UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period

ended ~~June~~September 30, 2020

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

Commission File Number 0-21719

Steel Dynamics, Inc.

(Exact name of registrant as specified in its charter)

Indiana		35-1929476
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7575 West Jefferson Blvd, Fort Wayne, IN		46804
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (260) 969-3500

Securities registered pursuant to Section 12(b) of the Act.


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company (see definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act).

Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻

Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No⌧

As of ~~July 31,~~October 29, 2020, Registrant had ~~210,364,813~~210,366,497 outstanding shares of common stock.

Table of Contents

STEEL DYNAMICS, INC.

Table of Contents


PART I. Financial Information

Item 1.	Financial Statements:	Page

	Consolidated Balance Sheets as of ~~June~~September 30, 2020 (unaudited) and December 31, 2019	1
~~��~~
	Consolidated Statements of Income for the three and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020 and 2019 (unaudited)	2

	Consolidated Statements of Comprehensive Income for the three and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020 and 2019 (unaudited)	3

	Consolidated Statements of Cash Flows for the three and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020 and 2019 (unaudited)	4

	Notes to Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1516

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2224

Item 4.	Controls and Procedures	2325



	PART II. Other Information

Item 1.	Legal Proceedings	2426

Item 1A.	Risk Factors	2426

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2527

Item 3.	Defaults Upon Senior Securities	2527

Item 4.	Mine Safety Disclosures	2527

Item 5.	Other Information	2527

Item 6.	Exhibits	2628

Exhibit Index		2628

Signature		2829

Table of Contents

STEEL DYNAMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

June 30,

December 31,

2020

2019
Assets
(unaudited)

Current assets

Cash and equivalents
$
1,496,458

$
1,381,460
Short-term investments

69,546

262,174
Accounts receivable, net

841,593

841,378
Accounts receivable-related parties

2,463

2,958
Inventories

1,567,017

1,689,043
Other current assets

39,043

76,012
Total current assets

4,016,120

4,253,025

Property, plant and equipment, net

3,587,450

3,135,886

Intangible assets, net

313,520

327,901
Goodwill

451,220

452,915
Other assets

100,031

106,038
Total assets
$
8,468,341

$
8,275,765
Liabilities and Equity

Current liabilities

Accounts payable
$
696,845

$
509,687
Accounts payable-related parties

5,087

3,657
Income taxes payable

25,411

2,014
Accrued payroll and benefits

148,055

208,287
Accrued interest

11,859

18,292
Accrued expenses

154,243

175,405
Current maturities of long-term debt

73,926

89,356
Total current liabilities

1,115,426

1,006,698

Long-term debt

2,636,722

2,644,988
Deferred income taxes

503,034

484,169
Other liabilities

73,237

75,055
Total liabilities

4,328,419

4,210,910

Commitments and contingencies

Redeemable noncontrolling interests

152,414

143,614

Equity

Common stock voting, $.0025 par value; 900,000,000 shares authorized;

266,072,787 and 266,072,787 shares issued; and 210,364,813 and 214,502,639

shares outstanding, as of June 30, 2020 and December 31, 2019, respectively

646

646
Treasury stock, at cost; 55,707,974 and 51,570,148 shares,

as of June 30, 2020 and December 31, 2019, respectively

(1,623,855)

(1,525,113)
Additional paid-in capital

1,191,614

1,181,012
Retained earnings

4,576,629

4,419,296
Accumulated other comprehensive income (loss)

216

(7)
Total Steel Dynamics, Inc. equity

4,145,250

4,075,834
Noncontrolling interests

(157,742)

(154,593)
Total equity

3,987,508

3,921,241
Total liabilities and equity
$
8,468,341

$
8,275,765



	September 30,		December 31,
	2020		2019
Assets	(unaudited)
Current assets
Cash and equivalents	$	1,267,618	$	1,381,460
Short-term investments		-		262,174
Accounts receivable, net		915,223		841,378
Accounts receivable-related parties		3,619		2,958
Inventories		1,609,216		1,689,043
Other current assets		59,219		76,012
Total current assets		3,854,895		4,253,025

Property, plant and equipment, net		3,862,375		3,135,886

Intangible assets, net		306,574		327,901
Goodwill		474,520		452,915
Other assets		119,192		106,038
Total assets	$	8,617,556	$	8,275,765
Liabilities and Equity
Current liabilities
Accounts payable	$	702,991	$	509,687
Accounts payable-related parties		12,690		3,657
Income taxes payable		827		2,014
Accrued payroll and benefits		177,935		208,287
Accrued interest		27,649		18,292
Accrued expenses		171,307		175,405
Current maturities of long-term debt		82,229		89,356
Total current liabilities		1,175,628		1,006,698

Long-term debt		2,636,615		2,644,988
Deferred income taxes		512,503		484,169
Other liabilities		94,011		75,055
Total liabilities		4,418,757		4,210,910

Commitments and contingencies

Redeemable noncontrolling interests		155,414		143,614

Equity
Common stock voting, $.0025 par value; 900,000,000 shares authorized;
266,072,787 and 266,072,787 shares issued; and 210,366,497 and 214,502,639
shares outstanding, as of September 30, 2020 and December 31, 2019, respectively		646		646
Treasury stock, at cost; 55,706,290 and 51,570,148 shares,
as of September 30, 2020 and December 31, 2019, respectively		(1,623,805)		(1,525,113)
Additional paid-in capital		1,200,228		1,181,012
Retained earnings		4,624,019		4,419,296
Accumulated other comprehensive income (loss)		95		(7)
Total Steel Dynamics, Inc. equity		4,201,183		4,075,834
Noncontrolling interests		(157,798)		(154,593)
Total equity		4,043,385		3,921,241
Total liabilities and equity	$	8,617,556	$	8,275,765

See notes to consolidated financial statements.

Table of Contents

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)



	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2020		2019		2020		2019		2020		2019		2020		2019

Net sales
Unrelated parties	$	2,092,964	$	2,766,364	$	4,664,508	$	5,580,850	$	2,327,224	$	2,523,279	$	6,991,732	$	8,104,129
Related parties		1,341		4,151		4,897		7,100		3,608		3,566		8,505		10,666
Total net sales		2,094,305		2,770,515		4,669,405		5,587,950		2,330,832		2,526,845		7,000,237		8,114,795

Costs of goods sold		1,809,874		2,349,349		3,969,745		4,733,214		2,038,017		2,167,006		6,007,762		6,900,220
Gross profit		284,431		421,166		699,660		854,736		292,815		359,839		992,475		1,214,575

Selling, general and administrative expenses		109,299		106,250		222,197		217,288		118,235		107,242		340,432		324,530
Profit sharing		9,092		22,871		30,546		46,548		11,778		17,848		42,324		64,396
Amortization of intangible assets		7,190		7,013		14,381		14,026		6,946		6,704		21,327		20,730
Operating income		158,850		285,032		432,536		576,874		155,856		228,045		588,392		804,919

Interest expense, net of capitalized interest		27,702		32,321		55,721		63,443		18,950		31,339		74,671		94,782
Other (income) expense, net		28,103		(4,249)		25,514		(10,592)		3,546		(4,545)		29,060		(15,137)
Income before income taxes		103,045		256,960		351,301		524,023		133,360		201,251		484,661		725,274

Income tax expense		24,280		60,214		81,700		122,450		29,083		48,643		110,783		171,093
Net income		78,765		196,746		269,601		401,573		104,277		152,608		373,878		554,181

Net income attributable to noncontrolling interests		(3,269)		(2,444)		(6,765)		(2,943)		(4,134)		(1,560)		(10,899)		(4,503)
Net income attributable to Steel Dynamics, Inc.	$	75,496	$	194,302	$	262,836	$	398,630	$	100,143	$	151,048	$	362,979	$	549,678



Basic earnings per share attributable to Steel Dynamics,
Inc. stockholders	$	0.36	$	0.88	$	1.24	$	1.79	$	0.48	$	0.69	$	1.72	$	2.49

Weighted average common shares outstanding		210,343		221,505		211,798		222,781		210,366		217,873		211,321		221,145

Diluted earnings per share attributable to Steel Dynamics, Inc.
stockholders, including the effect of assumed conversions
when dilutive	$	0.36	$	0.87	$	1.24	$	1.78	$	0.47	$	0.69	$	1.71	$	2.47

Weighted average common shares and share equivalents outstanding		211,378		222,519		212,701		223,741		211,926		219,109		212,443		222,197

Dividends declared per share	$	0.25	$	0.24	$	0.50	$	0.48	$	0.25	$	0.24	$	0.75	$	0.72

See notes to consolidated financial statements.

Table of Contents

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)



	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2020		2019		2020		2019		2020		2019		2020		2019

Net income	$	78,765	$	196,746	$	269,601	$	401,573	$	104,277	$	152,608	$	373,878	$	554,181
Other comprehensive income (loss) - net unrealized gain (loss) on
cash flow hedging derivatives, net of income tax		186		(52)		223		(223)		(121)		(39)		102		(262)
Comprehensive income		78,951		196,694		269,824		401,350		104,156		152,569		373,980		553,919

Comprehensive income attributable to noncontrolling interests		(3,269)		(2,444)		(6,765)		(2,943)		(4,134)		(1,560)		(10,899)		(4,503)
Comprehensive income attributable to Steel Dynamics, Inc.	$	75,682	$	194,250	$	263,059	$	398,407	$	100,022	$	151,009	$	363,081	$	549,416

See notes to consolidated financial statements.

