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Reliance Reports Profitable 3rd Quarter, Nine Month Results
10/23/2009 - For the 2009 third quarter, Reliance Steel & Aluminum Co. reports net income of $41.8 million, or $.57 per diluted share. For the 2009 second quarter, Reliance had a net loss of $5.8 million, or $0.08 per diluted share.
For the 2009 third quarter, Reliance Steel & Aluminum Co. reported net income of $41.8 million, or $.57 per diluted share. Net income was $152.5 million, or $2.07 per diluted share, for the same period a year ago. For the 2009 second quarter, Reliance had a net loss of $5.8 million, or $0.08 per diluted share.
Third quarter sales of $1.24 billion equaled second quarter sales, but were down from 2008 3Q sales of $2.57 billion. The 2009 3Q financial results include in cost of sales a pre-tax LIFO income amount of $67.5 million, compared with a pre-tax LIFO expense amount of $79.0 million for the same quarter in 2008 and a pre-tax LIFO income amount of $75.0 million in the previous quarter.
For the nine months ended September 30, 2009, net income amounted to $56.1 million, compared with net income of $416.5 million for the same period in 2008. Earnings per diluted share were $.76 for the nine months, compared with earnings of $5.65 per diluted share for the same nine-month period in 2008.
Sales for the 2009 year-to-date period were $4.04 billion, down 39% from 2008 nine-month sales of $6.58 billion. The 2009 nine-month financial results include in cost of sales a pre-tax LIFO income amount of $217.5 million, compared with a pre-tax LIFO expense amount of $136.5 million in the 2008 year-to-date period.
Reliance’s tons sold for 3Q 2009 were down 26% from the same quarter in 2008 and down less than 1% from the 2Q 2009. Average price per ton sold was down 34% compared to a year ago and flat with the previous quarter. For the nine months ended September 30, tons sold were down 13% and average pricing was down 29% compared to the same period of 2008.
For the 2009 3Q, carbon steel sales were 54% of the company’s revenues; aluminum sales were 19%; stainless steel sales 14%; alloy sales 7%; other sales were 4%; and toll processing sales 2%.
“The 2009 third quarter results improved substantially from the 2009 second quarter mainly due to higher gross profit margins,” said David H. Hannah, Chairman and CEO of Reliance. “Because of mill price increases for most of our products during the third quarter and our significant inventory reductions over the past 12 months, our inventory costs on hand are now more in line with current replacement costs, allowing us to improve our gross profit margins from the historically low margins experienced in the 2009 second quarter. We further reduced our FIFO inventory levels by $92 million in the quarter. Demand from our customers improved slightly during the quarter from the low levels experienced in July.
“During the 2009 nine months, we generated record cash flow from operations of $807.2 million,” he continued. “We repaid $192 million of debt during the quarter. On September 28, 2009, we amended our existing $1.1 billion credit facility to adjust certain financial ratios and limit certain uses of cash through June 30, 2010. Pricing was adjusted and we also extended the maturity date on $1.02 billion of the $1.1 billion credit facility an additional year, through November 2012. Concurrent with the amendment and extension of the credit facility, we paid off and terminated our term loan that had an outstanding balance of $444 million, using $194 million of cash on hand and $250 million of borrowings on the credit facility. At September 30, 2009, we had cash on hand of $88 million. Our net debt-to-total capital ratio is 28% as of September 30, 2009.”
Though Hannah believes that demand is fairly stable at low levels, he noted that the fourth quarter is typically slower for the company. He also said that pricing seems to be more stable than it was earlier in the year, but believes that “there may be some slight downward pressure on pricing for many of our products in the coming months. Because of this, we are not comfortable providing earnings guidance for the 2009 fourth quarter.”
On October 21, 2009, the Board of Directors declared a regular quarterly cash dividend of $.10 per share of common stock. The dividend is payable on January 6, 2010, to shareholders of record December 4, 2009. The company has paid regular quarterly dividends for 49 consecutive years.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, Calif., is the largest metals service center company in North America. Through a network of more than 200 locations in 38 states and Belgium, Canada, China, Mexico, Singapore, South Korea, and the United Kingdom, the company 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.
