Steel Dynamics(STLD) - 2025 Q2 - Quarterly Report

PART I. Financial Information Financial Statements This section presents the unaudited consolidated financial statements for the three and six-month periods ended June 30, 2025, and 2024, detailing the company's financial position and performance Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $5,690,599 | $5,431,338 | | Total assets | $15,548,638 | $14,935,233 | | Total current liabilities | $1,819,081 | $2,150,583 | | Long-term debt | $3,779,559 | $2,804,017 | | Total liabilities | $6,704,588 | $5,989,987 | | Total Steel Dynamics, Inc. equity | $8,864,052 | $8,934,287 | Consolidated Statements of Income Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total net sales | $4,565,123 | $4,632,634 | | Gross profit | $618,468 | $774,837 | | Operating income | $382,855 | $559,123 | | Net income attributable to SDI | $298,726 | $427,998 | | Diluted EPS | $2.01 | $2.72 | H1 2025 vs H1 2024 Performance (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total net sales | $8,934,318 | $9,326,637 | | Gross profit | $1,105,012 | $1,755,635 | | Operating income | $657,999 | $1,310,098 | | Net income attributable to SDI | $515,877 | $1,012,039 | | Diluted EPS | $3.44 | $6.39 | Consolidated Statements of Cash Flows Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $454,214 | $737,778 | | Net cash used in investing activities | ($484,455) | ($502,520) | | Net cash used in financing activities | ($101,488) | ($806,196) | | Decrease in cash | ($131,729) | ($570,938) | Notes to Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies and financial results, covering business segments, debt, inventory, equity, and segment performance - The company operates through four reporting segments: steel operations, metals recycling operations, steel fabrication operations, and aluminum operations. The aluminum operations segment was recently reorganized to include an entity previously in the metals recycling segment[14] - In March 2025, the company issued $600.0 million of 5.250% notes due 2035 and $400.0 million of 5.750% notes due 2055. Proceeds were used for general corporate purposes, including the repayment of $400.0 million notes that matured in June 2025[36][38] Segment Operating Income (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Steel Operations | $381,094 | $438,620 | | Metals Recycling Operations | $21,290 | $22,839 | | Steel Fabrication Operations | $93,114 | $180,740 | | Aluminum Operations | ($40,627) | ($13,862) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the company's financial performance for Q2 and H1 2025 versus 2024, covering consolidated and segment results, liquidity, capital resources, and debt management - Consolidated operating income for Q2 2025 decreased 32% YoY to $382.9 million, primarily due to metal spread contraction in the steel and steel fabrication segments[65] - For the first half of 2025, consolidated operating income fell 50% YoY to $658.0 million, with net income attributable to SDI decreasing by 49% to $515.9 million[66] Segment Operating Results This section details the performance of each of the company's four operating segments, noting lower income for steel and fabrication, a slight decrease for recycling, and increased start-up costs for aluminum - Steel Operations: Q2 2025 operating income decreased 13% YoY to $381.1 million. This was caused by a 3% decrease in metal spread, as rising scrap costs outpaced flat average selling prices, and a $32.3 million write-off of consumable assets[74] - Metals Recycling Operations: Q2 2025 operating income decreased 7% YoY to $21.3 million. While ferrous shipments hit a record high, a 9% decrease in ferrous metal spreads offset these gains[78] - Steel Fabrication Operations: Q2 2025 operating income dropped 48% YoY to $93.1 million. The decline was driven by a 15% decrease in volume and a 19% contraction in metal spread as selling prices fell faster than steel input costs[84][85] - Aluminum Operations: The segment produced and sold its first aluminum coils late in Q2 2025. Results primarily reflect increasing construction, start-up, and commissioning costs, leading to a higher operating loss compared to the prior year[87] Liquidity and Capital Resources The company maintains a strong liquidity position, with over $1.9 billion available as of June 30, 2025, and invested significantly in capital projects, dividends, and share repurchases during the first half of the year Liquidity Position as of June 30, 2025 (in thousands) | Component | Amount | | :--- | :--- | | Cash and equivalents | $458,048 | | Short-term and other investments | $285,455 | | Revolver availability | $1,190,673 | | Total liquidity | $1,934,176 | - Total outstanding debt increased by $550.0 million from year-end 2024 to $3.8 billion, following the issuance of new senior notes in March 2025[99] - The company repurchased $450.2 million of its common stock in the first half of 2025. As of June 30, 2025, $1.2 billion remained available under the current share repurchase authorization[106] Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risk from commodity price fluctuations and uses fixed-price contracts and financial derivatives to manage this risk, particularly for nonferrous and ferrous metals - The company is exposed to price fluctuations in raw materials such as metallic scrap, electricity, natural gas, and zinc[108] - To mitigate risk, the company enters into base metal financial contracts to protect profit margins on certain fixed-price sales and purchase commitments. Most of these contracts settle within the next twelve months[110] Controls and Procedures As of June 30, 2025, the company's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[111] - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[112] PART II. Other Information Legal Proceedings The company is involved in various litigation matters arising in the ordinary course of business, none of which are expected to materially impact its financial condition, results of operations, or liquidity - Ongoing litigation, administrative proceedings, and environmental matters are not expected to have a material impact on the company[113] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the company's risk factors have occurred since the filing of the 2024 Form 10-K[115] Issuer Purchases of Equity Securities This section details the company's repurchases of its own common stock during the second quarter of 2025, all made under the publicly announced share repurchase program authorized in February 2025 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 795,009 | $119.36 | | May 2025 | 515,824 | $132.19 | | June 2025 | 279,492 | $132.27 | | Total Q2 | 1,590,325 | | - In February 2025, the board of directors authorized a new share repurchase program for up to $1.5 billion of the company's common stock[117] Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, officer certifications, and interactive data files (XBRL) - The exhibits filed with this report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL financial data[124][125]