Steel Dynamics (NASDAQ: STLD) reported Q1 EPS of $0.26, $0.02 better than the analyst estimate of $0.24. Revenue for the quarter came in at $1.7 billion versus the consensus estimate of $1.71 billion.

"During the first quarter 2016, positive changes in the flat roll steel supply environment resulted in significantly improved sequential consolidated operating earnings, which increased over 175 percent to $132 million," said Mark D. Millett, President and Chief Executive Officer. "Flat roll steel import levels have declined and customer inventory levels are better matched with actual demand requirements, supporting higher domestic steel mill utilization. The domestic steel demand outlook is relatively unchanged and steady, with the heavy equipment, agricultural and energy markets remaining weak, while automotive continues to be strong and construction recovers.

"We saw improved volumes and profitability in all of our operating platforms for the first quarter 2016," continued Millett. "Our metals recycling operations returned to profitability as demand for ferrous scrap improved, which resulted in higher shipments and selling values. Likewise, our fabrication operations were supported with continued steady demand from the non-residential construction sector, achieving near record quarterly earnings. We are optimistic, as domestic steel industry dynamics seem to be shifting favorably. Our cash generation continues to be strong, resulting in record liquidity of $2.2 billion at the end of March 2016, providing a firm foundation for growth."

Outlook

"Steel customer inventory levels have moderated and import levels have declined," said Millett. "When combined with steady underlying steel demand, the result has been some improvement in domestic steel producer utilization, yet industry utilization still remains below historical performance due to the issue of unfairly traded steel imports. The proximity of our Columbus Flat Roll Division to the Gulf Region combined with the 2015 rapid decline in the energy sector, severely impacted Columbus' profitability last year, reducing its annual EBITDA by approximately 75 percent, when compared to 2014 annual proforma performance of $315 million. The successful market and product diversification we achieved at Columbus during 2015 is one of the key differentiators for anticipated improved profitability in 2016. As a testament, Columbus achieved near record quarterly shipments in the first quarter 2016 and increased value-added shipments almost 80 percent compared to prior year's first quarter.

"We continue to strengthen our financial position through strong cash flow generation and the execution of our long-term strategy. We also have additional earnings catalysts, including macro-industry improvements and several others which are company specific. We are well-positioned for growth. Customer focus, coupled with our market diversification and low-cost operating platforms, support our ability to maintain our best-in-class industry performance. We believe we are uniquely poised to capitalize on growth opportunities in a challenging environment that will benefit our customers, shareholders, employees and communities."

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