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截至2024年11月6日,注册公司拥有
STEEL DYNAMICS, INC.
基本报表
(以千为单位,除股票数据外)
九月30日, | 12月31日, | |||||
2024 | 2023 | |||||
资产 | (未经审计) | |||||
流动资产 | ||||||
现金及现金等价物 | $ | | $ | | ||
短期投资 | | | ||||
应收账款,净 | | | ||||
应收账款-关联方 | | | ||||
存货 | | | ||||
其他流动资产 | | | ||||
流动资产合计 | | | ||||
固定资产净额 | | | ||||
无形资产, 净额 | | | ||||
商誉 | | | ||||
其他资产 | | | ||||
总资产 | $ | | $ | | ||
负债和股东权益 | ||||||
流动负债 | ||||||
应付账款 | $ | | $ | | ||
与账款相关的应付款项 | | | ||||
应交所得税 | | | ||||
应计工资和福利费 | | | ||||
应计费用 | | | ||||
长期负债的流动部分 | | | ||||
总流动负债 | | | ||||
长期债务 | | | ||||
延迟所得税 | | | ||||
其他负债 | | | ||||
负债合计 | | | ||||
承诺和 contingencies | ||||||
次级债券托管人最初将是初级次级债券的证券注册人和支付代理人。所有与初级次级债券有关的交易,包括初级次级债券的登记、转让和交换,将由证券注册人在纽约市的一个办事处处理,该办事处由NEE Capital指定。NEE Capital最初指定了次级信托银行的企业信托办事处作为该办事处。此外,持有初级次级债券的持有人应将有关初级次级债券的通知地址寄往该办事处。NEE Capital将通知初级次级债券的持有人该办事处的位置变化。 | | | ||||
股权 | ||||||
普通股票表决, $ | ||||||
| ||||||
分别截至2024年9月30日和2023年12月31日的流通股为: | | | ||||
按成本核算的库存股: | ||||||
截至2024年9月30日和2023年12月31日,分别 | ( | ( | ||||
资本公积金 | | | ||||
未分配利润 | | | ||||
累计其他全面收益(损失) | ( | | ||||
总股东权益 | | | ||||
少数股东权益 | ( | ( | ||||
总权益 | | | ||||
负债和股东权益总计 | $ | | $ | |
请参见基本报表注释。
1
STEEL DYNAMICS, INC.
综合损益表(未经审计)
(以千为单位,除每股数据外)
最近三个月结束的 | 九个月期间结束 | ||||||||||
九月30日, | 九月30日, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
净销售额 | |||||||||||
非关联方 | $ | | $ | | $ | | $ | | |||
关联方 | | | | | |||||||
总净销售额 | | | | | |||||||
销售成本 | | | | | |||||||
毛利润 | | | | | |||||||
销售,总务及管理费用 | | | | | |||||||
利润共享 | | | | | |||||||
无形资产摊销 | | | | | |||||||
营业收入 | | | | | |||||||
利息支出,减去资本化利息 | | | | | |||||||
其他(收入)支出,净额 | ( | ( | ( | ( | |||||||
税前收入 | | | | | |||||||
所得税费用 | | | | | |||||||
净利润 | | | | | |||||||
归属于非控股权益的净收入 | ( | ( | ( | ( | |||||||
归属于Steel Dynamics,Inc.的净利润。 | $ | | $ | | $ | | $ | | |||
归属于钢铁的基本每股收益 | |||||||||||
Dynamics, Inc.的股东 | $ | $ | $ | | $ | ||||||
加权平均流通股份 | |||||||||||
每股摊薄收益归属于钢铁资产 | |||||||||||
Dynamics, Inc.股东,包括其它效应 | |||||||||||
of assumed conversions when dilutive | $ | $ | $ | | $ | ||||||
加权平均普通股和股票等价物的流通股数。 | |||||||||||
每股分红派息 | $ | $ | $ | $ |
请参见基本报表注释。
2
STEEL DYNAMICS, INC.
综合收益合并财务报表(未经审计)
(以千计)
最近三个月结束的 | 九个月期间结束 | ||||||||||
九月30日, | 九月30日, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
净利润 | $ | | $ | | $ | | $ | | |||
其他综合收益(损失) 现金的净未实现收益(损失) | |||||||||||
资金对冲衍生工具,扣除所得税费用(收益)后 | |||||||||||
$ | |||||||||||
截至2024年9月30日和2023年分别为九个月的时间 | | ( | ( | ( | |||||||
综合收益 | | | | | |||||||
归属于非控股权益综合收益 | ( | ( | ( | ( | |||||||
综合收益归属于Steel Dynamics, Inc.。 | $ | | $ | | $ | | $ | |
请参见基本报表注释。
3
STEEL DYNAMICS, INC.
综合现金流量表(未经审计)
(以千计)
最近三个月结束的 | 九个月期间结束 | ||||||||||
九月30日, | 九月30日, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
经营活动: | |||||||||||
净利润 | $ | | $ | | $ | | $ | | |||
调整以调节净利润至经营活动提供的净现金流量: | |||||||||||
折旧和摊销 | |||||||||||
权益补偿 | | | | | |||||||
延迟所得税 | | | | | |||||||
16,519 | | | ( | | |||||||
其他 | ( | ( | | ( | |||||||
特定资产和负债的变动: | |||||||||||
应收账款 | | | | | |||||||
存货 | | | ( | | |||||||
其他资产 | ( | ( | ( | ( | |||||||
应付账款 | ( | ( | ( | ( | |||||||
应收/应付所得税 | ( | ( | | | |||||||
应计费用 | | | ( | ( | |||||||
经营活动产生的现金净额 | | | | | |||||||
投资活动: | |||||||||||
购置固定资产、无形资产和其他长期资产支付的现金 | ( | ( | ( | ( | |||||||
购买短期投资 | ( | ( | ( | ( | |||||||
短期投资到期返还的收益 | | | | | |||||||
其他投资活动 | ( | ( | ( | ( | |||||||
投资活动产生的净现金流量 | ( | ( | ( | ( | |||||||
筹资活动: | |||||||||||
发行短期和长期债券 | | | | | |||||||
偿还短期和长期债务 | ( | ( | ( | ( | |||||||
分红派息 | ( | ( | ( | ( | |||||||
购买库存股 | ( | ( | ( | ( | |||||||
其他融资活动 | | | ( | ( | |||||||
筹资活动提供的(使用的)净现金 | | ( | ( | ( | |||||||
现金、现金等价物和受限制的现金的增加(减少) | | | ( | | |||||||
期初现金、货币资金及受限制资金余额 | | | | | |||||||
期末现金、货币资金及受限制资金余额 | $ | | $ | | $ | | $ | | |||
补充披露信息: | |||||||||||
支付利息现金 | $ | | $ | | $ | | $ | | |||
净所得税支付现金 | $ | | $ | | $ | | $ | |
请参见基本报表注释。
4
注1. 业务描述和重要会计政策
业务描述
Steel Dynamics, Inc. (SDI)及其子公司是最大和最多元化的国内钢铁制造商和金属回收企业之一,同时拥有重要的钢材制造平台。自2023年第四季度起,公司改变了可报告的业务单元,与其目前的业务管理方式一致,分为钢铁业务、金属回收业务、钢铁制造业务和铝业务。本表格10-Q中提供的业务单元信息,包括备注7中提供的信息,已按照目前的可报告业务单元呈现方式,为所有以前的期间进行了重算。
钢铁业务部门。 钢铁业务包括公司的电弧炉(EAF)钢铁厂,包括Butler Flat Roll Division,Columbus Flat Roll Division,Southwest-Sinton Flat Roll Division,结构和铁路部门,工程钢杆产品部,Roanoke Bar Division,Steel of West Virginia,The Techs的钢板涂覆和加工业务,Heartland Flat Roll Division,United Steel Supply(USS),Vulcan Threaded Products,Inc.,墨西哥的仓库操作,以及SDI Biocarbon Solutions,LLC,一个共同创立和运营生物炭生产设施的合资企业。
金属回收业务部门。 金属回收业务包括公司的OmniSource有色和有色金属加工、运输、营销、券商和废料管理服务,主要遍布美国各地以及中部和北部墨西哥。
钢铁制造业务部门。 钢铁制造业务包括公司在全美国和北墨西哥各地设立的New Millennium Building Systems梁和板厂。这些工厂的收入来自用于非住宅建筑业内的桁架、梁、钢梁和钢板的制造。
铝业务板块. Aluminum operations include the recycled aluminum flat rolled products mill being constructed in Columbus, Mississippi, and
其他。Other operations consist of subsidiary operations that are below the company’s quantitative thresholds required for reportable segments and primarily consist of certain joint ventures and the company’s idled Minnesota ironmaking operations. Also included in “Other” are certain unallocated corporate accounts, such as the company’s senior unsecured credit facility, senior notes, certain other investments and certain profit sharing expenses.
重要会计政策
合并原则
综合财务报表包括SDI的账户,以及其完全或多数拥有或控制的子公司,在清除公司间账户和交易后。非控制权益和可赎回的非控股权益代表非控股所有者在公司多数拥有或控制的合并子公司股权、收益或亏损中的比例份额。与USS相关的可赎回的非控股权益(于2024年9月30日和2023年12月31日拥有
5
Note 1. Description of the Business and Significant Accounting Policies (Continued)
Use of Estimates
These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, and accordingly, include amounts that require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and in the notes thereto. Actual results may differ from these estimates and assumptions.
In the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the interim period results. These consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Cash and Equivalents, and Restricted Cash
