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 25, 2019 (July 22, 2019)

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

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, $0.025 par value	STLD	NASDAQ Global Select Market

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:

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

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

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

oPre-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.

Item 2.02. Results of Operations and Financial Condition.

On July 22, 2019, Steel Dynamics, Inc. issued a press release titled “Steel Dynamics Reports Second Quarter 2019 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 22, 2019, titled “Steel Dynamics Reports Second Quarter 2019 Results.”

2

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 25, 2019	By:	Theresa E. Wagler
	Title:	Executive Vice President and Chief Financial Officer

3

EX-99.1

Exhibit 99.1

Press Release
July 22, 2019

7575 W. Jefferson Blvd.

Fort Wayne, IN  46804

Steel Dynamics Reports Second Quarter 2019 Results

FORT WAYNE, INDIANA, July 22, 2019 / PRNewswire / Steel Dynamics, Inc. (NASDAQ/GS: STLD) today announced second quarter 2019 financial results. The company reported second quarter 2019 net sales of $2.8 billion and net income of $194 million, or $0.87 per diluted share. Comparatively, prior year second quarter net income was $362 million, or $1.53 per diluted share, with net sales of $3.1 billion. Sequential first quarter 2019 net income was $204 million, or $0.91 per diluted share, with net sales of $2.8 billion.

“Our second quarter 2019 consolidated operating income was $285 million and adjusted EBITDA $365 million,” said Mark D. Millett, President and Chief Executive Officer.  “The team delivered a solid second quarter performance in a challenging steel pricing environment.  A weakening scrap price environment coupled with steel inventory destocking led to steel buying hesitancy. Despite these challenges, supported by the addition of United Steel Supply and the continued ramp-up of Heartland, our steel platform shipments improved.  As underlying steel demand remains constructive and scrap prices have steadied, we have recently seen stabilization and improvement in flat roll steel prices, resulting in increased flat roll order activity and improved order backlogs. However, structural, merchant bar, and reinforcing bar steel pricing remain pressured from domestic and import market competition.

“Underlying domestic steel demand remains intact, and we are seeing continued positive activity across most of the steel consuming sectors, including automotive, energy and industrial customers.  Additionally, as evidenced by our strong steel fabrication backlog, strength continues in non-residential construction.”

The company generated strong cash flow from operations of $361 million during the second quarter 2019 and increased liquidity to $2.3 billion. The company paid cash dividends of $54 million and repurchased $93 million of its common stock during the second quarter 2019.

Second Quarter 2019 Comments

Second quarter 2019 operating income for the company’s steel operations was $295 million, or six percent lower than sequential first quarter 2019 results. The decline in earnings resulted from metal spread compression which more than offset the three percent increase in overall steel shipments related to the ramp-up of the Heartland facility and the recent addition of United Steel Supply.  The sequential earnings decline was primarily driven by lower shipments and product pricing within the company’s long product steel operations. The second quarter 2019 average external product selling price for the company’s overall steel operations decreased $23 sequentially to $879 per ton.  The average ferrous scrap cost per ton melted at the company’s steel mills decreased $22 to $316 per ton.

The company’s steel processing locations (Heartland, Techs, United Steel Supply and Vulcan) represented 16 percent of the shipment mix in the second quarter 2019, compared to 13 percent in the sequential quarter and nine percent in the prior year second quarter.  These locations use steel products as their primary raw material, and the associated steel procurement cost represented 18 percent of the steel operations cost of goods sold for the second quarter 2019, 15 percent for the sequential quarter, and nine percent for the prior year second quarter.

Second quarter 2019 operating income from the company’s metals recycling operations decreased to $11 million, compared to $20 million in the sequential first quarter, as a result of both lower nonferrous shipments and ferrous selling values.  Both prime and obsolete scrap indices fell almost $90 per gross ton from March to June 2019.  As scrap flows started to slow based on lower procurement values, scrap pricing appears to have stabilized in July.

Second quarter 2019 operating income from the company’s steel fabrication operations was a strong $31 million, or 49 percent higher than sequential first quarter results. Earnings improved as higher shipments and lower raw material steel input costs, resulted in expanded profit margins. The steel fabrication platform order backlog remains strong, and customers remain optimistic concerning non-residential construction projects.

