Steel Dynamics (STLD) Issues Q2 EPS Outlook

Steel Dynamics (NASDAQ: STLD) rovided second quarter 2015 adjusted earnings guidance in the range of $0.20 to $0.24 per diluted share, excluding the following items:

− Approximately $29 million, or $0.07 per diluted share, of expenses associated with the company's Minnesota Operations, including severance costs and non-cash inventory valuation adjustments related to idling these operations, and

− Approximately $9 million, or $0.02 per diluted share, of reduced earnings related to a furnace maintenance outage at Iron Dynamics that generally is required once every five years.

Estimated second quarter adjusted earnings are higher than sequential first quarter 2015 adjusted earnings of $0.17 per diluted share and lower than prior-year second quarter earnings of $0.31 per diluted share. Including the above items, earnings guidance for the second quarter 2015 is in the range of $0.11 to $0.15 per diluted share.

*** The Street sees Q2 EPS of $0.24 and FY15 EPS of $1.22.

Profitability from the company's steel operations for the second quarter 2015 is expected to be similar in comparison to the sequential first quarter 2015 results. Improved second quarter 2015 shipments will be offset by unexpected metal margin compression, driven by steel imports remaining much higher than originally anticipated, resulting in average quarterly steel prices decreasing more than average quarterly scrap prices. The benefit of reduced scrap pricing was realized in the second quarter; but, the continued flood of steel imports thus far in 2015 continued to pressure steel product pricing to a greater degree. However, steel pricing has recently begun to stabilize and domestic steel demand remains solid.

Continued demand for the company's fabricated steel joist and decking products indicates the non-residential construction market is continuing a positive trend. Second quarter 2015 profitability from the company's fabrication operations is expected to be higher than near-record sequential first quarter 2015 results.

Metals recycling financial results are also expected to be higher for the second quarter 2015, compared to the sequential first quarter, based on both increased shipments and metal margin, as pricing volatility subsided.

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