STEEL DYNAMICS INC

Previous wording

This report contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as "anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or "expect", or by the words "may", "will", or "should", are intended to be made as "forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, and other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations from our customers or related regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance; (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment charges.

Current wording

This report contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as "anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or "expect", or by the words "may", "will", or "should", are intended to be made as "forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, and other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations from our customers and investors or related regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) our ability to retain, develop and attract key personnel; (14) litigation and legal compliance; (15) unexpected equipment downtime or shutdowns; (16) governmental agencies may refuse to grant or renew some of our licenses and permits; (17) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (18) the impacts of impairment charges.

Previous wording

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

Current wording

Companywide profit sharing and amortization of intangible assets are each separately presented in the statements of income.

Previous wording

Consolidated operating income for 2023 decreased $1.9 billion, or 38%, to $3.2 billion, compared to a record $5.1 billion in 2022. Net income attributable to Steel Dynamics, Inc. for 2023 decreased $1.4 billion, or 37%, to $2.5 billion, compared to a record in 2022. Diluted earnings per share attributable to Steel Dynamics, Inc. was $14.64 for 2023, compared to $20.92 for 2022.

Current wording

Consolidated operating income for 2024 decreased $1.2 billion, or 38%, to $1.9 billion, compared to $3.2 billion in 2023. Net income attributable to Steel Dynamics, Inc. for 2024 decreased $913.7 million, or 37%, to $1.5 billion, compared to 2023. Diluted earnings per share attributable to Steel Dynamics, Inc. was $9.84 for 2024, compared to $14.64 for 2023.

Previous wording

Refer to Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operationsin Part II of our Annual Report on Form 10-K for the year ended December 31, 2022, for additional information regarding results of operations for the year ended December 31, 2022, as compared to the year ended December 31, 2021, and segment operating results for 2022 as compared to 2021. Our 2023 change in reportable segments did not change the discussion previously provided.

Current wording

Refer to Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operationsin Part II of our Annual Report on Form 10-K for the year ended December 31, 2023, for additional information regarding results of operations for the year ended December 31, 2023, as compared to the year ended December 31, 2022, and segment operating results for 2023 as compared to 2022. Our 2024 change in reportable segments did not change the discussion previously provided. Refer to the Aluminum Operations segment discussion for additional information.

Previous wording

During 2023, our steel operations achieved record annual shipments of 12.8 million tons (11.4 million excluding intra-segment) a 5% increase over 2022 shipments, including 1.4 million tons from Sinton during 2023, an increase of 67% over 2022. Customer order activity and steel demand were strong during 2023, with the construction, automotive, industrial, and energy sectors continuing to lead demand. In spite of strong market demand, average selling prices were lower during 2023 compared to 2022, as total steel segment average selling prices decreased 18%, or $249 per ton, compared to 2022. Sheet steel pricing was 22% lower, while long products pricing decreased 6%. Net sales for the steel operations segment were 13% lower in 2023 when compared to historically high prices in 2022, due to lower average steel selling prices more than offsetting record volumes.

Current wording

During 2024, our steel operations achieved annual shipments of 12.7 million tons (11.4 million excluding intra-segment), slightly less than 2023 total record shipments. Customer order activity and steel demand were stable during 2024, with the construction, automotive, industrial, and energy sectors leading demand. In spite of strong market demand, average selling prices were lower during 2024 compared to 2023, as total steel segment average selling prices decreased 4%, or $46 per ton, compared to 2023. Net sales for the steel operations segment were 4% lower in 2024 when compared to 2023, due to lower average steel selling prices on consistent volumes.

Previous wording

Metallic raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost, generally comprising approximately 55% to 65% of our steel mill operations’ manufacturing costs. Our metallic raw material cost consumed in our steel mills decreased $61 per net ton, or 13%, in 2023 compared to 2022, consistent with overall decreased domestic scrap pricing noted below in the metals recycling operations segment discussion.

Current wording

Metallic raw materials used in our electric arc furnaces represent our single most significant steel manufacturing cost, generally comprising approximately 55% to 65% of our steel mill operations’ manufacturing costs. Our metallic raw material cost consumed in our steel mills decreased $28 per net ton, or 7%, in 2024 compared to 2023, consistent with overall decreased domestic scrap pricing noted below in the metals recycling operations segment discussion.

