Exhibit 99.1
[STEEL DYNAMICS, INC. LOGO]
PRESS RELEASE
February 2, 2005 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 RECORD RESULTS FOR 2004
FORT WAYNE, INDIANA, February 2, 2005 - Today Steel Dynamics, Inc. (NASDAQ:STLD)
announced net sales of $2.1 billion for the year 2004, more than double 2003 net
sales of $987 million. Net income was $295 million, or $5.27 per diluted share,
compared to 2003 net income of $47 million or $0.91 per diluted share, an
increase of 479 percent. For the fourth quarter of 2004 net income was $82
million, or $1.47 per diluted share, compared to $17 million or $0.31 per
diluted share in the fourth quarter of 2003. Net Sales were $600 million for the
quarter, an increase of 115 percent over the fourth quarter of 2003.
In 2004 the company's operating income was $148 per ton shipped with an
operating margin of 24 percent. After staffing new operations, employment in
2004 increased to 1,620 and revenues per employee reached $1.4 million. All
three of the company's steelmaking operations established records for shipping
volumes, sales, and profits.
Consolidated shipments for 2004 grew 22 percent to 3.4 million tons.
Consolidated shipments in the fourth quarter were up 10 percent to 846,000 tons
compared to 772,000 tons in the fourth quarter of 2003. Compared to the third
quarter of 2004, consolidated shipments were 6 percent lower. The average
consolidated selling price per ton in the fourth quarter increased to $710 from
$706 in the third quarter, and was up 96 percent over the fourth quarter of
2003.
The cost of steel scrap per net ton charged increased $40 from the third quarter
to the fourth quarter. Natural gas and electrical energy costs also increased in
the quarter. These costs were higher than expected and resulted in lower margins
compared to the third quarter of 2004. Fourth quarter results were also affected
by a special performance bonus that was awarded to all employees and corporate
charitable contributions of $1.5 million, which reduced the quarter's diluted
EPS by about $0.05 per common share. Overall, the fourth quarter was the
company's second strongest quarter to date, second only to 2004's third quarter.
The year's highlights included the quick start-up of the Bar Products Division
in Pittsboro, Indiana, which achieved profitability in its fourth month of
operation. In its first year of operation, the Bar Products Division shipped
318,000 tons of steel and achieved a return on investment greater than 25
percent. During the year, the Bar Products Division completed installation of a
second rolling mill, allowing it to diversify its production capabilities to
include merchant bar and reinforcing bar (rebar). The new equipment underwent
limited commissioning as strong demand for large-diameter special-bar-quality
(SBQ) and medium-bar-quality (MBQ) rounds kept the mill busy shipping only those
higher value-added products.
In 2004, the Flat Roll Division continued to be the dominant contributor to
SDI's strong financial results as it increased shipments of hot-rolled and
finished steels for the year to 2.4 million tons. The division also fully
commissioned two new, highly profitable production lines in 2004. The new paint
line achieved a run rate exceeding its rated production capacity of 240,000 tons
per year and the Jeffersonville, Indiana, galvanizing plant that was acquired in
2003 achieved rated capacity. The Jeffersonville plant produces lighter gauges
of galvanized steel than the company previously offered. Both the paint line and
the galvanizing line contributed to the Flat Roll Division's record profits.
The Structural & Rail Division, in its second full year of operations, achieved
record results in 2004. Although steel demand for non-residential construction
remained lackluster in 2004, the company continued to penetrate the Midwest and
Central Canadian wide-flange beam markets and increased its shipments by 59
percent to 734,000 tons.
New Millennium Building Systems also achieved record shipments and operating
income in 2004. The company's new production facility in Lake City, Florida is
ahead of schedule and hopes to begin operating in late February or early March
of this year.
Iron Dynamics operated at approximately 50% of its capability, and recorded its
first pre-tax net income on a quarterly basis. It is expected to further ramp up
production in the first quarter of 2005. Mesabi Nugget LLC, in which SDI is an
investor, is moving forward with its efforts to obtain an air permit for its
first production facility to be built in either Minnesota or Indiana.
