Steel Dynamics, Inc. today provided fourth quarter 2018 earnings guidance and expectations for record annual 2018 earnings. The company anticipates record annual 2018 earnings significantly higher than its previous record set in 2017. Based on strong steel demand fundamentals and customer optimism, the company believes steel consumption and market dynamics will remain strong in 2019 and has confidence in its ability to continue to deliver consistent strong free cash flow.
The company expects fourth quarter 2018 earnings to be in the range of $1.11 to $1.15 per diluted share. Comparatively, sequential third quarter 2018 earnings were $1.69 per diluted share. Prior year fourth quarter earnings were $1.28 per diluted share.
The company said in a statement that fourth quarter 2018 profitability from its steel operations is expected to be strong, but lower than record sequential third quarter results, primarily driven by lower earnings from the company’s flat roll operations. The company’s flat roll operations incurred higher maintenance costs and lower shipments, due to major maintenance outages at both its Butler and Columbus locations, as well as, flat roll metal spread compression, and seasonally lower steel shipments.
Fourth quarter 2018 earnings from the company’s metals recycling platform are expected to increase from sequential third quarter results, as recycled non-ferrous metal spread and shipments improved in the fourth quarter. Recycled ferrous metal margin is also expected to improve, while shipments are expected to be seasonally lower.
Fourth quarter 2018 profitability for the company’s steel fabrication business is expected to increase from sequential third quarter results. Average sales prices are expected to improve sequentially, more than offsetting seasonally lower shipments. The company continues to experience seasonally strong steel fabrication order activity and backlogs, and positive customer sentiment concerning 2019.