Earle M. Jorgensen Co. (EMJ) reported net income of $4.3 million on revenues of $401.7 million for the third fiscal quarter ended December 31, 2004.

Third Quarter Results—Net income of $4.3 million reflects 258.3% increase compared to $1.2 million for the same period in fiscal 2004. Revenues of $401.7 million reflect a 61.5% increase compared to $248.8 million for the third quarter of fiscal 2004, and operating income of $16.4 million reflects an 11.6% increase compared to operating income of $14.7 million for the same period in fiscal 2004. Tons shipped from inventory increased approximately 14% from the prior year quarter.

Results include a charge to inventory to record results on a last-in first-out basis (LIFO) of $18.1 million, versus $0.5 million during the prior year quarter due to the increased cost of metals. Operating expenses of $91.3 million included items outside of the ordinary course of business totaling $25.1 million. The company experienced a 66% increase in delivery expenses in fuel and third-party freight in the third quarter of fiscal 2005 due to higher volumes and price inflation for both fuel and freight rates compared to the prior year quarter.

A $3.5 million performance bonus was paid in the third quarter of fiscal 2005 to the company's CEO for his efforts to improve the company's operating performance in calendar 2004 and his efforts to implement the company's proposed financial restructuring and initial public offering. In addition, EMJ sold its redundant Houston and Tulsa facilities for $5.7 million in net proceeds, which generated a gain of $2.2 million.

Nine Month Results—Net income of $52.9 million compares to $5.3 million for the same period in fiscal 2004. Revenues increased 60.5% to $1,152.6 million, when compared to $718.3 million for the same period in fiscal 2004. Operating income increased 131.2% to $103.8 million compared to $44.9 million in the same period in fiscal 2004. Tons shipped from inventory increased by approximately 23.1% from the same period in fiscal 2004.

Financial results include a LIFO charge of $42.5 million versus $0.5 million for the comparable fiscal 2004 year-to-date period.

Comments—Maurice S. Nelson Jr., EMJ's President and CEO, stated, "The company continued to display positive operating momentum in the third quarter and for the first time in EMJ's history, revenues exceeded $400 million in a quarter. We continue to experience price increases from our raw material suppliers and have managed to pass most of these increases through to our customers. Although gross margins, including an $18.1 million LIFO charge in the quarter, were 26.8%, somewhat less than the 27.7% gross margin for the third quarter of last year, our year-to-date margin of 28.1%, which includes a $42.5 million LIFO charge, exceeded the 27.8% prior year-to-date gross margin that included a $0.5 million LIFO charge.

"We were very pleased with our shipping volumes during what is usually a seasonally slow quarter. We further note our fourth quarter ending March 31, 2005 has commenced with strong sales order activity."

EMJ is one of the largest distributors of metal products in North America with 35 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.