# EDGAR Filing Document

**Accession Number:** 0001022671
**File Stem:** 0001104659-23-039048
**Filing Date:** 2023-3
**Character Count:** 133915
**Document Hash:** 2c224f7ca75d0636b96dac66822e85d6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-039048.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001104659-23-039048

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**EFFECTIVENESS DATE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** STEEL DYNAMICS INC
- **CENTRAL INDEX KEY:** 0001022671
- **STANDARD INDUSTRIAL CLASSIFICATION:** STEEL WORKS, BLAST FURNACES  ROLLING MILLS (COKE OVENS) [3312]
- **IRS NUMBER:** 351929476
- **STATE OF INCORPORATION:** IN
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-21719
- **FILM NUMBER:** 23779645

**BUSINESS ADDRESS:**
- **STREET 1:** 7575 W JEFFERSON BLVD
- **CITY:** FORT WAYNE
- **STATE:** IN
- **ZIP:** 46804
- **BUSINESS PHONE:** 260 459 3553

**MAIL ADDRESS:**
- **STREET 1:** 7575 W JEFFERSON BLVD
- **CITY:** FORT WAYNE
- **STATE:** IN
- **ZIP:** 46804

### Attached PDF Documents

**Attachment 1:** `tm231847d5_ars.pdf`

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be required to clean up contamination discovered at our sites including contamination that may have been caused by former owners or operators of the sites, to conduct additional cleanup at sites that have already had some cleanup performed, to address emerging and newly-regulated contaminants such as per- and polyfluoroalkyl substances (PFAS) and 1,4-dioxane, and/or to perform cleanup with regard to sites formerly used in connection with our operations.

In addition, we may be required to pay for, or to pay a portion of, the costs of cleanup at sites to which we sent materials for disposal or recycling, notwithstanding that the original disposal or recycling activity may have complied with all regulatory requirements then in effect. Under certain laws, a party can be held jointly and severally liable for all of the cleanup costs associated with a disposal site. In practice, a liable party often splits the costs of cleanup with other potentially responsible parties. We have received notices from the United States EPA, state agencies and third parties that we have been identified as potentially responsible for the costs of investigating and cleaning up a number of disposal sites. In most cases, many other parties are also named as potentially responsible parties and also contribute to payment of those costs.

Because cleanup liability can in some cases be imposed retroactively on activities that occurred many years ago, and because federal and state agencies are still discovering sites that pose a threat to public health or the environment, we can provide no assurance that we will not become liable for significant costs associated with investigation and remediation of cleanup sites.

### **Operational and Commercial Risks Related to our Business**

*We may face significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials, which may adversely affect our business, financial condition, results of operations and cash flows.*

The global markets in which steel companies and scrap processors conduct business are highly competitive and became even more so due to consolidations in the steel and scrap industries. Additionally, in many applications, steel competes with other materials, such as aluminum, cement, composites, plastics, carbon fiber, glass and wood. Increased use of alternative materials for any reason, including as a response to regulations or customer demands, could decrease demand for steel or force other steel producers into new products or markets that compete more directly with us, and combined with increased competition could cause us to lose market share, increase expenditures or reduce pricing, any one of which may adversely affect our business, financial condition, results of operations and cash flows.

Additionally, during 2022 we announced our planned project to construct and operate a recycled aluminum flat roll mill with an anticipated annual production capacity of 650,000 tonnes of finished products to be located in Columbus, Mississippi, with two supporting satellite recycling aluminum slab centers. Although we anticipate being able to effectively compete in the aluminum industry, along with the other risks described herein, we may face unexpected and enhanced competition, which may adversely affect the expected contributions of our aluminum operations and our resulting business, financial condition, results of operations and cash flows.

*Availability of an adequate source of supply of scrap is required for our metals recycling operations.*

We procure our scrap inventory from numerous sources. These suppliers generally are not bound by long-term contracts and generally have no obligation to sell recyclable metal to us. In periods of low industry scrap prices, scrap suppliers may elect to hold recyclable metal to wait for higher prices or intentionally slow their metal collection activities. If a substantial number of scrap suppliers cease selling recyclable metal to us, we may be unable to recycle metal at desired levels which may adversely affect our results of operations and financial condition. In addition, a slowdown of industrial production in the United States reduces the supply of industrial grades of metal to the metals recycling industry, resulting in our having less recyclable metal available to process and sell. Further, additional EAF steel mill construction could increase the demand for scrap, potentially resulting in higher scrap prices or periods of decreased scrap supply. Any inability to secure scrap for our EAF steel mills could adversely affect our business, results of operations, financial condition and cash flows.

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2022 Annual Report

*We are subject to cybersecurity threats and may face risks to the security of our sensitive data and information technology which may adversely affect our business, results of operations, financial condition and cash flows.*

Increased global cybersecurity and information technology security requirements, vulnerabilities and threats and a rise in sophisticated and targeted cybercrime, all of which may be heightened during times of war or hostilities, pose a risk to the security and functionality of our systems and information networks, and to the confidentiality, availability and integrity of sensitive data, including intellectual property, proprietary information, financial information, customer and supplier information, and personally identifiable information. Additionally, such cybersecurity vulnerabilities or attacks could result in an interruption of the functionality of our automated and electronically controlled manufacturing operating systems, which, if compromised, could cease, threaten, delay or slow down our ability to melt, roll or otherwise process steel or any of our other products for the duration of such interruption. Our customers and suppliers may also store certain of our sensitive information on their information technology systems, which if breached or attacked, could likewise expose our sensitive information. Similarly, information system vendors and software suppliers may experience a cybersecurity or information technology breach that exposes our systems or sensitive data. Any of these cybersecurity and information technology breaches or disruptions may result in reputational harm and may adversely affect our business, results of operations, financial condition and cash flows.

Although we believe we have adopted procedures, training programs, and controls to adequately protect our sensitive data, networks and information and operating technology and systems, there can be no assurance that a system or network failure, or cybersecurity breach or attack, will be prevented, whether due to attacks by cyber criminals or due to employee, contractor or other error or malfeasance. This could lead to system interruption, production delays or downtimes and operational disruptions, and the disclosure, modification or destruction of sensitive data, which may adversely affect our reputation, customer and supplier relationships, financial results and results of operations, and could result in litigation or regulatory investigations, actions, fines or penalties, as well as increased cybersecurity monitoring and protection costs, including the cost or availability of insurance. Additionally, as cybersecurity threats continue to evolve and become more sophisticated, we may need to invest additional time, resources and finances to protect the security of our sensitive data, systems and information networks. We maintain an information security risk insurance policy to mitigate the impact of cybersecurity threats. We did not experience any material information security breaches or third-party information security breaches during 2022, 2021, or 2020 and we did not incur any net expenses from information security breach penalties and settlements during 2022, 2021, or 2020.

*We may face risks associated with the implementation of our growth strategy.*

Our growth strategy subjects us to various risks. As part of our growth strategy, we may expand existing facilities, enter into new business lines, products or process initiatives, acquire or build additional plants, acquire other businesses and assets, enter into joint ventures, or form strategic alliances that we believe will complement our existing business. These expansions and transactions, including our announced planned recycled aluminum flat roll mill with an anticipated annual production capacity of 650,000 tonnes of finished products to be located in Columbus, Mississippi, may involve some or all of the following risks:

- the risk of entering business lines or product, domestic, or foreign markets, in which we have little experience, including the aluminum industry;
- the risk of a newly constructed facility being completed over budget or not on time, including due to equipment delays or labor shortages;
- the risk of not being able to adequately obtain sufficient labor to efficiently build or staff a new facility;
- the risk of expected markets, products, customers and demand for products produced by a new facility being lower than expected;
- the risk of new product development, technology development or customer acquisition and penetration being more costly or difficult than expected;

29

- • the difficulty of competing for acquisitions and other growth opportunities with companies having materially greater financial resources than us;
- • the inability to realize anticipated synergies or other expected benefits;
- • the difficulty of integrating new or acquired operations and personnel into our existing operations;
- • the potential disruption of ongoing operations;
- • the diversion of financial resources or management attention to new operations or acquired businesses;
- • the loss of key employees, customers or suppliers of acquired businesses;
- • the potential exposure to unknown liabilities;
- • the inability of management to maintain uniform standards, controls, procedures and policies;
- • the difficulty of managing the growth of a larger company;
- • the risk of becoming involved in labor, commercial, or regulatory disputes or litigation related to the new operations or acquired businesses;
- • the risk of becoming more highly leveraged;
- • the risk of contractual or operational liability to other venture participants or to third parties as a result of our participation;
- • the inability to work efficiently with joint venture or strategic alliance partners; and
- • the difficulties of terminating joint ventures or strategic alliances.

As our Sinton Flat Roll Division ramps up, we have faced and could continue to face start-up inefficiencies. Delays in achieving full operational capacity may adversely affect our prospects, business, financial condition, results of operations and cash flows.

These expansions or transactions might be required for us to remain competitive, but we may not be able to complete any such expansions or transactions on favorable terms or obtain financing, if necessary. Future expansions and transactions may not improve our competitive position and business prospects as anticipated, and if they do not, our business, financial condition, results of operations and cash flows may be adversely affected.

*We are subject to litigation and legal compliance risks which may adversely affect our financial condition, results of operations and liquidity.*

We are involved from time to time in various litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which at the present time are expected to have a material impact on our financial conditions, results of operations or liquidity. For additional information regarding legal proceedings please refer to Item 3. *Legal Proceedings*.

In addition to risks associated with our environmental and other regulatory compliance, our international operations are subject to complex foreign and United States laws and regulations, including the Foreign Corrupt Practices Act and other anti-bribery laws, regulations related to import-export controls, the Office of Foreign Assets Control, and other laws and regulations, each of which may increase our cost of doing business and expose us to increased risk.

*Unexpected equipment downtime or shutdowns may adversely affect our business, financial condition, results of operations and cash flows.*

Interruptions in our production capabilities may adversely affect our production costs, products available for sale and earnings during the affected period. In addition to equipment failures, our facilities are subject to the risk of catastrophic loss due to unanticipated events such as fires, explosions or violent weather conditions. Our manufacturing processes are dependent upon critical pieces of steelmaking equipment, such as our EAFs,

30

2022 Annual Report

continuous casters and rolling equipment, some of which are controlled by our information technology systems, as well as electrical equipment, such as transformers. This equipment may, on occasion, be out of service as a result of unanticipated failures or other events, including equipment failure, power surges, cybersecurity breaches or attacks or system failures. Further, we have experienced and may continue to experience start-up inefficiencies at our Sinton Flat Roll Division. We have experienced and in the future may experience plant shutdowns or periods of reduced production as a result of equipment failures or other events. Supply chain disruptions and labor shortages have and may continue to exacerbate the effects of equipment failures. These disruptions may adversely affect our business, financial condition, results of operations and cash flows.

# ***Governmental agencies may refuse to grant or renew some of our licenses and permits required to operate our businesses.***

Some of our operations must receive licenses and air, water and other permits and approvals from federal, state and local governments to conduct certain of our operations or to build, expand or acquire new facilities. Governmental agencies, non-governmental organizations, and members of the public sometimes resist the establishment of certain types of facilities in their communities. There can be no assurance that future approvals, licenses and permits will be granted or that we will be able to maintain and renew the approvals, licenses and permits we currently hold. Failure to do so may adversely affect our business, financial condition, results of operations and cash flows.

# ***Our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility.***

Restrictions and covenants in our existing debt agreements, including our senior unsecured credit facility, and any future financing agreements, may impair our ability to finance future operations or capital needs or to engage in other business activities. A breach of any of the restrictions or covenants could cause a default under our senior unsecured credit facility, our senior notes, or our other debt. A significant portion of our indebtedness may then become immediately due and payable.

