April 2006
Service Center News

New Owner for Feralloy,
Delta, Infra-Metals
TUI AG has sold its PNA Group holdings to Platinum Equity, a California-based investment firm. The sale price for the deal, expected to finalize in the second quarter, was not disclosed.

PNA Group, based in Atlanta, includes Chicago-based Feralloy, which distributes hot-rolled, galvanized, pickled and other rolled steel; Delta Steel, Houston, which provides structural beams, channels, tubes, plates and hot-rolled coiled steel; and Infra-Metals, Atlanta, which sells structural steel products.

TUI AG, primarily a travel and tourism company in Europe, has been divesting its non-core businesses.

Platinum Equity, Beverly Hills, Calif., has completed more than 60 merger and acquisition transactions since its founding in 1995 for more than $11 billion in aggregate revenue.

“We are enthusiastic about the steel and steel services sector,” says Jacob Kotzubel, senior vice president for mergers and acquisitions. “Platinum’s transition and operations expertise will help ensure a smooth separation of PNA Group from TUI. We are excited to work with the management teams at each of the three business units.”

ThyssenKrupp Expands in Asia, U.S.
ThyssenKrupp Services AG, Dusseldorf, Germany, has entered a Shanghai joint venture with Leong Jin Corp. Pte. Ltd., a materials trading company headquartered in Singapore.

The new company, ThyssenKrupp Materials (Shanghai) Co. Ltd. specializes in stocking and processing of chiefly nonferrous metals and plastics. TK’s parent company holds a 70 percent stake in the joint venture. The company is projecting annual sales of $120 million.

Leong Jin, in which ThyssenKrupp Services also holds a 30 percent interest, generated sales of approximately $80 million in 2005 and has branches in Malaysia, China and Thailand.

In addition, ThyssenKrupp Metals Co. Ltd. in Seoul, South Korea, expanded its warehouse area from 43,000 to 110,000 square feet. The company plans further capacity expansions for aluminum processing.

In Thailand, ThyssenKrupp Services in Bangkok is expanding its current operations at Thai-German Special Steel Center Co. Ltd. with a new heat-treatment plant to broaden the tool and specialty engineering steel business.
“These are the first steps, and we intend to grow further,” says Joachim Limberg, executive board member of ThyssenKrupp Services. “Further acquisitions or joint ventures are on the agenda.”

Additionally, the company’s North American company, ThyssenKrupp Materials NA Inc., Southfield, Mich., has completed the acquisition of the assets of VPK Metal Inc., including Peckover’s, Vimetal Peckover, Roy Metals Sales Inc., Vifab and O.M.I. in Canada. The newly acquired VPK Metal business units will retain their current names and will operate as part of ThyssenKrupp Materials NA’s Copper and Brass Sales division.

VPK Metal Inc., headquartered near Toronto, Ontario, is a distributor and processor of copper, bronze, brass and aluminum. The company operates six service centers throughout Canada and the United States.

Worthington Sales, Earnings Decline
Worthington Industries’ nine-month sales and earnings lag the record-setting figures of last year.

Net sales for the third quarter of fiscal 2006 at the Columbus, Ohio-based company were $681.5 million, a decrease of 9 percent from last year’s record $747.4 million. Third quarter net earnings were $19.2 million, compared to the record $33.1 million in the same period last year.

For the nine-month period, net sales of $2.07 billion were 8 percent below the $2.26 billion the previous year. Net earnings were $86.6 million vs. $138.6 million for the same period last year.

“Our third quarter started with a much slower than anticipated December for our steel processing and metal framing segments, and although there was improvement in January and a stronger February, the results for the quarter remained short of our goal,” said John P. McConnell, chairman and CEO.
In the steel processing segment, quarterly net sales of $351.9 million were 15 percent lower than $414.6 million in the comparable quarter of fiscal 2005. The decrease in net sales was the result of lower selling prices, as volumes were flat.

Operating income declined from the year ago period as spreads between selling prices and material costs fell from near record levels and manufacturing expenses (such as freight, zinc and natural gas) increased.

Precision Strip Acquires Flat Rock
Precision Strip Inc., a subsidiary of Reliance Steel & Aluminum Co. in Los Angeles, has completed its previous acquisition of Flat Rock Metal Processing L.L.C. based in Flat Rock, Mich.

