Metals USA Reports Second Quarter 2010 Results

-Tables follow -

Metals USA Holdings Corp.
Unaudited Consolidated Statements of Operations
(In millions, except per share data)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2010

2009

2010

2010

2009

Revenues:

Net sales

$

335.0

$

267.8

$

287.9

$

622.9

$

598.0

Operating costs and expenses:

Cost of sales (exclusive of operating and delivery,
and depreciation and amortization shown below)

257.2

228.8

218.4

475.6

516.5

Operating and delivery

32.9

31.2

31.3

64.2

65.9

Selling, general and administrative

19.8

22.1

21.0

40.8

46.1

Depreciation and amortization

4.4

4.8

4.6

9.0

9.5

Gain on sale of property and equipment

-

-

(0.1)

(0.1)

-

Advisory agreement termination charge

3.3

-

-

3.3

-

Operating income (loss)

17.4

(19.1)

12.7

30.1

(40.0)

Other (income) expense:

Interest expense

9.5

17.2

11.7

21.2

36.5

Loss (gain) on extinguishment of debt

3.5

(56.1)

-

3.5

(88.4)

Other (income) expense, net

-

(0.2)

-

-

(0.3)

Income before income taxes

4.4

20.0

1.0

5.4

12.2

Provision for income taxes

1.9

6.2

0.9

2.8

2.5

Net income

$

2.5

$

13.8

$

0.1

$

2.6

$

9.7

Income per share:

Income per share - basic

$

0.07

$

0.56

$

-

$

0.09

$

0.40

Income per share - diluted

$

0.07

$

0.56

$

-

$

0.09

$

0.40

Number of common shares used in the per share calculation:

Basic

35.4

24.5

25.6

30.5

24.5

Diluted

35.7

24.5

25.9

30.8

24.5

Metals USA Holdings Corp.
Unaudited Consolidated Balance Sheets
(In millions, except share amounts)

June 30,

December 31,

2010

2009

Assets

Current assets:

Cash

$

18.1

$

6.0

Accounts receivable, net of allowance of $6.3 and $6.3, respectively

158.6

131.5

Inventories

258.8

216.0

Deferred income tax asset

14.8

14.5

Prepayments and other

4.5

6.5

Total current assets

454.8

374.5

Property and equipment, net

184.7

183.4

Intangible assets, net

7.4

8.4

Goodwill

49.9

45.6

Other assets, net

9.1

15.9

Total assets

$

705.9

$

627.8

Liabilities and Stockholders' Equity (Deficit)

Current liabilities:

Accounts payable

$

73.8

$

56.4

Accrued liabilities

33.6

38.9

Current portion of long-term debt

0.1

0.1

Total current liabilities

107.5

95.4

Long-term debt, less current portion

307.1

468.2

Deferred income tax liability

88.5

84.8

Other long-term liabilities

22.0

23.1

Total liabilities

525.1

671.5

Commitments and contingencies

Stockholders' equity (deficit):

Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued or

outstanding at June 30, 2010 and December 31, 2009, respectively

-

-

Common stock, $.01 par value, 140,000,000 shares authorized, 37,024,842 and 25,576,563

issued and outstanding at June 30, 2010 and December 31, 2009, respectively

0.4

0.2

Additional paid-in capital

228.8

7.5

Retained deficit

(48.4)

(51.0)

Accumulated other comprehensive loss

-

(0.4)

Total stockholders' equity (deficit)

180.8

(43.7)

Total liabilities and stockholders' equity (deficit)

$

705.9

$

627.8

Metals USA Holding Corp.
Unaudited Consolidated Statements of Cash Flows
(In millions)

Six Months Ended

June 30,

2010

2009

Cash flows from operating activities:

Net income

$

2.6

$

9.7

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Gain on sale of property and equipment

(0.1)

-

Provision for bad debts

1.1

2.1

Depreciation and amortization

10.0

10.4

Loss (gain) on extinguishment of debt

3.5

(88.4)

Amortization of debt issuance costs and discounts on long-term debt

2.1

2.9

Deferred income taxes

0.6

13.7

Stock-based compensation

0.2

0.2

Excess tax benefit from stock-based compensation

(0.1)

-

Non-cash interest on PIK option

6.2

13.8

Cash payment of interest on PIK option

(23.2)

(2.3)

