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Steel Dynamics' (STLD) Earnings and Sales Top Estimates in Q2

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Steel Dynamics, Inc. (STLD - Free Report) logged a net income of $1.2 billion or $6.44 per share in second-quarter 2022, up from $702.3 million or $3.32 in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at $6.73, topping the Zacks Consensus Estimate of $6.34.

Net sales in the quarter increased roughly 39% year over year to a record $6,212.9 million. The figure beat the Zacks Consensus Estimate of $6,066.3 million.

Steel Dynamics, Inc. Price, Consensus and EPS Surprise

 

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 28.1% year over year to $4,142 million in the reported quarter. Operating income increased roughly 8.8% year over year to $1,106.7 million. The average product selling price for the unit rose around 19.1% year over year to $1,539 per ton in the reported quarter. The company had record steel shipments of around 3.1 million tons.

The company's steel fabrication operations raked in sales of around $1,085.8 million, up around 228.2% year over year. The segment posted an operating income of $599.2 million compared with an operating income of $28.5 million in the year-ago quarter.

Net sales in metals recycling operations increased around 12.9% year over year to $649.7 million. Operating income increased roughly 13.1% year over year to $57.6 million.

Financial Position

Steel Dynamics ended the second quarter with cash and cash equivalents of $1,007 million, down around 10% from the year-ago quarter’s levels. Long-term debt declined to $3,011.1 million from $3,016.5 millionin the year-ago quarter.

The company generated around $1 billion cash flow from operations in the second quarter.

Outlook

Steel Dynamics stated that customer order entry activity remains healthy across all businesses. It is seeing strong steel order activity from automotive, construction, and industrial sectors and improvement in energy despite weakening flat roll steel pricing.Order backlog remains at near-record volumes and forward pricing levels at its steel fabrication operations.

Steel Dynamics also stated that operations continue to ramp up at its Sinton Flat Roll Steel Milland achieved run rates of 80%. It expects to realize meaningful improvement for the balance of the year.

It recently announced a planned investment in a new state-of-the-art low-carbon aluminum flat rolled mill continues its strategic growth. It is aligned with its core steelmaking and recycling platforms, benefits many existing customers, and provides for future value creation. STLD is well-placed for sustainable long-term growth and value creation, the company noted.

Price Performance

Shares of Steel Dynamics have gained 15.2% in the past year against a 20.3% decline of the industry.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Other Key Picks

Steel Dynamics currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Albemarle Corporation (ALB - Free Report) , Cabot Corporation (CBT - Free Report) and Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) .

Albemarle has a projected earnings growth rate of 239.1% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 20.5% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 22.5%, on average. ALB has gained around 13.9% in a year and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current year. The Zacks Consensus Estimate for CBT's earnings for the current year has been revised 6% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 32% over a year.

Sociedad has a projected earnings growth rate of 422.4% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 75.3% upward in the past 60 days.

Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has gained 77.4% in a year. The company sports a Zacks Rank #1.