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) October 23, 2017 (October 18, 2017)

STEEL DYNAMICS, INC.

(Exact name of registrant as specified in its charter)

Indiana	0-21719	35-1929476
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

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. o

Item 2.02.  Results of Operations and Financial Condition.

On October 18, 2017, Steel Dynamics, Inc. issued a press release titled “Steel Dynamics Reports Third Quarter 2017 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 October 18, 2017, titled “Steel Dynamics Reports Third Quarter 2017 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: October 23, 2017	By:	Theresa E. Wagler
	Title:	Executive Vice President and
		Chief Financial Officer

2

EX-99.1

Exhibit 99.1

Press Release October 18, 2017
	7575 W. Jefferson Blvd.
	Fort Wayne, IN 46804

Steel Dynamics Reports Third Quarter 2017 Results

FORT WAYNE, INDIANA, October 18, 2017 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced third quarter 2017 financial results.  The company reported third quarter 2017 net sales of $2.4 billion and net income of $153 million, or $0.64 per diluted share, which includes debt refinancing and repayment charges of $0.02 per diluted share.  Excluding these items, the company’s third quarter 2017 adjusted net income was $158 million, or $0.66 per diluted share.

Comparatively, prior year third quarter net sales were $2.1 billion, with net income of $157 million, or $0.64 per diluted share, which includes a litigation settlement charge of approximately $5 million (pretax).  Excluding this item, prior year third quarter adjusted net income was $160 million, or $0.65 per diluted share.  Sequential second quarter 2017 net sales were $2.4 billion, with net income of $154 million, or $0.63 per diluted share.

“The team delivered a solid performance for the third quarter 2017 despite the continued high levels of steel imports,” said Mark D. Millett, President and Chief Executive Officer. “Our third quarter 2017 income from operations was $271 million, a sequential increase of $6 million, and trailing twelve month adjusted EBITDA remained strong at $1.4 billion.

“Elevated levels of steel imports persisted during the quarter, hindering the ability for domestic steel prices to keep pace with raw material costs.  Despite reported low levels of steel service center inventory, we believe steel traders built inventory at the ports ahead of potential domestic trade actions, which resulted in an overhang position for flat roll steel during recent months.  This oversupply resulted in periods of weaker customer orders.  The increase in our sequential earnings was principally the result of improved engineered bar, structural and merchant steel shipments.  Underlying demand from the construction sector appeared to remain strong, and the energy sector was stable.  Conversely, demand from the domestic automotive sector softened, but our steel operations continue to gain market share somewhat mitigating the impact.

“Third quarter 2017 operating income from our metals recycling platform aligned with the strong first half 2017 performance, derived from steady shipments and ferrous metal spread expansion as increased scrap exports supported higher average quarterly selling values. Earnings from our fabrication operations also improved in the quarter.  The fabrication group achieved another quarter of record shipments, and maintains a strong order backlog.  We believe this is a solid indicator that the non-residential construction market is continuing a positive growth profile,” concluded Millett.

Additional Third Quarter 2017 Comments

Third quarter 2017 operating income for the company’s steel operations increased two percent, or $6 million, to $280 million sequentially, based on higher shipments from our long products divisions outpacing metal spread compression.  The third quarter 2017 average external selling price for the company’s steel operations decreased $1 to $778 per ton.  The average ferrous scrap cost per ton melted increased $2 to $305 per ton.

Third quarter 2017 operating income attributable to the company’s flat roll products decreased three percent when compared to the sequential second quarter, based on slightly lower shipments and metal spread compression, as average scrap costs increased more than average selling values.  Operating income from long products increased 34 percent as a result of a six percent increase in shipments, notably for engineered bar, structural and merchant steel products.  However, structural and merchant steel volumes still remain under pressure from excess domestic production capability, coupled with elevated import levels.  The company’s steel production utilization rate was 92 percent in the third quarter 2017, compared to 91 percent in the sequential second quarter and compared to the estimated third quarter domestic industry utilization rate of 75 percent.

Third quarter 2017 operating income from the company’s metals recycling operations was $21 million, compared to $20 million in the sequential second quarter, as a result of improved average quarterly ferrous sales price and somewhat steady shipments.

The company’s fabrication operations recorded third quarter 2017 operating income of $22 million, compared to sequential second quarter results of $20 million.  The platform achieved a third consecutive quarter of record shipments and average product pricing remained steady.

