Fort Wayne, Indiana, February 5, 2002—Today Steel Dynamics, Inc. (NASDAQ: STLD)
announced 2001 annual consolidated earnings of $4.5 million, or $0.10
per diluted share. SDI’s annual sales revenue was $607 million, on
consolidated shipments of 2.0 million tons during 2001, as compared with
annual sales revenue of $693 million, on shipments of 1.9 million tons
during 2000. During the year, capital expenditures were $91 million and
start-up costs were $20 million, all primarily related to our
structural and rail manufacturing facility and our steel scrap
substitute facility.
“Market conditions within the U.S. steel industry made 2001 our most
challenging year,” stated Keith Busse, president and chief executive
officer. “Due to the continued dumping of unfairly traded foreign steel
into the U.S. market, combined with the weakened U.S. economy, the
industry experienced historically low steel selling prices and tightened
margins. Numerous American steel related businesses filed for
bankruptcy during the past several years, although SDI remains one of a
very small group of American steel manufacturers that achieved
profitability for the year, and we look forward to what we believe will
be a much improved 2002.
“We have already experienced significant strengthening in our order
backlog. After reaching a low-water mark in the fourth quarter, spot
selling prices have now rebounded. A $20 increase announced in December
2001, which took affect in the first quarter 2002 has held, and we
should benefit from additional price increases throughout 2002.”
In June of 2001 the Bush Administration initiated a Section 201
action, which resulted in the U.S. International Trade Commission (ITC)
ruling that the U.S. steel industry had been seriously injured due to
increased steel imports. In March 2002, SDI hopes the Administration
will take action to provide comprehensive import relief, with expected
positive effects for the U.S. steel industry beginning in the second
quarter. Separately, as a result of trade case filings by SDI and other
American steel companies, the ITC in 2001 found injury by foreign
countries importing hot-rolled and cold-rolled sheet. These
determinations have led to duties on future imports of hot roll products
and are expected to lead to duties on cold-rolled sheet as well. Steel
Dynamics believes the outcome of these cases will help to stabilize the
steel marketplace by reducing the volume of unfairly priced imported
steel, thereby allowing domestic market pricing to return to more
profitable levels.
Busse concluded, “Steel Dynamics is one of the lowest cost steel
producers in existence today, with state-of-the-art production
facilities and extraordinary employee resources. We believe that we are
one of the best-positioned companies within our industry to most
quickly realize the anticipated positive benefits associated with an
improving economy, positive trade case results, and a potentially
favorable Section 201 ruling,”
Fourth Quarter Highlights
In the fourth quarter 2001, SDI reported its first quarterly
operating loss since achieving profitability in 1996, recording a net
loss of $3.9 million. SDI’s sales for the fourth quarter 2001 were $138
million, on consolidated shipments of 465,000 tons, in comparison with
sales of $152 million and consolidated shipments of 459,000 tons during
the same period in 2000.
SDI incurred a charge of $3.4 million related to the anticipated
uncollectable accounts receivable associated with the Metals USA
bankruptcy during the fourth quarter 2001, accounting for approximately
$0.05 of our fourth quarter reported loss per diluted share of $0.09.
Capital expenditures of $39 million and start-up costs of $3 million
were primarily related to our structural and rail manufacturing
facility.
Structural & Rail Mill Construction
In late May of 2001, SDI commenced construction of its structural and
rail manufacturing facility, located in Whitley County, Indiana.
Construction costs have remained within our capital budget and
construction is ahead of schedule. We are expecting to begin test
production of our structural products during the second quarter of 2002
and to initiate rail production during the first quarter of 2003. This
facility offers SDI an opportunity to complement its flat-roll and
fabricated steel businesses with additional high-margin products,
providing increased cyclical earnings stability through further market
diversification.
Financing Matters
On January 28, 2002, SDI and its Iron Dynamics subsidiary entered
into a settlement agreement with IDI’s senior secured bank lenders to
retire the existing IDI bank debt of approximately $59 million, subject
to satisfying certain conditions. The agreement requires SDI to pay $15
million in cash on February 1, 2002, to issue $22 million of Steel
Dynamics’ common stock in March 2002, and to make contingent future
payments retiring the balance of the obligation, if and to the extent
that IDI resumes operations and generates earnings, as defined in the
agreement.
SDI is also actively pursuing a plan of refinancing of the Steel
Dynamics’ senior secured and unsecured credit facilities and expects to
have the refinancing completed before the end of March 2002.
Steel Dynamics, Inc., based in Fort Wayne, Indiana, produces a broad
range of flat-rolled steel products, including light-gauge,
micro-alloyed and high-strength steels at its mini-mill in Butler,
Indiana. Products include hot-band, cold-rolled and coated steel sheet.
Conference Call webcast:
A conference call in which Steel Dynamics’ management will discuss
2001 fourth quarter and annual results is scheduled for 11:00am Eastern
Time on February 5, 2002. You are invited to listen to a live broadcast
of the conference call over the Internet, accessible from Steel
Dynamics’ home page at www.steeldynamics.com. A replay of the webcast will be available on the company’s home page for thirty days after the call.
Forward Looking Statements
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