Steel Dynamics(US:STLD)2024-02-28 16:00Production Capacity and Operations - Steel Dynamics, Inc. has an estimated steelmaking and steel coating capacity of approximately 16 million tons and actual metals recycling volumes as of December 31, 2023[22]. - The Southwest-Sinton Flat Roll Division has an annual steel production capacity of approximately 3.0 million tons, with new coating lines expected to begin operating in early 2024[29]. - The company has an annual production capacity of approximately 9.4 million tons of flat roll steel and an additional 2.0 million tons of processing capacity[70]. - The company has a flat roll galvanizing capability of 4.8 million tons and painting capability of 1.5 million tons[70]. - The company announced a $2.7 billion project to construct a 650,000 metric ton recycled aluminum flat rolled products mill, expected to begin commissioning in mid-2025[36]. - The new aluminum mill's product mix is projected to be approximately 45% can stock, 35% automotive, and 20% common alloy and industrial use[36]. Financial Performance - Total net sales for 2023 were $18,795,316, a decrease of 15.5% from $22,260,774 in 2022[306]. - Gross profit for 2023 was $4,045,883, down 33.9% from $6,117,831 in 2022[306]. - Net income attributable to Steel Dynamics, Inc. for 2023 was $2,450,882, a decline of 36.7% compared to $3,862,674 in 2022[306]. - Basic earnings per share for 2023 were $14.72, down from $21.06 in 2022, representing a decrease of 30.8%[306]. - The company reported a comprehensive income of $2,450,414 for 2023, down from $3,865,654 in 2022, a decrease of 36.6%[307]. - Net income for 2023 was $2,467,332, a decrease of 36.4% compared to $3,879,492 in 2022[313]. - Net cash provided by operating activities decreased to $3,519,928 in 2023 from $4,460,403 in 2022, reflecting a decline of 21.1%[313]. - Total current assets decreased to $6,787,826 in 2023 from $7,638,018 in 2022, a decline of 11.2%[306]. - Total assets increased to $14,908,420 in 2023, up from $14,159,984 in 2022, reflecting a growth of 5.3%[306]. - Total liabilities remained relatively stable at $6,068,893 in 2023 compared to $6,064,179 in 2022[306]. - Retained earnings increased to $13,545,590 in 2023 from $11,375,765 in 2022, an increase of 19.2%[311]. - Dividends declared per share increased to $1.70 in 2023 from $1.36 in 2022, a rise of 25%[306]. Market and Sales Dynamics - Over 70% of the company's steel and steel fabrication sales are considered value-added, contributing to higher volume and profitability[26]. - In 2023, the company's own steel-consuming businesses purchased 1.8 million tons of steel from its steel mills, representing 14% of total steel shipments[33]. - Steel operations accounted for 67% of consolidated net sales in 2023, with a slight decrease from 72% in 2021[69]. - Exported sales represented 8% of steel segment net sales in 2023, up from 4% in 2021[69]. - Sheet steel operations represented 68%, 77%, and 73% of steel operations net sales in 2023, 2022, and 2021, respectively, with 9.2 million tons produced in 2023[76]. - The company shipped 7,459,023 tons of sheet steel products from Butler, Columbus, and Sinton in 2023, up from 6,772,162 tons in 2022[77]. - Metals recycling operations accounted for 12% of consolidated net sales in 2023, with export sales representing 18% of metals recycling segment net sales[88]. Environmental and Regulatory Compliance - The company aims for a 35% reduction in its steel mills' Scope 1 GHG emissions through a joint venture producing biocarbon, with operations planned to begin in late 2024[41]. - The company is committed to reducing its environmental footprint and has set GHG emission reduction goals for 2025, 2030, and 2050, which may increase operational costs[139]. - Compliance with environmental regulations may result in increased capital requirements and operational costs, impacting the company's financial condition[141]. - Environmental compliance costs may increase due to evolving regulations, potentially impacting operational costs[113]. Workforce and Management - The total team size was approximately 12,600 full-time members as of December 31, 2023[53]. - The overall team retention rate was approximately 80% in 2023, with U.S.-based teams retention at 89%[58]. - The leadership team emphasizes decentralized operational decision-making and performance-based incentive compensation aligned with profitability and operational performance[42]. - The performance-based compensation framework aligns employee interests with long-term growth and shareholder value[56]. Risks and Challenges - The company is significantly impacted by fluctuations in demand from cyclical industries such as construction, automotive, and manufacturing, which may lead to reduced sales and profitability[125]. - Increased competition from foreign steel producers, particularly from countries like China and Vietnam, may exert downward pressure on U.S. steel prices[128]. - The availability and prices of raw materials, especially ferrous scrap, are subject to market volatility, which can constrain operating levels and profit margins[133]. - Economic downturns and reduced consumer confidence may lead to decreased demand for the company's products, affecting overall financial performance[126]. - The company faces risks associated with the creditworthiness of its customers and suppliers, which could impact sales and increase exposure to losses[126]. - Global economic factors, including trade policies and political actions, may disrupt the company's supply chain and adversely affect its business operations[124]. - The company is exposed to cybersecurity threats that may compromise sensitive data and disrupt operations, potentially leading to financial losses[156]. Debt and Financial Management - As of December 31, 2023, total outstanding debt is $3,052,042, with a weighted-average interest rate of 3.2% for fixed-rate debt and 7.2% for variable-rate debt[271]. - The company has a cumulative unrealized loss of $6.8 million associated with financial contracts, primarily set to settle in 2024[274]. - Fixed-rate debt maturing in 2024 amounts to $400,901 with an average interest rate of 2.8%[271]. - The average interest rate for variable-rate debt maturing in 2024 is 7.2%[271]. - The fair value of total debt is reported at $2,776,826[271]. - The company has a risk strategy to protect profit margins through base metal financial contracts[274]. - The company is required to maintain certain financial covenants under its senior unsecured credit facility, which could limit its operational flexibility[171].