# Steel Dynamics (STLD) Financial Model Free Excel 3-statement financial model and company analysis for Steel Dynamics. - Canonical: https://finamodel.com/companies/steel-dynamics - Industry: Materials - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/STLD.xlsx ## Model Purpose This model forecasts cyclical cash flows and intrinsic equity value to help an equity analyst determine whether the company's capital return capacity (dividends and share repurchases) and expansion into aluminium justify a buy rating across the commodity cycle. ## Company Overview Steel Dynamics, Inc. (STLD) is one of the largest domestic steel producers and metal recyclers in the United States. The company operates highly efficient electric arc furnace (EAF) mini-mills, which utilise recycled ferrous scrap as the primary raw material to produce flat-rolled, long, and coated steel products. Business segments include: * **Steel Operations** (approx. 72% of revenue): EAF steel mills producing sheet, plate, and long products. * **Metals Recycling Operations** (approx. 11% of revenue): OmniSource network collecting and processing ferrous and non-ferrous scrap. * **Steel Fabrication Operations** (approx. 8% of revenue): Production of steel joists and deck products for non-residential construction. * **Aluminum Operations** (approx. 2% of revenue and growing): A newly launched segment focused on flat-rolled aluminium products. The business model is asset-heavy but features a highly variable cost structure, with approximately 85% of costs being variable due to the EAF production method. STLD holds a strong competitive position as a low-cost producer compared to traditional blast furnace operators. Recent major events include the 2025 commissioning of a 650,000-metric-ton recycled aluminium flat-rolled mill in Columbus, Mississippi, the ramp-up of the Sinton Texas flat-roll steel mill, and the December 2025 acquisition of the remaining 55% stake in New Process Steel. ## Revenue Deep Dive ### Steel Operations * **Segment name:** Steel Operations * **Revenue driver formula:** Steel Shipments (Tons) x Average Realized Selling Price per Ton * **Historical growth rate:** Highly cyclical; shipments grew 9% in 2025 to a record 13.7 million tons, though revenue fluctuates with underlying commodity prices. * **Key growth levers and headwinds:** Infrastructure spending, automotive demand, and manufacturing onshoring act as tailwinds. Unfairly traded steel imports and fluctuating scrap prices are primary headwinds. * **Pricing dynamics:** Spot market driven, heavily influenced by global steel supply and domestic import tariffs. * **Revenue recognition notes:** Recognised upon transfer of control (shipment or delivery). * **Seasonality:** Q4 is typically weaker due to holiday schedules and winter weather impacting construction demand. ### Metals Recycling Operations * **Segment name:** Metals Recycling Operations * **Revenue driver formula:** Ferrous/Non-Ferrous Shipments (Gross Tons) x Average Scrap Price per Ton * **Historical growth rate:** 3-5% volume CAGR, with high price volatility. * **Key growth levers and headwinds:** Industrial manufacturing output drives scrap availability. A significant portion of this segment's volume is sold internally to the Steel Operations segment (intra-segment eliminations are material). * **Pricing dynamics:** Pure commodity spot pricing. * **Revenue recognition notes:** Point in time upon delivery. * **Seasonality:** Winter months can disrupt scrap collection and transportation. ### Steel Fabrication Operations * **Segment name:** Steel Fabrication Operations * **Revenue driver formula:** Fabrication Shipments (Tons) x Average Realized Price per Ton * **Historical growth rate:** 0-5% volume growth, highly dependent on non-residential construction cycles. * **Key growth levers and headwinds:** Warehouse, manufacturing, and data centre construction are key drivers. High