Net income rose 42% from the second quarter to $756 million, or $5.26 a share, against an FMP consensus of $5.48, while revenue beat at $6.51 billion. The average steel price rose $102 a ton and scrap costs fell. Metals recycling profit fell, and the aluminum business is still posting an operating loss.
Steel Dynamics' steel mills had a strong quarter. The rest of the company, and the bar set for it, made the result look weaker.
The steelmaker reported third-quarter net income of $756 million, or $5.26 a diluted share, up from $534 million, or $3.69, in the second quarter and $404 million, or $2.74, a year earlier. Revenue was $6.51 billion. The consensus compiled by Financial Modeling Prep was $5.48 a share on revenue of $6.43 billion, so the company beat on sales and missed on earnings by 22 cents, or about 4%.
Shares fell about 6.4% in premarket trading, to $229.40 at about 5 a.m. Eastern on Tuesday, from Monday's close of $245.17. That close was up 1.9% on the day, before the release.
The steel numbers
The steel business itself improved sharply. Shipments reached a record 3.8 million tons. The average external selling price rose $102 a ton from the second quarter to $1,400, while the cost of scrap melted fell $8 to $404. The gap between the two, a rough measure of the metal margin, widened by about $110 a ton, by this publication's arithmetic. Steel segment operating income rose about 43% to $1.03 billion.
"Steel prices continued to improve," Chief Executive Mark Millett said, citing steady demand, low customer inventories and historically low imports.
Where the drag sits
Other segments moved the other way. Metals recycling operating income fell to $33.0 million from $47.8 million. The aluminum business, still in its start-up phase, lost $26.2 million, less than the $33.4 million loss of the second quarter. Steel fabrication earned $90.6 million, up slightly.
Those segments are small next to steel. What they show is that the company's newer businesses are not yet adding to earnings. Millett said he expects aluminum volumes and profitability to improve in the fourth quarter and through 2027, and described himself as optimistic about 2027 and beyond. The release gave no numeric fourth-quarter guidance.
The capital return
Cash from operations was $846 million, and liquidity stood at $2.4 billion. The company bought back $276 million of stock, about 1% of its shares, and declared a dividend of 53 cents.
The peer comparison
Cleveland-Cliffs rose about 16% on Monday after its own results, which included a forecast for 2027 earnings before interest, taxes, depreciation and amortization above $4 billion. Steel Dynamics reported into that rally, which may have raised the bar for its own numbers.
Market implications
One reading is that the miss is a timing and expectations problem. Record shipments, a higher price, lower scrap costs and a 43% rise in steel profit from the second quarter point to a strong underlying business, and aluminum losses are narrowing.
A second reading is that the consensus was right to expect more. A company with record volumes and wider metal margins still fell short, recycling profit fell, and aluminum remains a drag that the market has been asked to look past for several quarters.
What to watch
Fourth-quarter guidance on the 11 a.m. Eastern call on Tuesday; flat-rolled steel prices; aluminum ramp-up milestones; import levels; and whether the after-hours decline holds through the regular session. Fourth-quarter guidance above consensus would support the first reading.