Steel Dynamics Provides Second Quarter 2020 Earnings Guidance

Steel Dynamics, Inc. today provided second quarter 2020 earnings guidance in the range of $0.29 to $0.33 per diluted share. Excluding the impact from the following items, the company expects second quarter 2020 adjusted earnings to be in the range of $0.40 to $0.44 per diluted share:

• Additional financing costs related to the company's June 2020 refinancing activities of approximately $25 million, or $0.08 per diluted share, and
• Start-up costs (net of capitalized interest) associated with the construction of the company's Sinton Texas Flat Roll Steel Mill of approximately $10 million, or $0.03 per diluted share.

Comparatively, the company's sequential first quarter 2020 earnings were $0.88 per diluted share and prior year second quarter earnings were $0.87 per diluted share.

"I could not be prouder of the Steel Dynamics team," said Mark D. Millett, President and Chief Executive Officer. "The operating, commercial, and financial teams have come together to deliver strong results within the current unprecedented health and economic environment. We are operating safely, providing ongoing customer support, and taking advantage of long-term financing opportunities.  Even though our second quarter 2020 earnings are expected to be significantly lower than our robust sequential first quarter, the results are tremendous given the circumstances.  Our commercial teams and downstream manufacturing businesses are helping us maintain higher steel production utilization rates, and our metals recycling platform is ensuring our steel mills are receiving the required raw materials. Our commitment is to the safety of our teams, families, communities and to meet the needs of our customers. Our culture and our business model continue to differentiate our performance from the rest of the industry."      

Second quarter 2020 earnings from the company's steel operations is expected to be significantly lower than sequential first quarter results, due to lower shipments and selling values as a result of the temporary closures of numerous steel consuming businesses in response to the coronavirus (COVID-19) pandemic. Domestic automotive producers and the related supply chain idled operations beginning in March and have just recently begun restarting production. However, construction related steel demand has been steadier than industrial manufacturing throughout the second quarter.

As domestic manufacturing slowed and states issued shelter-in-place mandates, scrap supply and collection declined. In addition, significantly lower domestic steel production resulted in weak scrap demand.  As a result, the company's metals recycling operations are expected to record an operating loss for the second quarter 2020.   

As states begin to reopen and steel consuming businesses resume operations, the company anticipates steel and recycled scrap volumes will improve. The company believes trade protections that are already in place will continue to limit the amount of unfairly traded steel products coming into the United States, providing additional support for domestic steel mill utilization.   

The customer order backlog for the company's steel fabrication platform is strong and customers remain constructive concerning non-residential construction projects.  At this time, the company has not seen widespread project delays or cancellations. Second quarter 2020 earnings from the company's steel fabrication operations are expected to be on pace with strong sequential first quarter results.