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Steel Dynamics Reports Record Second Quarter 2022 Results

FORT WAYNE, Ind., July 20, 2022 /PRNewswire/ —

Second Quarter 2022 Performance Highlights:

  • Record steel shipments of 3.1 million tons
  • Record net sales of $6.2 billion
  • Record operating income of $1.6 billion and net income of $1.2 billion
  • Record steel fabrication operating income of $599 million and record shipments of 218,000 tons
  • Record cash flow from operations of $1.0 billion and record adjusted EBITDA of $1.7 billion
  • Repurchased $517 million of the company’s common stock, representing 3.5 percent of its outstanding shares

Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced second quarter 2022 financial results. The company reported record second quarter 2022 net sales of $6.2 billion and record net income of $1.2 billion, or $6.44 per diluted share. Excluding the impact from the following item, the company’s second quarter 2022 adjusted net income was $1.3 billion, or $6.73 per diluted share:

  • Costs of approximately $77 million, or $0.29 per diluted share, associated with the continued startup of the company’s Sinton Texas Flat Roll Steel Mill growth investment.

Comparatively, the company’s sequential first quarter 2022 earnings were $5.71 per diluted share, and adjusted earnings were $6.02 per diluted share excluding costs of $0.31 per diluted share (net of capitalized interest), associated with construction and startup of the company’s Sinton Texas Flat Roll Steel Mill. Prior year second quarter earnings were $3.32 per diluted share and adjusted earnings were $3.40 per diluted share, excluding costs of $0.08 per diluted share (net of capitalized interest), associated with construction of the company’s Texas Flat Roll Steel Mill.

“The team delivered another strong performance, achieving record quarterly operating and financial performance, including record sales, operating income, cash flow from operations, and adjusted EBITDA,” said Mark D. Millett, Chairman, President, and Chief Executive Officer. “Our second quarter 2022 operating income was $1.6 billion, with adjusted EBITDA of $1.7 billion. This tremendous accomplishment displays the power of our highly diversified, value-added, circular manufacturing model — as the strength in our steel fabrication operations more than offset lower earnings in our flat roll steel business, as realized flat roll steel selling values declined during the quarter. Despite softening hot roll coil steel pricing, we achieved record quarterly steel shipments of 3.1 million tons based on solid steel demand, led by the automotive, construction, and industrial sectors, with energy continuing to improve.

“The teams achieved strong operating and financial results across all of our operating platforms,” continued Millett. “Second quarter operating income from our steel and metals recycling operations remained very strong at $1.1 billion and $58 million, respectively. Our steel fabrication operations again achieved record results, with earnings of $599 million, based on significantly higher realized selling values and a continued strong construction demand environment. Steel joist and deck pricing and order activity continues to be robust, supporting our continued near-record order backlog with higher forward pricing.”  

Second Quarter 2022 Comments

Second quarter 2022 operating income for the company’s steel operations remained historically strong at $1.1 billion. The incremental decline in earnings resulted from metal spread compression within the company’s flat roll steel operations, as lower average flat roll steel pricing more than offset higher flat roll steel shipments. Demand for the company’s long product steel also continues to be strong, supporting increased average realized pricing and shipments. The second quarter 2022 average external product selling price for the company’s steel operations decreased $22 sequentially to $1,539 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills increased $64 sequentially to $538 per ton.

Second quarter operating income from the company’s metals recycling operations increased to $58 million, above first quarter sequential results of $48 million, based on strong demand supporting increased pricing and related metal spread. Solid demand for ferrous scrap resulted in a 7 percent increase in second quarter 2022 shipments, compared to first quarter sequential results.  

The company’s steel fabrication operations reported another record operating income of $599 million in the second quarter 2022, substantially above sequential first quarter results, as significantly higher selling values and strong shipments more than offset marginally higher steel input costs. The non-residential construction sector remains strong, resulting in a near-record order backlog and higher forward-pricing for the company’s steel fabrication platform. The company anticipates this momentum to continue into 2023 based on these dynamics.