Year-to-Date June 30, 2019 Comparison

For the six months ended June 30, 2019, net income was $399 million, or $1.78 per diluted share, with net sales of $5.6 billion, as compared to net income of $590 million, or $2.49 per diluted share, with net sales of $5.7 billion for the same period in 2018.  Although net sales remained consistent, first half 2019 operating income decreased 30 percent from record high 2018 results of $825 million, to $577 million.  The decline in earnings was driven by decreased product pricing at the company’s Butler and Columbus Flat Roll divisions as hot roll coil price indices fell approximately $200 per ton, or over 25 percent, since December 2018.

Compared to the first half 2018, the average first half 2019 external selling price for the company’s overall steel operations increased $11 to $890 per ton, based on additional volumes from the company’s Heartland and United Steel Supply locations. The average first half 2019 ferrous scrap cost per ton melted at the company’s steel mills decreased $7 to $327 per ton.

The company generated strong cash flow from operations of $543 million, paid cash dividends of $96 million, and repurchased $177 million of its common stock during the first half of 2019.

Outlook

“Based on domestic steel demand fundamentals, we are constructive concerning second half 2019 North American steel market dynamics,” said Millett. “We believe steel consumption will experience modest growth and will be supported by further steel import reductions and the end of steel inventory destocking.  There have been recent trade actions that we believe could have a positive impact in further reducing unfairly traded steel imports into the United States, including coated flat roll steel, which could have a significant positive impact for Steel Dynamics, as we are the largest non-automotive flat roll steel coater in the U.S.

“In combination with our existing and newly announced expansion initiatives, we believe there are firm drivers for our continued growth.  We are excited about our planned flat roll steel mill, and the anticipated long-term value creation it will bring through geographic and value-added product diversification. We plan for the new steel mill to have product capabilities beyond existing electric-arc-furnace flat roll steel producers today, competing even more effectively with the integrated steel model and foreign competition. We have targeted regional markets that represent over 27 million tons of relevant flat roll steel consumption, which includes the growing Mexican flat roll steel market. This facility should have a meaningful competitive advantage in those regions.

“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 and remain focused on delivering long-term shareholder value through organic and transactional growth opportunities,” concluded Millett.

Conference Call and Webcast

Steel Dynamics, Inc. will hold a conference call to discuss second quarter 2019 operating and financial results on Tuesday, July 23, 2019, at 10:00 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. For the call, a quarterly slide presentation will be available on 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 July 28, 2019.

About Steel Dynamics, Inc.

Steel Dynamics 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 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 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 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, manufacturing, appliance, pipe and tube, and other steel-consuming industries; (4) fluctuations in the cost of key raw materials and supplies (including steel scrap, iron units, zinc, graphite electrodes, 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 or assets; (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						Six Months Ended						Three Months
	June 30,						June 30,						Ended
	2019			2018			2019			2018			March 31, 2019
Net sales	$	2,770,515		$	3,090,525		$	5,587,950		$	5,694,400		$	2,817,435
Costs of goods sold	2,349,349			2,438,443			4,733,214			4,578,902			2,383,865
Gross profit	421,166			652,082			854,736			1,115,498			433,570
Selling, general and administrative expenses	106,250			101,031			217,288			207,462			111,038
Profit sharing	22,871			42,335			46,548			68,997			23,677
Amortization of intangible assets	7,013			6,829			14,026			13,755			7,013
Operating income	285,032			501,887			576,874			825,284			291,842
Interest expense, net of capitalized interest	32,321			31,512			63,443			63,408			31,122
Other expense (income), net	(4,249		)	(5,035		)	(10,592		)	(9,498		)	(6,343		)
Income before income taxes	256,960			475,410			524,023			771,374			267,063
Income tax expense	60,214			112,838			122,450			183,327			62,236
Net income	196,746			362,572			401,573			588,047			204,827
Net (income) loss attributable to noncontrolling interests	(2,444		)	(123		)	(2,943		)	1,953			(499		)
Net income attributable to Steel Dynamics, Inc.	$	194,302		$	362,449		$	398,630		$	590,000		$	204,328
Basic earnings per share attributable to Steel Dynamics, Inc. stockholders	$	0.88		$	1.54		$	1.79		$	2.50		$	0.91
Weighted average common shares outstanding	221,505			235,617			224,058			236,120			224,058
Diluted earnings per share attributable to Steel Dynamics, Inc. stockholders, including the effect of assumed conversions when dilutive	$	0.87		$	1.53		$	1.78		$	2.49		$	0.91
Weighted average common shares and share equivalents outstanding	222,519			236,945			223,741			237,334			224,962
Dividends declared per share	$	0.2400		$	0.1875		$	0.4800		$	0.3750		$	0.2400

