Reliance Steel & Aluminum Co. (NYSE: RS) today reported its
financial results for the third quarter ended September 30, 2019
(in millions, except tons which are in thousands and per share
amounts).
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Sequential Quarter |
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Nine Months EndedSeptember 30, |
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Year-Over-Year |
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Year-Over-Year |
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Q3 2019 |
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Q2 2019 |
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% Change |
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2019 |
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2018 |
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% Change |
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Q3 2018 |
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% Change |
Income Statement Data: |
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Net sales |
$ |
2,685.9 |
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$ |
2,883.5 |
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(6.9 |
%) |
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$ |
8,526.0 |
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$ |
8,720.5 |
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(2.2 |
%) |
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$ |
2,974.5 |
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(9.7 |
%) |
Gross profit1 |
$ |
814.7 |
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$ |
853.6 |
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(4.6 |
%) |
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$ |
2,535.2 |
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$ |
2,571.7 |
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(1.4 |
%) |
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$ |
834.3 |
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(2.3 |
%) |
Gross profit margin1 |
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30.3 |
% |
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29.6 |
% |
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0.7 |
% |
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29.7 |
% |
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29.5 |
% |
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0.2 |
% |
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28.0 |
% |
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2.3 |
% |
Pretax income |
$ |
218.4 |
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$ |
245.8 |
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(11.1 |
%) |
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$ |
719.7 |
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$ |
726.7 |
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(1.0 |
%) |
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$ |
194.9 |
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12.1 |
% |
Net income |
$ |
162.7 |
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$ |
183.1 |
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(11.1 |
%) |
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$ |
535.9 |
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$ |
548.1 |
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(2.2 |
%) |
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$ |
148.3 |
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9.7 |
% |
Diluted EPS |
$ |
2.40 |
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$ |
2.69 |
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(10.8 |
%) |
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$ |
7.90 |
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$ |
7.49 |
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5.5 |
% |
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$ |
2.03 |
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18.2 |
% |
Non-GAAP diluted EPS2 |
$ |
2.39 |
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$ |
2.71 |
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(11.8 |
%) |
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$ |
7.90 |
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$ |
7.82 |
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1.0 |
% |
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$ |
2.42 |
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(1.2 |
%) |
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Balance Sheet and Cash Flow Data: |
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Cash provided by operations |
$ |
490.9 |
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$ |
346.0 |
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41.9 |
% |
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$ |
954.1 |
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$ |
233.3 |
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309.0 |
% |
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$ |
136.3 |
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260.2 |
% |
Free cash flow3 |
$ |
432.0 |
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$ |
275.1 |
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57.0 |
% |
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$ |
771.3 |
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$ |
80.7 |
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855.8 |
% |
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$ |
82.3 |
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424.9 |
% |
Net debt-to-total capital4 |
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22.6 |
% |
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27.4 |
% |
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22.6 |
% |
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28.2 |
% |
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28.2 |
% |
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Capital Allocation Data: |
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Capital expenditures |
$ |
58.9 |
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$ |
70.9 |
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$ |
182.8 |
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$ |
152.6 |
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$ |
54.0 |
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Acquisitions, net |
$ |
— |
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$ |
1.0 |
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$ |
1.0 |
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$ |
55.6 |
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$ |
16.0 |
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Dividends |
$ |
36.8 |
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$ |
36.9 |
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$ |
113.3 |
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$ |
110.5 |
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$ |
