Interpret Financial Result

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Resource:  Financial Statements for the company assigned by your instructor in Week 2.

Review the assigned company's financial statements from the past three years.

Calculate the financial ratios for the assigned company's financial statements, and then interpret those results against company historical data as well as industry benchmarks: 

  • Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011).
  • Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.

Write a 500 to 750 word summary of your analysis.

http://www.steeldynamics.com

http://www.worldsteeldynamics.com/pg/reports

http://www.steelbenchmarker.com/files/SteelBenchmarkerOperationsManual.pdf

2011.pdfundefined2013.pdf2014.pdf2012.pdf

Show financial calculations where appropriate.

This are the website and reports that YOU MUST USE, please include all necessary calculations in the paper as well.

Thanks



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Customer commitment Culture Strategic growth Innovation Financial strength RECORDS in annual steel shipments RECORDS in annual iron shipments RECORDS in annual metals-recycling shipments Total Steel Operations Total iron units Shipments of 5,842,694 tons Shipments of 389,143 metric tons Metals Recycling Recycled ferrous metals h10%over 2010 h33%over 2010 Engineered Bar Products Division Iron Dynamics Shipments of 634,964 tons h2%over 2010 SETTIN G h12%over 2010 Shipments of 229,502 metric tons Mesabi Nugget Flat Roll Division Shipments of 159,641 metric tons Shipments of 2,770,466 tons h137%over 2010 h5%over 2010 Shipments of 5,879,729 gross tons h14%over 2010 Metals Recycling Recycled nonferrous metals Shipments of 1,066,648,000 pounds h11%over 2010 Steel of West Virginia Shipments of 297,902 tons h27%over 2010 COVER: Finished round SBQ bars from the Engineered Bar Products Division at Pittsboro, Indiana, 2011 SUMMARY ANNUAL REPORT are among the many value-added steels SDI produces. FORWARD-LOOKING STATEMENTS: This publication contains predictive statements about future events. These statements are intended to be made as “forward-looking” within the safe-harbor protections of the Private Securities Litigation Reform Act of 1995. Reference is made to the “risk factors” section in SDI’s most recent Form 10-K, which describes the many factors and risks that may cause such predictive statements to turn out differently. ©2012 Steel Dynamics, Inc. boss, mentor, colleague, friend. 1 A Tribute to Keith Busse SDI Co-founder and Chairman of the Board that SDI has refined over impossible without the the last 19 years. unique employee-focused Under Keith’s leadership, Steel Dynamics has seen remarkable growth and culture Keith and his partners created. Over the years, Keith Net sales $ 6.3 $ 8.0 billion Operating income $ 365 $ 585 million Net income $ 141 $ 278 million $ 0.64 $ 1.22 (attributable to SDI) success in its short life. especially enjoyed the Net income per share What began as a single give-and-take of shop Cash dividends per share $ 0.30 $ 0.40 ffective January 1, 2012, mill making flat-rolled dinners, where he would Keith Busse retired steel has become a speak—directly, forcefully, Cash flow from operations $ 169 $ 486 million as Steel Dynamics’ Chief diversified company, and authoritatively— to Total assets $ 5.6 $ 6.0 billion Executive Officer, turning producing not just sheet employees about SDI and Capital expenditures $ 133 $ 167 million E executive responsibilities steel, but beams, rail, its growth and whatever for the company over to bars, angles and shapes, else was on his mind. Mark Millett. Keith continues and expanding to include to serve as a board member recycling of ferrous and philanthropist, Keith and Chairman of the Board nonferrous materials, spearheaded the creation of Directors. ironmaking, fabrication, of the Steel Dynamics and other steel-related Foundation, which and Dick Teets founded endeavors. SDI became a supports a wide variety the company in 1993, Fortune 500 company, the of worthy causes — Keith, Mark Millett, As a civic leader and (diluted) Long-term debt (including current portion) $ 2.4 Steel shipments 5.3 (tons) education, especially — producer in the United in communities where Steel operating income per ton shipped* $ 86 in the low-cost production States, and one of the most employees work and live. of high-quality steel. efficient and profitable Steel mill production All three had previously steelmakers in the world. Steel operations segment (tons) 4.7 Steel operations segment, excludes The Techs friend: Keith leaves his Ferrous metals shipments (gross tons) 5.2 fellow employees an Nonferrous metals shipments (pounds) 961 Steel fabrication shipments (tons) 164 Iron shipments 293 construction and operation principal architect of SDI’s enviable legacy, a broad of the world’s first thin-slab success, he is recognized foundation upon which casting mini-mill that worldwide for his vision and they can further build. revolutionized the American accomplishments. Of course, All owe Keith Busse steel industry — technology all of this would have been a debt of gratitude. $8B $4B $2B 07 08 09 10 11 $0 Net income $500M $278M $400M $300M $200M $100M 07 (metric tons) Iron Dynamics and Mesabi Nugget Full-time employees 6,180 h 10% h 36% 5.2 million h 11% 5.9 million h 14% 1,067 million h 11% 218 thousand h 32% 389 thousand h 33% 6,530 h 6% 08 09 10 11 Steel shipments (tons) 5.8 million $0 8M 5.8M $ 117 THE For 2 Letter to shareholders 6 A financial perspective 8 A pattern of excellence 10 Customer commitment 12 Culture 14 Strategic growth 16 Innovation 18 Financial strength 20 Summary information 20 Corporate overview profita ble, 22 Steel operations 24 Metals recycling and ferrous resources 25 Steel fabrication 26 Selected financial data 28 Adjusted EBITDA reconciliation 28 Map of locations 29 Investor information Growth in revenues, 1996–2011 $10B 6M 4M $8.0B $8B 2M 07 08 09 10 11 0 Steel Operations operating income per ton shipped* $200 $117 $6B $4B $150 $100 $2B $50 07 08 09 *Operating income per ton shipped excludes profit-sharing and amortization expenses related to the operating segment. Please refer to the summary information starting on page 20 and Steel Dynamics, Inc.’s 2011 Form 10-K, which is accompanying this report, for additional financial and operating information. HIG H $10B $6B $ 2.4 billion operating data 2010 2011 fifth-largest carbon-steel Not only was Keith the $8.0B RAISING would become a leader been instrumental in the h 27% h 60% h 98% h 91% h 33% h187% h 7% h 25% with the goal that SDI Boss, mentor, colleague, Net sales financial highlights 2010 2011 10 11 $0 $0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 2 3 Rail-finishing facility,Structural and Rail Division, Columbia City, Indiana. MARK MILLETT President and Chief Executive Officer “ I’m excited and honored to be leading SDI forward and to build upon our collective accomplishments. I’m convinced our unique culture and remarkable team can drive even greater value for our customers and shareholders.” April 5, 2012 (Far right) OmniSource retail metals-recycling facility, Jackson, Michigan. To Our Shareholders: I n challenging times, combined with loyal of higher volumes and industry peers for both The Flat Roll Division 635,000 tons. The division’s moderately, and we operations shipped Our metals-recycling the true character of customer support, drove improving operating our steelmaking and increased market share productivity and profitability significantly increased 5.9 million gross tons of operations also shipped an organization becomes significant achievement in income in both our metals-recycling operations. as it leveraged recent climbed. Exceptional quality, our market share of railroad ferrous scrap, 43 percent record amounts of increasingly visible. what was still a challenging steel and metals- process improvements value-added downstream rail business. We shipped of which supplied SDI’s nonferrous metals, Adversity amplifies steel market. recycling operations. to achieve an annualized processing, and a focus 117,000 tons of rail in 2011, steel mills, while 57 percent nearly 1.1 billion pounds. We achieved 27 percent Our 2011 production milestones in 2011. production capacity of more on superior on-time more than double the supported our third-party Almost 17 percent of these annual growth in net sales and shipping volumes Our steel operations than 3 million tons. A broad delivery has resulted 55,000 tons shipped in 2010. customers. In 2011, shipments were copper, most and nearly doubled net increased in each of our shipped a record product portfolio allowed in strong customer loyalty of which was exported. For the steel industry, income in 2011. Net sales of three operating segments 5.8 million tons, driven and market-share gains. Our metals-recycling we opened or expanded the division to run at an 10 retail facilities to increase In the future, we anticipate 2011 was the second year $8.0 billion grew by $1.7 when compared with principally by record Although the weak the proportion of obsolete directing much of this of recovery from the steep billion, from $6.3 billion in annual ferrous and 2010, with record volumes volumes at our Flat Roll scrap we collect as higher- copper-scrap flow to recessionary decline in 2010, and were only one being achieved in our and Engineered Bar margin retail material. the SDI LaFarga, LLC, steel demand. For SDI, percent short of our record steel and metals-recycling Products divisions. Our Engineered Bar wide-flange beam business, it was a year to once again net sales achieved in 2008, operations. We also Our Engineered Bar Products Division took mill utilization in our demonstrate our resilience prior to the global economic expanded operating Products and Steel advantage of robust demand Structural and Rail Division and the viability of our crises. The year’s net income margins in 2011 and of West Virginia divisions for its engineered special- improved from 35 percent to business model. Our increased 98 percent, to continued to show stronger also achieved record bar-quality (SBQ) steels to 49 percent, year-over-year, as unique employee culture, $278 million, as a result operating metrics than our annual operating income. achieve record shipments of demand for beams improved strengths and weaknesses, differentiating the strong from the weak. 2011 operating RESULTS We achieved many expanded utilization rate of 96 percent, a much stronger rate than that of the industry. non-residential construction market constrained the platform achieved record nonferrous shipping volumes as we leveraged copper-rod business that improved market dynamics In addition, upgrades to through additional retail some of our automobile yards and increased shredders increased shredder capacity. our processing capacity At our Iron Dynamics by approximately facility, we achieved record 150,000 gross tons. production of iron units. Our metals-recycling we expect to start up in the second quarter of 2012. 