Cash and equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition. Restricted cash is primarily funds held in escrow as required by various insurance and government organizations. The balance of cash, cash equivalents and restricted cash in the consolidated statements of cash flows includes restricted cash of $
Short-Term Investments
Short-term investments include investments with maturity dates of longer than three months but less than one year when purchased. The company’s short-term investments are classified as trading securities. Interest income from invested cash and short-term investments was $
Goodwill
The company’s goodwill consisted of the following at September 30, 2024, and December 31, 2023 (in thousands):
September 30, | December 31, | |||||||
2024 | 2023 | |||||||
Steel Operations Segment | $ | | $ | | ||||
Metals Recycling Operations Segment | | | ||||||
Steel Fabrication Operations Segment | | | ||||||
$ | | $ | |
6
Note 1. Description of the Business and Significant Accounting Policies (Continued)
Credit Losses
The company is exposed to credit risk in the event of nonpayment of accounts receivable by customers. The company mitigates its exposure to credit risk, which it generally extends on an unsecured basis, by performing ongoing credit evaluations and taking further action if necessary, such as requiring letters of credit or other security interests to support the customer receivable. The allowance for credit losses for accounts receivable is based on the company’s reasonable estimate of known credit risks and historical experience, adjusted for current and anticipated economic and other pertinent factors affecting the company’s customers, that may differ from historical experience. Customer accounts receivable are written off when all collection efforts have been exhausted and the amounts are deemed uncollectible.
At September 30, 2024, the company reported $
Derivative Financial Instruments
The company routinely enters into forward exchange traded futures to manage price risk associated with nonferrous metal inventory, as well as purchases and sales of nonferrous (primarily aluminum and copper) and ferrous metals, to reduce exposure to commodity related price fluctuations. The company does not enter into these derivative financial instruments for speculative purposes. The company recognizes all derivatives as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. Changes in the fair value of derivatives that are designated as hedges, depending on the nature of the hedge, are recognized as either an offset against the change in fair value of the hedged balance sheet item in the case of fair value hedges or as other comprehensive income in the case of cash flow hedges, until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings for fair value hedges. The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements.
The fair value of the Company’s derivative instruments, along with required margin deposit amounts with the same counterparty under master netting arrangements, totaled $
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.
7
Note 1. Description of the Business and Significant Accounting Policies (Continued)
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which modifies the rules on income tax disclosures to require entities to disclose specific categories in the rate reconciliation, the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 is to be applied on a prospective basis, but retrospective application is permitted. The company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.
Note 2. Earnings Per Share
Basic earnings per share is based on the weighted average shares of common stock outstanding during the period. Diluted earnings per share assumes the weighted average dilutive effect of common share equivalents outstanding during the period applied to the company’s basic earnings per share. Common share equivalents represent potentially dilutive restricted stock units, deferred stock units, restricted stock, and performance awards, and are excluded from the computation in periods in which they have an anti-dilutive effect. There were
Three-Month Periods Ended September 30, | |||||||||||||||||
2024 | 2023 | ||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Net Income | Shares | Per Share | Net Income | Shares | Per Share | ||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | ||||||||||||
Basic earnings per share | $ | | | $ | | $ | | | $ | | |||||||
Dilutive common share equivalents | - | | - | | |||||||||||||
Diluted earnings per share | $ | | | $ | | $ | | | $ | |
Nine-Month Periods Ended September 30, | |||||||||||||||||
2024 | 2023 | ||||||||||||||||
Weighted | Weighted | ||||||||||||||||
Average | Average | ||||||||||||||||
Net Income | Shares | Per Share | Net Income | Shares | Per Share | ||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | ||||||||||||
Basic earnings per share | $ | | | $ | | $ | | | $ | | |||||||
Dilutive common share equivalents | - | | - | | |||||||||||||
Diluted earnings per share | $ | | | $ | | $ | | | $ | |
Note 3. Long Term Debt
Senior Unsecured Notes
In July 2024, the company issued $
8
Note 3. Long Term Debt (Continued)
These notes are in equal right of payment with all existing and future senior unsecured indebtedness and are senior in right of payment to all subordinated indebtedness. Early redemption is permitted any time prior to May 15, 2034, at the greater of par or a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus
Note 4. Inventories
Inventories are stated at lower of cost or net realizable value. Cost is determined using a weighted average cost method for raw materials (including scrap and purchased steel substrate) and supplies, and on a first-in, first-out basis for other inventory.
