Steel Dynamics (STLD) Q2 Earnings and Sales Beat Estimates

Core Viewpoint - Steel Dynamics, Inc. reported a decline in earnings and net sales for the second quarter of 2024, but exceeded earnings estimates while net sales surpassed expectations [1]. Financial Performance - Earnings per share for the second quarter were $2.72, down from $4.81 year-over-year, but above the Zacks Consensus Estimate of $2.67 [1]. - Net sales decreased by approximately 8.8% year-over-year to $4,632.6 million, exceeding the Zacks Consensus Estimate of $4,417.6 million [1]. Segment Highlights - Steel operations generated net sales of $3,132 million, a 9.2% decline year-over-year, with steel shipments at around 3.2 million tons, slightly lower than the previous year's 3.3 million tons [2]. - The average external selling price per ton was $1,138, down from $1,251 year-over-year, but higher than the estimate of $1,092 [2]. - Operating income for steel operations fell 37% year-over-year to $442.3 million due to a significant drop in realized selling prices compared to scrap costs [2]. - Metals recycling operations reported net sales of $586.4 million, a 1% decrease year-over-year, with ferrous shipments totaling approximately 1.51 million gross tons, slightly above the forecast [2]. - Steel fabrication operations saw sales of approximately $472.8 million, down 38% from the previous year, with shipments of 159,069 tons exceeding estimates [3]. Financial Position - The company ended the quarter with cash and cash equivalents of around $830 million, a nearly 60% decrease year-over-year, while long-term debt declined by 26.5% to $2,212.8 million [4]. - Steel Dynamics repurchased $309 million of its common stock, representing 1.5% of its outstanding shares [4]. Outlook - The company is optimistic about strong market conditions for domestic steel consumption in the second half of 2024, citing improved order entries and expected firming steel prices [5]. - Positive impacts from onshoring manufacturing and public funding initiatives, such as the U.S. Infrastructure Act, are anticipated to benefit steel and fabrication operations [5]. - Steel Dynamics successfully ramped up four new flat-rolled steel coating lines, expecting an additional 1.1 million tons of value-added steel products in the latter half of the year, with full benefits projected for 2025 [5]. - The construction of an aluminum flat-rolled products mill is on track, with operations expected to begin in mid-2025, targeting sustainable markets [6]. Price Performance - Shares of Steel Dynamics have increased by 23.5% over the past year, contrasting with an 8.3% decline in its industry [7].