SDI predicts slight dip in Q4 earnings

Friday, 19 December 2014 01:56:03 (GMT+3)   |   San Diego
       

Steel Dynamics, Inc. announced Wednesday fourth quarter 2014 earnings guidance in the range of $0.33 to $0.37 per diluted share, which includes estimated charges of $12 million (before taxes) related to post-acquisition purchase accounting adjustments and $6 million (before taxes) related to estimated lower-of-cost or market adjustments caused by ferrous raw material pricing declines in the company's metals recycling and ferrous resources segment.  Excluding these charges, the company's estimated fourth quarter 2014 earnings guidance would have been in the range of $0.38 to $0.42 per diluted share.  Unadjusted estimated earnings are anticipated to be somewhat lower than the company's sequential third quarter 2014 results of $0.38 per diluted share and higher than prior year fourth quarter results of $0.24 per diluted share. 

The company is currently in the process of assessing the asset carrying values associated with its Minnesota operations.  As the analysis is still underway, no potential impairment impact has been included in the provided fourth quarter 2014 guidance range. 

Profitability from the company's steel operations for the fourth quarter 2014 is expected to be similar to the sequential third quarter results.  Excluding the impact of the company's recently acquired Columbus flat roll steel mill (completed September 16, 2014), both metal spread and shipments are expected to contract in the fourth quarter 2014.  An expected decrease in average quarterly product pricing is anticipated to outpace lower scrap costs in the quarter, compressing profit margins. Volume decline is generally related to typical fourth quarter seasonality and the continuation of elevated import levels.  End market demand dynamics remain intact heading into 2015.  The demand trend for key steel-consuming end markets is expected to remain favorable, as strength in automotive and manufacturing persists, and the construction market continues to improve.  Despite the recent volatility in the energy markets, the company believes that associated steel consumption in 2015 will remain strong and that the opportunity to displace related imports still exists.   


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