STLD Financial Analysis

Analysis Date: 1/24/2025

Business Model

Steel Dynamics generates revenue primarily through steel operations, steel fabrication, metals recycling, and aluminum segments

Revenue Sources

• Steel Operations (69% of revenue): Hot roll, cold roll, coated sheet steel, structural beams, rails, and specialty steel products
• Steel Fabrication (10% of revenue): Steel joists and deck products
• Metals Recycling (11% of revenue): Ferrous and nonferrous scrap processing
• Aluminum (1.5% of revenue): Aluminum products including beverage can and industrial products

Revenue Distribution by Channel

• Steel Operations: $12.1B (69% of total revenue)
• Steel Fabrication: $1.8B (10% of total revenue)
• Metals Recycling: $2.0B (11% of total revenue)

Income Statement Analysis

• Net sales declined 8.5% YoY due to lower steel prices and reduced shipments
• Gross margin contracted to 11.4% from 17.3% due to metal spread compression
• Operating income decreased 54.2% YoY reflecting challenging pricing environment

Balance Sheet Analysis

• Strong liquidity position maintained at $2.2B
• Total assets remained stable year-over-year with slight 0.2% increase

Cash Flow Analysis

• Generated strong operating cash flow of $1.8B for full year 2024
• Invested $1.9B in organic growth initiatives during 2024

Capital Allocation

The company maintained balanced capital allocation with $1.9B invested in organic growth, $1.2B in share repurchases (6% of outstanding shares), and $283M in dividends during 2024. Maintained strong liquidity of $2.2B while funding growth initiatives.

Management Commentary

Underlying domestic steel demand remained stable throughout 2024

Expect unfairly traded steel imports to decline in 2025 based on recent trade case

Experienced increased steel imports in 2024, particularly in coated flat rolled products

Overall Sentiment: Cautiously optimistic with expectations for improving market conditions in 2025

Recommendation

Rating: Buy

Reason for Rating: Strong market position and improving industry dynamics support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 4:35:42 AM