Under our senior unsecured credit facility, we are required to maintain certain financial covenants. Our ability to meet such covenants or other restrictions can be affected by events beyond our control. If a default were to occur, the lenders could elect to declare all amounts then outstanding to be immediately due and payable and terminate all commitments to extend further credit.

# ***Impairment charges may adversely affect our results of operations.***

Occasionally, assumptions that we have made regarding products or businesses we have acquired or sought to develop, about the sustainability of markets we sought to exploit, or about industry conditions that underlie our decision making when we elected to capitalize a venture turn out differently than anticipated. In such instances, the fair value of such assets may fall below their carrying value recorded on our balance sheet.

Accordingly, we periodically test goodwill, long-lived tangible and intangible assets and right of use assets to determine whether their estimated fair value is in fact less than their value recorded on our balance sheet. If we determine that the fair value of any of these assets, from whatever cause, is less than the value recorded on our balance sheet, we are required to incur non-cash asset impairment charges that adversely affect our results of operations. There can be no assurances that market dynamics or other factors may not result in future impairment charges.

# **ITEM 1B. UNRESOLVED STAFF COMMENTS**

None.

31

## ITEM 2. PROPERTIES

The following table describes our significant properties as of December 31, 2022. These properties are owned by us, and not subject to any significant encumbrances, or are leased by us. We believe these properties are suitable and adequate for our current operations and are appropriately utilized. For additional information regarding our significant facilities please refer to Item 1. *Business*.

| Operations | Location | Description | Site Acreage Owned | Site Acreage Leased |
| --- | --- | --- | --- | --- |
| Steel Operations Segment * |  |  |  |  |
| Butler Flat Roll Division: |  |  |  |  |
| Butler Operations . . . . . | Butler, IN | Flat Roll Steel Mill and Coating Facility | 993 | - |
| Jeffersonville Operations . . . | Jeffersonville, IN | Flat Roll Steel Coating Facility | 27 | 10 |
| Iron Dynamics . . . . . | Butler, IN | Liquid Ironmaking Facility | 25 | - |
| Columbus Flat Roll Division . . | Columbus, MS | Flat Roll Steel Mill and Coating Facility | 1,387 | - |
| Sinton Flat Roll Division . . . | Sinton, TX | Flat Roll Steel Mill and Coating Facility | 2,487 | - |
| The Techs . . . . . | Pittsburgh, PA | Flat Roll Steel Coating Facilities | 16 | 2 |
| Heartland Flat Roll Division . . | Terre Haute, IN | Flat Roll Steel Cold-Rolling and Coating Facility | 246 | - |
| United Steel Supply . . . . . | IN, MS, OR, and TX | Distributor of Painted Galvalume® Flat Roll Steel | 40 | 3 |
| Structural and Rail Division . . | Columbia City, IN | Structural and Rail Steel Mill | 814 | - |
| Engineered Bar Products |  |  |  |  |
| Division . . . . . | Pittsboro, IN | Engineered Bar Steel Mill and Finishing Facility | 312 | - |
| Vulcan Threaded Products . . . | Pelham, AL | Bar Steel Processing Facility | 31 | - |
| Roanoke Bar Division . . . . . | Roanoke, VA | Merchant Bar Steel Mill | 302 | - |
| Steel of West Virginia . . . . . | WV, KY, and TN | Specialty Shapes Steel Mill and Finishing and Coating Facilities | 139 | 6 |
| Metals Recycling Operations Segment |  |  |  |  |
| OmniSource: |  |  |  |  |
| Alabama . . . . . | Birmingham, AL | Ferrous Scrap Processing | 59 | - |
| Indiana . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 456 | 26 |
| Michigan . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 186 | - |
| Mississippi . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 54 | 13 |
| North Carolina . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 346 | - |
| Ohio . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 212 | 21 |
| Oklahoma . . . . . | Sand Springs, OK | Ferrous Scrap Processing | - | 10 |
| Tennessee . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 65 | - |
| Texas . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 75 | - |
| Virginia . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | 121 | - |
| Mexico . . . . . | Multiple Cities | Ferrous and Nonferrous Scrap Processing | - | 70 |
| Steel Fabrication Operations Segment |  |  |  |  |
| New Millennium Building |  |  |  |  |
| Systems: |  |  |  |  |
| Joist and Deck Operations . . | Butler, IN | Steel Joist and Deck Fabrication Facility | 156 | - |
| Joist Operations . . . . . | Fallon, NV | Steel Joist Fabrication Facility | 53 | - |
| Joist and Deck Operations . . | Hope, AR | Steel Joist and Deck Fabrication Facility | 245 | 7 |
| Joist Operations . . . . . | Juarez, MX | Steel Joist Fabrication Facility | 17 | - |
| Joist and Deck Operations . . | Lake City, FL | Steel Joist and Deck Fabrication Facility | 75 | - |
| Deck Operations . . . . . | Memphis, TN | Deck Fabrication Facility | 19 | - |
| Joist and Deck Operations . . | Salem, VA | Steel Joist and Deck Fabrication Facility | 113 | - |

The company's corporate headquarters is in Fort Wayne, Indiana on 20 owned acres. Our copper rod and wire facility, a controlled subsidiary, is in New Haven, Indiana on 35 owned acres.

* Our 2022 steel mill production utilization was 92% of our estimated annual steelmaking capability, exclusive of Sinton which started up steel operations in 2022.

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2022 Annual Report

### **ITEM 3. LEGAL PROCEEDINGS**

We are involved in various litigation matters, including administrative proceedings, regulatory proceedings, governmental investigations, environmental matters, and commercial and construction contract disputes, none of which are currently expected to have a material impact on our financial condition, results of operations, or 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, exclusive of interest and costs, which did not exceed $1 million in aggregate, as of December 31, 2022.

### **ITEM 4. MINE SAFETY DISCLOSURES**

Information required to be furnished pursuant to Item 4 concerning mine safety disclosure matters 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 annual report.

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# PART II

# ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is set forth in Part III, Item 12 of this Form 10-K. Our common stock trades on The NASDAQ Global Select Stock Market under the symbol STLD.

As of February 21, 2023, we had 171,577,705 shares of common stock outstanding and held beneficially by approximately 23,700 stockholders based on our security position listing. Because many of the shares were held by depositories, brokers and other nominees, the number of registered holders (approximately 1,320) is not representative of the number of beneficial holders.

# 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 December 31, 2022.

| 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) (1) |
| --- | --- | --- | --- | --- |
| Quarter ended December 31, 2022 |  |  |  |  |
| October 1-31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,493,698 | $83.68 | 1,493,698 | $120,501 |
| November 1-30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,419,306 | 99.35 | 1,419,306 | 1,479,496 |
| December 1-31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,402,142 | 104.85 | 1,402,142 | 1,332,506 |
|  | 4,315,146 |  | 4,315,146 |  |

$^{(1)}$ In February 2022, our board of directors authorized a share repurchase program of up to $1.25 billion of our common stock. This program was exhausted in November 2022. In November 2022, our board of directors authorized an additional share repurchase program of up to $1.5 billion of our common stock.

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2022 Annual Report

### Total Return Graph

On December 22, 2022, Steel Dynamics, Inc. was added to the S&P 500. As such, we have added the S&P 500 index to the comparison of 5 year cumulative total returns in the graph below.

#### COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Steel Dynamics, Inc., the NASDAQ Composite Index
the S&P Steel Index, and the S&P 500 Index

![img-0.jpeg](img-0.jpeg)

*$100 invested on 12/31/17 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

Copyright© 2023 Standard & Poor's, a division of S&P Global. All rights reserved.

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# **ITEM 6. [RESERVED]**

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2022 Annual Report

## ITEM 7. 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 domestic or global economies, conditions in steel, aluminum, and recycled metals market places, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as 'anticipate', 'intend', 'believe', 'estimate', 'plan', 'seek', 'project', or 'expect', or by the words 'may', 'will', or 'should', are intended to be made as '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) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues, such as COVID-19 or its variants; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, or other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations or regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance; (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment charges.

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 the sections titled *Special Note Regarding Forward-Looking Statements* at the beginning of Part I of this Report and Item 1A. *Risk Factors*, as well as in other subsequent reports we 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.'

### 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.

37

**Selling, General and Administrative Expenses.** Selling, general and administrative expenses consist of all costs associated with our sales, finance and accounting, and administrative departments, including, among other items, labor and related benefits, and professional services.

Companywide profit sharing and amortization of intangible assets are each separately presented in the statement of 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

**Other (Income) Expense, 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 investments in unconsolidated affiliates accounted for under the equity method. Other expense consists of any non-operating costs, such as certain acquisition and financing expenses.

## 2022 Overview

During 2022, domestic steel demand continued to be strong throughout the year, supported most significantly by the construction, automotive, industrial, and energy sectors. Customer steel inventories remained below historical averages for most of the year, allowing for steady order patterns. This strong market environment allowed annual average steel selling prices to remain at historically high levels, with steady steel operations segment metal spreads compared to 2021, partially offset by additional costs of $439 million during start-up at Sinton. Our metals recycling operations experienced a challenging pricing environment in 2022, with ferrous scrap prices generally falling throughout the year. Metal spread compression, coupled with lower volumes, resulted in significantly lower operating income. Our steel fabrication operations segment achieved significantly higher record operating income and record shipments during 2022, on continued strong non-residential construction demand, record average selling prices and stable average steel product pricing. The symbiotic relationship among our three operating segments resulted in record companywide financial and operational performance during 2022.

We achieved record 2022 operational and financial results.

- Record net sales of $22.3 billion
- Record operating income of $5.1 billion and net income of $3.9 billion
- Record cash flow from operations of $4.5 billion
- Record steel and steel fabrication shipments of 12.2 million and 856,000 tons, respectively
- Record steel fabrication operating income of $2.4 billion
- Share repurchases of $1.8 billion of our common stock, representing 12% of our outstanding shares

Consolidated operating income for 2022 increased $790.7 million, or 18%, to $5.1 billion, compared to $4.3 billion in 2021. Net income attributable to Steel Dynamics, Inc. for 2022 increased $648.6 million, or 20%, to $3.9 billion, compared to 2021. Diluted earnings per share attributable to Steel Dynamics, Inc. was $20.92 for 2022, compared to $15.56 for 2021.

Refer to Item 7. *Management's Discussion and Analysis of Financial Condition and Results of Operations* in Part II of our Annual Report on Form 10-K for the year ended December 31, 2021, for additional information regarding results of operations for the year ended December 31, 2021, as compared to the year ended December 31, 2020, and segment operating results for 2021 as compared to 2020.

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2022 Annual Report

# Segment Operating Results (dollars in thousands)

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | % Change | 2021 |
| Net sales |  |  |  |
| Steel Operations | $15,100,917 | 8% | $14,023,133 |
| Metals Recycling Operations | 4,395,636 | (4)% | 4,590,121 |
| Steel Fabrication Operations | 4,257,207 | 141% | 1,764,710 |
| Other | 1,288,984 | 2% | 1,266,971 |
|  | 25,042,744 |  | 21,644,935 |
| Intra-company | (2,781,970) |  | (3,236,085) |
|  | $22,260,774 | 21% | $18,408,850 |
| Operating income (loss) |  |  |  |
| Steel Operations | $3,095,348 | (29)% | $4,360,488 |
| Metals Recycling Operations | 117,266 | (36)% | 181,986 |
| Steel Fabrication Operations | 2,424,655 | 564% | 365,250 |
| Other | (599,828) | (9)% | (551,725) |
|  | 5,037,441 |  | 4,355,999 |
| Intra-company | 54,381 |  | (54,894) |
|  | $5,091,822 | 18% | $4,301,105 |

39

## Steel Operations Segment

Steel operations consist of our electric arc furnace steel mills, producing steel from ferrous scrap and scrap substitutes, utilizing continuous casting, automated rolling mills, numerous value-added downstream steel coating and processing operations, and distribution operations. Our steel operations sell directly to end-users, steel fabricators, and service centers. These products are used in numerous industry sectors, including the construction, automotive, manufacturing, transportation, heavy and agriculture equipment, and pipe and tube (including OCTG) markets. Steel operations accounted for 65% and 72% of our consolidated net sales during 2022 and 2021, respectively. See Item 1. *Business* for further information on Steel Operations segment operations.

