Net sales of $2.48 billion increased 12.3%
year-over-yearGross profit margin of 28.4%; $702.1 million gross
profit – 2nd highest in Company’s historyGAAP EPS of $1.40
Reliance Steel & Aluminum Co. (NYSE:RS) today reported its
financial results for the second quarter ended June 30, 2017.
Second Quarter 2017 Financial Highlights
- Sales were $2.48 billion, up 12.3% from $2.20 billion in the
second quarter of 2016 and up 2.3% from $2.42 billion in the first
quarter of 2017.
- Tons sold were up 1.4% from the second quarter of 2016 and flat
with the first quarter of 2017, with the average selling price per
ton sold up 11.3% from the second quarter of 2016 and up 2.4% from
the first quarter of 2017.
- Gross profit margin was 28.4%, compared to 31.1% in the second
quarter of 2016 and 29.8% in the first quarter of 2017. FIFO
gross profit margin was 28.8%, compared to 31.1% in the second
quarter of 2016 and 30.2% in the first quarter of 2017.
- Net income attributable to Reliance was $103.0 million, up 2.1%
from $100.9 million in the second quarter of 2016 and down 7.8%
from $111.7 million in the first quarter of 2017.
- Earnings per diluted share were $1.40, up 1.4% from $1.38 in
the second quarter of 2016 and down 7.9% from $1.52 in the first
quarter of 2017.
- Non-GAAP earnings per diluted share were $1.40, up 2.9% from
$1.36 in the second quarter of 2016 and down 7.9% from $1.52 in the
first quarter of 2017.
- Reliance recorded a pre-tax net LIFO inventory valuation
charge, or expense, of $10.0 million in both the second quarter of
2017 and the first quarter of 2017, included in cost of sales.
Reliance did not record a pre-tax LIFO inventory valuation
adjustment in the second quarter of 2016.
- The effective tax rate was 31.2%, compared to 32.7% in both the
second quarter of 2016 and the first quarter of 2017.
- A quarterly cash dividend of $0.45 per share was declared on
July 25, 2017 for stockholders of record as of August 18, 2017 and
will be payable on September 8, 2017.
Management Commentary “Continued steady demand
along with strong execution by our managers in the field resulted
in a gross profit margin of 28.4%, driving our second highest
quarterly gross profit dollars in the Company’s history of $702.1
million. Current pricing levels are higher than both the
first quarter of 2017 and the second quarter of 2016, which
positively contributed to our earnings,” said Gregg Mollins,
President and Chief Executive Officer of Reliance. “However,
mill prices were pressured in the second quarter of 2017,
especially for carbon and stainless steel products, which prevented
us from enhancing our gross profit margin as we did in both the
first quarter of 2017, and the second quarter of 2016 when multiple
metal price increases were announced by the mills. The
absence of meaningful price increases and our receipt of higher
cost metal during the second quarter of 2017 along with the added
elements of a competitive landscape due to continued uncertainty
around possible Section 232 action and increased imports in the
marketplace, collectively pressured our gross profit margin more
than we had anticipated. That said, we are very proud of our
strong results in the second quarter of 2017.”
Mr. Mollins concluded, “We are very pleased with our ability to
successfully increase our gross profit margin to our estimated
sustainable range of 27% to 29%. This accomplishment is the
result of our strategic targeted investments to increase our
value-added processing capabilities and expand our specialty
product offerings coupled with our focus on pricing discipline and
inventory management. Thanks to the continued strong
execution of our managers in the field, in the first six months of
2017, we increased our pretax income by $60.1 million, or 23.0%,
compared to the first half of 2016. Looking forward, we
remain optimistic about the potential for increased infrastructure
and equipment spending which we believe should improve both metal
demand and pricing that would support our efforts to drive our
earnings higher.”
