Steel Dynamics, Inc. announced record third quarter earnings of $114 million on record net sales of $635 million, and net income $213 million on net sales of $1545 million for the third quarter and nine months ended Sep. 30, 2004, respectively.

Third Quarter Results—Record quarterly earnings of $114 million ($2.01 per diluted share) compare to net income of $9.2 million in the third quarter of 2003. Earnings exceeded the company's earnings for the first half of the year, and were greater than any prior year. Net sales, a record $635 million, represent a 21% increase from the second quarter of 2004, and are 150% higher than the third quarter of 2003. Consolidated shipments of 898,000 tons were 21% higher than the third quarter of 2003.

SDI's consolidated average selling price was $706 per ton for the quarter, which was $115 per ton higher than the second quarter of 2004. Scrap costs per net ton charged were $250, approximately $23 per ton higher than the second quarter of 2004 and approximately $122 per ton higher than third quarter of 2003.

Nine Month Results—Net income of $213 million ($3.80 per diluted share) represents a seven-fold increase over 2003. Net sales, $1.5 billion, compare to net sales of $708 million for the first nine months of 2003. Year-to-date consolidated shipments of 2.6 million tons were 26% higher than the first nine months of 2003.

Comments—"Not only did the third quarter set company records for both sales and earnings," said Keith Busse, President and CEO of Steel Dynamics, "but several of our operations set monthly and quarterly records for both production and shipments. As expected, the combination of greater shipping volumes, higher steel selling prices, and continued effective cost control produced profit margins for the third quarter that were well above historical levels. Our steelmaking operations achieved a record quarterly operating profit of $216 per ton shipped.

"Although SDI's extraordinary third-quarter results arose in part from strong market conditions, we believe structural changes in the domestic steel industry as well as SDI's stronger competitive position have set the stage for sustainable profits at higher levels than we have achieved in the past. Some of the initiatives that have strengthened our market position include a growing volume of shipments made possible by recently added production capacity, an increasing diversity of steel-product offerings that serve new markets, and an improving mix of products with an emphasis on more value-added, finished steels," Busse said.

Recapitalization—Since the spring of 2002, Steel Dynamics has successfully recapitalized its balance sheet, achieving greater financial flexibility and broader access to the equity and financial markets. The company has reduced its long-term debt-to-equity ratio from close to 60% during 2001 to 40% at Sep. 30, 2004. During the second week in October the company further reduced this ratio to 35% with the repayment of $100 million on its now undrawn $230 million senior secured revolving credit facility.

Outlook—Although SDI foresees steel pricing in the fourth quarter softening somewhat, with scrap prices remaining high by historical standards, the company nevertheless expects strong fourth quarter results. SDI expects 2004 net sales to exceed $2 billion, more than double 2003 net sales. The company anticipates fourth-quarter earnings in the range of $1.55 to $1.75 per diluted share, slightly higher than the earlier estimate. The company notes that it will be replacing some of last year's year-end supply agreements with agreements containing more favorable terms that should result in increased profitability related to these shipments.

"With our steel-producing operations continuing to expand production and shipments in 2005, we believe next year can be another strong year for SDI,” comments Busse. “After an increase in steel shipments of about 25 percent in 2004, next year's volume could increase another 10%, with annual shipments approaching 4.0 million tons".