Investor Presentation
30 November 2020
Forward Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements
This presentation contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel and recycled metals market places, Steel Dynamics' production capacities, shipments, revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project" or "expect," or by the words "may," "will," or "should," are intended to be made as "forward-looking," subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) the effects of uncertain economic conditions; (2) the effects of pandemics or other health issues, such as the recent novel coronavirus outbreak (COVID-19); (3) cyclical and changing industrial demand; (4) changes in conditions in any of the steel or scrap-consuming sectors of the economy which affect demand for our products, including the strength of the non-residential and residential construction, automotive, manufacturing, appliance, energy, and other steel-consuming industries; (5) fluctuations in the cost of key raw materials and supplies (including steel scrap, iron units, zinc, graphite electrodes, and energy costs) and our ability to pass on any cost increases; (6) the impact of domestic and foreign imports, including trade policy, restrictions, or agreements; (7) unanticipated difficulties in integrating or starting up new, acquired or planned businesses or assets; (8) risks and uncertainties involving product and/or technology development; and (9) occurrences of unexpected plant outages or equipment failures.
More specifically, we refer you to Steel Dynamics' more detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently than expected or anticipated, as set forth in our most recent Annual Report on Form 10-K under the headings Special Note Regarding Forward-Looking Statements and Risk Factors, in our quarterly reports on Form 10-Q or in other reports which we from time to time file with the Securities and Exchange Commission. These are available publicly on the SEC website, www.sec.gov, and on the Steel Dynamics website, www.steeldynamics.com: Investors: SEC Filings.
Note Regarding Non-GAAP Financial Measures
Steel Dynamics reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that EBITDA, Adjusted EBITDA, Adjusted Operating Income, Free Cash Flow and Free Cash Flow Conversion, non-GAAP financial measures, provide additional meaningful information regarding Steel Dynamic's performance and financial strength. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Steel Dynamics' reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, EBITDA, Adjusted EBITDA, Adjusted Operating Income, Free Cash Flow and Free Cash Flow Conversion included in this presentation may not be comparable to similarly titled measures of other companies. The reconciliations of these non-GAAP measures to their most comparable GAAP measures are contained in the appendix at the end of this presentation.
30 November 2020 1
Differentiated and Proven Business Culture
We are a leading North American steel producer with a differentiated and proven business model
Consistent best-in-class performance
Led North American steel peers in EBITDA margin in eachof the last 10 years
Differentiated business model delivering strong profitability and cash flow
High value-added product mix and diversified customer base drives strong free cash flow conversion
Smart growth - Gaining market share and growing with customers
Organic and transactional growth drive supply-chain differentiation and higher steel mill utilization
100% of steel produced with electric-arc-furnace technology
Significantly much lower environmental impact than traditional technologies - Recycled scrap primary raw material
Strong balance sheet provides strategic flexibility for current operations and prudent growth
Q3 2020 net leverage of 1.4x - Committed to maintaining investment grade ratings
Sustainable shareholder value creation and distribution growth
Maintain a positive dividend profile complemented by share repurchases when appropriate
30 November 2020 2
Differentiated and Proven Business Culture
Steel Dynamics - One of the largest and most differentiated steel producers and metals recyclers in North America
2019 | Revenue: $10.5B | Net Income: $671M | Adj. EBITDA: $1.3B1 | Steel Shipping Capacity: 13M tons |
Market leader producing premium, value-added, diversified steel products, serving growing markets
Modern, state-of-the-art efficiently configured and flexible production facilities
Highly variable (85%), low cost structure
Vertically connected and controlled supply chain
Environmentally-friendly,recycling-basedelectric-arc-furnace (EAF) technology
Respected and experienced management team, driving our innovative, entrepreneurial culture
Highly motivated, safety focused and performance-based incentivized team of approximately 9,500 individuals
- The reconciliation to GAAP net income is provided in the appendix to this presentation.
- Based on 2019 steel sales.
³ Based on 2019 steel shipments.