|
|
|
|
|
|
|
Second
Quarter 2017 Business Metrics |
|
(tons in thousands; percentage
change) |
|
|
|
|
|
|
Q2 2017 |
Q1 2017 |
SequentialQuarterChange |
Q2 2016 |
Year-Over-YearChange |
|
Tons sold |
1,540.3 |
1,540.4 |
(0.0 |
%) |
1,519.4 |
1.4 |
% |
|
Tons sold (same-store) |
1,517.8 |
1,519.6 |
(0.1 |
%) |
1,501.6 |
1.1 |
% |
|
Average selling price per ton sold |
$1,600 |
$1,563 |
2.4 |
% |
$1,438 |
11.3 |
% |
|
Average selling price per ton sold (same-store)
|
$1,592 |
$1,555 |
2.4 |
% |
$1,431 |
11.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2017 Major Commodity Metrics |
|
|
|
|
Tons Sold (tons in thousands; percentage
change) |
Average Selling Price per Ton Sold
(percentage change) |
|
|
Q2 2017Tons Sold |
Q1 2017 Tons Sold |
SequentialQuarterChange |
Q2 2016 Tons Sold |
Year-Over-YearChange |
SequentialQuarter Change |
Year-Over-Year Change |
|
Carbon steel |
1,236.8 |
1,235.5 |
0.1 |
% |
1,233.9 |
0.2 |
% |
3.6 |
% |
13.4 |
% |
|
Aluminum |
93.2 |
92.7 |
0.5 |
% |
91.9 |
1.4 |
% |
0.4 |
% |
4.0 |
% |
|
Stainless steel |
78.6 |
79.8 |
(1.5 |
%) |
80.9 |
(2.8 |
%) |
1.7 |
% |
15.4 |
% |
|
Alloy |
53.7 |
56.3 |
(4.6 |
%) |
41.7 |
28.8 |
% |
5.2 |
% |
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales ($'s in millions; percentage
change) |
|
|
Q2 2017 Sales |
Q1 2017 Sales |
Sequential QuarterChange |
Q2 2016 Sales |
Year-Over- YearChange |
|
Carbon steel |
$1,331.8 |
$1,285.5 |
3.6 |
% |
$1,172.6 |
13.6 |
% |
|
Aluminum |
$487.8 |
$483.1 |
1.0 |
% |
$462.8 |
5.4 |
% |
|
Stainless steel |
$348.0 |
$347.3 |
0.2 |
% |
$310.1 |
12.2 |
% |
|
Alloy |
$145.8 |
$145.3 |
0.3 |
% |
$110.6 |
31.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date (6 months) 2017 Business
Metrics |
|
|
(tons in thousands; percentage
change) |
|
|
|
2017 |
2016 |
Year-Over- Year
Change |
|
|
Tons sold |
3,080.7 |
3,022.4 |
1.9 |
% |
|
|
Tons sold (same-store) |
3,037.4 |
2,989.5 |
1.6 |
% |
|
|
Average selling price per ton sold |
$1,581 |
$1,431 |
10.5 |
% |
|
|
Average selling price per ton sold (same-store)
|
$1,574 |
$1,425 |
10.5 |
% |
|
|
|
|
|
|
|
|
|
Year-to-Date (6 months) 2017 Major Commodity
Metrics |
|
|
|
Tons Sold (tons in thousands;
percentage change) |
Average Selling Price per Ton Sold
(percentage change) |
|
|
|
2017 Tons Sold |
2016 Tons Sold |
Year-Over- Year
Change |
Year-Over-Year
Change |
|
|
Carbon steel |
2,472.3 |
2,450.6 |
0.9 |
% |
12.9 |
% |
|
|
Aluminum |
185.9 |
182.0 |
2.1 |
% |
3.3 |
% |
|
|
Stainless steel |
158.4 |
159.1 |
(0.4 |
%) |
14.4 |
% |
|
|
Alloy |
110.0 |
90.7 |
21.3 |
% |
(0.7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales ($'s in millions; percentage
change) |
|
|
|
2017 Sales |
2016 Sales |
Year-Over-YearChange |
|
|
Carbon steel |
$2,617.3 |
$2,299.5 |
13.8 |
% |
|
|
Aluminum |
$970.9 |
$920.0 |
5.5 |
% |
|
|
Stainless steel |
$695.3 |
$610.4 |
13.9 |
% |
|
|
Alloy |
$291.1 |
$241.9 |
20.3 |
% |
|
|
|
|
|
|
|
End Market CommentaryOverall healthy customer
demand levels continued throughout 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. Through its extensive capital investments
over the years, the Company has significantly increased its
value-added processing capabilities.