Previous wording

As a result of average selling prices decreasing more than scrap costs, specifically for sheet steel products, metal spread (which we define as the difference between average steel mill selling prices and the cost of ferrous scrap consumed in our steel mills) decreased 20% in 2023 compared to 2022. Due to this metal spread compression, operating income for the steel operations decreased 39%, to $1.9 billion, in 2023 compared to 2022.

Current wording

As a result of average selling prices decreasing more than scrap costs, specifically for long products, metal spread (which we define as the difference between average steel mill selling prices and the cost of ferrous scrap consumed in our steel mills) decreased 3% in 2024 compared to 2023. Due to metal spread compression, operating income for the steel operations decreased 16% to $1.6 billion in 2024 compared to 2023.

Previous wording

Metals recycling operations includes both ferrous and nonferrous scrap metal processing, transportation, marketing, brokerage, and scrap management services. Our steel mills utilize a large portion of the ferrous scrap sold by our metals recycling operations as raw material in our steelmaking operations, and the remainder is sold to other consumers, such as other steel manufacturers and foundries. In 2023 and 2022, 62% and 66%, respectively, of metals recycling operations ferrous scrap was sold to our own steel mills, while our steel mill utilization was 82% and 77% including Sinton (91% and 92% exclusive of Sinton) in 2023 and 2022, respectively. Metals recycling operations accounted for 12% and 10% of our consolidated net sales during 2023 and 2022, respectively.

Current wording

Metals recycling operations include our OmniSource ferrous and nonferrous processing, transportation, marketing, brokerage, and scrap management services primarily throughout the United States and Mexico. Our steel mills utilize a large portion of the ferrous scrap sold by our metals recycling operations as raw material in our steelmaking operations, and the remainder is sold to other consumers, such as other steel manufacturers and foundries. In 2024 and 2023, 62% of metals recycling operations ferrous scrap was sold to our own steel mills, while our steel mill utilization remained consistent at 81% and 82% in 2024 and 2023, respectively. Metals recycling operations accounted for 11% of our consolidated net sales during 2024 and 2023.

Previous wording

During 2023, our metals recycling operations continued to benefit from solid domestic steel industry demand, resulting in higher ferrous and nonferrous scrap shipments compared to 2022. We were able to increase shipments even as domestic steel mill utilization rates declined slightly to approximately 75% in 2023, as compared to approximately 78% in 2022. Ferrous and nonferrous shipments increased 9% and 5%, respectively, in 2023 compared to 2022. Net sales for our metals recycling operations in 2023 were comparable to 2022, as increased shipments were offset by ferrous and nonferrous average selling prices that decreased 7% and 8%, respectively, during 2023 compared to 2022.

Current wording

During 2024, our metals recycling operations continued to benefit from solid domestic steel industry demand, resulting in consistent ferrous and nonferrous scrap shipments compared to 2023. Net sales for our metals recycling operations in 2024 were comparable to 2023 based on consistent shipments. Due to a challenging pricing environment throughout much of 2024, ferrous average selling prices decreased 7% while nonferrous average selling prices increased 10% during 2024 compared to 2023.

Previous wording

Ferrous metal spread (which we define as the difference between average selling prices and the cost of purchased scrap) decreased 7% and nonferrous metal spread increased 9% during 2023 compared to 2022. As a result of the overall decreased metals spreads, metals recycling operations operating income decreased 24% to $88.7 million in 2023 compared to 2022.

Current wording

Ferrous metal spread (which we define as the difference between average selling prices and the cost of purchased scrap) was flat and nonferrous metal spread increased 13% during 2024 compared to 2023. As a result of the overall increased metals spreads, metals recycling operations operating income increased 61% to $76.8 million in 2024 compared to 2023.

Previous wording

Steel fabrication operations include seven New Millennium Building Systems joist and deck plants located throughout the United States, and in Northern Mexico. Revenues from these plants are generated from the fabrication of trusses, girders, steel joists, and steel deck used within the non-residential construction industry. Steel fabrication operations accounted for 15% and 19% of our consolidated net sales during 2023 and 2022, respectively.

