- Fourth quarter EPS of $0.84- Record annual
gross profit margin of 30.1% for 2016 - Generated full year
cash flow from operations of $626.5 million- Increased quarterly
dividend by 6% to $0.45 per share
Reliance Steel & Aluminum Co. (NYSE:RS) today reported its
financial results for the fourth quarter and full year ended
December 31, 2016.
Fourth Quarter 2016 Financial
Highlights
- Sales were $2.06 billion, up 1.7% from $2.03 billion in the
fourth quarter of 2015 and down 5.7% from $2.19 billion in the
third quarter of 2016.
- Tons sold were down 1.1% from the fourth quarter of 2015 and
down 5.6% from the third quarter of 2016, with the average selling
price per ton sold up 2.7% from the fourth quarter of 2015 and down
0.1% from the third quarter of 2016.
- Gross profit margin was 29.8%, compared to 28.7% in the fourth
quarter of 2015 and 30.0% in the third quarter of 2016. FIFO
gross profit margin was 29.0%, compared to 26.7% in the fourth
quarter of 2015 and 29.4% in the third quarter of 2016.
- Net income attributable to Reliance was $61.7 million, compared
to $68.6 million in the fourth quarter of 2015 and $49.5 million in
the third quarter of 2016.
- Earnings per diluted share were $0.84, compared to $0.94 in the
fourth quarter of 2015 and $0.68 in the third quarter of 2016.
- Non-GAAP earnings per diluted share were $0.84, compared to
$0.87 in the fourth quarter of 2015 and $1.25 in the third quarter
of 2016.
- Reliance recorded a pre-tax LIFO inventory valuation credit
adjustment, or income, of $16.2 million in the fourth quarter of
2016, compared to $42.0 million in the fourth quarter of 2015 and
$11.3 million in the third quarter of 2016, included in cost of
sales.
- The effective tax rate was 35.8%, compared to 27.1% in the
fourth quarter of 2015 and 28.2% in the third quarter of 2016.
- Cash flow from operations was $238.9 million in the fourth
quarter of 2016 and net debt-to-total capital was 30.3% at December
31, 2016.
- A quarterly cash dividend of $0.45 per share, an increase of
5.9%, was declared on February 14, 2017 for stockholders of record
as of March 10, 2017 and will be payable on March 24, 2017.
Full Year 2016 Financial
Highlights
- Sales were $8.61 billion, down 7.9% from $9.35 billion in
2015.
- Tons sold were down 1.5% from 2015 and the average selling
price per ton sold was down 6.8%.
- Gross profit margin was 30.1%, up 290 basis points from 27.2%
in 2015. FIFO gross profit margin was 29.8%, up 380 basis points
from 26.0% in 2015.
- Net income attributable to Reliance was $304.3 million, down
2.3% from $311.5 million in 2015.
- Earnings per diluted share were $4.16, consistent with $4.16 in
2015.
- Non-GAAP earnings per diluted share were $4.48, compared to
$4.55 in 2015.
- A pre-tax LIFO inventory valuation credit adjustment, or
income, of $27.4 million is included in cost of sales compared to a
pre-tax LIFO inventory valuation credit adjustment, or income, of
$117.0 million in 2015.
- The effective tax rate was 28.0% for 2016, compared to 31.1%
for 2015.
- Cash flow from operations was $626.5 million, compared to $1.0
billion in 2015.
Management Commentary
“Operationally, 2016 was a terrific year for Reliance as our focus
on maximizing our gross profit margin resulted in our first ever
annual gross profit margin above 30%,” said Gregg Mollins,
President and Chief Executive Officer of Reliance. “Although
somewhat improved from 2015, the macro environment for our industry
continued to be challenging with overall lower demand levels and
pricing volatility resulting in a sales decline of $737 million in
2016 compared to 2015, due mostly to lower metal pricing.
However, the expansion of our FIFO gross profit margin to 29.8% for
the 2016 year, a 380 basis point improvement over 26.0% in 2015,
added $328 million more gross profit dollars, generally offsetting
the reduction to our pre-tax income from our lower sales
levels. We believe our ability to increase our gross profit
margin was made possible by the significant investments we have
made in our value-added processing equipment to provide our
customers with superior service and quality. Our effective
pricing strategy and discipline implemented by our managers in the
field along with our continued focus on inventory management
further contributed to this success.”
