st

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, 2023

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 31, 2023, Registrant had 165,644,387 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, 2023 (unaudited) and December 31, 2022	1
	Consolidated Statements of Income for the three and six-month periods ended June 30, 2023 and 2022 (unaudited)	2
	Consolidated Statements of Comprehensive Income for the three and six-month periods ended June 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Cash Flows for the three and six-month periods ended June 30, 2023 and 2022 (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	27
Item 6.	Exhibits	28
Exhibit Index		29
Signature		30

STEEL DYNAMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30,		December 31,
	2023		2022
Assets	(unaudited)
Current assets
Cash and equivalents	$	1,475,356	$	1,628,417
Short-term investments		611,701		628,215
Accounts receivable, net		2,079,949		1,976,282
Accounts receivable-related parties		63,015		79,769
Inventories		3,044,009		3,129,964
Other current assets		122,025		195,371
Total current assets		7,396,055		7,638,018
Property, plant and equipment, net		5,783,622		5,373,665
Intangible assets, net		274,005		267,507
Goodwill		477,471		502,067
Other assets		620,244		378,727
Total assets	$	14,551,397	$	14,159,984
Liabilities and Equity
Current liabilities
Accounts payable	$	1,039,149	$	1,007,304
Accounts payable-related parties		9,435		9,934
Income taxes payable		39,177		6,520
Accrued payroll and benefits		321,303		610,558
Accrued expenses		293,102		340,646
Current maturities of long-term debt		56,869		57,334
Total current liabilities		1,759,035		2,032,296
Long-term debt		3,010,829		3,013,241
Deferred income taxes		941,491		889,103
Other liabilities		175,073		129,539
Total liabilities		5,886,428		6,064,179
Commitments and contingencies
Redeemable noncontrolling interests		171,212		181,503
Equity
Common stock voting, $0.0025 par value; 900,000,000 shares authorized;
267,772,737 and 267,762,488 shares issued; and 166,383,336 and 172,936,163
shares outstanding, as of June 30, 2023 and December 31, 2022, respectively		650		650
Treasury stock, at cost; 101,389,401 and 94,826,325 shares,
as of June 30, 2023 and December 31, 2022, respectively		(5,179,722)		(4,459,513)
Additional paid-in capital		1,204,134		1,212,566
Retained earnings		12,681,894		11,375,765
Accumulated other comprehensive income		1,027		889
Total Steel Dynamics, Inc. equity		8,707,983		8,130,357
Noncontrolling interests		(214,226)		(216,055)
Total equity		8,493,757		7,914,302
Total liabilities and equity	$	14,551,397	$	14,159,984

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,
	2023		2022		2023		2022
Net sales
Unrelated parties	$	4,930,422	$	5,964,503	$	9,675,775	$	11,375,304
Related parties		151,208		248,375		299,061		407,476
Total net sales		5,081,630		6,212,878		9,974,836		11,782,780
Costs of goods sold		3,774,772		4,329,536		7,611,856		8,116,925
Gross profit		1,306,858		1,883,342		2,362,980		3,665,855
Selling, general and administrative expenses		141,209		118,377		285,518		270,392
Profit sharing		90,990		139,742		160,565		268,211
Amortization of intangible assets		10,924		7,160		17,802		14,322
Operating income		1,063,735		1,618,063		1,899,095		3,112,930
Interest expense, net of capitalized interest		20,767		25,667		43,274		42,336
Other (income) expense, net		(31,348)		(4,021)		(66,284)		16,447
Income before income taxes		1,074,316		1,596,417		1,922,105		3,054,147
Income tax expense		258,139		381,765		461,595		732,141
Net income		816,177		1,214,652		1,460,510		2,322,006
Net income attributable to noncontrolling interests		(4,070)		(5,098)		(11,093)		(8,521)
Net income attributable to Steel Dynamics, Inc.	$	812,107	$	1,209,554	$	1,449,417	$	2,313,485
Basic earnings per share attributable to Steel
Dynamics, Inc. stockholders	$	4.83	$	6.49	$	8.54	$	12.22
Weighted average common shares outstanding		168,009		186,442		169,803		189,300
Diluted earnings per share attributable to Steel
Dynamics, Inc. stockholders, including the effect
of assumed conversions when dilutive	$	4.81	$	6.44	$	8.49	$	12.14
Weighted average common shares and share equivalents outstanding		168,865		187,740		170,672		190,491
Dividends declared per share	$	0.425	$	0.34	$	0.85	$	0.68