"2004 was an extraordinary year for Steel Dynamics," said Keith Busse, President
and CEO. "Strong steel markets led to historically high selling prices and
margins despite substantially increased raw materials costs. In spite of
dramatically escalating raw material costs the company was able to maintain
strong profit margins through the implementation of raw material surcharges,
which allowed us to recover most of our raw material cost increases. Our results
were also enhanced by the contributions of our new production facilities that
were acquired or built, and started up in late 2003 and early 2004, thereby
expanding our steel product portfolio and increasing our volume of steel
shipments.
"As we look ahead to 2005, we are optimistic about the sustainability of
favorable domestic steel market conditions. Our existing steel manufacturing
capacity will permit us to increase shipments by an additional 10 percent in
2005, allowing us to take advantage of the anticipated favorable market climate.
While our visibility into the year is limited, our current outlook is for a
strong first half. Late in the first quarter we are likely to enjoy lower costs
as the price of steel scrap declined in December, January and February, and we
currently expect selling values to improve slightly late in the first quarter or
early second quarter. While we note some recent reports suggesting the adverse
effects of Chinese steel exports on U.S. steel producers, we are equally mindful
of those that disagree with this assessment, and on balance, we believe that
this has created unwarranted anxiety about 2005. We feel that there is a high
likelihood that U.S. producers will continue to benefit this year from strong
global and domestic steel demand.
"We believe that our business, and the majority of the U.S. steel industry, will
not be negatively affected in the near term by China's efforts to moderate its
growth rate or by steel exported from China. On the contrary, we believe China
for a number of years will require vast amounts of steel for its own use and
growth and will not have the capacity to satisfy its own needs for flat-roll
steel, wide-flange beams, and SBQ bars, the types of steel that Steel Dynamics
makes," Busse said.
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Forward Looking Statements
This press release contains predictive statements about future events, including
statements related to future shipments, sales and earnings of the company, the
economic environment, particularly the effects of global and U.S. supply and
demand for steel, the company's successful production and marketing of new
products, operation of production facilities, 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 current expectations.
The company refers you to a detailed explanation of the many factors and risks
that may cause such predictive statements to turn out differently, as set forth
in Steel Dynamics' December 31, 2003 Annual Report on Form 10-K under the
"Forward Looking Statements" heading and in the section on "Risk Factors," as
well as in other reports which the company from time to time files with the
Securities and Exchange Commission. These reports are 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 3, 2005 at 11:00 am EST, Steel Dynamics will host a
conference call in which Steel Dynamics' management will discuss fourth quarter
and 2004 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: Gary E. Heasley, Vice President of Finance & CFO, (260) 969-3555 or
fax (260) 969-3592
GARY.HEASLEY@STEELDYNAMICS.COM
STEEL DYNAMICS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NET SALES $ 600,370 $ 279,160 $ 2,144,913 $ 987,248
Costs of goods sold 430,914 243,976 1,541,423 841,920
Selling, general, and administrative expenses 29,463 13,208 96,581 48,721
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OPERATING INCOME 139,993 21,976 506,909 96,607
Interest expense 8,342 8,138 38,907 34,493
Gain from debt extinguishment - 13,987 - 13,987
Other (income) expense, net (1,327) (1,026) (7,031) 664
------------ ------------ ----------- ------------
INCOME BEFORE INCOME TAXES 132,978 26,799 475,033 75,437
Income taxes 50,532 10,050 179,719 28,289
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NET INCOME $ 82,446 $ 16,749 $ 295,314 $ 47,148
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BASIC EARNINGS PER SHARE $ 1.67 $ .35 $ 5.99 $ .99
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Weighted average common shares outstanding 49,250 48,270 49,287 47,829
============ ============ =========== ============
DILUTED EARNINGS PER SHARE,
including effect of assumed conversions $ 1.47 $ .31 $ 5.27 $ .91
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Weighted average common shares
and share equivalents outstanding 56,468 55,508 56,527 54,890
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STEEL DYNAMICS, INC.
