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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-14061
STEEL TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-0712014
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15415 Shelbyville Road, Louisville, KY 40245
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(502) 245-2110
(Registrant's telephone number, including area code)
Not applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No____
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes X No____
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock as of the latest practical date.
There were 12,747,081 shares outstanding of the Registrant's common stock as of
April 30, 2004.
STEEL TECHNOLOGIES INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
March 31, 2004 and September 30, 2003 ............................. 3
Condensed Consolidated Statements of Income and
Comprehensive Income Three and Six Months Ended
March 31, 2004 and 2003 ........................................... 4
Condensed Consolidated Statements of Cash Flows Six Months
Ended March 31, 2004 and 2003 ..................................... 5
Notes to Condensed Consolidated Financial Statements .............. 6-10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .............................................11-21
Item 3. Quantitative and Qualitative Disclosures About Market
Risk .............................................................. 22
Item 4. Controls and Procedures ........................................... 22
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................... 22
Signature ................................................................. 23
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Title 18,
United States Code, Section 1350 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Chief Financial Officer Pursuant to Title 18,
United States Code, Section 1350 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.1 Certification of Chief Executive Officer Pursuant to Title 18,
United States Code, Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.2 Certification of Chief Financial Officer Pursuant to Title 18,
United States Code, Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Part I. - FINANCIAL INFORMATION
Item 1. Financial Statements
STEEL TECHNOLOGIES INC.
Condensed Consolidated Balance Sheets
(In thousands) March 31 September 30
(Unaudited) 2004 2003
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents ................... $ 3,738 $ 2,758
Trade accounts receivable, net .............. 105,957 74,595
Inventories ................................. 119,039 84,301
Deferred income taxes ....................... 1,178 1,198
Prepaid expenses and other assets ........... 2,637 4,628
--------- ---------
Total current assets ..................... 232,549 167,480
Property, plant and equipment, net ............. 107,714 106,615
Investments in and advances to unconsolidated
affiliates .................................. 20,806 19,604
Goodwill ....................................... 18,148 18,148
Other assets ................................... 1,457 1,328
--------- ---------
$ 380,674 $ 313,175
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................ $ 76,858 $ 49,609
Accrued liabilities ......................... 13,372 10,353
Income taxes payable ........................ 2,864 -
Long-term debt due within one year .......... 5,680 5,720
--------- ---------
Total current liabilities ................ 98,774 65,682
Long-term debt ................................. 73,000 94,680
Deferred income taxes .......................... 15,101 14,872
--------- ---------
Total liabilities ........................ 186,875 175,234
--------- ---------
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value: 500,000 shares
authorized; none issued or outstanding..... - -
Common stock, no par value: 50,000,000 shares
authorized; issued and outstanding shares:
12,722,467 at March 31, 2004 and
9,765,409 at September 30, 2003............. 68,438 20,371
Treasury stock at cost: 2,603,928 shares at
March 31, 2004 and 2,573,953 at September
30, 2003.................................... (23,689) (23,169)
Additional paid-in capital .................. 5,098 5,098
Retained earnings ........................... 149,394 141,073
Accumulated other comprehensive loss ........ (5,442) (5,432)
--------- ---------
Total shareholders' equity ................ 193,799 137,941
--------- ---------
$ 380,674 $ 313,175
========= =========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Income
(Amounts in thousands, Three Months Ended Six Months Ended
except per share data, unaudited) March 31 March 31
- --------------------------------------------------------------------------------
2004 2003 2004 2003
------------------------------------------
Sales ................................ $184,842 $130,140 $315,631 $256,149
Cost of goods sold ................... 165,266 118,979 285,278 231,218
-------- -------- -------- --------
Gross profit ................... 19,576 11,161 30,353 24,931
Selling, general and
administrative expenses ........... 8,523 6,915 15,188 14,047
Equity in net income of unconsolidated
affiliates ........................ 687 85 1,169 410
-------- -------- -------- --------
Operating income .................. 11,740 4,331 16,334 11,294
Interest expense, net ................ 998 1,346 1,961 2,548
Loss (gain) on disposals/writeoffs of
property, plant and equipment ..... 12 (217) 12 (102)
-------- -------- -------- --------
Income before income taxes ........ 10,730 3,202 14,361 8,848
Provision for income taxes ........... 3,828 1,210 5,061 3,066
-------- -------- -------- --------
Net income ....................... $ 6,902 $ 1,992 $ 9,300 $ 5,782
-------- -------- -------- --------
Diluted weighted average number of
common shares outstanding ......... 10,098 9,889 10,037 9,925
======== ======== ======== ========
Diluted earnings per common share .... $ 0.68 $ 0.20 $ 0.93 $ 0.58
======== ======== ======== ========
Basic weighted average number of
common shares outstanding ......... 9,835 9,756 9,807 9,731
======== ======== ======== ========
Basic earnings per common share ...... $ 0.70 $ 0.20 $ 0.95 $ 0.59
======== ======== ======== ========
Cash dividends per common share ...... $ -- $ -- $ 0.10 $ 0.10
======== ======== ======== ========
Condensed Consolidated Statements of Comprehensive Income
(In thousands) Three Months Ended Six Months Ended
(Unaudited) March 31 March 31
- --------------------------------------------------------------------------------
2004 2003 2004 2003
------------------------------------------
Net income ........................... $ 6,902 $ 1,992 $ 9,300 $ 5,782
Foreign currency translation
adjustment ................... 532 (1,876) (169) (2,307)
Decrease in unrealized loss on cash
flow hedges, net of taxes .... 78 113 159 179
-------- --------- -------- --------
Comprehensive income ................. $ 7,512 $ 229 $ 9,290 $ 3,654
======== ========= ======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
STEEL TECHNOLOGIES INC.