Table of Contents

STEEL DYNAMICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)



	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2020		2019		2020		2019		2020		2019		2020		2019

Operating activities:
Net income	$	78,765	$	196,746	$	269,601	$	401,573	$	104,277	$	152,608	$	373,878	$	554,181

Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		78,721		80,911		158,980		161,085		81,752		79,470		240,732		240,555
Equity-based compensation		9,520		9,080		27,364		24,388		9,486		8,841		36,850		33,229
Deferred income taxes		14,634		11,550		20,561		23,641		10,388		11,311		30,949		34,952
Other adjustments		4,728		(564)		4,464		164		17,237		(1,116)		21,701		(952)
Changes in certain assets and liabilities:
Accounts receivable		154,352		70,624		280		9,562		(58,271)		85,633		(57,991)		95,195
Inventories		77,521		64,941		122,026		104,410		(38,236)		35,479		83,790		139,889
Other assets		11,137		7,292		9,596		7,593		(3,894)		39		5,702		7,632
Accounts payable		69,523		(58,484)		121,119		(55,278)		645		1,111		121,764		(54,167)
Income taxes receivable/payable		7,993		(36,428)		60,378		13,422		(27,127)		6,293		33,251		19,715
Accrued expenses		(20,884)		15,805		(97,078)		(147,534)		55,533		64,533		(41,545)		(83,001)
Net cash provided by operating activities		486,010		361,473		697,291		543,026		151,790		444,202		849,081		987,228

Investing activities:
Purchases of property, plant and equipment		(309,716)		(85,120)		(527,251)		(139,556)		(327,647)		(154,131)		(854,898)		(293,687)
Purchases of short-term investments		-		(49,465)		(149,359)		(99,142)		-		(34,884)		(149,359)		(134,026)
Proceeds from maturities of short-term investments		149,648		109,034		341,988		213,771		69,545		79,508		411,533		293,279
Acquisition of business, net of cash and restricted cash acquired		-		-		-		(93,412)		(59,012)		(3,694)		(59,012)		(97,106)
Other investing activities		803		913		1,321		1,277		380		2,746		1,701		4,023
Net cash used in investing activities		(159,265)		(24,638)		(333,301)		(117,062)		(316,734)		(110,455)		(650,035)		(227,517)
															��
Financing activities:
Issuance of current and long-term debt		1,099,774		125,222		1,316,035		246,456		295,814		128,230		1,611,849		374,686
Repayment of current and long-term debt		(1,103,814)		(133,875)		(1,339,571)		(249,146)		(305,911)		(119,988)		(1,645,482)		(369,134)
Dividends paid		(52,584)		(53,503)		(104,065)		(95,742)		(52,592)		(52,751)		(156,657)		(148,493)
Purchases of treasury stock		-		(93,136)		(106,529)		(177,444)		-		(114,950)		(106,529)		(292,394)
Other financing activities		(8,763)		(12)		(14,915)		(5,732)		(1,587)		(1,527)		(16,502)		(7,259)
Net cash used in financing activities		(65,387)		(155,304)		(249,045)		(281,608)		(64,276)		(160,986)		(313,321)		(442,594)

Increase in cash, cash equivalents, and restricted cash		261,358		181,531		114,945		144,356
Increase (decrease) in cash, cash equivalents, and restricted cash										(229,220)		172,761		(114,275)		317,117
Cash, cash equivalents, and restricted cash at beginning of period		1,240,984		797,248		1,387,397		834,423		1,502,342		978,779		1,387,397		834,423

Cash, cash equivalents, and restricted cash at end of period	$	1,502,342	$	978,779	$	1,502,342	$	978,779	$	1,273,122	$	1,151,540	$	1,273,122	$	1,151,540


Supplemental disclosure information:
Cash paid for interest	$	59,668	$	53,981	$	68,453	$	62,587	$	8,597	$	9,115	$	77,050	$	71,702
Cash paid for income taxes, net	$	1,430	$	84,516	$	1,948	$	86,355	$	43,900	$	29,794	$	45,848	$	116,149

See notes to consolidated financial statements.

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Description of the Business and Significant Accounting Policies

Description of the Business

Steel Dynamics, Inc. (SDI), together with its subsidiaries (the company), is a domestic manufacturer of steel products and metals recycler. The company has 3 reportable segments: steel operations, metals recycling operations, and steel fabrication operations.

Steel Operations Segment. Steel operations include the company’s Butler Flat Roll Division, Columbus Flat Roll Division, The Techs galvanizing lines, Heartland Flat Roll Division, United Steel Supply, Structural and Rail Division, Engineered Bar Products Division, Vulcan Threaded Products, Inc., Roanoke Bar Division, Steel of West Virginia, and Iron Dynamics, a liquid pig iron (scrap substitute) production facility that supplies solely the Butler Flat Roll Division. These operations include electric arc furnace steel mills, producing steel from ferrous scrap and scrap substitutes, utilizing continuous casting, automated rolling mills, with several coating and processing lines. Steel operations accounted for ~~78%~~73% and 76% of the company’s consolidated external net sales during the ~~three months~~three-month periods ended ~~June~~September 30, 2020 and 2019, and 75% and 76% ~~of the company's consolidated external net sales~~ during the ~~six months~~nine-month periods ended ~~June~~September 30, 2020 and ~~2019.~~2019, respectively.

Metals Recycling Operations Segment. Metals recycling operations consists ~~solely~~ of OmniSource, LLC (OmniSource), and includes both ferrous and nonferrous processing, transportation, marketing, brokerage, and scrap management ~~services.~~services, including Omni Mexico (formerly Zimmer, S.A de C.V), acquired August 3, 2020 (refer to Note 2. Acquisition). Metals recycling operations accounted for 7%12% and ~~12%~~11% of the company’s consolidated external net sales during the ~~three months~~three-month periods ended ~~June~~September 30, 2020 and 2019, respectively, and 10% and 12% ~~of the company’s consolidated external net sales~~ during the ~~six months~~nine-month periods ended ~~June~~September 30, 2020 and 2019, respectively.

Steel Fabrication Operations Segment. Steel fabrication operations include the company’s 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 trusses, girders, steel joists and steel deck used within the non-residential construction industry. Steel fabrication operations accounted for 10% of the company’s consolidated external net sales during the three-month periods ended September 30, 2020 and 2019, and 10% and 9% of the company’s consolidated external net sales during the ~~three months~~nine-month periods ended ~~June 30, 2020 and 2019, respectively and 9% and 8% of the company’s consolidated external net sales during the six months ended June~~September 30, 2020 and 2019, respectively.

Other. Other operations consists of subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of smaller joint ventures, and the idle 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.

Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of SDI, together with its wholly- and majority-owned or controlled subsidiaries, after elimination of intercompany accounts and transactions. Noncontrolling and redeemable noncontrolling interests represent the noncontrolling owner’s proportionate share in the equity, income, or losses of the company’s majority-owned or controlled consolidated subsidiaries.

Use of Estimates. These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States, and accordingly, include amounts that require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and in the notes thereto. Significant items subject to such estimates and assumptions include the carrying value of property, plant and equipment, intangible assets, and goodwill; allowances for credit losses for trade receivables, inventories and deferred income tax assets; unrecognized tax benefits; potential environmental liabilities; and litigation claims and settlements. Actual results may differ from these estimates and assumptions.

In the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the interim period results. These consolidated financial statements and notes should be read in conjunction with the audited financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Cash and Equivalents, and Restricted Cash

Cash and equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition. Restricted cash and equivalents is primarily funds held in escrow as required by various insurance and government organizations. The balance of cash, cash equivalents and restricted cash in the consolidated statements of cash flows includes restricted cash of $5.5 million at September 30, 2020 and 2019, $5.9 million ~~$5.5 million, $5.9 million, $6.2 million, $5.8 million,~~at June 30, 2020 and December 31, 2019, and $6.2 million at June 30, ~~2020, March 31, 2020, December 31, 2019, June 30, 2019, March 31,~~ 2019 and December 31, 2018, ~~respectively,~~ which are recorded in Other Assets (noncurrent) in the company’s consolidated balance sheets.

Goodwill

The company’s goodwill consisted of the following at ~~June~~September 30, 2020, and December 31, 2019, (in thousands):



	June 30,		December 31,			September 30,		December 31,
	2020		2019			2020		2019

Steel Operations Segment	$	272,133	$	272,133	Steel Operations Segment	$	272,133	$	272,133
Metals Recycling Operations Segment		177,162		178,857	Metals Recycling Operations Segment		200,462		178,857
Steel Fabrication Operations Segment		1,925		1,925	Steel Fabrication Operations Segment		1,925		1,925
	$	451,220	$	452,915		$	474,520	$	452,915

The company acquired Omni Mexico (formerly Zimmer S.A. de C.V.) on August 3, 2020 (refer to Note 2. Acquisition) resulting in a preliminary purchase price allocation in which $24.1 million of goodwill was recorded in the Metals Recycling Operations segment. Metals Recycling Operations Segment goodwill decreased ~~$1.7~~$2.5 million from December 31, 2019 to ~~June~~September 30, 2020, in recognition of the 2020 tax benefit related to the normal amortization of the component of OmniSource tax-deductible goodwill in excess of book goodwill.

Credit Losses

ASU 2016-13, Financial Instruments - Credit Losses and its subsequent corresponding updates (ASC 326), requires an entity to use a forward-looking expected loss model versus the incurred loss model for most financial instruments, including accounts receivable. The company adopted ASC 326 effective January 1, 2020, using the modified retrospective transition method, with no impact on the company’s financial position, results of operations or cash flows.

The company is exposed to credit risk in the event of nonpayment of accounts receivable by customers. The company mitigates its exposure to credit risk, which it generally extends on an unsecured basis, by performing ongoing credit evaluations and taking further action if necessary, such as requiring letters of credit or other security interests to support the customer receivable. The allowance for credit losses for accounts receivable is based on the company’s reasonable estimate of known credit risks and historical experience, adjusted for current and anticipated economic and other pertinent factors affecting the company’s customers, that may differ from historical experience. Customer accounts receivable are written off when all collection efforts have been exhausted and the amounts are deemed uncollectible.

At ~~June~~September 30, 2020, wethe company reported ~~$844.1~~$918.8 million of accounts receivable, net of allowances for credit losses of ~~$7.7~~$8.3 million. Changes in the allowance were not material for the three and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020.

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 2. Acquisition

On August 3, 2020, the company acquired Zimmer, S.A. de C.V. (“Zimmer”) for cash consideration of $59.0 million, a portion of which was used to pay off all existing borrowings of Zimmer in accordance with the purchase agreement. The transaction was funded with available cash. The acquisition of Zimmer is part of the company’s raw material procurement strategy to support its new Texas flat roll steel mill, which is planned to begin operations mid-year 2021. Zimmer is headquartered in Monterrey, Mexico and operates 6 ferrous and nonferrous scrap facilities strategically positioned near high-volume industrial scrap sources located throughout Central and Northern Mexico, and several third party scrap processing locations. The aggregate purchase price was preliminarily allocated to the opening balance sheet of Zimmer as of August 3, 2020, based on the information available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed: current assets of $30.0 million; property, plant, and equipment of $18.3 million; goodwill of $24.1 million; and liabilities assumed of $13.4 million. The accounting for the acquisition has not yet been completed because the company has not finalized the valuations of the acquired assets, identifiable intangible assets, if any, including goodwill, and assumed liabilities.

Note 2.3. Earnings Per Share

Basic earnings per share is based on the weighted average shares of common stock outstanding during the period. Diluted earnings per share assumes the weighted average dilutive effect of common share equivalents outstanding during the period applied to the company’s basic earnings per share. Common share equivalents represent potentially dilutive restricted stock units, deferred stock units, restricted stock, and performance awards, and are excluded from the computation in periods in which they have an anti-dilutive effect. There were 0 anti-dilutive common share equivalents as of or for the three and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020 and 2019.