Current wording

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 girders, steel joists and steel deck used within the non-residential construction industry. Steel fabrication operations accounted for 10% and 15% of our consolidated net sales during 2024 and 2023, respectively.

Previous wording

Our steel fabrication operations continue to benefit from the solid non-residential construction market, as evidenced by our historically strong order backlog that extends through the first half of 2024. The continued onshoring of manufacturing, coupled with the robust U.S. infrastructure and Inflation Reduction Act programs and industrial construction, supports consistent strong demand. Net sales for the steel fabrication operations decreased 34% during 2023 compared to the record levels during 2022, as average selling prices decreased $740 per ton, or 15%, and volumes decreased 23% from the record volume during 2022.

Current wording

Net sales for the steel fabrication operations decreased 37% during 2024 compared to 2023, as average selling prices decreased 31% and volumes decreased 8% compared to 2023. Our steel fabrication operations benefited from a solid non-residential construction market, as evidenced by historically solid order backlog that extends deep into the first half of 2025 at attractive pricing levels. The continued onshoring of manufacturing, coupled with the robust U.S. infrastructure and Inflation Reduction Act programs, supports consistent strong demand for steel joist and deck products.

Previous wording

The purchase of various steel products is the largest single cost of production for our steel fabrication operations, historically representing approximately two-thirds of the total cost of manufacturing. The average cost of steel consumed decreased 26% in 2023, as compared to 2022. Due to decreased selling prices per ton more than offsetting decreased steel input costs per ton, metal spread (which we define as the difference between average selling prices and the cost of purchased steel) contracted 10% in 2023 compared to 2022. Metal spread compression coupled with decreased volume resulted in operating income decreasing 34% to $1.6 billion in 2023, compared to $2.4 billion in 2022.

Current wording

The purchase of various steel products is the largest single cost of production for our steel fabrication operations, historically representing approximately two-thirds of the total cost of manufacturing. The average cost of steel consumed decreased 5% in 2024, as compared to 2023. Due to decreased selling prices per ton more than offsetting decreased steel input costs per ton, metal spread (which we define as the difference between average selling prices and the cost of purchased steel) contracted 41% in 2024 compared to 2023. Metal spread compression coupled with decreased volume resulted in operating income decreasing 58% to $667.0 million in 2024, compared to $1.6 billion in 2023.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses of $588.6 million during 2023 increased 8% from $545.6 million during 2022 primarily due to a 10% increase in payroll and benefits expense related to the execution of our growth strategy during 2023, including construction and start-up costs of our Aluminum Operations. Selling, general and administrative expenses represented 3.1% and 2.5% of net sales during 2023 and 2022, respectively.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses of $664.1 million during 2024 increased 13% from $588.6 million during 2023 primarily due to an increase in payroll and benefits expense related to the growth of the aluminum operations segment during 2024. Selling, general and administrative expenses represented 3.8% and 3.1% of net sales during 2024 and 2023, respectively.

Previous wording

Companywide profit sharing expense during 2023 of $272.0 million decreased 40% from $452.6 million during 2022, consistent with decreased pretax earnings. Refer to Note 11.Retirement Plans to the consolidated financial statements elsewhere in this report for further information.

Current wording

Profit sharing expense during 2024 of $164.9 million decreased 39% from $272.0 million during 2023, consistent with decreased pretax earnings. This decrease in profit sharing expense was the primary driver of decreased operating loss for other operations of 20% in 2024 compared to 2023. Profit sharing expense for eligible employees is 8% of consolidated pretax income excluding noncontrolling interests and other items. Refer to Note 10.Retirement Plans to the consolidated financial statements elsewhere in this report for further information.

Previous wording

Interest Expense, net of Capitalized Interest. During 2023, interest expense of $76.5 million decreased 16% from $91.5 million during 2022, due to higher capitalized interest in 2023 ($33.0 million, compared to $15.8 million in 2022) related to our ongoing expansion projects, most notably within Aluminum Operations.

Current wording

Interest Expense, net of Capitalized Interest. During 2024, interest expense of $56.3 million decreased 26% from $76.5 million during 2023. The lower interest expense in 2024 compared to 2023 is due to higher capitalized interest in 2024 ($66.8 million, compared to $33.0 million in 2023) related to our ongoing expansion projects, most notably within Aluminum Operations.