UNAUDITED SUPPLEMENTAL OPERATING INFORMATION
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------------- -----------------------
2004 2003 2004 2003
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SHIPMENTS AND PRODUCTION DATA (TONS)
Shipments
Steel Operations* 849,084 772,454 3,423,372 2,799,760
Other Operations** 95,778 66,697 359,410 206,718
Intercompany (98,682) (67,064) (350,660) (189,230)
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Consolidated shipments 846,180 772,087 3,432,122 2,817,248
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Steel Operations* production 845,826 782,302 3,468,123 2,950,249
Average consolidated selling price per ton $ 710 $ 362 $ 625 $ 350
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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.
STEEL DYNAMICS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2004 2003
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(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 16,334 $ 65,430
Accounts receivable 253,861 126,023
Inventories 381,488 184,496
Deferred income taxes 6,856 23,217
Other current assets 18,980 8,769
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TOTAL CURRENT ASSETS 677,519 407,935
PROPERTY, PLANT AND EQUIPMENT, NET 1,024,044 1,001,116
RESTRICTED CASH 989 2,636
OTHER ASSETS 31,067 36,752
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TOTAL ASSETS $ 1,733,619 $ 1,448,439
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 141,888 $ 79,326
Accrued interest 8,796 11,312
Accrued expenses 75,750 46,678
Current portion of long-term debt 6,774 15,988
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TOTAL CURRENT LIABILITIES 233,208 153,304
LONG-TERM DEBT, including bond premium of $7,147 and $8,834
December 31, 2004 and 2003, respectively 441,605 591,586
DEFERRED INCOME TAXES 209,215 115,703
MINORITY INTEREST 2,469 613
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 523 509
Treasury stock, at cost (84,141) (28,670)
Additional paid-in capital 390,505 362,328
Retained earnings 540,235 257,254
Other accumulated comprehensive loss - (4,188)
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TOTAL STOCKHOLDERS' EQUITY 847,122 587,233
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,733,619 $ 1,448,439
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STEEL DYNAMICS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- --------------------------
2004 2003 2004 2003
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OPERATING ACTIVITIES
Net income $ 82,446 $ 16,749 $ 295,314 $ 47,148
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 20,606 18,719 84,749 69,110
Deferred income taxes 43,002 7,915 109,873 28,836
Gain from debt extinguishment - (13,987) - (13,987)
Minority interest 195 (527) 1,856 (1,068)
Changes in certain assets and liabilities:
Accounts receivable (6,109) (8,905) (127,838) (7,544)
Inventories (95,698) (13,115) (196,992) (31,292)
Accounts payable (16,145) 8,780 50,009 33,109
Other working capital 13,498 14,180 31,983 3,294
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Net cash provided by operating activities 41,795 29,809 248,954 127,606
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INVESTING ACTIVITIES
Purchase of property, plant and equipment (29,174) (47,281) (102,046) (137,269)
Other investing activities 55 208 55 (8,075)
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Net cash used in investing activities (29,119) (47,073) (101,991) (145,344)
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FINANCING ACTIVITIES
Issuance of long-term debt 24,008 131,997 188,292 191,820
Repayment of long-term debt (126,630) (79,521) (347,487) (144,009)
Issuance of common stock (net of expenses) and proceeds
and tax benefits from exercise of stock options 6,322 10,874 28,191 15,288
Purchase of treasury stock (55,422) 395 (55,471) 219
Dividends paid (3,733) - (7,452) -
Debt issuance costs (561) (2,635) (2,132) (4,368)
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Net cash provided by (used in) financing activities (156,016) 61,110 (196,059) 58,950
----------- ----------- ----------- -----------
Increase (decrease) in cash and equivalents (143,340) 43,846 (49,096) 41,212
Cash and equivalents at beginning of period 159,674 21,584 65,430 24,218
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Cash and equivalents at end of period $ 16,334 $ 65,430 $ 16,334 $ 65,430
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