Steel Dynamics (STLD) 8-K Steel Dynamics Reports Second Quarter 2017 Results

Exhibit 99.1

Press Release July 19, 2017   7575 W. Jefferson Blvd. Fort Wayne, IN  46804

Steel Dynamics Reports Second Quarter 2017 Results

FORT WAYNE, INDIANA, July 19, 2017 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced second quarter 2017 financial results.  The company reported second quarter 2017 net income of $154 million, or $0.63 per diluted share, with net sales of $2.4 billion.  Comparatively, prior year second quarter net income was $142 million, or $0.58 per diluted share, with net sales of $2.0 billion.  Sequential first quarter 2017 net income was $201 million, or $0.82 per diluted share, with net sales of $2.4 billion.

“The team delivered a solid performance for the second quarter 2017 despite hesitant customer order entry and significantly higher quarter-over-quarter steel imports,” said Mark D. Millett, President and Chief Executive Officer. “Our second quarter 2017 income from operations was $265 million with a trailing twelve month adjusted EBITDA record of $1.4 billion.   The decrease in sequential quarterly earnings was principally driven by our flat roll operations, as increased average scrap costs outpaced average sales price growth.  As mentioned in our mid-quarter guidance, we had a planned galvanizing line upgrade at our Butler Flat Roll Division and also experienced some start-up issues at our new Columbus Flat Roll Division paint line, which increased expenses and decreased value-added flat roll shipments in the quarter.

“We believe the customer order hesitancy was related to anticipated scrap price changes rather than any underlying softness in demand.  Additionally, customer inventory levels continued to be positioned at historically low levels.  Steel demand from the automotive sector remained steady, as the construction and energy sectors continued to improve,” continued Millett.

“Second quarter 2017 operating income from our metals recycling platform remained aligned with the strong first quarter performance, in spite of somewhat lower shipments and metal spread, as the team continued to optimize costs throughout the business,” continued Millett. “The fabrication group achieved another quarter of record shipments, a solid indicator that the non-residential construction market is continuing a positive growth profile.”

Additional Second Quarter 2017 Comments

Second quarter 2017 operating income for the company’s steel operations decreased 22 percent, or $79 million, to $274 million sequentially, primarily related to two operational items within the flat roll operations and overall metal spread compression.  During the second quarter 2017, the company further modernized one of its galvanizing lines located at its Butler Flat Roll Division, while also expanding the line’s annual value-added production capability by an additional 180,000 tons.  The upgrade required the line to be down for three weeks in May.  Additionally, the company experienced quality issues related to the start-up of its new Galvalume and paint line at its Columbus Flat Roll Division, resulting in line downtime.  Combined, these two items resulted in higher costs and lower value-added shipments, reducing potential second quarter 2017 pretax earnings by an estimated $30 million.

The company’s average steel product price increased less than consumed raw material scrap costs, resulting in steel metal spread compression.  The second quarter 2017 average product selling price for the company’s steel operations increased $36 to $779 per ton.  The average ferrous scrap cost per ton melted increased $39 to $303 per ton.

Second quarter 2017 operating income attributable to the company’s flat roll products decreased 22 percent when compared to the sequential first quarter.  Operating income from long products decreased 24 percent as a result of an eight percent decrease in shipments, most significantly from the company’s Structural and Rail Division, despite record quarterly rail shipments.  Structural and merchant steel volumes remain under pressure from excess domestic production capability, coupled with elevated import levels.  The company’s steel production utilization rate was 91 percent in the second quarter 2017, compared to 95 percent in the sequential first quarter and compared to the estimated second quarter domestic industry utilization rate of 74 percent.

Second quarter 2017 operating income from the company’s metals recycling operations was $20 million, compared to $21 million in the sequential first quarter.  Higher average sales prices were offset by lower shipments, related in part to the company’s sale of certain southeastern U.S. locations at the end of the first quarter 2017.

