-- Net sales of $2.45 billion increased 12.1%
year-over-year -- Gross profit margin of 28.0% from
continued strong execution-- GAAP EPS of $1.32 increased 94.1%
year-over-year; Non-GAAP EPS of $1.30 increased 4.0%
year-over-year
Reliance Steel & Aluminum Co. (NYSE:RS) today reported its
financial results for the third quarter ended September 30, 2017.
Third Quarter 2017 Financial Highlights
- Sales were $2.45 billion, up 12.1% from $2.19 billion in the
third quarter of 2016 and down 1.0% from $2.48 billion in the
second quarter of 2017.
- Tons sold were up 5.3% from the third quarter of 2016 and down
1.2% from the second quarter of 2017, with the average selling
price per ton sold up 6.8% from the third quarter of 2016 and up
0.2% from the second quarter of 2017.
- Gross profit margin was 28.0%, compared to 30.0% in the third
quarter of 2016 and 28.4% in the second quarter of 2017. FIFO gross
profit margin was 28.2%, compared to 29.4% in the third quarter of
2016 and 28.8% in the second quarter of 2017.
- Net income attributable to Reliance was $97.3 million, up 96.6%
from $49.5 million in the third quarter of 2016 and down 5.5% from
$103.0 million in the second quarter of 2017. Net income
attributable to Reliance included pre-tax impairment and
restructuring charges of $2.1 million, or $0.02 per diluted share,
in the third quarter of 2017 and $67.3 million, or $0.57 per
diluted share, in the third quarter of 2016.
- Earnings per diluted share were $1.32, up 94.1% from $0.68 in
the third quarter of 2016 and down 5.7% from $1.40 in the second
quarter of 2017.
- Non-GAAP earnings per diluted share were $1.30, up 4.0% from
$1.25 in the third quarter of 2016 and down 7.1% from $1.40 in the
second quarter of 2017.
- Reliance recorded a pre-tax net LIFO inventory valuation
charge, or expense, of $6.3 million in the third quarter of 2017
and $10.0 million in the second quarter of 2017, included in cost
of sales. Reliance recorded a pre-tax LIFO inventory valuation
credit adjustment, or income, of $11.3 million in the third quarter
of 2016.
- The effective tax rate was 30.4%, compared to 28.2% in the
third quarter of 2016 and 31.2% in the second quarter of 2017.
- Cash flow from operations was $183.1 million in the third
quarter of 2017 and net debt-to-total capital was 29.0% at
September 30, 2017.
- A quarterly cash dividend of $0.45 per share was declared on
October 24, 2017 for stockholders of record as of November 17, 2017
and will be payable on December 8, 2017.
Management Commentary“Continued strong
execution by our managers in the field drove a third quarter gross
profit margin of 28.0%, solidly within our target range of 27% to
29%,” said Gregg Mollins, President and Chief Executive Officer of
Reliance. “Demand in the quarter was stronger than we had
anticipated, with our tons sold down only 1.2% from the second
quarter of 2017 despite one less shipping day in the third quarter.
Although many of our businesses experienced the normal seasonal
trend of lower shipping volumes compared to the second quarter,
certain of our businesses servicing the energy and non-residential
construction markets experienced an increase in tons sold. While
uncertainty in the marketplace from the pending Section 232
investigation continues, the level of imports has been declining
from the elevated levels reached in the second quarter. This,
combined with solid demand levels in the third quarter, supported
stable to higher average prices with the exception of stainless
steel products. This resulted in our average selling price
remaining relatively flat compared to the second quarter of
2017.”
Mr. Mollins continued, “Hurricane Harvey and Hurricane Irma
impacted certain of our operations in the coastal regions of Texas,
Louisiana and Florida in the third quarter. Despite temporary
closures of some of our locations in the impacted areas, we are
very fortunate to report that none of our employees were injured
and we incurred no material damage to our facilities, inventory or
equipment. The safety of all Reliance employees remains our top
priority and our thoughts and prayers continue to be with all who
suffered personal losses as they recover and rebuild.”
