SDI Sees Profitability in the First Quarter
In its initial projections for Q1 2024, Steel Dynamics Inc. (SDI), headquartered in Fort Wayne, Indiana, has forecasted earnings between $3.51 and $3.55 per diluted share. This estimate represents growth from the $2.61 per diluted share earned last quarter, although it falls slightly short of the $3.70 per diluted share reported in Q1 of 2023.
“First-quarter 2024 profitability from the company’s steel operations are expected to be meaningfully stronger than sequential fourth-quarter results,” SDI reports.
The steelmaker, who operates a recycled-content electric arc furnace (EAF) has noted a boost in performance that was attributed to a rise in sales and profits company-wide. This growth was primarily fueled by the successful performance of its flat-rolled steel division located in Sinton, Texas.
SDI also highlights the steady demand for finished steel across various industries such as the automotive, nonresidential construction, industrial, and energy sectors. The company additionally oversees the operations of the OmniSource LLC network of scrap yards.
“First-quarter 2024 earnings from the company’s metals recycling operations are also expected to be higher than sequential fourth-quarter results, based on substantially stronger realized product pricing and increased volume in both ferrous and nonferrous materials,” SDI comments referencing its OmniSource business arm.
Radius Recycling and Nucor Compare Financials
This data comes in sharp contrast to the recent quarterly performance of Portland’s Radius Recycling and the guidance provided by Nucor Corp., which leads the David J. Joseph network of scrap yards.
Radius runs a single EAF mill and multiple scrap yards, and the firm just disclosed its anticipation of a financial loss from Dec. 1, 2023, to Feb. 29, 2024. The CEO of Radius, Tamara Lundgren, stated in relation to the news release detailing Radius’s preliminary quarterly results that, “Without question, current market conditions remain challenging as cyclical headwinds are creating tighter supply flows and compressing metal spreads.”
In addition, Nucor, located in Charlotte, North Carolina, revealed its projections for the first quarter of 2024. The firm expects profitability in its electric arc furnace steelmaking division, however, the company is cautious about potential challenges in its raw materials division, attributing this concern to “lower margins at our scrap processing operations.”
“Strong Demand in Coming Years” Reported
Within its recommendations, SDI also mentions its downstream business units for steel products as kicking off the year with lower profitability, aligning with Nucor’s projections for managing comparable operations.
“First-quarter 2024 earnings from the company’s steel fabrication operations are expected to be historically strong but lower than sequential fourth-quarter results based on seasonally lower shipments and metal spread contraction, as realized pricing declined and steel input costs increased,” SDI explains.
“The nonresidential construction sector remains solid as further evidenced by steel joist and deck order backlog volume that extends into the third quarter of 2024, with historically strong associated product pricing. In addition, the continued onshoring of manufacturing, coupled with the robust U.S. infrastructure program and industrial buildouts, support strong demand in the coming years.”
SDI is gearing up to unveil its financial results for the first quarter of 2024 on April 23rd, and is scheduled to conduct a conference call with investors and analysts on April 24th.
