STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Description of the Business and Significant Accounting Policies (Continued)

Goodwill

The company’s goodwill consisted of the following ~~reporting units~~ at March 31, ~~2019,~~2020, and December 31, ~~2018,~~2019, (in thousands):

March 31,

December 31,

2019

2018

Steel Operations Segment

     Columbus Flat Roll Division

$
19,682

$
19,682

     The Techs

142,783

142,783

     Heartland Flat Roll Division

46,143

46,143

     United Steel Supply

101,918

-

     Vulcan Threaded Products

7,824

7,824

     Roanoke Bar Division

29,041

29,041

Metals Recycling Operations Segment – OmniSource

181,400

182,247

Steel Fabrication Operations Segment – New Millennium Building Systems

1,925

1,925

$
530,716

$
429,645



	March 31,		December 31,
	2020		2019

Steel Operations Segment	$	272,133	$	272,133
Metals Recycling Operations Segment		178,010		178,857
Steel Fabrication Operations Segment		1,925		1,925
	$	452,068	$	452,915

~~The company acquired a 75% equity interest in United Steel Supply on March 1, 2019 (refer to~~ ~~Note 2~~ ~~Acquisition – United Steel Supply, LLC), resulting in a preliminary purchase price allocation in which $101.9 million of goodwill was recorded. OmniSource~~Metals Recycling Operations Segment goodwill decreased $847,000 from December 31, ~~2018~~2019 to March 31, ~~2019,~~2020, in recognition of the ~~2019~~2020 tax benefit related to the normal amortization of the component of OmniSource tax-deductible goodwill in excess of book goodwill.

Credit Losses

~~Recently Issued Accounting Standards~~

~~In June 2016, the FASB issued~~ ASU 2016-13, Financial Instruments - Credit ~~Losses: which~~Losses and its subsequent corresponding updates (ASC 326), requires an entity to use a forward-looking expected loss model versus the ~~current~~ incurred loss model for most financial instruments, including accounts receivable. This new guidance is effective for annual and interim periods beginning after December 15, 2019, but can be early adopted. The company is currently evaluating the impact ASU 2016-13 will have in its consolidated financial statements and related disclosure.

~~Note 2. Acquisition – United Steel Supply, LLC~~

On March 1, 2019, the company purchased 75% of the equity interest of United Steel Supply, LLC (USS) for cash consideration of $93.4 million, subject to customary actual working capital purchase price adjustments. Additionally, the company has an option to purchase, and the sellers have the option to require the company to purchase, the remaining 25% equity interest of USS in the future. Headquartered in Austin, Texas, USS is a leading distributor of painted Galvalume® flat roll steel used for roofing and siding applications, with distribution centers strategically located in Mississippi, Indiana, Arkansas, and Oregon. USS provides the company a new, complementary distribution channel and connects it to a rapidly growing industry segment with customers that do not traditionally purchase steel directly from a steel producer. USS’s operating results from and after March 1, 2019, are reflected in the company’s financial statements in the steel operations reporting segment.

The aggregate purchase price was preliminarily allocated to the opening balance sheet of USS as of March 1, 2019. The following initial allocation of the purchase price (in thousands) is preliminary based on the information available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The accounting for the acquisition has not yet been completed because the company has not finalized the valuations of the acquired assets, assumed liabilities and identifiable intangible assets, if any, including goodwill.


~~Current assets, net of cash acquired~~	$	~~94,020~~
~~Property, plant & equipment~~		~~7,388~~
~~Intangible assets and goodwill~~		~~101,918~~
~~Total assets acquired~~		~~203,326~~
~~Liabilities assumed~~		~~81,224~~
~~Redeemable noncontrolling interest~~		~~28,690~~
~~Net cash consideration~~	$	~~93,412~~

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 3. Leases~~

In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) and its subsequent corresponding updates; which established a new lease accounting model that requires lessees to recognize a right-of-use asset and related lease liability for most leases having lease terms of more than 12 months. The company adopted ASC ~~842~~326 effective January 1, ~~2019,~~2020, using the ~~optional~~modified retrospective transition method, thereby applying the new guidance at the effective date, without retrospective application to prior periods. The company elected practical expedients permitted under the transition guidance which allowed the company to not reassess under the new standard its prior conclusions regarding lease identification and classification. The company elected to use hindsight when determining the lease term. The company also elected the short-term lease exemption, and did not recognize right-of-use assets and lease liabilities for short-term leases, those with lease commencement date terms of 12 months or less. The company recognized right-of-use assets and lease liabilities of $76.3 million, with no impact on ~~retained earnings,~~the company’s financial position, results of operations or cash flows.

The company is exposed to credit risk in the ~~consolidated balance sheet~~event of nonpayment of accounts receivable by customers. The company mitigates its exposure to credit risk, which it generally extends on ~~January 1, 2019,~~an unsecured basis, by performing ongoing credit evaluations and taking further action if necessary, such as requiring letters of credit or other security interests to support the ~~standard did not have a significant impact~~customer receivable. The allowance for credit losses for accounts receivable is based on the company’s ~~operating results or cash flows~~reasonable estimate of known credit risks and historical experience, adjusted for current and anticipated economic and other pertinent factors affecting the ~~three-month period ended~~company’s customers, that may differ from historical experience. Customer accounts receivable are written off when all collection efforts have been exhausted and the amounts are deemed uncollectible.

At March 31, ~~2019.~~

The company has operating leases relating principally to transportation and other equipment, and some real estate. The company determines if an arrangement contains a lease at inception, which generally occurs when the arrangement identifies a specific asset that the company has the right to direct the use2020, we reported $998.4 million of ~~and obtain substantially all~~accounts receivable, net of ~~the economic benefit from use~~allowances for credit losses of the identified asset. Certain of our lease agreements contain rent escalation clauses (including fixed and index-based escalations), and options to extend or terminate the lease. For purposes of calculating operating lease obligations under the standard, the company's lease terms include options to extend the lease when it is reasonably certain that the company will exercise such option. The company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is the rate of interest the company could borrow on a collateralized basis over a similar term with similar payments. Operating lease expense is recognized on a straight-line basis over the lease terms.

~~Operating lease right-of-use assets and lease obligations included~~$6.9 million. Changes in the ~~consolidated balance sheet at March 31, 2019, are as follows (in thousands):~~


~~Right-of-use assets under operating leases:~~
~~Other assets - noncurrent~~	$	~~72,219~~
~~Lease obligations under operating leases:~~
~~Accrued liabilities~~	$	~~16,378~~
~~Other liabilities - noncurrent~~		~~56,215~~
	$	~~72,593~~

~~The weighted average remaining lease term for our operating leases is 6.3 years and the weighted-average discount rate is 4.00% as of~~

~~March 31, 2019. Future operating lease liabilities as of March 31, 2019, for the next five years and thereafter are as follows (in thousands):~~

2019 - for the remaining nine months
$
14,565

2020

17,316

2021

14,165

2022

10,891

2023

7,924

Thereafter

20,503

Total undiscounted cash flows

85,364

Less imputed interest

(12,771)

Lease obligations under operating leases
$
72,593

Operating and short-term lease expense included in the consolidated statement of income was $4.7 million and $4.4 million, respectively, for the three-month period ended March 31, 2019. Cash paid related to operating lease obligations was $4.8 million for the three-month period ended

~~March 31, 2019. Variable lease costs~~allowance were not material for the three-month period ended March 31, ~~2019.~~2020.

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Note 4.2. Earnings Per Share

Basic earnings per share is based on the weighted average shares of common stock outstanding during the period. Diluted earnings per share assumes the weighted average dilutive effect of common share equivalents outstanding during the period applied to the company’s basic earnings per share. Common share equivalents represent potentially dilutive restricted stock units, deferred stock units, restricted stock, and performance awards, and are excluded from the computation in periods in which they have an anti-dilutive effect. There were no0 anti-dilutive common share equivalents as of or for the ~~three months~~three-month periods ended March 31, ~~2019~~2020 and ~~2018.~~2019.



	Three Months Ended March 31,
	2020						2019
			Weighted						Weighted
			Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	187,340		213,254	$	0.88	$	204,328		224,058	$	0.91
Dilutive common share equivalents		-		770				-		904
Diluted earnings per share	$	187,340		214,024	$	0.88	$	204,328		224,962	$	0.91

~~The following tables present a reconciliation~~

Table of ~~the numerators and the denominators of the company’s basic and diluted earnings per share computations for the three months ended March 31, 2019 and 2018 (in thousands, except per share data):~~

Three Months Ended March 31,

2019

2018

Weighted

Weighted

Average

Average

Net Income

Shares

Per Share

Net Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(Numerator)

(Denominator)

Amount
Basic earnings per share
$
204,328

224,058

$
0.91

$
227,551

236,623

$
0.96
Dilutive common share equivalents

-

904

-

1,100

Diluted earnings per share
$
204,328

224,962

$
0.91

$
227,551

237,723

$
0.96

Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 5.3. Inventories

Inventories are stated at lower of cost or net realizable value. Cost is determined using a weighted average cost method for raw materials and supplies, and on a first-in, first-out basis for other inventory. Inventory consisted of the following (in thousands):

March 31,

December 31,

2019

2018

Raw materials
$
828,733

$
810,766

Supplies

450,584

436,828

Work in progress

184,866

195,224

Finished goods

403,517

416,350

Total inventories
$
1,867,700

$
1,859,168


	March 31,		December 31,
	2020		2019
Raw materials	$	650,140	$	686,831
Supplies		490,401		498,298
Work in progress		160,831		154,669
Finished goods		343,166		349,245
Total inventories	$	1,644,538	$	1,689,043

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Note 6.4. Changes in Equity

The following tables provide a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to stockholders of Steel Dynamics, Inc., and equity and redeemable amounts attributable to noncontrolling interests (in thousands) for ~~the three months~~each quarterly period ended

March 31, ~~2019~~2020 and ~~2018:~~2019:



	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests
Balances at December 31, 2019	$	646	$	(1,525,113)	$	1,181,012	$	4,419,296	$	(7)	$	(154,593)	$	3,921,241	$	143,614
Dividends declared		-		-		-		(52,585)		-		-		(52,585)		-
Noncontrolling investors of USS		-		-		-		-		-		(7,504)		(7,504)		7,400
Share repurchases		-		(106,529)		-		-		-		-		(106,529)		-
Equity-based compensation		-		6,834		2,764		(169)		-		-		9,429		-
Net income		-		-		-		187,340		-		3,496		190,836		-
Other comprehensive loss, net of tax		-		-		-		-		37		-		37		-
Balances at March 31, 2020	$	646	$	(1,624,808)	$	1,183,776	$	4,553,882	$	30	$	(158,601)	$	3,954,925	$	151,014



	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests
Balances at December 31, 2018	$	645	$	(1,184,243)	$	1,160,048	$	3,958,320	$	301	$	(159,082)	$	3,775,989	$	111,240
Dividends declared		-		-		-		(53,504)		-		-		(53,504)		-
Noncontrolling investors of USS		-		-		-		-				-		-		28,690
Share repurchases		-		(84,308)		-		-		-		-		(84,308)		-
Equity-based compensation		-		6,714		91		(110)		-		-		6,695		-
Net income		-		-		-		204,328		-		499		204,827		-
Other comprehensive loss, net of tax		-		-		-		-		(171)		-		(171)		-
Balances at March 31, 2019	$	645	$	(1,261,837)	$	1,160,139	$	4,109,034	$	130	$	(158,583)	$	3,849,528	$	139,930

Stockholders of Steel Dynamics, Inc.

