Steel Dynamics Reports Fourth Quarter and Record Annual 2022 Results
Steel Dynamics reported record 2022 performance, achieving net sales of $22.3 billion and net income of $3.9 billion, a significant increase from the previous year. The company also noted a cash flow from operations of $4.5 billion. Q4 2022 saw net sales of $4.8 billion with net income at $635 million. Steel shipments reached 12.2 million tons for the year. Despite a challenging pricing environment, the company maintained strong operational performance, particularly in its steel fabrication segment, which generated $2.4 billion in earnings. The outlook for 2023 remains positive with expectations for increased steel consumption and robust order backlogs.
- Record net sales of $22.3 billion in 2022, a 21% increase from 2021.
- Record operating income of $5.1 billion and net income of $3.9 billion for 2022.
- Fourth quarter net income of $635 million, with adjusted earnings of $4.37 per diluted share.
- Record cash flow from operations of $4.5 billion in 2022.
- Increased liquidity to a record $3.4 billion as of December 31, 2022.
- Added to the S&P 500 Index.
- Strong demand in construction, automotive, and industrial sectors.
- Fourth quarter operating income for steel operations decreased to $178 million due to lower shipments and metal spread compression.
- Average external product selling price decreased by $257 sequentially to $1,124 per ton.
- Higher raw material costs affected profitability, particularly from high-priced pig iron.
Annual 2022 Performance Highlights:
- Record net sales of
$22.3 billion - Record operating income of
and net income of$5.1 billion $3.9 billion - Record cash flow from operations of
and adjusted EBITDA of$4.5 billion billion$5.5 - Record steel fabrication segment earnings of
$2.4 billion - Record steel and steel fabrication shipments of 12.2 million tons and 856,000 tons, respectively
- Added to the S&P500® Index
- Share repurchases of
of the company's common stock, representing 12 percent of its outstanding shares$1.8 billion
- Additional performance-based companywide special compensation of
, or$24 million per diluted share, awarded to all non-executive, eligible team members in recognition of the company's exceptional annual performance, and$0.09 - Costs of
, or$168 million per diluted share, associated with startup of the company's$0.67 Sinton Texas Flat Roll Steel Mill growth investment.
The company also realized a fourth quarter 2022 benefit of
Comparatively, the company's sequential third quarter 2022 earnings were
"The team delivered a tremendous operational and financial performance during 2022, achieving record net sales of
"Domestic steel demand was solid throughout the year supported most significantly by the construction, automotive, industrial, and energy sectors," continued Millett. "Customer steel inventories remained at below historical averages for most of the year, allowing for steady order patterns. Our steel operations achieved record 2022 annual shipments of 12.2 million tons and its second highest annual operating income of
Fourth Quarter 2022 Comments
Fourth quarter 2022 operating income for the company's steel operations was
Fourth quarter operating income from the company's metals recycling operations improved sequentially to
The company's steel fabrication business achieved another record quarter, with operating income of
Annual 2022 Comparison
Annual 2022 net income was a record
- Additional performance-based companywide special compensation of
, or$24 million per diluted share, awarded to all non-executive, eligible team members in recognition of the company's exceptional record annual performance, and$0.09 - Costs of
, or$439 million per diluted share, associated with construction and startup of the company's$1.66 Sinton Texas Flat Roll Steel Mill growth investment.
Similarly, adjusting for the company's
Annual 2022 record net sales increased 21 percent and operating income increased 18 percent to a record
Based on the company's differentiated business model and highly, variable cost structure, the company achieved record annual cash flow from operations of
Outlook
"Customer order entry activity continues to be healthy across our businesses," said Millett. "Steel pricing has firmed, and our order activity and backlogs remain solid. We believe North American steel consumption will increase in 2023, and that demand for lower-carbon emission,
"
"We are quickly progressing on our aluminum flat rolled products mill and are incredibly excited about this meaningful growth opportunity, which is aligned with our existing business and operational expertise," said Millett. "The team has placed orders for critical equipment, and the rolling mill site location in
"Our commitment is to the welfare 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 compared to others. We believe there are strong drivers for our continued growth, and we remain in a position of strength. Our planned investments in a new state-of-the-art low-carbon aluminum flat rolled mill and associated recycled aluminum slab centers 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. We are well-positioned for sustainable long-term growth," concluded Millett.
