Ryerson Tull, Inc. reported a net profit of $17.4 million on net sales of $898.7 million for the third quarter of 2004.

Third Quarter Results—Net profit of $17.4 million ($0.68 per diluted share) compares with a net loss of $3.2 million ($0.13 per share) in the third quarter of 2003, and a net profit of $21.3 million ($0.83 per diluted share) in the second quarter of 2004.

Third quarter 2004 results included a previously disclosed pretax restructuring charge of $3.0 million ($0.07 per share) to consolidate two locations in the Northeast; a pretax gain of $2.3 million ($0.05 per share) on the sale of property; and a $2.3 million after-tax ($0.09 per share) positive income adjustment associated with a discontinued operation. Second quarter 2004 results included a pretax restructuring charge of $593,000 ($0.01 per share); a pretax gain of $2.3 million ($0.06 per share) on the sale of property; and a $1.2 million after-tax ($0.05 per share) positive income adjustment associated with a discontinued operation. Third quarter 2003 results included a pretax restructuring charge of $898,000 ($0.02 per share).

Third quarter 2004 sales, including J&F Steel, increased 63.0% from the third quarter of 2003, on a 9.6% increase in tons shipped and a 48.8% increase in the average selling price per ton. On a sequential basis, third quarter 2004 sales increased 13.1% from the second quarter of 2004, on a 3.2% increase in tons shipped and a 9.6% increase in the average selling price per ton.

Gross profit per ton was $213 in the third quarter of 2004, compared with $159 in the year-ago period and $216 in the second quarter of 2004. Gross margins were 16.8% in the third quarter of 2004, compared with 18.7% in the second quarter of 2004 and the third quarter of 2003. The decline in the gross margin was largely the result of a dollar-for-dollar pass-through of price increases and surcharges, which mathematically results in a lower margin percentage.

Third quarter 2004 operating expenses per ton were $170, compared to $162 in the second quarter of 2004 and $161 in the third quarter of 2003. The third quarter of 2004 included higher restructuring charges and performance-based incentive expenses.

Comments—"This represents our third consecutive quarter of solid growth and profitability," said Neil S. Novich, Chairman, President, and CEO of Ryerson Tull. "Our national marketing program is enabling us to expand our customer base, with more than 5000 new customer accounts added year-to-date. We are also experiencing strong market demand and the benefits of our multi-year restructuring, which has made us a more efficient and responsive competitor."

"While we experienced the typical third-quarter slowdown, driven by customers' summer shutdowns, market demand and pricing remained strong," said Novich. "Additionally, we had two months' sales contribution from J&F Steel, which was acquired on July 30, 2004."

Financial Condition—In the third quarter of 2004, Ryerson Tull completed the acquisition of J&F Steel for approximately $59.0 million. In conjunction with this acquisition, the company increased its bank line of credit to $525 million from $450 million and extended the maturity from December 31, 2006, to July 30, 2008. During the third quarter, the company made the previously disclosed $21.5 million voluntary contribution to its pension fund.

Ryerson Tull ended the third quarter with a debt-to-capital ratio of 50.5% and approximately $136 million available under its credit facility, compared with a debt-to-capital ratio of 43% and availability of $158 million at the end of the second quarter of 2004.

Also, as previously reported, on September 17, 2004, the Pension Benefit Guarantee Corporation (PBGC) released Ryerson Tull from its guarantee and letter of credit to the PBGC for the Ispat Inland Pension Plan. As a result, Ryerson Tull recorded a $2.3 million after-tax adjustment during the third quarter of 2004 to the gain on the 1998 sale of the Inland Steel Co., a discontinued operation.

Outlook—"In the fourth quarter, we expect the typical year-end slowdown, resulting from customers' holiday shutdowns," concluded Novich. "And there are four fewer ship days. But we believe underlying metals demand will remain strong, and we will continue our aggressive marketing, aimed at expanding our customer base and growing business with existing accounts."

Ryerson Tull, Inc. is a leading North American distributor and processor of metals, with 2003 revenues of $2.2 billion. The company services customers through a network of service centers across the United States and in Canada, Mexico, and India.