Exhibit 99.1
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Press Release |
6714 Pointe Inverness Way, Suite 200 Fort Wayne, IN 46804-7932 260.459.3553 Phone260.969.3590 Fax |
Steel Dynamics Reports Strong Sales and Earnings for First Quarter
FORT WAYNE, INDIANA, April 16, 2007— Steel Dynamics, Inc. (NASDAQ-GS: STLD) today announced first quarter earnings of $102 million, or $1.01 per diluted share, an increase of 34 percent when compared to $76 million in the first quarter of 2006. Net income per share was relatively unchanged from the fourth quarter. Revenues increased 30 percent to $866 million from $666 million in the first quarter of 2006, largely due to the acquired Roanoke facilities not being included in first quarter 2006 results. First quarter consolidated shipments of 1.3 million tons were 19 percent higher than the first quarter of 2006 and 8 percent higher than the fourth quarter of 2006. Three of the company’s long products divisions each achieved record shipments in the first quarter due to continued strong demand within the non-residential construction and industrial markets.
“The first quarter was another excellent quarter for Steel Dynamics,” said Keith Busse, President and CEO of Steel Dynamics. “First quarter results came in comfortably above our most recent guidance of $0.94 to $0.98 per diluted share. Operating results were strong at each of our mills, with sustained strength in the long products markets and continued recovery in the flat rolled market. SDI’s operating margin was 20 percent in the first quarter, and cash flow from operations was $148 million. The cost of ferrous resources increased moderately during the quarter. However, higher scrap costs were somewhat offset by scrap surcharges, increased shipping volumes, and product mix.
First quarter operating profit per ton shipped was $136, down from $150 in the fourth quarter of 2006. Market softness for flat-rolled steel caused the first quarter’s average consolidated selling price to decrease to $689 per ton shipped, compared to $720 for the fourth quarter. The decline in average selling price was principally offset by cost declines due to mix, cost improvement, and cost compression. Average scrap costs were up $15 per net ton charged and were a factor in the operating margin decline.
In January, Flat Roll Division shipments began their recovery from the fourth quarter’s slower pace of 581,000 tons, reaching 612,000 tons for the first quarter. During the quarter the Iron Dynamics Division performed well, feeding 56,000 tonnes of liquid pig iron and hot-briquetted iron into the Flat Roll Division’s electric-arc furnaces. Order entry rates remain steady for flat-rolled products for the second quarter with prices increasing moderately due to improving market conditions. All of SDI’s long products divisions (52 percent of shipments in the first quarter) are experiencing strong shipping rates, increased selling values, and solid order books.
“Our outlook for the second quarter remains positive,” Busse said. “Our current expectation is for earnings to be in the range of $0.95 to $1.00 per diluted share, after taking into consideration an estimated reduction of $0.08 per diluted share due to the redemption of our $300 million 9½% Senior Unsecured Notes. The cost for ferrous resources for delivery mid-to-late second quarter is trending down, which should provide some relief from the margin compression we expect to experience early in the quarter.
“Just over a year ago we completed the merger of the Roanoke Electric Steel Corporation into Steel Dynamics,” Busse said. “We are very pleased with the integration of the Roanoke operations with SDI, which began with the approval of the merger by Roanoke shareholders on April 11, 2006. Since the date of the merger, both of the steelmaking operations we acquired, the Roanoke Bar Division and Steel of
West Virginia, Inc., have produced at record levels, achieving shipments totaling 941,000 tons over the last four quarters. The Roanoke acquisition has made a positive contribution to our revenue and operating income while providing SDI with a more diversified product mix.”
In April, the company completed an offering of unsecured $500 million 6¾% Senior Notes due 2015. A portion of the proceeds from this offering will be used to redeem the company’s $300 million 9½% Senior Unsecured Notes due 2009 on May 3, 2007. The remainder of the proceeds will be used to repay amounts outstanding on the company’s revolving credit facility and for general corporate purposes. During the first quarter of 2007, the company purchased approximately 2.8 million shares of its common stock in open market trades, after which approximately 2.9 million shares remained available for purchase pursuant to the company’s current repurchase program.
