Steel Technologies Inc. reported net income of $15.4 million on record sales of $287.0 million for the second fiscal quarter of 2005 ended March 31, 2005.

Second Quarter Results—Record net income of $15.4 million ($1.17 per diluted share) compares with net income of $6.9 million ($0.68 per diluted share) in the year-earlier period on approximately 30% more weighted average diluted shares outstanding. The higher volume of shares resulted from the company's successful completion of a secondary stock offering of 2.9 million shares in March 2004. Results included an income tax benefit of approximately $0.06 per diluted share, reflecting changes in tax laws effective January 1, 2005, for the company's Mexican operations.

Sales increased 55% to a record $287.0 million from $184.8 million in the same period a year ago.

Six Month Results—Year-to-date net income for fiscal 2005, a record $29.9 million ($2.28 per diluted share), compares to $9.3 million ($0.93 per diluted share) in the first six months of fiscal 2004 on approximately 30% more weighted average shares outstanding. Sales rose 71% to a record $541.0 million from $315.6 million for the same period last year.

Management Comments—"We are pleased to report record sales and net income for the second quarter and first six months of fiscal 2005, reflecting the positive impact of a strong pricing environment and our continued focus on operational efficiencies," said Bradford T. Ray, Chairman and CEO.

"In the second fiscal quarter of 2005, volume shipped was just 2.5% below the record level of the year-earlier period," commented Ray. "Demand remained solid through most of our second quarter in light of reduced automotive production levels. Overall transaction prices remain high by historic measures; however, we expect our selling prices to soften in the third quarter as a result of increased supply and a softening economic outlook.

"Our Mi-Tech Steel joint venture continued to experience substantial growth during the quarter," Ray continued. "Mi-Tech's sales increased 64% over year-earlier levels, fueling a significantly higher contribution to our earnings. Our joint-venture operations continue to play an important role in our North American platform that supplies automotive transplant and domestic customers.

"During the quarter, we generated substantial cash flow through our working capital management, further strengthening our balance sheet," commented Ray. "We reduced borrowings on our bank line of credit from $90 million to $62 million, providing us with additional and sufficient capacity on our $135 million unsecured credit facility to support our strategic opportunities."

As reported in March 2005, the company's Board of Directors voted to increase the semi-annual dividend 50% to $0.15 per share. "We are gratified that the company's ongoing growth positions us to increase our regular dividends so that our shareholders may participate more directly in the success of the company," Ray added.

Steel Technologies processes flat-rolled steel to specific thickness, width, temper, finish and shape requirements for a wide range of applications. The company has 20 facilities, including its joint-venture operations, located throughout the United States and Mexico.