STEEL DYNAMICS, INC. 
By
Following a very strong performance in both the steel and metals recycling
segments for the first three quarters of 2008, the significant weakening in
order activity first seen by our Flat Roll Division and in metals recycling in
late September broadened to other steel operations as the fourth quarter
progressed. Compared to the third quarter, fourth-quarter 2008 steel shipments
of 942,000 were down 34 percent, ferrous metals shipments of 898,000 net tons
were down 49 percent, and non-ferrous metals shipments of 177 million pounds
were down 27 percent. Lower volumes combined with declining prices for all
business segments resulted in fourth-quarter sales of
For the fourth quarter, the company incurred a net loss of
A significant portion of the fourth-quarter loss was due to a non-cash,
unrealized hedging loss of
"It is strange to be reporting the best year in the company's history and
at the same time the company's worst quarter," said
"We believe that SDI is well positioned with our low, variable cost
structure and state-of-the-art facilities that are capable of cost-effectively
producing excellent, high-quality products. We are optimistic that, even if we
continue to encounter lackluster demand for steel and scrap for several
quarters, we will return to profitability in the first quarter and remain
profitable in 2009, assuming no recurrence of dramatic price swings such as
those experienced in the second half of 2008. Our very preliminary estimate is
that we could achieve earnings of
The company reduced total debt by
Operating Segment Information
The following highlights our fourth quarter and full-year 2008 results for each of SDI's three primary operating segments.
Steel Operations. Steel operations represented 63 percent of the company's fourth quarter net sales and 57 percent of company sales for the full year 2008. This segment includes five electric-arc-furnace (EAF) steel mills and related steel finishing and processing facilities. In addition to flat-rolled steel, the company's steel operations produce structural steel, merchant bars, special-bar-quality steel, and other specialty shapes.
Fourth quarter 2008 steel operations net sales were
The fourth quarter's average selling price per ton for steel operations
was
Metals Recycling and Ferrous Resources. This segment includes ferrous and
non-ferrous metals processing and trading by OmniSource Corporation and SDI's
Iron Dynamics scrap-substitute operation, which produces pig iron for use by
the Flat Roll Division. The segment also includes expenses related to the
Mesabi Nugget project, which is currently under construction. The segment's
net sales for the quarter were
Total ferrous shipments in the fourth quarter, including shipments to SDI's steel operations, were 898,000 tons and non-ferrous metals shipments were 177 million pounds. During the fourth quarter, the company's metals recycling operations supplied 439,000 tons of ferrous scrap to SDI's steel operations, or approximately 42 percent of the tonnage of ferrous scrap purchased by our mills during the quarter. For the year 2008, metals recycling operations supplied 2.3 million tons of ferrous scrap to SDI's steel operations, or approximately 41 percent of the tonnage of ferrous scrap purchased by our mills.
Steel Fabrication Operations. Steel fabrication operations includes New
Millennium Building Systems, which fabricates steel joists, trusses, and
decking used in the construction of non-residential buildings. Fourth quarter
net sales were
Forward-Looking Statements
This press release contains some predictive statements about future events, including statements related to conditions in the steel and metallic scrap markets, Steel Dynamics' revenue growth, costs of purchased 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
www.steeldynamics.com
Dial-in information is available on our Web site. An audio replay of the
Webcast will be available from the SDI Web site. No telephone replay will be
available.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Three Months Ended Twelve Months Ended Three Months
Ended
December 31, December 31, September 30,
2008 2007 2008 2007 2008
Net sales $1,210,434 $1,451,034 $8,080,521 $4,384,549 $2,563,943
Costs of
goods
sold 1,251,344 1,196,776 6,849,262 3,468,855 2,118,737
Gross profit
(loss) (40,910) 254,258 1,231,259 915,694 445,206
Selling,
general, and
administrative
expenses 48,334 52,623 267,688 150,865 67,459
Profit
sharing (9,207) 17,963 66,997 61,703 30,800
Amortization
of intangible
assets 10,919 5,416 41,334 11,972 10,765
Operating
income
(loss) (90,956) 178,256 855,240 691,154 336,182
Interest
expense, net
capitalized
interest 41,845 26,368 144,574 55,416 37,446
Other
(income)
expense, net (99) (4,705) (33,147) 5,500 (8,342)
Income (loss)
before income
taxes (132,702) 156,593 743,813 630,238 307,078
Income taxes (50,029) 58,723 280,427 235,672 114,070
Net income
(loss) $(82,673) $97,870 $463,386 $394,566 $193,008
Basic earnings
(loss) per
share $(.45) $.53 $2.45 $2.12 $.99
Weighted
average common
shares
outstanding 181,825 186,314 189,140 186,321 195,347
Diluted
earnings
(loss) per
share,
Including
the effect of
assumed
conversions $(.45) $.50 $2.38 $2.01 $.98
Weighted
average
common shares
and share
equivalents
outstanding 181,825 196,525 194,586 196,805 196,859
Dividends
declared per
share $.10 $.075 $.40 $.30 $.10
Note: All prior period share data has been adjusted to reflect the
company's two-for-one stock split effective
Steel Dynamics, Inc.