Condensed Consolidated Statements of Cash Flows
(In thousands) Six Months Ended
(Unaudited) March 31
- --------------------------------------------------------------------------------
2004 2003
---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................... $ 9,300 $ 5,782
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation ................................... 7,380 6,749
Deferred income taxes .......................... 178 681
Equity in net income of unconsolidated
affiliates .................................... (1,169) (410)
Loss (gain) on disposals/writeoffs of property,
plant and equipment ........................... 12 (102)
Increase (decrease) in cash resulting from
changes in:
Trade accounts receivable ................ (31,445) 596
Inventories .............................. (34,816) (1,139)
Prepaids expenses and other assets ....... 1,169 (1,706)
Accounts payable ......................... 27,314 (30,567)
Accrued liabilities and income taxes ..... 6,618 (2,170)
-------- --------
Net cash used in operating activities ................. (15,459) (22,286)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment ......... (8,561) (5,629)
Proceeds from sale of property, plant and equipment - 591
Acquisition, net of cash acquired .................. - (9,853)
Distribution from unconsolidated affiliate ......... - 45
-------- --------
Net cash used in investing activities ................. (8,561) (14,846)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt ....................... 32,000 52,500
Principal payments on long-term debt ............... (53,720) (11,743)
Cash dividends on common stock ..................... (979) (972)
Repurchase of common stock ......................... (520) (1,079)
Net proceeds from issuance of common stock ......... 48,067 1,569
Other .............................................. 175 175
-------- --------
Net cash provided by financing activities ............. 25,023 40,450
-------- --------
Effect of exchange rate changes on cash ............... (23) (171)
-------- --------
Net increase in cash and cash equivalents ............. 980 3,147
Cash and cash equivalents, beginning of year .......... 2,758 2,127
-------- --------
Cash and cash equivalents, end of period .............. $ 3,738 $ 5,274
======== ========
Supplemental Cash Flow Disclosures:
Cash payment for interest ............................. $ 2,302 $ 2,507
======== ========
Cash payment for income taxes ......................... $ 1,369 $ 5,086
======== ========
Supplemental Schedule of Noncash Investing and Financing
Activities:
Fair value of assets acquired ...................... $ - $ 9,913
Liabilities assumed................................. - 60
-------- --------
Net cash paid....................................... $ - $ 9,853
======== ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
STEEL TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The condensed consolidated balance sheet as of March 31, 2004 and the condensed
consolidated statements of income and comprehensive income for the three and six
months ended March 31, 2004 and 2003, and condensed consolidated cash flows for
the six months ended March 31, 2004 and 2003 have been prepared by Steel
Technologies Inc. (the Company) without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
March 31, 2004 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report to shareholders for the year
ended September 30, 2003. The results of operations for the six months ended
March 31, 2004 are not necessarily indicative of the operating results for the
full year.
2. STOCK OPTIONS
At March 31, 2004, the Company had stock-based compensation plans which are
described more fully in Note 13 of Notes to Consolidated Financial Statements in
our Annual Report on Form 10-K for the fiscal year ended September 30, 2003. As
permitted by Statement of Financial Accounting Standards (SFAS) No. 123
"Accounting for Stock-Based Compensation" and amended by SFAS No. 148,
"Accounting for Stock-Based Compensation Transition and Disclosure," the Company
follows the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations in
accounting for its stock option plans under the intrinsic value based method.
Accordingly, no stock-based compensation expense has been recognized for stock
options issued under the plans as all stock options granted under the plans had
an exercise price equal to the market value of the underlying common stock on
the date of grant. Had compensation expense been determined based on the fair
value of the stock options at the grant date consistent with the provisions of
SFAS No. 123, the Company's net income and basic and diluted net income per
share would have been impacted as follows:
6
(In thousands except per share data) Three Months Ended Six Months Ended
(Unaudited) March 31 March 31
- -------------------------------------------------------------------------------
2004 2003 2004 2003
------ ------ ------ ------
Net income - as reported $6,902 $1,992 $9,300 $5,782
Total stock-based employee compensation
expense determined under
fair value method for all awards,
net of taxes 82 25 168 63
------ ------ ------ ------
Net income - pro forma $6,820 $1,967 $9,132 $5,719
====== ====== ====== ======
Diluted net income per share - as reported $ 0.68 $ 0.20 $ 0.93 $ 0.58
Diluted net income per share - pro forma $ 0.68 $ 0.20 $ 0.92 $ 0.58
Basic net income per share - as reported $ 0.70 $ 0.20 $ 0.95 $ 0.59
Basic net income per share - pro forma $ 0.69 $ 0.20 $ 0.93 $ 0.59
3. ACQUISITION
On March 7, 2003 the Company completed the purchase of certain assets from Cold
Metal Products, Inc. (Cold Metal Products) as approved by the U.S. Bankruptcy
Court in Youngstown, Ohio. The acquisition has been recorded under the purchase
method of accounting, with the operating results being included in the Company's
condensed consolidated financial statements since the date of acquisition. The
following unaudited pro forma consolidated results of operations have been
prepared as if the acquisition of the assets of Cold Metal Products had occurred
at the beginning of the corresponding period.
