8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported) July 20, 2016 (July 18, 2016)

STEEL DYNAMICS, INC.

(Exact name of registrant as specified in its charter)

Indiana	0-21719	35-1929476
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

7575 West Jefferson Blvd, Fort Wayne, Indiana 46804

(Address of principal executive offices) (Zip Code)

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

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On July 18, 2016, Steel Dynamics, Inc. issued a press release titled “Steel Dynamics Reports Second Quarter 2016 Results.” A copy of that press release is attached hereto as Exhibit 99.1.

The information contained in Exhibit 99.1 is furnished under this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing thereunder or under the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in any such filing.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is furnished with this report:

Exhibit Number	Description
99.1	A press release dated July 18, 2016, titled “Steel Dynamics Reports Second Quarter 2016 Results.”

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereto duly authorized.

		STEEL DYNAMICS, INC.
		/s/Theresa E. Wagler
Date: July 20, 2016	By:	Theresa E. Wagler
	Title:	Executive Vice President and
		Chief Financial Officer

2

EX-99.1

Exhibit 99.1

Press Release
July 18, 2016	7575 W. Jefferson Blvd.
	Fort Wayne, IN 46804

Steel Dynamics Reports Second Quarter 2016 Results

FORT WAYNE, INDIANA, July 18, 2016 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced second quarter 2016 net income of $142 million, or $0.58 per diluted share, on net sales of $2.0 billion.  Comparatively, prior year second quarter net sales were $2.0 billion, with adjusted net income of $53 million, or $0.22 per diluted share, which excludes certain non-cash inventory valuation adjustments and other costs primarily related to idling the company’s Minnesota Operations.  Sequential first quarter 2016 net sales were $1.7 billion, with net income of $63 million, or $0.26 per diluted share.

“During the second quarter 2016, continued positive momentum in the flat roll steel supply environment resulted in significantly improved sequential consolidated operating earnings, which increased over 94 percent to $256 million, “ said Mark D. Millett, President and Chief Executive Officer. “Year-over-year first half flat roll steel import levels have declined approximately 25 percent and customer inventory levels are balanced with current demand requirements, supporting higher domestic flat roll steel mill utilization.  The domestic steel demand outlook is relatively unchanged and steady, with the heavy equipment, agricultural and energy markets remaining weak, while automotive and construction continues to be strong.

“We also saw improved volumes and profitability in our metals recycling platform for the second quarter 2016,” continued Millett. “Ferrous scrap demand improved, resulting in both higher volumes and expanded metal spread through price increases.  Earnings from our fabrication operations declined in the quarter, due to increased steel costs and lower selling values.  However, we continue to experience steady demand from the non-residential construction sector.  Our cash generation continues to be strong, resulting in record liquidity of over $2.2 billion at the end of June 2016, providing a firm foundation for growth.”

Additional Second Quarter 2016 Comments

Second quarter 2016 operating income for the company’s steel operations increased 104 percent to $277 million sequentially, based on improved metal spread and a nine percent improvement in shipments as volumes increased at all of the company’s steel locations, except the Engineered Bar Products Division, which continues to experience a challenging demand environment.   The company’s average steel product price increased more than consumed raw material scrap costs, resulting in steel metal spread expansion.  The second quarter 2016 average product selling price for the company’s steel operations increased $66 to $640 per ton.  The average ferrous scrap cost per ton melted increased $43 to $227 per ton.

Second quarter 2016 operating income attributable to the company’s sheet products increased 159 percent when compared to the sequential first quarter.  The company’s flat roll shipments increased eight percent, and metal spread also expanded, as price improvements outpaced increased scrap costs.  Operating income from long products increased 25 percent, as shipments improved 14 percent, more than offsetting metal spread compression related to generally flat average product pricing coupled with increased scrap costs.  The company’s steel production utilization rate was 95 percent in the second quarter 2016, compared to 88 percent in the sequential quarter and compared to the domestic industry utilization rate of less than 75 percent.

The company’s metals recycling operations achieved a meaningful improvement in profitability based on a 30% improvement in ferrous metal margin, combined with increased shipments.  Second quarter 2016 operating income from the metals recycling operations was $15 million, compared to $6 million in the sequential quarter. Ferrous scrap demand and pricing improved due to increased domestic steel mill utilization.

The company’s fabrication operations achieved second quarter 2016 operating income of $24 million, compared to $32 million in the sequential first quarter.  Shipments were relatively flat in the quarter; however, as predicted, metal spread compression occurred as product pricing declined and raw material steel costs continued to increase.

