Steel Dynamics Projects Resilient Q1 2025 Performance Amid Key Sector Growth
Steel Dynamics, Inc. (NASDAQ/GS: STLD), a leading player in North America’s steel production and metals recycling industries, announced its earnings guidance for the first quarter of 2025. The company is projecting earnings per diluted share in the range of $1.36 to $1.40, marking a slight decrease compared to the $3.67 per share in Q1 2024, but comparable to $1.36 per share in Q4 2024. Despite facing some challenges, including pressure on steel pricing, Steel Dynamics remains optimistic about its financial outlook.
Steel Operations: Profitability Boost Despite Market Compression
Steel Dynamics anticipates stronger profitability from its steel operations compared to the fourth quarter of 2024. This is primarily due to increased shipments, which are expected to offset some of the compression in metal margins. The company notes that while contractual steel prices have lagged behind recent spot price improvements, they expect to realize the benefits of these price increases over the coming months.
Key sectors driving demand for steel include energy, automotive, non-residential construction, and industrial applications. These sectors are expected to remain strong throughout the first quarter of 2025, continuing to support steel consumption.
Steel Dynamics’ Sinton Texas Flat Roll Division has been operating at over 90% production capacity in Q1 2025, positioning the company for a strong finish in the second quarter. The division has made notable strides in improving both product quality and cost efficiency, with a clear path to improved profitability moving forward.
Metals Recycling: Higher Earnings from Strong Pricing
Steel Dynamics also forecasts an increase in earnings from its metals recycling operations compared to the fourth quarter of 2024. This is largely driven by stronger realized pricing and stable volumes in ferrous and nonferrous materials. The improved pricing reflects a positive shift in the scrap metal market, which bodes well for the company’s recycling segment.
The continued growth in scrap prices has helped to stabilize margins, while volumes for both ferrous and nonferrous materials have remained steady, allowing Steel Dynamics to maintain a favorable outlook in its metals recycling division for Q1 2025.
Steel Fabrication: Lower Earnings Amid Seasonal Declines
While Steel Dynamics anticipates higher profitability in both its steel and metals recycling divisions, the company expects a decline in earnings from its steel fabrication operations in Q1 2025. This is attributed to seasonally lower shipments and a less than 5% decline in realized pricing compared to Q4 2024.
Despite the seasonal slowdown, Steel Dynamics reports that order activity has increased, and its order backlog has improved significantly. The company’s backlog now extends well into the third quarter of 2025, with strong demand driven by sectors such as commercial construction, data centers, manufacturing, warehouse, and healthcare. Furthermore, domestic manufacturing investment and U.S. infrastructure projects are expected to positively impact demand, particularly for steel joists, deck products, and long products such as flat rolled steel.
Aluminum Operations: Progress on New Mills
In addition to its steel and metals recycling segments, Steel Dynamics is continuing to develop its aluminum operations, with a focus on its Columbus, Mississippi aluminum flat rolled products mill and San Luis Potosi recycled slab center in Mexico.
The company successfully cast its first aluminum ingot in January 2025 and has since completed the start-up of the Ingot Scalper, an important step toward ramping up production at the new facilities. The construction of the Hot Line and No. 1 Cold Rolling Mill is nearing completion, and the installation of finishing equipment for the Automotive Treatment and Can Coil Coating lines is on schedule.
Steel Dynamics continues to expect to begin shipping materials from these new facilities by mid-2025, adding to its diversified product offerings and strengthening its position in the aluminum market.
Dividend Increase and Share Repurchase Program
Steel Dynamics is confident in its earnings outlook and cash flow generation, leading the company’s board of directors to increase its Q1 2025 cash dividend by 9%, raising it to $0.50 per common share. The dividend increase reflects the company’s strong cash flow and commitment to returning value to shareholders.
Furthermore, the board authorized an additional $1.5 billion for share repurchases, following the exhaustion of its previous repurchase program. As of March 12, 2025, the company had repurchased $191 million, or approximately 1% of its outstanding common stock during the first quarter.
Key Dates for Shareholders
Steel Dynamics plans to release its full Q1 2025 earnings after market close on Tuesday, April 22, 2025. Following the earnings release, the company will hold a conference call on Wednesday, April 23, 2025, at 11:00 a.m. Eastern Daylight Time to discuss its financial performance and outlook for the remainder of 2025.
KEY TAKEAWAYS:
• Earnings per diluted share for Q1 2025 are expected to be between $1.36 and $1.40.
• Steel operations are forecasted to see stronger profitability due to higher shipments, offsetting some metal margin compression.
• Metals recycling earnings are anticipated to be higher than the previous quarter, driven by stronger pricing and stable volumes.
• Steel fabrication operations will see a decline in earnings due to seasonal shipment reductions and a less than 5% decline in realized pricing.
• The company reports increased order activity, with backlogs extending into the third quarter of 2025, supported by demand from key sectors.
• Progress continues on aluminum operations, including the Columbus, Mississippi aluminum mill and San Luis Potosi recycled slab center, with shipping expected to begin by mid-2025.
• Dividend increase of 9% to $0.50 per common share and authorization of an additional $1.5 billion for share repurchases.
• As of March 12, 2025, Steel Dynamics repurchased $191 million of its stock, representing 1% of its outstanding shares.
