Steel Dynamics (STLD)

In October, the company gave qualitative guidance concerning fourth quarter 2009 estimated results, and indicated an expectation for a slight easing in sheet-related operating rates, which would result in somewhat lower earnings than those achieved during the third quarter.  The company also suggested other factors which could, and did, impact fourth quarter earnings, including lower shipments and margin compression at its metals recycling operations, caused by the sharp declines in transaction prices experienced early in the quarter.

“Encouragingly, though, recent order entry activity has been robust at our flat rolled and SBQ bar operations, and pricing has begun to move in a positive direction,” stated Keith Busse, Chairman and Chief Executive Officer. “Yet, sustainability remains a question mark.

“As stated previously, our operations remain capable of responding quickly to meet renewed demand for our products, and we demonstrated this ability in the second half of 2009 at our sheet product locations and our metals recycling facilities, “said Busse.  “Our employees have put forth an incredible effort to continue to reduce costs and work more effectively.  I applaud their innovation and achievement, and look forward to an economic environment in which we can fully capitalize on our abilities.”

Third quarter net sales of $1.2 billion increased significantly from $792 million in the second quarter of 2009, up 48 percent, but were down 54 percent from $2.6 billion when compared to the third quarter of 2008, a period when pricing reached historical peaks. Sequentially, shipping volumes in all segments except fabrication were up in the third quarter, as were selling prices. Steel shipments for the third quarter were 1.2 million tons, 41 percent higher than the second quarter. SDI’s average steel selling price for the third quarter increased $33 per ton, to $627 from $594 per ton in the second quarter. Average scrap cost per net ton charged increased $49 compared to the second quarter. This further demonstrates the excellent cost compression achieved by both increased volume and team effort. In metals recycling, OmniSource’s ferrous metals shipments were 1.3 million tons, up 54 percent from the second quarter, and nonferrous shipments were 217 million pounds, up 28 percent from the second quarter.

“In the third quarter, the company’s steel operations produced operating income of $128 million, or $105 per ton, while OmniSource made significant strides in earnings growth, resulting in operating income of $50 million during the quarter,” said Keith Busse, Chairman and CEO. “I salute SDI’s employees as these results are testament to our focus on efficient operations and cost control throughout the company. Our steelmaking divisions all produced pre-tax profits in the quarter, including the Structural and Rail Division which continues to face very challenging conditions in the construction marketplace. Our steel fabricating operations showed an operating loss of $3 million on continued weakness in non-residential construction.

“Current business conditions remain relatively steady. Orders for flat-rolled steel products continue to be strong; merchant, specialty and engineered bars are reasonably good; but structural steel backlogs remain weak. Our flat-roll steel business, inclusive of The Techs, continues to run at near full capacity utilization rates, while the bar divisions are running at 60 to 70 percent of capacity. The Structural and Rail Division has seen modest improvement, with utilization now in the low thirty-percent range, which is now being calculated on the basis of its expanded annual production capacity of 1.8 million tons. OmniSource has experienced

“Since we announced our preliminary earnings views, we have seen continued strength in orders for flat-rolled steel and stronger volumes in metal recycling,” said Keith Busse, Chairman and CEO.  “Earlier in the quarter, it was uncertain as to whether the strength in flat-rolled order entry could be maintained; encouragingly, orders have remained strong.  Both the Flat Roll Division and The Techs have continued to experience strong order entry and are achieving excellent operating results.  The Butler mill broke previous hot-band production records in August, producing at an annualized rate of 3 million tons, benefiting from mill modifications that were completed in early July.  The order book continues to be solid, with bookings through October for value-added flat-rolled products.

“OmniSource is benefiting from increased demand for and increased flows of recycled ferrous scrap as domestic steel producers become more active buyers.  As we indicated in July, we expect OmniSource to be profitable for the year as a result of significant improvements in processing volume and better margins due to higher facility utilization, better cost control, and more favorable pricing.

