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Steel Dynamics Sees Sequential Drop In Q1 EPS

Steel Dynamics Inc. (STLD) said that it expects earnings to be in the range of $0.88 to $0.92 per share for the first quarter of 2018. Comparatively, the company's sequential fourth quarter 2017 earnings were $1.28 per share, which included debt refinancing charges of $0.02 per share and a one-time tax benefit of $0.76 per share resulting from the revaluation of deferred tax assets and liabilities in connection with the enacted U.S. Federal Tax Cuts and Jobs Act of 2017.

Excluding the fourth quarter 2017 non-operational items, the first quarter 2018 results are expected to be higher than adjusted fourth quarter 2017 earnings of $0.54 per share. Prior year first quarter earnings were $0.82 per share. Analysts polled by Thomson Reuters expect the company to report earnings of $0.94 per share for the first-quarter of 2018. Analysts' estimates typically exclude special items.

First quarter 2018 profitability from the company's steel operations is expected to meaningfully improve in comparison to sequential fourth quarter results, based on higher shipments and metal spread expansion. Average quarterly steel product pricing is expected to increase more than scrap costs, as steel pricing across the platform has been improving throughout the first quarter 2018, supported by strong domestic steel demand.

Based on strong steel demand fundamentals and customer optimism, the company believes this pricing momentum and improving steel consumption will continue during the year. The company also believes that recent U.S. Federal Administration steel trade actions will result in reduced imports.

First quarter 2018 profitability for the company's metals recycling platform is also expected to improve when compared to sequential fourth quarter results, based on higher shipments as demand for recycled ferrous material from the domestic steel sector increased in the quarter.

First quarter 2018 earnings from the company's steel fabrication business are expected to decrease somewhat from sequential fourth quarter results, based on seasonally lower shipments. However, demand from the non-residential construction sector remains solid, and the company's seasonally adjusted fabrication order backlog is strong.

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