UNAUDITED SUPPLEMENTAL OPERATING INFORMATION
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Steel Operations*
Flat Roll Division 361,145 613,999 2,328,805 2,495,360
Structural and Rail
Division 228,132 279,158 1,095,095 1,174,776
Engineered Bar
Products Division 123,449 138,455 566,190 546,585
Roanoke Bar Division 94,374 141,788 530,452 595,041
Steel of West Virginia 45,788 69,111 264,695 283,568
The Techs 89,551 224,186 823,661 454,877
Shipments (net
tons) 942,439 1,466,697 5,608,898 5,550,207
Intracompany (51,803) (122,039) (447,729) (494,576)
External Shipments 890,636 1,344,658 5,161,169 5,055,631
Average Selling Price
(per net ton shipped) $ 913 $ 710 $ 973 $ 689
Production (net tons,
excluding The Techs) 760,307 1,242,136 4,780,083 5,023,273
Steel Fabrication Operations**
Joist and Deck (net
tons) 63,783 71,460 286,612 276,836
Intracompany (101) (761) (969) (4,237)
External Shipments 63,682 70,699 285,643 272,599
Average Selling Price
(per net ton shipped) $1,461 $1,339 $1,310 $1,305
Metals Recycling & Ferrous Resources ***
Ferrous Metals (net
tons) 897,922 833,779 5,553,540 1,090,758
Intracompany (438,532) (239,245) (2,270,777) (445,202)
External shipments 459,390 594,534 3,282,763 645,556
Non-ferrous (thousands
of pounds) 177,246 137,417 911,832 137,417
Iron Dynamics (net
tons) 52,009 61,427 256,388 246,702
2008 Quarterly Data
Steel Operations* First Second Third
Flat Roll Division 685,320 706,281 576,059
Structural and Rail Division 299,687 286,150 281,126
Engineered Bar Products
Division 147,948 145,085 149,708
Roanoke Bar Division 151,368 136,582 148,128
Steel of West Virginia 75,724 80,334 62,849
The Techs 262,011 262,908 209,191
Shipments (net tons) 1,622,058 1,617,340 1,427,061
Intracompany (130,685) (124,128) (141,113)
External Shipments 1,491,373 1,493,212 1,285,948
Average Selling Price
(per net ton shipped) $ 782 $ 1,011 $ 1,186
Production (net tons,
excluding The Techs) 1,372,364 1,368,071 1,279,341
Steel Fabrication Operations**
Joist and Deck (net tons) 68,606 76,018 78,205
Intracompany (273) (43) (552)
External Shipments 68,333 75,975 77,653
Average Selling Price
(per net ton shipped) $ 1,145 $ 1,227 $ 1,413
Metals Recycling & Ferrous Resources ***
Ferrous Metals (net tons) 1,391,382 1,506,902 1,757,334
Intracompany (463,893) (654,117) (714,235)
External shipments 927,489 852,785 1,043,099
Non-ferrous (thousands of
pounds) 238,788 254,147 241,651
Iron Dynamics (net tons) 67,994 66,727 69,658
* Steel Operations include the company's five steelmaking divisions and
The Techs, three flat roll galvanizing plants (acquired July 2007).
** Steel Fabrication Operations include the company's joist and deck
fabrication operations.
*** Metals Recycling & Ferrous Resources Operations include OmniSource
metals recycling operations (acquired October 2007), Recycle South
metals recycling operations (acquired June 2008) and Iron Dynamics,
the company's pig iron substitute production facility (Note: all Iron
Dynamics shipments are consumed internally).