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,
	2023		2022		2023		2022
Net income	$	816,177	$	1,214,652	$	1,460,510	$	2,322,006
Other comprehensive income - net unrealized gain (loss) on cash
flow hedging derivatives, net of income tax expense (benefit) of
($247) and ($4,465) for the three months ended, and $44 and ($908)
for the six months ended June 30, 2023 and 2022, respectively		(773)		(14,295)		138		(2,908)
Comprehensive income		815,404		1,200,357		1,460,648		2,319,098
Comprehensive income attributable to noncontrolling interests		(4,070)		(5,098)		(11,093)		(8,521)
Comprehensive income attributable to Steel Dynamics, Inc.	$	811,334	$	1,195,259	$	1,449,555	$	2,310,577

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,
	2023		2022		2023		2022
Operating activities:
Net income	$	816,177	$	1,214,652	$	1,460,510	$	2,322,006
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		110,970		95,701		218,664		183,247
Equity-based compensation		11,678		11,069		27,756		27,588
Deferred income taxes		43,380		(2,636)		52,388		(4)
Other adjustments		1,541		(640)		(8,465)		10,517
Changes in certain assets and liabilities:
Accounts receivable		(16,971)		(297,047)		(87,893)		(744,281)
Inventories		(55,158)		(130,552)		85,954		(116,237)
Other assets		(4,923)		(12,887)		2,919		6,515
Accounts payable		(114,013)		187,521		3,299		111,550
Income taxes receivable/payable		(85,486)		(203,352)		103,761		138,553
Accrued expenses		100,611		140,023		(317,304)		(118,634)
Net cash provided by operating activities		807,806		1,001,852		1,541,589		1,820,820
Investing activities:
Purchases of property, plant and equipment		(358,280)		(164,142)		(584,599)		(323,472)
Purchases of short-term investments		(165,052)		(351,510)		(521,829)		(351,510)
Proceeds from maturities of short-term investments		267,969		-		539,076		-
Investments in unconsolidated affiliates		-		-		-		(222,480)
Other investing activities		(217,905)		4,817		(215,562)		5,227
Net cash used in investing activities		(473,268)		(510,835)		(782,914)		(892,235)
Financing activities:
Issuance of current and long-term debt		327,132		382,868		721,042		702,647
Repayment of current and long-term debt		(321,143)		(414,719)		(726,422)		(763,991)
Dividends paid		(72,323)		(64,344)		(131,121)		(115,043)
Purchases of treasury stock		(380,206)		(517,024)		(734,203)		(906,214)
Other financing activities		(17,579)		(60,241)		(41,028)		(82,768)
Net cash used in financing activities		(464,119)		(673,460)		(911,732)		(1,165,369)
Decrease in cash, cash equivalents, and restricted cash		(129,581)		(182,443)		(153,057)		(236,784)
Cash, cash equivalents, and restricted cash at beginning of period		1,610,443		1,195,028		1,633,919		1,249,369
Cash, cash equivalents, and restricted cash at end of period	$	1,480,862	$	1,012,585	$	1,480,862	$	1,012,585
Supplemental disclosure information:
Cash paid for interest	$	41,781	$	41,114	$	51,377	$	50,282
Cash paid for income taxes, net	$	308,055	$	580,454	$	312,758	$	590,402

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, combined with a meaningful steel fabrication manufacturing platform. 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, Steel of West Virginia, steel coating and processing operations at The Techs, Heartland Flat Roll Division, United Steel Supply (USS) – 90% equity interest as of April 1, 2023, Vulcan Threaded Products, Inc., and SDI Biocarbon Solutions, LLC, a joint venture to construct and operate a biocarbon production facility. Steel operations accounted for 67% of the company’s consolidated net sales during the three-month periods ended June 30, 2023 and 2022 and the six-month period ended June 30, 2022 and 65% during the six-month period ended June 30, 2023.

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 12% of the company’s consolidated net sales during the three and six-month periods ended June 30, 2023 and 10% during the three and six-month periods ended June 30, 2022.

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 15% and 16% of the company’s consolidated net sales during the three and six-month periods ended June 30, 2023, respectively, and 17% during the three and six-month periods ended June 30, 2022.

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, including the company’s newly announced aluminum flat roll mill 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.

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 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 90% by SDI at April 1, 2023 and 87.5% at December 31, 2022) are $60.0 million at June 30, 2023, and $70.3 million at December 31, 2022. On April 1, 2023, a noncontrolling member of USS exercised its option to require SDI to purchase its 2.5% equity interest, increasing SDI’s ownership to 90%. The remaining noncontrolling members’ option to require SDI to purchase the remaining 10% equity interest of USS has been extended to on or after February 28, 2025. Redeemable noncontrolling interests related to Mesabi Nugget (owned 85.5% by SDI) are $111.2 million at June 30, 2023, and December 31, 2022.