Based on the company’s differentiated business model and highly variable cost structure, the company generated record cash flow from operations of $1.0 billion during the quarter. The company also invested $164 million in capital investments, paid cash dividends of $64 million, and repurchased $517 million of its outstanding common stock representing 3.5 percent of its outstanding stock, while maintaining strong liquidity of $2.5 billion as of June 30, 2022.

Year-to-Date June 30, 2022 Comparison

For the six months ended June 30, 2022, net income was $2.3 billion, or $12.14 per diluted share, with net sales of $11.8 billion, as compared to net income of $1.1 billion, or $5.35 per diluted share, with net sales of $8.0 billion for the same period in 2021. Excluding the impact from the following item, the company’s first half 2022 adjusted net income was $2.4 billion, or $12.74 per diluted share:

  • Costs of approximately $161 million, or $0.60 per diluted share (net of capitalized interest), associated with construction and startup of the company’s Sinton Texas Flat Roll Steel Mill growth investment.

Similarly, adjusting for the company’s Texas steel mill construction costs, first half 2021 net income was $1.2 billion, or $5.50 per diluted share.

First half 2022 net sales increased 47 percent and operating income doubled to $3.1 billion, when compared to the same period in 2021. Higher earnings were driven by metal spread expansion within the company’s steel fabrication business and steel operations, as increased product pricing outpaced higher raw material costs. The steel fabrication platform achieved record first half 2022 operating income of $1.1 billion, materially higher than the $38 million recorded in the first half 2021. First half 2022 operating income for the company’s steel operations was $2.3 billion, an increase of $615 million compared to prior year results. The average first half 2022 external selling price for the company’s steel operations increased $380 to $1,549 per ton compared prior year’s same period, and the average ferrous scrap cost per ton melted at the company’s steel mills increased $101 to $507 per ton.

Based on the company’s differentiated business model and highly, variable cost structure, the company achieved cash flow from operations of $1.8 billion in the first half 2022, representing a record first half performance. The company also invested $323 million in capital investments, paid cash dividends of $115 million, and repurchased $906 million of its common stock, while maintaining strong liquidity.

Outlook   

“Customer order entry activity continues to be healthy across all of our businesses, conflicting with the more pessimistic emotion in the marketplace,” said Millett. “Despite softening flat roll steel pricing, our steel order activity remains solid from the automotive, construction, and industrial sectors, with energy continuing to improve. Our steel fabrication operations order backlog remains at near-record volumes and forward pricing levels. This combined with continued healthy order activity and broad customer optimism, supports strong overall demand dynamics for the construction industry.

“Operations continue to ramp up at our Sinton Flat Roll Steel Mill, and the team has already achieved run rates of 80 percent through the hot side. However, they have been challenged with unexpected power and equipment issues that have impacted their operating time in July. The team expects to realize meaningful improvement for the remainder of the year. We are investing approximately $500 million to build four additional value-added flat roll steel coating lines comprised of two paint lines and two galvanizing lines with Galvalume® coating capability, a set of which will be located onsite at our new Texas steel mill, providing Sinton with the same diversification and higher-margin product capabilities as our two existing flat roll steel divisions. The other two lines will be placed at our Heartland Flat Roll Division located in Terre Haute, Indiana to support growing coated flat roll steel demand in the region and to further increase the diversification and cash generation capacity of our existing Midwest operations. Based on current plans, we believe these four lines will begin operating in the second half of 2023.

“We are excited about our recent partnership with Aymium,” said Millett. “We believe this strategic joint venture will cost-effectively reduce our greenhouse gas emissions, which are already materially lower than our global steel competitors. We also believe Aymium’s process can provide a renewable carbon alternative to fossil fuel for Iron Dynamics, our proprietary ironmaking operations. We have successfully trialed Aymium’s biocarbon product in our steel operations, and conservatively estimate this first facility will reduce our Scope 1 steelmaking greenhouse gas emission intensity between 20 and 25 percent, with potential upside through the use of the facility’s biogas. Our commitment to all aspects of sustainability is embedded in our founding principles. This investment represents a significant step forward on our path to carbon neutrality, and our continued commitment to reduce our environmental footprint.”   

