FORT WAYNE, Ind., Dec. 15, 2022 — Steel Dynamics, Inc. (NASDAQ/GS: STLD) today provided fourth quarter 2022 earnings guidance in the range of $3.34 to $3.38 per diluted share. Excluding the impact from the following items, the company expects fourth quarter 2022 adjusted earnings to be in the range of $4.10 to $4.14 per diluted share.
- Additional performance-based companywide special compensation of $24 million, or $0.10 per diluted share, awarded to all non-executive, eligible team members in recognition of the company’s exceptional record annual performance.
- Costs of approximately $167 million, or $0.66 per diluted share, associated with startup of the company’s Sinton Texas Flat Roll Steel Division (Sinton).
The company also expects to realize a benefit of approximately $17 million, or $0.10 per diluted share, related to state and federal prior year return to provision reconciliations.
Comparatively, the company’s sequential third quarter 2022 earnings were $5.03 per diluted share, and adjusted earnings were $5.46 per diluted share excluding costs of $0.43 per diluted share, associated with startup of Sinton. Prior year fourth quarter earnings were $5.49 per diluted share and adjusted earnings were $5.78 per diluted share, excluding costs associated with construction of Sinton of $0.18 per diluted share, additional performance-based companywide special compensation of $0.08 per diluted share, and a contribution to the company’s charitable foundation of $0.04 per diluted share.
Fourth quarter 2022 profitability from the company’s steel operations is expected to be significantly lower than sequential third quarter results, based on seasonally lower shipments and metal spread compression, particularly within the flat roll operations. Metal spread compression was amplified by higher raw material costs, as the flat roll operations work through higher than current market priced pig iron inventories ordered in early 2022 in reaction to the Ukraine and Russia supply chain disruptions. The company believes flat roll steel prices have bottomed and expects them to increase into 2023 as underlying steel demand and corresponding order activity remain intact from the automotive, non-residential construction, industrial, and energy sectors with some weakness in the residential sector.
As ferrous and nonferrous scrap prices have stabilized, fourth quarter 2022 earnings from the company’s metals recycling operations are expected to moderately improve compared to sequential third quarter results, based on increased volume more than offsetting lower average price realization.
Fourth quarter 2022 earnings from the company’s steel fabrication operations are expected to be strong and remain steady with third quarter results, expanding metal spreads more than offsetting slightly lower seasonal volumes. The non-residential construction sector remains steady as evidenced by customer order activity supporting a continuing historically strong order backlog, which the company anticipates will continue through 2023.
Based on the resilience of the company’s circular business model and continued confidence in its earnings outlook and cash flow generation, the company repurchased $338 million, or two percent, of its common stock during the fourth quarter through December 15, 2022.
Steel Dynamics 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 facilities located throughout the United States, and in Mexico. Steel Dynamics produces steel products, including hot roll, cold roll, and coated sheet steel, structural steel beams and shapes, rail, engineered special-bar-quality steel, cold finished steel, merchant bar products, specialty steel sections and steel joists and deck. In addition, the company produces liquid pig iron and processes and sells ferrous and nonferrous scrap.
The company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes that Adjusted Diluted Earnings Per Share, a non-GAAP financial measure, provides additional meaningful information regarding the company’s performance and financial strength. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company’s reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, Adjusted Diluted Earnings Per Share included in this release may not be comparable to similarly titled measures of other companies.
This report contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, Steel Dynamics’ revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities. These statements, which we generally precede or accompany by such typical conditional words as “anticipate”,”intend”,”believe”,”estimate”,”plan”,”seek”,”project”, or “expect”, or by the words “may”, “will”, or “should”, are intended to be made as “forward-looking”, subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: 1 domestic and global economic factors; 2 global steelmaking overcapacity and imports of steel and North American aluminum flat rolled supply deficit, together with increased scrap prices; 3 pandemics, epidemics, widespread illness or other health issues, such as the COVID-19 pandemic; 4 the cyclical nature of the steel industry and the industries we serve; 5 volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes, and our potential inability to pass higher costs on to our customers; 6cost and availability of electricity, natural gas, oil, or other energy resources are subject to volatile market conditions; 7 increased environmental, greenhouse gas emissions and sustainability considerations or regulations; 8 compliance with and changes in environmental and remediation requirements; 9 significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; 10 availability of an adequate source of supply of scrap for our metals recycling operations; 11 cybersecurity threats and risks to the security of our sensitive data and information technology; 12 the implementation of our growth strategy; 13 litigation and legal compliance; 14 unexpected equipment downtime or shutdowns; 15 governmental agencies may refuse to grant or renew some of our licenses and permits; 16 our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; 17 the impacts of impairment charges; 18 unanticipated difficulties in integrating or starting up new assets; and 19 risks and uncertainties involving product and/or technology development.
More specifically, refer to Steel Dynamics’ more detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently, as set forth in our most recent Annual Report on Form 10-K under the headings Special Note Regarding Forward-Looking Statements and Risk Factors, in our quarterly reports on Form 10-Q, or in other reports which we file with the Securities and Exchange Commission. These are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on the Steel Dynamics website, www.steeldynamics.com under “Investors – SEC Filings”.
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SOURCE Steel Dynamics, Inc.