Reliance Reports Record 1st Quarter Results
04/20/2007 - Reliance Steel & Aluminum reported record net income of $111.7 million on sales of $1.84 billion for the first quarter ended March 31, 2007.
Reliance Steel & Aluminum Co. reported record net income of $111.7 million on sales of $1.84 billion for the first quarter ended March 31, 2007.
First Quarter Results—The $111.7 million net income reflects a 55% increase compared with net income of $71.9 million for the 2006 first quarter. Earnings per diluted share were a record $1.46, compared with $1.07 for the 2006 first quarter. Sales of $1.84 billion reflect an 86% increase compared with 2006 first quarter sales of $988 million.
Results include in cost of sales an $18.8 million pre-tax LIFO expense ($.15 per diluted share), which compares with a $5.0 million pre-tax LIFO expense ($.05 per diluted share) in the 2006 first quarter. All share and per share amounts have been adjusted to account for the two-for-one common stock split effective July 19, 2006.
Management Comments—“We are very pleased with our 2007 first quarter results,” said David H. Hannah, CEO of Reliance. “Overall, customer demand was steady throughout the quarter at what we consider to be a healthy level. Our first-quarter performance, as compared to 2006, was most significantly impacted by our 2006 and 2007 acquisitions that represented over $750 million of revenue in the 2007 first quarter.”
“During the quarter, we completed three acquisitions. They include the Encore Group of metals service center companies (Encore Metals, Encore Metals (USA), Inc., Encore Coils, and Team Tube in Canada) headquartered in Edmonton, Alta., Canada; Crest Steel Corp., a metals service center company headquartered in Carson, Calif., and Industrial Metals and Surplus, Inc. a metals service center company headquartered in Atlanta, Ga., and a related company, Athens Steel, Inc. located in Athens, Ga.,” Hannah said.
“We also managed our working capital well during the quarter that ended with net debt-to-total capital at 40.6%. Operating cash flow was strong at about $71 million, up 72% from the 2006 first quarter. In April of 2007, we exchanged the $600 million of notes that were issued in November of 2006 for publicly traded notes registered with the Securities and Exchange Commission,” added Hannah.
“We believe that our major markets including aerospace, energy, non-residential construction, electronics and semiconductors, as well as rail car and ship building will continue to grow, but at a slower rate than in 2006. Additionally, we do not expect our costs and pricing to change significantly as the year progresses. As a result, we expect record sales and earnings in 2007 and currently estimate earnings per diluted share for the 2007 second quarter in a range of $1.45 to $1.55,” Hannah concluded.
On February 14, 2007, the Board of Directors declared a 33% increase in the regular quarterly cash dividend to $.08 per share of common stock. The 2007 first quarter dividend was paid on March 30 to shareholders of record March 9. The company has paid regular quarterly dividends for 47 consecutive years.
Headquartered in Los Angeles, Calif., Reliance Steel & Aluminum is one of the largest metals service center companies in the United States. Through a network of more than 180 locations in 37 states and Belgium, Canada, China and South Korea, the company provides value-added metals processing services and distributes a full line of over 100,000 metal products. These products include galvanized, hot-rolled and cold-finished steel; stainless steel; aluminum; brass; copper; titanium and alloy steel sold to more than 125,000 customers in various industries.