Accumulated

Additional

Other

Redeemable

Common

Treasury

Paid-In

Retained

Comprehensive

Noncontrolling

Total

Noncontrolling

Stock

Stock

Capital

Earnings

Loss

Interests

Equity

Interests
Balances at December 31, 2018
$
645

$
(1,184,243)

$
1,160,048

$
3,958,320

$
301

$
(159,082)

$
3,775,989

$
111,240
Dividends declared

-

-

-

(53,504)

-

-

(53,504)

-
Noncontrolling investors of USS

-

-

-

-

-

-

-

28,690
Share repurchases

-

(84,308)

-

-

-

-

(84,308)

-
Equity-based compensation

-

6,714

91

(110)

-

-

6,695

-
Net income

-

-

-

204,328

-

499

204,827

-
Other comprehensive loss, net of tax

-

-

-

-

(171)

-

(171)

-
Balances at March 31, 2019
$
645

$
(1,261,837)

$
1,160,139

$
4,109,034

$
130

$
(158,583)

$
3,849,528

$
139,930

Stockholders of Steel Dynamics, Inc.

Accumulated

Additional

Other

Redeemable

Common

Treasury

Paid-In

Retained

Comprehensive

Noncontrolling

Total

Noncontrolling

Stock

Stock

Capital

Earnings

Loss

Interests

Equity

Interests
Balances at December 31, 2017
$
644

$
(665,297)

$
1,141,534

$
2,874,693

$
-

$
(156,506)

$
3,195,068

$
111,240
Dividends declared

-

-

-

(44,269)

-

-

(44,269)

-
Share repurchases

-

(69,269)

-

-

-

-

(69,269)

-
Equity-based compensation

-

3,866

1,337

(71)

-

-

5,132

-
Comprehensive and net income (loss)

-

-

-

227,551

-

(2,076)

225,475

-
Balances at March 31, 2018
$
644

$
(730,700)

$
1,142,871

$
3,057,904

$
-

$
(158,582)

$
3,312,137

$
111,240

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 7.5. Derivative Financial Instruments

The company is exposed to certain risks relating to its ongoing business operations. The company utilizes derivative instruments to mitigate commodity margin risk, and occasionally to mitigate foreign currency exchange rate risk, and have in the past to mitigate interest rate fluctuation risk. The company routinely enters into forward exchange traded futures and option contracts to manage the price risk associated with nonferrous metals inventory as well as purchases and sales of nonferrous and ferrous metals (primarily aluminum and copper). The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements.

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 7. Derivative Financial Instruments (Continued)~~

Commodity Futures Contracts. If the company is “long” on futures contracts, it means the company has more futures contracts purchased than futures contracts sold for the underlying commodity. If the company is “short” on a futures contract, it means the company has more futures contracts sold than futures contracts purchased for the underlying commodity. The following summarizes the company’s significant futures contract commitments as of March 31, ~~2019:~~2020:



Commodity Futures	Long/Short	��		Metric Tons
~~Commodity Futures~~	~~Long/Short~~		~~Metric Tons~~
Aluminum	Long		~~3,075~~	1,425
Aluminum	Short		~~5,925~~	4,475
Copper	Long		~~12,440~~	8,766
Copper	Short		~~22,759~~
				13,562

The following summarizes the location and amounts of the fair values reported on the company’s consolidated balance sheets as of March 31, ~~2019,~~2020, and December 31, ~~2018,~~2019, and gains and losses related to derivatives included in the company’s statement of income for the ~~three months~~three-month periods ended March 31, ~~2019~~2020, and ~~2018~~2019 (in thousands):



		Asset Derivatives				Liability Derivatives
	Balance sheet	Fair Value				Fair Value
	location	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018


											Asset Derivatives				Liability Derivatives
										Balance sheet	Fair Value				Fair Value
										location	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Derivative instruments designated as hedges
Commodity futures	Other current assets	$	552	$	2,999	$	1,068	$	1,837	Other current assets	$	3,283	$	966	$	2,441	$	1,011


Derivative instruments not designated as hedges
Commodity futures	Other current assets		1,480		1,559		1,752		2,053	Other current assets		2,111		310		2,598		721
Total derivative instruments		$	2,032	$	4,558	$	2,820	$	3,890		$	5,394	$	1,276	$	5,039	$	1,732

The fair value of the above derivative instruments along with required margin deposit amounts with the same counterparty under master netting arrangements totaled ~~$3.7~~$2.6 million at March 31, ~~2019,~~2020, and ~~$4.9~~$3.7 million at December 31, ~~2018,~~2019, and are reflected in other current assets in the consolidated balance sheets.

Amount of gain (loss) recognized

Location of gain

Amount of gain (loss) recognized

Location of gain

in income on derivatives

(loss) recognized

in income on related hedged items

(loss) recognized

for the three months ended

Hedged items in

in income on

for the three months ended

in income on

March 31,

fair value hedge

related hedged

March 31,

derivatives

2019

2018

relationships

items

2019

2018

Amount of gain (loss)

recognized in income

Location of gain

recognized in income

Location of gain

on derivatives for the

(loss) recognized

on derivatives for the

(loss) recognized

three months ended

Hedged items in

in income on

three months ended

in income on

March 31,

fair value hedge

related hedged

March 31,

derivatives

2020

2019

relationships

items

2020

2019

Derivatives in fair value

hedging relationships

Commodity futures

Costs of goods sold

(1,453)

8,516

Firm commitments

Costs of goods sold

(1,499)

(793)

Costs of goods sold

838

(1,453)

Firm commitments

Costs of goods sold

1,739

(1,499)

Inventory

Costs of goods sold

721

(2,596)

Inventory

Costs of goods sold

(1,239)

721

Derivatives not designated

(778)

(3,389)

500

(778)

as hedging instruments

Commodity futures

Costs of goods sold

(4,077)

2,756

Costs of goods sold

10,939

(4,077)

Derivatives accounted for as fair value hedges had ineffectiveness resulting in losses of $61,000 and $1.1 million ~~and $101,000~~ during the three-month periods ended March 31, 2020, and 2019, ~~and 2018,~~ respectively. Gains excluded from hedge effectiveness testing of $1.4 million decreased cost of goods sold during the three-month period ended March 31, 2020. Losses excluded from hedge effectiveness testing of $2.2 million increased cost of goods sold during the three-month period ended March 31, 2019. ~~Gains excluded from hedge effectiveness testing~~

Table of ~~$5.0 million decreased cost of goods sold during the three-month period ended March 31, 2018.~~Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 5. Derivative Financial Instruments (Continued)

Derivatives accounted for as cash flow hedges resulted in net gains of $11,000 and $58,000 recognized in other comprehensive income for the three-month ~~period~~periods ended March 31, ~~2019.~~2020, and 2019, respectively. Net losses of $37,000 and net gains of $283,000 were reclassified from accumulated other comprehensive income for the three-month ~~period~~periods ended March 31, ~~2019.~~2020, and 2019, respectively. At March 31, ~~2019,~~2020, the company expects to reclassify ~~$170,000~~all $39,000 of net gains on derivative instruments from accumulated other comprehensive income to earnings during the next 12 months due to the settlement of futures contracts.

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Note 8.6. Fair Value Measurements

~~FASB accounting~~Accounting standards provide a comprehensive framework for measuring fair value and sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. Levels within the hierarchy are defined as follows:

●

Level 1—Unadjusted quoted prices for identical assets and liabilities in active markets;

●

Level 2—Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable for the asset or liability, either directly or indirectly; and

●

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following table sets forth financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheet and the respective levels to which the fair value measurements are classified within the fair value hierarchy as of March 31, ~~2019,~~2020, and December 31, ~~2018~~2019 (in thousands):



			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
March 31, 2020
Short-term investments	$	219,193	$	-	$	219,193	$	-
Commodity futures – financial assets		5,394		-		5,394		-
Commodity futures – financial liabilities		5,039		-		5,039		-

December 31, 2019
Short-term investments	$	262,174	$	-	$	262,174	$	-
Commodity futures – financial assets		1,276		-		1,276		-
Commodity futures – financial liabilities		1,732		-		1,732		-

Quoted Prices

Significant

in Active

Other

Significant

Markets for

Observable

Unobservable

Identical Assets

Inputs

Inputs

Total

(Level 1)

(Level 2)

(Level 3)
March 31, 2019

Short-term investments
$
173,723

$

$
173,723

$

Commodity futures – financial assets

2,032

-

2,032

-
Commodity futures – financial liabilities

2,820

-

2,820

-

December 31, 2018

Short-term investments
$
228,783

$
-

$
228,783

$
-
Commodity futures – financial assets

4,558

-

4,558

-
Commodity futures – financial liabilities

3,890

-

3,890

-

The carrying amounts of financial instruments including cash and equivalents approximate fair value (Level 1). The fair values of short-term investments and the commodity futures contracts are estimated by the use of quoted market prices, estimates obtained from brokers, and other appropriate valuation techniques based on references available (Level 2). The fair value of long-term debt, including current maturities, as determined by quoted market prices (Level 2), was approximately ~~$2.5~~$2.6 billion and ~~$2.4~~$2.8 billion at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively (with a corresponding carrying amount in the consolidated balance sheet of ~~$2.5~~$2.7 billion at March 31, ~~2019~~2020 and ~~$2.4~~$2.8 billion at December 31, ~~2018)~~2019).

Note 9.7. Commitments and Contingencies

The company is involved in various routine litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which are expected to have a material impact on our financial condition, results of operations, or ~~liquidity~~. liquidity.

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note ~~10.~~8. Segment Information

The company’s operations are primarily organized and managed by reportable operating segments, which are steel operations, metals recycling operations, and steel fabrication operations. The segment operations are more fully described in Note 1 to the consolidated financial statements. Operating segment performance and resource allocations are primarily based on operating results before income taxes. The accounting policies of the reportable segments are consistent with those described in Note 1 to the consolidated financial statements. ~~Intra‑segment~~Intra-segment sales and any related profits are eliminated in consolidation. Amounts included in the category “Other” are from subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of smaller joint ventures, and ~~our~~the idle Minnesota ironmaking operations. ~~In addition,~~Also included in “Other” ~~also includes~~are certain unallocated corporate accounts, such as the company’s senior ~~secured~~unsecured credit facility, senior notes, certain other investments and certain profit sharing expenses.