35.9 |
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Share repurchases |
$ |
— |
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$ |
50.0 |
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$ |
50.0 |
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$ |
130.7 |
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$ |
80.7 |
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Key Business Metrics: |
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Tons sold |
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1,476.6 |
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1,507.3 |
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(2.0 |
%) |
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4,485.9 |
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4,684.3 |
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(4.2 |
%) |
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1,504.1 |
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(1.8 |
%) |
Tons sold (same-store) |
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1,472.8 |
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1,504.6 |
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(2.1 |
%) |
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4,476.8 |
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4,681.4 |
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(4.4 |
%) |
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1,502.4 |
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(2.0 |
%) |
Average selling price per ton sold |
$ |
1,807 |
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$ |
1,904 |
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(5.1 |
%) |
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$ |
1,890 |
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$ |
1,860 |
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1.6 |
% |
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$ |
1,972 |
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(8.4 |
%) |
Average selling price per ton sold (same-store) |
$ |
1,793 |
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$ |
1,890 |
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(5.1 |
%) |
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$ |
1,876 |
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$ |
1,857 |
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1.0 |
% |
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$ |
1,966 |
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(8.8 |
%) |
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Please refer to the footnotes at the end of this press release for
additional information. |
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Management Commentary“We continued to execute
our strategy of focusing on high levels of customer service across
diverse products and end markets with increasing levels of
value-added processing which once again produced strong financial
results during the third quarter of 2019,” said Jim Hoffman,
President and Chief Executive Officer of Reliance. “Demand was
somewhat better than we had anticipated, which, along with
outstanding performance by our managers in the field, generated
quarterly net sales of $2.69 billion and a gross profit margin of
30.3%. Despite metal prices declining more than we had anticipated,
our managers’ disciplined focus on high quality, high margin
business, coupled with increased levels of value-added processing
requested by our customers, enabled us to maintain a FIFO gross
profit margin in-line with the second quarter of 2019 at 28.8%. We
believe our third quarter 2019 financial results, including diluted
earnings per share of $2.40, an increase of 18.2% year-over-year,
further highlight our unique business model and improved earnings
power as well as our increased resilience to fluctuations in metal
pricing. Looking ahead, we will maintain our focus on maximizing
earnings and delivering long-term shareholder value.”
End Market CommentaryThe Company’s shipments
were higher than anticipated in the third quarter of 2019 as
Reliance continued to benefit from its strategy of serving diverse
end markets and providing a wide range of products and processing
services, generally in small quantities on a just-in-time basis.
While the Company experienced the typical seasonal slowdown during
the third quarter resulting from customer shutdowns and vacation
schedules, Reliance's shipments in the third quarter of 2019
decreased only 2.0% compared to the second quarter of 2019,
outpacing the Company’s expectations of a more typical seasonal
decline of 4% to 6%.
While shipment levels across all of Reliance’s major commodity
groups were better than anticipated, the overall higher shipment
levels were primarily due to increased demand in the
non-residential construction (including infrastructure) market
during the third quarter of 2019.
Demand for the products and services Reliance provides to the
aerospace and automotive markets remained strong. Reliance
maintains its positive outlook for these end markets and continues
to invest in growing its capabilities in these areas.
Demand in the energy (oil and gas) market remains at low levels,
which the Company expects to continue for the remainder of fiscal
2019.
Balance Sheet & Cash FlowReliance ended the
third quarter of 2019 with total debt outstanding of $1.65 billion,
a decrease of $367.5 million compared to total debt outstanding of
$2.02 billion at June 30, 2019. At September 30, 2019, Reliance’s
net debt-to-total capital ratio was 22.6% compared to 27.4% at June
30, 2019. The Company had $1.05 billion available for borrowings on
its $1.5 billion revolving credit facility at September 30, 2019.
Reliance generated cash flow from operations of $490.9 million
during the third quarter of 2019 and $954.1 million in the first
nine months of 2019.
“We remain very pleased with our overall financial position
resulting from our strong profitability and effective working
capital management including a focused reduction in inventory
levels,” commented Karla Lewis, Senior Executive Vice President and
Chief Financial Officer of Reliance. “We generated significant cash
flow from operations during the quarter which allowed us to
concurrently continue investing in the growth of our business, pay
down debt, and return value to our stockholders. In the third
quarter of 2019, we invested $58.9 million in capital expenditures,
reduced our debt balance by $367.5 million and paid $36.8 million
in quarterly cash dividends. We are very well positioned to
continue executing all of our capital allocation strategies going
forward.”
Stockholder Return ActivityOn October 22, 2019,
the Board of Directors declared a quarterly cash dividend of $0.55
per share of common stock, payable on December 6, 2019 to
stockholders of record as of November 15, 2019. Reliance has paid
regular quarterly dividends for 60 consecutive years and has
increased the dividend 26 times since its 1994 IPO.