Year-to-Date June 30, 2016 Comparison

For the six months ended June 30, 2016, net income was $205 million, or $0.84 per diluted share, on net sales of $3.8 billion, as compared to adjusted net income of $84 million, or $0.35 per diluted share, on net sales of $4.1 billion for the six months ended June 30, 2015.  First half 2016 shipments improved for each of the company’s operating platforms; however, same period consolidated net sales decreased seven percent, as a result of decreased steel and metals recycling selling values.  First half 2016 consolidated operating income increased $168 million, or 76 percent, based primarily on improved earnings from the company’s steel operations. The average year-to-date selling price for the company’s steel operations decreased $101 to $608 per ton.  The average year-to-date ferrous scrap cost per ton melted decreased $74 to $206 per ton.

The company generated strong cash flow from operations of $447 million during the first half of 2016, with relatively flat working capital requirements.  Including its undrawn revolver and available cash of $1.1 billion, the company achieved record liquidity of over $2.2 billion at June 30, 2016.

Outlook

“Steel customer inventory levels have moderated and import levels have declined,” said Millett.  “When combined with steady underlying demand, the result has been an improvement in domestic flat roll steel producer utilization, and we anticipate improved flat roll metal spreads in the third quarter 2016.  The successful market and product diversification that we achieved at Columbus during 2015 is one of our key differentiators for anticipated improved annual profitability in 2016.  As an example, Columbus achieved a record six month production level in the first half 2016, while continuing to improve and diversify its value-added production capability.

“However, aside from the construction sector, long product steel demand is generally challenged, and selling values are under pressure from excess domestic production capability.  The robust increase in second quarter 2016 long product group shipments was due, in part, to customers buying ahead of the significant scrap cost increase in May.  While we also anticipate metal spread expansion for our long products group in the third quarter 2016, lower shipments related to the customers buying ahead could offset related margin gain.

“We continue to strengthen our financial position through strong cash flow generation and the execution of our long-term strategy.  We are well-positioned for growth.  Customer focus, coupled with our market diversification and low-cost operating platforms, support our ability to maintain our best-in-class industry performance. We believe we are uniquely poised to capitalize on growth opportunities that will benefit our customers, shareholders, employees and communities.”

Supplemental Information

	Second Quarter						Year to Date
	2016			2015			2016			2015			1Q 2016
	(Dollars in thousands)
External Net Sales
Steel	$	1,466,704		$	1,375,677		$	2,683,880		$	2,761,096		$	1,217,176
Fabrication	170,542			154,513			350,597			315,536			180,055
Metals Recycling	311,060			391,210			580,467			816,806			269,407
Other	75,596			83,607			150,259			159,004			74,663
Consolidated	$	2,023,902		$	2,005,007		$	3,765,203		$	4,052,442		$	1,741,301
Operating Income
Steel	$	276,529		$	101,212		$	412,221		$	218,208		$	135,692
Fabrication	23,512			27,660			55,587			49,021			32,075
Metals Recycling	14,686			12,300			21,046			11,820			6,360
Operations	314,727			141,172			488,854			279,049			174,127
Non-cash Amortization of Intangible Assets	(7,232		)	(6,493		)	(14,482		)	(12,816		)	(7,250		)
Profit Sharing Expense	(20,176		)	(5,031		)	(29,467		)	(9,629		)	(9,291		)
Non-segment Operations	(31,197		)	(52,089		)	(56,818		)	(79,274		)	(25,621		)
Consolidated Operating Income	256,122			77,559			388,087			177,330			131,965
Minnesota Idle Charges (Including Noncontrolling Interests)	—			33,167			—			33,167			—
Iron Dynamics Outage Impact	—			9,403			—			9,403			—
Adjusted Operating Income	$	256,122		$	120,129		$	388,087		$	219,900		$	131,965
External Shipments
Steel (In tons)	2,291,162			2,078,685			4,413,034			3,895,056			2,121,872
Steel Shipped to Internal Locations	200,200			163,723			355,537			296,372			155,337
Fabrication (In tons)	142,828			109,662			287,954			222,391			145,126
Metals Recycling
Nonferrous (In 000’s of pounds)	247,492			253,273			490,052			494,853			242,560
Ferrous (In gross tons)	539,247			626,264			1,043,034			1,268,344			503,787
Ferrous Scrap Shipped to Internal Steel Mills	807,077			731,491			1,608,444			1,322,412			801,367
Other Operating Information
Steel
Average External Sales Price (Per ton shipped)	$	640		$	662		$	608		$	709		$	574
Average Ferrous Cost (Per ton melted)	$	227		$	255		$	206		$	280		$	184
Flat Roll Shipments
Butler Division	773,823			721,115			1,485,961			1,300,608			712,138
Columbus Division	804,406			693,772			1,561,339			1,258,013			756,933
The Techs	209,569			182,239			397,838			328,173			188,269
Long Product Shipments
Structural and Rail Division-Structural	292,513			227,338			526,559			464,982			234,046
-Rail	64,091			74,912			123,033			141,620			58,942
Engineered Bar Products Division	122,593			120,559			247,793			276,925			125,200
Roanoke Bar Division	139,775			140,795			265,246			265,918			125,471
Steel of West Virginia	84,593			81,678			160,802			155,189			76,209
Total Steel Shipments (In tons)	2,491,363			2,242,408			4,768,571			4,191,428			2,277,208
Steel Production (In tons)	2,561,354			2,344,895			4,924,606			4,294,158			2,363,252
Fabrication
Average External Sales Price (Per ton shipped)	$	1,202		$	1,409		$	1,222		$	1,419		$	1,241
Consolidated EBITDA
Earnings Before Taxes	$	221,294		$	41,608		$	318,008		$	82,100		$	96,714
Net Interest Expense	35,379			36,890			71,529			79,764			36,150
Depreciation	66,053			66,281			131,278			131,141			65,225
Amortization	7,232			6,493			14,482			12,816			7,250
Non-controlling Interest	1,526			6,225			2,945			10,032			1,419
EBITDA	331,484			157,497			538,242			315,853			206,758
Non-cash Adjustments
Unrealized Hedging (Gain) Loss	1,188			(1,808		)	1,507			1,407			319
Inventory Valuation	235			18,075			427			23,065			192
Equity Based Compensation	7,287			6,356			14,266			13,555			6,979
Financing Expenses	—			—			—			3,326			—
Adjusted EBITDA	$	340,194		$	180,120		$	554,442		$	357,206		$	214,248

