UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒     Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period

      ended March 31, 2020

OR

☐       Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-21719

Steel Dynamics, Inc.

(Exact name of registrant as specified in its charter)

Indiana	35-1929476
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7575 West Jefferson Blvd, Fort Wayne, IN	46804
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (260) 969-3500

Securities registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock voting, $0.0025 par value	STLD	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧   No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ⌧   No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (see definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act).

(Check one):	Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻
	Smaller reporting company  ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No⌧

As of May 1, 2020, Registrant had 210,332,119 outstanding shares of common stock.

STEEL DYNAMICS, INC.

Table of Contents

PART I. Financial Information
Item 1.	Financial Statements:	Page
	Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	1
	Consolidated Statements of Income for the three-month periods ended March 31, 2020 and 2019 (unaudited)	2
	Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2020 and 2019 (unaudited)	3
	Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2020 and 2019 (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	20
	PART II. Other Information
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
Exhibit Index		23
Signature		24

STEEL DYNAMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	March 31,		December 31,
	2020		2019
Assets	(unaudited)
Current assets
Cash and equivalents	$	1,235,478	$	1,381,460
Short-term investments		219,193		262,174
Accounts receivable, net		995,324		841,378
Accounts receivable-related parties		3,084		2,958
Inventories		1,644,538		1,689,043
Other current assets		45,351		76,012
Total current assets		4,142,968		4,253,025
Property, plant and equipment, net		3,327,605		3,135,886
Intangible assets, net		320,711		327,901
Goodwill		452,068		452,915
Other assets		101,571		106,038
Total assets	$	8,344,923	$	8,275,765
Liabilities and Equity
Current liabilities
Accounts payable	$	602,875	$	509,687
Accounts payable-related parties		9,285		3,657
Income taxes payable		17,806		2,014
Accrued payroll and benefits		124,181		208,287
Accrued interest		39,749		18,292
Accrued expenses		167,718		175,405
Current maturities of long-term debt		70,106		89,356
Total current liabilities		1,031,720		1,006,698
Long-term debt		2,646,012		2,644,988
Deferred income taxes		489,248		484,169
Other liabilities		72,004		75,055
Total liabilities		4,238,984		4,210,910
Commitments and contingencies
Redeemable noncontrolling interests		151,014		143,614
Equity
Common stock voting, $.0025 par value; 900,000,000 shares authorized;
266,079,627 and 266,072,787 shares issued; and 210,338,959 and 214,502,639
shares outstanding, as of March 31, 2020 and December 31, 2019, respectively		646		646
Treasury stock, at cost; 55,740,668 and 51,570,148 shares,
as of March 31, 2020 and December 31, 2019, respectively		(1,624,808)		(1,525,113)
Additional paid-in capital		1,183,776		1,181,012
Retained earnings		4,553,882		4,419,296
Accumulated other comprehensive income (loss)		30		(7)
Total Steel Dynamics, Inc. equity		4,113,526		4,075,834
Noncontrolling interests		(158,601)		(154,593)
Total equity		3,954,925		3,921,241
Total liabilities and equity	$	8,344,923	$	8,275,765

See notes to consolidated financial statements.

1

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended
	March 31,
	2020		2019
Net sales
Unrelated parties	$	2,571,544	$	2,814,486
Related parties		3,556		2,949
Total net sales		2,575,100		2,817,435
Costs of goods sold		2,159,871		2,383,865
Gross profit		415,229		433,570
Selling, general and administrative expenses		112,898		111,038
Profit sharing		21,454		23,677
Amortization of intangible assets		7,191		7,013
Operating income		273,686		291,842
Interest expense, net of capitalized interest		28,019		31,122
Other income, net		(2,589)		(6,343)
Income before income taxes		248,256		267,063
Income tax expense		57,420		62,236
Net income		190,836		204,827
Net income attributable to noncontrolling interests		(3,496)		(499)
Net income attributable to Steel Dynamics, Inc.	$	187,340	$	204,328
Basic earnings per share attributable to Steel Dynamics,
Inc. stockholders	$	0.88	$	0.91
Weighted average common shares outstanding		213,254		224,058
Diluted earnings per share attributable to Steel Dynamics, Inc.
stockholders, including the effect of assumed conversions
when dilutive	$	0.88	$	0.91
Weighted average common shares and share equivalents outstanding		214,024		224,962
Dividends declared per share	$	0.2500	$	0.2400

See notes to consolidated financial statements.