Premium / value-added product mix2
15% Hot Roll Sheet | |||||
Coated | 42% | 10% | Structural | ||
Sheet | |||||
5% | MBQ | ||||
2% | Other | ||||
Value-Added | |||||
Steels 68% | 5% 8% 5% | 5%3% | Rail | ||
Shapes | |||||
Cold | Engineered | ||||
Hot Roll | SBQ | ||||
Roll | |||||
and Pickled | |||||
Sheet | |||||
& Oiled |
Sheet
Serving diverse, growing steel end-markets3
Other Manufacturing | 18% | |
Ag, Equipment, & Mining | 6% | |
Non-Energy Pipe & Tube | 6% | |
Energy | 7% | |
Transportation & Rail | 8% | |
Automotive | 12% | |
Appliance / HVAC | 6% | |
Light Commercial / Residential | 18% | Construction- |
Related | ||
Heavy Non-Residential | 7% | |
43% | ||
Metal Building | 12% | |
30 November 2020 3
Differentiated and Proven Business Culture
We have a proven track record of delivering smart growth and shareholder value creation
2020: Columbus
Coating Line
Addition
2019: Achieved | ||||||||||||||||||||||||
Investment Grade | ||||||||||||||||||||||||
Credit Ratings | ||||||||||||||||||||||||
1996 | 2014: Flat Roll Steel | |||||||||||||||||||||||
Mill Acquisition - | ||||||||||||||||||||||||
Shipments | Columbus | |||||||||||||||||||||||
Steel: 794,000 tons | ||||||||||||||||||||||||
2002: SBQ Steel Mill | 2006: Merchant & | |||||||||||||||||||||||
Specialty Steel | ||||||||||||||||||||||||
Acquisition | Acquisition - 2 Mills | |||||||||||||||||||||||
2002: Structural | ||||||||||||||||||||||||
Steel Mill - | ||||||||||||||||||||||||
Greenfield | ||||||||||||||||||||||||
2018: Flat Roll Steel | ||||||||||||||||||||||||
1996: Flat Roll Steel | ||||||||||||||||||||||||
Mill - Greenfield | Processing Facility | |||||||||||||||||||||||
Acquisition - | ||||||||||||||||||||||||
Heartland | ||||||||||||||||||||||||
2007: Ferrous and | ||||||||||||||||||||||||
2007: Galvanizing | ||||||||||||||||||||||||
Nonferrous Metals | ||||||||||||||||||||||||
Facilities Acquisition - | Recycling | |||||||||||||||||||||||
2000: 1st Steel | ||||||||||||||||||||||||
The Techs | Acquisition - | |||||||||||||||||||||||
Fabrication Facility - | OmniSource | |||||||||||||||||||||||
Greenfield |
2019-2021:
Planned Sinton, Texas
Greenfield EAF Flat
Roll Steel Mill
2019 Shipments
- Steel: Record10.8M tons
- Metals Recycling: 4.6M gross tons ferrous and 1.1B pounds nonferrous
- Steel Fabrication: Record644,000 tons
Experienced, entrepreneurial leadership has delivered significant value
through disciplined M&A and strategic capital investments
1 Based on the period from 1996 to December 31, 2019.
30 November 2020 4
Differentiated and Proven Business Culture
Consistent best-in-classthrough-cycle financial performance
Our six strategic pillars delivering
sustained, profitable growth
EBITDA Margin1
1
11%
2
Peer 1 | ||||||||
Peer 2 | ||||||||
Peer 3 | ||||||||
Peer 4 | 3 | |||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Q3'20 |
TTM
Safety
Goal of zero injuries - No accidents
Culture
Foster a team of energetic, positive,
driven, innovative and diverse individuals
Customer Commitment
Focus on being a preferred partner by providing quality products and unique supply-chain solutions
4
5
6
Growth
Intentional margin expansion and consistency through-the-cycle
Innovation
Drive innovation to improve safety, quality, productivity and resource sustainability
Financial Strength
Higher utilization and lower costs provide strong cash flow generation
1 EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization (excludes non-cash asset impairments). See the reconciliation to GAAP net income for Steel Dynamics in the appendix to this presentation. Peers include: Nucor, AK Steel, US Steel, and Commercial Metals Company (CMC). Source: Respective SEC filings. CMC data for annual periods ended
November 30 and Q3 2020 TTM period ended August 31, 2020. Q3 2020 TTM EBITDA Margin for Peer 4 could not be calculated based on data disclosed, as the peer was acquired in 2020.30 November 2020 5
Differentiated and Proven Business Culture
Our differentiated business model maximizes cash generation through-the-cycle
Metals Recycling | |||||
- | 11% 2019 Revenue | ||||
Steel Operations | - | Low-cost, efficient, green | |||
- 66% of 2019 ferrous shipments were to | |||||
- 76% 2019 Revenue | |||||
our internal steel operations | |||||
- Low-cost, modern, efficient | |||||
- Premium value-added focus | |||||
6 Electric-Arc-Furnace | Metals Recycling | ||||
Steel Mills |
Our steel operations have | ||
a secure supply of high- | ||
quality scrap from our | ||
metals recycling | ||
Steel Fabrication | ||
operations, and also | ||
benefit from base-load | ||
- | 9% 2019 Revenue | |
"pull-through" volume | ||
- | Manufacturing operations support | |
from our manufacturing | ||
base-load,"pull-through" volume | ||
operations. | ||
for SDI steel operations | ||
Note: Above representation based on the Company's est. annual capacity, except for Metals Recycling, Steel Fabrication, and United Steel Supply which are actual 2019 shipments.
