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 quarterly period

      ended June 30, 2022

OR

☐       Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______

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
​

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 July 22, 2022, Registrant had 182,610,729 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 June 30, 2022 (unaudited) and December 31, 2021	1
	Consolidated Statements of Income for the three and six-month periods ended June 30, 2022 and 2021 (unaudited)	2
	Consolidated Statements of Comprehensive Income for the three and six-month periods ended June 30, 2022 and 2021 (unaudited)	3
	Consolidated Statements of Cash Flows for the three and six-month periods ended June 30, 2022 and 2021 (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	25
	PART II. Other Information
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
Exhibit Index		27
Signature		28

STEEL DYNAMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30,		December 31,
	2022		2021
Assets	(unaudited)
Current assets
Cash and equivalents	$	1,007,085	$	1,243,868
Short-term investments		351,005		-
Accounts receivable, net		2,573,539		1,911,385
Accounts receivable-related parties		87,176		5,049
Inventories		3,647,061		3,531,130
Other current assets		90,144		209,591
Total current assets		7,756,010		6,901,023
Property, plant and equipment, net		4,886,555		4,751,430
Intangible assets, net		281,022		295,345
Goodwill		452,341		453,835
Other assets		335,286		129,601
Total assets	$	13,711,214	$	12,531,234
Liabilities and Equity
Current liabilities
Accounts payable	$	1,365,608	$	1,266,833
Accounts payable-related parties		15,206		13,722
Income taxes payable		36,976		13,746
Accrued payroll and benefits		428,758		539,812
Accrued interest		17,531		17,533
Accrued expenses		300,663		278,549
Current maturities of long-term debt		37,130		97,174
Total current liabilities		2,201,872		2,227,369
Long-term debt		3,011,116		3,008,702
Deferred income taxes		853,407		854,905
Other liabilities		95,929		120,087
Total liabilities		6,162,324		6,211,063
Commitments and contingencies
Redeemable noncontrolling interests		168,303		211,414
Equity
Common stock voting, $0.0025 par value; 900,000,000 shares authorized;
267,224,622 and 267,224,622 shares issued; and 182,610,729 and 194,997,922
shares outstanding, as of June 30, 2022 and December 31, 2021, respectively		649		649
Treasury stock, at cost; 84,613,893 and 72,226,700 shares,
as of June 30, 2022 and December 31, 2021, respectively		(3,566,493)		(2,674,267)
Additional paid-in capital		1,213,481		1,218,933
Retained earnings		9,945,710		7,761,417
Accumulated other comprehensive income (loss)		(4,999)		(2,091)
Total Steel Dynamics, Inc. equity		7,588,348		6,304,641
Noncontrolling interests		(207,761)		(195,884)
Total equity		7,380,587		6,108,757
Total liabilities and equity	$	13,711,214	$	12,531,234

See notes to consolidated financial statements.

1

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

	Three-Month Periods Ended				Six-Month Periods Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net sales
Unrelated parties	$	5,964,503	$	4,453,556	$	11,375,304	$	7,991,181
Related parties		248,375		11,752		407,476		18,724
Total net sales		6,212,878		4,465,308		11,782,780		8,009,905
Costs of goods sold		4,329,536		3,265,616		8,116,925		6,009,947
Gross profit		1,883,342		1,199,692		3,665,855		1,999,958
Selling, general and administrative expenses		118,377		154,379		270,392		304,160
Profit sharing		139,742		82,140		268,211		130,988
Amortization of intangible assets		7,160		7,438		14,322		14,876
Operating income		1,618,063		955,735		3,112,930		1,549,934
Interest expense, net of capitalized interest		25,667		14,898		42,336		32,167
Other (income) expense, net		(4,021)		10,039		16,447		20,110
Income before income taxes		1,596,417		930,798		3,054,147		1,497,657
Income tax expense		381,765		218,595		732,141		346,699
Net income		1,214,652		712,203		2,322,006		1,150,958
Net income attributable to noncontrolling interests		(5,098)		(9,912)		(8,521)		(18,160)
Net income attributable to Steel Dynamics, Inc.	$	1,209,554	$	702,291	$	2,313,485	$	1,132,798
Basic earnings per share attributable to Steel
Dynamics, Inc. stockholders	$	6.49	$	3.35	$	12.22	$	5.39
Weighted average common shares outstanding		186,442		209,647		189,300		210,331
Diluted earnings per share attributable to Steel
Dynamics, Inc. stockholders, including the effect
of assumed conversions when dilutive	$	6.44	$	3.32	$	12.14	$	5.35
Weighted average common shares and share equivalents outstanding		187,740		211,246		190,491		211,750
Dividends declared per share	$	0.34	$	0.26	$	0.68	$	0.52

See notes to consolidated financial statements.

