SDI predicts lower profitability from its steel operations in Q1

According to the company’s earnings guidance, while profitability will be “historically strong,” it will be “significantly lower” than in Q4 2021.


Steel Dynamics Inc., the electric arc furnace steelmaker based in Fort Wayne, Indiana, has provided first-quarter 2022 earnings guidance in the range of $5.55 to $5.59 per diluted share. Excluding the impact from costs associated with the startup of the company’s Sinton, Texas, steel mill of an estimated $83 million, or 30 cents per diluted share, SDI says it expects first-quarter 2022 adjusted earnings to be in the range of $5.85 to $5.89 per diluted share.

These figures compare with sequential fourth-quarter 2021 earnings of $5.49 per diluted share and adjusted earnings of $5.78 per diluted share, excluding additional performance-based companywide special compensation of approximately 8 cents per diluted share, a contribution to the company’s charitable foundation of 4 cents per diluted share and costs of 18 cents per diluted share (net of capitalized interest) associated with construction and startup of the company’s Texas mill. Prior year first-quarter earnings were $2.03 per diluted share and adjusted earnings were $2.10 per diluted share, excluding costs of 7 cents per diluted share associated with construction of SDI’s Texas steel mill.

SDI says it is expecting first-quarter 2022 profitability from its steel operations to be “historically strong” though “significantly lower” than its fourth-quarter 2021 record results in light of lower earnings from its flat-roll steel operations resulting from an expected decline of more than 10 percent in average flat-roll pricing, which it says will more than offset anticipated higher shipments and lower average scrap prices. Flat-roll steel prices have firmed with extending lead-times and expectations for further improvements based on higher input costs and global flat-roll steel supply disruptions, coupled with a continuing strong demand environment, the company says, adding that the automotive, construction and industrial sectors continue to lead steel demand.

SDI says its first-quarter 2022 earnings from its metals recycling operations are expected to be aligned with sequential fourth-quarter results based on improved metal margins offsetting modestly lower volume.

The company says it expects first-quarter 2022 earnings from its steel fabrication operations to almost double its sequential record fourth-quarter results because of significantly higher selling values and strong shipments, more than offset marginally higher steel input costs. The nonresidential construction sector remains strong as evidenced by robust order activity, resulting in a historically strong order backlog with record forward-pricing for SDI’s steel fabrication platform. The company says it anticipates this momentum to continue through 2022 based on these dynamics.

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