Steel Dynamics Reports First Quarter 2024 Results
FORT WAYNE, Ind., April 23, 2024 /PRNewswire/ --
First Quarter 2024 Performance Highlights:
- Steel shipments of 3.3 million tons
- Net sales of $4.7 billion, operating income of $751 million, net income of $584 million, and adjusted EBITDA of $879 million
- Cash flow from operations of $355 million, which was reduced by the annual companywide profit-sharing contribution of $265 million in the quarter
- Strong liquidity of $3.1 billion as of March 31, 2024
- Share repurchases of $298 million of the company's common stock, representing 1.5 percent of its outstanding shares
- First quarter 2024 cash dividend increase of 8 percent
Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced first quarter 2024 financial results. The company reported first quarter 2024 net sales of $4.7 billion and net income of $584 million, or $3.67 per diluted share. Comparatively, the company's sequential fourth quarter 2023 net income was $424 million, or $2.61 per diluted share and prior year first quarter net income was $637 million, or $3.70 per diluted share.
"The teams executed well delivering a solid first quarter performance," said Mark D. Millett, Chairman and Chief Executive Officer. "Underlying steel demand was steady in the quarter; however, we experienced some steel order volatility early in the quarter as customer inventories remain incredibly low and scrap prices declined month over month in the quarter. Customer orders rebounded strongly in March supporting increased pricing and solid order backlogs, especially within our value-added coated flat rolled steel products portfolio.
"The teams achieved strong first quarter 2024 operating income of $751 million and adjusted EBITDA of $879 million," continued Millett. "The sequential improvement in earnings was driven by our steel and metals recycling businesses and supported by continued historically strong results from our steel fabrication operations. Across the company, our teams achieved strong performance, while keeping each other safe."
First Quarter 2024 Comments
First quarter 2024 operating income for the company's steel operations was $675 million, or 85 percent higher than sequential fourth quarter results, due to solid demand resulting in near-record first quarter steel shipments of 3.3 million tons and higher realized selling values. The automotive, non-residential construction, energy, and industrial sectors lead demand. Flat rolled steel pricing has rebounded from recent lows and steel producer lead times have extended since the end of the first quarter. The first quarter 2024 average external product selling price for the company's steel operations increased $111 sequentially to $1,201 per ton. The average ferrous scrap cost per ton melted at the company's steel mills increased $24 sequentially to $417 per ton.
Compared to the sequential fourth quarter, first quarter 2024 operating income from the company's metals recycling operations increased to $23 million, based on increased demand supporting higher volume and metal spread expansion. Domestic steel production utilization increased from 74 percent in the sequential fourth quarter to 77 percent in the first quarter 2024. The team did an excellent job executing in a falling price environment since December 2023 before prices stabilized in April.
The company's steel fabrication operations achieved historically strong operating income of $178 million in the first quarter 2024, but below sequential fourth quarter results, based on seasonally lower shipments coupled with a decline in metal spread as realized pricing declined and steel raw material input costs increased in the quarter. The steel fabrication order backlog extends through the third quarter 2024, at pricing levels well above pre-Covid levels. In addition, the continued onshoring of manufacturing, coupled with the robust U.S. infrastructure program and industrial build-outs, supports strong demand for 2024 and beyond.
Based on the company's differentiated business model and highly variable cost structure, the company generated cash flow from operations of $355 million during the quarter, even after funding the companywide profit-sharing contribution of $265 million. The company also invested $374 million in capital investments, paid cash dividends of $68 million, and repurchased $298 million of its outstanding common stock, representing 1.5 percent of its outstanding shares, while maintaining strong liquidity of $3.1 billion as of March 31, 2024.
Outlook
"We remain confident that market conditions are in place for domestic steel consumption to be strong throughout 2024," said Millett. "Order entry activity continues to be solid across all of our businesses and steel pricing has firmed. We believe North American steel consumption will increase in 2024, and that demand for lower-carbon emission, U.S. produced steel products coupled with lower imports will support steel pricing. We believe the automotive, non-residential construction, industrial, and energy sectors will remain solid this year. The continued onshoring of manufacturing businesses, combined with the expectation of significant fixed asset investment to be derived from public funding related to the U.S. Infrastructure, Inflation Reduction Act, and Department of Energy programs, will competitively position the domestic steel industry. We believe this will benefit all of our operating platforms, especially our steel and steel fabrication businesses.
