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Steel Dynamics Reports Strong Third Quarter and Nine-Month 2008 Results

October 15, 2008

FORT WAYNE, Ind., Oct. 15 /PRNewswire-FirstCall/ — Steel Dynamics, Inc. today announced third quarter 2008 net income of $193 million, or $0.98 per diluted share, down sequentially 8 percent from $210 million, or $1.05 per diluted share, compared to the second quarter of 2008, but 92 percent higher than the $101 million reported for the third quarter of 2007. Net sales of $2.6 billion for the third quarter were up 7 percent compared to $2.4 billion in the second quarter of 2008, and increased 122 percent from $1.2 billion in the third quarter of 2007. For the first nine months of 2008, both net sales of $6.9 billion and net income of $546 million set company records. Earnings were $2.75 per diluted share for the first nine months versus $1.51 for the year-earlier period. Third quarter 2008 results included contributions from the Recycle South operations that were purchased in June 2008.

Third quarter steel shipments of 1.4 million tons were 12 percent lower than second quarter 2008 and 9 percent lower than third quarter 2007 shipments. Reduced volume was due primarily to a 19 percent sequential decrease in flat-rolled steel shipments by the Flat Roll Division and The Techs. Flat-rolled steel shipments for late September were below our expectations as steel customers reduced order entry and deferred order releases when steel selling prices started to fall. Lower September prices resulted in reduced margins for the Flat Roll Division while working down mill scrap inventories that had been purchased at higher prices.

Compared to the second quarter, SDI’s merchant bar shipments were up 8 percent, engineered bar shipments were up 3 percent, and structural steel shipments were down 2 percent. Operating income for the long products steel operations remained very strong. New Millennium Building Systems saw modest improvement in volume and higher selling prices, but continued to experience weak commercial building market conditions.

OmniSource shipments of ferrous scrap were 1.8 million net tons, up 17 percent compared to the second quarter of 2008 and non-ferrous shipments were 242 million pounds, down 5 percent. Iron Dynamics continued to operate well, producing 70,000 net tons of pig iron for use in flat-roll steel production.

“SDI’s third quarter results of $0.98 per diluted share were somewhat below our July 21 third-quarter earnings guidance, principally due to the unprecedented decline in ferrous scrap prices in September,” said Keith Busse, Chairman and CEO of Steel Dynamics. “The steep drop in ferrous and non-ferrous scrap prices in September resulted in significantly reduced profits for OmniSource due to lower selling values for shipments as matched against higher August input costs. Despite record performances in July and August, and although the level of OmniSource’s scrap inventories was within a customary range, the September decline of approximately $300 per ton in prime scrap prices nevertheless caused a significant decrease in OmniSource’s September operating profit, reducing SDI’s expected quarterly earnings results by about $0.12 per diluted share.

“Because scrap-yard inventories typically turn within the month, the impact of this large price reduction on scrap operating profits is primarily confined to September, although there will be some further impact on scrap operating profits in the fourth quarter due to further ferrous pricing declines. Normal margins should return to health in the November-December timeframe, but volumes could be lower, with anticipated further improvement in the first quarter of 2009. The bright side of this recent significant decline in ferrous scrap prices is that with lower scrap costs, raw material costs at our steel operations will be significantly lower.

“It should be noted that had the steep decline in scrap prices not occurred, our third quarter could have, in fact, been a record quarter for the company, despite the difficulties of the U.S. economy,” Busse said. “This speaks volumes about the viability of our low cost variable cost structure.

“Pricing and the volume of steel production and shipments in the fourth quarter will depend on the tenor of the steel market and the economy in general, as well as business and consumer confidence. If business activity is slow to recover, we will generate lower fourth quarter shipping volumes and earnings, primarily in flat-rolled products. Our long products steel operations have recently seen slightly weaker order entry, but they all currently have healthy backlogs. The outlook in the marketplace for flat-rolled steel is currently more uncertain.

“Raw materials inventories for our long products mills were relatively low going into the fourth quarter, but our flat products scrap inventories were relatively high, suggesting it will take longer to work them down with lower anticipated volumes in this part of our steel business. Accordingly, we would expect our overall earnings could be about half that of our earnings in the third quarter. Nevertheless, given the current uncertainties about steel demand and pricing for the fourth quarter, we are not providing specific fourth-quarter guidance at this time, but will provide an update as the quarter progresses. We are withdrawing our previous full-year 2008 earnings guidance of $3.80 to $3.90 per diluted share as market circumstances have changed dramatically. We believe that our steel shipments (primarily flat-rolled) will be significantly lower in the fourth quarter, but I would emphasize that the low, variable-cost structure of our steel operations enables us to operate profitably at lower operating rates than most of our peers,” Busse said.