The company’s fabrication operations recorded second quarter 2017 operating income of $20 million, compared to sequential first quarter results of $24 million.  The platform achieved a second consecutive quarter of record shipments.  However, metal spread compression based on higher average steel input costs more than offset the improved volume.

Year-to-Date June 30, 2017 Comparison

For the six months ended June 30, 2017, net income was $355 million, or $1.46 per diluted share, on net sales of $4.8 billion, as compared to net income of $205 million, or $0.84 per diluted share, on net sales of $3.8 billion for the same period in 2016.  First half 2017 net sales increased 26 percent.  Although all platforms experienced improved revenues, the improvement was driven by higher average steel product pricing.  First half 2017 operating income increased $212 million, or 55 percent, to $600 million, based on improved earnings from the company’s steel operations. The average year-to-date selling price for the company’s steel operations increased $153 to $761 per ton.  The average year-to-date ferrous scrap cost per ton melted increased $77 to $283 per ton.

During the first half of 2017, the company generated strong cash flow from operations of $321 million and maintained liquidity of $2.1 billion at June 30, 2017.  The company also repurchased $138 million of its common stock during the first half of 2017.

Outlook

“We remain optimistic that macroeconomic and market conditions are in place to benefit domestic steel consumption in the coming years,” said Millett.  “Although U.S. automotive production has peaked, we believe North American automotive steel consumption will be steady, and that there will be additional growth in the energy and construction sectors, especially for larger, public sector infrastructure projects.

“We continue to strengthen our financial position through strong cash flow generation and the execution of our long-term strategy. We are well-positioned for growth, and remain focused on delivering shareholder value through organic and strategic growth opportunities,” concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss second quarter 2017 operating and financial results on Thursday, July 20, 2017, at 10:00 a.m. Eastern 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 Time on July 25, 2017.

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 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 Operating Income, 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, 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 the steel and metallic scrap markets, Steel Dynamics’ revenues, costs of purchased materials, future profitability and earnings, and the operation of new or existing 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) the effects of uncertain economic conditions; (2) cyclical and changing industrial demand; (3) changes in conditions in any of the steel or scrap-consuming sectors of the economy which affect demand for our products, including the strength of the non-residential and residential construction, automotive, appliance, pipe and tube, and other steel-consuming industries; (4) fluctuations in the cost of key raw materials (including steel scrap, iron units, and energy costs) and our ability to pass-on any cost increases; (5) the impact of domestic and foreign import price competition; (6) unanticipated difficulties in integrating or starting up new or acquired businesses; (7) risks and uncertainties involving product and/or technology development; and (8) occurrences of unexpected plant outages or equipment failures.

More specifically, we refer you 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 from time to time file with the Securities and Exchange Commission. These are available publicly on the SEC website, www.sec.gov, and on the Steel Dynamics website, www.steeldynamics.com: Investors: SEC Filings.

Contact:  Tricia Meyers, Investor Relations Manager— +1.260.969.3500

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
	2017			2016			2017			2016			March 31, 2017
Net sales	$	2,390,720		$	2,023,902		$	4,758,936		$	3,765,203		$	2,368,216
Costs of goods sold	1,998,202			1,643,519			3,894,264			3,148,784			1,896,062
Gross profit	392,518			380,383			864,672			616,419			472,154
Selling, general and administrative expenses	98,433			96,853			201,366			184,383			102,933
Profit sharing	21,308			20,176			48,539			29,467			27,231
Amortization of intangible assets	7,424			7,232			14,848			14,482			7,424
Operating income	265,353			256,122			599,919			388,087			334,566
Interest expense, net of capitalized interest	33,869			36,646			67,842			73,689			33,973
Other expense (income), net	(3,835		)	(1,818		)	(7,494		)	(3,610		)	(3,659		)
Income before income taxes	235,319			221,294			539,571			318,008			304,252
Income tax expense	82,372			80,851			187,958			116,247			105,586
Net income	152,947			140,443			351,613			201,761			198,666
Net loss attributable to noncontrolling interests	986			1,526			3,137			2,945			2,151
Net income attributable to Steel Dynamics, Inc.	$	153,933		$	141,969		$	354,750		$	204,706		$	200,817
Basic earnings per share attributable to Steel Dynamics, Inc. stockholders	$	0.64		$	0.58		$	1.47		$	0.84		$	0.83
Weighted average common shares outstanding	241,343			243,655			242,143			243,429			242,943
Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive	$	0.63		$	0.58		$	1.46		$	0.84		$	0.82
Weighted average common shares and share equivalents outstanding	243,021			245,392			243,784			245,000			244,546
Dividends declared per share	$	0.155		$	0.140		$	0.310		$	0.280		$	0.155