Steel Dynamics, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2008 2007
(unaudited)
Assets
Current assets
Cash and equivalents $16,233 $28,486
Accounts receivable, net 502,932 714,123
Inventories 1,023,235 904,398
Deferred income taxes 23,562 10,427
Other current assets 150,746 38,795
Total current assets 1,716,708 1,696,229
Property, plant and equipment, net 2,072,857 1,652,097
Restricted cash 11,722 11,945
Intangible assets, net 616,459 514,547
Goodwill 770,438 510,983
Other assets 65,393 133,652
Total assets $5,253,577 $4,519,453
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $263,393 $378,849
Income taxes payable 4,107 25,870
Accrued expenses 209,697 150,687
Accrued profit sharing 62,561 53,958
Senior secured revolving credit facility,
matures 2012 366,000 239,000
Other current maturities of long-term debt 65,223 56,162
Total current liabilities 970,981 904,526
Long-term debt
Senior secured term A loan 503,800 481,250
7 3/8% senior notes, due 2012 700,000 700,000
6 3/4% senior notes, due 2015 500,000 500,000
7 3/4% senior notes, due 2016 500,000 -
4.0% convertible subordinated notes, due 2012 - 37,250
Other long-term debt 15,361 16,183
Total long-term debt 2,219,161 1,734,683
Deferred income taxes 365,496 301,470
Minority interest 8,427 11,038
Other liabilities 65,626 38,540
Commitments and contingencies
Stockholders' equity
Common stock 545 542
Treasury stock, at cost (737,319) (457,368)
Additional paid-in capital 541,686 553,805
Other accumulated comprehensive income (loss) (1,411) 21
Retained earnings 1,820,385 1,432,196
Total stockholders' equity 1,623,886 1,529,196
Total liabilities and stockholders'
equity $5,253,577 $4,519,453
Steel Dynamics, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Operating activities:
Net income (loss) $(82,673) $97,870 $463,386 $394,566
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation and
amortization 52,599 42,039 208,752 138,136
Unamortized bond
premium - - - (3,350)
Equity-based
compensation 4,302 1,855 14,278 8,073
Deferred income
taxes 21,815 14,321 11,923 12,642
Minority interest (512) 62 (2,611) (386)
Changes in certain
assets and
liabilities:
Accounts
receivable 618,526 78,858 310,985 57,653
Inventories 334,458 (1,063) (18,667) (119,577)
Accounts
payable (318,720) (149,429) (88,451) (48,835)
Income taxes
payable (27,508) (11,926) (21,765) (10,684)
Other working
capital (173,109) 7,249 (102,530) (35)
Net cash provided by
operating
activities 429,178 79,836 775,300 428,203
Investing activities:
Purchases of
property, plant
and equipment (101,872) (139,353) (412,497) (395,198)
Acquisition of
businesses, net of
cash acquired - (436,444) (271,159) (848,071)
Purchases of
securities - (3,584) (20,373) (3,584)
Sales of securities - - 32,758 -
Other investing
activities (138) 216 2,038 224
Net cash used in
investing
activities (102,010) (579,165) (669,233) (1,246,629)
Financing activities:
Issuance of current
and long-term
debt 655,000 1,362,053 2,845,900 3,157,053
Repayment of
current and
long-term
debt (952,213) (733,421) (2,402,033) (1,761,807)
Debt issuance
costs - (7,266) (7,544) (17,857)
Issuance of common
stock (net of expenses)
and proceeds from
exercise of stock
options, including
related tax effect (1,061) 9,187 18,422 29,446
Purchase of treasury
stock (16,484) (100,472) (501,777) (533,654)
Dividends paid (18,312) (13,077) (71,288) (55,642)
Net cash provided by
(used in)
financing
activities (333,070) 517,004 (118,320) 817,539
Increase (decrease)
in cash and
equivalents (5,902) 17,675 (12,253) (887)
Cash and equivalents
at beginning of
period 22,135 10,811 28,486 29,373
Cash and equivalents
at end of period $16,233 $28,486 $16,233 $28,486
Supplemental disclosure information:
Cash paid for
interest $75,562 $33,470 $152,263 $56,391
Cash paid for federal
and state income
taxes $25,655 $24,800 $341,502 $208,321
SOURCE Steel Dynamics, Inc.
