SDI predicts earnings boost compared with prior quarter

Fort Wayne, Indiana-based Steel Dynamics Inc. (SDI) has provided first-quarter 2024 guidance that predicts earnings in the range of $3.51 to $3.55 per diluted share. That would be a boost from the $2.61 per diluted share earned in the prior quarter but slightly below the $3.70 per diluted share earned in the first quarter of 2023.

“First-quarter 2024 profitability from the company’s steel operations are expected to be meaningfully stronger than sequential fourth-quarter results,” SDI states.

The recycled-content electric arc furnace (EAF) steelmaker says the improvement is based on increased shipments and earnings across the platform, driven by the company’s flat-rolled steel operations, including improved performance at the company’s Sinton, Texas, flat-roll division.

The company, which also operates the OmniSource LLC network of scrap yards, says demand for finished steel from the automotive, nonresidential construction, energy and industrial sectors is providing a sound market.

“First-quarter 2024 earnings from the company’s metals recycling operations are also expected to be higher than sequential fourth-quarter results, based on substantially stronger realized product pricing and increased volume in both ferrous and nonferrous materials," SDI says of its OmniSource business unit.

That characterization contrasts with recent quarterly results from Portland, Oregon-based Radius Recycling and guidance from fellow EAF steelmaker Nucor Corp., which operates the David J. Joseph network of scrap yards.

Radius, which operates one EAF mill and several dozen scrap yards, says it is expecting a net loss in its financial quarter that spanned Dec. 1, 2023, to Feb. 29, 2024. “Without question, current market conditions remain challenging as cyclical headwinds are creating tighter supply flows and compressing metal spreads,” Radius CEO Tamara Lundgren says in a news release about the company's preliminary quarterly results.

Charlotte, North Carolina-based Nucor, in first-quarter 2024 guidance released last week, expects profitability in its EAF steelmaking operations but said earnings in its raw materials segment could suffer in part from “lower margins at our scrap processing operations.”

In its guidance, SDI also refers to its steel products downstream business units as starting as less profitable this year, which mirrors expectations from Nucor for its management of similar operations.

“First-quarter 2024 earnings from the company’s steel fabrication operations are expected to be historically strong but lower than sequential fourth-quarter results based on seasonally lower shipments and metal spread contraction, as realized pricing declined and steel input costs increased,” SDI writes.

“The nonresidential construction sector remains solid as further evidenced by steel joist and deck order backlog volume that extends into the third 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.”

SDI plans to release its first-quarter 2024 earnings April 23 and host a conference call for investors and analysts the following day.