Steel Dynamics · Earnings release

Press Release

Steel

Dynamics Reports Third Quarter 2024 Results

FORT WAYNE, INDIANA, October 16, 2024 / PRNewswire /

Third Quarter 2024 Performance Highlights:

§

Steel shipments of 3.2 million tons

§

Net sales of $4.3 billion, operating income of $395 million, net income of $318 million, and adjusted EBITDA of $557 million

§

Cash flow from operations of $760 million

§

Strong liquidity of $3.1 billion, as of September 30, 2024

§

Share repurchases of $310 million of the company’s common stock, representing 1.6 percent of its outstanding shares

Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced third

quarter 2024 financial results. The company reported third quarter 2024 net sales of $4.3 billion and net income of $318 million, or

$2.05 per diluted share. Comparatively, the company’s sequential second quarter 2024 net income was $428 million, or $2.72 per

diluted share and prior year third quarter net income was $577 million, or $3.47 per diluted share.

“The teams achieved a solid third quarter 2024 performance across

the platforms, with adjusted EBITDA of $557 million and cash flow from operations of $760 million,” said Mark D. Millett, Co-Founder,

Chairman, and Chief Executive Officer. “With our proven through-cycle cash generation, we increased liquidity to $3.1 billion,

while also investing $621 million in our internal ongoing growth initiatives and distributing $381 million to our shareholders through

cash dividends and share repurchases. Our three-year after-tax return-on-invested capital of 26 percent is a testament to our ongoing

high-return capital allocation execution.

“Underlying

steel demand continued to be stable in the third quarter,” continued Millett. “However, earnings declined sequentially, based

on lower average realized steel pricing, primarily within the flat rolled operations as generally 80 percent of this business is contractually

based and tied to lagging pricing indices. Steady steel demand, coupled with continued low customer inventory and stabilized scrap prices,

resulted in stabilization and improvement in flat rolled steel prices during the later part of the third quarter. Our long product steel

operations realized a slight improvement in metal spread as scrap pricing declined more than average realized pricing.”

Third Quarter 2024 Comments

Third quarter 2024 operating income for the company’s steel

operations was $305 million, lower than sequential results, as realized selling values declined more than scrap costs in the quarter.

The third quarter 2024 average external product selling price for the company’s steel operations decreased $79 per ton sequentially

to $1,059 per ton. The average ferrous scrap cost per ton melted at the company’s steel mills decreased $21 sequentially to $367

per ton. The company’s Sinton Texas Flat Roll Steel Mill team has completed the planned changes discussed on the second quarter

2024 earnings call. The team had great operating momentum in September and operated at 72 percent of its capability, excluding scheduled

downtime.

Compared to the sequential quarter, third quarter 2024 operating income

from the company’s metals recycling operations decreased to $12 million, based on softer demand as many domestic steel mills had

scheduled maintenance outages. Shipments and pricing declined for both ferrous and nonferrous materials in the quarter. Additionally,

the platform experienced an unexpected unrealized, non-cash copper hedging loss of $10 million, as copper prices sequentially increased

significantly from August to September.

The company’s steel fabrication operations achieved strong operating

income of $166 million in the third quarter 2024, modestly lower than sequential second quarter results, as demand remained steady, and

average realized pricing softened five percent yet remained historically strong. The order backlog was steady, extending into the first

quarter 2025 at attractive pricing levels. Current order activity is steady with expectations for improved volumes in 2025, as interest

rates decline and the support from the U.S. infrastructure program and onshoring are expected to positively impact demand for not only

steel joist and deck products, but also for flat rolled and long product steels.

Year-to-Date September 30, 2024 Comparison

For the nine months ended September 30, 2024, net income was

$1.3 billion, or $8.46 per diluted share, with net sales of $13.7 billion, as compared to net income of $2.0 billion, or $11.98 per diluted

share, with net sales of $14.6 billion for the same period in 2023.

For the first nine months 2024, net sales decreased six percent to

$13.7 billion and operating income declined 35 percent to $1.7 billion, when compared to the same period in 2023. Decreased earnings

were the result of lower volume and pricing from the company’s steel and steel fabrication operations during the period. For the

first nine months 2024, operating income from the company’s steel fabrication operations was $525 million, compared to $1.3 billion

in the same prior year period. Operating income from the company’s steel operations was $1.4 billion, compared to $1.5 billion

for the same prior year period. The average nine-month 2024 external selling price for the company's steel operations decreased $38 per

ton to $1,133 per ton compared to the first nine months of 2023, and the average ferrous scrap cost per ton melted at the company’s

steel mills decreased $30 per ton to $391 per ton.

