EXHIBIT 99.1
[Steel Dynamics, Inc. Logo]
Press Release
February 4, 2004
6714 Pointe Inverness Way, Suite 200
Fort Wayne, IN 46804-7932
260.459.3553 Phone
260.969.3590 Fax
www.steeldynamics.com
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Steel Dynamics Reports Fourth Quarter and Annual 2003 Results
FORT WAYNE, INDIANA, February 4, 2004 - Today Steel Dynamics, Inc. (NASDAQ:STLD)
announced record annual net sales of $987 million and record shipments of 2.8
million tons, resulting in net income of $47 million, or $.98 per diluted share,
which represents the company's third strongest yearly earnings performance.
Fourth quarter 2003 net sales of $279 million increased 10 percent as compared
to the third quarter, with net income of $17 million, or $.34 per diluted share.
Fourth quarter consolidated operating profit (excluding start-up costs and
minority interest adjustments) was $34 per ton, and for the year was $37 per
ton. The Flat Roll Division achieved record annual production volume, while the
Structural and Rail Division increased its annual shipments to 462,000 tons
during 2003.
"Steel Dynamics has experienced another year of opportunity and growth. We are
very pleased with the operating performances at our Flat Roll and Structural
Divisions as well as the start-up progress of our Bar Products Division," said
Keith Busse, President and CEO of Steel Dynamics. "At the same time, we
experienced, as did others in our industry, an unprecedented increase in steel
scrap costs, up approximately $22 per ton in 2003 compared to 2002, and up $18
per ton in the fourth quarter compared to the third quarter. The higher scrap
costs, combined with decreased selling values of $12 per ton, resulted in
decreased margins of approximately 10 percent for the year, although selling
values increased $21 per ton from the third to fourth quarter. Market weakness
early in the year coupled with unprecedented resource-cost escalation in the
latter half of the year made 2003 a volatile year.
"During 2004, we expect to see continued improvement in the U.S. economy with
stronger demand for steel in the non-residential construction and capital goods
markets. Throughout the year, we are optimistic that we will begin to see
favorable quarter-to-quarter margin and earnings growth. We are currently
experiencing strong bookings with rapidly rising steel prices in the first
quarter of 2004 which should more than offset or mitigate the financial impact
of the further escalation in scrap prices. With the expectation that all three
of our Indiana mini-mills and Iron Dynamics will be in operation this year,
Steel Dynamics is in a position to ship an increasing volume and breadth of
value-added steel products in 2004, enhancing prospects for a much stronger
year," Busse said.
Several financing activities occurred during the fourth quarter of 2003. In
November the company issued an additional $100 million of its existing Senior
Unsecured Notes due 2009. The net proceeds from this offering were used to
prepay $50 million of indebtedness under SDI's senior secured credit facility
and to finance certain capital expenditures. Steel Dynamics and the former
lender group to Iron Dynamics (IDI) agreed to settle a contingent obligation
related to the lenders' potential participation in future profits from the
operation of the IDI facility. This settlement generated a non-cash pre-tax gain
of $14 million, which is reflected in our financial statements as an early
extinguishment of debt.
Project Status
Bar Products Division, Pittsboro, Indiana. Steel Dynamics began commissioning
its third mini-mill ahead of schedule. On December 29, 2003, the mill
successfully produced special-bar-quality (SBQ) and merchant-bar-quality (MBQ)
rounds in 3-inch to 9-inch diameters for shipment. We expect to add SBQ and MBQ
rounds in diameters less than 3 inches and reinforcing bars ranging from #3 to
#18 to the mill's product offerings by the late second quarter of this year.
Production of angles, flats and channels should begin in the third quarter. We
anticipate the mill will have an eventual annual capacity of between 500,000 and
600,000 tons.
Glenn Pushis, general manager of SDI's new Bar Products Division, said, "We've
made rapid progress with construction and equipment installation since the
beginning of September when we received the environmental permit that allowed us
to proceed with the project. We are continuing to make numerous modifications
which we believe will allow the mill to flexibly produce a broader range of bar
products than most other bar mills. We expect to ramp up production and
shipments of these products rapidly in 2004."
