# Steel Dynamics, Inc. (STLD): Business, Risks and Management's Discussion, Third Quarter 2026

Sources: the Annual Report on Form 10-K for 2025 (fiscal year ended December 31, 2025; accession 0001104659-26-021395, filed February 27, 2026), the Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (accession 0001104659-26-118461, filed October 23, 2026), and the company's Form 8-K current reports and press-release exhibits filed during 2026, each cited by accession where used.

## Business

*From the 2025 Form 10-K, accession 0001104659-26-021395, Item 1, and the Q3 2026 Form 10-Q, accession 0001104659-26-118461, Note 1.*

Steel Dynamics makes and sells steel, recycles scrap metal, fabricates steel joists and deck for non-residential buildings, and has begun producing recycled-content aluminum flat-rolled sheet. Its plants are in the United States and Mexico. Most revenue comes from steel sold to service centers, processors, fabricators and manufacturers in construction, automotive, manufacturing, transportation, heavy and agricultural equipment, energy, and pipe and tube (including oil country tubular goods). The rest comes from ferrous and nonferrous scrap, joist and deck products, and aluminum sheet for beverage cans, automotive and industrial customers. The company describes itself as one of the largest domestic steel producers and metals recyclers in North America, with about 16 million tons of estimated steelmaking and coating capacity at December 31, 2025. All of its steel is made in electric arc furnaces (EAFs) that melt recycled scrap. In 2025 steel operations generated 72% of consolidated net sales, metals recycling 11%, steel fabrication 8% and aluminum 2%. Consolidated 2025 net sales were $18.2 billion.

The company reports four segments plus an "Other" category:

- **Steel operations.** Three flat-roll EAF mills (Butler, Indiana; Columbus, Mississippi; and Southwest-Sinton, Texas) have about 9.4 million tons of annual flat-roll capacity. Four long-product mills (Structural and Rail, Engineered Bar Products, Roanoke Bar, and Steel of West Virginia) have about 4.6 million tons. Downstream, the segment has coating and processing at The Techs and Heartland (2.0 million tons of processing capacity, 5.5 million tons of galvanizing and 2.0 million tons of painting capability), distribution and processing through United Steel Supply and New Process Steel, and Vulcan Threaded Products. Sheet products were 64% of steel segment net sales in 2025, and exports were about 4%. Premium rail made at the Structural and Rail Division is certified by all Class I railroads. About 70% of steel and steel fabrication sales are value-added products. The segment also includes SDI Biocarbon Solutions, a Columbus, Mississippi plant that began operating in the second half of 2025. It converts biomass into biocarbon to replace anthracite in steelmaking, which the company says could cut its mills' Scope 1 greenhouse-gas emissions by as much as 35%.
- **Metals recycling (Omni).** Ferrous and nonferrous scrap processing, brokerage and scrap-management services across the U.S. and in Central and Northern Mexico. In 2025 it shipped 6.16 million gross tons of ferrous scrap, 65% of it to the company's own mills, and 917 million pounds of nonferrous metals. Exports were 14% of segment net sales.
- **Steel fabrication (New Millennium Building Systems).** Seven joist and deck plants. They shipped about 561,000 tons in 2025 to non-residential construction customers, including retail chains, distribution warehouses, data centers, manufacturing plants and schools. The company estimates it holds about one-third of domestic joist and deck bookings.
- **Aluminum operations.** A 650,000-metric-ton recycled aluminum flat-rolled products mill in Columbus, Mississippi. Steel Dynamics owns 94.4% of the mill through a joint venture with Unity Aluminum, Inc. The segment also has two planned 150,000-metric-ton satellite recycled slab centers (one in San Luis Potosi, Mexico, and a second under construction) and a recycled aluminum deox-rod facility. At full production the company expects a product mix of about 45% can sheet, 35% automotive, and 20% common-alloy and industrial products.
- **Other.** Operations below the reporting threshold, mainly a joint venture and the idled Minnesota ironmaking operations (Mesabi Nugget, 86% owned), plus unallocated corporate items.