“We believe there are strong drivers for our continued growth and remain in a position of strength. Our recently announced planned investment in a new state-of-the-art low-carbon aluminum flat rolled mill continues our strategic growth, is aligned with our core steelmaking and recycling platforms, benefits many of our existing customers, and provides for future value creation. Our customers and our people are incredibly excited for this growth opportunity. Our commitment is to the health and safety of our teams, families, and communities, while meeting the growing needs of our customers. Our culture and business model continue to positively differentiate our performance from the industry. We are well-positioned for sustainable long-term growth and value creation,” concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss second quarter 2022 operating and financial results on Thursday, July 21, 2022, at 9:00 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 July 27, 2022.

About Steel Dynamics, Inc.

Steel Dynamics 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 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 Adjusted Net Income, Adjusted Diluted Earnings Per Share, EBITDA and Adjusted EBITDA, non-GAAP financial measures, 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, because not all companies use identical calculations, Adjusted Net Income, Adjusted Diluted Earnings Per Share, EBITDA and Adjusted EBITDA included in this release may not be comparable to similarly titled measures of other companies.

Forward-Looking Statements

This press release contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel and recycled metals marketplaces, 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 a guarantee 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, such as the COVID-19 pandemic; (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 our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, or other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations or regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel 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 required to operate our businesses; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impact of impairment charges.

More specifically, refer to Steel Dynamics’ 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 are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on the Steel Dynamics 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


Six Months Ended


Three Months



June 30,


June 30,


Ended



2022


2021


2022


2021


March 31, 2022

















Net sales


$

6,212,878


$

4,465,308


$

11,782,780


$

8,009,905


$

5,569,902

Costs of goods sold



4,329,536



3,265,616



8,116,925



6,009,947



3,787,389

      Gross profit



1,883,342



1,199,692



3,665,855



1,999,958



1,782,513

















Selling, general and administrative expenses



118,377



154,379



270,392



304,160



152,015

Profit sharing



139,742



82,140



268,211



130,988



128,469

Amortization of intangible assets



7,160



7,438



14,322



14,876



7,162

      Operating income



1,618,063



955,735



3,112,930



1,549,934



1,494,867

















Interest expense, net of capitalized interest



25,667



14,898



42,336



32,167



16,669

Other expense (income), net



(4,021)



10,039



16,447



20,110



20,468

      Income before income taxes



1,596,417



930,798



3,054,147



1,497,657



1,457,730

















Income tax expense



381,765



218,595



732,141



346,699



350,376

      Net income



1,214,652



712,203



2,322,006



1,150,958



1,107,354

Net income attributable to noncontrolling interests



(5,098)



(9,912)



(8,521)



(18,160)



(3,423)

      Net income attributable to Steel Dynamics, Inc.


$

1,209,554


$

702,291


$

2,313,485


$

1,132,798


$

1,103,931

































Basic earnings per share attributable to
















   Steel Dynamics, Inc. stockholders


$

6.49


$

3.35


$

12.22


$

5.39


$

5.74

















Weighted average common shares outstanding



186,442



209,647



189,300



210,331



192,158

















Diluted earnings per share attributable to
















   Steel Dynamics, Inc. stockholders, including the
















   effect of assumed conversions when dilutive


$

6.44


$

3.32


$

12.14


$

5.35


$

5.71

















Weighted average common shares
















   and share equivalents outstanding



187,740



211,246



190,491



211,750



193,241

































Dividends declared per share


$

0.34


$

0.26


$

0.68


$

0.52


$

0.34

 

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)









June 30,



December 31,

Assets

2022



2021


(unaudited)





Current assets







   Cash and equivalents

$

1,007,085



$

1,243,868

   Short-term investments


351,005




   Accounts receivable, net


2,660,715




1,916,434

   Inventories


3,647,061




3,531,130

   Other current assets


90,144




209,591

      Total current assets


7,756,010




6,901,023








Property, plant and equipment, net


4,886,555




4,751,430








Intangible assets, net


281,022




295,345








Goodwill


452,341




453,835








Other assets


335,286




129,601

      Total assets

$

13,711,214



$

12,531,234

Liabilities and Equity







Current liabilities







   Accounts payable

$

1,380,814



$

1,280,555

   Income taxes payable


36,976




13,746

   Accrued expenses


746,952




835,894

   Current maturities of long-term debt


37,130




97,174

      Total current liabilities


2,201,872




2,227,369








Long-term debt


3,011,116




3,008,702








Deferred income taxes


853,407




854,905








Other liabilities


95,929




120,087

      Total liabilities


6,162,324




6,211,063








Commitments and contingencies














Redeemable noncontrolling interests


168,303




211,414








Equity







   Common stock


649




649

   Treasury stock, at cost


(3,566,493)




