10-Q 1 stld-20240331x10q.htm 10-Q
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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 March 31, 2024

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 May 8, 2024, Registrant had 157,133,196 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, 2024 (unaudited) and December 31, 2023

1

Consolidated Statements of Income for the three-month periods ended March 31, 2024 and 2023 (unaudited)

2

Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2024 and 2023 (unaudited)

3

Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2024 and 2023 (unaudited)

4

Notes to Consolidated Financial Statements (unaudited)

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

22

Item 4.

Controls and Procedures

22

PART II. Other Information

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3.

Defaults Upon Senior Securities

23

Item 4.

Mine Safety Disclosures

23

Item 5.

Other Information

24

Item 6.

Exhibits

25

Exhibit Index

26

Signature

27

STEEL DYNAMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

March 31,

December 31,

2024

2023

Assets

(unaudited)

Current assets

Cash and equivalents

$

1,039,421

$

1,400,887

Short-term investments

653,255

721,210

Accounts receivable, net

1,665,424

1,535,062

Accounts receivable-related parties

73,636

73,245

Inventories

3,027,143

2,894,632

Other current assets

138,557

162,790

Total current assets

6,597,436

6,787,826

Property, plant and equipment, net

7,063,990

6,734,218

Intangible assets, net

250,095

257,759

Goodwill

477,471

477,471

Other assets

637,758

651,146

Total assets

$

15,026,750

$

14,908,420

Liabilities and Equity

Current liabilities

Accounts payable

$

1,174,060

$

1,078,645

Accounts payable-related parties

9,533

9,685

Income taxes payable

150,103

5,524

Accrued payroll and benefits

209,782

469,143

Accrued expenses

329,490

309,312

Current maturities of long-term debt

425,696

459,987

Total current liabilities

2,298,664

2,332,296

Long-term debt

2,612,246

2,611,069

Deferred income taxes

923,745

944,768

Other liabilities

144,336

180,760

Total liabilities

5,978,991

6,068,893

Commitments and contingencies

Redeemable noncontrolling interests

171,212

171,212

Equity

Common stock voting, $0.0025 par value; 900,000,000 shares authorized;

268,142,204 and 268,112,991 shares issued; and 157,878,760 and 160,018,100

shares outstanding, as of March 31, 2024 and December 31, 2023, respectively

651

651

Treasury stock, at cost; 110,263,444 and 108,094,891 shares,

as of March 31, 2024 and December 31, 2023, respectively

(6,182,274)

(5,897,606)

Additional paid-in capital

1,197,176

1,217,610

Retained earnings

14,056,868

13,545,590

Accumulated other comprehensive income (loss)

(13)

421

Total Steel Dynamics, Inc. equity

9,072,408

8,866,666

Noncontrolling interests

(195,861)

(198,351)

Total equity

8,876,547

8,668,315

Total liabilities and equity

$

15,026,750

$

14,908,420

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

March 31,

2024

2023

Net sales

Unrelated parties

$

4,496,819

$

4,745,353

Related parties

197,184

147,853

Total net sales

4,694,003

4,893,206

Costs of goods sold

3,713,205

3,837,084

Gross profit

980,798

1,056,122

Selling, general and administrative expenses

159,507

144,309

Profit sharing

62,652

69,575

Amortization of intangible assets

7,664

6,878

Operating income

750,975

835,360

Interest expense, net of capitalized interest

11,978

22,507

Other (income) expense, net

(26,784)

(34,936)

Income before income taxes

765,781

847,789

Income tax expense

178,281

203,456

Net income

587,500

644,333

Net income attributable to noncontrolling interests

(3,459)

(7,023)

Net income attributable to Steel Dynamics, Inc.

$

584,041

$

637,310

Basic earnings per share attributable to Steel

Dynamics, Inc. stockholders

$

3.68

$

3.71

Weighted average common shares outstanding

158,666

171,597

Diluted earnings per share attributable to Steel

Dynamics, Inc. stockholders, including the effect

of assumed conversions when dilutive

$

3.67

$

3.70

Weighted average common shares and share equivalents outstanding

159,354

172,479

Dividends declared per share

$

0.46

$

0.425

See notes to consolidated financial statements.

2

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

Three-Month Periods Ended

March 31,

2024

2023

Net income

$

587,500

$

644,333

Other comprehensive income - net unrealized (loss) gain on cash

flow hedging derivatives, net of income tax benefit of $139 and income

tax expense of $291 for the three months ended March 31, 2024 and

2023, respectively

(434)

911

Comprehensive income

587,066

645,244

Comprehensive income attributable to noncontrolling interests

(3,459)

(7,023)

Comprehensive income attributable to Steel Dynamics, Inc.