### Steel Operations Shipments (tons):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | % Change | 2021 |
| Total shipments | 12,158,168 | 8% | 11,217,640 |
| Intra-segment shipments | (1,353,824) |  | (1,106,525) |
| Steel Operations Segment shipments | 10,804,344 | 7% | 10,111,115 |
| External shipments | 10,410,469 | 9% | 9,559,617 |

### Steel Operations Segment Shipments and Average Selling Price

![img-0.jpeg](img-0.jpeg)

### Segment Results 2022 vs. 2021

During 2022, domestic steel demand remained strong from the construction, automotive, industrial, and energy sectors, resulting in record shipments of 10.8 million tons in 2022, including 828,000 tons from Sinton. Average product pricing for our steel operations, though higher year over year compared to 2021, experienced steady declines throughout 2022 for sheet steel products, which had risen to record levels at the end of 2021. Conversely, long products realized higher selling prices through the majority of 2022. Steel operations segment shipments increased 7% in 2022 compared to 2021, as Sinton started up production throughout the year, with average selling prices remaining steady. Net sales for the steel operations segment were 8% higher in 2022 when compared to 2021, due to stable average steel selling prices and record volumes.

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2022 Annual Report

Metallic raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost, generally comprising approximately 55% to 65% of our steel mill operations' manufacturing costs. Our metallic raw material cost consumed in our steel mills increased $28 per net ton, or 6%, in 2022 compared to 2021.

As a result of scrap costs increasing more than average selling prices, specifically for sheet steel products, 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) decreased slightly in 2022 compared to 2021. Due to metal spread compression and additional costs during start-up at Sinton, operating income for the steel operations decreased 29%, to $3.1 billion, in 2022 compared to 2021.

### Metals Recycling Operations Segment

Metals recycling operations includes both ferrous and nonferrous scrap metal processing, transportation, marketing, brokerage, and scrap management services. In October 2022, we completed our acquisition of ROCA ACERO, S.A. de C.V. (ROCA), whose post-acquisition operations are included in 2022 results. Our steel mills utilize a large portion (approximately 66% in 2022 and 2021) of the ferrous scrap sold by our metals recycling operations as raw material in our steelmaking operations, and the remainder is sold to other consumers, such as other steel manufacturers and foundries. Metals recycling operations accounted for 10% and 12% of our consolidated net sales during 2022 and 2021, respectively.

#### Metals Recycling Operations Shipments:

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | % Change | 2021 |
| Ferrous metal (gross tons) |  |  |  |
| Total | 5,301,774 | (3)% | 5,442,478 |
| Inter-company | (3,475,662) | 3% | (3,574,668) |
| External shipments | 1,826,112 | (2)% | 1,867,810 |
| Nonferrous metal (thousands of pounds) |  |  |  |
| Total | 1,053,852 | (4)% | 1,093,472 |
| Inter-company | (138,407) | (2)% | (135,914) |
| External shipments | 915,445 | (4)% | 957,558 |

41

## Segment Results 2022 vs. 2021

Our metals recycling operations faced a challenging price environment during 2022. Domestic steel mill utilization rates decreased to approximately 78% in 2022 from 81% in the prior year, impacting demand for ferrous scrap. Net sales for our metals recycling operations decreased 4% in 2022 as compared to 2021, driven by lower shipments and average selling values. Ferrous scrap average selling prices decreased 4% during 2022 compared to 2021, falling nine out of twelve months during the year, while nonferrous average selling prices increased 3%. Ferrous metal spread (which we define as the difference between average selling prices and the cost of purchased scrap) decreased 2%, while nonferrous metal spread also decreased 2% in 2022 compared to 2021. Metals recycling operations operating income in 2022 of $117.3 million decreased $64.7 million, or 36%, from the record in 2021, due to decreased ferrous and nonferrous shipments and metal spread.

### Steel Fabrication Operations Segment

Steel fabrication operations include seven 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, girders, trusses, and steel deck used within the non-residential construction industry. Steel fabrication operations accounted for 19% and 10% of our consolidated net sales during 2022 and 2021, respectively.

### Steel Fabrication Operations Segment

![img-1.jpeg](img-1.jpeg)

## Segment Results 2022 vs. 2021

Our steel fabrication operations benefited in 2022 from a steady non-residential construction market, as order activity remained strong throughout the year, resulting in record shipments and significantly higher selling prices. Our order backlog for steel fabrication extends through the first half of 2023. Record net sales for the segment of $4.3 billion increased 141% during 2022, compared to 2021, as shipments increased 8%, and average selling prices increased 123%, or $2,740 per ton.

The purchase of various steel products is the largest single cost of production for our steel fabrication operations, historically representing approximately two-thirds of the total cost of manufacturing, increasing to approximately three-fourths during 2022 and 2021 consistent with the historically higher steel costs. The average cost of steel consumed increased 24% in 2022, as compared to 2021. Selling prices per ton increased

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2022 Annual Report

more than steel input costs per ton, resulting in metal spread (which we define as the difference between average selling prices and the cost of purchased steel) increasing 258% in 2022 compared to 2021. This expanded metal spread, coupled with record shipments, resulted in record operating income of $2.4 billion in 2022 compared to $365.3 million in 2021.

## Other Operations

### Consolidated Results 2022 vs. 2021

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses decreased $98.4 million, or 15%, to $545.6 million during 2022 compared to 2021, representing 2.5% and 3.5% of net sales, respectively. This decrease is due primarily to a $27.7 million decrease in equity-based compensation expense, as well as decreased costs of $64.5 million related to Sinton that were included in selling, general and administrative expenses prior to the completion of the mill’s construction and start-up in early 2022.

Companywide profit sharing expense was $452.6 million in 2022 (including $22.5 million of additional companywide special compensation awarded to all non-executive eligible team members in recognition of the company’s exceptional annual performance), an increase of $64.4 million from the $388.1 million earned during 2021, consistent with increased pretax income. Refer to Note 11. *Retirement Plans* to the consolidated financial statements elsewhere in this report for further information.

*Interest Expense, net of Capitalized Interest.* During 2022, interest expense of $91.5 million increased 60% from $57.2 million during 2021. The higher interest expense in 2022 compared to 2021 was due to higher capitalized interest in 2021 ($50.5 million, compared to $15.8 million in 2022) related to the construction of Sinton.

*Other (Income) Expense, net.* Net other income was $20.8 million in 2022, compared to net other expense of $34.8 million in 2021. The net other income in 2022 compared to net other expense in 2021 was due primarily to an increase in interest income of $28.0 million associated with our increased invested cash and short-term investment balances, as well as an increase in net earnings from equity investments of $18.6 million.

*Income Tax Expense.* During 2022, income tax expense of $1.1 billion, at an effective income tax rate of 22.7%, increased 19% from the $962.3 million of income tax expense, at an effective income tax rate of 22.9%, during 2021, consistent with increased pretax earnings. Refer to Note 4. *Income Taxes* to the consolidated financial statements elsewhere in this report for additional information.

Included in the balance of unrecognized tax benefits at December 31, 2022, are potential benefits of $25.1 million that, if recognized, would affect the effective tax rate. We recognize interest and penalties related to our tax contingencies on a net-of-tax basis in income tax expense. During the year ended December 31, 2022, we recognized expense from the increase of interest expense and penalties of $480,000, net of tax. In addition to the unrecognized tax benefits noted above, we had $1.2 million accrued for the payment of interest and penalties at December 31, 2022.

We file income tax returns in the United States federal jurisdiction as well as income tax returns in various state jurisdictions. The tax years 2019 through 2021 remain open to examination by the Internal Revenue Service and various state and local jurisdictions. At this time, we do not believe there will be any significant examination adjustments that would result in a material change to our financial position, results of operations or cash flows. It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months in an amount ranging from zero to $3.3 million, as a result of the expiration of the statute of limitations and other federal and state income tax audits.

43

## 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 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 expansion projects, principal and interest payments related to our outstanding indebtedness (no significant principal payments until 2024), dividends to our shareholders, and potential stock repurchases and acquisitions or investments. We have met and intend to continue to meet these liquidity requirements primarily with available cash and cash provided by operations, and long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at December 31, 2022, is as follows (in thousands):

| Cash and equivalents | $1,628,417 |
| --- | --- |
| Short-term investments | 628,215 |
| Unsecured revolver availability | 1,190,899 |
| Total liquidity | $3,447,531 |

Our total outstanding debt of \$3.1 billion at December 31, 2022 is consistent with December 31, 2021. 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 27.7% and 32.9% at December 31, 2022, and 2021, respectively, decreasing due to the growth in stockholders' equity from undistributed 2022 earnings.

Our unsecured credit agreement has a senior unsecured revolving credit facility (Facility), which provides a \$1.2 billion unsecured Revolver, and matures in December 2024. Subject to certain conditions, we have the opportunity to increase the Facility size by \$500.0 million. The unsecured 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 to incur indebtedness and permit liens on certain assets. 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 December 31, 2022, we had \$1.2 billion of availability on the Revolver, \$9.1 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 debt to capitalization ratio of not more than 0.60:1.00 must be maintained. At December 31, 2022, our interest coverage ratio and debt to capitalization ratio were 54.42:1.00 and 0.27:1.00, respectively. We were, therefore, in compliance with these covenants at December 31, 2022, and we anticipate we will continue to be in compliance during the next twelve months.

*Working Capital.* We generated cash flow from operations of \$4.5 billion in 2022 compared to \$2.2 billion in 2021. Operational working capital (representing amounts invested in trade receivables and inventories, less current liabilities other than income taxes payable and debt) decreased \$112.5 million, or 3%, to \$3.2 billion at December 31, 2022, due primarily to decreased inventory values, consistent with decreased steel and scrap selling prices as steel fabrication customer accounts increased with higher selling prices in the fourth quarter of 2022 compared to the same period in 2021.

*Capital Investments.* During 2022, we invested \$908.9 million in property, plant and equipment, primarily within our steel operations segment, compared with \$1.0 billion invested during 2021. Spending at Sinton decreased in 2022 versus 2021 as we completed the construction phase in early 2022. We enter 2023 with ample liquidity of \$3.4 billion and anticipated operating cash flow generation to provide for our planned 2023 capital requirements, including the four new flat roll coating lines at Sinton and Heartland. We

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2022 Annual Report

announced in July our plans to invest $2.5 billion in a new state-of-the-art low-carbon aluminum flat roll mill with two supporting satellite recycled aluminum slab centers, which is planned to be funded by available cash and cash flow from operations. Expenditures began in the third quarter of 2022 and are expected to continue through 2025.

**Cash Dividends.** As a reflection of continued confidence in our current and future cash flow generation capability and financial position, we increased our quarterly cash dividend by 31% to $0.34 per share in the first quarter of 2022 (from $0.26 per share in 2021), resulting in declared cash dividends of $245.3 million during 2022, compared to $210.9 million during 2021. We paid cash dividends of $237.2 million and $213.0 million during 2022 and 2021, 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.