Conference Call and Webcast
Steel Dynamics, Inc. will hold a conference call to discuss fourth quarter and annual 2022 operating and financial results on
About Steel Dynamics, Inc.
Note Regarding Non-GAAP Financial Measures
The company reports its financial results in accordance with
Forward-Looking Statements
This report contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places,
More specifically, refer to
(in thousands, except per share data) | |||||||||||||||
Three Months Ended | Year Ended | Three Months | |||||||||||||
Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net sales | $ | 4,826,287 | $ | 5,310,657 | $ | 22,260,774 | $ | 18,408,850 | $ | 5,651,707 | |||||
Costs of goods sold | 3,838,740 | 3,548,820 | 16,142,943 | 13,046,426 | 4,187,278 | ||||||||||
Gross profit | 987,547 | 1,761,837 | 6,117,831 | 5,362,424 | 1,464,429 | ||||||||||
Selling, general and administrative expenses | 142,602 | 182,290 | 545,621 | 643,976 | 132,627 | ||||||||||
Profit sharing | 79,218 | 143,243 | 452,551 | 388,111 | 105,122 | ||||||||||
Amortization of intangible assets | 6,679 | 7,178 | 27,837 | 29,232 | 6,836 | ||||||||||
Operating income | 759,048 | 1,429,126 | 5,091,822 | 4,301,105 | 1,219,844 | ||||||||||
Interest expense, net of capitalized interest | 23,855 | 12,338 | 91,538 | 57,209 | 25,347 | ||||||||||
Other expense (income), net | (23,257) | 7,940 | (20,785) | 34,826 | (13,975) | ||||||||||
Income before income taxes | 758,450 | 1,408,848 | 5,021,069 | 4,209,070 | 1,208,472 | ||||||||||
Income tax expense | 119,439 | 313,151 | 1,141,577 | 962,256 | 289,997 | ||||||||||
Net income | 639,011 | 1,095,697 | 3,879,492 | 3,246,814 | 918,475 | ||||||||||
Net income attributable to noncontrolling interests | (4,147) | (5,192) | (16,818) | (32,748) | (4,150) | ||||||||||
Net income attributable to | $ | 634,864 | $ | 1,090,505 | $ | 3,862,674 | $ | 3,214,066 | $ | 914,325 | |||||
Basic earnings per share attributable to | |||||||||||||||
| $ | 3.63 | $ | 5.53 | $ | 21.06 | $ | 15.67 | $ | 5.07 | |||||
Weighted average common shares outstanding | 174,706 | 197,346 | 183,393 | 205,115 | 180,264 | ||||||||||
Diluted earnings per share attributable to | |||||||||||||||
| |||||||||||||||
effect of assumed conversions when dilutive | $ | 3.61 | $ | 5.49 | $ | 20.92 | $ | 15.56 | $ | 5.03 | |||||
Weighted average common shares | |||||||||||||||
and share equivalents outstanding | 175,892 | 198,794 | 184,622 | 206,615 | 181,613 | ||||||||||
Dividends declared per share | $ | 0.34 | $ | 0.26 | $ | 1.36 | $ | 1.04 | $ | 0.34 |
CONSOLIDATED BALANCE SHEETS (in thousands) | ||||||
Assets | 2022 | 2021 | ||||
(unaudited) | ||||||
Current assets | ||||||
Cash and equivalents | $ | 1,628,417 | $ | 1,243,868 | ||
Short-term investments | 628,215 | - | ||||
Accounts receivable, net | 2,056,051 | 1,916,434 | ||||
Inventories | 3,129,964 | 3,531,130 | ||||
Other current assets | 195,371 | 209,591 | ||||
Total current assets | 7,638,018 | 6,901,023 | ||||
Property, plant and equipment, net | 5,373,665 | 4,751,430 | ||||
Intangible assets, net | 267,507 | 295,345 | ||||
502,067 | 453,835 | |||||
Other assets | 378,727 | 129,601 | ||||
