Steel Dynamics Inc.

Steel Dynamics had a strong quarter, generating sales, earnings, and cash flow above market expectations. Sinton is demonstrating considerable operating improvement and has a clear path to profitability in the second quarter of 2023. Its New Millennium Building Systems platform delivered good steel fabrication earnings. Their new aluminum group is investing in flat-rolled aluminum with excellent success. Operating income from their steel business reached $3.1 billion. Despite lower average selling prices, their metal recycling activities’ operating income for the fourth quarter climbed to $14 million due to higher volume and metal spread expansion. While metal spreads continue to widen due to stable product pricing and decreased steel input costs, steel fabrication businesses had a solid quarterly operating income of $682 million. They also disclosed Columbus, Mississippi, as the location of their aluminum rolling facility. In addition, they established a joint venture with Aymium, a top manufacturer of renewable biocarbon products. On the other hand, they are moving forward intending to have a positive impact on their sustainability and carbon reduction strategy. We give Steel Dynamics a ‘Hold’ rating with a revised target price.