Previous wording

Income Tax Expense. During 2023, income tax expense of $751.6 million, at an effective income tax rate of 23.3%, decreased 34% compared to the $1.1 billion, at an effective income tax rate of 22.7%, during 2022, consistent with decreased pretax earnings. Refer to Note 4.Income Taxes to the consolidated financial statements elsewhere in this report for additional information.

Current wording

Income Tax Expense. During 2024, income tax expense of $432.9 million, at an effective income tax rate of 21.8%, decreased 42% compared to the $751.6 million, at an effective income tax rate of 23.3%, during 2023, consistent with decreased pretax earnings. Our effective tax rate decrease was due primarily to certain discrete tax adjustments during the third quarter and fourth quarters of 2024. Refer to Note 4.Income Taxes to the consolidated financial statements elsewhere in this report for additional information.

Previous wording

Included in the balance of unrecognized tax benefits at December 31, 2023, are potential benefits of $27.8 million that, if recognized, would affect the effective tax rate. We recognize interest and penalties related to our tax contingencies on a net-of-tax basis in income tax expense. During the year ended December 31, 2023, we recognized expense from the increase of interest expense and penalties of $1.6 million, net of tax. In addition to the unrecognized tax benefits noted above, we had $3.2 million accrued for the payment of interest and penalties at December 31, 2023.

Current wording

Included in the balance of unrecognized tax benefits at December 31, 2024, are potential benefits of $26.4 million that, if recognized, would affect the effective tax rate. We recognize interest and penalties related to our tax contingencies on a net-of-tax basis in income tax expense. During the year ended December 31, 2024, we recognized expense from the increase of interest expense and penalties of $710,000, net of tax. In addition to the unrecognized tax benefits noted above, we had $4.2 million accrued for the payment of interest and penalties at December 31, 2024.

Previous wording

We file income tax returns in the United States federal jurisdiction as well as income tax returns in various state jurisdictions. The tax years 2020 through 2022 remain open to examination by the Internal Revenue Service and various state and local jurisdictions. At this time, we do not believe there will be any significant examination adjustments that would result in a material change to our financial position, results of operations or cash flows. It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months in an amount ranging from zero to $10.0 million, as a result of the expiration of the statute of limitations and other federal and state income tax audits.

Current wording

We file income tax returns in the United States federal jurisdiction as well as income tax returns in various state jurisdictions. The tax years 2021 through 2023 remain open to examination by the Internal Revenue Service and various state and local jurisdictions. At this time, we do not believe there will be any significant examination adjustments that would result in a material change to our financial position, results of operations or cash flows. It is reasonably possible that the amount of unrecognized tax benefits could change in the next twelve months in an amount ranging from zero to $12.0 million, as a result of the expiration of the statute of limitations and other federal and state income tax audits.

Previous wording

Capital Resources and Long-term Debt. Our business is capital intensive and requires substantial expenditures for, among other things, the purchase and maintenance of equipment used in our operations, and to remain in compliance with environmental laws. Our short-term and long-term liquidity needs arise primarily from working capital requirements, capital expenditures, including expansion projects, principal and interest payments related to our outstanding indebtedness, dividends to our shareholders, and potential stock repurchases and acquisitions or investments. We have met and intend to continue to meet these liquidity requirements primarily with available cash and cash provided by operations, long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at December 31, 2023, is as follows (in thousands):

Current wording

Capital Resources and Long-term Debt. Our business is capital intensive and requires substantial expenditures for, among other things, the purchase and maintenance of equipment used in our operations, and to remain in compliance with environmental laws. Our short-term and long-term liquidity needs arise primarily from working capital requirements, capital expenditures, including expansion projects, principal and interest payments related to our outstanding indebtedness, dividends to our shareholders, potential stock repurchases and acquisitions or investments. We have met and intend to continue to meet these liquidity requirements primarily with available cash and cash provided by operations, long-term borrowings, and we also have availability under our unsecured Revolver. Our liquidity at December 31, 2024, is as follows (in thousands):

Previous wording

Our total outstanding debt of $3.1 billion is consistent with our total outstanding debt at December 31, 2022. 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 25.8% and 27.7% at December 31, 2023 and December 31, 2022, respectively.

