Reliance Steel & Aluminum Reports 4th Quarter, Year End Results
02/18/2011 - Reliance Steel & Aluminum reported net income of $39.5 million on sales of $1.58 billion for the fourth quarter and net income of $194.4 million on sales of $6.31 billion for the year ended December 31, 2010.
Reliance Steel & Aluminum Co. reported net income of $39.5 million on sales of $1.58 billion for the fourth quarter and net income of $194.4 million on sales of $6.31 billion for the year ended December 31, 2010.
Fourth Quarter Results — The $39.5 million fourth quarter net income ($.53 per diluted share) compare to net income of $48.7 million ($.65 per diluted share) for the previous quarter (3Q 2010) and net income of $92.1 million ($1.25 per diluted share) in the year-ago fourth quarter. Sales of $1.58 billion were down 4% from 2010 third quarter sales of $1.65 billion but up 24% from 2009 fourth quarter sales of $1.27 billion.
Results include in cost of sales a pre-tax LIFO charge, or expense, of $10.0 million, compared with a pre-tax LIFO credit, or income, of $87.5 million in the 2009 fourth quarter.
Full Year Results — Net income of $194.4 million reflects a 31% increases from net income of $148.2 million in 2009, while earnings per diluted share of $2.61 were up 30% from earnings per diluted share of $2.01 for 2009. Sales of $6.31 billion were up 19% from 2009 sales of $5.32 billion. Results include in cost of sales a pre-tax LIFO charge, or expense, of $34.8 million, compared with a pre-tax LIFO credit, or income, of $305.0 million for the 2009 year. The LIFO adjustments, in effect, reflect cost of sales at current replacement costs.
Reliance’s tons sold for the 2010 year were up 6% and the average price per ton sold was up 12% compared to 2009. Carbon steel sales were 52% of revenues; aluminum sales were 18%; stainless steel sales were 16%; alloy sales were 8%; toll processing sales were 2% and other sales were 4%.
Management Comments — “Our guidance for the 2010 fourth quarter did not anticipate the carbon steel price increases that were announced by the carbon steel producers consistently throughout December,” said David H. Hannah, Chairman and CEO of Reliance. “Demand during the quarter was seasonably lower than the 2010 third quarter, but not by as much as we expected, as some customers purchased a little more during December to get ahead of further price increases. As a result, we sold a little more steel at generally higher prices and margins that resulted in the quarter finishing up better than we originally expected.”
“Our strongest markets during 2010 were in energy, oil and gas; semiconductor and electronics; aerospace; agriculture and our toll processing business which is primarily related to the auto and appliance industries. Non-residential construction was our most difficult area last year,” commented Hannah.
“Our balance sheet is strong, inventories are in line with demand, and our net debt-to-total capital ratio was only 23.5% at December 31, 2010; down from 24.7% at the end of the 2010 third quarter and 25.6% at the end of 2009. We have about $860 million available on our $1.1 billion credit facility and if we were to use it all, our net debt-to-total capital ratio would still be less than 40%,” continued Hannah.
Outlook — “Currently, the prices of most all the metals we sell are continuing on an upward trend,” continued Hannah. “We expect pricing, in general, to remain at strong levels at least through the 2011 first quarter. The recent rapid price increases can cause changes in our customers’ buying patterns that can make it difficult to determine what real end use demand is doing. While there is certainly some buying ahead of the announced increases we believe that real underlying demand is steadily improving, but not at a large or rapid rate. We expect this slow and steady growth pattern to continue as the year progresses. Given these expectations, 2011 looks like a much better year than 2010 and, at this time, we estimate earnings per diluted share in a range of $.90 to $1.00 for the 2011 first quarter,” Hannah concluded.
Headquartered in Los Angeles, Calif., Reliance Steel & Aluminum is a leading North American metals service center company. Through a network of more than 200 locations in 38 states and Belgium, Canada, China, Malaysia, 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.
