Steel Dynamics Inc. (Nasdaq: STLD) – Q1 FY 2011 Earnings Preview
Tuesday, April 12, 2022 1:30 PM

Carbon steel products manufacturer, Steel Dynamics Inc. (Nasdaq: STLD) is scheduled to report its first quarter earnings results on April 18. For the last four quarters ended December 2010, the company’s reported EPS missed analysts’ consensus estimates on three occasions. For quarters ending June, September and December, it missed analysts’ estimate by margins of 12 percent, 10 percent, and 22.20 percent, respectively. For quarter ended March 2010, it exceeded analysts’ consensus estimate by margin of 11.50 percent.

Steel Dynamics Inc. is one of the largest steel producers and one of the largest metals recyclers in the United States based on a current estimated annual steel making capability of 6.4 million tons. The relatively new additional business of metals recycling shipments during 2008, 2009, and 2010, respectively, were 5.0 million gross tons, 3.6 million gross tons, and 5.2 million gross tons of ferrous materials; and 912 million pounds, 780 million pounds and 961 million pounds of nonferrous metallics. The Company operates in three segments: steel operations, metals recycling and ferrous resources operations, and steel fabrication operations.

For the fourth quarter ended December 2010, STLD reported net income of $8 million, or $0.04 per share, on net sales of $1.5 billion, compared to net income of $27 million, or $0.12 per  share, on net sales of $1.2 billion and third quarter 2010 net income of $19 million, or $0.09 per  share, on net sales of $1.6 billion. For full year 2010, net income was $141 million, or $0.64 per  share, on net sales of $6.3 billion, in comparison to a net loss of $8 million, or minus $0.04 per share, on net sales of $4.0 billion for 2009.

For the current quarter, the company expects first quarter earnings per share to be in the range of $0.37 to $0.42, significantly higher than fourth quarter 2010 earnings per share and also a nice gain from earnings of $0.29 achieved in the first quarter 2010. The increase in the guidance is mainly due to increased volumes and margins across all of the company operations.

During the first quarter of FY 2011, the board of directors declared a quarterly cash dividend of $0.10 per common share, an increase of 33 percent from the 2010 dividend level. The dividend is payable on April 14, to shareholders of record on March 31, 2011. The board of directors has authorized the repurchase shares of common stock through open market trades. The company did not repurchase any shares during 2010 or 2009, and repurchased 22.3 million shares for $501.8 million during 2008. As of December 31, 2010, remaining authorization to repurchase was approximately 3.6 million additional shares. The repurchase program does not have an expiration date.

For the first quarter, analysts’ EPS estimates range from a low of $0.39 to $0.50 per share, with a consensus estimate of $0.42 per share. As previously noted, earnings were $0.29 in the year ago quarter. For this quarter, analysts’ revenue estimates range from a low of $1.08 billion to a high of $2.16 billion, with a consensus estimate of $1.81 billion. Revenues were $1.56 billion in the same quarter a year ago. For the quarter ending March, 2011, the consensus EPS forecast has been increased from $0.39 per share estimated 60 days ago to the current estimate of $0.42 per share.

In the last 52 weeks, STLD’s shares have been trading in the range of $12.89 and $20.70.  The relatively wide spread between Wall Street estimates and large difference of opinion in the revenue numbers could indicate a surprise in either direction when actual earnings are announced.