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, 2022.

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 for all periods presented, which are recorded in Other Assets (noncurrent) in the company’s consolidated balance sheets.

Senior Credit Facility

On July 19, 2023, the company entered into a new unsecured credit agreement comprised of a senior unsecured credit facility (Facility), which provides a $1.2 billion Revolver, maturing July 19, 2028. The new Credit Agreement replaces the December 3, 2019 Credit Agreement. Subject to certain conditions, the company has the ability to increase the Revolver size by $500.0 million. The Facility is available to fund working capital, capital expenditures, and other general corporate purposes. The Facility contains financial covenants and other covenants pertaining to the company’s ability to incur indebtedness and permit liens on certain assets. The company’s ability to borrow funds within the terms of the unsecured Revolver is dependent upon its continued compliance with financial and other covenants.

The Facility pricing grid is adjusted quarterly and is based on either the company’s leverage of net debt (as defined in the Facility) to last-twelve-months (LTM) consolidated Adjusted EBITDA as defined in the Facility (earnings before interest, taxes, depreciation, amortization, and certain other non-cash items, as defined in the Facility), or the company’s credit ratings. The minimum pricing is adjusted Secured Overnight Financing Rate (SOFR) plus 1.000% and the maximum pricing is adjusted SOFR plus 1.75%. In addition, the company is subject to an unused commitment fee of between 0.11% and 0.275% (based on either the company’s leverage of net debt to LTM consolidated adjusted EBITDA, or the company’s credit ratings) which is applied to the unused portion of the Revolver.

6

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Other Obligations

One of the company’s consolidated joint venture subsidiaries amended and restated its secured credit agreement and extended the maturity to June 2028, comprised of a $125.0 million revolving credit facility, which is subject to a borrowing base determined from eligible accounts receivable and inventory.

Goodwill

The company’s goodwill consisted of the following at June 30, 2023, and December 31, 2022 (in thousands):

	June 30,		December 31,
	2023		2022
Steel Operations Segment	$	272,133	$	272,133
Metals Recycling Operations Segment		203,413		228,009
Steel Fabrication Operations Segment		1,925		1,925
	$	477,471	$	502,067

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, 2023, the company reported $2,143 million of accounts receivable, net of allowances for credit losses of $7.9 million. Changes in the allowance were not material for each of the three and six-month periods ended June 30, 2023 and 2022.

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 and six-month periods ended June 30, 2023 and 2022.

7

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 2. Earnings Per Share (Continued)

	Three-Month Periods Ended June 30,
	2023						2022
			Weighted						Weighted
			Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	812,107		168,009	$	4.83	$	1,209,554		186,442	$	6.49
Dilutive common share equivalents		-		856				-		1,298
Diluted earnings per share	$	812,107		168,865	$	4.81	$	1,209,554		187,740	$	6.44

N
	Six-Month Periods Ended June 30,
	2023						2022
			Weighted						Weighted
			Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	1,449,417		169,803	$	8.54	$	2,313,485		189,300	$	12.22
Dilutive common share equivalents		-		869				-		1,191
Diluted earnings per share	$	1,449,417		170,672	$	8.49	$	2,313,485		190,491	$	12.14

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

	June 30,		December 31,
	2023		2022
Raw materials	$	1,416,669	$	1,608,344
Supplies		678,823		629,074
Work in progress		305,691		256,071
Finished goods		642,826		636,475
Total inventories	$	3,044,009	$	3,129,964

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 of the three and six-month periods ended June 30, 2023 and 2022:

8

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 4. 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		Interests		Equity		Interests
Balances at December 31, 2022	$	650	$	(4,459,513)	$	1,212,566	$	11,375,765	$	889	$	(216,055)	$	7,914,302	$	181,503
Dividends declared		-		-		-		(72,316)		-		-		(72,316)		-
Noncontrolling investors, net		-		-		-		-		-		(7,387)		(7,387)		4,702
Share repurchases		-		(353,997)		-		-		-		-		(353,997)		-
Equity-based compensation		-		12,997		(18,487)		(138)		-		-		(5,628)		-
Net income		-		-		-		637,310		-		7,023		644,333		-
Other comprehensive income, net of tax		-		-		-		-		911		-		911		-
Balances at March 31, 2023		650		(4,800,513)		1,194,079		11,940,621		1,800		(216,419)		8,120,218		186,205
Dividends declared		-		-		-		(70,694)		-		-		(70,694)		-
Noncontrolling investors, net		-		-		-		-		-		(1,877)		(1,877)		(14,993)
Share repurchases		-		(380,206)		-		-		-		-		(380,206)		-
Equity-based compensation		-