Current wording

Our total outstanding debt of $3.2 billion increased $160.0 million compared to December 31, 2023, due to our issuance of $600.0 million of senior unsecured notes in July 2024 as described in Note 3, the proceeds of which were used for general corporate purposes, including the repayment of our 2.800% senior notes due December 2024, working capital, capital expenditures, advances for or investments in subsidiaries, acquisitions, redemption and repayment of other outstanding indebtedness, and purchases of the company’s common stock. 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 26.5% and 25.8% at December 31, 2024 and 2023, respectively.

Previous wording

In the third quarter of 2023, we entered into a new unsecured credit agreement, replacing the previous one, which has a senior unsecured revolving credit facility (Facility), which provides a $1.2 billion Revolver and matures in July 2028. Subject to certain conditions, we have the ability to increase the Facility size by $500.0 million. The unsecured Revolver is available to fund working capital, capital expenditures, and other general corporate purposes. The Facility contains financial covenants and other covenants pertaining to our ability to incur indebtedness and permit liens on certain assets. Our ability to borrow funds within the terms of the unsecured Revolver is dependent upon our continued compliance with the financial and other covenants. At December 31, 2023, we had $1.2 billion of availability on the Revolver, $9.1 million of outstanding letters of credit and other obligations which reduce availability, and there were no borrowings outstanding.

Current wording

Our unsecured credit agreement has a senior unsecured revolving credit facility (Facility), which provides a $1.2 billion Revolver and matures in July 2028. Subject to certain conditions, we have the ability to increase the Facility size by $500.0 million. The unsecured Revolver is available to fund working capital, capital expenditures, and other general corporate purposes. The Facility contains financial covenants and other covenants pertaining to our ability to incur indebtedness and permit liens on certain assets. Our ability to borrow funds within the terms of the unsecured Revolver is dependent upon our continued compliance with the financial and other covenants. At December 31, 2024, we had $1.2 billion of availability on the Revolver, $9.3 million of outstanding letters of credit and other obligations which reduce availability, and there were no borrowings outstanding.

Previous wording

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 as defined in the Facility (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transactions as defined in the Facility) by our LTM gross interest expense, less amortization of financing fees. In addition, a debt to capitalization ratio of not more than 0.60:1.00 must be maintained. At December 31, 2023, our interest coverage ratio and debt to capitalization ratio were 36.13:1.00 and 0.26:1.00, respectively. We were, therefore, in compliance with these covenants at December 31, 2023, and we anticipate we will continue to be in compliance during the next twelve months.

Current wording

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 as defined in the Facility (earnings before interest, taxes, depreciation, amortization, and certain other non-cash transactions as defined in the Facility) by our LTM gross interest expense, less amortization of financing fees. In addition, a debt to capitalization ratio of not more than 0.60:1.00 must be maintained. At December 31, 2024, our interest coverage ratio and debt to capitalization ratio were 21.68:1.00 and 0.27:1.00, respectively. We were, therefore, in compliance with these covenants at December 31, 2024, and we anticipate we will continue to be in compliance during the next twelve months.

Previous wording

Working Capital (representing excess of current assets over current liabilities). We generated cash flow from operations of $3.5 billion in 2023 compared to $4.5 billion in 2022. Working capital decreased $1.2 billion, or 21%, during 2023 to $4.5 billion at December 31, 2023, due primarily to our accounts receivable and inventories decreasing $683.1 million, or 13%, compared to December 31, 2022, due to lower sales and inventory values in 2023. In addition, our $400 million 2.800% senior notes were recorded as current at December 31, 2023.

Current wording

Working Capital (representing excess of current assets over current liabilities). We generated cash flow from operations of $1.8 billion in 2024 compared to $3.5 billion in 2023. Working capital decreased $1.2 billion, or 26%, during 2024 to $3.3 billion at December 31, 2024, due primarily to a $1.4 billion decrease in cash and equivalents and short-term investments in support of our capital investments within our aluminum and steel operations.