4 5 The liquid iron transferred continued to provide a operating teams have done the risks associated with development during the integration of new metals- growth that is coupled status quo, seeking new value, but we recognize to our flat-roll mill continues strong base load to the in a challenging environment. inventory value have too recent years of economic separation technologies, with enhanced, consistent SDI’s culture is one in opportunities to enhance that this is not a strategy to be one of the key catalysts Roanoke Bar Division that Their performance in 2011 often led to a focus on challenge. Significant and the development of margins. We’ll also continue which each employee products and services, unto itself, but a result for the mill’s increased produces merchant-bar is a continuing testament short-term market price increases in productive new value-added ferrous to leverage our existing has a sense of ownership, and increase productivity of the future success productivity. The combined steel, helping Roanoke to our business model— fluctuations, both in raw capacity have been products to enhance margins. facilities through capital- accountability, loyalty, and and quality. of our business — output of Iron Dynamics maintain an 85 percent our customer commitment, materials and finished achieved at our sheet effective investment to purpose — and the ability and Mesabi Nugget, which operating rate for the year. our innovative low-cost products. Although mill, structural steel expand organic growth. to make contributions continued its progress NMBS initiated operation operating culture, and it’s important for us to and rail mill, and our in ramping up production of three joist-fabrication our diversified portfolio of recognize and respond engineered bar mill. in 2011, now provides facilities acquired in value-added products. All to such short-term market our mills with an internal 2010. These facilities, of this puts Steel Dynamics trends, I’d like to emphasize supply of iron units, making located in the South and in an enviable position to that our focus at SDI is very them self-sufficient and southwestern United States, take advantage of improved much on the longer term. obviating the need to along with our existing market conditions as and purchase imported pig iron. plants, now provide a when they occur. Our New Millennium broad, nationwide footprint. will be driven by providing has maintained a proven quality products and expansion and ability to well into the future We are on a continued track record of sustained unsurpassed value serve national accounts. our record of profitable path of responsible, performance—consistently to our customers. growth through focus on: strategic growth, in which in excess of our metals- we will strive to provide industry peers. in 2013 that will further a wider range of SBQ bars. investment and product strength, Steel Dynamics expansion to be completed Products Division to supply in raw-materials pricing and In the end, our success 325,000-tons-per-year latent value that we have the phenomenal job our economic weakness and competencies to extend A LONG-TERM VIEW steel-fabrication business on the job is paramount. in our execution. to leverage our core of our Engineered Bar built through capital We intend to continue During both periods of through its geographic excited to embrace the In our industry, the volatility to gain further market share that have impact. Safety in its planning and and grow its profitability add to the capabilities I can’t stress enough business is now positioned • Financial Strength We’ve announced a As we look forward, we’re Building Systems (NMBS) Our steel-fabrication • Culture In keeping with the entrepreneurial spirit that • Customer Commitment • Strategic Growth sustained appreciation On behalf of the whole Steel Dynamics flows through our company, Making customer service we’ll continue to assess our highest priority means opportunities for growth, providing outstanding In addition, our metals- whether in new products, products and services that recycling platform is new technologies, or new exceed our customers’ improving its capabilities investments—with a focus expectations, anticipating Innovation lies at the very We aspire to financial to thank our employees through capacity expansion, toward not only top-line their future needs, and heart and soul of SDI. We success and to the for all their hard work, addition of retail facilities, revenue growth, but delivering greater value. continually challenge the appreciation of shareholder dedication, and passion. of cumulative shareholder The importance of each value, exceeding market of these elements is and peer performance. discussed in greater • Innovation detail later in this report. team, I’d like to thank our loyal customers and shareholders for their continued support. And I’d like Sincerely, Engineered Bar Products Division, Pittsboro, Indiana. Mark Millett President and CEO 6 7 THERESA WAGLER Executive Vice President and Chief Financial Officer “ Our financial strategy continues to include a commitment to the maintainability of improved credit metrics, while allowing for long-term sustainable growth and appropriate levels of liquidity.” long-term debt maturities liquidity $800M $4B $600M $3B $400M $2B $0 A financial perspective 2011 points in 2011 (excluding sales • The execution of a Undrawn revolver $1.6B $200M net Cash and commercial paper $1B 12 13 14 15 16 post2016 $0 07 08 09 10 over 2010 results. We or 40 percent, of our $439 million during the net debt to Adjusted growth and production- credit metrics, while 11 the impact of impairment new senior secured also effectively managed 7 / % Senior Notes year, attaining a level EBITDA improved from efficiency projects for which allowing for long-term of $8.0 billion increased charges recorded during revolving credit facility working capital during due November 2012, of nearly $1.6 billion 3.4 times to 2.4 times. we anticipate appropriate sustainable growth and $1.7 billion, or 27 percent, 2010), as gross margins in September, increasing the year to minimize which mitigated potential at December 31, 2011. Our interest coverage future returns. We believe appropriate levels of over 2010 results, and improved in each of our the facility size from its impact on free cash refinancing risk later in Funds that were available ratio also improved year that our resilient cash-flow liquidity. This is achieved were only one percent reporting segments, and $924 million to $1.1 billion. flow. Our low-cost, the year and reduced our to us—after our minimum over year from 3.8 times generation capability, through our unyielding less than our record net operating expenses related Additionally, we gained highly variable operating minimum liquidity covenant liquidity covenant*— for 2010 to 4.9 times coupled with our strong focus on remaining a sales for 2008, which to amortization of intangible improved economics structure supports from $850 million to were $964 million. for 2011. capital structure —which low-cost, highly efficient, were achieved prior to assets and other cost for the company, and continued strength $570 million, thereby has minimal secured customer-centric, innovative the global economic crises. improvements were realized. more flexible terms in cash-flow generation. increasing availability borrowings — has the metals company — flexibility to sustain optimizing our operating our current operations margins and maintaining and to support future our rich employee culture. Although revenues Record Liquidity rebounded to nearly record and Strong levels, profitability margins— Credit Statistics while improved from 2010 and covenants. 38 on our revolver. •T  he expansion of Adjusted EBITDA† Growth improved $205 million, Our annual 2011 or 32 percent, during the capital investments were our senior secured At December 31, 2011, year, allowing for additional $167 million, and our strengthening of our credit facility through we had no outstanding strengthening in our credit current cash allocation Liquidity levels reached cash generation from the completion of a borrowings on our revolving statistics. Our ratio of total plans for 2012 include levels—did not increase record heights during operations, providing $275 million term loan credit facility. Taking into debt to Adjusted EBITDA additional investments Our financial strategy to the same degree. We 2011. The keys to our $486 million of funding in January 2012. The consideration the January improved from 3.7 times of between $225 and continues to include achieved operating-margin increase in available funds during the year— a net proceeds were used 2012 refinancing, our at the end of 2010 to $250 million, of which over a commitment to the Theresa Wagler expansion of 132 basis during the year included: $317 million increase to repay $280 million, liquidity improved 2.8 times. Our current 70% are related to organic maintainability of improved Chief Financial Officer • The significant growth initiatives. Sincerely, *Our senior secured credit facility includes a minimum liquidity covenant, which requires us to maintain $150 million plus the amount outstanding on the 73/8% Senior Notes due 2012 as available liquidity through maturity of the Notes. For instance, at December 31, 2011, taking into consideration the January 2012 refinancing, the minimum required liquidity would have been $570 million. Adjusted EBITDA as defined in our senior secured credit facility represents our earnings before interest, taxes, depreciation, amortization, and certain other non-cash items. See the adjusted † EBITDA reconciliation from income (loss) before income taxes on page 28. 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We economic weakness and providing outstanding a sense of ownership, strategic growth, in which continually challenge the strength, Steel Dynamics products and services that accountability, loyalty, and we will strive to provide status quo, seeking new has maintained a proven exceed our customers’ purpose—and the ability sustained appreciation opportunities to enhance track record of sustained expectations, anticipating to make contributions that of cumulative shareholder products and services, performance—consistently their future needs, and have impact. Safety on value, exceeding market and increase productivity in excess of our metals- delivering greater value. the job is paramount. and peer performance. and quality. industry peers. 