Mr. Mollins continued, “The positive metals pricing
environment experienced in the second quarter of 2016 lost momentum
as we progressed into the second half of the year. However, the
environment recovered as multiple price increases were announced by
the mills in late 2016 and have continued into 2017. The
trade cases filed by U.S. producers on various products throughout
the year, along with production capacity discipline and price
increases in raw materials, also continue to be supportive of
domestic pricing. These factors have led to positive pricing
momentum in early 2017. Customer sentiment is also more
positive than we have seen in some time, which we believe will
materialize into higher metals demand in 2017.”
Mr. Mollins concluded, “2016 was a solid year for
Reliance. We could not be more pleased with the strong operational
execution throughout our Company that allowed us to thrive, even in
challenging times. We continued to profitably grow the
Company, both organically and by completing three acquisitions, and
ended the year with a strong balance sheet that provides us the
ability to continue to execute our growth strategies and
stockholder return activities, including an increase of our
quarterly dividend. We look forward to 2017, which we believe
will feature a renewed enthusiasm for infrastructure and equipment
spending, as well as improvement in the energy market, and we
believe that Reliance is very well positioned to capitalize on
these opportunities.”
Fourth Quarter 2016 Business Metrics |
|
|
|
|
|
|
(tons in thousands; percentage change) |
|
|
|
|
|
|
|
Q4 2016 |
Q3 2016 |
Sequential Quarter Change
|
Q4 2015 |
Year-Over- Year Change
|
|
Tons sold |
|
1,365.0 |
|
1,445.5 |
(5.6 |
%) |
|
1,380.3 |
(1.1 |
%) |
|
Tons sold (same-store) |
|
1,346.1 |
|
1,426.3 |
(5.6 |
%) |
|
1,380.3 |
(2.5 |
%) |
|
Average selling price per ton sold |
$ |
1,500 |
$ |
1,501 |
(0.1 |
%) |
$ |
1,460 |
2.7 |
% |
|
Average selling price per ton sold (same-store)
|
$ |
1,495 |
$ |
1,494 |
0.1 |
% |
$ |
1,460 |
2.4 |
% |
|
Fourth Quarter 2016 Major Commodity
Metrics |
|
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold
(percentage change) |
|
Q4 2016 Tons Sold
|
Q3 2016 Tons Sold
|
Sequential Quarter Change
|
Q4 2015 Tons Sold
|
Year-Over- Year Change
|
Sequential Quarter Change
|
Year-Over- Year Change
|
Carbon steel |
1,096.1 |
1,167.4 |
(6.1 |
%) |
1,127.9 |
(2.8 |
%) |
(1.4 |
%) |
4.8 |
% |
Aluminum |
82.3 |
86.3 |
(4.6 |
%) |
81.7 |
0.7 |
% |
(0.1 |
%) |
(0.2 |
%) |
Stainless steel |
72.5 |
78.0 |
(7.1 |
%) |
71.8 |
1.0 |
% |
0.8 |
% |
2.0 |
% |
Alloy |
44.9 |
44.6 |
0.7 |
% |
47.8 |
(6.1 |
%) |
1.9 |
% |
(1.4 |
%) |
|
|
|
|
|
|
|
|
Sales ($'s in millions; percentage
change) |
|
|
Q4 2016 Sales |
Q3 2016 Sales |
Sequential Quarter Change
|
Q4 2015 Sales |
Year-Over- Year Change
|
|
Carbon steel |
$ |
1,096.1 |
$ |
1,183.9 |
(7.4 |
%) |
$ |
1,076.1 |
1.9 |
% |
|
Aluminum |
$ |
418.5 |
$ |
439.2 |
(4.7 |
%) |
$ |
416.3 |
0.5 |
% |
|
Stainless steel |
$ |
291.1 |
$ |
311.0 |
(6.4 |
%) |
$ |
283.0 |
2.9 |
% |
|
Alloy |
$ |
117.1 |
$ |
114.2 |
2.5 |
% |
$ |
126.4 |
(7.4 |
%) |
|
Full Year 2016 Business Metrics |
|
|
|
|
(tons in thousands; percentage change) |
|
|
|
|
|
|
2016 |
|
2015 |
Year-Over- Year Change
|
|
Tons sold |
|
5,832.9 |
|
5,918.9 |
(1.5 |
%) |
|
Tons sold (same-store) |
|
5,761.9 |
|
5,918.9 |
(2.7 |
%) |
|
Average selling price per ton sold |
$ |
1,465 |
$ |
1,572 |
(6.8 |
%) |
|
Average selling price per ton sold (same-store)
|
$ |
1,458 |
$ |
1,572 |
(7.3 |
%) |
|
Full Year 2016 Major Commodity
Metrics |
|
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold
(percentage change) |
|
|
2016 Tons Sold |
