Sales Up 20%, EPS Up 25%
LOS ANGELES--(BUSINESS WIRE)--
Reliance Steel & Aluminum Co. (NYSE:RS) reported today its financial
results for the first quarter ended March 31, 2012. For the 2012 first
quarter, Reliance reported net income of $116.2 million, up 26% from
2011 first quarter net income of $92.3 million, and up 71% from $67.9
million in the 2011 fourth quarter. Earnings per diluted share were
$1.54 in the 2012 first quarter, up 25% from 2011 first quarter earnings
per diluted share of $1.23 and up 69% from $.91 for the 2011 fourth
quarter. Sales for the 2012 first quarter were $2.29 billion, up 20%
from 2011 first quarter sales of $1.91 billion, and up 13% from 2011
fourth quarter sales of $2.03 billion. The 2012 first quarter financial
results include in cost of sales a pre-tax LIFO charge, or expense, of
$7.5 million, compared with a pre-tax LIFO charge of $20.0 million for
the 2011 first quarter and $17.8 million for the 2011 fourth quarter.
The LIFO adjustments, in effect, reflect cost of sales at current
replacement costs.
Reliance’s tons sold for the 2012 first quarter were up 13.8% from the
2011 first quarter and up 11.2% from the 2011 fourth quarter. Average
prices per ton sold in the 2012 first quarter were up 5.3% compared to
the 2011 first quarter and up 1.3% compared to the 2011 fourth quarter.
For the 2012 first quarter, carbon steel sales were 52% of net sales;
aluminum sales were 15%; stainless steel sales were 15%; alloy sales
were 12%; toll processing sales were 2%; and other sales were 4%.
David H. Hannah, Chairman and CEO of Reliance said, “As we indicated in
our earnings guidance update last week, the quarter, overall was better
than we originally anticipated. Demand was stronger, especially in
January and February, aided in part by a more favorable pricing
environment for most of our products. Sales dollars per day in March
were down slightly from February due to a drop in tons sold per day, as
the direction of carbon steel pricing became a little uncertain and
stainless steel surcharges decreased.”
“Once again, the markets that continued to provide the most growth
during the quarter were energy (oil and gas), aerospace, farm and heavy
equipment, and auto through our toll processing businesses.
Semiconductor and general manufacturing also remained strong. We have
seen improvements in our non-residential construction related
businesses, but it still lags the growth seen in other areas. We are
very fortunate that Reliance has such a broad range of products and
substantial customer diversification. Those attributes have helped our
operating results to be less volatile than if we had a more narrow range
of products sold into fewer industries,” Hannah continued.
“Our balance sheet is in excellent shape, with net debt-to-total capital
at 29% and only $745 million borrowed on our $1.5 billion credit
facility at March 31, 2012. The liquidity available on our credit
facility provides ample room for continued growth both organically and
through acquisitions, where we have seen increased activity recently,”
Hannah further commented.
“We expect real demand to continue its steady improvement from existing
levels for most of our products with larger improvements in the
aerospace and energy-related industries during the second quarter. There
is still some uncertainty regarding the direction of prices for some of
the metals we sell, with prices currently moving in different directions
for different of our products, but all within manageable ranges. Given
these expectations, we currently estimate earnings per diluted share in
a range of $1.40 to $1.50 for the 2012 second quarter,” concluded Hannah.
Effective April 3, 2012, Reliance acquired all the outstanding limited
liability company interests of National Specialty Alloys, LLC (“NSA”), a
global specialty alloy processor and distributor of premium stainless
steel and nickel alloy bars and shapes, headquartered in Houston, Texas.
NSA was founded in 1985 and has additional locations in Anaheim,
California; Buford, Georgia; and Tulsa, Oklahoma. NSA had net sales of
approximately $96 million for the twelve months ended October 31, 2011.
NSA’s primary end market is the energy market, with aerospace, power
generation, petrochemical and other major end markets.
Reliance recently announced that it has signed an agreement to acquire
substantially all the assets of the Worthington Steel Vonore, Tennessee
plant, a processing facility owned by Worthington Industries, Inc.