Structural and Rail Division, Columbia City, Indiana. The Structural and Rail
Division achieved GAAP profitability in November, only sixteen months after
start-up, while producing at a rate of only 67 percent of its estimated
production capacity due principally to the slowly recovering non-residential
construction market. The mill is currently commissioning 6-inch and 36-inch
beams, which will conclude the commissioning of the full range of its
wide-flange product offerings. Several successful rail-rolling trials were
completed in the fourth quarter and we expect to ship rail products in the first
half of 2004.
Flat Roll Division, Butler, Indiana. In November, the Flat Roll Division began
operation of its new, technologically advanced coil-coating line. It is the only
paint line in North America that is an integral part of a steel-making facility,
offering significant advantages in terms of manufacturing cost, product quality,
logistics, and customer service. Coated coils have already been produced and
delivered to numerous customers, and have been well received. The division's
Jeffersonville, Indiana, galvanizing plant, which began operation in July, is
now in full operation.
Iron Dynamics, Inc., Butler, Indiana. Iron Dynamics restarted operations at the
end of November with encouraging results. Through an internally developed
process, IDI is currently producing a virgin form of iron intended to serve as a
lower cost substitute for 10 to 15 percent of the metallic raw material mix used
in the Flat Roll Division's electric arc furnaces. Since restart, the Flat Roll
Division has consistently and successfully used iron briquettes (HBI) from Iron
Dynamics as a part of its metallic input. In December, its first full month of
operation after restarting, IDI produced 15,000 tons of HBI, which is
approximately 40 to 50 percent of its expected capacity. The final stage of Iron
Dynamics' production process, the liquefaction of solid iron briquettes to
produce liquid pig iron, is expected to restart in February. We are encouraged
that IDI is currently achieving its cost targets. On this basis, we are hopeful
that IDI can deliver meaningful cost savings in the current turbulent scrap
markets.
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Forward Looking Statements
This press release contains predictive statements about future events, including
statements related to the future sales and earnings of the company, the
introduction of products new to the company, the start-up or restart and
operation of production facilities, the use of new manufacturing processes,
expectations of future successful production at these facilities and sales of
products made, and future financial benefits to the company as a result of
operating these facilities and selling these 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's Web site, www.sec.gov and on the company's Web site,
www.steeldynamics.com.
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Conference Call and Webcast
On Thursday, February 5, 2004 at 11:00 am EST, Steel Dynamics will host a
conference call in which Steel Dynamics' management will discuss fourth quarter
and 2003 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 is available on our Web site. 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 or fax (260)
969-3590
f.warner@steeldynamics.com
Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Quarter Ended Year Ended
December 31, December 31,
---------------------------- ----------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Net sales............................................... $ 279,160 $ 243,154 $ 987,248 $ 864,493
Cost of goods sold...................................... 239,474 170,693 827,264 638,860
Selling, general & administrative expenses.............. 17,710 15,476 63,377 67,266
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Operating income................................... 21,976 56,985 96,607 158,367
Interest expense........................................ 8,138 10,326 34,493 30,201
Gain from debt extinguishment........................... 13,987 - 13,987 -
Other (income) expense, net............................. 1,026 (220) 664 3,689
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Income before income taxes......................... 26,799 46,879 75,437 124,477
Income taxes............................................ 10,050 17,500 28,289 46,600
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Net income......................................... $ 16,749 $ 29,379 $ 47,148 $ 77,877
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Basic earnings per share:
Net income.............................................. $ .35 $ .62 $ .99 $ 1.65
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Weighted average common shares outstanding.............. 48,270 47,563 47,829 47,144
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Diluted earnings per share:
Net income.............................................. $ .34 $ .61 $ .98 $ 1.64
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Weighted average common shares
and share equivalents outstanding.................. 48,745 47,793 48,127 47,463
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Steel Dynamics, Inc.
