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SDI anticipates record Q4 performance

In its earnings guidance, the company says it expects higher quarterly steel operations profitability driven by strong underlying steel demand and metal spread expansion.

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December 20, 2021

Steel Dynamics Inc., headquartered in Fort Wayne, Indiana, has provided fourth quarter 2021 earnings guidance in the range of $5.46 to $5.50 per diluted share, once again representing record quarterly performance. Excluding the impact of additional performance-based companywide special compensation of approximately $21 million and costs of approximately $43 million associated with construction and startup of its Sinton, Texas, electric arc furnace steel mill, the company says it expects fourth-quarter 2021 adjusted earnings to be in the range of $5.69 to $5.73 per diluted share.

Comparatively, the company's sequential third-quarter 2021 earnings were $4.85 per diluted share, and adjusted earnings were $4.96 per diluted share, excluding the impact of construction and startup costs related to the Texas steel mill of 11 cents per diluted share. Prior-year fourth-quarter earnings were 89 cents per diluted share, and adjusted earnings were 97 cents per diluted share, excluding additional financing costs related to the company's October 2020 refinancing activities, costs associated with the construction of its Texas steel mill, noncash asset impairment charges related to certain noncore oil and gas investments and a tax benefit related to the reduction of a valuation allowance.

Fourth-quarter 2021 profitability from SDI’s steel operations is expected to be higher than third-quarter results, the company says, setting a new quarterly record. SDI points to strong underlying steel demand and metal spread expansion across the platform, more than offsetting seasonally lower steel shipments, as factors contributing to its expected record profitability. Domestic steel demand remains strong, with the automotive, construction and industrial sectors continuing to lead the momentum, the company adds.

Fourth-quarter 2021 earnings from SDI’s OmniSource metals recycling operations are expected to be aligned with sequential third-quarter results, the company says, based on improved metal margins despite modestly lower selling values and offsetting lower shipments. Many domestic steel mills had planned maintenance outages throughout the quarter, which lowered ferrous scrap demand.

Fourth-quarter 2021 earnings from SDI’s steel fabrication operations are expected to be more than two and one-half times higher than sequential record third-quarter results, the company says, as significantly higher selling values and near-record shipments meaningfully more than offset higher steel input costs. The nonresidential construction sector remains strong as evidenced by robust order activity, resulting in another record order backlog and record forward pricing for SDI’s steel fabrication platform. The company says it anticipates this momentum to continue through 2022 based on these dynamics.