Previous wording

Capital Investments. During 2023, we invested $1.7 billion in property, plant and equipment, primarily within our aluminum operations and steel operations segments, compared with $908.9 million invested during 2022. We are currently executing our plan to invest $2.7 billion in a new state-of-the-art low-carbon recycled aluminum flat rolled products mill with two supporting satellite recycled aluminum slab centers, which is planned to be funded by available cash and cash flow from operations. Related expenditures began in the third quarter of 2022 and are expected to continue through early 2025. Our liquidity of $3.5 billion and anticipated future operating cash flow generation is sufficient to provide for our planned 2024 capital requirements.

Current wording

Capital Investments. During 2024, we invested $1.9 billion in property, plant and equipment, primarily within our aluminum operations and steel operations segments, compared with $1.7 billion invested during 2023. We are currently executing our plan to invest $2.7 billion in a new state-of-the-art lower-carbon recycled aluminum flat rolled products mill with two new supporting satellite recycled aluminum slab centers, which are being funded by available cash and cash flow from operations. Related expenditures began in the third quarter of 2022 and are expected to continue through 2025. Our liquidity of $2.2 billion and anticipated future operating cash flow generation is sufficient to provide for our planned 2025 capital requirements.

Previous wording

Cash Dividends. As a reflection of continued confidence in our current and future cash flow generation capability and financial position, we increased our quarterly cash dividend by 25% to $0.425 per share in the first quarter of 2023, and continued at that level through the remainder of 2023 (from $0.34 per share in 2022), resulting in declared cash dividends of $280.5 million during 2023, compared to $245.3 million during 2022. We paid cash dividends of $271.3 million and $237.2 million during 2023 and 2022, 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.

Current wording

Cash Dividends. As a reflection of continued confidence in our current and future cash flow generation capability and financial position, we increased our quarterly cash dividend by 8% to $0.46 per share in the first quarter of 2024 (from $0.425 per share for each quarter in 2023), resulting in declared cash dividends of $284.1 million during 2024, compared to $280.5 million in 2023. We paid cash dividends of $282.6 million and $271.3 million during 2024 and 2023, 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.

Previous wording

Other. Our board of directors has authorized share repurchase programs during prior years, the most recent of which occurred in November 2023 for a program of up to $1.5 billion of the company’s common stock. Under the share repurchase programs, purchases take place as and when we determine in open market or private transactions made based upon the market price of our common stock, the nature of other investment opportunities or growth projects, our cash flows from operations, and general economic conditions. The share repurchase programs do not require us to acquire any specific number of shares, and may be modified, suspended, extended, or terminated by us at any time. The share repurchase programs do not have an expiration date. There were $1.5 billion and $1.8 billion of share repurchases during 2023 and 2022, respectively. As of December 31, 2023, we had $1.4 billion remaining available to purchase under the November 2023 share repurchase program. See Part II, Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional information.

Current wording

Other. Our board of directors has authorized share repurchase programs during prior years, the most recent of which occurred in November 2023 for a program of up to $1.5 billion of the company’s common stock. In February 2025, our board of directors authorized an additional share repurchase program of up to $1.5 billion of our common stock. Under the share repurchase programs, purchases take place as and when we determine in open market or private transactions made based upon the market price of our common stock, the nature of other investment opportunities or growth projects, our cash flows from operations, and general economic conditions. The share repurchase programs do not require us to acquire any specific number of shares, and may be modified, suspended, extended, or terminated by us at any time. The share repurchase programs do not have an expiration date. There were $1.2 billion and $1.5 billion of share repurchases during 2024 and 2023, respectively. As of December 31, 2024, we had $193.5 million remaining available to purchase under the November 2023 share repurchase program. See Part II, Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional information.

Previous wording

Long-term debt and estimated interest. Refer to Note 3.Long-Term Debt to the consolidated financial statements elsewhere in this report for our long-term debt maturities. Estimated interest payments on our senior unsecured notes were determined based on their outstanding balances through maturity at their contractual interest rates, as detailed in Note 3. Estimated interest payments also include a 0.15% commitment fee on our available Revolver, and an average interest rate of 7.0% on our other debt of $61.8 million. Our estimated interest payments are $102.2 million, $80.1 million, $74.9 million, $54.5 million, $50.0 million, for the years 2024 through 2028, respectively, and $343.2 million thereafter.