2015 Tons Sold |
Year-Over- Year Change |
Year-Over-Year Change |
|
Carbon steel |
4,714.1 |
4,831.6 |
(2.4 |
%) |
(6.6 |
%) |
|
Aluminum |
350.6 |
343.4 |
2.1 |
% |
(3.4 |
%) |
|
Stainless steel |
309.6 |
303.8 |
1.9 |
% |
(11.2 |
%) |
|
Alloy |
180.2 |
230.8 |
(21.9 |
%) |
(4.8 |
%) |
|
|
|
|
|
|
|
Sales ($'s in millions; percentage
change) |
|
|
2016 Sales |
2015 Sales |
Year-Over-Year Change |
|
Carbon steel |
$ |
4,579.5 |
$ |
5,023.0 |
(8.8 |
%) |
|
Aluminum |
$ |
1,777.6 |
$ |
1,801.5 |
(1.3 |
%) |
|
Stainless steel |
$ |
1,212.5 |
$ |
1,339.5 |
(9.5 |
%) |
|
Alloy |
$ |
473.3 |
$ |
636.9 |
(25.7 |
%) |
|
|
|
|
|
|
|
|
End Market
Commentary Consistent with normal seasonal patterns,
Reliance’s shipments declined in the fourth quarter of 2016
compared to the third quarter of 2016. However, Reliance
continues to benefit from its strategy of serving diverse end
markets and providing superior quality and processing services
through its extensive capital investments. The Company’s
same-store tons sold were down only 2.7% for the full year ended
December 31, 2016, compared to the MSCI industry decline of
6.2%.
- Automotive demand remains strong. Reliance supports the
automotive market mainly through the Company’s toll processing
operations in the U.S. and Mexico and continues to increase its
toll processing capacity through investments in new facilities and
processing equipment primarily to support incremental demand from
the increased usage of aluminum by the automotive industry.
- Aerospace demand also remains strong. Reliance maintains
its positive outlook in aerospace and expects to continue growing
its market share in this end market given the capital investments
and key acquisitions it has made in this space.
- Heavy industry demand remains relatively steady at low levels,
with the greatest impact to heavier items. Demand for small
to mid-sized equipment remains healthier and demand for road
construction equipment has improved as a result of the five year
infrastructure bill, which was passed in December 2015.
Reliance anticipates modest improvement in the industrial equipment
markets in 2017.
- Non-residential construction demand remains relatively steady,
with gradual upward growth expected in 2017. The Company is
optimistic that the new Administration’s focus on infrastructure
spending will further improve future demand for metals.
Reliance has made investments in equipment and facilities, and is
well positioned to absorb increased volume into its existing cost
structure as this important market improves over time.
- Energy (oil and gas) demand has improved slightly for the
products Reliance sells into this end market. Rig counts have
improved and Reliance has begun to see signs of new activity in the
market.
Balance Sheet & LiquidityThe
Company generated cash flow from operations of $626.5 million in
the twelve months ended December 31, 2016, compared to $1.0 billion
in 2015. The Company ended the year with total debt
outstanding of $1.9 billion, for a net debt-to-total capital ratio
of 30.3%. The Company had $897.4 million available for
borrowings on its $1.5 billion revolving credit facility at
December 31, 2016.
“In 2016, our higher gross profit levels along with
effective expense and working capital management allowed us to grow
the Company while maintaining our solid financial position,”
commented Karla Lewis, Senior Executive Vice President and Chief
Financial Officer of Reliance. “We were able to use our
strong cash flow from operations to fund $154.9 million of capital
expenditures and $348.7 million for our three acquisitions, as well
as to pay $120.4 million in dividends to our valued stockholders.
