FORT WAYNE, Ind., Oct. 18, 2021/PRNewswire/ --

Third Quarter 2021 Highlights:

• Record steel fabrication shipments of 211,000 tons
• Record net sales of $5.1 billion
• Record operating income of $1.3 billionand record net income of $991 million
• Record steel and steel fabrication operating income of $1.4 billionand $89 million, respectively.
• Record cash flow from operations of $631 millionand record adjusted EBITDA of $1.4 billion
• Share repurchases of $338 millionof the company's common stock, representing 3 percent of its outstanding shares

Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced third quarter 2021 financial results. The company reported record third quarter 2021 net sales of $5.1 billionand net income of $991 million, or $4.85per diluted share. Excluding the impact from the following item, the company's third quarter 2021 adjusted net income was $1.0 billion, or $4.96per diluted share:

• Costs of approximately $30 million, or $0.11per diluted share (net of capitalized interest), associated with construction of the company's Sinton Texas Flat Roll Steel Mill growth investment.

Comparatively, prior year third quarter net sales were $2.3 billion, with net income of $100 million, or $0.47per diluted share, and adjusted earnings were $0.51per diluted share, excluding the impact of the costs associated with the construction of the company's Texassteel mill of $0.04per diluted share. The company's sequential second quarter 2021 earnings were $3.32per diluted share, and adjusted earnings were $3.40per diluted share, also excluding the impact of construction costs related to the Texassteel mill of $0.08per diluted share.

"The team continued to perform extraordinarily well, achieving record quarterly financial results, including record sales, operating income, cash flow from operations, and adjusted EBITDA," said Mark D. Millett, Chairman and Chief Executive Officer. "Our third quarter 2021 operating income increased 38 percent sequentially to $1.3 billion, while adjusted EBITDA increased 36 percent to $1.4 billion. This is truly an incredible achievement and a testament to the passion and commitment of our team. We generated record quarterly cash flow from operations of $631 millionand maintained strong liquidity, while supporting our working capital needs, growing our business through organic growth investments, and returning capital to our shareholders.

"During the third quarter, steel demand remained strong as product pricing continued its positive trajectory across our entire steel platform. Higher realized steel selling values drove significant metal spread expansion and were again most prominent within our flat roll steel operations, as continued demand strength and low customer inventories persisted throughout the supply chain and supported prices. Domestic steel consumption was strong from the automotive, construction, and industrial sectors, while the energy sector continued to show signs of recovery.

"Our segment operating results continue to be outstanding," continued Millett. "Third quarter operating income from our steel operations was a record $1.4 billion, and our metals recycling operations sustained strong earnings, even as scrap prices declined in August and September. Our steel fabrication operations achieved record operating income over three times sequential second quarter results and once again achieved record quarterly shipments. Our steel fabrication backlog continues grow, remaining at record volumes and forward-pricing."

Third Quarter 2021 Comments

Third quarter 2021 operating income for the company's steel operations was a record $1.4 billion, or 33 percent higher than sequential second quarter results, due to significant metal spread expansion. Record flat roll and strong long product steel realized selling values, more than offset higher scrap input costs. The third quarter 2021 average external product selling price for the company's steel operations increased $258sequentially to $1,550per ton. The average ferrous scrap cost per ton melted at the company's steel mills increased $50sequentially to $489per ton.

Third quarter operating income from the company's metals recycling operations remained strong at $47 millionas a result of higher sequential ferrous metal margins offsetting slightly lower volumes. Ferrous scrap prices moderated in August and September after rising early in the quarter. The company anticipates ferrous prime scrap pricing indices to increase slightly for the remainder of the year, after also declining in October.

The company's steel fabrication operations reported record operating income of $89 millionin the third quarter 2021, more than tripling the sequential second quarter results. Supported by record quarterly shipments, earnings significantly improved as realized pricing increased $586per ton, more than offsetting higher average steel input costs. Steel joist and deck product pricing has strengthened significantly to record levels, due strong demand. Order activity remains extremely strong, and customers continue to be optimistic concerning new projects well into 2022. The company's steel fabrication order backlog is at a record level in terms of volume and forward-pricing at the end of September.

