Steel Dynamics (NASDAQ: STLD): Q2 Earnings Preview 2011

Steel Dynamics Inc. (NASDAQ: STLD), the fifth-largest US steelmaker, is scheduled to release second-quarter earnings after the closing bell on Monday, July 18, 2011. Analysts, on average, expect the company to report earnings of 39 cents per share on revenue of $2.01 billion. In the year ago quarter, the company reported earnings of 22 cents per share on revenue of $1.63 billion.

Steel Dynamics, Inc., together with its subsidiaries, manufactures and sells steel products in the United States. It operates in three segments: Steel Operations, Metals Recycling and Ferrous Resources Operations, and Steel Fabrication Operations.

In the preceding first quarter, the Fort Wayne, Indiana-based company's net income was $106 million, or 46 cents per share, compared to $65 million, or 29 cents per share, in the year-ago quarter.  Revenue increased to $2.0 billion from $1.6 billion in the year-ago period. Analysts, on average, expected the company to report earnings of 41 cents per share on revenue of $1.81 billion.

Last month, the company announced that it expects second quarter earnings to be in the range of $0.35 to $0.40 per share. In addition, the company increased its quarterly cash dividend by 33% to 10 cents per common share, payable payable on or about April 14, 2011, to shareholders of record at the close of business on March 31, 2011. The hedging loss is expected at about $3 million or $0.03 per share.

Steel Dynamics' metals recycling operations were impacted by an estimated 15 percent quarterly reduction in ferrous margins and an estimated 25 percent reduction in nonferrous margins. As well, the cost of acquiring unprocessed scrap material more than outpaced any price increases. The company also was impacted by weaker incoming orders for flat-rolled steel in April. The slump in residential and non-residential construction markets resulted in unexpected weakness in incoming orders for structural steel.

Steel demand and production have improved nicely in the past year due to increased government support and more balanced demand. The rebound in demand has been largely attributed to stronger auto and non-residential construction sectors as well as surging steel demand from China and India. According to the Steel Index, Iron-ore prices more than doubled in the past two years largely due to emerging market demand.

The company, known as a low-cost producer, is attempting to free itself from some outside raw materials suppliers by creating its own pig-iron replacement. Steel Dynamics has built the Mesabi Nugget plant at Minnesota in cooperation with Kobe Steel Ltd. of Japan, which has licensed the technology and provided equipment and technical support. Steel Dynamics, with 81 percent ownership, is responsible for operation of the plant and utilizes a substantial portion of the plant's output as feedstock for SDI's electric-arc furnace mini mills in Indiana. The plant makes iron nuggets that are about 95% pure to feed electric arc minimills and produce flat rolled steel. Conventional taconite plants typically produce pellets with an iron content of about 65%.

Full Disclosure: None.

Steel Dynamics (NASDAQ: STLD): Q1 Earnings Preview 2011

Steel Dynamics Inc. (NASDAQ: STLD), the fifth-largest US steelmaker, is scheduled to release first-quarter earnings after the closing bell on Monday, April 18, 2011. Analysts, on average, expect the company to report earnings of 41 cents per share on revenue of $1.81 billion. In the year ago quarter, the company reported earnings of 29 cents per share on revenue of $1.56 billion.

Steel Dynamics, Inc., together with its subsidiaries, manufactures and sells steel products in the United States. It operates in three segments: Steel Operations, Metals Recycling and Ferrous Resources Operations, and Steel Fabrication Operations.

In the preceding fourth quarter, the Fort Wayne, Indiana-based company's net income was $7.79 million or 4 cents per share, in comparison to prior year's $26.65 million or 12 cents per share. On an adjusted basis, the company earned 7 cents per share in the fourth quarter. Revenue increased to $1.53 billion from last year's $1.18 billion. Analysts, on average, expected the company to report earnings of 9 cents per share on revenue of $1.60 billion. 

Last month, the company announced that it expects first quarter earnings to be in the range of 37 cents to 42 cents per share. In addition, the company increased its quarterly cash dividend by 33% to 10 cents per common share, payable payable on or about April 14, 2011, to shareholders of record at the close of business on March 31, 2011.

The company said that in recent months it has experienced increased volumes and margins in all of its operations, although to a much smaller extent at its Structural and Rail Division and fabrication operations, which are more directly impacted by the commercial construction markets. The demand for sheet and special bar quality steels remains robust and the increase in steel utilization rates continues to strengthen demand for recycled ferrous materials.

Steel demand and production have improved nicely in the past year due to increased government support and more balanced demand. The rebound in demand has been largely attributed to stronger auto and non-residential construction sectors as well as surging steel demand from China and India. According to the Steel Index, Iron-ore prices more than doubled in the past two years largely due to emerging market demand.