Reliance did not repurchase any shares of its common stock in
the third quarter of 2019. In the first nine months of 2019,
Reliance repurchased $50.0 million of its common stock at an
average cost of $84.33 per share. At September 30, 2019,
approximately 6.4 million shares remained available for repurchase
under the Company’s stock repurchase program. Reliance expects to
continue efficiently repurchasing shares of its common stock going
forward.
Corporate DevelopmentsAs previously announced,
on October 22, 2019, Gregg Mollins, Reliance’s former President and
Chief Executive Officer, stepped down from the Board of Directors.
Mr. Mollins will continue to serve as Senior Advisor to the Chief
Executive Officer until his retirement in December 2019.
Jim Hoffman, the Company’s current President and Chief Executive
Officer, was appointed to serve as a member of the Board upon Mr.
Mollins’ resignation. In addition, Lisa Baldwin was appointed to
serve as an independent director on Reliance’s Board, effective
October 3, 2019. Ms. Baldwin has over 24 years of experience in the
information technology field and currently serves as the Chief
Information Officer of Tiffany & Co. Both Mr. Hoffman’s and Ms.
Baldwin’s term as a director will expire at Reliance’s 2020 Annual
Meeting of Stockholders.
Business Outlook Reliance management remains
optimistic about business conditions in the fourth quarter of 2019.
The Company expects that end demand in the fourth quarter of 2019
will remain relatively steady, excluding the impact of normal
seasonal patterns, which generally includes a decline in shipping
volume due to customer holiday-related shutdowns and fewer shipping
days compared to the third quarter of 2019. As a result, the
Company estimates tons sold will be down 4% to 7% in the fourth
quarter of 2019 compared to the third quarter of 2019. The Company
also expects that overall metals pricing will remain near current
levels which is estimated to result in its average selling price
per ton sold for the fourth quarter of 2019 declining 2% to 3%
compared to the third quarter of 2019. Based on these expectations,
Reliance management currently anticipates non-GAAP earnings per
diluted share in the range of $1.60 to $1.70 for the fourth quarter
of 2019.
Conference Call DetailsA conference call and
simultaneous webcast to discuss Reliance’s third quarter 2019
financial results and business outlook will be held today, October
24, 2019 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: 13695107.
The call will also be broadcast live over the Internet hosted on
the Investors section of the Company's website at
investor.rsac.com.
For those unable to participate during the live broadcast, a
replay of the call will also be available beginning that same day
at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on
Thursday, November 7, 2019 by dialing (844) 512-2921 (U.S. and
Canada) or (412) 317-6671 (International) and entering the
conference ID: 13695107. 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
2018, Reliance’s average order size was $2,130, approximately
49% 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, end markets, business strategies and
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,” “preliminary,” “range” 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 United States 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 “Item 1A. Risk Factors” of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2018
filed with the SEC.
CONTACT: Brenda MiyamotoInvestor
Relations(213) 576-2428investor@rsac.com
or Addo Investor Relations(310) 829-5400
(Tables to follow)
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Third Quarter 2019 Major Commodity Metrics |
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Tons Sold (tons in thousands; % change) |
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Average Selling Price per Ton Sold (% change) |
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Q3 2019 |
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Q2 2019 |
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Sequential Quarter Change |
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Q3 2018 |
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Year-Over-YearChange |
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Sequential Quarter Change |
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Year-Over-YearChange |
Carbon steel |
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1,187.2 |
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1,207.9 |
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(1.7 |
%) |
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1,200.0 |
