Exhibit 99.1
Steel Dynamics, Inc.
6714 Pointe Inverness Way, Suite 200
Fort Wayne, IN 46804-7932
260.459.3553 Phone260.969.3590 Fax
Steel Dynamics Reports Strong First Quarter 2006 Results
FORT WAYNE, INDIANA, April 19, 2006— Steel Dynamics, Inc. (NASDAQ:STLD) today announced first quarter 2006 earnings of $76 million, or $1.52 per diluted share, versus $61 million or $1.12 per diluted share in the first quarter of 2005 and $65 million, or $1.31 per diluted share, in the fourth quarter of 2005. Net sales for the first quarter were $666 million, an increase of 17 percent when compared to the first quarter of 2005 and the fourth quarter of 2005.
SDI’s average consolidated selling price per ton shipped increased from $619 in the fourth quarter to $631 in the first quarter largely due to better price realizations and mix while the cost of steel scrap per net ton charged increased by $5 from the fourth quarter. Operating income per ton shipped was $124 for the quarter and our net income margin was 11 percent. Cash flow from operations was very strong, increasing to $136 million, compared to $55 million in the first quarter of 2005 and $92 million in the fourth quarter of 2005.
First quarter consolidated shipments of 1.1 million tons were 24 percent higher than the first quarter of 2005 and 15 percent higher than the fourth quarter of 2005. Steel shipments for all of our steelmaking units increased quarter over quarter.
“Steel Dynamics had a very strong first quarter which was our second best quarter to date,” said Keith Busse, President and CEO. “Revenue and net income exceeded our preliminary views principally due to a record volume of steel shipments. Our mills were able to take advantage of the continuing strong market demand for flat-rolled steel and wide-flange beams, increasing production rates and enjoying record shipping volumes.
“In the second quarter we expect to see continued strength in the steel marketplace. Second-quarter financial results should equal or exceed the first quarter due to continued strong demand, favorable pricing trends, moderate steel scrap cost increases and declining utility costs,” Busse stated.
Operating highlights for the first quarter included new monthly and quarterly production records for the flat roll and structural mills. During the quarter, the Structural and Rail Division successfully completed multiple rail rolling trials using blooms produced on new casting equipment. At Pittsboro, substantial progress has been made in the construction of the new SBQ finishing facility with the start-up of some finishing operations planned this month.
As previously announced, Steel Dynamics completed its acquisition of Roanoke Electric Steel Corporation on April 11, 2006. As a result, Steel Dynamics is announcing new names for its bar steel operations: The name of our SBQ bar division based in Pittsboro, Indiana, has been changed from the Bar Products Division to Engineered Bar Products Division, and Roanoke Electric Steel in Roanoke, Virginia, has become the Roanoke Bar Division.
With the announced capacity increases at Columbia City and Butler, and the acquisition of Roanoke, SDI’s new steel production potential, with all units running at full capability, will approach 6.0 million tons by the end of 2007.
Conference Call and Webcast
On Thursday, April 20, 2006 at 11:00 a.m. Eastern, Steel Dynamics will host a conference call in which Steel Dynamics’ management will discuss first quarter 2006 results. You are invited to listen to the live audio broadcast of the conference call over the Internet, accessible from Steel Dynamics’ Web site:
www.steeldynamics.com
Dial-in information to listen to the call is available on our Web site. Only analysts and other callers identified prior to the call will be included in queue for questions.
No telephone replay will be available. An audio replay of the Webcast will be available on the SDI Web site.
Contact: Fred Warner, Investor Relations Manager, (260) 969-3564
F.Warner@SteelDynamics.com
Forward Looking Statements
This press release contains some predictive statements about future events, including statements related to conditions in the steel marketplace, Steel Dynamics’ revenue growth, costs of raw materials, future profitability, and the operation of new or existing facilities. These statements are intended to be made as “forward-looking,” subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. Such predictive statements are not guarantees of future performance, and actual results could differ materially from our current expectations.
We refer you to SDI’s detailed explanation of the many factors and risks that may cause such predictive statements to turn out differently, as set forth in our most recent Annual Report on Form 10-K and in other reports which we from time to time file with the Securities and Exchange Commission, available publicly on the SEC Web site, www.sec.gov, and on the Steel Dynamics Web site, www.steeldynamics.com
2
Steel Dynamics, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
Net sales | | $ | 665,878 | | $ | 570,706 | |
Costs of goods sold | | 506,391 | | 441,929 | |
Selling, general and administrative expenses | | 28,375 | | 22,454 | |
Operating income | | 131,112 | | 106,323 | |
Interest expense | | 8,136 | | 8,077 | |
Other (income) expense, net | | (681 | ) | (578 | ) |
Income before income taxes | | 123,657 | | 98,824 | |
Income taxes | | 47,608 | | 38,047 | |
Net income | | $ | 76,049 | | $ | 60,777 | |
Basic earnings per share | | $ | 1.75 | | $ | 1.27 | |
Weighted average common shares outstanding | | 43,517 | | 47,703 | |
Diluted earnings per share, | | | | | |
including effect of assumed conversions | | $ | 1.52 | | $ | 1.12 | |
Weighted average common shares | | | | | |
and share equivalents outstanding | | 50,336 | | 54,828 | |
Dividends declared per share | | $ | .20 | | $ | .10 | |
3
Steel Dynamics, Inc.
