FORT WAYNE, INDIANA, October 16, 2001— Steel Dynamics, Inc. (NASDAQ: STLD)
today reported third quarter consolidated earnings of $2.1 million, or
$.05 per diluted share, on sales of $157 million, compared to third
quarter 2000 earnings of $12.4 million on sales of $160 million. Third
quarter earnings showed a slight increase of $169,000 from the second
quarter on relatively flat revenues.
Shipments in the third quarter were 500,000 tons, down 3% from the
second quarter, but up 13% from the year-ago quarter. Third quarter
hot-band production was 526,000 tons. Start-up costs during the quarter
were $2.4 million.
“SDI’s third quarter suffered from a continuing influx of low-priced
foreign steel imports that have kept steel selling prices at or near
historical lows,” said Keith Busse, president and chief executive
officer. “Our third-quarter average selling value for the Flat Rolled
Steel Division was $298 per ton, up $3 per ton from the second quarter,
but still substantially below selling values expected under normalized
market conditions. Lower selling values as well as sluggish demand for
steel have taken their toll on the industry’s financial results, as well
as SDI’s. Steel Dynamics may well be the only carbon flat-roll producer
in the U.S. with positive earnings.”
SDI’s sales for the first nine months of 2001 were $469 million, 13%
lower than the same period of 2000. Earnings for the first nine months
of 2001 totaled $8.5 million, or $.19 per diluted share, compared to
$46.7 million, or $.99 per diluted share during the same period in 2000.
Busse further commented, “In spite of these very difficult market
conditions, the excellent operating performance of our flat-rolled steel
mini-mill at Butler, Indiana, allowed SDI to record its nineteenth
consecutive profitable quarter. SDI has consistently maintained capacity
utilization in excess of 85% this year, compared to recent U.S. steel
industry average utilization of approximately 75%.”
Third quarter operating profit (pretax income before interest and
start-up costs) was $11.5 million, or $23 per ton shipped versus $31 in
the second quarter. Lower margins in the quarter resulted from a $5 per
ton increase in scrap costs that were not offset by selling price
increases, from an increase of $2 per ton in cost of goods sold at
standard due to product mix, and from higher administrative costs of $3
per ton associated with a $1.3 million write-off for uncollectible
accounts receivable. In the quarter SDI also wrote off approximately
$700,000 related to its investment in MetalSite, an Internet-based
metals trader.
Regarding the outlook for the fourth quarter and the first half of
2002, Busse stated, “Recent events have raised new uncertainties
regarding the timing and strength of the recovery of the U.S. economy.
Industry conditions in the fourth quarter will remain challenging, with
operating levels and results expected to show little improvement. On the
positive side, we expect steel imports to decline as a result of
success in numerous steel industry trade cases, some of which have
recently been decided in favor of the U.S. steel industry, and some of
which are still pending with positive results anticipated.”
During the third quarter, SDI participated in the International Trade
Commission’s Section 201 hearings in Washington, D.C. We believe the
steel industry made a strong presentation and that the ITC is likely to
rule quickly in the industry’s favor regarding injury resulting from
unfairly priced and/or dumped steel imports. Comprehensive import relief
that prevents country and product switching which has occurred since
1998, and generally occurs after each successful trade case, is long
overdue. The positive effects for U.S. steel manufacturers should begin
to be felt in the first or second quarter of 2002. As the U.S. economy
recovers, reduced levels of imports should result in higher capacity
utilization rates, creating the conditions needed to re-establish the
price levels required to restore financial health to the domestic steel
industry.
Construction of Steel Dynamics’ $315 million structural steel mill at
Columbia City, Indiana, has proceeded rapidly since construction began
May 1. The project is on schedule and under budget, with the mill
expected to be ready to begin its ramp-up of production of structural
steel products in the second quarter of 2002. Approximately 90% of SDI’s
third quarter capital expenditures of $27 million were related to the
structural project. Capitalized interest of approximately $35 million
could bring the total cost of the project to nearly $350 million.
Conference Call Webcast Available on SDI Web Site
A conference call in which Steel Dynamics’ management will discuss
its third quarter 2001 results and outlook is scheduled for 11:00 am
Eastern Daylight Time on October 16, 2001.
You are invited to listen in to the live broadcast of the conference
call over the Internet, accessible from Steel Dynamics’ Web site home
page.A replay of the Webcast will be available from the SDI Web site for
thirty days. A dial-in telephone replay will be available on request
until October 21, 2001. Click here to access conference call.
Forward Looking Statements
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