10 11 S Railway bridge under repair, White River Junction, Vermont. real-time information special short-term customer as a preferred supplier systems yield accurate requirements for the product. not just because we provide lead-time and shipping A good example of this was the highest-quality products estimates. On-time our ability, in September 2011, and services, but also production and shipments following a bridge failure because we view our help us honor order promises. caused by Hurricane Irene, customers as our greatest Flexible operations and to ship an emergency order priority—partners, really, our responsive people for 47 tons of steel beams in our endeavors. and systems permit us to put an essential Vermont Photo courtesy of Kevin Burkholder. teel Dynamics stands rail line back into operation. Unable to find the needed beams regionally, We design many of our steel products to meet unique SDI has developed a Web-based tools that contractors for the top-notch technical-support allow flat-roll customers State of Vermont infrastructure, and we to directly access a variety had conducted a provide outstanding product- of product and order data. nationwide search application and development Our success — our to respond to changing for the product that led to services. We’ve developed shareholders’ success — customer needs. SDI. Thanks to our ability powerful iPhone and iPad is reliant upon that of For some products having to ship the beams from our apps that enable our flat-roll our customers. Through Through rigorous monitoring longer manufacturing cycle inventory, work on the bridge steel sales force to instantly our passionate customer of processes and product times, we help our customers could begin quickly — and, answer customer queries focus, our goal is to exceed testing, we pay close leverage volatility with in less than a month, the and check mill status and customer expectations and attention to quality. Our in-process inventories that bridge reopened to essential lead times from anywhere. deliver greater value than process discipline and can be finished to serve freight traffic. This complements powerful our competitors. customer requirements. Our customers are our most important partners. Making customer service our highest priority means providing outstanding products and services that exceed our customers’ expectations, anticipating their future needs, and delivering greater value. 12 13 O model that allows fairly, by communicating are the force that disciplined autonomy openly and acting upon creates and sustains and front-line decision employees’ ideas and value for the company, making, while fostering addressing their our customers, and an entrepreneurial concerns, we foster our shareholders. spirit. We hold people trust and respect. From the beginning, CULTURE Melt shop pulpit, Flat Roll Division, Butler, Indiana. ur employees accountable, understand SDI also places we’ve hired energetic, when mistakes are great emphasis on positive-spirited made, but strive for employee training individuals who excellence. We build and development have the right mindset employee ownership to sustain current and talent to drive through inclusion performance and to innovation and success. and collaboration; we develop human resources than in all employees’ accident. Meeting that We’ve placed them welcome and encourage for company growth. concern for on-the-job challenge would entail in an incentivized creativity and ingenuity. We provide employees safety. We strive for zero close communication, with opportunities for accidents each day. recognition of potential environment where SDI maintains a their compensation flat, lean organizational personal growth through To reach that goal hazards, and strict is based on their structure that minimizes education. We also requires constant effort. adherence to all safety performance and the bureaucracy, enhances have strong internship company’s resulting the flow of ideas between programs to attract the melting manager at shop team had just profitability. And they managers and workers, best recent graduates. our Butler, Indiana, one lost-time accident have excelled. and increases accessibility mill challenged his team in 2010, and achieved SDI is built on a decentralized business Nowhere is our Late in 2009, the programs. The melt to top management. unparalleled team to go an entire calendar its goal of zero lost-time By treating people spirit also more obvious year without a lost-time accidents in 2011. Our highly productive, low-cost operations are driven by a unique company culture in which all have a sense of ownership, accountability, loyalty, and purpose, and can make contributions that have impact. Our employees propel us forward with their spirit, innovation, determination, and ever-present desire to improve, grow, and succeed. 14 15 G Shipping bay, Engineered Bar Products Division, Pittsboro, Indiana. rowth is the develop a richer product on special-bar-quality lifeblood of mix and services that (SBQ) products, the mill Steel Dynamics. add value to our products. became profitable soon We constantly look We’ll maintain our focus after production began for ways to provide on containing and under SDI ownership our customers new reducing costs, sustaining in 2004. We later added and better products, our superior operating a finishing facility to to grow our business and culture, retaining our become a “one-stop make it more profitable. low-cost advantage, shop,” providing not just and striving the steel, but processes to enhance and services that added our margin value to our products. in every segment. Our In 2011, the bar mill capacity by more than with customers as set records for annual 50 percent. We’ll also their preferred supplier. operating income, expand its finishing As we do so, we’ll be Engineered production, and capabilities, further mindful that diversity Bar Products shipments. Its customers increasing our higher- of product offerings Division at Pittsboro, encouraged us to expand margin, value-added and end-market sectors steelmaking through the Indiana, is an example our product offerings product offerings. has helped reduce our expansion of our existing of a strategic acquisition to meet all their SBQ In the future, exposure in any given facilities, the introduction that has been very needs, and this led us we’ll continue to focus area. It has also brought of new products, and successful, and greatly to initiate a $76 million on the prime engines us higher margins through acquisitions. enhanced by adding expansion that will of our success. We’ll also in tough economic higher-margin products increase the mill’s look to develop even more times, and maximum to the mix. Concentrating annual production long-lasting relationships opportunity in good. We’ve grown in Moving forward, we’ll strive to continue to We are on a continued path of responsible, strategic growth, in which we will strive to provide sustained appreciation of cumulative shareholder value, exceeding market and peer performance. 16 17 S IN N OVATION Paint line, Flat Roll Division, Jeffersonville, Indiana. teel Dynamics customer applications. steel company operates was born of a spirit After developing a a paint line integral to of entrepreneurialism type of galvanized a mill. Why not? A study and innovation. The steel specially suited for team quickly concluded idea was to take a stamping steel garage the idea was sound and technology — thin-slab doors, using a proprietary the economics were right. casting— and, through “post-anneal” process, In a little over a year, the innovation, to refine that our team observed that Butler paint line began technology and take it customers were shipping operation, employing to a higher level. SDI has it in volume to “roll the latest technologies long since accomplished coaters”— companies to produce high-quality, that at our Flat Roll specializing in applying painted steels cost- Division at Butler, various colors of paint effectively and in made up 18 percent of creating lucrative Indiana. It has become to coils of sheet steel. an environmentally the Flat Roll Division’s business opportunities. friendly way. shipments. Whether it is new one of the most productive Soon we asked the and profitable flat-roll question: Why not add The Butler paint mini-mills in the world. a paint line at our mill? line soon became so we work with our processes, energy SDI would control all the successful that in 2008 customers to develop savings, or any other our metallurgists have elements of the process, a second paint line innovative product and area where creative ideas formulated unique alloyed eliminating multi-vendor was installed at our service solutions. As in can make a difference — and finished steels and logistics issues and Jeffersonville, Indiana, the paint line example, we encourage our to meet the stringent assuring product quality. galvanizing operation. these efforts often add employees to “think specifications of specific No other North American Last year painted steel customer value while outside the box.” On the product side, Across the company, products, business Innovation lies at the very heart and soul of Steel Dynamics. We continually challenge the status quo, seeking new opportunities to enhance products and services, and create technologies to increase productivity and quality. 18 19 S teel Dynamics’ generation of best-in-class financial strength returns on invested capital maintain strong credit is evidenced by its strong throughout the business statistics and appropriate current liquidity level of cycle has provided excellent liquidity, which includes $1.6 billion, coupled with access to capital markets a long-term preference its ability to efficiently and a strong, flexible of net leverage* of less generate strong cash flows. capital structure. Our than 3.0 times. During both periods balance sheet is aligned of economic weakness and appropriately to support • A commitment to • A preference to fund and to elicit superior returns on dollars spent. • A current focus on utilizing free cash flows for strategic growth both current operations has maintained a proven and adaptable to support track record of sustained further growth initiatives. operating MARGIN 20% $600M 15% $486M $400M 10% 7% $200M 5% capital investments through free cash flow strength, Steel Dynamics cash flow from operations $800M initiatives and some debt reduction. $0 07 08 09 10 11 To encourage and reward 0% 07 08 09 10 11 structure—our steel superior performance, and metals-recycling while aligning employee cost structures are over interests with those of 85% variable and our our shareholders, we fabrication operations offer pay-for-performance over 70%— coupled with compensation that is linked our vertically integrated • An effort to minimize to the safe production of operating platforms, we the impact of working quality products and the have a uniquely efficient in excess of our metals- framework under which capital movement through effective and efficient use ability to generate strong industry peers. Our we operate aims to sustain effectively managing of our resources. cash flow both in periods reputation for prudent our financial strength customer receivables use of capital and the and adaptability: and inventory balances. performance—consistently The financial Given our highly variable, low-cost operating of economic weakness and strength. Our future financial success is not a strategy, but a result. It is driven by the support of our customers, our employee culture, and the timely delivery of preferred products. *Total debt less cash and equivalents, and short-term commercial paper investments as a percentage of pretax earnings before interest, depreciation, amortization, and certain other non-cash adjustments. summary information 20 21 summary information CORPORATE OVERVIEW $9B net sales ( n ) increased $600M $8.0B $6B 27% Net income ( l ) increased $278M $3B 98% $200M from 2010. $0 400 $0 07 08 09 10 08 Net debt ( n ) — or total debt 6 less 200 cash and 5 commercial 4 paper— totaled 3 $1.92billion at year-end 2011. 