In addition, we used proceeds from our new revolving credit
facilities to retire $350.0 million of 6.2% senior unsecured notes
when they matured on November 15, 2016, which will result in pro
forma pre-tax interest savings of approximately $15.0 million per
year. Looking ahead, we remain focused on maintaining a solid
overall liquidity position which will continue to provide us with
the flexibility and resources to keep investing in the growth of
our business, both organically and through acquisition
opportunities, as well as to return value to our stockholders
through increased dividend payments and opportunistic share
repurchases.”
Stockholder Return ActivityOn
February 14, 2017, the Board of Directors declared a 5.9% increase
to the Company’s quarterly cash dividend to $0.45 per share of
common stock, payable on March 24, 2017 to stockholders of record
as of March 10, 2017. The Company has paid regular quarterly
dividends for 57 consecutive years and, including the current
increase of 5.9%, has increased the dividend 24 times since its
1994 IPO.
The Company did not repurchase any shares of its
common stock in 2016. In 2015, Reliance repurchased 6.2
million shares at an average price of $57.39 per share, for a total
of $355.5 million. At December 31, 2016, approximately 8.4
million shares remained available for repurchase under the share
repurchase program. The Company expects to opportunistically
repurchase shares of its common stock going forward.
Business Outlook Reliance
management is optimistic in regard to business activity levels and
metal pricing entering 2017 given the positive sentiment
surrounding both. The Company estimates tons sold will be up
8% to 10% in the first quarter of 2017 compared to the fourth
quarter of 2016 due to normal seasonal factors as well as January
shipment levels exceeding year ago levels. Metal pricing
continues to trend higher for almost all of the products the
Company sells. Therefore, the Company expects its average
selling price will be up 2% to 4% from the fourth quarter of 2016.
Accordingly, management currently expects earnings per diluted
share to be in the range of $1.25 to $1.35 for the first quarter of
2017.
Conference Call DetailsA
conference call and simultaneous webcast to discuss the fourth
quarter and full year 2016 financial results and business outlook
will be held today, February 16, 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) 407-0789 (U.S. and Canada) or (201)
689-8562 (International) approximately 10 minutes prior to the
start time and use conference ID: 13653314. 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, March 2, 2017 by dialing (844) 512-2921 (U.S. and
Canada) or (412) 317-6671 (International) and entering the
conference ID: 13653314. 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 39 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 business strategies and its expectations
concerning future demand and metal 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, 2015, filed with the
SEC.
(Tables to follow)
|
RELIANCE STEEL & ALUMINUM
CO.SELECTED UNAUDITED FINANCIAL
DATA(in millions, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
Income
Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,061.6 |
|
|
$ |
2,026.2 |
|
|
$ |
8,613.4 |
|
|
$ |
9,350.5 |