During the third quarter 2017, the company issued $350 million of new 4.125% senior notes due 2025 to repay $350 million of its existing 6.375% senior notes due 2022.  At September 30, 2017, the company had repaid $183 million of the existing senior notes, and repaid the remaining amount of $167 million on October 13, 2017.  After giving effect to the October repayment, total debt of $2.4 billion remained consistent with the sequential second quarter and liquidity remained strong at $2.1 billion, with $935 million in cash and $1.2 billion of available funding under the revolving credit facility. These transactions extended the company’s overall debt maturity profile, and will provide an estimated annual interest savings of approximately $8 million.

Year-to-Date September 30, 2017 Comparison

For the nine months ended September 30, 2017, net income was $508 million, or $2.09 per diluted share, on net sales of $7.2 billion, as compared to net income of $362 million, or $1.48 per diluted share, on net sales of $5.9 billion for the same period in 2016.  Year-to-date 2017 net sales increased 23 percent.  Although all platforms experienced increased revenues, the overall improvement was driven by higher average steel product pricing and shipments.  Year-to-date 2017 operating income increased $199 million, or 30 percent, to $871 million, based on improved earnings of $183 million from the company’s steel operations and $32 million from its metals recycling platform. The average year-to-date selling price for the company’s steel operations increased $116 to $767 per ton.  The average year-to-date ferrous scrap cost per ton melted increased $71 to $291 per ton.  Additionally, the metals recycling operations continued to optimize administrative and operating costs, more than doubling operating income year-to-date 2017 compared to the same period in the prior year.

During the nine months ended September 30, 2017, the company generated strong cash flow from operations of $548 million and repurchased $237 million of its common stock.

Outlook

“Despite a somewhat noisy market environment related to continued high levels of steel imports, we remain optimistic that macroeconomic and market conditions are in place to benefit domestic steel consumption in 2018,” said Millett.  “Although U.S. automotive production has peaked, we believe North American automotive steel consumption will be steady, and that there will be continued additional growth in the energy and construction sectors, especially for larger, public sector infrastructure projects.

“We continue to reinvest in our existing facilities through equipment upgrades and further product diversification.  During the fourth quarter 2017, we plan to complete a $29 million replacement and upgrade of two ladle furnace cranes at our Butler Flat Roll Division, including a facility expansion to improve logistics.  We also plan to complete a $10 million upgrade of the hot strip mill at our Columbus Flat Roll Division, further diversifying our value-added flat roll steel product capabilities.  The planned upgrades require longer than typical outages, which will result in higher costs and lower shipments, reducing potential fourth quarter 2017 pretax earnings by an estimated $25 million.

“Our financial position continues to strengthen through strong cash flow generation and the execution of our long-term strategy. We are well-positioned for growth, and remain focused on delivering shareholder value through organic and strategic growth opportunities,” concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss third quarter 2017 operating and financial results on Thursday, October 19, 2017, 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 October 24, 2017.

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 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 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, Adjusted Net Income, Adjusted Diluted Earnings Per Share, 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: Investors: SEC Filings.

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				Nine Months Ended					Three Months
	September 30,				September 30,					Ended
	2017		2016		2017			2016		June 30, 2017
Net sales	$	2,443,382	$	2,101,310	$	7,202,318		$	5,866,513	$	2,390,720
Costs of goods sold	2,046,864		1,692,807		5,941,128			4,841,591		1,998,202
Gross profit	396,518		408,503		1,261,190			1,024,922		392,518
Selling, general and administrative expenses	97,056		95,185		298,422			279,899		98,433
Profit sharing	21,175		22,255		69,714			51,722		21,308
Amortization of intangible assets	7,272		7,208		22,120			21,359		7,424
Operating income	271,015		283,855		870,934			671,942		265,353
Interest expense, net of capitalized interest	34,177		36,199		102,019			109,888		33,869
Other expense (income), net	2,526		4,351		(4,968		)	741		(3,835		)
Income before income taxes	234,312		243,305		773,883			561,313		235,319
Income tax expense	83,300		88,892		271,258			205,139		82,372
Net income	151,012		154,413		502,625			356,174		152,947
Net loss attributable to noncontrolling interests	2,246		2,984		5,383			5,929		986
Net income attributable to Steel Dynamics, Inc.	$	153,258	$	157,397	$	508,008		$	362,103	$	153,933
Basic earnings per share attributable to Steel Dynamics, Inc. stockholders	$	0.64	$	0.65	$	2.11		$	1.49	$	0.64
Weighted average common shares outstanding	239,066		243,761		241,117			243,539		241,343
Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive	$	0.64	$	0.64	$	2.09		$	1.48	$	0.63
Weighted average common shares and share equivalents outstanding	240,880		245,682		242,816			245,227		243,021
Dividends declared per share	$	0.155	$	0.1400	$	0.465		$	0.4200	$	0.155

