Steel Dynamics stock jumps to a record on 'meaningfully stronger' profit outlook

By Tomi Kilgore

Stronger steel demand being led by automotive, nonresidential construction and energy markets

Shares of Steel Dynamics Inc. surged into record territory Friday after the steelmaker provided a first-quarter profit outlook that was above Wall Street's projections amid cited increased shipments across its businesses.

The Indiana-based company (STLD) said strength was broad-based, led by its flat-rolled steel operations, with demand strongest in the automotive, nonresidential construction, energy and industrial markets.

The company said the continued return of manufacturing to the U.S., coupled with the "robust" U.S. infrastructure program, will support strong demand for years.

The stock climbed 3% in morning trading, to surpass the current record closing price of $136.06 reached on March 3.

The steelmaker's upbeat outlook comes a day after President Joe Biden said he opposed the acquisition of rival U.S. Steel Corp. (X) by Japan's Nippon Steel Corp. (NPSCY) (JP:5401), saying it was important to keep "strong American steel companies powered by American steel workers."

For the first quarter, Steel Dynamics expects earnings per share of $3.51 to $3.55, down from $4.01 in the same period a year ago, but up from $2.61 in the fourth quarter and above the FactSet consensus of $3.32.

"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," the company stated.

The metals-recycling operations are also seeing improvement from the previous quarter, due to "substantially stronger" pricing and increased volume.

Meanwhile, results from the steel fabrication operations are expected to decline from the fourth quarter, because of lower shipment and pricing while costs increased.

Full first-quarter results are expected to be released on April 23.

Separately, the company said it repurchased $279 million worth of its common stock, or 1.4% of the shares outstanding, this year, citing "continued confidence in the company's earnings outlook and cash flow generation."

This year, the stock has run up 15.3% year to date, while the S&P 500 index SPX has gained 7.5%.

-Tomi Kilgore

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03-15-24 1107ET

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