Mr. Mollins concluded, “We are pleased with our ability to
continue operating at improved profitability levels due primarily
to the efforts of our managers in the field. Through our
industry-leading value-added processing capabilities and relatively
stable overall metals pricing, we were able to maintain a strong
gross profit margin in the third quarter. For the first nine months
of 2017, we increased our pre-tax income by $131.8 million, or
39.8%, and $63.8 million, or 16.1%, on a Non-GAAP basis, compared
to the first nine months of 2016. We will continue to focus on
maximizing our gross profit margin while managing our inventory
accordingly. Despite continuing uncertainty in the marketplace,
both pricing and demand levels are better than they were a year ago
and we remain optimistic about the potential for increased
infrastructure and equipment spending which should help support
earnings growth.”
|
|
|
|
|
|
Third Quarter 2017 Business
Metrics |
(tons in thousands; percentage
change) |
|
Q32017 |
Q22017 |
Sequential Quarter Change |
Q32016 |
Year-Over-Year Change |
Tons sold |
|
1,521.7 |
|
1,540.3 |
(1.2%) |
|
1,445.5 |
5.3% |
Tons sold (same-store) |
|
1,500.1 |
|
1,517.8 |
(1.2%) |
|
1,426.3 |
5.2% |
Average selling price per ton
sold |
$1,603 |
$1,600 |
0.2% |
$1,501 |
6.8% |
Average selling price per ton sold
(same-store) |
$1,595 |
$1,592 |
0.2% |
$1,494 |
6.8% |
Third Quarter 2017 Major Commodity
Metrics |
|
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold (percentage
change) |
|
Q3 2017 Tons Sold |
Q2 2017 Tons Sold |
Sequential Quarter Change |
Q3 2016 Tons Sold |
Year-Over-Year Change |
Sequential Quarter Change |
Year-Over-Year Change |
Carbon steel |
1,220.3 |
1,236.8 |
(1.3%) |
1,167.4 |
4.5% |
0.4% |
6.6% |
Aluminum |
89.8 |
93.2 |
(3.6%) |
86.3 |
4.1% |
1.1% |
4.0% |
Stainless steel |
79.1 |
78.6 |
0.6% |
78.0 |
1.4% |
(1.9%) |
8.9% |
Alloy |
54.8 |
53.7 |
2.0% |
44.6 |
22.9% |
0.4% |
6.5% |
|
Sales ($'s in millions; percentage
change) |
|
|
Q3 2017 Sales |
Q2 2017 Sales |
Sequential Quarter Change |
Q3 2016 Sales |
Year-Over-Year Change |
|
Carbon steel |
$1,319.5 |
$1,331.8 |
(0.9%) |
$1,183.9 |
11.5% |
|
Aluminum |
$475.3 |
$487.8 |
(2.6%) |
$439.2 |
8.2% |
|
Stainless steel |
$343.3 |
$348.0 |
(1.4%) |
$311.0 |
10.4% |
|
Alloy |
$149.3 |
$145.8 |
2.4% |
$114.2 |
30.7% |
|
Year-to-Date (9 months) 2017 Business
Metrics |
(tons in thousands; percentage
change) |
|
2017 |
2016 |
Year-Over- Year Change |
Tons sold |
4,602.4 |
4,467.9 |
3.0% |
Tons sold (same-store) |
4,537.5 |
4,415.8 |
2.8% |
Average selling price per ton sold |
$1,588 |
$1,454 |
9.2% |
Average selling price per ton sold
(same-store) |
$1,581 |
$1,447 |
9.3% |
Year-to-Date (9 months) 2017 Major Commodity
Metrics |
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold (percentage
change) |
|
2017 Tons Sold |
2016 Tons Sold |
Year-Over- Year Change |
Year-Over-Year Change |
Carbon steel |
3,692.6 |
3,617.9 |
2.1% |
10.7% |
Aluminum |
275.7 |
268.3 |
2.8% |
3.6% |
Stainless steel |
237.5 |
237.1 |
0.2% |
12.5% |
Alloy |
164.8 |
135.3 |
21.8% |
1.6% |
|
Sales ($'s in millions; percentage
change) |
|
2017 Sales |
2016 Sales |
Year-Over-Year Change |
Carbon steel |
$3,936.8 |
$3,483.4 |
13.0% |
Aluminum |
$1,446.2 |
$1,359.1 |
6.4% |
Stainless steel |
$1,038.6 |
$921.4 |
12.7% |
Alloy |
$440.4 |
$356.2 |
23.6% |
End Market CommentaryCustomer demand levels
remained healthy overall and exceeded the Company’s expectations,
throughout the third quarter of 2017. Due to normal seasonal
patterns and one less shipping day, however, Reliance’s shipments
declined slightly compared to the second quarter of 2017. Reliance
continues to benefit from its strategy of serving diverse end
markets and providing superior quality products and processing
services, generally in small quantities on a just-in-time basis.
- Automotive demand remains strong. Reliance services the
automotive market mainly through its toll processing operations in
the U.S. and Mexico. Through investments in new facilities and
processing equipment, Reliance continues to increase its toll
processing capacity, enabling the Company to support incremental
demand from the increased usage of aluminum in the automotive
industry.
