Steel Dynamics (STLD) Repays Senior Secured Loan Worth $228M

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Steel Dynamics, Inc. STLD has repaid its senior secured term loan in the principal amount of $228,125,000 under the company's Senior Secured Credit Facility dated Nov 14, 2014, using its cash in hand.

Recently, Steel Dynamics also closed the sale of $400 million aggregate principal amount of its 5.000% Senior Notes due 2026. The company sold the notes in a private offering to qualified institutional buyers. Both transactions are expected to reduce annual interest by roughly $10 million in 2017. The transactions are likely to help the company establish a strong capital structure and credit profile to support growth opportunities.

Shares of Steel Dynamics rose roughly 1.2% to close at $36.87 on Dec 14.

Steel Dynamics' shares have gained 57% over the past three months, outperforming the Zacks categorized 'Steel-Producers' industry's gain of 42.2% over the same period.

Steel Dynamics reported adjusted earnings of 65 cents per share in the third quarter of 2016, which was within management's expected range of 63−67 cents and above the prior-year quarter figure of 25 cents. The improvement in the bottom line was backed by positive momentum in the flat roll metal spread expansion. Sales for the reported quarter increased 7.7% year over year to $2.1 billion.

Steel Dynamics expects fourth-quarter 2016 to witness lower volumes due to seasonality, along with weaker pricing. However, the automotive sector is expected to grow in 2017, which might boost sales. The construction sector is also expected to grow, particularly in terms of large infrastructure projects. Further, the company expects the energy sector to witness some improvement as well.

Steel Dynamics' share repurchase program and a capital allocation strategy is evident of its strong balance sheet and liquidity position. The company remains committed toward increasing shareholders' value via organic and strategic growth.



Zacks Rank & Key Picks

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the steel space include POSCO PKX , GrupoSimec S.A.B. de C.V. SIM and AK Steel Holding Corp. AKS .

POSCO has an expected long-term growth of 5% and sports a Zacks Rank #1 (Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here.

GrupoSimec, with a Zacks Rank #2 (Buy), saw its estimates for the current quarter increase roughly 53% in the last 60 days.

AK Steel has an expected long-term growth of 5%. The company carries a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: AKS , PKX , STLD , SIM

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