	Three Months Ended June 30,												Three Months Ended September 30,
	2020						2019						2020						2019
			Weighted						Weighted						Weighted						Weighted
			Average						Average						Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share		Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	75,496		210,343	$	0.36	$	194,302		221,505	$	0.88	$	100,143		210,366	$	0.48	$	151,048		217,873	$	0.69
Dilutive common share equivalents		-		1,035				-		1,014				-		1,560				-		1,236
Diluted earnings per share	$	75,496		211,378	$	0.36	$	194,302		222,519	$	0.87	$	100,143		211,926	$	0.47	$	151,048		219,109	$	0.69



	Six Months Ended June 30,												Nine Months Ended September 30,
	2020						2019						2020						2019
			Weighted						Weighted						Weighted						Weighted
			Average						Average						Average						Average
	Net Income		Shares		Per Share		Net Income		Shares		Per Share		Net Income		Shares		Per Share		Net Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share	$	262,836		211,798	$	1.24	$	398,630		222,781	$	1.79	$	362,979		211,321	$	1.72	$	549,678		221,145	$	2.49
Dilutive common share equivalents		-		903				-		960				-		1,122				-		1,052
Diluted earnings per share	$	262,836		212,701	$	1.24	$	398,630		223,741	$	1.78	$	362,979		212,443	$	1.71	$	549,678		222,197	$	2.47

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 3.4. Inventories

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

June 30,

December 31,

2020

2019

Raw materials
$
589,122

$
686,831

Supplies

483,323

498,298

Work in progress

150,139

154,669

Finished goods

344,433

349,245

Total inventories
$
1,567,017

$
1,689,043


	September 30,		December 31,
	2020		2019
Raw materials	$	628,911	$	686,831
Supplies		497,274		498,298
Work in progress		149,929		154,669
Finished goods		333,102		349,245
Total inventories	$	1,609,216	$	1,689,043

Note 4.5. Debt

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 will be used to fund the November 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 will record expenses related to premiums and write off of unamortized debt issuance costs of approximately $10.3 million in other expenses in the fourth quarter of 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 5.250% senior notes due 2023 ~~(“2023 Notes”)~~ 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 ~~(“2024 Notes”)~~ 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 of unamortized debt issuance costs, and other expenses of approximately $22.8 million, which are reflected in other expenses in the consolidated statements of income for the ~~three and six-months~~nine-month period ended ~~June~~September 30, ~~2020~~.2020.

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 5.6. Changes in Equity

The following tables provide a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to stockholders of Steel Dynamics, Inc., and equity and redeemable amounts attributable to noncontrolling interests (in thousands) for the three and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020 and 2019:



	Stockholders of Steel Dynamics, Inc.																Stockholders of Steel Dynamics, Inc.
									Accumulated																Accumulated
					Additional				Other						Redeemable						Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling		Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Loss		Interests		Equity		Interests		Stock		Stock		Capital		Earnings		Income (Loss)		Interests		Equity		Interests
Balances at December 31, 2019	$	646	$	(1,525,113)	$	1,181,012	$	4,419,296	$	(7)	$	(154,593)	$	3,921,241	$	143,614	$	646	$	(1,525,113)	$	1,181,012	$	4,419,296	$	(7)	$	(154,593)	$	3,921,241	$	143,614
Dividends declared		-		-		-		(52,585)		-		-		(52,585)		-		-		-		-		(52,585)		-		-		(52,585)		-
Noncontrolling investors of USS		-		-		-		-		-		(7,504)		(7,504)		7,400		-		-		-		-		-		(7,504)		(7,504)		7,400
Share repurchases		-		(106,529)		-		-		-		-		(106,529)		-		-		(106,529)		-		-		-		-		(106,529)		-
Equity-based compensation		-		6,834		2,764		(169)		-		-		9,429		-		-		6,834		2,764		(169)		-		-		9,429		-
Net income		-		-		-		187,340		-		3,496		190,836		-		-		-		-		187,340		-		3,496		190,836		-
Other comprehensive loss, net of tax		-		-		-		-		37		-		37		-
Other comprehensive income, net of tax																		-		-		-		-		37		-		37		-
Balances at March 31, 2020		646		(1,624,808)		1,183,776		4,553,882		30		(158,601)		3,954,925		151,014		646		(1,624,808)		1,183,776		4,553,882		30		(158,601)		3,954,925		151,014
Dividends declared		-		-		-		(52,591)		-		-		(52,591)		-		-		-		-		(52,591)		-		-		(52,591)		-
Noncontrolling investors of USS		-		-		-		-		-		(2,410)		(2,410)		1,400		-		-		-		-		-		(2,410)		(2,410)		1,400
Share repurchases		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-
Equity-based compensation		-		953		7,838		(158)		-		-		8,633		-		-		953		7,838		(158)		-		-		8,633		-
Net income		-		-		-		75,496		-		3,269		78,765		-		-		-		-		75,496		-		3,269		78,765		-
Other comprehensive income, net of tax																		-		-		-		-		186		-		186		-
Balances at June 30, 2020																		646		(1,623,855)		1,191,614		4,576,629		216		(157,742)		3,987,508		152,414
Dividends declared																		-		-		-		(52,592)		-		-		(52,592)		-
Noncontrolling investors of USS																		-		-		-		-		-		(4,190)		(4,190)		3,000
Share repurchases																		-		-		-		-		-		-		-		-
Equity-based compensation																		-		50		8,614		(161)		-		-		8,503		-
Net income																		-		-		-		100,143		-		4,134		104,277		-
Other comprehensive loss, net of tax		-		-		-		-		186		-		186		-		-		-		-		-		(121)		-		(121)		-
Balances at June 30, 2020	$	646	$	(1,623,855)	$	1,191,614	$	4,576,629	$	216	$	(157,742)	$	3,987,508	$	152,414
Balances at September 30, 2020																	$	646	$	(1,623,805)	$	1,200,228	$	4,624,019	$	95	$	(157,798)	$	4,043,385	$	155,414

Stockholders of Steel Dynamics, Inc.

Accumulated

Additional

Other

Redeemable

Common

Treasury

Paid-In

Retained

Comprehensive

Noncontrolling

Total

Noncontrolling

Stock

Stock

Capital

Earnings

Loss

Interests

Equity

Interests
Balances at December 31, 2018
$
645

$
(1,184,243)

$
1,160,048

$
3,958,320

$
301

$
(159,082)

$
3,775,989

$
111,240
Dividends declared

-

-

-

(53,504)

-

-

(53,504)

-
Noncontrolling investors of USS

-

-

-

-

-

-

28,690
Share repurchases

-

(84,308)

-

-

-

-

(84,308)

-
Equity-based compensation

-

6,714

91

(110)

-

-

6,695

-
Net income

-

-

-

204,328

-

499

204,827

-
Other comprehensive loss, net of tax

-

-

-

-

(171)

-

(171)

-
Balances at March 31, 2019

645

(1,261,837)

1,160,139

4,109,034

130

(158,583)

3,849,528

139,930
Dividends declared

-

-

-

(52,751)

-

-

(52,751)

-
Share repurchases

-

(93,136)

-

-

-

-

(93,136)

-
Equity-based compensation

-

816

7,366

(166)

-

-

8,016

-
Net income

-

-

-

194,302

-

2,444

196,746

-
Other comprehensive loss, net of tax

-

-

-

-

(52)

-

(52)

-
Balances at June 30, 2019
$
645

$
(1,354,157)

$
1,167,505

$
4,250,419

$
78

$
(156,139)

$
3,908,351

$
139,930



	Stockholders of Steel Dynamics, Inc.
									Accumulated
					Additional				Other						Redeemable
	Common		Treasury		Paid-In		Retained		Comprehensive		Noncontrolling		Total		Noncontrolling
	Stock		Stock		Capital		Earnings		Income (Loss)		Interests		Equity		Interests
Balances at December 31, 2018	$	645	$	(1,184,243)	$	1,160,048	$	3,958,320	$	301	$	(159,082)	$	3,775,989	$	111,240
Dividends declared		-		-		-		(53,504)		-		-		(53,504)		-
Noncontrolling investors of USS		-		-		-		-				-		-		28,690
Share repurchases		-		(84,308)		-		-		-		-		(84,308)		-
Equity-based compensation		-		6,714		91		(110)		-		-		6,695		-
Net income		-		-		-		204,328		-		499		204,827		-
Other comprehensive loss, net of tax		-		-		-		-		(171)		-		(171)		-
Balances at March 31, 2019		645		(1,261,837)		1,160,139		4,109,034		130		(158,583)		3,849,528		139,930
Dividends declared		-		-		-		(52,751)		-		-		(52,751)		-
Share repurchases		-		(93,136)		-		-		-		-		(93,136)		-
Equity-based compensation		-		816		7,366		(166)		-		-		8,016		-
Net income		-		-		-		194,302		-		2,444		196,746		-
Other comprehensive loss, net of tax		-		-		-		-		(52)		-		(52)		-
Balances at June 30, 2019		645		(1,354,157)		1,167,505		4,250,419		78		(156,139)		3,908,351		139,930
Dividends declared		-		-		-		(51,778)		-		-		(51,778)		-
Noncontrolling investors of USS		-		-		-		-		-		(1,321)		(1,321)		3,684
Share repurchases		-		(114,950)		-		-		-		-		(114,950)		-
Equity-based compensation		-		29		8,007		(166)		-		-		7,870		-
Net income		-		-		-		151,048		-		1,560		152,608		-
Other comprehensive loss, net of tax		-		-		-		-		(39)		-		(39)		-
Balances at September 30, 2019	$	645	$	(1,469,078)	$	1,175,512	$	4,349,523	$	39	$	(155,900)	$	3,900,741	$	143,614

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 6.7. 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, and occasionally to mitigate foreign currency exchange rate risk, and have in the past to mitigate interest rate fluctuation risk. The company routinely enters into forward exchange traded futures and option contracts to manage the price risk associated with nonferrous metals inventory as well as purchases and sales of nonferrous and ferrous metals (primarily aluminum and copper). The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements.

