FORT WAYNE, INDIANA, January 30, 2001— Steel Dynamics, Inc. (NASDAQ: STLD)
today announced 2000 annual consolidated earnings of $53.8 million and
sales of $693 million. Net income increased 36% over 1999 results, on a
12% increase in sales. Flat-rolled steel shipments in 2000 were
1,913,000 tons, an increase of 2% from 1999. Net income per diluted
share for 2000 was $1.15, up 40% from $.82 a year earlier.
“In spite of very difficult market conditions in the second half of
2000, Steel Dynamics (SDI) achieved both record sales and profits for
the year,” said Keith Busse, president and chief executive officer.
“Our fifth year of operation also yielded a production milestone of more
than two million tons of hot-rolled steel, a high percentage of which
we converted and sold as value-added cold-rolled and galvanized
products.
“SDI remained solidly profitable in the fourth quarter despite lower
demand and dramatically lower selling values. As demand for steel
declined in the fourth quarter, SDI was able to maintain a stable rate
of production, thanks to strong efforts by our sales organization
coupled with the flexibility built into our manufacturing process,
allowing us to achieve 80% capacity utilization,” Busse said.
In the fourth quarter of 2000, net income was $7.1 million, or $.16
per diluted share, compared to $13.8 million, or $.29 per diluted share
for the fourth quarter of 1999. The quarter’s sales were $152 million,
down 13% from 1999, while shipments of 457,000 tons were down 10%.
Fourth quarter operating profit (pretax income before interest and
start-up costs) was $18.3 million, or $40 per ton shipped, compared to
an operating profit of $32.9 million, or $65 per ton for the
year-earlier quarter. Busse also noted that “Lower raw material prices
helped to counteract significant margin reductions caused by pricing
pressures, but as in the past our low-cost operating capability and
highly productive work force continue to be the keys to our success in a
tough operating environment.”
Hot band production was 455,500 tons in the fourth quarter, compared
to 519,100 in the fourth quarter of 1999. For the year, hot band
production was 2,031,000 tons compared to 1,938,200 tons in 1999, an
increase of 5%. Man-hours per ton of hot band produced in 2000 was 0.37,
an improvement from 0.41 hours in 1999. Start-up costs in the fourth
quarter were $3.7 million.
Commenting on industry conditions, Busse stated, “Of greater concern
to us than the recent softness in demand, which we believe is cyclical
and will bottom out in the first or second quarter, is the precipitous
decline in selling values. Prices are at their lowest levels in several
decades, driven principally by the serious steel import crisis. In 2000
near-record volumes of foreign steel flooded into the U.S. market from
numerous countries at prices well below their cost of production and
transportation. These conditions threaten the viability of much of the
U.S. steel industry.”
In November 2000, SDI joined with other domestic steel producers in
filing anti-dumping and countervailing duty petitions with the U.S.
Department of Commerce and the International Trade Commission. On
December 28, 2000 the ITC ruled preliminarily, but unanimously, that
hot-rolled steel imports from eleven countries have harmed U.S. steel
producers. The Department of Commerce is expected to recommend duties on
future imports of hot-rolled steel from these eleven countries in March
and April, but the amounts are yet to be determined.
Busse continued, “Steel Dynamics is among the lowest cost steel
producers in the world. So, in turn, we believe we can compete with the
world’s best, but doing so requires a level playing field. Although the
previous Administration at times provided well-justified relief from
specific steel import problems, the piecemeal actions were insufficient
to stem the repeated waves of unfair steel imports into the United
States. With the tremendous amount of excess steel production capacity
outside of the U.S., foreign producers continue to flood the domestic
market with low-priced steel in an effort to keep their under-utilized
mills running. We are hopeful that the new Administration will recognize
the severity of this problem and will soon take effective,
comprehensive action to alleviate the serious injury being suffered by
U.S. mills.”
Status of Other Business
On January 10, 2001 the Indiana Department of Environmental
Management (IDEM) reissued the Air Permit for SDI’s planned structural
steel mill in Whitley County, Indiana, after addressing the issues
remanded June 22, 2000 to IDEM by the U.S. Environmental Appeals Board.
Steel Dynamics is ready to begin construction of the new mill as early
as February, absent any further legal or regulatory action. SDI is
hopeful that all parties will now be satisfied with the revised permit’s
environmental safeguards which ensure that this new mill will be one of
the cleanest and most environmentally friendly steel mills ever built
in the United States.
Construction of the mill is expected to take 12 to 14 months. Steel
Dynamics expects this centrally located state-of-the-art facility to
begin generating revenues, and potentially profits, by the second half
of 2002. The structural steel business offers SDI an opportunity to
complement its flat-roll steel business with additional potentially
high-margin products, providing increased earnings stability through
diversification into new markets.
New Millennium Building Systems, a consolidated entity of Steel
Dynamics, has shown continuous progress since the June 2000 start-up of
its Butler, Indiana plant. It has enjoyed good initial success in the
Midwest commercial construction market with its fabricated-steel joists
and girders, and achieved profitability within the first six months of
start-up. In the fourth quarter, New Millennium began commercial
production of painted and galvanized corrugated roof and floor decking
material. Steel Dynamics supplies 100% of the steel sheet New Millennium
uses. SDI expects that New Millennium will continue to provide an
increasingly positive contribution to SDI’s results in 2001.
Iron Dynamics, Inc., SDI’s alternative iron production facility, was
shut down for planned repairs and retrofits at midyear 2000. Replacement
of IDI’s submerged-arc furnace (SAF) was completed in the fourth
quarter, as well as numerous other modifications to the facility,
including improvements in material handling, batching, direct reduction,
off-gas systems and SAF feeding mechanisms. The company believes it has
now solved all of the mechanical, electrical and operating issues that
were encountered in the course of developing this new and important
technology. In mid-February IDI will begin reheat of the SAF in
preparation for commercial iron production planned to begin in March.
In December of 2000, SDI’s corporate offices moved to the new Steel
Dynamics Corporate Center located along interstate I-69, southwest of
Fort Wayne, Indiana. The new corporate address is 6714 Pointe Inverness
Way, Suite 200, Fort Wayne IN 46804-7932.
Conference Call Webcast:
A conference call in which Steel Dynamics’ management will discuss
fourth quarter and full-year 2000 results is scheduled for 11:00 am
Eastern Time on January 30, 2001.
You are invited to listen in to a live broadcast of the conference
call over the Internet, accessible from Steel Dynamics’ Web site home
page: www.steeldynamics.com
A replay of the Webcast will also be available from the SDI Web site for thirty days.
Forward Looking Statements
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