- Second highest quarterly EPS in Company’s
history of $3.16 increased 125.7% year-over-year; record quarterly
Non-GAAP EPS of $3.10
Reliance Steel & Aluminum Co. (NYSE:RS) today reported its
financial results for the second quarter ended June 30, 2018.
Second Quarter 2018 Financial Highlights
- Net sales of $2.99 billion set a new Company record, and were
up 20.8% from $2.48 billion in the second quarter of 2017 and up
8.4% from $2.76 billion in the first quarter of 2018.
- Tons sold were up 2.9% from the second quarter of 2017 and down
0.7% from the first quarter of 2018, with the average selling price
per ton sold up 18.1% from the second quarter of 2017 and up 9.6%
from the first quarter of 2018.
- Gross profit dollars were a record $917.5 million with a gross
profit margin of 30.7%, compared to 28.4% in the second quarter of
2017 and 29.7% in the first quarter of 2018. FIFO gross profit
margin was the second highest in the Company’s history at 32.8%,
compared to 28.8% in the second quarter of 2017 and 30.6% in the
first quarter of 2018.
- Pre-tax income was a record $306.6 million, up 101.2% from
$152.4 million in the second quarter of 2017 and up 36.1% from
$225.2 million in the first quarter of 2018.
- Net income attributable to Reliance was $230.8 million, up
124.1% from $103.0 million in the second quarter of 2017 and up
36.6% from $169.0 million in the first quarter of 2018.
- Earnings per diluted share were the second highest in the
Company’s history at $3.16, up 125.7% from $1.40 in the second
quarter of 2017 and up 37.4% from $2.30 in the first quarter of
2018.
- Non-GAAP earnings per diluted share were a record at $3.10, up
121.4% from $1.40 in the second quarter of 2017 and up 34.8% from
$2.30 in the first quarter of 2018.
- The effective tax rate was 24.0%, compared to 31.2% in the
second quarter of 2017 and 24.0% in the first quarter of 2018.
- Cost of sales includes a pre-tax net LIFO inventory valuation
charge, or expense, of $62.5 million in the second quarter of 2018,
compared to $10.0 million in the second quarter of 2017 and $25.0
million in the first quarter of 2018.
- Cash flow from operations was $83.7 million in the second
quarter of 2018 and net debt-to-total capital was 27.9% at June 30,
2018.
- A quarterly cash dividend of $0.50 per share was declared on
July 25, 2018 for stockholders of record as of August 17, 2018 and
will be payable on September 7, 2018.
Management Commentary“Pricing momentum
continued to build throughout the second quarter, resulting in yet
another quarter of milestone achievements, of which we are
extremely proud,” said Gregg Mollins, President and Chief Executive
Officer of Reliance. “We generated record quarterly net sales and
gross profit dollars for the second consecutive quarter. Our record
sales of $2.99 billion, coupled with our strong gross profit margin
of 30.7%, produced the highest ever quarterly gross profit dollars
in Reliance’s history of $917.5 million. The continued strong
execution by our managers in the field, supported by the positive
business environment, drove record quarterly pre-tax income of
$306.6 million, and generated the second highest quarterly earnings
in our Company’s history at $3.16 per diluted share, exceeded by
only the fourth quarter of 2017, which included a significant
benefit from tax reform.”
Mr. Mollins continued, “The metal pricing environment was
significantly stronger than we had anticipated, gaining strength as
the second quarter progressed, with prices increasing in each month
of the quarter across all of our major commodities. Solid demand,
coupled with ongoing Section 232 activity, drove metal price
increases on almost every product we sell. As a result, our average
selling price per ton sold increased 9.6% compared to the first
quarter of 2018, exceeding our expectation of up 5% to 8%. Tons
sold in the quarter were down 0.7%, in-line with our expectation
given pre-buying activity by certain of our customers in the first
quarter of 2018. However, underlying demand remained strong.”