2

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three Months Ended
	March 31,
	2020		2019
Net income	$	190,836	$	204,827
Other comprehensive income (loss) - net unrealized gain (loss) on
cash flow hedging derivatives, net of income tax		37		(171)
Comprehensive income		190,873		204,656
Comprehensive income attributable to noncontrolling interests		(3,496)		(499)
Comprehensive income attributable to Steel Dynamics, Inc.	$	187,377	$	204,157

See notes to consolidated financial statements.

3

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended
	March 31,
	2020		2019
Operating activities:
Net income	$	190,836	$	204,827
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		80,259		80,174
Equity-based compensation		17,844		15,308
Deferred income taxes		5,927		12,091
Other adjustments		(264)		728
Changes in certain assets and liabilities:
Accounts receivable		(154,072)		(61,062)
Inventories		44,505		39,469
Other assets		(1,541)		301
Accounts payable		51,596		3,206
Income taxes receivable/payable		52,385		49,850
Accrued expenses		(76,194)		(163,339)
Net cash provided by operating activities		211,281		181,553
Investing activities:
Purchases of property, plant and equipment		(217,535)		(54,436)
Purchases of short-term investments		(149,359)		(49,677)
Proceeds from maturities of short-term investments		192,340		104,737
Acquisition of business, net of cash and restricted cash acquired		-		(93,412)
Other investing activities		518		364
Net cash used in investing activities		(174,036)		(92,424)
Financing activities:
Issuance of current and long-term debt		216,261		121,234
Repayment of current and long-term debt		(235,757)		(115,271)
Dividends paid		(51,481)		(42,239)
Purchases of treasury stock		(106,529)		(84,308)
Other financing activities		(6,152)		(5,720)
Net cash used in financing activities		(183,658)		(126,304)
Decrease in cash, cash equivalents, and restricted cash		(146,413)		(37,175)
Cash, cash equivalents, and restricted cash at beginning of period		1,387,397		834,423
Cash, cash equivalents, and restricted cash at end of period	$	1,240,984	$	797,248
Supplemental disclosure information:
Cash paid for interest	$	8,785	$	8,606
Cash paid for income taxes, net	$	518	$	1,839

See notes to consolidated financial statements.

4

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Description of the Business and Significant Accounting Policies

Description of the Business

Steel Dynamics, Inc. (SDI), together with its subsidiaries (the company), is a domestic manufacturer of steel products and metals recycler. The company has three reportable segments: steel operations, metals recycling operations, and steel fabrication operations.

Steel Operations Segment. Steel operations include the company’s Butler Flat Roll Division, Columbus Flat Roll Division, The Techs galvanizing lines, Heartland Flat Roll Division, United Steel Supply, Structural and Rail Division, Engineered Bar Products Division, Vulcan Threaded Products, Inc., Roanoke Bar Division, Steel of West Virginia, and Iron Dynamics, a liquid pig iron (scrap substitute) production facility that supplies solely the Butler Flat Roll Division. These operations include electric arc furnace steel mills, producing steel from ferrous scrap and scrap substitutes, utilizing continuous casting, automated rolling mills, with several coating and processing lines. Steel operations accounted for 75% of the company’s consolidated external net sales during the three months ended March 31, 2020 and 2019.

Metals Recycling Operations Segment. Metals recycling operations consists solely of OmniSource, LLC (OmniSource), and includes both ferrous and nonferrous processing, transportation, marketing, brokerage, and scrap management services. Metals recycling operations accounted for 11% and 13% of the company’s consolidated external net sales during the three months ended March 31, 2020 and 2019, respectively.

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 9% and 8% of the company’s consolidated external net sales during the three months ended March 31, 2020 and 2019, respectively.

Other. Other operations consists of subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of smaller joint ventures, and the idle 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.

Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of SDI, together with its wholly- and majority-owned or controlled subsidiaries, after elimination of intercompany accounts and transactions. Noncontrolling and redeemable noncontrolling interests represent the noncontrolling owner’s proportionate share in the equity, income, or losses of the company’s majority-owned or controlled consolidated subsidiaries.

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. Significant items subject to such estimates and assumptions include the carrying value of property, plant and equipment, intangible assets, and goodwill; allowances for credit losses for trade receivables, inventories and deferred income tax assets; unrecognized tax benefits; potential environmental liabilities; and litigation claims and settlements. 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, 2019.

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 and equivalents 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 $5.5 million, $5.9 million, $5.8 million, and $6.2 million at March 31, 2020, December 31, 2019, March 31, 2019, and December 31, 2018, respectively, which are recorded in Other Assets (noncurrent) in the company’s consolidated balance sheets.

