FT. WAYNE, INDIANA — July 18, 2000 — Steel Dynamics, Inc.
(NASDAQ: STLD) today reported record net income of $19.1 million or $.40
per diluted share of common stock, for the second quarter of 2000, up
57% over a year ago. Net sales for the second quarter were $191
million, an increase of 14% over the year-ago quarter. Both net income
and revenues set company quarterly records. Continued strong demand for
the company’s flat-rolled steel products combined with higher price
realizations boosted revenues. Lower steel scrap costs expanded margins
and net income.
For the six months ended June 30, 2000, the company’s earnings per
diluted share were $.72, compared to $.31 for the first half of 1999, a
132% increase. Earnings for this year’s first half were $34.3 million
on sales of $380 million, an increase in sales of 34%.
Steel Dynamics continued its industry-leading operating performance
with excellent productivity and cost control at its Flat Roll Steel
Division at Butler, Indiana. Operating profit (operating income before
start-up costs) for the second quarter set a new company record of $43.4
million, or $86 per net ton shipped, compared to $64 per net ton in the
second quarter of 1999 and $71 per net ton in 2000’s first quarter.
SDI’s second quarter steel shipments were 503,000 net tons, about the
same as a year ago. Second quarter hot band production reached 528,000
tons, up from 512,000 in last year’s second quarter. In the second
quarter, costs related to the start-up of new businesses were $6.4
million and capital expenditures were $25.6 million.
Keith Busse, SDI’s President and CEO, stated, “Our operating profit
was the best quarterly performance since our start-up in 1996, up over
$7 million from the first quarter. Our quarterly results have improved
steadily since the first quarter of 1999, when the recovery from the
steel import crisis began. Our strong performance for the first half of
2000 provides an excellent base to achieve another record year.”
Regarding market conditions and the prospects for the rest of the
year, Busse continued, “We have recently seen some softness in orders
and in pricing, particularly of hot bands. We believe this reflects
corrections in service center inventories, a renewed concern over
imports, interest rates, and certain seasonal effects. We do not expect
further declines in steel demand or prices, and anticipate some
recovery in demand in the fourth quarter. Prices for our primary
resource, steel scrap, have declined significantly, partially offsetting
the softness in selling values. We believe we are well-positioned to
weather a pause in economic growth, if it occurs.”
SDI’s second quarter earnings were negatively impacted by a special
charge related to its 1998 investment in Nakornthai Strip Mill Public
Co., Ltd. (NSM). NSM filed for bankruptcy in Thailand during the second
quarter, causing Steel Dynamics to write off its remaining $1.4 million
investment and resulting in a reduction of $.02 in SDI’s second quarter
earnings per share.
In June, only six months after construction began, New Millennium
Building Systems produced its first steel trusses and joists at its new
production facility at Butler, Indiana. This investment is expected to
contribute to SDI profits by the end of this year.
From January of this year until production was suspended early in
July, Iron Dynamics, SDI’s wholly owned subsidiary, consistently
produced liquid pig iron at reduced output levels for use in SDI’s melt
shop, gaining invaluable operating experience. Facility modifications
have recently begun to prepare for the retrofit of the submerged arc
furnace (SAF) later this year. This month’s decision to discontinue
production was made in order to reduce IDI’s start-up losses in the
second half and permit a more cost-effective changeover to the new
equipment. During the first half of 2000, the operational and product
benefits to SDI of using liquid iron from IDI were confirmed, with
excellent metallurgical results. After completion of installation of
the new SAF, the IDI facility is expected to ramp up steadily to attain
full capacity production by the end of 2001.
As a part of the innovative electric-furnace mini-mill sector of the
U.S. steel industry, Steel Dynamics has grown quickly and has become a
profitable independent domestic steel producer. SDI produces a broad
range of flat-rolled steel products, including light gauge,
micro-alloyed and high-strength steels for demanding automotive
applications at its mini mill in Butler, Indiana. |