|
|
|
Gross profit1
|
|
613.9 |
|
|
|
582.0 |
|
|
|
2,590.3 |
|
|
|
2,546.9 |
|
|
|
Operating income |
|
116.2 |
|
|
|
115.4 |
|
|
|
512.6 |
|
|
|
546.6 |
|
|
|
Pre-tax income |
|
97.9 |
|
|
|
94.5 |
|
|
|
429.2 |
|
|
|
458.7 |
|
|
|
Net income attributable
to Reliance |
|
61.7 |
|
|
|
68.6 |
|
|
|
304.3 |
|
|
|
311.5 |
|
|
|
Diluted earnings per
share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance
stockholders |
$ |
0.84 |
|
|
$ |
0.94 |
|
|
$ |
4.16 |
|
|
$ |
4.16 |
|
|
|
Non-GAAP diluted
earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to Reliance stockholders2 |
$ |
0.84 |
|
|
$ |
0.87 |
|
|
$ |
4.48 |
|
|
$ |
4.55 |
|
|
|
Weighted average shares
outstanding – |
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted |
|
73,338,628 |
|
|
|
72,614,482 |
|
|
|
73,120,918 |
|
|
|
74,902,064 |
|
|
|
Gross profit margin1
|
|
29.8 |
% |
|
|
28.7 |
% |
|
|
30.1 |
% |
|
|
27.2 |
% |
|
|
Operating income
margin |
|
5.6 |
% |
|
|
5.7 |
% |
|
|
6.0 |
% |
|
|
5.8 |
% |
|
|
Pre-tax income
margin |
|
4.7 |
% |
|
|
4.7 |
% |
|
|
5.0 |
% |
|
|
4.9 |
% |
|
|
Net income margin
– Reliance |
|
3.0 |
% |
|
|
3.4 |
% |
|
|
3.5 |
% |
|
|
3.3 |
% |
|
|
Cash dividends per
share |
$ |
0.425 |
|
|
$ |
0.40 |
|
|
$ |
1.65 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
|
|
2016 |
|
2015* |
|
|
|
|
|
|
|
|
Balance Sheet
and Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
$ |
2,688.5 |
|
|
$ |
2,554.2 |
|
|
|
|
|
|
|
|
|
Working capital |
|
2,032.5 |
|
|
|
1,564.5 |
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
1,662.2 |
|
|
|
1,635.5 |
|
|
|
|
|
|
|
|
|
Total assets |
|
7,411.3 |
|
|
|
7,121.6 |
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
656.0 |
|
|
|
989.7 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
1,846.7 |
|
|
|
1,427.9 |
|
|
|
|
|
|
|
|
|
Total Reliance
stockholders’ equity |
|
4,148.8 |
|
|
|
3,914.1 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
154.9 |
|
|
|
172.2 |
|
|
|
|
|
|
|
|
|
Cash provided by
operations |
|
626.5 |
|
|
|
1,025.0 |
|
|
|
|
|
|
|
|
|
Net debt-to-total
capital3 |
|
30.3 |
% |
|
|
31.8 |
% |
|
|
|
|
|
|
|
|
Return on Reliance
stockholders' equity4 |
|
7.8 |
% |
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
Current ratio |
|
4.1 |
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
Book value per
share5 |
$ |
57.07 |
|
|
$ |
54.59 |
|
|
|
|
|
|
|
|
* 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 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 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 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
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2016 |
|
2015* |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
122.8 |
|
|
$ |
104.3 |
|
|
|
|
Accounts
receivable, less allowance for doubtful accounts of |
|
|
|
|
|
|
|
|
$15.3 at December 31, 2016 and $16.3 at December 31,
2015 |
|
960.2 |
|
|
|
916.6 |
|
|
|
|
Inventories |
|
1,532.6 |
|
|
|
1,436.0 |
|
|
|
|
Prepaid
expenses and other current assets |
|
72.9 |
|
|
|
60.8 |
|
|
|
|
Income
taxes receivable |
|
— |
|
|
|
36.5 |
|
|
|
|
Total
current assets |
|
2,688.5 |
|
|
|
2,554.2 |
|
|
|
|
Property, plant and equipment: |
|
|
|
|
|
|
|
|
Land |
|
228.2 |
|
|
|
196.2 |
|
|
|
|
Buildings |
|
1,059.2 |
|
|
|
1,006.3 |
|
|
|
|
Machinery
and equipment |