(NYSE:WOR). The transaction has not yet closed however, upon completion,
the Vonore plant is expected to operate as a Precision Strip, Inc. (a
wholly-owned subsidiary of Reliance) location that will process and
deliver carbon steel, aluminum and stainless steel products on a “toll”
basis, processing the metal for a fee without taking ownership of the
metal.
On April 24, 2012, the Board of Directors declared a regular quarterly
cash dividend of $.15 per share of common stock. The dividend is payable
on June 22, 2012 to shareholders of record June 1, 2012. The Company has
increased its dividend 17 times since the IPO in 1994 and has paid
regular quarterly dividends for 53 consecutive years.
Reliance will host a conference call that will be broadcast live over
the Internet (listen only mode) regarding the first quarter financial
results for the period ended March 31, 2012. All interested parties are
invited to listen to the web cast on April 26, 2012 at 11:00 a.m.
Eastern Time at: http://www.rsac.comon the Investor Information section or http://www.streetevents.com.
Player format: Windows Media and RealPlayer. The web cast will remain on
the Reliance web site at: www.rsac.comon the Investor Information sectionthrough May 25, 2012and
a printed transcript will be posted on the Reliance web site after the
completion of the conference call.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, California,
is the largest metals service center company in North America. Through a
network of more than 220 locations in 38 states and Belgium, Canada,
China, Malaysia, Mexico, Singapore, South Korea, the U.A.E. and the
United Kingdom, the Company provides value-added metals processing
services and distributes a full line of over 100,000 metal products to
more than 125,000 customers in a broad range of industries.
Reliance Steel & Aluminum Co.’s press releases and additional
information are available on the Company’s web site at www.rsac.com.
The Company was named to the 2011 “Fortune500” List and
the 2012 Fortune List of “The World’s Most Admired
Companies.”
This release may contain forward-looking statements. Actual results and
events may differ materially as a result of a variety of factors, many
of which are outside of Reliance Steel & Aluminum Co.’s control. Risk
factors and additional information are included in Reliance Steel &
Aluminum Co.’s reports on file with the Securities and Exchange
Commission, including Reliance Steel & Aluminum Co.’s Annual Report on
Form 10-K for the year ended December 31, 2011.
|
|
| RELIANCE STEEL & ALUMINUM CO. |
| SELECTED FINANCIAL DATA |
| (in millions, except share and per share amounts) |
|
| |
| | Three Months Ended |
| | March 31, |
| | 2012 |
| 2011 |
| Income Statement Data: | |
(Unaudited)
|
|
Net sales
| |
$
|
2,288.3
| | |
$
|
1,912.7
| |
|
Gross profit1 | | |
577.8
| | | |
506.3
| |
|
Operating income
| | |
184.6
| | | |
154.8
| |
|
Pre-tax income
| | |
176.6
| | | |
140.4
| |
|
Net income attributable to Reliance
| | |
116.2
| | | |
92.3
| |
|
Diluted earnings per share attributable to Reliance shareholders
| |
$
|
1.54
| | |
$
|
1.23
| |
|
Weighted average shares outstanding – diluted
| | |
75,426,552
| | | |
75,023,866
| |
|
Gross profit margin1 | | |
25.3
|
%
| | |
26.5
|
%
|
|
Operating income margin
| | |
8.1
|
%
| | |
8.1
|
%
|
|
Pre-tax income margin
| | |
7.7
|
%
| | |
7.3
|
%
|
|
Net income margin – Reliance
| | |
5.1
|
%
| | |
4.8
|
%
|
|
Cash dividends per share
| |
$
|
0.15
| | |
$
|
0.12
| |
| | | |
|
| | March 31, | | December 31, |
| | 2012 | | 2011* |
| Balance Sheet and Other Data: | |
(Unaudited)
| | |
|
Current assets
| |
$
|
2,585.9
| | |
$
|
2,274.7
| |
|
Working capital
| | |
1,910.2
| | | |
1,698.3
| |
|
Property, plant and equipment, net
| | |
1,120.6
| | | |
1,105.5
| |
|
Total assets
| | |
5,931.8
| | | |
5,605.9
| |
|
Current liabilities
| | |
675.7
| | | |
576.4
| |
|
Long-term debt
| | |
1,419.0
| | | |
1,319.0
| |
|
Total Reliance shareholders’ equity
| | |
3,265.4
| | | |
3,143.9
| |
|
Capital expenditures (year-to-date)
| | |
34.6
| | | |
156.4
| |
|
Cash (used in) provided by operations (year-to-date)
| | |
(63.2
|
)
| | |
234.8
| |
|
Net debt-to-total capital2 | | |
29.4
|
%
| | |
28.4
|
%
|
|
Return on Reliance shareholders’ equity3 | | |
11.7
|
%
| | |
12.2
|
%
|
|
Current ratio
| | |
3.8
| | | |
3.9
| |
|
Book value per share4 | |
$
|
43.48
| | |
$
|
41.92
| |
* Amounts were derived from audited financial statements.