Commodity Futures Contracts. If the company is “long” on futures contracts, it means the company has more futures contracts purchased than futures contracts sold for the underlying commodity. If the company is “short” on a futures contract, it means the company has more futures contracts sold than futures contracts purchased for the underlying commodity. The following summarizes the company’s significant futures contract commitments as of ~~June~~September 30, 2020:



Commodity Futures	Long/Short	Metric Tons
Aluminum	Long	~~3,525~~1,850
Aluminum	Short	~~4,475~~3,450
Copper	Long	~~11,453~~4,831
Copper	Short	~~19,493~~16,284

The following summarizes the location and amounts of the fair values reported on the company’s consolidated balance sheets as of ~~June~~September 30, 2020, and December 31, 2019, and gains and losses related to derivatives included in the company’s statement of income for the ~~three~~three- and ~~six-month~~nine-month periods ended ~~June~~September 30, 2020, and 2019 (in thousands):



		Asset Derivatives				Liability Derivatives					Asset Derivatives				Liability Derivatives
	Balance sheet	Fair Value				Fair Value				Balance sheet	Fair Value				Fair Value
	location	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019		location	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Derivative instruments designated as hedges
Commodity futures	Other current assets	$	2,060	$	966	$	4,260	$	1,011	Other current assets	$	2,012	$	966	$	827	$	1,011

Derivative instruments not designated as hedges
Commodity futures	Other current assets		3,500		310		2,588		721	Other current assets		949		310		667		721
Total derivative instruments		$	5,560	$	1,276	$	6,848	$	1,732		$	2,961	$	1,276	$	1,494	$	1,732

The fair value of the above derivative instruments along with required margin deposit amounts with the same counterparty under master netting arrangements totaled ~~$3.1~~$3.5 million at ~~June~~September 30, 2020, and $3.7 million at December 31, 2019, and are reflected in other current assets in the consolidated balance sheets.

Amount of gain (loss)

Amount of gain (loss)

recognized in income

Location of gain
recognized in income

Location of gain
on derivatives for the

(loss) recognized
on derivatives for the

(loss) recognized
three months ended

Hedged items in

in income on
three months ended

in income on
June 30,

fair value hedge

related hedged
June 30,

derivatives
2020

2019

relationships

items
2020

2019
Derivatives in fair value

hedging relationships

Commodity futures

Costs of goods sold
$
(3,287)

$
591

Firm commitments

Costs of goods sold
$
(484)

$
1,415

Inventory

Costs of goods sold

2,579

(294)
Derivatives not designated

$
2,095

$
1,121
as hedging instruments

Commodity futures

Costs of goods sold
$
(1,289)

$
5,487

910

Table of Contents

STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 6.7. Derivative Financial Instruments (Continued)

Amount of gain (loss)

recognized in income

Location of gain

recognized in income

Location of gain

recognized in income

Location of gain

on derivatives for the

(loss) recognized

on derivatives for the

Location of gain

on derivatives for the

(loss) recognized

on derivatives for the

(loss) recognized

six months ended

Hedged items in

in income on

six months ended

(loss) recognized

three months ended

Hedged items in

in income on

three months ended

in income on

June 30,

fair value hedge

related hedged

June 30,

in income on

September 30,

fair value hedge

related hedged

September 30,

derivatives

2020

2019

relationships

items

2020

2019

derivatives

2020

2019

relationships

items

2020

2019

Derivatives in fair value

hedging relationships

Commodity futures

Costs of goods sold

(2,449)

(862)

Firm commitments

Costs of goods sold

1,255

(84)

Costs of goods sold

3,545

302

Firm commitments

Costs of goods sold

(2,156)

(519)

Inventory

Costs of goods sold

1,340

427

Inventory

Costs of goods sold

(1,682)

(182)

Derivatives not designated

2,595

343

(3,838)

(701)

as hedging instruments

Commodity futures

Costs of goods sold

9,650

1,410

Costs of goods sold

(10,289)

4,536

Amount of gain (loss)

recognized in income

Location of gain

recognized in income

Location of gain

on derivatives for the

(loss) recognized

on derivatives for the

(loss) recognized

nine months ended

Hedged items in

in income on

nine months ended

in income on

September 30,

fair value hedge

related hedged

September 30,

derivatives

2020

2019

relationships

items

2020

2019

Derivatives in fair value

hedging relationships

Commodity futures

Costs of goods sold

1,096

(560)

Firm commitments

Costs of goods sold

(901)

(603)

Inventory

Costs of goods sold

(342)

245

Derivatives not designated

(1,243)

(358)

as hedging instruments

Commodity futures

Costs of goods sold

(639)

5,946

Derivatives accounted for as fair value hedges had ineffectiveness resulting in gains of ~~$2,400~~$110,000 and ~~$1.2 million~~$69,000 during the three-month periods ended ~~June~~September 30, 2020, and 2019, respectively, and ~~losses of $59,000 and~~ gains of ~~$32,000~~$51,000 and $101,000 during the ~~six-month~~nine-month periods ended ~~June~~September 30, 2020, and 2019, respectively. Losses excluded from hedge effectiveness testing of ~~$1.2 million~~$403,000 and $399,000 increased cost of goods sold during the three-month ~~period~~periods ended ~~June~~September 30, 2020, and g~~ains of $1.7 million decreased cost of goods sold during the three-month period ended June 30,~~ 2019,~~. Gains~~ respectively. Losses excluded from hedge effectiveness testing of ~~$205,000 decreased cost of goods sold during the six-month period ended June 30, 2020~~$198,000 and l~~osses of $519,000~~$918,000 increased cost of goods sold during the ~~six-month period~~nine-month periods ended ~~June~~September 30, ~~2019.~~2020, and 2019, respectively.

Derivatives accounted for as cash flow hedges resulted in net ~~gains~~losses of ~~$480,000~~$274,000 and ~~$88,000~~$8,000 recognized in other comprehensive income for the three-month periods ended ~~June~~September 30, 2020, and 2019, respectively, and net gains of ~~$491,000~~$217,000 and ~~$147,000~~$139,000 for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2020, and 2019, respectively. Net losses of $115,000 and net gains of ~~$236,000 and $157,000~~$43,000 were reclassified from accumulated other comprehensive income for the three-month periods ended ~~June~~September 30, 2020, and 2019, respectively, and net gains of ~~$198,000~~$84,000 and ~~$440,000~~$43,000 for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2020, and 2019, respectively. At ~~June~~September 30, 2020, the company expects to reclassify all ~~$284,000~~$124,000 of net gains on derivative instruments from accumulated other comprehensive income to earnings during the next 12 months due to the settlement of futures contracts.

Note 7.8. 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.

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 7.8. Fair Value Measurements (Continued)

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

~~June~~ September 30, 2020, and December 31, 2019 (in thousands):



			Quoted Prices		Significant						Quoted Prices		Significant
			in Active		Other		Significant				in Active		Other		Significant
			Markets for		Observable		Unobservable				Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs				Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
June 30, 2020
Short-term investments	$	69,546	$	-	$	69,546	$	-
September 30, 2020
Commodity futures – financial assets		5,560		-		5,560		-	$	2,961	$	-	$	2,961	$	-
Commodity futures – financial liabilities		6,848		-		6,848		-		1,494		-		1,494		-

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

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 and the commodity futures contracts are estimated by the use of quoted market prices, estimates obtained from brokers, and other appropriate valuation techniques based on references available (Level 2). The fair value of long-term debt, including current maturities, as determined by quoted market prices (Level 2), was approximately $2.9 billion and $2.8 billion at ~~June~~September 30, 2020, and December 31, 2019, respectively (with a corresponding carrying amount in the consolidated balance sheet of $2.7 billion at ~~June~~September 30, 2020 and $2.8 billion at December 31, 2019).

Note 8.9. Commitments and Contingencies

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

Note 9.10. Segment Information

The company’s operations are primarily organized and managed by reportable operating segments, which are steel operations, metals recycling operations, and steel fabrication operations. The segment operations are more fully described in Note 1 to the consolidated financial statements. Operating segment performance and resource allocations are primarily based on operating results before income taxes. The accounting policies of the reportable segments are consistent with those described in Note 1 to the consolidated financial statements. Intra-segment sales and any related profits are eliminated in consolidation. Amounts included in the category “Other” are from subsidiary operations that are below the quantitative thresholds required for reportable segments and primarily consist of smaller joint ventures, and the idle 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.

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 9.10. Segment Information (Continued)

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



			Metals		Steel												Metals		Steel
For the three months ended	Steel		Recycling		Fabrication										Steel		Recycling		Fabrication
June 30, 2020	Operations		Operations		Operations		Other			Eliminations			Consolidated
September 30, 2020															Operations		Operations		Operations		Other			Eliminations			Consolidated

Net sales - disaggregated revenue
External	$	1,578,252	$	126,818	$	214,951	$	94,274		$	-		$	2,014,295	$	1,634,122	$	202,034	$	241,440	$	120,175		$	-		$	2,197,771
External Non-U.S.		49,775		29,764		300		171			-			80,010		62,409		70,429		98		125			-			133,061
Other segments		71,371		260,106		3,177		-			(334,654)			-		79,253		364,010		5,052		62			(448,377)			-
		1,699,398		416,688		218,428		94,445			(334,654)			2,094,305		1,775,784		636,473		246,590		120,362			(448,377)			2,330,832
Operating income (loss)		168,043		(8,715)		27,155		(32,089)	⁽¹⁾		4,456	⁽²⁾		158,850		139,466		12,668		39,231		(34,384)	⁽¹⁾		(1,125)			155,856
Income (loss) before income taxes		151,012		(12,654)		25,959		(65,445)			4,173			103,045		126,825		12,051		38,374		(42,484)			(1,406)	⁽²⁾		133,360
Depreciation and amortization		60,686		12,170		2,737		3,128			-			78,721		63,538		12,368		2,634		3,212			-			81,752
Capital expenditures		301,179		3,821		2,364		2,352			-			309,716		309,421		5,674		5,113		7,439			-			327,647

As of June 30, 2020
As of September 30, 2020
Assets	$	5,533,365	$	867,866	$	397,070	$	1,718,951	⁽³⁾	$	(48,911)	⁽⁴⁾	$	8,468,341	$	5,839,628	$	1,026,630	$	373,085	$	1,442,910	⁽³⁾	$	(64,697)	⁽⁴⁾	$	8,617,556

Footnotes related to the three months ended June 30, 2020, segment results (in millions):

(1)
Corporate SG&A
$
(14.5)

(2)
Gross profit increase from intra-company sales
$
4.5

Company-wide equity-based compensation

(9.7)

Profit sharing

(8.2)

Other, net

0.3

$
(32.1)

(3)
Cash and equivalents
$
1,418.4

(4)
Elimination of intra-company receivables
$
(35.5)

Short-term investments

69.5

Elimination of intra-company debt

(6.5)

Accounts receivable

11.4

Other

(6.9)

Inventories

26.9

$
(48.9)

Property, plant and equipment, net

148.2

Intra-company debt

6.5

Other

38.1

$
1,719.0


Footnotes related to the three months ended September 30, 2020, segment results (in millions):