**How the model makes money.** Steel earnings depend mainly on metal spread, meaning the steel selling price minus the cost of scrap melted. Metallic raw materials are about 55% to 65% of steel-mill manufacturing cost. The businesses are vertically connected. The recycling arm is the largest scrap supplier to both the steel mills and the aluminum mill. Internal steel consumers bought 1.8 million tons from the company's own mills in 2025, 13% of steel shipments, and those purchases support mill utilization when outside demand softens. The steel operations also supplied 62% of the sheet steel used by the fabrication business. Pay is heavily performance-based. More than 60% of a production team member's potential pay, and more than 85% of senior leadership's, is "at risk." Companywide profit sharing equals 8% of consolidated pretax income, excluding noncontrolling interests and other items. The company had about 14,400 full-time team members at December 31, 2025.

**How the portfolio has shifted recently.** The steel segment's downstream reach grew when New Process Steel became wholly owned on December 1, 2025. New Process Steel is a Houston-based metals solutions and distribution supply-chain company that the company says expands its exposure to value-added manufacturing. Total acquisition-date consideration was $449.3 million: cash for the remaining 55% plus the earlier 45% stake, remeasured at $220.4 million. The final valuation, received in the third quarter of 2026, assigns $55.8 million to customer-related intangibles, $71.9 million to the trade name and $50.0 million to property, plant and equipment. United Steel Supply is now 95% owned, and SDI Biocarbon Solutions became wholly owned effective June 19, 2026; the 10-Q discloses no price for the biocarbon stake. The planned second satellite aluminum slab center was moved from the Southwest U.S. to Columbus, Mississippi. Separately, on January 5, 2026 Steel Dynamics and SGH Ltd confirmed a joint non-binding indicative offer for all of BlueScope Steel Ltd at A$30.00 per share (8-K accession 0001104659-26-000833). On February 17, 2026 they confirmed a revised non-binding indicative offer of A$32.35 per share, described as best and final, for a total BlueScope equity value of about A$15 billion (US$11 billion), all cash. After closing, SGH would on-sell BlueScope's North American operations to Steel Dynamics, and the release said no final decision to make a binding proposal had been taken (8-K accession 0001104659-26-016583). No later SEC filing by the company reports a binding agreement, a withdrawal or any other outcome, and neither the 2025 10-K nor the third-quarter 2026 10-Q mentions the proposal.

## Risk factors

*From the 2025 Form 10-K, accession 0001104659-26-021395, Item 1A. The Q3 2026 10-Q reports no material changes to these risk factors.*

The risks below are condensed. Most come back to one exposure: earnings depend on the gap between steel and aluminum prices and the cost of scrap, energy and other inputs, and both sides of that gap are set by cyclical markets the company does not control.