September 30, | December 31, | ||||
2024 | 2023 | ||||
Raw materials | $ | $ | |||
Supplies | |||||
Work in progress | |||||
Finished goods | |||||
Total inventories | $ | $ |
Note 5. Changes in Equity
The following tables provide a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to stockholders of Steel Dynamics, Inc., and equity and redeemable amounts attributable to noncontrolling interests for each of the three and nine-month periods ended September 30, 2024 and 2023 (in thousands).
Stockholders of Steel Dynamics, Inc. | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | Redeemable | ||||||||||||||||||||||
Common | Treasury | Paid-In | Retained | Comprehensive | Noncontrolling | Total | Noncontrolling | |||||||||||||||||
Stock | Stock | Capital | Earnings | Income (Loss) | Interests | Equity | Interests | |||||||||||||||||
Balances at December 31, 2023 | $ | | $ | ( | $ | | $ | | $ | | $ | ( | $ | | $ | | ||||||||
Dividends declared | - | - | - | ( | - | - | ( | - | ||||||||||||||||
Noncontrolling investors, net | - | - | - | - | - | ( | ( | - | ||||||||||||||||
Share repurchases | - | ( | - | - | - | - | ( | - | ||||||||||||||||
Equity-based compensation | - | | ( | ( | - | - | ( | - | ||||||||||||||||
Net income | - | - | - | | - | | | - | ||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | ( | - | ( | - | ||||||||||||||||
Balances at March 31, 2024 | | ( | | | ( | ( | | | ||||||||||||||||
Dividends declared | - | - | - | ( | - | - | ( | - | ||||||||||||||||
Noncontrolling investors, net | - | - | - | - | - | | | - | ||||||||||||||||
Share repurchases | - | ( | - | - | - | - | ( | - | ||||||||||||||||
Equity-based compensation | - | | | ( | - | - | | - | ||||||||||||||||
Net income | - | - | - | | - | | | - | ||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | ( | - | ( | - | ||||||||||||||||
Balances at June 30, 2024 | | ( | | | ( | ( | | | ||||||||||||||||
Dividends declared | - | - | - | ( | - | - | ( | - | ||||||||||||||||
Noncontrolling investors, net | - | - | - | - | - | | | - | ||||||||||||||||
Share repurchases | - | ( | - | - | - | - | ( | - | ||||||||||||||||
Equity-based compensation | - | | | ( | - | - | | - | ||||||||||||||||
Net income | - | - | - | | - | | | - | ||||||||||||||||
Other comprehensive income, net of tax | - | - | - | - | | - | | - | ||||||||||||||||
Balances at September 30, 2024 | $ | | $ | ( | $ | | $ | | $ | ( | $ | ( | $ | | $ | |
9
Note 5. Changes in Equity (Continued)
Stockholders of Steel Dynamics, Inc. | ||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||
Additional | Other | Redeemable | ||||||||||||||||||||||
Common | Treasury | Paid-In | Retained | Comprehensive | Noncontrolling | Total | Noncontrolling | |||||||||||||||||
Stock | Stock | Capital | Earnings | Income (Loss) | Interests | Equity | Interests | |||||||||||||||||
Balances at December 31, 2022 | $ | | $ | ( | $ | | $ | | $ | | $ | ( | $ | | $ | | ||||||||
Dividends declared | - | - | - | ( | - | - | ( | - | ||||||||||||||||
Noncontrolling investors, net | - | - | - | - | - | ( | ( | | ||||||||||||||||
Share repurchases | - | ( | - | - | - | - | ( | - | ||||||||||||||||
Equity-based compensation | - | | ( | ( | - | - | ( | - | ||||||||||||||||
Net income | - | - | - | | - | | | - | ||||||||||||||||
Other comprehensive income, net of tax | - | - | - | - | | - | | - | ||||||||||||||||
Balances at March 31, 2023 | | ( | | | | ( | | | ||||||||||||||||
Dividends declared | - | - | - | ( | - | - | ( | - | ||||||||||||||||
Noncontrolling investors, net | - | - | - | - | - | ( | ( | ( | ||||||||||||||||
Share repurchases | - | ( | - | - | - | - | ( | - | ||||||||||||||||
Equity-based compensation | - | | | ( | - | - | | - | ||||||||||||||||
Net income | - | - | - | | - | | | - | ||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | ( | - | ( | - | ||||||||||||||||
Balances at June 30, 2023 | | ( | | | | ( | | | ||||||||||||||||
Dividends declared | - | - | - | ( | - | - | ( | - | ||||||||||||||||
Noncontrolling investors, net | - | - | - | - | - | | | - | ||||||||||||||||
Share repurchases | - | ( | - | - | - | - | ( | - | ||||||||||||||||
Equity-based compensation | - | | | ( | - | - | | - | ||||||||||||||||
Net income | - | - | - | | - | | | - | ||||||||||||||||
Other comprehensive loss, net of tax | - | - | - | - | ( | - | ( | - | ||||||||||||||||
Balances at September 30, 2023 | $ | | $ | ( | $ | | $ | | $ | ( | $ | ( | $ | | $ | |
Note 6. Fair Value Measurements
Accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows:
● | Level 1—Unadjusted quoted prices for identical assets and liabilities in active markets; |
● | Level 2—Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and |
● | Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
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Note 6. Fair Value Measurements (Continued)
The following table sets forth financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of September 30, 2024 and December 31, 2023 (in thousands):
Quoted Prices | Significant | ||||||||||
in Active | Other | Significant | |||||||||
Markets for | Observable | Unobservable | |||||||||
Identical Assets | Inputs | Inputs | |||||||||
Total | (Level 1) | (Level 2) | (Level 3) | ||||||||
September 30, 2024 | |||||||||||
Short-term investments | $ | | $ | $ | | $ | |||||
Commodity futures – financial assets | | | |||||||||
Commodity futures – financial liabilities | | | |||||||||
December 31, 2023 | |||||||||||
Short-term investments | $ | | $ | $ | | $ | |||||
Commodity futures – financial assets | | | |||||||||
Commodity futures – financial liabilities |
| |
|
| |
|
The carrying amounts of financial instruments including cash equivalents approximate fair value (Level 1). The fair values of short-term investments and commodity futures contracts are estimated by the use of quoted market prices, estimates obtained from brokers, and other appropriate valuation techniques based on references available (Level 2). The fair value of long-term debt, including current maturities, as determined by quoted market prices (Level 2), was approximately $
Note 7. Commitments and Contingencies
The company is involved in various routine litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which are expected to have a material impact on the company’s financial condition, results of operations, or liquidity.