Mr. Mollins concluded, “Throughout the second quarter, our
managers in the field successfully executed on Reliance’s core
principles that include strong pricing discipline, inventory
management and expense control, helping to generate record
quarterly sales, gross profit dollars and pre-tax income, as well
as our second highest quarterly earnings per share. Looking ahead,
despite some continued uncertainty regarding trade actions, we are
encouraged by the positive pricing momentum and continuing solid
demand conditions. We remain confident in our ability to maximize
our earnings power in the current environment and maintain our
focus on increasing value to our stockholders.”
|
Second Quarter 2018 Business
Metrics |
(tons in thousands; percentage
change) |
|
Q2 2018 |
Q1 2018 |
Sequential Quarter Change |
Q2 2017 |
Year-Over- Year Change |
Tons sold |
|
1,584.5 |
|
1,595.7 |
(0.7%) |
|
1,540.3 |
2.9% |
Tons sold (same-store) |
|
1,581.5 |
|
1,593.7 |
(0.8%) |
|
1,540.3 |
2.7% |
Average selling price per ton sold |
$1,890 |
$1,724 |
9.6% |
$1,600 |
18.1% |
Average selling price per ton sold (same-store)
|
$1,883 |
$1,719 |
9.5% |
$1,600 |
17.7% |
Second Quarter 2018 Major Commodity
Metrics |
|
|
|
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold
(percentage change) |
|
|
Q2 2018 Tons Sold |
|
Q1 2018 Tons Sold |
|
Sequential Quarter Change |
|
Q2 2017 Tons Sold |
|
Year-Over- Year Change |
|
Sequential Quarter Change |
|
Year-Over- Year Change |
|
Carbon steel |
1,267.7 |
|
1,271.8 |
|
(0.3%) |
|
1,236.8 |
|
2.5% |
|
12.7% |
|
20.2% |
|
Aluminum |
94.5 |
|
98.3 |
|
(3.9%) |
|
93.2 |
|
1.4% |
|
7.8% |
|
15.2% |
|
Stainless steel |
85.1 |
|
86.1 |
|
(1.2%) |
|
78.6 |
|
8.3% |
|
7.5% |
|
13.8% |
|
Alloy |
55.8 |
|
59.5 |
|
(6.2%) |
|
53.7 |
|
3.9% |
|
8.8% |
|
13.8% |
|
|
|
Sales ($'s in millions; percentage
change) |
|
|
|
Q2 2018Sales |
|
Q1 2018Sales |
|
SequentialQuarterChange |
|
Q2 2017Sales |
|
Year-Over-Year Change |
|
|
Carbon steel |
|
$1,642.2 |
|
$1,461.2 |
|
12.4% |
|
$1,331.8 |
|
23.3% |
|
|
Aluminum |
|
$570.0 |
|
$550.2 |
|
3.6% |
|
$487.8 |
|
16.9% |
|
|
Stainless steel |
|
$428.7 |
|
$403.2 |
|
6.3% |
|
$348.0 |
|
23.2% |
|
|
Alloy |
|
$172.5 |
|
$169.0 |
|
2.1% |
|
$145.8 |
|
18.3% |
|
|
Year-to-Date (6 months) 2018 Business Metrics |
|
|
|
|
(tons in thousands; percentage change) |
|
|
|
|
|
|
2018 |
|
2017 |
|
Year-Over-Year Change |
|
Tons sold |
|
3,180.2 |
|
3,080.7 |
|
3.2% |
|
Tons sold (same-store) |
|
3,175.2 |
|
3,080.7 |
|
3.1% |
|
Average selling price per ton sold |
|
$1,807 |
|
$1,581 |
|
14.3% |
|
Average selling price per ton sold
(same-store) |
|
$1,801 |
|
$1,581 |
|
13.9% |
|
Year‑to‑Date (6 months) 2018 Major Commodity Metrics |
|
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold (percentage
change) |
|
|
2018 TonsSold |
|
2017 TonsSold |
|
Year-Over- Year Change |
|
Year-Over-Year Change |
|
Carbon steel |
|
2,539.5 |
|
2,472.3 |
|
2.7% |
|
15.4% |
|
Aluminum |
|
192.8 |
|
185.9 |
|
3.7% |
|
11.2% |
|
Stainless steel |
|
171.2 |
|
158.4 |
|
8.1% |
|
10.7% |
|
Alloy |
|
115.3 |
|
110.0 |
|
4.8% |
|
11.9% |
|
|
|
Sales ($'s in millions; percentage
change) |
|
|
2018 Sales |
|
2017 Sales |
|
Year-Over-Year Change |
|
Carbon steel |
|
$3,103.4 |
|
$2,617.3 |
|
18.6% |
|
Aluminum |
|
$1,120.2 |
|
$970.9 |
|
15.4% |
|
Stainless steel |
|
$831.9 |
|
$695.3 |
|
19.6% |
|
Alloy |
|
$341.5 |
|
$291.1 |
|
17.3% |
|
