Steel Dynamics (STLD) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $428 million on $4.6 billion revenue, with adjusted EBITDA of $686 million, reflecting sequential and year-over-year declines due to lower steel prices and metal spread contraction, but solid operational execution and safety performance.

• Sinton facility overcame challenges, gaining full melting capacity, and is expected to improve production and profitability in the second half; four new value-add flat-rolled steel coating lines ramped up, adding 1.1 million tons of higher-margin product diversification.

• Aluminum rolling mill and recycled slab center construction progressing, with $1.5 billion invested to date and reaffirmed total project cost of $2.7 billion; operations expected to begin mid-2025.

• Share repurchases totaled $607 million in H1 2024 (3% of shares), and quarterly dividend increased 8% to $0.46 per share.

• Continued execution on long-term strategy, leveraging a differentiated, circular business model and sustainability initiatives, including a joint venture with Aymium to reduce Scope 1 GHG emissions by up to 35%.

Financial highlights

• Q2 2024 net income was $428 million ($2.72 per diluted share), down 27% sequentially and 47% year-over-year; adjusted EBITDA was $686 million; revenue was $4.63 billion, down 1% sequentially and 9% year-over-year.

• Operating income was $559 million, down 26% sequentially and 47% year-over-year.

• Cash flow from operations was $383 million in Q2 and $738 million in H1 2024; inventories increased ahead of new coating lines.

• Q2 2024 gross profit was $775 million, down from $1.31 billion in Q2 2023.

• Q2 2024 basic EPS was $2.73, diluted EPS $2.72; first half 2024 diluted EPS was $6.39.

Outlook and guidance

• Management expects continued strong demand in steel and non-residential construction, supported by onshoring and infrastructure investments; steel pricing expected to firm in H2 2024.

• Sinton mill utilization expected to rise from 60% in H1 to 75% in H2 2024, with full availability in 2025.

• Aluminum operations expected to begin production in mid-2025, with slab centers operational in late 2024 and mid-2025; investments expected to be EBITDA positive in H2 2025.

• Expect to invest $900 million more in aluminum projects in 2024 and $250 million in 2025.

• Optimistic about demand outlook, supported by infrastructure, onshoring, and decarbonization trends.