30 November 2020 6
Differentiated and Proven Business Culture
Our differentiated business model results in higher through-cycle steel utilization
We achieve consistently higher through-cycle steel utilization compared to our peers, driven by our low-cost, vertically connected business model, and diversified value-added product portfolio and supply-chain solutions.
Steel Mill Production Utilization
96% | 94% | |||||||||||
89% | ||||||||||||
82% | 82% | 88% | 88% | 87% | 88% | 85% | ||||||
79% | 79% | |||||||||||
73% | 78% | 80% | 80% | |||||||||
74% | 75% | 77% | 78% | |||||||||
74% | ||||||||||||
70% | 70% | 71% | ||||||||||
65% | ||||||||||||
56% | ||||||||||||
22% | 24% | 23% | 28% | 29% | 25% | 27% | 23% | |||||
21% | 21% | |||||||||||
19% | ||||||||||||
17% | 18% | |||||||||||
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Q1'20 | Q2'20 | Q3'20 |
Domestic Steel Industry Production Utilization (%)
Domestic Steel Imports Excluding Semi-finished as a % of Apparent Domestic Consumption Steel Dynamics Steel Mill Production Utilization (%)
2020
Est. Annual SDI Steel Mill Production Capacity
(Thousands of Tons) | |
Flat Roll Group - Butler | 3,200 |
- Columbus | 3,200 |
Structural & Rail | 2,200 |
Engineered Bar | 950 |
Roanoke Bar | 720 |
Steel of West Virginia | 555 |
Total¹ | 10,825 |
Q3 2020 SDI Steel Mill Production | 2,320 |
Q3 2020 SDI Steel Mill Utilization | 85% |
- Excludes our processing divisions capacity of approximately 2.4 million tons.
Source: AISI, U.S. Department of Commerce, Accenture
30 November 2020 7
Differentiated and Proven Business Culture
Our differentiated business model is a proven cash generator in all demand environments
Doubled Average Annual Free
Cash Flow
Free Cash Flow1 (dollars in millions)
5-year average: $1.1 billion
5-year average: $564 million | $1,086 | |||||||||
$793 | ||||||||||
$1,835 | ||||||||||
$974 | $1,240 | $881 | ||||||||
$510 | $681 | $751 | $591 | |||||||
$397 | $479 | |||||||||
$69 | ||||||||||
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Q3'20 TTM |
Excluding 2019 and Q3 2020 TTM funding | ||||||||||||
of $205M and $724M, respectively, for our | ||||||||||||
new Texas flat roll steel mill, our 2019 and | ||||||||||||
Q3 2020 TTM free cash flow would have | ||||||||||||
Strong "Through-Cycle" Cash | ||||||||||||
been $1.1B and $.8B and our 2019 and Q3 | ||||||||||||
Generation | 2020 TTM free cash flow conversion would | |||||||||||
Free Cash Flow Conversion1 | 88% | 88% | have been 81% and 73%. | |||||||||
87% | 84% | 83% | ||||||||||
79% | 80% | 81% | ||||||||||
72% | ||||||||||||
73% | ||||||||||||
64% | ||||||||||||
66% | ||||||||||||
6% | ||||||||||||
2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Q3'20 TTM |
1 "Free Cash Flow" is defined as Adjusted EBITDA - Capital Investments. "Free Cash Flow Conversion" is defined as Free Cash Flow / Adjusted EBITDA. The Adjusted EBITDA and Free Cash Flow reconciliations to GAAP net income are provided in the appendix to this presentation.
