Steel Dynamics lifts profit view on metal-margin surge
The steelmaker set second-quarter earnings guidance 75% above year-ago levels.
The steel and metals producer Steel Dynamics (STLD) raised its second-quarter earnings outlook as record shipments and widening metal spreads offset higher raw-material costs. The company said it now expects earnings of $3.51 to $3.55 a share for the period, up 26% to 28% from the $2.78 it reported for the first quarter and 75% to 77% above the $2.01 earned in the year-ago quarter.
The upward revision marks a sharp inflection after a quarter in which Steel Dynamics posted its highest-ever steel shipments and a 73% sequential jump in steel-segment operating income. Management attributed the improved guidance to "meaningfully higher" profitability in its core steel operations, driven by strong demand and realized selling values that rose faster than scrap costs.
First-quarter revenue reached $4.8 billion, up 12% from the prior quarter, while earnings climbed to $2.78 a share from $1.89 in the fourth quarter of 2025. Steel shipments hit a record 3.6 million tons, and the average external sales price rose $86 to $1,193 a ton, outpacing a $22 increase in average ferrous scrap costs. Steel-segment operating income surged to $557 million from $322 million in the prior quarter.
The steel fabrication backlog continued to expand, now nearly 40% higher than a year ago and extending into 2027, though earnings in that segment are expected to dip slightly in the second quarter as higher input costs offset steady pricing. Metals recycling results are projected to hold steady, with increased shipments balancing unrealized hedging losses. Aluminum operations, which posted a $65 million operating loss in the first quarter, are expected to "improve significantly" on higher shipments and pricing as the company brings additional cold mills online at its Mississippi flat-rolled facility.
The company also disclosed $16 million in asset write-downs tied to relocating an aluminum recycled slab center from Arizona to Mississippi, trimming the midpoint of its earnings guidance by one cent a share. Despite the charge, Steel Dynamics increased its quarterly cash dividend 6% to $0.53 a share and repurchased $170 million of its stock in the second quarter, up from $115 million in the prior period.
Working capital rose $413 million in the first quarter, nearly two-and-a-half times the increase in the prior quarter, as higher product pricing and demand absorbed cash during the aluminum ramp-up. Adjusted EBITDA climbed to $700 million from $505 million in the fourth quarter, though cash flow from operations was reduced by a $120 million annual profit-sharing distribution.
Steel Dynamics said two of three cold mills at its Columbus, Mississippi, aluminum mill are now operational, with the third expected to begin qualifying material in July. The first continuous annealing and solution heat-treatment line is shipping material for customer qualification, while a second line is now slated to start qualifications in the fourth quarter.