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 10. Segment Information (Continued)~~

The company’s segment results,including disaggregated revenue by segment to external, external non-United States, and other segment customers, are as follows (in thousands):



			Metals		Steel


																	Metals		Steel
For the three months ended	Steel		Recycling		Fabrication										Steel		Recycling		Fabrication
March 31, 2019	Operations		Operations		Operations		Other			Eliminations			Consolidated

March 31, 2020															Operations		Operations		Operations		Other			Eliminations			Consolidated

Net sales - disaggregated revenue
External	$	2,044,491	$	285,725	$	228,429	$	113,248		$	-		$	2,671,893	$	1,860,585	$	234,833	$	220,935	$	120,342		$	-		$	2,436,695
External Non-U.S.		80,079		65,412		51		-			-			145,542		81,121		57,024		-		260			-			138,405
Other segments		75,595		385,908		189		248			(461,940)			-		74,446		336,882		506		88			(411,922)			-
		2,200,165		737,045		228,669		113,496			(461,940)			2,817,435
																2,016,152		628,739		221,441		120,690			(411,922)			2,575,100
Operating income (loss)		309,078		16,962		20,623		(56,920)	(1)		2,099			291,842		288,394		5,528		29,163		(46,355)	⁽¹⁾		(3,044)			273,686
Income (loss) before income taxes		293,019		15,505		19,351		(62,696)			1,884			267,063		273,555		4,305		27,918		(54,240)			(3,282)	⁽²⁾		248,256
Depreciation and amortization		62,512		11,439		2,967		3,256			-			80,174		62,427		11,972		2,748		3,112			-			80,259
Capital expenditures		43,676		6,642		1,993		2,125			-			54,436		193,273		18,223		4,089		1,950			-			217,535

As of March 31, 2019

As of March 31, 2020
Assets	$	5,378,536	$	982,844	$	407,576	$	1,170,832	(2)	$	(82,555)	(3)	$	7,857,233	$	5,458,553	$	918,403	$	405,860	$	1,619,924	⁽³⁾	$	(57,817)	⁽⁴⁾	$	8,344,923


Footnotes related to the three months ended March 31, 2020, segment results (in millions):

(1)	Corporate SG&A	$	(17.2)	(2)	Gross profit decrease from intra-company sales	$	(3.3)
	Company-wide equity-based compensation		(8.2)
	Profit sharing		(21.3)
	Other, net		0.3
		$	(46.4)

(3)	Cash and equivalents	$	1,169.6	(4)	Elimination of intra-company receivables	$	(38.6)
	Short-term investments		219.2		Elimination of intra-company debt		(8.1)
	Accounts receivable		8.6		Other		(11.1)
	Inventories		21.1			$	(57.8)
	Property, plant and equipment, net		148.8
	Intra-company debt		8.1
	Other		44.5
		$	1,619.9

Footnotes related to the three months ended March 31, 2019, segment results (in millions):

(1)
Corporate SG&A
$
(22.6)

(3)
Elimination of intra-company receivables
$
(59.5)

Company-wide equity-based compensation

(9.0)

Elimination of intra-company debt

(10.8)

Profit sharing

(23.0)

Other

(12.3)

Other, net

(2.3)

$
(82.6)

$
(56.9)

(2)
Cash and equivalents
$
756.9

Short-term investments

153.7

Accounts receivable

12.2

Inventories

36.1

Property, plant and equipment, net

152.6

Intra-company debt

10.8

Other

48.5

$
1,170.8

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note ~~10.~~8. Segment Information (Continued)



			Metals		Steel


																Metals		Steel
For the three months ended	Steel		Recycling		Fabrication									Steel		Recycling		Fabrication
March 31, 2018	Operations		Operations		Operations		Other			Eliminations		Consolidated

March 31, 2019														Operations		Operations		Operations		Other			Eliminations			Consolidated

Net sales - disaggregated revenue
External	$	1,832,303	$	329,872	$	201,437	$	92,471		$	-	$	2,456,083	$	2,044,491	$	285,725	$	228,429	$	113,248		$	-		$	2,671,893
External Non-U.S.		89,486		58,250		56		-			-		147,792		80,079		65,412		51		-			-			145,542
Other segments		59,985		364,644		210		147			(424,986)		-		75,595		385,908		189		248			(461,940)			-
		1,981,774		752,766		201,703		92,618			(424,986)		2,603,875
															2,200,165		737,045		228,669		113,496			(461,940)			2,817,435
Operating income (loss)		334,562		24,715		19,791		(55,406)	(1)		(265)		323,397		309,078		16,962		20,623		(56,920)	⁽¹⁾		2,099	⁽²⁾		291,842
Income (loss) before income taxes		315,805		23,005		18,457		(61,033)			(270)		295,964		293,019		15,505		19,351		(62,696)			1,884			267,063
Depreciation and amortization		59,141		11,558		2,898		2,538			-		76,135		62,512		11,439		2,967		3,256			-			80,174
Capital expenditures		38,402		6,946		2,077		3,181			-		50,606		43,676		6,642		1,993		2,125			-			54,436


Footnotes related to the three months ended March 31, 2019, segment results (in millions):

(1)	Corporate SG&A	$	(22.6)	(2)	Gross profit decrease from intra-company sales	$	(2.1)
	Company-wide equity-based compensation		(9.0)
	Profit sharing		(23.0)
	Other, net		(2.3)
		$	(56.9)

Footnotes related to the three months ended March 31, 2018, segment results (in millions):

(1)
Corporate SG&A
$
(15.7)

Company-wide equity-based compensation

(8.5)

Profit sharing

(25.6)

Other, net

(5.6)

$
(55.4)

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 11. Condensed Consolidating Information~~

~~Certain 100% owned subsidiaries~~Table of SDI have fully and unconditionally guaranteed jointly and severally all of the indebtedness relating to the issuance of the company’s senior unsecured notes due 2021, 2023, 2024, 2025 and 2026. Following are the company’s condensed consolidating financial statements, including the guarantors, which present the financial position, results of operations, and cash flows of (i) SDI (in each case, reflecting investments in its consolidated subsidiaries under the equity method of accounting), (ii) the guarantor subsidiaries of SDI, (iii) the non-guarantor subsidiaries of SDI, and (iv) the eliminations necessary to arrive at the information on a consolidated basis.

Condensed Consolidating Balance Sheets (in thousands)

Combined

Consolidating

Total
As of March 31, 2019

Parent

Guarantors

Non-Guarantors

Adjustments

Consolidated
Cash and equivalents

$
755,014

$
26,067

$
10,363

$
-

$
791,444
Short-term investments

153,723

20,000

-

-

173,723
Accounts receivable, net

344,209

1,727,028

71,953

(999,795)

1,143,395
Inventories

786,300

1,010,636

84,420

(13,656)

1,867,700
Other current assets

38,977

17,243

3,331

(6,923)

52,628
  Total current assets

2,078,223

2,800,974

170,067

(1,020,374)

4,028,890
Property, plant and equipment, net

870,626

1,905,151

161,116

-

2,936,893
Intangible assets, net

-

263,315

-

-

263,315
Goodwill

-

428,798

101,918

-

530,716
Other assets, including investments in subs

2,934,875

59,075

5,850

(2,902,381)

97,419
  Total assets

$
5,883,724

$
5,457,313

$
438,951

$
(3,922,755)

$
7,857,233

Accounts payable

$
197,481

$
376,400

$
94,697

$
(77,111)

$
591,467
Accrued expenses

200,512

275,807

17,763

(163,417)

330,665
Current maturities of long-term debt

809

1,116

104,574

(25,541)

80,958
  Total current liabilities

398,802

653,323

217,034

(266,069)

1,003,090
Long-term debt

2,328,859

-

166,353

(140,785)

2,354,427
Other liabilities

(852,048)

1,398,528

33,483

(69,705)

510,258
  Total liabilities

1,875,613

2,051,851

416,870

(476,559)

3,867,775

Redeemable noncontrolling interests

-

-

139,930

-

139,930

Common stock

645

1,727,859

15,016

(1,742,875)

645
Treasury stock

(1,261,837)

-

-

-

(1,261,837)
Additional paid-in-capital

1,160,139

683,048

787,572

(1,470,620)

1,160,139
Retained earnings (deficit)

4,109,034

994,555

(761,854)

(232,701)

4,109,034
Accumulated other comprehensive loss

130

-

-

-

130
  Total Steel Dynamics, Inc. equity

4,008,111

3,405,462

40,734

(3,446,196)

4,008,111
Noncontrolling interests

-

-

(158,583)

-

(158,583)
  Total equity

4,008,111

3,405,462

(117,849)

(3,446,196)

3,849,528
  Total liabilities and equity

$
5,883,724

$
5,457,313

$
438,951

$
(3,922,755)

$
7,857,233

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 11. Condensed Consolidating Information (Continued)~~

Combined

Consolidating

Total
As of December 31, 2018

Parent

Guarantors

Non-Guarantors

Adjustments

Consolidated
Cash and equivalents

$
809,763

$
13,491

$
4,966

$
-

$
828,220
Short-term investments

198,783

30,000

-

-

228,783
Accounts receivable, net

340,439

1,635,168

26,655

(958,506)

1,043,756
Inventories

793,174

1,038,702

39,214

(11,922)

1,859,168
Other current assets

56,578

18,627

3,994

(6,469)

72,730
  Total current assets

2,198,737

2,735,988

74,829

(976,897)

4,032,657
Property, plant and equipment, net

871,482

1,918,198

156,087

-

2,945,767
Intangible assets, net

-

270,328

-

-

270,328
Goodwill

-

429,645

-

-

429,645
Other assets, including investments in subs

2,862,556

5,593

5,557

(2,848,540)

25,166
  Total assets

$
5,932,775

$
5,359,752

$
236,473

$
(3,825,437)

$
7,703,563

Accounts payable

$
209,156

$
330,156

$
74,353

$
(62,911)

$
550,754
Accrued expenses

296,528

295,668

11,171

(159,218)

444,149
Current maturities of long-term debt

793

1,355

51,079

(28,993)

24,234
  Total current liabilities

506,477

627,179

136,603

(251,122)

1,019,137
Long-term debt

2,327,798

381

166,226

(141,916)

2,352,489
Other liabilities

(836,571)

1,447,464

31,791

(197,976)

444,708
  Total liabilities

1,997,704

2,075,024

334,620

(591,014)

3,816,334

Redeemable noncontrolling interests

-

-

111,240

-

111,240

Common stock

645

1,727,859

15,016

(1,742,875)

645
Treasury stock

(1,184,243)

-

-

-

(1,184,243)
Additional paid-in-capital

1,160,048

683,048

695,502

(1,378,550)

1,160,048
Retained earnings (deficit)

3,958,320

873,821

(760,823)

(112,998)

3,958,320
Accumulated other comprehensive income

301

-

-

-

301
  Total Steel Dynamics, Inc. equity

3,935,071

3,284,728

(50,305)

(3,234,423)

3,935,071
Noncontrolling interests

-

-

(159,082)

-

(159,082)
  Total equity

3,935,071

3,284,728

(209,387)

(3,234,423)

3,775,989
  Total liabilities and equity

$
5,932,775

$
5,359,752

$
236,473

$
(3,825,437)

$
7,703,563

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 11. Condensed Consolidating Information (Continued)~~

Condensed Consolidating Statements of Operations (in thousands)

For the three months ended,

Combined

Consolidating

Total
March 31, 2019

Parent

Guarantors

Non-Guarantors

Adjustments

Consolidated
Net sales

$
1,124,735

$
3,110,229

$
171,883

$
(1,589,412)

$
2,817,435
Costs of goods sold

905,995

2,865,989

165,460

(1,553,579)

2,383,865
  Gross profit

218,740

244,240

6,423

(35,833)

433,570
Selling, general and administrative

69,006

74,583

3,930

(5,791)

141,728
  Operating income

149,734

169,657

2,493

(30,042)

291,842
Interest expense, net of capitalized interest

18,654

11,766

3,214

(2,512)

31,122
Other (income) expense, net

(7,400)

(1,377)

(292)

2,726

(6,343)
Income (loss) before income taxes and

  equity in net income of subsidiaries

138,480

159,268

(429)

(30,256)

267,063
Income taxes

30,764

38,534

103

(7,165)

62,236

107,716

120,734

(532)

(23,091)

204,827
Equity in net income of subsidiaries

96,612

-

-

(96,612)

-
Net income attributable to noncontrolling interests

-

-

(499)

-

(499)
Net income (loss) attributable to Steel Dynamics, Inc.