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30,			December 31,
	2017			2016
	(unaudited)
Assets
Current assets
Cash and equivalents	$	1,101,964		$	841,483
Accounts receivable, net	923,017			729,784
Inventories	1,487,516			1,275,211
Other current assets	59,648			83,197
Total current assets	3,572,145			2,929,675
Property, plant and equipment, net	2,708,777			2,787,215
Restricted cash	17,092			18,060
Intangible assets, net	263,357			283,977
Goodwill	388,518			393,351
Other assets	10,848			11,454
Total assets	$	6,960,737		$	6,423,732
Liabilities and Equity
Current liabilities
Accounts payable	$	528,683		$	395,196
Income taxes payable	5,596			5,593
Accrued expenses	349,589			308,394
Current maturities of long-term debt	182,661			3,632
Total current liabilities	1,066,529			712,815
Long-term debt	2,351,483			2,353,194
Deferred income taxes	461,399			448,375
Other liabilities	20,305			20,649
Total liabilities	3,899,716			3,535,033
Commitments and contingencies
Redeemable noncontrolling interests	111,240			111,240
Equity
Common stock	641			641
Treasury stock, at cost	(650,210		)	(416,829		)
Additional paid-in capital	1,147,463			1,132,749
Retained earnings	2,606,831			2,210,459
Total Steel Dynamics, Inc. equity	3,104,725			2,927,020
Noncontrolling interests	(154,944		)	(149,561		)
Total equity	2,949,781			2,777,459
Total liabilities and equity	$	6,960,737		$	6,423,732

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Operating activities:
Net income	$	151,012		$	154,413		$	502,625		$	356,174
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	75,210			74,190			224,068			222,970
Equity-based compensation	6,875			5,946			24,558			23,716
Deferred income taxes	3,284			18,478			17,849			53,879
Other adjustments	8,202			161			8,055			1,376
Changes in certain assets and liabilities:
Accounts receivable	(36,123		)	29,384			(193,233		)	(149,810		)
Inventories	(67,285		)	(76,013		)	(211,726		)	(102,339		)
Other assets	(9,234		)	694			(1,703		)	11,855
Accounts payable	44,887			(49,171		)	133,251			117,220
Income taxes receivable/payable	(12,929		)	(7,421		)	5,803			40,960
Accrued expenses	62,249			45,701			38,058			69,361
Net cash provided by operating activities	226,148			196,362			547,605			645,362
Investing activities:
Purchases of property, plant and equipment	(42,795		)	(59,774		)	(127,746		)	(123,168		)
Acquisition of businesses, net of cash acquired	(5,518		)	(109,065		)	(5,518		)	(109,065		)
Other investing activities	1,081			1,507			30,386			5,767
Net cash used in investing activities	(47,232		)	(167,332		)	(102,878		)	(226,466		)
Financing activities:
Issuance of current and long-term debt	450,215			12,911			501,448			97,018
Repayment of current and long-term debt	(294,913		)	(9,999		)	(331,339		)	(95,253		)
Dividends paid	(37,180		)	(34,124		)	(108,837		)	(101,639		)
Purchase of treasury stock	(99,085		)	—			(237,154		)	—
Other financing activities	(4,832		)	1,005			(8,364		)	5,435
Net cash provided by (used in) financing activities	14,205			(30,207		)	(184,246		)	(94,439		)
Increase (decrease) in cash and equivalents	193,121			(1,177		)	260,481			324,457
Cash and equivalents at beginning of period	908,843			1,052,666			841,483			727,032
Cash and equivalents at end of period	$	1,101,964		$	1,051,489		$	1,101,964		$	1,051,489
Supplemental disclosure information:
Cash paid for interest	$	13,530		$	26,225		$	80,155		$	97,605
Cash paid for income taxes, net	$	93,123		$	75,860		$	246,793		$	104,124