30 November 2020 8
Differentiated and Proven Business Culture
Strong track record of delivering smart growth and attractive returns
2012 | 2019 |
Steel Shipments
Net Income
Cash Flow from
Operations
Adjusted EBITDA
Margin1
ROIC2
Average
Market Cap
Net Leverage
Liquidity
5.8 million tons
$164 million
$446 million
9%
4%
$3 billion
2.9x
$1.5 billion
10.8 million tons | +85% |
$671 million | +300% |
$1.4 billion | +200% |
13%+45%
10%+190%
$7 billion | +145% |
0.8x(2.1x)
$2.8 billion | +85% |
- See the reconciliation to GAAP net income in the appendix to this presentation.
- ROIC defined as Net Income / Average Invested Capital; Invested Capital defined as (Total Debt + Total Book Value of Equity)
30 November 2020 9
Differentiated and Proven Business Culture
We are operating from a position of strength, investing to deliver our next phase of meaningful growth
Timing
Leveraging expertise to create next generation EAF production capabilities, while gaining market share from disadvantaged, high-cost competitors and imports
New Sinton, Texas Greenfield Flat Roll Steel Mill | Mid-20211 |
Current estimated investment of approximately $1.9 billion1 | |
Continuing to grow and diversify premium, value-added product capabilities and unlock value of existing operations
- Columbus Flat Roll Division $160 million Metallic Coating Line, with galvanized and aluminized coating capability
- Roanoke Bar Division $38 million Reinforcing Bar Expansion
- Structural and Rail Division $82 million Reinforcing Bar Expansion
First prime coil July 2020
Q2 2018
Q1 2019
Collectively, these primary strategic growth investments provide estimated incremental annual EBITDA of over $425M on a through- cycle historical spread basis.
Growing high-margin downstream manufacturing to provide optional base-load,"pull-through" volume for our steel operations
| United Steel Supply Coated Flat Roll Steel Distributor, | March 2019 |
75% Acquisition of Equity Interest, Valued at $134 million | ||
| Heartland Flat Roll Steel Acquisition $434 million (includes $98 million of working capital) | June 2018 |
1 Estimated project cost and start-up timeline.
30 November 2020 10
Differentiated and Proven Business Culture
Columbus Flat Roll Division 3rd state-of-the-art metallic coating line addition, with galvanized and aluminized coating capability
Congratulations to the team on
running their 1st prime coil!
July 9, 2020
30 November 2020 11
Differentiated and Proven Business Culture
Our new Sinton, Texas flat roll steel mill provides transformational growth
Once completed as planned, will represent over a 25% increase in our annual steel production capacity
Investment
Track
Record
Strategically Compelling
- "Next Generation" electric-arc-furnace flat roll steel mill, including a higher-margin,value-added galvanizing line (550k tons) and paint line (250k tons)
- Estimated 3.0 million tons of annual production capability
- Differentiated production capabilities, with meaningful customer and supply-chain benefits
- Widths (38" to 84") and gauges from 0.047" to 1.00" / Produce up to 52.5 ton coils
- Our team has an unparalleled track record for delivering organic investments "on time" and "on budget", creating significant value
- Expertise delivering "Next Generation", state-of-the-art steel production facilities
- "Next Generation" capabilities that goes beyond existing EAF-based production capabilities
- Latest generation of advanced high strength steel grades, including automotive and energy grades
- Diversified, higher-qualityvalue-added product mix
- Targeting underserved markets reliant on imports with long lead times and inferior product quality
- Competitively advantaged location
Smart | Growth from import share gains and higher-growth,steel-consuming markets |
Mexican flat roll steel consumption grew over 20% from 2013 - 20191, with shipments of 15M tons in 2019 | |
Growth |
Mexican market imported 6M tons of flat roll steel or over 40% in 20192
- Source: CRU
- Source: U.S. Department of Commerce
30 November 2020 12
Differentiated and Proven Business Culture
New greenfield Sinton, Texas flat roll steel mill drives transformational growth and "next-generation" EAF steelmaking
Estimated 27 million tons in Targeted Regional Markets
- Texas and Surrounding States = 7 million tons1
- West Coast = 4 million tons1
Mexico = 15 million tons2 (~45% imported) | Location Benefits |
No Flat Roll Steel
Production Capacity
Houston
Sinton
SDI's New Texas Mill
Monterrey
Steel Dynamics flat roll steel mills
Other flat roll steel producers
- Customer-centriclogistics, providing shorter lead times and working capital savings
