Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Steel Dynamics, Inc. (SDI) anticipates its Q4 earnings to decrease though demand remains strong and record shipments are expected in its steel operations and fabrications business.


SDI projects Q4 2019 earnings guidance in the range of 49¢ to 53¢ per diluted share, with adjusted earnings per share between 55¢ to 59¢. Comparatively, the company’s Q4 2018 earnings were at $1.17 per diluted share. 


Earnings from SDI’s steel operations in Q4 are expected to decline due to two planned annual maintenance outages at its Butler and Columbus flat roll divisions, seasonally lower shipments, and pressure on profit margins as steel prices declined more than scrap prices. Together, these factors have resulted in higher than normal maintenance and associated costs of about $15mn. 


The outages also decreased flat roll steel shipments by approximately 70,000nt to 80,000nt (63,503mt to 72,575mt), further reducing the Q4 earnings outlook. Additional costs related to the company’s December 2019 refinancing activities totaled about $4mn.


Domestic steel demand remains strong for the primary steel consuming divisions. The company expects the likelihood of record shipments during the quarter and customers remain optimistic about the business in 2020.   


Earnings from the company’s steel fabrication business in Q4 are expected to decline due to profit margin pressure as product prices declined more than steel input prices during the quarter. Steel fabrication demand remains strong amid healthy order backlogs. 


Q4 2019 results for SDI’s metals recycling division is expected to decrease on account of lower ferrous shipments and average selling values.

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