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Note 8. Segment Information
The company’s operations are primarily organized and managed by reportable operating segments. In the fourth quarter 2023, the company changed its reportable segments, consistent with how it currently manages the business, which include steel operations (including warehousing operations previously included in “Other”), metals recycling operations, steel fabrication operations, and a newly created aluminum operations. The segment operations are more fully described in Note 1 to the consolidated financial statements. Operating segment performance and resource allocations are primarily based on operating results before income taxes. The accounting policies of the reportable segments are consistent with those described in Note 1 to the consolidated financial statements. Intra-segment sales and any related profits are eliminated in consolidation. Amounts included in the category “Other” are from subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of certain joint ventures and the idled Minnesota ironmaking operations. Also included in “Other” are certain unallocated corporate accounts, such as the company’s senior unsecured credit facility, senior notes, certain other investments and certain profit sharing expenses.
The company’s segment results, with prior periods recast consistent with our current reportable segments presentation, including disaggregated revenue by segment to external, external non-United States, and other segment customers, are as follows (in thousands):
Metals | Steel | ||||||||||||||||||||
For the three-month period ended | Steel | Recycling | Fabrication | Aluminum | |||||||||||||||||
September 30, 2024 | Operations | Operations | Operations | Operations | Other | Eliminations | Consolidated | ||||||||||||||
Net sales - disaggregated revenue | |||||||||||||||||||||
External | $ | | $ | | $ | | $ | - | $ | | $ | - | $ | | |||||||
External Non-U.S. | | | | - | | - | | ||||||||||||||
Other segments | | | | | - | ( | - | ||||||||||||||
| | | | | ( | | |||||||||||||||
Operating income (loss) | | | | ( | ( | (1) | | | |||||||||||||
Income (loss) before income taxes | | | | ( | ( | ( | | ||||||||||||||
Depreciation and amortization | | | | | | - | | ||||||||||||||
Capital expenditures | | | | | | ( | | ||||||||||||||
As of September 30, 2024 | |||||||||||||||||||||
Assets | $ | | $ | | $ | | $ | | $ | | (2) | $ | ( | (3) | $ | | |||||
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Note 8. Segment Information (Continued)
Metals | Steel | ||||||||||||||||||||
For the three-month period ended | Steel | Recycling | Fabrication | Aluminum | |||||||||||||||||
September 30, 2023 | Operations | Operations | Operations | Operations | Other | Eliminations | Consolidated | ||||||||||||||
Net sales - disaggregated revenue | |||||||||||||||||||||
External | $ | | $ | | $ | | $ | - | $ | | $ | - | $ | | |||||||
External Non-U.S. | | | | - | | - | | ||||||||||||||
Other segments | | | | - | | ( | - | ||||||||||||||
| | | - | | ( | | |||||||||||||||
Operating income (loss) | | | | ( | ( | (1) | | | |||||||||||||
Income (loss) before income taxes | | | | ( | ( | | | ||||||||||||||
Depreciation and amortization | | | | | | - | | ||||||||||||||
Capital expenditures | | | | | | - | | ||||||||||||||
Footnotes related to the three-month period ended September 30, 2023, segment results (in millions): | ||||||||
(1) | Corporate selling, general, & administrative expenses | $ | ( | |||||
Companywide equity-based compensation | ( | |||||||
Company profit sharing component | ( | |||||||
Other, net | | |||||||
$ | ( |
Metals | Steel | ||||||||||||||||||||
For the nine-month period ended | Steel | Recycling | Fabrication | Aluminum | |||||||||||||||||
September 30, 2024 | Operations | Operations | Operations | Operations | Other | Eliminations | Consolidated | ||||||||||||||
Net sales - disaggregated revenue | |||||||||||||||||||||
External | $ | | $ | | $ | | $ | - | $ | | $ | - | $ | | |||||||
External Non-U.S. | | | | - | | - | | ||||||||||||||
Other segments | | | | | - | ( | - | ||||||||||||||
| | | | | ( | | |||||||||||||||
Operating income (loss) | | | | ( | ( | (1) | | | |||||||||||||
Income (loss) before income taxes | | | | ( | ( | ( | | ||||||||||||||
Depreciation and amortization | | | | | | - | | ||||||||||||||
Capital expenditures | | | | | | ( | | ||||||||||||||
Footnotes related to the nine-month period ended September 30, 2024, segment results (in millions): | ||||||||
(1) | Corporate selling, general, & administrative expenses | $ | ( | |||||
Companywide equity-based compensation | ( | |||||||
Company profit sharing component | ( | |||||||
Other, net | | |||||||
$ | ( |
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Note 8. Segment Information (Continued)
Metals | Steel | ||||||||||||||||||||
For the nine-month period ended | Steel | Recycling | Fabrication | Aluminum | |||||||||||||||||
September 30, 2023 | Operations | Operations | Operations | Operations | Other | Eliminations | Consolidated | ||||||||||||||
Net sales - disaggregated revenue | |||||||||||||||||||||
External | $ | | $ | | $ | | $ | - | $ | | $ | - | $ | | |||||||
External Non-U.S. | | | | - | | - | | ||||||||||||||
Other segments | | | | - | | ( | - | ||||||||||||||
| | | - | | ( | | |||||||||||||||
Operating income (loss) | | | | ( | ( | (1) | | | |||||||||||||
Income (loss) before income taxes | | | | ( | ( | | | ||||||||||||||
Depreciation and amortization | | | | | | - | | ||||||||||||||
Capital expenditures | | | | | | - | | ||||||||||||||
Footnotes related to the nine-month period ended September 30, 2023, segment results (in millions): | ||||||||
(1) | Corporate SG&A | $ | ( | |||||
Companywide equity-based compensation | ( | |||||||
Company profit sharing component | ( | |||||||
Other, net | | |||||||
$ | ( |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as "anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or "expect", or by the words "may", "will", or "should", are intended to be made as "forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, and other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations from our customers or related regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance; (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment charges.
More specifically, we refer you to our more detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently, as set forth in our most recent Annual Report on Form 10-K under the headings Special Note Regarding Forward-Looking Statements and Risk Factors for the year ended December 31, 2023, in our quarterly reports on Form 10-Q, or in other reports which we from time to time file with the Securities and Exchange Commission. These reports are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on our website, www.steeldynamics.com under “Investors – SEC Filings.”
Description of the Business
We are one of the largest domestic steel producers and metal recyclers in the United States, based on estimated steelmaking and steel coating capacity of approximately 16 million tons and actual metals recycling volumes, with one of the most diversified product and end market portfolios in the domestic steel industry, combined with meaningful downstream steel fabrication operations. The company’s primary sources of revenue are currently from the manufacture and sale of steel products, the processing and sale of recycled ferrous and nonferrous metals, and the fabrication and sale of steel joists and deck products.