- Automotive demand remains solid. Reliance services the
automotive market mainly through the Company’s toll processing
operations in the U.S. and Mexico. Reliance continues to increase
its toll processing capacity through investments in new facilities
and processing equipment. This has enabled the Company to
support incremental demand from the increased usage of aluminum by
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 capital investments in new facilities and processing
equipment.
- Heavy industry demand remains relatively steady, though still
at low levels. Reliance has begun to see slight improvement
in activity in the industrial equipment markets.
- Non-residential construction demand, including infrastructure,
continues to experience steady growth. Though there has been
uncertainty in the market surrounding certain government decisions,
Reliance remains optimistic that the Administration’s stated focus
on infrastructure spending will meaningfully improve future demand
for metal. 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 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 & LiquidityThe Company ended
the quarter with total debt outstanding of $2.08 billion, for a net
debt-to-total capital ratio of 30.7%. The Company had $740.5
million available for borrowings on its $1.5 billion revolving
credit facility at June 30, 2017.
“We were pleased with our liquidity position at quarter end,
which again highlights our ability to effectively manage our
working capital throughout various industry cycles. Our
increased average selling price and our strong gross profit margin
generated higher earnings levels that contributed positively to our
cash flow,” commented Karla Lewis, Senior Executive Vice President
and Chief Financial Officer of Reliance. “Our healthy balance sheet
and liquidity help support our capital allocation strategy of
investing in the growth of our business, both organically and
through acquisitions, as well as returning value to our
stockholders.”
Stockholder Return ActivityOn July 25, 2017,
the Board of Directors declared a quarterly cash dividend of $0.45
per share of common stock payable on September 8, 2017 to
stockholders of record as of August 18, 2017. Reliance has paid
regular quarterly dividends for 58 consecutive years and has
increased the dividend 24 times since its 1994 IPO, with the most
recent increase in the first quarter of 2017.
The Company did not repurchase any shares of its common stock in
the second quarter of 2017. At June 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
cautiously optimistic in regard to business activity levels in the
third quarter of 2017, subject to normal seasonal patterns.
The Company expects current demand will remain steady except for
the typical third quarter decline in shipping volume due to
customer shutdowns and vacation schedules. In addition, there
is one less shipping day in the third quarter of 2017 compared to
the second quarter of 2017. As a result, the Company
estimates tons sold will be down 3% to 5% in the third quarter of
2017 compared to the second quarter of 2017. Given the recent
increases in carbon steel pricing and the potential for fewer
imports, pricing momentum is positive. Therefore, the Company
expects its average selling price will be flat to up 3% compared to
the second quarter of 2017. Accordingly, management
currently expects earnings per diluted share to be in the range of
$1.15 to $1.25 for the third quarter of 2017.
Conference Call DetailsA conference call and
simultaneous webcast to discuss the second quarter 2017 financial
results and business outlook will be held today, July 27, 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: 13665720. 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 10, 2017 by dialing (844) 512-2921 (U.S. and
Canada) or (412) 317-6671 (International) and entering the
conference ID: 13665720. 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 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.