- Aerospace demand remains strong. Reliance maintains its
positive outlook in this space and expects to continue growing its
market share given increased exposure to the defense market as well
as continued international expansion and capital investments in new
facilities and processing equipment.
- Heavy industry demand remains relatively steady, though still
at low levels. Reliance is beginning to see a slight improvement in
activity in the industrial equipment markets, primarily related to
construction equipment.
- Non-residential construction demand, including infrastructure,
continues to experience steady growth. Reliance remains optimistic
that the Administration’s stated focus on infrastructure spending
will eventually improve demand for metal in addition to any
potential incremental upside from rebuilding activity resulting
from the recent hurricanes. Reliance has made investments in
equipment and facilities, and is well positioned to absorb
increased volume into its existing facilities and cost structure as
this important end market continues to improve.
- Energy (oil and gas) demand continues to improve for the
products Reliance sells into this end market. Rig counts and
drilling activity have improved and Reliance continues to see
improved quoting and overall activity in the market.
Balance Sheet & LiquidityReliance ended the
quarter with total debt outstanding of $1.99 billion, for a net
debt-to-total capital ratio of 29.0%. The Company had $827.0
million available for borrowings on its $1.5 billion revolving
credit facility at September 30, 2017.
“We remain pleased with our overall financial position with a
higher average selling price and strong gross profit margin
supporting increased earnings which contributed positively to our
cash flow from operations of $183.1 million in the third quarter of
2017,” commented Karla Lewis, Senior Executive Vice President and
Chief Financial Officer of Reliance. “Our enhanced profitability
allows us to support higher activity levels while maintaining our
strong balance sheet and liquidity position. Subsequent to quarter
end, we were also pleased to complete our acquisition of Ferguson
Perforating Company, a manufacturer of highly engineered and
complex perforated metal parts for a diverse range of end markets.
We expect to continue investing in growth activities while
simultaneously returning value to our stockholders through
quarterly dividends and opportunistic share repurchases.”
Acquisition of Ferguson Perforating CompanyAs
previously announced, effective October 2, 2017, Reliance acquired
all of the common stock of Ferguson Perforating Company
(“Ferguson”), through Diamond Manufacturing Company, a wholly-owned
subsidiary of Reliance. Founded in 1927 and headquartered in
Providence, Rhode Island, Ferguson manufactures perforated metal
parts for numerous applications in domestic and international
markets. Ferguson specializes in producing highly engineered and
complex perforated metal parts for diverse end markets ranging from
aerospace and automotive to industrial machinery, consumer
electronics manufacturers and sugar producers. Ferguson fits within
Reliance’s growth strategy of acquiring companies with high
value-added processing capabilities and furthers its product
diversification in a niche market. Ferguson’s net sales were
approximately $31 million for the year ended December 31, 2016.
Stockholder Return ActivityOn October 24, 2017,
the Board of Directors declared a quarterly cash dividend of $0.45
per share of common stock payable on December 8, 2017 to
stockholders of record as of November 17, 2017. Reliance has paid
regular quarterly dividends for 58 consecutive years and has
increased the dividend 24 times since its 1994 IPO.
The Company did not repurchase any shares of its common stock in
the third quarter of 2017. At September 30, 2017, approximately 8.4
million shares remained available for repurchase under the
Company’s share repurchase program. Reliance expects to
opportunistically repurchase shares of its common stock going
forward.
Business Outlook Reliance management remains
optimistic in regard to business activity levels in the fourth
quarter of 2017, subject to the typical fourth quarter decline in
shipping volumes that result from fewer shipping days due to
holiday-related customer closures. As a result, the Company
estimates tons sold will be down 4% to 6% in the fourth quarter of
2017 compared to the third quarter of 2017. Despite the recent
increases in carbon and stainless steel pricing, the Company
believes its average selling price in the fourth quarter will be
subject to downward pressure given lower activity levels, with the
recently announced mill price increases taking hold in early 2018.
The Company, therefore, expects its average selling price will be
flat to down 2% compared to the third quarter of 2017. Accordingly,
management currently expects earnings per diluted share to be in
the range of $0.90 to $1.00 for the fourth quarter of 2017.
Conference Call DetailsA conference call and
simultaneous webcast to discuss the third quarter 2017 financial
results and business outlook will be held today, October 26, 2017
at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To listen to
the live call by telephone, please dial (877) 407-0792 (U.S. and
Canada) or (201) 689-8263 (International) approximately 10 minutes
prior to the start time and use conference ID: 13671629. The call
will also be broadcast live over the Internet hosted on the
Investors section of the Company's website at
investor.rsac.com.
