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Steel Dynamics' (STLD) Earnings and Sales Top Estimates in Q1

Steel Dynamics, Inc. STLD logged net income of $431 million or $2.03 per share in first-quarter 2021, up from $187 million or 88 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at $2.10, which topped the Zacks Consensus Estimate of $1.98.

Net sales in the quarter increased roughly 37.7% year over year to $3,544.6 million. The figure beat the Zacks Consensus Estimate of $3,275.8 million. The company achieved record quarterly net sales, operating income and adjusted EBITDA, despite pandemic-led challenges.

Steel Dynamics, Inc. Price, Consensus and EPS Surprise

 

Steel Dynamics, Inc. price-consensus-eps-surprise-chart | Steel Dynamics, Inc. Quote

 

Segment Highlights

Net sales in the company's steel operations rose around 29.3% year over year to $2,510.7 million in the reported quarter. Operating income increased roughly 119.1% year over year to $641.4 million. Average product selling price for the unit gained roughly 34.5% year over year to $1,041 per ton in the reported quarter. Steel shipments inched down roughly 1% year over year to around 2.82 million tons. Significant metal spread expansion and near-record steel shipments drove operating income.

The company's steel fabrication operations raked in sales of around $256.9 million, up around 16.3% year over year. Operating income declined around 66% to $9.9 million on a year-over-year basis. The decrease in earnings does not reflect weaker demand, as order activity remains solid and customers continue to be optimistic regarding non-residential construction projects.

Net sales in metals recycling operations increased almost 61% year over year to $470 million. The segment’s posted operating income of $53.9 million against operating income of $8.3 million in the year-ago quarter. Demand for recycled scrap and prices increased in the first quarter on higher domestic steel production.

Financial Position

Steel Dynamics ended the first quarter with cash and cash equivalents of $1,245.2 million, down 14.4% year over year. Long-term debt was around $3,016.2 million, up 14% year over year.

The company generated $262 million of cash flow from operations in the first quarter.

Outlook

Steel Dynamics stated that it is witnessing strong steel demand and significantly low customer steel inventory throughout the supply chain. It forecasts that earnings for second-quarter 2021 will be higher than first-quarter levels. The company is optimistic regarding the steel market dynamics in North America. Moreover, U.S. trade policies and existing steel trade cases are expected to continue to moderate steel imports.

The company’s investment in Sinton Texas Flat Roll Steel Mill investment represents transformational competitively-advantaged strategic growth, with associated long-term value creation for shareholders, Steel Dynamics noted.

Price Performance

Shares of Steel Dynamics have gained 171.1% in the past year compared with 130.3% rise of the industry.

Zacks Rank & Other Key Picks

Steel Dynamics currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, Nucor Corporation NUE and Impala Platinum Holdings Limited IMPUY.

Fortescue has a projected earnings growth rate of roughly 105% for the current fiscal. The company’s shares have surged 139.3% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has an expected earnings growth rate of around 171% for the current fiscal. The company’s shares have gained 120.3% in the past year. It currently sports a Zacks Rank #1.

Impala has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have skyrocketed 290.1% in the past year. It currently flaunts a Zacks Rank #1.

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Steel Dynamics, Inc. (STLD): Free Stock Analysis Report
 
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