Steel Dynamics reports tighter margin in second quarter

Steel Dynamics Inc. (SDI), Fort Wayne, Indiana, today, has provided second quarter 2015 adjusted earnings guidance in the range of 20 cents to 24 cents per diluted share, excluding approximately $29 million, or 7 cents per diluted share, of expenses associated with the company's Minnesota operations, including severance costs and noncash inventory valuation adjustments related to idling these operations and approximately $9 million, or 2 cents per diluted share, of reduced earnings related to a furnace maintenance outage at Iron Dynamics that typically is required once every five years. Including these items, earnings guidance for the second quarter 2015 is in the range of 11 cents to 15 cents per diluted share.

Estimated second quarter adjusted earnings are higher than sequential first quarter 2015 adjusted earnings of 17 cents per diluted share and lower than prior-year second quarter earnings of 31 cents per diluted share, the company notes.

Profitability from SDI’s steel operations for the second quarter 2015 is expected to be similar in comparison with those of the sequential first quarter of 2015, the company says. “Improved second quarter 2015 shipments will be offset by unexpected metal margin compression, driven by steel imports remaining much higher than originally anticipated, resulting in average quarterly steel prices decreasing more than average quarterly scrap prices,” SDI says.

SDI says it benefitted from reduced scrap pricing in the second quarter; but, the continued flood of steel imports so far in 2015 added pressure to steel product pricing. However, steel pricing has recently begun to stabilize, and domestic steel demand remains solid.

The company says continued demand for its fabricated steel joist and decking products shows the nonresidential construction market is improving. SDI says it expect second quarter 2015 profitability from its fabrication operations to be higher than near-record sequential first quarter 2015 results. 

Metals recycling financial results also expected to be higher for the second quarter 2015 compared with the sequential first quarter, the company says, citing increased shipments and metal margin, as pricing volatility subsided.  

The SDI board of directors has declared a quarterly cash dividend of 13.75 cents per common share, which is payable to shareholders of record at the close of business on June 30, 2015, on or about July 10, 2015.

SDI is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $8.8 billion in 2014, approximately 7,600 employees and manufacturing facilities throughout the United States (including six steel mills, eight steel coating facilities, an iron production facility, approximately 90 metals recycling locations and six steel fabrication plants).