- Central to the largest domestic consumption of flat roll Galvalume® and construction painted products, with the ability to effectively compete with excessive imports
- Available acreage to allow customers to locate on-site, providing logistic savings and steel mill volume base-loading opportunities, representing 800,000 to 1.0M annual tons of local steel processing and consumption capability
- Proximity to prime ferrous scrap generation via the four-state Texas region and Mexico through our existing metals recycling platform and our recent acquisition of Zimmer, a Mexican metals recycling company
- Cost-effectiveaccess to pig iron through the deep-water port of Corpus Christi, as well as other alternative iron units
- Excellent logistics provided by on-site access to two class I railroads, proximity to a major U.S. highway system, and access to the deep-water port of Corpus Christi
- Existing, mature and dependable power, natural gas, and water sources
1 Source: 2017 CANACERO information published through AISI, market study including imports by regional ports, producer shipments and confidential customer information
2 Source: CRU
30 November 2020 13
Differentiated and Proven Business Culture
Sinton, Texas flat roll steel mill provides value-added product diversification
Sinton's targeted markets are similar to our other flat roll operations including construction,
automotive, energy tubulars, appliance, and other manufacturing. Like our other steel
operations, we can quickly pivot from one market to another based on underlying demand.
Estimated Sinton | Estimated Sinton | ||
Product Mix¹ | Shipments by Region¹ | ||
9% | |||
12% | Hot Roll | 30% | |
Pickled & Oiled | United States | ||
7% | Cold Roll | ||
Mexico | |||
60% | Galvanized | ||
Painted | |||
12% | 70% | ||
1 Based on a pro-forma full year of production at the Flat Roll Group Southwest - Sinton Division.
30 November 2020 14
Differentiated and Proven Business Culture
Capital allocation framework, committed to growth and investment grade ratings
Best-in-class performance
- Strong free cash flow conversion
- Leading EBITDA margin
Strong cash flow
generating business
model
- Capital investments largely funded through cash flow
- Acquisitions funded to maintain credit flexibility and prudent liquidity while ensuring strong strategic logic, cultural fit, levering core competencies, and clear execution roadmap
Strong balance sheet
- Broad access to low- cost debt
- Net leverage managed to not exceed 2.0x through-cycle
- Subsequent to an acquisition, committed to deleveraging in a timely manner
Significant strategic
optionality
- Current growth strategy plans funded through free cash flow and debt capacity
- Flexible shareholder distributions - maintain positive dividend profile and use share repurchases as appropriate
Balanced Capital Allocation - $5.6 billion Cash Flow
from Operations over the last five years1
Conservative net leverage while growing and
returning capital to shareholders
$2.6 billion
Growth
$ 0.7 B
M&A
$ 1.9 B
Internal
Capital
Investments
1 Period ended September 30, 2020.
$2.1 billion
Capital Returned to Shareholders
$ 1.3 B
Share
Repurchases
$ 0.8 B
Dividends
2.5 | ||||||
2.0 | ||||||
1.5 | 1.3 | 1.4 | ||||
1.0 | 1.0 | 0.8 | ||||
0.6 | ||||||
0.5 | ||||||
0.0 | ||||||
2016 | 2017 | 2018 | 2019 | Q3' 20 | ||
30 November 2020 15
Differentiated and Proven Business Culture
Strong liquidity and conservative credit metrics
Strong liquidity (dollars in millions)
As of September 30, 2020
$1,188
Staggered debt maturity profile2 (dollars in millions)
$750 | |||||||||||||||||
$600 | |||||||||||||||||
$500 | |||||||||||||||||
No Near-Term | $400 | $400 | |||||||||||||||
Maturities | |||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 |
Low leverage, low-cost debt (dollars in millions)
$2,456
$1,2681268
Cash and cash | Revolver | Total liquidity |
equivalents | availability |
September 30, | x Adjusted | |
2020 | EBITDA¹ | |
Cash and cash equivalents | $1,268 | |
2.800% senior notes, 2024 | 400 | 0.4x |
2.400% senior notes, 2025 | 400 | 0.4x |
4.125% senior notes, 2025 | 350 | 0.3x |
5.000% senior notes, 2026 | 400 | 0.4x |
3.450% senior notes, 2030 | 600 | 0.6x |
3.250% senior notes, 2031 | 500 | 0.5x |
Other obligations | 105 | 0.1x |
Total debt | $2,755 | 2.5x |
Net debt | $1,487 | 1.4x |
Adjusted TTM EBITDA¹ | $1,082 |
In October 2020, we issued $350M of 1.650% senior notes due 2027 and $400M of 3.250% senior notes due 2050, with the proceeds intended to refinance $350M of 4.125% senior notes due 2025 and general corporate purposes.