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30,			December 31,
	2017			2016
	(unaudited)
Assets
Current assets
Cash and equivalents	$	908,843		$	841,483
Accounts receivable, net	886,894			729,784
Inventories	1,418,732			1,275,211
Other current assets	37,188			83,197
Total current assets	3,251,657			2,929,675
Property, plant and equipment, net	2,729,721			2,787,215
Restricted cash	17,373			18,060
Intangible assets, net	269,129			283,977
Goodwill	390,129			393,351
Other assets	12,121			11,454
Total assets	$	6,670,130		$	6,423,732
Liabilities and Equity
Current liabilities
Accounts payable	$	484,003		$	395,196
Income taxes payable	5,589			5,593
Accrued expenses	286,329			308,394
Current maturities of long-term debt	19,971			3,632
Total current liabilities	795,892			712,815
Long-term debt	2,354,337			2,353,194
Deferred income taxes	459,639			448,375
Other liabilities	20,781			20,649
Total liabilities	3,630,649			3,535,033
Commitments and contingencies
Redeemable noncontrolling interests	111,240			111,240
Equity
Common stock	641			641
Treasury stock, at cost	(551,125		)	(416,829		)
Additional paid-in capital	1,141,050			1,132,749
Retained earnings	2,490,373			2,210,459
Total Steel Dynamics, Inc. equity	3,080,939			2,927,020
Noncontrolling interests	(152,698		)	(149,561		)
Total equity	2,928,241			2,777,459
Total liabilities and equity	$	6,670,130		$	6,423,732

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Operating activities:
Net income	$	152,947		$	140,443		$	351,613		$	201,761
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	73,801			74,795			148,858			148,780
Equity-based compensation	6,380			7,236			17,683			17,770
Deferred income taxes	6,849			18,314			14,565			35,401
Other adjustments	(43		)	1,035			(147		)	1,215
Changes in certain assets and liabilities:
Accounts receivable	(3,746		)	(103,598		)	(157,110		)	(179,194		)
Inventories	(57,622		)	(108,893		)	(144,441		)	(26,326		)
Other assets	5,418			10,613			7,531			11,161
Accounts payable	(45,445		)	53,732			88,364			166,391
Income taxes receivable/payable	(77,587		)	34,388			18,732			48,381
Accrued expenses	20,056			29,907			(24,191		)	23,660
Net cash provided by operating activities	81,008			157,972			321,457			449,000
Investing activities:
Purchases of property, plant and equipment	(43,274		)	(35,686		)	(84,951		)	(63,394		)
Other investing activities	2,387			1,206			29,305			4,260
Net cash used in investing activities	(40,887		)	(34,480		)	(55,646		)	(59,134		)
Financing activities:
Issuance of current and long-term debt	51,233			63,655			51,233			84,107
Repayment of current and long-term debt	(34,997		)	(81,022		)	(36,426		)	(85,254		)
Dividends paid	(37,527		)	(34,090		)	(71,657		)	(67,515		)
Purchase of treasury stock	(76,813		)	—			(138,069		)	—
Other financing activities	—			3,680			(3,532		)	4,430
Net cash used in financing activities	(98,104		)	(47,777		)	(198,451		)	(64,232		)
Increase (decrease) in cash and equivalents	(57,983		)	75,715			67,360			325,634
Cash and equivalents at beginning of period	966,826			976,951			841,483			727,032
Cash and equivalents at end of period	$	908,843		$	1,052,666		$	908,843		$	1,052,666
Supplemental disclosure information:
Cash paid for interest	$	53,976		$	45,094		$	66,625		$	71,380
Cash paid for income taxes, net	$	152,116		$	27,565		$	153,670		$	28,264