“The outlook for the fourth quarter remains uncertain, as the economy at this point appears to be fragile in its rather slow recovery mode.  The most difficult part of our business remains our long-products steel divisions and our fabrication operations whose recovery awaits stronger construction activity.  We have not yet seen signs of improvement in non-residential building or gains from government stimulus.  Regarding the outlook for flat-roll steel, we believe it will still take a few months to determine if credit markets will continue to improve, allowing consumers to be more inclined to make major purchases, such as demonstrated in the “Cash for Clunkers” program.  If on the other hand we begin to see steel and finished-product inventories building, flat-roll utilization could slow later in the year.

“Steel Dynamics continues to be in an excellent position to take advantage of any improvement in order flow for steel and recycled metallics.  Our production and processing facilities are in top-notch operating condition, and are ready to respond to increased demand.  With our long-products divisions modestly profitable at very low utilization rates, any improvement in volumes can have a very positive impact.” Busse said.

During June 2009, the company issued 31,050,000 shares of its common stock at a public offering price of $13.50 and issued $287.5 million of 5.125% convertible notes due 2014. Net proceeds of slightly more than $675 million were used to repay a term loan of $552 million and for other general purposes. During this time frame, the company also amended its senior secured credit agreement, obtaining greater financial covenant flexibility through 2010. There was no net impact to the second quarter’s loss per diluted share due to these transactions, as the weighted average increase in outstanding shares was offset by certain related transaction expenses of approximately $3.5 million.

Net sales for the second quarter of 2009 were $792 million, 3 percent lower than net sales of $815 million in the first quarter 2009. Compared to the second quarter of 2008, net sales were down 67 percent due to much lower volume and lower selling values for steel and recycled metals. Steel shipments for the second quarter were 886,000 tons, 45 percent below second quarter 2008 shipments of 1.6 million tons. SDI’s average steel selling price for the second quarter of 2009 declined $126 per ton, to $594 from $720 per ton in the first quarter. Average scrap cost per net ton charged decreased $79 compared to the first quarter. In metals recycling, OmniSource’s ferrous metals shipments were 840,000 tons, down 44 percent from the second quarter of 2008, and nonferrous shipments were 170 million pounds, down 33 percent.

“In the second quarter, the company’s steel operations produced operating income of $36 million, with overall capacity utilization improving to approximately 50 percent, despite continued low operating rates at the long-products divisions,” said Keith Busse, Chairman and CEO. “The Structural and Rail Division operated at about 25 percent of current capacity. In spite of this depressed operating environment, the division achieved an operating profit for the quarter.

“We are very pleased to report that OmniSource generated operating income for the quarter, with May and June results offsetting April losses. The increase in demand for ferrous and nonferrous materials, coupled with stronger material flows and a reduced cost structure, position OmniSource to continue to improve performance in the second half of 2009.  We believe OmniSource will be profitable for the full year.

“New Millennium Building Systems, our joist-and-deck fabricating operation, continues to face stiff headwinds as the non-residential building construction market remains very weak. This resulted in basically breakeven operations for the quarter. Joist-and-decking shipments of 35,000 tons were off 53 percent from the year-ago quarter.

The company had provided qualitative guidance in April suggesting the possibility of improving results in the second quarter, indicating that the second quarter could be close to breakeven, possibly showing a small loss or a small profit. The expected small loss in the second quarter marks an improvement compared to a reported first-quarter loss of $0.48 per diluted share.

“As we expected early in the quarter, we have experienced some improvement in flat-roll steel order entry and shipping volumes as the quarter progressed while, at the same time, pricing continued to erode,” said Keith Busse, Chairman and CEO. “I do believe, though, that flat-roll pricing has finally bottomed and is currently moving higher. Our principal weakness in steel operations remains at our Structural and Rail Division, with our other steel operations experiencing steady or improving results. On balance, we expect our steel operations to produce a small operating profit in the second quarter while operating at a quarterly utilization rate of about 50 percent. Our metals recycling operations are now expected to produce a small second-quarter operating loss, although showing month-to-month improvement and an expected profit for the month of June.

