Steel Dynamics, Inc. announced earnings of $45 million on net sales of $499 million for the third quarter of 2005.

Third Quarter Results—The $45 million earnings ($0.92 per diluted share) but are less than 2004's record quarterly results which generated earnings of $114 million ($2.01 per diluted share) achieved during a period of unusually strong industry conditions. Net sales of $499 million compare with sales of $635 million for the year-ago third quarter.

Consolidated shipments totaled 924,000 tons, up 3% from the third quarter of 2004 and also up 3% from the second quarter of 2005. SDI's average consolidated selling price was $540 per ton, down 24% from the third quarter of 2004 and down 11% from the second quarter of 2005. Average cost per ton of scrap charged was down 19% from the previous quarter.

Year-to-Date Results—Year-to-date 2005 earnings of $157 million ($3.05 per diluted share) are 26% lower than earnings of $213 million ($3.80 per diluted share) for YTD2004. Net sales of $1,615 million reflect a 5% increase compared to $1,545 million in the first nine months of 2004, primarily as a result of increased steel shipments.

Comments—"Overall, our third quarter performance was solid, in spite of a variety of challenges including higher natural gas and electricity costs and disruptions in production indirectly caused by Hurricane Katrina," said Keith Busse, President and CEO of Steel Dynamics. "On the other hand, we have seen positive developments in the steel marketplace.

"We have recovered from the shortage of hydrogen used by our Flat Roll Division for annealing, but we did experience somewhat lower margins for finished flat-roll products as we were unable to produce and ship cold-rolled, fully finished steel for several weeks. Although natural gas is a much less significant factor in our production process than for integrated steelmakers, we have incurred additional costs as a result of the recent spike in gas prices. Electrical energy purchased on the spot market saw increases in the third quarter as well, although much of our electricity consumption is purchased under long-term contract.

"On the positive side, compared to the first six months of this year, steel imports have slowed and steel service center inventories have adjusted to more normal levels, resulting in stronger factory order bookings and greater backlogs for our flat-rolled and structural steel divisions. Strong backlogs for wide-flange beams persisted through the quarter. The Structural & Rail Division again achieved record quarterly shipments and reduced its finished goods inventories significantly. Likewise, flat roll shipments were also strong. Pricing trends are positive for both of these product categories. New Millennium Building Systems, our joist-and-deck fabricating business, is experiencing robust demand and stronger pricing at both its Indiana and Florida facilities. After beginning operations in March 2005, the new Lake City, Fla., plant became profitable in August."

"The Bar Products Division experienced a slower quarter as shipping volume declined due to a fall-off in spot-market demand for our SBQ products. The Pittsboro team continues to make progress on new product certifications with major customers and in its negotiations for OEM annual contracts for 2006. We remain positive on the prospects for this segment of our business."

During the third quarter, the company replaced its $230 million senior secured revolving credit facility with a five-year $350 million facility. The new facility is secured by substantially all of the company's accounts receivable and inventories and also includes an option to increase the facility size by $100 million during the next five years. Costs related to this refinancing reduced the quarter's earnings by approximately $0.02 per diluted share.

In July the company completed the purchase of an additional 200,000 shares of its common stock, completing the repurchase programs authorized by the Board of Directors. During the past four quarters the company repurchased 7.5 million shares.

"Looking forward, we expect fourth quarter conditions to remain strong for the steel business," Busse said. "Demand has improved for beams as a result of stronger non-residential construction activity. We expect shipments for flat-rolled steel and building systems to remain strong and we expect some recovery in our bar-steel business. Overall, we are anticipating as much as a 20% increase in fourth quarter earnings."