Operating Statement Classifications
Net Sales. Net sales from our operations are a factor of volumes shipped, product mix and related pricing. We charge premium prices for certain grades of steel, product dimensions, certain smaller volumes, and for value-added processing or coating of our steel products. Except for the steel fabrication operations, we recognize revenues from sales and the allowance for estimated returns and claims from these sales at the point in time control of the product transfers to the customer, upon shipment or delivery. Our steel fabrication operations recognize revenues over time based on completed fabricated tons to date as a percentage of total tons required for each contract.
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Costs of Goods Sold. Our costs of goods sold represent all direct and indirect costs associated with the manufacture of our products. The principal elements of these costs are scrap and scrap substitutes (which represent the most significant single component of our consolidated costs of goods sold), steel substrate, direct and indirect labor and related benefits, alloys, zinc, transportation and freight, repairs and maintenance, utilities such as electricity and natural gas, and depreciation.
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist of all costs associated with our sales, finance and accounting, and administrative departments, including, among other items, labor and related benefits, and professional services.
Companywide profit sharing and amortization of intangible assets are each separately presented in the statement of income.
Interest Expense, net of Capitalized Interest. Interest expense consists of interest associated with our senior credit facilities and other debt, net of interest costs that are required to be capitalized during the construction period of certain capital investment projects.
Other (Income) Expense, net. Other income consists of interest income earned on our temporary cash deposits, short-term and other investments, and any other non-operating income activity, including income from investments in unconsolidated affiliates accounted for under the equity method. Other expense consists of any non-operating costs, such as certain acquisition and financing expenses.
Results Overview
In the third quarter of 2024 we achieved quarterly steel shipments of 3.2 million tons, as steel demand was solid. Our metals recycling operations benefitted from consistent domestic steel industry demand during the third quarter of 2024 compared to the same period in 2023, while our steel fabrication segment achieved strong results on seasonally solid non-residential construction demand.
Consolidated operating income decreased $338.1 million, or 46%, to $395.4 million for the third quarter of 2024, compared to the third quarter of 2023 as metal spread contracted across all operating platforms. Third quarter 2024 net income attributable to Steel Dynamics, Inc. decreased $259.4 million, or 45%, to $317.8 million, compared to the third quarter of 2023, consistent with decreased operating income.
Consolidated operating income decreased $927.1 million, or 35%, to $1.7 billion for the first nine months of 2024, compared to the first nine months of 2023. First nine months 2024 net income attributable to Steel Dynamics, Inc. decreased $696.8 million, or 34%, to $1.3 billion, compared to the first nine months of 2023, consistent with decreased operating income.
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Segment Operating Results 2024 vs. 2023 (dollars in thousands)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2024 | % Change | 2023 | 2024 | % Change | 2023 | ||||||||||
Net sales: | |||||||||||||||
Steel Operations Segment | $ | 3,024,008 | (8)% | $ | 3,293,356 | $ | 9,786,498 | (3)% | $ | 10,060,497 | |||||
Metals Recycling Operations Segment | 1,092,562 | 4% | 1,052,305 | 3,358,809 | (1)% | 3,382,357 | |||||||||
Steel Fabrication Operations Segment | 449,803 | (29)% | 633,207 | 1,375,302 | (40)% | 2,281,609 | |||||||||
Aluminum Operations Segment | 4,169 | - | - | 6,034 | - | - | |||||||||
Other | 411,733 | 65% | 249,118 | 1,163,985 | 35% | 862,160 | |||||||||
4,982,275 | 5,227,986 | 15,690,628 | 16,586,623 | ||||||||||||
Intra-company | (640,660) | (640,929) | (2,022,376) | (2,024,730) | |||||||||||
$ | 4,341,615 | (5)% | $ | 4,587,057 | $ | 13,668,252 | (6)% | $ | 14,561,893 | ||||||
Operating income (loss): | |||||||||||||||
Steel Operations Segment | $ | 301,254 | (37)% | $ | 478,740 | $ | 1,410,805 | (7)% | $ | 1,520,367 | |||||
Metals Recycling Operations Segment | 7,709 | (45)% | 13,981 | 54,662 | (37)% | 86,674 | |||||||||
Steel Fabrication Operations Segment | 165,592 | (50)% | 330,020 | 524,672 | (61)% | 1,343,372 | |||||||||
Aluminum Operations Segment | (23,593) | (229)% | (7,172) | (56,372) | (333)% | (13,004) | |||||||||
Other | (60,154) | 33% | (90,441) | (231,961) | 25% | (308,077) | |||||||||
390,808 | 725,128 | 1,701,806 | 2,629,332 | ||||||||||||
Intra-company | 4,629 | 8,422 | 3,729 | 3,313 | |||||||||||
$ | 395,437 | (46)% | $ | 733,550 | $ | 1,705,535 | (35)% | $ | 2,632,645 |
Steel Operations Segment |
Steel operations include our electric arc furnace (EAF) steel mills, including Butler Flat Roll Division, Columbus Flat Roll Division, Southwest-Sinton Flat Roll Division, Structural and Rail Division, Engineered Bar Products Division, Roanoke Bar Division, Steel of West Virginia, steel coating and processing operations at The Techs, Heartland Flat Roll Division, United Steel Supply (USS), Vulcan Threaded Products, Inc., warehouse operations in Mexico, and SDI Biocarbon Solutions, LLC, a joint venture to construct and operate a biocarbon production facility. Steel operations accounted for 67% and 70% of our consolidated net sales during the three-month periods ended September 30, 2024 and 2023, respectively, and 69% and 67% during the nine-month periods ended September 30, 2024 and 2023, respectively.
Steel Operations Segment Shipments (tons):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2024 | % Change | 2023 | 2024 | % Change | 2023 | ||||||
Total shipments | 3,181,377 | 1% | 3,147,702 | 9,640,171 | (1)% | 9,758,016 | |||||
Intra-segment shipments | (320,674) | (372,377) | (1,001,795) | (1,150,423) | |||||||
Steel Operations Segment shipments | 2,860,703 | 3% | 2,775,325 | 8,638,376 | 0% | 8,607,593 | |||||
External shipments | 2,754,853 | 3% | 2,676,068 | 8,311,539 | 0% | 8,302,311 |
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Steel Operations Segment Results 2024 vs. 2023
During the third quarter of 2024, our steel operations achieved shipments of 3.2 million tons (2.9 million excluding intra-segment). Despite stable steel demand during the quarter, we experienced lower realized average selling prices, primarily for flat rolled products as generally 80 percent of this business is contractually based and tied to lagging pricing indices. Third quarter 2024 total steel segment average selling prices decreased 11%, or $130 per ton, compared to the third quarter of 2023. Steel operations segment shipments increased 3% in the third quarter 2024, as compared to the third quarter of 2023. Net sales for the steel operations in the third quarter 2024 decreased 8% compared to the same period in 2023, due to the decrease in average steel selling prices. Net sales for the steel operations decreased 3% in the first nine months of 2024 when compared to the same period in 2023.