$
204,328

$
120,734

$
(1,031)

$
(119,703)

$
204,328

For the three months ended,

Combined

Consolidating

Total
March 31, 2018

Parent

Guarantors

Non-Guarantors

Adjustments

Consolidated
Net sales

$
1,036,674

$
2,823,129

$
152,587

$
(1,408,515)

$
2,603,875
Costs of goods sold

819,145

2,551,620

148,630

(1,378,936)

2,140,459
  Gross profit

217,529

271,509

3,957

(29,579)

463,416
Selling, general and administrative

62,927

76,952

5,597

(5,457)

140,019
  Operating income (loss)

154,602

194,557

(1,640)

(24,122)

323,397
Interest expense, net of capitalized interest

18,623

12,437

3,540

(2,704)

31,896
Other (income) expense, net

(5,203)

(1,697)

(273)

2,710

(4,463)
Income (loss) before income taxes and

  equity in net income of subsidiaries

141,182

183,817

(4,907)

(24,128)

295,964
Income taxes

29,746

45,720

909

(5,886)

70,489

111,436

138,097

(5,816)

(18,242)

225,475
Equity in net income of subsidiaries

116,115

-

-

(116,115)

-
Net loss attributable to noncontrolling interests

-

-

2,076

-

2,076
Net income (loss) attributable to Steel Dynamics, Inc.

$
227,551

$
138,097

$
(3,740)

$
(134,357)

$
227,551

~~STEEL DYNAMICS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 11. Condensed Consolidating Information (Continued)~~

Condensed Consolidating Statements of Cash Flows (in thousands)

For the three months ended,

Combined

Consolidating

Total
March 31, 2019

Parent

Guarantors

Non-Guarantors

Adjustments

Consolidated
Net cash provided by (used in) operating activities

$
38,735

$
151,815

$
(4,520)

$
(4,477)

$
181,553
Net cash used in investing activities

(71,294)

(16,183)

(365)

(4,582)

(92,424)
Net cash provided by (used in) financing activities

(22,190)

(123,429)

10,256

9,059

(126,304)
Increase (decrease) in cash, cash equivalents and

     restricted cash

(54,749)

12,203

5,371

-

(37,175)
  Cash, cash equivalents, and restricted cash

     at beginning of period

809,763

14,368

10,292

-

834,423
  Cash, cash equivalents, and restricted cash

     at end of period

$
755,014

$
26,571

$
15,663

$
-

$
797,248

For the three months ended,

Combined

Consolidating

Total
March 31, 2018

Parent

Guarantors

Non-Guarantors

Adjustments

Consolidated
Net cash provided by operating activities

$
9,009

$
149,336

$
21,283

$
(1,693)

$
177,935
Net cash used in investing activities

(60,919)

(24,517)

(2,997)

(1,944)

(90,377)
Net cash provided by (used in) financing activities

18,920

(135,966)

(17,813)

3,637

(131,222)
Increase (decrease) in cash, cash equivalents and

     restricted cash

(32,990)

(11,147)

473

-

(43,664)
  Cash, cash equivalents, and restricted cash

��

     at beginning of period

1,002,230

20,740

12,115

-

1,035,085
  Cash, cash equivalents, and restricted cash

     at end of period

$
969,240

$
9,593

$
12,588

$
-

$
991,421

Contents

ITEM 2.~~MANAGEMENT’S~~ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains some predictive statements about future events, including statements related to conditions in ~~the~~domestic or global economies, conditions in steel and ~~metallic scrap markets,~~recycled metals market places, Steel ~~Dynamics’~~Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or ~~existing~~planned facilities. These statements, which we generally precede or accompany by such typical conditional words as ~~"anticipate," "intend," "believe," "estimate," "plan," "seek,"~~"anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or ~~"expect,"~~"expect", or by the words ~~"may," "will,"~~"may", "will", or ~~"should,"~~"should", are intended to be made as ~~“forward-looking,”~~"forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) the effects of uncertain economic conditions; (2) the effects of pandemics or other health issues, such as the recent novel coronavirus outbreak (COVID-19); (3) cyclical and changing industrial demand; ~~(3)~~(4) changes in conditions in any of the steel or scrap-consuming sectors of the economy which affect demand for our products, including the strength of the non-residential and residential construction, automotive, manufacturing, appliance, ~~pipe and tube,~~energy, and other steel-consuming industries; ~~(4)~~(5) fluctuations in the cost of key raw materials and supplies (including steel scrap, iron units, zinc, graphite electrodes, and energy costs) and our ability to pass on any cost increases; ~~(5)~~(6) the impact of domestic and foreign ~~import price competition; (6)~~imports, including trade policy, restrictions, or agreements; (7) unanticipated difficulties in integrating or starting up new, acquired or ~~acquired~~planned businesses or assets; ~~(7)~~(8) risks and uncertainties involving product and/or technology development; and ~~(8)~~(9) occurrences of unexpected plant outages or equipment ~~failures~~.failures.

More specifically, we refer you to our more detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently,, as set forth in our most recent Annual Report on Form 10-K under the headings Special Note Regarding Forward-Looking Statements and Risk Factors for the year ended December 31, ~~2018,~~2019, in our quarterly reports on Form 10-Q, or in other reports which we from time to time file with the Securities and Exchange Commission. These reports are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on our website, www.steeldynamics.com under “Investors – SEC Filings.”

Description of the Business

We are one of the largest domestic steel producers and metal recyclers in the United States based on current estimated annual steelmaking and coating ~~capacity of approximately 13 million tons~~capability and actual metals recycling ~~volumes.~~volumes, with one of the most diversified, high-margin steel product portfolios. Our primary ~~source~~sources of ~~revenues is~~revenue are from the manufacture and sale of steel products, the processing and sale of recycled ferrous and nonferrous metals, and the fabrication and sale of steel joists and deck products. We have three reportable segments: steel operations, metals recycling operations, and steel fabrication operations.

Operating Statement Classifications

Net Sales. Net sales from our operations are a factor of volumes shipped, product mix and related pricing. We charge premium prices for certain grades of steel, product dimensions, certain smaller volumes, and for value-added processing or coating of our steel products. Except for the steel fabrication operations, we recognize revenues from sales and the allowance for estimated returns and claims from these sales at the point in time control of the product transfers to the customer, upon shipment or delivery. Our steel fabrication operations recognize revenues over time based on completed fabricated tons to date as a percentage of total tons required for each contract.

Costs of Goods Sold. Our costs of goods sold represent all direct and indirect costs associated with the manufacture of our products. The principal elements of these costs are scrap and scrap substitutes (which represent the most significant single component of our consolidated costs of goods sold), steel substrate, direct and indirect labor and related benefits, alloys, zinc, transportation and freight, repairs and maintenance, utilities such as electricity and natural gas, and depreciation.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist of all costs associated with our sales, finance and accounting, and administrative departments. These costs include, among other items, labor and related benefits, professional services, insurance premiums, and property taxes. Company-wide profit sharing and amortization of intangible assets are each separately presented in the statement of ~~operations.~~income.

Interest Expense, net of Capitalized Interest. Interest expense consists of interest associated with our senior credit facilities and other debt net of interest costs that are required to be capitalized during the construction period of certain capital investment projects.

Table of Contents

Other ~~Expense (Income),~~Income, net. Other income consists of interest income earned on our temporary cash deposits and short-term investments; any other non-operating income activity, including income from non-consolidated investments accounted for under the equity method. Other expense consists of any non-operating costs, such as certain acquisition and financing expenses.

Impact of COVID-19 on Our Business

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic and since that time, efforts to slow the contagion have impacted global economies. Countries, including the United States have issued “shelter in place” orders, temporarily closing businesses and restricting social interactions in this effort to slow the spread of COVID-19.

~~Acquisition~~Due to use of ~~United Steel Supply, LLC~~

~~On March 1, 2019, we purchased 75%~~steel in the broad infrastructure and defense framework of the ~~equity interest~~United States, our business operations have been designated as part of ~~United Steel Supply, LLC (USS)~~the critical infrastructure of all the states in which we operate. As a result, all our facilities continued to operate during the first quarter of 2020, and continue to operate.

Our teams are our most valued priority, and among many precautions, we have implemented numerous additional process and procedural initiatives to ensure the health and safety of our people, their families, and our communities. We have adjusted schedules to support social distancing, provided additional and more frequent sanitizing applications, provided additional protective measures where needed, and many other items.

While COVID-19 had limited impact on our results of operations during the first quarter of 2020, we are unable to predict the ultimate impact it may have on our business, financial condition, results of operations, or cash flow. The extent to which our operations may be impacted by COVID-19 will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the further spread, the duration of the pandemic and its eventual impact on world economies. A prolonged COVID-19 pandemic could materially reduce the supply of scrap and other raw materials and demand for our products, and thus reduce the productivity of our operations, and have a negative impact on our results of operations, financial condition, and cash ~~consideration~~flows. Certain of ~~$93.4 million, subject to customary actual working capital purchase price adjustments. Additionally, w have an option to purchase,~~our suppliers and ~~the sellers have the option to require us to purchase, the remaining 25% equity interest of USS~~customers, such as those in the ~~future. Headquartered~~automotive, energy and related industries, have experienced temporary shutdowns or significant demand reductions. Reduced demand for our products or lack of ferrous scrap raw material supply due to shutdowns or slowdowns in ~~Austin, Texas, USS is a leading distributor of painted Galvalume~~® ~~flat roll steel used~~manufacturing businesses could adversely affect our volumes, selling prices, and margins. However, our low, highly variable cost structure, our diversified value-added product offerings, and our downstream manufacturing businesses which are able to provide base-load “pull-through” volume for roofing and siding applications, with distribution centers strategically located in Mississippi, Indiana, Arkansas, and Oregon. USS provides us a new, complementary distribution channel and connects us to a rapidly growing industry segment with customers that do not traditionally purchase steel directly from a steel producer. USS’s operating results from and after March 1, 2019, are reflected in the company’s financial statements in theour steel operations, ~~reporting segment.~~support our continued cash flow prospects.

Results Overview

Our consolidated results for the first quarter of 2020 benefitted from record steel segment shipments and production, while lower average selling prices compared to first quarter 2019 were ~~constrained by~~ a ~~challenging market for~~headwind to operating income in our ~~Butler~~steel and ~~Columbus Flat Roll Divisions. While product pricing improved in~~metals recycling segments. Underlying domestic steel demand remained intact during the first quarter ~~of 2019 compared to the same period in 2018, sheet~~2020, driving steel operations shipments ~~from our steel mills decreased, resulting in a decline in steel segment operating income. Likewise,~~as well as higher ferrous scrap shipments for our metals recycling operations experienced decreased operating income in the first quarter of 2019 compared to 2018 largely due to slightly lower utilization rates at our steel mills, which resulted in decreased shipments and product pricing for our ferrous metals.operations. The non-residential construction market remained strong, resulting in higher quarter over quarter shipments for our fabrication operations, with ~~increased~~metal margins holding steady in spite of lower average selling ~~prices outpacing higher steel input costs in our steel fabrication segment.~~

prices.