(In thousands except per share data) Three Months Ended Six Months Ended
(Unaudited) March 31, 2003 March 31, 2003
- ----------------------------------- ------------------ ----------------
Sales $ 134,446 $ 267,813
Net income $ 1,893 $ 5,669
Diluted net income per share $ 0.19 $ 0.57
Basic net income per share $ 0.19 $ 0.58
This unaudited pro forma information is presented for informational purposes
only and is not necessarily indicative of future operating results.
7
4. INVENTORIES
Inventory consists of:
(In thousands) March 31 September 30
(Unaudited)) 2004 2003
- -------------------------------------------------------------------------------
Raw materials .................................... $ 87,026 $ 58,204
Finished goods and work in process ............... 32,013 26,097
---------- ----------
$ 119,039 $ 84,301
========== ==========
5. COMMON STOCK
On March 31, 2004, the Company completed a public stock offering of 2,905,000
shares of common stock at a price of $17.25. The Company realized net proceeds
of approximately $47.3 million from this offering.
6. NET INCOME PER SHARE COMPUTATIONS
The following is a reconciliation of the denominator of the basic and diluted
per share computations:
(Amounts in thousands, except per share results) Three Months Ended
(Unaudited) March 31
- --------------------------------------------------------------------------------
2004 2003
----------------------
Net income ............................................ $ 6,902 $ 1,992
--------- ---------
Shares (denominator) used for diluted
per share computations:
Weighted average shares of common stock
outstanding ................................... 9,835 9,756
Plus: dilutive effect of stock options ............ 263 133
--------- ---------
Diluted weighted average shares ............ $ 10,098 $ 9,889
--------- ---------
Shares (denominator) used for basic per
share computations:
Weighted average shares of common stock
outstanding .................................... 9,835 9,756
--------- ---------
Net income per share data:
Diluted ........................................... $ 0.68 $ 0.20
========= =========
Basic ............................................. $ 0.70 $ 0.20
========= =========
8
(Amounts in thousands, except per share results) Six Months Ended
(Unaudited) March 31
- --------------------------------------------------------------------------------
2004 2003
----------------------
Net income ............................................ $ 9,300 $ 5,782
--------- ---------
Shares (denominator) used for diluted
per share computations:
Weighted average shares of common stock
outstanding ................................... 9,807 9,731
Plus: dilutive effect of stock options ............ 230 194
--------- ---------
Diluted weighted average shares ............ $ 10,037 $ 9,925
--------- ---------
Shares (denominator) used for basic per
share computations:
Weighted average shares of common stock
outstanding .................................... 9,807 9,731
--------- ---------
Net income per share data:
Diluted ........................................... $ 0.93 $ 0.58
========= =========
Basic ............................................. $ 0.95 $ 0.59
========= =========
All outstanding options are included in the diluted earnings per share
calculation above for the three and six months ended March 31, 2004 and 2003.
7. RELATED PARTIES
Summarized condensed income statement information of Mi-Tech Steel, Inc.
(Mi-Tech Steel), a fifty percent owned unconsolidated affiliate accounted for by
the equity method, follows:
(In Thousands) Three Months Ended Six Months Ended
(Unaudited) March 31 March 31
- ----------------- --------------------- -----------------------
2004 2003 2004 2003
---- ---- ---- ----
Sales $49,317 $32,227 $91,113 $64,240
Gross profit 3,950 1,721 6,750 4,068
Net income 1,234 60 2,026 561
The Company has various transactions with Mi-Tech Steel. Included in operating
income of the Company are management fees, Decatur operating expense
reimbursement and equity in the net income of Mi-Tech Steel. During the three
months and six months ended March 31, 2004, these transactions totaled $606,000
and $1,040,000, respectively, compared to $204,000 and $628,000 for the three
and six months ended March 31, 2003, respectively. The Company's equity in
undistributed net income of Mi-Tech Steel was $7,434,000 and $5,911,000 at March
31, 2004 and 2003, respectively.
During the second quarter and first six months of fiscal 2004, the Company
recorded sales of $4,866,000 and $7,565,000, respectively, for products sold to
a company owned by an
9
officer and director of the Company compared to sales of $1,591,000 and
$3,080,000, respectively, during the second quarter and first six months of
fiscal 2003. Accounts receivable from the aforementioned company was $3,524,000
and $1,337,000 as of March 31, 2004 and September 30, 2003, respectively. The
Company believes these transactions are in the best interests of the Company and
the terms and conditions of these transactions are in the aggregate not
materially more favorable or unfavorable to the Company than would be obtained
on an arm's length basis from unaffiliated parties. See also information
contained under "Certain Transactions" in the Company's 2004 Proxy Statement.
8. IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB
51" (FIN 46). The primary objectives of FIN 46 are to provide guidance on the
identification of entities for which control is achieved through means other
than through voting right (variable interest entities, or VIEs) and how to
determine when and which business enterprise should consolidate the VIE (the
primary beneficiary). The provisions of FIN 46, as amended by FASB Staff
Position 46-6, "Effective Date of FIN 46" and FIN 46R, are effective immediately
for VIEs created after January 31, 2003 and no later than March 31, 2004 for
VIEs created before February 1, 2003. In addition, FIN 46 requires that both the
primary beneficiary and all other enterprises with a significant variable
interest make additional disclosure in filings issued after January 31, 2003.