Flat Rock was founded in 2001 and is a privately held toll processing company with facilities in Perrysburg, Ohio, and Eldridge, Iowa.
The two Flat Rock facilities will operate as Precision Strip locations that process and deliver carbon steel, aluminum and stainless steel products on a toll basis.

Steel Warehouse Picks Chattanooga
for Temper Mill Cut-to-Length Line
Steel Warehouse Co., South Bend, Ind., has selected Chattanooga, Tenn., as the site for its fifth temper mill cut-to-length line. This new operation, which should be completed late this year or in early 2007, will supply steel to meet the growing need for temper passed product in the Southeastern portion of the United States.

Company officials say the temper mill will be one of the largest in the United States and will have the capability to handle three-quarter-inch steel in widths up to 100 inches.

Steel Warehouse considered sites along the Tennessee River in Alabama and Tennessee for the new line, but opted to build it adjacent to its existing operations in Chattanooga.

IMSA Purchases Two Slitting Lines
Industrias Monterrey S.A. de C.V. has recently purchased two loop-type slitting lines from Herr-Voss Stamco for expansion of capacity at its Monterrey and San Luis Potosi service centers. Hot-rolled steel, cold-rolled steel, pre-painted, HSLA and zinc-coated steel will be processed on the new lines.

One line will run incoming coils up to 55,000 pounds and 72 inches wide with a material thickness range of 0.009 inches to 0.150 inches. The second line will run incoming coils up to 55,000 pounds and 60 inches wide with a material thickness range of 0.009 inches to 0.075 inches. Both lines have a maximum speed capability of 1,500 feet per minute, and include two Herr-Voss Stamco precision slitter heads.

Berlin Metals Adds Slitting Capacity
Berlin Metals LLC has ordered a 60-inch wide, double-loop coil slitting and automatic slit coil packaging line from Braner USA, Schiller Park, Ill. for installation later this year in Berlin’s Hammond, Ind., production facility.

The line can handle 72-inch coils weighing up to 40,000 pounds, at speeds up to 1,200 feet per minute, and can accommodate rapid tooling changes. It can make up to 50 cuts across the width of the coil.

The slitting line was designed specifically to process surface-critical coated and bare carbon steel, 300 and 400 series stainless steel and aluminum alloy in thicknesses from 0.005 inches through 0.075 inches.

Berlin Metals specializes in the processing and distribution of tin mill products and stainless steel strip for manufacturers throughout North America. The company has coil slitters and one cut-to-length line.

Metals USA Reports
Positive Results in ‘05
Metals USA Inc., Houston, reported sales exceeding $1.6 billion in 2005, and achieved its targets for profitability and safety.

Cash flow provided by operating activities totaled $177.4 million, while capital expenditures totaled $20.3 million. Thus, the service center chain generated $157.1 million in positive free cash flow last year.

Metals USA significantly reduced its inventories during 2005. Inventories on Dec. 31, 2005, were $350.7 million, down $112.2 million from $462.9 million on Dec. 31, 2004. Net debt on Dec. 31, 2005, was $462.2 million as the company continued to actively manage its working capital. Early in 2005, Metals USA made a strategic decision to reduce inventories in virtually all of its service centers to levels substantially below the historical marks for its business.

“Our ability to work out of a reduced inventory has proven itself to be good for Metals USA, good for the service center industry and, most importantly, good for the entire supply chain,” said President and CEO Lourenço Gonçalves. “Lower inventory levels are not only sustainable, but should support even greater profitability in our business going forward.”

Metals USA’s 2005 sales revenues increased by $129.2 million as the average realized sales price per ton for its Flat-Rolled and Plates and Shapes Groups increased 13.6 percent, partially offset by a 4.2 percent decline in shipped tonnage. Shipped volumes typically experience a seasonal slowdown near year’s end, though the company’s fourth-quarter shipments remained essentially level with the third quarter as the market began to strengthen in September and continue at a higher-than-normal pace through the holiday season, the company reported.

Sales activity for the first two months of 2006 continued to be solid, and Metals USA has a positive view on its first-quarter performance.

Reliance Acquisition of EMJ Completed
Reliance Steel & Aluminum Co., Los Angeles, has completed the acquisition of Earle M. Jorgensen Co. The transaction was valued at $984 million, including the assumption of EMJ’s net debt.

EMJ’s shareholders voted to accept the offer from Reliance at the end of March, paving the way for the completion of the deal.