Metallic raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost, generally comprising approximately 55% to 65% of our steel mill operations’ manufacturing costs. Our metallic raw material cost per net ton consumed in our steel operations decreased $38 per ton, or 9%, in the third quarter of 2024, compared to the same period in 2023, consistent with overall decreased domestic ferrous scrap pricing noted below in the Metals Recycling Operations segment discussion. In the first nine months of 2024, our metallic raw material cost per ton decreased $30, or 7%, compared to the same period in 2023.
In the third quarter of 2024, as a result of average selling prices decreasing more than scrap costs, metal spread (which we define as the difference between average steel mill selling prices and the cost of ferrous scrap consumed in our steel mills) decreased 12% compared to the third quarter of 2023. As a result of this metal spread compression, operating income for the steel operations decreased 37%, to $301.3 million, in the third quarter of 2024, compared to the same period in 2023. First nine months 2024 operating income decreased 7%, to $1.4 billion, compared to the first nine months of 2023 due primarily to a 1% decrease in metal spread, as scrap costs decreased more than selling prices.
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Metals Recycling Operations Segment |
Metals recycling operations include our OmniSource ferrous and nonferrous processing, transportation, marketing, brokerage, and scrap management services primarily throughout the United States and in Central and Northern Mexico. Our steel mills utilize a large portion of the ferrous scrap sold by our metals recycling operations as raw material in our steelmaking operations, and the remainder is sold to other consumers, such as other steel manufacturers and foundries. In the third quarters of 2024 and 2023, 61% and 62%, respectively, of metals recycling operations ferrous scrap was sold to our own steel mills, while our steel mill utilization was 80% in the third quarters of 2024 and 2023. Metals recycling operations accounted for 13% and 11% of our consolidated net sales during the three-month periods ended September 30, 2024 and 2023, respectively, and 13% and 12% during the nine-month periods ended September 30, 2024 and 2023.
Metals Recycling Operations Segment Shipments:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2024 | % Change | 2023 | 2024 | % Change | 2023 | ||||||
Ferrous metal (gross tons) | |||||||||||
Total | 1,459,206 | 1% | 1,442,964 | 4,420,054 | 0% | 4,415,949 | |||||
Inter-company | (922,124) | (895,318) | (2,754,879) | (2,722,921) | |||||||
External shipments | 537,082 | (2)% | 547,646 | 1,665,175 | (2)% | 1,693,028 | |||||
Nonferrous metals (thousands of pounds) | |||||||||||
Total | 293,470 | 5% | 279,877 | 886,923 | 5% | 845,477 | |||||
Inter-company | (42,432) | (43,043) | (121,576) | (123,552) | |||||||
External shipments | 251,038 | 6% | 236,834 | 765,347 | 6% | 721,925 |
Metals Recycling Operations Segment Results 2024 vs. 2023
During the third quarter of 2024, our metals recycling operations were negatively impacted by declining nonferrous metal spreads (primarily copper), with ferrous scrap shipments that remained flat compared to the same period in 2023 and nonferrous shipments increased 5%. Ferrous scrap average selling prices decreased 5% during the third quarter of 2024 compared to the same period in 2023, while nonferrous scrap prices increased 10%, resulting in a 4% increase in segment net sales. Ferrous metal spreads (which we define as the difference between average selling prices and the cost of purchased scrap) increased 8% during the third quarter of 2024 compared to the same period in 2023, and nonferrous metal spreads decreased 22%. As a result of the decreased nonferrous metals spreads, metals recycling operations operating income decreased 45% to $7.7 million in the third quarter of 2024 compared to the third quarter of 2023.
Net sales for our metals recycling operations in the first nine months of 2024 decreased 1% compared to the same period in 2023. Ferrous scrap average selling prices declined 6% during the first nine months of 2024 compared to the same period in 2023, while nonferrous average selling prices increased 3%. Ferrous shipments were flat and nonferrous shipments increased 5% in the first nine months of 2024 compared to the first nine months of 2023. Ferrous metal spreads were flat, while nonferrous metal spreads decreased 16% in the first nine months of 2024 compared to the first nine months of 2023. Metals recycling operations operating income in the first nine months of 2024 of $54.7 million decreased 37% from the first nine months of 2023 due to the decreased nonferrous metal spreads.
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Steel Fabrication Operations Segment |
Steel fabrication operations include the company’s New Millennium Building Systems’ joist and deck plants located throughout the United States, and in Northern Mexico. Revenues from these plants are generated from the fabrication of trusses, girders, steel joists and steel deck used within the non-residential construction industry. Steel fabrication operations accounted for 10% and 14% of our consolidated net sales during the three-month periods ended September 30, 2024 and 2023, respectively, and 10% and 15% during the nine-month periods ended September 30, 2024 and 2023, respectively.
Steel Fabrication Operations Segment Results 2024 vs. 2023
Net sales for the steel fabrication operations decreased 29% during the third quarter of 2024 compared to the same period in 2023, as average selling prices decreased $1,080 per ton, or 28%, and volume decreased 2% from the third quarter of 2023. While demand remained at historically strong levels, third quarter 2024 was impacted by lower shipments and continued falling selling prices, as we continue to move back to pre-pandemic pricing levels. Our steel fabrication operations continue to benefit from the solid non-residential construction market, as evidenced by an historically solid order backlog that extends through the first quarter 2025. The continued onshoring of manufacturing, coupled with interest rate declines and the U.S. infrastructure program, supports consistent strong demand.
The purchase of various steel products is the largest single cost of production for our steel fabrication operations, historically representing approximately two-thirds of the total cost of manufacturing. The average cost per ton of steel consumed decreased 9% in the third quarter of 2024 compared to the same period in 2023. As a result of decreased selling prices per ton, metal spread (which we define as the difference between average selling prices and the cost of purchased steel) contracted 36% in the third quarter of 2024 compared to the same period in 2023. This metal spread compression coupled with decreased volume resulted in operating income decreasing 50% to $165.6 million in the third quarter 2024, compared to $330.0 million in the same period in 2023. For the first nine months of 2024, operating income decreased 61% to $524.7 million compared to the first nine months of 2023, due to a 44% decrease in metal spread.
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Aluminum Operations Segment |
Aluminum operations include the recycled aluminum flat rolled products mill being constructed in Columbus, Mississippi, and two satellite recycled aluminum slab centers in the southwest United States (US) and central Mexico. The flat rolled products mill is a joint venture concurrently formed with Unity Aluminum, Inc. of which SDI has a 94.4% equity interest. Construction is progressing on the flat rolled products mill and the recycled aluminum slab centers with the flat rolled mill operations expected to begin mid-2025 and operations at the Mexico and US recycled slab centers in 2025. The results of this segment currently consist of construction and start-up costs recorded in selling, general and administrative expenses, included within the discussion of consolidated results within the Other Consolidated Results section below. During the first nine months of 2024, there were no additional results of operations, such as those related to shipments or production, to be discussed.
