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Steel Dynamics Reports Strong 1st Quarter Results

04/21/2004 - Steel Dynamics, Inc. reported first quarter 2005 earnings of $61 million on net sales of $571 million.

Steel Dynamics, Inc. reported first quarter 2005 earnings of $61 million on net sales of $571 million.

"Steel Dynamics had a good first quarter with consolidated shipments up slightly from the fourth quarter," said Keith Busse, President and CEO of Steel Dynamics. "Because market demand for flat-rolled steel remained weaker than initially expected, flat-roll selling prices declined from fourth-quarter levels. Our average consolidated selling price decreased 6%, from $710 in the fourth quarter to $669 in the first quarter, principally due to lower flat-rolled pricing."

"Our average steel scrap and scrap substitute costs declined by $16 per ton from the fourth quarter, but not sufficient to offset lower selling prices, resulting in narrower profit margins.

“On the bright side, we bought a significant amount of steel scrap in the first quarter as scrap prices declined, potentially allowing for stronger margins in the second quarter as we consume that material. In the second quarter we anticipate that pricing will be flat, although we expect increased shipping volumes in our bar and structural operating units. We expect second-quarter results to be substantially stronger than the first quarter as a result of lower steel scrap costs," said Busse.

The $61 million earnings ($1.12 per diluted share) compares to $32 million ($0.58 per diluted share) in the first quarter of 2004 and $82 million ($1.47 per diluted share) in the fourth quarter. Earnings were up 90% percent from the first quarter of 2004 and were higher than any prior year's first quarter. Net sales of $571 million represent an increase of 49% from the first quarter of 2004, but were 5% lower than the fourth quarter of 2004.

Cash flow from operations remained strong, increasing to $55 million, compared to $11 million in the first quarter of 2004 and $41 million in the fourth quarter of 2004.

First quarter consolidated shipments of 853,000 tons were 7% higher than the first quarter of 2004 and 1% higher than the fourth quarter of 2004. Shipments of flat-rolled and bar steel declined modestly from the fourth quarter, while structural steel and joist-and-deck shipments increased.

Operating highlights for the first quarter included the start-up of joist fabrication and shipments from the New Millennium plant in Lake City, Fla., where new crews are quickly ramping up production. The Structural & Rail mill continued its shipments of industrial-grade rail and commissioned additional structural products in the quarter. The Iron Dynamics Division continued pig-iron production at a rate of about 20,000 tonnes per month. Temporary equipment problems encountered in February at the Bar Products mill and the Flat-Roll mill were quickly resolved, and did not significantly reduce the mills' overall output for the quarter. Currently, all our facilities are in excellent position to take advantage of the expected seasonal increase in demand in the steel markets.

During the quarter the company repurchased an additional 2.1 million shares of its common stock, thus completing the repurchase of the entire 5 million shares authorized by the Board of Directors when it approved the company's 2004 Share Repurchase Program on October 26, 2004. Effective April 19, 2005, however, the Board granted approval to repurchase an additional 2.5 million shares under its Share Repurchase Program.