Exhbitit 99.1
[SDI Steel Dynamics, Inc.(R) Logo]
Press Release 6714 Pointe Inverness Way, Suite 200
October 22, 2003 Fort Wayne, IN 46804-7932
260.459.3553 Phone
260.969.3590 Fax
www.steeldynamics.com
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Steel Dynamics Announces Third Quarter Net Income of $9.2 Million
FORT WAYNE, INDIANA, October 22, 2003- Steel Dynamics, Inc. (NASDAQ: STLD) today
announced third quarter earnings of $9.2 million, or $.19 per diluted share,
compared to earnings of $5.4 million, or $.11 per diluted share, in the second
quarter of 2003. Net income in the year-ago quarter was $29.1 million, or $.61
per diluted share. Net sales for the third quarter of 2003 increased 16 percent
to $254 million, compared to $219 million in the second quarter of 2003. Sales
increased six percent as compared to $241 million recorded in the third quarter
of 2002.
SDI's shipments and production volume grew as a result of our continued strength
in the flat-roll steel markets and increased penetration of the structural steel
market. Third quarter consolidated shipments were 745,000tons, 14 percent higher
than the second quarter of 2003, and 25 percent higher than the third quarter of
2002. Structural steel shipments increased sequentially each month, reaching a
total of 130,000 tons for the third quarter. Third quarter production of 787,000
tons by SDI's steel operations rose 23% compared to the third quarter of last
year. In August the Flat Roll Division achieved a new monthly hot-band
production record.
"We believe market conditions have begun to improve," said Keith Busse,
president and chief executive officer. "Our Flat Roll Division's third quarter
shipments improved from the second quarter and our order book for the fourth
quarter is stronger. In addition, our construction-related businesses are also
seeing stronger demand. While part of our recent volume growth is attributable
to gains in market share, there appears to be a gradual pick-up in the level of
building project activity in the markets we serve.
"As we previously announced, the Structural and Rail Division achieved its first
operating profit in the month of August after just over one year of operation.
After achieving even stronger results in September, the division is expected to
continue to make positive progress in the fourth quarter," Busse said.
In the third quarter, SDI's average consolidated selling price per ton was $341
per ton which was $6 per ton higher than the second quarter and $62 per ton
lower than the third quarter of 2002. Third quarter scrap costs increased
approximately $3 per ton, compared to the second quarter of 2003, and increased
approximately $11 per ton from the third quarter of 2002. This resulted in a
slight increase in overall margins when compared to the second quarter's
results.
"Recent steel-scrap price increases are expected to result in a fourth quarter
scrap-cost increase of approximately $12 per ton. We believe higher selling
prices will more than offset the effect of higher scrap costs during the fourth
quarter, thereby slightly increasing our margins," Busse said.
In the third quarter Steel Dynamics made progress on four growth projects which
are expected to generate increased volume of steel shipments and enrich the
company's product mix throughout the next year:
o Most significant is the new Bar Products Division mini-mill in Pittsboro,
Indiana, which will add an estimated 500,000 to 600,000 tons in annual
capacity. After receiving its construction permit early in September,
facility modifications and construction began which will allow the mill to
produce a wide range of bar products, including special-bar-quality (SBQ)
steel, merchant shapes and rebar. SBQ production is expected to begin in the
first quarter of 2004 and merchant shape production is expected to follow in
the second quarter.
o Following its start-up in mid-July, SDI's newly acquired Jeffersonville,
Indiana, galvanizing facility has ramped up production, allowing SDI to
diversify its cold-rolled, galvanized steel production to include lighter
gauges, thereby gaining entry into a variety of new construction materials
markets.
o Installation of the Flat Roll Division's new paint line was completed and
production tests began in mid-October. Painted coils are expected to
begin shipping before the end of the year. SDI has had numerous
conversations with potential customers for painted products and
customer acceptance of these new products is expected to be rapid.
o At the Structural and Rail Division, rail production trials are expected to
begin in late October, later than previously expected due to the need for
modification of rolling equipment and control software. Initial shipments of
rail for evaluation by railroad customers are planned before the end of the
year.
"As these new products are added to our product portfolio and as steel-market
conditions are expected to improve with a strengthening economy, we are
optimistic about 2004 and believe there is an opportunity for a substantial
improvement in Steel Dynamics' earnings in the coming year," Busse concluded.
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Conference Call Webcast available on SDI Web site
A conference call in which Steel Dynamics' management will discuss the company's
third quarter 2003 results and the business outlook is scheduled for 10:00 am
EDT (9:00 am Central) on October 23, 2003.
You are invited to listen to the live broadcast of the conference call over the
Internet, accessible from Steel Dynamics' Web site home page. An audio replay of
the Webcast will be available on the SDI Web site until November 1, 2004.
The Webcast, as well as other information about Steel Dynamics, can be found at:
www.steeldynamics.com
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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, the
timing of construction and operation of new or existing facilities, and the
extent and timing of introduction and customer acceptance of new products. 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.
