Metal Management Sees Dip in Earnings

Metal Management, Inc. announced results for the first fiscal quarter ended June 30, 2005.

The company generated consolidated net sales of $382 million in the first quarter of fiscal 2006 and net income of $5.4 million.

Consolidated net sales of $382 million for the quarter ended June 30, 2005 represented an increase of 4 percent over net sales of $367 million for the quarter ended June 30, 2004.

Net income was $5.4 million, compared to $12.5 million for the quarter ended June 30, 2004.

Approximately 1.2 million tons of metal were processed and sold or brokered, including ferrous yard shipments of approximately 1.1 million tons and non-ferrous shipments of approximately 120 million pounds.

Daniel Dienst, chairman, CEO and president of Metal Management said, "Metal Management met the challenges in the first quarter of fiscal 2006 by adhering to our disciplined strategy of turning inventories as rapidly as market conditions permit. We have now generated positive pre tax income for 14 consecutive quarters. Our business was tested in the first quarter and maintaining profitability in the face of ferrous and nickel markets that declined precipitously is a testament to our franchise and the hard work of our 1,600 employees across the country."

The company noted that weakness in the ferrous markets during the first half of calendar 2005 was without precedent both in terms of percentage and absolute dollar declines in unit pricing. These price changes were extreme and significantly reduced the spreads that the Company was able to realize.

Prices for prime grades of ferrous scrap declined by more than $300 per ton between late last year and this June.

Prices for prime grades of ferrous scrap declined from approximately $250 per ton at the start of the first quarter to about $140 per ton in June 2005.

Obsolete grades of ferrous scrap also declined precipitously in the first half of calendar 2005 and during the first quarter of fiscal 2006.

Dienst continued, "Due to our operational flexibility and unique distribution channels, we were able to offset weak domestic demand for ferrous scrap by taking advantage of more favorable export markets. In the first quarter we exported approximately 330,000 tons of ferrous grades of scrap. The weakness evidenced by declining prices in the ferrous market has now abated to some degree and we are cautiously optimistic for continued recovery in ferrous prices in the current quarter.