|
1,647.3 |
|
|
|
1,569.8 |
|
|
|
|
Accumulated depreciation |
|
(1,272.5 |
) |
|
|
(1,136.8 |
) |
|
|
|
|
|
1,662.2 |
|
|
|
1,635.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
1,827.4 |
|
|
|
1,724.8 |
|
|
|
|
Intangible assets, net |
|
1,151.3 |
|
|
|
1,125.4 |
|
|
|
|
Cash
surrender value of life insurance policies, net |
|
46.9 |
|
|
|
45.8 |
|
|
|
|
Other
assets |
|
35.0 |
|
|
|
35.9 |
|
|
|
|
Total
assets |
$ |
7,411.3 |
|
|
$ |
7,121.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
$ |
302.2 |
|
|
$ |
247.0 |
|
|
|
|
Accrued
expenses |
|
83.7 |
|
|
|
83.0 |
|
|
|
|
Accrued
compensation and retirement costs |
|
140.8 |
|
|
|
118.7 |
|
|
|
|
Accrued
insurance costs |
|
40.6 |
|
|
|
40.2 |
|
|
|
|
Current
maturities of long-term debt and short-term borrowings |
|
82.5 |
|
|
|
500.8 |
|
|
|
|
Income
taxes payable |
|
6.2 |
|
|
|
— |
|
|
|
|
Total
current liabilities |
|
656.0 |
|
|
|
989.7 |
|
|
|
|
Long-term debt |
|
1,846.7 |
|
|
|
1,427.9 |
|
|
|
|
Long-term retirement costs |
|
89.6 |
|
|
|
103.8 |
|
|
|
|
Other
long-term liabilities |
|
13.0 |
|
|
|
30.4 |
|
|
|
|
Deferred income taxes |
|
626.9 |
|
|
|
627.1 |
|
|
|
|
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 – 72,682,793 at December 31, 2016 and
71,739,072 |
|
|
|
|
|
|
|
|
at
December 31, 2015 |
|
590.3 |
|
|
|
533.8 |
|
|
|
|
Retained
earnings |
|
3,663.2 |
|
|
|
3,480.0 |
|
|
|
|
Accumulated
other comprehensive loss |
|
(104.7 |
) |
|
|
(99.7 |
) |
|
|
|
Total Reliance
stockholders’ equity |
|
4,148.8 |
|
|
|
3,914.1 |
|
|
|
|
Noncontrolling
interests |
|
30.3 |
|
|
|
28.6 |
|
|
|
|
Total equity |
|
4,179.1 |
|
|
|
3,942.7 |
|
|
|
|
Total liabilities and equity |
$ |
7,411.3 |
|
|
$ |
7,121.6 |
|
|
|
|
|
|
|
|
*
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 |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
2,061.6 |
|
|
$ |
2,026.2 |
|
|
$ |
8,613.4 |
|
|
$ |
9,350.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales (exclusive of depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
and
amortization shown below) |
|
1,447.7 |
|
|
|
1,444.2 |
|
|
|
6,023.1 |
|
|
|
6,803.6 |
|
|
Warehouse, delivery, selling, general and |
|
|
|
|
|
|
|
|
|
|
|
|
administrative |
|
441.7 |
|
|
|
412.7 |
|
|
|
1,803.3 |
|
|
|
1,728.5 |
|
|
Depreciation and amortization |
|
55.3 |
|
|
|
53.9 |
|
|
|
222.0 |
|
|
|
218.5 |
|
|
Impairment of long-lived assets |
|
0.7 |
|
|
|
— |
|
|
|
52.4 |
|
|
|
53.3 |
|
|
|
|
1,945.4 |
|
|
|
1,910.8 |
|
|
|
8,100.8 |
|
|
|
8,803.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
116.2 |
|
|
|
115.4 |
|
|
|
512.6 |
|
|
|
546.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
(19.0 |
) |
|
|
(21.0 |
) |
|
|
(84.6 |
) |
|
|
(84.3 |
) |
|
Other
income (expense), net |
|
0.7 |
|
|
|
0.1 |
|
|
|
1.2 |
|
|
|
(3.6 |
) |
|
Income before income
taxes |
|
97.9 |
|
|
|
94.5 |
|
|
|
429.2 |
|
|
|
458.7 |
|
|
Income tax
provision |
|
35.0 |
|
|
|
25.6 |
|
|
|
120.1 |
|
|
|
142.5 |
|
|
Net income |
|
62.9 |
|
|
|
68.9 |
|
|
|
309.1 |
|
|
|
316.2 |
|
|
Less: Net income attributable to noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
interests |
|
1.2 |
|
|
|
0.3 |
|
|
|
4.8 |
|
|
|
4.7 |
|
|
Net income attributable
to Reliance |
$ |
61.7 |
|
|
$ |
68.6 |
|
|
$ |
304.3 |
|
|
$ |