End Market CommentaryCustomer demand remained
healthy throughout the second quarter of 2018. As anticipated, the
Company experienced a limited amount of customer pre-buying
activity in the first quarter of 2018 which reduced Reliance’s
shipments by 0.7% in the second quarter of 2018 compared to the
first quarter of 2018. Reliance continues to benefit from its
strategy of serving a broad spectrum of diverse end markets and
providing superior quality products and processing services,
generally in small quantities on a just-in-time basis.
- Aerospace demand remains strong, and continues to be one of the
Company’s top-performing end markets. Reliance maintains its
positive outlook for aerospace as build rates and the backlog for
orders of commercial planes continues to improve. Reliance expects
to continue growing its market share in aerospace given its
increased exposure to the defense market and international
expansion activities.
- Automotive demand continues to be strong. Reliance services the
automotive market mainly through its toll processing operations in
the U.S. and Mexico. Reliance maintains its positive outlook for
this market as the usage of aluminum in the automotive industry
continues to rise. Reliance remains well positioned to increase its
processing capacity through the Company’s continued investments in
new facilities and equipment.
- Non-residential construction demand, including infrastructure,
continues to steadily improve. Reliance is well positioned to
absorb increased volume into its existing facilities and cost
structure and remains optimistic that the uptick in activity in the
non-residential construction market will continue.
- Heavy industry demand continues to strengthen. Reliance
continues to experience increased activity in the industrial
equipment markets, primarily related to construction and
agricultural equipment. Reliance believes the heightened demand in
construction and agricultural equipment has been supported by
increased capital spending budgets due to tax reform, and maintains
its positive outlook that demand in this end-market will continue
to improve.
- Energy (oil and gas) demand continues to recover slowly for the
products Reliance sells into this end market. Rig counts and
drilling activity continue to increase with mill lead times
extending. Completion activity also continues to gain strength.
Balance Sheet & LiquidityReliance ended the
second quarter of 2018 with total debt outstanding of $2.05
billion, for a net debt-to-total capital ratio of 27.9%. The
Company had $760.8 million available for borrowings on its $1.5
billion revolving credit facility at June 30, 2018.
“We are very pleased with our financial performance in the
second quarter of 2018,” commented Karla Lewis, Senior Executive
Vice President and Chief Financial Officer of Reliance. “Our
increased average selling price and our strong gross profit margin
generated milestone earnings levels that in turn, resulted in
positive cash flow from operations of $97.0 million for the first
six months of 2018. Our continued strong execution in a positive
pricing environment generated cash from operations despite
significantly higher working capital requirements. We remain
pleased with our solid balance sheet which enables us to continue
executing on our capital allocation strategy of investing in the
growth of our business and returning value to our stockholders.”
