Steel Technologies Inc. reported net income of $1.5 million on sales of $204.4 million for the fourth quarter, and record net income of $37.1 million on record sales of $1.0 billion for the fiscal year ended September 30, 2005.

Fourth Quarter Results—The $1.5 million net income ($0.12 per diluted share) compares with a record $15.4 million ($1.18 per diluted share) in the year-earlier period. Sales of $204.4 million reflect a 15% decline compared to the record $239.2 million for the same period a year ago.

Results reflected the benefit of approximately $0.05 per diluted share resulting from reductions in income tax expense, primarily because of more favorable state income tax apportionments.

Fiscal Year Results—The record $37.1 million net income ($2.83 per diluted share) compares with $35.2 million ($3.05 per diluted share) in the year-earlier period, on approximately 14% more weighted average diluted shares outstanding. The increase in shares primarily reflected the company's successful completion of a secondary stock offering of 2.9 million shares in March 2004. Sales rose 27% to a record $1.0 billion from $786.9 million for the same period last year.

"In 2005, we achieved record sales and net income levels despite reduced demand and softer market prices in the latter half of the year," said Bradford T. Ray, Chairman and CEO. "As we indicated in an earlier release, our margins were affected by utilizing higher-cost material in a declining-price environment. In addition, the July-August seasonal softness was more pronounced this year due to excess inventory throughout the supply chain. This trend began to reverse late in the quarter as our volume and pricing trends began to firm. During the quarter, we reduced our inventories by $34 million, which contributed largely to a reduction in our bank debt from $67 million to $30 million.

"Looking ahead, we anticipate improved performance since our inventory is now more in line with current pricing trends," Ray added. "In addition, we expect demand to maintain better balance throughout the year. We are very confident about our growth strategies and market position as we move into fiscal 2006.

"Our Mi-Tech Steel joint venture continued to experience growth during the quarter," Ray continued. "Its sales increased 11% over year-earlier levels, fueling a higher contribution to our earnings. Mi-Tech Steel achieved records in sales and net income in 2005 and continues to play an important role in our North American platform."

The company recently amended and extended its $135 million unsecured credit facility with its existing syndicated banking group, which may be expanded to $200 million under certain circumstances. In addition to extending the maturity of this credit facility to October 2010, the pricing has been improved to reflect the company's favorable financial performance.

The company recently announced that it signed a formal letter of intent to secure land as part of its plan to construct and operate a new steel processing facility in Juarez, Mexico. Start-up is scheduled for the latter half of fiscal 2006. "We are pleased to announce this new facility in Mexico as we continue to strengthen our leadership position in value-added steel processing in a growing Mexican market," Ray concluded.

Steel Technologies processes flat-rolled steel to specific thickness, width, temper, finish and shape requirements for automotive, appliance, lawn and garden, office furniture, agriculture, railcar, construction, hardware, and consumer goods. The company has 20 facilities, including its joint-venture operations, located throughout the United States and Mexico.