Year-to-Date September 30, 2021Comparison

For the nine months ended September 30, 2021, net income was $2.1 billion, or $10.15per diluted share, with net sales of $13.1 billion, as compared to net income of $363 million, or $1.71per diluted share, with net sales of $7.0 billionfor the same period in 2020. Excluding the impact from the following item, the company's nine-months ended 2021 adjusted net income was $2.2 billion, or $10.40per diluted share:

• Costs of approximately $73 million, or $0.25per diluted share (net of capitalized interest), associated with construction of the company's Sinton Texas Flat Roll Steel Mill growth investment.

Similarly, adjusting for the company's Texassteel mill construction costs and a June 2020refinancing, nine-months ended September 30, 2020net income was $398 million, or $1.88per diluted share.

Net sales for the first nine months of 2021 increased 87 percent and operating income increased 388 percent to $2.9 billion, when compared to the same period in 2020. Higher earnings were primarily the result of steel metal spread expansion, as significantly higher average steel selling values, more than offset higher average ferrous scrap costs across the steel platform, especially within the company's flat roll steel operations. Compared to the same period in 2020, the average external selling price for the company's steel operations during the first nine-months of 2021 increased $538to $1,293per ton. The average ferrous scrap cost per ton melted at the company's steel mills for the first nine months increased $169to $433per ton.

Based on the company's differentiated business model and highly, variable cost structure, the company achieved cash flow from operations of $1.5 billionduring the first nine months of 2021, representing a record performance. The company also invested $802 millionin capital investments, paid cash dividends of $161 million, and repurchased $731 millionof its common stock representing over 5 percent of its outstanding shares, while maintaining liquidity of $2.3 billion.

Outlook

"Current market conditions are in place to support solid domestic steel demand for the fourth quarter and into 2022," said Millett. "Order entry activity continues to be robust across our businesses. We continue to see strong steel demand coupled with moderating, but still historically low customer inventories throughout the supply chain. These dynamics support continued elevated steel selling values. Domestic steel demand remains solid in our automotive, construction, and industrial end markets. We believe this momentum will continue and that our fourth quarter consolidated earnings could represent another record performance. Based on strong domestic steel fundamentals and customer confidence, we continue to be positive regarding North American steel market dynamics. This constructive environment coupled with our strategic growth initiatives provide firm drivers for our further growth in the coming years.

"We and our customers continue to be extremely excited about our Sinton Texas EAF Flat Roll Steel Mill investment. It represents transformational competitively-advantaged strategic growth, with associated long-term value creation for all of our stakeholders. I want to thank the entire Sinton team for their tremendous efforts. Actual steel production is still planned to start before the end of 2021, and based on current forecasts, we believe shipments could be in the range of 2.0 million tons to 2.2 million tons in 2022. Based on mid-cycle flat roll metal spreads, we currently believe through-cycle annual EBITDA for our Sinton Texas Flat Roll Steel Mill once fully operational with access to four value-added coating lines is likely in the range of $475 millionto $525 million.

"We also plan to invest approximately $500 millionto 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 Texassteel 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, Indianato 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 estimates, we believe these four lines will likely begin operating mid-2023.

"From our founding over 25 years ago, Steel Dynamics has been intentional in managing our resources sustainably for the benefit of our teams, communities, and the environment. We are a steel industry leader in sustainability, operating exclusively with electric arc furnace technology with a circular manufacturing model. As our journey continues, we are committed to the reduction of our environmental footprint, including a goal for our steel mills to be carbon neutral by 2050. We are starting from a position of strength yet plan to do more. We are competitively positioned and focused toward generating long-term sustainable growth for all of our stakeholders," concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss third quarter 2021 operating and financial results on Tuesday, October 19, 2021, at 10:00 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 October 25, 2021.

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 Statesand in Mexico. Steel Dynamics produces steel products, including hot roll, cold roll, and coated sheet steel, structural steel beams and shapes, railroad 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 steel imports, 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 resources are subject to volatile market conditions; (7) compliance with and changes in environmental and remediation requirements; (8) increased regulation associated with the environment, climate change, greenhouse gas emissions and sustainability; (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 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.

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".

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SOURCE Steel Dynamics, Inc.