01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. reported a sharp decline in 2023 profitability from record 2022 levels, although volumes were strong.
Net sales were $18.80 billiona, down 16% from $22.26 billion in 2022. Operating income fell 38% to $3.15 billion from $5.09 billion, and net income attributable to Steel Dynamics, Inc. decreased 37% to $2.45 billion. Diluted earnings per share were $14.64, compared with $20.92 in 2022.
Management attributed the decline to metal spread compression across operating segments, as average selling prices fell faster than scrap costs despite record steel operations shipments of 12.8 million tons. Balance sheet and cash flow remained solid. Cash flow from operations was $3.52 billionb, and total liquidity was $3.54 billion at December 31, 2023.
Total debt was $3.1 billionc, and the company had a $1.2 billion unsecured revolver with no borrowings outstanding. Capital expenditures were $1.66 billion, driven largely by the $2.7 billion recycled aluminum flat rolled products mill under construction in Columbus, Mississippi, which is expected to begin operations in 2025. The company repurchased $1.5 billion of common stock in 2023 and declared dividends of $1.70 per share, up from $1.36 in 2022.
The company also changed its reportable segments in the fourth quarter of 2023 to steel operations, metals recycling operations, steel fabrication operations, and aluminum operations. Ernst & Young LLP issued an unqualified opinion on the financial statements and an effective opinion on internal control over financial reporting as of December 31, 2023.
02—Key points
Key Highlights
- Net sales of $18.80 billion, down 16% from $22.26 billion in 2022.
- Operating income of $3.15 billion, down 38% from $5.09 billion; net income attributable to Steel Dynamics, Inc. of $2.45 billion, down 37%.
- Diluted EPS of $14.64 versus $20.92 in 2022.
- Record steel operations shipments of 12.8 million tons, but average steel selling prices decreased 18%, compressing metal spreads.
- Cash flow from operations of $3.52 billion; total liquidity of $3.54 billion, including $1.4 billion in cash and equivalents and $1.2 billion of unsecured revolver availability.
- Capital investments of $1.66 billion in 2023, including the $2.7 billion recycled aluminum flat rolled products mill project expected to begin operations in 2025.
- Repurchased $1.5 billion of common stock in 2023 and declared dividends of $1.70 per share, up from $1.36 in 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Steel Dynamics kept $0.13.
- Revenue$18.80B100.0%
- Cost of revenue−$14.75B78.5%
- Gross profit$4.05B21.5%
- Operating costs−$894.7M4.8%
- Operating income$3.15B16.8%
- Interest, other & tax−$683.8M3.6%
- Net income$2.47B13.1%
Where FY2023 revenue went
$18.80B- Cost of revenue: $14.75B, 78% of revenue
- Net income: $2.47B, 13% of revenue
- SG&A: $588.6M, 3.1% of revenue
- Other operating costs: $306.1M, 1.6% of revenue
- Interest, other & tax: $683.8M, 3.6% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $18.80B$22.26B | −15.6% |
| Cost of Revenue | $14.75B$16.14B | −8.6% |
| Gross Profit | $4.05B$6.12B | −33.9% |
| SG&A Expenses | $588.62M$545.62M | +7.9% |
| Operating Income | $3.15B$5.09B | −38.1% |
| Interest Expense | $76.48M$91.54M | −16.4% |
| Net Income | $2.47B$3.88B | −36.4% |
| EPS (Basic) | $14.72$21.06 | −30.1% |
| EPS (Diluted) | $14.64$20.92 | −30.0% |
| Shares Outstanding (Basic) | 166.55M183.39M | −9.2% |
| Shares Outstanding (Diluted) | 167.43M184.62M | −9.3% |
05—Questions
Frequently Asked Questions
Why did Steel Dynamics' earnings decline so sharply in 2023?
The filing attributes the decline to metal spread compression across all operating segments. Average steel selling prices fell 18% in 2023, more than scrap costs, while record shipments partly offset the impact. Steel fabrication operating income fell 34%, and steel operations operating income fell 39%.
How strong is the company's liquidity and balance sheet?
At December 31, 2023, total liquidity was $3.54 billion, consisting of $1.40 billion in cash and equivalents, $951.9 million in short-term and other investments, and $1.19 billion of unsecured revolver availability. Total debt was $3.1 billion, and the long-term debt to capitalization ratio was 25.8%. The company was in compliance with its financial covenants, with an interest coverage ratio of 36.13:1.00.
What is the status of the recycled aluminum flat rolled products mill?
The company is executing a $2.7 billion project to build a 650,000 metric ton recycled aluminum flat rolled products mill in Columbus, Mississippi, with two satellite recycled aluminum slab centers. The mill is expected to begin commissioning in mid-2025, and related expenditures are expected to continue through early 2025. The project is planned to be funded by available cash and operating cash flow.
How did the company return capital to shareholders in 2023?
Steel Dynamics repurchased 13.4 million shares for $1.5 billion in 2023 and declared cash dividends of $280.5 million, or $1.70 per share. The quarterly dividend was increased 25% to $0.425 per share in the first quarter of 2023. As of December 31, 2023, $1.4 billion remained available under the November 2023 repurchase program.
06—Continue