Acquisition of DuBose National Energy Services, Inc. and
DuBose National Energy Fasteners & Machined Parts,
Inc.Effective March 1, 2018, Reliance acquired all of the
issued and outstanding capital stock of DuBose National Energy
Services, Inc. (“DuBose Energy”) in Clinton, North Carolina and its
affiliate, DuBose National Energy Fasteners & Machined Parts,
Inc. (“DuBose Fasteners”) in Cleveland, Ohio. DuBose Energy and
DuBose Fasteners specialize in global fabrication, supply and
distribution of metal and metal products to the nuclear industry,
including utilities, component manufacturers and contractors. The
DuBose acquisition aligns with Reliance’s growth strategy of
acquiring niche businesses that provide specialty products with
high levels of value-added processing at attractive returns. For
the fiscal year ended June 30, 2017, the DuBose companies’ combined
net sales were $36.3 million.
Stockholder Return ActivityOn July 25, 2018,
the Board of Directors declared a quarterly cash dividend of $0.50
per share of common stock, payable on September 7, 2018 to
stockholders of record as of August 17, 2018. Reliance has paid
regular quarterly dividends for 59 consecutive years and has
increased the dividend 25 times since its 1994 IPO, with the most
recent increase of 11.1% in the first quarter of 2018.
Reliance repurchased $50.0 million of its common stock in the
first half of 2018 at an average cost of $84.38 per share. At June
30, 2018, approximately 7.5 million shares remained available for
repurchase under the Company’s share repurchase program. Reliance
expects to continue opportunistically repurchasing shares of its
common stock going forward.
Business Outlook Reliance management is
optimistic in regard to business conditions in the third quarter of
2018 and anticipates that the end markets in which the Company
operates will continue to gradually improve. The Company expects
that demand in the third quarter of 2018 will remain solid, subject
to normal seasonal patterns, which include a decline in shipping
volume due to customer shutdowns and vacation schedules. In
addition, there is one less shipping day in the third quarter of
2018 compared to the second quarter of 2018. As a result, the
Company estimates tons sold will be down 2% to 4% in the third
quarter of 2018 compared to the second quarter of 2018. Reliance
management also believes pricing fundamentals will remain steady
based on current demand levels and ongoing trade actions.
Accordingly, the Company expects its average selling price per ton
sold for the third quarter to be up 1% to 3% compared to the second
quarter of 2018. As a result, management currently expects earnings
per diluted share to be in the range of $2.65 to $2.75 for the
third quarter of 2018.
Conference Call DetailsA conference call and
simultaneous webcast to discuss the second quarter 2018 financial
results and business outlook will be held today, July 26, 2018 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: 13681229. 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, August 9, 2018 by dialing (844) 512-2921 (U.S. and
Canada) or (412) 317-6671 (International) and entering the
conference ID: 13681229. 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
