ------- External 1,320,849 691,114 1,102,141 ========= ======= ========= Production (excluding The Techs) 1,191,138 702,317 996,834 ========= ======= ======= Net sales Combined $1,018,548 $535,184 $789,960 Intra-segment (6,052) (8,070) (3,995) ------ ------ ------ 1,012,496 527,114 785,965 Intra-company (39,929) (22,072) (29,887) ------- ------- ------- External $972,567 $505,042 $756,078 ======== ======== ======== Operating income (loss) before amortization of intangibles $137,669 $(65,022) $107,757 Amortization of intangibles (2,931) (3,189) (2,931) ------ ------ ------ Operating income (loss) $134,738 $(68,211) $104,826 ======== ======== ======== Metals Recycling and Ferrous Resources** OmniSource Ferrous metals shipments (gross tons) Combined 1,230,075 651,669 1,074,059 Intra-company (519,306) (191,744) (449,230) -------- -------- -------- External 710,769 459,925 624,829 Non-ferrous metals shipments (thousands of pounds) Combined 238,245 190,394 202,838 Intra-company (2,194) - - ------ --- --- External 236,051 190,394 202,838 Mesabi Nugget shipments (metric tons) 7,179 - - Iron Dynamics shipments (metric tons) Liquid pig iron 46,428 37,400 36,289 Hot briquetted iron 11,372 18,440 12,825 Other 698 611 675 --- --- --- Intra-company 58,498 56,451 49,789 ====== ====== ====== Net sales Combined $756,303 $296,408 $521,554 Intra-company (224,240) (58,702) (143,386) -------- ------- -------- External $532,063 $237,706 $378,168 ======== ======== ======== Operating income (loss) before amortization of intangibles $32,436 $(12,204) $(2,545) Amortization of intangibles (8,302) (11,943) (8,865) ------ ------- ------ Operating income (loss) $24,134 $(24,147) $(11,410) ======= ======== ======== Steel Fabrication*** Shipments (net tons) Combined 25,678 45,278 30,066 Intra-company (19) (15) (200) --- --- ---- External 25,659 45,263 29,866 ====== ====== ====== Net sales Combined $23,998 $60,807 $27,245 Intra-company (37) (22) (311) --- --- ---- External $23,961 $60,785 $26,934 ======= ======= ======= Operating income (loss) before amortization of intangibles $(6,549) $3,225 $(6,173) Amortization of intangibles (31) (165) (31) --- ---- --- Operating income (loss) $(6,580) $3,060 $(6,204) ======= ====== ======= * Steel Operations include the company's five steelmaking divisions and The Techs three galvanizing plants. ** Metals Recycling and Ferrous Resources Operations include OmniSource metals recycling operations, as well as Iron Dynamics' (IDI) pig iron substitute production facility (all IDI shipments are consumed internally) and Mesabi Nugget iron nugget production facility (all Mesabi shipments, which began in 2010, were consumed internally). *** Steel Fabrication Operations include the company's joist and deck fabrication operations. Steel Dynamics, Inc. CONSOLIDATED BALANCE SHEETS (in thousands) March December 31, 31, 2010 2009 (unaudited) Assets Current assets Cash and equivalents $225,506 $9,008 Accounts receivable, net 649,732 426,592 Inventories 900,889 852,831 Deferred income taxes 21,585 21,492 Income taxes receivable 124,950 137,024 Other current assets 12,091 9,856 ------ ----- Total current assets 1,934,753 1,456,803 Property, plant and equipment, net 2,240,375 2,254,050 Restricted cash 10,547 12,595 Intangible assets, net 522,245 533,510 Goodwill 756,624 758,259 Other assets 117,578 114,655 ------- ------- Total assets $5,582,122 $5,129,872 ========== ========== Liabilities and Stockholders' Equity Current liabilities Accounts payable $390,312 $262,285 Income taxes payable 30,723 5,664 Accrued expenses 202,961 156,570 Accrued profit sharing 9,682 2,860 Senior secured revolving credit facility, matures - 167,000 2012 Other current maturities of long- term debt 6,333 1,182 ----- ----- Total current liabilities 640,011 595,561 Long-term debt 7 3/8% senior notes, due 2012 700,000 700,000 5.125% convertible senior notes, due 2014 287,500 287,500 6 3/4% senior notes, due 2015 500,000 500,000 7 3/4% senior notes, due 2016 500,000 500,000 7 5/8% senior notes, due 2020 350,000 - Other long-term debt 62,364 67,072 ------ ------ Total long-term debt 2,399,864 2,054,572 Deferred income taxes 423,395 416,468 Other liabilities 60,957 60,006 Commitments and contingencies Stockholders' equity Common stock 630 629 Treasury stock, at cost (728,489) (730,857) Additional paid-in capital 978,090 972,985 Retained earnings 1,794,247 1,745,511 --------- --------- Total Steel Dynamics, Inc. stockholders' equity 2,044,478 1,988,268 Non-controlling interests 13,417 14,997 ------ ------ Total stockholders' equity 2,057,895 2,003,265 --------- --------- Total liabilities and stockholders' equity $5,582,122 $5,129,872 ========== ========== Steel Dynamics, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Three Months Ended March 31, --------- 2010 2009 ---- ---- Operating activities: Net income (loss) attributable to Steel Dynamics, Inc. $64,969 $(87,862) Adjustments to reconcile net income (loss) attributable to Steel Dynamics, Inc. to net cash provided by operating activities: Depreciation and amortization 56,272 56,963 Equity-based compensation 2,769 8,579 Deferred income taxes 8,468 7,695 Non-controlling interests (1,580) (1,912) Changes in certain assets and liabilities: Accounts receivable (223,140) 141,093 Inventories (48,058) 193,097 Accounts payable 118,217 (34,054) Income taxes receivable/ payable 37,133 (11,261) Other working capital 57,692 (57,643) ------ ------- Net cash provided by operating activities 72,742 214,695 Investing activities: Purchase of property, plant and equipment (30,684) (74,338) Other investing activities 504 (3,223) --- ------ Net cash used in investing activities (30,180) (77,561) Financing activities: Issuance of current and long- term debt 544,550 237,059 Repayment of current and long-term debt (351,330) (358,666) Debt issuance costs (6,538) (453) Issuance of common stock (net of expenses) and proceeds from 3,454 (2,058) exercise of stock options, including related tax effect Contribution from non- controlling investor - 5,000 Dividends paid (16,200) (18,182) ------- ------- Net cash provided by (used in) financing activities 173,936 (137,300) ------- -------- Increase (decrease) in cash and equivalents 216,498 (166) Cash and equivalents at beginning of period 9,008 16,233 ----- ------ Cash and equivalents at end of period $225,506 $16,067 Supplemental disclosure information Cash paid for interest $3,769 $11,984 Cash paid (received) for federal and state income taxes, net $(13,010) $(55,430)
Steel Dynamics, Inc.
CONTACT: Fred Warner, Investor Relations Manager, +1-260-969-3564, or
fax +1-260-969-3590, f.warner@steeldynamics.com
Web Site: http://www.steeldynamics.com/