1 00 09 10 11 $3B 6x $1.9B 4x $2B 2.4x $1B $0 11 2x 07 08 09 11 10 0x The ratio of net debt to adjusted ebitda*( l ) improved to 2.4x in 2011. Operating margin EBITDA margin † 20% 20% 15% 15% 10% 10% 7% 3.0 0% 2.5 $10B $8.0B $8B $6B $4B $2B 10 11 $0 96 100% 50% 0% 97 98 99 00 01 02 03 04 05 06 07 08 09 10 STEEL FABRICATION 10% 5% 5% 07 08 09 10 11 0% 07 08 09 10 3% STEEL OPERATIONS 61% —— Other 1% 11 METALS RECYCLING AND FERROUS RESOURCES 2.0 1.5 1.0 $400M 0.5 $300M 0.0 $167M $200M $100M Growth in revenues, 1996–2011 2011 revenues as a percent of external sales by operating segment: By a number of measures, SDI leads the U.S. steel industry in profitability. 60% $300M $0 07 $585M $600M from 2010. $400M Operating income increased from 2010, driven primarily by significant margin improvement within steel operations. $900M600 $0 Long-term profitable growth has been our deep-seated objective since the start-up of operations in 1996. 07 08 09 10 11 $6.0B $6B $4B 07 08 09 10 No external sales are currently associated with ferrous resources. About 70% of our 2011 metals-recycling sales were external. 35% 2011 operating income by operating segment* … while our total assets have grown to nearly $6 billion. $2B $0 Capital expenditures continue to focus on projects having a high rate of return … Steel operations $668 million Steel fabrication (7) million Metals recycling $95 million Ferrous resources (40) million Metals recycling and ferrous resources $55 million 11 11 n Steel operations n Steel fabrication n Metals recycling and ferrous resources Company and employee interests are Aligned. Our highly incentivized workforce excels in productivity. Percent of external sales by operating segment — SDI expanded into metals recycling with the acquisition of OmniSource in 2007. *Adjusted EBITDA, represents our earnings before interest, taxes, depreciation, amortization, and certain other non-cash items. See a reconciliation from earnings before taxes on page 28. *Throughout † 6,530 full-time employees at year-end 2011. this summary information section on pages 21 through 25, operating income of segments excludes profit-sharing and amortization expenses related to the operating segment. See EBITDA as presented in the adjusted EBITDA reconciliation from income (loss) before income taxes on page 28. summary information 22 $9B steel operations 23 $600M DICK TEETS Executive Vice President for Steelmaking, President $6B and COO of Steel Operations $400M “ Operating income for our steel operations in 2011 continued to improve, $6B segment sales ( n ) increased 28% from 2010. $900M $5.1B $668M $4B $600M $2B $300M reaching $668 million. We $3B achieved record shipments $0 07 08 09 10 about the potential for additional growth using existing capacity as the economy improves.” $0 07 08 09 10 5.8M 6M Value-added steels accounted for 60% of steel segment sales in 2011, $3.1 billion of the $5.1 billion total. 0 08 09 10 11 Structural 12% 6.4M 6M Rail 2% MILL CAPACITY Sheet 42% Shapes 5% 5.2M Special-bar-quality 11% VALUE-ADDED STEELS MILL STEEL PRODUCTION 2M 72% 0 07 08 09 10 6.4million tons per year, providing SDI with increased market opportunity as the economy improves. 4M of SDI’s flat-rolled steel sales were of higher-value finished sheet steel. *Operating 07 Steel Production capacity‡ ( n ) has grown incrementally to Innovation extends SDI’s product line. 2% RAIL Structural and Rail Division —— SPECIALTY SHAPES Steel of West Virginia 5% 9% — MERCHANT BAR Roanoke Bar Division 5.8million tons. BY PRODUCT TYPE /DIVISION Steel service centers, distributors and fabricators accounted for 11% — SBQ/MBQ STEEL Engineered Bar Products Division 13% — STRUCTURAL STEEL Structural and Rail Division FLAT-ROLLED SHEET—— 48% Flat Roll Division Flat rolled sHEET accounted for 12% 64% —— FLAT-ROLLED SHEET The Techs 60% BY DISTRIBUTION CHANNEL of 2011 steel shipments. Steel service centers — 59% and distributors tons in 2011. 2M STANDARD STEELS $0 5.8 million 11 Sheet 17% 11 steel shipments† were a record 4M Merchant Bar 8% 48% 2011 STEEL SHIPMENTS $200M at three of our mills last year, and we’re excited $0 Segment Operating income* ( l ) increased from 2010. * Other 3% summary information Energy Automotive — 14% 9% Only SDI produces Galvalume® corrosionresistant steel in wide widths preferred by steelsiding manufacturers. 36% — Direct sales — Other transportation 6% Construction 33% 6% BY END MARKET † DIVERSE END Metal buildings — 12% MARKETS† reduce our Light commercial and —— 11% dependence on residential construction 10% Heavy construction — any single industry or customer. of SDI’s 2011 steel shipments. 5% — Appliance/HVAC 6% — Steel fabricators — Agriculture — Mining 4% 3% — Heavy equipment Uniquely in North America, Steel Dynamics rolls extra-long, highquality AREMA Standard rail — 240 feet in length. — Other manufacturing 19% Diversified mix of steel products includes 1 hot-rolled sheet 2 painted flat roll 3 specialty-bar-quality rounds 4 merchant bars 5 wide-flange beams 6 rail 7 rebar 8 specialty steel 11 In 2011, Mill Utilization ( n ) of SDI’s five steel mills increased to 82% income excludes profit-sharing and amortization expenses related to the operating segment. 1 † End-market 2 3 4 5 6 7 8 percentages shown are best estimates. Because nearly two-thirds of our steel shipments go through a distribution channel, and because service centers and distributors † Steel shipments includes The Techs. do not typically provide to us the details of their customer and end-market sales, we have estimated these sales. Our estimates are based on knowledge of types of products sold for ‡ Steel mill annual production capacity and utilization include only SDI’s five steel mills. The Techs, which is excluded from steel mill production, has the capacity to coat specific applications and on assessments by the sales and marketing staffs of our steel-product divisions. This accounts for the large percentage of shipments categorized as “other an additional 1 million tons per year. manufacturing,” some of which could actually belong in other defined categories. summary information 24 25 metals recycling and ferrous resources steel fabrication ferrous shipments RUSS RINN (gross tons) nonferrous shipments (pounds) 1.1B Iron units sufficient to meet the needs of our steel mills are now produced internally. Executive Vice President of Metals Recycling, President and COO of OmniSource Corporation 6M “ At OmniSource we’re 4M 0.8B 500,000 Iron Units 500,000 2M 0.4B 400,000 400,000 focusing on increasing profit margins— summary information 5.9M 1.2B Produced New Millennium’s three new western plants ( ) introduce coast-to-coast market coverage. (metric tons) 389,000 by expanding retail scrap collection, increasing the throughput of our shredders, producing value-added ferrous products, and improving the $9B $600M recovery of nonferrous metals.” $4.2B $4B Segment sales ( n ) increased $150M $400M $200M $3B $6B $2B $100M $55M $1B from 2010. $50M $3B $0 31% 07† 07† 08 43% 09 07† 11 10 $0 09 10 $125M $5B $3.9B $4B $100M $95M $75M $3B $50M $2B $25M $0 New downstream 07 08 09 10 processing facilities are designed to improve recycling margins. $0 08 $0 11 09 was acquired October 26, 2007. 10 11 10 Omnisource 2011 NeT sales $3.9billion 70% of OmniSource’s 2011 net sales went to external customers ( n ). Internal sales ( n ) accounted for the rest. Ferrous scrap Gamma Tech units at three OmniSource facilities in the Midwest reduce residual metals to produce highervalue ferrous shredded scrap. 0 0 $9B positioning for future 07 07 08 08 09 09 10 10 11 11 growth. The three plants we bought, upgraded, Iron Units consumed customers nationwide and restarted provide (percent) $9B SEGMENT sales$80M (n) increased $300M $6B $400M 07 07 08 08 09 09 10 11 10 $100M 11 87% 07 08 09 10 11 Hope, Arkansas Atlanta Kernersville Wellford Spartanburg Anderson Clinton Columbia Greenwood Athens Smithfield Fayetteville Raeford Wilmington Lumberton Swainsboro Fitzgerald Lake City, Florida $0 $3B 08 $0 08 09 10 1 joists 11 2 decking 1 2 11 Shipments (tons) $80M $400M $276M 300,000 218,000 $300M $40M $200M $40M 150,000 $100M $20M 75,000 56% 09 10 $200M $0 07 New Millennium Products $60M $20M from 2010. 07 of iron units consumed in 2011 were supplied internally ( n ). $0 Montvale Rocky Mount Charlotte Greenville Liberty and gain market share.” $600M $200M $200M $0 Jeffersonville Cherryville a new presence to serve $400M 25%$400M 25% $3B Mansfield Elizabethton Johnson City Winston-Salem Juarez, Mexico Together, Iron Dynamics ( n ) and Mesabi Nugget ( n ) supplied 390,000 metric tons of iron units in 2011. 0% 0% New Haven Fort Wayne Lima St. Marys Marion Muncie Greencastle progress in 2011 50% 50% NONFERROUS scrap The new SDI LaFarga operation in Indiana will produce secondary copper rod from shredded copper scrap. Kokomo Indianapolis Adrian Elkhart Goshen Auburn Toledo Defiance Salem, Virginia “ We’ve made great 75% 75% $6B Munster Bourbon Peru Normal St. Louis Executive Vice President of Business Development, President and COO of New Millennium Building Systems $600M 100% 100% 11 Sturgis South Bend Butler, Indiana Fallon, Nevada Gary heasley 200,000 200,000 OmniSource Operating income* ( l ) was throttled in 2011 by costs to acquire scrap feedstock. income excludes profit-sharing and amortization expenses related to the operating segment. † OmniSource 09 300,000 300,000 100,000 100,000 $0 11 08 0 of OmniSource’s 2011 ferrous scrap shipments went to SDI steel mills ( n ). $1B SEgMENT Operating income*(l) was negatively impacted by Mesabi Nugget start-up in 2010 and 2011. *Operating 0 $200M 08 Burlington Bay City Warren Sterling Heights Howell Jonesville Jackson Ecorse Kalamazoo Belvidere $0 $0 07 08 09 Operating -$20M LOSS* ( l ) narrowed in 2011 while starting up new plants. *Operating 10 11 $60M $0 -$7M 225,000 07 08 09 -$20M loss excludes profit-sharing and amortization expenses related to the operating segment. 2010 operating loss of $25 million included a $13 million impairment charge. 