- **Economic cycles and end-market concentration.** Demand depends on cyclical customer industries such as construction, automotive, energy, equipment, beverage can and pipe and tube. Higher interest rates and tighter credit can reduce orders, delay projects and weaken customers' and suppliers' credit. Metals industries have historically seen sharp drops in consumption and pricing during downturns.
- **Imports and global overcapacity.** Global steelmaking capacity exceeds consumption, and China's excess capacity in particular has made it a major exporter. Low-priced or dumped imports, a strong dollar, or the relaxation, expiry or circumvention of tariffs, duties or quotas could push down U.S. prices. New domestic capacity could add to the pressure and raise scrap demand.
- **Metal-spread compression from scrap and input costs.** Scrap prices are volatile and do not necessarily move with steel or aluminum prices. Integrated blast-furnace competitors rely less on scrap and gain a cost advantage when scrap is expensive. New EAF and aluminum capacity across the industry could raise scrap demand and prices. If the company cannot pass on higher input costs, including zinc, electrodes and alloys, margins shrink.
- **Energy.** The mills use large amounts of electricity and natural gas. Price spikes, power outages or curtailments would disrupt production. Sinton buys electricity at market prices. Fuel costs also affect truck deliveries.
- **Environmental and climate regulation.** The company is subject to RCRA, CERCLA, the Clean Water Act and the Clean Air Act. EAF dust is classified as hazardous waste. Shredder residue rules could change. Cleanup liability can be retroactive and joint and several, including for emerging contaminants such as PFAS. Greenhouse-gas rules or customer and investor decarbonization demands, including the company's own 2030 and 2050 goals, could add capital and operating costs that may not be recoverable. Permits may be denied or not renewed.
- **Growth-strategy and startup execution.** The aluminum business is a new line in which the company has limited experience. The 10-K states plainly that delays in reaching full operating capacity at new facilities have hurt results and may continue to. It also cites risks of budget overruns, delayed product qualification, labor shortages, integration of acquisitions, and higher leverage.
- **Aluminum customer concentration.** A relatively small group of aluminum customers hold sizable sales agreements. The aluminum business would suffer if any of them faced distress, sought relief from its contract, or ended the relationship.
- **Scrap supply.** Scrap suppliers are not bound by long-term contracts and may hold back material when prices are low. Weaker industrial output also reduces the supply of prime scrap.
- **Operational disruption.** The business depends on critical equipment such as EAFs, casters, aluminum melting and rolling lines, and transformers. Fires, explosions, weather or equipment failure can cause outages. The company says it has already had inefficiencies and equipment failures while ramping up new facilities.
- **Cybersecurity.** An attack could interrupt automated melt, roll and processing systems as well as compromise data. The company reports no material cybersecurity incidents in the past three years.
- **Competition and substitutes.** Steel and aluminum compete with each other and with cement, composites, plastics, carbon fiber, glass and wood. Industry consolidation has intensified price competition.
- **Debt covenants, people, legal and impairment risks.** The revolving credit facility requires interest coverage of at least 2.50x and debt-to-capitalization of no more than 0.60, and a breach could accelerate the debt. Other risks include losing key personnel, compliance with anti-bribery, export-control and sanctions laws, and non-cash impairment of goodwill, other long-lived assets or equity investments.

## Management's discussion of 2025

*From the 2025 Form 10-K, accession 0001104659-26-021395, Item 7 and Item 7A.*

Earnings fell in 2025 even though volumes reached records, because metal spreads narrowed. Consolidated net sales rose 4% to $18.18 billion. Operating income fell $467.1 million, or 24%, to $1.48 billion. Net income attributable to Steel Dynamics fell 23% to $1.2 billion, and diluted EPS was $7.99, down from $9.84. Operating cash flow was $1.4 billion, compared with $1.8 billion in 2024.

| Segment (2025 vs. 2024) | Net sales | Change | Operating income (loss) | Change |
|---|---|---|---|---|
| Steel operations | $13.41 billion | +7% | $1.43 billion | -10% |
| Metals recycling | $4.35 billion | +5% | $97.2 million | +27% |
| Steel fabrication | $1.42 billion | -20% | $407.4 million | -39% |
| Aluminum | $473.9 million | +49% | ($173.0 million) | loss widened from ($72.3 million) |

- **Steel.** Total shipments reached a record 13.7 million tons, up 9%. Most of the gain came from Sinton and Heartland, where four new value-added lines ran for a full year. Average selling prices slipped 1% ($14 per ton) amid trade-policy uncertainty, while scrap cost per ton was unchanged, so metal spread narrowed 2%. Mill utilization rose to 86% from 81%. Management cited demand support from onshoring, infrastructure funding, lower interest rates and regionalized supply chains, as well as lower imports in the second half.
- **Metals recycling.** Ferrous shipments rose 5% and ferrous and nonferrous prices rose 2% and 7%. Ferrous spreads were flat, while nonferrous spreads, mainly aluminum, widened 24%.
- **Steel fabrication.** Average selling prices fell 13% and volumes 8%. Steel input cost fell only 7%, so metal spread contracted 17% from historically high 2024 levels. The backlog stayed solid into the first half of 2026, driven by commercial, data center, manufacturing, warehouse and healthcare work.
- **Aluminum.** The flat-rolled mill began shipping in the second half of 2025, with 15,000 metric tons of finished product. It qualified industrial, beverage can and automotive hot-band products. Startup and commissioning costs drove the larger loss, and they also lifted SG&A 15% to $765.3 million.

Other items: interest expense rose 24% to $70.0 million on higher debt. The effective tax rate was 20.5%, compared with 21.8%, and the company said the July 2025 One Big Beautiful Bill Act was not expected to have a material effect on its tax rate. Net other income was $87.0 million.