(Tables to follow)
|
|
|
|
RELIANCE STEEL & ALUMINUM
CO. |
|
|
SELECTED UNAUDITED FINANCIAL
DATA |
|
|
(in millions, except share and per share
amounts) |
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
Income
Statement Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
2,475.2 |
|
|
$ |
2,203.9 |
|
|
$ |
4,894.5 |
|
|
$ |
4,366.6 |
|
|
|
Gross
profit1 |
|
702.1 |
|
|
|
685.1 |
|
|
|
1,423.7 |
|
|
|
1,321.8 |
|
|
|
Operating income2 |
|
171.2 |
|
|
|
174.4 |
|
|
|
361.4 |
|
|
|
305.5 |
|
|
|
Pre-tax
income |
|
152.4 |
|
|
|
151.6 |
|
|
|
320.9 |
|
|
|
260.8 |
|
|
|
Net
income attributable to Reliance |
|
103.0 |
|
|
|
100.9 |
|
|
|
214.7 |
|
|
|
193.1 |
|
|
|
Diluted
earnings per share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance
stockholders |
$ |
1.40 |
|
|
$ |
1.38 |
|
|
$ |
2.92 |
|
|
$ |
2.65 |
|
|
|
Non-GAAP
diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to Reliance stockholders3 |
$ |
1.40 |
|
|
$ |
1.36 |
|
|
$ |
2.92 |
|
|
$ |
2.39 |
|
|
|
Weighted
average shares outstanding – |
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted |
|
73,500,701 |
|
|
|
73,112,808 |
|
|
|
73,458,170 |
|
|
|
72,910,578 |
|
|
|
Gross
profit margin1 |
|
28.4 |
% |
|
|
31.1 |
% |
|
|
29.1 |
% |
|
|
30.3 |
% |
|
|
Operating income margin2 |
|
6.9 |
% |
|
|
7.9 |
% |
|
|
7.4 |
% |
|
|
7.0 |
% |
|
|
Pre-tax
income margin |
|
6.2 |
% |
|
|
6.9 |
% |
|
|
6.6 |
% |
|
|
6.0 |
% |
|
|
Net
income margin – Reliance |
|
4.2 |
% |
|
|
4.6 |
% |
|
|
4.4 |
% |
|
|
4.4 |
% |
|
|
Cash dividends per
share |
$ |
0.45 |
|
|
$ |
0.40 |
|
|
$ |
0.90 |
|
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
|
|
|
2017 |
|
2016* |
|
|
|
|
|
|
|
|
Balance Sheet
and Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets |
$ |
3,144.4 |
|
|
$ |
2,688.5 |
|
|
|
|
|
|
|
|
|
Working
capital |
|
2,396.6 |
|
|
|
2,032.5 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
1,648.8 |
|
|
|
1,662.2 |
|
|
|
|
|
|
|
|
|
Total
assets |
|
7,831.2 |
|
|
|
7,411.3 |
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
747.8 |
|
|
|
656.0 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
1,990.1 |
|
|
|
1,846.7 |
|
|
|
|
|
|
|
|
|
Total
Reliance stockholders’ equity |
|
4,331.1 |
|
|
|
4,148.8 |
|
|
|
|
|
|
|
|
|
Capital expenditures
(year-to-date) |
|
72.8 |
|
|
|
154.9 |
|
|
|
|
|
|
|
|
|
Cash provided by
operations (year-to-date) |
|
15.2 |
|
|
|
626.5 |
|
|
|
|
|
|
|
|
|
Net debt-to-total
capital4 |
|
30.7 |
% |
|
|
30.3 |
% |
|
|
|
|
|
|
|
|
Return on Reliance
stockholders' equity5 |
|
7.9 |
% |
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
Current ratio |
|
4.2 |
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
Book value per
share6 |
$ |
59.41 |
|
|
$ |
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) |
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2017 |
|
2016* |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
146.5 |
|
|
$ |
122.8 |
|
|
|
Accounts
receivable, less allowance for doubtful accounts of |
|
|
|
|
|
|
|
of $17.5
at June 30, 2017 and $15.3 at December 31, 2016 |
|
1,177.5 |