“Regarding costs, we have benefitted from consuming lower-cost scrap at our steel mills during the quarter. We are, at all of our operations, exercising tight cost control, implemented successfully through the cooperation, support, and ideas of our dedicated employees. During the first half of this year we have right-sized the workforce at OmniSource operations by approximately 20 percent based on a review of the ongoing staffing levels required to maintain future operating volumes and customer service.

“The outlook for the remainder of the year remains uncertain, but is improving, as demand is strengthening for some of our steel products and recycled metals. We now expect to be profitable in the third and fourth quarters of 2009 assuming only a modest increase in production volume. Steel Dynamics is in an excellent position to take advantage of any improvement in order flow in the second half as our operations are poised to increase production rates. Our production facilities are in top-notch operating condition with adequate raw materials on hand or available, and our trained workforce is ‘at the ready’,” Busse said.

As previously disclosed, the Company intends to use the net proceeds from these offerings to repay the term loan portion of its existing senior secured credit facility in full.  The remaining proceeds from the offerings will be used for general corporate purposes.

Merrill Lynch & Co., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. served as joint book-running managers for both the common stock and the convertible senior notes offerings.  BMO Capital Markets, PNC Capital Markets LLC and Wachovia Securities served as co-managers for the common stock offering.  ABN AMRO Incorporated and PNC Capital Markets LLC served as co-managers for the convertible senior notes offering.

Copies of the prospectuses relating to offerings meeting the requirements of Section 10 of the Securities Act of 1933, as amended, may be obtained from Merrill Lynch & Co., 4 World Financial Center, New York, New York 10080, Attention: Prospectus Department; Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Prospectus Department or by calling 212-902-1171; Morgan Stanley & Co. Incorporated, 180 Varick Street, Second Floor, New York, New York 10014, Attention: Prospectus Department (email: prospectus@morganstanley.com); or J.P.Morgan Securities Inc., National Statement Processing, Prospectus Library, 4 Chase Metrotech Center, CS Level, Brooklyn, New York 11245 or by telephone at (718) 242-8002.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the convertible senior notes or the common stock, nor shall there be any sale of any of the convertible senior notes or the common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.  A registration statement relating to these securities has been filed with the Securities and Exchange Commission and is effective.

The Company announced that it has agreed to sell 27,000,000 shares of its common stock at a public offering price of $13.50.  The Company has granted the underwriters a 30-day option to purchase up to an additional 4,050,000 shares of common stock from the Company on the same terms and conditions to cover over-allotments, if any.

The Company also announced the pricing of its public offering of $250,000,000 aggregate principal amount of 5.125% convertible senior notes due 2014.  The Company has granted the underwriters a 30-day option to purchase up to an additional $37,500,000 principal amount of convertible senior notes on the same terms and conditions to cover over-allotments, if any.   The convertible senior notes will pay interest semi-annually at a rate of 5.125% and will mature on June 15, 2014, unless earlier repurchased or converted.  The convertible senior notes will be convertible at the holder’s option into shares of the Company at an initial conversion rate of 56.9801 shares of common stock per $1,000 principal amount of convertible senior notes, equivalent to a conversion price of approximately $17.55 per share of common stock, subject to adjustment in certain circumstances. The convertible senior notes are guaranteed by certain subsidiaries of the Company.

The Company intends to use the net proceeds from the offerings to repay the term loan portion of its existing senior secured credit facility in full.  The remaining proceeds from the offerings will be used for general corporate purposes.

Merrill Lynch & Co., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and J.P.Morgan Securities Inc. are serving as joint book-running managers for both the common stock and the convertible senior notes offerings.  BMO Capital Markets, PNC Capital Markets LLC and Wachovia Securities are serving as co-managers for the common stock offering.  ABN AMRO Incorporated and PNC Capital Markets LLC are serving as co-managers for the convertible senior notes offering.