For those unable to participate during the live broadcast, a
replay of the call will also be available beginning that same day
at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on
Thursday, November 9, 2017 by dialing (844) 512-2921 (U.S. and
Canada) or (412) 317-6671 (International) and entering the
conference ID: 13671629. The webcast will remain posted on the
Investors section of Reliance’s website at investor.rsac.com for 90
days.
About Reliance Steel & Aluminum Co.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 300 locations in 40 states and
twelve countries outside of the United States, Reliance 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 focuses on small orders with
quick turnaround and increasing levels of value-added processing.
In 2016, Reliance’s average order size was $1,560, approximately
47% of orders included value-added processing and approximately 40%
of orders were delivered within 24 hours. Reliance Steel &
Aluminum Co.’s press releases and additional information are
available on the Company’s website at www.rsac.com.
Forward-Looking StatementsThis press release
contains certain statements that are, or may be deemed to be,
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements may include, but are not limited to, discussions of
Reliance’s industry and its end markets, its business strategies
and its expectations concerning future demand and metals pricing
and the Company’s results of operations, margins, profitability,
impairment charges, liquidity, litigation matters and capital
resources. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "could,"
"would," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential" and "continue," the negative of these terms,
and similar expressions.
These forward-looking statements are based on management's
estimates, projections and assumptions as of today’s date that may
not prove to be accurate. Forward-looking statements involve known
and unknown risks and uncertainties and are not guarantees of
future performance. Actual outcomes and results may differ
materially from what is expressed or forecasted in these
forward-looking statements as a result of various important
factors, including, but not limited to, those disclosed in reports
Reliance has filed with the Securities and Exchange Commission (the
"SEC"). As a result, these statements speak only as of the date
that they are made, and Reliance disclaims any and all obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Important risks and uncertainties about Reliance’s business can be
found in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2016, filed with the SEC.
CONTACT: Brenda MiyamotoInvestor
Relations(213) 576-2428investor@rsac.com
or Addo Investor Relations(310) 829-5400
(Tables to follow)
|
|
RELIANCE STEEL & ALUMINUM
CO. |
|
SELECTED UNAUDITED FINANCIAL
DATA |
|
(in millions, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
Income
Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,450.1 |
|
|
$ |
2,185.2 |
|
|
$ |
7,344.6 |
|
|
$ |
6,551.8 |
|
|
|
Gross profit1 |
|
685.5 |
|
|
|
654.6 |
|
|
|
2,109.2 |
|
|
|
1,976.4 |
|
|
|
Operating income2 |
|
158.7 |
|
|
|
94.8 |
|
|
|
520.1 |
|
|
|
400.3 |
|
|
|
Pre-tax income |
|
142.2 |
|
|
|
70.5 |
|
|
|
463.1 |
|
|
|
331.3 |
|
|
|
Net income attributable
to Reliance |
|
97.3 |
|
|
|
49.5 |
|
|
|
312.0 |
|
|
|
242.6 |
|
|
|
Diluted earnings per
share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance
stockholders |
$ |
1.32 |
|
|
$ |
0.68 |
|
|
$ |
4.24 |
|
|
$ |
3.32 |
|
|
|
Non-GAAP diluted
earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to Reliance stockholders3 |
$ |
1.30 |
|
|
$ |
1.25 |
|
