STEEL DYNAMICS INC (STLD)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 results: net sales $3.87B and diluted EPS $1.36; sequential declines driven by lower realized steel pricing, seasonally lower shipments, and an unplanned Butler outage (~50k tons). Adjusted EBITDA was $372M, and steel operations posted operating income of $165M while metals recycling improved to $23M and steel fabrication delivered $142M .
• EPS beat company guidance ($1.26–$1.30) with actual $1.36, helped by a lower effective tax rate (~$13M; ~5.4%) and a further ~3% reserve benefit in the quarter .
• Management expects Sinton to turn to positive operating income contributions beginning in 1H 2025 as extra start-up and quality costs dissipate; aluminum cast its first ingots in January 2025 with commercial shipments targeted before mid-2025 .
• 2025 catalysts: potential import relief from the CORE trade case, full earnings benefit from four new coating lines, Sinton profitability, and aluminum ramp to ~50% utilization exiting 2025 (target through-cycle ADI EBITDA $650–$700M plus $40–$50M from recycling) .

What Went Well and What Went Wrong

What Went Well

• Steel fabrication maintained historically strong earnings with $142M operating income; backlog extends deep into 1H 2025 at attractive pricing, supported by onshoring, infrastructure, and IRA-driven demand (“we believe…will drive industrial construction activity”) .
• Metals recycling improved sequentially to $23M operating income as metal spreads and cost efficiencies offset lower seasonal shipments .
• Strategic execution milestones: four new coating lines ramping for 2025 earnings contribution; aluminum team cast first industrial and can ingots on Jan 12, 2025, with “commercially viable products before mid-year 2025” .

What Went Wrong

• Steel operations operating income fell 46% QoQ to $165M due to metal spread compression and seasonally lower shipments; Butler outage reduced volume by ~50k tons; Sinton incurred a $58M operating loss in Q4 2024 from elevated start-up costs .
• Average external steel selling price decreased $48/ton sequentially to $1,011/ton while ferrous scrap costs rose to $370/ton, further pressuring spreads .
• Consolidated metrics declined QoQ: operating income $238M (from $395M) and gross profit $442M (from $605M), reflecting pricing pressure and seasonality .

Financial Results

Summary financials (quarterly)

YoY reference (Q4 2023): Net sales $4,233,423; diluted EPS $2.61; operating income $518,536; gross profit $730,884 .

Segment revenue and operating income

Note: Beginning Q4 2024, an entity was reclassified from Metals Recycling to Aluminum; prior periods recast for comparability .

Operating KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Underlying domestic steel demand was stable… however, steel imports… increased significantly in 2024, negatively impacting… pricing pressure for flat rolled steel products.” (CEO) .
• “We have had limited benefit from these new [coating] lines as production ramped but expect to realize the full run-rate earnings potential in 2025.” (CEO) .
• “Sinton… operated at levels in excess of 80 percent… [but] additional operating costs… elicited an operating loss of $58 million in the fourth quarter 2024… expect these extra costs to dissipate… resulting in positive operating income… in the first half of 2025.” (Company) .
• “The team successfully cast their first industrial and beverage can ingots… on January 12, 2025… plan… commercially viable products before mid-year 2025.” (CEO) .
• “Our effective tax rate benefited the quarter approximately $13 million, or 5.4%, due to state adjustments and another 3% benefit related to certain reserve items.” (CFO) .

Q&A Highlights

• Volume outlook and weather: Seasonality should lift Q1 volumes; cold weather tightened scrap flows but minimal operational impact to date .
• CORE trade case: Procedural delays normal; imports saw a bump but are subsiding; management expects favorable countervailing/dumping rulings in coming months .
• Sinton profitability: Throughput and yields improving; extraordinary maintenance/quality costs still weigh; management targets profitability in Q2 2025, with hot side performance now regularly >80–90% utilization .
• Capital allocation: No imminent large-scale new projects; focus on execution of Sinton/coating lines/aluminum; capital returns (buybacks/dividends) to remain active given strong cash flow .
• Aluminum ramp economics: 50% utilization exit-2025, 75% in 2026; recycled content targets ~95% for can stock and ~60–65% for auto grades; near-term aluminum losses ~$30–$35M in Q1 before offset by sales starting June .

Estimates Context

• Wall Street consensus (S&P Global) data was unavailable due to SPGI request limit; unable to present consensus EPS/revenue or estimate counts for Q4 2024 at this time. Results did exceed company-issued EPS guidance range (actual $1.36 vs $1.26–$1.30) .
• Implications: Given stabilized pricing, backlog strength in fabrication, improving metals recycling spreads, and Sinton’s path to profitability in 1H 2025, we see reasons for upward bias to 2025 earnings trajectories in models once import relief and coating line contributions materialize .

Key Takeaways for Investors

• Near-term setup: Q1 seasonality, stabilized steel prices, and strong order activity support sequential improvement; watch scrap flows and Butler normalization; Sinton’s cost dissipation is a key swing factor for margins .
• 2025 inflection: Sinton turning profitable and coating lines at full run-rate should lift steel segment earnings; import relief on coated flat rolled would further support spreads and utilization .
• Aluminum optionality: ADI is tracking ahead of plan (first ingots cast; mid-2025 shipments); through-cycle EBITDA $650–$700M with structural cost advantages (labor, yield, recycled content, logistics) offers diversified growth .
• Cash returns: Strong cash generation and balance sheet flexibility underpin continued buybacks/dividend growth; Q4 repurchases were ~$295M and full-year 2024 ~$1.2B (~6% of shares) .
• Monitor CORE case timelines and tariff actions; favorable rulings are a potential catalyst for coated product pricing and spreads in 2025 .
• Fabrication resilience: Backlog visibility into 1H 2025 at attractive pricing supports earnings stability through construction cycles; provides internal pull-through volume and mitigates pricing risk .
• Sustainability advantage: Certified science-based targets and biocarbon ramp enhance cost curve positioning vs integrated peers, supporting longer-term spread resilience .