10 11 0 -75,000 07 08 09 summary information 26 27 summary information Selected Financial Data T he following table sets forth the selected consolidated financial and operating data of Steel Dynamics, Inc. The selected consolidated financial and operating data as of and for each of the years in the five-year period ended December 31, 2011, were derived from our audited consolidated financial statements. You should read the following data in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and notes appearing in our accompanying Form 10-K for the period ended December 31, 2011. You should also read the following information in conjunction with the data in the table on the following page: • On June 9, 2008, • On October 26, 2007, • On July 2, 2007, • For purposes of calculating • For purposes of we completed the we completed the we completed the our “ratio of earnings to calculating our acquisition of Recycle acquisition of OmniSource acquisition of The Techs, fixed charges,” earnings “operational working South, a privately held, Corporation, a privately three flat-rolled-steel consist of earnings from capital” for all periods regional scrap-metal held scrap-metal galvanizing facilities. continuing operations presented, we consider recycling company recycling and trading The Techs operations before income taxes, amounts invested located in the company. OmniSource are reflected in our steel extraordinary items and in trade receivables southeastern United operations are reflected operating segment. before adjustments for and inventories, States. Recycle South in our metals recycling noncontrolling interests, less current liabilities operations are reflected and ferrous resources adjusted for the portion of other than income in our metals recycling operating segment. fixed charges deducted taxes payable and and ferrous resources from these earnings, debt as reported operating segment. plus amortization of on our consolidated capitalized interest. balance sheets. Fixed charges consist of interest on all indebtedness, including capitalized interest, and amortization of debt issuance costs. Year ended december 31, 2011 2010 2009 2008 2007 Operating data Net sales $ 7,997,500 $ 6,300,887 $ 3,958,806 $ 8,080,521 $ 4,384,844 Gross profit 931,518 675,666 399,076 1,231,259 915,694 Operating income 584,820 364,753 119,531 846,368 690,745 Net income (loss) 265,692 129,599 (11,019) 454,514 394,157 Net income (loss) attributable to Steel Dynamics, Inc. 278,120 140,709 (8,184) 463,386 394,566 Basic earnings (loss) per share $ Weighted average common shares outstanding Diluted earnings (loss) per share $ Weighted average common shares and share equivalents outstanding Dividends declared per share $ Other Financial data Capital expenditures $ Ratio of earnings to fixed charges 1.27 $ 218,471 1.22 $ .65 $ 216,760 .64 $ (.04) $ 200,704 (.04) $ 2.45 $ 189,140 2.38 $ 2.12 186,321 2.01 235,992 .400 $ 234,717 .300 $ 200,704 .325 $ 194,586 .400 $ 196,805 .300 167,007 $ 3.40x 133,394 $ 2.20x 330,052 $ .78x 412,497 $ 5.44x 395,198 9.37x Other data Shipments Steel operations (tons) 5,842,694 5,295,852 4,045,787 5,608,898 5,550,207 Metals recycling and ferrous resources Ferrous metals (gross tons) 5,879,729 5,179,812 3,631,102 4,958,518 973,891 Nonferrous metals (thousands of pounds) 1,066,648 961,288 780,084 911,832 137,417 Mesabi Nugget (metric tons) 159,641 67,485 — — — Iron Dynamics (metric tons) 229,502 225,545 201,897 232,593 223,805 Steel fabrication operations (tons) 217,838 164,431 145,259 286,612 276,836 Steel operations production (tons) 5,931,833 5,413,093 4,187,526 5,584,019 5,471,314 Shares outstanding (in thousands) 218,874 217,575 216,000 181,820 190,324 Number of employees 6,530 6,180 5,990 6,652 5,940 Balance sheet data Cash and equivalents, and commercial paper $ 475,591 $ 186,513 $ 9,008 $ 16,233 $ 28,486 Operational working capital 1,276,916 1,189,086 857,708 990,516 1,035,027 Net property, plant and equipment 2,193,745 2,213,333 2,254,050 2,072,857 1,652,097 Total assets 5,979,226 5,589,934 5,129,872 5,253,577 4,519,453 Long-term debt (including current maturities) 2,380,100 2,386,821 2,222,754 2,650,384 2,029,845 Equity 2,299,900 2,076,835 2,003,265 1,632,313 1,540,234 summary information 28 29 Investor information Adjusted ebitda reconciliation* Year ended december 31, In millions 2007 2008 2009 2010 2011 Income (loss) before income taxes $ 630 $ 735 $ (18) $ 213 $ 424 Interest expense 55 145 141 170 177 Interest income (2) (3) (1) (4) (5) Depreciation 126 162 159 171 177 Amortization 12 41 53 46 40 Loss attributable to noncontrolling interests – 9 3 12 13 EBITDA $ Unrealized hedging (gains) losses $ Inventory valuation adjustments Equity-based compensation Asset impairment losses Adjusted EBITDA* $ 821 $ 1,089 4 $ – 10 – 835 $ 1,182 337 $ 608 $ $ 404 $ 643 $ 18 15 14 10 17 16 (4) 9 17 – 848 to EBITDA are as defined in our senior secured credit facility. STOCKHOLDER RECORDS Computershare Trust Company, N.A. P.O. Box 43078 Providence, Rhode Island 02940-3078 (877) 282-1168 www.computershare.com INVESTOR INFORMATION Investor Relations (260) 969-3500 investor@steeldynamics.com CORPORATE OFFICES 7575 West Jefferson Boulevard Fort Wayne, Indiana 46804 (260) 969-3500 (260) 969-3590 fax www.steeldynamics.com MARKET INFORMATION The company’s stock trades on the NASDAQ Global Select Market under the symbol STLD. 2011 Board of directors executive offiCers Employee Directors Non-employee Directors Mark D. Millett Co-founder President and CEO Steel Dynamics, Inc. Keith E. Busse Co-founder Chairman Steel Dynamics, Inc. Mark D. Millett President and CEO Richard P. Teets, Jr. Executive Vice President for Steelmaking Gary E. Heasley Executive Vice President of Business Development President and COO of Steel Operations Richard P. Teets, Jr. Co-founder Executive Vice President Steel Dynamics, Inc. John C. Bates President and CEO Heidtman Steel Products, Inc. President and COO of New Millennium Building Systems Theresa E. Wagler Executive Vice President and Chief Financial Officer metals recycling OmniSource Corporation 9 Head office, Fort Wayne, Indiana. Over 80 locations in the Midwest and southeastern United States. Frank D. Byrne, M.D. President St. Mary’s Hospital Medical Center Madison, Wisconsin ferrous resources Iron Dynamics 10 Butler, Indiana. Mesabi Nugget 11 Hoyt Lakes, Minnesota. Mining Resources 12 Chisholm, Minnesota. Paul B. Edgerley Managing Director Bain Capital, Inc. steel fabrication New Millennium Building Systems 13 Head office, Fort Wayne, Indiana. Plants in 14 Butler, Indiana, 15 Salem, Virginia, 16 Lake City, Florida, 17 Hope, Arkansas, 18 Fallon, Nevada, and 19 Juarez, Mexico. *Adjustments ANNUAL MEETING May 17, 2012 9 a.m. Eastern Calhoun Ballroom Grand Wayne Convention Center 120 West Jefferson Boulevard Fort Wayne, Indiana 46802 826 Steel operations Flat Roll Division 1 Butler and 2 Jeffersonville, Indiana. Structural and Rail Division 3 Columbia City, Indiana. Engineered Bar Products Division 4 Pittsboro, Indiana. Roanoke Bar Division 5 Roanoke, Virginia. Steel of West Virginia 6 Huntington, West Virginia, and 7 Memphis, Tennessee. The Techs 8 Pittsburgh, Pennsylvania. 11 12 19 $ 38 $ (35) $ 2 $ 37 85 6 18 17 14 – – 13 steel dynamics operations 13 summary information Richard J. Freeland Chairman Pizza Hut of Fort Wayne, Inc. Dr. Jürgen Kolb Retired Former member of Executive Office Salzgitter, AG James Marcuccilli President and CEO STAR Financial Bank Gabriel L. Shaheen Partner NxtStar Ventures, LLC Vice Chairman Horace Mann Educators Corporation In memoriam Joseph D. Ruffolo Principal Ruffolo Benson, LLC Russell B. Rinn Executive Vice President of Metals Recycling President and COO of OmniSource Corporation www.steeldynamics.com Steel Dynamics Roanoke Bar Division where standard carbon-steel merchant bar products are produced elements of success From our entrepreneurial culture and focus on safety to the customer relationships we cultivate to our strategic growth plan, innovation and low-cost platforms, our success is driven by many different, essential elements. When our people bring these elements together, we become an unstoppable force. 02 06 contents A message from Mark Millett A message from Theresa Wagler Financial summary 01 Steel 08 Metals recycling and ferrous resources 12 Minnesota operations 14 Steel fabrication 16 Front Cover: Steel Dynamics Steel West Virginia employees An entrepreneurial culture is found throughout Steel Dynamics Financial summary Selected Financial Data (millions of dollars, except share amounts) 2012 Net Sales $ Operating Income $ Net Income (loss) Attributable to SDI $ Cash Flow from Operations $ Capital Expenditures Total Assets 2011 7,290 2010 2009 2008 $ 7,998 $ 6,301 $ 3,959 $ 8,081 391 $ 585 $ 365 $ 120 $ 846 164 $ 278 $ 141 $ (8) $ 463 486 $ 169 $ 446 $ 770 446 $ $ 224 $ 167 $ 133 $ 330 $ 412 $ 5,815 $ 5,979 $ 5,590 $ 5,130 $ 5,254 Long-term Debt (including current portion) $ 2,202 $ 2,380 $ 2,387 $ 2,223 $ 2,650 Net Debt (long-term debt less cash and short-term investments) $ 1,795 $ 1,905 $ 2,200 $ 2,214 $ 2,634 Net Income (loss) per Diluted Share $ 0.73 $ 1.22 $ 0.64 $ (0.04) $ Year-end Shares Outstanding (thousands) Dividends Declared per Share 219,523 $ Selected Operating Data 0.400 218,874 $ 2012 0.400 217,575 $ 2011 0.300 216,000 $ 2010 0.325 2.38 181,820 $ 2009 0.400 2008 Steel Operations Shipments (thousands of tons) 5,833 5,843 5,296 4,046 5,609 Metals Recycling: Ferrous Shipments (thousands of gross tons) 5,647 5,880 5,180 3,631 4,959 Ferrous Shipments to SDI (thousands of gross tons) 2,587 2,565 2,161 1,435 2,027 Nonferrous Shipments (millions of pounds) 1,051 1,067 961 780 912 Steel Fabrication Operations Shipments (thousands of tons) 295 218 164 145 287 6,670 6,530 6,180 5,990 Number of Full-time Employees Operating Income Margin Operating Income per Ton Shipped* (Steel Operations) 5.4% $ 88 $ 7.3% 117 5.8% $86 3.0% $51 $ 6,652 10.5% 155 * Operating income excludes profit-sharing costs and amortization related to the operating segment. 1 Steel Dynamics, Inc. 2012 annual report Elements of Success letter to our shareholders I want to first offer a sincere thanks benefits. We have a solid strategic frame- to our customers for their business work in place that focuses on growing our partnership over the past year and to our business in spite of the macro environment shareholders for their continued confidence in we cannot control. We are optimizing and our company. To our team at Steel Dynamics, leveraging our existing assets. We approved my heartfelt thanks for your passion and dedi- three key capital projects for our steel opera- cation to excellence. tions that will increase our ability to deliver While many hoped 2012 would bring a steadily improving economy, the combination of global economic and political uncertainty from Mark MilletT operating environment. One of our initiatives in 2012 was further and dampen global steel demand. Though strengthening the company’s balance sheet the metals industry remains challenging, our to be even more flexible to support future talented team once again achieved a perfor- growth. We are financially prepared to mance of which I am proud. implement growth plans in a prudent manner Our 2012 revenues of $7.3 billion were however, they still were our third highest year. The real challenge of 2012 presented itself in our sales margins—2012 operating Steel Dynamics has a strong financial foundation and an incredible team that will exploit opportunities, putting us in an excellent position for growth. Our low-cost position is driven by the fact that we have state-of-the-art facilities and technology, but even more importantly, we have a culture that leverages that technology. while improving our already low-cost continued to suppress consumer confidence less than the $8.0 billion achieved in 2011; President and Chief Executive Officer value-added, high-quality products, income was $391 million, compared to $585 million in the prior year. The driver was steel margins, specifically sheet steel margins, as the weakened global economy dampened demand and encouraged import activity, and our raw material pricing did not decline in lockstep with sales prices. Despite the macroeconomic environment surrounding us, we seized opportunities in 2012. We entered new markets, gained market share, introduced new product capabilities and identified several growth projects which are expected to have meaningful future 2 to ensure our invested capital will bring appropriate returns to our shareholders. 