Steel Dynamics announced fourth quarter and full-year financial results. Q4 2015 operating income was $30 million.
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Excluding non-cash goodwill and asset impairment charges related to the company's metals recycling operations of $1.13 per diluted share, the company's adjusted fourth quarter 2015 net income was $22 million, or $0.09 per diluted share, on net sales of $1.6 billion.
Including the non-cash impairment charges, the company reported a fourth quarter net loss of $253 million, or $1.04 per diluted share.
Fourth quarter 2015 operating income attributable to the company's sheet products decreased 43 percent when compared to the sequential third quarter.
The company's flat roll metal spread decreased in the quarter as average pricing declined more than scrap costs, and quarterly shipments also decreased 10 percent. Flat roll products, specifically commodity-grade hot roll, were the most severely impacted by high import volumes.
Operating income from long products decreased 47 percent, caused by average price declines and reduced shipments of 13 percent. The company's steel production utilization rate declined to 73 percent for the fourth quarter 2015, which remains higher than the average U.S. domestic steel mill utilization rate, but lower than the company's third quarter 2015 rate of 82 percent.
The company's metals recycling operations recorded an adjusted fourth quarter 2015 operating loss of $16 million(excluding non-cash goodwill and asset impairment charges), compared to third quarter 2015 operating income of $463,000.
Based on lower domestic steel mill production utilization and traditional year-end steel mill scrap inventory reduction, fourth quarter 2015 ferrous scrap shipments declined 12 percent. Additionally, sequential quarterly ferrous scrap pricing decreased substantially resulting in a 34 percent margin reduction.
The company's fabrication operations continued to achieve strong financial performance. Fourth quarter 2015 operating income of $30 million was only surpassed by the sequential third quarter's record of $37 million.
Sustained demand supported a 10 percent increase in quarterly shipments, which partially offset metal spread compression, as average product pricing declined more than raw material steel costs.
Despite record full-year fabrication and steel shipments (a function of including the company's Columbus Flat Roll Division shipments for a full year in 2015), annual 2015 net sales were $7.6 billion compared to $8.8 billion in 2014, a decrease of 13 percent, based on significantly lower product pricing.
The dramatic drop in global commodity prices caused the average full-year 2015 selling price for the company's metals recycling operations to decline over 36 percent year-over-year. Additionally, due to sustained high levels of unfairly traded steel imports during the year, the average full-year 2015 selling price for the company's steel operations decreased $152 per ton, or 18 percent.
As a result, annual 2015 revenues for the company's metals recycling and steel operations fell $794 million and $338 million, respectively. The average full-year 2015 ferrous scrap cost per ton melted decreased $105 to $255 per ton, resulting in meaningful metal spread compression.
Adjusted annual 2015 operating income was $398 million, with adjusted net income of $178 million, or $0.74 per diluted share, excluding non-cash asset impairment and other charges related to the company's metals recycling and ferrous production operations and first quarter 2015 refinancing costs. Including these charges, annual 2015 net loss was $130 million, or $0.54 per diluted share.
Comparatively, adjusted annual 2014 operating income was $612 million, with adjusted net income of $323 million, or $1.35 per diluted share, excluding charges related to the Minnesota asset impairment and Columbus acquisition. Including these charges, annual 2014 net income was $157 million, or $0.67 per diluted share. ■