Steel Dynamics Provides Second Quarter 2022 Record Earnings Guidance

Rhea-AI Summary

Steel Dynamics (STLD) announced record earnings guidance for Q2 2022, projecting a range of $6.33 to $6.37 per diluted share. Adjusted earnings, excluding startup costs from its Sinton Texas Flat Roll Steel Mill, are expected between $6.61 and $6.65 per diluted share, up from Q1's $5.71 per share. Steel operations are projected to remain historically strong, although slightly lower than Q1 due to decreased pricing for flat roll steel. The company also reported strong performance in metals recycling and steel fabrication, alongside significant share repurchases totaling $397 million.

Positive

• Record Q2 2022 earnings guidance of $6.33 to $6.37 per share.
• Adjusted earnings expected to rise to $6.61 to $6.65, up from $6.02 in Q1.
• Strong demand in long product steel categories supporting high average realized pricing.
• Significant increase in earnings from metals recycling operations due to strong demand.
• Higher earnings in steel fabrication operations driven by record shipments.

Negative

• Lower earnings from flat roll steel operations due to decreased average pricing.

FORT WAYNE, Ind., June 16, 2022 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today provided record second quarter 2022 earnings guidance in the range of $6.33 to $6.37 per diluted share. Excluding the impact from costs associated with the startup of the company's Sinton Texas Flat Roll Steel Mill growth investment of an estimated $76 million, or $0.28 per diluted share, the company expects second quarter 2022 adjusted earnings to be in the range of $6.61 to $6.65 per diluted share. 

Comparatively, the company's sequential first quarter 2022 earnings were $5.71 per diluted share, and adjusted earnings were $6.02 per diluted share excluding costs of $0.31 per diluted share (net of capitalized interest), associated with construction and startup of the company's Texas Flat Roll Steel Mill. Prior year second quarter earnings were $3.32 per diluted share and adjusted earnings were $3.40 per diluted share, excluding costs of $0.08 per diluted share, associated with construction of the company's Texas Flat Roll Steel Mill.

Second quarter 2022 profitability from the company's steel operations is expected to be historically strong, but lower than first quarter 2022 results, due to lower earnings from the company's flat roll steel operations, as lower average flat roll steel pricing is expected to more than offset increased flat roll steel shipments. Demand for the company's long product steel products is also strong, supporting increased average realized pricing and expected record shipments for the company's Engineered Bar Products, Roanoke Bar, and Structural and Rail steel divisions. Despite softening hot roll coil steel pricing, broad steel demand remained solid during the second quarter, led by the automotive, construction, and industrial sectors, with energy continuing to improve.

Second quarter 2022 earnings from the company's metals recycling operations are expected to be significantly higher than sequential first quarter results, based on strong demand supporting increased shipments and higher pricing.

Second quarter 2022 earnings from the company's steel fabrication operations are expected to be meaningfully higher than record first quarter results, based on record shipments and significantly higher selling values more than offsetting marginally higher steel input costs. The non-residential construction sector remains strong as evidenced by robust order activity, resulting in a continuing historically strong order backlog, with record forward-pricing for the company's steel fabrication platform. The company anticipates this momentum to continue into 2023 based on these dynamics.

Based on continued confidence in the company's earnings outlook and cash flow generation, the company repurchased $397 million, or over 2.5 percent, of its common stock during the second quarter through June 10, 2022.

About Steel Dynamics, Inc.
Steel Dynamics is one of the largest domestic steel producers and metals recyclers in the United States, 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.

Note Regarding Non-GAAP Financial Measures
The company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that Adjusted Diluted Earnings Per Share, a non-GAAP financial measure, provides additional meaningful information regarding the company's performance and financial strength. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, Adjusted Diluted Earnings Per Share included in this release may not be comparable to similarly titled measures of other companies.

Forward-Looking Statements
This press release contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel and recycled metals marketplaces, 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 a guarantee 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 including periods of slower than anticipated economic growth and the risk of a recession; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues, such as the COVID-19 pandemic; (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 our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, or other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations or regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel 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 required to operate our businesses; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impact of impairment charges.

More specifically, refer to Steel Dynamics' 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 are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on the Steel Dynamics website, www.steeldynamics.com under "Investors — SEC Filings".

 

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SOURCE Steel Dynamics, Inc.

FAQ

What is Steel Dynamics' earnings guidance for Q2 2022?

Steel Dynamics expects a record earnings guidance of $6.33 to $6.37 per diluted share for Q2 2022.

How do the expected Q2 earnings compare to Q1 for STLD?

The anticipated Q2 earnings are higher than Q1, where STLD reported $5.71 per share.

What factors are affecting Steel Dynamics' adjusted earnings?

Adjusted earnings are significantly impacted by costs associated with the startup of the Sinton Texas Flat Roll Steel Mill.

What market conditions are influencing STLD's steel operations?

Steel operations are expected to be strong, although lower average flat roll steel prices may affect overall profitability.

How much stock has Steel Dynamics repurchased recently?

Steel Dynamics repurchased $397 million of its common stock during the second quarter through June 10, 2022.