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)

	Second Quarter						Year to Date
	2017			2016			2017			2016			1Q 2017
External Net Sales
Steel	$	1,758,242		$	1,466,704		$	3,479,575		$	2,683,880		$	1,721,333
Fabrication	197,866			170,542			391,962			350,597			194,096
Metals Recycling	343,529			311,060			707,365			580,467			363,836
Other	91,083			75,596			180,034			150,259			88,951
Consolidated	$	2,390,720		$	2,023,902		$	4,758,936		$	3,765,203		$	2,368,216
Operating Income
Steel	$	273,818		$	276,529		$	626,241		$	412,221		$	352,423
Fabrication	20,188			23,512			43,955			55,587			23,767
Metals Recycling	19,988			14,686			41,329			21,046			21,341
Operations	313,994			314,727			711,525			488,854			397,531
Non-cash Amortization of Intangible Assets	(7,424		)	(7,051		)	(14,848		)	(14,151		)	(7,424		)
Profit Sharing Expense	(21,308		)	(20,176		)	(48,539		)	(29,467		)	(27,231		)
Non-segment Operations	(19,909		)	(31,378		)	(48,219		)	(57,149		)	(28,310		)
Consolidated Operating Income	$	265,353		$	256,122		$	599,919		$	388,087		$	334,566
Adjusted EBITDA
Earnings Before Taxes	$	235,319		$	221,294		$	539,571		$	318,008		$	304,252
Net Interest Expense	31,629			35,379			63,962			71,529			32,333
Depreciation	65,014			66,234			131,283			131,609			66,269
Amortization of Intangible Assets	7,424			7,051			14,848			14,151			7,424
Non-controlling Interest	985			1,526			3,137			2,945			2,152
EBITDA	340,371			331,484			752,801			538,242			412,430
Non-cash Adjustments
Unrealized Hedging (Gain) Loss	724			1,188			87			1,507			(637		)
Inventory Valuation	2,359			235			2,521			427			162
Equity-based Compensation	6,975			7,287			16,049			14,266			9,074
Adjusted EBITDA	$	350,429		$	340,194		$	771,458		$	554,442		$	421,029
Other Operating Information
Steel
Average External Sales Price (Per ton)	$	779		$	640		$	761		$	608		$	743
Average Ferrous Cost (Per ton melted)	$	303		$	227		$	283		$	206		$	264
Flat Roll Shipments	1,737,404			1,787,797			3,473,358			3,445,138			1,735,954
Long Product Shipments
Structural and Rail Division	311,421			356,604			661,976			649,592			350,555
Engineered Bar Products Division	180,787			122,593			372,927			247,793			192,140
Roanoke Bar Division	116,231			139,775			242,100			265,246			125,869
Steel of West Virginia	76,054			84,593			153,283			160,802			77,229
Total Shipments (Tons)	2,421,897			2,491,362			4,903,644			4,768,571			2,481,747
External Shipments (Tons)	2,246,569			2,291,162			4,551,649			4,413,034			2,305,080
Metals Recycling
Total Nonferrous Shipments (000’s of pounds)	270,444			278,198			554,047			548,608			283,603
Total Ferrous Shipments (Gross tons)	1,222,777			1,346,324			2,561,376			2,651,478			1,338,599
External Ferrous Shipments (Gross tons)	466,506			539,247			951,920			1,043,034			485,414
Fabrication
Average External Sales Price (Per ton)	$	1,311		$	1,202		$	1,301		$	1,222		$	1,291
Total Shipments (Tons)	151,052			142,828			301,454			287,954			150,402