Steel Dynamics, Inc. announced net income of $82 million on net sales of $600 million for the fourth quarter, and net income of $295 million on net sales of $2.1 billion for the year 2004.

Fourth Quarter Results—Net income of $82 million ($1.47 per diluted share) compares to $17 million ($0.31 per diluted share) in the fourth quarter of 2003. Net sales of $600 million reflect an increase of 115% over the fourth quarter of 2003.

Consolidated shipments in the fourth quarter increased 10% to 846,000 tons compared to 772,000 tons in the fourth quarter of 2003. Compared to the third quarter of 2004, consolidated shipments were 6% lower. The average consolidated selling price per ton increased to $710 from $706 in the third quarter, and was up 96% over the fourth quarter of 2003.

The cost of steel scrap per net ton charged increased $40 compared to the third quarter. Natural gas and electrical energy costs also increased in the quarter. These costs were higher than expected and resulted in lower margins compared to the third quarter of 2004. Fourth quarter results were also affected by a special performance bonus that was awarded to all employees as well as corporate charitable contributions of $1.5 million, which reduced diluted EPS by about $0.05 per common share. Overall, the fourth quarter was the company's second strongest quarter to date, second only to 2004's third quarter.

Full Year Results—Net income of $295 million ($5.27 per diluted share) compares to 2003 net income of $47 million ($0.91 per diluted share), an increase of 479%. Net sales of $2.1 billion are more than double 2003 net sales of $987 million.

Operating income was $148 per ton shipped with an operating margin of 24%. After staffing new operations, employment increased to 1,620 and revenues per employee reached $1.4 million. All three of the company's steelmaking operations established records for shipping volumes, sales, and profits. Consolidated shipments grew 22% to 3.4 million tons.

Highlights for the year included the quick start-up of the Bar Products Division in Pittsboro, Ind., which achieved profitability in its fourth month of operation. In its first year of operation, this division shipped 318,000 tons of steel and achieved a return on investment greater than 25%. During the year, the division completed installation of a second rolling mill, allowing it to diversify its production capabilities to include merchant bar and reinforcing bar (rebar). The new equipment underwent limited commissioning as strong demand for large-diameter special bar quality (SBQ) and medium bar quality (MBQ) rounds kept the mill busy shipping only those higher value-added products.

In 2004, the Flat Roll Division continued to be the dominant contributor to SDI's strong financial results as it increased shipments of hot-rolled and finished steels for the year to 2.4 million tons. The division also fully commissioned two new, highly profitable production lines in 2004. The new paint line achieved a run rate exceeding its rated production capacity of 240,000 tons per year and the Jeffersonville, Ind., galvanizing plant that was acquired in 2003 achieved rated capacity. The Jeffersonville plant produces lighter gauges of galvanized steel than the company previously offered. Both the paint line and the galvanizing line contributed to the Flat Roll Division's record profits.

The Structural & Rail Division, in its second full year of operations, achieved record results in 2004. Although steel demand for non-residential construction remained lackluster in 2004, the company continued to penetrate the Midwest and Central Canadian wide-flange beam markets and increased its shipments by 59% to 734,000 tons.

New Millennium Building Systems also achieved record shipments and operating income in 2004. The company's new production facility in Lake City, Fla., is ahead of schedule and could begin operating as soon as late February or early March of this year.

Iron Dynamics operated at approximately 50% of its capability, and recorded its first pre-tax net income on a quarterly basis. It is expected to further ramp up production in the first quarter of 2005. Mesabi Nugget LLC, in which SDI is an investor, is moving forward with its efforts to obtain an air permit for its first production facility to be built in either Minnesota or Indiana.

Comments—"2004 was an extraordinary year for Steel Dynamics," said Keith Busse, President and CEO. "Strong steel markets led to historically high selling prices and margins despite substantially increased raw materials costs. In spite of dramatically escalating raw material costs the company was able to maintain strong profit margins through the implementation of raw material surcharges, which allowed us to recover most of our raw material cost increases. Our results were also enhanced by the contributions of our new production facilities that were acquired or built, and started up in late 2003 and early 2004, thereby expanding our steel product portfolio and increasing our volume of steel shipments.

"As we look ahead to 2005, we are optimistic about the sustainability of favorable domestic steel market conditions. Our existing steel manufacturing capacity will permit us to increase shipments by an additional 10% in 2005, allowing us to take advantage of the anticipated favorable market climate. While our visibility into the year is limited, our current outlook is for a strong first half. Late in the first quarter we are likely to enjoy lower costs as the price of steel scrap declined in December, January and February, and we currently expect selling values to improve slightly late in the first quarter or early second quarter. While we note some recent reports suggesting the adverse effects of Chinese steel exports on U.S. steel producers, we are equally mindful of those that disagree with this assessment, and on balance, we believe that this has created unwarranted anxiety about 2005. We feel that there is a high likelihood that U.S. producers will continue to benefit this year from strong global and domestic steel demand.

"We believe that our business, and the majority of the U.S. steel industry, will not be negatively affected in the near term by China's efforts to moderate its growth rate or by steel exported from China. On the contrary, we believe China for a number of years will require vast amounts of steel for its own use and growth and will not have the capacity to satisfy its own needs for flat-roll steel, wide-flange beams, and SBQ bars, the types of steel that Steel Dynamics makes," Busse said.