Regarding the company’s capital structure, long-term debt was $2.2 billion at the end of the quarter with only $65 million of principal due in the next twelve months. Borrowings on our $874-million senior secured revolving credit facility (maturing July 2012), totaled $575 million. We currently anticipate substantial decreases in working capital requirements during the fourth quarter, providing for a meaningful reduction of our revolver borrowings before the end of the year.

During the third quarter, the company repurchased 18.9 million shares of its common stock at a cost of $439 million, or at an average purchase price of $23 per share. At the end of the quarter, there were 183.1 million shares of Steel Dynamics common stock outstanding. During the quarter, the last of the outstanding 4.0% convertible notes were converted to stock.

“In light of these factors, it is simply beyond comprehension why our share price, which is supposed to reflect rational thinking by rational people, is where it is today. Frankly, in my judgment, those who have literally dumped their shares into a grossly oversold market have made some very poor investment decisions,” Busse said.

“Indeed, we believe that our metals recycling segment will soon return to a solid and sustainable level of profitability and that our long products businesses will remain stable with excellent earnings. And, considering the impact from our flat-rolled products operations, where we have anticipated the possibility of substantial short-term weakness into early next year-including a drop in steel pricing and sharply reduced volumes-substantial earnings growth in the first quarter of 2009 is not an unreasonable expectation in light of our superior cost structure. So, in spite of a weaker economy, 2009 could, with scrap prices remaining soft, be another outstanding year for Steel Dynamics,” Busse concluded.

Project Status

Regarding capital investments, steelmaking capacity upgrades at the company’s three Indiana steel mills are on track. The Structural & Rail Division’s new medium section rolling mill began commissioning in August. It is ramping up one product family at a time, and made its first shipments of wide-flange beams at the end of August. Construction of the building housing Columbia City’s second caster is underway. After installation of the second caster in mid-2009, the structural mill will be capable of casting and rolling at least 2 million tons per year.

At the Engineered Bar Products mill at Pittsboro, work has been ongoing to expand the existing reheat furnace as well as making equipment modifications in casting and rolling. These changes are expected to be completed early in 2009, increasing the mill’s production capacity to 750,000 tons per year and extending its product capabilities.

At the Butler Flat Roll mill, replacement of the first two EAF furnace shells began in September, two months ahead of schedule. All four shells will be replaced with higher-capacity vessels, and along with other completed upgrades, will increase the mill’s capacity ultimately to 3 million tons per year.

Meanwhile, construction of the Mesabi Nugget plant at Hoyt Lakes, Minnesota, is proceeding on plan. The two major processing buildings are in the process of being enclosed for the winter. Installation of the large rotary hearth furnace has begun, and site utility and rail infrastructure projects are proceeding. During the third quarter the re-permitting of the Steel Dynamics Mesabi iron mine received strong public support at a public hearing conducted by Minnesota environmental officials. We continue to expect the start-up of the Mesabi Nugget plant in the third quarter of 2009 and, subject to obtaining on a timely basis the permits needed to operate the mine, commencing mining operations by late 2010.

Third Quarter 2008 Operating Segment Information

The following highlights our third quarter 2008 results for each of SDI’s three primary operating segments.

Steel Operations. Steel Operations represented 53 percent of the company’s third quarter net sales. This segment includes five electric-arc-furnace (EAF) steel mills and related steel processing facilities, including The Techs, which galvanize steel sheet that is sourced primarily from third parties. In addition to flat-rolled steel, the company’s steel operations produce structural steel, merchant bars, special-bar-quality steel, and other specialty shapes.

Third quarter 2008 Steel Operations net sales were $1.7 billion on shipments of 1.4 million tons (including intra-company shipments). Based on tons shipped, including steel shipments made by The Techs, flat-rolled products accounted for 55 percent of third quarter steel segment shipments. Structural steel shipments were 20 percent, engineered bars were 10 percent, merchant bars were 10 percent, and the remaining 5 percent were shipments by the Steel of West Virginia subsidiary. Operating income for the steel segment was $285 million, or $200 per ton shipped, compared to $206 per ton in the second quarter. These figures exclude profit-sharing costs and amortization related to the segment’s intangible assets.

