Steel Dynamics says to expect record earnings in Q3

Electric arc furnace (EAF) steelmaker Steel Dynamics Inc, headquartered in Fort Wayne, Indiana, has provided third quarter 2021 earnings guidance in the range of $4.78 to $4.82 per diluted share, which the company indicates would be record quarterly performance. When the impact from costs associated with the construction of SDI’s Sinton, Texas, mill investment of nearly $30 million, or 10 cents per diluted share, SDI is forecasting third-quarter 2021 adjusted earnings range from $4.88 to $4.92 per diluted share.

Its sequential second-quarter 2021 earnings were $3.32 per diluted share, and adjusted earnings were $3.40 per diluted share once the impact of construction costs related to the Texas steel mill of 9 cents per diluted share are excluded. Prior-year third-quarter earnings were 47 cents per diluted share, and adjusted earnings were 51 cents per diluted share, also excluding the costs associated with the construction of the company’s Texas steel mill of 4 cents per diluted share.

SDI says third-quarter 2021 profitability from its steel operations is expected to be “meaningfully” higher than its second-quarter results, driven by strong steel demand and significant expansion in metal spread, particularly within the flat-roll steel operations. This would result in a new quarterly record, according to the company, which says it also expects third-quarter steel shipments to be strong across its steel portfolio.

Domestic steel demand remains strong, SDI sys, with the automotive, construction and industrial sectors continuing to lead the momentum. The company also points to robust orders as strong demand, coupled with continuing low flat-roll steel inventories underpin elevated steel selling values. SDI says it expects this momentum t0 continue, resulting in even stronger fourth-quarter results.

SDI says it expects third-quarter earnings from its metals recycling operations to be aligned with sequential second-quarter results, based on higher sequential ferrous metal margin offsetting lower volume. As many domestic steel mills are taking maintenance outages in the fourth quarter of 2021, the company says it expects ferrous scrap demand to moderate in line with reduced steel production.

Third-quarter 2021 earnings from SDI’s steel fabrication operations are expected to be more than 2.5 times higher than sequential second-quarter results, with higher prices and expected record quarterly shipments more than offsetting higher steel input costs. Nonresidential construction remains strong, SDI says, as evidenced by increasing order activity that has led to a record order backlog and record forward pricing for the company’s steel fabrication platform. SDI says it anticipates the momentum to continue through the end of the year and into 2022.

SDI says it expects its consolidated fourth-quarter 2021 earnings to be even stronger than third-quarter 2021 guidance. In light of its continued confidence in cash flow generation, SDI repurchased approximately $280 million, or more than 2 percent, of its common stock during the third quarter 2021 through Sept. 10.