|
|
|
960.2 |
|
|
|
Inventories |
|
1,751.3 |
|
|
|
1,532.6 |
|
|
|
Prepaid
expenses and other current assets |
|
69.1 |
|
|
|
72.9 |
|
|
|
Total
current assets |
|
3,144.4 |
|
|
|
2,688.5 |
|
|
|
Property, plant and equipment: |
|
|
|
|
|
|
|
Land |
|
230.2 |
|
|
|
228.2 |
|
|
|
Buildings |
|
1,076.2 |
|
|
|
1,059.2 |
|
|
|
Machinery
and equipment |
|
1,689.4 |
|
|
|
1,647.3 |
|
|
|
Accumulated depreciation |
|
(1,347.0 |
) |
|
|
(1,272.5 |
) |
|
|
Property,
plant and equipment, net |
|
1,648.8 |
|
|
|
1,662.2 |
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
1,831.2 |
|
|
|
1,827.4 |
|
|
|
Intangible assets, net |
|
1,126.7 |
|
|
|
1,151.3 |
|
|
|
Cash
surrender value of life insurance policies, net |
|
41.0 |
|
|
|
46.9 |
|
|
|
Other
assets |
|
39.1 |
|
|
|
35.0 |
|
|
|
Total
assets |
$ |
7,831.2 |
|
|
$ |
7,411.3 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
$ |
421.2 |
|
|
$ |
302.2 |
|
|
|
Accrued
expenses |
|
88.8 |
|
|
|
83.7 |
|
|
|
Accrued
compensation and retirement costs |
|
113.0 |
|
|
|
140.8 |
|
|
|
Accrued
insurance costs |
|
43.2 |
|
|
|
40.6 |
|
|
|
Current
maturities of long-term debt and short-term borrowings |
|
78.9 |
|
|
|
82.5 |
|
|
|
Income
taxes payable |
|
2.7 |
|
|
|
6.2 |
|
|
|
Total
current liabilities |
|
747.8 |
|
|
|
656.0 |
|
|
|
Long-term debt |
|
1,990.1 |
|
|
|
1,846.7 |
|
|
|
Long-term retirement costs |
|
90.8 |
|
|
|
89.6 |
|
|
|
Other
long-term liabilities |
|
13.4 |
|
|
|
13.0 |
|
|
|
Deferred income taxes |
|
626.8 |
|
|
|
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 – 72,901,625 at June 30, 2017 and 72,682,793
|
|
|
|
|
|
|
|
at
December 31, 2016 |
|
607.3 |
|
|
|
590.3 |
|
|
|
Retained
earnings |
|
3,812.2 |
|
|
|
3,663.2 |
|
|
|
Accumulated other comprehensive loss |
|
(88.4 |
) |
|
|
(104.7 |
) |
|
|
Total
Reliance stockholders’ equity |
|
4,331.1 |
|
|
|
4,148.8 |
|
|
|
Noncontrolling interests |
|
31.2 |
|
|
|
30.3 |
|
|
|
Total
equity |
|
4,362.3 |
|
|
|
4,179.1 |
|
|
|
Total
liabilities and equity |
$ |
7,831.2 |
|
|
$ |
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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
2,475.2 |
|
$ |
2,203.9 |
|
$ |
4,894.5 |
|
$ |
4,366.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales (exclusive of depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
and
amortization shown below) |
|
1,773.1 |
|
|
1,518.8 |
|
|
3,470.8 |
|
|
3,044.8 |
|
Warehouse, delivery, selling, general and |
|
|
|
|
|
|
|
|
|
|
|
|
administrative |
|
475.9 |
|
|
455.2 |
|
|
952.1 |
|
|
904.7 |
|
Depreciation and amortization |
|
55.0 |
|
|
55.5 |
|
|
110.2 |
|
|
111.6 |
|
|
|
2,304.0 |
|
|
2,029.5 |
|
|
4,533.1 |
|
|
4,061.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
171.2 |
|
|
174.4 |
|
|
361.4 |
|
|
305.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
18.5 |
|
|
21.7 |
|
|
35.8 |
|
|
43.4 |
|
Other
expense, net |
|
0.3 |
|
|
1.1 |
|
|
4.7 |
|
|
1.3 |
|
Income
before income taxes |
|
152.4 |
|
|
151.6 |
|
|
320.9 |
|
|
260.8 |
|
Income
tax provision |
|
47.6 |
|
|
49.5 |
|
|
102.7 |
|
|
65.2 |