|
$ |
4.22 |
|
|
$ |
3.64 |
|
|
|
Weighted average shares
outstanding – |
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted |
|
73,617,479 |
|
|
|
73,280,797 |
|
|
|
73,511,427 |
|
|
|
73,034,938 |
|
|
|
Gross profit
margin1 |
|
28.0% |
|
|
|
30.0% |
|
|
|
28.7% |
|
|
|
30.2% |
|
|
|
Operating income
margin2 |
|
6.5% |
|
|
|
4.3% |
|
|
|
7.1% |
|
|
|
6.1% |
|
|
|
Pre-tax income
margin |
|
5.8% |
|
|
|
3.2% |
|
|
|
6.3% |
|
|
|
5.1% |
|
|
|
Net income margin
– Reliance |
|
4.0% |
|
|
|
2.3% |
|
|
|
4.2% |
|
|
|
3.7% |
|
|
|
Cash dividends per
share |
$ |
0.45 |
|
|
$ |
0.425 |
|
|
$ |
1.35 |
|
|
$ |
1.225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
|
|
|
|
2017 |
|
|
2016* |
|
|
|
|
|
|
|
|
Balance Sheet
and Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
$ |
3,169.1 |
|
|
$ |
2,688.5 |
|
|
|
|
|
|
|
|
|
Working capital |
|
2,387.9 |
|
|
|
2,032.5 |
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
1,651.1 |
|
|
|
1,662.2 |
|
|
|
|
|
|
|
|
|
Total assets |
|
7,846.9 |
|
|
|
7,411.3 |
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
781.2 |
|
|
|
656.0 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
1,896.0 |
|
|
|
1,846.7 |
|
|
|
|
|
|
|
|
|
Total Reliance
stockholders’ equity |
|
4,414.9 |
|
|
|
4,148.8 |
|
|
|
|
|
|
|
|
|
Capital expenditures
(year-to-date) |
|
118.1 |
|
|
|
154.9 |
|
|
|
|
|
|
|
|
|
Cash provided by
operations (year-to-date) |
|
198.3 |
|
|
|
626.5 |
|
|
|
|
|
|
|
|
|
Net debt-to-total
capital4 |
|
29.0% |
|
|
|
30.3% |
|
|
|
|
|
|
|
|
|
Return on Reliance
stockholders' equity5 |
|
9.0% |
|
|
|
7.8% |
|
|
|
|
|
|
|
|
|
Current ratio |
|
4.1 |
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
Book value per
share6 |
$ |
60.56 |
|
|
$ |
57.07 |
|
|
|
|
|
|
|
|
* 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, is not significant and is excluded
from our cost of sales. Therefore, our cost of sales is
substantially 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 their fluctuations
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 The 2016
amounts have been retrospectively adjusted pursuant to our adoption
of accounting changes related to the presentation of net periodic
pension cost and net periodic postretirement benefit cost.3 See
accompanying Non-GAAP earnings and adjusted gross profit
reconciliation.4 Net debt-to-total capital is calculated as total
debt (net of cash) divided by total Reliance stockholders’ equity
plus total debt (net of cash). 5 Calculations are based on the
latest twelve months net income attributable to Reliance and
beginning total Reliance stockholders’ equity.6 Book value per
share is calculated as total Reliance stockholders’ equity divided
by outstanding common shares.
|
|
|
|
|
|
RELIANCE STEEL & ALUMINUM CO. |
|
|
UNAUDITED CONSOLIDATED BALANCE
SHEETS |
|
|
(in millions, except share
amounts) |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
2017 |
|
|
2016* |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
170.2 |
|
|
$ |
122.8 |
|
|
|
|
Accounts
receivable, less allowance for doubtful accounts of |
|
|
|
|
|
|
|
|
of $17.0
at September 30, 2017 and $15.3 at December 31, 2016 |
|
1,166.0 |
|
|
|
960.2 |
|
|
|
|
Inventories |
|
1,772.5 |
|
|
|
1,532.6 |
|
|
|
|
Prepaid
expenses and other current assets |
|
60.4 |
|
|
|
72.9 |
|
|
|
|
Total
current assets |
|
3,169.1 |
|
|
|
2,688.5 |
|
|
|
|
Property, plant and equipment: |
|
|
|
|
|
|
|
|
Land |
|
232.8 |
|
|
|
228.2 |
|
|
|
|
Buildings |
|
1,087.1 |
|
|
|
1,059.2 |
|
|
|
|
Machinery
and equipment |
|
1,712.2 |
|
|
|
1,647.3 |
|
|
|
|
Accumulated depreciation |
|
(1,381.0 |
) |
|
|
(1,272.5 |
) |
|
|
|
Property,
plant and equipment, net |
|