**Other.** Our board of directors has authorized share repurchase programs during prior years, the most recent of which occurred in November 2022 for a program of up to $1.5 billion of the company’s common stock. Under the share repurchase programs, purchases 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 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. The share repurchase programs do not have an expiration date. There were $1.8 billion and $1.1 billion of share repurchases during 2022 and 2021, respectively. As of December 31, 2022, we had $1.3 billion remaining available to purchase under the November 2022 share repurchase program. See Part II, Item 5. *Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities* 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, and business 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 borrowings under our Revolver, if necessary, will be adequate for the next twelve months for making required payments of principal and interest on our indebtedness, funding working capital requirements, and funding anticipated capital expenditures.

### Contractual Obligations and Other Long-Term Liabilities

We have the following minimum commitments under contractual obligations, including purchase obligations, as defined by the Securities and Exchange Commission. A “purchase obligation” is defined as an agreement to purchase goods or services that is enforceable and legally binding and that specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

**Long-term debt and estimated interest.** Refer to Note 3. *Long-Term Debt* to the consolidated financial statements elsewhere in this report for our long-term debt maturities. Estimated interest payments on our senior unsecured notes were determined based on their outstanding balances through maturity at their contractual interest rates, as detailed in Note 3. Estimated interest payments also include a 0.175% commitment fee on our available Revolver, and an average interest rate of 5.5% on our other debt of $63.7 million. Our estimated interest payments are $102.2 million, $98.3 million, $80.3 million, $75.0 million, $54.6 million, for the years 2023 through 2027, respectively, and $393.2 million thereafter.

**Purchase obligations.** We have commitments for the purchase of commodities such as electricity, water, natural gas and its transportation services, fuel, air products, zinc, and electrodes. Refer to Note 9. *Commitments and Contingencies* to the consolidated financial statements elsewhere in this report for this information.

45

**Construction commitments.** We have firm contracts with various vendors for the completion of certain construction projects at our various divisions at December 31, 2022. Refer to Note 9. *Commitments and Contingencies* to the consolidated financial statements elsewhere in this report for this information.

**Lease commitments.** We have entered into operating leases relating principally to transportation and other equipment, and some real estate. Refer to Note 12. *Leases* to the consolidated financial statements elsewhere in this report for this information.

**Unrecognized tax benefits.** We expect to make cash outlays in the future related to our unrecognized tax benefits; however, due to the uncertainty of the timing, we are unable to make reasonably reliable estimates regarding the period of cash settlement with the respective taxing authorities. Refer to Note 4. *Income Taxes* to the consolidated financial statements elsewhere in this report for this information.

## Other Matters

### Environmental and Other Contingencies

We have incurred, and in the future will continue to incur, capital expenditures and operating expenses for matters relating to environmental control, remediation, monitoring and compliance. During 2022, we incurred costs related to the monitoring and compliance of environmental matters in the amount of approximately $47.7 million and capital expenditures related to environmental compliance of approximately $9.8 million. Of the costs incurred during 2022 for monitoring and compliance, approximately 70% were related to the normal transportation of certain types of waste produced in our steelmaking processes and other facilities, in accordance with legal requirements. We incurred combined environmental remediation costs of approximately $398,000 at all of our facilities during 2022. We have an accrual of $6.2 million recorded for environmental remediation related to our metals recycling operations, and $2.6 million related to our idled Minnesota ironmaking operations. We believe, apart from our dependence on environmental construction and operating permits for our existing and any future manufacturing facilities, that compliance with current environmental laws and regulations is not likely to have a materially adverse effect on our financial condition, results of operations or liquidity. However, environmental laws and regulations evolve and change, and we may become subject to more stringent environmental laws and regulations in the future, such as the impact of United States government or various governmental agencies introducing regulatory changes in response to the potential of climate change.

### Critical Accounting Estimates

Management’s Discussion and Analysis of Our Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. We review the accounting estimates we use in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities. We evaluate the appropriateness of these estimations and judgments on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions. We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

**Impairments of Long-Lived Tangible and Definite-Lived Intangible Assets.** We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be fully recoverable. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. We consider various factors and determine whether an impairment test is necessary, including by way of examples, a significant and prolonged deterioration in operating results and/or projected cash flows, significant changes in the extent or manner in which an asset is used, technological advances with respect to assets which would potentially render them obsolete, our strategy and capital

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2022 Annual Report

planning, and the economic environment in markets to be served. When determining future cash flows and if necessary, fair value, we must make judgments as to the expected utilization of assets and estimated future cash flows related to those assets. We consider historical and anticipated future results, general economic and market conditions, the impact of planned business and operational strategies and all other available information at the time the estimates are made. Those estimates and judgments may or may not ultimately prove accurate.

Events occurred during the fourth quarter of 2020, that represented impairment indicators related to the company's noncore oil and gas joint ventures. Therefore, the company undertook a fourth quarter 2020 assessment of the recoverability of the carrying amounts of these joint ventures' property, plant and equipment. Based on the joint ventures' outlook at the time of this 2020 assessment, the company concluded that the carrying amounts of its property, plant and equipment were fully impaired. This assessment resulted in a total non-cash asset impairment charge of $19.4 million, which include amounts attributable to noncontrolling interests of $2.4 million, that in total served to reduce net income attributable to Steel Dynamics, Inc. by $12.0 million for the year ended December 31, 2020.

### *Goodwill.*

Our goodwill, relating to various business combinations, consisted of the following at December 31 (in thousands):

|  | 2022 | 2021 |
| --- | --- | --- |
| Steel Operations Segment | $272,133 | $272,133 |
| Metals Recycling Operations Segment | 228,009 | 179,777 |
| Steel Fabrication Operations Segment | 1,925 | 1,925 |
|  | $502,067 | $453,835 |

At least once annually (as of October 1), or when indicators of impairment exist, the company performs an impairment test for goodwill. Goodwill is allocated to various reporting units, which are generally one level below the company's operating segments. The fair value of the reporting unit is determined by using an estimate of future cash flows utilizing a risk-adjusted discount rate to calculate the net present value of future cash flows (income approach), and for some years by using a market approach based upon an analysis of valuation metrics of comparable peer companies, using Level 3 fair value inputs as provided for under ASC 820. If the fair value exceeds the carrying value of the reporting unit, there is no impairment. If the carrying amount exceeds the fair value, we recognize an impairment loss in the amount by which the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit.

Key assumptions used to determine the estimated fair value of each reporting unit under the discounted cash flows method (income approach) include: (a) expected cash flows for the five-year period following the testing date (including market share, sales volumes and prices, costs to produce and estimated capital needs); (b) an estimated terminal value using a terminal year growth rate determined based on the growth prospects of the reporting unit; and (c) a risk-adjusted discount rate based on management's best estimate of market participants' after-tax weighted average cost of capital and market risk premiums. Key assumptions used to determine the estimated fair value of each reporting unit under the market approach include the expected revenues and cash flows in the next year. We consider historical and anticipated future results, general economic and market conditions, the impact of planned business and operational strategies and all available information at the time the fair values of its reporting units are estimated. Those estimates and judgments may or may not ultimately prove accurate.

Goodwill acquired in past transactions are naturally more susceptible to impairment, primarily due to the fact that they are recorded at fair value based on operating plans and economic conditions at the time of acquisition. Consequently, if operating results and/or economic conditions deteriorate after an acquisition, it could result in the impairment of the acquired asset. A deterioration of economic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models but may also negatively impact other assumptions used in our analyses, including, but not limited to, the estimated cost of capital

67

# **STEEL DYNAMICS, INC.**  
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 3. Long-Term Debt (continued)**

1.125% and the maximum pricing is adjusted SOFR plus 1.75%. In addition, the company is subject to an unused commitment fee of between 0.15% and 0.275% (based on either our leverage of net debt to LTM consolidated adjusted EBITDA, or our credit ratings) which is applied to the unused portion of the Revolver.

The financial covenants under the Facility state that the company must maintain an interest coverage ratio of not less than 2.50:1.00. The company’s interest coverage ratio is calculated by dividing its LTM consolidated Adjusted EBITDA by its LTM gross interest expense, less amortization of financing fees. In addition, a debt to capitalization ratio of not more than 0.60:1.00 must be maintained. At December 31, 2022, the company’s interest coverage ratio and debt to capitalization ratio were 54.42:1.00 and 0.27:1.00, respectively. The company was, therefore, in compliance with these covenants at December 31, 2022, and anticipates remaining in compliance during the next twelve months.

# ***Senior Unsecured Notes***

The company has seven different tranches of senior unsecured notes (Notes) outstanding. These Notes are in equal right of payment with all existing and future senior unsecured indebtedness and are senior in right of payment to all subordinated indebtedness. These Notes contain provisions that allow the company to redeem the Notes on or after the dates and at redemption prices (expressed as a percentage of principal amount) listed below.

The company’s $400.0 million of 2.800% senior notes due 2024 mature on December 15, 2024, with interest payable semi-annually. Early redemption is permitted as follows: any time prior to November 15, 2024, at a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus 0.20%; and as of November 15, 2024, at 100.000%.

The company’s $400.0 million of 2.400% senior notes due 2025 mature on June 15, 2025, with interest payable semi-annually. Early redemption is permitted as follows: any time prior to May 15, 2025, at a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus 0.35%; and as of May 15, 2025, at 100.000%.

The company’s $400.0 million of 5.000% senior notes due 2026 mature on December 15, 2026, with interest payable semi-annually. Early redemption is permitted as follows: as of December 15, 2022, at 101.667%; as of December 15, 2023, at 100.833%; and as of December 15, 2024, at 100.000%.

The company’s $350.0 million of 1.650% senior notes due 2027 mature on October 15, 2027, with interest payable semi-annually. Early redemption is permitted as follows: any time prior to August 15, 2027, at a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus 0.20%; and as of August 15, 2027, at 100.000%.

The company’s $600.0 million of 3.450% senior notes due 2030 mature on April 15, 2030, with interest payable semi-annually. Early redemption is permitted as follows: any time prior to January 15, 2030, at a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus 0.25%; and as of January 15, 2030, at 100.000%.

The company’s $500.0 million of 3.250% senior notes due 2031 mature on January 15, 2031, with interest payable semi-annually. Early redemption is permitted as follows: any time prior to October 15, 2030, at a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus 0.40%; and as of October 15, 2030, at 100.000%.

The company’s $400.0 million of 3.250% senior notes due 2050 mature on October 15, 2050, with interest payable semi-annually. Early redemption is permitted as follows: any time prior to April 15, 2050, at a make-whole price of the remaining payments to be made discounted at the applicable U.S. Treasury rate plus 0.30%; and as of April 15, 2050, at 100.000%.

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2022 Annual Report

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 3. Long-Term Debt (continued)**

# **Other Obligations**

*Secured Loans.* Two of the company’s controlled subsidiaries have entered into financing agreements for certain equipment which bear interest at an average rate of 4.8%, with monthly principal and interest payments required through 2028. The outstanding principal balance of these agreements was $8.6 million and $10.4 million at December 31, 2022, and 2021, respectively.

One of the company’s controlled subsidiaries has a secured credit agreement, which matures in August 2024, and provides a revolving variable rate credit facility of up to $100.0 million, subject to a borrowing base determined from eligible accounts receivable and inventory, and is further secured with $30.0 million of letter of credit support from Steel Dynamics, Inc. Interest, which was 5.6% at December 31, 2022, is payable monthly. Amounts due under the credit facility were $55.1 million and $94.4 million at December 31, 2022, and 2021, respectively.

Another of the company’s controlled subsidiaries has a secured credit agreement, which matures in March 2023, and provides a revolving variable rate credit facility of up to $25.0 million, subject to a borrowing base determined from eligible accounts receivable and inventory. Interest, which was 5.65% at December 31, 2022, is payable monthly. There were no amounts due under the credit facility at December 31, 2022 or 2021.

