Steel Dynamics Updates Third Quarter Earnings Guidance
08/31/2007 - Steel Dynamics says third-quarter earnings could be in an updated range of $1.02 to $1.07 per diluted share, but says its near-term market assessment remains relatively unchanged from its most recent news release in July.
Steel Dynamics, Inc. is adjusting its earnings guidance for the third quarter of 2007 based on required purchase accounting adjustments related to the July 2, 2007 acquisition of The Techs.
"At the time of our July guidance, we suggested that we would update our estimates, by the end of August, if necessary, for certain purchase accounting charges related to The Techs acquisition," said Keith Busse, Chairman and CEO. "The company is still in the process of determining final purchase price allocations for The Techs acquisition and the resulting impact on our third-quarter earnings. However, based on current estimates, we believe third-quarter earnings could be in an updated range of $1.02 to $1.07 per diluted share."
Commenting on current steel industry conditions, Busse noted that the company sees no significant changes from the market assessment that it had offered at the time of its July 23 news release and subsequent conference call.
"Flat-rolled steel market conditions are improving, resulting in steady order activity and moderately increasing selling values,” said Busse. “Structural and bar steels continue to experience solid bookings and pricing strength. Order rates for fabricated building products remain strong.
“Lower steel scrap costs for the third quarter, as we mentioned previously, will have a positive impact on the quarter's results due to our favorable scrap inventory position, and we expect the moderate increases in scrap pricing seen recently not to seriously impact our profit margins in the near term," Busse said.
“Taking a longer view, we remain optimistic that 2007 will be another record-setting year for Steel Dynamics in steel shipments, revenues, and earnings,” said Busse. “We continue to benefit from our diversified product mix, new product offerings, added production capacity, low cost-structure, effective scrap procurement programs, and continued commercial acceptance of our steel products.
“With the addition of The Techs for the second half of the year, we will significantly increase our market share in value-added hot-dipped galvanized steel products,” Busse said. “We continue to make investments to support our future growth, with a recently announced caster project at the structural mill expected to bring our annual steel production capacity to 6.7 million tons by 2009, plus the capability of The Techs facilities to process an additional one million tons of flat-roll steel.”
In other company news, the Board of Directors approved the regular quarterly dividend of $0.10 per share as well as a continued special quarterly dividend of $0.05 per share for the third and fourth quarters of 2007.
The Board of Directors also approved an increase of 5 million shares to the existing share repurchase program. As of August 24, 2007, approximately 6.7 million shares remained available for repurchase after including the additional authorized shares. From July 1 through August 24, the company repurchased approximately 3.2 million shares at a cost of approximately $125 million. Purchases of the shares of the company's common stock are made based on the market price, the nature of other investment opportunities and growth projects, expected cash flows from operations, and other general and industry- specific economic conditions.