5

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Description of the Business and Significant Accounting Policies (Continued)

Goodwill

The company’s goodwill consisted of the following at March 31, 2020, and December 31, 2019, (in thousands):

	March 31,		December 31,
	2020		2019
Steel Operations Segment	$	272,133	$	272,133
Metals Recycling Operations Segment		178,010		178,857
Steel Fabrication Operations Segment		1,925		1,925
	$	452,068	$	452,915

Metals Recycling Operations Segment goodwill decreased $847,000 from December 31, 2019 to March 31, 2020, in recognition of the 2020 tax benefit related to the normal amortization of the component of OmniSource tax-deductible goodwill in excess of book goodwill.

Credit Losses

ASU 2016-13, Financial Instruments - Credit Losses and its subsequent corresponding updates (ASC 326), requires an entity to use a forward-looking expected loss model versus the incurred loss model for most financial instruments, including accounts receivable. The company adopted ASC 326 effective January 1, 2020, using the modified retrospective transition method, with no impact on the company’s financial position, results of operations or cash flows.

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 March 31, 2020, we reported $998.4 million of accounts receivable, net of allowances for credit losses of $6.9 million. Changes in the allowance were not material for the three-month period ended March 31, 2020.

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 no anti-dilutive common share equivalents as of or for the three-month periods ended March 31, 2020 and 2019.

	Three Months Ended March 31,
	2020						2019
			Weighted						Weighted
			Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	187,340		213,254	$	0.88	$	204,328		224,058	$	0.91
Dilutive common share equivalents		-		770				-		904
Diluted earnings per share	$	187,340		214,024	$	0.88	$	204,328		224,962	$	0.91

6

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 3. Inventories

Inventories are stated at lower of cost or net realizable value. Cost is determined using a weighted average cost method for raw materials and supplies, and on a first-in, first-out basis for other inventory. Inventory consisted of the following (in thousands):

	March 31,		December 31,
	2020		2019
Raw materials	$	650,140	$	686,831
Supplies		490,401		498,298
Work in progress		160,831		154,669
Finished goods		343,166		349,245
Total inventories	$	1,644,538	$	1,689,043

Note 4. 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 (in thousands) for each quarterly period ended March 31, 2020 and 2019:

	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests
Balances at December 31, 2019	$	646	$	(1,525,113)	$	1,181,012	$	4,419,296	$	(7)	$	(154,593)	$	3,921,241	$	143,614
Dividends declared		-		-		-		(52,585)		-		-		(52,585)		-
Noncontrolling investors of USS		-		-		-		-		-		(7,504)		(7,504)		7,400
Share repurchases		-		(106,529)		-		-		-		-		(106,529)		-
Equity-based compensation		-		6,834		2,764		(169)		-		-		9,429		-
Net income		-		-		-		187,340		-		3,496		190,836		-
Other comprehensive loss, net of tax		-		-		-		-		37		-		37		-
Balances at March 31, 2020	$	646	$	(1,624,808)	$	1,183,776	$	4,553,882	$	30	$	(158,601)	$	3,954,925	$	151,014

	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests
Balances at December 31, 2018	$	645	$	(1,184,243)	$	1,160,048	$	3,958,320	$	301	$	(159,082)	$	3,775,989	$	111,240
Dividends declared		-		-		-		(53,504)		-		-		(53,504)		-
Noncontrolling investors of USS		-		-		-		-				-		-		28,690
Share repurchases		-		(84,308)		-		-		-		-		(84,308)		-
Equity-based compensation		-		6,714		91		(110)		-		-		6,695		-
Net income		-		-		-		204,328		-		499		204,827		-
Other comprehensive loss, net of tax		-		-		-		-		(171)		-		(171)		-
Balances at March 31, 2019	$	645	$	(1,261,837)	$	1,160,139	$	4,109,034	$	130	$	(158,583)	$	3,849,528	$	139,930

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 5. Derivative Financial Instruments

The company is exposed to certain risks relating to its ongoing business operations. The company utilizes derivative instruments to mitigate commodity margin risk, and occasionally to mitigate foreign currency exchange rate risk, and have in the past to mitigate interest rate fluctuation risk. The company routinely enters into forward exchange traded futures and option contracts to manage the price risk associated with nonferrous metals inventory as well as purchases and sales of nonferrous and ferrous metals (primarily aluminum and copper). The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements.