Steel Dynamics, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	June 30,			December 31,
	2019			2018
	(unaudited)
Assets
Current assets
Cash and equivalents	$	972,561		$	828,220
Short term investments	114,154			228,783
Accounts receivable, net	1,072,879			1,043,756
Inventories	1,802,759			1,859,168
Other current assets	61,248			72,730
Total current assets	4,023,601			4,032,657
Property, plant and equipment, net	2,947,243			2,945,767
Intangible assets, net	256,302			270,328
Goodwill	526,462			429,645
Other assets	104,306			25,166
Total assets	$	7,857,914		$	7,703,563
Liabilities and Equity
Current liabilities
Accounts payable	$	525,156		$	550,754
Income taxes payable	3,032			7,468
Accrued expenses	325,417			436,681
Current maturities of long-term debt	72,131			24,234
Total current liabilities	925,736			1,019,137
Long-term debt	2,355,917			2,352,489
Deferred income taxes	457,784			435,838
Other liabilities	70,196			8,870
Total liabilities	3,809,633			3,816,334
Commitments and contingencies
Redeemable noncontrolling interests	139,930			111,240
Equity
Common stock	645			645
Treasury stock, at cost	(1,354,157		)	(1,184,243		)
Additional paid-in capital	1,167,505			1,160,048
Retained earnings	4,250,419			3,958,320
Accumulated other comprehensive income	78			301
Total Steel Dynamics, Inc. equity	4,064,490			3,935,071
Noncontrolling interests	(156,139		)	(159,082		)
Total equity	3,908,351			3,775,989
Total liabilities and equity	$	7,857,914		$	7,703,563

Steel Dynamics, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Operating activities:
Net income	$	196,746		$	362,572		$	401,573		$	588,047
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	80,911			79,120			161,085			155,255
Equity-based compensation	9,080			8,041			24,388			20,882
Deferred income taxes	11,550			11,993			23,641			21,538
Other adjustments	(564		)	(145		)	164			(115		)
Changes in certain assets and liabilities:
Accounts receivable	70,624			(163,465		)	9,562			(282,283		)
Inventories	64,941			(90,312		)	104,410			(171,023		)
Other assets	7,292			(630		)	7,593			(735		)
Accounts payable	(58,484		)	48,919			(55,278		)	115,251
Income taxes receivable/payable	(36,428		)	22,579			13,422			86,541
Accrued expenses	15,805			47,361			(147,534		)	(29,390		)
Net cash provided by operating activities	361,473			326,033			543,026			503,968
Investing activities:
Purchases of property, plant and equipment	(85,120		)	(55,203		)	(139,556		)	(105,809		)
Purchases of short term investments	(49,465		)	(50,000		)	(99,142		)	(90,000		)
Proceeds from maturities of short term investments	109,034			—			213,771			—
Acquisition of business, net of cash and restricted cash acquired	—			(396,409		)	(93,412		)	(396,409		)
Other investing activities	913			657			1,277			886
Net cash used in investing activities	(24,638		)	(500,955		)	(117,062		)	(591,332		)
Financing activities:
Issuance of current and long-term debt	125,222			124,571			246,456			217,629
Repayment of current and long-term debt	(133,875		)	(118,089		)	(249,146		)	(231,123		)
Dividends paid	(53,503		)	(44,268		)	(95,742		)	(81,065		)
Purchase of treasury stock	(93,136		)	(49,145		)	(177,444		)	(118,414		)
Other financing activities	(12		)	(3,144		)	(5,732		)	(8,324		)
Net cash used in financing activities	(155,304		)	(90,075		)	(281,608		)	(221,297		)
Increase (decrease) in cash, cash equivalents, and restricted cash	181,531			(264,997		)	144,356			(308,661		)
Cash, cash equivalents, and restricted cash at beginning of period	797,248			991,421			834,423			1,035,085
Cash, cash equivalents, and restricted cash at end of period	$	978,779		$	726,424		$	978,779		$	726,424
Supplemental disclosure information:
Cash paid for interest	$	53,981		$	53,226		$	62,587		$	61,855
Cash paid for income taxes, net	$	84,516		$	79,995		$	86,355		$	78,950

Steel Dynamics, Inc.

