This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Steel Dynamics Management Discusses Q2 2012 Results - Earnings Call Transcript

Our overall performance was commendable in what remains a challenging environment. In the second quarter, we achieved stable sequential financial results from our steel and fabrication operations, although earnings in our metals recycling operations deteriorated as margins and volume compressed.

We reported net income of $44 million or $0.20 per diluted share on net sales of $1.9 billion for the second quarter of 2012. This matches the $0.20 reported in the first quarter this year, but is substantially lower than last year's second quarter results of $0.43 a share. It should be pointed out, I think, that the first half of 2011 was a time frame in which historically high margins and flat growth were achieved. This past quarter, the combination of increased domestic flat roll capacity and increased imports have stripped the demand of a slow U.S. economy that did not allow for that level of margin to be repeated.

Overall steel demand through the quarter remains steady, although the added burden from imports from the additional domestic flat roll capacity exerted downward pressure on flat roll pricing, muting second quarter sheet steel margins. However, long products operations did see some metal spread expansion in the quarter as product pricing decreased less than scrap roll material costs.

Our steel mills operated at 83% production utilization rate in the quarter, slightly lower than the 85% for the first quarter this year. This compares to the recent domestic industry rate of under 80%. Notably, even though nonresidential construction is still anemic, our Structural Rail division has operated at 53% utilization for the year. Rail production is held back. We increased our rail shipments over 12% this past quarter, shipping 38,200 tons. Dick and his team will continue to focus on increasing this number throughout the year.

Operating income per ton shipped for our steel operations decreased about 5% from the first quarter of $898 [ph] to a second quarter $893 [ph] a ton. Average combined steel pricing related to second quarter shipments declined $21 in the quarter, which is over 2%. And based on shipping mix, the decrease in flat roll pricing was the most prominent factor in the overall change. The cost of scrap used for the production for the second quarter declined $20 per ton charged into our furnaces.

3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 16,865.52 +75.33 0.45%
S&P 500 1,991.13 +11.21 0.57%
NASDAQ 4,780.0970 +31.7360 0.67%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs