Steel Technologies Announces First Quarter Results

Steel Technologies Inc. (NASDAQ: STTX) today reported results for the first quarter ended December 31, 2006.

For the three months ended December 31, 2006, income from continuing operations was $895,000 or $0.07 per diluted share versus $2.9 million or $0.22 per diluted share in the first quarter of last year. For the quarter, income from discontinued operations was negligible, compared with $470,000 or $0.04 per diluted share in the same period last year. Sales for the quarter were $201 million, virtually unchanged from the first quarter of fiscal 2006 as volume declined 9%. Lower volume was largely offset by higher average selling prices compared to the fiscal first quarter of 2006.

“As we discussed during our last call, we expected to face difficult headwinds moving in to our first fiscal quarter,” said Bradford T. Ray, Chairman and Chief Executive Officer. “Though soft demand from certain customer segments and steel price volatility had a negative impact on our financial performance, we view this as a temporary setback. Current shipment levels and forecasts point to improved volume in our second quarter.

“While our team is not pleased with the results of the past quarter, we continue to believe that our network of steel processing operations in the United States, Canada and Mexico is second to none in the industry,” Ray added. “This superior platform should provide the foundation for improved financial performance and growth over the long term.”

A live broadcast of Steel Technologies’ conference call will begin at 10:00 a.m. Eastern Time today. An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue through February 23, 2007. A link to this event will be available at the Company’s website.

Steel Technologies processes flat-rolled steel to specific thickness, width, temper, finish and shape requirements for automotive, appliance, lawn and garden, office furniture, agriculture, construction, hardware, and consumer goods. The Company now has 25 facilities, including its joint venture operations, located throughout the United States, Mexico and Canada. More information about the Company may be found on the World Wide Web at www.steeltechnologies.com.

Statements contained in this release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties (contained in the Company’s SEC filings), which could cause actual results to differ materially from those projected. These include, without limitation, statements regarding the anticipated completion date of our acquisition of Kasle Steel Corporation. SEC filings may be obtained from the SEC or by contacting the Company.

STEEL TECHNOLOGIES INC.

Condensed Consolidated Balance Sheets

 

December 31

September 30

(In thousands)

2006 

2006

ASSETS

Current assets:

Cash and cash equivalents

$ 4,576 

$ 12,066 

Trade accounts receivable, net

107,886 

104,356 

Inventories

168,923 

181,267 

Deferred income taxes

1,975 

1,688 

Prepaid expenses and other assets

8,187 

6,607 

Total current assets

291,547 

305,984 

 

Property, plant and equipment, net

113,971 

112,642 

 

Investments in unconsolidated affiliates

64,282 

63,626 

 

Goodwill

25,489 

25,678 

 

Other assets

5,472 

5,687 

$ 500,761 

$ 513,617 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 53,666 

$ 62,204 

Bank overdrafts

8,783 

13,617 

Accrued liabilities

13,849 

15,993 

Income taxes payable

2,583 

2,500 

Current portion of debt and capital lease obligations

1,979 

2,074 

Total current liabilities

80,860 

96,388 

 

Long-term debt and capital lease obligations

124,795 

119,911 

Deferred income taxes

19,118 

20,243 

Other long-term liabilities

4,191 

3,941 

228,964 

240,483 

 

Commitments and contingencies

 

Minority interest

3,470 

3,374 

 

Shareholders’ equity:

Preferred stock

- 

- 

Common stock

71,251 

71,176 

Treasury stock

(24,496)

(24,486)

Additional paid-in capital

6,755 

6,551 

Retained earnings

218,885 

219,971 

Accumulated other comprehensive loss

(4,068)

(3,452)

Total shareholders’ equity

268,327 

269,760 

$ 500,761 

$ 513,617 

STEEL TECHNOLOGIES INC.

Condensed Consolidated Statements of Income

 

For the Three Months Ended

(In thousands, except per share results)

December 31

2006 

2005 

Sales

$ 200,816 

$ 201,185 

Cost of goods sold

190,542 

188,947 

Gross profit

10,274 

12,238 

 

Selling, general and administrative expenses

9,513 

8,546 

 

Operating income

761 

3,692 

 

Interest expense

(1,992)

(799)

Interest income

205 

339 

Minority interest

(165)

(236)

Equity in net income of unconsolidated affiliates, net

2,270 

849 

 

Income before income taxes

1,079 

3,845 

 

Provision for income taxes

184 

974 

 

Income from continuing operations

895 

2,871 

 

Discontinued operations, net of tax

(22)

469 

 

Net income

$ 873 

$ 3,340 

 

 

Diluted weighted average number of

common shares outstanding

13,135 

13,085 

 

Diluted earnings per common share:

From continuing operations

$ 0.07 

$ 0.22 

From discontinued operations

(0.00)

0.04 

$ 0.07 

$ 0.26 

 

Basic weighted average number of

common shares outstanding

12,979 

12,936 

 

Basic earnings per common share:

From continuing operations

$ 0.07 

$ 0.22 

From discontinued operations

(0.00)

0.04 

$ 0.07 

$ 0.26 

 

Cash dividends per common share

$ 0.15 

$ 0.15