**Capital and liquidity.** Capital spending fell to $948.0 million in 2025 from $1.9 billion in 2024 as aluminum construction wound down. Working capital rose $1.1 billion to $4.4 billion, including $624.8 million more inventory, mostly at the aluminum operations. Total debt rose $980.2 million to $4.2 billion. In March 2025 the company issued $600 million of 5.250% notes due 2035 and $400 million of 5.750% notes due 2055. In November 2025 it issued $650 million of 4.000% notes due 2028 and an additional $150 million of the 2035 notes. It used the proceeds partly to redeem $400 million of 2.400% notes due June 2025 and $400 million of 5.000% notes due December 2026. Long-term debt to capitalization was 32.1%. At year-end the company had $2.2 billion of liquidity, including an undrawn $1.2 billion revolver maturing July 2028. The quarterly dividend rose 9% to $0.50. Share repurchases were $900.9 million, leaving $801.0 million under the February 2025 authorization of $1.5 billion. At year-end, the company's hedges on fixed-price metal contracts had a cumulative unrealized loss of $56.0 million.

## Current quarter: third quarter 2026

*From the Q3 2026 Form 10-Q, accession 0001104659-26-118461 (Item 2, Notes 1, 2 and 8, Part II), and the third-quarter results release furnished on Form 8-K, accession 0001104659-26-117217, Exhibit 99.1.*

The steel cycle has turned sharply in the company's favor since 2025. Third-quarter 2026 net sales rose 35% to $6.51 billion, from $4.83 billion. Operating income nearly doubled, up $498.6 million or 98%, to $1.01 billion. Net income attributable to Steel Dynamics rose 87% to $756.0 million, or $5.26 per diluted share compared with $2.74. Sequentially, net income was up from $534 million ($3.69) in the second quarter and $403 million ($2.78) in the first. For the first nine months, net sales rose 29% to $17.81 billion, operating income 93% to $2.24 billion, and net income attributable to the company 84% to $1.69 billion ($11.72 per diluted share compared with $6.17).

Segment results for the quarter, compared with the third quarter of 2025:

- **Steel operations: the main driver.** Operating income rose 108% to $1.03 billion. Total steel shipments were a record 3.8 million tons, up 5%. Segment shipments excluding intra-segment volume fell 1% to 3.23 million tons. Average segment selling prices rose 25% ($282 per ton), while metallic cost rose only $23 per ton (6%), so metal spread widened 35%. The average external selling price reached $1,400 per ton, up $102 from the second quarter, while scrap cost melted fell $8 to $404 per ton. Mill utilization was 92%, compared with 88%. Shipments at the steel processing divisions, which include New Process Steel since December 1, 2025, rose to 743,254 tons from 543,700. Management describes the market as strong. It cites steady demand, low customer inventories and historically low imports. It says coated flat-rolled imports abated after recent trade actions and that structural steel and rail demand is extremely strong.
- **Metals recycling.** Net sales rose 11% to $1.26 billion. Ferrous prices rose 6% and nonferrous prices 27%, and nonferrous spreads widened 48%, helped by copper. Ferrous shipments rose 7% and nonferrous shipments fell 17%. Operating income rose 5% to $33.0 million. That was $15 million below the second quarter, which the company attributed to lower ferrous scrap pricing and metal spread contraction; realized ferrous prices fell $15 per gross ton sequentially.
- **Steel fabrication.** Net sales rose 24% to $468.7 million on 25% higher volume, with average prices down 1%. Steel input cost rose 20%, so metal spread contracted 18% and operating income fell 15% to $90.6 million, from $107.0 million. That was still above the second quarter's $85 million, on sequential shipments up 18%. The order backlog is 50% higher than a year earlier and extends into the second quarter of 2027.
- **Aluminum.** Net sales rose 373% to $493.5 million. The operating loss narrowed 54% to $26.2 million, and the segment was EBITDA-breakeven for the quarter. The mill shipped 55,000 metric tons of flat-rolled sheet and produced 91,000 metric tons of hot band. The company said volumes were below expectations for several weeks because yield losses at higher speeds traced to the composition of the hot strip mill's rolling coolant. It has changed the coolant and expects no ongoing costs from the issue. Aluminum was 7% of consolidated net sales, compared with 2%.

