Advertisement
Canada markets closed

  • S&P/TSX

    21,947.41
    +124.19 (+0.57%)
     

  • S&P 500

    5,127.79
    +63.59 (+1.26%)
     

  • DOW

    38,675.68
    +450.02 (+1.18%)
     

  • CAD/USD

    0.7308
    -0.0006 (-0.08%)
     

  • CRUDE OIL

    77.99
    -0.96 (-1.22%)
     

  • Bitcoin CAD

    86,134.58
    +5,209.25 (+6.44%)
     

  • CMC Crypto 200

    1,359.39
    +82.41 (+6.45%)
     

  • GOLD FUTURES

    2,310.10
    +0.50 (+0.02%)
     

  • RUSSELL 2000

    2,035.72
    +19.61 (+0.97%)
     

  • 10-Yr Bond

    4.5000
    -0.0710 (-1.55%)
     

  • NASDAQ

    16,156.33
    +315.37 (+1.99%)
     

  • VOLATILITY

    13.49
    -1.19 (-8.11%)
     

  • FTSE

    8,213.49
    +41.34 (+0.51%)
     

  • NIKKEI 225

    38,236.07
    -37.98 (-0.10%)
     

  • CAD/EUR

    0.6787
    -0.0030 (-0.44%)
     

Steel Dynamics Inc (STLD) (Q1 2024) Earnings Call Transcript Highlights: Robust Performance and ...

GuruFocus Research
·3 min read

  • Net Income: $584 million

  • Earnings Per Share (EPS): $3.67 per diluted share

  • Adjusted EBITDA: $879 million

  • Revenue: $4.7 billion, up 11% from the previous quarter

  • Operating Income: $751 million, 45% higher than the previous quarter

  • Steel Shipments: Near-record 3.3 million tons

  • Steel Operations Operating Income: $675 million

  • Metals Recycling Operating Income: $23 million

  • Steel Fabrication Operating Income: $178 million

  • Cash Flow from Operations: $355 million

  • Liquidity: $3.1 billion

  • Capital Investments Forecast for 2024: $2 billion

  • Dividend: Increased by 8% to $0.46 per common share

  • Share Repurchases: $298 million, representing 1.5% of outstanding shares

  • Free Cash Flow Profile: Changed from an annual average of $540 million (2011-2015) to $2.9 billion currently

  • Return on Invested Capital: 3-year average after-tax ROIC of 32%

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Within steel, conversion costs appear to have declined a bit quarter-on-quarter. Taking into account Sinton's continued to ramp up and substrate costs going into 2Q, would you anticipate a comparable reduction in the current quarter? A: Theresa E. Wagler, Executive VP, CFO & Company Secretary, mentioned that with the increasing production at Sinton expected to continue improving into the second quarter and the second half of the year, additional volume will help compress costs across the spectrum. However, product mix also needs consideration when thinking about flat versus long products. The conversion rate is expected to continue to reduce, although the exact magnitude is not specified.

ADVERTISEMENT

Q: Can you give us a timeline on when you think the greenfield aluminum project could get to an EBITDA breakeven level and what type of utilization rate you would need to achieve that? A: Mark D. Millett, Co-Founder, Chairman & CEO, explained that from a CapEx standpoint, everything is contracted out with inflationary pressures baked into the $2.7 billion cost. Commercial arrangements are ongoing with major beverage can consumers and automotive sectors, matching customer demand with the startup ramp. Operations are expected to start mid-2025, with EBITDA breakeven anticipated by the end of the year.

Q: How do you see fabrication volumes performing into 2Q, and can you give us a sense of how joist and deck products fit into federal programs like the CHIPS Act and IRA battery plants? A: Mark D. Millett indicated that fabrication shipments are expected to increase in Q2 and throughout the year, with only slight quarter-over-quarter price erosion. This suggests a volume trough has been reached with an upward trend expected. Theresa E. Wagler added that the structural shift in the market supports strong long-term prospects for fabrication.

Q: The long steel volumes declined significantly year-on-year. Can you provide more color on the different construction markets that may be leading to this decline? A: Mark D. Millett responded that the mix across line products is responsive to current market demands, with Structural and Rail performing well. The market has shifted from fabricators going directly to mills to more of a service center type relationship, which is a more historical approach after busy construction years.

Q: On Sinton, can you provide more color on how we should think about the utilization rates for the rest of the year? A: Barry T. Schneider, President & COO, mentioned that Sinton's utilization was about 70% in the first quarter, with expectations to reach 80% by year-end. A significant outage in April addressed power issues, setting the stage for improved operational capacity and efficiency moving forward.

Q: Could you share your views on the CRC, HRC spreads that have been quite robust recently? A: Mark D. Millett noted that coated products are gaining market share, supporting higher spreads. The solar market, consuming significant amounts of coated product, is a major factor. Barry T. Schneider added that SDI's diversification in coated profiles provides good supply solutions, helping to maintain attractive spreads between coated and hot roll products.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.