thirteen 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 2017, Reliance’s average order size was $1,740, approximately
48% 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, taxes, 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, 2017, 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 |
|
Six Months |
|
|
|
Ended June 30, |
|
Ended June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
Income
Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,988.9 |
|
|
$ |
2,475.2 |
|
|
$ |
5,746.0 |
|
|
$ |
4,894.5 |
|
|
|
Gross profit1
|
|
917.5 |
|
|
|
702.1 |
|
|
|
1,737.4 |
|
|
|
1,423.7 |
|
|
|
Operating income |
|
327.3 |
|
|
|
171.2 |
|
|
|
573.7 |
|
|
|
361.4 |
|
|
|
Pre-tax income |
|
306.6 |
|
|
|
152.4 |
|
|
|
531.8 |
|
|
|
320.9 |
|
|
|
Net income attributable
to Reliance |
|
230.8 |
|
|
|
103.0 |
|
|
|
399.8 |
|
|
|
214.7 |
|
|
|
Diluted earnings per
share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance
stockholders |
$ |
3.16 |
|
|
$ |
1.40 |
|
|
$ |
5.46 |
|
|
$ |
2.92 |
|
|
|
Non-GAAP diluted
earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to Reliance stockholders2 |
$ |
3.10 |
|
|
$ |
1.40 |
|
|
$ |
5.40 |
|
|
$ |
2.92 |
|
|
|
Weighted average shares
outstanding – |
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted |
|
72,987,798 |
|
|
|
73,500,701 |
|
|
|
73,217,770 |
|
|
|
73,458,170 |
|
|
|
Gross profit margin1
|
|
30.7% |
|
|
|
28.4% |
|
|
|
30.2% |
|
|
|
29.1% |
|
|
|
Operating income
margin |
|
11.0% |
|
|
|
6.9% |
|
|
|
10.0% |
|
|
|
7.4% |
|
|
|
Pre-tax income
margin |
|
10.3% |
|
|
|
6.2% |
|
|
|
9.3% |
|
|
|
6.6% |
|
|
|
Net income margin
– Reliance |
|
7.7% |
|
|
|
4.2% |
|
|
|
7.0% |
|
|
|
4.4% |
|
|
|
Cash dividends per
share |
$ |
0.50 |
|
|
$ |
0.45 |
|
|
$ |
1.00 |
|
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
|
|
|
|
|
2018 |
|
2017* |
|
|
|
|
|
|
|
|
Balance Sheet
and Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
$ |
3,648.2 |
|
|
$ |
3,051.3 |
|
|
|
|
|
|
|
|
|
Working capital |
|
2,748.8 |
|
|
|
2,347.6 |
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
1,666.4 |
|
|
|
1,656.3 |
|
|
|
|
|
|
|
|
|
Total assets |
|
8,352.6 |
|
|
|
7,751.0 |
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
899.4 |
|
|
|
703.7 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
1,932.7 |
|
|
|
1,809.4 |
|
|
|
|
|
|
|
|
|
Total Reliance
stockholders’ equity |
|
4,946.2 |
|
|
|
4,667.1 |
|
|
|
|
|
|
|
|
|
Capital expenditures
(year-to-date) |
|
98.6 |
|
|
|
161.6 |
|
|
|
|
|
|
|
|
|
Cash provided by
operations (year-to-date) |
|
97.0 |
|
|
|
399.0 |
|
|
|
|
|
|
|
|
|
Net debt-to-total
capital3 |
|
27.9% |
|
|
|
27.2% |
|
|
|
|
|
|
|
|
|
Return on Reliance
stockholders' equity4 |
|
18.4% |
|
|
|
14.8% |
|
|
|
|
|
|
|
|
|
Current ratio |
|
4.1 |
|
|
|
4.3 |
|
|
|
|
|
|
|
|
|
Book value per
share5 |
$ |
68.32 |
|
|
$ |
64.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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.
About half 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 See accompanying Non-GAAP earnings and adjusted
gross profit reconciliation.3 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).4 Calculations
are based on the latest twelve months net income attributable to