1 Gross profit, calculated as net sales less cost of sales,
and gross profit margin, calculated as gross profit divided by net
sales, are non-GAAP financial measures as they exclude depreciation and
amortization expense associated with the corresponding sales. The
majority of our orders are basic distribution with no processing
services performed. For the remainder of our sales orders, we perform
“first-stage” processing which is generally not labor intensive as we
are simply cutting the metal to size. Because of this, the amount of
related labor and overhead, including depreciation and amortization, are
not significant and are excluded from our cost of sales. Therefore, our
cost of sales is primarily comprised of the cost of the material we
sell. We use gross profit and gross profit margin as shown above as
measures of operating performance. Gross profit and gross profit margin
are important operating and financial measures, as fluctuations in our
gross profit margin can have a significant impact on our earnings. Gross
profit and gross profit margin, as presented, are not necessarily
comparable with similarly titled measures for other companies.
2 Net debt-to-total capital is calculated as total debt (net
of cash) divided by total Reliance shareholders’ equity plus total debt
(net of cash).
3 Calculations are based on the latest twelve months net
income attributable to Reliance and beginning total Reliance
shareholders’ equity.
4 Book value per share is calculated as total Reliance
shareholders’ equity divided by outstanding common shares.
|
|
| RELIANCE STEEL & ALUMINUM CO. |
| CONSOLIDATED BALANCE SHEETS |
| (in millions, except share amounts) |
|
|
| ASSETS |
|
| March 31, 2012 |
| December 31, 2011* |
| |
(Unaudited)
| | |
|
Current assets:
| | | | |
|
Cash and cash equivalents
| |
$
|
70.0
| | |
$
|
84.6
| |
|
Accounts receivable, less allowance for doubtful accounts of $23.3
at March 31, 2012 and $22.2 at December 31, 2011 | | |
1,044.2
| | | |
896.2
| |
|
Inventories
| | |
1,399.4
| | | |
1,212.8
| |
|
Prepaid expenses and other current assets
| | |
38.9
| | | |
47.8
| |
|
Deferred income taxes
| |
| 33.4 |
| |
| 33.3 |
|
|
Total current assets
| | |
2,585.9
| | | |
2,274.7
| |
|
Property, plant and equipment:
| | | | |
|
Land
| | |
147.5
| | | |
145.8
| |
|
Buildings
| | |
660.9
| | | |
656.8
| |
|
Machinery and equipment
| | |
1,013.9
| | | |
982.9
| |
|
Accumulated depreciation
| |
| (701.7 |
)
| |
| (680.0 |
)
|
| | |
1,120.6
| | | |
1,105.5
| |
| | | |
|
|
Goodwill
| | |
1,249.6
| | | |
1,244.3
| |
|
Intangible assets, net
| | |
890.9
| | | |
895.9
| |
|
Cash surrender value of life insurance policies, net
| | |
40.3
| | | |
41.9
| |
|
Investments in unconsolidated entities
| | |
16.4
| | | |
16.2
| |
|
Other assets
| |
| 28.1 |
| |
| 27.4 |
|
|
Total assets
| | $ | 5,931.8 |
| | $ | 5,605.9 |
|
| | | |
|
| LIABILITIES AND EQUITY |
| | | |
|
|
Current liabilities:
| | | | |
|
Accounts payable
| |