$

583,607

$

638,221

See notes to consolidated financial statements.

3

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Three-Month Periods Ended

March 31,

2024

2023

Operating activities:

Net income

$

587,500

$

644,333

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

115,252

107,694

Equity-based compensation

15,612

16,078

Deferred income taxes

(21,024)

9,008

Other adjustments

18,705

(10,006)

Changes in certain assets and liabilities:

Accounts receivable

(130,753)

(70,922)

Inventories

(133,025)

141,112

Other assets

(12,176)

7,842

Accounts payable

29,499

117,312

Income taxes receivable/payable

165,664

189,247

Accrued expenses

(280,037)

(417,915)

Net cash provided by operating activities

355,217

733,783

Investing activities:

Purchases of property, plant and equipment

(374,310)

(226,319)

Purchases of short-term investments

(205,873)

(356,777)

Proceeds from maturities of short-term investments

272,994

271,107

Other investing activities

14,255

2,343

Net cash used in investing activities

(292,934)

(309,646)

Financing activities:

Issuance of current and long-term debt

379,268

393,910

Repayment of current and long-term debt

(413,939)

(405,279)

Dividends paid

(68,008)

(58,798)

Purchases of treasury stock

(298,059)

(353,997)

Other financing activities

(23,108)

(23,449)

Net cash used in financing activities

(423,846)

(447,613)

Decrease in cash, cash equivalents, and restricted cash

(361,563)

(23,476)

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

1,406,464

1,633,919

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

$

1,044,901

$

1,610,443

Supplemental disclosure information:

Cash paid for interest

$

9,327

$

9,596

Cash paid for income taxes, net

$

28,390

$

4,703

See notes to consolidated financial statements.

4

Table of Contents

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. Effective the fourth quarter 2023, the company changed its reportable segments, consistent with how it currently manages the business, representing four reporting segments: steel operations, metals recycling operations, steel fabrication operations, and aluminum operations. Segment information provided within this Form 10-Q, including within Note 7. Segment Information, has been recast for all prior periods consistent with the current reportable segment presentation.

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), Vulcan Threaded Products, Inc., warehouse operations in Mexico, and SDI Biocarbon Solutions, LLC, a joint venture to construct and operate a biocarbon production facility.

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.

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.

Aluminum Operations Segment. Aluminum operations include the recycled aluminum flat rolled products mill being constructed in Columbus, Mississippi, and two satellite recycled aluminum slab centers in Arizona and Mexico. The flat rolled products mill is a joint venture concurrently formed with Unity Aluminum, Inc. of which SDI has a 94.4% equity interest. Construction has begun on the flat rolled products mill and the recycled aluminum slab centers with the flat rolled mill operations expected to begin mid-2025 and operations at the Mexico and Arizona recycled slab centers in late 2024 and mid-2025, respectively.

Other. Other operations consist of subsidiary operations that are below the company’s quantitative thresholds required for reportable segments and primarily consist of certain joint ventures and the company’s idled Minnesota ironmaking operations. Also included in “Other” are certain unallocated corporate accounts, such as the company’s senior unsecured credit facility, senior notes, certain other investments and certain profit sharing expenses.

Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Steel Dynamics, Inc., 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) are $60.0 million at March 31, 2024, and December 31, 2023. Redeemable noncontrolling interests related to Mesabi Nugget (owned 86% by SDI) are $111.2 million at March 31, 2024, and December 31, 2023.

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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. Actual results may differ from these estimates and assumptions.

In the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the interim period results. These consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Cash and Equivalents, and Restricted Cash

Cash and equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition. Restricted cash is primarily funds held in escrow as required by various insurance and government organizations. The balance of cash, cash equivalents and restricted cash in the consolidated statements of cash flows includes restricted cash of $5.5 million at March 31, 2024, $5.6 million at December 31, 2023, $5.5 million at March 31, 2023, and $5.5 million at December 31, 2022, which are recorded in Other Assets (noncurrent) in the company’s consolidated balance sheets.

Short-Term Investments

Short-term investments include investments with maturity dates of longer than three months but less than one year when purchased. The company’s short-term investments are classified as trading securities. Interest income from invested cash and short-term investments was $26.3 million and $26.0 million for the three-month periods ended March 31, 2024 and 2023, respectively, and is recorded in other (income) expense, net as earned. The company’s short-term investments were $653.3 million and $721.2 million as of March 31, 2024 and December 31, 2023, respectively.

