Steel Dynamics (NASDAQ:STLD) shares declined in after-hours trading Monday despite the company posting second-quarter results that exceeded analyst expectations on both earnings and revenue. The steelmaker reported diluted earnings per share of $3.69 on net sales of $6.09 billion.
Analysts polled by FactSet had forecast EPS of $3.63 on revenue of $5.56 billion, making the beat a clear positive for the company. Net income rose 79% year-over-year to $534 million, though that figure included a $16 million impairment charge.
Steel Dynamics’ steel operating income per shipped ton increased approximately 26% sequentially, climbing from $153 in the first quarter to $193 in the second quarter. Steel operating income overall rose 29.5% to $720.9 million, while total steel shipments grew a more modest 2.8% to 3.741 million tons.
The average selling price for external steel increased by $105 per ton to $1,298, while scrap costs rose by only $16 per ton to $412. This resulted in a significant expansion of the price-minus-scrap spread by $89 per ton, or 11%, highlighting improving margins in the company’s core steel operations.
CEO Mark Millett attributed the strong performance to strengthening steel fundamentals. “Steel fundamentals continued to strengthen during the second quarter, as pricing improved, demand remained solid, and customer inventory levels declined,” he said. The company’s steel fabrication backlog was nearly 45% higher than a year earlier, with orders extending into the first quarter of 2027.
Despite the positive results, Steel Dynamics shares fell 2.1% in regular trading to close at $230.49 before slipping further to $225.98 in after-hours trading, a decline of about 2.0% from the close. The stock had risen 3.1% last week, finishing Friday at $235.51, but gave back most of those gains in Monday’s regular session.
The broader steel sector also faced headwinds ahead of the earnings release. Nucor Corp. (NYSE:NUE) declined 2.5%, and Cleveland-Cliffs Inc. (NYSE:CLF) fell 3.2%. The S&P 500 edged down 0.19% on the day.
Steel Dynamics’ aluminum operations remained a drag on overall results, though the operating loss narrowed by 48.3% to $33.4 million on shipments of 53,000 metric tons. Management expects the third cold mill to begin its commercial ramp-up in August, which could help further reduce losses.
Operating cash flow totaled $428 million as working capital increased by $225 million. The company continued its share repurchase program, spending $200 million during the quarter. Steel Dynamics will hold its investor conference call on Tuesday at 11 a.m. EDT to discuss the results in more detail.
Looking ahead, risks include potential margin compression if steel prices decline more quickly than scrap costs. Additionally, the nascent aluminum operations and working capital requirements could weigh on cash conversion in the near term. Cleveland-Cliffs is scheduled to report before market open on Thursday, while Nucor will release its results after the closing bell next Monday.