The company, known as a low-cost producer, is attempting to free itself from some outside raw materials suppliers by creating its own pig-iron replacement. Steel Dynamics has built the Mesabi Nugget plant at Minnesota in cooperation with Kobe Steel Ltd. of Japan, which has licensed the technology and provided equipment and technical support. Steel Dynamics, with 81 percent ownership, is responsible for operation of the plant and utilizes a substantial portion of the plant's output as feedstock for SDI's electric-arc furnace mini mills in Indiana. The plant makes iron nuggets that are about 95% pure to feed electric arc minimills and produce flat rolled steel. Conventional taconite plants typically produce pellets with an iron content of about 65%.

During the quarter in review, Steel Dynamics jointly announced the creation of a new partnership with and LaFarga Group, headquartered in Barcelona, Spain, which will operate under the SDI LaFarga, LLC name. Plans include the construction of a $39 million facility which will produce copper wire rod from recycled copper. This new venture is expected to result in the creation of 35 new full-time management, administrative and production positions by 2013.  

The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 8.07 and PEG ratio of 0.33. In terms of stock performance, STLD shares have lost nearly 2 percent over the past year.  

Full Disclosure: None.

Steel Dynamics (NASDAQ: STLD): Q4 Earnings Preview 2010

Steel Dynamics Inc. (NASDAQ: STLD), the fifth-largest US steelmaker, is scheduled to release fourth-quarter earnings before the opening bell on Monday, January 24, 2011. Analysts, on average, expect the company to report earnings of 9 cents per share on revenue of $1.60 billion. In the year ago quarter, the company reported earnings of 12 cents per share on revenue of $1.18 billion.

Steel Dynamics, Inc., together with its subsidiaries, manufactures and sells steel products in the United States. It operates in three segments: Steel Operations, Metals Recycling and Ferrous Resources Operations, and Steel Fabrication Operations.

In the preceding third quarter, the Fort Wayne, Indiana-based company's net income was $18.74 million, or 9 cents per share, compared to $69.02 million, or 30 cents per share, in the year-ago period. Revenue rose to $1.58 billion from $1.17 billion. Analysts, on average, expected the company to report earnings of 9 cents per share on revenue of $1.50 billion. 

Steel demand and production have improved nicely in the past year due to increased government support and more balanced demand. The rebound in demand has been largely attributed to -- at least in the US -- stronger auto and non-residential construction sectors. China posted a significant surge in steel imports last month; however stricter measures may reduce the nation's demand going forward.

A run-up in raw materials costs has helped steel mills press home higher prices with their biggest customers, especially auto makers and distribution centers. Epochal floods have inundated the coal mines of Queensland, Australia, which supplies nearly 70% of the planet's coking coal, used to smelt iron ore in blast furnaces, and therefore a crucial steel ingredient.

Last month, the company said that it expects fourth quarter earnings per diluted share, before certain asset impairment charges related to its fabrication operations, to be in the range of $0.05 to $0.10, consistent with third quarter 2010 earnings per diluted share of $0.09. The company is currently evaluating the assets of two idled fabrication locations for impairment based on current plans for their future use, as these plans were impacted by the company's recent purchase of additional joist locations and equipment. The company said that it currently estimates a fourth quarter impairment charge of $13 million to $15 million, or approximately $0.03 to $0.04 per diluted share. In recent weeks the company's sheet operations order entry and pricing have increased significantly, but were negatively impacted early in the quarter by reduced volumes and pricing. The company also experienced quarterly improvement in its long product steel operations, notably at its Structural and Rail Division, as volumes and pricing increased slightly and rail became a larger component of product mix. In addition, the Engineered Bar Products Division continues to maintain strong volumes and margins. As a whole, however, the steel operations financial performance appears to be consistent quarter to quarter. Comparative third quarter to fourth quarter metals recycling earnings will be slightly impacted by seasonally reduced volumes, and reduced non ferrous margins.

The company, known as a low-cost producer, is attempting to free itself from some outside raw materials suppliers by creating its own pig-iron replacement. Steel Dynamics has built the Mesabi Nugget plant at Minnesota in cooperation with Kobe Steel Ltd. of Japan, which has licensed the technology and provided equipment and technical support. Steel Dynamics, with 81 percent ownership, is responsible for operation of the plant and utilizes a substantial portion of the plant's output as feedstock for SDI's electric-arc furnace mini mills in Indiana. The plant makes iron nuggets that are about 95% pure to feed electric arc minimills and produce flat rolled steel. Conventional taconite plants typically produce pellets with an iron content of about 65%.

In terms of stock performance, STLD shares have gained nearly 5 percent over the past year.  

Full Disclosure: None.