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(1.1 |
%) |
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(6.0 |
%) |
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(12.6 |
%) |
Aluminum |
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85.3 |
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87.7 |
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(2.7 |
%) |
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89.4 |
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(4.6 |
%) |
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(2.8 |
%) |
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(0.2 |
%) |
Stainless steel |
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78.1 |
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77.8 |
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0.4 |
% |
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81.3 |
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(3.9 |
%) |
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(4.9 |
%) |
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(3.3 |
%) |
Alloy |
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48.2 |
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49.3 |
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(2.2 |
%) |
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52.8 |
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(8.7 |
%) |
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(3.3 |
%) |
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2.7 |
% |
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Sales ($'s in millions; % change) |
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Q3 2019 |
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Q2 2019 |
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Sequential Quarter Change |
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Q3 2018 |
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Year-Over-YearChange |
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Carbon steel |
$ |
1,416.1 |
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$ |
1,532.7 |
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(7.6 |
%) |
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$ |
1,637.6 |
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(13.5 |
%) |
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Aluminum |
$ |
532.4 |
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$ |
564.4 |
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(5.7 |
%) |
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$ |
559.9 |
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(4.9 |
%) |
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Stainless steel |
$ |
388.7 |
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$ |
407.2 |
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(4.5 |
%) |
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$ |
418.7 |
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(7.2 |
%) |
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Alloy |
$ |
160.7 |
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$ |
170.0 |
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(5.5 |
%) |
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$ |
171.2 |
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(6.1 |
%) |
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Year-to-Date (9 months) 2019 Major Commodity
Metrics |
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Average Selling |
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Tons Sold (tons in thousands; |
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Price per Ton Sold |
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% change) |
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(% change) |
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2019 |
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2018 |
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Year-Over-YearChange |
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Year-Over-Year Change |
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Carbon steel |
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3,591.1 |
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3,739.5 |
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(4.0 |
%) |
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(0.2 |
%) |
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Aluminum |
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261.9 |
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282.2 |
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(7.2 |
%) |
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6.7 |