Based on the company’s differentiated business model and highly

variable cost structure, the company achieved cash flow from operations of $1.5 billion in the first nine months of 2024, representing

a strong performance. The company also invested $1.4 billion in capital investments, paid cash dividends of $212 million, and repurchased

$917 million of its outstanding common stock, representing 4.5 percent of its outstanding shares, while maintaining strong liquidity

of $3.1 billion.

Outlook

“Based on domestic steel demand fundamentals, we are constructive

regarding the outlook for 2025 metal market dynamics,” said Millett. “We expect steel pricing to recover with an anticipated

lower domestic interest rate environment, coupled with continuing onshoring of manufacturing businesses, and the expectation of significant

fixed asset investment to be derived from public funding related to the U.S. Infrastructure, Inflation Reduction Act, and Department

of Energy programs. We believe current trade actions could also reduce volumes of unfairly traded steel imports into the United States,

especially for coated flat rolled steel, which could have a significant positive impact for us, as we are the largest non-automotive

flat rolled steel coater in the United States. We believe these dynamics collectively could benefit all of our operating platforms, especially

our steel and steel fabrication businesses.

“Our four new value-added flat rolled steel coating lines that

began operating earlier this year continue to increase production. The teams have produced prime quality galvanized and painted products

on all four lines in record time. We have had limited benefit from these new lines so far this year, as we have been increasing production,

and expect to realize the additional earnings potential in 2025. Value-added product investments such as these enhance our differentiated

supply-chain capabilities, while also increasing our higher-margin product offerings, which already represent upwards of 65 percent of

our steel revenues.

“We are also quickly progressing on our aluminum flat rolled

products mill construction and are incredibly excited about this meaningful growth opportunity, which is aligned with our existing business

and operational expertise,” said Millett. “We plan to begin operating the aluminum flat rolled mill mid-2025. We have intentionally

grown with our customers’ needs, providing efficient sustainable supply chain solutions for the highest quality products. We are

pleased to further diversify our end markets with plans to supply aluminum flat rolled products with high recycled content to the countercyclical

sustainable beverage can and packaging industry, in addition to the automotive, industrial, and construction sectors. Our customers and

our people are incredibly excited for this growth opportunity.

“Our commitment is to the health and safety of our teams, families,

and communities, while meeting the current and future needs of our customers. Our culture and business model continue to positively differentiate

our performance from the rest of the industry. We are competitively positioned and focused to generate long-term sustainable value,”

concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss third

quarter 2024 operating and financial results on Thursday, October 17, 2024, at 11:00 a.m. Eastern Daylight Time. You may access

the call and find dial-in information on the Investors section of the company’s website at www.steeldynamics.com. A replay

of the call will be available on our website until 11:59 p.m. Eastern Daylight Time on October 24, 2024.

About Steel Dynamics, Inc.

Steel Dynamics is one of the largest domestic steel producers and

metals recyclers in North America, based on estimated annual steelmaking and metals recycling capability, with facilities located throughout

the United States, and in Mexico. Steel Dynamics produces steel products, including hot roll, cold roll, and coated sheet steel, structural

steel beams and shapes, rail, engineered special-bar-quality steel, cold finished steel, merchant bar products, specialty steel sections,

and steel joists and deck. In addition, the company produces liquid pig iron and processes and sells ferrous and nonferrous scrap.

Note Regarding Financial Metrics

The company believes that after-tax return-on-invested capital (After-tax

ROIC) provides an indication of the effectiveness of the company’s invested capital and is calculated as follows:

After-tax

ROIC =

Net Income Attributable to Steel Dynamics, Inc.

(Quarterly Average Current Maturities of Long-term Debt + Long-term Debt + Total Equity)

Note Regarding Non-GAAP Financial Measures

The company reports its financial results in accordance with U.S.

generally accepted accounting principles (GAAP). Management believes that the non-GAAP financial measures EBITDA and Adjusted EBITDA

provide additional meaningful information regarding the company’s performance and financial strength. Non-GAAP financial measures

should be viewed in addition to and not as an alternative for the company’s reported results prepared in accordance with GAAP.

In addition, not all companies use identical calculations for EBITDA or Adjusted EBITDA; therefore, EBITDA and Adjusted EBITDA included

in this release may not be comparable to similarly titled measures of other companies.

Forward-Looking Statements

This press release 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, in our Quarterly

Reports on Form 10-Q, or in other reports which we 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.”