# **Outstanding Debt Maturities**

Maturities of outstanding debt as of December 31, 2022, are as follows (in thousands):

| 2023 | $57,334 |
| --- | --- |
| 2024 | 401,800 |
| 2025 | 401,608 |
| 2026 | 401,481 |
| 2027 | 351,142 |
| Thereafter | 1,500,361 |
|  | $3,113,726 |

The company capitalizes interest on all qualifying construction in progress assets. For the years ended December 31, 2022, 2021, and 2020, total interest costs incurred were $107.4 million, $107.7 million, and $118.8 million, respectively, of which $15.8 million, $50.5 million and $23.9 million, respectively, were capitalized.

# **Financing Activity**

In October 2020, the company issued $350.0 million of 1.650% notes due 2027 and $400.0 million of 3.250% notes due 2050. The net proceeds from these notes were used to fund the October 2020 call and redemption of the $350.0 million outstanding principal amount of the company’s 4.125% senior notes due 2025 at a redemption price of 102.063%, plus accrued and unpaid interest to, but not including, the date of redemption, and for general corporate purposes. The company recorded expenses related to premiums and write off of unamortized debt issuance costs of approximately $10.3 million, which are reflected in other expenses in the consolidated statement of income for the year ended December 31, 2020.

In June 2020, the company issued $400.0 million of 2.400% notes due 2025 and $500.0 million of 3.250% notes due 2031. The net proceeds from these notes were used to fund the June 2020 call and redemption of the $400.0 million outstanding principal amount of the company’s 5 1/4% senior notes due 2023 at a redemption price of 100.875%, and the $500.0 million outstanding principal amount of the company’s 5.500% senior notes due 2024 at a redemption price of 102.750%, plus accrued and unpaid interest to, but not including, the date of redemption. The company recorded expenses related to premiums, write off

69

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 3. Long-Term Debt (continued)**

of unamortized debt issuance costs, and other expenses of approximately \$22.8 million, which are reflected in other expenses in the consolidated statement of income for the year ended December 31, 2020.

# **Note 4. Income Taxes**

The company files a consolidated federal income tax return. The current and deferred federal and state income tax expense for the years ended December 31 is as follows (in thousands):

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Current income tax expense . . . . . | $1,107,379 | $643,639 | $88,914 |
| Deferred income tax expense . . . . . | 34,198 | 318,617 | 45,736 |
| Total income tax expense . . . . . | $1,141,577 | $962,256 | $134,650 |

A reconciliation of the statutory rates to the actual effective tax rates for the years ended December 31 are as follows:

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Statutory federal tax rate . . . . . | 21.0% | 21.0% | 21.0% |
| State income taxes, net of federal benefit . . . . . | 2.6 | 2.5 | 2.6 |
| Release of valuation allowance . . . . . | - | - | (2.9) |
| Federal research & development credits . . . . . | (0.6) | (0.7) | (2.1) |
| Other permanent differences . . . . . | (0.3) | 0.1 | 0.5 |
| Effective tax rate . . . . . | 22.7% | 22.9% | 19.1% |

Significant components of the company's deferred tax assets and liabilities at December 31 are as follows (in thousands):

|  | 2022 | 2021 |
| --- | --- | --- |
| Deferred tax assets |  |  |
| Accrued expenses and allowances . . . . . | $34,052 | $24,324 |
| Inventories . . . . . | 8,028 | 9,088 |
| Net operating loss carryforwards . . . . . | 16,412 | 20,333 |
| Other . . . . . | 8,091 | 8,776 |
|  | 66,583 | 62,521 |
| Less: valuation allowance . . . . . | (805) | (805) |
| Total net deferred tax assets . . . . . | 65,778 | 61,716 |
| Deferred tax liabilities |  |  |
| Property, plant and equipment . . . . . | (951,404) | (846,942) |
| Amortizable assets . . . . . | (1,304) | (62,339) |
| Other . . . . . | (2,173) | (7,340) |
| Total deferred tax liabilities . . . . . | (954,881) | (916,621) |
| Net deferred tax liability . . . . . | $(889,103) | $(854,905) |

Certain wholly-owned and controlled subsidiaries of the company file separate federal and state income tax returns. One of the controlled subsidiaries generated federal net operating loss carryforwards in the years 2018 and prior, which total \$53.8 million at December 31, 2022, and which expire in the years 2035 through 2039, along with state net operating loss carryforwards which expire in the years 2034 through 2039. During

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# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 4. Income Taxes (continued)**

the fourth quarter of 2020, the company evaluated the realizability of the net deferred tax assets for this controlled subsidiary. In completing this evaluation, the company considered all available positive and negative evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for its deferred tax assets was necessary. Such evidence included current operating results, historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies. Based on the positive evidence, the company concluded that it was more likely than not that the net deferred tax assets would be realized. As a result, $21.2 million of the valuation allowance was reversed in the year ended December 31, 2020. The company continues to maintain a valuation allowance of $805,000 as of December 31, 2022, and 2021, with respect to certain state tax credits of the controlled subsidiary.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Balance at January 1 | $20,466 | $12,830 | $10,162 |
| Increases related to current year tax positions | 9,600 | 8,250 | 4,350 |
| Increases related to prior year tax positions | 364 | 2,095 | - |
| Decreases related to prior year tax positions | (1,784) | (2,709) | (1,682) |
| Balance at December 31 | $28,646 | $20,466 | $12,830 |

Included in the balance of unrecognized tax benefits at December 31, 2022 and 2021, are potential benefits of $25.1 million and $16.8 million, respectively, that, if recognized, would affect the effective tax rate. The company recognizes interest and penalties related to its tax contingencies on a net-of-tax basis in income tax expense. During the year ended December 31, 2022, the company recognized expense from the increase of interest expense and penalties of $480,000, net of tax and during the years ended December 31, 2021 and 2020, the company recognized benefits from the decrease of interest expense and penalties of $205,000 and $450,000, respectively, net of tax. In addition to the unrecognized tax benefits in the table above, the company had $1.2 million and $561,000 accrued for the payment of interest and penalties at December 31, 2022 and 2021, respectively.

It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months in an amount ranging from zero to $3.3 million, as a result of the expiration of the statute of limitations and other federal and state income tax audits. The company files income tax returns in the U.S. federal jurisdiction as well as income tax returns in various state jurisdictions. The tax years 2019 through 2021 remain open to examination by the Internal Revenue Service and various state and local jurisdictions.

# **Note 5. Shareholders' Equity**

# ***Cash Dividends***

The company declared cash dividends of $245.3 million, or $1.36 per common share, during 2022; $210.9 million, or $1.04 per common share, during 2021; and $210.5 million, or $1.00 per common share, during 2020. The company paid cash dividends of $237.2 million, $213.0 million and $209.2 million during 2022, 2021, and 2020, respectively.

# ***Treasury Stock***

In February 2020, the board of directors authorized a share repurchase program of up to $500.0 million of the company's common stock. This program was exhausted in July 2021. In July 2021, the board of directors authorized an additional share repurchase program of up to $1.0 billion of the company's common

71

# **STEEL DYNAMICS, INC.**  
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 5. Shareholders' Equity (continued)**

stock. This program was exhausted in April 2022. In February 2022, the board of directors authorized an additional share repurchase program of up to $1.25 billion of the company’s common stock. This program was exhausted in November 2022. In November 2022, the board of directors authorized an additional share repurchase program of up to $1.5 billion of the company’s common stock. Under the above share repurchase programs, and similar prior programs, purchases take place as and when the company determines in open market or private transactions made based upon the market price of the company’s common stock, the nature of other investment opportunities or growth projects, the company’s cash flows from operations, and general economic conditions. The share repurchase programs do not require the company to acquire any specific number of shares, and may be modified, suspended, extended or terminated by the company at any time. The share repurchase programs do not have an expiration date. The company repurchased 23.0 million shares for $1.8 billion during 2022, 16.9 million shares for $1.1 billion during 2021, and 4.4 million shares for $106.5 million during 2020 under the share repurchase programs. At December 31, 2022, the company had remaining authorization to repurchase $1.3 billion of additional shares under the November 2022 share repurchase program.

# **Note 6. Equity-Based Incentive Plans**

# ***Amended and Restated 2015 Equity Incentive Plan (2015 Plan)***

The 2015 Plan is designed to attract, motivate and retain qualified persons that are able to make important contributions to the company’s success. To accomplish these objectives, the 2015 Plan provides for awards of equity-based incentives through granting of restricted stock units (RSUs), deferred stock units (DSUs), restricted stock awards, stock options (of which there are none), unrestricted stock awards (of which there are none), stock appreciation rights (SARs), and performance awards, such as long-term incentive compensation program (LTIP). The company’s shareholders approved the 2015 Plan in May 2015, and 12.5 million shares of common stock were reserved for issuance upon exercise of equity grants through December 31, 2025. In May 2019, the 2015 Plan was amended and restated with an additional 8.0 million shares of common stock reserved for issuance upon exercise of equity grants. The 2015 Plan uses a fungible share concept under which any awards that are not a full-value award, such as stock options and stock-settled SARs, will be counted against the share limit as one share for each share of common stock, and awards that are full-value awards, such as RSUs, DSUs, restricted and unrestricted stock awards, and performance awards, will be counted against the share limit as 2.09 shares for each share of common stock. The SARs the company has granted to date can only be settled in cash, and thus, do not count against the share reserve. At December 31, 2022, there were 2.5 million shares still available for issuance.

Substantially all of the company’s full-time, non-union, U.S. team members receive RSUs, which are granted annually in November at no cost to employees and vest 100% over the shorter of two years from grant date or upon the recipient reaching retirement eligible age (591⁄2 years). During 2021 and 2022, certain senior leadership of the company received RSUs in February which vest over a period of 2 to 4 years. The stock is issued to employees upon vesting. The company satisfies RSUs with newly issued shares, and satisfies restricted stock awards, DSUs, and performance awards with treasury shares. In addition to the RSUs and LTIP awards granted during the three-year period ended December 31, 2022, presented below, the company awarded 20,000, 25,000 and 52,000 DSUs in 2022, 2021 and 2020, respectively; and 171,200 and 325,500 SARs in 2021 and 2020, respectively. No SARs awards were granted in 2022. The 102,000 SAR awards outstanding at December 31, 2022, for which no shares of common stock can be issued because the awards must be cash-settled upon exercise, have a weighted-average exercise price of $38.43.

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# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 6. Equity-Based Incentive Plans (continued)**

# ***Restricted Stock Units***

A summary of the company's RSU activity and outstanding RSUs as of December 31, 2022, are presented below (dollars in thousands except grant date fair value):

|  | Number of RSUs | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | Unrecognized Compensation |
| --- | --- | --- | --- | --- |
| Outstanding RSUs as of January 1, 2020 | 1,557,994 | $32.53 | $53,034 | $33,581 |
| Granted | 1,017,518 | 33.54 |  |  |
| Vested | (811,317) | 36.09 |  |  |
| Forfeited | (65,616) | 32.20 |  |  |
| As of December 31, 2020 | 1,698,579 | $31.44 | $62,627 | $35,821 |
| Granted | 627,973 | 59.38 |  |  |
| Vested | (895,706) | 32.30 |  |  |
| Forfeited | (82,588) | 32.47 |  |  |
| As of December 31, 2021 | 1,348,258 | $43.82 | $83,686 | $39,657 |
| Granted | 481,926 | 98.29 |  |  |
| Vested | (786,622) | 37.38 |  |  |
| Forfeited | (70,011) | 46.82 |  |  |
| As of December 31, 2022 (nonvested) | 973,551 | $71.80 | $94,765 | $44,394 |

The weighted average remaining life before vesting of the outstanding RSUs as of December 31, 2022, is 1.56 years. The fair value of RSUs vesting during 2022, 2021, and 2020 was $79.1 million, $56.5 million, and $29.9 million, respectively, and was net-share settled such that the company withheld shares with value equivalent to the employees' minimum statutory obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. The total shares withheld in 2022, 2021, and 2020 were approximately 249,000, 290,000, and 266,000 shares, respectively, and were based on the value of the RSUs on their vesting dates as determined by the company's closing stock price.

