Steel Dynamics' Q3 Earnings and Revenues Beat Expectations
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Steel Dynamics, Inc. STLD logged third-quarter 2024 earnings of $2.05 per share, down from $3.47 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.98.
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Net sales in the reported quarter were down around 5% year over year to $4,341.6 million. The top line beat the Zacks Consensus Estimate of $4,251.3 million. While underlying steel demand was steady in the quarter, STLD’s results were impacted by lower average realized steel prices.
Steel Dynamics, Inc. Stock Price, Consensus and EPS Surprise
Steel Dynamics, Inc. price-consensus-eps-surprise-chart | Steel Dynamics, Inc. Quote
Lower Prices Hurt STLD’s Steel Operations
Steel Dynamics’ net sales from steel operations totaled $2,917 million in the reported quarter, down roughly 8% year over year. Steel shipments amounted to around 3.2 million tons, modestly higher than the previous year's roughly 3.1 million tons. It was below our estimate of 3.25 million tons. The average external selling price per ton was $1,059, down from $1,191 in the same quarter last year and below our estimate of $1,124 per ton.
Operating income for STLD's steel operations in the third quarter was $305 million, down roughly 37% year over year. It was also down sequentially due to a greater decline in realized selling prices compared to scrap costs during the quarter.
Net sales for metals recycling operations reached $565.6 million, rising around 9% year over year. Ferrous shipments totaled around 1.46 million gross tons, above our forecast of 1.44 million.
STLD's steel fabrication operations reported sales of around $447.3 million, down around 29% from the previous year’s tally. Shipments amounted to 158,595 tons, which exceeded our estimate of 139,703 tons.
Steel Dynamics’ Financial Position
Steel Dynamics ended the quarter with cash and cash equivalents of around $1,015.2 million, up roughly 22% from the prior quarter. Long-term debt was roughly $2,801.9 million, up around 27% sequentially. STLD ended the quarter with strong liquidity of $3.1 billion.
STLD repurchased $310 million of its common stock in the quarter, accounting for 1.6% of its outstanding shares.
STLD’s Outlook
Steel Dynamics anticipates steel prices to recover with an expected lower domestic interest rate environment, coupled with positive impacts from continuing onshoring of manufacturing businesses and the expectation of significant fixed asset investment from public funding associated with the U.S. Infrastructure, Inflation Reduction Act, and Department of Energy programs.
STLD also expects current trade actions to reduce volumes of unfairly traded steel imports into the United States, including for coated flat-rolled steel. This is expected to have a significant positive impact on the company, as it is the largest non-automotive flat rolled steel coater in the United States.
The company also noted that its four new flat-rolled steel coating lines, which started operation earlier this year, continue to increase production. With increasing production, STLD expects to realize the additional earnings potential in 2025. It is also progressing with the construction of its aluminum flat-rolled products mill and plans to begin operating the mill in mid-2025.