Other Consolidated Results |
Third Quarter Consolidated Results 2024 vs. 2023
Selling, General and Administrative Expenses. Selling, general and administrative expenses of $167.7 million during the third quarter of 2024 increased 15% from $145.9 million during the third quarter of 2023 primarily due to an increase in payroll and benefits expense related to the growth of the aluminum operations segment during 2024. Selling, general and administrative expenses represented 3.9% and 3.2% of net sales during third quarter 2024 and 2023, respectively.
Profit sharing expense during the third quarter of 2024 of $34.4 million decreased 47% from the $64.4 million during the same period in 2023, consistent with decreased pretax earnings. This decrease in profit sharing expense was the primary driver of decreased operating loss for other operations of 33% in the third quarter of 2024 compared to the same period in 2023. Profit sharing expense for eligible employees is 8% of consolidated pretax income excluding noncontrolling interests and other items.
Interest Expense, net of Capitalized Interest. During the third quarter of 2024, interest expense of $17.1 million, was comparable to the $18.4 million during the third quarter of 2023.
Other (Income) Expense, net. Net other income was $29.7 million in the third quarter of 2024, compared to $39.5 million in the third quarter of 2023, due primarily to the impact of decreased interest income and increased foreign currency exchange rate losses in the third quarter 2024 compared to the same period in 2023.
Income Tax Expense. Third quarter 2024 income tax expense of $87.1 million, at an effective income tax rate of 21.4%, decreased 50% compared to the $174.8 million, at an effective income tax rate of 23.2%, during the third quarter of 2023, consistent with decreased pretax earnings. Our effective tax rate decrease was due primarily to certain discrete tax adjustments during the third quarter of 2024.
First Nine Months Consolidated Results 2024 vs. 2023
Selling, General and Administrative Expenses. Selling, general and administrative expenses of $487.2 million during the first nine months of 2024 increased 13% from $431.4 million during the first nine months of 2023 primarily due to an increase in payroll and benefits expense related to the growth of the aluminum operations segment during 2024. Selling, general and administrative expenses represented 3.6% and 3.0% of net sales during the first nine months of 2024 and 2023, respectively.
Profit sharing expense during the first nine months of 2024 of $145.1 million decreased 35% from the $225.0 million during the same period in 2023, consistent with decreased pretax earnings. This decrease in profit sharing expense was the primary driver of decreased operating loss for other operations of 25% in the first nine months of 2024 compared to the same period in 2023.
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Interest Expense, net of Capitalized Interest. During the first nine months of 2024, interest expense of $41.8 million decreased 32% from $61.7 million during the first nine months of 2023. The lower interest expense in the first nine months of 2024 compared to the same period in 2023 is due to higher capitalized interest in 2024 related to construction at our Sinton and Heartland divisions, and within the aluminum operations segment.
Other (Income) Expense, net. Net other income was $75.2 million in the first nine months of 2024, compared to $105.7 million in the first nine months of 2023, due primarily to the impact of foreign currency exchange rate losses of $14.5 million in 2024 compared to gains of $7.5 million in 2023.
Income Tax Expense. First nine months 2024 income tax expense of $398.8 million, at an effective income tax rate of 22.9%, decreased 37% compared to the $636.4 million, at an effective income tax rate of 23.8%, during the first nine months of 2023, consistent with decreased pretax earnings. Our effective tax rate decrease was due primarily to certain discrete tax adjustments during the third quarter of 2024.
Liquidity and Capital Resources
Capital Resources and Long-term Debt. Our business is capital intensive and requires substantial expenditures for, among other things, the purchase and maintenance of equipment used in our operations, and to remain in compliance with environmental laws. Our short-term and long-term liquidity needs arise primarily from working capital requirements, capital expenditures, including expansion projects, principal and interest payments related to our outstanding indebtedness, dividends to our shareholders, and potential stock repurchases and acquisitions or investments. We have met and intend to continue to meet these liquidity requirements primarily with available cash and cash provided by operations, long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at September 30, 2024, is as follows (in thousands):
Cash and equivalents | $ | 1,015,210 | |||||||
Short-term and other investments | 883,546 | ||||||||
Revolver availability | 1,190,709 | ||||||||
Total liquidity | $ | 3,089,465 |
Our total outstanding debt of $3.7 billion increased $612.8 million compared to December 31, 2023, due to our issuance of senior unsecured notes in July 2024 as described in Note 3, the proceeds of which may be used for the repayment at or prior to maturity of our 2.800% senior notes due December 2024, working capital, capital expenditures, advances for or investments in the company’s subsidiaries, acquisitions, redemption and repayment of other outstanding indebtedness, and purchases of the company’s common stock. Our total long-term debt to capitalization ratio (representing our long-term debt, including current maturities, divided by the sum of our long-term debt, redeemable noncontrolling interests, and our total stockholders’ equity) was 28.9% and 25.8% at September 30, 2024 and December 31, 2023, respectively.
Our unsecured credit agreement has a senior unsecured revolving credit facility (Facility), which provides a $1.2 billion Revolver and matures in July 2028. Subject to certain conditions, we have the ability to increase the Facility size by $500.0 million. The unsecured Revolver is available to fund working capital, capital expenditures, and other general corporate purposes. The Facility contains financial covenants and other covenants pertaining to our ability to incur indebtedness and permit liens on certain assets. Our ability to borrow funds within the terms of the unsecured Revolver is dependent upon our continued compliance with the financial and other covenants. At September 30, 2024, we had $1.2 billion of availability on the Revolver, $9.3 million of outstanding letters of credit and other obligations which reduce availability, and there were no borrowings outstanding.
The financial covenants under our Facility state that we must maintain an interest coverage ratio of not less than 2.50:1.00. Our interest coverage ratio is calculated by dividing our last-twelve-months (LTM) consolidated Adjusted EBITDA as defined in the Facility (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transactions as defined in the Facility) by our LTM gross interest expense, less amortization of financing fees. In addition, a debt to capitalization ratio of not more than 0.60:1.00 must be maintained. At September 30, 2024, our
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interest coverage ratio and debt to capitalization ratio were 25.88:1.00 and 0.29:1.00, respectively. We were, therefore, in compliance with these covenants at September 30, 2024, and we anticipate we will continue to be in compliance during the next twelve months.
Working Capital (representing excess of current assets over current liabilities). We generated cash flow from operations of $1.5 billion in the first nine months of 2024 compared to $2.7 billion in the same 2023 period. Working capital decreased $704.2 million, or 16%, during the first nine months of 2024 to $3.8 billion at September 30, 2024, due to a $385.7 million decrease in cash and equivalents, and a $422.0 million increase in current maturities of long-term debt, as our $400 million 2.400% senior notes due 2025 were recorded as current in June 2024.
