01—Abstract
Summary
Summary of the 10-K filed February 27, 2013. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. (STLD) reported 2012 net sales of $7.29 billiona, down from $8.00 billion in 2011, and operating income of $391.2 million versus $584.8 million a year earlier.
Net income attributable to Steel Dynamics, Inc. was $163.6 millionb, or $0.73 per diluted share, compared with $278.1 million, or $1.22 per diluted share, in 2011. The steel operations segment drove most of the decline, with operating income falling $162.5 million to $495.6 million as average selling prices per ton shipped dropped $64 while scrap costs fell only $32 per ton. The metals recycling and ferrous resources segment swung to an operating loss of $36.5 million from income of $26.6 million in 2011.
The company refinanced a substantial portion of its debt during 2012, issuing $400.0 millionc of 6 1/8% Senior Notes due 2019 and $350.0 million of 6 3/8% Senior Notes due 2022, and adding a $275.0 million term loan. Total debt was reduced by $177.9 million to $2.2 billion, and the refinancing generated $40.3 million of related expenses. Cash and equivalents ended the year at $375.9 million, with $1.1 billion of revolver availability, and operating cash flow was $445.7 million.
Capital expenditures were $223.5 milliond, and the company's 2013 capital plan calls for $200.0 to $225.0 million. The filing also highlights the ramp-up of the Mesabi Nugget iron-nugget facility and the Mining Resources iron tailings operation, which together reduced net income by approximately $41.5 million in 2012, and management expects lower iron concentrate costs to benefit results beginning in the second quarter of 2013. The company remains a defendant, with other steel producers, in a class action antitrust suit in Chicago, and management stated it does not presently believe the outcome would have a material impact on the company.
02—Key points
Key Highlights
- Net sales fell to $7.29 billion in 2012 from $8.00 billion in 2011, and operating income declined 33% to $391.2 million.
- Net income attributable to Steel Dynamics, Inc. was $163.6 million ($0.73 per diluted share), down from $278.1 million ($1.22 per diluted share) in 2011.
- Steel operations operating income fell $162.5 million to $495.6 million as selling prices per ton shipped declined $64 against a $32 per ton drop in scrap costs.
- The metals recycling and ferrous resources segment reported an operating loss of $36.5 million in 2012, compared with operating income of $26.6 million in 2011.
- Total debt decreased $177.9 million to $2.2 billion, and the company completed a refinancing that included $750.0 million of new senior notes and a $275.0 million term loan.
- Operating cash flow was $445.7 million, and cash and equivalents stood at $375.9 million at year-end, with $1.1 billion of revolver availability.
- The company declared dividends of $0.40 per share in 2012, unchanged from 2011, and its 2013 capital investment plan is between $200.0 and $225.0 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Steel Dynamics kept $0.02.
- Revenue$7.29B100.0%
- Cost of revenue−$6.57B90.1%
- Gross profit$719.9M9.9%
- Operating costs−$328.7M4.5%
- Operating income$391.2M5.4%
- Interest, other & tax−$227.6M3.1%
- Net income$163.6M2.2%
Where FY2012 revenue went
$7.29B- Cost of revenue: $6.57B, 90% of revenue
- Net income: $163.6M, 2.2% of revenue
- SG&A: $328.7M, 4.5% of revenue
- Interest, other & tax: $227.6M, 3.1% of revenue
Kept 2.2% as net incomeNet income $163.6M · 2.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 27, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $7.29B$8.00B | −8.8% |
| Cost of Revenue | $6.57B$7.07B | −7.0% |
| Gross Profit | $719.90M$931.52M | −22.7% |
| SG&A Expenses | $328.73M— | — |
| Operating Expenses | $328.73M$346.70M | −5.2% |
| Operating Income | $391.17M$584.82M | −33.1% |
| Interest Expense | $158.59M$176.98M | −10.4% |
| Net Income | $163.55M$278.12M | −41.2% |
| EPS (Basic) | $0.75$1.27 | −40.9% |
| EPS (Diluted) | $0.73$1.22 | −40.2% |
| Shares Outstanding (Basic) | 219.16M218.47M | +0.3% |
| Shares Outstanding (Diluted) | 236.62M235.99M | +0.3% |
05—Questions
Frequently Asked Questions
Why did Steel Dynamics' profitability decline in 2012?
The filing attributes the decline mainly to the steel operations segment, where average selling prices per ton shipped fell $64 while scrap raw material costs fell only $32 per ton, compressing metal spreads. Weaker U.S. economic conditions and increased import activity pressured steel margins, and the metals recycling operation at OmniSource also saw margin compression.
How did the company change its debt structure in 2012?
In 2012 the company added a $275.0 million term loan due 2016 and issued $400.0 million of 6 1/8% Senior Notes due 2019 and $350.0 million of 6 3/8% Senior Notes due 2022. It used the proceeds to retire $700.0 million of 7 3/8% Senior Notes due 2012 and $500.0 million of 7 3/4% Senior Notes due 2016, reducing total long-term debt by $175.0 million and recording $40.3 million of related refinancing expenses.
What is the status of the Mesabi Nugget ironmaking project?
Mesabi Nugget produced and shipped 169,000 metric tons of iron nuggets in 2012 against a designed annual capacity of 500,000 metric tons. The company says Minnesota iron operations reduced net income by about $41.5 million in 2012, and it expects improvements planned for the first half of 2013 along with lower-cost iron concentrate from its Mining Resources operation to benefit results beginning in the second quarter of 2013.
What legal risks does the company disclose?
The company is among nine steel manufacturers named in a class action antitrust complaint filed in Chicago in September 2008, alleging a conspiracy to restrict steel supply and fix prices, and plaintiffs have sought treble damages. The filing states that management does not currently believe there is a reasonable possibility the outcome would have a material impact on the company's financial condition, results of operations or liquidity.
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