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss second quarter 2016 operating and financial results on Tuesday, July 19, 2016, at 10:00 a.m. Eastern 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 Time on July 24, 2016.

About Steel Dynamics, Inc.

Steel Dynamics, Inc. is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $7.6 billion in 2015, approximately 7,500 employees, and manufacturing facilities primarily located throughout the United States (including six electric-arc-furnace steel mills, ten steel coating lines, an iron production facility, approximately 75 metals recycling locations and eight steel fabrication plants).

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 Adjusted Operating Income, EBITDA and Adjusted EBITDA, non-GAAP financial measures, 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, because not all companies use identical calculations, 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 the steel and metallic scrap markets, Steel Dynamics’ revenues, costs of purchased materials, future profitability and earnings, and the operation of new or existing 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) the effects of uncertain economic conditions; (2) cyclical and changing industrial demand; (3) changes in conditions in any of the steel or scrap-consuming sectors of the economy which affect demand for our products, including the strength of the non-residential and residential construction, automotive, appliance, pipe and tube, and other steel-consuming industries; (4) fluctuations in the cost of key raw materials (including steel scrap, iron units, and energy costs) and our ability to pass-on any cost increases; (5) the impact of domestic and foreign import price competition; (6) unanticipated difficulties in integrating or starting up new or acquired businesses; (7) risks and uncertainties involving product and/or technology development; and (8) occurrences of unexpected plant outages or equipment failures.

More specifically, we refer you to Steel Dynamics’ 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 from time to time file with the Securities and Exchange Commission. These are available publicly on the SEC website, www.sec.gov, and on the Steel Dynamics website, www.steeldynamics.com.

Contact:  Tricia Meyers, Investor Relations Manager— +1.260.969.3500

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended					Three Months Ended
	June 30,						June 30,					March 31,
	2016			2015			2016			2015		2016
Net sales	$	2,023,902		$	2,005,007		$	3,765,203		$	4,052,442	$	1,741,301
Costs of goods sold	1,643,519			1,833,264			3,148,784			3,693,657		1,505,265
Gross profit	380,383			171,743			616,419			358,785		236,036
Selling, general and administrative expenses	96,853			82,660			184,383			159,010		87,530
Profit sharing	20,176			5,031			29,467			9,629		9,291
Amortization of intangible assets	7,232			6,493			14,482			12,816		7,250
Operating income	256,122			77,559			388,087			177,330		131,965
Interest expense, net of capitalized interest	36,646			37,163			73,689			80,250		37,043
Other expense (income), net	(1,818		)	(1,212		)	(3,610		)	14,980		(1,792		)
Income before income taxes	221,294			41,608			318,008			82,100		96,714
Income taxes	80,851			16,283			116,247			29,821		35,396
Net income	140,443			25,325			201,761			52,279		61,318
Net loss attributable to noncontrolling interests	1,526			6,225			2,945			10,032		1,419
Net income attributable to Steel Dynamics, Inc.	$	141,969		$	31,550		$	204,706		$	62,311	$	62,737

