Earle M. Jorgensen Co. (EMJ) reported net income of $22.6 million on revenues of $444.0 million for the first fiscal quarter ended June 29, 2005.

The $444.0 million in revenues reflects a 22.8% increase compared to $361.6 million for the three months ended June 30, 2004. Sales volume was 201,000 tons, an increase of 3.1% over the 195,000 tons shipped in the first quarter of fiscal 2005. Operating income of $47.4 million reflect an increase of 19.4% compared to $39.7 million for the same period in fiscal 2005.

The $22.6 million net income compares to net income of $11.7 million for the same period in fiscal 2005. EBITDA was $50.1 million, a 17.9% increase over the $42.5 million in the same period in fiscal 2005. Current financial results include a LIFO (last-in-first-out) charge of $5.0 million versus $11.4 million for the same quarter last year, which are included in cost of sales. Diluted earnings per share was $0.48 per share, based on 47.3 million diluted weighted shares outstanding; this compares with diluted earnings per share of $0.58, based on 15.5 million diluted weighted shares outstanding for the first quarter of fiscal 2005.

The significant increase in the diluted weighted shares outstanding is the result of the shares issued in conjunction with EMJ’s merger, financial restructuring and initial public offering in April 2005. The current quarter included a one-time IPO cash bonus of $8.5 million, partially offset by a favorable $4.4 million to mark-to-market adjustment to value EMJ’s common stock obligation, to the Stock Bonus Plan, based on the per share price of the company’s common stock at June 29, 2005. The mark-to-market adjustment is recorded as a reduction in general and administrative expenses.

Maurice S. Nelson Jr., EMJ's President and CEO, stated, "We are very pleased with our results for the June quarter, as we saw continued strong demand throughout the quarter with each months' revenues exceeding the comparable month of the prior year. As expected, we have, however, seen pressure on our gross margins, which at 26.0% for the current quarter, is below our historical average. We believe that this is due to increased competitive pressure, and some decline in the market price of certain products, in particular, carbon steel, during the quarter. We saw modest overall inflation in our inventory during the quarter that resulted in a $5.0 million LIFO charge, but we are currently seeing a flattening out of our overall cost per ton in inventory."

Mr. Nelson continued, "During the first quarter of fiscal 2006 we opened our Spokane, WA, satellite and expanded our internal value added capabilities by opening our Houston bar trepanning facility. Additional growth initiatives include plans to open satellite facilities in Hartford, Conn., Quebec City, Canada, and Lafayette, La., and expansion of our Toronto and Kansas City facilities."

In addition, shortly after the end of the fiscal first quarter, EMJ contributed 1.7 million shares of its 2.5 million share obligation to the Stock Bonus Plan, thus reducing the future volatility of operating expenses, as the company is required to mark-to-market the uncontributed shares based on the share price of common stock at the end of each quarter.

EMJ’s revolving line of credit facility increased to $72.2 million from $16.9 million at March 31, 2005, primarily due to a $16.6 million payment of federal and state taxes, a $12.2 million payment for the semi-annual interest obligation on senior notes, an $8.5 million payment of the IPO bonus, capital expenditures of $7.8 million, annual management incentive payments, and an increase in net working capital due to investments in inventory and accounts receivables.

Outlook—EMJ expects business to continue at the levels of the first quarter, subject to the typical seasonal slowness in the summer months and a continuation of competitive pressures on pricing resulting in gross margins at the low end of the company’s recent historic range. As such, EMJ currently expects revenue for its fiscal second quarter ending September 28, 2005, to be in the range of $390-$410 million, EBITDA within a range of $42-$45 million and diluted earnings per share of $0.32 -$0.35, based on 52.0 million diluted weighted shares outstanding.

EMJ is one of the largest distributors of metal products in North America with 37 service and processing centers. EMJ inventories more than 25,000 different bar, tubing, plate, and various other metal products, specializing in cold finished carbon and alloy bars, mechanical tubing, stainless bars and shapes, aluminum bars, shapes and tubes, and hot-rolled carbon and alloy bars.