"We have successfully started commissioning and operating our four new value-added flat rolled steel coating lines. The teams have produced prime quality galvanized and painted products on the first two lines in record times. We expect to begin benefitting from the additional 1.1 million tons of value-added steel products beginning in the second quarter of this year and fully in 2025.
"We are also quickly progressing on our aluminum flat rolled products mill and are incredibly excited about this meaningful growth opportunity, which is aligned with our existing business and operational expertise," said Millett. "We plan to begin operating the aluminum flat rolled mill mid-2025. We have intentionally grown with our customers' needs, providing efficient sustainable supply-chain solutions for the highest quality products. Thus far, this has primarily been achieved within the steel industry – however, a significant number of our flat rolled steel customers are also consumers and processors of aluminum flat rolled products. We are pleased to further diversify our end markets with plans to supply aluminum flat rolled products with high recycled content to the countercyclical sustainable beverage can and packaging industry, in addition to the automotive, industrial, and construction sectors. We believe our unique performance-based operating culture, coupled with our considerable experience in successfully constructing and operating cost-effective, highly profitable flat rolled steel mills, positions us exceptionally well to execute this strategic opportunity and to deliver strong long-term value creation. Our customers and our people are also incredibly excited for this growth opportunity.
"Our commitment is to the health and safety of our teams, families, and communities, while meeting the current and future needs of our customers. Our culture and business model continue to positively differentiate our performance from the rest of the industry. We are competitively positioned and focused to generate long-term sustainable value," concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss first quarter 2024 operating and financial results on Wednesday, April 24, 2024, at 11:00 a.m. Eastern Daylight 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 Daylight Time on May 1, 2024.
About Steel Dynamics, Inc.
Steel Dynamics is one of the largest domestic steel producers and metals recyclers in North America, 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 the non-GAAP financial measures EBITDA and Adjusted EBITDA 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, not all companies use identical calculations for EBITDA or Adjusted EBITDA; therefore, EBITDA and Adjusted EBITDA included in this release may not be comparable to similarly titled measures of other companies.
Forward-Looking Statements
This report contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned 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) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, and other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations from our customers or related regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance; (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment charges.
More specifically, we refer you to our 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 file with the Securities and Exchange Commission. These reports are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on our website, www.steeldynamics.com under "Investors – SEC Filings."
Steel Dynamics, Inc. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data) | |||||||||
Three Months Ended | Three Months | ||||||||
March 31, | Ended | ||||||||
2024 | 2023 | Dec. 31, 2023 | |||||||
Net sales | $ | 4,694,003 | $ | 4,893,206 | $ | 4,233,423 | |||
Costs of goods sold | 3,713,205 | 3,837,084 | 3,502,539 | ||||||
Gross profit | 980,798 | 1,056,122 | 730,884 | ||||||
Selling, general and administrative expenses | 159,507 | 144,309 | 157,207 | ||||||
Profit sharing | 62,652 | 69,575 | 47,055 | ||||||
Amortization of intangible assets | 7,664 | 6,878 | 8,086 | ||||||
