Steel Dynamics, Inc. STLD reported net income of $75.5 million or 36 cents per share in second-quarter 2020, down from $194.3 million or 87 cents in the year-ago quarter.
Barring one-time items, adjusted earnings per share came in at 47 cents, which surpassed the Zacks Consensus Estimate of 41 cents.
Net sales in the quarter fell 24.4% year over year to $2,094.3 million. Nevertheless, the figure beat the Zacks Consensus Estimate of $2,044.9 million.
Steel Dynamics, Inc. Price, Consensus and EPS Surprise
Steel Dynamics, Inc. price-consensus-eps-surprise-chart | Steel Dynamics, Inc. Quote
Segment Highlights
Net sales in the company’s steel operations declined 22.7% year over year to $1,628 million in the second quarter. Operating income fell 41.5% year over year to $172.4 million. Average product selling price for the unit declined 14.1% year over year to $755 per ton in the reported quarter. Steel shipments fell 9.1% year over year to roughly 2.5 million tons.
The company’s fabrication operations raked in sales of $215.3 million, down 10.8% year over year. Operating income rose 11.4% to $27.2 million on a year-over-year basis.
Net sales in metals recycling operations plunged 51.5% year over year to $156.6 million. The segment’s posted operating loss of $5.9 million against operating income of $10.6 million in the year-ago quarter.
Financial Position
Steel Dynamics ended the second quarter with cash and cash equivalents of $1,496.5 million, up 37.7% year over year. Long-term debt was around $2,636.7 million, up 11.9% year over year.
The company generated $486 million of cash flow from operations in the second quarter.
Outlook
Steel Dynamics stated that it is not possible to establish the full scope of the coronavirus impact on global economies and the related impact on domestic steel demand. Given that the states are developing their reopening guidelines and steel consuming businesses are resuming operations, the company expects steel and metals recycling demand to improve in the second half of 2020.
Further, the construction sector has remained resilient and associated steel demand has been steady. The automotive sector and associated supply chain have restarted production and the company is witnessing higher steel demand and prime scrap production. Energy and general industrial consumers continue remain the weaker sectors.
Price Performance
Shares of Steel Dynamics have lost 15.7% in the past year compared with the industry’s 28.8% decline.
Zacks Rank & Key Picks
Steel Dynamics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Harmony Gold Mining Company Limited HMY and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 52.3% in the past year.
Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 163.4% in the past year.
Northern Dynasty has an expected earnings growth rate of 28.6% for 2020. The company’s shares have skyrocketed 228.5% in the past year.
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