(2,674,267)

   Additional paid-in capital


1,213,481




1,218,933

   Retained earnings


9,945,710




7,761,417

   Accumulated other comprehensive income


(4,999)




(2,091)

      Total Steel Dynamics, Inc. equity


7,588,348




6,304,641

   Noncontrolling interests


(207,761)




(195,884)

      Total equity


7,380,587




6,108,757

      Total liabilities and equity

$

13,711,214



$

12,531,234

 

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)














Three Months Ended


Six Months Ended


June 30,


June 30,


2022


2021


2022


2021













Operating activities:












   Net income

$

1,214,652


$

712,203


$

2,322,006


$

1,150,958













   Adjustments to reconcile net income to net cash provided by












      operating activities:












      Depreciation and amortization


95,701



87,047



183,247



173,966

      Equity-based compensation


11,069



9,808



27,588



26,848

      Deferred income taxes


(2,636)



50,722



(4)



117,466

      Other adjustments


(640)



(1,472)



10,517



(2,134)

      Changes in certain assets and liabilities:












         Accounts receivable


(297,047)



(204,561)



(744,281)



(599,106)

         Inventories


(130,552)



(264,935)



(116,237)



(639,523)

         Other assets


(12,887)



(4,285)



6,515



1,543

         Accounts payable


187,521



63,155



111,550



423,836

         Income taxes receivable/payable


(203,352)



27,551



138,553



87,144

         Accrued expenses


140,023



111,997



(118,634)



108,423

      Net cash provided by operating activities


1,001,852



587,230



1,820,820



849,421













Investing activities:












   Purchases of property, plant and equipment


(164,142)



(277,206)



(323,472)



(587,069)

   Purchases of short-term investments


(351,510)





(351,510)



Investments in unconsolidated affiliates






(222,480)



   Other investing activities


4,817



1,859



5,227



2,249

      Net cash used in investing activities


(510,835)



(275,347)



(892,235)



(584,820)













Financing activities:












   Issuance of current and long-term debt


382,868



419,464



702,647



716,905

   Repayment of current and long-term debt


(414,719)



(408,565)



(763,991)



(712,849)

   Dividends paid


(64,344)



(54,916)



(115,043)



(107,645)

   Purchase of treasury stock


(517,024)



(393,198)



(906,214)



(393,198)

   Other financing activities


(60,241)



(6,094)



(82,768)



(22,692)

      Net cash used in financing activities


(673,460)



(443,309)



(1,165,369)



(519,479)













Decrease in cash, cash equivalents, and restricted cash


(182,443)



(131,426)



(236,784)



(254,878)

Cash, cash equivalents, and restricted cash at beginning of period


1,195,028



1,250,670



1,249,369



1,374,122

Cash, cash equivalents, and restricted cash at end of period

$

1,012,585


$

1,119,244


$

1,012,585


$

1,119,244

























Supplemental disclosure information:












   Cash paid for interest

$

41,114


$

41,727


$

50,282


$

53,042

   Cash paid for income taxes, net

$

580,454


$

146,002


$

590,402


$

148,144

 

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)





