UNAUDITED SUPPLEMENTAL OPERATING INFORMATION
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
Shipments and Production Data (tons) | | | | | |
Shipments | | | | | |
Steel Operations* | | | | | |
Flat Roll Division | | 663,045 | | 569,556 | |
Structural & Rail Division | | 247,133 | | 186,614 | |
Engineered Bar Products Division | | 125,350 | | 89,548 | |
| | 1,035,528 | | 845,718 | |
Other Operations** | | 113,885 | | 97,241 | |
Intercompany | | (93,661 | ) | (89,816 | ) |
Consolidated shipments | | 1,055,752 | | 853,143 | |
Steel Operations* production | | 1,060,885 | | 882,311 | |
Average consolidated selling price per ton | | $ | 631 | | $ | 669 | |
| | | | | | | |
* Steel Operations include the company’s Flat Roll Division, Structural and Rail Division and Engineered Bar Products Division.
** Other Operations include New Millennium Building Systems, Paragon Steel Trading and Iron Dynamics.
4
Steel Dynamics, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
| | March 31, | | December 31, | |
| | 2006 | | 2005 | |
| | (unaudited) | | | |
Assets | | | | | |
Current assets | | | | | |
Cash and equivalents | | $ | 195,705 | | $ | 65,518 | |
Accounts receivable | | 260,895 | | 241,708 | |
Inventories | | 381,505 | | 398,684 | |
Deferred income taxes | | 6,950 | | 6,516 | |
Other current assets | | 13,300 | | 13,307 | |
Total current assets | | 858,355 | | 725,733 | |
Property, plant and equipment, net | | 990,506 | | 999,969 | |
Restricted cash | | 2,139 | | 1,588 | |
Other assets | | 30,619 | | 30,397 | |
Total assets | | $ | 1,881,619 | | $ | 1,757,687 | |
Liabilities and Stockholders’ Equity | | | | | |
Current liabilities | | | | | |
Accounts payable | | $ | 180,115 | | $ | 115,542 | |
Accrued interest | | 3,053 | | 8,952 | |
Accrued expenses | | 59,988 | | 80,527 | |
Current portion of long-term debt | | 1,072 | | 2,156 | |
Total current liabilities | | 244,228 | | 207,177 | |
Long-term debt | | | | | |
Senior unsecured 9.5% notes | | 300,000 | | 300,000 | |
Subordinated convertible 4.0% notes | | 110,000 | | 115,000 | |
Other long-term debt | | 17,807 | | 17,959 | |
Unamortized bond premium | | 5,037 | | 5,459 | |
| | 432,844 | | 438,418 | |
Deferred income taxes | | 231,668 | | 231,106 | |
Minority interest | | 1,357 | | 1,118 | |
Commitments and contingencies | | | | | |
Stockholders’ equity | | | | | |
Common stock | | 534 | | 529 | |
Treasury stock, at cost | | (262,241 | ) | (270,905 | ) |
Additional paid-in capital | | 421,648 | | 405,900 | |
Retained earnings | | 811,581 | | 744,344 | |
Total stockholders’ equity | | 971,522 | | 879,868 | |
Total liabilities and stockholders’ equity | | $ | 1,881,619 | | $ | 1,757,687 | |
| | | | | | | | | |
5
Steel Dynamics, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
Operating activities | | | | | |
Net income | | $ | 76,049 | | $ | 60,777 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | | 24,917 | | 21,830 | |
Deferred income taxes | | 128 | | 13,033 | |
Minority interest | | 239 | | 119 | |
Changes in certain assets and liabilities: | | | | | |
Accounts receivable | | (19,187 | ) | (13,932 | ) |
Inventories | | 17,179 | | (14,147 | ) |
Accounts payable | | 60,079 | | 10,843 | |
Other working capital | | (23,372 | ) | (23,548 | ) |
Net cash provided by operating activities | | 136,032 | | 54,975 | |
Investing activities | | | | | |
Purchase of property, plant and equipment | | (14,585 | ) | (19,141 | ) |
Purchase of short-term investments | | (14,075 | ) | — | |
Maturities of short-term investments | | 9,375 | | — | |
Net cash used in investing activities | | (19,285 | ) | (19,141 | ) |
Financing activities | | | | | |
Issuance of long-term debt | | — | | 61,308 | |
Repayment of long-term debt | | (6,658 | ) | (40,511 | ) |
Issuance of common stock (net of expenses) and proceeds and tax benefits from exercise of stock options | | 15,753 | | 12,364 | |
Issuance (purchase) of treasury stock | | 8,664 | | (76,700 | ) |
Dividends paid | | (4,319 | ) | (4,882 | ) |
Net cash provided by (used in) financing activities | | 13,440 | | (48,421 | ) |
Increase/(decrease) in cash and equivalents | | 130,187 | | (12,587 | ) |
Cash and equivalents at beginning of period | | 65,518 | | 16,334 | |
Cash and equivalents at end of period | | $ | 195,705 | | $ | 3,747 | |
| | | | | | | | |
6