The Company has determined that it does not have any VIEs and the adoption of
FIN 46 does not have an impact on our financial position, results of operations
or cash flows.
10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
When used in the following discussion, the word "expects" and other similar
expressions are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those projected. Specific risks and uncertainties include, but are not limited
to, competitive factors such as pricing and availability of steel; cyclicality
of demand in the steel industry, specifically in the automotive market; our
ability to make and integrate acquisitions; our inability to obtain sufficient
capital resources to fund our operations and our growth; risk of business
interruptions affecting automotive manufacturers; and reliance on key customers.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. We undertake no obligation
to republish revised forward-looking statements to reflect the occurrence of
unanticipated events or circumstances after the date hereof. Unless the context
otherwise requires, references to "we," "us" or "our" refer collectively to
Steel Technologies Inc. and its subsidiaries.
Application of Critical Accounting Policies
- -------------------------------------------
Our consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
amounts reported in the financial statements. Actual results could differ from
these estimates under different assumptions or conditions. On an ongoing basis,
we monitor and evaluate our estimates and assumptions.
A summary of significant accounting policies used in the preparation of the
consolidated financial statements are described in Note 1 of Notes to
Consolidated Financial Statements in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2003.
Our most critical accounting policies include the valuation of accounts
receivable, which impacts selling, general and administrative expense and the
assessment of recoverability of goodwill and long-lived assets. Management
reviews the estimates, including, but not limited to, the allowance for doubtful
accounts on a regular basis based on historical experiences, current conditions
and future expectations. The reviews are performed regularly and adjustments are
made as required by currently available information. We believe these estimates
are reasonable, but actual results could differ from these estimates.
11
Allowance for Doubtful Accounts Receivable
------------------------------------------
Our accounts receivable represent those amounts which have been billed to
our customers but not yet collected. An allowance for doubtful accounts is
maintained for estimated losses resulting from the inability of our
customers to make required payments. The allowance is maintained at a level
considered appropriate based on historical and other factors that affect
collectibility. The factors include historical trends of write-offs,
recoveries and credit losses; the monitoring of portfolio credit quality;
and current and projected economic and market conditions. If the financial
condition of our customers were to deteriorate, resulting in an impairment
of the ability to make payments, additional allowances may be required.
Impairment of Long-Lived Assets and Goodwill
--------------------------------------------
Long-lived assets with estimated useful lives are depreciated to their
residual values over those useful lives in proportion to the economic value
consumed. We review the carrying value of our long-lived assets for
impairment whenever changes in events and circumstances indicate that the
carrying amount of the assets may not be recoverable. If an evaluation is
required, the estimated future discounted cash flows associated with an
asset would be compared to the asset's carrying value to determine if a
write-down to market value or discounted cash flows value is required.
Future changes in circumstances, cash flow estimates and fair value could
affect the valuations.
Goodwill is reviewed annually, or sooner if indicators of impairment exist,
for impairment using the present value technique to determine estimated
fair value of goodwill associated with each reporting entity. If the
goodwill is indicated as being impaired (the present value of cash flows
(fair value) of the reporting unit is less than the carrying amount), the
fair value of the reporting unit would then be allocated to our assets and
liabilities in a manner similar to a purchase price allocation in order to
determine the implied fair value of the reporting unit goodwill. This
implied fair value of the reporting unit goodwill would then be compared
with the carrying amount of the reporting unit goodwill and, if it were
less, we would then recognize an impairment loss.
Considerable management judgment is necessary to assess impairment and
estimate fair value. The projection of future cash flows for the goodwill
impairment analysis requires significant judgment and estimates with
respect to future revenues related to the assets and the future cash
outlays related to those revenues. Actual revenues and related cash flows
or changes in anticipated revenues and related cash flows could result in
changes in this assessment and result in an impairment charge. The
assumptions used in our evaluations, such as forecasted growth rates, cost
of capital, tax rates and residual values, are consistent with our internal
projections and operating plans. The use of different assumptions,
including cash flows and discount rates, could increase or decrease the
related impairment charge.
12
Overview
- --------
Steel Technologies Inc. is one of the largest independent flat-rolled steel
processors in North America. Our North American platform of 21 facilities,
including our unconsolidated affiliates, is strategically positioned in the
steel producing and consuming markets throughout the United States and Mexico.
We bring value to our customers through precision steel processing as well as
supply chain management, quality control and technical support. We utilize the
most advanced equipment to produce high-quality steel products and specialize in
meeting exact specifications for customers in a variety of industries and end
use markets including automotive, lawn and garden, appliance and rail car
industries.
Through our geographic diversity, broad capabilities and strong marketing
efforts, we have been successful in achieving meaningful market growth, both
with existing and new customers across a wide range of end use markets. In the
second quarter of fiscal 2004, our tons sold on a direct basis increased 39%
over the same quarter of fiscal 2003 to 334,000 tons. We anticipate
approximately 35% volume growth year over year in the upcoming third fiscal
quarter through continued market growth with large national accounts and
improving economic conditions.