1,651.1 |
|
|
|
1,662.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
1,834.0 |
|
|
|
1,827.4 |
|
|
|
|
Intangible assets, net |
|
1,116.8 |
|
|
|
1,151.3 |
|
|
|
|
Cash
surrender value of life insurance policies, net |
|
36.8 |
|
|
|
46.9 |
|
|
|
|
Other
assets |
|
39.1 |
|
|
|
35.0 |
|
|
|
|
Total
assets |
$ |
7,846.9 |
|
|
$ |
7,411.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
407.2 |
|
|
$ |
302.2 |
|
|
|
|
Accrued
expenses |
|
103.5 |
|
|
|
83.7 |
|
|
|
|
Accrued
compensation and retirement costs |
|
128.5 |
|
|
|
140.8 |
|
|
|
|
Accrued
insurance costs |
|
42.6 |
|
|
|
40.6 |
|
|
|
|
Current
maturities of long-term debt and short-term borrowings |
|
79.7 |
|
|
|
82.5 |
|
|
|
|
Income
taxes payable |
|
19.7 |
|
|
|
6.2 |
|
|
|
|
Total
current liabilities |
|
781.2 |
|
|
|
656.0 |
|
|
|
|
Long-term debt |
|
1,896.0 |
|
|
|
1,846.7 |
|
|
|
|
Long-term retirement costs |
|
86.2 |
|
|
|
89.6 |
|
|
|
|
Other
long-term liabilities |
|
13.0 |
|
|
|
13.0 |
|
|
|
|
Deferred income taxes |
|
624.6 |
|
|
|
626.9 |
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value: |
|
|
|
|
|
|
|
|
Authorized shares — 5,000,000 |
|
|
|
|
|
|
|
|
None
issued or outstanding |
|
— |
|
|
|
— |
|
|
|
|
Common
stock and additional paid-in capital, $0.001 par value: |
|
|
|
|
|
|
|
|
Authorized shares — 200,000,000 |
|
|
|
|
|
|
|
|
Issued
and outstanding shares – 72,913,683 at September 30, 2017 and
72,682,793 |
|
|
|
|
|
|
|
|
at
December 31, 2016 |
|
616.2 |
|
|
|
590.3 |
|
|
|
|
Retained earnings |
|
3,876.6 |
|
|
|
3,663.2 |
|
|
|
|
Accumulated other
comprehensive loss |
|
(77.9 |
) |
|
|
(104.7 |
) |
|
|
|
Total Reliance
stockholders’ equity |
|
4,414.9 |
|
|
|
4,148.8 |
|
|
|
|
Noncontrolling
interests |
|
31.0 |
|
|
|
30.3 |
|
|
|
|
Total equity |
|
4,445.9 |
|
|
|
4,179.1 |
|
|
|
|
Total
liabilities and equity |
$ |
7,846.9 |
|
|
$ |
7,411.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts were derived from audited financial
statements.
|
|
|
|
RELIANCE STEEL & ALUMINUM
CO. |
|
UNAUDITED CONSOLIDATED STATEMENTS OF
INCOME |
|
(in millions, except per share
amounts) |
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2017 |
|
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,450.1 |
|
|
$ |
2,185.2 |
|
$ |
7,344.6 |
|
$ |
6,551.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales (exclusive of depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
and
amortization shown below) |
|
1,764.6 |
|
|
|
1,530.6 |
|
|
5,235.4 |
|
|
4,575.4 |
|
Warehouse, delivery, selling, general and |
|
|
|
|
|
|
|
|
|
|
|
|
administrative |
|
470.0 |
|
|
|
453.0 |
|
|
1,422.1 |
|
|
1,357.7 |
|
Depreciation and amortization |
|
54.0 |
|
|
|
55.1 |
|
|
164.2 |
|
|
166.7 |
|
Impairment of long-lived assets |
|
2.8 |
|
|
|
51.7 |
|
|
2.8 |
|
|
51.7 |
|
|
|
2,291.4 |
|
|
|
2,090.4 |
|
|
6,824.5 |
|
|
6,151.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
158.7 |
|
|
|
94.8 |
|
|
520.1 |
|
|
400.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
19.1 |
|
|
|
22.2 |
|
|
54.9 |
|
|
65.6 |
|
Other
(income) expense, net |
|
(2.6 |
) |
|
|
2.1 |
|
|
2.1 |
|
|
3.4 |
|
Income before income
taxes |
|
142.2 |
|
|
|
70.5 |
|
|
463.1 |
|
|
331.3 |
|
Income tax
provision |
|
43.2 |
|
|
|
19.9 |
|
|
145.9 |
|
|
85.1 |
|
Net income |
|
99.0 |
|
|
|
50.6 |
|
|
317.2 |
|
|
246.2 |
|
Less: Net
income attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
interests |
|
1.7 |
|
|
|
1.1 |
|
|
5.2 |
|
|
3.6 |
|
Net income attributable
to Reliance |
$ |
97.3 |
|
|
$ |
49.5 |
|
$ |
312.0 |
|
$ |
242.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Reliance stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
1.32 |
|
|
$ |