We are committed to maintaining investment grade credit ratings
¹ September 30, 2020 Trailing Twelve Months Adjusted EBITDA. The reconciliation to GAAP net income is provided in the appendix to this presentation. 2 Excludes other debt obligations of $105 million.
30 November 2020 16
Differentiated and Proven Business Culture
We have a strong track record of returning significant cash to shareholders
65% of net income, or $2.1 billion returned to shareholders
over the last five years1
Cash Dividends (dollars in millions)
8 consecutive years of increases, more than doubling the distribution
Share Repurchases (dollars in millions)
Decreased outstanding
shares by over 15%
$136 $146
We increased | |||
our cash | |||
dividend | |||
4% in Q1'20, and | |||
$208 | over 20% in both | ||
$200 | 2018 and 2019. |
$169
$524
$252$349
$25
$163
2016 | 2017 | 2018 | 2019 Q3'20 TTM |
2016 | 2017 | 2018 | 2019 Q3'20 TTM |
1 Period ended September 30, 2020.
30 November 2020 17
Differentiated and Proven Business Culture
Financial Strength in Diverse Market Environments
Revenue (dollars in billions)
Record | |||||||||
High | 2nd Best | ||||||||
Year | |||||||||
$11.8 | |||||||||
$10.5 | |||||||||
$9.5 | |||||||||
$9.4 |
$7.8
Adjusted Operating Income1 (dollars in millions)
Record | ||||||||||||||
High | ||||||||||||||
$1,738 | ||||||||||||||
3rd Best | ||||||||||||||
Year | ||||||||||||||
$1,067 | ||||||||||||||
$987 | ||||||||||||||
$861 | ||||||||||||||
$770 | ||||||||||||||
2016 | 2017 | 2018 | 2019 | Q3'20 TTM |
Net Income (dollars in millions)
Record
High
$1,258
3rd Best
Year
$813
$671
$484
$382
2016 | 2017 | 2018 | 2019 | Q3'20 TTM |
2016 | 2017 | 2018 | 2019 | Q3'20 TTM |
Adjusted EBITDA1 (dollars in millions)
Record
High
$2,074 | ||||||||||||
3rd Best | ||||||||||||
Year | ||||||||||||
$1,405 | ||||||||||||
$1,333 | ||||||||||||
$1,172 | ||||||||||||
$1,082 | ||||||||||||
2016 | 2017 | 2018 | 2019 | Q3'20 TTM |
¹ Please see the reconciliation of these amounts to GAAP measures in the appendix to this presentation.
30 November 2020 18
Differentiated and Proven Business Culture
Safety is our number one value
COMMITTED TO WORLD-CLASS SAFETY RESULTS
Safety for Me | Control safety for yourself - Keeping |
safety "Top-of-Mind" | |
Safety for My | Control safety for your team - Being one |
another's "Keeper" / "See Something / | |
Team | |
Say Something / Do Something" | |
Platform Total Recordable Injury Rate1
Steel | Steel | Metals | ||||||||||
During 2019, each of | Fabrication | Recycling | ||||||||||
our platforms | ||||||||||||
performed | 5.0 | 5.1 | ||||||||||
meaningfully better | ||||||||||||
than industry | ||||||||||||
benchmarks | 2.7 | 2.7 | ||||||||||
2.4 | ||||||||||||
1.4 | ||||||||||||
Steel Dynamics | Industry² | |||||||||||
Total Recordable Injury Rate1
2.3
2.0 | ||||||||||
1.9 | ||||||||||
1.8 | 1.8 | |||||||||
1.5 | ||||||||||
Identification and elimination of hazardous exposures that could result in
Safety for All potentially significant life-altering injuries
- Total Recordable Injury Rate is defined as OSHA recordable incidents x 200,000 / hours worked and Lost Time Injury Rate is defined as OSHA days away from work cases x 200,000 / hours worked.
