Slide Presentation of Earle M. Jorgensen Company

EX-99.1 2 dex991.htm SLIDE PRESENTATION OF EARLE M. JORGENSEN COMPANY Slide Presentation of Earle M. Jorgensen Company

Earle M. Jorgensen Company

Management Presentation

November 2005

Safe Harbor Statement

The following information contains, or may be deemed to contain,

“forward-

looking statements”

(as defined in the U.S. Private Securities Litigation Reform

Act of 1995) that are based on information currently available to Earle M.

Jorgensen Company. By their nature, forward-looking statements involve

risks and uncertainties because they relate to events and depend

circumstances that may or may not occur in the future. The actual future

results, performance, prospects or opportunities of Earle M. Jorgensen

Company may vary from the results expressed in, or implied by, the

forward-looking

statements contained herein, possibly to a material degree.

For a discussion of some of the important risks, uncertainties and other factors

that could cause Earle M. Jorgensen’s results to differ from those expressed

in, or implied by, the following forward-looking statements, please refer to our

filings with the Securities and Exchange Commission, particularly, our Report

on Form 10-K for the fiscal year ended March 31, 2005, and, in particular, the

"Risk Factors" section thereof.

Investment Highlights

Increasing Bar and tube product market leadership

Positioned for continued growth

Core product focus

Delivery guarantee

Low cost “satellite”

operations

Proven record of organic growth

Low cost operations enabled by IT platform, Kasto storage and

retrieval system and lean approach to staffing

Superior operating performance and strong gross profit margins

Experienced and committed management team

Product Mix and End-Market Breakdown

FY2005 Product Mix

FY2005 End-Market Distribution

Bars

60.1%

Tubing

27.5%

Plate

6.7%

Others

5.7%

Source:

Company filings.

Source:

Company filings.

General

Machining

29.3%

Industrial

Equipment

8.1%

Transportation

6.7%

Metal Service

Centers &

Wholesale

Trade

6.3%

Fluid Power

6.1%

Fabricated

Metal

6.0%

Construction/

Farm

Equipment

5.5%

Screw

Machine

Products

5.3%

Oil, Gas &

Energy

4.8%

Power

Transmission

Equipment

3.8%

All Other

Industries

18.1%

Growth Enablers

Leading market positions in core products

Service guarantee

Low cost geographic expansion through satellites

Capacity expansion throughout system

Additional added value processing capabilities

Market Share Leader In All Core Products

Carbon and Alloy Cold Finished Bar

225

20.8%

Carbon

Drawn Mechanical Tubing

107

13.5%

Carbon and Alloy SBQ Bar

181

15.2%

Stainless

Bars and Shapes

11.2%

Aluminum

Bars, Shapes and Tubing

8.6%

% of LTM

Revenue

LTM Shipments

(000 Tons)

Industry’s Only On-Time Guarantee

Information technology, Kasto system and Company

approach permit EMJ to offer the industry’s only on-

time guarantee

Since implementation in February 2000:

•

99.97% on-time performance since implemented in

February 2000

•

9,645,715 line items shipped

•

Only 2,482 misses and $1,405,681 paid out

$50

$100

$150

$200

$250

$300

$350

$400

$450

Excellent Track Record of Growth

Quarterly Sales Since 1984

Shipments

($ in millions)

Note:

Earle M. Jorgensen Company and Kilsby-Roberts Holding Co. combined prior to

merger.

774.5

788.9

626.2

590.0

605.1

682.4

564.6

553.1

550.1

1997

1998

1999

2000

2001

2002

2003

2004

LTM

09/28/0

(000 Tons)

Asian

Flu

Manufacturing

Recession

6% Annual

Sales Growth

Trend Line

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

JAN 02

FY02

MAY 02

FY03

SEP 02

FY03

JAN 03

FY03

MAY 03

FY04

SEP 03

FY04

JAN 04

FY04

MAY 04

FY05

SEP 04

FY05

JAN 05

FY05

MAY 05

FY06

SEP 05

FY06

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

EMJ Gaining market share –

Volume Growth Exceeds Industry Rate

Source:

MSCI Industry Data for EMJ’s core products.

New and Upgraded Facilities Driving Growth

Greenfields

Birmingham

Orlando

Edmonton

Wrightsville, PA

Quad Cities

Toronto (2000)

Salt Lake City

North Bay, Ontario

Spokane (2000)

Hartford (2000)

In process: Lafayette (2006), Portland

(2006), Quebec City (2005)

Upgrades

Dallas

Kansas City

Chicago

Los Angeles

Houston

Tulsa

Denver

Boston

Cincinnati

All EMJ facilities have been modernized including layout, ergonomics, mechanized

packing, hand held computers and paperless work flow

Low Cost Enablers

Information technology

Kasto system

Flat management structure

Highly productive empowered employees

Technology-Driven Operations

Results

Paperless efficient processes

Reduced headcount and expenses

Company wide visibility of every

open order and stock on hand in

real time improves customer

service

Instantaneous order processing

Ability to deliver “on-time or free”