UNAUDITED SUPPLEMENTAL OPERATING INFORMATION
Quarter Ended Year Ended
December 31, December 31,
---------------------- ------------------------
2003 2002 2003 2002
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Shipments (tons)
Steel Operations*..................................... 772,454 597,248 2,799,760 2,357,528
Other Operations**.................................... 66,697 42,952 206,718 204,153
Intercompany.......................................... (67,064) (37,418) (189,230) (171,339)
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Consolidated...................................... 772,087 602,782 2,817,248 2,390,342
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Steel Operations* production (tons)........................ 782,302 669,123 2,950,249 2,488,353
Average consolidated selling price per ton (dollars)....... $ 362 $ 403 $ 350 $ 362
Operating profit per ton shipped*** (dollars).............. 34 98 37 74
Start-up costs (thousands of dollars)...................... $ 4,145 $ 213 $ 7,862 $ 13,242
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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)
December 31, December 31,
2003 2002
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(unaudited)
Assets
Current assets:
Cash & short-term investments................................... $ 65,430 $ 24,218
Accounts receivable............................................. 126,023 118,479
Inventories..................................................... 184,496 153,204
Deferred income taxes........................................... 23,217 6,680
Other current assets............................................ 8,769 8,322
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Total current assets...................................... 407,935 310,903
Property, plant & equipment, net..................................... 1,001,116 929,338
Restricted cash...................................................... 2,636 2,616
Other assets......................................................... 36,752 32,839
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Total assets.............................................. $ 1,448,439 $ 1,275,696
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable................................................ $ 79,326 $ 46,217
Accrued interest................................................ 11,312 10,665
Accrued expenses................................................ 46,678 44,755
Current portion of long-term debt............................... 15,988 11,913
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Total current liabilities................................. 153,304 113,550
Long-term debt, including unamortized bond premium of $8,834......... 591,586 543,537
Deferred income taxes................................................ 115,703 70,330
Minority interest.................................................... 613 4,632
Other long-term contingent liabilities............................... - 21,987
Stockholders' equity:
Common stock.................................................... 509 499
Treasury stock, at cost......................................... (28,670) (28,889)
Additional paid-in capital...................................... 362,328 347,050
Retained earnings............................................... 257,254 210,106
Other accumulated comprehensive loss............................ (4,188) (7,106)
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Total stockholders' equity................................ 587,233 521,660
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Total liabilities and stockholders' equity................ $ 1,448,439 $ 1,275,696
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Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Quarter Ended Year Ended
December 31, December 31,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ---------- ----------- ----------
(unaudited) (unaudited)
Operating activities:
Net income.............................................. $ 16,749 $ 29,379 $ 47,148 $ 77,877
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & amortization.......................... 18,719 15,647 69,110 59,443
Deferred income taxes................................ 7,915 11,367 28,836 25,485
Gain from debt extinguishment........................ (13,897) - (13,897) -
Minority interest.................................... (527) (174) (1,068) (137)
Net change in working capital........................ 940 (50,340) (2,433) (47,646)
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Net cash provided by operating activities......... 29,899 5,879 127,696 115,022
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Investing activities:
Purchase of property, plant & equipment................. (47,073) (17,512) (137,061) (142,599)
Other................................................... - 8,813 (8,283) 8,813
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Net cash used in investing activities............. (47,073) (8,699) (145,344) (133,786)
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Financing activities:
Issuance of long-term debt.............................. 131,997 104,778 191,820 598,991
Repayment of long-term debt............................. (79,611) (99,066) (144,099) (621,465)
Issuance of common stock (net of expenses) and proceeds
and tax benefits from exercise of stock options...... 10,874 203 15,288 5,001
Treasury stock issuance (purchase)...................... 395 - 219 (43)
Debt issuance costs..................................... (2,635) (3,050) (4,368) (17,743)
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Net cash provided by (used in)
financing activities............................ 61,020 2,865 58,860 (35,259)
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Increase (decrease) in cash and equivalents................. 43,846 45 41,212 (54,023)
Cash & equivalents at beginning of period................... 21,584 24,173 24,218 78,241
----------- ----------- ----------- -----------
Cash & equivalents at end of period......................... $ 65,430 $ 24,218 $ 65,430 $ 24,218
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