Consolidated operating income decreased ~~$31.6~~$18.2 million, or ~~10%~~6%, to ~~$291.8~~$273.7 million for the first quarter ~~2019,~~2020, compared to the first quarter ~~2018.~~2019. First quarter ~~2019~~2020 net income attributable to Steel Dynamics, Inc. decreased ~~$23.2~~$17.0 million, or ~~10%~~8%, to ~~$204.3~~$187.3 million, compared to the first quarter ~~2018, due to~~2019, consistent with the decreased operating ~~income as described above.~~income.

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Segment Operating Results 2020 vs. 2019 ~~vs. 2018~~ (dollars in thousands)



	Three Months Ended March 31,
	2020		% Change		2019
Net sales:
Steel Operations Segment	$	2,016,152	(8)%	$	2,200,165
Metals Recycling Operations Segment		628,739	(15)%		737,045
Steel Fabrication Operations Segment		221,441	(3)%		228,669
Other		120,690	6%		113,496
		2,987,022			3,279,375
Intra-company		(411,922)			(461,940)
	$	2,575,100	(9)%	$	2,817,435

Operating income (loss):
Steel Operations Segment	$	288,394	(7)%	$	309,078
Metals Recycling Operations Segment		5,528	(67)%		16,962
Steel Fabrication Operations Segment		29,163	41%		20,623
Other		(46,355)	19%		(56,920)
		276,730			289,743
Intra-company		(3,044)			2,099
	$	273,686	(6)%	$	291,842

Three Months Ended March 31,

2019

% Change

2018
Net sales:

  Steel Operations Segment
$
2,200,165

11%

$
1,981,774
  Metals Recycling Operations Segment

737,045

(2)%

752,766
  Steel Fabrication Operations Segment

228,669

13%

201,703
  Other

113,496

23%

92,618

3,279,375

3,028,861
  Intra-company

(461,940)

(424,986)

$
2,817,435

8%

$
2,603,875

Operating income (loss):

  Steel Operations Segment
$
309,078

(8)%

$
334,562
  Metals Recycling Operations Segment

16,962

(31)%

24,715
  Steel Fabrication Operations Segment

20,623

4%

19,791
  Other

(56,920)

(3)%

(55,406)

289,743

323,662
  Intra-company

2,099

(265)

$
291,842

(10)%

$
323,397

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Steel Operations Segment

Steel operations consist of our electric arc furnace steel mills, producing sheet and long products steel from ferrous scrap and scrap substitutes, utilizing continuous casting and automated rolling mills, with numerous downstream processing and coating lines, as well as IDI, our liquid pig iron production facility that supplies solely the Butler Flat Roll Division. Our steel operations sell a diverse portfolio of sheet and long products directly to end-users, steel fabricators, and service centers. These products are used in a wide variety of industry sectors, including the construction, automotive, manufacturing, transportation, heavy equipment and agriculture, and ~~pipe and tube (including OCTG) markets~~.energy markets. Steel operations accounted for 75% ~~and 74%~~ of our consolidated external net sales during the first ~~quarter~~quarters of ~~2019~~2020 and ~~2018, respectively.~~

2019.

Steel Operations Segment Shipments (tons):



	Three Months Ended March 31,
	2019	% Change	2018



				Three Months Ended March 31,
				2020	% Change	2019

Total shipments	2,684,411	6%	2,534,644	2,847,182	6%	2,684,411
Intra-segment shipments	(247,403)		(121,653)	(253,477)		(247,403)
Steel Operations Segment shipments	2,437,008	1%	2,412,991	2,593,705	6%	2,437,008


External shipments	2,347,209	1%	2,327,515	2,495,164	6%	2,347,209

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Segment Results ~~2019~~2020 vs. ~~2018~~2019

Overall domestic steel demand remained ~~strong~~solid during the first quarter of ~~2019, with continued strength in~~2020, driving increased quarterly steel segment shipments and record production compared to the ~~automotive, energy and other industrial sectors.~~first quarter of 2019. Steel operations segment shipments increased 1%6% in the first quarter ~~2019,~~2020, as compared to the same period in ~~2018, with~~2019. However, first quarter 2020 average selling prices decreased 14% compared to 2019, a period which was still benefitting from the ~~acquisitions~~historically high steel prices of ~~Heartland Flat Roll Division (June 29, 2018) and USS (March 1, 2019).~~2018. Net sales for the steel operations ~~increased 11%~~decreased 8% in the first quarter ~~2019~~2020 when compared to the same period in ~~2018,~~2019, due primarily to ~~the additions of Heartland and USS, and a 10% increase~~decreases in overall steel selling ~~prices to $899 per ton.~~ ~~Our steel mill utilization rate averaged 90% for the first quarter 2019, as compared to 94% in the first quarter 2018~~.

prices.

Metallic raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost, generally comprising approximately ~~60%~~50 to 60 percent of our steel mill operations’ manufacturing costs. Our metallic raw material cost per net ton consumed in our steel operations ~~increased $17,~~decreased $71, or 5%21%, in the first quarter ~~2019,~~2020, compared to the same period in ~~2018,~~2019, consistent with overall ~~increased~~decreased domestic scrap pricing.

As a result of average selling prices ~~increasing~~decreasing more than scrap costs, metal spread (which we define as the difference between average steel mill selling prices and the cost of ferrous scrap consumed in our steel mills) ~~increased~~decreased 13% in the first quarter ~~2019~~2020 compared to the first quarter ~~2018. In spite of~~2019. Due to this metal spread ~~expansion,~~contraction more than offsetting the increase in shipments, operating income for the steel operations decreased 8%7%, to ~~$309.1~~$288.4 million, in the first quarter ~~2019,~~2020, compared to the

same period in 2018, due primarily to decreased shipments at our Butler and Columbus Flat Roll Divisions. Imports of sheet steel into the United States began to increase in late 2018 and into the first quarter of 2019 due to historically high selling prices, presenting a headwind to our flat roll mills, as well as beginning to put downward pressure on average pricing.2019.

Metals Recycling Operations Segment

Metals recycling operations consists solely of OmniSource and includes both ferrous and nonferrous scrap metal processing, transportation, marketing, and brokerage services, strategically located primarily in close proximity to our steel mills and other end-user scrap consumers throughout the eastern half of the United States. In addition, OmniSource designs, installs, and manages customized scrap management programs for industrial manufacturing companies at hundreds of locations throughout North America. Our steel mills utilize a large portion ~~(increasing from~~(approximately 65% ~~to 67% for the periods presented)~~) of the ferrous scrap sold by OmniSource as raw material in our steelmaking operations, and the remainder is sold to other consumers, such as other steel manufacturers and foundries. Our metals recycling operations accounted for ~~13%~~11% and ~~15%~~13% of our consolidated external net sales during the first quarters of ~~2019~~2020 and ~~2018,~~2019, respectively.

Metals Recycling Operations Shipments:



	Three Months Ended March 31,
	2020	% Change	2019
Ferrous metal (gross tons)
Total	1,192,144	2%	1,171,361
Inter-company	(798,493)	1%	(788,520)
External shipments	393,651	3%	382,841

Nonferrous metals (thousands of pounds)
Total	272,078	(7)%	292,038
Inter-company	(40,678)		(39,108)
External shipments	231,400	(9)%	252,930

Three Months Ended March 31,

2019

% Change

2018
Ferrous metal (gross tons)

  Total
1,171,361

(7)%

1,256,899
  Inter-company
(788,520)

(819,909)
     External shipments
382,841

(12)%

436,990

Nonferrous metals (thousands of pounds)

  Total
292,038

8%

271,628
  Inter-company
(39,108)

(20,855)
     External shipments
252,930

1%

250,773

Segment Results ~~2019~~2020 vs. ~~2018~~2019

Our metals recycling operations ~~net sales decreased 2%~~were negatively impacted during the first quarter of 2020 by decreased ferrous and nonferrous scrap prices compared to the first quarter of 2019, which was still buoyed by the historically higher steel and scrap prices of 2018. Net sales decreased 15% during the first quarter of 2020 compared to the same period in ~~2018,~~2019, driven primarily by decreased ~~ferrous metals shipments and~~ average selling prices. Ferrous shipments to our own steel mills ~~decreased by 4%~~remained relatively flat in the first quarter ~~2019,~~2020, compared to the same period in ~~2018,~~2019, as our steel mill utilization percentage ~~decreased slightly~~increased from ~~prior~~90% to 94% year over year. Ferrous and nonferrous scrap average selling prices decreased 3%9% during the first quarter ~~2019~~2020 compared to the same period in ~~2018, while nonferrous average selling prices increased 4%.~~2019. Ferrous metal spread (which we define as the difference between average selling prices and the cost of purchased scrap) decreased ~~11%~~4%, as selling prices decreased more than unprocessed scrap procurement costs, while nonferrous metal spread decreased 3%26%. Metals recycling operations operating income decreased ~~31%~~67% to ~~$17.0~~$5.5 million in the first quarter ~~2019~~2020 compared to the first quarter ~~2018~~2019 operating income of ~~$24.7~~$17.0 million, due primarily to the ferrous and nonferrous metal spread ~~contraction and decreased ferrous shipments.~~contraction.

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Steel Fabrication Operations Segment

Steel fabrication operations include our New Millennium Building Systems joist and deck plants located throughout the United States and in Northern Mexico. Revenues from these plants are generated from the fabrication of steel joists, trusses, girders and steel deck used within the non-residential construction industry. Steel fabrication operations accounted for 9% and 8% of our consolidated external net sales during the first quarters of 2020 and 2019, ~~and 2018.~~respectively.

Segment Results ~~2019~~2020 vs. ~~2018~~2019

Net sales for the steel fabrication operations ~~increased $27.0~~decreased $7.2 million, or ~~13%~~3%, during the first quarter ~~2019,~~ 2020 compared to the same period in ~~2018,~~2019, as average selling prices ~~increased $230 per ton, or 17%~~decreased 14%, while shipments ~~decreased 3%~~increased 12%. Our steel fabrication operations continue to leverage our national operating ~~footprint to sustain market share.~~footprint. Market demand, orders and ~~order backlogs~~backlog continue to be strong for non-residential construction project ~~development; however, severe weather and other construction delays during the first quarter 2019 restricted shipments somewhat.~~development.

The purchase of various steel products is the largest single cost of production for our steel fabrication operations, generally representing approximately two-thirds of the total cost of manufacturing. ~~While the~~The average cost of steel consumed ~~increased~~decreased 24% in the first quarter ~~2019,~~2020, as compared to the same period in ~~2018 consistent with increased steel selling prices discussed in the steel operations results, the 17% average selling price increase was more significant.~~2019. As a result of steel costs decreasing more than selling prices, metal spread (which we define as the difference between average selling prices and the cost of purchased steel) increased 7%slightly in the first quarter ~~2019~~2020 compared to the same period in ~~2018~~.2019. Operating income increased 4%41% to ~~$20.6~~$29.2 million in the first quarter ~~2019~~2020 compared to the same period in ~~2018,~~2019, due primarily to the ~~increases~~increase in ~~metal spread more than offsetting the slight decrease in~~ shipments.