Commodity Futures Contracts. If the company is “long” on futures contracts, it means the company has more futures contracts purchased than futures contracts sold for the underlying commodity. If the company is “short” on a futures contract, it means the company has more futures contracts sold than futures contracts purchased for the underlying commodity. The following summarizes the company’s significant futures contract commitments as of March 31, 2020:

Commodity Futures	Long/Short	Metric Tons
Aluminum	Long	1,425
Aluminum	Short	4,475
Copper	Long	8,766
Copper	Short	13,562

The following summarizes the location and amounts of the fair values reported on the company’s consolidated balance sheets as of March 31, 2020, and December 31, 2019, and gains and losses related to derivatives included in the company’s statement of income for the three-month periods ended March 31, 2020, and 2019 (in thousands):

		Asset Derivatives				Liability Derivatives
	Balance sheet	Fair Value				Fair Value
	location	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Derivative instruments designated as hedges
Commodity futures	Other current assets	$	3,283	$	966	$	2,441	$	1,011
Derivative instruments not designated as hedges
Commodity futures	Other current assets		2,111		310		2,598		721
Total derivative instruments		$	5,394	$	1,276	$	5,039	$	1,732

The fair value of the above derivative instruments along with required margin deposit amounts with the same counterparty under master netting arrangements totaled $2.6 million at March 31, 2020, and $3.7 million at December 31, 2019, and are reflected in other current assets in the consolidated balance sheets.

		Amount of gain (loss)						Amount of gain (loss)
		recognized in income					Location of gain	recognized in income
	Location of gain	on derivatives for the					(loss) recognized	on derivatives for the
	(loss) recognized	three months ended				Hedged items in	in income on	three months ended
	in income on	March 31,				fair value hedge	related hedged	March 31,
	derivatives	2020		2019		relationships	items	2020		2019
Derivatives in fair value
hedging relationships
Commodity futures	Costs of goods sold	$	838	$	(1,453)	Firm commitments	Costs of goods sold	$	1,739	$	(1,499)
						Inventory	Costs of goods sold		(1,239)		721
Derivatives not designated								$	500	$	(778)
as hedging instruments
Commodity futures	Costs of goods sold	$	10,939	$	(4,077)

Derivatives accounted for as fair value hedges had ineffectiveness resulting in losses of $61,000 and $1.1 million during the three-month periods ended March 31, 2020, and 2019, respectively. Gains excluded from hedge effectiveness testing of $1.4 million decreased cost of goods sold during the three-month period ended March 31, 2020. Losses excluded from hedge effectiveness testing of $2.2 million increased cost of goods sold during the three-month period ended March 31, 2019.

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 5. Derivative Financial Instruments (Continued)

Derivatives accounted for as cash flow hedges resulted in net gains of $11,000 and $58,000 recognized in other comprehensive income for the three-month periods ended March 31, 2020, and 2019, respectively. Net losses of $37,000 and net gains of $283,000 were reclassified from accumulated other comprehensive income for the three-month periods ended March 31, 2020, and 2019, respectively. At March 31, 2020, the company expects to reclassify all $39,000 of net gains on derivative instruments from accumulated other comprehensive income to earnings during the next 12 months due to the settlement of futures contracts.

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.

The following table sets forth financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheet and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of March 31, 2020, and December 31, 2019 (in thousands):

			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
March 31, 2020
Short-term investments	$	219,193	$	-	$	219,193	$	-
Commodity futures – financial assets		5,394		-		5,394		-
Commodity futures – financial liabilities		5,039		-		5,039		-
December 31, 2019
Short-term investments	$	262,174	$	-	$	262,174	$	-
Commodity futures – financial assets		1,276		-		1,276		-
Commodity futures – financial liabilities		1,732		-		1,732		-

The carrying amounts of financial instruments including cash and equivalents approximate fair value (Level 1). The fair values of short-term investments and the 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 $2.6 billion and $2.8 billion at March 31, 2020 and December 31, 2019, respectively (with a corresponding carrying amount in the consolidated balance sheet of $2.7 billion at March 31, 2020 and $2.8 billion at December 31, 2019).

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 our financial condition, results of operations, or liquidity.

9

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 8. Segment Information

The company’s operations are primarily organized and managed by reportable operating segments, which are steel operations, metals recycling operations, and steel fabrication 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 smaller joint ventures, and the idle 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, 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 months ended	Steel		Recycling		Fabrication
March 31, 2020	Operations		Operations		Operations		Other		Eliminations		Consolidated
Net sales - disaggregated revenue
External	$	1,860,585	$	234,833	$	220,935	$	120,342	$	-	$	2,436,695
External Non-U.S.		81,121		57,024		-		260		-