01—Abstract
Summary
Summary of the 10-Q filed August 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. (STLD) reported a sharp earnings decline in the second quarter of 2024 as metal spreads contracted across its operating platforms.
Net sales for the three months ended June 30, 2024 were $4.63 billiona, down from $5.08 billion a year earlier, and operating income fell to $559.1 million from $1.06 billion. Net income attributable to Steel Dynamics was $428.0 million, or $2.72 diluted EPS, compared with $812.1 million, or $4.81 diluted EPS, in the second quarter of 2023. For the first half of 2024, net income attributable to the company was $1.01 billion, or $6.39 diluted EPS, versus $1.45 billion, or $8.49 diluted EPS, in the prior-year period.
By segment, steel operations generated $438.6 millionb of operating income in the quarter, down 37%, as average selling prices fell faster than scrap costs. Steel fabrication operating income dropped 61% to $180.7 million on lower volume and selling prices, though management cited a historically strong order backlog extending through the fourth quarter of 2024. The aluminum operations segment, which is building a recycled aluminum flat rolled products mill in Columbus, Mississippi, recorded an operating loss of $19.2 million in the quarter as construction and start-up costs were incurred.
Liquidity remained solid, with total liquidity of $2.67 billionc at June 30, 2024, including $829.98 million of cash and equivalents and $1.19 billion of Revolver availability. Cash flow from operations was $737.8 million in the first half of 2024, down from $1.54 billion a year earlier, while the company repurchased $607.1 million of common stock and paid $140.6 million in dividends. In July 2024, the company issued $600.0 million of 5.375% notes due 2034, with proceeds intended in part to repay its 2.800% senior notes due December 2024.
02—Key points
Key Highlights
- Net income attributable to Steel Dynamics, Inc. for Q2 2024 was $428.0 million ($2.72 diluted EPS), down from $812.1 million ($4.81 diluted EPS) in Q2 2023.
- Consolidated operating income fell 47% to $559.1 million in Q2 2024 as metal spread contracted across all operating platforms.
- Steel fabrication operating income decreased 61% to $180.7 million in Q2 2024, with average selling prices down $1,406 per ton, or 32%.
- Total liquidity was $2.67 billion at June 30, 2024, including $829.98 million of cash and equivalents and $1.19 billion of Revolver availability.
- The company issued $600.0 million of 5.375% notes due 2034 in July 2024, a subsequent event, with proceeds intended for general corporate purposes including repayment of 2.800% senior notes due December 2024.
- Share repurchases totaled $607.1 million in the first half of 2024, with $793.2 million remaining under the November 2023 $1.5 billion program.
- The aluminum operations segment, building a recycled aluminum flat rolled products mill in Columbus, Mississippi, posted an operating loss of $19.2 million in Q2 2024, with mill operations expected to begin mid-2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Steel Dynamics kept $0.09.
- Revenue$4.63B100.0%
- Cost of revenue−$3.86B83.3%
- Gross profit$774.8M16.7%
- Operating costs−$215.7M4.7%
- Operating income$559.1M12.1%
- Interest, other & tax−$127.4M2.8%
- Net income$431.7M9.3%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 8, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $4.63B$5.08B | −8.8% |
| Cost of Revenue | $3.86B$3.77B | +2.2% |
| Gross Profit | $774.84M$1.31B | −40.7% |
| SG&A Expenses | $160.02M$141.21M | +13.3% |
| Operating Income | $559.12M$1.06B | −47.4% |
| Net Income | $431.69M$816.18M | −47.1% |
| EPS (Basic) | $2.73$4.83 | −43.5% |
| EPS (Diluted) | $2.72$4.81 | −43.5% |
| Shares Outstanding (Basic) | 156.86M168.01M | −6.6% |
| Shares Outstanding (Diluted) | 157.58M168.87M | −6.7% |
05—Questions
Frequently Asked Questions
Why did Steel Dynamics' earnings decline so sharply in the second quarter of 2024?
Management attributed the decline to metal spread compression across all operating platforms. In steel operations, average selling prices decreased 9%, or $111 per ton, while metallic raw material costs fell 13% per ton, a smaller decline than selling prices. Steel fabrication also saw lower selling prices and a 11% volume decrease, and metal spread contracted 44%.
How is the company's liquidity and debt position at June 30, 2024?
Total liquidity was $2.67 billion, including $829.98 million of cash and equivalents, $654.0 million of short-term and other investments, and $1.19 billion of Revolver availability. Total outstanding debt was $3.1 billion, and the long-term debt to capitalization ratio was 24.9%. The company was in compliance with its financial covenants, with an interest coverage ratio of 30.84:1.00 against a minimum of 2.50:1.00.
What is the status of the aluminum operations and its capital spending?
The company is building a recycled aluminum flat rolled products mill in Columbus, Mississippi, through a joint venture with Unity Aluminum, Inc. in which SDI holds a 94.4% equity interest. The mill is expected to begin operations in mid-2025, and the Mexico and U.S. recycled slab centers are expected to begin operations in late 2024 and mid-2025, respectively. The company plans to invest $2.7 billion in this project, funded from available cash and operating cash flow, and first-half 2024 property, plant and equipment purchases totaled $793.5 million.
What did the company do with capital returns during the first half of 2024?
Steel Dynamics repurchased $607.1 million of common stock in the first half of 2024 and paid $140.6 million in cash dividends. The quarterly dividend was raised to $0.46 per share in the first quarter of 2024, from $0.425 per share in 2023. As of June 30, 2024, $793.2 million remained available under the November 2023 share repurchase program.
What debt activity occurred after the balance sheet date?
In July 2024, the company issued $600.0 million of 5.375% notes due 2034. The net proceeds are intended for general corporate purposes, which may include repaying the company's 2.800% senior notes due December 2024. The current maturities of long-term debt rose to $815.6 million at June 30, 2024, partly because $400 million of 2.400% senior notes due 2025 were reclassified as current.
06—Continue