guarantee

Used Across All Functions

Purchasing

Selling / Order Entry

Order Processing

Delivery

Significant investments in technology and infrastructure

Unique customized IT system developed by in-house technology team

working in sync with operations

Easily scaleable

Kasto System Benefits

Kasto automated storage and retrieval

system installed over two years in

Chicago, completed in October 2003

$35 million cost for initial four bays

Reduced Chicago headcount by

approximately 20% once started up

Chicago capacity increased 72% to

3,100 line items per day

Reduced warehouse cost per ton by

17%

Recently completed double-cranes on

three systems

30% of EMJ’s products go through the

Chicago facility

Flat Management Structure

•

Small team of highly experienced senior managers

•

All have ownership stakes

•

Significant delegation of operating decisions down to

the facility level

Current Managers –

GM Level and Above

Highly Productive Employees

Consistent focus on managing headcount

Headcount reduced 35% from 1997

Annual Shipments vs. Employees

400,000

500,000

600,000

700,000

800,000

900,000

1997

1998

1999

2000

2001

2002

2003

2004

LTM

9/28/ 05

1,500

1,800

2,100

2,400

2,700

3,000

Employees

Tons

Shipped

24.9%

27.8%

28.1%

28.0%

28.4%

29.5%

28.6%

27.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

EMJ

Industry Average

CY1997

CY1998

CY1999

CY2000

CY2001

CY2002

CY2003

CY2004

LTM

09/28/05

Historical Gross Margins

Strong and Consistent Gross Margins

Developing higher value-added product and processing mix plus higher

productivity yields strong gross margins

Note:

Average based on publicly available data for A.M. Castle, Metals

USA, Olympic Steel, Reliance Steel & Aluminum, Russel Metals and Ryerson Tull.

3.2%

6.5%

7.2%

7.4%

5.3%

4.4%

6.8%

9.0%

7.9%

4.6%

4.7%

4.6%

3.0%

1.2%

1.4%

1.5%

8.9%

7.7%

CY1997

CY1998

CY1999

CY2000

CY2001

CY2002

CY2003

CY2004

LTM 9/28/05

EMJ

EMJ Adjustments

Industry Average

Demonstrated Top-Tier Profitability

Note:

Average based on publicly available data for A.M. Castle, Metals

USA, Olympic Steel, Reliance Steel & Aluminum, Russel Metals and Ryerson Tull.

(1)

Adjusted for $17.3 million special contribution, $6.3 million Kelso termination fee, $3.5 million CEO bonus payment, $1.6 million SFAS 123 non-cash charge, $1.5 million specialized

equipment charge, ($2.2) million gain in real estate.

(2)

Adjusted for $25.6 million special contribution, $0.4 million specialized equipment charge ($1.5 million in FY2005, $1.1 million

of which in 1Q2005), $6.3 million Kelso termination fee, $3.5

million CEO bonus payment, $1.6 million SFAS 123 non- cash charge, $8.5 million IPO bonus, ($2.2) million gain on property sale, ($4.4) million special contribution mark-to-market, $0.1

million SFAS 123 non-cash charge.

(1)

(2)

Operating Profit Margin

10.6%

11.8%

$43.9

$50.1

$33.9

$19.4

$50.6

$42.5

$27.3

$17.5

$16.8

$24.0

$19.0

Adj.

$46.3

Adj.

$54.3

Adj.

$42.1

Adj.

$45.5

Strong Financial Performance

Revenue

EBITDA and Margin

($ in millions)

(1)

Adjusted for $17.3 million special contribution, $6.3 million Kelso termination fee, $3.5 million

CEO bonus payment, $1.6 million SFAS 123 non- cash charge, ($2.2) million gain in real

estate, $0.4 million specialized equipment charge.

(2)

Adjusted for $8.3 million special contribution.

(3)

Adjusted for $8.5 million IPO bonus, ($4.4) million special contribution mark- to-market, $0.1

million SFAS 123 non-cash charge.

(4)

Adjusted for $1.2 million special contribution mark-to- market, $0.4 million SFAS 123 non-

cash charge.

2003 2004

2005

Calendar Years

2003 2004

2005

(1) (2) (3) (4)

9.8% 8.0% 7.3% 7.0% 8.5% 11.8% 13.0% 12.0% 9.2% 12.2% 11.0%

$246.0

$238.3

$231.2

$248.8

$322.1

$361.6

$389.3

$407.1

$456.3

$444.0

$414.0

Simplified Financial Structure, Reduced Net Debt

42.6

16.9

91.5

Revolving credit balance US (3)

496.9

1.2

516.9

245.9

4.1

250.0

---

20.0

3/31/05

586.5

2.3

592.6

245.9

4.1

250.0

1.1

6.1

12/31/04(1)

3.2

Short Term Portion

290.0

Net Debt (B) –

(A)

298.7

Total Debt (B)

Variable rate senior notes (5)

3.6

Industrial development bonds

250.0

9¾

senior secured notes (4)

Long-term debt

2.5

Canada Overdraft –

short term

Debt

8.7

Cash & equivalents (A)

9/28/05(2)

$ millions

(1)

On a pro forma basis to give effect to the financial restructuring to account for the transfer of assets and exchange of

shares between entities, EMJ Holding, under common control. For

further details see the Company’s prospectus

dated April 14, 2005 filed with the Securities and Exchange Commission

(2)

Unaudited

(3)

Due Mar 03, 2010, secured by domestic AR and Inventory

(4)

Due June 01, 2012, secured by fixed assets/real estate. Callable June 01, 2007 at 104.875%

(5)

Redeemed with proceeds from IPO

Earle M. Jorgensen Company, Consolidated