$
|
433.7
| | |
$
|
335.2
| |
|
Accrued expenses
| | |
62.6
| | | |
54.0
| |
|
Accrued compensation and retirement costs
| | |
73.6
| | | |
111.0
| |
|
Accrued insurance costs
| | |
44.1
| | | |
42.1
| |
|
Current maturities of long-term debt and short-term borrowings
| | |
12.1
| | | |
12.2
| |
|
Income taxes payable
| |
| 49.6 |
| |
| 21.9 |
|
|
Total current liabilities
| | |
675.7
| | | |
576.4
| |
|
Long-term debt
| | |
1,419.0
| | | |
1,319.0
| |
|
Long-term retirement costs
| | |
91.5
| | | |
88.6
| |
|
Other long-term liabilities
| | |
29.0
| | | |
30.1
| |
|
Deferred income taxes
| | |
442.1
| | | |
439.8
| |
|
Commitments and contingencies
| | | | |
|
Equity:
| | | | |
Preferred stock, no par value:
| | | | |
Authorized shares — 5,000,000
| | | | |
|
None issued or outstanding
| | |
--
| | | |
--
| |
Common stock, no par value:
| | | | |
Authorized shares — 100,000,000
| | | | |
Issued and outstanding shares – 75,122,110 at March 31, 2012 and
75,007,694 at December 31, 2011, stated capital
| | |
666.6
| | | |
657.1
| |
|
Retained earnings
| | |
2,599.8
| | | |
2,495.6
| |
|
Accumulated other comprehensive loss
| |
| (1.0 |
)
| |
| (8.8 |
)
|
|
Total Reliance shareholders’ equity
| | |
3,265.4
| | | |
3,143.9
| |
|
Noncontrolling interests
| |
| 9.1 |
| |
| 8.1 |
|
|
Total equity
| |
| 3,274.5 |
| |
| 3,152.0 |
|
|
Total liabilities and equity
| | $ | 5,931.8 |
| | $ | 5,605.9 |
|
* Amounts were derived from audited financial statements.
|
|
| RELIANCE STEEL & ALUMINUM CO. |
| CONSOLIDATED STATEMENTS OF INCOME |
| (in millions, except per share amounts) |
|
| |
| | Three Months Ended |
| | March 31, |
| | 2012 |
| 2011 |
| |
(Unaudited)
|
|
Net sales
| |
$
|
2,288.3
| | |
$
|
1,912.7
| |
| | | |
|
|
Costs and expenses:
| | | | |
|
Cost of sales (exclusive of depreciation
| | | | |
|
and amortization shown below)
| | |
1,710.5
| | | |
1,406.4
| |
|
Warehouse, delivery, selling, general and administrative
| | |
357.7
| | | |
318.5
| |
|
Depreciation and amortization
| |
| 35.5 |
| |
| 33.0 |
|
| | |
2,103.7
| | | |
1,757.9
| |
| | | |
|
|
Operating income
| | |
184.6
| | | |
154.8
| |
| | | |
|
|
Other income (expense):
| | | | |
|
Interest
| | |
(14.5
|
)
| | |
(14.6
|
)
|
|
Other income, net
| |
| 6.5 |
| |
| 0.2 |
|
|
Income before income taxes
| | |
176.6
| | | |
140.4
| |
|
Income tax provision
| |
| 58.7 |
| |
| 46.8 |
|
|
Net income
| | |
117.9
| | | |
93.6
| |
|
Less: Net income attributable to noncontrolling interests
| |
| 1.7 |
| |
| 1.3 |
|
|
Net income attributable to Reliance
| | $ | 116.2 |
| | $ | 92.3 |
|
| | | |
|
|
Earnings per share:
| | | | |
Diluted earnings per common share attributable to Reliance
shareholders
| | $ | 1.54 |
| | $ | 1.23 |
|
| | | |
|
Basic earnings per common share attributable to Reliance
shareholders
| | $ | 1.55 |
| | $ | 1.24 |
|
| | | |
|
|
Cash dividends per share
| | $ | 0.15 |
| | $ | 0.12 |
|
|
|
| RELIANCE STEEL & ALUMINUM CO. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (in millions) |