0.68 |
|
$ |
4.24 |
|
$ |
3.32 |
|
Basic |
$ |
1.33 |
|
|
$ |
0.68 |
|
$ |
4.28 |
|
$ |
3.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
$ |
0.45 |
|
|
$ |
0.425 |
|
$ |
1.35 |
|
$ |
1.225 |
|
RELIANCE STEEL & ALUMINUM CO. |
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(in millions) |
|
|
|
|
Nine Months Ended |
|
|
September 30, |
|
|
2017 |
|
|
2016 |
|
|
Operating
activities: |
|
|
|
|
|
|
Net income |
$ |
317.2 |
|
|
$ |
246.2 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
164.2 |
|
|
|
166.7 |
|
|
Impairment of long-lived assets |
|
2.8 |
|
|
|
51.7 |
|
|
Deferred
income tax (benefit) provision |
|
(4.7 |
) |
|
|
0.5 |
|
|
Gain on
sales of property, plant and equipment |
|
(8.4 |
) |
|
|
(1.1 |
) |
|
Stock-based compensation expense |
|
23.3 |
|
|
|
17.8 |
|
|
Other |
|
4.9 |
|
|
|
5.9 |
|
|
Changes
in operating assets and liabilities (excluding effect of businesses
acquired): |
|
|
|
|
|
|
Accounts
receivable |
|
(202.6 |
) |
|
|
(112.0 |
) |
|
Inventories |
|
(235.5 |
) |
|
|
(95.5 |
) |
|
Prepaid
expenses and other assets |
|
12.6 |
|
|
|
35.2 |
|
|
Accounts
payable and other liabilities |
|
124.5 |
|
|
|
72.2 |
|
|
Net cash provided by
operating activities |
|
198.3 |
|
|
|
387.6 |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
(118.1 |
) |
|
|
(110.6 |
) |
|
Acquisitions, net of cash acquired |
|
(1.3 |
) |
|
|
(349.0 |
) |
|
Proceeds
from sales of property, plant and equipment |
|
14.0 |
|
|
|
5.7 |
|
|
Other |
|
5.6 |
|
|
|
(4.1 |
) |
|
Net cash used in
investing activities |
|
(99.8 |
) |
|
|
(458.0 |
) |
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
Net
short-term debt borrowings (repayments) |
|
3.6 |
|
|
|
(11.9 |
) |
|
Proceeds
from long-term debt borrowings |
|
674.0 |
|
|
|
1,713.0 |
|
|
Principal
payments on long-term debt |
|
(634.5 |
) |
|
|
(1,525.2 |
) |
|
Debt
issuance costs |
|
— |
|
|
|
(6.8 |
) |
|
Dividends
and dividend equivalents paid |
|
(99.3 |
) |
|
|
(89.5 |
) |
|
Exercise
of stock options |
|
3.4 |
|
|
|
31.3 |
|
|
Other |
|
(5.3 |
) |
|
|
(4.1 |
) |
|
Net cash (used in)
provided by financing activities |
|
(58.1 |
) |
|
|
106.8 |
|
|
Effect of exchange rate
changes on cash |
|
7.0 |
|
|
|
2.6 |
|
|
Increase in cash and
cash equivalents |
|
47.4 |
|
|
|
39.0 |
|
|
Cash and cash
equivalents at beginning of year |
|
122.8 |
|
|
|
104.3 |
|
|
Cash and cash
equivalents at end of period |
$ |
170.2 |
|
|
$ |
143.3 |
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
Interest paid during
the period |
$ |
44.2 |
|
|
$ |
47.0 |
|
|
Income taxes paid
during the period, net |
$ |
135.2 |
|
|
$ |
67.2 |
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities: |
|
|
|
|
|
|
Debt assumed in
connection with acquisition |
$ |
— |
|
|
$ |
6.1 |
|
|
RELIANCE STEEL & ALUMINUM
CO. |
|
NON-GAAP EARNINGS AND ADJUSTED GROSS PROFIT
RECONCILIATION |
|
(in millions, except per share
amounts) |
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
Three Months Ended |
|
Three Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
June 30, |
|
September 30, |
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
$ |
97.3 |
|
|
$ |
103.0 |
|
|
$ |
49.5 |
|
|
$ |
1.32 |
|
|
$ |
1.40 |
|
|
$ |
0.68 |
|
|
Impairment and
restructuring charges |
|
2.1 |
|
|
|
0.4 |
|
|
|
67.3 |
|
|
|
0.03 |
|
|
|
0.01 |
|
|
|
0.91 |
|
|
Income tax benefit,
related to above items |
|
(0.8 |
) |
|
|
(0.2 |
) |
|
|
(25.0 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.34 |
) |
|
Gain related to sales
of non-core assets |
|
(4.6 |
) |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.06 |
) |
|
|
— |
|
|
|
— |
|
|
Income tax expense
related to sales of non-core assets |
|