# ***Long-Term Incentive Compensation Program (LTIP)***

The company maintains an LTIP performance-based program directed toward key senior leadership of the company, as determined at the discretion of the Compensation Committee of the Board of Directors. Awards are in shares of the company's common stock using the stock price on the first day of the performance period to convert each key senior executive's predetermined multiple of annual base salary. The performance period is generally three years; however, a transition award was issued in 2020 with a shorter performance period. Performance is measured in terms of equal portions of four growth and profitability measures, as compared to the same measures, similarly treated, of a pre-established group of steel sector competitors. Awards earned can range from zero to 100% of the shares awarded. Beginning with 2018, award shares vest immediately once earned on the basis of performance. For awards prior to 2018, once earned on the basis of performance, one-third of the shares vest immediately, and the remaining shares vest in equal annual installments over an additional two-year service-based vesting period requirement.

The Compensation Committee granted the following three-year performance period awards and two-year performance period transition awards, which have been earned and have or will be issued over the vesting period as follows:

73

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 6. Equity-Based Incentive Plans (continued)**

|  | Maximum Shares That Could Be Issued | Award Earned | Award Issued/Issuable |  |
| --- | --- | --- | --- | --- |
| 2017 LTIP Award: |  |  |  |  |
| Three-year performance period award . . . . . | 182,274 | 164,047 | 54,683 | March 2020 |
|  |  |  | 54,682 | March 2021 |
|  |  |  | 54,682 | March 2022 |
| 2019 LTIP Award: |  |  |  |  |
| Three-year performance period award . . . . . | 422,008 | 379,811 | 379,811 | March 2022 |
| 2020 LTIP Award: |  |  |  |  |
| Three-year performance period award . . . . . | 405,922 | 356,845 | 356,845 | March 2023 |
| Two-year performance period transition award . . . . . | 9,764 | 8,300 | 8,300 | March 2022 |
| 2021 LTIP Award: |  |  |  |  |
| Three-year performance period award . . . . . | 360,189 | * | * |  |
| 2022 LTIP Award: |  |  |  |  |
| Three-year performance period award . . . . . | 249,759 | * | * |  |

\* Not yet earned as performance period not complete.

# **2018 Executive Incentive Compensation Plan (2018 Executive Plan)**

The 2018 Executive Plan provides for eligibility of certain senior leadership of the company to receive cash and stock bonuses based on predetermined formulas. The company's shareholders approved the 2018 Executive Plan in May 2018 and 2.0 million shares of company stock were reserved for issuance through February 28, 2028. At times a portion of the bonus may be distributed in shares of the company's stock, of which one-third of the shares vest immediately and the remaining shares vest in equal annual installments over an additional two-year service-based vesting period requirement. At December 31, 2022, 2021, and 2020, 1.4 million, 1.4 million, and 1.5 million shares, respectively, under the 2018 Executive Plan remained available for issuance. Pursuant to the 2018 Executive Plan, 26,000, 157,000, and 148,000 shares were awarded with a market value of $3.2 million, $8.7 million, and $5.1 million for the 2022, 2021, and 2020 award years, respectively.

# **Note 7. 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, 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 (primarily aluminum and copper) and ferrous metals. The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements.

If the company is 'long' on commodity 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 futures contract commitments as of December 31, 2022:

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2022 Annual Report

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 7. Derivative Financial Instruments (continued)**

| Commodity Futures | Long/Short | Metric Tons |
| --- | --- | --- |
| Aluminum . . . . . | Long | 8,750 |
| Aluminum . . . . . | Short | 13,850 |
| Copper . . . . . | Long | 10,250 |
| Copper . . . . . | Short | 28,822 |

The following summarizes the location and amounts of the fair values reported on the company's consolidated balance sheets and gains or losses related to derivatives included in the company's consolidated statements of income as of and for the years ended December 31 (in thousands):

|  | Balance sheet location | Asset Derivatives |  | Liability Derivatives |  |
| --- | --- | --- | --- | --- | --- |
|  |  | Fair Value |  | Fair Value |  |
|  |  | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 |
| Derivative instruments designated as hedges |  |  |  |  |  |
| Commodity futures . . . . . | Other current assets | $2,169 | $1,278 | $2,119 | $7,430 |
| Derivative instruments not designated as hedges |  |  |  |  |  |
| Commodity futures . . . . . | Other current assets | 2,102 | 4,319 | 5,269 | 6,171 |
| Total derivative instruments . . |  | $4,271 | $5,597 | $7,388 | $13,601 |

75

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 7. Derivative Financial Instruments (continued)**

The fair value of the above derivative instruments along with required margin deposit amounts with the same counterparty under master netting agreements totaled $23.5 million and $24.9 million at December 31, 2022, and 2021, respectively, and are reflected in other current assets in the consolidated balance sheets.

|  | Location of gain (loss) recognized in income on derivatives | Amount of gain (loss) recognized in income on derivatives | Hedged items in fair value hedge relationships | Location of gain (loss) recognized in income on related hedged items | Amount of gain (loss) recognized in income on related hedged items |
| --- | --- | --- | --- | --- | --- |
| For the Year Ended December 31, 2022 |  |  |  |  |  |
| Derivatives in fair value hedging relationships |  |  |  |  |  |
| Commodity futures . . . . . Costs of goods sold |  | $2,284 | Firm commitments | Costs of goods sold | $(2,290) |
|  |  |  | Inventory | Costs of goods sold | (708) |
|  |  |  |  |  | $(2,998) |
| Derivatives not designated as hedging instruments |  |  |  |  |  |
| Commodity futures . . . . . Costs of goods sold |  | $24,748 |  |  |  |
| For the Year Ended December 31, 2021 |  |  |  |  |  |
| Derivatives in fair value hedging relationships |  |  |  |  |  |
| Commodity futures . . . . . Costs of goods sold |  | $(1,369) | Firm commitments | Costs of goods sold | $3,354 |
|  |  |  | Inventory | Costs of goods sold | 1,054 |
|  |  |  |  |  | $4,408 |
| Derivatives not designated as hedging instruments |  |  |  |  |  |
| Commodity futures . . . . . Costs of goods sold |  | $(33,517) |  |  |  |
| For the Year Ended December 31, 2020 |  |  |  |  |  |
| Derivatives in fair value hedging relationships |  |  |  |  |  |
| Commodity futures . . . . . Costs of goods sold |  | $(2,004) | Firm commitments | Costs of goods sold | $(79) |
|  |  |  | Inventory | Costs of goods sold | (482) |
|  |  |  |  |  | $(561) |
| Derivatives not designated as hedging instruments |  |  |  |  |  |
| Commodity futures . . . . . Costs of goods sold |  | $(17,368) |  |  |  |

Derivatives accounted for as fair value hedges had ineffectiveness resulting in gains of $72,000, losses of $101,000, and gains of $68,000 for the years ended December 31, 2022, 2021, and 2020, respectively. Losses excluded from hedge effectiveness testing of $786,000 and $2.6 million increased cost of goods sold for the years ended December 31, 2022 and 2020, respectively. Gains excluded from hedge effectiveness testing of $3.1 million decreased cost of goods sold for the year ended December 31, 2021.

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# **STEEL DYNAMICS, INC.**
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 7. Derivative Financial Instruments (continued)**

Derivatives accounted for as cash flow hedges resulted in net gains of $15.0 million, $40.9 million and $2.8 million recognized in other comprehensive income for the years ended December 31, 2022, 2021, and 2020, respectively. Net losses of $11.1 million were reclassified from accumulated other comprehensive income to expense for the year ended December 31, 2022. Net gains of $46.1 million and $265,000, were reclassified from accumulated other comprehensive income into income for the years ended December 31, 2021, and 2020, respectively. At December 31, 2022, the company expects to reclassify $1.2 million of net gains on derivative instruments from accumulated other comprehensive income to income during the next 12 months due to the settlement of futures contracts. The maximum term over which the company is hedging its exposure to the variability of future cash flows for forecasted transactions is less than 12 months.

# **Note 8. Fair Value Measurements**

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 December 31 (in thousands):

|  | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) |
| --- | --- | --- | --- | --- |
| December 31, 2022 |  |  |  |  |
| Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $628,215 | $- | $628,215 | $- |
| Commodity futures - financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 4,271 | - | 4,271 | - |
| Commodity futures - financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7,388 | - | 7,388 | - |
| December 31, 2021 |  |  |  |  |
| Commodity futures - financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $5,597 | $- | $5,597 | $- |
| Commodity futures - financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 13,601 | - | 13,601 | - |

The carrying amounts of financial instruments including cash and equivalents, and restricted cash approximate fair value (Level 1). The fair values of short-term investments 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 $2.7 billion and $3.3 billion at December 31, 2022 and 2021 (with a corresponding carrying amount in the consolidated balance sheet of $3.1 billion at December 31, 2022 and 2021).

77

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 9. Commitments and Contingencies**

The company has entered into certain commitments with suppliers which are of a customary nature. Commitments have been entered into relating to future expected requirements for commodities such as electricity, water, natural gas and its transportation services, fuel, air products, zinc, and electrodes. Certain commitments contain provisions which require that the company “take or pay” for specified quantities at fixed prices 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 15 years for air products and 29 years for water products. The company utilized such “take or pay” requirements during the past three years under these contracts, except for certain air products at the idled Minnesota ironmaking operations. The company believes 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 idled Minnesota ironmaking operations.

The company’s commitments for these agreements with “take or pay” or other similar commitment provisions for the years ending December 31 are as follows (in thousands):

| 2023 | $363,988 |
| --- | --- |
| 2024 | 85,574 |
| 2025 | 44,934 |
| 2026 | 25,470 |
| 2027 | 25,117 |
| Thereafter | 181,811 |
|  | $726,894 |

At December 31, 2022, the company has outstanding commitments of $1.4 billion, of which $1.3 billion are expected to be paid in 2023 and an expected $100 million in 2024, related to ongoing construction of property, plant, and equipment, most significantly our newly announced aluminum flat roll mill, and other steel operations expansion projects. The company’s commitments for operating leases are discussed in Note 12. *Leases*.

The company is involved in various 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 the company’s financial condition, results of operations, or liquidity.

# **Note 10. Transactions with Affiliated Companies**

The company purchases and sells recycled and scrap metal, and steel with other smaller affiliated companies, including our equity method investments and the addition of New Process Steel during 2022. These transactions for the years ended December 31, are as follows (in thousands):

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Sales | $791,523 | $32,107 | $13,791 |
| Accounts receivable | 79,769 | 5,049 | 3,937 |
| Purchases | 127,860 | 163,453 | 132,560 |
| Accounts payable | 9,934 | 13,722 | 8,919 |

# **Note 11. Retirement Plans**

The company sponsors several 401(k) retirement savings and profit sharing plans (Plans) for eligible employees, which are considered “qualified plans” for federal income tax purposes. The company’s total expense for the Plans was $466.9 million, $382.8 million, and $74.5 million for the years ended December 31, 2022, 2021, and 2020, respectively. Profit sharing expense for eligible employees is 8% of consolidated pretax income excluding noncontrolling interests and other items. The resulting profit sharing expense under the Plan was $421.6 million, $359.8 million, and $58.3 million for the years ended December 31, 2022, 2021, and 2020,

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# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 11. Retirement Plans (continued)**

respectively; of which up to $337.2 million, $287.8 million (subject to total Plan contribution limitations), and $46.7 million, respectively, was directed by the company's board of directors to be contributed to the Plans, with the remaining amounts each year paid directly in cash to the Plans' participants.

# **Note 12. Leases**

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 use of and obtain substantially all of the economic benefit from use 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, 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 term.