311.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Reliance stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
0.84 |
|
|
$ |
0.94 |
|
|
$ |
4.16 |
|
|
$ |
4.16 |
|
|
Basic |
$ |
0.85 |
|
|
$ |
0.96 |
|
|
$ |
4.21 |
|
|
$ |
4.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share |
$ |
0.425 |
|
|
$ |
0.40 |
|
|
$ |
1.65 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts were derived from audited financial
statements. |
|
RELIANCE STEEL & ALUMINUM
CO.UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS(in millions) |
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
December 31, |
|
|
2016 |
|
2015* |
|
Operating
activities: |
|
|
|
|
|
|
Net income |
$ |
309.1 |
|
|
$ |
316.2 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
222.0 |
|
|
|
218.5 |
|
|
Impairment of long-lived assets |
|
52.4 |
|
|
|
53.3 |
|
|
Deferred
income tax benefit |
|
(0.5 |
) |
|
|
(17.1 |
) |
|
Gain on
sales of property, plant and equipment |
|
(1.2 |
) |
|
|
(2.2 |
) |
|
Stock-based compensation expense |
|
24.4 |
|
|
|
21.3 |
|
|
Other |
|
7.7 |
|
|
|
9.8 |
|
|
Changes
in operating assets and liabilities (excluding effect of businesses
acquired): |
|
|
|
|
|
|
Accounts
receivable |
|
(31.2 |
) |
|
|
222.5 |
|
|
Inventories |
|
(30.4 |
) |
|
|
306.8 |
|
|
Prepaid
expenses and other assets |
|
26.7 |
|
|
|
(25.2 |
) |
|
Accounts
payable and other liabilities |
|
47.5 |
|
|
|
(78.9 |
) |
|
Net cash provided by
operating activities |
|
626.5 |
|
|
|
1,025.0 |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
(154.9 |
) |
|
|
(172.2 |
) |
|
Acquisitions, net of cash acquired |
|
(348.7 |
) |
|
|
(0.4 |
) |
|
Other |
|
(1.5 |
) |
|
|
2.7 |
|
|
Net cash used in
investing activities |
|
(505.1 |
) |
|
|
(169.9 |
) |
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
Net
short-term debt (repayments) borrowings |
|
(12.6 |
) |
|
|
12.7 |
|
|
Proceeds
from long-term debt borrowings |
|
2,073.0 |
|
|
|
573.0 |
|
|
Principal
payments on long-term debt |
|
(2,061.4 |
) |
|
|
(962.3 |
) |
|
Debt
issuance costs |
|
(6.8 |
) |
|
|
— |
|
|
Dividends
and dividend equivalents paid |
|
(120.4 |
) |
|
|
(120.1 |
) |
|
Exercise
of stock options |
|
37.5 |
|
|
|
15.1 |
|
|
Share
repurchases |
|
— |
|
|
|
(355.5 |
) |
|
Other |
|
(9.5 |
) |
|
|
(11.4 |
) |
|
Net cash used in
financing activities |
|
(100.2 |
) |
|
|
(848.5 |
) |
|
Effect of exchange rate
changes on cash |
|
(2.7 |
) |
|
|
(8.5 |
) |
|
Increase (decrease) in
cash and cash equivalents |
|
18.5 |
|
|
|
(1.9 |
) |
|
Cash and cash
equivalents at beginning of year |
|
104.3 |
|
|
|
106.2 |
|
|
Cash and cash
equivalents at end of year |
$ |
122.8 |
|
|
$ |
104.3 |
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
Interest paid during
the year |
$ |
81.4 |
|
|
$ |
82.0 |
|
|
Income taxes paid
during the year, net |
$ |
95.1 |
|
|
$ |
204.9 |
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities: |
|
|
|
|
|
|
Debt assumed in
connection with acquisition |
$ |
6.1 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
* Amounts were derived from audited financial
statements. |
|
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 |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
$ |
61.7 |
|
|
$ |
49.5 |
|
|
$ |
68.6 |
|
|
$ |
0.84 |
|
|
$ |
0.68 |
|
|
$ |
0.94 |
|
|
Antitrust related
litigation gain |
|
— |
|
|
|
— |
|
|
|
