01—Abstract
Summary
Summary of the 10-Q filed November 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Steel Dynamics, Inc. (STLD) reported a sharp earnings decline in its third-quarter 2024 Form 10-Q.
Net sales for the three months ended September 30, 2024 were $4.34 billiona, down from $4.59 billion a year earlier, while operating income fell to $395.4 million from $733.6 million and net income attributable to Steel Dynamics was $317.8 million versus $577.2 million. The filing attributes the decline to metal spread contraction across all operating platforms, with steel operations' average selling prices down 11% and steel fabrication average selling prices down 28% in the quarter. For the nine months, operating income was $1.71 billion versus $2.63 billion and net income attributable was $1.33 billion versus $2.03 billion.
Cash generation and liquidity remained substantial. Operating cash flow was $1.50 billionb for the first nine months of 2024, compared with $2.66 billion a year earlier, and the company invested $1.41 billion in property, plant and equipment, primarily in its aluminum and steel operations. Total liquidity was $3.09 billion at September 30, 2024, including $1.02 billion of cash and equivalents and $1.19 billion of Revolver availability.
Total debt rose to $3.7 billionc after the July 2024 issuance of $600.0 million of 5.375% senior notes due 2034, and the long-term debt to capitalization ratio increased to 28.9% from 25.8%. The company continued to return capital to shareholders, paying $212.2 million in dividends and repurchasing $917.0 million of common stock in the first nine months of 2024, with $486.4 million remaining under the November 2023 $1.5 billion program.
The company stated it was in compliance with its financial covenants, with an interest coverage ratio of 25.88:1.00 against a 2.50:1.00 minimum. The aluminum operations segment, including the flat rolled mill in Columbus, Mississippi, remains under construction with operations expected to begin in mid-2025.
02—Key points
Key Highlights
- Net income attributable to Steel Dynamics fell to $317.8 million in Q3 2024 from $577.2 million in Q3 2023; nine-month net income attributable was $1.33 billion versus $2.03 billion.
- Consolidated operating income decreased 46% to $395.4 million in the third quarter, as metal spread contracted across all operating platforms.
- Steel operations average selling prices fell 11% ($130 per ton) in Q3 2024, with 80% of that business contractually tied to lagging pricing indices.
- Steel fabrication operating income fell 50% to $165.6 million in Q3 2024, with average selling prices down 28% and metal spread contracting 36%.
- Operating cash flow was $1.50 billion for the first nine months of 2024, versus $2.66 billion a year earlier, while capital expenditures reached $1.41 billion.
- Total liquidity was $3.09 billion at September 30, 2024; the company issued $600.0 million of 5.375% senior notes due 2034 in July 2024, lifting total debt to $3.7 billion.
- The company repurchased $917.0 million of stock and paid $212.2 million in dividends in the first nine months of 2024, with $486.4 million remaining under its November 2023 program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Steel Dynamics kept $0.07.
- Revenue$4.34B100.0%
- Cost of revenue−$3.74B86.1%
- Gross profit$605.2M13.9%
- Operating costs−$209.8M4.8%
- Operating income$395.4M9.1%
- Interest, other & tax−$74.5M1.7%
- Net income$320.9M7.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 8, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $4.34B$4.59B | −5.4% |
| Cost of Revenue | $3.74B$3.64B | +2.8% |
| Gross Profit | $605.22M$952.02M | −36.4% |
| SG&A Expenses | $167.69M$145.90M | +14.9% |
| Operating Income | $395.44M$733.55M | −46.1% |
| Net Income | $320.89M$579.78M | −44.7% |
| EPS (Basic) | $2.06$3.49 | −41.0% |
| EPS (Diluted) | $2.05$3.47 | −40.9% |
| Shares Outstanding (Basic) | 154.06M165.17M | −6.7% |
| Shares Outstanding (Diluted) | 154.81M166.10M | −6.8% |
05—Questions
Frequently Asked Questions
Why did Steel Dynamics' earnings decline so sharply in the third quarter of 2024?
The filing attributes the decline to metal spread compression across all operating platforms. Average steel selling prices fell faster than scrap costs, and steel fabrication selling prices dropped 28% per ton, which together with lower fabrication volume drove operating income down 46% consolidated.
How did the company's debt and liquidity change in 2024?
Total outstanding debt rose to $3.7 billion, an increase of $612.8 million from December 31, 2023, following the July 2024 issuance of $600.0 million of 5.375% notes due 2034. Liquidity stood at $3.09 billion at September 30, 2024, including $1.2 billion of unsecured Revolver availability, and the company stated it was in compliance with its covenants.
What is the status of the aluminum operations investment?
The company is constructing a recycled aluminum flat rolled products mill in Columbus, Mississippi, in a joint venture with Unity Aluminum, Inc. in which it holds a 94.4% equity interest, along with two satellite recycled aluminum slab centers. The flat rolled mill operations are expected to begin in mid-2025, and the Mexico and US slab centers in 2025. The company plans to invest $2.7 billion in the project, funded by available cash and operating cash flow.
How much did the company return to shareholders in 2024?
In the first nine months of 2024, the company paid $212.2 million in cash dividends and repurchased $917.0 million of common stock. The quarterly dividend was raised 8% to $0.46 per share in the first quarter of 2024, and $486.4 million remained available under the November 2023 $1.5 billion repurchase program as of September 30, 2024.
06—Continue