|
| |
| | Three Months Ended March 31, |
| | 2012 |
| 2011 |
| |
(Unaudited)
|
| Operating activities: | | | | |
|
Net income
| |
$
|
117.9
| | |
$
|
93.6
| |
Adjustments to reconcile net income to net cash used in operating
activities:
| | | | |
|
Depreciation and amortization expense
| | |
35.5
| | | |
33.0
| |
|
Deferred income tax benefit
| | |
(1.2
|
)
| | |
(1.2
|
)
|
|
Gain on sales of property, plant and equipment
| | |
(0.1
|
)
| | |
--
| |
|
Equity in earnings of unconsolidated entities
| | |
(0.5
|
)
| | |
(0.7
|
)
|
|
Dividends received from unconsolidated entities
| | |
0.3
| | | |
0.3
| |
|
Share-based compensation expense
| | |
4.9
| | | |
4.8
| |
|
Tax deficit from share-based compensation
| | |
0.1
| | | |
--
| |
|
Net (gain) loss from life insurance policies
| | |
(1.2
|
)
| | |
1.6
| |
|
Changes in operating assets and liabilities (excluding effect of
business acquired):
| | | | |
|
Accounts receivable
| | |
(143.6
|
)
| | |
(215.1
|
)
|
|
Inventories
| | |
(182.2
|
)
| | |
(228.2
|
)
|
|
Prepaid expenses and other assets
| | |
9.0
| | | |
34.6
| |
|
Accounts payable and other liabilities
| |
| 97.9 |
| |
| 175.9 |
|
|
Net cash used in operating activities
| | |
(63.2
|
)
| | |
(101.4
|
)
|
| | | |
|
| Investing activities: | | | | |
|
Purchases of property, plant and equipment
| | |
(34.6
|
)
| | |
(35.8
|
)
|
|
Acquisition of a metals service center, net of cash acquired
| | |
(10.0
|
)
| | |
--
| |
|
Proceeds from sales of property, plant and equipment
| | |
0.2
| | | |
0.9
| |
|
Net proceeds from redemption of life insurance policies
| |
| 2.8 |
| |
| 0.1 |
|
|
Net cash used in investing activities
| | |
(41.6
|
)
| | |
(34.8
|
)
|
| | | |
|
| Financing activities: | | | | |
|
Net short-term debt repayments
| | |
(0.4
|
)
| | |
--
| |
|
Proceeds from long-term debt borrowings
| | |
221.0
| | | |
197.0
| |
|
Principal payments on long-term debt
| | |
(122.2
|
)
| | |
(52.0
|
)
|
|
Payments to noncontrolling interest holders
| | |
(0.7
|
)
| | |
(0.8
|
)
|
|
Dividends paid
| | |
(11.2
|
)
| | |
(9.0
|
)
|
|
Tax deficit from share-based compensation
| | |
(0.1
|
)
| | |
--
| |
|
Exercise of stock options
| |
| 4.6 |
| |
| 3.9 |
|
|
Net cash provided by financing activities
| | |
91.0
| | | |
139.1
| |
|
Effect of exchange rate changes on cash
| |
| (0.8 |
)
| |
| 1.0 |
|
|
(Decrease) increase in cash and cash equivalents
| | |
(14.6
|
)
| | |
3.9
| |
|
Cash and cash equivalents at beginning of year
| |
| 84.6 |
| |
| 72.9 |
|
|
Cash and cash equivalents at end of period
| | $ | 70.0 |
| | $ | 76.8 |
|
| | | |
|
| Supplemental cash flow information: | | | | |
|
Interest paid during the period
| |
$
|
5.2
| | |
$
|
2.9
| |
|
Income taxes paid during the period
| |
$
|
32.6
| | |
$
|
4.2
| |
Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor
Relations
713-610-9937
213-576-2428
kfeazle@rsac.com
investor@rsac.com
Source: Reliance Steel & Aluminum Co.