Goodwill

The company’s goodwill consisted of the following at March 31, 2024, and December 31, 2023 (in thousands):

March 31,

December 31,

2024

2023

Steel Operations Segment

$

272,133

$

272,133

Metals Recycling Operations Segment

203,413

203,413

Steel Fabrication Operations Segment

1,925

1,925

$

477,471

$

477,471

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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 March 31, 2024, the company reported $1,739.1 million of accounts receivable, net of allowances for credit losses of $8.2 million. Changes in the allowance were not material for each of the three-month periods ended March 31, 2024 and 2023.

Derivative Financial Instruments

The company routinely enters into forward exchange traded futures to manage price risk associated with nonferrous metal inventory, as well as purchases and sales of nonferrous (primarily aluminum and copper) and ferrous metals, to reduce exposure to commodity related price fluctuations. The company does not enter into these derivative financial instruments for speculative purposes. The company recognizes all derivatives as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. Changes in the fair value of derivatives that are designated as hedges, depending on the nature of the hedge, are recognized as either an offset against the change in fair value of the hedged balance sheet item in the case of fair value hedges or as other comprehensive income in the case of cash flow hedges, until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings for fair value hedges. The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements.

The fair value of the Company’s derivative instruments, along with required margin deposit amounts with the same counterparty under master netting arrangements, totaled $19.8 million at March 31, 2024, and $24.0 million at December 31, 2023, and are reflected in other current assets in the consolidated balance sheets. Total gains and losses related to derivatives in fair value hedging relationships, as well as those not designated as hedging instruments, are recognized in costs of goods sold and were not material for each of the three-month periods ended March 31, 2024 and 2023. Derivatives accounted for as cash flow hedges, for which gains and losses are recognized in other comprehensive income, along with net gains reclassified from accumulated other comprehensive income, were not material for each of the three-month periods ended March 31, 2024 and 2023.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which modifies the rules on income tax disclosures to require entities to disclose specific categories in the rate reconciliation, the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 is to be applied on a prospective basis, but retrospective application is permitted. The company is currently evaluating the potential impact of adopting this new guidance on the consolidated financial statements and related disclosures.

Note 2. Earnings Per Share

Basic earnings per share is based on the weighted average shares of common stock outstanding during the period. Diluted earnings per share assumes the weighted average dilutive effect of common share equivalents outstanding during the period applied to the company’s basic earnings per share. Common share equivalents represent potentially dilutive restricted stock units, deferred stock units, restricted stock, and performance awards, and are excluded from the computation in periods in which they have an anti-dilutive effect. There were no anti-dilutive common share equivalents as of or for the three-month periods ended March 31, 2024 and 2023.

Three-Month Periods Ended March 31,

2024

2023

Weighted

Weighted

Average

Average

Net Income

Shares

Per Share

Net Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(Numerator)

(Denominator)

Amount

Basic earnings per share

$

584,041

158,666

$

3.68

$

637,310

171,597

$

3.71

Dilutive common share equivalents

-

688

-

882

Diluted earnings per share

$

584,041

159,354

$

3.67

$

637,310

172,479

$

3.70

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):

March 31,

December 31,

2024

2023

Raw materials

$

1,277,714

$

1,226,272

Supplies

730,243

711,653

Work in progress

330,222

296,932

Finished goods

688,964

659,775

Total inventories

$

3,027,143

$

2,894,632

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 for each of the three-month periods ended March 31, 2024 and 2023 (in thousands).

Stockholders of Steel Dynamics, Inc.

Accumulated

Additional

Other

Redeemable

Common

Treasury

Paid-In

Retained

Comprehensive

Noncontrolling

Total

Noncontrolling

Stock

Stock

Capital

Earnings

Income (Loss)

Interests

Equity

Interests

Balances at December 31, 2023

$

651

$

(5,897,606)

$

1,217,610

$

13,545,590

$

421

$

(198,351)

$

8,668,315

$

171,212

Dividends declared

-

-

-

(72,624)

-

-

(72,624)

-

Noncontrolling investors, net

-

-

-

-

-

(969)

(969)

-

Share repurchases

-

(298,059)

-

-

-

-

(298,059)

-

Equity-based compensation

-

13,391

(20,434)

(139)

-

-

(7,182)

-

Net income

-

-

-

584,041

-

3,459

587,500

-

Other comprehensive income, net of tax

-

-

-

-

(434)

-

(434)

-

Balances at March 31, 2024

$

651

$

(6,182,274)

$

1,197,176

$

14,056,868

$

(13)

$

(195,861)

$

8,876,547

$

171,212

Stockholders of Steel Dynamics, Inc.

