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Non-Tech : RECY Looking Good... A -- Ignore unavailable to you. Want to Upgrade?

To: James Strauss who wrote (4266)	3/5/1998 11:36:00 PM
From: James Anderson	Read Replies (1) \| Respond to of 7006

Recycling Industries Sees 5-10 Acquisitions By Yr-End By Rebecca Wolf NEW YORK (Dow Jones)--In a continuing effort to consolidate the scrap-metal industry, Recycling Industries Inc. (RECY) hopes to acquire between five and 10 companies before the end of the year, a senior executive said. Vice Chairman Luke Botica told Dow Jones that those plans don't include deals currently under negotiation. Botica said the industry is ripe for consolidation, since there are so many "father and son" scrap-metal shops around the country. Those small companies sprouted shortly after World War II, when demand for metal increased, he said. But as the decades pass, and the firm founders age, more and more companies have been trying to sell out of the business. "There are over 3,000 businesses interested in liquidating value," he said. The more the merrier. As a scrap metal recycler, Recycling Industries always is looking for more materials like empty soda cans and used auto bodies. After it has collected or bought the scrap, the company processes it for purification and then sells it to steel minimills. The minimills, which make steel from scrap instead of iron ore, a higher cost material, are becoming "large players" in the steel industry, he said. Since Recycling Industries targets minimills, it plans to acquire scrap metal companies located in minimill-dense areas such as the Southeast and upper Midwest to save on eventual transportation costs of the scrap. Botica said the company looks for high-value concerns with good management. Though Recycling Industries has removed the management of some of the companies it acquired, the top officials have been retained in the last six deals. The primary issue for Recycling Industries is value, Botica said. The company negotiates the price for scrap every month, but it manages the net margin, so "the price doesn't really matter." What does matter is the annualized revenue run rate, which increases with acquisitions. Botica said Recycling Industries aims to have a $1 billion run rate by the end of the year, "and we're right on target," he added. Looking ahead, Botica said the company has no immediate plans for a stock buyback. He said the company would rather use the cash for acquisitions. Botica declined to comment on the company's earnings expectations for the current fiscal second quarter ended March. In the year-ago period, Recycling Industries earned $820,000, or 4 cents a share, on sales of $12.7 million. "We need to continue to grow and acquire," he said. "We know there are opportunities for improvement." -Rebecca Wolf; 201-938-5166