interest rates can delay commercial real estate projects. * **Pricing dynamics:** Contractual project-based pricing, often with a backlog extending 6-9 months. * **Revenue recognition notes:** Recognised over time or upon shipment depending on contract specifics. * **Seasonality:** Stronger in Q2 and Q3 during peak construction season. ### Aluminum Operations * **Segment name:** Aluminum Operations * **Revenue driver formula:** Aluminum Shipments (Metric Tons) x Average Realized Price per Ton * **Historical growth rate:** N/A (New segment ramping up in 2025/2026). * **Key growth levers and headwinds:** Penetration into automotive and beverage can markets. The key headwind is the execution risk of ramping up the new $2.5 billion Columbus facility. * **Pricing dynamics:** LME aluminium price plus regional Midwest premium and conversion margin. * **Revenue recognition notes:** Point in time upon delivery. * **Seasonality:** Minimal seasonality expected once fully operational. ## Cost Structure ### Variable Costs / COGS * **Line-by-line breakdown:** Metallic raw materials (ferrous scrap), energy (electricity and natural gas), alloys, electrodes, and direct manufacturing labour. * **Gross margin range:** 11% to 29% (11.8% in Q4 2025, mid-cycle average is 13-16%, peak was 29% in 2021). * **Key input costs and commodity exposures:** Ferrous scrap represents 55% to 65% of steel mill manufacturing costs. * **How COGS scales with revenue:** Highly variable. The key metric is "Metal Spread" (Average Realized Selling Price minus Average Scrap Cost per Ton). ### Operating Expenses * **R&D:** Negligible; not explicitly broken out as a material percentage of revenue. * **SG&A:** Includes standard corporate overhead, but crucially includes the company's profit-sharing and bonus programmes. These are calculated as a strict percentage of pre-tax income, making SG&A highly variable and tied to profitability. * **Depreciation & Amortisation:** Typically 2-3% of revenue, heavily weighted towards tangible PP&E (steel mills). * **Stock-Based Compensation:** Minimal relative to tech, typically under 0.5% of revenue. * **Restructuring / one-time charges:** Rare, though start-up costs for new mills (like Sinton and Aluminum Dynamics) are expensed as incurred and can drag margins temporarily. ### Margin Profile * **Gross margin:** 11-29% (currently compressing to ~12-13% mid-cycle). * **EBITDA margin:** 10-25% (12% in 2025, down from peak 25% in 2021/2022). * **Operating margin:** 7-23% (8% in 2025). * **Net margin:** 6-17% (6.5% in 2025). * **Margin trend:** Compressing from historical peaks due to lower metal spreads and the dilutive start-up phase of the aluminium segment, but expected to stabilise around 12-14% EBITDA margins. ## Balance Sheet Structure * **Total assets:** Approximately $18 billion to $20 billion. * **Key asset categories:** PP&E is the largest component (mills and equipment), followed by Inventory (scrap and finished steel) and Accounts Receivable. * **Goodwill & intangibles as % of total assets:** Low (under 10%), as growth is primarily organic rather than through transformational M&A. * **Working capital profile:** * **Days Sales Outstanding (DSO):** 30-40 days. * **Days Inventory Outstanding (DIO):** 60-75 days (scrap inventory is held to ensure continuous EAF operation). * **Days Payable Outstanding (DPO):** 30-45 days. * **Net working capital as % of revenue:** Typically 15-20%. * **Is working capital positive or negative?