Accumulated

Additional

Other

Redeemable

Common

Treasury

Paid-In

Retained

Comprehensive

Noncontrolling

Total

Noncontrolling

Stock

Stock

Capital

Earnings

Income (Loss)

Interests

Equity

Interests

Balances at December 31, 2022

$

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

Note 5. Fair Value Measurements

Accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows:

Level 1—Unadjusted quoted prices for identical assets and liabilities in active markets;
Level 2—Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and
Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 5. Fair Value Measurements (Continued)

The following table sets forth financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (in thousands):

Quoted Prices

Significant

in Active

Other

Significant

Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Total

(Level 1)

(Level 2)

(Level 3)

March 31, 2024

Short-term investments

$

653,255

$

-

$

653,255

$

-

Commodity futures – financial assets

3,576

-

3,576

-

Commodity futures – financial liabilities

5,989

-

5,989

-

December 31, 2023

Short-term investments

$

721,210

$

-

$

721,210

$

-

Commodity futures – financial assets

2,483

-

2,483

-

Commodity futures – financial liabilities

9,305

-

9,305

-

The carrying amounts of financial instruments including cash equivalents approximate fair value (Level 1). The fair values of short-term investments and commodity futures contracts are estimated by the use of quoted market prices, estimates obtained from brokers, and other appropriate valuation techniques based on references available (Level 2). The fair value of long-term debt, including current maturities, as determined by quoted market prices (Level 2), was approximately $2.8 billion at March 31, 2024 and December 31, 2023 (with a corresponding carrying amount in the consolidated balance sheet of $3.1 billion at March 31, 2024 and December 31, 2023).

Note 6. Commitments and Contingencies

The company is involved in various routine litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which are expected to have a material impact on the company’s financial condition, results of operations, or liquidity.

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 7. Segment Information

The company’s operations are primarily organized and managed by reportable operating segments. In the fourth quarter 2023, the company changed its reportable segments, consistent with how it currently manages the business, which include steel operations (including warehousing operations previously included in “Other”), metals recycling operations, steel fabrication operations, and a newly created aluminum operations. The segment operations are more fully described in Note 1 to the consolidated financial statements. Operating segment performance and resource allocations are primarily based on operating results before income taxes. The accounting policies of the reportable segments are consistent with those described in Note 1 to the consolidated financial statements. Intra-segment sales and any related profits are eliminated in consolidation. Amounts included in the category “Other” are from subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of certain joint ventures and the idled Minnesota ironmaking operations. Also included in “Other” are certain unallocated corporate accounts, such as the company’s senior unsecured credit facility, senior notes, certain other investments and certain profit sharing expenses.

The company’s segment results, with prior periods recast consistent with our current reportable segments presentation, including disaggregated revenue by segment to external, external non-United States, and other segment customers, are as follows (in thousands):

Metals

Steel

For the three-month period ended

Steel

Recycling

Fabrication

Aluminum

March 31, 2024

Operations

Operations

Operations

Operations

Other

Eliminations

Consolidated

Net sales - disaggregated revenue

External

$

3,133,610

$

390,923

$

446,096

$

-

$

307,859

$

-

$

4,278,488

External Non-U.S.

232,627

178,550

1,083

-

3,255

-

415,515

Other segments

148,291

524,568

4,584

-

-

(677,443)

-

3,514,528

1,094,041

451,763

-

311,114

(677,443)

4,694,003

Operating income (loss)

670,931

18,728

178,340

(13,531)

(97,872)

(1)

(5,621)

750,975

Income (loss) before income taxes

674,812

21,509

178,367

(13,811)

(89,073)

(6,023)

765,781

Depreciation and amortization

87,507

18,470

2,682

20

6,573

-

115,252

Capital expenditures

95,833

31,864

5,436

237,328

3,849

-

374,310

As of March 31, 2024

Assets

$

8,890,778

$

1,507,536

$

768,832

$

1,606,906

$

3,121,797

(2)

$

(869,099)

(3)

$

15,026,750

Footnotes related to the three-month period ended March 31, 2024, segment results (in millions):

(1)

Corporate selling, general, & administrative expenses

$

(25.3)

(2)

Cash and equivalents

$

911.1

Companywide equity-based compensation

(14.5)

Short-term and other investments

886.4

Company profit sharing component

(63.0)

Accounts receivable

31.6

Other, net

4.9

Inventories

59.3

$

(97.9)

Property, plant and equipment, net

136.2

Intra-company debt

789.7