FORT WAYNE, INDIANA, July 22, 2009— Steel Dynamics, Inc. (NASDAQ/GS:
STLD) today announced a loss of $0.08 per diluted share for the second
quarter of 2009. This was a narrower loss than was expected in mid-June
due to a change in the company’s estimated annual income tax rate, which
reduced the second quarter net loss by $0.02 per diluted share. Net
losses for the second quarter of 2009 were $16 million, compared to a
net loss of $88 million, or $0.48 per diluted share, in the first
quarter of 2009 and net income of $210 million, or $1.05 per diluted
share, in the second quarter of 2008.
During June 2009, the company issued 31,050,000 shares of its common
stock at a public offering price of $13.50 and issued $287.5 million of
5.125% convertible notes due 2014. Net proceeds of slightly more than
$675 million were used to repay a term loan of $552 million and for
other general purposes. During this time frame, the company also amended
its senior secured credit agreement, obtaining greater financial
covenant flexibility through 2010. There was no net impact to the second
quarter’s loss per diluted share due to these transactions, as the
weighted average increase in outstanding shares was offset by certain
related transaction expenses of approximately $3.5 million.
Net sales for the second quarter of 2009 were $792 million, 3 percent
lower than net sales of $815 million in the first quarter 2009.
Compared to the second quarter of 2008, net sales were down 67 percent
due to much lower volume and lower selling values for steel and recycled
metals. Steel shipments for the second quarter were 886,000 tons, 45
percent below second quarter 2008 shipments of 1.6 million tons. SDI’s
average steel selling price for the second quarter of 2009 declined $126
per ton, to $594 from $720 per ton in the first quarter. Average scrap
cost per net ton charged decreased $79 compared to the first quarter. In
metals recycling, OmniSource’s ferrous metals shipments were 840,000
tons, down 44 percent from the second quarter of 2008, and nonferrous
shipments were 170 million pounds, down 33 percent.
“In the second quarter, the company’s steel operations produced
operating income of $36 million, with overall capacity utilization
improving to approximately 50 percent, despite continued low operating
rates at the long-products divisions,” said Keith Busse, Chairman and
CEO. “The Structural and Rail Division operated at about 25 percent of
current capacity. In spite of this depressed operating environment, the
division achieved an operating profit for the quarter.
“We are very pleased to report that OmniSource generated operating
income for the quarter, with May and June results offsetting April
losses. The increase in demand for ferrous and nonferrous materials,
coupled with stronger material flows and a reduced cost structure,
position OmniSource to continue to improve performance in the second
half of 2009. We believe OmniSource will be profitable for the full
year.
“New Millennium Building Systems, our joist-and-deck fabricating
operation, continues to face stiff headwinds as the non-residential
building construction market remains very weak. This resulted in
basically breakeven operations for the quarter. Joist-and-decking
shipments of 35,000 tons were off 53 percent from the year-ago quarter.
“During the second quarter, we experienced a slight improvement in
business conditions. Order entry picked up at the Flat Roll Division and
at The Techs in early May and has continued to be strong, resulting in
improved backlogs. It remains unclear whether this increase in business
activity will persist, or will be short-lived, as we continue to see
conflicting signs in the economy. While our flat-roll steel businesses
are currently operating near capacity, we have seen only marginal
improvement in long products. We have yet to see signs of improvement in
the construction markets.
“Based on our assumptions that flat-roll demand will remain steady in
the near term, recycled metals will continue to recover, and demand for
long products will remain sluggish, we currently expect third quarter
diluted earnings per share to be in the range of $0.10 to $0.20 for the
third quarter. We will provide an update to this guidance in early
September.
“Steel Dynamics remains poised to ramp up quickly to meet renewed
demand for steel products when it occurs. Our employees demonstrated
this responsiveness in June as our flat-roll and metals recycling
operations quickly ramped up output in response to increased demand. I
would like to salute all of our employees for their positive attitudes,
as many continue to receive smaller paychecks due to shorter workweeks
and lower production bonuses. They, as in the past, continue to do an
excellent job in controlling costs as we all recognize the realities of
the current business environment,” Busse said.
In June Steel Dynamics relocated their corporate offices to a
building obtained through the acquisition of OmniSource, and at which
OmniSource continues to also maintain its central offices. Telephone and
email contact information for Steel Dynamics corporate office employees
remains unchanged.
Second Quarter 2009 Operating Segment Information
The following highlights second quarter 2009 results for each of SDI’s three primary operating segments.