Our largest unconsolidated affiliate, Mi-Tech Steel, Inc. (Mi-Tech Steel),
experienced 53% growth in revenue in the second quarter of fiscal 2004 compared
to the second quarter of fiscal 2003. We expect 40% growth in the upcoming third
quarter as Mi-Tech Steel is well positioned with their network of facilities to
grow with transplant automotive and other domestic customers.
Our gross profit margin was 10.6% in the second quarter of fiscal 2004 compared
to 8.6% in the second quarter of fiscal 2003. Our gross profit margin improved
somewhat from an escalating price environment due to rising raw material costs.
This benefit to our earnings will reverse in subsequent quarters as the full
effect of raw material increases works through our inventory.
During the most recent fiscal quarter, our steel suppliers continue to be
impacted by the shortage of raw materials resulting in unprecedented increases
affecting the cost to steel producers on scrap, coke, iron ore and energy. As a
result, the North American steel producers have implemented temporary raw
material surcharges to offset these costs until conditions subside. We are
currently subject to raw material price increases and surcharges from our
suppliers. We intend to continue to pass on these price increases and surcharges
to our customers. We anticipate double-digit selling price increases year over
year in the upcoming third fiscal quarter. To the extent we are unable to
continue to pass on these price increases and surcharges, the profitability of
our business could be adversely affected.
With reduced import levels, a weaker U.S. dollar and improving demand we expect
our raw material costs to increase throughout our third fiscal quarter. We
remain diligent and focused on our supplier relations and in securing material
to support our customer
13
requirements. Although we expect supply conditions to remain tight throughout
the upcoming quarter, we have aligned our business with the most viable North
American producer base and expect to maintain adequate supply to support our
valued customers and projected growth.
In addition, we successfully completed a secondary public stock offering during
our second fiscal quarter. We raised approximately $47.3 million which was used
to reduce the debt outstanding on our unsecured line of credit facility. This
will allow us the financial flexibility to continue to implement our strategic
growth initiatives, through additional investments in current operations, future
acquisitions and existing affiliates.
Financial Highlights
--------------------
(in thousands except per share data, other data and percentages)
----------------------------------------------------------------
For the Three Months Ended March 31
2004 2003
--------------- ------------------
% of % of %
(Unaudited) Actual Sales Actual Sales Change
- --------------------------------- -------- ------- -------- --------- --------
Sales $184,842 100.0% $130,140 100.0% 42%
Gross profit 19,576 10.6 11,161 8.6 75
Selling, general and
administrative expenses 8,523 4.6 6,915 5.3 23
Equity in net income of
unconsolidated affiliates 687 0.4 85 - 708
Operating income 11,740 6.4 4,331 3.3 171
Interest expense, net 998 0.5 1,346 1.0 (26)
Net income 6,902 3.7 1,992 1.5 246
Diluted earnings per common share $0.68 $0.20 240
Other data
- ----------
Average days sales outstanding 51.6 53.7 (4)
Inventory turnover 5.6 5.3 5
Return on equity (annualized) 14.2% 5.9% 141
14
For the Six Months Ended March 31
2004 2003
--------------- ------------------
% of % of %
(Unaudited) Actual Sales Actual Sales Change
- --------------------------------- -------- ------- -------- --------- --------
Sales $315,631 100.0% $256,149 100.0% 23%
Gross profit 30,353 9.6 24,931 9.7 22
Selling, general and
administrative expenses 15,188 4.8 14,047 5.5 8
Equity in net income of
unconsolidated affiliates 1,169 0.4 410 0.2 185
Operating income 16,334 5.2 11,294 4.4 45
Interest expense, net 1,961 0.6 2,548 1.0 (23)
Net income 9,300 2.9 5,782 2.3 61
Diluted earnings per common share $0.93 $0.58 60
Cash dividends per common share $0.10 $0.10 --
Results of Operations
- ---------------------
Sales
-----
We posted net sales of $184,842,000 for the fiscal quarter ended March 31,
2004, an increase of 42% from sales of $130,140,000 for the fiscal quarter
ended March 31, 2003. Tons shipped of company-owned steel products in the
second quarter of fiscal 2004 increased approximately 39% to 334,000 tons
compared to the second quarter of fiscal 2003 as a result of continued
market growth with large national accounts and improved economic
conditions. The average selling price of company-owned steel products
increased approximately 3% for the second quarter of fiscal 2004 as
compared to the previous year.
Sales for the six months ended March 31, 2004 increased by 23% to
$315,631,000 compared to $256,149,000 for the six months ended March 31,
2003. Tons shipped in the first six months of fiscal 2004 increased 24%
compared to the first six months of fiscal 2003. Average selling prices of
steel for the first six months of fiscal 2004 remained about the same as
compared to the previous year.
Gross profit
------------
Our gross profit margin was 10.6% in the second quarter of fiscal 2004
compared to 8.6% in the second quarter of fiscal 2003. Cost of goods sold
increased 38.9% in the second quarter of fiscal 2004 compared to the second
quarter of fiscal 2003. Cost of materials sold increased $41,253,000 in the
second quarter of fiscal 2004 primarily on
15
higher sales volume. The remaining increase in cost of goods sold in the
second quarter of fiscal 2004 was $5,034,000 and was primarily a result of
increased labor costs and related fringe benefits and increased delivery
costs due to higher sales volume.
For the first six months of fiscal 2004 our gross profit margin was 9.6%
compared to 9.7% for the first six months of fiscal 2003. Cost of goods
sold increased 23.4% in the first six months of fiscal 2004 compared to the
first six months of fiscal 2003. Cost of materials sold increased
$47,116,000 primarily on higher sales volume. The remaining increase in
cost of goods sold for the six months ended March 31, 2004 compared to
March 31, 2003 of $6,944,000 was primarily a result of increased labor
costs and related fringe benefits and increased delivery costs due to
higher sales volume. These increases were offset by an approximately
$279,000 reduction in health insurance and workers' compensation accruals
during the first quarter of fiscal 2004 attributable to more favorable
trends than previously estimated.
Our gross profit margin improved somewhat from an escalating price
environment due to rising raw material costs. This benefit to our earnings
will reverse in subsequent quarters as the full effect of raw material
increases works through our inventory.
We expect average raw material costs in the third quarter of fiscal 2004 to
exceed average raw material costs in the second quarter of fiscal 2004 as a
result of steel supply shortages and raw material surcharges that are
currently being implemented by our suppliers. We intend to continue to pass
on these price increases and surcharges to our customers to mitigate the
impact of the surcharges on our gross profit margin. If we are unable to
continue to pass through future price increases to our customers, our gross
margins will decrease.
We may offset rising material costs and positively impact gross profit by
achieving production cost efficiencies and product mix improvements.
Selling, general and administrative expenses
--------------------------------------------
Selling, general and administrative costs were $8,523,000 or 4.6% of sales
for the second quarter ended March 31, 2004, compared to $6,915,000 or 5.3%
for the second quarter ended March 31, 2003. Higher sales volume and net
income levels contributed to an increase in selling, general and
administrative expenses as a result of higher selling costs, an increase in
bad debt expense and increases in company wide bonus plan expenses.
Selling, general and administrative cost reductions were achieved from a
non-recurring state payroll tax incentive credit in the amount of $355,000
received during the second quarter of fiscal 2004.
Selling, general and administrative costs for the first six months ended
March 31, 2004 were $15,188,000 or 4.8% of sales compared to $14,047,000 or
5.5% of sales for the first six months ended March 31, 2003. Higher sales
volume and net income levels contributed to an increase in selling, general
and administrative expenses as a result of higher selling costs, an
increase in bad debt expense and increases in company wide
16
bonus plan expenses. Selling, general and administrative cost reductions
were achieved in the amount of $740,000 from a non-recurring state payroll
tax incentive and a reduction of property tax expenses as a result of
receiving an assessment at amounts significantly lower than estimated.
We continue to actively manage the level at which selling, general and
administrative expenses are added to our cost structure
Equity in net income of unconsolidated affiliates
-------------------------------------------------
Our share of the income of our unconsolidated affiliates increased to
$687,000 for the second quarter of fiscal 2004 compared to $85,000 in 2003.
For the six months ended March 31, 2004 income from unconsolidated
affiliates was $1,169,000 compared to $410,000 for the first six months
ended March 31, 2003.
Our largest unconsolidated affiliate, Mi-Tech Steel, experienced 53% sales
growth during the second quarter and 42% sales growth for the first six
month of fiscal 2004. The continued ramping up of the Nissan Motor Co.,
Ltd.'s new Canton, Mississippi operation contributed positively to Mi-Tech
Steel's earnings. Mi-Tech Steel's newest facility located near the Nissan
Mississippi operation has begun a $4,000,000 follow-on expansion to handle
automotive exposed processing to service Nissan and other businesses in the
southern region of the U.S.
Interest expense
----------------
Net interest expense for the second quarter of fiscal 2004 decreased to
$998,000 from $1,346,000 for the second quarter of fiscal 2003. Net
interest expense for the six months ended March 31, 2004 decreased to
$1,961,000 compared to $2,548,000 during the same period of fiscal 2003.
The decrease is primarily attributable to lower interest rates on variable
rate debt during the current period as compared to the same period last
year.
Income tax expense
------------------
Our effective income tax rate was approximately 35.7% and 37.8%,
respectively, for the second quarters of fiscal 2004 and 2003. The decrease
is attributable to a higher percentage of overall earnings from our
unconsolidated affiliate, Mi-Tech Steel, joint venture during our second
fiscal quarter of 2004, which are not fully taxable to the Company, and a
lower percentage of expense items not deductible for tax purposes.
For the first six months of fiscal 2004 and 2003 our effective income tax
rate was 35.2% and 34.6%, respectively. The increase is attributable
primarily to a non-recurring state income tax benefit recorded during the
quarter ended December 31, 2002. We estimate our effective income tax rate
will be approximately 35% for fiscal 2004.
17
Liquidity and Capital Resources
- -------------------------------
As of March 31, 2004, we had $133,775,000 of working capital, maintained a
current ratio of 2.4:1 and had total debt at 29% of capitalization. Generally,
in periods of economic expansion and increased demand for our products, our
working capital requirements increase. Conversely, in periods of economic
contraction and reduced demand for our products, our working capital
requirements decrease.
Average days sales outstanding to customers was 52 days as of March 31, 2004
compared to 54 as of March 31, 2003. We expect average days sales outstanding to
remain at 52 days during the third quarter of fiscal 2004. Average days
inventory was 65 days as of March 31, 2004 compared to 67 days as of March 31,
2003. We expect average days inventory remain at 65 days during the third
quarter of fiscal 2004.