Reliance and beginning total Reliance stockholders’ equity. 5 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 and par value
amounts) |
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2018 |
|
2017* |
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
124.3 |
|
|
$ |
154.4 |
|
|
|
|
Accounts
receivable, less allowance for doubtful accounts of $21.2 at June
30, 2018 and $15.5 at December 31, 2017 |
|
1,379.2 |
|
|
|
1,087.3 |
|
|
|
|
Inventories |
|
2,062.1 |
|
|
|
1,726.0 |
|
|
|
|
Prepaid
expenses and other current assets |
|
82.6 |
|
|
|
80.7 |
|
|
|
|
Income
taxes receivable |
|
— |
|
|
|
2.9 |
|
|
|
|
Total
current assets |
|
3,648.2 |
|
|
|
3,051.3 |
|
|
|
|
Property, plant and
equipment: |
|
|
|
|
|
|
|
|
Land |
|
230.5 |
|
|
|
229.7 |
|
|
|
|
Buildings |
|
1,122.6 |
|
|
|
1,095.3 |
|
|
|
|
Machinery
and equipment |
|
1,797.4 |
|
|
|
1,738.6 |
|
|
|
|
Accumulated depreciation |
|
(1,484.1 |
) |
|
|
(1,407.3 |
) |
|
|
|
Property,
plant and equipment, net |
|
1,666.4 |
|
|
|
1,656.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
1,848.7 |
|
|
|
1,842.6 |
|
|
|
|
Intangible assets,
net |
|
1,101.5 |
|
|
|
1,112.1 |
|
|
|
|
Cash surrender value of
life insurance policies, net |
|
41.0 |
|
|
|
47.8 |
|
|
|
|
Other assets |
|
46.8 |
|
|
|
40.9 |
|
|
|
|
Total
assets |
$ |
8,352.6 |
|
|
$ |
7,751.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
517.8 |
|
|
$ |
346.7 |
|
|
|
|
Accrued
expenses |
|
83.0 |
|
|
|
83.6 |
|
|
|
|
Accrued
compensation and retirement costs |
|
141.8 |
|
|
|
139.3 |
|
|
|
|
Accrued
insurance costs |
|
43.9 |
|
|
|
42.1 |
|
|
|
|
Current
maturities of long-term debt and short-term borrowings |
|
104.4 |
|
|
|
92.0 |
|
|
|
|
Income
taxes payable |
|
8.5 |
|
|
|
— |
|
|
|
|
Total
current liabilities |
|
899.4 |
|
|
|
703.7 |
|
|
|
|
Long-term debt |
|
1,932.7 |
|
|
|
1,809.4 |
|
|
|
|
Long-term retirement
costs |
|
88.0 |
|
|
|
85.4 |
|
|
|
|
Other long-term
liabilities |
|
14.2 |
|
|
|
11.8 |
|
|
|
|
Deferred income
taxes |
|
437.5 |
|
|
|
440.8 |
|
|
|
|
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 – 72,350,258 at June 30, 2018 and 72,609,540
at December 31, 2017 |
|
561.3 |
|
|
|
594.6 |
|
|
|
|
Retained
earnings |
|
4,470.6 |
|
|
|
4,144.1 |
|
|
|
|
Accumulated other comprehensive loss |
|
(85.7 |
) |
|
|
(71.6 |
) |
|
|
|
Total Reliance
stockholders’ equity |
|
4,946.2 |
|
|
|
4,667.1 |
|
|
|
|
Noncontrolling
interests |
|
34.6 |
|
|
|
32.8 |
|
|
|
|
Total equity |
|
4,980.8 |
|
|
|
4,699.9 |
|
|
|
|
Total
liabilities and equity |
$ |
8,352.6 |
|
|
$ |
7,751.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
|
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,988.9 |
|
|
$ |
2,475.2 |
|
$ |
5,746.0 |
|
$ |
4,894.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales (exclusive of depreciation and amortization shown below) |
|
2,071.4 |
|
|
|
1,773.1 |
|
|
4,008.6 |
|
|
3,470.8 |
|
Warehouse, delivery, selling, general and administrative |
|
535.9 |
|
|
|
475.9 |
|
|
1,055.3 |
|
|
952.1 |
|
Depreciation and amortization |
|
54.3 |
|
|
|
55.0 |
|
|
108.4 |
|
|
110.2 |
|
|
|
2,661.6 |
|
|
|
2,304.0 |
|
|
5,172.3 |
|
|
4,533.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
327.3 |
|