2

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three-Month Periods Ended				Six-Month Periods Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	1,214,652	$	712,203	$	2,322,006	$	1,150,958
Other comprehensive income - net unrealized gain (loss) on cash
flow hedging derivatives, net of income tax of ($4,465), $8,332,
($908), and $9,508 for the three and six-month periods ended
June 30, 2022 and 2021, respectively		(14,295)		26,677		(2,908)		30,442
Comprehensive income		1,200,357		738,880		2,319,098		1,181,400
Comprehensive income attributable to noncontrolling interests		(5,098)		(9,912)		(8,521)		(18,160)
Comprehensive income attributable to Steel Dynamics, Inc.	$	1,195,259	$	728,968	$	2,310,577	$	1,163,240

See notes to consolidated financial statements.

3

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three-Month Periods Ended				Six-Month Periods Ended
	June 30,				June 30,
	2022		2021		2022		2021
Operating activities:
Net income	$	1,214,652	$	712,203	$	2,322,006	$	1,150,958
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		95,701		87,047		183,247		173,966
Equity-based compensation		11,069		9,808		27,588		26,848
Deferred income taxes		(2,636)		50,722		(4)		117,466
Other adjustments		(640)		(1,472)		10,517		(2,134)
Changes in certain assets and liabilities:
Accounts receivable		(297,047)		(204,561)		(744,281)		(599,106)
Inventories		(130,552)		(264,935)		(116,237)		(639,523)
Other assets		(12,887)		(4,285)		6,515		1,543
Accounts payable		187,521		63,155		111,550		423,836
Income taxes receivable/payable		(203,352)		27,551		138,553		87,144
Accrued expenses		140,023		111,997		(118,634)		108,423
Net cash provided by operating activities		1,001,852		587,230		1,820,820		849,421
Investing activities:
Purchases of property, plant and equipment		(164,142)		(277,206)		(323,472)		(587,069)
Purchases of short-term investments		(351,510)		-		(351,510)		-
Investments in unconsolidated affiliates		-		-		(222,480)		-
Other investing activities		4,817		1,859		5,227		2,249
Net cash used in investing activities		(510,835)		(275,347)		(892,235)		(584,820)
Financing activities:
Issuance of current and long-term debt		382,868		419,464		702,647		716,905
Repayment of current and long-term debt		(414,719)		(408,565)		(763,991)		(712,849)
Dividends paid		(64,344)		(54,916)		(115,043)		(107,645)
Purchases of treasury stock		(517,024)		(393,198)		(906,214)		(393,198)
Other financing activities		(60,241)		(6,094)		(82,768)		(22,692)
Net cash used in financing activities		(673,460)		(443,309)		(1,165,369)		(519,479)
Decrease in cash, cash equivalents, and restricted cash		(182,443)		(131,426)		(236,784)		(254,878)
Cash, cash equivalents, and restricted cash at beginning of period		1,195,028		1,250,670		1,249,369		1,374,122
Cash, cash equivalents, and restricted cash at end of period	$	1,012,585	$	1,119,244	$	1,012,585	$	1,119,244
Supplemental disclosure information:
Cash paid for interest	$	41,114	$	41,727	$	50,282	$	53,042
Cash paid for income taxes, net	$	580,454	$	146,002	$	590,402	$	148,144

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 one of the largest and most diversified domestic steel producers and metals recycler. The company has three reporting segments: steel operations, metals recycling operations, and steel fabrication operations.

Steel Operations Segment. Steel operations include the company’s 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, and Steel of West Virginia; and steel coating and processing operations at The Techs, Heartland Flat Roll Division, United Steel Supply (USS), and Vulcan Threaded Products, Inc (Vulcan). Steel operations accounted for 67% and 72% of the company’s consolidated net sales during each of the three and six-month periods ended June 30, 2022 and 2021, respectively.

Metals Recycling Operations Segment. Metals recycling operations include the company’s OmniSource ferrous and nonferrous processing, transportation, marketing, brokerage, and scrap management services primarily throughout the United States and in Central and Northern Mexico. Metals recycling operations accounted for 10% and 13% of the company’s consolidated net sales during each of the three and six-month periods ended June 30, 2022 and 2021, 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 17% and 7% of the company’s consolidated net sales during each of the three and six-month periods ended June 30, 2022, and 2021, respectively.

Other. Other operations consist of subsidiary operations that are below the company’s quantitative thresholds required for reportable segments and primarily consist of joint ventures, and our 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 the company’s profit sharing component.

Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of SDI, together with its wholly- and majority-owned or controlled consolidated subsidiaries, after elimination of intercompany accounts and transactions. Noncontrolling and redeemable noncontrolling interests represent the noncontrolling owners’ proportionate share in the equity, income, or losses of the company’s majority-owned or controlled consolidated subsidiaries. Redeemable noncontrolling interests related to USS (owned 87.5% by SDI) are $57.1 million at June 30, 2022 and $100.2 million at December 31, 2021. Noncontrolling members of USS exercised their put option to require the company to purchase an additional 12.5% of the equity interest of USS effective April 1, 2022. Redeemable noncontrolling interests related to Mesabi Nugget (owned 85% by SDI) are $111.2 million at June 30, 2022, and December 31, 2021.

5

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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. Significant items subject to such estimates and assumptions include the carrying value of property, plant and equipment, intangible assets, and goodwill; valuation allowances 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, 2021.

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 $5.5 million at June 30, 2022, March 31, 2022, December 31, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, which are recorded in Other Assets (noncurrent) in the company’s consolidated balance sheets.

Goodwill

The company’s goodwill consisted of the following at June 30, 2022, and December 31, 2021 (in thousands):

	June 30,		December 31,
	2022		2021
Steel Operations Segment	$	272,133	$	272,133
Metals Recycling Operations Segment		178,283		179,777
Steel Fabrication Operations Segment		1,925		1,925
	$	452,341	$	453,835

Metals Recycling Operations Segment goodwill decreased $1.5 million from December 31, 2021 to June 30, 2022, in recognition of the 2022 tax benefit related to the normal amortization of the component of Metals Recycling Operations tax-deductible goodwill in excess of book goodwill.

6

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 June 30, 2022, the company reported $2.7 billion of accounts receivable, net of allowances for credit losses of $6.3 million. Changes in the allowance were not material for each of the three and six-month periods ended June 30, 2022 and 2021.

Note 2. Investments in Unconsolidated Affiliates

On January 31, 2022, the company purchased a 45% minority equity interest in New Process Steel, L.P. (NPS), a metals solutions and distribution supply-chain management company headquartered in Houston, Texas, with a focus toward growing its value-added manufacturing applications. On February 28, 2022, the company also purchased a minority equity interest in Aymium, a producer of renewable biocarbon products. As the company does not have power to control these entities, the company accounts for these investments using the equity method of accounting, which are recorded in Other Assets (noncurrent) in the company’s consolidated balance sheets.

Note 3. 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 and six-month periods ended June 30, 2022 and 2021.

	Three-Month Periods Ended June 30,
	2022						2021
			Weighted						Weighted
			Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	1,209,554		186,442	$	6.49	$	702,291		209,647	$	3.35
Dilutive common share equivalents		-		1,298				-		1,599
Diluted earnings per share	$	1,209,554		187,740	$	6.44	$	702,291		211,246	$	3.32

7

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 3. Earnings Per Share (Continued)

	Six-Month Periods Ended June 30,
	2022						2021
			Weighted						Weighted
			Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	2,313,485		189,300	$	12.22	$	1,132,798		210,331	$	5.39
Dilutive common share equivalents		-		1,191				-		1,419
Diluted earnings per share	$	2,313,485		190,491	$	12.14	$	1,132,798		211,750	$	5.35

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 and supplies, and on a first-in, first-out basis for other inventory. Inventory consisted of the following (in thousands):

	June 30,		December 31,
	2022		2021
Raw materials	$	1,948,639	$	1,870,300
Supplies		585,805		552,616
Work in progress		388,830		402,207
Finished goods		723,787		706,007
Total inventories	$	3,647,061	$	3,531,130

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 (in thousands) for each of the three and six-month periods ended June 30, 2022 and 2021:

8

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, 2021	$	649	$	(2,674,267)	$	1,218,933	$	7,761,417	$	(2,091)	$	(195,884)	$	6,108,757	$	211,414
Dividends declared		-		-		-		(64,344)		-		-		(64,344)		-
Noncontrolling investors, net		-		-		-		-		-		(21,633)		(21,633)		16,500
Share repurchases		-		(389,190)		-		-		-		-		(389,190)		-
Equity-based compensation		-		12,960		(14,910)		(121)		-		-		(2,071)		-
Net income		-		-		-		1,103,931		-		3,423		1,107,354		-
Other comprehensive income, net of tax		-		-		-		-		11,387		-		11,387		-
Balances at March 31, 2022		649		(3,050,497)		1,204,023		8,800,883		9,296		(214,094)		6,750,260		227,914
Dividends declared		-		-		-		(62,088)		-		-		(62,088)		-
Noncontrolling investors, net		-		-		630		(2,495)		-		1,235		(630)		(59,611)
Share repurchases		-		(517,024)		-		-		-		-		(517,024)		-
Equity-based compensation		-		1,028		8,828		(144)		-		-		9,712		-
Net income		-		-		-