1.8 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
|
— |
|
|
Non-GAAP net income
attributable to Reliance |
$ |
95.8 |
|
|
$ |
103.1 |
|
|
$ |
91.8 |
|
|
$ |
1.30 |
|
|
$ |
1.40 |
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
Nine Months Ended |
|
|
|
|
|
|
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
|
|
|
$ |
312.0 |
|
|
$ |
242.6 |
|
|
$ |
4.24 |
|
|
$ |
3.32 |
|
|
|
|
|
Non-recurring
settlement charges (gains) |
|
|
|
|
2.8 |
|
|
|
(2.2 |
) |
|
|
0.04 |
|
|
|
(0.03 |
) |
|
|
|
|
Impairment and
restructuring charges |
|
|
|
|
2.4 |
|
|
|
67.3 |
|
|
|
0.04 |
|
|
|
0.92 |
|
|
|
|
|
Income tax benefit,
related to above items |
|
|
|
|
(2.0 |
) |
|
|
(24.2 |
) |
|
|
(0.03 |
) |
|
|
(0.33 |
) |
|
|
|
|
Gain related to sales
of non-core assets |
|
|
|
|
(8.1 |
) |
|
|
— |
|
|
|
(0.11 |
) |
|
|
— |
|
|
|
|
|
Income tax expense
related to sales of non-core assets |
|
|
|
|
3.1 |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
|
|
|
Resolution of certain
tax matters |
|
|
|
|
— |
|
|
|
(17.6 |
) |
|
|
— |
|
|
|
(0.24 |
) |
|
|
|
|
Non-GAAP net income
attributable to Reliance |
|
|
|
$ |
310.2 |
|
|
$ |
265.9 |
|
|
$ |
4.22 |
|
|
$ |
3.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
Gross profit -
LIFO |
$ |
685.5 |
|
|
$ |
702.1 |
|
|
$ |
654.6 |
|
|
$ |
2,109.2 |
|
|
$ |
1,976.4 |
|
|
|
|
|
Net LIFO/LCM expense
(income) |
|
6.3 |
|
|
|
10.0 |
|
|
|
(11.3 |
) |
|
|
26.3 |
|
|
|
(11.3 |
) |
|
|
|
|
Gross profit -
FIFO |
|
691.8 |
|
|
|
712.1 |
|
|
|
643.3 |
|
|
|
2,135.5 |
|
|
|
1,965.1 |
|
|
|
|
|
Restructuring charges
(credits) |
|
— |
|
|
|
— |
|
|
|
11.7 |
|
|
|
(0.2 |
) |
|
|
11.7 |
|
|
|
|
|
Adjusted gross profit -
FIFO |
$ |
691.8 |
|
|
$ |
712.1 |
|
|
$ |
655.0 |
|
|
$ |
2,135.3 |
|
|
$ |
1,976.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin -
LIFO |
|
28.0 |
% |
|
|
28.4 |
% |
|
|
30.0 |
% |
|
|
28.7 |
% |
|
|
30.2 |
% |
|
|
|
|
Net LIFO/LCM expense
(income) as a % of sales |
|
0.2 |
% |
|
|
0.4 |
% |
|
|
(0.6 |
%) |
|
|
0.4 |
% |
|
|
(0.2 |
%) |
|
|
|
|
Gross profit margin -
FIFO |
|
28.2 |
% |
|
|
28.8 |
% |
|
|
29.4 |
% |
|
|
29.1 |
% |
|
|
30.0 |
% |
|
|
|
|
Restructuring charges
(credits) as a % of sales |
|
— |
|
|
|
— |
|
|
|
0.6 |
% |
|
|
— |
|
|
|
0.2 |
% |
|
|
|
|
Adjusted gross profit
margin - FIFO |
|
28.2 |
% |
|
|
28.8 |
% |
|
|
30.0 |
% |
|
|
29.1 |
% |
|
|
30.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance Steel & Aluminum Co.'s presentation of non-GAAP or
adjusted net income, EPS, gross profit and gross profit margin over
certain time periods is an attempt to provide meaningful
comparisons to the Company's historical performance for its
existing and future stockholders. Adjustments include pension
settlement, settlement gains, impairment and restructuring charges
(credits) related to certain of the Company's energy-related
businesses and the closure or sale of some of its locations, a debt
restructuring-related charge, sales of non-core machinery and
equipment, and the resolution of certain tax matters, which make
comparisons of the Company's operating results between periods
difficult using GAAP measures. Reliance Steel & Aluminum Co.'s
presentation of gross profit margin - FIFO, which is calculated as
gross profit plus net LIFO/LCM expense (or minus net LIFO/LCM
income) divided by net sales, is presented in order to provide a
means of comparison amongst its competitors who may not use the
same inventory valuation method. For further information on the
Company's gross profit and gross profit margin, see footnote 1 to
the accompanying Selected Unaudited Financial Data.
Reliance (NYSE:RS)
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