|
Net
income |
|
104.8 |
|
|
102.1 |
|
|
218.2 |
|
|
195.6 |
|
Less: Net
income attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
interests |
|
1.8 |
|
|
1.2 |
|
|
3.5 |
|
|
2.5 |
|
Net
income attributable to Reliance |
$ |
103.0 |
|
$ |
100.9 |
|
$ |
214.7 |
|
$ |
193.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share attributable to Reliance stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
1.40 |
|
$ |
1.38 |
|
$ |
2.92 |
|
$ |
2.65 |
|
Basic |
$ |
1.41 |
|
$ |
1.39 |
|
$ |
2.95 |
|
$ |
2.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
$ |
0.45 |
|
$ |
0.40 |
|
$ |
0.90 |
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RELIANCE STEEL & ALUMINUM CO. |
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(in millions) |
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2017 |
|
2016 |
|
Operating activities: |
|
|
|
|
|
|
Net
income |
$ |
218.2 |
|
|
$ |
195.6 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
110.2 |
|
|
|
111.6 |
|
|
Deferred
income tax (benefit) provision |
|
(2.1 |
) |
|
|
1.6 |
|
|
Gain on
sales of property, plant and equipment |
|
(3.9 |
) |
|
|
(0.4 |
) |
|
Stock-based compensation expense |
|
14.9 |
|
|
|
11.4 |
|
|
Other |
|
5.6 |
|
|
|
2.5 |
|
|
Changes
in operating assets and liabilities (excluding effect of businesses
acquired): |
|
|
|
|
|
|
Accounts
receivable |
|
(215.4 |
) |
|
|
(106.2 |
) |
|
Inventories |
|
(216.5 |
) |
|
|
(126.6 |
) |
|
Prepaid
expenses and other assets |
|
1.4 |
|
|
|
20.7 |
|
|
Accounts
payable and other liabilities |
|
102.8 |
|
|
|
95.0 |
|
|
Net cash provided by
operating activities |
|
15.2 |
|
|
|
205.2 |
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
(72.8 |
) |
|
|
(71.7 |
) |
|
Acquisitions, net of cash acquired |
|
(1.3 |
) |
|
|
(322.4 |
) |
|
Other |
|
7.2 |
|
|
|
(1.3 |
) |
|
Net cash
used in investing activities |
|
(66.9 |
) |
|
|
(395.4 |
) |
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
Net
short-term debt borrowings (repayments) |
|
3.3 |
|
|
|
(13.5 |
) |
|
Proceeds
from long-term debt borrowings |
|
541.0 |
|
|
|
613.0 |
|
|
Principal
payments on long-term debt |
|
(406.7 |
) |
|
|
(365.1 |
) |
|
Dividends
and dividend equivalents paid |
|
(66.5 |
) |
|
|
(58.0 |
) |
|
Exercise
of stock options |
|
2.8 |
|
|
|
30.1 |
|
|
Other |
|
(3.3 |
) |
|
|
(3.6 |
) |
|
Net cash
provided by financing activities |
|
70.6 |
|
|
|
202.9 |
|
|
Effect of exchange rate
changes on cash |
|
4.8 |
|
|
|
(0.5 |
) |
|
Increase in cash and
cash equivalents |
|
23.7 |
|
|
|
12.2 |
|
|
Cash and cash
equivalents at beginning of year |
|
122.8 |
|
|
|
104.3 |
|
|
Cash and cash
equivalents at end of period |
$ |
146.5 |
|
|
$ |
116.5 |
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
Interest paid during
the period |
$ |
36.1 |
|
|
$ |
41.3 |
|
|
Income taxes paid
during the period, net |
$ |
107.1 |
|
|
$ |
58.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
$ |
103.0 |
|
|
$ |
111.7 |
|
|
$ |
100.9 |
|
|
$ |
1.40 |
|
|
$ |
1.52 |
|
|
$ |
1.38 |
|
|
Non-recurring
settlement charges (gains) |
|
— |
