Full-Year 2011 Net Income Increases 98% to $278 Million, Compared to 2010
FORT WAYNE, INDIANA, January 24, 2012 / PRNewswire / Steel
Dynamics, Inc. (NASDAQ/GS: STLD) today announced fourth quarter net
income of $30 million, or $0.14 per diluted share, on net sales of $1.9
billion. By comparison, prior year fourth quarter net income was $8
million, or $0.04 per diluted share, on net sales of $1.5 billion.
Full-year 2011 net income increased 98% to $278 million, or $1.22 per
diluted share, on net sales of $8.0 billion, compared to prior year net
income of $141 million, or $0.64 per diluted share, on net sales of $6.3
billion.
“We are pleased with the strong revenue and bottom-line performance
in both the quarter and for the year in comparison to prior year
results,” said President and Chief Executive Officer Mark Millett. “We
achieved both quarterly and annual organic sales growth of over 20
percent, and nearly doubled our annual pretax earnings in a challenging
environment. Many of our operations achieved notable milestones in 2011:
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Our Flat Roll and Engineered Bar Products divisions achieved record
annual production and shipping volumes individually, as did our steel
operations in total,
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Our Engineered Bar Products and Steel of West Virginia steel divisions achieved record annual operating income,
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We significantly increased our market share of railroad rail business,
shipping 117,000 tons in 2011 (more than double the 55,000 tons shipped
during 2010),
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Our metals recycling operations achieved record annual ferrous and
nonferrous shipping volumes, as we leveraged improved market dynamics
through additional retail yards and increased shredder capacity,
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We achieved record production of iron units at our Iron Dynamics facility, with the lowest cost structure achieved to date, and
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We began operations at three fabrication facilities located
strategically in the South and Southwest, providing market expansion.
This solid performance in a difficult economy is driven by our
ongoing commitment to provide exceptional value to our customers, while
sustaining our innovative, low-cost operating culture.”
Fourth Quarter Review
Fourth quarter volumes increased in each of the company’s operating
segments when compared to the prior-year fourth quarter and decreased
when compared to the third quarter of 2011. While the company’s
operating income increased 76 percent over prior-year performance, it
decreased 24 percent in comparison to the third quarter of 2011. The
decrease in consecutive quarterly operating income was primarily the
result of compressed flat roll margins and Iron Dynamics’ planned three
week maintenance shutdown, which reduced operating income by $10 million
due to associated costs and reduced volume. Despite increased volumes,
earnings from flat roll operations declined 26 percent, as lower selling
prices in the first half of the quarter were not matched with
corresponding declines in the cost of raw materials, resulting in margin
compression. However, beginning mid-quarter, increases in both order
entry and pricing should benefit the first quarter of 2012.
Fourth quarter margins for the combined steel operations expanded in
comparison to prior year fourth quarter results, as the average selling
price per ton shipped increased $100 per ton to $853, and the average
ferrous scrap cost per ton melted increased $68. In contrast, steel
margins compressed in comparison to the third quarter of 2011, as the
average selling price per ton shipped decreased $44 per ton across the
steel group, and the average ferrous scrap cost per ton melted decreased
only $12.
As is typical in the last quarter of the year, metals recycling
volumes decreased when compared to the third quarter of 2011, but
increases in nonferrous margins more than offset the impact of reduced
ferrous and nonferrous shipments. Operating income for OmniSource was
$16 million in the fourth quarter, an increase of $7 million in
comparison to prior year, and an increase of $4 million compared to the
third quarter of 2011. Non-cash unrealized hedging losses were $3
million, or approximately $0.01 per diluted share, in the fourth quarter
of 2011, as compared to gains of $2 million in the third quarter of
2011.
The impact of losses from the company’s Minnesota operations on
fourth quarter 2011 consolidated net income was $10 million, or
approximately $0.05 per diluted share. This compares to losses of $8
million, or approximately $0.03 per diluted share in the third quarter
of 2011. The increased loss was a function of margin compression as
product pricing decreased and the cost of raw materials increased
quarter over quarter. Fourth quarter shipments of iron nuggets was
53,000 metric tons, a 62 percent increase over third quarter 2011
levels.