(1)	Corporate SG&A	$	(14.2)	(2)	Gross profit decrease from intra-company sales	$	1.4
	Company-wide equity-based compensation		(9.6)
	Profit sharing		(10.5)
	Other, net		(0.1)
		$	(34.4)

(3)	Cash and equivalents	$	1,162.3	(4)	Elimination of intra-company receivables	$	(49.1)
	Accounts receivable		12.1		Elimination of intra-company debt		(7.2)
	Inventories		61.9		Other		(8.4)
	Property, plant and equipment, net		152.8			$	(64.7)
	Intra-company debt		7.2
	Other		46.6
		$	1,442.9

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 9.10. Segment Information (Continued)



			Metals		Steel												Metals		Steel
For the three months ended	Steel		Recycling		Fabrication										Steel		Recycling		Fabrication
June 30, 2019	Operations		Operations		Operations		Other			Eliminations			Consolidated
September 30, 2019															Operations		Operations		Operations		Other			Eliminations			Consolidated

Net sales - disaggregated revenue
External	$	2,040,756	$	262,826	$	240,439	$	99,641		$	-		$	2,643,662	$	1,838,682	$	230,086	$	245,914	$	77,330		$	-		$	2,392,012
External Non-U.S.		65,595		60,273		985		-			-			126,853		83,845		50,823		165		-			-			134,833
Other segments		81,834		333,667		-		121			(415,622)			-		85,678		293,999		637		100			(380,414)			-
		2,188,185		656,766		241,424		99,762			(415,622)			2,770,515		2,008,205		574,908		246,716		77,430			(380,414)			2,526,845
Operating income (loss)		291,411		7,619		30,664		(49,153)	⁽¹⁾		4,491	⁽²⁾		285,032		234,683		(101)		35,280		(42,441)	⁽¹⁾		624			228,045
Income (loss) before income taxes		274,155		6,500		29,466		(57,438)			4,277			256,960		217,699		(1,159)		34,080		(49,780)			411	⁽²⁾		201,251
Depreciation and amortization		63,150		11,525		2,974		3,262			-			80,911		63,170		11,769		2,941		1,590			-			79,470
Capital expenditures		43,575		12,173		3,019		26,353			-			85,120		40,818		11,498		3,759		98,056			-			154,131


Footnotes related to the three months ended June 30, 2019, segment results (in millions):
Footnotes related to the three months ended September 30, 2019, segment results (in millions):								Footnotes related to the three months ended September 30, 2019, segment results (in millions):

(1)	Corporate SG&A	$	(18.0)	(2)	Gross profit increase from intra-company sales	$	4.5	Corporate SG&A	$	(15.4)	(2)	Gross profit increase from intra-company sales	$	0.4
	Company-wide equity-based compensation		(8.4)					Company-wide equity-based compensation		(8.7)
	Profit sharing		(21.3)					Profit sharing		(17.0)
	Other, net		(1.5)					Other, net		(1.3)
		$	(49.2)						$	(42.4)



			Metals		Steel												Metals		Steel
For the six months ended	Steel		Recycling		Fabrication
June 30, 2020	Operations		Operations		Operations		Other			Eliminations			Consolidated
For the nine months ended															Steel		Recycling		Fabrication
September 30, 2020															Operations		Operations		Operations		Other			Eliminations			Consolidated

Net sales - disaggregated revenue
External	$	3,438,837	$	361,651	$	435,886	$	214,616		$	-		$	4,450,990	$	5,072,959	$	563,685	$	677,326	$	334,791		$	-		$	6,648,761
External Non-U.S.		130,896		86,788		300		431			-			218,415		193,305		157,217		398		556			-			351,476
Other segments		145,817		596,988		3,683		88			(746,576)			-		225,070		960,998		8,735		150			(1,194,953)			-
		3,715,550		1,045,427		439,869		215,135			(746,576)			4,669,405		5,491,334		1,681,900		686,459		335,497			(1,194,953)			7,000,237
Operating income (loss)		456,437		(3,187)		56,318		(78,444)	⁽¹⁾		1,412	⁽²⁾		432,536		595,903		9,481		95,549		(112,828)	⁽¹⁾		287			588,392
Income (loss) before income taxes		424,567		(8,349)		53,877		(119,685)			891			351,301		551,392		3,702		92,251		(162,169)			(515)	⁽²⁾		484,661
Depreciation and amortization		123,113		24,142		5,485		6,240			-			158,980		186,651		36,510		8,119		9,452			-			240,732
Capital expenditures		494,452		22,044		6,453		4,302			-			527,251		803,873		27,718		11,566		11,741			-			854,898

Footnotes related to the six months ended June 30, 2020, segment results (in millions):

(1)
Corporate SG&A
$
(31.7)

(2)
Gross profit increase from intra-company sales
$
1.4

Company-wide equity-based compensation

(17.9)

Profit sharing

(29.5)

Other, net

0.7

$
(78.4)


Footnotes related to the nine months ended September 30, 2020, segment results (in millions):

(1)	Corporate SG&A	$	(45.9)	(2)	Gross profit decrease from intra-company sales	$	(0.5)
	Company-wide equity-based compensation		(27.5)
	Profit sharing		(40.0)
	Other, net		0.6
		$	(112.8)

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STEEL DYNAMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 9.10. Segment Information (Continued)



			Metals		Steel												Metals		Steel
For the six months ended	Steel		Recycling		Fabrication
June 30, 2019	Operations		Operations		Operations		Other			Eliminations			Consolidated
For the nine months ended															Steel		Recycling		Fabrication
September 30, 2019															Operations		Operations		Operations		Other			Eliminations			Consolidated

Net sales - disaggregated revenue
External	$	4,085,247	$	548,551	$	468,868	$	212,889		$	-		$	5,315,555	$	5,918,189	$	778,637	$	714,782	$	290,219		$	-		$	7,701,827
External Non-U.S.		145,674		125,685		1,036		-			-			272,395		235,259		176,508		1,201		-			-			412,968
Other segments		157,429		719,575		189		369			(877,562)			-		243,107		1,013,574		826		469			(1,257,976)			-
		4,388,350		1,393,811		470,093		213,258			(877,562)			5,587,950		6,396,555		1,968,719		716,809		290,688			(1,257,976)			8,114,795
Operating income (loss)		600,489		24,581		51,287		(106,073)	⁽¹⁾		6,590	⁽²⁾		576,874		835,172		24,480		86,567		(148,514)	⁽¹⁾		7,214			804,919
Income (loss) before income taxes		567,174		22,005		48,817		(120,134)			6,161			524,023		784,873		20,846		82,897		(169,914)			6,572	⁽²⁾		725,274
Depreciation and amortization		125,662		22,964		5,941		6,518			-			161,085		188,832		34,733		8,882		8,108			-			240,555
Capital expenditures		87,251		18,815		5,012		28,478			-			139,556		128,069		30,313		8,771		126,534			-			293,687


Footnotes related to the six months ended June 30, 2019, segment results (in millions):
Footnotes related to the nine months ended September 30, 2019, segment results (in millions):								Footnotes related to the nine months ended September 30, 2019, segment results (in millions):

(1)	Corporate SG&A	$	(40.6)	(2)	Gross profit increase from intra-company sales	$	6.6	Corporate SG&A	$	(56.0)	(2)	Gross profit increase from intra-company sales	$	6.6
	Company-wide equity-based compensation		(17.4)					Company-wide equity-based compensation		(26.1)
	Profit sharing		(44.3)					Profit sharing		(61.3)
	Other, net		(3.8)					Other, net		(5.1)
		$	(106.1)						$	(148.5)

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ITEM 2. 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 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) the effects of uncertain economic conditions; (2) the effects of pandemics or other health issues, such as the recent novel coronavirus outbreak (COVID-19); (3) cyclical and changing industrial demand; (4) changes in conditions in any of the steel or scrap-consuming sectors of the economy which affect demand for our products, including the strength of the non-residential and residential construction, automotive, manufacturing, appliance, energy, and other steel-consuming industries; (5) fluctuations in the cost of key raw materials and supplies (including steel scrap, iron units, zinc, graphite electrodes, and energy costs) and our ability to pass on any cost increases; (6) the impact of domestic and foreign imports, including trade policy, restrictions, or agreements; (7) unanticipated difficulties in integrating or starting up new, acquired or planned businesses or assets; (8) risks and uncertainties involving product and/or technology development; and (9) occurrences of unexpected plant outages or equipment failures.

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

Description of the Business

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

Operating Statement Classifications

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

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

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

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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 non-consolidated investments accounted for under the equity method. Other expense consists of any non-operating costs, such as certain acquisition and financing expenses.

Impact of COVID-19 on Our Business

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

Due to use of steel in the broad infrastructure and defense framework of the United States, our business operations are designated “essential” as part of the critical infrastructure of the states where we operate. As a result, all of our locations continued to operate during the first ~~half~~nine months of 2020 and continue to operate.

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

While the continuing economic impact of COVID-19 negatively impacted our results of operations during the second ~~quarter~~and third quarters of 2020, we are unable to specifically quantify that impact or predict the ultimate impact it may have on our business, financial condition, results of operations, or cash flow for the remainder of ~~2020.~~the year. The extent to which our operations may continue to be impacted by COVID-19 will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the possibility of a resurgence or further spread of the virus. In addition, the duration of the pandemic and its eventual impact on domestic and world economies is not known or estimable. The COVID-19 pandemic significantly reduced the supply of scrap and the demand for some of our steel products during the second quarter 2020, ~~and its continuation could continue to have similar impact.~~with lingering effects on average selling prices impacting third quarter 2020 results. Certain of our suppliers and customers, such as those in the automotive, energy, and related industries, have experienced, and could further experience, temporary shutdowns or significant demand reductions. Reduced demand for our products or lack of ferrous scrap raw material supply due to shutdowns or slowdowns in manufacturing businesses could adversely affect our volumes, selling prices, and margins. However, our low, highly variable cost structure, our diversified value-added product offerings, and our downstream manufacturing businesses which are able to provide base-load “pull-through” volume for our steel operations, support our continued cash flow prospects.

Results Overview

Our consolidated results for the ~~second~~third quarter of 2020 were negatively impacted by the continuing COVID-19 pandemic, ~~from~~although the related temporary closures of numerous domestic steel consuming ~~businesses. Domestic steel demand lagged~~businesses during the second quarter were largely reversed during the third quarter, as most industrial activity resumed. Domestic steel demand rebounded meaningfully during the third quarter 2020 compared to the sequential second quarter, driving ~~lower~~higher steel shipments, ~~and selling values,~~ as well as significantly ~~lower~~higher scrap flows and profitability for our metals recycling operations. The non-residential construction market remained ~~resilient,~~strong, with construction activity largely intact during the quarter, resulting in ~~steady second~~record third quarter 2020 shipments and ~~selling prices~~operating income for our fabrication ~~operations compared to second quarter 2019.~~operations.

