Reliance Steel & Aluminum Reports Record Quarterly Sales
04/18/2008 - Reliance Steel & Aluminum reports net income of $107.4 million on record sales of $1.91 billion for the first quarter ended March 31, 2008.
Reliance Steel & Aluminum Co. reported net income of $107.4 million on record sales of $1.91 billion for the first quarter ended March 31, 2008.
First Quarter Results—Net income, $107.4 million, compares with net income of $111.7 million for the year-ago first quarter, while earnings per diluted share, $1.46, were consistent with $1.46 for the year-ago first quarter. Record sales of $1.91 billion reflect a 3.6% increase compared with sales of $1.84 billion for the year-ago first quarter.
Financial results include in cost of sales a $17.5 million pre-tax LIFO expense ($.15 per diluted share), which compared with an $18.8 million pre-tax LIFO expense ($.15 per diluted share) in the year-ago first quarter. In addition, share repurchases during the current quarter as well as in the 2007 third quarter lowered the number of shares outstanding.
Management Comments—“The 2008 first quarter turned out well,” said David H. Hannah, Chairman and CEO of Reliance. “Pricing for our products was strong with significant increases in carbon steel, leading to improved gross profit margins. Demand in the markets that we serve remained fairly healthy, especially in the non-residential construction, energy, oil and gas, and aerospace industries. Additionally, our cash flow from operations during the quarter was strong and we managed our working capital well.”
“As we look forward through the second quarter, we expect prices to be up or flat for most of the metals we sell,” continued Hannah. “Demand remains more difficult to predict. We believe our customers will continue to be cautious in their buying, especially given the uncertainty in many areas of the economy and the mostly negative views of business activity portrayed by the media, therefore we do not expect any significant changes in demand in any of our market segments. We do expect continued improvement in our gross profit margins as carbon steel prices increase further during the second quarter. As a result, we currently estimate earnings per diluted share for the 2008 second quarter to be in a range of $1.50 to $1.60,” Hannah stated.
“On April 1, 2008, we acquired Dynamic Metals International, LLC based in Bristol, Conn.,” said Hannah. “Dynamic was founded in 1999 and is a specialty metal distributor of primarily maraging steel. Dynamic’s 2007 revenues were approximately $11 million. Dynamic will operate as part of our subsidiary, Service Steel Aerospace Corp. headquartered in Tacoma, Wash. This strategic acquisition expands our existing Service Steel Aerospace specialty product offerings in a new market area,” he added.
In recognition of the company’s significant growth in revenues, earnings and cash flow, all of which set records in 2007, on February 13, 2008, the Reliance Board of Directors increased the quarterly dividend rate 25%, to $.10 per share of common stock from $.08 per share. The 2008 first quarter dividend payment of $.10 per share was paid on March 28, 2008 to shareholders of record on March 7, 2008. The Company has paid regular quarterly dividends for 48 consecutive years.
In early January 2008, the company repurchased 2,443,500 shares of its common stock at an average cost of $46.97 per share. As of March 31, 2008, the company had repurchased a total of 15,193,517 shares of its common stock at an average cost of $18.41 per share, since the Stock Repurchase Plan was first adopted in December 1994. At March 31, 2008, there were 7,883,033 shares of the company’s common stock authorized for repurchase under the Plan. Repurchased shares are redeemed and treated as authorized but unissued shares.
Headquartered in Los Angeles, Calif., Reliance Steel & Aluminum Co., 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, 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. 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.
Reliance Steel & Aluminum was named to the 2007 “Fortune 500” List, the Fortune 2007 “100 Fastest Growing Companies” List, the Fortune 2008 List of “America’s Most Admired Companies” the 2008 Forbes “America’s Best Managed Companies” List, and the 2008 Forbes “Platinum 400 List of America’s Best Big Companies.”