** Positive. The company consumes cash for working capital during cyclical upswings when steel prices and volumes rise. * **PP&E:** Heavy machinery, furnaces, rolling mills, and land. Useful lives range from 10 to 30 years for heavy equipment. * **Right-of-use assets / operating leases:** Immaterial relative to owned PP&E. ## Capital Expenditure & Investment * **Capex as % of revenue:** 6% to 11% (peaked at 10.8% in 2024, normalising to 6-8%). * **Maintenance capex vs. growth capex:** Maintenance capex is roughly $300-$400 million annually. The remainder is growth capex. * **Major capex programmes underway or planned:** The $2.5 billion Aluminum Dynamics flat-rolled mill in Mississippi (largely completed in 2025) and a biocarbon facility. * **Capitalised software / development costs:** Immaterial. * **M&A pattern:** Bolt-on acquirer (e.g., New Process Steel, scrap processors) to vertically integrate; primary growth is organic greenfield development. * **Typical acquisition multiple paid:** 4x-6x EBITDA for scrap and processing assets. ## Debt & Capital Structure * **Total debt:** Approximately $4.2 billion (Net debt approx. $3.4 billion). * **Debt/EBITDA ratio:** 1.0x to 1.8x (currently around 1.8x on trailing EBITDA). * **Credit rating:** BBB+ (Fitch), investment grade. * **Key debt instruments:** Unsecured senior notes (bonds) with fixed interest rates ranging from 1.65% to 5.375%. * **Maturity profile:** Well-laddered, with long-term maturities extending to 2050. * **Interest rate profile:** Predominantly fixed rate, insulating the company from short-term rate hikes. * **Covenants:** Standard investment-grade incurrence covenants; highly compliant. * **Share repurchase programme:** Highly active. Repurchased $1.2 billion in 2024 (approx. 6% of outstanding shares). * **Dividend policy:** Progressive dividend policy. Yield is approximately 1.2% to 1.5%, with a payout ratio around 20-25%. ## Cash Flow Characteristics * **Operating cash flow conversion:** OCF / Net Income is typically 1.1x to 1.3x due to high D&A. * **Free cash flow margin:** 5% to 10% (depressed recently due to peak capex, expected to expand as capex normalises). * **Major non-cash items:** Depreciation and amortisation, deferred income taxes. * **Working capital cash flow impact:** Significant use of cash during price run-ups; significant source of cash during cyclical downturns as inventory is liquidated. * **Capex intensity:** High. The transition from peak growth capex to maintenance/normalised capex is the primary driver of future FCF expansion. * **Cash tax rate vs. GAAP effective tax rate:** Effective tax rate is typically 20-23%. Cash taxes closely track GAAP taxes, with minor deferred tax liabilities related to accelerated depreciation on new mills. ## Sheet Structure 1. **Assumptions**: Hardcoded drivers for macroeconomic indicators, segment volumes, pricing, scrap costs, and capital allocation. 2. **Scenario Tracker**: Toggles for Base, Bull (infrastructure boom), and Bear (import flood) cases altering metal spreads and volumes. 3. **Operating Model**: * Steel Operations (Shipments, Price, Scrap Cost, Metal Spread, Conversion Cost). * Metals Recycling (Shipments, Price, Intra-segment eliminations). * Steel Fabrication (Shipments, Price, Backlog). * Aluminum Operations (Ramp-up schedule, Shipments, Price). 4. **Consolidated Income Statement**: Revenue, COGS, Gross Profit, SG&A (with explicit profit-sharing calculation), D&A, Operating Income, Interest, Taxes, Net Income. 5. **Working Capital Schedule**: Accounts Receivable, Inventory, Accounts Payable driven by DSO, DIO, DPO. 6. **PP&E & Capex Schedule**: Base PP&E roll-forward, separate tracking for Aluminum Dynamics growth capex, D&A waterfall. 7. **Debt & Interest Schedule**: Tranche-by-tranche bond schedule, interest expense calculation, cash sweep for revolver (if needed). 8. **Shareholders Equity**: Retained earnings, dividend payouts, share repurchase schedule, and outstanding share count roll-forward. 9. **Cash Flow Statement**: GAAP format (Operating, Investing, Financing), bridging Net Income to ending cash. 10. **Valuation (DCF)**: Unlevered free cash flow calculation, WACC assumptions, terminal value (using exit multiple to capture cyclicality), and implied share price. 