Contact: Fred Warner, Investor Relations Manager
(260) 969-3564 or fax (260) 969-3590
f.warner@steeldynamics.com
Steel Dynamics, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales.......................................... $ 253,952 $ 240,697 $ 708,088 $ 621,339
Costs of goods sold................................ 215,097 167,942 587,790 468,167
Selling, general, & administrative expenses........ 16,010 15,679 45,667 51,790
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Operating income.......................... 22,845 57,076 74,631 101,382
Interest expense................................... 8,251 10,580 26,355 19,875
Other (income) expense, net........................ (112) (113) (362) 3,909
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Income before income taxes................ 14,706 46,609 48,638 77,598
Income taxes....................................... 5,515 17,478 18,239 29,099
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Net income................................ $ 9,191 $ 29,131 $ 30,399 $ 48,499
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Basic earnings per share:
Net income......................................... $ .19 $ .61 $ .64 $ 1.03
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Weighted average common shares outstanding......... 47,797 47,545 47,683 47,005
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Diluted earnings per share:
Net income......................................... $ .19 $ .61 $ .63 $ 1.02
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Weighted average common shares
and share equivalents outstanding............. 48,122 47,854 47,920 47,354
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Steel Dynamics, Inc.
UNAUDITED SUPPLEMENTAL OPERATING INFORMATION
Three Months Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Steel Operation* shipments (tons).......................... 742,864 592,665 2,027,306 1,760,280
Other Operation** shipments (tons)......................... 49,676 43,494 140,021 161,201
Intercompany shipments (tons).............................. (48,025) (38,449) (122,166) (133,921)
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Consolidated shipments (tons).............................. 744,515 597,710 2,045,161 1,787,560
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Steel Operation* production (tons)......................... 762,430 639,615 2,167,947 1,819,231
Average consolidated selling price per ton (dollars)....... $ 341 $ 403 $ 346 $ 348
Operating profit per ton shipped*** (dollars).............. 34 95 38 66
Start-up costs (thousands of dollars)...................... $ 2,196 $ - $ 3,717 $ 12,952
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* Steel Operations include the company's Flat Roll Division, Structural and
Rail Division and Bar Products Division.
** Other Operations include New Millennium Building Systems, Paragon Steel
Trading and Iron Dynamics.
*** Operating profit per ton shipped represents operating income before start-up
costs and minority interest adjustments divided by consolidated shipments.
Steel Dynamics, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2003 2002
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(unaudited)
Assets
Current assets:
Cash and short-term investments................................. $ 21,584 $ 24,218
Accounts receivable............................................. 117,118 118,479
Inventories..................................................... 171,381 153,204
Deferred income taxes........................................... 9,425 6,680
Other current assets............................................ 11,433 8,322
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Total current assets...................................... 330,941 310,903
Property, plant, and equipment, net.................................. 971,536 929,338
Restricted cash...................................................... 2,632 2,616
Other assets......................................................... 35,207 32,839
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Total assets.............................................. $ 1,340,316 $ 1,275,696
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable................................................ $ 70,546 $ 46,217
Accrued interest................................................ 4,935 10,665
Accrued expenses................................................ 42,132 44,755
Current portion of long-term debt............................... 14,889 11,913
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Total current liabilities................................. 132,502 113,550
Long-term debt, less current maturities.............................. 532,209 543,537
Deferred income taxes................................................ 93,996 70,330
Minority interest.................................................... 1,140 4,632
Other long-term contingent liabilities............................... 21,987 21,987
Stockholders' equity:
Common stock.................................................... 502 499
Treasury stock, at cost......................................... (29,065) (28,889)
Additional paid-in capital...................................... 351,462 347,050
Retained earnings............................................... 240,505 210,106
Other accumulated comprehensive loss............................ (4,922) (7,106)
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Total stockholders' equity................................ 558,482 521,660
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Total liabilities and stockholders' equity................ $ 1,340,316 $ 1,275,696
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Steel Dynamics, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
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2003 2002 2003 2002
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Operating activities:
Net income.............................................. $ 9,191 $ 29,131 $ 30,399 $ 48,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................ 17,472 15,716 50,391 43,796
Deferred income taxes................................ 9,491 7,427 20,921 14,118
Minority interest.................................... 86 (193) (541) 37
Net change in working capital........................ 3,213 (8,567) (3,373) 2,693
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Net cash provided by operating activities......... 39,453 43,514 97,797 109,143
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Investing activities:
Purchases of property, plant, and equipment............. (28,883) (65,890) (89,988) (125,087)
Other................................................... - - (8,283) -
----------- ----------- ----------- -----------
Net cash used in investing activities............. (28,883) (65,890) (98,271) (125,087)
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Financing activities:
Issuance of long-term debt.............................. 11,343 8,298 59,823 494,213
Repayments of long-term debt............................ (14,588) (10,235) (64,488) (522,399)
Issuance of common stock (net of expenses) and
proceeds and tax benefits from exercise of stock options 2,744 549 4,414 4,757
Purchase of treasury stock.............................. - - (176) -
Debt issuance costs..................................... (413) (810) (1,733) (14,695)
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Net cash used in financing activities............. (914) (2,198) (2,160) (38,124)
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Increase (decrease) in cash and cash equivalents............ 9,656 (24,574) (2,634) (54,068)
Cash and cash equivalents at beginning of period............ 11,928 48,747 24,218 78,241
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Cash and cash equivalents at end of period.................. $ 21,584 $ 24,173 $ 21,584 $ 24,173
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