Earle M. Jorgensen Co. (EMJ) reported net income of $59.4 million on revenues of revenues of $456.3 million for the fourth fiscal quarter and net income of $97.5 million on revenues of $1,608.9 million for the twelve months ended March 31, 2005.

Fourth Quarter Results — The $59.4 million net income compares to a net loss of $3.5 million for the same period in fiscal 2004. Revenues of $456.3 million reflect a 41.7% increase compared to $322.1 million for the same period in fiscal 2004. Operating income $30.9 million is a 26.1% increase compared to $24.5 million for the same period in fiscal 2004. Tons shipped from inventory increased approximately 2% compared to the same period in 2004, and increased approximately 10% over our third fiscal quarter ended December 31, 2004. EBITDA was $33.9 million, a 24.2% increase over $27.3 million in the prior year quarter.

Financial results include an increase in the pre-tax LIFO reserve of $31.7 million compared to $13.8 million for the same period in fiscal 2004. Results also include $2.6 million of pre-tax income from the redemption of life insurance policies in the fourth quarter of fiscal 2005.

Full Year Results — Net income of $97.5 million compares to a net loss of $23.6 million for the same period in fiscal 2004. Revenues, $1,608.9 million, reflect a 54.6% increase compared to $1,040.4 million for the same period in fiscal 2004. Tons shipped from inventory increased by approximately 16% from the same period in fiscal 2004. Operating income of $134.7 million reflects a 93.8% increase compared to $69.5 million for the same period in fiscal 2004. EBITDA was $146.4 million, an 81.2% increase over the $80.8 million for fiscal 2004.

Fiscal 2005 financial results include an increase in the company’s LIFO (last-in first-out) reserve of $74.2 million versus $14.3 million in fiscal 2004. Results also include a net income tax benefit of $38.6 million, which compares to a tax provision of $3.1 million for fiscal 2004. The current year net tax benefit included a nonrecurring tax benefit from the reduction of the deferred tax asset valuation reserve primarily attributable to the payment of the high-yield debt interest on the Holding Company Notes and the utilization of net operating losses during the year.

Comments — Maurice S. Nelson, Jr., EMJ's President and CEO, stated: "We were very pleased with our results for the fourth quarter and the fiscal year. We had a historic year with record revenues and profit, which culminated with the merger and financial restructuring and the initial public offering (IPO) on April 14, 2005. I am proud of the collective efforts of all EMJ employees who contributed to the record results."

"In addition, the company significantly de-leveraged during the quarter with our revolving credit facility decreasing by $74.6 million to a balance of $16.9 million," Mr. Nelson added.

Mr. Nelson went on to state that: "We have completed our Kasto System upgrades in Schaumburg, Ill., that will allow an additional 25% increase in throughput at this location in addition to the 72% capacity increase we experienced from the first phase of the system expansion. Furthermore, we will be opening our Spokane, Wash., satellite in June and have three more satellite locations, Hartford, Conn., Lafayette, La., and Quebec City, Canada, approved for completion during fiscal 2006. Additionally, expansion projects are planned in our Kansas City, Missouri, and Toronto, Ont., facilities. Estimated capital expenditures required to complete these projects will be approximately $11.6 million. We anticipate funding these investments with a combination of internally generated cash and debt.

"Revenues and shipments for April continued at the same record pace established in the March ending quarter and the price per pound increased marginally. We have seen, however, some compression of our pre-LIFO gross margin. We anticipate some seasonal revenue slow-down as we approach the summer months consistent with past history. We estimate the range of revenue for the June 2005 quarter (First Qtr. of FY'06) to be $430 to $440 million, EBITDA to be within a range of $42 to $46 million (after paying the $8.5 million IPO bonus), and estimated net earnings per diluted share for the June quarter to be in a range of $0.30 to $0.34 per share. Our first quarter guidance is based on 52.0 million diluted weighted shares outstanding, and a 35% statutory tax rate. In addition, guidance assumes no change in the valuation of the 2.5 million share obligation to the stock bonus plan."

On April 20, 2005, EMJ completed its merger and financial restructuring, pursuant to which EMJ's parent, Earle M. Jorgensen Holding Co., Inc., was merged with and into a wholly owned subsidiary of EMJ. On April 20, 2005 the company also closed its initial public offering of 17,600,000 shares of EMJ common stock.

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.