Copies of the prospectuses relating to offerings meeting the requirements of Section 10 of the Securities Act of 1933, as amended, may be obtained from Merrill Lynch & Co., 4 World Financial Center, New York, New York 10080, Attention: Prospectus Department; Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Prospectus Department or by calling 212-902-1171; Morgan Stanley & Co. Incorporated, 180 Varick Street, Second Floor, New York, New York 10014, Attention: Prospectus Department (email: prospectus@morganstanley.com); or J.P.Morgan Securities Inc., National Statement Processing, Prospectus Library, 4 Chase Metrotech Center, CS Level, Brooklyn, New York 11245 or by telephone at (718) 242-8002.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the convertible senior notes or the common stock, nor shall there be any sale of any of the convertible senior notes or the common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.  A registration statement relating to these securities has been filed with the Securities and Exchange Commission and is effective.

The underwriters in the common stock offering and the convertible senior notes offering will have a 30-day option to purchase, from the company, up to an additional 15% of the offered amount of common stock and convertible senior notes to cover over-allotments, if any.  The offerings will be made pursuant to Steel Dynamics’ shelf registration statement filed with the Securities and Exchange Commission.  Neither the completion of the common stock offering nor the convertible senior notes offering will be contingent on the completion of the other.

Steel Dynamics intends to use the net proceeds from the offerings to repay term loan borrowings under its existing senior secured credit facility.

Merrill Lynch & Co., Goldman, Sachs & Co., Morgan Stanley and J.P.Morgan are serving as joint book-running managers for both the common stock and the convertible senior notes offerings.  BMO Capital Markets, PNC Capital Markets LLC and Wachovia Securities are serving as co-managers for the common stock offering.  ABN AMRO Incorporated and PNC Capital Markets LLC are serving as co-managers for the convertible senior notes offering.

Copies of the preliminary prospectuses relating to offerings meeting the requirements of Section 10 of the Securities Act of 1933, as amended, may be obtained, when available, from Merrill Lynch & Co., 4 World Financial Center, New York, New York 10080, Attention: Prospectus Department; Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Prospectus Department or by calling 212-902-1171; Morgan Stanley, 180 Varick Street, Second Floor, New York, New York 10014, Attention: Prospectus Department (email: prospectus@morganstanley.com); or J.P.Morgan, National Statement Processing, Prospectus Library, 4 Chase Metrotech Center, CS Level, Brooklyn, New York 11245 or by telephone at (718) 242-8002.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the convertible notes or the common stock, nor shall there be any sale of any of the convertible notes or the common stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.  A registration statement relating to these securities has been filed with the Securities and Exchange Commission and is effective.

1

The most significant component of our first quarter loss was a non-cash adjustment to raw-materials inventory values due principally to lower selling values for flat rolled steel.  A charge of $83 million, or $0.27 per diluted share, related to both flat-roll and long-products steel operations, exceeded an earlier estimate of $70 million as a result of the continued weakening in steel prices during March.  The company also recorded an additional amortization charge of approximately $5 million, related to the final valuation of the Recycle South acquisition.  Excluding these adjustments, the first quarter loss would have been approximately $0.19 per diluted share, within the range forecast in March.

“The first quarter was obviously not a strong quarter for any of our operating units,” said Keith Busse, Chairman and CEO, “During the first quarter our steel mills operated at 46 percent of capacity, ferrous metals recycling at about 42 percent of processing capacity, and fabricating operations at about 45 percent. Unfortunately, we have still not seen clear signs of increasing demand, as our orders remain relatively steady month-to-month at these reduced rates.

“Our employees, who are now earning less because of shorter workweeks and lower production bonuses, have done an excellent job of controlling costs as we all recognize the realities of the current business environment.  We continue to focus on actions to reduce costs, including options to delay capital spending and related expenses.

“The valuation adjustments to our scrap inventory at the end of the first quarter, principally at the Flat Roll Division, to current market prices positions us for improved profit margins for flat-roll steel shipments in the second quarter.  On the long products side, profit margins remain healthy, but could contract somewhat in the second quarter because of lower selling values.  In all of our operations, the key challenge in the coming quarters will be to increase throughput.”