Full-Year Review
Overall 2011 shipping volumes increased in each of the company’s
operating segments when compared to prior year, and record volumes were
achieved in the steel and metals recycling operations. 2011 net sales of
$8.0 billion, increased $1.7 billion, or 27 percent, over 2010 results,
and were only 1 percent less than the company’s record net sales
achieved in 2008.
The company’s operating income increased 60 percent versus the prior
year, driven primarily by significant margin improvement within the
steel operations in both flat and long products. The average annual
selling price per ton shipped for the company’s steel operations in 2011
was $897, an increase of $123 per ton compared to 2010. The 2011
average ferrous scrap cost per ton melted increased $71.
Outlook
As previously reported in early January, the company successfully
expanded its existing senior secured credit facility by adding a $275
million term loan facility. The net proceeds from the term loan were
used to repay approximately $278 million, or 40 percent, of the
company’s outstanding 7 3/8% Senior Notes due November 2012, in
accordance with the announced cash tender offer. During the first
quarter of 2012, the company expects to recognize expenses of
approximately $10 million (net of interest cost savings) associated with
the refinancing, including the tender premium and unamortized financing
fee write-offs. During the remainder of the year beginning in April
through maturity in November, the refinancing is expected to result in
interest cost savings of approximately $9 million (based on current
interest rates).
“Entering the new year,“ Millett said, “we are optimistic, despite
continued uncertainty within the U.S. and global economies. We believe
there is the possibility for more stability to develop in 2012 as
improvements continue in certain market sectors, such as energy,
agriculture, automotive, transportation and construction equipment. If
the U.S. economy continues a pattern of slow and steady growth during
the year, steel demand should logically follow, given the relatively low
levels of inventory across the supply chain. We remain confident that
with our exceptional team, coupled with our superior, low-cost operating
culture, we are uniquely prepared to capitalize on the opportunities
ahead.”
Summary Fourth Quarter and Full-Year 2011 Operating Segment Information
The following tables highlight operating results for each of the
company’s three primary operating segments. References to segment
operating income in the following paragraphs exclude profit-sharing
costs and amortization pertaining to intangible assets. (Amounts
excluding full year 2010 data are unaudited, and dollar amounts are in
thousands, excluding per ton data.)
Steel Operations
This segment includes five electric-arc-furnace steel mills and
related steel finishing and processing facilities, including The Techs.
The company’s steel operations produce flat-rolled steel, structural
steel, merchant bars, special-bar-quality steel, rebar, rail, and
specialty shapes.
Metals Recycling and Ferrous Resources
This segment principally includes the company’s metals recycling
operations (OmniSource Corporation), a liquid pig iron production
facility (Iron Dynamics), and the company’s Minnesota operations, which
currently primarily includes an iron nugget manufacturing facility
(Mesabi Nugget, which is 81 percent company-owned).
Steel Fabrication Operations
Steel fabrication operations include New Millennium Building Systems,
which fabricates steel joists, trusses, and decking used in the
construction of non-residential buildings. Fourth quarter and annual
2010 operating losses of $13 million and $25 million, respectively,
include a $13 million impairment charge.
About Steel Dynamics, Inc.
Steel Dynamics, Inc. 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 annual sales of $8.0
billion in 2011, 6,500 employees, and manufacturing facilities primarily
located throughout the United States (five steel mills, six steel
processing facilities, two iron production facilities, over 70 metals
recycling locations and six steel fabrication plants).
Forward Looking Statements
Conference Call and Webcast
On Wednesday, January 25, 2012, at 10:00 a.m. Eastern time, Steel
Dynamics will host a conference call with investors and analysts to
discuss the company’s fourth quarter and full-year 2011 results. We
invite you to listen to the live audiocast of the conference call
accessible from our website (http://steeldynamics.com)
, or via telephone (the conference call number may be obtained on our
website). A replay of the discussion will be available on our website
following the conclusion of the conference call.
Contact
Theresa E. Wagler, Executive Vice President and Chief Financial Officer
+1.260.969.3500 |