2012 Operating Results We continue to outperform our industry peers on a number of key business measures, including operating margin, EBITDA margin and for our steel operations, operating income per ton shipped. We remain focused on being the lowest-cost metals producer in the industry. Our culture underlies our success. Our customers and shareholders see the results, and our employees thrive on it. We encourage and reward the esprit de corps that permeates everything we do. From top-class safety practices, to achieving on-time, quality deliveries, our employees at every division and in every job demonstrate passion for success. Employees at the Roanoke Bar Division stand ready Steel Our steel operations shipped 5.8 for the year, SDI’s steel mills operated at Fabrication Our Fabrication business million tons of steel in 2012, which con- 82%. We are able to consistently achieve turned the corner, with three consecutive tinues to be well above pre-recessionary higher rates as a result of our diversified profitable quarters in 2012. We imple- levels, and only 10,000 tons less than product portfolio, emphasis on higher, mented changes earlier in the year that the volume achieved in our record year value-added offerings and consistent focus yielded efficiencies and improved of 2011. As mentioned, 2012 operat- on the customer. productivity, resulting in positive full-year ing income for our steel operations was significantly lower as steel margins were compressed. The downward pressure on steel margins was due to two primary factors: a continued weakness in the U.S. economy which translated into a weaker demand for steel and steel products, and a downward pressure on selling prices that outpaced declines in our raw material costs, causing compressed margins. An oversupplied domestic steel market resulted from increased import activity, coupled with the current capacity overhang given the weaker demand environment. In spite of this, our steel operations achieved a mill utilization rate higher than the industry. While the industry reported a 75% capacity utilization rate Metals Recycling and Ferrous Resources Our Metals Recycling and Ferrous Resources operations experienced a fickle year, driven by fluctuations in both export and domestic steel mill demand. Despite compressed margins, our metals operating income of $2.1 million. The employees entered new markets, grew our customer footprint from a regional to a national focus, increased sales and dramatically optimized the business to be more competitive. recycling operations were still able to Key Initiatives We approved key outperform their peers, while also synergisti- growth projects in 2012 to add to our cally working with our steel mills in the long-term growth and profitability. In supply of low-cost, high-quality raw material. February 2012, we announced plans Our Minnesota operations made note- to expand our engineered, special-bar- worthy progress. With some innovative quality (SBQ) steel mill. When the expan- approaches, we implemented a series of sion is complete, the mill’s production changes that have already dramatically capacity will increase 52%. This growth improved the quality of our iron nuggets, initiative affords us and our customers with anticipated improvement in produc- numerous advantages: we further diversify tion rates as we proceed through 2013. our product offerings to include high- 3 Steel Dynamics, Inc. 2012 annual report Elements of Success From Mark quality, smaller diameter rounds, we become It also provides a high-quality, value-added New technology at our metals recycling a single-source for a broad range of SBQ product for our customers. locations in Toledo, Ohio, and Indianapolis, Working to control our costs as far into the Indiana, will recover more higher-margin supply chain as possible, we achieved a copper, nickel and stainless steel. We’ve also pivotal milestone for our Minnesota operations made capital improvements to existing retail by constructing a facility that will allow us to yards, and opened new yards that will help supply low-cost iron concentrate to our iron us acquire a greater supply of higher-margin nugget operations, which has been obsolete scrap. consuming much more expensive, market- We reopened two steel fabrication plants priced third-party concentrate up to this point. acquired in Hope, Arkansas, and Fallon, products and services to our customers, and we improve the cost-efficiency at our Structural and Rail Division, through increased utilization related to the supply of semifinished product to our SBQ steel mill. The two locations, working together, creatively leverage our assets, use our technology wisely and collectively maximize the company’s financial performance. In November 2012, we announced an exciting new project using leading-edge technology developed by our Structural and Rail Division team to manufacture premium railroad rail. The state-of-the-art heat-treating system air-quenches the rail heads, making them harder and more wear-resistant. The technology further diversifies our product mix, and increases the utilization of our Structural and Rail Division through We also improved both the productivity of our Minnesota iron nugget facility and the quality of the product. We are working toward increasing equipment availability to consistently sustain operating rates of 1,000 metric tons per day. In order to reach our designed production capacity of between Nevada, expanding the national footprint of our New Millennium Building Systems business. Because every product made is custom-engineered, the business remains focused on customer service and is poised to take full advantage when the construction industry recovery begins. 1,250 and 1,400 metric tons per day, We achieved outstanding performance as we plan to make additional improvements measured by our customers on the 2012 in the second quarter of 2013. Jacobson Steel Satisfaction Survey. Our steel mills received admirable performance ratings. non-residential market cycles. Results of this survey attest to our drive to provide superior customer service and value. Our Focus on Safety Nothing is more important than creating and maintaining a safe work environment for every employee. While our business success is judged by its results, those results could not be achieved without the dedication and hard work of our employees. Even though our present safety record is better than industry averages, our goal is higher. We are aiming for a zero-incident environment, and our focus on safety in 2012 produced some remarkable results: Our Jackson metals recycling and Minnesota The steel processing teams at The Techs Nearly 50% of our metals recycling locations iron nugget facilities achieved zero lost work achieved a perfect safety record – attaining were accident-free the entire year. The Michi- days for the second consecutive year. a full year with no recordable injuries. gan division had zero recordable injuries, a tremendous achievement. 4 Millions of dollars Millions of dollars In dollars Operating income Net income (Loss) Net income (Loss) Per diluted share $391 2012 2011 2009 2011 $585 $365 2010 $164 2012 2009 $120 $846 2008 Billions of dollars $(8) 2009 $463 2008 $6.3 $4.0 2008 2009 $1.22 2010 $141 $8.1 Net sales 2011 $278 2010 $0.73 2012 2010 $0.64 $(0.04) $2.38 2008 $8.0 $7.3 2011 2012 Beyond the safety programs instituted last year nine months following. These are two critical I’m optimistic about 2013 and beyond. and to be instituted in the future, achieving a sectors to not only the steel industry, but to the We continue to drive toward maximizing zero-accident performance record depends on U.S. economy and job creation. Additionally, opportunities to effectively and efficiently maintaining a culture where every employee is corporate America has significant cash perform through the cycle and maintain engaged and taking responsibility for creating reserves that are waiting to be invested, and sustainable differentiation from our peers. and maintaining a safe working environment. access to funds from lenders at historically We will continue to assess opportunities This is an ongoing focus for us and one we low interest rates. Longer term, as America for growth, not only top-line revenue growth, continue to monitor, assess and refine. becomes energy-independent with the inex- but growth that will enhance and provide pensive shale gas reserves, and the domestic consistency to margins. Thanks to the dedi- workplace is recognized as one of the most cation and integrity of our employees, the efficient and effective places to do business, confidence of our customers and the support companies will relocate to the U.S. In fact, of our shareholders, we look forward it has already begun. We are uniquely posi- to continuing our superior performance tioned to benefit from this economic growth. in the future. Looking Ahead I am expectant—for us and for America. The automotive and manufacturing industries remain strong. There has clearly been upward momentum in the residential construction arena, and nonresidential construction historically mimics the sector six to Sincerely, Mark Millett President and Chief Executive Officer 5 Steel Dynamics, Inc. 2012 annual report Elements of Success letter to our shareholders C from Theresa Wagler Executive Vice President and Chief Financial Officer “Our overall financial strategy is to be the safest, lowest-cost metals producer of diversified high-quality, value-added products, creating the highest margins. Through our superior operating culture, experienced and impassioned employee base and performance-based incentive programs, we will continue to focus on best-in-class financial and operating performance.” hallenging conditions in the metals Our annual 2012 capital investments were industry continued throughout $224 million, and our current capital 2012. Despite only a 9% decline in year-over- allocation plans for 2013 include additional year revenues, our operating income investments of between $200 and $225 decreased 33%, to $391 million. Although million, of which over 70% are related to our conversion costs remained among the low- organic growth and production efficiency est in the industry, our selling values decreased projects for which we anticipate appropri- more quickly than our raw material costs, ate future returns. These investments include resulting in this margin compression. However, the engineered special-bar-quality (SBQ) the team’s unyielding focus on remaining rolling mill expansion ($76 million) and a low-cost, highly efficient, customer-centric premium rail air-quenching technology metals company resulted in another year of installation ($27 million), both of which best-in-class financial and operating perfor- are expected to be completed in the fourth mance when compared to our industry peers. quarter of 2013. We prefer funding capital Our performance supported strong cash flow