Consolidated operating income decreased ~~$126.2~~$72.2 million, or ~~44%~~32%, to ~~$158.9~~$155.9 million for the ~~second~~third quarter 2020, compared to the ~~second~~third quarter 2019. ~~Second~~Third quarter 2020 net income attributable to Steel Dynamics, Inc. decreased ~~$118.8~~$50.9 million, or ~~61%~~34%, to ~~$75.5~~$100.1 million, compared to the ~~second~~third quarter 2019, consistent with the decreased operating ~~income, and due to the additional expenses and interest associated with our June 2020 refinancing of senior notes.~~income.

Consolidated operating income decreased ~~$144.3~~$216.5 million, or ~~25%~~27%, to ~~$432.5~~$588.4 million for the first ~~half~~nine months of 2020, compared to the first ~~half~~nine months of 2019. First ~~half~~nine months 2020 net income attributable to Steel Dynamics, Inc. decreased ~~$135.8~~$186.7 million, or 34%, to ~~$262.8~~$363.0 million, compared to the first ~~half~~nine months of 2019, consistent with the decreased operating income, and due to the additional expenses and interest associated with our June 2020 refinancing of senior notes.

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



	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended September 30,					Nine Months Ended September 30,
	2020		% Change		2019	2020		% Change	2019		2020		% Change		2019	2020		% Change	2019
Net sales:
Steel Operations Segment	$	1,699,398	(22)%	$	2,188,185	$	3,715,550	(15)%	$	4,388,350	$	1,775,784	(12)%	$	2,008,205	$	5,491,334	(14)%	$	6,396,555
Metals Recycling Operations Segment		416,688	(37)%		656,766		1,045,427	(25)%		1,393,811		636,473	11%		574,908		1,681,900	(15)%		1,968,719
Steel Fabrication Operations Segment		218,428	(10)%		241,424		439,869	(6)%		470,093		246,590	( - )%		246,716		686,459	(4)%		716,809
Other		94,445	(5)%		99,762		215,135	1%		213,258		120,362	55%		77,430		335,497	15%		290,688
		2,428,959			3,186,137		5,415,981			6,465,512		2,779,209			2,907,259		8,195,190			9,372,771
Intra-company		(334,654)			(415,622)		(746,576)			(877,562)		(448,377)			(380,414)		(1,194,953)			(1,257,976)
	$	2,094,305	(24)%	$	2,770,515	$	4,669,405	(16)%	$	5,587,950	$	2,330,832	(8)%	$	2,526,845	$	7,000,237	(14)%	$	8,114,795

Operating income (loss):
Steel Operations Segment	$	168,043	(42)%	$	291,411	$	456,437	(24)%	$	600,489	$	139,466	(41)%	$	234,683	$	595,903	(29)%	$	835,172
Metals Recycling Operations Segment		(8,715)	(214)%		7,619		(3,187)	(113)%		24,581		12,668	N/A		(101)		9,481	(61)%		24,480
Steel Fabrication Operations Segment		27,155	(11)%		30,664		56,318	10%		51,287		39,231	11%		35,280		95,549	10%		86,567
Other		(32,089)	35%		(49,153)		(78,444)	26%		(106,073)		(34,384)	19%		(42,441)		(112,828)	24%		(148,514)
		154,394			280,541		431,124			570,284		156,981			227,421		588,105			797,705
Intra-company		4,456			4,491		1,412			6,590		(1,125)			624		287			7,214
	$	158,850	(44)%	$	285,032	$	432,536	(25)%	$	576,874	$	155,856	(32)%	$	228,045	$	588,392	(27)%	$	804,919

Steel Operations Segment

Steel operations consist of our six electric arc furnace steel mills, producing sheet and long products steel from ferrous scrap and scrap substitutes, utilizing continuous casting and automated rolling mills, with numerous value-added downstream processing and coating lines, as well as IDI, our liquid pig iron production facility that solely supplies our Butler Flat Roll Division. Our steel operations sell a diverse portfolio of value-added sheet and long products directly to end-users, steel fabricators, and service centers. These products are used in a wide variety of industries, including the construction, automotive, manufacturing, transportation, heavy equipment, and agriculture, and energy markets. Steel operations accounted for ~~78%~~73% and 76% of our consolidated external net sales during the ~~second~~third quarter of 2020 and 2019, respectively, and 75% and 76% during the first ~~half~~nine months of 2020 and 2019.

Steel Operations Segment Shipments (tons):



	Three Months Ended June 30,			Six Months Ended June 30,			Three Months Ended September 30,			Nine Months Ended September 30,
	2020	% Change	2019	2020	% Change	2019	2020	% Change	2019	2020	% Change	2019

Total shipments	2,518,019	(9)%	2,769,358	5,365,201	(2)%	5,453,769	2,682,686	(1)%	2,711,909	8,047,887	(1)%	8,165,678
Intra-segment shipments	(257,219)		(280,024)	(510,696)		(527,427)	(244,185)		(225,399)	(754,881)		(752,826)
Steel Operations Segment shipments	2,260,800	(9)%	2,489,334	4,854,505	(1)%	4,926,342	2,438,501	(2)%	2,486,510	7,293,006	(2)%	7,412,852

External shipments	2,152,856	(10)%	2,386,851	4,648,020	(2)%	4,734,060	2,310,004	(2)%	2,362,915	6,958,024	(2)%	7,096,975

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Steel Operations Segment Results 2020 vs. 2019

The COVID-19 pandemic continued to negatively ~~impacted~~impact our steel operations during the ~~second~~third quarter of 2020. ~~The temporary closure~~In spite of increased sequential quarterly shipments driven by the reopening of numerous steel consuming businesses such as automotive manufacturers and ~~the~~their related supply ~~change drove lower~~chain, average selling prices ~~and shipments,~~continued to decline, particularly for sheet steel products. ~~Conversely, construction related steel demand remained steady. However, steel~~Overall segment pricing continued to trend lower in the third quarter of 2020 compared to the same period in 2019. Third quarter 2020 average selling prices decreased 9%, or $75 per ton, compared to third quarter 2019, reflecting the lag in price recovery during the quarter compared to prior year. Steel operations segment shipments decreased only 9%2% in the ~~second~~third quarter 2020, as compared to the same period in 2019, ~~and decreased only 12%~~but increased 8% from ~~record first quarter 2020. Second~~second quarter 2020, ~~average selling prices decreased 14%, or $125 per ton, compared to 2019, reflecting the decreased~~which was adversely impacted by COVID-19 related steel ~~demand during the quarter.~~consuming business closures. Net sales for the steel operations decreased ~~22%~~12% in the ~~second~~third quarter 2020 when compared to the same period in 2019, due to ~~decreases~~the 9% decrease in ~~shipments and overall~~average steel selling ~~prices.~~prices and 2% decrease in shipments. Net sales for the steel operations decreased ~~15%~~14% in the first ~~half~~nine months of 2020 when compared to the same period in 2019, due to the decrease in steel demand primarily due to the COVID-19 pandemic, negatively impacting both steel shipments (down 2%) and average selling prices ~~primarily~~(down 12%), most notably in the second quarter of 2020.

Metallic raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost, generally comprising approximately 50 to 60% of our steel mill operations’ manufacturing costs. Our metallic raw material cost per net ton consumed in our steel operations decreased ~~$50,~~$16, or ~~16%~~6%, in the ~~second~~third quarter 2020, compared to the same period in 2019, consistent with overall decreased domestic scrap pricing. In the first ~~half~~nine months of 2020, our metallic raw material cost per ton decreased ~~$61,~~$45, or ~~18%~~15% compared to the same period in 2019.

As a result of average selling prices decreasing more than scrap costs, metal spread (which we define as the difference between average steel mill selling prices and the cost of ferrous scrap consumed in our steel mills) decreased ~~13%~~11% in the ~~second~~third quarter 2020 compared to the ~~second~~third quarter 2019. Due to this metal spread contraction, coupled with the slight decrease in shipments, operating income for the steel operations decreased ~~42%~~41%, to ~~$168.0~~$139.5 million, in the ~~second~~third quarter 2020, compared to the same period in 2019. First ~~half~~nine months 2020 operating income decreased ~~24%~~29%, to ~~$456.4~~$595.9 million, compared to the first ~~half~~nine months of 2019, due primarily to ~~decreased~~an 11% decrease in metal spreads, and to a lesser extent the 2% lower steel shipping ~~volumes, which decreased only 2%.~~volumes.

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Metals Recycling Operations Segment

Metals recycling operations consist of our ferrous and nonferrous scrap metal processing, transportation, marketing, and brokerage services, strategically located primarily in close proximity to our steel mills and other end-user scrap consumers throughout largely the eastern half of the United ~~States.~~States, as well as in Central and Northern Mexico. In addition, our metals recycling operations designs, installs, and manages customized scrap management programs for industrial manufacturing companies at hundreds of locations throughout North America. Our steel mills utilize a large portion of the ferrous scrap sold by our metals recycling operations as raw material in our steelmaking operations,

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and the remainder is sold to other consumers, such as other steel manufacturers and foundries. In the ~~second~~third quarter 2020, ~~75%~~71% of the metals recycling operations ferrous scrap was sold to our own steel mills, as ~~scrap flow slowed and~~ our steel mills were able to maintain ~~79%~~85% utilization compared to ~~55%~~64% estimated domestic steel mill utilization. Our metals recycling operations accounted for 7%12% and ~~12%~~11% of our consolidated external net sales during the ~~second~~third quarter of 2020 and 2019, respectively, and 10% and 12% during the first ~~half~~nine months of 2020 and 2019, respectively.