Operating income | 750,975 | 835,360 | 518,536 | ||||||
Interest expense, net of capitalized interest | 11,978 | 22,507 | 14,795 | ||||||
Other (income) expense, net | (26,784) | (34,936) | (38,498) | ||||||
Income before income taxes | 765,781 | 847,789 | 542,239 | ||||||
Income tax expense | 178,281 | 203,456 | 115,199 | ||||||
Net income | 587,500 | 644,333 | 427,040 | ||||||
Net income attributable to noncontrolling interests | (3,459) | (7,023) | (2,770) | ||||||
Net income attributable to Steel Dynamics, Inc. | $ | 584,041 | $ | 637,310 | $ | 424,270 | |||
Basic earnings per share attributable to | |||||||||
Steel Dynamics, Inc. stockholders | $ | 3.68 | $ | 3.71 | $ | 2.63 | |||
Weighted average common shares outstanding | 158,666 | 171,597 | 161,434 | ||||||
Diluted earnings per share attributable to | |||||||||
Steel Dynamics, Inc. stockholders, including the | |||||||||
effect of assumed conversions when dilutive | $ | 3.67 | $ | 3.70 | $ | 2.61 | |||
Weighted average common shares | |||||||||
and share equivalents outstanding | 159,354 | 172,479 | 162,276 | ||||||
Dividends declared per share | $ | 0.46 | $ | 0.425 | $ | 0.425 | |||
Steel Dynamics, Inc. CONSOLIDATED BALANCE SHEETS (in thousands) | ||||||
March 31, | December 31, | |||||
Assets | 2024 | 2023 | ||||
(unaudited) | ||||||
Current assets | ||||||
Cash and equivalents | $ | 1,039,421 | $ | 1,400,887 | ||
Short-term investments | 653,255 | 721,210 | ||||
Accounts receivable, net | 1,739,060 | 1,608,307 | ||||
Inventories | 3,027,143 | 2,894,632 | ||||
Other current assets | 138,557 | 162,790 | ||||
Total current assets | 6,597,436 | 6,787,826 | ||||
Property, plant and equipment, net | 7,063,990 | 6,734,218 | ||||
Intangible assets, net | 250,095 | 257,759 | ||||
Goodwill | 477,471 | 477,471 | ||||
Other assets | 637,758 | 651,146 | ||||
Total assets | $ | 15,026,750 | $ | 14,908,420 | ||
Liabilities and Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | 1,183,593 | $ | 1,088,330 | ||
Income taxes payable | 150,103 | 5,524 | ||||
Accrued expenses | 539,272 | 778,455 | ||||
Current maturities of long-term debt | 425,696 | 459,987 | ||||
Total current liabilities | 2,298,664 | 2,332,296 | ||||
Long-term debt | 2,612,246 | 2,611,069 | ||||
Deferred income taxes | 923,745 | 944,768 | ||||
Other liabilities | 144,336 | 180,760 | ||||
Total liabilities | 5,978,991 | 6,068,893 | ||||
Commitments and contingencies | ||||||
Redeemable noncontrolling interests | 171,212 | 171,212 | ||||
Equity | ||||||
Common stock | 651 | 651 | ||||
Treasury stock, at cost | (6,182,274) | (5,897,606) | ||||
Additional paid-in capital | 1,197,176 | 1,217,610 | ||||
Retained earnings | 14,056,868 | 13,545,590 | ||||
Accumulated other comprehensive income (loss) | (13) | 421 | ||||
Total Steel Dynamics, Inc. equity | 9,072,408 | 8,866,666 | ||||
Noncontrolling interests | (195,861) | (198,351) | ||||
Total equity | 8,876,547 | 8,668,315 | ||||
Total liabilities and equity | $ | 15,026,750 | $ | 14,908,420 | ||
Steel Dynamics, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) | |||||
Three Months Ended | |||||
March 31, | |||||
2024 | 2023 | ||||
Operating activities: | |||||
Net income | $ | 587,500 | $ | 644,333 | |
Adjustments to reconcile net income to net cash provided by | |||||
operating activities: | |||||
Depreciation and amortization | 115,252 | 107,694 | |||
Equity-based compensation | 15,612 | 16,078 | |||
Deferred income taxes | (21,024) | 9,008 | |||
Other adjustments | 18,705 | (10,006) | |||
Changes in certain assets and liabilities: | |||||
Accounts receivable | (130,753) | (70,922) | |||
Inventories | (133,025) | 141,112 | |||
Other assets | (12,176) | 7,842 | |||
Accounts payable | 29,499 | 117,312 | |||
Income taxes receivable/payable | 165,664 | 189,247 | |||
Accrued expenses | (280,037) | (417,915) | |||
Net cash provided by operating activities | 355,217 | 733,783 | |||
Investing activities: | |||||
Purchases of property, plant and equipment | (374,310) | (226,319) | |||
Purchases of short-term investments | (205,873) | (356,777) | |||
Proceeds from maturities of short-term investments | 272,994 | 271,107 | |||