Other Operations

First Quarter Consolidated Results ~~2019~~2020 vs. ~~2018~~2019

Selling, General and Administrative Expenses. Selling, general and administrative expenses of $112.9 million during the first quarter 2020 increased 2% from $111.0 million during the first quarter 2019, ~~increased~~representing 4% ~~from $106.4 million during the first quarter 2018, representing 3.9% and 4.1%~~ of net sales ~~respectively.~~during each period. Profit sharing expense during the first quarter of ~~2019~~2020 of ~~$23.7~~$21.5 million was down ~~11%~~9% from the ~~$26.7~~$23.7 million during the same period in ~~2018,~~2019, consistent with decreases in pretax income ~~before income taxes.~~from 2019.

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Interest Expense, net of Capitalized Interest.During the first quarter ~~2019,~~2020, interest expense of ~~$31.1~~$28.0 million ~~was comparable to the $31.9~~decreased 10% from $31.1 million during the first quarter of ~~2018,~~2019. The decrease in net interest expense is due to lower average interest rates on ~~consistent~~increased debt ~~levels.~~levels from our fourth quarter 2019 senior note refinancing activity, as well as increased capitalized interest in conjunction with our new electric arc furnace flat roll steel mill currently under construction in Sinton, Texas.

Income Tax ~~Expense~~.Expense. First quarter ~~2019~~2020 income tax expense of $57.4 million, at an effective income tax rate of 23.1%, was down 8% from the $62.2 million, at an effective income tax rate of 23.3%, ~~is comparable to the $70.5 million at an effective income tax rate of 23.8%~~ during the first quarter ~~2018.~~2019, consistent with decreased pretax income.

Liquidity and Capital Resources

Capital Resources and Long-term Debt. Our business is capital intensive and requires substantial expenditures for, among other things, the purchase and maintenance of equipment used in our steel, metals recycling, and steel fabrication operations, and to remain in compliance with environmental laws. Our short-term and long-term liquidity needs arise primarily from working capital requirements, capital expenditures including those related to the flat roll steel mill currently under construction in Sinton, Texas, principal and interest payments related to our outstanding indebtedness (no significant principal payments until 2023), dividends to our shareholders, potential stock repurchases, and acquisitions such as our recently announced planned acquisition of Zimmer, S.A. de C.V., a Mexico ferrous and nonferrous scrap metals recycling business. We have met these liquidity requirements primarily with cash provided by operations and long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at March 31, 2020, is as follows (in thousands):

Capital Resources and ~~Long‑term~~Long-term Debt. Our business is capital intensive and requires substantial expenditures for, among other things, the purchase and maintenance of equipment used in our steel, metals recycling, and steel fabrication operations, and to remain in compliance with environmental laws. Our short-term and long-term liquidity needs arise primarily from working capital requirements, capital expenditures including those related to our flat roll steel mill under construction in Sinton, Texas, principal and interest payments related to our outstanding indebtedness (no significant principal payments until 2023), dividends to our shareholders, potential stock repurchases, and acquisitions. We have met these liquidity requirements primarily with cash provided by operations and long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at March 31, ~~2019,~~2020, is as follows (in thousands):



~~Cash and equivalents~~	$	~~791,444~~
~~Short-term investments~~		~~173,723~~
~~Revolver availability~~		~~1,188,161~~
~~Total liquidity~~	$	~~2,153,328~~



Cash and equivalents	$	1,235,478
Short-term investments		219,193
Revolver availability		1,188,031
Total liquidity	$	2,642,702

Our total outstanding debt ~~increased $58.7~~decreased $18.2 million during the first quarter of ~~2019~~2020, primarily due to repayment of revolving debt ~~assumed in conjunction with~~at one of our ~~acquisition of USS.~~consolidated joint ventures. Our total long-term debt to capitalization ratio (representing our long-term debt, including current maturities, divided by the sum of our long-term debt, redeemable noncontrolling interests, and our total stockholders’ equity) was ~~37.9%~~39.8% and 40.2% at March 31, ~~2019,~~2020, and December 31, ~~2018.~~

2019, respectively.

Our unsecured credit agreement has a senior ~~secured~~unsecured revolving credit facility (Facility), which provides a $1.2 billion unsecured Revolver, ~~was renewed~~ and ~~extended~~matures in ~~June 2018 to extend maturity to June 2023.~~December 2024. Subject to certain conditions, we have the opportunity to increase the ~~Revolver~~Facility size by ~~at least $750.0~~$500.0 million. The Facility is guaranteed by certain of our subsidiaries; and is secured by substantially all of our and our wholly-owned subsidiaries’ receivables and inventories, and by pledges of all shares of our wholly-owned subsidiaries’ capital stock or other equity interests, and intercompany debt held by us as collateral. Theunsecured Revolver is available to fund working capital, capital expenditures, and other general corporate purposes. The Facility contains financial covenants and other covenants pertaining to our ability ~~(which may under certain circumstances be limited)~~ to ~~make capital expenditures;~~ incur ~~indebtedness;~~indebtedness and permit liens on property; enter into transactions with affiliates; make restricted payments or investments; enter into mergers, acquisitions or consolidations; conduct asset sales; pay dividends or distributions, or enter into other specified transactions and activities.property. Our ability to borrow funds within the terms of the unsecured Revolver is dependent upon our continued compliance with the financial and other covenants. At March 31, ~~2019,~~2020, we had $1.2 billion of availability on the Revolver, ~~$11.8~~$12.0 million of outstanding letters of credit and other obligations which reduce availability, and there were no borrowings outstanding.

The financial covenants under our Facility state that we must maintain an interest coverage ratio of not less than 2.50:1.00. Our interest coverage ratio is calculated by dividing our last-twelve-months (LTM) consolidated adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transactions as allowed in the Facility) by our LTM gross interest expense, less amortization of financing fees. In addition, a ~~net~~ debt ~~(as defined in the Facility)~~ to ~~LTM consolidated adjusted EBITDA (net debt leverage ratio)~~capitalization ratio of not more than ~~5.00:~~0.60:1.00 must be maintained. If the net debt leverage ratio exceeds 3.50:1:00 at any time, our ability to make certain payments as defined in the Facility (which includes cash dividends to stockholders and share purchases, among other things), is limited. At March 31, ~~2019,~~2020, our interest coverage ratio and ~~net~~ debt ~~leverage~~to capitalization ratio were ~~16.81:~~10.54:1.00 and ~~0.87:~~0.40:1.00, respectively. We were, therefore, in compliance with these covenants at March 31, ~~2019,~~2020, and we anticipate we will continue to be in compliance during the next twelve ~~months~~. months.

Working Capital.We generated cash flow from operations of ~~$181.6~~$211.3 million in the first quarter of ~~2019.~~2020. Operational working capital (representing amounts invested in trade receivables and inventories, less current liabilities other than income taxes payable and debt) increased ~~$181.7~~$80.8 million, ~~excluding the effect of acquired USS working capital,~~ to ~~$2.1~~$1.7 billion at March 31, ~~2019,~~2020, due primarily to ~~decreased accrued expenses, as our 2018 accrued profit sharing was paid in~~increased accounts receivable consistent with increased sales compared to the ~~first~~fourth quarter of ~~2019~~. 2019.

Capital Investments.During the first quarter of ~~2019,~~2020, we invested ~~$54.4~~$217.5 million in property, plant and equipment, primarily within our steel operations segment, compared with ~~$50.6~~$54.4 million invested during the same period in ~~2018.~~2019. The increase in the first quarter of 2020 versus the same 2019 period relates primarily to our new flat roll steel mill under construction in Sinton, Texas. We intentionally entered 2020 with sufficient liquidity for the capital requirements necessary to construct the Sinton steel mill. In January 2020, we received the required environmental permitting to allow for full construction efforts, and we anticipate a mid-2021 start-up. For the remainder of 2020, we are planning for capital investments to be roughly $1.2 billion, of which the new flat roll steel mill in Sinton, Texas, represents approximately $1.0 billion. This spending for Sinton is heavily weighted to the second half of 2020, which

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could be impacted by equipment or other delays due to COVID-19 and related matters. We will continue to assess our capital investment timeline as we gain more visibility into the impact of COVID-19 and could shift some of the planned 2020 investment into 2021 if we believe it is necessary.

Cash Dividends.As a reflection of continued confidence in our current and future cash flow generation ability and financial position, we increased our quarterly cash dividend by ~~28%~~4% to ~~$0.2400~~$0.2500 per share in the first quarter ~~2019~~2020 (from ~~$0.1875~~$0.2400 per share in ~~2018)~~2019), resulting in declared cash dividends of ~~$53.5~~$52.6 million during the first quarter of ~~2019,~~2020, compared to ~~$44.3~~$53.5 million during the same period in ~~2018.~~2019. The decrease in declared cash dividends quarter over quarter was due to stock repurchases which took place throughout 2019 and into the first quarter of 2020, reducing our common stock shares outstanding. We paid fourth quarter 2019 declared cash dividends of $51.5 million ($0.24 per share), and fourth quarter 2018 declared cash dividends of $42.2 million ~~and $36.8 million~~($0.1875 per share) during the first quarters of ~~2019~~2020 and ~~2018,~~2019, respectively. Our board of directors, along with executive management, approves the payment of dividends on a quarterly basis. The determination to pay cash dividends in the future is at the discretion of our board of directors, after taking into account various factors, including our financial condition, results of operations, outstanding indebtedness, current and anticipated cash needs and growth plans. ~~In addition, the terms of our Facility and the indentures relating to our senior notes may restrict the amount of cash dividends we can pay~~.

Other.In August 2018, our board of directors authorized a share repurchase program of up to $750 million of our common stock. In February 2020, our board authorized an additional share repurchase program of up to $500 million. Under the share repurchase ~~program,~~programs, purchases will take place, as and when, we determine in open market or private transactions made based upon the market price of our common stock, the nature of other investment opportunities or growth projects, our cash flows from operations, and general economic conditions. The share repurchase ~~program does~~programs do not require us to acquire any specific number of shares, and may be modified, suspended, extended or terminated by us at any time. We acquired ~~2.3~~4.4 million shares of our common stock for ~~$84.3~~$106.5 million in the first quarter of ~~2019 pursuant to this~~2020, fully expending the remaining purchases available under the 2018 program, and leaving ~~$314.8~~$444.0 million remaining available to purchase under the 2020 program. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information.

Our ability to meet our debt service obligations and reduce our total debt will depend upon our future performance which, in turn, will depend upon general economic, financial, business and ~~business~~COVID-19 pandemic conditions, along with competition, legislation and regulatory factors that are largely beyond our control. In addition, we cannot assure that our operating results, cash flows, access to credit markets and capital resources will be sufficient for repayment of our indebtedness in the future. We believe that based upon current levels of operations and anticipated growth, cash flows from operations, together with other available sources of funds, including if necessary borrowings under our Revolver through its term, will be adequate for the next twelve months for making required payments of principal and interest on our indebtedness, funding working capital requirements, and anticipated capital ~~expenditures.~~expenditures noted above.