Operating lease right-of-use assets and lease obligations included in the consolidated balance sheets at December 31, are as follows (in thousands):

|  | 2022 | 2021 |
| --- | --- | --- |
| Right-of-use assets under operating leases: |  |  |
| Other assets - noncurrent | $110,638 | $100,124 |
| Lease obligations under operating leases: |  |  |
| Accrued liabilities | $18,850 | $17,822 |
| Other liabilities - noncurrent | 91,793 | 82,252 |
|  | $110,643 | $100,074 |

The weighted average remaining lease term for our operating leases is ten years, and the weighted-average discount rate is 3.86% and 3.60% as of December 31, 2022 and 2021, respectively. Future operating lease liabilities as of December 31, 2022, for the next five years and thereafter are as follows (in thousands):

| 2023 | $22,784 |
| --- | --- |
| 2024 | 18,994 |
| 2025 | 15,329 |
| 2026 | 11,259 |
| 2027 | 9,340 |
| Thereafter | 55,719 |
| Total undiscounted cash flows | 133,425 |
| Less imputed interest | (22,782) |
| Lease obligations under operating leases | $110,643 |

Operating lease expense included in the consolidated statements of income was $23.7 million, $22.5 million, and $21.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. Cash paid related to operating lease obligations was $20.1 million, $19.0 million, and $18.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. Variable lease costs were not material for the years ended December 31, 2022, 2021, or 2020. Short-term lease expense included in the consolidated statements of

79

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 12. Leases (continued)**

income was $35.8 million, $28.0 million, and $19.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. Right-of-use assets obtained in exchange for new operating lease liabilities for the years ended December 31, 2022, 2021, and 2020, was $30.9 million, with addition of $16.8 million related to ROCA, $28.6 million, and $33.3 million, with addition of $19.7 million related to Zimmer, respectively.

# **Note 13. 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. *Description of the Business and Summary of Significant Accounting Policies* 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 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 joint ventures and the idled Minnesota ironmaking operations. Also included in 'Other' are certain unallocated corporate accounts, such as the company's senior unsecured credit facility, senior notes, certain other investments and certain profit sharing expenses.

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):

| For the year ended December 31, 2022 | Steel Operations | Metals Recycling Operations | Steel Fabrication Operations | Other | Eliminations | Consolidated |
| --- | --- | --- | --- | --- | --- | --- |
| Net sales - disaggregated revenue |  |  |  |  |  |  |
| External | $13,801,448 | $1,545,347 | $4,245,803 | $1,259,173 | $ - | $20,851,771 |
| External Non-United States | 760,929 | 619,361 | 183 | 28,530 | - | 1,409,003 |
| Other segments | 538,540 | 2,230,928 | 11,221 | 1,281 | (2,781,970) | - |
|  | 15,100,917 | 4,395,636 | 4,257,207 | 1,288,984 | (2,781,970) | 22,260,774 |
| Operating income (loss) | 3,095,348 | 117,266 | 2,424,655 | (599,828) (1) | 54,381 | 5,091,822 |
| Income (loss) before income taxes | 3,057,560 | 117,803 | 2,417,752 | (625,037) | 52,991 (2) | 5,021,069 |
| Depreciation and amortization | 295,386 | 53,893 | 9,727 | 25,196 | - | 384,202 |
| Capital expenditures | 611,154 | 68,074 | 17,519 | 212,155 | - | 908,902 |

# **As of December 31, 2022**

| Assets | $8,607,290 | $1,320,368 | $1,349,138 | $3,007,942 (3) | $(124,754) (4) | $14,159,984 |
| --- | --- | --- | --- | --- | --- | --- |

Footnotes related to the year ended December 31, 2022, segment results (in millions):

| (1) Corporate SG&A | $(77.8) | (2) Gross profit increase from intra-company sales | $53.0 |
| --- | --- | --- | --- |
| Companywide equity-based compensation | (67.3) |  |  |
| Profit sharing | (444.4) |  |  |
| Other, net | (10.3) |  |  |
|  | $(599.8) |  |  |
| (3) Cash and equivalents | $1,463.2 | (4) Elimination of intra-company receivables | $(58.2) |
| Short-term investments | 628.2 | Elimination of intra-company debt | (46.9) |
| Accounts receivable | 33.3 | Elimination of intra-company profit in inventory | (19.7) |
| Inventories | 90.4 |  | $(124.8) |
| Property, plant and equipment, net | 375.6 |  |  |
| Intra-company debt | 46.9 |  |  |
| Investments in unconsolidated affiliates | 226.6 |  |  |
| Other | 143.7 |  |  |
|  | $3,007.9 |  |  |

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2022 Annual Report

# **STEEL DYNAMICS, INC.**  
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **Note 13. Segment Information (continued)**

| For the year ended December 31, 2021 | Steel Operations | Metals Recycling Operations | Steel Fabrication Operations | Other | Eliminations | Consolidated |
| --- | --- | --- | --- | --- | --- | --- |
| Net sales - disaggregated revenue |  |  |  |  |  |  |
| External | $12,618,917 | $1,658,843 | $1,761,078 | $1,252,095 | $ - | $17,290,933 |
| External Non-United States | 580,225 | 524,629 | 569 | 12,494 | - | 1,117,917 |
| Other segments | 823,991 | 2,406,649 | 3,063 | 2,382 | (3,236,085) | - |
|  | 14,023,133 | 4,590,121 | 1,764,710 | 1,266,971 | (3,236,085) | 18,408,850 |
| Operating income (loss) | 4,360,488 | 181,986 | 365,250 | (551,725) (1) | (54,894) | 4,301,105 |
| Income (loss) before income taxes | 4,327,300 | 181,579 | 362,473 | (606,021) | (56,261) (2) | 4,209,070 |
| Depreciation and amortization | 263,125 | 55,620 | 9,961 | 18,947 | - | 347,653 |
| Capital expenditures | 937,011 | 46,360 | 12,939 | 9,929 | - | 1,006,239 |

# **As of December 31, 2021**

| Assets | $8,686,216 | $1,266,920 | $1,195,396 | $1,523,830 (3) | $(141,128) (4) | $12,531,234 |
| --- | --- | --- | --- | --- | --- | --- |

Footnotes related to the year ended December 31, 2021, segment results (in millions):

| (1) Corporate SG&A | $(78.0) | (2) Gross profit decrease from intra-company sales | $(56.3) |
| --- | --- | --- | --- |
| Companywide equity-based compensation | (78.8) |  |  |
| Profit sharing | (379.3) |  |  |
| Other, net | (15.6) |  |  |
|  | $(551.7) |  |  |
| (3) Cash and equivalents | $1,088.8 | (4) Elimination of intra-company receivables | $(48.9) |
| Accounts receivable | 27.5 | Elimination of intra-company debt | (19.6) |
| Inventories | 94.2 | Elimination of intra-company profit in inventory | (72.6) |
| Property, plant and equipment, net | 128.9 |  | $(141.1) |
| Intra-company debt | 19.6 |  |  |
| Other | 164.8 |  |  |
|  | $1,523.8 |  |  |

| For the year ended December 31, 2020 | Steel Operations | Metals Recycling Operations | Steel Fabrication Operations | Other | Eliminations | Consolidated |
| --- | --- | --- | --- | --- | --- | --- |
| Net sales - disaggregated revenue |  |  |  |  |  |  |
| External | $6,873,209 | $820,262 | $895,227 | $500,496 | $ - | $9,089,194 |
| External Non-United States | 263,895 | 247,662 | 474 | 257 | - | 512,288 |
| Other segments | 318,533 | 1,335,216 | 10,663 | 434 | (1,664,846) | - |
|  | 7,455,637 | 2,403,140 | 906,364 | 501,187 | (1,664,846) | 9,601,482 |
| Operating income (loss) | 889,480 | 32,991 | 120,575 | (188,525) (1) | (7,379) | 847,142 |
| Income (loss) before income taxes | 833,035 | 27,753 | 116,625 | (263,470) | (8,465) (2) | 705,478 |
| Depreciation and amortization | 251,590 | 50,099 | 10,819 | 13,281 | - | 325,789 |
| Capital expenditures | 1,132,298 | 32,875 | 15,234 | 17,648 | - | 1,198,055 |

Footnotes related to the year ended December 31, 2020, segment results (in millions):

| (1) Corporate SG&A | $(57.9) | (2) Gross profit decrease from intra-company sales | $(8.5) |
| --- | --- | --- | --- |
| Companywide equity-based compensation | (48.5) |  |  |
| Profit sharing | (58.3) |  |  |
| Asset impairment charges | (19.4) |  |  |
| Other, net | (4.4) |  |  |
|  | $(188.5) |  |  |

81

## ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

## ITEM 9A. 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 December 31, 2022, the end of the period covered by this annual 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, as appropriate to allow timely decisions regarding required disclosure.

Management’s report on our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and the independent registered public accounting firm’s related audit report are included in Item 8. *Consolidated Financial Statements and Supplementary Data* of this Form 10-K and are incorporated herein by reference.

### (b) Changes in Internal Control Over Financial Reporting

No 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 December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our Management’s Report on Internal Control Over Financial Reporting, as of December 31, 2022, can be found on page 50 of this Form 10-K, and the related Report of Independent Registered Public Accounting Firm, Ernst & Young LLP, can be found on page 51 of this Form 10-K, each of which is incorporated by reference into this Item 9A.

## ITEM 9B. OTHER INFORMATION

None.

## ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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2022 Annual Report

# PART III

# ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required to be furnished pursuant to Item 10 with respect to directors, executive officers, code of ethics, and audit committee and audit committee financial experts is incorporated herein by reference from the section entitled “Governance of the Company” and “Proposal No. 1 - Election of Directors” in our Proxy Statement for the 2023 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year.

# ITEM 11. EXECUTIVE COMPENSATION

The information required to be furnished pursuant to Item 11 with respect to executive compensation is incorporated herein by reference from the section entitled “Executive Compensation and Related Information” in our Proxy Statement for the 2023 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year.

# ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information relating to security ownership of certain beneficial owners and management required by Item 12 is incorporated herein by reference from the section entitled “Security Ownership of Directors and Executive Officers” and “Security Ownership of Certain Beneficial Owners” in our Proxy Statement for the 2023 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year. The Equity Compensation Plan Information required by Item 12 is set forth in the table below.

# Equity Compensation Plan Information

Our stockholders approved the *Steel Dynamics, Inc. 2015 Equity Incentive Plan* at our annual meeting of stockholders held May 21, 2015, and the *Amended and Restated Steel Dynamics, Inc. 2015 Equity Incentive Plan* (2015 Plan) at our annual meeting of stockholders held May 16, 2019. Our stockholders approved the *Amended and Restated Steel Dynamics, Inc. 2006 Equity Incentive Plan* at our annual meeting of stockholders held May 17, 2012 (2006 Plan). Our stockholders approved the *Steel Dynamics, Inc. 2018 Executive Incentive Compensation Plan* at our annual meeting of stockholders held May 17, 2018 (2018 Plan). The following table summarizes information about our equity compensation plans at December 31, 2022, all of which have been approved by stockholders. We do not have any equity compensation plans that have not been approved by stockholders.

| Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted-average exercise price of outstanding options, warrants and rights (1) | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| --- | --- | --- | --- |
| Equity compensation plans approved by security holders: |  |  |  |
| 2015 Plan and predecessor 2006 Plan (1) . . . | 1,562,872 | - | 2,459,482 |
| 2018 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 171,243 | - | 1,363,297 |
| Equity compensation plans not approved by security holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | N/A | N/A | N/A |
| Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,734,115 | - | 3,822,779 |

(1) Includes 973,551 RSUs, 263,265 DSUs, and 326,056 LTIP awards issuable upon expiration of the vesting or deferral periods, which have no exercise price.

