01—Abstract
Summary
Summary of the 10-Q filed May 10, 2024. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. (SDI), together with its subsidiaries, reported first-quarter 2024 net sales of $4.69 billiona, down from $4.89 billion in the first quarter of 2023, and net income attributable to Steel Dynamics, Inc. of $584.0 million, compared with $637.3 million a year earlier.
Consolidated operating income was $751.0 millionb versus $835.4 million, which the company attributes to metal spread contraction in its metals recycling and steel fabrication operations, partly offset by metal spread expansion in its steel operations. Steel operations operating income rose to $670.9 million from $341.9 million, while steel fabrication operating income fell to $178.3 million from $551.3 million. Cash flow from operations was $355.2 million versus $733.8 million in the prior-year quarter, and capital expenditures rose to $374.3 million from $226.3 million, driven by construction of the planned recycled aluminum flat rolled products mill and related slab centers.
The company repurchased $298.1 millionc of common stock and paid $68.0 million in dividends. Liquidity totaled $3.12 billion at March 31, 2024, including $1.04 billion in cash and equivalents, $886.4 million in short-term and other investments, and $1.19 billion of revolver availability, and the company stated it was in compliance with its credit facility covenants.
Total debt was $3.1 billiond, consistent with December 31, 2023, and the long-term debt to capitalization ratio was 25.1% at March 31, 2024, versus 25.8% at December 31, 2023. Management stated that liquidity and anticipated operating cash flow are sufficient for planned 2024 capital requirements.
02—Key points
Key Highlights
- Net sales were $4.69 billion, down from $4.89 billion in Q1 2023, with steel operations net sales up to $3.51 billion from $3.17 billion.
- Operating income was $751.0 million, down from $835.4 million, while steel operations operating income nearly doubled to $670.9 million.
- Steel fabrication operating income fell to $178.3 million from $551.3 million as selling prices declined and metal spread contracted.
- Net income attributable to Steel Dynamics, Inc. was $584.0 million, or $3.67 diluted EPS, compared with $637.3 million, or $3.70 diluted EPS, a year earlier.
- Cash flow from operations was $355.2 million versus $733.8 million, while capital expenditures increased to $374.3 million from $226.3 million.
- The company repurchased $298.1 million of stock and raised its quarterly dividend to $0.46 per share from $0.425.
- Total liquidity was $3.12 billion at March 31, 2024, and the company was in compliance with its credit facility covenants, with an interest coverage ratio of 35.44:1.00.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Steel Dynamics kept $0.13.
- Revenue$4.69B100.0%
- Cost of revenue−$3.71B79.1%
- Gross profit$980.8M20.9%
- Operating costs−$229.8M4.9%
- Operating income$751.0M16.0%
- Interest, other & tax−$163.5M3.5%
- Net income$587.5M12.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 10, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $4.69B$4.89B | −4.1% |
| Cost of Revenue | $3.71B$3.84B | −3.2% |
| Gross Profit | $980.80M$1.06B | −7.1% |
| SG&A Expenses | $159.51M$144.31M | +10.5% |
| Operating Income | $750.98M$835.36M | −10.1% |
| Interest Expense | $11.98M$22.51M | −46.8% |
| Net Income | $587.50M$644.33M | −8.8% |
| EPS (Basic) | $3.68$3.71 | −0.8% |
| EPS (Diluted) | $3.67$3.70 | −0.8% |
| Shares Outstanding (Basic) | 158.67M171.60M | −7.5% |
| Shares Outstanding (Diluted) | 159.35M172.48M | −7.6% |
05—Questions
Frequently Asked Questions
Why did operating income decline despite higher steel operations profits?
Metal spread contracted in the metals recycling and steel fabrication segments, and those declines more than offset the metal spread expansion in steel operations. Steel fabrication operating income fell to $178.3 million from $551.3 million, and metals recycling operating income fell to $18.7 million from $39.7 million.
How is the company funding its aluminum investment?
The filing states the company is executing a plan to invest $2.7 billion in a recycled aluminum flat rolled products mill with two satellite slab centers, planned to be funded by available cash and operating cash flow. Related expenditures began in the third quarter of 2022 and are expected to continue through early 2025.
What is the company's debt position and covenant compliance?
Total outstanding debt was $3.1 billion, consistent with December 31, 2023. The $1.2 billion unsecured revolver had no borrowings outstanding at March 31, 2024, and the company reported an interest coverage ratio of 35.44:1.00 against a required minimum of 2.50:1.00, and a debt to capitalization ratio of 0.25:1.00 against a maximum of 0.60:1.00.
How much capital has the company returned to shareholders?
In the first quarter of 2024 the company repurchased $298.1 million of common stock and paid $68.0 million in cash dividends. At March 31, 2024, $1.1 billion remained available under the November 2023 share repurchase program, which authorized up to $1.5 billion.
06—Continue