investments through free cash flow when from operations and resulting liquidity levels. possible. Our cash flow generation is Liquidity levels remained at near-record highs strong because of the variability of our cost during 2012. At December 31, 2012, we structure and the focus on keeping supply- had $1.5 billion of funds available to us, chain inventories at a minimum, such as comprised of our undrawn $1.1 billion reducing the amount of ferrous scrap revolving credit facility and $407 million material maintained at the steel mills. of cash and short-term investments. Our financial framework also includes the Given both the strength of the capital preference for maintaining net leverage markets and historically favorable interest below three times throughout the market rate environment, we opportunistically cycle. On an adjusted basis, we did just refinanced over $1.0 billion of our debt, that during 2012. We believe additional or just less than half of our outstanding debt repayment could further ease this balances. We were able to elongate and objective, and intend to further reduce debt stagger our debt maturities while reducing in 2013, while maintaining sufficient liquid- our overall interest burden by approximately ity for growth. Adjusted EBITDA* for 2012 $20 million annually. We also reduced was $621 million. Our net debt, defined debt by $178 million to further improve as total debt less cash and short-term invest- our credit profile throughout the business ments, was $1.8 billion, resulting in net cycle, supporting our financial framework debt to Adjusted EBITDA* of 2.9 times. guidelines, which included debt reduction while maintaining appropriate liquidity for current operations and future growth opportunities. 6 * Adjusted EBITDA represents our earnings before interest, taxes, depreciation, amortization, and certain other non-cash items. See the reconciliation on page 20. Liquidity Net Debt and ratio of net debt Millions of dollars to adjusted EBITDA $3.0 $1,400 $2.5 $407 $1,000 $1,085 $1.8 2.9 $2.0 14% SDI 6.0 12% Peer Group 5.0 10% 4.0 8% $1.5 3.0 $1.0 2.0 $600 $0.5 1.0 $400 $0 $800 08 09 10 11 12 Available Bank Revolver Cash and Shortterm Investments 08 09 10 11 12 Ratio $1,200 Billions of dollars $1,600 EBITDA Margin (%)* Ratio of Net Debt to Adjusted EBITDA 5.5% 6% 4% 2% 0 0 Total Debt less Cash and Short-Term Investments 8.2% -2% 08 09 10 11 12 * EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization. Peer Group includes Nucor, US Steel, AK Steel and Commercial Metals Company Outstanding debt maturities As We look to 2013, we are optimistic as we anticipate: Millions of dollars $1,124 $1,200 • The completion of two compelling organic investments related to our engineered special-bar-quality (SBQ) expansion and premium rail product addition, both $1,000 of which are expected to be completed in the fourth quarter of 2013 $800 $600 • Improvements from our Minnesota operations, as we expect increased production $400 and utilize our own lower-cost iron ore concentrate $200 • An improving domestic economy $0 13 14 15 16 17 After • Reduced interest burden related to our 2012 refinancing and debt repayment initiatives Capital investments Millions of dollars Our overall financial strategy is to be the safest and lowest-cost metals producer of highquality, value-added products, creating the highest margins. Through our superior operating culture, experienced employee base and performance-based incentive programs, we are uniquely positioned to take advantage of each opportunity. Our growth must be additive to margins, counter-cyclical where possible, and be in areas where our culture of performance- $24 $20 $56 based incentive compensation and ownership can thrive. Sincerely, $61 $63 Theresa Wagler Executive Vice President and Chief Financial Officer Steel Operations 25% Metals Recycling 28% Completion of Iron Concentrate Facility 27% Completion of Copper Rod Facility 9% Other 11% 7 Steel Dynamics, Inc. 2012 annual report Elements of Success A Steel Will Steel of West Virginia surpassed 550 days and nearly two million man-hours without a lost-time injury. Dick teets Executive Vice President for Steelmaking, President and COO of Steel Operations “While we continued to experience a challenging market in 2012, we set production and shipping records at some of our steelmaking facilities and maintained higher utilization rates than the industry average. We remain focused on differentiating our products and services in the marketplace and continue to invest in developing new high-quality, high-value products that our customers want and need. The investments we continue to make in our steel operations will help us further achieve that differentiation.” Steel | Strategic Growth Progress at Engineered Bar Products Division As part of our strategic growth plan, we continually apply innovative ways to leverage existing assets and diversify our product portfolio. Our Engineered Bar Products Division (EBD) presents a unique organic growth opportunity for the company. By adding a second rolling mill and making numerous enhancements to the facility’s current rolling mill, we can increase the plant’s capacity to produce engineered, special-bar-quality (SBQ) steel bars and expand our product diversity with high-quality, smaller-diameter rounds. 8 In 2012, we began a $76 million expansion that will increase the mill’s production by 52%, from 625,000 tons to 950,000 tons per year. Additional improvements in material handling and staging and an expansion of the mill’s bar finishing capabilities for non-destructive testing of finished bars will potentially double its inspection capacity. Seeking the most advanced technology available, EBD’s engineer- Finished SBQ bars at the Engineered Bar Products Division. ing and rolling teams evaluated state-of-the-art equipment from four major global suppliers. The equipment selected will help us efficiently produce the most precise product possible and maintain the plant’s production flexibility, both of which will enhance our relationships with customers. The plant expansion will improve our cost-efficiency by increasing capacity utilization at our Structural and Rail Division, which will supply EBD with semi-finished product for its new rolling mill. Establishing a symbiotic relationship between the two plants allows us to optimize both assets and maximize our return on investment. Our efforts to create an even stronger, more adaptable capital structure support projects such as the expansion that effectively leverage our assets. At completion during the fourth quarter of this year, our Engineered Bar Products Division will rank among the largest singlesite SBQ production facilities in North America, giving customers a single source of high-quality, value-added products. Gauging success Steel Dynamics operates some of the most technologically advanced steel mills in the country. Cutting-edge technology helps us deliver higher-quality products to our customers, realize production efficiencies and provide value-added products. The Flat Roll Division in Butler, Ind., consistently maintains great on-time delivery and very short lead times. In 2012, we installed new shape and profile gauges in the hot mill at our Flat Roll Division. These gauges help control the thickness and width of our steel products, which in turn provides greater yield, or performance, for our customers. Steel is sold by weight, so it’s always associated with a thickness or width tolerance. With this new technology, the mill holds even tighter product tolerances, so we provide more linear footage to customers at the same weight, allowing them to create more out of our coil. This, along with the fact that the mill consistently achieves over 90% on-time delivery, well above industry average, makes us a preferred supplier. 9 Steel Dynamics, Inc. 2012 annual report Elements of Success A Steel Will Steel | Innovation Tough as rails Our strategic growth plan directs us to leverage existing facilities and adapt innovative technologies that diversify our product portfolio and enhance its quality. Our culture thrives on applying cutting-edge technologies that help us realize greater success and provide solutions to our customers’ challenges. The Structural and Rail Division is one of the key growth projects that will provide high-quality, value-added products. As our rail customers struggle to update an antiquated system throughout the country, they need a product that can hold up longer in the most severe applications, reducing their cost of rail maintenance and replacement. In response, our Structural and Rail Division developed state-of-the-art technology that air-quenches the heads of rails to make them harder, stronger and more wear-resistant. The air-quenched rails give us the potential to become the pre-eminent rail manufacturer for rail quality, end straightness and dimensional control in North America. This technology brings added value to our products and diversifies the mill’s product portfolio, helping it weather the variability of nonresidential steel demand. Construction of the new system, a nearly $27 million investment, has already begun. When complete at the end of this year, it will be capable of producing up to 350,000 tons of hardened plain carbon steel rails as well as standard-strength rails, which the division currently manufactures. The capability to produce 320-foot rail makes the division the only U.S. manufacturer of long rail and our customers’ single resource for all lengths of rail. Our employees at every division and in every job demonstrate passion for success. Our strategic growth plan directs us to leverage e xisting facilities and adapt innovative technologies that diversify our product portfolio and enhance its quality. 