Steel Dynamics, Inc

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Steel Dynamics, Inc Steel Dynamics, Inc. 2012 2012 annual report Steel Dynamics, Inc. 2012 annual report safety | financial strength | customer commitment | culture | strategic growth | innovation steeldynamics.com Elements of Success STEEL DYNAMICS ROANOKE BAR DIVISION where standard carbon-steel merchant bar products INVESTOR INFORMATION are produced ANNUAL MEETING STOCKHOLDER RECORDS MARKET INFORMATION May 16, 2013 Computershare Trust Company, N.A. The company’s stock trades on the 9:00 a.m. Eastern P.O. Box 43078 NASDAQ Global Select Market Calhoun Ballroom Providence, Rhode Island 02940-3078 under the symbol STLD. Grand Wayne Convention Center (877) 282-1168 120 West Jefferson Boulevard www.computershare.com Fort Wayne, Indiana 46802 CORPORATE OFFICES INVESTOR INFORMATION 7575 West Jefferson Boulevard Investor Relations Fort Wayne, Indiana 46804 (260) 969-3500 (260) 969-3500 [email protected] (260) 969-3584 fax www.steeldynamics.com 2012 BOARD OF DIRECTORS ELEMENTS OF SUCCESS EMPLOYEE DIRECTORS NON- EMPLOYEE DIRECTORS From our entrepreneurial culture and focus on safety to the customer relationships we cultivate to our strategic MARK D. MILLETT KEITH E. BUSSE TRACI M. DOLAN JAMES C. MARCUCCILLI Co-founder Co-founder Chief Administrative Officer President and CEO growth plan, innovation and low-cost platforms, our success is driven by many different, essential elements. President and CEO Chairman ExactTarget, Inc. STAR Financial Bank When our people bring these elements together, we become an unstoppable force. Steel Dynamics, Inc. Steel Dynamics, Inc. PAUL B. EDGERLEY GABRIEL L. SHAHEEN RICHARD P. TEETS, JR. JOHN C. BATES Managing Director Partner Co-founder Co-founder Bain Capital Partners, LLC NxtStar Ventures, LLC Executive Vice President President and CEO President, CEO Steel Dynamics, Inc. Heidtman Steel Products, Inc. GLS Capital Ventures, LLC DR. JÜRGEN KOLB Retired FRANK D. BYRNE, M.D. Former member JAMES A. TRETHEWEY President Management Board CEO St. Mary’s Hospital Medical Center Salzgitter, AG DJD Investments Madison, Wisconsin Retired Executive positions with Cliffs CONTENTS Natural Resources, Inc. A message from EXECUTIVE OFFICERS Mark Millett FINANCIAL SUMMARY 01 02 STEEL 08 MARK D. MILLETT RUSSELL B. RINN THERESA E. WAGLER President and CEO Executive Vice President of Metals Recycling Executive Vice President METALS RECYCLING AND FERROUS RESOURCES 12 President and COO of OmniSource Corporation and Chief Financial Officer GARY E. HEASLEY A message from Executive Vice President RICHARD P. TEETS, JR. MINNESOTA OPERATIONS 14 Theresa Wagler of Business Development Executive Vice President for Steelmaking President and COO President and COO of Steel Operations 06 STEEL FABRICATION 16 New Millennium Building Systems FRONT COVER: Steel Dynamics Steel West Virginia employees Steel Dynamics, Inc. 2012 annual report AN ENTREPRENEURIAL CULTURE is found throughout Steel Dynamics FINANCIAL SUMMARY SELECTED FINANCIAL DATA (millions of dollars, except share amounts) 2012 2011 2010 2009 2008 Net Sales $ 7,290 $ 7,998 $ 6,301 $ 3,959 $ 8,081 Operating Income $ 391 $ 585 $ 365 $ 120 $ 846 Net Income (loss) Attributable to SDI $ 164 $ 278 $ 141 $ (8) $ 463 Cash Flow from Operations $ 446 $ 486 $ 169 $ 446 $ 770 Capital Expenditures $ 224 $ 167 $ 133 $ 330 $ 412 Total Assets $ 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) $ 2.38 Year-end Shares Outstanding (thousands) 219,523 218,874 217,575 216,000 181,820 Dividends Declared per Share $ 0.400 $ 0.400 $ 0.300 $ 0.325 $ 0.400 SELECTED OPERATING DATA 2012 2011 2010 2009 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 Number of Full-time Employees 6,670 6,530 6,180 5,990 6,652 Operating Income Margin 5.4% 7.3% 5.8% 3.0% 10.5% Operating Income per Ton Shipped* (Steel Operations) $ 88 $ 117 $86 $51 $ 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 want to first offer a sincere thanks benefits. We have a solid strategic frame- I 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 value-added, high-quality products, While many hoped 2012 would bring a while improving our already low-cost steadily improving economy, the combination operating environment. of global economic and political uncertainty continued to suppress consumer confidence 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 to ensure our invested capital will bring ap- FROM MARK MILLETT Our 2012 revenues of $7.3 billion were less propriate returns to our shareholders. than the $8.0 billion achieved in 2011; yet President and it still represents our third highest year. The Chief Executive Officer 2012 OPERATING RESULTS real challenge of 2012 presented itself in our We continue to outperform our industry peers sales margins—2012 operating income was on a number of key business measures, Steel Dynamics has a strong $391 million, compared to $585 million in including operating margin, EBITDA margin financial foundation and an the prior year. The driver was steel margins, and for our steel operations, operating specifically sheet steel margins, as the weak- incredible team that will income per ton shipped. We remain focused ened global economy dampened demand leverage opportunities, putting on being the lowest-cost metals producer and encouraged import activity, and our raw us in an excellent position for in the industry. Our culture underlies our material pricing did not decline in lockstep success. Our customers and shareholders growth. Our low-cost position with sales prices. is driven by the fact that we see the results, and our employees thrive Despite the macroeconomic environment on it. We encourage and reward the esprit have state-of-the-art facilities surrounding us, we seized opportunities in de corps that permeates everything we do. and technology, but even 2012. We entered new markets, gained From top-class safety practices, to achieving more importantly, we have market share, introduced new product capa- on-time, quality deliveries, our employees at bilities and identified several growth projects a culture that optimizes that every division and in every job demonstrate which are expected to have meaningful future technology. passion for success. 2 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 operating income of $2.1 million. The METALS RECYCLING AND FERROUS significantly lower as steel margins were employees entered new markets, grew RESOURCES Our Metals Recycling and compressed. The downward pressure on our customer footprint from a regional Ferrous Resources operations experienced steel margins was due to two primary to a national focus, increased sales and a fickle year, driven by fluctuations in both factors: a continued weakness in the U.S. dramatically optimized the business to be export and domestic steel mill demand. economy which translated into a weaker more competitive. Despite compressed margins, our metals demand for steel and steel products, and recycling operations were still able to KEY INITIATIVES We approved key a downward pressure on selling prices outperform their peers, while also synergisti- growth projects in 2012 to add to our that outpaced declines in our raw material cally working with our steel mills in the long-term growth and profitability. In costs, causing compressed margins. An supply of low-cost, high-quality raw material. February 2012, we announced plans oversupplied
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