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)

	Third Quarter						Year to Date
	2017			2016			2017			2016			1Q 2017			2Q 2017
External Net Sales
Steel	$	1,782,805		$	1,557,502		$	5,262,380		$	4,241,382		$	1,721,333		$	1,758,242
Fabrication	211,305			177,429			603,267			528,026			194,096			197,866
Metals Recycling	348,215			306,092			1,055,580			886,559			363,836			343,529
Other	101,057			60,287			281,091			210,546			88,951			91,083
Consolidated	$	2,443,382		$	2,101,310		$	7,202,318		$	5,866,513		$	2,368,216		$	2,390,720
Operating Income
Steel	$	280,285		$	311,127		$	906,526		$	723,348		$	352,423		$	273,818
Fabrication	21,903			17,814			65,858			73,401			23,767			20,188
Metals Recycling	21,118			9,747			62,447			30,793			21,341			19,988
Operations	323,306			338,688			1,034,831			827,542			397,531			313,994
Non-cash Amortization of Intangible Assets	(7,272		)	(7,208		)	(22,120		)	(21,359		)	(7,424		)	(7,424		)
Profit Sharing Expense	(21,175		)	(22,255		)	(69,714		)	(51,722		)	(27,231		)	(21,308		)
Non-segment Operations	(23,844		)	(25,370		)	(72,063		)	(82,519		)	(28,310		)	(19,909		)
Consolidated Operating Income	$	271,015		$	283,855		$	870,934		$	671,942		$	334,566		265,353
Adjusted EBITDA
Earnings Before Taxes	$	234,312		$	243,305		$	773,883		$	561,313		$	304,252		$	235,319
Net Interest Expense	31,298			34,867			95,260			106,396			32,333			31,629
Depreciation	66,574			65,473			197,857			197,082			66,269			65,014
Amortization of Intangible Assets	7,272			7,208			22,120			21,359			7,424			7,424
Non-controlling Interest	2,246			2,984			5,383			5,929			2,152			985
EBITDA	341,702			353,837			1,094,503			892,079			412,430			340,371
Non-cash Adjustments
Unrealized Hedging (Gain) Loss	(2,724		)	(880		)	(2,637		)	627			(637		)	724
Inventory Valuation	236			405			2,757			832			162			2,359
Equity-based Compensation	6,875			5,895			22,924			20,161			9,074			6,975
Financing Expenses	1,393			—			1,393			—			—			—
Adjusted EBITDA	$	347,482		$	359,257		$	1,118,940		$	913,699		$	421,029		$	350,429
Other Operating Information
Steel
Average External Sales Price (Per ton)	$	778		$	740		$	767		$	651		$	743		$	779
Average Ferrous Cost (Per ton melted)	$	305		$	251		$	291		$	220		$	264		$	303
Flat Roll Shipments	1,733,006			1,620,794			5,206,364			5,065,932			1,735,954			1,737,404
Long Product Shipments
Structural and Rail Division	337,985			330,694			999,961			980,286			350,555			311,421
Engineered Bar Products Division	192,448			110,633			565,375			358,426			192,140			180,787
Roanoke Bar Division	120,652			119,555			362,752			384,801			125,869			116,231
Steel of West Virginia	74,901			75,080			228,184			235,882			77,229			76,054
Total Shipments (Tons)	2,458,992			2,256,756			7,362,636			7,025,327			2,481,747			2,421,897
External Shipments (Tons)	2,279,229			2,104,219			6,830,878			6,517,253			2,305,080			2,246,569
Steel Production (Tons)	2,536,990			2,341,659			7,557,231			7,266,265			2,544,082			2,476,159
Metals Recycling
Total Nonferrous Shipments (000’s of pounds)	261,716			280,107			815,763			828,715			283,603			270,444
Total Ferrous Shipments (Gross tons)	1,219,582			1,243,277			3,780,958			3,894,755			1,338,599			1,222,777
External Ferrous Shipments (Gross tons)	462,683			468,498			1,414,603			1,511,532			485,414			466,506
Fabrication
Average External Sales Price (Per ton)	$	1,317		$	1,253		$	1,306		$	1,232		$	1,291		$	1,311
Total Shipments (Tons)	160,482			142,585			461,936			430,539			150,402			151,052