- Source: 2018 U.S. DOL Bureau of Labor Statistics
2015 | 2016 | 2017 | 2018 | 2019 | Q3'20 |
TTM |
Lost Time Injury Rate¹
0.66
0.34 | 0.35 | ||||||||||
0.33 | 0.33 | ||||||||||
0.25 | |||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Q3'20 | ||||||
TTM |
30 November 2020 19
Differentiated and Proven Business Culture
We are committed to sustainability | |||||
Greenhouse Gas Emissions Intensity | |||||
Metric tons of CO2 equivalent emissions / cast steel metric ton | |||||
Scope 1 Emissions Intensity | |||||
1.62 | 1.72 | ||||
0.20 | 0.21 | 0.20 | N/A* | ||
2017 | 2018 | 2019 | |||
Steel Dynamics 6 EAF steel mills | U.S. blast furnace average¹ | ||||
Scope 2 Emissions Intensity | |||||
0.32 | 0.32 | 0.29 | |||
2017 | 2018 | 2019 | |||
Energy Intensity | |||||
GJ / cast steel metric ton | |||||
Matching operations to sustainability | 19.9 | 20.2 | |||
EAF steel production uses a fraction of the energy and has a | |||||
fraction of the carbon footprint vs. blast furnace technology | |||||
We are the largest nonferrous metals recycler and the 2nd largest | 5.0 | 5.0 | |||
ferrous recycler in the U.S. | 4.9 | N/A* | |||
We reintroduced 1.1 billion pounds of recycled nonferrous | |||||
2017 | 2018 | 2019 | |||
scrap into the manufacturing life cycle in 2019 | |||||
We reintroduced 11 million tons of recycled ferrous scrap | Steel Dynamics 6 EAF steel mills | World average² | |||
into the manufacturing life cycle in 2019 | Source: Our 2019 Sustainability Report located on our website at www.steeldynamics.com/Sustainability.aspx | ||||
¹Based on Scope 1 CO2 equivalent emissions reported to the U.S. EPA | |||||
²World Steel Association | |||||
*The 2019 information is not yet available |
Differentiated and Proven Business Culture
Steel Dynamics steel production is 100% electric-arc-furnace
EAF vs. blast furnace technology
100%
of our steel mills water withdrawn was recycled and reused in 2019
84%
of the material used in our furnaces to produce steel was recycled ferrous scrap and internally generated iron substitutes
Source: Our 2019 Sustainability Report located on our website at www.steeldynamics.com/Sustainability.aspx ¹Based on Scope 1 CO2 equivalent emissions reported to the U.S. EPA
²World Steel Association
12%
our steel mills generated only 12% of the Scope 1 emissions per metric ton of average U.S. blast furnaces¹
25%
our steel mills required only 25% of the energy needed per metric ton versus world steel averages²
30 November 2020 21
Differentiated and Proven Business Culture
Our highly levered performance-based compensation programs drive opportunity
Our unique compensation culture promotes a balance of innovation, responsible growth, low-cost efficient operations, and risk mitigation
Individual | • | Base pay rewards an individual for performance and skill level | |
Performance | |||
• | Teamwork and performance bonuses focus teams on quality, | ||
Team Performance | cost control, and efficient use of assets | ||
• | Promotes individual division success | ||
• Production / Conversion Costs / ROA
• Unites all platforms to promote the success of
Company Wide PerformanceSteel Dynamics as a whole
• Profit Sharing (8% of pretax earnings)
• 401k Match is also performance-based (ROA)
• Aligns all teams with stakeholder interests
Stakeholder Alignmentin pursuit of long-term value creation
• Company wide annual equity (RSU) award, with two year vesting
• ~85% of total potential compensation is
Performance Based Executive Compensationperformance-based
• Based on ROE, ROA, revenue growth, operating margin, and cash flow margin
30 November 2020 22
Differentiated and Proven Business Culture
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 electric-arc-furnace technology