Current wording

Long-term debt and estimated interest. Refer to Note 3.Long-Term Debt to the consolidated financial statements elsewhere in this report for our long-term debt maturities. Estimated interest payments on our senior unsecured notes were determined based on their outstanding balances through maturity at their contractual interest rates, as detailed in Note 3. Estimated interest payments also include a 0.175% commitment fee on our available Revolver, and an average interest rate of 6.23% on our other debt of $28.8 million. Our estimated interest payments are $116.4 million, $109.4 million, $89.0 million, $83.4 million, and $82.2 million, for the years 2025 through 2029, respectively, and $442.4 million thereafter.

Previous wording

We have incurred, and in the future will continue to incur, capital expenditures and operating expenses for matters relating to environmental control, remediation, monitoring and compliance. During 2023, we incurred costs related to the monitoring and compliance of environmental matters in the amount of approximately $54.6 million and capital expenditures related to environmental compliance of approximately $5.4 million. Of the costs incurred during 2023 for monitoring and compliance, approximately 71% were related to the normal transportation of certain types of by-products produced in our steelmaking processes and other facilities, in accordance with legal requirements. We incurred combined environmental remediation costs of approximately $3.1 million at all of our facilities during 2023. We have an accrual of $6.6 million recorded for environmental remediation related to our metals recycling operations, and $2.6 million related to our idled Minnesota ironmaking operations. We believe, apart from our dependence on environmental construction and operating permits for our existing and any future manufacturing facilities, that compliance with current environmental laws and regulations is not likely to have a materially adverse effect on our financial condition, results of operations or liquidity. However, environmental laws and regulations evolve and change, and we may become subject to more stringent environmental laws and regulations in the future, such as the impact of various governmental legislatures and agencies introducing regulatory changes in response to the potential of climate change.

Current wording

We have incurred, and in the future will continue to incur, capital expenditures and operating expenses for matters relating to environmental control, remediation, monitoring, and compliance. During 2024, we incurred costs related to the monitoring and compliance of environmental matters in the amount of approximately $60.2 million and capital expenditures related to environmental compliance of approximately $4.3 million. Of the costs incurred during 2024 for monitoring and compliance, approximately 74% were related to the normal transportation of certain types of by-products produced in our steelmaking processes and other facilities in accordance with legal requirements. We incurred combined environmental remediation costs of approximately $4.9 million at all of our facilities during 2024. We have an accrual of $3.8 million recorded for environmental remediation related to our metals recycling operations, $2.6 million related to our idled Minnesota ironmaking operations, and $712,000 related to our steel operations. We believe, apart from our dependence on environmental construction and operating permits for our existing and any future manufacturing facilities, that compliance with current environmental laws and regulations is not likely to have a materially adverse effect on our financial condition, results of operations, or liquidity. However, environmental laws and regulations evolve and change, and we may become subject to more stringent environmental laws and regulations in the future, such as the impact of various governmental legislatures and agencies introducing regulatory changes in response to the potential of climate change.

Previous wording

Impairments of Long-Lived Tangible and Definite-Lived Intangible Assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be fully recoverable. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. We consider various factors and determine whether an impairment test is necessary, including by way of examples, a significant and prolonged deterioration in operating results and/or projected cash flows, significant changes in the extent or manner in which an asset is used, technological advances with respect to assets which would potentially render them obsolete, our strategy and capital planning, and the economic environment in markets to be served. When determining future cash flows and if necessary, fair value, we must make judgments as to the expected utilization of assets and estimated future cash flows related to those assets. We consider historical and anticipated future results, general economic and market conditions, the impact of planned business and operational strategies and all other available information at the time the estimates are made. Those estimates and judgments may or may not ultimately prove accurate. There were no indicators of impairment or impairment charges recorded during 2023, 2022, of 2021.

