Metals USA, Inc. announced net income of $14.3 million on net sales of $426.8 million for the three months ended June 30, 2005.

Second Quarter Results—The $14.3 million net income ($0.68 per diluted share) compares to net income of $33.7 million ($1.63 per diluted share) for the second quarter of 2004.

Demand in the second quarter was good, with $426.8 million of net sales, against $427.6 million during the first quarter and $383.6 million sold during 2Q04. Although average realized sales prices by the Flat Rolled and Plates and Shapes Groups were 18.7% higher than prices during the same quarter last year, margins were compressed because the cost of the inventory grew by 38.4%.

Operating income was $26.7 million, compared to operating income of $56.5 million reported in the second quarter of 2004. The Building Products Group continued to show positive results after the actions taken last year, contributing with $7.1 million of operating income this quarter. Total EBITDA was $27.7 million this quarter.

Comments—C. Lourenco Goncalves, President and CEO, stated, "Price declines in May and June have placed service center margins under near-term pressure. Under this scenario, Metals USA reduced our inventories by $55.8 million and total debt by $70.5 million during the quarter, while preserving our profitability." Mr. Goncalves continued, "We expect a rebound in activity and prices during the second half of the year."

Metals USA provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, specialty metals, and building products markets.