% |
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Stainless steel |
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234.6 |
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252.5 |
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(7.1 |
%) |
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3.5 |
% |
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Alloy |
|
153.0 |
|
|
168.1 |
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(9.0 |
%) |
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10.3 |
% |
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Sales ($'s in millions; % change) |
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2019 |
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2018 |
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Year-Over-YearChange |
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Carbon steel |
$ |
4,542.4 |
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$ |
4,741.0 |
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(4.2 |
%) |
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Aluminum |
$ |
1,662.6 |
|
$ |
1,680.1 |
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(1.0 |
%) |
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Stainless steel |
$ |
1,202.4 |
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$ |
1,250.6 |
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(3.9 |
%) |
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Alloy |
$ |
515.0 |
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$ |
512.7 |
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0.4 |
% |
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RELIANCE STEEL & ALUMINUM CO. |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME |
(in millions, except number of shares which are reflected
in thousands and per share amounts) |
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2019 |
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2018 |
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2019 |
|
2018 |
Net sales |
$ |
2,685.9 |
|
$ |
2,974.5 |
|
|
$ |
8,526.0 |
|
$ |
8,720.5 |
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Costs and expenses: |
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Cost of sales (exclusive of depreciation and amortization shown
below) |
|
1,871.2 |
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|
2,140.2 |
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|
5,990.8 |
|
|
6,148.8 |
|
Warehouse, delivery, selling, general and administrative |
|
518.7 |
|
|
531.0 |
|
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|
1,582.2 |
|
|
1,586.3 |
|
Depreciation and amortization |
|
54.8 |
|
|
53.4 |
|
|
|
163.2 |
|
|
161.8 |
|
Impairment of long-lived assets |
|
— |
|
|
35.5 |
|
|
|
1.2 |
|
|
35.5 |
|
|
|
2,444.7 |
|
|
2,760.1 |
|
|
|
7,737.4 |
|
|
7,932.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
241.2 |
|
|
214.4 |
|
|
|
788.6 |
|
|
788.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
20.5 |
|
|
22.0 |
|
|
|
68.4 |
|
|
62.6 |
|
Other expense (income), net |
|
2.3 |
|
|
(2.5 |
) |
|
|
0.5 |
|
|
(1.2 |
) |
Income before income taxes |
|
218.4 |
|
|
194.9 |
|
|
|
719.7 |
|
|
726.7 |
|
Income tax provision |
|
54.5 |
|
|
44.6 |
|
|
|
179.9 |
|
|
172.2 |
|
Net income |
|
163.9 |
|
|
150.3 |
|
|
|
539.8 |
|
|
554.5 |
|
Less: Net income attributable to noncontrolling interests |
|
1.2 |
|
|
2.0 |
|
|
|
3.9 |
|
|
6.4 |
|
Net income attributable to Reliance |
$ |
162.7 |
|
$ |
148.3 |
|
|
$ |
535.9 |
|
$ |
548.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Reliance stockholders: |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
2.40 |
|
$ |
2.03 |
|
|
$ |
7.90 |
|
$ |
7.49 |
|
Basic |
$ |
2.44 |
|
$ |
2.06 |
|
|
$ |
8.01 |
|
$ |
7.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
67,704 |
|
|
72,981 |
|
|
|
67,868 |
|
|
73,137 |
|
Basic |
|
66,656 |
|
|
71,940 |
|
|
|
66,941 |
|
|
72,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share |
$ |
0.55 |
|
$ |
0.50 |
|
|
$ |
1.65 |
|
$ |
1.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RELIANCE STEEL & ALUMINUM CO. |
UNAUDITED CONSOLIDATED BALANCE SHEETS |
(in millions, except number of shares
which are reflected in thousands and par
value) |
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
2019 |
|
2018* |
ASSETS |
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
166.0 |
|
|
$ |
128.2 |
|
Accounts receivable, less allowance for doubtful accounts of $21.3
at September 30, 2019 and $18.8 at December 31, 2018 |
|
1,250.9 |
|
|
|
1,242.3 |
|
Inventories |
|
1,669.5 |
|
|
|
1,817.1 |
|
Prepaid expenses and other current assets |
|
69.6 |
|
|
|
81.5 |
|
Income taxes receivable |
|
9.0 |