The first quarter’s operating loss, inclusive of the $83-million inventory adjustment, was predominantly in steel operations.  Without the inventory valuation adjustment, steel operations would have shown an operating profit of approximately $17 million, or $22 per ton shipped.  The major factors impacting the quarter’s operational results were the continued deterioration in steel shipping volumes and the consumption of scrap valued at levels much higher than current market prices.  First quarter steel shipments of 743,000 tons were 54 percent lower than first quarter 2008 shipments of 1.6 million tons, and were 21 percent lower than fourth quarter 2008 shipments of 942,000 tons.  In addition, our average steel selling price declined $193 per ton, down to $720 in the first quarter from $913 in the fourth quarter of 2008.

The principal non-inventory adjustments related to changes in our outlook are driven by weaker than expected shipping volumes at our steel operations and continued weakness in the metals recycling segment of our business.

Demand for steel products remained soft through February, resulting in lower production rates (as low as 30 percent at some of our facilities) and a lower volume of steel shipments. Despite these very low utilization rates and excluding the $70 million loss related to inventory write downs, our steel operations are expected to report a pre-tax profit for the first quarter.

Our metals recycling operations are expected to report a loss for the first quarter as scrap prices continue to fall and recycled-metals shipping volumes come in much lower than projected.  Our earlier January forecast was based on achieving a small pre-tax profit in this segment of our business.  OmniSource continues to experience very weak demand and limited flows of ferrous and nonferrous scrap; however, we believe operating profits will moderately return in the second quarter.  The supply of both industrial and “obsolete” scrap and the demand for processed metals are greatly affected by the slowdown in the U.S. economy, and in particular, the reduced demand by steel mill and foundry consumers.  Demand weaknesses in the automotive and construction sectors of the economy are the primary drivers.

“The outlook for the remainder of 2009 remains clouded.  We are currently not able to clearly project volumes and financial performance for the rest of the year,” said Keith Busse, Chairman and CEO of Steel Dynamics. “We had earlier suggested the possibility of 2009 earnings that could be comparable or close to those of 2008, but we now recognize that the entire year of 2009 will be more challenging.  We

Following a very strong performance in both the steel and metals recycling segments for the first three quarters of 2008, the significant weakening in order activity first seen by our Flat Roll Division and in metals recycling in late September broadened to other steel operations as the fourth quarter progressed. Compared to the third quarter, fourth-quarter 2008 steel shipments of 942,000 were down 34 percent, ferrous metals shipments of 898,000 net tons were down 49 percent, and non-ferrous metals shipments of 177 million pounds were down 27 percent. Lower volumes combined with declining prices for all business segments resulted in fourth-quarter sales of $1.2 billion, down 53 percent from $2.6 billion in the third quarter, and down 17 percent from $1.5 billion in the year-ago quarter.

For the fourth quarter, the company incurred a net loss of $83 million, or $0.45 per diluted share. This compares to net income of $193 million in the third quarter of 2008, or $0.98 per diluted share, and to net income of $98 million in the fourth quarter of 2007, or $0.50 per diluted share. Steel operations achieved operating income in the fourth quarter, but this income declined significantly from recent quarters due to slower operating rates and shipping volumes, declining steel selling prices, and higher input costs as lower production volumes led to a slower than anticipated depletion of ferrous raw materials that had been purchased at higher prices. Steel fabrication operations also generated an operating profit for the quarter on lower volume.

A significant portion of the fourth-quarter loss was due to a non-cash, unrealized hedging loss of $35 million related to valuing certain non-ferrous financial contracts at fair market value. Additionally, our steel and metals recycling operations recorded losses of approximately $26 million and $10 million, respectively, due to necessary reductions in ending inventory values for lower of cost or market requirements. After making these adjustments and having consumed much of the older, higher-cost raw materials, our steel and metals recycling operations begin 2009 with lower scrap costs reflecting more recent market values.