Our average payment days to suppliers was 42 days as of March 31, 2004 compared
to 26 days as of March 31, 2003. We expect average payment days to suppliers to
decrease to 35 days during the third quarter of fiscal 2004.
During the first six months of fiscal 2004, cash used in operations was
$15,459,000 primarily working capital related. We increased inventory by
$34,816,000 and accounts receivable by $31,445,000 to support our sales growth,
which was partially offset by an increase in accounts payable of $27,314,000.
This working capital increase was financed primarily from borrowings under our
bank line of credit. In the third quarter of fiscal 2004, as we continue to
expand our sales, we expect to increase inventory and accounts receivable to
support our growth. We expect to finance our cash flow needs with borrowings
under our line of credit agreement.
Capital expenditures for the first six months of fiscal 2004 totaled
approximately $8,561,000 primarily for various capacity improvement projects. We
continue to expand production capacity to serve the growing needs of customers
and invest in automation to improve productivity and make our operations more
efficient. For fiscal 2004, the capital additions to all facilities are expected
to approximate $17,000,000.
We maintain an equity investment of approximately $18,244,000 in our 90%-owned
Mexican subsidiary. Additional investments in our Mexican operations, if
required, would be financed with available funds from our credit facility.
The translation of the financial statements of our Mexican subsidiary from local
currencies to the U.S. dollar subjects us to exposure relating to fluctuating
exchange rates. However, this exposure is mitigated somewhat by a large
percentage of transactions denominated in the U.S. dollar. We do not consider
our exposure to exchange rate risks to be material and consider the Mexican peso
a relatively stable currency. We do not typically manage our related foreign
currency exchange rate risk through the use of financial instruments. Foreign
currency transaction gains included in sales were $40,000 and $80,000 during the
first three and six months of fiscal 2004, respectively. Foreign currency
transaction gains recorded during the first three and six months of fiscal 2003
were $503,000 and $616,000,
18
respectively, reflecting a weaker average exchange rate of the peso during the
first six months of fiscal 2003 relative to the U.S. dollar.
We maintain a 50% equity investment in Mi-Tech Steel and a 49% equity investment
in Ferrolux Metals. As part of our strategy to develop the operations of our
unconsolidated affiliates, we loaned Mi-Tech Steel $2,000,000 on September 30,
2003. The loan is subordinate to all existing Mi-Tech Steel loans and matures
September 30, 2006. Interest is paid at maturity at a LIBOR based interest rate.
Additional equity contributions to our unconsolidated affiliates are not
required and we do not guarantee any obligations of our unconsolidated
affiliates. While distributions from Mi-Tech Steel are permitted if authorized
by Mi-Tech Steel's board of directors, such distributions are restricted by one
of Mi-Tech Steel's loan agreements. Such restrictions limit distributions to 15%
of Mi-Tech Steel's net income in any fiscal year. Distributions from Mi-Tech
Steel are not, and are not expected to be, material sources of liquidity for us.
Mi-Tech Steel's liquidity needs are met primarily by their cash flows from
operating activities and existing line of credit facility. Cash flows from
operations and available borrowing capabilities are expected to meet Mi-Tech
Steel's future needs.
On March 31, 2004, the Company completed a public stock offering of 2,905,000
shares of common stock at a price of $17.25. The Company realized net proceeds
of approximately $47.3 million from this offering. We intend to use the net
proceeds of the offering to continue to implement our strategic growth
initiatives, through additional investments in current operations, future
acquisitions and existing affiliates. Pending such use, we used the net proceeds
to reduce borrowings under our line of credit facility.
Borrowings and repayments under our line of credit agreement are initiated as
needed to fund our operating and investing activities described above. During
the first six months of fiscal 2004, we borrowed $32,000,000 to finance our
working capital needs and repaid $53,720,000 on our indebtedness.
We have a $151,000,000 unsecured line of credit agreement expiring on August 31,
2005, with various variable options on the interest rate, none of which are
greater than the bank's prime rate. At March 31, 2004, there was $73,000,000
outstanding on the credit facility.
We have $5,680,000 outstanding at March 31, 2004 on the ten-year note which
requires the final principal payment in March 2005. During our third quarter of
fiscal 2004, we intend to prepay the final principal amount and expense an
approximate $300,000 make-whole payment. We expect to borrow approximately
$6,000,000 on our line of credit to finalize this transaction.
Provisions contained in our debt agreements require us to maintain specified
levels of net worth, maintain certain financial ratios and limit the addition of
substantial debt. Our line of credit agreement and private placement note
contain cross-default provisions with respect to the line of credit agreement
and private placement note. Once our private placement note is retired the cross
default provisions will cease to exist. We are in compliance with all
19
of our loan covenants, and none of these covenants would restrict the completion
of currently planned capital expenditures.
Cash Requirements, Contractual Obligations and Contingencies
- ------------------------------------------------------------
Our liquidity needs are met primarily by our cash flows from operating
activities and our line of credit facility. We anticipate borrowing on our
existing line of credit facility to support our continued growth and to meet our
working capital needs. Cash flows from operations and available borrowing
capabilities are expected to meet our future needs. Operating cash flows are
somewhat influenced by cyclicality of demand in the steel industry, especially
in the automotive market. Any additional funds will be used for growth,
including strategic acquisitions, investment in unconsolidated affiliates,
construction of new plant capacity, and investment in production and processing
capabilities. The form of such financing may vary depending upon the prevailing
market and related conditions, and may include short or long-term borrowings or
the issuance of debt or equity securities.
