Steel Dynamics Lowers Earnings Guidance for Jul-Sep’22 Quarter

Fort Wayne Indiana headquartered Steel Dynamics has provided third quarter 2022 earnings guidance in the range of USD 4.93-4.97 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 USD 104 million, or USD 0.40 per diluted share, the company expects third quarter 2022 adjusted earnings to be in the range of USD 5.33-5.37 per diluted share. Comparatively, the company’s sequential second quarter 2022 earnings were USD 6.44 per diluted share, and adjusted earnings were USD 6.73 per diluted share excluding costs of USD 0.29 per diluted share, associated with startup of the company’s Texas Flat Roll Steel Mill. Prior year third quarter earnings were USD 4.85 per diluted share and adjusted earnings were USD 4.96 per diluted share, excluding costs of US 0.11 per diluted share, associated with construction of the company’s Texas Flat Roll Steel Mill.Third quarter 2022 profitability from the company’s steel operations is expected to be historically strong, but significantly lower than second quarter 2022 results, due to lower earnings from the company’s flat rolled steel operations, as lower average flat rolled steel pricing is expected to more than offset lower raw material costs and higher shipments. The company expects flat rolled steel prices to stabilize as broad underlying steel demand and corresponding order activity remains intact from the automotive, construction, industrial, and energy sectors. The company’s Texas Flat Roll Steel Division was hindered with high-cost steel substrate inventory during the third quarter 2022. The company believes the impact of this higher cost inventory will be alleviated before the end of the year.As ferrous and nonferrous scrap prices have declined, third quarter 2022 earnings from the company’s metals recycling operations are expected to be below sequential second quarter results, based on lower realized pricing and volume.Third quarter 2022 earnings from the company’s steel fabrication operations are expected to be meaningfully higher than record second quarter results, based on continued strong volume and expanding margins, as realized pricing improves and average steel input costs declined. The non-residential construction sector remains strong as evidenced by customer order activity supporting a continuing historically strong order backlog, which the company anticipates will continue into 2023.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.