Metals Recycling Operations Segment Shipments:



	Three Months Ended June 30,			Six Months Ended June 30,			Three Months Ended September 30,			Nine Months Ended September 30,
	2020	% Change	2019	2020	% Change	2019	2020	% Change	2019	2020	% Change	2019
Ferrous metal (gross tons)
Total	802,070	(33)%	1,189,679	1,994,214	(16)%	2,361,040	1,256,351	7%	1,169,963	3,250,565	(8)%	3,531,003
Inter-company	(604,100)	(21)%	(764,202)	(1,402,593)	(10)%	(1,552,722)	(886,775)	15%	(773,828)	(2,289,368)	(2)%	(2,326,550)
External shipments	197,970	(53)%	425,477	591,621	(27)%	808,318	369,576	(7)%	396,135	961,197	(20)%	1,204,453

Nonferrous metals (thousands of pounds)
Total	166,914	(37)%	266,222	438,992	(21)%	558,260	267,338	4%	257,087	706,330	(13)%	815,347
Inter-company	(39,540)		(34,671)	(80,218)		(73,779)	(42,026)		(31,419)	(122,244)		(105,198)
External shipments	127,374	(45)%	231,551	358,774	(26)%	484,481	225,312	( - )%	225,668	584,086	(18)%	710,149

Metals Recycling Operations Segment Results 2020 vs. 2019

Our metals recycling operations ~~were also negatively impacted~~benefitted from a rebound in manufacturing activity during the third quarter of 2020 compared to the second quarter of 2020, which was severely impacted by the COVID-19 pandemic. ~~Decreased manufacturing activity during the quarter, primarily~~Scrap flows increased as temporary closures of domestic automotive manufacturers and their related supply chain ~~resulted in reduced scrap flows.~~were lifted. In addition, domestic steel mill utilization rates ~~declined significantly,~~rose from the trough experienced in the sequential second quarter, resulting in ~~decreased~~increased ferrous scrap demand. Net sales ~~decreased 37%~~increased 11% during the ~~second~~third quarter of 2020 compared to the same period in 2019, driven ~~primarily~~ by ~~decreased shipments. Ferrous~~increased shipments ~~to our own steel mills decreased 21% in the second quarter 2020, compared to the same period in 2019, as our quarterly steel mill utilization percentage decreased from 89% to 79% year over year.~~and higher average selling prices. Ferrous scrap average selling prices ~~decreased 3%~~increased 13% during the ~~second~~third quarter 2020 compared to the same period in 2019, while average nonferrous scrap prices increased 7%6%. Ferrous metal spread (which we define as the difference between average selling prices and the cost of purchased scrap) ~~however~~ increased ~~28%~~26%, ~~as selling prices decreased less than unprocessed scrap procurement costs,~~ while nonferrous metal spread ~~decreased 21%. Metals recycling operations operating income decreased 214% to a loss of $8.7 million in~~increased 4% during the ~~second~~third quarter 2020 compared to the ~~second~~same period in 2019. This resulted in metals recycling operations operating income increasing to $12.7 million in the third quarter 2020 compared to the third quarter 2019 operating ~~income~~loss of ~~$7.6 million, due primarily to the decrease in ferrous and nonferrous shipments.~~$101,000.

Net sales for our metals recycling operations decreased ~~25%~~15% in the first ~~half~~nine months of 2020 as compared to the same period in 2019, driven by decreased shipments in conjunction with slowdowns in industrial activity due to the COVID-19 pandemic, most notably in the second quarter. Ferrous and ~~pricing. Ferrous~~nonferrous scrap average selling prices ~~decreased 6%~~were flat during the first ~~half~~nine months of 2020 compared to the same period in ~~2019, while nonferrous average selling prices decreased 3%.~~2019. Nonferrous metal spread decreased ~~24%~~15%, while ferrous metal spread increased 9%15% in the first ~~half~~nine months of 2020 compared to the ~~first half of~~same period in 2019. Metals recycling operations operating ~~loss~~income in the first ~~half~~nine months of 2020 ~~of $3.2~~decreased 61% to $9.5 million ~~decreased 113%~~ from the first ~~half~~nine months of 2019 operating income of ~~$24.6~~$24.5 million, due primarily to decreased ferrous and nonferrous shipments, ~~most notably~~mostly in the second quarter 2020.

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Steel Fabrication Operations Segment

Steel fabrication operations include our joist and deck plants located throughout the United States and in Northern Mexico. Revenues from these plants are generated from the fabrication of steel joists, trusses, girders and steel deck used within the ~~non-~~

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~~residential~~non-residential construction industry. Steel fabrication operations accounted for 10% ~~and 9%~~ of our consolidated external net sales during the ~~second~~third quarter of 2020 and 2019, ~~respectively,~~and 10% and 9% ~~and 8%~~ during the first ~~half~~nine months of 2020 and 2019, respectively.

Steel Fabrication Operations Segment Results 2020 vs. 2019

Net sales for the steel fabrication operations ~~decreased 10%~~were flat during the ~~second~~third quarter 2020 compared to the same period in 2019, as average selling prices decreased ~~11%~~6%, or ~~$174~~$89 per ton, while shipments increased ~~2%.~~6% to a quarterly record 179,000 tons. Net sales for the segment decreased 6%4% during the first ~~half~~nine months of 2020, compared to the same period in 2019, as shipments increased 7%, and average selling prices decreased ~~13%~~10%, or ~~$196~~$158 per ton. Our steel fabrication operations continue to leverage our national operating footprint. Market demand, orders and backlog continued to be strong in the ~~second~~third quarter 2020, indicating resilience of the non-residential construction market during the COVID-19 pandemic.

The purchase of various steel products is the largest single cost of production for our steel fabrication operations, generally representing approximately two-thirds of the total cost of manufacturing. The average cost of steel consumed decreased ~~16%~~11% in the ~~second~~third quarter 2020, as compared to the same period in 2019. As a result of steel costs decreasing slightly less than selling prices per ton, metal spread (which we define as the difference between average selling prices and the cost of purchased steel) decreased 5%only 1% in the ~~second~~third quarter 2020 compared to the same period in 2019. Operating income increased 11% to a record $39.2 million in the third quarter 2020 compared to the same period in 2019 ~~and operating income decreased 11% to $27.2 million in the second quarter 2020 compared to the same period in 2019.~~on increased shipments. For the first ~~half~~nine months of 2020, operating income increased 10% to ~~$56.3~~$95.5 million compared to the first ~~half~~nine months of 2019, as increased shipments more than offset ~~the~~a 2% decrease in metal spread.

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Other Operations

~~Second~~Third Quarter Consolidated Results 2020 vs. 2019

Selling, General and Administrative Expenses. Selling, general and administrative expenses of ~~$109.3~~$118.2 million during the ~~second~~third quarter 2020 ~~were comparable to~~increased 10% from the ~~$106.3~~$107.2 million during the ~~second~~third quarter 2019, representing 5% and 4% of net sales during each period, respectively. This increase relates primarily to non-capitalized expenses incurred during construction of our new flat roll steel mill. Profit sharing expense during the ~~second~~third quarter of 2020 of ~~$9.1~~$11.8 million was down ~~60%~~34% from the ~~$22.9~~$17.8 million during the same period in 2019. The company-wide profit sharing plan represents 8% of pretax earnings; therefore, our lower ~~second~~third quarter 2020 earnings resulted in lower profit sharing.

Interest Expense, net of Capitalized Interest. During the ~~second~~third quarter 2020, interest expense of ~~$27.7~~$19.0 million decreased ~~14%~~40% from ~~$32.3~~$31.3 million during the ~~second~~third quarter of 2019, due to decreased interest rates from our December 2019 and June 2020 refinancing of $1.6 billion of high yield senior notes, and increased capitalized interest in 2020 in conjunction with our new flat roll steel mill currently under construction in Sinton, Texas.

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Income Tax Expense. ~~Second~~Third quarter 2020 income tax expense of ~~$24.3~~$29.1 million, at an effective income tax rate of ~~23.6%~~21.8%, was down ~~60%~~40% from the ~~$60.2~~$48.6 million, at an effective income tax rate of ~~23.4%~~24.2%, during the ~~second~~third quarter 2019, consistent with decreased income before income taxes.

First ~~Six~~Nine Months Consolidated Results 2020 vs. 2019

Selling, General and Administrative Expenses. Selling, general and administrative expenses of ~~$222.2~~$340.4 million during the first ~~half~~nine months of 2020 were ~~comparable to~~up 5% from the ~~$217.3~~$324.5 million during the first ~~half~~nine months of 2019, representing 5% and 4% of net sales, respectively. This increase relates primarily to non-capitalized expenses incurred during construction of our new flat roll steel mill. Profit sharing expense during the first ~~half~~nine months of 2020 of ~~$30.5~~$42.3 million decreased 34% from the ~~$46.5~~$64.4 million during the same period in 2019. The company-wide profit sharing plan represents 8% of pretax earnings; therefore, our lower first ~~half~~nine months 2020 earnings resulted in lower profit sharing.

Interest Expense, net of Capitalized Interest. During the first ~~half~~nine months of 2020, interest expense of ~~$55.7~~$74.7 million decreased ~~12%~~21% from ~~$63.4~~$94.8 million during the first ~~half~~nine months of 2019 due to decreased interest rates from our December 2019 and June 2020 refinancing of $1.6 billion of high yield senior notes, and increased capitalized interest in 2020 in conjunction with our new electric arc furnace flat roll steel mill currently under construction in Sinton, Texas.

Income Tax Expense. First ~~half~~nine months 2020 income tax expense of ~~$81.7~~$110.8 million, at an effective income tax rate of ~~23.3%~~22.9%, was down ~~33%~~35% from the ~~$122.5~~$171.1 million, at an effective income tax rate of ~~23.4%~~23.6%, during the first ~~half~~nine months of 2019, consistent with decreased income before income taxes.

Liquidity and Capital Resources

Capital Resources and Long-term Debt. Our business is capital intensive and requires substantial expenditures for, among other things, the purchase and maintenance of equipment used in our steel, metals recycling, and steel fabrication operations, and to remain in compliance with environmental laws. Our short-term and long-term liquidity needs arise primarily from working capital requirements, capital expenditures, currently including those related to our flat roll steel mill under construction in Sinton, Texas, principal and interest payments related to our outstanding indebtedness (no significant principal payments until 2024), dividends to our shareholders, potential stock repurchases, and acquisitions. We have met these liquidity requirements primarily with cash provided by operations and long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at ~~June~~September 30, 2020, is as follows (in thousands):



��	Cash and equivalents	$	1,496,458
	Short-term investments		69,546
	Revolver availability		1,188,191
	Total liquidity	$	2,754,195	Cash and equivalents	$	1,267,618
				Revolver availability		1,187,940
				Total liquidity	$	2,455,558

Our total outstanding debt decreased ~~$23.7~~$15.5 million during the first ~~half~~nine months of 2020, primarily due to ~~repayment of~~lower revolving debt at two of our consolidated joint ventures. Our total long-term debt to capitalization ratio (representing our long-term debt, including current maturities, divided by the sum of our long-term debt, redeemable noncontrolling interests, and our total stockholders’ equity) was ~~39.6%~~39.3% and 40.2% at ~~June~~September 30, 2020, and December 31, 2019, respectively.

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In October 2020, we 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 will be used to fund the November 2020 call and redemption of the $350.0 million outstanding principal amount of our 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. We will record expenses related to premiums and write off of unamortized debt issuance costs of approximately $10.3 million in other expenses in the fourth quarter of 2020.