Strong balance sheet provides strategic flexibility for current operations and prudent growth
Sustainable shareholder value creation and distribution growth
30 November 2020 23
Differentiated and Proven Business Culture
APPENDIX
Our primary steel operations - at a glance
We are one of the largest domestic steel producers, with approx. 13 million tons of steel shipping capability We have one of the most diversified product and end-market portfolios in the domestic steel industry
Flat Roll Steel Group
8.4M Tons Annual Shipping Capacity
Butler, Indiana
- Greenfield EAF Steel Mill
- 3.2M Tons
- 3 Galvanizing Lines
- 2 Paint Lines
Columbus, Mississippi
- Acquired / Expanded EAF Steel Mill
- 3.2M Tons
- 3 Galvanizing Lines
- 1 Paint Line
Terre Haute, IN¹
- Heartland / Acquired Flat Roll
Processing Facility
- 1.0M Tons
- 1 Galvanizing Line
Pittsburgh, PA¹
- The Techs / Acquired Flat
Roll Galvanizing Facilities
- 1.0M Tons Galvanized
- 3 Galvanizing Lines
1 Processing locations
Long Product Steel Group
4.6M Tons Annual Shipping Capacity
Columbia City, Indiana
- Greenfield EAF Steel Mill
- 2.2M Tons
- Structural and Rail
Pittsboro, Indiana
- Acquired / Expanded EAF Steel Mill
- 950K Tons
- Special-bar-quality
- Value-AddedFinishing / Inspecting Lines
Roanoke, Virginia
- Acquired / Expanded EAF Steel Mill
- 720K Tons
- Merchant and Rebar
Huntington, WV
- Acquired / Expanded EAF Steel Mill
- 555K tons
- Specialty Shapes
30 November 2020 25
Differentiated and Proven Business Culture
Steel Dynamics - Adjusted EBITDA, Free Cash Flow and Adjusted Operating Income Reconciliations
Q3'20 | |||||||||||
Dollars in millions | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | TTM |
Net Income (Loss) | $130 | $266 | $142 | $164 | $ 92 | $ (145) | $ 360 | $ 806 | $1,256 | $ 678 | $ 498 |
Income Taxes (Benefit) | 83 | 158 | 62 | 99 | 73 | (97) | 204 | 129 | 364 | 197 | 137 |
Net Interest Expense | 166 | 172 | 154 | 123 | 135 | 153 | 141 | 124 | 104 | 99 | 91 |
Depreciation | 171 | 177 | 180 | 192 | 229 | 263 | 261 | 265 | 283 | 286 | 286 |
Amortization | 46 | 40 | 36 | 32 | 28 | 25 | 29 | 29 | 28 | 30 | 30 |
Noncontrolling Interests | 12 | 13 | 21 | 26 | 65 | 15 | 22 | 7 | 3 | (7) | (13) |
EBITDA | $608 | $826 | $595 | $636 | $622 | $ | 214 | $1,017 | $1,360 | $2,038 | $1,283 | $1,029 | |||
Unrealized Hedging (Gains) / Losses | 2 | (4) | (3) | 5 | (5) | 3 | 1 | 5 | (6) | 3 | - | ||||
Inventory Valuation | 6 | 9 | 6 | 7 | 10 | 28 | 1 | 3 | 2 | 1 | 1 | ||||
Equity-Based Compensation | 14 | 17 | 12 | 16 | 23 | 29 | 30 | 34 | 40 | 43 | 44 | ||||
Asset Impairment Charge | 13 | - | 8 | - | 213 | 429 | 120 | - | - | - | - | ||||
Refinancing Charges | - | - | 3 | 2 | - | 3 | 3 | 3 | - | 3 | 8 | ||||
Adjusted EBITDA | $643 | $848 | $621 | $666 | $863 | $ | 706 | $1,172 | $1,405 | $2,074 | $1,333 | $1,082 | |||
Less Capital Investments | 133 | 167 | 224 | 187 | 112 | 115 | 198 | 165 | 239 | 452 | 1,013 | ||||
Free Cash Flow | $510 | $681 | $397 | $479 | $751 | $ | 591 | $ | 974 | $1,240 | $1,835 | $ | 881 | $ | 69 |
Q3'20 | |||||||||||||||
Dollars in millions | 2016 | 2017 | 2018 | 2019 | TTM | ||||||||||
Consolidated Operating Income | $ | 728 | $ 1,067 | $ 1,722 | $ | 987 | $ | 770 | |||||||
Asset Impairment Charge | 133 | - | - | - | - | ||||||||||
Non-cash Purchase Accounting | - | - | 16 | - | - | ||||||||||
Adjusted Operating Income | $ | 861 | $ 1,067 | $ 1,738 | $ | 987 | $ | 770 |
30 November 2020 26
Differentiated and Proven Business Culture
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SDI - Steel Dynamics Inc. published this content on 30 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 November 2020 19:48:02 UTC