Total assets | $ | 14,159,984 | $ | 12,531,234 | ||
Liabilities and Equity | ||||||
Current liabilities | ||||||
Accounts payable | $ | 1,017,238 | $ | 1,280,555 | ||
Income taxes payable | 6,520 | 13,746 | ||||
Accrued expenses | 951,204 | 835,894 | ||||
Current maturities of long-term debt | 57,334 | 97,174 | ||||
Total current liabilities | 2,032,296 | 2,227,369 | ||||
Long-term debt | 3,013,241 | 3,008,702 | ||||
Deferred income taxes | 889,103 | 854,905 | ||||
Other liabilities | 129,539 | 120,087 | ||||
Total liabilities | 6,064,179 | 6,211,063 | ||||
Commitments and contingencies | ||||||
Redeemable noncontrolling interests | 181,503 | 211,414 | ||||
Equity | ||||||
Common stock | 650 | 649 | ||||
| (4,459,513) | (2,674,267) | ||||
Additional paid-in capital | 1,212,566 | 1,218,933 | ||||
Retained earnings | 11,375,765 | 7,761,417 | ||||
Accumulated other comprehensive income (loss) | 889 | (2,091) | ||||
| 8,130,357 | 6,304,641 | ||||
Noncontrolling interests | (216,055) | (195,884) | ||||
Total equity | 7,914,302 | 6,108,757 | ||||
Total liabilities and equity | $ | 14,159,984 | $ | 12,531,234 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) | |||||||||||
Three Months Ended | Year Ended | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Operating activities: | |||||||||||
Net income | $ | 639,011 | $ | 1,095,697 | $ | 3,879,492 | $ | 3,246,814 | |||
Adjustments to reconcile net income to net cash provided by | |||||||||||
operating activities: | |||||||||||
Depreciation and amortization | 102,241 | 86,280 | 384,202 | 347,653 | |||||||
Equity-based compensation | 19,559 | 20,950 | 59,240 | 57,715 | |||||||
Deferred income taxes | 33,200 | 133,533 | 37,186 | 322,007 | |||||||
Other adjustments | 97 | (325) | (1,795) | (3,240) | |||||||
Changes in certain assets and liabilities: | |||||||||||
Accounts receivable | 306,990 | (23,639) | (110,560) | (944,516) | |||||||
Inventories | 258,871 | (633,359) | 413,262 | (1,685,834) | |||||||
Other assets | 2,390 | 16,327 | (6,884) | (2,491) | |||||||
Accounts payable | (136,279) | 85,173 | (289,042) | 557,735 | |||||||
Income taxes receivable/payable | (115,199) | (192,712) | 31,623 | (105,921) | |||||||
Accrued expenses | 32,547 | 135,974 | 63,679 | 414,214 | |||||||
Net cash provided by operating activities | 1,143,428 | 723,899 | 4,460,403 | 2,204,136 | |||||||
Investing activities: | |||||||||||
Purchases of property, plant and equipment | (344,201) | (204,541) | (908,902) | (1,006,239) | |||||||
Purchases of short-term investments | (292,886) | - | (927,584) | - | |||||||
Proceeds from maturities of short-term investments | 248,156 | - | 297,950 | - | |||||||
Business combinations, net of cash acquired | (86,452) | - | (134,090) | - | |||||||
Investments in unconsolidated affiliates | - | - | (222,480) | - | |||||||
Other investing activities | 6,497 | 3,546 | 15,837 | 6,819 | |||||||
Net cash used in investing activities | (468,886) | (200,995) | (1,879,269) | (999,420) | |||||||
Financing activities: | |||||||||||
Issuance of current and long-term debt | 414,324 | 456,644 | 1,465,257 | 1,516,556 | |||||||