Forward-Looking Statements
This press release contains some predictive statements about future events, including statements related to conditions in the steel marketplace, Steel Dynamics’ revenue growth, costs of raw materials, future profitability and earnings, and the operation of new or existing facilities. These statements are intended to be made as “forward-looking,” subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. Such predictive statements are not guarantees of future performance, and actual results could differ materially from our current expectations.
Factors that could cause such predictive statements to turn out other than as anticipated or predicted include, among others: changes in economic conditions affecting steel consumption; increased foreign imports; increased price competition; difficulties in integrating acquired businesses; risks and uncertainties involving new products or new technologies; changes in the availability or cost of steel scrap or substitute materials; increases in energy costs; occurrence of unanticipated equipment failures and plant outages; labor unrest; and the effect of the elements on production or consumption.
In addition, we refer you to SDI’s detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently, as set forth in our most recent Annual Report on Form 10-K and in other reports which we from time to time file with the Securities and Exchange Commission, available publicly on the SEC Web site, www.sec.gov, and on the Steel Dynamics Web site, www.steeldynamics.com
Forward-looking or predictive statements we make are based on our knowledge of our businesses and the environment in which they operate as of the date on which the statements were made. Due to these risks and uncertainties, as well as matters beyond our control which can affect forward-looking statements, you are cautioned not to place undue reliance on these predictive statements, which speak only as of the date of this press release. We undertake no duty to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Conference Call and Webcast
On Tuesday, April 17, 2007 at 11:00 am EDT, Steel Dynamics will host a conference call in which Steel Dynamics’ management will discuss first quarter 2007 results. You are invited to listen to the live audio broadcast of the conference call over the Internet, accessible from Steel Dynamics’ Web site:
www.steeldynamics.com
Dial-in information is available on our Web site. No telephone replay will be available. An audio replay of the Webcast will be available from the SDI Web site.
Contact: Fred Warner, Investor Relations Manager, (260) 969-3564 or fax (260) 969-3590
f.warner@steeldynamics.com
Steel Dynamics, Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
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Three Months Ended |
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Three Months Ended |
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March 31, |
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December 31, |
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2007 |
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2006 |
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2006 |
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Net sales |
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$ |
865,674 |
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$ |
665,878 |
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$ |
839,800 |
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Costs of goods sold |
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649,271 |
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506,391 |
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610,654 |
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Selling, general, and administrative expenses |
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45,092 |
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28,375 |
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53,872 |
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Operating income |
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171,311 |
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131,112 |
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175,274 |
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Interest expense |
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7,246 |
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8,136 |
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8,498 |
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Other income, net of other expense |
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(715 |
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(681 |
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(1,615 |
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Income before income taxes |
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164,780 |
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123,657 |
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168,391 |
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Income taxes |
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62,616 |
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47,608 |
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63,325 |
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Net income |
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$ |
102,164 |
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$ |
76,049 |
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$ |
105,066 |
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Basic earnings per share |
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$ |
1.06 |
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$ |
0.87 |
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$ |
1.14 |
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Weighted average common shares outstanding |
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96,316 |
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87,034 |
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92,545 |
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Diluted earnings per share, including effect of assumed conversions |
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$ |
1.01 |
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$ |
0.76 |
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$ |
1.03 |
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Weighted average common shares and share equivalents outstanding |
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101,637 |
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100,976 |
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102,297 |
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Dividends declared per share |
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$ |
.15 |
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$ |
0.10 |
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$ |
.15 |
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Note: All prior period share data has been adjusted to include the company’s two-for-one stock split effective November 20, 2006.
Note: First quarter 2007 weighted average common shares outstanding were impacted by the company’s repurchase of 2.8 million shares of its common stock during the quarter and basic weighted average common shares outstanding was also impacted by the company’s issuance of approximately 5.0 million shares due to the conversion of a portion of its 4.0% subordinated convertible notes in late December 2006.