“It is strange to be reporting the best year in the company’s history and at the same time the company’s worst quarter,” said Keith Busse, Chairman and CEO. “The steel industry took it on the chin in the fourth quarter as orders dried up, and Steel Dynamics was not exempted. The combination of weaker demand, inventory reductions in both distribution and at the OEM level, and the commercial paralysis brought about by tight credit markets led to very slow order activity. This resulted in fourth-quarter production curtailments at our mills and metals-recycling facilities. We have started the new year with somewhat better activity, but we cannot be certain how long it will take the steel and scrap markets to return to more normal demand patterns. All of our SDI facilities are currently operating well below capacity. However, the company is prepared to ramp up very quickly with any pick-up in business activity.

Third quarter steel shipments of 1.4 million tons were 12 percent lower than second quarter 2008 and 9 percent lower than third quarter 2007 shipments. Reduced volume was due primarily to a 19 percent sequential decrease in flat-rolled steel shipments by the Flat Roll Division and The Techs. Flat-rolled steel shipments for late September were below our expectations as steel customers reduced order entry and deferred order releases when steel selling prices started to fall. Lower September prices resulted in reduced margins for the Flat Roll Division while working down mill scrap inventories that had been purchased at higher prices.

Compared to the second quarter, SDI’s merchant bar shipments were up 8 percent, engineered bar shipments were up 3 percent, and structural steel shipments were down 2 percent. Operating income for the long products steel operations remained very strong. New Millennium Building Systems saw modest improvement in volume and higher selling prices, but continued to experience weak commercial building market conditions.

OmniSource shipments of ferrous scrap were 1.8 million net tons, up 17 percent compared to the second quarter of 2008 and non-ferrous shipments were 242 million pounds, down 5 percent. Iron Dynamics continued to operate well, producing 70,000 net tons of pig iron for use in flat-roll steel production.

“SDI’s third quarter results of $0.98 per diluted share were somewhat below our July 21 third-quarter earnings guidance, principally due to the unprecedented decline in ferrous scrap prices in September,” said Keith Busse, Chairman and CEO of Steel Dynamics. “The steep drop in ferrous and non-ferrous scrap prices in September resulted in significantly reduced profits for OmniSource due to lower selling values for shipments as matched against higher August input costs. Despite record performances in July and August, and although the level of OmniSource’s scrap inventories was within a customary range, the September decline of approximately $300 per ton in prime scrap prices nevertheless caused a significant decrease in OmniSource’s September operating profit, reducing SDI’s expected quarterly earnings results by about $0.12 per diluted share.

“Because scrap-yard inventories typically turn within the month, the impact of this large price reduction on scrap operating profits is primarily confined to September, although there will be some further impact on scrap operating profits in the fourth quarter due to further ferrous pricing declines. Normal margins should return to health in the November-December timeframe, but volumes could be lower, with anticipated further improvement in the first quarter of 2009. The bright side of this recent significant decline in ferrous

Earnings from steel operations continued to improve as a result of strong shipments and higher selling values. Second quarter net steel shipments of 1.5 million tons were slightly stronger than the first quarter and, excluding The Techs, were 10 percent higher than second quarter 2007. The Flat Roll Division showed the largest increase, up 22 percent from second quarter 2007 and up 3 percent from the first quarter of 2008.

The steel scrap and scrap substitutes segment also provided a strong margin contribution. Demand for recycled ferrous scrap has remained strong, both from Steel Dynamics mills and from other mini mills, integrated steel mills, and foundries. Compared to the first quarter of 2008, second quarter ferrous shipments of 1.5 million net tons were up 8 percent and non-ferrous shipments of 254 million pounds were up 6 percent.  OmniSource reported higher than expected earnings for the quarter, and Iron Dynamics continued to operate well, providing 51,000 metric tons of pig iron used as an alternative to higher-cost imported pig iron in the production of flat-roll steel.

“SDI’s second quarter results of $1.05 per diluted share exceeded our June 12 earnings guidance of $0.90 to $0.95 due to the stronger than anticipated performance by both our steel and metals recycling operations,” said Keith Busse, Chairman and CEO.  Steel Dynamics made a $15 million contribution to the Steel Dynamics Foundation, Inc.  This contribution reduced second quarter earnings per diluted share by approximately $0.04. The foundation will support local communities served by the company.

