Steel Dynamics, Inc. · NASDAQ:STLD
Steel Dynamics — Q3 2023 Earnings Presentation
31 slides from Steel Dynamics's earnings presentation, Oct 19, 2023
Slide 1: Investor Call Presentation Third Quarter 2023
19 October 2023 2022 Investor Call Presentation Investor Third Quarter 2023 Presentation Health and Health and Safety Entrepreneurial Culture Entrepreneurial Culture Customer Commitment Customer Commitment Strategic Growth Strategic Growth z Innovation Innovation Financial Strength Financial Strengt
Slide 2: Forward looking statements and Non-GAAP financial measures
Forward looking statements and Non-GAAP financial measures Forward-Looking Statements More specifically, refer to Steel Dynamics' more detailed explanation of This presentation contains some predictive statements about future events, these and other factors and risks that may cause such predictive s
Slide 3: Safety is our number one value
Safety is our number one value Total Recordable Injury Rate1 Total 2022 Recordable Injury Rate1 By Platform Steel Steel Metals Fabrication Recycling 2.3 4.2 4.1 1.9 1.9 1.8 1.8 1.4 2.8 2.3 1.7 1.6 2018 2019 2020 2021 2022 2023TTM Steel Dynamics Industry² Lost Time Injury Rate1 0.61 0.39 0.33 0.31 0.
Slide 4: Solid Third Quarter 2023 performance
Solid Third Quarter 2023 performance Key highlights Strong revenue at $4.6 billion $4.6 billion Revenue Net Income of $577 million $577 million Net income Adjusted EBITDA1 of $876 million, a 19% margin $ 876 million Adjusted EBITDA1 EPS of $3.47 $3.47 EPS Repurchased 1.8% of our shares outstanding $
Slide 5: Q3 financial performance
Q3 financial performance Strong results reflect execution on our long-term strategy, and our differentiated circular business model % Sequential % Prior Year Dollars in millions, except per share data Q3 2023 Q2 2023 Q3 2022 Change Change Net Sales $4,587 $5,082 $5,652 (10) (19) Operating Income 734
Slide 6: Third Quarter 2023 operating performance
Third Quarter 2023 operating performance Declining steel spreads impacted profitability % Sequential % Prior Year Quarterly Segment Highlights Q3 2023 Q2 2023 Q3 2022 Change Change Steel Average External Sales Price per ton $1,191 $1,257 $1,381 (5) (14) Steel Average Ferrous Cost per ton 405 444 472
Slide 7: Differentiated business model results in higher through cycle utilization
Differentiated business model results in higher through cycle utilization We achieve consistently higher through-cycle steel utilization, driven by our low-cost, circularly connected business model, and diversified value-added steel product portfolio and supply-chain solutions 2023 96%3 94%3 93%3 Es
Slide 8: Differentiated business model, proven cash generation
Differentiated business model, proven cash generation More Than Tripled Average Annual Free Cash Flow¹ since the acquisition of our Columbus Flat Roll Division (dollars in millions) 5-year average: $2.6 billion¹ $4,808 $4,509 Columbus $3,057 Heartland Transformation 5-year average: $540 million $4,6
Slide 9: Capital allocation framework, committed to growth, shareholder returns and investment grade ratings
Capital allocation framework, committed to growth, shareholder returns and investment grade ratings Strong cash flow Best-In-Class Significant Strategic generating business Strong Balance Sheet Performance Opportunity model ◼ Strong free cash flow ◼ Capital investments largely ◼ Broad access to low-
Slide 10: Strong liquidity and credit metrics
Strong liquidity and credit metrics Strong Balance Sheet to Deliver Profitable Growth Strong Liquidity Staggered debt maturity profile2 (dollars in millions) – As of September 30, 2023 (dollars in millions) $600 $500 $400 $400 $400 $400 $350 $1,191 2023 2024 2025 2026 2027 2028 2029 2030 2031 2050 $
Slide 11: Strategic high-return growth, driving increasing sustainable value
Strategic high-return growth, driving increasing sustainable value Investing to deliver our next phase of transformational growth ▪ Ramping operations on our new state-of-the art Sinton, Texas flat roll steel mill ― $1.9 billion greenfield investment, started production Q1 2022 ― 3.0-million-ton “Ne
Slide 12: We are committed to decarbonization, starting from a position of strength
We are committed to decarbonization, starting from a position of strength From our founding 30 years ago, we have been intentional in managing our resources sustainably for the benefit of our teams, communities, and the environment Our Electric Arc Furnace Steel Mills Impact at a Glance 2022 Scope 1
Slide 13: Operating efficiently and sustainably
Operating efficiently and sustainably We are a steel industry leader in sustainability, operating exclusively with EAF technology, a circular manufacturing model, and innovative teams creating solutions to increase efficiencies, reduce raw material usage, reuse secondary materials, and promote mater
Slide 14: SDI's Decarbonization Goals
SDI’s Decarbonization Goals Our journey continues, we are committed to the reduction of our environmental footprint with our announced 2025, 2030, and 2050 steel mill goals¹ Reduction of our steel mills' Scope 1 + 2 GHG emissions 2018 – 2022 intensity Achieved Reduction Start up of biocarbon facilit
Slide 15: Innovation is key to lowering emissions – Renewable Biocarbon Investment
Innovation is key to lowering emissions – Renewable Biocarbon Investment This Investment Represents a Significant Step Forward on Our Path to Carbon Neutrality for Our Steel Mills, and Our Continued Commitment to Reduce Our Environmental Footprint • Plan to construct and operate a biocarbon producti