|
|
|
15.9 |
|
Total current assets |
|
3,165.0 |
|
|
|
3,285.0 |
|
Property, plant and equipment: |
|
|
|
|
|
Land |
|
236.5 |
|
|
|
233.9 |
|
Buildings |
|
1,183.7 |
|
|
|
1,158.9 |
|
Machinery and equipment |
|
2,005.7 |
|
|
|
1,880.1 |
|
Accumulated depreciation |
|
(1,650.1 |
) |
|
|
(1,543.0 |
) |
Property, plant and equipment, net |
|
1,775.8 |
|
|
|
1,729.9 |
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
198.9 |
|
|
|
— |
|
Goodwill |
|
1,872.8 |
|
|
|
1,870.8 |
|
Intangible assets, net |
|
1,040.7 |
|
|
|
1,072.0 |
|
Cash surrender value of life insurance policies, net |
|
30.2 |
|
|
|
43.6 |
|
Other assets |
|
47.5 |
|
|
|
43.6 |
|
Total assets |
$ |
8,130.9 |
|
|
$ |
8,044.9 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
385.9 |
|
|
$ |
338.8 |
|
Accrued expenses |
|
94.4 |
|
|
|
77.4 |
|
Accrued compensation and retirement costs |
|
146.3 |
|
|
|
174.8 |
|
Accrued insurance costs |
|
45.3 |
|
|
|
42.9 |
|
Current maturities of long-term debt and short-term borrowings |
|
65.2 |
|
|
|
65.2 |
|
Current maturities of operating lease liabilities |
|
51.4 |
|
|
|
— |
|
Total current liabilities |
|
788.5 |
|
|
|
699.1 |
|
Long-term debt |
|
1,578.2 |
|
|
|
2,138.5 |
|
Operating lease liabilities |
|
148.5 |
|
|
|
— |
|
Long-term retirement costs |
|
81.0 |
|
|
|
71.8 |
|
Other long-term liabilities |
|
14.0 |
|
|
|
15.9 |
|
Deferred income taxes |
|
439.0 |
|
|
|
440.1 |
|
Commitments and contingencies |
|
|
|
|
|
Equity: |
|
|
|
|
|
Preferred stock, $0.001 par value: |
|
|
|
|
|
Authorized shares — 5,000 |
|
|
|
|
|
None issued or outstanding |
|
— |
|
|
|
— |
|
Common stock and additional paid-in capital, $0.001 par value: |
|
|
|
|
|
Authorized shares — 200,000 |
|
|
|
|
|
Issued and outstanding shares — 66,656 at September 30, 2019 and
66,882 at December 31, 2018 |
|
114.9 |
|
|
|
136.4 |
|
Retained earnings |
|
5,061.9 |
|
|
|
4,637.9 |
|
Accumulated other comprehensive loss |
|
(103.4 |
) |
|
|
(102.7 |
) |
Total Reliance stockholders’ equity |
|
5,073.4 |
|
|
|
4,671.6 |
|
Noncontrolling interests |
|
8.3 |
|
|
|
7.9 |
|
Total equity |
|
5,081.7 |
|
|
|
4,679.5 |
|
Total liabilities and equity |
$ |
8,130.9 |
|
|
$ |
8,044.9 |
|
|
|
|
|
|
|
* Amounts were derived from audited financial statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RELIANCE STEEL & ALUMINUM CO. |
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
September 30, |
|
2019 |
|
|
2018 |
|
Operating activities: |
|
|
|
|
|
Net income |
$ |
539.8 |
|
|
$ |
554.5 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization expense |
|
163.2 |
|
|
|
161.8 |
|
Impairment of long-lived assets |
|
1.2 |
|
|
|
35.5 |
|
Provision for uncollectible accounts |
|
5.2 |
|
|
|
8.4 |
|
Stock-based compensation expense |
|
37.3 |
|
|
|
33.8 |
|
Other |
|
4.9 |
|
|
|
(4.3 |
) |
Changes in operating assets and liabilities (excluding effect of
businesses acquired): |
|
|
|
|
|
Accounts receivable |
|
(14.2 |
) |
|
|
(339.6 |
) |
Inventories |
|
147.0 |
|
|
|
(352.2 |
) |
Prepaid expenses and other assets |
|
59.7 |
|
|
|
9.9 |
|
Accounts payable and other liabilities |
|
10.0 |
|
|
|
125.5 |
|
Net cash provided by operating activities |
|
954.1 |
|
|
|
233.3 |
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
Purchases of property, plant and equipment |
|
(182.8 |
) |
|
|
(152.6 |
) |
Acquisitions, net of cash acquired |
|
(1.0 |
) |
|
|
(55.6 |
) |
Other |
|
11.9 |
|
|
|
19.2 |
|
Net cash used in investing activities |
|
(171.9 |
) |
|
|
(189.0 |
) |
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
Net short-term debt repayments |
|
— |
|
|
|
(24.6 |
) |
Proceeds from long-term debt borrowings |
|
742.0 |
|
|
|
941.0 |
|
Principal payments on long-term debt |
|
(1,304.3 |
) |
|
|
(752.5 |
) |
Dividends and dividend equivalents paid |
|
(113.3 |
) |
|
|
(110.5 |
) |
Share repurchases |
|
(50.0 |
) |
|
|
(130.1 |
) |
Other |
|
(13.2 |
) |
|
|
(7.1 |
) |
Net cash used in financing activities |
|
(738.8 |
) |
|
|
(83.8 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(5.6 |
) |
|
|
(2.8 |
) |
Increase (decrease) in cash and cash equivalents |
|
37.8 |
|
|
|
(42.3 |
) |
Cash and cash equivalents at beginning of year |
|
128.2 |
|
|
|
154.4 |
|
Cash and cash equivalents at end of period |
$ |
166.0 |
|
|
$ |
112.1 |
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
Interest paid during the period |
$ |
57.2 |
|
|
$ |
50.6 |
|
Income taxes paid during the period, net |
$ |
173.7 |
|
|
$ |
171.4 |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
Debt assumed in connection with acquisition |
$ |
— |
|
|
$ |
3.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RELIANCE STEEL & ALUMINUM CO. |
NON-GAAP EARNINGS AND GROSS PROFIT