Current wording

Impairments of Long-Lived Tangible and Definite-Lived Intangible Assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be fully recoverable. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. We consider various factors and determine whether an impairment test is necessary, including by way of examples, a significant and prolonged deterioration in operating results and/or projected cash flows, significant changes in the extent or manner in which an asset is used, technological advances with respect to assets which would potentially render them obsolete, our strategy and capital planning, and the economic environment in markets to be served. When determining future cash flows, and, if necessary, fair value, we must make judgments as to the expected utilization of assets and estimated future cash flows related to those assets. We consider historical and anticipated future results, general economic and market conditions, the impact of planned business and operational strategies, and all other available information at the time the estimates are made. Those estimates and judgments may or may not ultimately prove accurate. There were no indicators of impairment or impairment charges recorded during 2024, 2023, or 2022.

Previous wording

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

Current wording

Our goodwill, relating to various business combinations, consisted of the following at December 31, 2024 and 2023 (in thousands):

Previous wording

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

Current wording

At least once annually (as of October 1), or when indicators of impairment exist, we perform a goodwill impairment analysis. Goodwill is allocated to various reporting units, which are generally one level below the company’s operating segments. If the fair value exceeds the carrying value of the reporting unit, there is no impairment. If the carrying amount exceeds the fair value, we recognize an impairment loss in the amount by which the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. We have the option to consider qualitative factors to assess if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If we elect to bypass the qualitative assessment or if indications of a potential impairment exist, we perform a quantitative test.

Previous wording

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

Current wording

When conducting a quantitative test, the fair value of the reporting unit is determined by using an estimate of future cash flows utilizing a risk-adjusted discount rate to calculate the net present value of future cash flows (income approach), and for some years by using a market approach based upon an analysis of valuation metrics of comparable peer companies, using Level 3 fair value inputs as provided for under ASC 820. Key assumptions used to determine the estimated fair value of each reporting unit under the discounted cash flows method (income approach) include: (a) expected cash flows for the five-year period following the testing date (including market share, sales volumes and prices, costs to produce and estimated capital needs); (b) an estimated terminal value using a terminal year growth rate determined based on the growth prospects of the reporting unit; and (c) a risk-adjusted discount rate based on management’s best estimate of market participants’ after-tax weighted average cost of capital and market risk premiums. Key assumptions used to determine the estimated fair value of each reporting unit under the market approach include the expected revenues and cash flows in the next year. We consider historical and anticipated future results, general

Previous wording

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

Current wording

Goodwill acquired in past transactions is naturally more susceptible to impairment, primarily due to the fact that they are recorded at fair value based on operating plans and economic conditions at the time of acquisition. Consequently, if operating results and/or economic conditions deteriorate after an acquisition, it could result in the impairment of the acquired asset. A deterioration of economic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models but may also negatively impact other assumptions used in our analyses, including, but not limited to, the estimated cost of capital and/or discount rates. Additionally, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions a hypothetical marketplace participant would use. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether our actual cost of capital has changed. Therefore, we may recognize an impairment in spite of realizing actual cash flows that are approximately equal to or greater than our previously forecasted amounts. Accordingly, our qualitative assessments consider changes in interest rates and our quantitative tests include discount rate scenario analysis to evaluate the impact on estimated reporting unit fair values.

Previous wording

Our fourth quarter 2023, 2022, and 2021 annual goodwill impairment analyses did not result in any impairment charges. Management does not believe that it is reasonably likely that our reporting units will fail the goodwill impairment test in the near term, as the determined fair value of the reporting units with goodwill exceeded their carrying value by more than an insignificant amount. Changes in judgments and estimates underlying our analysis of goodwill for possible impairment, including expected future operating cash flows and discount rate, could decrease the estimated fair value of our reporting units in the future and could result in an impairment of goodwill.

Current wording

Our fourth quarter 2024, 2023, and 2022 annual goodwill impairment analyses did not result in any impairment charges. During 2024, we performed a qualitative assessment and performed quantitative tests in 2023 and 2022. Management does not believe that it is reasonably likely that our reporting units will fail the goodwill impairment test in the near term, given the results of our most recent qualitative assessment and the determined fair value of the reporting units with goodwill from our most recent quantitative test exceeded their carrying value by more than an insignificant amount. Changes in judgments and estimates underlying our analysis of goodwill for possible impairment, including expected future operating cash flows and discount rate, could decrease the estimated fair value of our reporting units in the future and could result in an impairment of goodwill.