Jan. 24, 2007 — Steel Dynamics, Inc. announced net income of $105 million on net sales of $840 million for the fourth quarter and net income of $397 million on net sales of $3.2 billion for the year 2006. Full year sales represent a 48% increase over 2005 net sales of $2.2 billion.

Fourth Quarter Results — The $105 million net income ($1.03 per diluted share) compares to net income of $65 million ($0.65 per diluted share) in the fourth quarter of 2005. Net sales of $840 million reflect a 47% increase over the fourth quarter of 2005.

Consolidated shipments were up 27% to 1.2 million tons compared to 920,000 tons in the fourth quarter of 2005. Compared to the third quarter of 2006, consolidated shipments were 6% lower. The average consolidated selling price per ton decreased to $720 from $733 in the third quarter, but was up 16% compared to the fourth quarter of 2005. The cost of steel scrap per net ton charged decreased $28 from the third quarter to the fourth quarter.

Full Year Results — The $397 million net income ($3.77 per diluted share) compares to 2005 net income of $222 million ($2.17 per diluted share), a 79% increase in net income. Per-share figures for all periods reflect a two-for-one stock split in the company's common stock effective November 20, 2006. Consolidated shipments grew 30% to 4.7 million tons.

All three of the company's Indiana steel mills established annual records for sales and profits. Each mill also achieved new production and shipping milestones. For the first time, the Flat Roll Division's annual shipments exceeded 2.5 million tons, the Structural and Rail Division topped one million tons, and Engineered Bar Products surpassed 500,000 tons.

Both steel mills that were acquired as a part of SDI’s merger with the Roanoke Electric Steel Corp. achieved record results in 2006. Roanoke contributed to Steel Dynamics' results for slightly less than three calendar quarters, following the merger's effective date of April 12, 2006.

In 2006, the company's operating income was $141 per ton shipped with an operating margin of 20%. SDI's 2006 average consolidated selling price per ton increased to $691 from $608 in 2005. During 2006, Steel Dynamics generated $404 million in cash flow from operations. Capital expenditures for the year were $129 million.

The company invested $247 million in 2006 to repurchase 9.4 million shares of common stock, post-split.

Comments — "2006 was an excellent year for Steel Dynamics," said Keith Busse, President and CEO. "During 2006 we were able to take advantage of numerous marketplace opportunities as a result of the production capabilities we've put into place over the past several years. With the exception of some softening of demand for flat-rolled steel in the fourth quarter due to market oversupply, the markets for our products were strong all year. With prices for steel scrap and energy costs remaining relatively stable or declining, and selling prices relatively strong, we were able to achieve stronger margins.

"The integration of Roanoke Electric Steel into Steel Dynamics is progressing extremely well, with a strong contribution to SDI's earnings from those operations starting in the third quarter. With the addition to our product mix of Roanoke's merchant bars and Steel of West Virginia's specialty structural steel products, as well as the strong growth in wide-flange beams and SBQ bars, Steel Dynamics ended 2006 as a much more diversified steelmaker. In 2005 two-thirds of our volume was in flat-rolled steel, but by the fourth quarter of 2006 flat rolled accounted for slightly less than half of our steel operations shipments. The strength of other steel products helped us offset lower volumes in flat rolled toward the end of the year."

Outlook — "As we look ahead to 2007, we are optimistic about our ability to continue our growth in sales and earnings, continuing to take advantage of our production assets and our capabilities to provide our customers with quality steel products tailored to meet their needs," Busse said. "The capital spending projects now underway in 2007 should increase our production capacity to nearly 6.5 million tons by the end of 2008.

“As for the current market conditions, we expect the inventory correction for flat-rolled steel to be resolved by the second quarter, and at this time foresee continued favorable market conditions in 2007 for other product categories related to non-residential building, commercial transportation, and commercial and industrial investment. SDI sees its first quarter 2007 earnings in the range of $0.85 to $0.90 per diluted share. Although the first quarter appears to be slightly softer than the fourth quarter due to continued weakness in the flat-rolled sector, it will still be stronger than the first quarter of 2006. All in all, should the economy remain strong and stable, 2007 could be another record year."