83

# **ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

The information required to be furnished pursuant to Item 13 with respect to certain relationships and related transactions is incorporated herein by reference from the sections entitled “Governance of the Company - Statement of Policy for the Review, Approval or Ratification of Transactions with Related Persons,” and “Governance of the Company - Director Independence” in our Proxy Statement for the 2023 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year; and from Note 10. *Transactions with Affiliated Companies* to our consolidated financial statements as of December 31, 2022 and 2021, and each of the three years in the periods ended December 31, 2022, 2021, and 2020, included in Item 8. *Consolidated Financial Statements and Supplementary Data* of this Form 10-K Annual Report for the fiscal year ended December 31, 2022.

# **ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

The information required to be furnished pursuant to Item 14 with respect to principal accountant fees and services is incorporated herein by reference from the sections entitled “Proposal No. 2 - Ratification of the Appointment of Independent Registered Public Accounting Firm as Auditors - Audit and Non-Audit Fees” and “Proposal No. 2 - Ratification of the Appointment of Independent Registered Public Accounting Firm as Auditors - Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm” in our Proxy Statement for the 2023 Annual Meeting of Stockholders, which we will file with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year.

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2022 Annual Report

# PART IV

# ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as a part of this report:

1. Financial Statements: See the Audited Consolidated Financial Statements of Steel Dynamics, Inc. included as part of Item 8. Consolidated Financial Statements and Supplementary Data and described in the Index on page 49 of this Report.
2. Financial Statement Schedules: All schedules for which provision is made in the applicable regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(b) Exhibits:

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

# ITEM 16. FORM 10-K SUMMARY

None.

# EXHIBIT INDEX

# 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 January 23, 2023.

# Instruments Defining the Rights of Security Holders, Including Indentures

4.1 Description of Common Stock, incorporated herein by reference from Exhibit 4.1 to our Form 10-K filed February 27, 2020.
4.27a Indenture dated December 6, 2016, relating to our issuance of $400 million 5.000% Senior Notes due 2026, among Steel Dynamics, Inc., as Issuer, the Initial Subsidiary Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference from Exhibit 4.27 to our Form 8-K filed December 8, 2016.
4.27b Form of 5.000% Senior Notes due 2026 (included in Exhibit 4.27a), incorporated herein by reference from Exhibit 4.27 to our Form 8-K filed December 8, 2016.
4.31 Indenture dated December 4, 2019, among Steel Dynamics, Inc., as Issuer, and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference from Exhibit 4.1 to our Registration Statement on Form S-3 (Registration No. 333-235343) filed December 4, 2019.
4.32 First Supplemental Indenture dated December 11, 2019, relating to our issuance of $400 million 2.800% Notes due 2024, and $600 million 3.450% Notes due 2030 among Steel Dynamics, Inc., as Issuer, and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference from Exhibit 4.2 to our Form 8-K filed December 11, 2019.
4.33 Form of 2.800% Notes due 2024 (included in Exhibit 4.32), incorporated herein by reference from Exhibit 4.3 to our Form 8-K filed December 11, 2019.

85

4.34 Form of 3.450% Notes due 2030 (included in Exhibit 4.32), incorporated herein by reference from Exhibit 4.4 to our Form 8-K filed December 11, 2019.

4.35 Second Supplemental Indenture, dated as of June 5, 2020, relating to our issuance of $400 million 2.400% Notes due 2025 and $500 million 3.250% Notes due 2031, between Steel Dynamics, Inc. and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference from Exhibit 4.2 to our Form 8-K filed June 5, 2020.

4.36 Form of 2.400% Notes due 2025 (included in Exhibit 4.35), incorporated herein by reference from Exhibit 4.3 to our Form 8-K filed June 5, 2020.

4.37 Form of 3.250% Notes due 2031 (included in Exhibit 4.35), incorporated herein by reference from Exhibit 4.4 to our Form 8-K filed June 5, 2020.

4.38 Third Supplemental Indenture, dated as of October 9, 2020, relating to our issuance of $350 million 1.650% Notes due 2027 and $400 million 3.250% Notes due 2050, between Steel Dynamics, Inc. and Wells Fargo Bank, National Association, as Trustee, incorporated herein by reference from Exhibit 4.2 to our Form 8-K filed October 9, 2020.

4.39 Form of 1.650% Notes due 2027 (included in Exhibit 4.38), incorporated herein by reference from Exhibit 4.3 to our Form 8-K filed October 9, 2020.

4.40 Form of 3.250% Notes due 2050 (included in Exhibit 4.38), incorporated herein by reference from Exhibit 4.4 to our Form 8-K filed October 9, 2020.

4.41 Indenture, dated as of December 7, 2022, between Steel Dynamics, Inc., as Issuer, and U.S. Bank Trust Company, National Association, as Trustee, incorporated herein by reference from Exhibit 4.1 to our Registration Statement on Form S-3 (Registration No. 333-268703) filed December 7, 2022.

## Material Contracts

10.20† Steel Dynamics, Inc., Change in Control Benefit Plan, incorporated herein by reference from our Exhibit 10.20 to our 8-K filed December 4, 2012.

10.41b† Amended and Restated Steel Dynamics, Inc. 2006 Equity Incentive Plan, as approved by shareholders on May 17, 2012, incorporated herein by reference from our Exhibit 10.41b to our 8-K filed August 21, 2012.

10.52† Director Agreement between the Company and Keith E. Busse, dated October 14, 2011, incorporated herein by reference from Exhibit 10.52 to our Form 8-K filed October 20, 2011.

10.55† Steel Dynamics, Inc. 2014 Employee Stock Purchase Plan, incorporated herein by reference from our May 15, 2014, Notice of Annual Meeting and Stockholders filed March 27, 2014.

10.59 Credit Agreement dated as of December 3, 2019, by and among Steel Dynamics, Inc. and the agents and lenders named therein, incorporated herein by reference from Exhibit 10.59 to our Form 8-K filed December 3, 2019.

10.60† Amended and Restated 2015 Equity Incentive Plan, as approved by shareholders on May 16, 2019, incorporated herein by reference from our May 16, 2019, Notice of Annual Meeting of Stockholders filed March 27, 2019.

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2022 Annual Report

10.61† 2018 Executive Incentive Compensation Plan, approved by stockholders on May 17, 2018, incorporated herein by reference from our May 17, 2018, Notice of Annual Meeting of Stockholders filed March 28, 2018.

# Other

21.1* List of our Subsidiaries.
23.1* Consent of Ernst & Young LLP.
24.1 Powers of attorney (see signature pages on pages 87 and 88 of this Report).
95* Mine Safety Disclosures.

# 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 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 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 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 Act of 2002.

# 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* Inline XBRL Taxonomy Extension Schema Document
101. CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101. DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101. LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101. PRE* Inline XBRL Taxonomy Presentation Linkbase Document
104* Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed concurrently herewith

† Indicates a management contract or compensatory plan or arrangement.

87

## SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of Securities Exchange Act of 1934, Steel Dynamics, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

February 28, 2023

STEEL DYNAMICS, INC.

By: /s/ MARK D. MILLETT  
Mark D. Millett  
Chief Executive Officer  
(Principal Executive Officer)

## POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Mark D. Millett and Theresa E. Wagler, either of whom may act without the joinder of the other, as his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities to sign any and all amendments, and supplements to this 2022 Annual Report on Form 10-K, filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and performs each and every act and thing requisite and necessary to be done, as full to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue thereof. **Pursuant to the requirements of the Securities Exchange Act of 1934, this 2022 Annual Report on Form 10-K has been signed below by the following persons on behalf of Steel Dynamics, Inc. and in the capacities and on the dates indicated.**

| Signatures | Title | Date |
| --- | --- | --- |
| /s/ MARK D. MILLETT Mark D. Millett | Chairman, President and Chief Executive Officer (Principal Executive Officer) | February 28, 2023 |
| /s/ THERESA E. WAGLER Theresa E. Wagler | Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 28, 2023 |
| /s/ KEITH E. BUSSE Keith E. Busse | Director | February 28, 2023 |
| /s/ SHEREE L. BARGABOS Sheree L. Bargabos | Director | February 28, 2023 |
| /s/ KENNETH W. CORNEW Kenneth W. Cornew | Director | February 28, 2023 |
| /s/ TRACI M. DOLAN Traci M. Dolan | Director | February 28, 2023 |
| /s/ JAMES C. MARCUCCILLI James C. Marcuccilli | Director | February 28, 2023 |

88

2022 Annual Report

| Signatures | Title | Date |
| --- | --- | --- |
| /s/ BRADLEY S. SEAMAN Bradley S. Seaman | Director | February 28, 2023 |
| /s/ GABRIEL L. SHAHEEN Gabriel L. Shaheen | Director | February 28, 2023 |
| /s/ LUIS M. SIERRA Luis M. Sierra | Director | February 28, 2023 |
| /s/ STEVEN A. SONNENBERG Steven A. Sonnenberg | Director | February 28, 2023 |
| /s/ RICHARD P. TEETS, JR. Richard P. Teets, Jr. | Director | February 28, 2023 |

# INVESTOR INFORMATION

THE COMPANY'S STOCK TRADES ON THE NASDAQ GLOBAL SELECT MARKET UNDER THE SYMBOL STLD

ANNUAL MEETING

May 11, 2023 | 9:00 a.m. EDT

Fort Wayne Country Club
5221 Covington Road
Fort Wayne, IN 46804

INVESTOR INFORMATION

Investor Relations
(260) 969-3500
investor@steeldynamics.com

STOCKHOLDER RECORDS

Computershare Investor Services
150 Royall St., Suite 101
Canton, MA 02021
(877) 282-1168
computershare.com/investor

HEADQUARTERS

7575 West Jefferson Blvd.
Fort Wayne, IN 46804
(260) 969-3500
steeldynamics.com

2022 Board of Directors

EMPLOYEE DIRECTOR

Mark D. Millett
Co-Founder, Chairman, and
Chief Executive Officer

NON-EMPLOYEE DIRECTORS

Keith E. Busse
Co-Founder
Retired
Sheree L. Bargabos
Retired
Former President of Roofing
& Asphalt Division, Owens
Corning
Kenneth W. Cornew
Retired
Former Senior Executive
Vice President and Chief
Commercial Officer, Exelon
Corporation, and President
and CEO, Exelon Generation

Traci M. Dolan
Retired
Former Chief Administrative
Officer, ExactTarget, Inc.
James C. Marcuccilli
Chairman and CEO
STAR Financial Bank
Bradley S. Seaman
Managing Partner
Parallel49 Equity
Gabriel L. Shaheen
President, CEO, and Principal
GLS Capital Ventures, LLC
Founding Partner Insurex, LLC

Luis M. Sierra
Former President, CEO
NOVA Chemicals
Corporation
Steven A. Sonnenberg
Retired
Former Chair of Automation
Solutions, Emerson Electric Co.
Richard P. Teets, Jr.
Co-Founder
Retired

Executive Officers

Mark D. Millett
Co-Founder, Chairman,
and Chief Executive Officer

Theresa E. Wagler
Executive Vice President, Chief Financial
Officer, and Corporate Secretary

Miguel Alvarez
Senior Vice President,
Metals Recycling

James S. Anderson
Senior Vice President,
Steel Fabrication

Christopher A. Graham
Senior Vice President,
Long Products Steel Group

Glenn A. Pushis
Senior Vice President,
Special Projects

Barry T. Schneider1
Senior Vice President,
Flat Roll Steel Group

1 Effective March 1, 2023, Barry T. Schneider was appointed President and Chief Operating Officer.

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Health
and Safety

Entrepreneurial
Culture

Customer
Commitment

Strategic
Sustainable
Growth

Innovation

Financial
Strength