“Our outlook continues to be very positive. We currently expect third quarter results to be in a range of $1.05 to $1.15 per diluted share, similar in nature to the second quarter,” Busse said. “Third-quarter steel and scrap shipments could decline slightly as the result of seasonally planned mill outages and other consumer / provider industrial outages in July and August.  Currently, though, order activity remains strong for steel products and metals recycling volumes are running at a record pace.

“Throughout 2008, we have modeled for a seasonally weaker fourth quarter, as is historically the case for the steel and metals recycling industries; however it is very difficult to have clarity concerning market conditions later in the year. Even so, given our expectations for the third quarter and our current thoughts regarding the fourth quarter, we are now increasing our estimate for full-year 2008 diluted earnings per share to a range of $3.80 to $3.90, representing potential year-over-year annual growth of approximately 90 percent.  Looking at industry fundamentals beyond 2008, we believe that the U.S. steel marketplace will remain attractive for domestic producers, as strong global steel demand continues; steelmaking resources and ocean freight costs remain high; and a weaker dollar remains.  We believe the U.S. steel industry is well positioned and globally competitive, and that these conditions are likely to persist. With many expansion projects already underway and others under consideration, Steel Dynamics expects to continue to be a strong participant in the growth and success of the American steel industry,” Busse said.

“We continue to experience strong market conditions for our steel and recycled metals businesses,” said Keith Busse, Chairman and CEO of Steel Dynamics. “In addition to the improving performance of the Flat Rolled Division and The Techs, our long products divisions continue to perform well, with continued strong order activity and backlogs. Strong shipping volumes and profit margins of our OmniSource Corporation subsidiary are expected to continue in the third quarter as well, as both internal and external demand for recycled metals remain strong.”

A major factor positively impacting the quarter results is a significant improvement in steel operations results. First quarter steel shipments of 1.6 million tons reflect increased sequential shipping volumes by all six steelmaking operations. Flat-rolled steel shipments from the Flat Roll Division and The Techs were particularly strong, together totaling 947,000 tons, an increase of 109,000 tons, or 13 percent, compared to the fourth quarter of 2007. Shipments by the four long-products steel mills increased 7 percent sequentially.

Another significant impact on the quarter’s increased net sales and earnings is OmniSource Corporation. OmniSource was accretive to first quarter earnings by approximately $0.09 per diluted share. During the quarter, OmniSource experienced very strong demand for recycled ferrous scrap, both from the Steel Dynamics mills and from other mini mills, integrated steel mills, and foundries. Its favorable inventory posture entering the quarter put OmniSource in a position to capitalize on high scrap demand during the first quarter.

“SDI’s first quarter results exceeded our March 11 earnings guidance of $0.625 to $0.65 per diluted share, primarily due to the continued strengthening in the quarter of the flat-roll steel market and the metals recycling business,” said Keith Busse, Chairman and CEO. “Prices for both flat-rolled steel and scrap climbed faster and higher than we had anticipated, accelerating the margin growth we had predicted for the second quarter. Current market conditions suggest that resource cost increases can be offset by surcharges and selling price adjustments resulting in growing margins.

“Our outlook for 2008 continues to be very positive,” Busse said. “Even with weakness in the U.S. economy, we continue to see strong demand for flat-rolled steels, due principally to constrained domestic supply, low steel inventories, and limited steel imports. Second quarter backlogs for structural steel, merchant bars, and SBQ remain strong due to relatively steady demand as well as limited import activity. Likewise, we expect our metals recycling business to continue to perform well during this period of high demand for ferrous and non-ferrous recycled resources and pricing above historical levels. As long as global steel demand remains high and global steel prices meet or exceed U.S. prices, we should expect that steel imports into the U.S. will remain at a low level especially in light of a weak dollar.

“The path that resource costs and product pricing will take in the second half of the year is uncertain, although we believe that second quarter as well as third quarter domestic market conditions will remain favorable, allowing us to adequately recover any increase in costs. As a result, our preliminary earnings estimate for the second quarter of 2008 is in a range of $0.80 to $0.90 per diluted share,” Busse said.

