Steel Dynamics Provides Third Quarter 2024 Earnings Guidance

Rhea-AI Summary

Steel Dynamics (NASDAQ/GS: STLD) has provided third quarter 2024 earnings guidance of $1.94 to $1.98 per diluted share, lower than Q2 2024 ($2.72) and Q3 2023 ($3.47). The company expects lower profitability from steel operations due to reduced flat rolled pricing, although prices have stabilized and improved. Metals recycling earnings are anticipated to be comparable to Q2, while steel fabrication earnings are expected to be moderately lower. The order backlog extends into Q1 2025 with attractive pricing. STLD repurchased $307 million of common stock in Q3 through September 11, 2024. The company will release Q3 2024 earnings after market close on October 16, 2024, followed by a conference call on October 17.

Positive

• Steel prices have stabilized and improved in Q3 2024
• Order backlog extends into Q1 2025 with attractive pricing
• Company repurchased $307 million (2%) of common stock in Q3 2024
• Steady underlying steel demand
• Expectations for improved volumes in 2025 due to anticipated interest rate declines and U.S. infrastructure program support

Negative

• Q3 2024 earnings guidance of $1.94-$1.98 per share, lower than Q2 2024 ($2.72) and Q3 2023 ($3.47)
• Lower profitability expected from steel operations in Q3 2024
• Anticipated slight decline in average realized pricing for steel fabrication operations

Insights

Financial Analyst

Steel Dynamics' Q3 2024 earnings guidance of $1.94 to $1.98 per diluted share represents a significant decline from both Q2 2024 ($2.72) and Q3 2023 ($3.47). This downward trend in profitability is primarily driven by lower pricing in flat rolled operations, which constitute a major portion of their business. However, it's noteworthy that steel prices have stabilized and shown improvement, suggesting a potential bottoming out of the pricing cycle.

The company's continued share repurchase program, amounting to $307 million in Q3, signals management's confidence in future performance and cash flow generation. This could be viewed positively by investors, as it potentially indicates undervaluation at current price levels.

Looking ahead, the steady order backlog extending into Q1 2025 and expectations of improved volumes in 2025 due to potential interest rate declines and infrastructure spending provide a cautiously optimistic outlook for the medium term.

Market Research Analyst

The steel industry is showing signs of a cyclical shift. While Steel Dynamics faces near-term pressure on earnings, several factors point towards a potential recovery in 2025:

• Stabilization and improvement in flat rolled steel prices
• Steady underlying steel demand
• Anticipated positive impact from U.S. infrastructure program
• Expected benefits from onshoring trends

The company's diverse operations across steel production, metals recycling and fabrication provide some resilience against market fluctuations. The steady performance in metals recycling and only moderate decline in fabrication earnings demonstrate this diversification benefit.

Investors should monitor macroeconomic indicators, particularly interest rates and infrastructure spending, as key drivers for Steel Dynamics' future performance.

FORT WAYNE, Ind., Sept. 16, 2024 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) today provided third quarter 2024 earnings guidance in the range of $1.94 to $1.98 per diluted share. Comparatively, the company's sequential second quarter 2024 earnings were $2.72 per diluted share, and prior year third quarter earnings were $3.47 per diluted share.

Third quarter 2024 profitability from the company's steel operations is expected to be meaningfully lower than sequential second quarter results, based on lower average realized pricing within the flat rolled operations as generally 80 percent of this business is contractually based and tied to lagging pricing indices. Flat rolled steel prices stabilized in the third quarter 2024 and have improved. Underlying steel demand remains steady.

Third quarter 2024 earnings from the company's metals recycling operations are expected to be comparable to second quarter sequential results, based on steady volumes offsetting marginally lower realized pricing. 

Third quarter 2024 earnings from the company's steel fabrication operations are expected to be moderately lower than sequential second quarter results, based on an anticipated slight decline in average realized pricing. The order backlog is steady, extending into the first quarter 2025 at attractive pricing levels. Current order activity is steady with expectations for improved volumes in 2025, as interest rates decline and the support from the U.S. infrastructure program and onshoring are expected to positively impact demand for not only steel joist and deck products, but also for flat rolled and long product steels. 

Based on continued confidence in the company's earnings outlook and cash flow generation, the company repurchased $307 million, or two percent, of its common stock during the third quarter through September 11, 2024.

The company plans to release its third quarter 2024 earnings after the markets close on Wednesday, October 16, 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' (STLD) earnings guidance for Q3 2024?

Steel Dynamics (STLD) has provided third quarter 2024 earnings guidance in the range of $1.94 to $1.98 per diluted share.

How does STLD's Q3 2024 earnings guidance compare to previous quarters?

The Q3 2024 earnings guidance is lower than both the Q2 2024 earnings of $2.72 per diluted share and the Q3 2023 earnings of $3.47 per diluted share.

What factors are affecting Steel Dynamics' (STLD) profitability in Q3 2024?

STLD expects lower profitability from steel operations due to reduced flat rolled pricing, although prices have stabilized and improved. Metals recycling earnings are expected to be comparable to Q2, while steel fabrication earnings are anticipated to be moderately lower.

Has Steel Dynamics (STLD) conducted any share repurchases in Q3 2024?

Yes, Steel Dynamics repurchased $307 million, or two percent, of its common stock during the third quarter through September 11, 2024.

When will Steel Dynamics (STLD) release its Q3 2024 earnings report?

Steel Dynamics plans to release its third quarter 2024 earnings after the markets close on Wednesday, October 16, 2024, with a conference call scheduled for the following day.