Repayment of current and long-term debt | (380,424) | (426,664) | (1,507,475) | (1,522,002) | |||||||
Dividends paid | (60,032) | (51,943) | (237,163) | (212,968) | |||||||
Purchase of treasury stock | (413,015) | (329,818) | (1,800,905) | (1,060,632) | |||||||
Other financing activities | (27,473) | (22,955) | (116,298) | (50,423) | |||||||
Net cash used in financing activities | (466,620) | (374,736) | (2,196,584) | (1,329,469) | |||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | 207,922 | 148,168 | 384,550 | (124,753) | |||||||
Cash, cash equivalents, and restricted cash at beginning of period | 1,425,997 | 1,101,201 | 1,249,369 | 1,374,122 | |||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 1,633,919 | $ | 1,249,369 | $ | 1,633,919 | $ | 1,249,369 | |||
Supplemental disclosure information: | |||||||||||
Cash paid for interest | $ | 41,498 | $ | 41,158 | $ | 100,994 | $ | 103,374 | |||
Cash paid for income taxes, net | $ | 196,494 | $ | 366,322 | $ | 1,063,844 | $ | 737,157 |
SUPPLEMENTAL INFORMATION (dollars in thousands) | |||||||||||||||||||||
Fourth Quarter | Year to Date | ||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 1Q 2022 | 2Q 2022 | 3Q 2022 | |||||||||||||||
External | |||||||||||||||||||||
Steel | $ | 2,937,034 | $ | 3,786,221 | $ | 14,562,377 | $ | 13,199,142 | $ | 3,762,496 | $ | 4,142,021 | $ | 3,720,826 | |||||||
Steel Fabrication | 1,089,979 | 680,006 | 4,245,986 | 1,761,647 | 929,981 | 1,085,753 | 1,140,273 | ||||||||||||||
| 463,282 | 550,674 | 2,164,708 | 2,183,472 | 579,625 | 649,736 | 472,065 | ||||||||||||||
Other | 335,992 | 293,756 | 1,287,703 | 1,264,589 | 297,800 | 335,368 | 318,543 | ||||||||||||||
Consolidated | $ | 4,826,287 | $ | 5,310,657 | $ | 22,260,774 | $ | 18,408,850 | $ | 5,569,902 | $ | 6,212,878 | $ | 5,651,707 | |||||||
Operating Income | |||||||||||||||||||||
Steel | $ | 178,487 | $ | 1,366,880 | $ | 3,110,355 | $ | 4,376,079 | $ | 1,166,945 | $ | 1,106,659 | $ | 658,264 | |||||||
Steel Fabrication | 681,904 | 237,639 | 2,424,819 | 365,414 | 466,916 | 599,232 | 676,767 | ||||||||||||||
| 14,240 | 43,581 | 129,933 | 195,464 | 48,146 | 57,629 | 9,918 | ||||||||||||||
874,631 | 1,648,100 | 5,665,107 | 4,936,957 | 1,682,007 | 1,763,520 | 1,344,949 | |||||||||||||||
Non-cash amortization of intangible assets | (6,679) | (7,178) | (27,837) | (29,232) | (7,162) | (7,160) | (6,836) | ||||||||||||||
Profit sharing expense | (79,218) | (143,243) | (452,551) | (388,111) | (128,469) | (139,742) | (105,122) | ||||||||||||||
Non-segment operations | (29,686) | (68,553) | (92,897) | (218,509) | (51,509) | 1,445 | (13,147) | ||||||||||||||
Consolidated Operating Income | $ | 759,048 | $ | 1,429,126 | $ | 5,091,822 | $ | 4,301,105 | $ | 1,494,867 | $ | 1,618,063 | $ | 1,219,844 | |||||||
Adjusted EBITDA | |||||||||||||||||||||
Net income | $ | 639,011 | $ | 1,095,697 | $ | 3,879,492 | $ | 3,246,814 | $ | 1,107,354 | $ | 1,214,652 | $ | 918,475 | |||||||
Income taxes | 119,439 | 313,151 | 1,141,577 | 962,256 | 350,376 | 381,765 | 289,997 | ||||||||||||||
Net interest expense | 5,032 | 11,999 | 62,148 | 55,852 | 16,055 | 24,159 | 16,902 | ||||||||||||||