The company also announced the completion of an amendment to its senior secured credit facility on March 31, 2008, pursuant to which commitments under the revolving credit facility increased $124 million and funding under the term loan A facility increased $94 million.

The Notes were offered in a transaction exempt from the registration requirements of the Securities Act of 1933 and have not been registered under the Securities Act of 1933, or any state securities laws, and may not be offered or sold in the United States, absent registration under, or an applicable exemption from, the registration requirements of the Securities Act of 1933 and applicable state laws.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any debt securities, and shall not constitute an offer, solicitation or sale of any debt securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Steel Dynamics also announced that it is currently negotiating an amendment to its senior secured credit facility pursuant to which it expects to increase existing commitments under the credit facility by approximately $150 to $250 million in the aggregate. Steel Dynamics currently expects to amend the senior secured credit facility in March 2008.

This announcement is neither an offer to sell nor a solicitation of an offer to buy these securities.  The securities will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws.

During the fourth quarter of 2007, net income was $98 million, or $1.00 per diluted share, in comparison to $105 million or $1.03 per diluted share in the fourth quarter of 2006 and to $101 million or $1.06 per diluted share in the third quarter of 2007. Net sales for the fourth quarter were $1.5 billion, 73 percent higher than the fourth quarter of 2006 and 25 percent higher than the third quarter of 2007. The primary driver for the quarter’s increase in net sales was the October 26, 2007, acquisition of OmniSource Corporation. OmniSource was dilutive to fourth quarter earnings by approximately $0.07 per diluted share as previously forecast. Of this amount, purchase accounting adjustments represented $0.01. Net income per share exclusive of the OmniSource transaction would have been $1.07, which was at the high end of our original and mid-quarter guidance, $0.01 higher than the third quarter’s diluted earnings per share and $0.04 higher than the fourth quarter of 2006.

“Our 2007 results are indicative of our success as it relates to diversification and growth strategies,” said Keith Busse, Chairman and CEO. “In a year when flat-rolled steel, the largest market segment in the U.S. steel industry, struggled, we experienced record consolidated results. Our strategy to diversify from the flat-roll steel business that we started in the mid-1990s into a multi-product steel producer has resulted in five steelmaking operations, plus related steel processing, fabricating, scrap, and virgin-iron resource operations. Our steelmaking operations each produce distinct steel products that permit us to serve a variety of end markets. During 2007, while our shipments of flat-rolled sheet declined 2 percent, our structural steel volume increased 15 percent and shipments of engineered bars increased 9 percent, netting a 4 percent year-over-year increase in steel shipments from our three Indiana mills that were owned and operated throughout 2006 and 2007. Total steel shipments, including acquired steelmaking operations, grew to 5.6 million tons in 2007, a 17 percent increase over 2006.

“Also contributing to SDI’s revenue growth were three noteworthy acquisitions in 2007: OmniSource Corporation (October 2007), The Techs (July 2007), and Elizabethton Iron (April 2007). The integration of these operations is proceeding well, and we anticipate further efficiencies to be realized throughout 2008.

“Our outlook for 2008 is very positive,” Busse said. “Conditions in the U.S. steel marketplace are favorable, absent major events that could severely reduce steel demand. Even with the slowdown in the U.S. economy in 2008, we are currently seeing stronger demand for flat-rolled steels than in 2007, due principally to low steel inventories and an expected lower level of steel imports. For long products, demand continues to be strong as we enter the first quarter, and we believe that it will continue. Meanwhile, ferrous resources have seen dramatic price increases in the past few months, and may remain strong. Significant steel price increases have recently been announced in the industry, yet we expect that the higher steel selling values will be somewhat offset by the increased costs of steel scrap and other inputs. We also expect increased demand for and higher pricing of ferrous scrap to have a positive effect on consolidated earnings in the first quarter. As a result of all of the above, we currently foresee improvement in SDI’s earnings to a range of $1.10 to $1.20 per diluted share in the first quarter of 2008.”