Second Quarter


Year to Date







2022



2021



2022



2021



1Q 2022

External Net Sales

















   Steel



$

4,142,021


$

3,234,519


$

7,904,517


$

5,745,203


$

3,762,496

   Steel Fabrication




1,085,753



330,852



2,015,734



587,837



929,981

   Metals Recycling




649,736



575,700



1,229,361



1,045,707



579,625

   Other




335,368



324,237



633,168



631,158



297,800

Consolidated Net Sales



$

6,212,878


$

4,465,308


$

11,782,780


$

8,009,905


$

5,569,902

Operating Income

















   Steel



$

1,106,659


$

1,017,024


$

2,273,604


$

1,658,463


$

1,166,945

   Steel Fabrication




599,232



28,450



1,066,148



38,345



466,916

   Metals Recycling




57,629



50,965



105,775



104,898



48,146





1,763,520



1,096,439



3,445,527



1,801,706



1,682,007


















   Non-cash amortization of intangible assets




(7,160)



(7,438)



(14,322)



(14,876)



(7,162)

   Profit sharing expense




(139,742)



(82,140)



(268,211)



(130,988)



(128,469)

   Non-segment operations




1,445



(51,126)



(50,064)



(105,908)



(51,509)

Consolidated Operating Income



$

1,618,063


$

955,735


$

3,112,930


$

1,549,934


$

1,494,867


















Adjusted EBITDA

















      Net income



$

1,214,652


$

712,203


$

2,322,006


$

1,150,958


$

1,107,354

      Income taxes




381,765



218,595



732,141



346,699



350,376

      Net interest expense




24,159



14,604



40,214



31,419



16,055

      Depreciation




86,943



78,015



165,733



155,903



78,790

      Amortization of intangible assets




7,160



7,438



14,322



14,876



7,162

      Noncontrolling interest (a)




(5,456)



(9,665)



(8,728)



(18,087)



(3,272)

EBITDA




1,709,223



1,021,190



3,265,688



1,681,768



1,556,465

      Non-cash adjustments

















         Unrealized (gains) losses




(14,001)



1,305



(13,701)



(5,547)



300

         Inventory valuation




9,328



144



20,453



253



11,125

         Equity-based compensation




5,482



9,808



25,276



20,018



19,794

Adjusted EBITDA



$

1,710,032


$

1,032,447


$

3,297,716


$

1,696,492


$

1,587,684

Other Operating Information

















   Steel

















      Average external sales price (Per ton) (b)



$

1,539


$

1,292


$

1,549


$

1,169


$

1,561

      Average ferrous cost (Per ton melted) (c)



$

538


$

439


$

507


$

406


$

474


















      Flat Roll shipments

















         Butler, Columbus, and Sinton Flat Roll divisions




1,690,832



1,512,530



3,242,677



3,009,061



1,551,845

         Steel Processing divisions (d)




432,701



410,596



844,354



833,446



411,653

      Long Product shipments

















         Structural and Rail Division




513,170



497,079



979,991



975,766



466,821

         Engineered Bar Products Division




227,293



205,205



453,346



405,833



226,053

         Roanoke Bar Division




157,652



175,390



301,271



311,810



143,619

         Steel of West Virginia




92,597



90,476



187,434



177,634



94,837

Total Shipments (Tons)




3,114,245



2,891,276



6,009,073



5,713,550



2,894,828


















External Shipments (Tons) (b)




2,691,918



2,504,007



5,101,681



4,914,824



2,409,763


















Steel Mill Production (Tons)




2,737,460



2,443,314



5,245,644



4,920,253



2,508,184

   Metals Recycling

















      Nonferrous shipments (000’s of pounds)




266,781



266,859



527,671



547,668



260,890

      Ferrous shipments (Gross tons)




1,358,729



1,400,447



2,623,951



2,796,290



1,265,222

            External ferrous shipments (Gross tons)




438,001



520,726



875,229



957,908



437,228

   Steel Fabrication

















      Average sales price (Per ton)



$

5,001


$

1,753


$

4,718


$

1,582


$

4,424

   Shipments (Tons)




218,007



189,180



428,244



373,424



210,237


















(a)   Net of income tax expense (benefit) on noncontrolling interests.










(b)   Represents all steel operations










(c)   Represents ferrous cost per ton melted at our electric arc furnace steel mills










(d)   Includes Heartland, The Techs, and United Steel Supply operations










 

 

Cision View original content:https://www.prnewswire.com/news-releases/steel-dynamics-reports-record-second-quarter-2022-results-301590460.html

SOURCE Steel Dynamics, Inc.

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The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
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