Advisory agreement termination charge

3.3

-

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(24.3)

47.7

Inventories

(36.7)

189.9

Prepayments and other

2.2

2.0

Accounts payable and accrued liabilities

10.1

(18.2)

Other operating

0.1

(0.5)

Net cash (used in) provided by operating activities

(42.4)

183.0

Cash flows from investing activities:

Sale of assets

0.2

-

Purchases of assets

(1.4)

(2.3)

Acquisition costs, net of cash acquired

(19.0)

(4.2)

Net cash used in investing activities

(20.2)

(6.5)

Cash flows from financing activities:

Borrowings on credit facility

49.5

63.5

Repayments on credit facility

(49.5)

(265.5)

Repayments of long-term debt

(146.6)

(87.7)

Excess tax benefit from stock-based compensation

0.1

-

Net proceeds from initial public stock offering

221.2

-

Net cash provided by (used in) financing activities

74.7

(289.7)

Net increase (decrease) in cash

12.1

(113.2)

Cash, beginning of period

6.0

166.7

Cash, end of period

$

18.1

$

53.5

Metals USA Holdings Corp.
Unaudited Supplemental Segment and Non-GAAP Information
(In millions, except shipments)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2010

2009

2010

2010

2009

Segment:

Flat Rolled and Non-Ferrous:

Net sales

$ 177.0

$ 117.6

$     152.0

$ 329.0

$ 258.5

Operating income

$   13.2

$     3.1

$       10.9

$   24.1

$     0.8

Depreciation and amortization

$     1.7

$     1.8

$         1.8

$     3.5

$     3.6

EBITDA       (1)

$   14.9

$     4.9

$       12.7

$   27.6

$     4.4

Adjusted EBITDA       (2)

$   14.9

$     4.9

$       12.7

$   27.6

$     4.4

Shipments    (3)

146

110

134

280

223

Plates and Shapes:

Net sales

$ 136.5

$ 124.8

$     121.9

$ 258.4

$ 297.3

Operating income (loss)

$   11.4

$ (17.0)

$         9.1

$   20.5

$ (25.7)

Depreciation and amortization

$     2.3

$     2.3

$         2.4

$     4.7

$     4.7

EBITDA       (1)

$   13.7

$ (14.7)

$       11.5

$   25.2

$ (21.0)

Adjusted EBITDA       (2)

$   13.7

$ (14.7)

$       11.5

$   25.2

$ (21.0)

Shipments    (3)

126

120

117

243

257

Building Products:

Net sales

$   24.3

$   27.2

$       16.2

$   40.5

$   46.9

Operating income (loss)

$     0.6

$     0.5

$       (1.7)

$   (1.1)

$   (3.8)

Depreciation and amortization (5)

$     0.6

$     0.6

$         0.6

$     1.2

$     1.2

EBITDA       (1)

$     1.2

$     1.1

$       (1.1)

$     0.1

$   (2.6)

Adjusted EBITDA       (2)

$     1.2

$     1.1

$       (1.1)

$     0.1

$   (2.2)

Shipments    (3)

-

-

-

-

-

Corporate and other:

Net sales

$   (2.8)

$   (1.8)

$       (2.2)

$   (5.0)

$   (4.7)

Operating loss

$   (7.8)

$   (5.7)

$       (5.6)

$ (13.4)

$ (11.3)

Depreciation and amortization

$     0.3

$     0.5

$         0.3

$     0.6

$     0.9

EBITDA       (1)

$   (7.5)

$   (5.2)

$       (5.3)

$ (12.8)

$ (10.4)

Adjusted EBITDA       (2)

$   (4.1)

$   (4.8)

$       (4.9)

$   (9.0)

$   (9.6)

Shipments    (3)  (4)

        (2)

        (2)

            (2)

        (4)

        (4)

Consolidated:

Net sales

$ 335.0

$ 267.8

$     287.9

$ 622.9

$ 598.0

Operating income (loss)

$   17.4

$ (19.1)

$       12.7

$   30.1

$ (40.0)

Depreciation and amortization (5)

$     4.9

$     5.2

$         5.1

$   10.0

$   10.4

EBITDA       (1)

$   22.3

$ (13.9)

$       17.8

$   40.1

$ (29.6)

Adjusted EBITDA       (2)

$   25.7

$ (13.5)

