Steel Dynamics Provides Second Quarter 2024 Earnings Guidance

Rhea-AI Summary

Steel Dynamics (NASDAQ: STLD) has provided its earnings guidance for Q2 2024, projecting earnings per diluted share between $2.64 and $2.68. This is a decline from Q1 2024 earnings of $3.67 per share and Q2 2023 earnings of $4.81 per share. The company's steel operations are expected to see lower profitability due to decreased pricing, despite steady shipments. Metals recycling earnings are predicted to rise thanks to higher volumes. Steel fabrication earnings should remain consistent with Q1 2024, supported by increased shipments. Solid demand persists in the automotive, non-residential construction, energy, and industrial sectors. During Q2, Steel Dynamics repurchased $247 million in common stock, representing 1.1% of shares, demonstrating confidence in its financial outlook. The company will release its full Q2 2024 earnings report on July 17, 2024, followed by a conference call on July 18, 2024, at 11:00 a.m. EDT.

Positive

• Metals recycling operations expected to have higher earnings compared to Q1 2024 due to stronger volumes.
• Steel fabrication earnings expected to remain consistent with Q1 2024, supported by increased shipments.
• Non-residential construction demand remains solid with backlog extending into Q4 2024.
• Steel Dynamics repurchased $247 million, or 1.1%, of common stock in Q2 2024, indicating strong cash flow and confidence in future performance.
• Continued onshoring of manufacturing and robust U.S. infrastructure program expected to support strong demand in the coming years.

Negative

• Q2 2024 earnings guidance of $2.64-$2.68 per diluted share represents a significant decline from Q1 2024 earnings of $3.67 per share.
• Profitability from steel operations expected to be lower in Q2 2024 due to reduced realized pricing.
• Q2 2024 earnings forecast shows a decline compared to Q2 2023 earnings of $4.81 per share.
• Weakening scrap price environment causing hesitancy in steel buying.

Insights

Financial Analyst

Steel Dynamics' second quarter 2024 earnings guidance indicates a significant decline compared to both the previous quarter and the same period last year. This reduction in earnings per share—from $3.67 in the first quarter of 2024 to an expected range of $2.64 to $2.68—reflects challenges in their steel operations, primarily due to lower realized pricing, even though shipments remain steady.

The guidance highlights a mixed outlook, with the steel fabrication operations expected to maintain consistent performance and the metals recycling operations likely to see improved earnings due to increased volumes. The company's repurchase of $247 million worth of common stock during the quarter demonstrates their confidence in long-term earnings and cash flow, but investors should be cautious about the near-term profitability decline in the core steel sector.

Rating: 0

Market Research Analyst

The ongoing demand from the automotive, non-residential construction, energy and industrial sectors is a positive indicator for Steel Dynamics. Despite the short-term challenges with steel pricing, the underlying market segments appear robust. The non-residential construction sector's sustained strength, supported by a solid order backlog, alongside onshoring of manufacturing and U.S. infrastructure programs, points to a strong demand landscape in the future.

This mixed guidance requires investors to weigh the immediate downside in earnings against the strong fundamentals in steel demand. The strategic repurchase of shares also signals management's confidence but should be balanced against the current earnings dip.

Rating: 0

FORT WAYNE, Ind., June 17, 2024 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today provided second quarter 2024 earnings guidance in the range of $2.64 to $2.68 per diluted share. Comparatively, the company's sequential first quarter 2024 earnings were $3.67 per diluted share, and prior year second quarter earnings were $4.81 per diluted share.

Second quarter 2024 profitability from the company's steel operations are expected to be meaningfully lower than sequential first quarter results, based on lower realized pricing offsetting steady shipments. Underlying domestic steel demand remains intact although steel buying hesitancy has resulted from a weakening scrap price environment.  The automotive, non-residential construction, energy, and industrial sectors continue to lead demand.

Second quarter 2024 earnings from the company's metals recycling operations are expected to be higher than sequential first quarter results, based on stronger volumes in both ferrous and nonferrous materials.  

Second quarter 2024 earnings from the company's steel fabrication operations are expected to be in line with sequential first quarter results, based on increased shipments offsetting incrementally lower realized pricing.  The non-residential construction sector remains solid, as further evidenced by steel joist and deck order backlog volume that extends into the fourth 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 $247 million, or 1.1 percent, of its common stock during the second quarter through June 10, 2024.    

The company plans to release its second quarter 2024 earnings after the markets close on Wednesday, July 17, 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."

View original content:https://www.prnewswire.com/news-releases/steel-dynamics-provides-second-quarter-2024-earnings-guidance-302174120.html

SOURCE Steel Dynamics, Inc.

FAQ

What is Steel Dynamics' Q2 2024 earnings guidance?

Steel Dynamics projects Q2 2024 earnings between $2.64 and $2.68 per diluted share.

How do the Q2 2024 earnings compare to Q1 2024?

Q2 2024 earnings are expected to be lower, with guidance at $2.64-$2.68 per diluted share compared to Q1 2024 earnings of $3.67 per share.

What were Steel Dynamics' earnings in Q2 2023?

In Q2 2023, Steel Dynamics reported earnings of $4.81 per diluted share.

Why is profitability from Steel Dynamics' steel operations expected to be lower in Q2 2024?

Profitability is expected to be lower due to decreased realized pricing, despite steady shipments.

What sectors are leading demand for Steel Dynamics' products?

The automotive, non-residential construction, energy, and industrial sectors are leading demand.

How are Steel Dynamics' metals recycling operations expected to perform in Q2 2024?

Earnings from metals recycling operations are expected to be higher in Q2 2024 due to stronger volumes.

What is the outlook for Steel Dynamics' steel fabrication operations in Q2 2024?

Steel fabrication earnings are expected to remain in line with Q1 2024, supported by increased shipments.

When will Steel Dynamics release its full Q2 2024 earnings report?

The full Q2 2024 earnings report will be released on July 17, 2024, after market close.

When is Steel Dynamics' Q2 2024 earnings conference call?

The conference call to review Q2 2024 earnings results will be held on July 18, 2024, at 11:00 a.m. EDT.