The third quarter’s average selling price per ton for Steel Operations was $1,186, an increase of $175 per ton from $1,011 in the second quarter of 2008 and an increase of $487 per ton from the year-ago quarter. The average scrap cost per net ton charged increased by $87 compared to the second quarter, and was $290 higher than the third quarter of 2007.

Metals Recycling and Ferrous Resources. This segment includes ferrous and non-ferrous metals processing and trading by OmniSource Corporation and SDI’s Iron Dynamics scrap-substitute operation, which produces pig iron for use by the Flat Roll Division. The segment also includes expenses related to the Mesabi Nugget project, which is currently under construction. The segment’s net sales for third quarter 2008 were $1.3 billion (including intra-company sales), representing 42 percent of SDI’s third quarter net sales. Operating income for this segment was a record $101 million, excluding profit-sharing costs and amortization related to the segment’s intangible assets.

For the third quarter, total ferrous scrap shipments, including shipments to SDI’s Steel Operations, were 1.8 million tons and non-ferrous scrap shipments were 242 million pounds. During the third quarter, the company’s scrap operations supplied 714,000 tons of ferrous scrap to SDI’s steel operations, or approximately 43 percent of the tonnage of ferrous scrap purchased by our mills during the quarter.

Steel Fabrication Operations. Steel Fabrication Operations includes New Millennium Building Systems fabricating plants that produce joists, trusses, and steel decking used in the construction of non-residential buildings. Third quarter net sales were $111 million, or 3 percent of SDI’s third quarter net sales. Operating income for this segment was $5 million, or $58 per ton shipped, excluding profit-sharing costs and amortization related to the segment’s intangible assets. Third quarter shipments totaled 78,000 tons at an average selling price of $1,413 per ton.

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 growth, 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: changes in economic conditions affecting steel consumption; increased foreign imports; increased price competition; 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.