Depreciation | 93,960 | 77,438 | 349,971 | 311,972 | 78,790 | 86,943 | 90,278 | ||||||||||||||
Amortization of intangible assets | 6,679 | 7,178 | 27,837 | 29,232 | 7,162 | 7,160 | 6,836 | ||||||||||||||
Noncontrolling interest (a) | (4,839) | (5,242) | (18,373) | (33,257) | (3,272) | (5,456) | (4,806) | ||||||||||||||
EBITDA | 859,282 | 1,500,221 | 5,442,652 | 4,572,869 | 1,556,465 | 1,709,223 | 1,317,682 | ||||||||||||||
Non-cash adjustments | |||||||||||||||||||||
Unrealized (gains) losses | 8,361 | (2,856) | 713 | (2,048) | 300 | (14,001) | 6,053 | ||||||||||||||
Inventory valuation | 9,143 | 6,101 | 37,292 | 6,495 | 11,125 | 9,328 | 7,696 | ||||||||||||||
Equity-based compensation | 29,425 | 23,119 | 69,219 | 80,163 | 19,794 | 5,482 | 14,518 | ||||||||||||||
Adjusted EBITDA | $ | 906,211 | $ | 1,526,585 | $ | 5,549,876 | $ | 4,657,479 | $ | 1,587,684 | $ | 1,710,032 | $ | 1,345,949 | |||||||
Other Operating Information | |||||||||||||||||||||
Steel | |||||||||||||||||||||
Average external sales price (Per ton) (b) | $ | 1,124 | $ | 1,662 | $ | 1,399 | $ | 1,381 | $ | 1,561 | $ | 1,539 | $ | 1,381 | |||||||
Average ferrous cost (Per ton melted) (c) | $ | 414 | $ | 490 | $ | 475 | $ | 447 | $ | 474 | $ | 538 | $ | 472 | |||||||
Flat Roll shipments | |||||||||||||||||||||
Butler, | 1,761,738 | 1,416,890 | 6,771,141 | 5,868,734 | 1,551,845 | 1,690,832 | 1,766,726 | ||||||||||||||
Steel Processing divisions (d) | 404,309 | 404,733 | 1,673,967 | 1,653,433 | 411,653 | 432,701 | 425,304 | ||||||||||||||
Long Product shipments | |||||||||||||||||||||
Structural and Rail Division | 408,109 | 460,651 | 1,865,405 | 1,933,433 | 466,821 | 513,170 | 477,305 | ||||||||||||||
Engineered Bar Products Division | 206,035 | 199,546 | 894,374 | 809,808 | 226,053 | 227,293 | 234,993 | ||||||||||||||
| 126,346 | 132,318 | 589,449 | 595,879 | 143,619 | 157,652 | 161,832 | ||||||||||||||
| 87,701 | 86,381 | 363,832 | 356,353 | 94,837 | 92,597 | 88,697 | ||||||||||||||
Total Shipments (Tons) | 2,994,238 | 2,700,519 | 12,158,168 | 11,217,640 | 2,894,828 | 3,114,245 | 3,154,857 | ||||||||||||||
External Shipments (Tons) (b) | 2,614,079 | 2,277,865 | 10,410,469 | 9,559,617 | 2,409,763 | 2,691,918 | 2,694,709 | ||||||||||||||
Steel Mill Production (Tons) | 2,681,597 | 2,395,437 | 10,720,704 | 9,844,170 | 2,508,184 | 2,737,460 | 2,793,463 | ||||||||||||||
| |||||||||||||||||||||
Nonferrous shipments (000's of pounds) | 268,471 | 274,479 | 1,053,852 | 1,093,472 | 260,890 | 266,781 | 257,710 | ||||||||||||||
Ferrous shipments (Gross tons) | 1,357,706 | 1,275,062 | 5,301,774 | 5,442,478 | 1,265,222 | 1,358,729 | 1,320,117 | ||||||||||||||
External ferrous shipments (Gross tons) | 527,699 | 434,335 | 1,826,112 | 1,867,810 | 437,228 | 438,001 | 423,184 | ||||||||||||||
Steel Fabrication | |||||||||||||||||||||
Average sales price (Per ton) | $ | 5,222 | $ | 3,325 | $ | 4,976 | $ | 2,236 | $ | 4,424 | $ | 5,001 | $ | 5,245 | |||||||
Shipments (Tons) | 208,956 | 204,497 | 855,641 | 789,118 | 210,237 | 218,007 | 218,441 | ||||||||||||||
(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 |
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