ITEM 3.~~QUANTITATIVE~~ QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

In the normal course of business, we are exposed to the market risk and price fluctuations related to the sale of our products and to the purchase of raw materials used in our operations, such as metallic raw materials, electricity, natural gas and its transportation services, fuel, air products, zinc, and electrodes. Our risk strategy associated with product sales has generally been to obtain competitive prices for our products and to allow operating results to reflect market price movements dictated by supply and demand.

Our risk strategy associated with the purchase of raw materials utilized within our operations has generally been to make some commitments with suppliers relating to future expected requirements for some commodities such as electricity, water, natural gas and its transportation services, fuel, air products, zinc, and electrodes. Certain of these commitments contain provisions which require us to “take or pay” for specified quantities without regard to actual usage for periods of generally up to 5 years for physical commodity requirements and commodity transportation requirements, with some extending beyond, and for up to 13 years for air products. We utilized such “take or pay” requirements during the past three years under these contracts, except for certain air products at our idle Minnesota ironmaking operations. We believe that production requirements will be such that consumption of the products or services purchased under these commitments will occur in the normal production process, other than certain air products related to our Minnesota ironmaking operations during the idle period. We also purchase electricity consumed at our Butler Flat Roll Division pursuant to a contract which extends through December 2020, which establishes an agreed fixed-rate energy charge per Mill/kWh consumed for each year through the expiration of the agreement.

We19

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In our metals recycling and steel operations, we have certain fixed price contracts with various customers and suppliers for future delivery of nonferrous and ferrous metals. Our risk strategy has been to enter into base metal financial contracts with the goal to protect the profit margin, within certain parameters, that was contemplated when we entered into the transaction with the customer or vendor. At March 31, ~~2019,~~2020, we had a cumulative unrealized ~~loss~~gain associated with these financial contracts of ~~$788,000,~~$355,000, substantially all of which have a settlement date within the next twelve months. We believe the customer contracts associated with the financial contracts will be fully consummated.

ITEM 4.~~CONTROLS~~ CONTROLS AND PROCEDURES

(a)

Evaluation of Disclosure Controls and Procedures

As required, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, ~~2019,~~2020, the end of the period covered by this quarterly report, our disclosure controls and procedures were designed to provide and were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our principal executive and principal financial ~~officer,~~officers, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Controls Over Financial Reporting

No ~~change~~changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, ~~2019,~~2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II OTHER INFORMATION

ITEM 1.~~LEG~~AL LEGAL PROCEEDINGS

We are involved in various ~~routine~~ litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which are expected to have a material impact on our financial condition, results of operations, or ~~liquidity~~.

liquidity.

We may also be involved from time to time in various governmental investigations, regulatory proceedings or judicial actions seeking penalties, injunctive relief, and/or remediation under federal, state and local environmental laws and regulations. The United States EPA has conducted such investigations and proceedings involving us, in some instances along with state environmental regulators, under various environmental laws, including RCRA, CERCLA, the Clean Water Act and the Clean Air Act. Some of these matters have resulted in fines or penalties, for which a total of ~~$451,000~~$450,000 is recorded in our financial statements as of March 31, ~~2019.~~2020.

ITEM 1A.RISK RISK FACTORS

NoExcept as stated below, no material changes have occurred to the indicated risk factors as disclosed in our Annual Report on Form 10-K for the year ended

December 31, ~~2018.~~2019. Additionally, the impact of the COVID-19 pandemic can also exacerbate other risks discussed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019.

Pandemics, epidemics, widespread illness or other health issues, such as the recent novel coronavirus outbreak (COVID-19) may adversely affect our business, results of operations, financial condition, cash flows, liquidity, and stock price.

Although we had not experienced the full effects of the recent novel coronavirus outbreak (COVID-19) as of March 31, 2020, the COVID-19 pandemic has and may continue to adversely affect our business, results of operations, financial condition, cash flows, liquidity and stock price. Other pandemics, epidemics, widespread illness or other health issues could also adversely affect us. The COVID-19 pandemic has resulted in various government actions globally, including United States federal and state governmental actions designed to slow the spread of the virus. These actions have included quarantines, “shelter in place,” “stay at home” and “social distancing” orders, business shutdowns or restrictions, travel restrictions and other mitigation efforts, which, among other things, have impacted and may further impact demand for our products, as well as our supply chain. These measures, along with further voluntary measures by businesses and individuals, have impacted and may further impact our working conditions, productivity and operations, as well as those of our customers, suppliers, vendors and business partners. These mitigation measures have also adversely affected and may continue to adversely affect the United States and world economies, resulting in increased unemployment in the United States and the communities in which we operate. However, due to our variable compensation system that rewards productivity, as well as our low fixed cost structure, we have not and do not expect in the future to significantly reduce our workforce due to the COVID-19 pandemic.

We have been identified by governmental authorities as a critical infrastructure industry and have been deemed an essential business in all of the states in which we operate. This has permitted us to continue to advance our commitment to our customers and meet their demand by operating our business consistent with federal guidelines and state and local orders, including social distancing guidelines. In order to promote the health and safety of our employees, our most critical core value, we have implemented certain procedures, such as remote working accommodations, staggering shifts, social distancing guidelines and curtailing in person meetings and travel. These health and safety initiatives are not expected to have a material effect on our operations, but further required limitations and restrictions could adversely affect our results of operations.

Additionally, while we have not currently curtailed our operations, a prolonged COVID-19 pandemic could materially reduce demand for our products and thus reduce the productivity of our operations and have a negative impact on our business, results of operations, financial condition and cash flows. Certain of our suppliers and customers, such as those in the automotive, energy and related industries, have experienced temporary shutdowns or significant demand reductions, adversely affecting our operations. Further reduced demand for our products or raw material supply availability due to shutdowns or slowdowns in businesses could further adversely affect our volumes and margins, results of operations, financial condition and cash flows. Prolonged shutdowns of critical equipment suppliers, or their suppliers, to our planned capital improvements, including our under construction Sinton, Texas Flat Roll Steel Mill expected to commence operations mid-year 2021, could, if they were to occur, cause our planned expansions to be delayed. The COVID-19 pandemic has also caused volatility in the financial and capital markets, which has adversely affected our stock price and may adversely affect our ability to access and the costs associated with accessing the debt or equity capital markets, which could adversely affect our liquidity, which as of March 31, 2020 was approximately $2.6 billion, consisting of approximately $1.4 billion in cash and cash equivalents and short-term investments, and $1.2 billion in availability under our undrawn credit facility.

Table of Contents

There is considerable uncertainty regarding the economic and industry impacts, including duration, from COVID-19 and the measures introduced to curtail its spread. Although these highly uncertain impacts cannot be reasonably estimated at this time, general economic conditions, business closures, slow payments from customers, increased bankruptcies, and labor restrictions may adversely affect our business, results of operations, financial condition, cash flows, liquidity and stock price. Additionally, the impact of the COVID-19 pandemic could exacerbate other risks to us, including those discussed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019.

ITEM 2.~~UNREGISTERED~~ UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)

Issuer Purchases of Equity Securities

~~(c) Issuer Purchases of Equity Securities~~

We purchased the following equity securities registered by us pursuant to Section 12 of the Exchange Act during the three months ended
March 31, ~~2019.~~2020.



Period	Total Number of Shares Purchased	Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Program ^{(1) (2)}		Maximum Dollar Value of Shares That May Yet be Purchased Under the Programs (in thousands)^{(1) (2)}
Quarter ended March 31, 2020

January 1 - 31⁽¹⁾	443,130		$	30.37		443,130		$	37,081
February 1 - 29 ^{(1) (2)}	1,091,569			28.65		1,091,569			505,812
March 1 - 31 ⁽²⁾	2,867,518			21.55		2,867,518			444,011
	4,402,217					4,402,217

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Program (1)

Maximum Dollar Value of Shares That May Yet be Purchased Under the Program
(in thousands)

Quarter ended March 31, 2019

    January 1 - 31 (1)

234,274

$
30.19

234,274

$
392,075

    February 1 - 28 (1)

1,469,445

37.58

1,469,445

336,852

    March 1 - 31 (1)

595,422

36.97

595,422

314,840

2,299,141

2,299,141

(1)

~~(1)~~

On September 4, 2018, we announced that our board of directors had authorized a share purchase program of up to $750.0 million of our common stock.

This program was completed in March 2020.

(2)	On February 26, 2020, we announced that our board of directors had authorized an additional share purchase program of up to $500.0 million of our common stock.

ITEM 3.~~DEFAULTS~~ DEFAULTS UPON SENIOR SECURITIES

None.

~~None~~.

ITEM 4.MINE MINE SAFETY DISCLOSURES

Information required to be furnished pursuant to Item 4 concerning mine safety disclosure matters, if applicable, by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104), is included in Exhibit 95 to this quarterly report. ~~There are no mine safety disclosures to report for the three months ended March 31, 2019, therefore, no Exhibit 95 is required.~~

ITEM 5.OT OTHER INFORMATION

None.

~~HER INFORMATION~~

Table of Contents

~~None~~.

ITEM 6.EXHIBITS

Reference is made to the Exhibit Index preceding the signature page hereto, which Exhibit Index is hereby incorporated into this item.

EXHIBIT INDEX

~~EXHIBIT INDEX~~
Articles of Incorporation

~~Articles of Incorporation~~

3.1		Amended and Restated Articles of Incorporation of Steel Dynamics, Inc., reflecting all amendments thereto through May 17, 2018, incorporated herein by reference from Exhibit 3.1e to our Form 10-Q filed August 9, 2018.

3.2		Amended and Restated Bylaws of Steel Dynamics, Inc., reflecting all amendments thereto through October 17, 2018, incorporated herein by reference from Exhibit 3.2d to our Form 10-Q filed November 7, 2018.

Executive Officer Certifications

31.1*		Certification of Chief Executive Officer required by Item 307 of Regulation S-K as promulgated by the Securities and Exchange Commission and pursuant to Section 302 of the ~~Sarbanes‑Oxley~~Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer required by Item 307 of Regulation S-K as promulgated by the Securities and Exchange Commission and pursuant to Section 302 of the ~~Sarbanes‑Oxley~~Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the ~~Sarbanes‑Oxley~~Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the ~~Sarbanes‑Oxley~~Sarbanes-Oxley Act of 2002.

Other

95**		Mine Safety Disclosures.

XBRL Documents

101.INS*		XBRL Instance Document	- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Document

101.DEF*		XBRL Taxonomy Definition Document

101.LAB*		XBRL Taxonomy Extension Label Document

101.PRE*		XBRL Taxonomy Presentation Document

104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*	Filed concurrently herewith

*~~Filed concurrently herewith~~

**~~Inapplicable for purposes~~Table of ~~this report~~

Contents

~~SIGNATURE~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~May 10, 2019~~

May 11, 2020


STEEL DYNAMICS, INC.