In June 2020, we 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 5.250% senior notes due 2023 and the $500.0 million outstanding principal amount of the company’s 5.500% senior notes due 2024. We recorded expenses related to premiums, write off of unamortized debt issuance costs, and other expenses of approximately $22.8 million, which are reflected in other expenses in the consolidated statements of income for the second quarter and first ~~half~~nine months 2020.

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 property. Our ability to borrow funds within the terms of the unsecured Revolver is dependent upon our continued compliance with the financial and other covenants. At ~~June~~September 30, 2020, we had $1.2 billion of availability on the Revolver, ~~$11.8~~$12.1 million of outstanding letters of credit and other obligations which reduce availability, and there were no borrowings outstanding.

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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 ~~June~~September 30, 2020, our interest coverage ratio and debt to capitalization ratio were ~~9.45:~~9.22:1.00 and ~~0.40:~~0.39:1.00, respectively. We were, therefore, in compliance with these covenants at ~~June~~September 30, 2020, and we anticipate we will continue to be in compliance during the next twelve months.

Working Capital. We generated cash flow from operations of ~~$697.3~~$849.1 million in the first ~~half~~nine months of 2020 compared to ~~$543.0~~$987.2 million in the comparable 2019 period. Operational working capital (representing amounts invested in trade receivables and inventories, less current liabilities other than income taxes payable and debt) decreased ~~$223.7~~$182.1 million (21%), to $1.4 billion at ~~June~~September 30, 2020, due primarily to decreased ~~inventories~~inventory and increased accounts payable, generating operating cash flows during the first ~~half~~nine months of 2020.

Capital Investments. During the first ~~half~~nine months of 2020, we invested ~~$527.3~~$854.9 million in property, plant and equipment, primarily within our steel operations segment, compared with ~~$139.6~~$293.7 million invested during the same period in 2019. The increase in the first ~~half~~nine months of 2020 versus the same period in 2019 relates to our new flat roll steel mill under construction in Sinton, Texas. We entered 2020 with sufficient liquidity of $2.8 billion to provide for our planned 2020 capital requirements, including those necessary to construct the Sinton steel mill. For the ~~remainder~~fourth quarter of 2020, we are planning for capital investments to be roughly ~~between $800 million and $850~~$400 million, of which the new flat roll steel mill in Sinton, Texas, represents approximately ~~$700 million to $750~~$360 million.

Cash Dividends. As a reflection of continued confidence in our current and future cash flow generation ability and financial position, we increased our quarterly cash dividend by 4% to $0.25 per share in the first quarter 2020 (from $0.24 per share in 2019), resulting in declared cash dividends of ~~$105.1~~$157.8 million during the first ~~half~~nine months of 2020, compared to ~~$106.3~~$158.0 million during the same period in 2019. The slight decrease in declared cash dividends period over period, after the 4% increase in dividend per share, was due to stock repurchases which took place throughout 2019 and into the first quarter of 2020, reducing our common stock shares outstanding. We paid cash dividends of ~~$104.1~~$156.7 million and ~~$95.7~~$148.5 million during the first ~~half~~nine months of 2020 and 2019, respectively. Our board of directors, along with executive management, approves the payment of dividends on a quarterly basis. The determination to pay cash dividends in the future is at the discretion of our board of directors, after taking into account various factors, including our financial condition, results of operations, outstanding indebtedness, current and anticipated cash needs and growth plans.

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

Our ability to meet our debt service obligations and reduce our total debt will depend upon our future performance which, in turn, will depend upon general economic, financial, business and the ongoing COVID-19 pandemic conditions, along with competition, legislation and regulatory factors that are largely beyond our control. In addition, we cannot assure that our operating results, cash flows, access to credit markets and capital resources will be sufficient for repayment of our indebtedness in the future. We believe that based upon current levels of operations and anticipated growth, cash flows from operations, together with other available sources of funds, including 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 anticipated capital expenditures noted above.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

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

Our risk strategy associated with the purchase of raw materials utilized within our operations has generally been to make some commitments with suppliers relating to future expected requirements for some commodities such as electricity, water, natural gas and

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its transportation services, fuel, air products, zinc, and electrodes. Certain of these commitments contain provisions which require us to “take or pay” for specified quantities without regard to actual usage for periods of generally up to 5 years for physical commodity requirements and commodity transportation requirements, with some extending beyond, and for up to 13 remaining years for air products. We utilized such “take or pay” requirements during the past three years under these contracts, except for certain air products at our idle Minnesota ironmaking operations. We believe that production requirements will be such that consumption of the products or services purchased under these commitments will occur in the normal production process, other than certain air products related to our Minnesota ironmaking operations while idle. We also purchase electricity consumed at our Butler Flat Roll Division pursuant to a contract which extends through December ~~2020,~~2022, which establishes an agreed fixed-rate energy charge per Mill/kWh consumed for each year through the expiration of the agreement.

In our metals recycling and steel operations, we have certain fixed price contracts with various customers and suppliers for future delivery of nonferrous and ferrous metals. Our risk strategy has been to enter into base metal financial contracts with the goal to protect the profit margin, within certain parameters, that was contemplated when we entered into the transaction with the customer or vendor. At ~~June~~September 30, 2020, we had a cumulative unrealized loss associated with these financial contracts of ~~$1.3~~$1.5 million, substantially all of which have a settlement date within the next twelve months. We believe the customer contracts associated with the financial contracts will be fully consummated.

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ITEM 4. 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 ~~June~~September 30, 2020, the end of the period covered by this quarterly report, our disclosure controls and procedures were designed to provide and were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Controls 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 ~~June~~September 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1. 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 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, for which a total of ~~$495,000~~$485,000 is recorded in our financial statements as of ~~June~~September 30, 2020.

ITEM 1A. RISK FACTORS

Except as stated below, no material changes have occurred to the indicated risk factors as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. Additionally, the impact of the COVID-19 pandemic could also exacerbate other risks discussed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2019.

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

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

We have been identified by governmental authorities as a critical infrastructure industry and have been deemed an essential business in all of the states in which we operate. This has permitted us to continue to advance our commitment to our customers and meet their demand by operating our business consistent with federal guidelines and state and local orders, including social distancing guidelines. Our teams are our most valued priority, and we have implemented numerous process and procedural initiatives to ensure the health and safety of our people, their families and our communities. We have adjusted schedules to support social distancing, provided additional and more frequent sanitizing applications, provided additional protective measures, and many other ~~items..~~items. These health and safety initiatives have not and are not expected to have a material effect on our operations, but further required limitations and restrictions could adversely affect our results of operations.

Additionally, while we have not currently curtailed our operations, a prolonged COVID-19 pandemic or resurgence or further spread of the virus could further materially reduce demand for our products and thus, reduce the productivity of our operations and have a negative impact on our business, results of operations, financial condition and cash flows. Certain of our suppliers and customers, such as those in the automotive, energy and related industries, have experienced temporary shutdowns or significant demand reductions, adversely affecting our operations. Further reduced demand for our products or raw material supply availability due to shutdowns or slowdowns in businesses could further adversely affect our volumes and margins, results of operations, financial condition and cash flows. Prolonged shutdowns of critical equipment suppliers, or their suppliers, to our planned capital improvements, including our under construction Sinton, Texas Flat Roll Steel Mill expected to commence operations mid-year 2021, could, if they were to occur, cause our planned expansions to be delayed. The COVID-19 pandemic has also caused volatility in the financial and capital markets, which has adversely affected our stock price and may adversely affect our ability to access and the costs associated with accessing the debt or equity capital markets, which could adversely affect our liquidity, which as of ~~June~~September 30, 2020 was approximately ~~$2.8~~$2.5 billion, consisting of approximately ~~$1.4~~$1.3 billion in cash and cash equivalents ~~and short-term investments,~~ and $1.2 billion in availability under our undrawn credit facility.

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Information required to be furnished pursuant to Item 4 concerning mine safety disclosure matters, if applicable, by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104), is included in Exhibit ~~95 to this quarterly report. There are no mine safety disclosures to report for the three months ended June 30, 2020, therefore, no Exhibit 95 is required.~~None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

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

EXHIBIT INDEX

HIDDEN_ROW
Articles of Incorporation

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

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

Executive Officer Certifications

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

Instruments Defining the Rights of Security Holders, Including Indentures

~~4.35~~4.38	~~Second~~Third Supplemental Indenture, dated as of ~~June 5,~~October 9, 2020, relating to our issuance of ~~$400~~$350 million ~~2.400%~~1.650% Notes due ~~2025~~2027, and ~~$500~~$400 million 3.250% Notes due ~~2031,~~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 ~~June 5,~~October 9, 2020.

~~4.36~~4.39	Form of ~~2.400%~~1.650% Notes due ~~2025~~2027 (included in Exhibit ~~4.35)~~4.38), incorporated herein by reference from Exhibit 4.3 to our Form 8-K filed ~~June 5,~~October 9, 2020.

~~4.37~~4.40	Form of 3.250% Notes due ~~2031~~2050 (included in Exhibit ~~4.35)~~4.38), incorporated herein by reference from Exhibit 4.4 to our Form 8-K filed ~~June 5,~~October 9, 2020.

~~Other~~

95**	~~Mine Safety Disclosures.~~

XBRL Documents

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

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Document

101.DEF*	XBRL Taxonomy Definition Document

~~Table of Contents~~


101.LAB*	XBRL Taxonomy Extension Label Document

101.PRE*	XBRL Taxonomy Presentation Document

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

*	Filed concurrently herewith

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

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SIGNATURE

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

~~August 10,~~November 9, 2020

		STEEL DYNAMICS, INC.

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

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Footnotes related to the three months ended June 30, 2020, segment results (in millions):

(1)	Corporate SG&A	$	(14.5)	(2)	Gross profit increase from intra-company sales	$	4.5
	Company-wide equity-based compensation		(9.7)
	Profit sharing		(8.2)
	Other, net		0.3
		$	(32.1)

(3)	Cash and equivalents	$	1,418.4	(4)	Elimination of intra-company receivables	$	(35.5)
	Short-term investments		69.5		Elimination of intra-company debt		(6.5)
	Accounts receivable		11.4		Other		(6.9)
	Inventories		26.9			$	(48.9)
	Property, plant and equipment, net		148.2
	Intra-company debt		6.5
	Other		38.1
		$	1,719.0


Footnotes related to the six months ended June 30, 2020, segment results (in millions):

(1)	Corporate SG&A	$	(31.7)	(2)	Gross profit increase from intra-company sales	$	1.4
	Company-wide equity-based compensation		(17.9)
	Profit sharing		(29.5)
	Other, net		0.7
		$	(78.4)