Steel Dynamics sees Q2 EPS $4.78-$4.82, consensus $5.06

Second quarter 2023 profitability from the company’s steel operations is expected to be significantly stronger than sequential first quarter results, based on significant metal spread expansion across the platform as realized selling values more than offset moderately higher scrap costs. The company also expects its Sinton Texas Flat Roll Steel Mill to be EBITDA positive for the second quarter 2023, as the team continues to ramp up. Steel order activity remains solid from the automotive, construction, industrial, and energy sectors. Additionally, recent positive data from the steel service center sector points to low customer inventory levels which the company believes will cause destocking to abate and support steel product pricing. Second quarter 2023 earnings from the company’s metals recycling operations are expected to be steady compared to sequential first quarter results, based on increased ferrous scrap shipments offsetting lower metal spread. Second quarter 2023 earnings from the company’s steel fabrication operations are expected to be historically very strong, but lower than sequential first quarter results. Second quarter 2023 steel fabrication shipments are expected to be steady compared to first quarter results, but lower-than-originally expected due to delays in some customer projects related to continued supply-chain constraints due to steel fabricator extended backlogs and lack of construction materials and labor. In addition, second quarter 2023 metal margins are expected to be lower than near-record first quarter results, as average realized product pricing remains at strong levels but lower than sequential first quarter performance combined with higher steel costs. Order entry continues to be steady, and the order backlog is strong with robust forward-pricing for the company’s steel fabrication platform. The non-residential construction sector remains solid, as further evidenced by the strength in the company’s demand for its long product steels. In addition, the continued onshoring of manufacturing, coupled with the strong U.S. infrastructure program and industrial build-outs, supports strong demand in the coming years.