11. **Outputs & Charts**: Summary dashboard of Metal Spread trends, EBITDA margins, FCF yield, and Debt/EBITDA. ## Key Financial Relationships 1. `Steel Operations Revenue = Steel Shipments (Tons) * Average Realized Steel Price per Ton` 2. `Metal Spread per Ton = Average Realized Steel Price per Ton - Average Ferrous Scrap Cost per Ton` 3. `Steel Operations COGS = Steel Shipments (Tons) * (Average Ferrous Scrap Cost per Ton + Non-Scrap Conversion Cost per Ton)` 4. `Metals Recycling External Revenue = (Total Ferrous Shipments - Intra-segment Ferrous Shipments) * Average Ferrous Scrap Price` 5. `Consolidated Revenue = Steel Revenue + Metals Recycling External Revenue + Steel Fabrication Revenue + Aluminum Revenue` 6. `Profit Sharing Expense (within SG&A) = Profit Sharing % * (Gross Profit - Fixed SG&A - D&A)` (Calculated pre-tax). 7. `Aluminum Segment EBITDA = Aluminum Shipments * (Realized Price per Ton - Aluminum Scrap/Ingot Cost per Ton - Conversion Cost per Ton)` 8. `Total D&A = Existing PP&E D&A + (New Aluminum Mill Capex * Depreciation Rate)` 9. `Ending Share Count = Beginning Share Count - (Share Repurchase Amount / Average Share Price during period)` 10. `Dividends Paid = Dividend per Share * Average Shares Outstanding` 11. `Free Cash Flow = Cash Flow from Operations - Capital Expenditures` 12. `Net Debt = Total Debt - Cash & Short-Term Investments` ## Cross-Sheet Dependencies * The **Assumptions** sheet dictates pricing and volume inputs on the **Operating Model**. * The **Operating Model** calculates segment-level revenues and COGS, which aggregate into the **Consolidated Income Statement**. * Net Income from the **Consolidated Income Statement** feeds the top line of the **Cash Flow Statement** and Retained Earnings in **Shareholders Equity**. * The **Working Capital Schedule** calculates changes in NWC, which feeds the **Cash Flow Statement**. * The **PP&E & Capex Schedule** calculates D&A, which feeds the **Consolidated Income Statement** (operating expenses) and the **Cash Flow Statement** (non-cash add-back). * The **Cash Flow Statement** determines the ending cash balance, which feeds the **Balance Sheet** and dictates the capacity for share repurchases in the **Shareholders Equity** sheet. * *Circularity Risk:* Interest expense in the **Debt & Interest Schedule** depends on the average debt balance. If a cash sweep is used to pay down a revolver, interest depends on debt, which depends on cash flow, which depends on interest. A circuit breaker toggle must be included. ## Sign Convention * **Revenues and Income:** Positive. * **Expenses (COGS, SG&A, Interest, Taxes):** Positive numbers in their respective schedules, but subtracted in subtotal formulas (e.g., `Gross Profit = Revenue - COGS`). * **Assets:** Positive. * **Liabilities and Equity:** Positive. * **Cash Flow Statement:** Cash inflows are positive; cash outflows (Capex, Dividends, Repurchases) are negative. * **Working Capital:** An increase in an asset (e.g., Inventory) is calculated as a negative impact on cash flow. ## Things Most Likely to Go Wrong 1. **Mismodelling the Metal Spread:** Assuming COGS is a fixed percentage of revenue will break the model. Steel prices and scrap prices move independently; the model must calculate COGS based on a per-ton scrap cost and a per-ton conversion cost. 2. **Ignoring Intra-Segment Eliminations:** The Metals Recycling segment sells heavily to the Steel segment. Failing to eliminate these intercompany sales will double-count consolidated revenue. 3. **Static SG&A Assumptions:** STLD has a highly variable profit-sharing structure. If SG&A is modelled as a fixed percentage of revenue, margins will be artificially volatile during downturns. Profit-sharing must scale with pre-tax income. 4. **Extrapolating Peak Margins:** Using 2021/2022 peak EBITDA margins (25%+) for terminal value calculations will massively overvalue the company. Mid-cycle margins (12-15%) must be used for long-term forecasting. 