Steel Dynamics Q3 Earnings Call Highlights

Key Points

• Record steel performance drove strong third-quarter results: Steel Dynamics reported $756 million in net income, $6.5 billion in revenue and record steel shipments of 3.8 million tons. Steel operations generated $1 billion in operating income, supported by higher prices, strong demand and 92% mill utilization.
• Aluminum operations continued to recover after a hot-strip-mill surface-quality issue caused lower production and a $26 million operating loss. Management said the issue was resolved, with utilization improving and finished automotive aluminum shipments expected before year-end.
• Leadership and capital plans are changing: CFO Theresa Wagler is expected to become CEO when retiring CEO Mark Millett steps down at year-end. The company also repurchased $591 million of stock in 2026 and is evaluating more than $600 million in capital spending opportunities for 2027.

Steel Dynamics NASDAQ: STLD reported third-quarter 2026 net income of $756 million, or $5.26 per diluted share, as record steel shipments and higher realized steel prices lifted results from the prior quarter. The company generated $6.5 billion in revenue, operating income of just over $1 billion and adjusted EBITDA of $1.2 billion.

Chairman and Chief Executive Officer Mark Millett said the company came in slightly below its earlier guidance range because of late-September foreign-currency and aluminum-hedging unrealized mark-to-market adjustments totaling just under $30 million. Still, the company posted record quarterly steel shipments of 3.8 million tons and operating cash flow of $846 million.

Millett also used the call to congratulate Executive Vice President and Chief Financial Officer Theresa Wagler on her planned appointment as CEO at the end of the year. Wagler has been with Steel Dynamics for more than 28 years, Millett said. Millett, who is retiring, said he expects to remain associated with the company in a more limited capacity.

Steel operations lead quarterly performance

Steel operations generated $1 billion of operating income during the third quarter, up 43% sequentially. Wagler attributed the improvement to higher average realized steel pricing and record shipment volumes. The company’s mills operated at a 92% utilization rate, compared with an estimated 80% for the domestic steel industry.

Wagler said flat-rolled steel market conditions remained favorable, citing strong customer demand, lean supply-chain inventories and elevated order lead times. Value-added spreads to hot-rolled coil prices increased to more than $230 per ton. About 80% of the company’s flat-rolled portfolio is tied to contractual pricing that generally trails market changes by two months, which management said should support fourth-quarter results and extend into 2027.

• Hot-rolled coil shipments were 992,000 tons in the third quarter.
• Cold-rolled shipments were 146,000 tons.
• Coated flat-rolled shipments were 1.63 million tons.

During the question-and-answer session, Millett said steel markets were tight, with lead times extending into 2027, inventories at the low end of historical ranges and fourth-quarter outages expected to remove an estimated 1 million to 1.2 million tons from the market. He said scrap costs had remained relatively stable despite an October increase, supported by strong obsolete and prompt scrap flows, soft export markets and the company’s scrap-segregation technologies.

“It would be our view that the margins or spreads will remain very strong to slightly upward in the coming months,” Millett said.

Aluminum ramp affected by hot-strip mill issue

Steel Dynamics’ aluminum operations posted an operating loss of $26 million in the third quarter, a 21% sequential improvement. Management said shipments and financial performance fell below its original expectations because of a surface-quality issue at the hot strip mill while the facility increased rolling speeds for light-gauge product.

Millett said the company identified the need to change the coolant in the hot strip mill. The troubleshooting process, coolant change and reestablishment of rolling conditions resulted in several weeks of lower production and yield losses, reducing volume and increasing costs during the quarter.

The issue has been resolved, according to management. Millett said October operations had improved materially, with the hot strip mill operating at 75% utilization during the month to date. The company believes it can reach 90% hot-strip-mill capability by year-end, though finished-product shipments will take additional time to move through downstream operations.

All three cold mills are operational, while the first of two automotive continuous anneal and solution heat-treat lines is operating. The company has achieved finished-product qualification with multiple automotive manufacturers for 5182 and 5754 products and is conducting trials for 6000-series material. Steel Dynamics expects to ship finished automotive products before year-end, while the second automotive line is expected to begin operating in the first quarter of 2027.

Wagler said yield improvements are expected before the end of 2026, while increased recycled scrap content should be in place by the first half of 2027. She said the company expects its aluminum product mix to continue improving through 2027, with automotive products potentially reaching an optimized mix around 2028 as the company gains access to additional automotive platforms.

Fabrication demand and capital allocation

The steel fabrication segment reported $91 million in third-quarter operating income, compared with $85 million in the second quarter. Higher volume and pricing offset increased steel raw-material costs. Wagler said the company’s steel joist and deck backlog was 50% higher than a year earlier, with improving demand and pricing expected to support 2027 results.

Management said higher raw-material costs had pressured fabrication margins because pricing adjustments take time to work through the backlog. However, Wagler said projects entering the backlog for early 2027 delivery carry higher pricing and should support improvements in margins, volume and pricing next year.

Steel Dynamics ended the quarter with $2.4 billion of liquidity and invested $150 million in capital expenditures during the quarter. The company expects fourth-quarter capital spending to be in a similar range. It repurchased $591 million of common stock during 2026, with $216 million remaining under its current authorization as of Sept. 30.

For 2027, Wagler said the company was evaluating a pipeline of organic growth opportunities and estimated capital expenditures could be “in the range of $600-plus million,” subject to refinement. Management expects to provide additional details during a capital markets day in the first half of 2027.

About Steel Dynamics (NASDAQ:STLD)

Steel Dynamics, Inc is a steel producer and metals recycler headquartered in Fort Wayne, Indiana. The company manufactures steel products using electric arc furnace technology and serves customers across industries such as construction, automotive, manufacturing, and energy.

Its operations include the production of flat rolled steel, long steel products, structural steel, rail, and specialty products. Steel Dynamics also provides steel processing and fabrication services, including the manufacture of steel joists, deck systems, and other components used in commercial and industrial construction.

The company operates metals recycling facilities that collect, process, and supply ferrous and nonferrous scrap to support its steelmaking operations.

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