FORT WAYNE, INDIANA, January 27, 2003 — Today Steel
Dynamics, Inc. (NASDAQ:STLD) announced record annual earnings for 2002
of $78 million, or $1.64 per diluted share, compared to $3 million, or
$0.07 per diluted share in 2001. Record net sales for the year 2002 were
$864 million with consolidated shipments of 2.4 million tons, compared
to net sales of $607 million and consolidated shipments of 2.0 million
tons for 2001. SDI’s average consolidated selling price per ton was
$362, or 17 percent higher in 2002 as compared to $309 per ton in 2001.
“Steel industry market and competitive conditions improved
dramatically in 2002,” said Keith Busse, president and chief executive
officer, “and Steel Dynamics was in a great position to take advantage
of the opportunities presented. After several large steel companies
entered bankruptcy, with some shutting down, Steel Dynamics and other
steelmakers benefited from reduced domestic steel supplies and the U.S.
government’s Section 201 action. These factors, as well as favorable
trade-case rulings, contributed to stabilizing the domestic steel market
during the year 2002.”
The company’s Flat Roll Division at Butler, Indiana, achieved record
annual hot band production of 2.4 million tons, exceeding previous
estimates of the mill’s annual production capacity. Productivity
improved to 0.31 man-hours per ton of hot band steel produced.
Consolidated operating profit per ton shipped (excluding start-up costs
and extraordinary items) increased to $74 per ton for the year, and
reached a quarterly record of $98 per ton in the fourth quarter.
During 2002, SDI’s start-up costs were $13 million, primarily related
to the structural and rail manufacturing facility, which began
operations midyear 2002. Capital expenditures were $143 million, which
includes the $45 million purchase cost of the Pittsboro, Indiana,
mini-mill assets from Qualitech Steel SBQ, LLC in September 2002. All
litigation related to the purchase of this asset has now been resolved.
“Steel Dynamics is one of the lowest cost flat-roll steel producers
in existence today, which helps us to achieve strong profit margins,”
Busse said. “We expect to maintain that cost leadership with our entry
into the long products steel markets. In 2002 we completed construction
of our second mini-mill, the structural and rail mill in Columbia City,
Indiana. We began production in July 2002 and are now producing a wide
range of structural steel products. Rail production trials are set to
begin in the first half of 2003.
“We are also looking toward additional future growth, starting in
2004, from our newly-formed Bar Products Division mini-mill in
Pittsboro, Indiana. We expect permitting, engineering and retrofitting
activities will continue throughout 2003. We plan initially to produce
merchant shapes, with the possibility of manufacturing SBQ bars in the
future. The purchase of this relatively new mill at a very reasonable
price provides SDI with an attractive entry into a new product field. We
continue to review other growth opportunities, with an eye for value
and future profit growth potential,” Busse said.
Fourth Quarter 2002 Highlights
SDI’s net sales for fourth quarter 2002 were $243 million, with
consolidated shipments of 603,000 tons, in comparison to sales of $138
million and consolidated shipments of 465,000 tons during the same
period in 2001. SDI’s average consolidated selling price for the quarter
was $403 per ton, compared to $297 per ton in the fourth quarter of
2001, a 36 percent increase. Capital expenditures in the quarter were
$18 million, primarily related to work at the structural and rail
manufacturing facility at Columbia City.
“Our fourth quarter was another record quarter as it would regard
operating profit per ton,” Busse commented, “Excluding the costs related
to debt extinguishment for the issuance of convertible notes in
December, which reduced earnings by approximately $0.03 per share, SDI’s
diluted earnings per share in the fourth quarter would have been $0.64.
“In late December 2002 and early January 2003 the company
successfully issued $115 million of 4.0% Convertible Subordinated Notes
due 2012. The net proceeds received from this issuance were used to
prepay approximately 40 percent of our then outstanding senior secured
bank facility. We believe this transaction further supports our
commitment to continually strengthen our capital structure while
maintaining the financial flexibility necessary to accommodate our
growth strategies.”
Steel Dynamics, Inc., based in Fort Wayne, Indiana, produces a broad
range of flat-rolled and long steel products. Flat-roll products include
hot-band, cold-rolled and coated steel sheet. The company emphasizes
value-added coated and light-gauge, micro-alloyed and high-strength
steels at its Flat Roll Division mini-mill in Butler, Indiana. In 2002
the company’s Structural and Rail Division began producing and shipping
structural steel products from its new mini-mill at Columbia City,
Indiana.
www.steeldynamics.com.
A replay of the webcast will be available on the company’s Web site until February 15, 2003.
Fred Warner, Investor Relations, 260-969-3564, fax 260-969-3590
Forward Looking Statements
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