|
|
171.2 |
|
|
573.7 |
|
|
361.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
21.3 |
|
|
|
18.5 |
|
|
40.6 |
|
|
35.8 |
|
Other
(income) expense, net |
|
(0.6 |
) |
|
|
0.3 |
|
|
1.3 |
|
|
4.7 |
|
Income before income
taxes |
|
306.6 |
|
|
|
152.4 |
|
|
531.8 |
|
|
320.9 |
|
Income tax
provision |
|
73.5 |
|
|
|
47.6 |
|
|
127.6 |
|
|
102.7 |
|
Net income |
|
233.1 |
|
|
|
104.8 |
|
|
404.2 |
|
|
218.2 |
|
Less: Net
income attributable to noncontrolling interests |
|
2.3 |
|
|
|
1.8 |
|
|
4.4 |
|
|
3.5 |
|
Net income attributable
to Reliance |
$ |
230.8 |
|
|
$ |
103.0 |
|
$ |
399.8 |
|
$ |
214.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Reliance stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
3.16 |
|
|
$ |
1.40 |
|
$ |
5.46 |
|
$ |
2.92 |
|
Basic |
$ |
3.19 |
|
|
$ |
1.41 |
|
$ |
5.51 |
|
$ |
2.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
$ |
0.50 |
|
|
$ |
0.45 |
|
$ |
1.00 |
|
$ |
0.90 |
|
|
RELIANCE STEEL & ALUMINUM CO. |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in millions) |
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2018 |
|
|
2017 |
|
|
Operating
activities: |
|
|
|
|
|
|
Net income |
$ |
404.2 |
|
|
$ |
218.2 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
108.4 |
|
|
|
110.2 |
|
|
Provision
for uncollectible accounts |
|
7.1 |
|
|
|
4.1 |
|
|
Deferred
income tax benefit |
|
(2.8 |
) |
|
|
(2.1 |
) |
|
Gain on
sales of property, plant and equipment |
|
(0.1 |
) |
|
|
(3.9 |
) |
|
Stock-based compensation expense |
|
19.3 |
|
|
|
14.9 |
|
|
Other |
|
4.1 |
|
|
|
5.6 |
|
|
Changes
in operating assets and liabilities (excluding effect of businesses
acquired): |
|
|
|
|
|
|
Accounts
receivable |
|
(295.0 |
) |
|
|
(219.5 |
) |
|
Inventories |
|
(332.0 |
) |
|
|
(216.5 |
) |
|
Prepaid
expenses and other assets |
|
(1.5 |
) |
|
|
1.4 |
|
|
Accounts
payable and other liabilities |
|
185.3 |
|
|
|
102.8 |
|
|
Net cash provided by
operating activities |
|
97.0 |
|
|
|
15.2 |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
(98.6 |
) |
|
|
(72.8 |
) |
|
Acquisitions, net of cash acquired |
|
(39.6 |
) |
|
|
(1.3 |
) |
|
Other |
|
9.2 |
|
|
|
7.2 |
|
|
Net cash used in
investing activities |
|
(129.0 |
) |
|
|
(66.9 |
) |
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
Net
short-term debt (repayments) borrowings |
|
(2.1 |
) |
|
|
3.3 |
|
|
Proceeds
from long-term debt borrowings |
|
670.0 |
|
|
|
541.0 |
|
|
Principal
payments on long-term debt |
|
(533.3 |
) |
|
|
(406.7 |
) |
|
Dividends
and dividend equivalents paid |
|
(74.6 |
) |
|
|
(66.5 |
) |
|
Exercise
of stock options |
|
2.8 |
|
|
|
2.8 |
|
|
Share
repurchases |
|
(50.0 |
) |
|
|
— |
|
|
Other |
|
(8.0 |
) |
|
|
(3.3 |
) |
|
Net cash provided by
financing activities |
|
4.8 |
|
|
|
70.6 |
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(2.9 |
) |
|
|
4.8 |
|
|
(Decrease) increase in
cash and cash equivalents |
|
(30.1 |
) |
|
|
23.7 |
|
|
Cash and cash
equivalents at beginning of year |
|
154.4 |
|
|
|
122.8 |
|
|
Cash and cash
equivalents at end of period |
$ |
124.3 |
|
|
$ |
146.5 |
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
Interest paid during
the period |
$ |
39.7 |
|
|
$ |
36.1 |
|
|
Income taxes paid
during the period, net |