EMJ, Lynwood, Calif., will operate as a wholly owned subsidiary of Reliance. The combined companies have more than 150 locations in 35 states and Belgium, Canada, China and South Korea with total assets of approximately $3 billion and annual revenues of more than $5 billion.

“The EMJ acquisition will significantly broaden and strengthen our product offerings and will meaningfully expand our existing geographic network,” says David H. Hannah, CEO of Reliance. “This is our largest acquisition to-date and our first acquisition of a public company. We look forward to the opportunities we see for future growth and success as our companies join forces.”

The successful completion of the sale also resulted in the retirement of EMJ’s Chief Executive Officer, Sandy Nelson, to be replaced by President and Chief Operating Officer R. Neil McCaffery. Nelson will continue to act as a consultant to EMJ and Reliance during a post-closing transition period.

Copper and Brass Sales Acquires C-S Metals
Copper and Brass Sales, a division of ThyssenKrupp Materials NA Inc., has completed the acquisition of the assets of C-S Metals Service Inc., Baltimore. The purchase includes all inventories, equipment, machinery and assumption of the lease.

C-S Metals Service is a distributor of non-ferrous metals, with primary focus on aluminum plate, sheet and extrusions.

“We are very pleased to have successfully completed this acquisition, which will give Copper and Brass Sales increased market coverage in the Mid-Atlantic region and will favorably complement our existing product line, particularly in aluminum,” says Frank G. Kevane, CEO of Southfield, Mich.-based Copper and Brass Sales.

Copper and Brass Sales will retain all of the operational and sales personnel of C-S Metals Service, including Terry Miller, the acting branch manager.

Titan to Construct
Steel Processing Facility
Titan Metal Service Inc., Clearwater, Fla., will lease five acres from the Port of Tampa to construct a 50,000-square-foot steel processing facility.

The plant will house a Braner-Loopco slitter with the capacity to handle steel coils up to 60 inches wide, 0.187-inch thick and 60,000 pounds. The system will also feature Loopco's' latest packaging technology.

Titan also has an option to lease four additional acres for future expansion at the property, which has rail service from CSX. The facility is scheduled to open this fall.

Liebovich Writes the Book
on Metals Distribution
Larry Liebovich, retired president of Liebovich Steel & Aluminum Co., Rockford, Ill., has authored a book on metals distribution, drawing on his successful 33-year career in the industry.

In “Metal Distribution My Way,” Liebovich walks the reader through the process of setting up and achieving excellent customer service at every level of an organization.

The book is available at amazon.com.

Briefs
VSMPO-Tirus US, with service centers in Golden, Colo., Ontario, Calif., and Pittsburgh, has selected Verticent, Tampa, Fla., to provide enterprise software solutions. The distributor of titanium, magnesium and aluminum will employ the Verticent ERP Plus system.

Union and Ryerson officials scheduled bargaining sessions through April following the weeklong strike last month at three Chicago-area Joseph T. Ryerson and Son Inc. facilities. The strike ended when the estimated 540 employees of United Steelworkers Local Unions 9777 and 6787, and Teamsters Local Union 714, agreed to unconditionally return to work while talks continued. The collective bargaining contract expired Jan. 31 and the joint union refused the company's offer to extend the contract.

Marmon/Keystone Corp. surpassed its safety record when 12 branches completed 2005 accident-free. The company enjoyed 403,000 work hours without a recordable accident.

Maverick Tube Corp. has agreed to become the exclusive marketing and sales representative for Pueblo, Colo.-based Rocky Mountain Steel Mills' seamless pipe products. The agreement calls for a minimum of 48,000 tons per year. The mill has production capabilities of 150,000 tons annually. Rocky Mountain Steel Mills is a division of Oregon Steel Mills Inc., Portland, Ore.

Steel Technologies Inc., Louisville, Ky., expects to report sales of approximately $250 million for the second quarter of fiscal 2006, which ended March 31. The company expects shipments for the quarter to be approximately 320,000 tons. Steel Technologies will release final second quarter results April 25. Additionally, the company has agreed to sell subsidiary Custom Steel Inc. to American Railcar Industries Inc.

Regal Steel Co., Warren, Mich., has been certified to TS16949:2002 and ISO14001:2004 standards. Regal is a steel service center specializing in the processing and distribution of high-carbon spring steel, including cold-rolled strip, hardened and tempered strip and assorted specialty steel.

 
 

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