Slide 16: We are a leading North American steel producer with a differentiated and proven business model
We are a leading North American steel producer with a differentiated and proven business model Consistent best-in-class performance Differentiated business model delivering strong profitability and cash flow Smart growth — Gaining market share and growing with customers 100% of steel produced with e
Slide 17: Appendix
Appendix Health and Safety Entrepreneurial Culture Customer Commitment Strategic Growth z Innovation Financial Strength Differentiated, Sustainable, Metals Growth Company 19 October 2023 17
Slide 18: Aluminum flat rolled mill investment overview
Aluminum flat rolled mill investment overview ◼ Estimated $2.5 billion investment to build a state-of-the-art low-carbon, recycled aluminum flat rolled mill, and two satellite recycled aluminum slab centers Capital Commitment ◼ Received near-term state incentives of $250 million and meaningful addit
Slide 19: Growing with our customers, providing alternative metal solutions
Growing with our customers, providing alternative metal solutions ◼ A vast majority of our existing carbon steel customers also consume or process aluminum flat rolled products for automotive, appliance, construction, and other applications ◼ This investment provides our customers with a new high-qu
Slide 20: Attractive financial returns
Attractive financial returns Key Commentary ◼ Estimated $2.5 billion investment, including the aluminum flat rolled mill and 2 satellite recycled aluminum slab centers, to be funded with available cash and cash flow from operations ◼ Received near-term state incentives of $250 million and meaningful
Slide 21: Transformational flat roll steel growth – new Texas steel mill & 4 value added coating lines
Transformational flat roll steel growth ꟷ new Texas steel mill & 4 valued added coating lines Represents transformative strategic growth with “next generation” steelmaking capabilities Transformational Strategic Growth • Expands our annual steel production capacity to almost 14 million tons (over 25
Slide 22: Competitively advantaged location
Competitively advantaged location Estimated 27 million tons in Targeted Regional Markets Location Benefits Western U.S. Southern U.S. Mexico • Customer-centric logistics, providing shorter 4 Million Tons 7 Million Tons 16 Million Tons lead times and working capital savings 45%-50% Imported • Central
Slide 23: Value-added product diversification
Value-added product diversification Estimated Sinton Product Mix¹ Estimated Sinton Shipments (Thousand tons) by Region¹ 260 340 Hot Roll 30% Pickled & Oiled United States 220 Cold Roll 1,750 Mexico Galvanized Painted 70% 360 Estimated Sinton Product Mix after two new lines start 2023¹ Sinton’s targe
Slide 24: Steel Operations at a glance – Flat Roll Steel Group
Steel Operations at a glance – Flat Roll Steel Group We are one of the largest domestic steel producers, with approx. 16 million tons of steel shipping capability, including Sinton. We have one of the most diversified product and end-market portfolios in the domestic steel industry Flat Roll Steel G
Slide 25: Steel Operations at a glance – Long Products Steel Group
Steel Operations at a glance – Long Products Steel Group Long Products Steel Group: 4.6M Tons Annual Shipping Capacity Columbia City, IN Pittsboro, IN Roanoke, VA Huntington, WV Greenfield EAF Steel Mill Acquired/Expanded EAF Acquired/Expanded EAF Acquired/Expanded EAF • 2.2M Tons Steel Mill Steel M
Slide 26: Financial strength in diverse market environments
Financial strength in diverse market environments Revenue (dollars in billions) Adjusted Operating Income1 (dollars in millions) Record Record High High $5,092 $22.3 $4,301 $18.4 $11.8 $10.5 $9.6 $1,738 $987 $867 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Net Income (dollars in millions) Adju
Slide 27: Annual steel operations results
Annual steel operations results Steel Operations Shipments (millions of tons) Operating Income (dollars in millions) Record Record High High 12.2 11.2 $4,376 10.6 10.8 10.7 3.7 3.1 3.1 3.7 3.4 Acquired $3,110 8.4 Heartland Flat Roll 7.7 7.6 7.5 Division Q3 2018 7.2 and United Steel $1,855 Supply Mar
Slide 28: Annual metals recycling results
Annual metals recycling results Ferrous Shipments (millions of gross tons) Operating Income (dollars in millions) Record High 5.4 5.3 5.1 $195 4.6 4.6 66% of 2021 and 2022 ferrous scrap volume was sold to $130 Steel Dynamics’ own steel mills $88 $45 $28 2018 2019 2020 2021 2022 2018 2019 2020 2021 2
Slide 29: Annual steel fabrication results
Annual steel fabrication results Shipments (thousands of tons) Operating Income (dollars in millions) Record Record High High 856 789 $2,425 642 644 666 $62 $119 $121 $365 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Differentiated, Sustainable, Metals Growth Company 19 October 2023 29
Slide 30: Adjusted EBITDA, free cash flow, adjusted free cash flow and adjusted operating income reconciliations
Adjusted EBITDA, free cash flow, adjusted free cash flow and adjusted operating income reconciliations Dollars in millions 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023TTM Net Income (Loss) $266 $142 $164 $92 $(145) $360 $806 $1,256 $678 $571 $3,247 $3,879 $2,679 Income Taxes (Ben
Slide 31: Quarterly adjusted EBITDA reconciliation
Quarterly adjusted EBITDA reconciliation Dollars in millions Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Net Income $918 $639 $644 $816 $580 Income Taxes 290 119 203 258 175 Net Interest Expense(Income) 17 5 (3) (5) (10) Depreciation 90 94 99 98 98 Amortization 7 7 7 11 8 EBITDA $1,322 $864 $950 $1,179