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

Three Months

Ended

Net sales

$

$

$

$

$

Costs of goods sold

Gross profit

Selling, general and administrative expenses

Profit sharing

Amortization of intangible assets

Operating income

Interest expense, net of capitalized interest

Other (income) expense, net

)

)

)

)

)

Income before income taxes

Income tax expense

Net income

Net income attributable to noncontrolling interests

)

)

)

)

)

Net income attributable to Steel Dynamics, Inc.

$

$

$

$

$

Basic earnings per share attributable to Steel Dynamics, Inc. stockholders

$

$

$

$

$

Weighted average common shares outstanding

Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive

$

$

$

$

$

Weighted average common shares and share equivalents outstanding

Dividends declared per share

$

$

$

$

$

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

Assets

Current assets

Cash and equivalents

$

$

Short-term investments

Accounts receivable, net

Inventories

Other current assets

Total current assets

Property, plant and equipment, net

Intangible assets, net

Goodwill

Other assets

Total assets

$

$

Liabilities and Equity

Current liabilities

Accounts payable

$

$

Income taxes payable

Accrued expenses

Current maturities of long-term debt

Total current liabilities

Long-term debt

Deferred income taxes

Other liabilities

Total liabilities

Commitments and contingencies

Redeemable noncontrolling interests

Equity

Common stock

Treasury stock, at cost

)

)

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

)

Total Steel Dynamics, Inc. equity

Noncontrolling interests

)

)

Total equity

Total liabilities and equity

$

$

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in

thousands)

Three Months Ended

Nine Months Ended

Operating activities:

Net income

$

$

$

$

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

Equity-based compensation

Deferred income taxes

)

Other adjustments

)

)

)

Changes in certain assets and liabilities:

Accounts receivable

Inventories

)

Other assets

)

)

)

)

Accounts payable

)

)

)

)

Income taxes receivable/payable

)

)

Accrued expenses

)

)

Net cash provided by operating activities

Investing activities:

Purchases of property, plant and equipment

)

)

)

)

Purchases of short-term investments

)

)

)

)

Proceeds from maturities of short-term investments

Other investing activities

)

)

)

)

Net cash used in investing activities

)

)

)

)

Financing activities:

Issuance of current and long-term debt

Repayment of current and long-term debt

)

)

)

)

Dividends paid

)

)

)

)

Purchase of treasury stock

)

)

)

)

Other financing activities

)

)

Net cash provided by (used in) financing activities

)

)

)

Increase (decrease) in cash, cash equivalents, and restricted cash

)

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

$

$

$

$

Supplemental disclosure information:

Cash paid for interest

$

$

$

$

Cash paid for income taxes, net

$

$

$

$

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION (UNAUDITED)

(dollars

in thousands)

Third Quarter

Year to Date

External Net Sales

Steel

$

$

$

$

$

$

Steel Fabrication

Metals Recycling

Other

Consolidated Net Sales

$

$

$

$

$

$

Operating Income (Loss)

Steel

$

$

$

$

$

$

Steel Fabrication

Metals Recycling

Aluminum

)

)

)

)

)

)

Non-cash amortization of intangible assets

)

)

)

)

)

)

Profit sharing expense

)

)

)

)

)

)

Non-segment operations

)

)

)

)

)

)

Consolidated Operating Income

$

$

$

$

$

$

Adjusted EBITDA

Net income

$

$

$

$

$

$

Income taxes

Net interest expense (income)

)

)

)

)

)

)

Depreciation

Amortization of intangible assets

EBITDA

Non-cash adjustments

Unrealized (gains) losses on derivatives and currency remeasurement

)

)

Equity-based compensation

Adjusted EBITDA

$

$

$

$

Other Operating Information

Steel

Average external sales price (Per ton)

$

$

$

$

$

$

Average ferrous cost (Per ton melted)

$

$

$

$

$

$

Flat Roll shipments

Butler, Columbus, and Sinton

Steel Processing divisions *

Long Product shipments

Structural and Rail Division

Engineered Bar Products Division

Roanoke Bar Division

Steel of West Virginia

Total Shipments (Tons)

External Shipments (Tons)

Steel Mill Production (Tons)

Metals Recycling

Nonferrous shipments (000's of pounds)

Ferrous shipments (Gross tons)

External ferrous shipments (Gross tons)

Steel Fabrication

Average sales price (Per ton)

$

$

$

$

$

$

Shipments (Tons)

Effective the fourth quarter 2023, we added a new reporting segment, Aluminum Operations. All prior periods presented have been recast to reflect those changes.

* Includes Heartland, The Techs and United Steel Supply operations