$ |
114.5 |
|
|
$ |
107.1 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
$ |
230.8 |
|
|
$ |
169.0 |
|
|
$ |
103.0 |
|
|
$ |
3.16 |
|
|
$ |
2.30 |
|
|
$ |
1.40 |
|
|
Non-recurring
settlement gains |
|
(5.8 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.08 |
) |
|
|
— |
|
|
|
— |
|
|
Restructuring
charges |
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
Income tax expense
(benefit) related to above items |
|
1.4 |
|
|
|
— |
|
|
|
(0.2 |
) |
|
|
0.02 |
|
|
|
— |
|
|
|
(0.01 |
) |
|
Gain related to sales
of non-core assets |
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Income tax expense
related to sales of non-core assets |
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Non-GAAP net income
attributable to Reliance |
$ |
226.4 |
|
|
$ |
169.0 |
|
|
$ |
103.1 |
|
|
$ |
3.10 |
|
|
$ |
2.30 |
|
|
$ |
1.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
|
|
|
|
|
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
|
|
|
$ |
399.8 |
|
|
$ |
214.7 |
|
|
$ |
5.46 |
|
|
$ |
2.92 |
|
|
|
|
|
Non-recurring
settlement (gains) charges |
|
|
|
|
(5.8 |
) |
|
|
2.8 |
|
|
|
(0.08 |
) |
|
|
0.04 |
|
|
|
|
|
Restructuring
charges |
|
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.01 |
|
|
|
|
|
Income tax expense
(benefit) related to above items |
|
|
|
|
1.4 |
|
|
|
(1.2 |
) |
|
|
0.02 |
|
|
|
(0.02 |
) |
|
|
|
|
Gain related to sales
of non-core assets |
|
|
|
|
— |
|
|
|
(3.5 |
) |
|
|
— |
|
|
|
(0.05 |
) |
|
|
|
|
Income tax expense
related to sales of non-core assets |
|
|
|
|
— |
|
|
|
1.3 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
|
|
Non-GAAP net income
attributable to Reliance |
|
|
|
$ |
395.4 |
|
|
$ |
214.4 |
|
|
$ |
5.40 |
|
|
$ |
2.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
Gross profit -
LIFO |
$ |
917.5 |
|
|
$ |
819.9 |
|
|
$ |
702.1 |
|
|
$ |
1,737.4 |
|
|
$ |
1,423.7 |
|
|
|
|
|
Net LIFO/LCM
expense |
|
62.5 |
|
|
|
25.0 |
|
|
|
10.0 |
|
|
|
87.5 |
|
|
|
20.0 |
|
|
|
|
|
Gross profit -
FIFO |
|
980.0 |
|
|
|
844.9 |
|
|
|
712.1 |
|
|
|
1,824.9 |
|
|
|
1,443.7 |
|
|
|
|
|
Restructuring
credits |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
|
|
|
Adjusted gross profit -
FIFO |
$ |
980.0 |
|
|
$ |
844.9 |
|
|
$ |
712.1 |
|
|
$ |
1,824.9 |
|
|
$ |
1,443.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin -
LIFO |
|
30.7 |
% |
|
|
29.7 |
% |
|
|
28.4 |
% |
|
|
30.2 |
% |
|
|
29.1 |
% |
|
|
|
|
Net LIFO/LCM expense as
a % of sales |
|
2.1 |
% |
|
|
0.9 |
% |
|
|
0.4 |
% |
|
|
1.6 |
% |
|
|
0.4 |
% |
|
|
|
|
Gross profit margin -
FIFO |
|
32.8 |
% |
|
|
30.6 |
% |
|
|
28.8 |
% |
|
|
31.8 |
% |
|
|
29.5 |
% |
|
|
|
|
Restructuring credits
as a % of sales |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Adjusted gross profit
margin - FIFO |
|
32.8 |
% |
|
|
30.6 |
% |
|
|
28.8 |
% |
|
|
31.8 |
% |
|
|
29.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 charges, settlement gains, restructuring charges
(credits) related to certain of the Company's energy-related
businesses and the closure or sale of some of its locations, and
gain on sales of non-core property, plant, and equipment, 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. |
|
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