Steel Dynamics announced fourth quarter and annual 2016 financial results. The company reported fourth quarter net sales of $1.9 billion and net income of $20 million, or $0.08 per diluted share.
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That includes non-cash goodwill and asset impairment charges of $0.31 per diluted share and debt refinancing and repayment charges of $0.04 per diluted share.
Excluding these items, the company's adjusted fourth quarter 2016 net income was $106 million, or $0.43 per diluted share.
As indicated in the company's December 16, 2016 guidance, based on recent events related to the company's 82%-owned and idled Mining Resources joint venture, the company assessed the carrying value of its Minnesota iron mining operations during the fourth quarter 2016.
Upon completion of the assessment, it was determined that the estimated fair value did not support the carrying value in place.
Therefore, the company recorded a pretax, non-cash asset impairment charge of $127 million during the fourth quarter 2016, and based on the company's joint venture ownership percentages, reduced consolidated pretax income by $114 million.
The planned sale of certain metals recycling assets also resulted in a pretax, non-cash goodwill impairment charge of $5.5 million during the fourth quarter 2016.
The fourth quarter 2016 also included additional compensation costs of approximately $7.5 million, or $0.02 per diluted share, associated with a one-time, special cash performance bonus paid to all non-executive, eligible employees in recognition of their tremendous performance during the year.
Comparatively, prior year fourth quarter net sales were $1.6 billion, with adjusted net income of $22 million, or $0.09 per diluted share, which excluded the impact of non-cash goodwill and asset impairment charges related to the company's metals recycling operations of $1.13 per diluted share.
Sequential third quarter 2016 net sales were $2.1 billion, with adjusted net income of $160 million, or $0.65 per diluted share, which excluded the impact of a litigation settlement charge of approximately $5 million, or $0.01 per diluted share. ■