Steel Dynamics Provides First Quarter 2024 Earnings Guidance

Rhea-AI Summary

Steel Dynamics, Inc. (STLD) expects strong first quarter 2024 earnings, with guidance ranging from $3.51 to $3.55 per diluted share. The company anticipates improved profitability in steel operations driven by increased shipments and earnings, particularly in flat rolled steel operations. Metals recycling operations are also expected to show higher earnings due to better pricing and increased volume. However, steel fabrication operations may see lower earnings compared to the previous quarter due to seasonally lower shipments and increased steel input costs. The company remains confident in its earnings outlook, repurchasing $279 million of its common stock and increasing the cash dividend by eight percent.

Insights

Market Research Analyst

Steel Dynamics' Q1 2024 earnings projection indicates a robust performance with expected earnings per diluted share surpassing the previous quarter but slightly below the same quarter of the previous year. This suggests a positive trajectory in the company's operations, particularly in its flat rolled steel division. The increase in shipments and earnings across various sectors, such as automotive and non-residential construction, points to a strong demand for steel products, which could have implications for the broader steel industry. The trend of onshoring manufacturing and the U.S. infrastructure program are likely to sustain demand, potentially leading to favorable conditions for steel producers.

The company's stock repurchase program reflects a strong balance sheet and confidence in future performance, which could be attractive to investors. The increased dividend also signals financial health and a commitment to shareholder returns. However, it's important to monitor input costs and pricing dynamics, as the steel fabrication operations have experienced some pressure from increased costs. It's essential to consider how these factors could affect margins and profitability in the long term.

Financial Analyst

An eight percent increase in the cash dividend is a significant move, indicating Steel Dynamics' ability to generate sufficient cash flow and its willingness to share profits with shareholders. This could be interpreted as a strong signal to the market about the company's financial stability and future outlook. Conversely, the repurchase of 1.4 percent of common stock could be seen as a move to optimize shareholder value, potentially leading to an increase in earnings per share by reducing the number of shares outstanding.

Investors should consider the company's performance against industry benchmarks and competitors. While the guidance is promising, the steel market is cyclical and sensitive to economic fluctuations. The company's strategic positioning, including its focus on sectors like energy and non-residential construction, seems to be paying off, but vigilance is necessary to navigate any sudden changes in the market conditions.

Economist

The information provided by Steel Dynamics serves as an economic indicator for the manufacturing and construction sectors, which are significant contributors to GDP. The company's positive outlook, supported by strong order backlogs extending into Q3 2024, suggests a healthy economic environment for these sectors. Moreover, the reference to the robust U.S. infrastructure program and industrial buildouts may imply a favorable macroeconomic climate for the steel industry, with potential multiplier effects on employment and related industries.

However, the mention of increased input costs is a reminder of inflationary pressures that could affect the broader economy. It's important to assess whether these cost increases are a result of supply chain issues, which may be temporary, or more persistent inflationary trends, which could lead to tighter monetary policy and impact economic growth.

FORT WAYNE, Ind., March 15, 2024 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today provided first quarter 2024 earnings guidance in the range of $3.51 to $3.55 per diluted share. Comparatively, the company's sequential fourth quarter 2023 earnings were $2.61 per diluted share and prior year first quarter earnings were $3.70 per diluted share.

First quarter 2024 profitability from the company's steel operations are expected to be meaningfully stronger than sequential fourth quarter results, based on increased shipments and earnings across the platform, driven by the company's flat rolled steel operations, including improved performance at the Company's Sinton Texas Flat Roll Division. The automotive, non-residential construction, energy, and industrial sectors continue to lead demand.

First quarter 2024 earnings from the company's metals recycling operations are also expected to be higher than sequential fourth quarter results, based on substantially stronger realized product pricing and increased volume in both ferrous and nonferrous materials.

First quarter 2024 earnings from the company's steel fabrication operations are expected to be historically strong, but lower than sequential fourth quarter results, based on seasonally lower shipments and metal spread contraction, as realized pricing declined and steel input costs increased. The non-residential construction sector remains solid, as further evidenced by steel joist and deck order backlog volume that extends into the third quarter of 2024, with historically strong associated product pricing. In addition, the continued onshoring of manufacturing, coupled with the robust U.S. infrastructure program and industrial buildouts, support strong demand in the coming years. 

Based on continued confidence in the company's earnings outlook and cash flow generation, the company repurchased $279 million, or 1.4 percent, of its common stock during the first quarter through March 11, 2024. The company's board of directors also increased the company's first quarter 2024 cash dividend by eight percent to $0.46 per common share.

The company plans to release its first quarter 2024 earnings after the markets close on Tuesday, April 23, 2024, and will hold a conference call the following day at 11:00 a.m. Eastern Daylight Time to review the company's results. 

About Steel Dynamics, Inc.
Steel Dynamics is one of the largest domestic steel producers and metals recyclers in North America, based on estimated annual steelmaking and metals recycling capability, with facilities located throughout the United States, and in Mexico. Steel Dynamics produces steel products, including hot roll, cold roll, and coated sheet steel, structural steel beams and shapes, rail, engineered special-bar-quality steel, cold finished steel, merchant bar products, specialty steel sections, and steel joists and deck. In addition, the company produces liquid pig iron and processes and sells ferrous and nonferrous scrap.

Forward-Looking Statements
This report contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, Steel Dynamics' revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as "anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or "expect", or by the words "may", "will", or "should", are intended to be made as "forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (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.

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, in our Quarterly Reports on Form 10-Q, or in other reports which we file with the Securities and Exchange Commission. These reports are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on our website, www.steeldynamics.com under "Investors – SEC Filings."

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SOURCE Steel Dynamics, Inc.

FAQ

What is Steel Dynamics, Inc.'s (STLD) first quarter 2024 earnings guidance?

Steel Dynamics, Inc. (STLD) expects first quarter 2024 earnings in the range of $3.51 to $3.55 per diluted share.

What factors are driving the expected profitability in Steel Dynamics, Inc.'s (STLD) steel operations for the first quarter 2024?

Increased shipments and earnings across the platform, particularly in flat rolled steel operations, are driving the expected profitability in Steel Dynamics, Inc.'s (STLD) steel operations for the first quarter 2024.

How does Steel Dynamics, Inc. (STLD) anticipate the performance of its metals recycling operations in the first quarter 2024?

Steel Dynamics, Inc. (STLD) expects higher earnings from its metals recycling operations in the first quarter 2024, driven by better pricing and increased volume in ferrous and nonferrous materials.

Why might Steel Dynamics, Inc.'s (STLD) steel fabrication operations see lower earnings in the first quarter 2024?

Steel Dynamics, Inc.'s (STLD) steel fabrication operations may see lower earnings in the first quarter 2024 due to seasonally lower shipments, metal spread contraction, declining realized pricing, and increased steel input costs.

What actions has Steel Dynamics, Inc. (STLD) taken to show confidence in its earnings outlook?

Steel Dynamics, Inc. (STLD) repurchased $279 million of its common stock and increased the cash dividend by eight percent to demonstrate confidence in its earnings outlook.