Steel Operations. Steel Operations achieved net
sales of $526 million for the second quarter and represented 64 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 galvanize steel sheet that is sourced primarily from
third parties.
Second quarter 2009 Steel Operations shipments were 886,000 tons, of
which 582,000 tons were flat-rolled shipments. Based on tons shipped,
including steel shipments made by The Techs, flat-rolled products
accounted for 66 percent of second quarter steel segment shipments, 11
percent was structural steel shipments, 7 percent was engineered bars,
10 percent was merchant bars, and 6 percent was Steel of West Virginia
shipments. The second quarter operating profit for the steel segment was
$36 million, or $41 per ton shipped, compared to an operating loss of
$88 per ton in the first quarter. (Without the effect of the first
quarter’s lower of cost or market inventory adjustments, Steel
Operations would have generated an operating profit of about $17
million, or $22 per ton, in the first quarter.) These figures exclude
amortization related to the segment’s intangible assets and certain
non-allocated corporate overhead expenses, such as profit-sharing costs.
The second quarter’s average selling price per ton for Steel
Operations was $594, a decrease of $126 per ton from $720 in the first
quarter of 2009 and a decrease of $417 per ton from the year-ago
quarter. The average scrap cost per net ton charged decreased $79
compared to the first quarter.
Notable items for the second quarter include the completion, late in
the quarter, of the second electric- arc-furnace upgrade at the Butler,
Indiana, Flat Roll Mill. This brings the mill’s total annual production
capacity to 3 million tons. Also during the quarter, rail production
increased at the Structural and Rail Division. In April, our
rail-welding operation shipped its first rail-train of quarter-mile-long
rail strings welded from 240-foot rail sections produced at the
Columbia City mill. Separately, Dynamic Composites, a majority-owned
facility at Columbia City (reported in the “All Other” business
segment), shipped a major order for steel-core composite railroad ties.
It then received a follow-on order for 25,000 ties from the BNSF Railway
Co.
Metals Recycling and Ferrous Resources. This segment
includes ferrous and non-ferrous metals recycling by OmniSource
Corporation (processing and trading) and SDI’s Iron Dynamics
scrap-substitute operation that produces pig iron for use by the Flat
Roll Division. The segment also includes expenses related to the Mesabi
Nugget project, which currently is under construction.
The segment’s net sales for second quarter 2009 were $309 million,
and represented 30 percent of SDI’s second quarter external sales. The
operating income for this segment was $4 million, excluding amortization
related to the segment’s intangible assets and certain non-allocated
corporate overhead expenses, such as profit-sharing costs. OmniSource
achieved a $9 million operating profit for the quarter. The segment’s
overall pretax loss is attributable to losses at Iron Dynamics (related
to lower market-based pig-iron prices) and to the expenses related to
the Mesabi Nugget project as it nears expected start-up in November.
For the second quarter, total ferrous scrap shipments, including
shipments to SDI’s Steel Operations, were 840,000 tons, 44 percent lower
than the year-ago-quarter (excluding Recycle South’s second quarter
2008 shipments prior to its acquisition by OmniSource) and 15 percent
higher than the first quarter of 2009. Non-ferrous scrap shipments for
the second quarter of 2009 were 170 million pounds, 33 percent lower
than the year-ago quarter and 11 percent lower than first quarter 2009
shipments.
During the second quarter, the company’s scrap operations supplied
313,000 tons of ferrous scrap to SDI’s Steel Operations, or
approximately 54 percent of the tonnage of ferrous scrap purchased by
our mills during the quarter.
Steel Fabrication Operations. Steel Fabrication
Operations are the New Millennium Building Systems fabricating plants
that produce joists, trusses, and steel deck used in the construction of
non-residential buildings. Second quarter net sales were $37 million,
or 5 percent of SDI’s second quarter external sales. New Millennium
reported a very small operating loss for the quarter. Second quarter
shipments totaled 35,000 tons at an average selling price of $1,047 per
ton. Second quarter shipments were 53 percent lower than the year-ago
quarter, and 22 percent lower than the first quarter of 2009.
Download Unaudited Financial Statements (PDF file)
Conference Call and Webcast
On Thursday, July 23, 2009, at 9:30 a.m. Eastern time, Steel Dynamics
will host a conference call in which management will discuss second
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:
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.
Forward Looking Statements
Contact:
Fred Warner, Investor Relations Manager
(260) 969-3564 or fax (260) 969-3590
f.warner@steeldynamics.com |