RECONCILIATION |
(in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
Diluted EPS |
|
Three Months Ended |
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
June 30, |
|
September 30, |
|
|
2019 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2018 |
|
Net income attributable to Reliance |
$ |
162.7 |
|
|
$ |
183.1 |
|
|
$ |
148.3 |
|
|
$ |
2.40 |
|
|
$ |
2.69 |
|
|
$ |
2.03 |
|
Tax reform |
|
— |
|
|
|
— |
|
|
|
1.1 |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Net income attributable to Reliance excluding the impact of tax
reform |
|
162.7 |
|
|
|
183.1 |
|
|
|
149.4 |
|
|
|
2.40 |
|
|
|
2.69 |
|
|
|
2.05 |
|
Impairment and restructuring charges |
|
— |
|
|
|
1.2 |
|
|
|
36.8 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.50 |
|
Income tax benefit related to above items |
|
— |
|
|
|
(0.3 |
) |
|
|
(9.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.12 |
) |
Gains related to sales of non-core assets |
|
(0.9 |
) |
|
|
— |
|
|
|
(0.9 |
) |
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.01 |
) |
Income tax expense related to sales of non-core assets |
|
0.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-GAAP net income attributable to Reliance |
$ |
162.0 |
|
|
$ |
184.0 |
|
|
$ |
176.3 |
|
|
$ |
2.39 |
|
|
$ |
2.71 |
|
|
$ |
2.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
Nine Months Ended |
|
Nine Months Ended |
|
|
|
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
Net income attributable to Reliance |
|
|
$ |
535.9 |
|
|
$ |
548.1 |
|
|
$ |
7.90 |
|
|
$ |
7.49 |
|
|
|
Tax reform |
|
|
|
— |
|
|
|
1.1 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
Net income attributable to Reliance excluding the impact of tax
reform |
|
|
|
535.9 |
|
|
|
549.2 |
|
|
|
7.90 |
|
|
|
7.51 |
|
|
|
Impairment and restructuring charges |
|
|
|
1.2 |
|
|
|
36.8 |
|
|
|
0.02 |
|
|
|
0.51 |
|
|
|
Non-recurring settlement gains |
|
|
|
— |
|
|
|
(5.8 |
) |
|
|
— |
|
|
|
(0.08 |
) |
|
|
Income tax benefit related to above items |
|
|
|
(0.3 |
) |
|
|
(7.6 |
) |
|
|
— |
|
|
|
(0.11 |
) |
|
|
Gains related to sales of non-core assets |
|
|
|
(0.9 |
) |
|
|
(0.9 |
) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
Income tax expense related to sales of non-core assets |
|
|
|
0.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Non-GAAP net income attributable to Reliance |
|
|
$ |
536.1 |
|
|
$ |
571.7 |
|
|
$ |
7.90 |
|
|
$ |
7.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
Gross profit - LIFO |
$ |
814.7 |
|
|
$ |
853.6 |
|
|
$ |
834.3 |
|
|
$ |
2,535.2 |
|
|
$ |
2,571.7 |
|
|
|
Net LIFO (income) expense |
|
(40.0 |
) |
|
|
(22.5 |
) |
|
|
77.5 |
|
|
|
(75.0 |
) |
|
|
165.0 |
|
|
|
Gross profit - FIFO |
$ |
774.7 |
|
|
$ |
831.1 |
|
|
$ |
911.8 |
|
|
$ |
2,460.2 |
|
|
$ |
2,736.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin - LIFO |
|
30.3 |
% |
|
|
29.6 |
% |
|
|
28.0 |
% |
|
|
29.7 |
% |
|
|
29.5 |
% |
|
|
Net LIFO (income) expense as a % of sales |
|
(1.5 |
%) |
|
|
(0.8 |
%) |
|
|
2.7 |
% |
|
|
(0.8 |
%) |
|
|
1.9 |
% |
|
|
Gross profit margin - FIFO |
|
28.8 |
% |
|
|
28.8 |
% |
|
|
30.7 |
% |
|
|
28.9 |
% |
|
|
31.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliance Steel & Aluminum Co.'s presentation of non-GAAP or
adjusted net income and EPS 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 revision to its provisional estimate of the impact of tax
reform, impairment and restructuring charges mainly related to
certain of the Company's energy-related businesses and the closure
or sale of some of its locations, settlement gains, and gains 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 LIFO expense (or minus LIFO 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. Please see footnote 1 below for additional
information on the Company's gross profit and gross profit
margin. |
|
Footnotes |
|
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 Reliance's orders are basic distribution with no
processing services performed. For the remainder of its sales
orders, Reliance performs “first-stage” processing, which is
generally not labor intensive as it is 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 cost of sales. Therefore, Reliance's cost of sales is
substantially comprised of the cost of the material it sells.
Reliance uses gross profit and gross profit margin, as shown, 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 Reliance's 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 Gross Profit
Reconciliation. |
3 Free cash flow is calculated as cash provided by operations
reduced by capital expenditures. |
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). |
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