Other investing activities | 14,255 | 2,343 | |||
Net cash used in investing activities | (292,934) | (309,646) | |||
Financing activities: | |||||
Issuance of current and long-term debt | 379,268 | 393,910 | |||
Repayment of current and long-term debt | (413,939) | (405,279) | |||
Dividends paid | (68,008) | (58,798) | |||
Purchase of treasury stock | (298,059) | (353,997) | |||
Other financing activities | (23,108) | (23,449) | |||
Net cash used in financing activities | (423,846) | (447,613) | |||
Decrease in cash, cash equivalents, and restricted cash | (361,563) | (23,476) | |||
Cash, cash equivalents, and restricted cash at beginning of period | 1,406,464 | 1,633,919 | |||
Cash, cash equivalents, and restricted cash at end of period | $ | 1,044,901 | $ | 1,610,443 | |
Supplemental disclosure information: | |||||
Cash paid for interest | $ | 9,327 | $ | 9,596 | |
Cash paid for income taxes, net | $ | 28,390 | $ | 4,703 | |
Steel Dynamics, Inc. SUPPLEMENTAL INFORMATION (UNAUDITED) (dollars in thousands) | ||||||||||
First Quarter | ||||||||||
2024 | 2023 | Q4 2023 | ||||||||
External Net Sales | ||||||||||
Steel | $ | 3,366,237 | $ | 3,088,490 | $ | 2,915,325 | ||||
Steel Fabrication | 447,179 | 868,768 | 520,573 | |||||||
Metals Recycling | 569,473 | 583,468 | 488,070 | |||||||
Other | 311,114 | 352,480 | 309,455 | |||||||
Consolidated Net Sales | $ | 4,694,003 | $ | 4,893,206 | $ | 4,233,423 | ||||
Operating Income (Loss) | ||||||||||
Steel | $ | 674,648 | $ | 346,478 | $ | 364,829 | ||||
Steel Fabrication | 178,381 | 551,313 | 249,930 | |||||||
Metals Recycling | 22,635 | 42,930 | 6,429 | |||||||
Aluminum | (13,531) | (2,422) | (10,769) | |||||||
862,133 | 938,299 | 610,419 | ||||||||
Non-cash amortization of intangible assets | (7,664) | (6,878) | (8,086) | |||||||
Profit sharing expense | (62,652) | (69,575) | (47,055) | |||||||
Non-segment operations | (40,842) | (26,486) | (36,742) | |||||||
Consolidated Operating Income | $ | 750,975 | $ | 835,360 | $ | 518,536 | ||||
Adjusted EBITDA | ||||||||||
Net income | $ | 587,500 | $ | 644,333 | $ | 427,040 | ||||
Income taxes | 178,281 | 203,456 | 115,199 | |||||||
Net interest expense (income) | (14,327) | (3,470) | (16,830) | |||||||
Depreciation | 106,030 | 99,210 | 102,082 | |||||||
Amortization of intangible assets | 7,664 | 6,878 | 8,086 | |||||||
EBITDA | 865,148 | 950,407 | 635,577 | |||||||
Non-cash adjustments | ||||||||||
Unrealized (gains) losses on derivatives | ||||||||||
and currency remeasurement | (1,347) | (8,142) | 461 | |||||||
Equity-based compensation | 14,825 | 13,877 | 22,694 | |||||||
Adjusted EBITDA | $ | 878,626 | $ | 956,142 | $ | 658,732 | ||||
Other Operating Information | ||||||||||
Steel | ||||||||||
Average external sales price (Per ton) | $ | 1,201 | $ | 1,076 | $ | 1,090 | ||||
Average ferrous cost (Per ton melted) | $ | 417 | $ | 413 | $ | 393 | ||||
Flat Roll shipments | ||||||||||
Butler, Columbus, and Sinton | 1,993,305 | 1,929,792 | 1,841,701 | |||||||
Steel Processing divisions * | 418,547 | 435,602 | 423,690 | |||||||
Long Product shipments | ||||||||||
Structural and Rail Division | 440,921 | 495,551 | 407,175 | |||||||
Engineered Bar Products Division | 191,373 | 231,723 | 186,390 | |||||||
Roanoke Bar Division | 124,920 | 157,024 | 117,244 | |||||||
Steel of West Virginia | 86,528 | 95,456 | 87,537 | |||||||
Total Shipments (Tons) | 3,255,594 | 3,345,148 | 3,063,737 | |||||||
External Shipments (Tons) | 2,803,569 | 2,869,321 | 2,674,396 | |||||||
Steel Mill Production (Tons) | 2,992,018 | 2,939,032 | 2,755,778 | |||||||
Metals Recycling | ||||||||||
Nonferrous shipments (000's of pounds) | 289,436 | 285,837 | 262,734 | |||||||
Ferrous shipments (Gross tons) | 1,453,619 | 1,452,821 | 1,363,165 | |||||||
External ferrous shipments (Gross tons) | 536,973 | 567,403 | 506,128 | |||||||
Steel Fabrication | ||||||||||
Average sales price (Per ton) | $ | 3,141 | $ | 5,021 | $ | 3,501 | ||||
Shipments (Tons) | 143,842 | 173,021 | 150,002 | |||||||
* Includes Heartland, The Techs and United Steel Supply operations | ||||||||||
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SOURCE Steel Dynamics, Inc.
