Steel Dynamics, Inc. announced first quarter earnings of $102 million, or $1.01 per diluted share, an increase of 34 percent when compared to $76 million in the first quarter of 2006. Net income per share was relatively unchanged from the fourth quarter. Revenues increased 30 percent to $866 million from $666 million in the first quarter of 2006, largely due to the acquired Roanoke facilities not being included in first quarter 2006 results.
Those results handily beat the consensus estimate of $0.95, which in turn was at the low end of management’s guided range of $0.94-$0.98. For next quarter, the consensus estimate of $1.01 will also be beat on an operating basis:
“Our outlook for the second quarter remains positive,” Busse said. “Our current expectation is for earnings to be in the range of $0.95 to $1.00 per diluted share, after taking into consideration an estimated reduction of $0.08 per diluted share due to the redemption of our $300 million 9 1/2% Senior Unsecured Notes.
We had written about the debt redemption earlier, saying “So let’s see: It now has $500 million of debt-financed capital for which it must pay $33.75 million in annual interest expense, compared to the $300 million it used to have, on which it spent $28.5 million.” We didn’t factor the current charge into the equation, but it does little to change the long-term economics of the deal.
In keeping with its larger stature following the Roanoke acquisition, Steel Dynamics also announced some management promotions.
The stock traded down a bit after the announcement, but we think investors will ultimately find this report to be highly positive.
STLD 1-yr chart: