Fort Wayne-based Steel Dynamics Inc. (Nasdaq: STLD) is reporting net income of $142 million, compared to $31.5 million during the same period a year earlier. Chief Executive Officer Mark Millett says strong cash generation has boosted liquidity to a record level, "providing a firm foundation for growth."
At the end of last month, liquidity stood at $2.2 billion. Steel Dynamics says results were affected by the idling of a Minnesota plant.
In a statement, Millett said positive momentum in the flat roll steel supply provided a significant boost. He added "year-over-year first half flat roll steel import levels have declined approximately 25 percent and customer inventory levels are balanced with current demand requirements, supporting higher domestic flat roll steel mill utilization. The domestic steel demand outlook is relatively unchanged and steady, with the heavy equipment, agricultural and energy markets remaining weak, while automotive and construction continues to be strong. We also saw improved volumes and profitability in our metals recycling platform for the second quarter 2016. Ferrous scrap demand improved, resulting in both higher volumes and expanded metal spread through price increases. Earnings from our fabrication operations declined in the quarter, due to increased steel costs and lower selling values. However, we continue to experience steady demand from the non-residential construction sector."
Last month, the company announced it was doubling its profit outlook in anticipation of this week’s quarterly earnings release. Steel Dynamics recently detailed the acquisition of Alabama-based Vulcan Threaded Products Inc.
The steel industry, which has traditionally been a signature of the Indiana manufacturing portfolio, has seen challenging times in recent years with foreign imports applying pressure to American companies. Looking ahead, Millett says "steel customer inventory levels have moderated and import levels have declined. When combined with steady underlying demand, the result has been an improvement in domestic flat roll steel producer utilization, and we anticipate improved flat roll metal spreads in the third quarter 2016." He adds "we continue to strengthen our financial position through strong cash flow generation and the execution of our long-term strategy. We are well-positioned for growth."
You can connect to the full report by clicking here.