Steel Dynamics' Resilience in 2024: A Strong Foundation for Future Growth

Steel Dynamics, Inc. (NASDAQ/GS: STLD) reported its fourth quarter and annual 2024 financial results, showcasing the company's resilience and strong performance despite market headwinds. The company achieved solid operational and financial performance across its operating platforms, resulting in annual net sales of $17.5 billion, operating income of $1.9 billion, and adjusted EBITDA of $2.5 billion. Mark D. Millett, Co-founder, Chairman, and Chief Executive Officer, highlighted the team's performance, cash generation, and significant organic growth investments, coupled with strong shareholder distributions through positive dividend growth and meaningful share repurchases.



Underlying domestic steel demand was stable throughout 2024, supported by the construction, automotive, industrial, and energy sectors. However, steel imports of certain products, most notably coated flat rolled steels, increased significantly, negatively impacting the supply/demand balance and causing pricing pressure for flat rolled steel products. Millett expects unfairly traded steel imports to decline in 2025, based on the recent CORE trade case initiated in late 2024. This, coupled with steady to increasing North American steel demand, provides a positive commercial environment for 2025.

Despite some headwinds in 2024, Steel Dynamics' steel operations achieved near-record annual shipments of 12.7 million tons and historically strong operating income of $1.6 billion. The company's steel fabrication business also achieved historically strong earnings with operating income of $667 million. Despite a challenging pricing environment throughout much of the year, the metals recycling team achieved operating income of $77 million. The strength of Steel Dynamics' diversified, value-added circular manufacturing model was certainly demonstrated in 2024.



Fourth quarter 2024 operating income for the company's steel operations was $165 million, representing a 46 percent sequential decline, based on seasonally lower steel shipments and metal spread compression, as average realized steel selling values declined. The company also experienced an unplanned outage at its Butler Flat Roll Division, further reducing quarterly volume by an estimated 50,000 tons. The fourth quarter 2024 average external product selling price for the company's steel operations decreased $48 per ton sequentially to $1,011 per ton. The average ferrous scrap cost per ton melted at the company's steel mills increased to $370 per ton, or $3 per ton.

Steel Dynamics' focus on safety and operational efficiency significantly contributed to its overall performance in 2024. The company celebrated its safest year ever, which is a testament to its commitment to prioritizing the well-being of its employees and the environment. This focus on safety has likely led to improved morale, reduced downtime, and lower costs associated with accidents and injuries. In terms of operational efficiency, the company's Sinton Texas Flat Roll Steel Division operated at levels in excess of 80 percent during November and December, while also improving product quality and cost efficiency. This high level of operational efficiency contributed to the company's strong financial performance in 2024, as it was able to produce more products with fewer resources.

Looking ahead, the company expects these operational improvements to continue to drive positive operating income contributions beginning in the first half of 2025 and increasing throughout the year. This is a result of the company's ongoing efforts to improve its operational efficiency and reduce costs. Additionally, the company's focus on safety and operational efficiency is expected to contribute to its long-term growth and value creation strategy. By prioritizing these areas, the company is able to improve its overall performance and better position itself for future success.

In conclusion, Steel Dynamics' strong performance in 2024, despite market headwinds, demonstrates the company's resilience and commitment to its long-term growth and value creation strategy. With a positive commercial environment expected in 2025, the company is well-positioned to continue its strong performance and drive shareholder value.