Steel Dynamics, Inc., headquartered in Fort Wayne, Indiana, announced its financial results for the third quarter of 2024 on October 16, 2024. The company reported steel shipments totaling 3.2 million metric tons, which reflects its continued capacity to meet market demand. For this quarter, Steel Dynamics recorded net sales of $4.3 billion, operating income of $395 million, and a net income of $318 million, translating to $2.05 per diluted share. These figures show a decline in net income compared to the second quarter of 2024, where the company reported a net income of $428 million or $2.72 per diluted share.
Mark D. Millett, Co-Founder, Chairman, and CEO of Steel Dynamics, commented on the quarter's performance, highlighting the company's strong operational cash flow of $760 million and a liquidity position of $3.1 billion as of September 30, 2024. Despite the earnings decline, Millett emphasized the company's effective cash generation capabilities and its strategic investments totaling $621 million in ongoing growth initiatives. Additionally, the company returned $381 million to shareholders through cash dividends and share repurchases during this quarter.
During the third quarter, underlying steel demand remained stable, although the company experienced a decline in average realized steel pricing, especially in its flat rolled operations. The flat rolled business, which primarily relies on contractual pricing linked to lagging indices, saw prices decrease. However, steady demand and low customer inventory levels contributed to a stabilization in flat rolled steel prices towards the end of the quarter. Conversely, Steel Dynamics' long product steel operations noted a slight improvement in metal spread, as scrap prices fell more significantly than the realized selling prices.
The company's third-quarter operating income from its steel operations was reported at $305 million, lower than in previous quarters due to decreased realized selling values that outpaced declines in scrap costs. The average external product selling price for Steel Dynamics' steel operations fell by $79 per metric ton to $1,059 per metric ton. On the cost side, the average ferrous scrap cost per metric ton melted at the company's mills decreased by $21 to $367 per metric ton.
Steel Dynamics' metals recycling operations faced challenges, reporting an operating income of $12 million, which was down due to reduced demand during scheduled maintenance outages at many domestic steel mills. The decline in shipments and pricing for both ferrous and nonferrous materials was notable, compounded by an unexpected non-cash copper hedging loss of $10 million resulting from a significant price increase in copper from August to September.
On a more positive note, the company’s steel fabrication operations achieved an operating income of $166 million, reflecting a steady demand environment despite a five percent decline in average realized pricing. The order backlog for these operations remained robust, extending into early 2025, with expectations for improved volumes as interest rates decline and support from U.S. infrastructure initiatives bolster demand for steel products.
Looking at the year-to-date performance, Steel Dynamics reported net income of $1.3 billion, or $8.46 per diluted share, with net sales of $13.7 billion for the nine months ending September 30, 2024. This marks a decline in net sales of 6% and a decrease in operating income of 35% compared to the same period in 2023. The declines were attributed to lower volume and pricing from the company's steel and fabrication operations.
