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Steel Dynamics' (STLD) Q4 Earnings & Revenues Top Estimates

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Steel Dynamics, Inc. STLD logged a net income of $1.1 billion or $5.49 per share in fourth-quarter 2021, up from $188 million or 89 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share came in at $5.78, topping the Zacks Consensus Estimate of $5.73.

Net sales in the quarter rose 104.1% year over year to $5,310.7 million. The top line beat the Zacks Consensus Estimate of $5,224.8 million.

The company experienced robust steel demand, particularly in construction, automotive, and industrial sectors. Higher selling prices and significant steel metal spread expansion also drove results in the quarter.

Segment Highlights

Net sales in the company's steel operations rose 102.4% year over year to $3,786.2 million in the reported quarter. Operating income increased more than four folds to $1,366.9 million on the back of significant metal spread expansion across the entire steel platform. The average external product selling price for the unit rose 104.2% year over year to $1,662 per ton in the quarter. Steel shipments rose roughly 1.1% to around 2.7 million tons.

The company's steel fabrication operations raked in sales of $680 million, up more than three folds year over year. Operating income rose more than nine folds on a year-over-year basis to $237.6 million, aided by strong shipments and higher realized pricing.

Net sales in metals recycling operations increased 58.7% year over year to $550.7 million. The segment’s posted operating income of roughly $43.6 million, rising 61.5%, supported by improved metal margins. Maintenance outages throughout the fourth quarter led to reduced ferrous scrap demand.

FY21 Results

Earnings for full-year 2021 were $15.56 per share compared with earnings of $2.59 per share a year ago. Net sales increased 91.7% year over year to $18.4 billion.

Financial Position

Steel Dynamics ended 2021 with cash and cash equivalents of $1,243.9 million, down around 9.1% year over year. Long-term debt was $3,008.7 million, down 0.2%.

The company generated record cash flow from operations of $2.2 billion in 2021. It repurchased shares worth $1.1 billion during the year.

Outlook

Steel Dynamics stated that it expects further year-over-year increase in domestic steel consumption in 2022 based on the prevailing market dynamics. It sees steel consumption in North America to experience steady growth, backed by the construction, automotive, and industrial sectors. It expects construction to remain strong factoring in its record steel fabrication order backlog extending through most of this year, along with the sustained strength of order activity and broad customer optimism. Steel Dynamics also expects the more severe supply-chain challenges in the automotive sector in North America to subside this year, supporting stronger production for vehicles that are in high demand and short supply.

The company is ramping up operations at its new electric-arc-furnace flat roll steel mill located in Texas. It anticipates the full operation to commence before the end of February 2022 and envisions shipments to be around 2 million tons in 2022.

Price Performance

Steel Dynamics' shares have risen 49.4% over a year compared with 28.5% growth of the industry.

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Zacks Rank & Other Stocks to Consider

Currently, Steel Dynamics carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Commercial Metals Company CMC, Albemarle Corporation ALB and AdvanSix Inc. ASIX.

Commercial Metals, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 39.5% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has rallied around 68% in a year.

Albemarle, carrying a Zacks Rank #1, has an expected earnings growth rate of 51.3% for the current year. ALB's consensus estimate for the current year has been revised 5.4% upward over the past 60 days.

Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 22.1%. ALB shares have gained around 21% in a year.

AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 5.3% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 80% in a year.


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