Steel Dynamics touts record liquidity of $1.6 billion at end of Q2

By Lisa Kerner

Charlotte, N.C., July 21 – Steel Dynamics, Inc. ended its second quarter on June 30 with record liquidity of more than $1.6 billion, “even after deleveraging our balance sheet and increasing cash dividends,” said executive vice president and chief financial officer Theresa Wagler.

Total debt remained “consistent” at $2.7 billion, while net debt of $2.2 billion increased by $258 million, or 10%, in the quarter due to cash flow performance, according to Wagler.

Wagler made her comments during the company’s earnings conference call on Tuesday.

Steel Dynamics’ debt maturity outlook is “incredibly flexible,” said Wagler. The company has no near-term maturities, and its debt maturities are “well laddered.”

At June 30, the company had cash and cash equivalents of about $419 million and total long-term debt of $2.7 billion. This compares with $361 million and about $3 billion at Dec. 31, 2014, according to the earnings news release.

Industry challenges

The second-quarter market environment was “extremely challenging” for the company’s steel and metals recycling operations, according to chief executive officer Mark D. Millett.

An ongoing flood of steel imports continued to pressure pricing despite some benefit from lower scrap costs.

Steel shipments improved during the quarter due to continued solid U.S. steel demand, Millett said.

“Based on an expected reduction in steel import volume and sustained lower scrap costs, we anticipate improved financial results in the second half of 2015,” said Millett. “We believe we are poised to capitalize on meaningful growth opportunities, both near-term and in the future, that will benefit our customers, shareholders, employees and communities.”

Financial highlights

Steel Dynamics had second-quarter adjusted net income of $53 million, or $0.22 per diluted share, and adjusted operating income of $120 million.

For the prior-year period, net income was $72 million, or $0.31 per diluted share, on net sales of $2.1 billion. Sequential first-quarter 2015 net sales were $2 billion, with adjusted net income of $40 million, or $0.17 per diluted share, which excluded the impact of refinancing charges of $0.04 per diluted share, the release stated.

Cash flow from operations was up 32% sequentially at $309 million. For the first six months of the year, Steel Dynamics generated $488 million of free cash flow.

Fort Wayne, Ind.-based Steel Dynamics is a domestic steel producer and metals recycler.

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