5. **Missing the Aluminum Ramp-up:** The new Columbus aluminium mill will drag consolidated margins during its initial ramp-up phase (2025/2026) due to start-up costs before contributing positively to EBITDA. 6. **Working Capital Cash Drain:** In a cyclical upswing, rising steel prices inflate inventory and receivables, draining cash. The model must dynamically link working capital balances to projected commodity prices, not just historical averages. 7. **Capex Cliff:** Failing to step down capex from the $1.5B-$1.9B range (2024/2025) to the normalised $800M-$1B range (2026+) will severely understate future free cash flow. 8. **Share Count Stagnation:** STLD aggressively buys back stock. Failing to reduce the share count dynamically based on FCF generation will understate EPS and per-share valuation metrics. ## Validation Checks 1. "Consolidated Gross Margin should be in the 11-16% range for mid-cycle years; flag if it exceeds 20% outside of a defined bull cycle." 2. "Capex as a % of revenue should drop below 8% by 2027 as the Aluminum Dynamics build-out concludes." 3. "Total Steel Shipments should not exceed stated capacity (approx. 16 million tons) without triggering a flag for required expansion capex." 4. "Debt/EBITDA must remain below 2.5x to align with the company's investment-grade rating targets." 5. "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period." 6. "Effective tax rate should remain between 20-24% based on historical US domestic operations." 7. "Dividend payout ratio should remain below 30% of Net Income to allow for continued share repurchases." 8. "Intra-segment revenue eliminations must exactly match the internal sales reported by the Metals Recycling segment." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Steel Shipments (2026E) | 13.7 | Millions of Tons | Flat to 2025 record levels, assuming stable domestic demand. | | Average Realized Steel Price | 1,050 | $ / Ton | Normalised mid-cycle pricing based on recent quarters. | | Average Ferrous Scrap Cost | 400 | $ / Ton | Historical mid-cycle average, maintaining a ~$650 metal spread. | | Steel Conversion Cost | 250 | $ / Ton | Estimated non-scrap manufacturing costs (energy, labour, alloys). | | Metals Recycling External Rev Growth | 3.0 | % YoY | GDP-plus growth for external scrap sales. | | Steel Fabrication Shipments | 550 | Thousands of Tons | Based on recent run-rates and non-residential construction outlook. | | Aluminum Shipments (2026E) | 300 | Thousands of Metric Tons | Ramp-up phase of the 650k-ton Columbus facility. | | SG&A (Fixed Component) | 3.5 | % of Revenue | Base corporate overhead excluding profit sharing. | | Profit Sharing Expense | 8.0 | % of Pre-Tax Income | Estimated historical relationship for variable compensation. | | Days Sales Outstanding (DSO) | 35 | Days | 3-year historical average. | | Days Inventory Outstanding (DIO) | 65 | Days | 3-year historical average, reflecting scrap buffer requirements. | | Days Payable Outstanding (DPO) | 40 | Days | 3-year historical average. | | Capital Expenditures (2026E) | 900 | $ Millions | Management guidance for normalised capex post-aluminium build. | | Effective Tax Rate | 22.0 | % | Historical average for US-centric operations. | | Share Repurchase Allocation | 50.0 | % of FCF | Aggressive buyback policy consistent with recent years. | | Annual Dividend per Share | 2.00 | $ / Share | Current run-rate, assuming modest annual increases. | | WACC | 9.5 | % | Reflects cyclical risk premium and current interest rate environment. | | Terminal EBITDA Multiple | 6.5 | x | Standard mid-cycle exit multiple for EAF steel producers. | ## Data Sources & Benchmarks * **Filings:** SEC EDGAR (STLD 10-K, 10-Q, 8-K), Steel Dynamics Investor Relations page (Earnings Presentations). * **Key Peers:** Nucor (NUE), Reliance, Inc. (RS), Cleveland-Cliffs (CLF), United States Steel (X). * **Industry Data:** World Steel Association (WSA) for global production, American Iron and Steel