We expect to extend and expand our line of credit agreement prior to its
maturity on August 31, 2005. We believe that, given our successful multiple year
renewals in 1998 and 2001 and the one-year extension of the maturity date in
fiscal 2003 to its current maturity, we will obtain this extension and
expansion. We continue to remain in compliance with all covenants, including our
leverage ratios, and all of our borrowings are unsecured. In the event we are
unable to refinance our line of credit on a similar basis, we have sufficient
working capital and fixed assets available to obtain secured financing to meet
our future needs.
We have entered into operating leases and agreements to purchase electricity to
meet the needs of our facilities. These obligations have not changed
significantly from those disclosed in our Annual Report on Form 10-K for the
year ended September 30, 2003.
At this time, we have no other known material off-balance sheet arrangements,
contractual obligations, contingent liabilities or commitments that must be met
beyond the next twelve months.
We believe all manufacturing facilities are in compliance with applicable
federal and state environmental regulations. We are not presently aware of any
fact or circumstance, which would require the expenditure of material amounts
for environmental compliance.
Related Party Transactions
- --------------------------
We have various transactions with Mi-Tech Steel and we sell scrap steel products
to a company owned by Stuart N. Ray, an officer and director of Steel
Technologies (see Note 7 of our Notes to Condensed Consolidated Financial
Statements). The price that we receive for our scrap steel is based on a
published index price. We have no ongoing contractual or other commitments to
sell scrap steel to Mr. Ray's company and we can discontinue sales to this
company at any time. We bid our scrap steel business to potential purchasers on
a regular basis.
20
Recently Issued Accounting Pronouncements
- -----------------------------------------
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities, an interpretation of ARB 51" (FIN 46). The primary
objectives of FIN 46 are to provide guidance on the identification of entities
for which control is achieved through means other than through voting right
(variable interest entities, or VIEs) and how to determine when and which
business enterprise should consolidate the VIE (the primary beneficiary). The
provisions of FIN 46, as amended by FASB Staff Position 46-6, "Effective Date of
FIN 46" and FIN 46R, are effective immediately for VIEs created after January
31, 2003 and no later than March 31, 2004 for VIEs created before February 1,
2003. In addition, FIN 46 requires that both the primary beneficiary and all
other enterprises with a significant variable interest make additional
disclosure in filings issued after January 31, 2003. We have determined that we
do not have any variable interest entities and the adoption of FIN 46 does not
have an impact on our financial position, results of operations or cash flows.
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change during the first six months ended March 31,
2004 from the disclosures about market risk provided in our Annual Report on
Form 10-K for the year ended September 30, 2003.
Item 4. Controls and Procedures
Management, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the second quarter covered by this
Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that the disclosure controls and
procedures are effective to ensure that material information required to be
disclosed in the reports we file or submit under the Securities Exchange Act of
1934 is made known to us by others within our company, including our
consolidated subsidiaries, particularly during the period for which reports of
our company, including this Quarterly Report on Form 10-Q, are being prepared.
There were no changes in our internal control over financial reporting that
occurred during our second fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
Exhibits filed with this report are attached hereto.
On March 19, 2004, we filed a current report on Form 8-K under Items 5 and 7,
concerning the issuance of a press release announcing our expected financial
results for the second quarter ended March 31, 2004.
On April 19, 2004, we furnished a current report on Form 8-K under Item 12,
concerning the issuance of a press release reporting our financial results for
the second quarter ended March 31, 2004.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STEEL TECHNOLOGIES INC.
-----------------------
(Registrant)
By /s/ Joseph P. Bellino
-----------------------------
Joseph P. Bellino
Chief Financial Officer
(Principal Financial and Chief Accounting Officer)
Dated: May 12, 2004
23
EXHIBIT 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bradford T. Ray, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Steel Technologies
Inc. for the fiscal quarter ending March 31, 2004;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
first fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: May 12, 2004
/s/ Bradford. T. Ray
- --------------------
Bradford T. Ray
Chief Executive Officer
EXHIBIT 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph P. Bellino, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Steel Technologies
Inc. for the fiscal quarter ending March 31, 2004;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
first fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: May 12, 2004
/s/ Joseph P. Bellino
- ---------------------
Joseph P. Bellino
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, I, Bradford T. Ray, Chief
Executive Officer of Steel Technologies Inc., (the Company) certify, to the best
of my knowledge, based upon a review of the Quarterly Report on Form 10-Q of the
Company for the quarter ended March 31, 2004:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Bradford T. Ray
-------------------
Bradford T. Ray
Chief Executive Officer
Date: May 12, 2004
EXHIBIT 32.1
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, I, Bradford T. Ray, Chief
Executive Officer of Steel Technologies Inc., (the Company) certify, to the best
of my knowledge, based upon a review of the Quarterly Report on Form 10-Q of the
Company for the quarter ended March 31, 2004:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Joseph P. Bellino
---------------------
Joseph P. Bellino
Chief Financial Officer
Date: May 12, 2004