10 Steel Sales by end market Steel Segment Steel Sales by product type $4.7B $505M $5.0 $1,000 $4.0 $800 $3.0 $600 $2.0 $400 $1.0 $200 $0 Construction 40% $1,200 08 Steel Sales 09 10 11 12 Millions of dollars Billions of dollars $6.0 $0 Steel operating income* * Operating income excludes profit-sharing costs and amortization related to the operating segment. Steel operations metrics 9% Flat-rolled Sheet - Flat Roll Division 47% Light Commercial & Residential 25% Flat-rolled Sheet - The Techs 11% Heavy Construction 6% 15% Automotive 16% Structural Steel - Structural & Rail Division Heavy Equipment 5% Rail - Structural & Rail Division 2% Other Transportation 3% 9% Agriculture 5% SBQ/MBQ Steel - Engineered Bar Products Division Mining 2% Merchant Bar - Roanoke Bar Division 10% Appliance/HVAC 6% 5% Other Manufacturing 20% Specialty Shapes - Steel of West Virginia Energy 7.5 81% 56% 73% 82% 82% 6.0 Millions of tons Metal Buildings 4.5 3.0 1.5 0 08 09 10 11 12 3% excess Capacity Steel Mill utilization % (a) Steel Production (a) Total Steel Shipments Calculated as SDI steel operation (excluding The Techs) with an estimated annual steelmaking capacity of 6.42 million tons. Steel | Safety Steel | Customer Relationships/Commitment A state of mind that saves Our customers have spoken To us, safety is more than a set of rules and processes. It’s more than One way we achieve sustainable differentiation in the marketplace a checkbox. It’s a mindset, a culture that permeates every one of our is through the exceptional level of customer service and partnership facilities. We’re relentless in our drive down to reach zero incidents, we provide. We continually expand our product portfolio and and this company-wide dedication to safety resulted in remarkable improve quality to exceed customers’ expectations, anticipate achievements in 2012. their future needs and deliver greater value. One of those achievements was realized at Steel of West Virginia, This commitment to superior customer service was showcased by our longest-operating mill. As a result of capital investments in safety our performance on the 2012 Jacobson Steel Satisfaction Survey, equipment and the dedication of a great team, the mill has surpassed an independent, third-party customer satisfaction survey of all 550 days and nearly two million man-hours without major steel customers in the United States and Canada. The survey a lost-time injury for the first time in its history. measures product quality, price competitiveness, on-time delivery, Steel of West Virginia serves niche markets by providing value-added e-commerce, outside sales representation, inside sales support, specialty steel products that meet customers’ individual needs. total customer service and overall satisfaction. Because they custom-fabricate steel products, employees at the mill Our facilities were named satisfaction leaders in Overall frequently handle the steel, unlike traditional mills. Satisfaction, Inside Sales and Quality in the categories of Sheet This poses a safety challenge that we’ve addressed by employing Producer, Bar/Structurals, SBQ and Beams. This recognition no-touch tools whenever possible. Steel of West Virginia is one highlights our commitment to enhancing relationships with of our many facilities that achieved impressive safety records our customers and becoming their preferred supplier. in 2012, a model for what can be achieved when safety remains top of mind every day. 11 Steel Dynamics, Inc. 2012 annual report Elements of Success Mettle tested Our Metals Recycling and Ferrous Resources operations continue to outperform their peers. Russ Rinn EVP of Metals Recycling, President and COO of OmniSource Corporation “We continually look at opportunities to expand our presence in our current markets and increase our profit margins. By making improvements to existing collection sites and opening new ones, we’ll be able to acquire a greater supply of highermargin obsolete scrap.” Metals Recycling and Ferrous Resources SAFETY & VERTICAL INTEGRATION Steel is the most-recycled material in the world. In North America alone, 80 million tons of steel are recycled annually. Our metals-recycling operation, OmniSource, is one of the largest metals-recycling companies in the country, providing the steel industry with quality ferrous recycled metals. One of the ways SDI maintains our position as a low-cost steel producer is by controlling part of our supply of recycled metals, which not only gives us a hedge against volatile raw materials markets, but also allows tighter control of inventory. 12 In 2012, we took several actions to mitigate some of the macro supply-and-demand dynamics in today’s metals recycling industry. First, we expanded our retail Nearly 50% of theMetals Recycling operations were accident-free throughout 2012. yard network to gain a greater supply of higher-margin obsolete scrap and made capital investments to existing retail yards. This effort will help us capture more of the market, while also providing greater customer service. Our entrepreneurial retail facilities develop business in their areas, expanding our footprint as a result. We also invested in cutting-edge technology used in the recovery of auto shredder residue (ASR) at our Toledo and Indianapolis locations. It allows us to recover Metals recycling net sales and operating income more copper, nickel and stainless steel to reduce our yield loss. Billions of dollars 12-15 million automobiles reach the end of their useful lives in the U.S., and the steel industry recovers millions of tons of $3.0 Millions of dollars recycling efforts. Each year, approximately $200 $72M $3.5 critical role as we intensify our automobile $150 $2.5 $2.0 $100 $1.5 $1.0 $50 $0.5 steel from them. Since about 75% can be $0 recycled, these vehicles provide significant $0 08 value and return on investment while also 09 10 Sales to steel operations External Sales helping increase our profit margins. 11 12 Operating Income* * Operating income excludes profit-sharing costs and amortization related to the operating segment. Metals recycling & ferrous 2012 Ferrous scrap shipments 2012 Nonferrous scrap shipments resources Thousands of gross tons Millions of pounds $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0 $3.6B $(12)M $180 $130 $80 $30 $(20) 08 09 Net Sales 10 11 12 Operating Income 5,647 6,000 Millions of dollars Billions of dollars $3.4B $4.0 Investment in ASR technology plays a 1,200 5,000 1,000 4,000 800 3,000 600 2,000 400 1,000 200 0 08 09 10 11 12 Gross Tons Gross Tons Sold Internally Sold Externally 0 1,051 08 09 10 11 12 Nonferrous Shipments Generally, approximately 45% of sales are to SDI steel mills. 13 Steel Dynamics, Inc. 2012 annual report Elements of Success fortifying our future A unique technolgy extracts iron ore concentrate from tailings basins. Minnesota Operations To remain the lowest-cost metals producer, we continually seek innovative ways to improve our margins and control variability—even in light of challenges out of our control, such as the economy. We tackled such a challenge with our Minnesota operations, whose profitability relies, in part, on our own supply of iron ore concentrate. The company’s originally anticipated mining operation was to supply that iron ore concentrate; however, a delay in securing mining permits posed a substantial obstacle. 14 Immediately, our team began pursuing other options. The result? We partnered in a joint venture using an innovative technology, perfectly suited to our needs. The process extracts valuable iron ore concentrate from iron ore tailings basins, Mining Resources the waste left over from decades of processing that began in the 1890s and intensified during WWI and WWII. The joint venture began operations in September 2012. We now have our own supply of low-cost iron ore concentrate—the primary raw material used in our Minnesota nugget production process. We will have the capability to process up to three million metric tons of tailings per year to produce about one million metric tons of high-quality iron ore concentrate. This self-sufficiency allows us to reduce working capital requirements and reduce susceptibility to the volatile raw materials market. Aerial view of the Mining Resources concentrator building Our joint venture operation began in 2012. 15 Steel Dynamics, Inc. 2012 annual report Elements of Success d y n a m i c d e t e r m i n at i o n Gary Heasley New Millennium Building Systems continued to penetrate new markets and achieved a dramatic growth in tons in 2012. EVP of Business Development, President and COO of New Millennium Building Systems “We continue to enter new markets and grow our market share, establishing a nationwide presence. As a result, we’ve experienced a dramatic growth in tons and improved profitability. We remain very customer-centric as we take on a troubled market and work to transform our business to be even more competitive in today’s world.” Steel Fabrication STRATEGIC GROWTH/SUPERIOR OPERATING CULTURE/CUSTOMER RELATIONSHIPS New Millennium Building Systems demonstrates both the creativity of our employees and the outstanding results achievable with a superior operating culture and a strategic growth plan. After acquiring three idled manufacturing facilities in Hope, Arkansas; Fallon, Nevada; and Juarez, Mexico in 2010, we immediately established a western sales force and opened the Juarez plant. As we worked to expand our footprint and create greater demand, we opened the Hope and Fallon plants in 2012. 16 Every product made at New Millennium Building Systems is custom-engineered, making it a very customer-centric business. All three plants were completely modernized to meet the demand of increased sales, gain greater efficiencies, enhance product quality, increase production and provide superior customer service. In 2012, New Millennium delivered a positive operating income in an anemic non-residential construction market, as a result of our efforts to gain greater market share and volume, and our employees’ passion to deliver world-class products and service. Butler, Indiana Fallon, Nevada Salem, Virginia Hope, Arkansas Juarez, Mexico Steel Fabrication Lake City, Florida Steel Fabrication shipments $371M $300 $30 300 $20 250 $10 $0 $200 $(10) $100 $(20) 08 09 10 11 200 150 100 50 0 $(30) $0 Sales Millions of dollars Millions of dollars $400 295 Thousands of tons $2M 12 08 Operating income* 09 10 11 12 Steel fabrication shipments * Operating income excludes profit-sharing costs and amortization related to the operating segment. 17 Steel Dynamics, Inc. 2012 annual report elements of success On our best day, we hold true to the elements that bind us together. We strive to make every day our best day for our customers, our shareholders and our employees. This is the determination that runs throughout every part of Steel Dynamics. 18 The Steel Dynamics Roanoke Bar Division stocks a wide selection of bar products. 19 Steel Dynamics, Inc. 2012 annual report Elements of Success a d d i t i o n a l i n f o r m at i o n Millions of dollars Adjusted EBITDA Reconciliation 2012 Earnings Before Taxes $ 2011 204 $ 2010 424 2009 $ 213 170 2008 $ (18) 141 $ 735 145 Interest Expense 159 177 Interest Income (5) (5) (4) (1) (3) Depreciation 180 177 171 159 162 Amortization 36 40 46 53 41 Noncontrolling Interests 21 13 12 3 9 EBITDA $ Unrealized Hedging (Gains)/Losses 595 $ (3) $ $ 826 (4) $ 608 $ 2 $ $ 337 (35) $ 1,089 $ 38 Inventory Valuation 6 9 6 85 37 Equity-based Compensation 12 17 14 17 18 Asset Impairment - Adjusted EBITDA $ 11 621 $ 848 $ 13 643 $ 404 Steel Dynamics continues to maximize opportunities with an entrepreneurial spirit that flows throughout the company. With this superior operating culture, we will continue to strategically move forward to shape our future. 20 $ 1,182 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012 Commission File Number 0-21719 29MAR201218114101 Steel Dynamics, Inc. (Exact name of registrant as specified in its charter) Indiana 35-1929476 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 7575 West Jefferson Blvd, Fort Wayne, IN 46804 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (260) 969-3500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.0025 par value Nasdaq Global Select Stock Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer  Accelerated file  Non-accelerated filer  Smaller reporting company  (Do not check if a smaller reporting company.) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No  The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the pri...
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