Institute (AISI) for domestic capacity utilisation and import data. * **Consensus Estimates:** Bloomberg or FactSet for forward EPS and revenue estimates. * **Proprietary Data:** Fastmarkets AMM (American Metal Market) for spot steel and ferrous scrap pricing trends. ## Sources * Steel Dynamics SEC 10-K Report (TradingView summary): https://www.tradingview.com/news/publicnow:AUZIYQFaL6KkqPEwsCJaORcW_bBi1WiLOhW_6Y4qG37TBio0NDcVDsHanIVoOBxyMJRYcfCkn38Bzx_LoLRv7PEKJ3bT0_6Jo_zSRjUhHcByUtZ0K9cvRc4pVQmlKswt8y94ohmsqXHRhdfxLi54wrBhvY9o9SR0taY9nj4gmwJK5hyQkkhxEXXw7b9bsJvLHw== * Steel Dynamics Q4 and Annual 2025 Results (Markets data): https://www.ft.com/content/AUZIYQEzL28S-vzKOH6cDtdwtJAmvucsayLs407qH69BrSN6nHqSbKZzvFW0hELQaEn5kkwfmY4YiOr3QAeVSkh1KxiIPGfGWhCr_0LsJcVDG9SNIsJYReXAF_mVxkPX63vPUbYtAhwxM76M7-f4wh60Tv9uYD5x953Zliz1ieOwr7CSGcUp6B6bWYqq4D2LSPYD1__MUTNHKit_ * Steel Dynamics Investor Presentation: https://d1io3yog0oux5.cloudfront.net/steeldynamics/files/pages/steeldynamics/db/1086/description/Investor+Presentation.pdf * Seeking Alpha STLD Investment Model Analysis: https://seekingalpha.com/article/4688888-steel-aluminum-and-capital-the-steel-dynamics-investment-model * Macrotrends STLD Financial Ratios: https://www.macrotrends.net/stocks/charts/STLD/steel-dynamics/financial-ratios --- ## Frequently asked questions ### What does Steel Dynamics, Inc. (STLD) primarily do? Steel Dynamics is a leading domestic steel producer and metal recycler in the United States. The company utilizes efficient electric arc furnace (EAF) mini-mills to produce various steel products from recycled scrap and also operates a significant metals recycling network. They are also expanding into flat-rolled aluminum products. ### What are the main revenue drivers for Steel Dynamics? Steel Dynamics' revenue is primarily driven by the volume and pricing of its steel products, which are influenced by the broader commodity cycle and demand from sectors like non-residential construction. Its diverse operations, including steel fabrication and metals recycling, also contribute to overall revenue. The newly launched Aluminum Operations segment is expected to contribute to future growth. ### What is Steel Dynamics' capital expenditure strategy? Steel Dynamics maintains a significant capital expenditure program, with capex as a percentage of revenue typically ranging from 6% to 11%. This includes both maintenance capex, estimated at $300-$400 million annually, and growth capex, such as the recently completed $2.5 billion Aluminum Dynamics flat-rolled mill. The model uses a Capex_Pct_Revenue assumption of approximately 7%. ### How is Steel Dynamics' intrinsic value typically assessed in a financial model? A financial model for Steel Dynamics forecasts cyclical cash flows to determine its intrinsic equity value. This assessment helps analysts evaluate the company's capacity for capital returns, like dividends and share repurchases, and the impact of its expansion into aluminum across the commodity cycle. Free Cash Flow is a critical input for Discounted Cash Flow (DCF) analysis. ### Is there an Excel financial model available for Steel Dynamics (STLD)? Yes, an Excel financial model for Steel Dynamics (STLD) is available for download. This model is designed to help equity analysts forecast the company's cyclical cash flows and intrinsic equity value, covering a forecast horizon from FY2026 to FY2030. ### What is unique about Steel Dynamics' cost structure? Steel Dynamics operates with a highly variable cost structure, with approximately 85% of its costs being variable due to its efficient electric arc furnace (EAF) production method. This allows the company to maintain a strong competitive position as a low-cost producer compared to traditional blast furnace operators. The model assumes COGS_Pct_Revenue at about 78.5%. [Interactive forecast calculator](https://finamodel.com/companies/steel-dynamics/forecast)