Steel Dynamics, Inc. (STLD) has provided its earnings outlook for the third quarter of 2024, indicating a period of anticipated lower profitability compared to recent quarters. The company anticipates earnings per share between $1.94 and $1.98, a significant decrease from the $2.72 per share achieved in the second quarter of 2024 and the $3.47 per share recorded in the third quarter of 2023.
The primary driver of this expected decline is a decrease in profitability within the steel operations, particularly in the flat rolled steel segment. This segment, which accounts for approximately 80% of STLD’s business, is largely contract-based and tied to lagging pricing indices. While flat rolled steel prices have stabilized and are showing signs of improvement, the company expects reduced average realized pricing to impact the third-quarter results.
However, the company remains optimistic about the long-term prospects for the steel industry. The underlying demand for flat rolled steel remains consistent, and the company expects growth in 2025 driven by several factors, including a potential decline in interest rates, the U.S. infrastructure program, and an increase in onshoring efforts. These factors are expected to benefit not only STLD’s flat rolled steel operations but also its long product steels and steel joist and deck products.
STLD’s metals recycling division is anticipated to perform in line with the second quarter, with steady volumes offsetting the impact of slightly lower realized pricing. The steel fabrication segment is expected to experience a moderate decline in earnings compared to the previous quarter due to a slight dip in average realized pricing. Despite this, the company’s order backlog remains steady and extends into the first quarter of 2025, with pricing at attractive levels.
To further demonstrate its confidence in the company’s future, Steel Dynamics has repurchased $307 million worth of its common stock through September 11, 2024. This move signals a belief in the company’s earnings potential and cash flow generation capabilities. Despite the anticipated dip in third-quarter earnings, Steel Dynamics remains optimistic about its long-term prospects and believes its strong position in the steel market will drive future growth.