$       18.2

$   43.9

$ (28.4)

Shipments    (3)

270

228

249

519

476

 (1)   EBITDA is the summation of Operating income (loss) and Depreciation and amortization.  We believe that
EBITDA is commonly used as a measure of performance for companies in our industry and is frequently used by
analysts, investors, lenders and other interested parties to evaluate a company's financial performance and its ability
to incur and service debt.  EBITDA should not be considered as a measure of financial performance under accounting
principles generally accepted in the United States.  The items excluded from EBITDA are significant components in
understanding and assessing financial performance.  EBITDA should not be considered in isolation or as an
alternative to net income, cash flows generated by operating, investing or financing activities or other financial
statement data presented in the consolidated financial statements as an indicator of operating performance or a
measure of liquidity.

 (2) Adjusted EBITDA, as contemplated by our credit documents, is used by our lenders for debt covenant compliance
purposes. Adjusted EBITDA is EBITDA adjusted to eliminate management fees to related parties, one-time, non-
recurring charges related to the use of purchase accounting, and other non-cash income or expenses, which are more
particularly defined in our credit documents and the indentures governing our notes.

 (3)   Unaudited and is expressed in thousands of tons.  Not a meaningful measure for Building Products.

 (4)   Negative net sales and shipment information represent the elimination of intercompany transactions.

 (5)   Includes depreciation expense recorded in cost of sales.

EBITDA and Adjusted EBITDA Non-GAAP Measures, Reconciliations and Explanations

EBITDA represents net income before interest, income taxes, depreciation and amortization.  Adjusted EBITDA (as defined by
the loan and security agreement governing the ABL facility and the indentures governing our notes) is defined as EBITDA further
adjusted to exclude certain non-cash, non-recurring and realized (or in the case of the indentures, expected) future cost savings
directly related to prior acquisitions.  EBITDA and Adjusted EBITDA are not defined terms under GAAP.  Neither EBITDA nor
Adjusted EBITDA should be considered an alternative to operating income or net income as a measure of operating results or an
alternative to cash flow as a measure of liquidity.  

There are material limitations associated with making the adjustments to our earnings to calculate EBITDA and Adjusted
EBITDA and using these non-GAAP financial measures as compared to the most directly comparable GAAP financial measures.
For instance, EBITDA and Adjusted EBITDA do not include:

*  interest expense, and because we have borrowed money in order to finance our operations, interest expense is a necessary
element of our costs and ability to generate revenue;    

*  depreciation and amortization expense, and because we use capital assets, depreciation and amortization expense is a
necessary element of our costs and ability to generate revenue; and    

*  income tax expense, and because the payment of taxes is part of our operations, tax expense is a necessary element of our
costs and ability to operate.    

We present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently
used by our investors and other interested parties, as well as by our management, in the evaluation of companies in our
industry, many of which present EBITDA when reporting their results.  In addition, EBITDA provides additional information used
by our management and board of directors to facilitate internal comparisons to historical operating performance of prior periods.  
Further, management believes EBITDA facilitates their operating performance comparisons from period to period because it
excludes potential differences caused by variations in capital structure (affecting interest expense), tax positions (such as the
impact of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment
(affecting depreciation expense).

We believe that the inclusion of supplemental adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to
provide additional information to investors about the performance of the business, and we are required to reconcile net income to
Adjusted EBITDA to demonstrate compliance with debt covenants.  Management uses Adjusted EBITDA as a key indicator to
evaluate performance of certain employees.

Three Months Ended

Six Months Ended

June 30,

March  31,

June 30,

2010

2009

2010

2010

2009

(In millions)

Operating income (loss)

$ 17.4

$ (19.1)

$        12.7

$ 30.1

$ (40.0)

Depreciation and amortization (1)

4.9

5.2

5.1

10.0

10.4

EBITDA

22.3

(13.9)

17.8

40.1

(29.6)

Indenture defined adjustments to EBITDA:

Facility closure and severance costs

-

-

-

-

0.4

Stock options and grant expense

0.1

0.1

0.1

0.2

0.2

Management fees and other costs

3.3

0.3

0.3

3.6

0.6

Adjusted EBITDA

$ 25.7

$ (13.5)

$        18.2

$ 43.9

$ (28.4)

(1)   Includes depreciation expense recorded in cost of sales for the Building Products Group.