Basic earnings per share attributable to Steel Dynamics, Inc. stockholders	$	0.58	$	0.13	$	0.84	$	0.26	$	0.26
Weighted average common shares outstanding	243,655		241,900		243,429		241,718		243,202
Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive	$	0.58	$	0.13	$	0.84	$	0.26	$	0.26
Weighted average common shares and equivalents outstanding	245,392		243,491		245,000		243,179		244,608
Dividends declared per share	$	0.1400	$	0.1375	$	0.2800	$	0.2750	$	0.1400

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30,2016			December 31,
	(unaudited)			2015
Assets
Current assets
Cash and equivalents	$	1,052,666		$	727,032
Accounts receivable, net	794,003			613,605
Inventories	1,175,716			1,149,390
Other current assets	28,072			47,914
Total current assets	3,050,457			2,537,941
Property, plant and equipment, net	2,885,844			2,951,210
Restricted cash	19,555			19,565
Intangible assets, net	265,476			278,960
Goodwill	394,275			397,470
Other assets	14,069			16,936
Total assets	$	6,629,676		$	6,202,082
Liabilities and Equity
Current liabilities
Accounts payable	$	461,267		$	283,355
Income taxes payable	43,367			2,023
Accrued expenses	256,543			233,232
Current maturities of long-term debt	18,047			16,680
Total current liabilities	779,224			535,290
Long-term debt	2,573,186			2,577,976
Deferred income taxes	433,116			400,770
Other liabilities	19,544			16,595
Commitments and contingencies
Redeemable noncontrolling interests	126,340			126,340
Equity
Common stock	639			638
Treasury stock, at cost	(392,050		)	(396,455		)
Additional paid-in capital	1,125,519			1,110,253
Retained earnings	2,101,729			1,965,291
Total Steel Dynamics, Inc. equity	2,835,837			2,679,727
Noncontrolling interests	(137,571		)	(134,616		)
Total equity	2,698,266			2,545,111
Total liabilities and equity	$	6,629,676		$	6,202,082

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Operating activities:
Net income	$	140,443		$	25,325		$	201,761		$	52,279
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	74,795			74,273			148,780			147,095
Equity-based compensation	7,236			6,357			15,641			14,900
Deferred income taxes	18,314			16,367			35,401			33,084
Changes in certain assets and liabilities:
Accounts receivable	(103,598		)	(47,149		)	(179,194		)	85,935
Inventories	(108,893		)	161,174			(26,326		)	326,173
Accounts payable	53,732			62,735			166,391			(64,318		)
Income taxes receivable/payable	34,388			(6,844		)	48,381			9,421
Other assets and liabilities	41,555			16,974			36,036			(60,650		)
Net cash provided by operating activities	157,972			309,212			446,871			543,919
Investing activities:
Purchase of property, plant and equipment	(35,686		)	(22,821		)	(63,394		)	(56,172		)
Other investing activities	1,206			806			4,260			2,469
Net cash used in investing activities	(34,480		)	(22,015		)	(59,134		)	(53,703		)
Financing activities:
Issuance of current and long-term debt	63,655			60,941			84,107			111,034
Repayment of current and long-term debt	(81,022		)	(60,557		)	(85,254		)	(488,008		)
Exercise of stock options proceeds, including related tax effect	3,683			5,206			6,575			6,959
Distributions to noncontrolling investors, net	(2		)	(1,135		)	(10		)	(1,164		)
Dividends paid	(34,090		)	(33,233		)	(67,515		)	(60,999		)
Debt issuance costs	(1		)	—			(6		)	—
Net cash used in financing activities	(47,777		)	(28,778		)	(62,103		)	(432,178		)
Increase in cash and equivalents	75,715			258,419			325,634			58,038
Cash and equivalents at beginning of period	976,951			160,982			727,032			361,363
Cash and equivalents at end of period	$	1,052,666		$	419,401		$	1,052,666		$	419,401

Supplemental disclosure information:
Cash paid for interest	$	45,094	$	48,550	$	71,380	$	88,644
Cash paid (received) for federal and state income taxes, net	$	27,565	$	7,046	$	28,264	$	(11,493	)