**Aluminum ramp milestones.** All three cold mills are operating, enough to reach the mill's annual volume expectations. The first of two continuous annealing and solution heat-treat (CASH) lines is running and is expected to ship finished automotive products before year-end 2026. The second CASH line's timing has moved back over the year. In April 2026 the company expected to commission it in the third quarter of 2026. In July it expected the line to begin material qualifications in the fourth quarter. The October release says the line will be commissioned in the coming months and become operational early in the first quarter of 2027 (8-K accessions 0001104659-26-045938, 0001104659-26-085277 and 0001104659-26-117217). For the first nine months, the aluminum segment loss was $140.7 million, including the $16 million slab-center write-down, compared with $125.9 million a year earlier.

**Below the operating line.** Third-quarter SG&A fell 7% to $187.0 million, or 2.9% of sales. Profit-sharing expense rose 92% to $81.3 million along with pretax income. Net interest expense nearly tripled to $39.3 million from $13.6 million, mainly because capitalized interest fell $21.4 million (72%) after aluminum construction was substantially completed. The effective tax rate was 22.8%, compared with 21.4%.

**Cash, balance sheet and capital returns.** Operating cash flow was $846 million in the quarter and $1.42 billion for nine months, compared with $1.18 billion a year earlier. Working capital rose $1.1 billion during the nine months to $5.5 billion. Receivables rose $763.8 million on higher prices and volumes and inventories rose $510.5 million with the aluminum ramp, partly offset by $373.9 million more payables. Nine-month capital spending fell to $411.4 million from $759.5 million, and the second satellite aluminum slab center is still under construction. Total debt was unchanged at $4.2 billion. Debt-to-capitalization improved to 30% from 32%, and the revolver's interest-coverage ratio was 18.09x. Liquidity was $2.37 billion: $928.6 million of cash, $255.2 million of other investments and $1.19 billion of revolver availability. The quarterly dividend is $0.53, raised 6% in the first quarter of 2026. Repurchases were $275.6 million in the quarter and $590.9 million year to date, leaving $215.9 million under the February 2025 authorization.

**Leadership succession, announced during the quarter.** Co-founder Mark D. Millett will hand the CEO role to CFO Theresa E. Wagler on January 1, 2027, and become Executive Chairman. Treasurer Richard A. Poinsatte will become CFO. On September 1, 2026, the operating structure was reorganized under four executive vice presidents: a Chief Technology Officer, plus chief operating officers for aluminum and metals recycling, construction products (long products and steel fabrication), and flat-rolled steel (8-K accession 0001104659-26-090129).

**Outlook.** Management expects aluminum volumes and profitability to improve in the fourth quarter of 2026 and through 2027 as startup costs subside, yields and utilization improve, and scrap content increases. Looking to 2027 and beyond, it expects steel and aluminum demand to benefit from infrastructure, manufacturing, energy and data-center investment, a supportive U.S. trade environment and less unfairly traded import competition. It acknowledges that additional domestic steel and aluminum capacity may enter the market.

## Subsequent events

*From the Q3 2026 Form 10-Q, accession 0001104659-26-118461, and Form 8-K reports filed after September 30, 2026.*

The third-quarter 10-Q has no subsequent-events note. It discloses no acquisitions, divestitures, borrowings or debt issuances after September 30, 2026. Its legal-proceedings disclosure reports no matter expected to be material. Developments after the quarter-end disclosed in the company's current reports:

- **Further leadership changes.** Additional senior promotions took effect October 1, 2026, and flat-rolled and long-product steel production, along with treasury, come under new leaders on November 1, 2026. These moves extend the reorganization announced in August (8-K accession 0001104659-26-116898).
- **Aluminum mill performance in October.** In its October 19 results release, management said performance at the flat-rolled mill had been excellent in October after the coolant change (8-K accession 0001104659-26-117217).
- **Pending.** The CEO and CFO successions take effect January 1, 2027.