In addition, 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 and 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 on our knowledge of our businesses and the environment in which they operate as of the date on which the statements were made. Due to these risks and uncertainties, 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 Thursday, October 16, 2008, at 10:00 a.m. Eastern time, Steel Dynamics will host a conference call in which management will discuss third 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 INCOME (UNAUDITED)                   (in thousands, except per share data)                                                                  Three Months                   Three Months Ended        Nine Months Ended      Ended                      September 30,            September 30,       June 30,                   2008         2007         2008        2007        2008    Net sales    $2,563,943   $1,156,593   $6,870,087  $2,933,515  $2,403,939   Costs of    goods sold   2,118,737      928,142    5,597,917   2,272,079   1,924,284     Gross      profit       445,206      228,451    1,272,170     661,436     479,655    Selling,    general, and    administrative    expenses        67,459       37,670      219,355      98,242      86,557   Profit sharing   30,800       14,699       76,204      43,740      26,897   Amortization    of intangible    assets          10,765        2,155       30,416       6,556       8,120      Operating      income       336,182      173,927      946,195     512,898     358,081    Interest expense,    net capitalized    interest        37,446       14,602      102,728      29,048      35,475   Other (income)    expense, net    (8,342)        (602)     (33,048)      10,205    (16,901)      Income before      income taxes 307,078      159,927      876,515     473,645     339,507    Income taxes    114,070       59,336      330,456     176,949     129,013      Net income   $193,008     $100,591     $546,059    $296,696    $210,494     Basic earnings    per share         $.99         $.56        $2.85       $1.59       $1.11    Weighted average    common shares    outstanding    195,347      179,481      191,579     186,324     190,351     Diluted earnings    per share,     Including the      effect of      assumed      conversions     $.98         $.53        $2.75       $1.51       $1.05   Weighted average    common shares    and share    equivalents    outstanding    196,859      189,858      198,840     196,898     200,345     Dividends    declared    per share         $.10        $.075         $.30       $.225        $.10     Note:  All prior period share data has been adjusted to reflect the          company's two-for-one stock split effective March 2008.                               Steel Dynamics, Inc.                UNAUDITED SUPPLEMENTAL OPERATING INFORMATION                                 Three Months Ended     Nine Months Ended                                    September 30,         September 30,                                   2008      2007        2008      2007    Steel Operations*     Shipments (net tons)       Flat Roll Division        576,059    689,762   1,967,660 1,881,361       Structural and        Rail Division            281,126    302,141     866,963   895,618       Engineered Bar        Products Division        149,708    133,795     442,741   408,130       Roanoke Bar Division      148,128    142,243     436,078   453,253       Steel of West Virginia     62,849     69,024     218,907   214,457       The Techs                 209,191    230,691     734,110   230,691                               1,427,061  1,567,656   4,666,459 4,083,510       Intercompany             (141,113)  (134,614)   (395,926) (372,537)       Net shipments           1,285,948  1,433,042   4,270,533 3,710,973    Average selling price    per ton shipped               $1,186       $699        $985      $682   Production (net tons,    excluding The Techs)       1,279,341  1,284,512   4,019,776 3,781,137    Steel Fabrication    Operations**     Shipments (net tons)         78,205     70,005     222,829   205,376       Intercompany                 (552)      (683)       (868)   (3,476)       Net shipments              77,653     69,322     221,961   201,900      Average selling price      per ton shipped             $1,413     $1,403      $1,267    $1,308    Metals Recycling & Ferrous    Resources ***     Shipments (net tons)       Ferrous                 1,757,334    106,138   4,655,618   256,979       Scrap substitute           69,658     61,036     204,379   185,275       Intercompany             (783,893)  (135,039) (2,036,623) (391,232)       Net shipments           1,043,099     32,135   2,823,374    51,022        Non-ferrous        (pounds)             241,651,104          - 734,586,194         -      Other Operations****     Shipments (net tons)         31,882     34,107     130,246    93,576       Intercompany                  (35)      (156)       (345)     (293)       Net shipments              31,847     33,951     129,901    93,283                                                       First         Second                                                    Quarter        Quarter                                                      2008          2008    Steel Operations*     Shipments (net tons)       Flat Roll Division                           685,320        706,281       Structural and Rail Division                 299,687        286,150       Engineered Bar Products Division             147,948        145,085       Roanoke Bar Division                         151,368        136,582       Steel of West Virginia                        75,724         80,334       The Techs                                    262,011        262,908                                                  1,622,058      1,617,340       Intercompany                                (130,685)      (124,128)       Net shipments                              1,491,373      1,493,212    Average selling price per ton shipped               $782         $1,011   Production (net tons, excluding The Techs)     1,372,364      1,368,071    Steel Fabrication Operations**     Shipments (net tons)                            68,606         76,018       Intercompany                                    (273)           (43)       Net shipments                                 68,333         75,975      Average selling price per ton shipped           $1,145         $1,227    Metals Recycling & Ferrous Resources ***     Shipments (net tons)       Ferrous                                    1,391,382      1,506,902       Scrap substitute                              67,994         66,727       Intercompany                                (531,886)      (720,844)       Net shipments                                927,490        852,785        Non-ferrous (pounds)                     238,787,934    254,147,156    Other Operations****     Shipments (net tons)                            48,841         49,523       Intercompany                                    (222)           (88)       Net shipments                                 48,619         49,435     *    Steel Operations include the company's Flat Roll Division, Structural        and Rail Division, Engineered Bar Products Division, Roanoke Bar        Division, Steel of West Virginia, and The Techs flat roll galvanizing        operations (acquired July 2007).    **   Steel Fabrication Operations include the company's five joist and        deck fabrication operations.    ***  Metals Recycling and Ferrous Resources Operations include Iron        Dynamics, the company's previously existing five scrap procurement        and processing facilities, and most recently, OmniSource Corporation        operations (acquired October 26, 2007) and Recycle South operations        (acquired June 10, 2008).    **** Other Operations include Paragon Steel Enterprises and Dynamic        Composites operations.                               Steel Dynamics, Inc.                        CONSOLIDATED BALANCE SHEETS                               (in thousands)                                                 September 30,    December 31,                                                    2008            2007                                                 (unaudited)                     Assets   Current assets       Cash and equivalents                     $     79,492   $     28,486       Accounts receivable, net                    1,122,648        714,123       Inventories                                 1,356,992        904,398       Deferred income taxes                          12,023         10,427       Other current assets                           61,977         38,795           Total current assets                    2,633,132      1,696,229    Property, plant and equipment, net              1,997,495      1,652,097    Restricted cash                                     7,679         11,945    Intangible assets, net                            625,537        514,547    Goodwill                                          781,555        510,983    Other assets                                       66,838        133,652           Total assets                         $  6,112,236   $  4,519,453       Liabilities and Stockholders' Equity   Current liabilities       Accounts payable                         $    710,152   $    378,849       Income taxes payable                           31,614         25,870       Accrued expenses                              274,886        150,687       Accrued profit sharing                         75,212         53,958       Senior secured revolving credit        facility, matures 2012                       575,000        239,000       Other current maturities of long-term debt     65,203         56,162           Total current liabilities               1,732,067        904,526    Long-term debt       Senior secured term A loan                    519,900        481,250       7 3/8% senior notes, due 2012                 700,000        700,000       6 3/4% senior notes, due 2015                 500,000        500,000       7 3/4% senior notes, due 2016                 500,000              -       4.0% convertible subordinated notes,        due 2012                                           -         37,250       Other long-term debt                           15,884         16,183           Total long-term debt                    2,235,784      1,734,683    Deferred income taxes                             333,025        301,470    Minority interest                                   8,939         11,038    Other liabilities                                  63,027         38,540    Commitments and contingencies    Stockholders' equity       Common stock                                      544            542       Treasury stock, at cost                      (720,835)      (457,368)       Additional paid-in capital                    538,445        553,805       Other accumulated comprehensive income              -             21       Retained earnings                           1,921,240      1,432,196           Total stockholders' equity              1,739,394      1,529,196           Total liabilities and            stockholders' equity                $  6,112,236   $  4,519,453                               Steel Dynamics, Inc.             CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                               (in thousands)                                 Three Months Ended     Nine Months Ended                                   September 30,          September 30,                                  2008      2007       2008        2007    Operating activities:     Net income                 $193,008  $100,591   $546,059    $296,696      Adjustments to reconcile      net income to net cash      provided by operating      activities:        Depreciation and         amortization             55,359    33,853    156,153      96,096        Unamortized bond premium       -         -          -      (3,350)        Equity-based         compensation              3,293     1,817      9,976       6,218        Deferred income taxes     (2,047)     (562)    (9,893)     (1,679)        Minority interest         (3,365)      107     (2,099)       (448)        Changes in certain         assets and liabilities:          Accounts receivable     89,664    12,544   (307,540)    (21,204)          Inventories           (135,430)   35,212   (353,125)   (118,514)          Accounts payable       (76,554)   29,784    287,626     100,594          Income taxes payable   (32,114)    5,374      5,743       1,242          Other working capital   42,778    31,479     70,580      (7,284)         Net cash provided by         operating activities    134,592   250,199    403,480     348,367    Investing activities:     Purchases of property,      plant and equipment       (115,636)  (99,935)  (310,625)   (255,845)     Acquisition of      businesses, net of      cash acquired                    -  (373,407)  (271,159)   (411,626)     Purchases of securities           -         -    (20,373)          -     Sales of securities          32,533         -     32,758           -     Other investing      activities                  (1,753)      169      2,176           7        Net cash used in         investing activities    (84,856) (473,173)  (567,223)   (667,464)    Financing activities:     Issuance of current      and long-term debt       1,186,000   798,000  2,190,900   1,795,000     Repayment of current      and long-term debt        (814,665) (366,230)(1,449,820) (1,028,387)     Debt issuance costs             (28)   (2,603)    (7,544)    (10,591)     Issuance of common      stock (net of expenses)      and proceeds from exercise      of stock options, including      related tax effect           2,029     4,113     19,483      20,260     Purchase of treasury      stock                     (439,166) (197,867)  (485,293)   (433,183)     Dividends paid              (19,819)  (13,840)   (52,977)    (42,564)       Net cash provided by        (used in) financing        activities               (85,649)  221,573    214,749     300,535     Increase (decrease) in      cash and equivalents       (35,913)   (1,401)     51,006    (18,562)     Cash and equivalents at      beginning of period        115,405    12,212     28,486      29,373      Cash and equivalents at      end of period              $79,492   $10,811    $79,492     $10,811     Supplemental disclosure    information:      Cash paid for interest      $7,982    $4,563    $76,701     $22,921      Cash paid for federal       and state income taxes   $153,938   $51,236   $315,847    $183,521  

Steel Dynamics, Inc.

CONTACT: Fred Warner, Investor Relations Manager, Steel Dynamics, Inc.,+1-260-969-3564, fax +1-260-969-3590, f.warner@steeldynamics.com

Web site: http://www.steeldynamics.com/