Steel Dynamics Sees Strong Number for Quarter, Year

Steel Dynamics, Inc. announced net sales of $2.2 billion for the year 2005, a 2 percent increase over 2004 net sales of $2.1 billion. Net income was $222 million, compared to 2004 net income of $295 million. For the fourth quarter net income was $65 million, compared to $82 million in the fourth quarter of 2004. Net sales for the fourth quarter were $570 million, 5 percent lower than the fourth quarter of 2004.

In 2005 the company's operating income was $109 per ton shipped with an operating margin of 18 percent.

Consolidated shipments for 2005 grew 5 percent to 3.6 million tons. Consolidated shipments in the fourth quarter were up 9 percent to 920,000 tons compared to 846,000 tons in the fourth quarter of 2004. Compared to the third quarter of 2005, fourth quarter consolidated shipments were essentially the same. The average consolidated selling price per ton shipped in the fourth quarter increased 15 percent to $619 from $540 in the third quarter, but was 13 percent lower than the $710 achieved in the fourth quarter of 2004. The cost of steel scrap per net ton charged increased $41 from the third quarter to the fourth quarter. Natural gas and electrical energy costs also increased substantially quarter over quarter.

The company's 2005 capital expenditures of $63 million were somewhat lower than initially planned as several projects were delayed. These and other contemplated growth opportunities will likely increase SDI's capital expenditures in 2006.

"2005 was a very strong year for Steel Dynamics," said Keith Busse, president and CEO. "Although steel demand fell off sharply in the first half of the year, steel shipments rebounded in the second half of the year with backlogs remaining strong as we move forward in 2006. Overall, though, we were able to maintain strong profit margins for the year in spite of selling prices and steel scrap costs fluctuating dramatically throughout the year."

"Looking ahead to 2006, we are optimistic about the sustainability of favorable domestic steel market conditions, especially for construction steels and bar products," Busse said. "The U.S. economy remains strong which suggests steel demand should continue to be strong across most steel-consuming market sectors. Steel inventories appear to be in line now, if not low by historical standards, and consequently we expect SDI's steel shipments to continue to grow this year. SDI anticipates first quarter results to be relatively unchanged, if not up slightly, from the fourth quarter. Selling values could rise slightly, but it is too soon to make that call. We expect scrap prices on a linked-quarter basis will be relatively unchanged.

"We currently expect the previously announced merger of Roanoke Electric Steel with Steel Dynamics to close by the end of the first quarter of 2006. Roanoke posted excellent operating results in its fiscal year ended October 31. We believe that together, the two companies can achieve operating synergies and produce even greater returns which will be additive to SDI's growth. Combining Roanoke's capacity with SDI's recent capacity improvements, our overall steelmaking capability could approach 5 million tons in 2006."