(8.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.12 |
) |
|
Non-recurring
settlement gains |
|
(1.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
|
|
— |
|
|
Impairment and
restructuring charges |
|
1.8 |
|
|
|
67.3 |
|
|
|
— |
|
|
|
0.03 |
|
|
|
0.91 |
|
|
|
— |
|
|
Income tax
(benefit) expense, related to above items |
(0.5 |
) |
|
|
(25.0 |
) |
|
|
3.3 |
|
|
|
(0.01 |
) |
|
|
(0.34 |
) |
|
|
0.05 |
|
|
Non-GAAP net income
attributable to Reliance |
$ |
61.7 |
|
|
$ |
91.8 |
|
|
$ |
63.3 |
|
|
$ |
0.84 |
|
|
$ |
1.25 |
|
|
$ |
0.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
|
|
|
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
|
|
|
$ |
304.3 |
|
|
$ |
311.5 |
|
|
$ |
4.16 |
|
|
$ |
4.16 |
|
|
|
|
|
Antitrust related
litigation gain |
|
|
|
|
— |
|
|
|
(8.6 |
) |
|
|
— |
|
|
|
(0.12 |
) |
|
|
|
|
Non-recurring
settlement gains |
|
|
|
|
(3.5 |
) |
|
|
— |
|
|
|
(0.05 |
) |
|
|
— |
|
|
|
|
|
Impairment and
restructuring charges |
|
|
|
|
69.1 |
|
|
|
56.3 |
|
|
|
0.95 |
|
|
|
0.75 |
|
|
|
|
|
Income tax benefit,
related to above items |
|
|
|
|
(24.7 |
) |
|
|
(18.1 |
) |
|
|
(0.34 |
) |
|
|
(0.24 |
) |
|
|
|
|
Resolution of certain
tax matters |
|
|
|
|
(17.6 |
) |
|
|
— |
|
|
|
(0.24 |
) |
|
|
— |
|
|
|
|
|
Non-GAAP net income
attributable to Reliance |
|
|
|
$ |
327.6 |
|
|
$ |
341.1 |
|
|
$ |
4.48 |
|
|
$ |
4.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31 |
|
|
|
|
|
2016 |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
Gross profit -
LIFO |
$ |
613.9 |
|
|
$ |
654.6 |
|
|
$ |
582.0 |
|
|
$ |
2,590.3 |
|
|
$ |
2,546.9 |
|
|
|
|
|
Net LIFO/LCM
income |
|
(16.2 |
) |
|
|
(11.3 |
) |
|
|
(42.0 |
) |
|
|
(27.4 |
) |
|
|
(117.0 |
) |
|
|
|
|
Gross profit -
FIFO |
|
597.7 |
|
|
|
643.3 |
|
|
|
540.0 |
|
|
|
2,562.9 |
|
|
|
2,429.9 |
|
|
|
|
|
Restructuring
charges |
|
1.1 |
|
|
|
11.7 |
|
|
|
— |
|
|
|
12.8 |
|
|
|
1.6 |
|
|
|
|
|
Adjusted gross profit -
FIFO |
$ |
598.8 |
|
|
$ |
655.0 |
|
|
$ |
540.0 |
|
|
$ |
2,575.7 |
|
|
$ |
2,431.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin -
LIFO |
|
29.8 |
% |
|
|
30.0 |
% |
|
|
28.7 |
% |
|
|
30.1 |
% |
|
|
27.2 |
% |
|
|
|
|
Net LIFO/LCM income as
a % of sales |
|
(0.8 |
%) |
|
|
(0.6 |
%) |
|
|
(2.0 |
%) |
|
|
(0.3 |
%) |
|
|
(1.2 |
%) |
|
|
|
|
Gross profit margin -
FIFO |
|
29.0 |
% |
|
|
29.4 |
% |
|
|
26.7 |
% |
|
|
29.8 |
% |
|
|
26.0 |
% |
|
|
|
|
Restructuring
charges |
|
0.0 |
% |
|
|
0.6 |
% |
|
|
— |
|
|
|
0.1 |
% |
|
|
0.0 |
% |
|
|
|
|
Adjusted gross profit
margin - FIFO |
|
29.0 |
% |
|
|
30.0 |
% |
|
|
26.7 |
% |
|
|
29.9 |
% |
|
|
26.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 legal settlement proceeds, settlement gains,
impairment and restructuring charges related to certain of the
Company's energy related-businesses and the anticipated closure or
sale of some of its locations, a debt restructuring-related charge,
and the resolution of certain tax matters, which make comparisons
to the Company's operating results between periods difficult using
GAAP measures. Reliance Steel & Aluminum Co.'s presentation of
gross profit - 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. |
Brenda Miyamoto
Investor Relations
(213) 576-2428
investor@rsac.com
or Addo Investor Relations
(310) 829-5400
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