~~By:~~	By:	/s/ Theresa E. Wagler
		Theresa E. Wagler
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)


☒	~~Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period ended March 31, 2019~~

	OR

☐	~~Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

Indiana		35-1929476

~~Steel Dynamics, Inc.~~
~~(Exact name of registrant as specified in its charter)~~

~~Indiana~~		~~35-1929476~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer 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~~


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock voting, ~~$0.025~~$0.0025 par value	STLD	NASDAQ Global Select Market

(Check one):		Large accelerated filer ⌧		Accelerated filer ◻	Non-accelerated filer ◻
~~(Check one):~~	~~Large accelerated filer ☒~~	~~Accelerated filer ☐~~	~~Non-accelerated filer ☐~~

	Smaller reporting company ☐		Emerging growth company ☐


PART I. Financial Information

Item 1.	Financial ~~Statements~~Statements::	Page

	Consolidated Balance Sheets as of March 31, ~~2019~~2020 (unaudited) and December 31, ~~201~~20198	1

	Consolidated Statements of Income for the ~~three month~~three-month periods ended March 31, 2020 and 2019 ~~and 2018 (unaudited~~(unaudited))	2

	Consolidated Statements of Comprehensive Income for the ~~three month~~three-month periods ended March 31, 2020 and 2019 ~~and 2018~~ (unaudited)	3

	Consolidated Statements of Cash Flows for the ~~three month~~three-month periods ended March 31, 2020 and 2019 ~~and 2018~~ (unaudited)	4

	Notes to Consolidated Financial Statements (unaudited)	5

Item 22..	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1812

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2419

Item 4.	Controls and Procedures	2420



	PART II. Other Information

Item 1.	Legal Proceedings	2521

Item 1A1A..	Risk Factors	2521

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2522

Item 33..	Defaults Upon Senior Securities	2522

Item 44..	Mine Safety Disclosures	2522

Item 55..	Other Information	2522

Item 6.	Exhibits	2523

Exhibit Index		2623

Signature		2724



	March 31,		December 31,
	2019		2018
Assets	(unaudited)
Current assets
Cash and equivalents	$	791,444	$	828,220
Short-term investments		173,723		228,783
Accounts receivable, net		1,141,038		1,040,220
Accounts receivable-related parties		2,357		3,536
Inventories		1,867,700		1,859,168
Other current assets		52,628		72,730
Total current assets		4,028,890		4,032,657

Property, plant and equipment, net		2,936,893		2,945,767

Intangible assets, net		263,315		270,328
Goodwill		530,716		429,645
Other assets		97,419		25,166
Total assets	$	7,857,233	$	7,703,563
Liabilities and Equity
Current liabilities
Accounts payable	$	582,284	$	536,743
Accounts payable-related parties		9,183		14,011
Income taxes payable		26,896		7,468
Accrued payroll and benefits		114,575		264,542
Accrued interest		47,955		25,526
Accrued expenses		141,239		146,613
Current maturities of long-term debt		80,958		24,234
Total current liabilities		1,003,090		1,019,137

Long-term debt		2,354,427		2,352,489
Deferred income taxes		447,087		435,838
Other liabilities		63,171		8,870
Total liabilities		3,867,775		3,816,334

Commitments and contingencies

Redeemable noncontrolling interests		139,930		111,240

Equity
Common stock voting, $.0025 par value; 900,000,000 shares authorized;
265,552,825 and 265,822,402 shares issued; and 222,931,285 and 225,272,174
shares outstanding, as of March 31, 2019 and December 31, 2018, respectively		645		645
Treasury stock, at cost; 42,621,540 and 40,550,228 shares,
as of March 31, 2019 and December 31, 2018, respectively		(1,261,837)		(1,184,243)
Additional paid-in capital		1,160,139		1,160,048
Retained earnings		4,109,034		3,958,320
Accumulated other comprehensive income		130		301
Total Steel Dynamics, Inc. equity		4,008,111		3,935,071
Noncontrolling interests		(158,583)		(159,082)
Total equity		3,849,528		3,775,989
Total liabilities and equity	$	7,857,233	$	7,703,563



	Three Months Ended
	March 31,
	2019		2018

Net sales
Unrelated parties	$	2,814,486	$	2,597,312
Related parties		2,949		6,563
Total net sales		2,817,435		2,603,875

Costs of goods sold		2,383,865		2,140,459
Gross profit		433,570		463,416

Selling, general and administrative expenses		111,038		106,431
Profit sharing		23,677		26,662
Amortization of intangible assets		7,013		6,926
Operating income		291,842		323,397

Interest expense, net of capitalized interest		31,122		31,896
Other (income) expense, net		(6,343)		(4,463)
Income before income taxes		267,063		295,964

Income tax expense		62,236		70,489
Net income		204,827		225,475

Net (income) loss attributable to noncontrolling interests		(499)		2,076
Net income attributable to Steel Dynamics, Inc.	$	204,328	$	227,551



Basic earnings per share attributable to Steel Dynamics,
Inc. stockholders	$	0.91	$	0.96

Weighted average common shares outstanding		224,058		236,623

Diluted earnings per share attributable to Steel Dynamics, Inc.
stockholders, including the effect of assumed conversions
when dilutive	$	0.91	$	0.96

Weighted average common shares and share equivalents outstanding		224,962		237,723

Dividends declared per share	$	0.2400	$	0.1875


2019 - for the remaining nine months	$	14,565
2020		17,316
2021		14,165
2022		10,891
2023		7,924
Thereafter		20,503
Total undiscounted cash flows		85,364
Less imputed interest		(12,771)
Lease obligations under operating leases	$	72,593



	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests
Balances at December 31, 2018	$	645	$	(1,184,243)	$	1,160,048	$	3,958,320	$	301	$	(159,082)	$	3,775,989	$	111,240
Dividends declared		-		-		-		(53,504)		-		-		(53,504)		-
Noncontrolling investors of USS		-		-		-		-		-		-		-		28,690
Share repurchases		-		(84,308)		-		-		-		-		(84,308)		-
Equity-based compensation		-		6,714		91		(110)		-		-		6,695		-
Net income		-		-		-		204,328		-		499		204,827		-
Other comprehensive loss, net of tax		-		-		-		-		(171)		-		(171)		-
Balances at March 31, 2019	$	645	$	(1,261,837)	$	1,160,139	$	4,109,034	$	130	$	(158,583)	$	3,849,528	$	139,930


	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests
Balances at December 31, 2017	$	644	$	(665,297)	$	1,141,534	$	2,874,693	$	-	$	(156,506)	$	3,195,068	$	111,240
Dividends declared		-		-		-		(44,269)		-		-		(44,269)		-
Share repurchases		-		(69,269)		-		-		-		-		(69,269)		-
Equity-based compensation		-		3,866		1,337		(71)		-		-		5,132		-
Comprehensive and net income (loss)		-		-		-		227,551		-		(2,076)		225,475		-
Balances at March 31, 2018	$	644	$	(730,700)	$	1,142,871	$	3,057,904	$	-	$	(158,582)	$	3,312,137	$	111,240



			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
March 31, 2019
Short-term investments	$	173,723	$		$	173,723	$
Commodity futures – financial assets		2,032		-		2,032		-
Commodity futures – financial liabilities		2,820		-		2,820		-

December 31, 2018
Short-term investments	$	228,783	$	-	$	228,783	$	-
Commodity futures – financial assets		4,558		-		4,558		-
Commodity futures – financial liabilities		3,890		-		3,890		-


Footnotes related to the three months ended March 31, 2018, segment results (in millions):

(1)	Corporate SG&A	$	(15.7)
	Company-wide equity-based compensation		(8.5)
	Profit sharing		(25.6)
	Other, net		(5.6)
		$	(55.4)



Condensed Consolidating Balance Sheets (in thousands)
					Combined		Consolidating		Total
As of March 31, 2019	Parent		Guarantors		Non-Guarantors		Adjustments		Consolidated
Cash and equivalents	$	755,014	$	26,067	$	10,363	$	-	$	791,444
Short-term investments		153,723		20,000		-		-		173,723
Accounts receivable, net		344,209		1,727,028		71,953		(999,795)		1,143,395
Inventories		786,300		1,010,636		84,420		(13,656)		1,867,700
Other current assets		38,977		17,243		3,331		(6,923)		52,628
Total current assets		2,078,223		2,800,974		170,067		(1,020,374)		4,028,890
Property, plant and equipment, net		870,626		1,905,151		161,116		-		2,936,893
Intangible assets, net		-		263,315		-		-		263,315
Goodwill		-		428,798		101,918		-		530,716
Other assets, including investments in subs		2,934,875		59,075		5,850		(2,902,381)		97,419
Total assets	$	5,883,724	$	5,457,313	$	438,951	$	(3,922,755)	$	7,857,233

Accounts payable	$	197,481	$	376,400	$	94,697	$	(77,111)	$	591,467
Accrued expenses		200,512		275,807		17,763		(163,417)		330,665
Current maturities of long-term debt		809		1,116		104,574		(25,541)		80,958
Total current liabilities		398,802		653,323		217,034		(266,069)		1,003,090
Long-term debt		2,328,859		-		166,353		(140,785)		2,354,427
Other liabilities		(852,048)		1,398,528		33,483		(69,705)		510,258
Total liabilities		1,875,613		2,051,851		416,870		(476,559)		3,867,775

Redeemable noncontrolling interests		-		-		139,930		-		139,930

Common stock		645		1,727,859		15,016		(1,742,875)		645
Treasury stock		(1,261,837)		-		-		-		(1,261,837)
Additional paid-in-capital		1,160,139		683,048		787,572		(1,470,620)		1,160,139
Retained earnings (deficit)		4,109,034		994,555		(761,854)		(232,701)		4,109,034
Accumulated other comprehensive loss		130		-		-		-		130
Total Steel Dynamics, Inc. equity		4,008,111		3,405,462		40,734		(3,446,196)		4,008,111
Noncontrolling interests		-		-		(158,583)		-		(158,583)
Total equity		4,008,111		3,405,462		(117,849)		(3,446,196)		3,849,528
Total liabilities and equity	$	5,883,724	$	5,457,313	$	438,951	$	(3,922,755)	$	7,857,233



Condensed Consolidating Statements of Operations (in thousands)

For the three months ended,					Combined		Consolidating		Total
March 31, 2019	Parent		Guarantors		Non-Guarantors		Adjustments		Consolidated
Net sales	$	1,124,735	$	3,110,229	$	171,883	$	(1,589,412)	$	2,817,435
Costs of goods sold		905,995		2,865,989		165,460		(1,553,579)		2,383,865
Gross profit		218,740		244,240		6,423		(35,833)		433,570
Selling, general and administrative		69,006		74,583		3,930		(5,791)		141,728
Operating income		149,734		169,657		2,493		(30,042)		291,842
Interest expense, net of capitalized interest		18,654		11,766		3,214		(2,512)		31,122
Other (income) expense, net		(7,400)		(1,377)		(292)		2,726		(6,343)
Income (loss) before income taxes and
equity in net income of subsidiaries		138,480		159,268		(429)		(30,256)		267,063
Income taxes		30,764		38,534		103		(7,165)		62,236
		107,716		120,734		(532)		(23,091)		204,827
Equity in net income of subsidiaries		96,612		-		-		(96,612)		-
Net income attributable to noncontrolling interests		-		-		(499)		-		(499)
Net income (loss) attributable to Steel Dynamics, Inc.	$	204,328	$	120,734	$	(1,031)	$	(119,703)	$	204,328


Period	Total Number of Shares Purchased	Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Program (1)		Maximum Dollar Value of Shares That May Yet be Purchased Under the Program (in thousands)
Quarter ended March 31, 2019

January 1 - 31 (1)	234,274		$	30.19		234,274		$	392,075
February 1 - 28 (1)	1,469,445			37.58		1,469,445			336,852
March 1 - 31 (1)	595,422			36.97		595,422			314,840
	2,299,141					2,299,141