Capital Investments. During the first nine months of 2024, we invested $1.4 billion in property, plant and equipment, primarily within our aluminum operations segment and steel operations segment, compared with $1.1 billion invested during the same period in 2023. We are currently executing our plan to invest $2.7 billion in a new state-of-the-art low-carbon recycled aluminum flat rolled products mill with two supporting satellite recycled aluminum slab centers, which are being funded by available cash and cash flow from operations. Related expenditures began in the third quarter of 2022 and are expected to continue through early 2025. Our liquidity of $3.1 billion and anticipated future operating cash flow generation is sufficient to provide for our planned 2024 capital requirements.
Cash Dividends. As a reflection of continued confidence in our current and future cash flow generation capability and financial position, we increased our quarterly cash dividend by 8% to $0.46 per share in the first quarter of 2024 (from $0.425 per share for each quarter in 2023), resulting in declared cash dividends of $214.6 million during the first nine months of 2024, compared to $212.5 million during the same period in 2023. We paid cash dividends of $212.2 million and $201.8 million during the first nine months of 2024 and 2023, respectively. Our board of directors, along with executive management, approves the payment of dividends on a quarterly basis. The determination to pay cash dividends in the future is at the discretion of our board of directors, after taking into account various factors, including our financial condition, results of operations, outstanding indebtedness, current and anticipated cash needs and growth plans.
Other. Our board of directors has authorized share repurchase programs during prior years, the most recent of which occurred in November 2023 for a program of up to $1.5 billion of the company’s common stock. Under the share repurchase programs, purchases take place as and when we determine in open market or private transactions made based upon the market price of our common stock, the nature of other investment opportunities or growth projects, our cash flows from operations, and general economic conditions. The share repurchase programs do not require us to acquire any specific number of shares, and may be modified, suspended, extended, or terminated by us at any time. The share repurchase programs do not have an expiration date. There were $917.0 million and $1.1 billion of share repurchases during the first nine months of 2024 and 2023, respectively. As of September 30, 2024, we had $486.4 million remaining available to purchase under the November 2023 share repurchase program.
Our ability to meet our debt service obligations and reduce our total debt will depend upon our future performance which, in turn, will depend upon general economic, financial, and business conditions, along with competition, legislation and regulatory factors that are largely beyond our control. In addition, we cannot assure that our operating results, cash flows, access to credit markets and capital resources will be sufficient for repayment of our indebtedness in the future. We believe that based upon current levels of operations and anticipated growth, cash flows from operations, together with other available sources of funds, including borrowings under our Facility, if necessary, will be adequate for the next twelve months for making required payments of principal and interest on our indebtedness, funding working capital requirements, and funding anticipated capital expenditures.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Risk
In the normal course of business, we are exposed to the market risk and price fluctuations related to the sale of our products and to the purchase of raw materials used in our operations, such as metallic raw materials, electricity, water, natural gas and its transportation services, fuel, air products, zinc, and electrodes. Our risk strategy associated with product sales has generally been to obtain competitive prices for our products and to allow operating results to reflect market price movements dictated by supply and demand.
Our risk strategy associated with the purchase of raw materials utilized within our operations has generally been to make some commitments with suppliers relating to future expected requirements for some commodities such as electricity, water, natural gas and its transportation services, fuel, air products, zinc, and electrodes. Certain of these commitments contain provisions which require us to “take or pay” for specified quantities without regard to actual usage for periods of generally up to 5 years for physical commodity requirements and commodity transportation requirements, with some extending beyond, and for up to 16 years for air products and 28 years for water products. We utilized such “take or pay” requirements during the past three years under these contracts. We believe that production requirements will be such that consumption of the products or services purchased under these commitments will occur in the normal production process.
In our metals recycling and steel operations, we have certain fixed price contracts with various customers and suppliers for future delivery of nonferrous and ferrous metals. Our risk strategy has been to enter into base metal financial contracts with the goal to protect the profit margin, within certain parameters, that was contemplated when we entered into the transaction with the customer or vendor. As of September 30, 2024, substantially all of these financial contracts have a settlement date within the next twelve months. We believe the customer contracts associated with the financial contracts will be fully consummated.
ITEM 4. CONTROLS AND PROCEDURES
(a) | Evaluation of Disclosure Controls and Procedures |
As required, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures, as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2024, the end of the period covered by this quarterly report, our disclosure controls and procedures were designed to provide and were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) | Changes in Internal Controls Over Financial Reporting |
No changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which are currently expected to have a material impact on our financial condition, results of operations, or liquidity.
We may also be involved from time to time in various governmental investigations, regulatory proceedings or judicial actions seeking penalties, injunctive relief, and/or remediation under federal, state and local environmental laws and regulations. The United States EPA has conducted such investigations and proceedings involving us, in some instances along with state environmental regulators, under various environmental laws, including RCRA, CERCLA, the Clean Water Act and the Clean Air Act. Some of these matters have resulted in fines or penalties, exclusive of interest and costs, which did not exceed $1 million in aggregate, as of September 30, 2024.
ITEM 1A. RISK FACTORS
No material changes have occurred to the indicated risk factors as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities
We purchased the following equity securities registered by us pursuant to Section 12 of the Exchange Act during the three-month period ended September 30, 2024.
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs (1) | Maximum Dollar Value of Shares That May Yet be Purchased Under the Programs | |||||||||
Quarter ended September 30, 2024 | |||||||||||||
July 1 - 31 | 964,893 | $ | 129.59 | 964,893 | $ | 669,430 | |||||||
August 1 - 31 | 1,256,867 | 120.56 | 1,256,867 | 519,431 | |||||||||
September 1 - 30 | 297,003 | 112.24 | 297,003 | 486,432 | |||||||||
2,518,763 | 2,518,763 |
(1) | In November 2023, our board of directors authorized a share repurchase program of up to $1.5 billion of the company’s common stock. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the three-month period ended September 30, 2024, none of the Company’s directors or executive officers
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EXHIBIT INDEX
Articles of Incorporation | |
3.1 | |
3.2 | |
Instruments Defining the Rights of Security Holders, Including Indentures | |
4.42 | |
4.43 | |
Executive Officer Certifications | |
31.1* | |
31.2* | |
32.1* | |
32.2* | |
XBRL Documents | |
101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Document |
101.DEF* | Inline XBRL Taxonomy Definition Document |
101.LAB* | Inline XBRL Taxonomy Extension Label Document |
101.PRE* | Inline XBRL Taxonomy Presentation Document |
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed concurrently herewith |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
November 8, 2024 | ||
| ||
STEEL DYNAMICS, INC. | ||
By: | /s/ Theresa E. Wagler | |
Theresa E. Wagler | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
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