SUPPLEMENTAL INFORMATION

(dollars in thousands)

	Second Quarter						Year to Date
	2019			2018			2019			2018			1Q 2019
External Net Sales
Steel	$	2,106,350		$	2,325,426		$	4,230,920		$	4,247,216		$	2,124,570
Fabrication	241,424			217,439			469,904			418,931			228,480
Metals Recycling	323,100			424,704			674,237			812,826			351,137
Other	99,641			122,956			212,889			215,427			113,248
Consolidated	$	2,770,515		$	3,090,525		$	5,587,950		$	5,694,400		$	2,817,435
Operating Income
Steel	$	294,769		$	537,192		$	607,206		$	875,549		$	312,437
Fabrication	30,706			14,185			51,369			34,017			20,663
Metals Recycling	10,614			25,728			30,572			53,533			19,958
Operations	336,089			577,105			689,147			963,099			353,058
Non-cash amortization of intangible assets	(7,013		)	(6,829		)	(14,026		)	(13,755		)	(7,013		)
Profit sharing expense	(22,871		)	(42,335		)	(46,548		)	(68,997		)	(23,677		)
Non-segment operations	(21,173		)	(26,054		)	(51,699		)	(55,063		)	(30,526		)
Consolidated Operating Income	$	285,032		$	501,887		$	576,874		$	825,284		$	291,842
Adjusted EBITDA
Net income	$	196,746		$	362,572		$	401,573		$	588,047		$	204,827
Income taxes	60,214			112,838			122,450			183,327			62,236
Net interest expense	25,598			25,928			49,615			53,410			24,017
Depreciation	72,585			70,871			144,431			138,694			71,846
Amortization of intangible assets	7,013			6,829			14,026			13,755			7,013
Noncontrolling interest	(2,444		)	(124		)	(2,943		)	1,953			(499		)
EBITDA	359,712			578,914			729,152			979,186			369,440
Non-cash adjustments
Unrealized hedging (gain) loss	(3,719		)	2,836			(1,977		)	(7,120		)	1,742
Inventory valuation	351			265			592			465			241
Equity-based compensation	9,080			8,375			19,699			17,955			10,619
Adjusted EBITDA	$	365,424		$	590,390		$	747,466		$	990,486		$	382,042
Other Operating Information
Steel
Average external sales price (Per ton) *	$	879		$	932		$	890		$	879		$	902
Average ferrous cost (Per ton melted) #	$	316		$	348		$	327		$	334		$	338
Flat Roll shipments
Butler and Columbus Flat Roll Divisions	1,574,463			1,601,498			3,101,314			3,150,312			1,526,851
Techs, Heartland, and USS Divisions (processing)	422,849			222,303			753,624			417,065			330,775
Long Product shipments
Structural and Rail Division	352,013			441,019			728,276			809,802			376,263
Engineered Bar Products Division	195,644			250,092			402,518			465,242			206,874
Roanoke Bar Division	128,460			140,143			280,860			263,546			152,400
Steel of West Virginia	95,929			78,881			187,177			162,613			91,248
Total shipments (Tons)	2,769,358			2,733,936			5,453,769			5,268,580			2,684,411
External shipments (Tons) *	2,386,851			2,480,223			4,734,060			4,807,738			2,347,209
Steel production (Tons) *	2,769,910			2,768,512			5,515,038			5,369,712			2,745,128
Metals Recycling
Nonferrous shipments (000’s of pounds)	266,222			304,034			558,260			575,662			292,038
Ferrous shipments (Gross tons)	1,189,679			1,347,016			2,361,040			2,603,915			1,171,361
External ferrous shipments (Gross tons)	425,477			466,125			808,318			903,115			382,841
Fabrication
Average external sales price (Per ton)	$	1,538		$	1,380		$	1,556		$	1,363		$	1,575
Shipments (Tons)	156,983			157,902			302,205			307,828			145,222

*Includes all steel operations

#Includes ferrous cost per ton melted at our steel mills