|
|
|
2.8 |
|
|
|
(2.2 |
) |
|
|
— |
|
|
|
0.04 |
|
|
|
(0.03 |
) |
|
Restructuring charges
(credits) |
|
0.4 |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
Income tax benefit,
related to above items |
|
(0.2 |
) |
|
|
(1.0 |
) |
|
|
0.8 |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
0.01 |
|
|
Gain related to sales
of non-core assets |
|
(0.2 |
) |
|
|
(3.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.04 |
) |
|
|
— |
|
|
Income tax expense
related to sales of non-core assets |
|
0.1 |
|
|
|
1.2 |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
Non-GAAP net income
attributable to Reliance |
$ |
103.1 |
|
|
$ |
111.3 |
|
|
$ |
99.5 |
|
|
$ |
1.40 |
|
|
$ |
1.52 |
|
|
$ |
1.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
|
|
|
Six Months Ended |
|
Six Months Ended |
|
|
|
|
|
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Reliance |
|
|
|
$ |
214.7 |
|
|
$ |
193.1 |
|
|
$ |
2.92 |
|
|
$ |
2.65 |
|
|
|
|
|
Non-recurring
settlement charges (gains) |
|
|
|
|
2.8 |
|
|
|
(2.2 |
) |
|
|
0.04 |
|
|
|
(0.03 |
) |
|
|
|
|
Restructuring
charges |
|
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
|
|
Income tax (benefit)
expense, related to above items |
|
|
|
|
(1.2 |
) |
|
|
0.8 |
|
|
|
(0.02 |
) |
|
|
0.01 |
|
|
|
|
|
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 |
|
|
|
— |
|
|
|
|
|
Resolution of certain
tax matters |
|
|
|
|
— |
|
|
|
(17.6 |
) |
|
|
— |
|
|
|
(0.24 |
) |
|
|
|
|
Non-GAAP net income
attributable to Reliance |
|
|
|
$ |
214.4 |
|
|
$ |
174.1 |
|
|
$ |
2.92 |
|
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
Gross profit -
LIFO |
$ |
702.1 |
|
|
$ |
721.6 |
|
|
$ |
685.1 |
|
|
$ |
1,423.7 |
|
|
$ |
1,321.8 |
|
|
|
|
|
Net LIFO/LCM expense
(income) |
|
10.0 |
|
|
|
10.0 |
|
|
|
— |
|
|
|
20.0 |
|
|
|
— |
|
|
|
|
|
Gross profit -
FIFO |
|
712.1 |
|
|
|
731.6 |
|
|
|
685.1 |
|
|
|
1,443.7 |
|
|
|
1,321.8 |
|
|
|
|
|
Restructuring (credit)
charges |
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
|
|
|
Adjusted gross profit -
FIFO |
$ |
712.1 |
|
|
$ |
731.4 |
|
|
$ |
685.1 |
|
|
$ |
1,443.5 |
|
|
$ |
1,321.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin -
LIFO |
|
28.4 |
% |
|
|
29.8 |
% |
|
|
31.1 |
% |
|
|
29.1 |
% |
|
|
30.3 |
% |
|
|
|
|
Net LIFO/LCM expense
(income) as a % of sales |
|
0.4 |
% |
|
|
0.4 |
% |
|
|
— |
|
|
|
0.4 |
% |
|
|
— |
|
|
|
|
|
Gross profit margin -
FIFO |
|
28.8 |
% |
|
|
30.2 |
% |
|
|
31.1 |
% |
|
|
29.5 |
% |
|
|
30.3 |
% |
|
|
|
|
Restructuring (credit)
charges as a % of sales |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Adjusted gross profit
margin - FIFO |
|
28.8 |
% |
|
|
30.2 |
% |
|
|
31.1 |
% |
|
|
29.5 |
% |
|
|
30.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, restructuring charges (credits)
related to the closure or sale of some of its locations, 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.
CONTACT:
Brenda Miyamoto
Investor Relations
(213) 576-2428
investor@rsac.com
or Addo Investor Relations
(310) 829-5400
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