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Reliance Steel Reports Q3, Nine-Month Results
10/22/2010 - For the 2010 third quarter ended September 30, 2010, Reliance Steel & Aluminum Co. reported net income of $48.7 million, an increase of 17% compared to 2009 third-quarter net income of $41.8 million. Sales were $1.65 billion, a 33% increase from 2009 Q3 sales of $1.24 billion.
For the 2010 third quarter ended September 30, 2010, Reliance Steel & Aluminum Co. reported net income of $48.7 million, an increase of 17% compared to 2009 third-quarter net income of $41.8 million. Earnings per diluted share were $.65 in the 2010 third quarter, up 14% compared to $.57 for the same period last year.
Sales were $1.65 billion, a 33% increase from 2009 Q3 sales of $1.24 billion, and up 2% from 2010 second-quarter sales of $1.62 billion. The 2010 Q3 financial results include in cost of sales a pre-tax LIFO charge of $9.75 million, compared with a pre-tax LIFO credit of $67.5 million last year. The LIFO adjustments, in effect, reflect cost of sales at current replacement costs.
For the nine months ended September 30, 2010, net income amounted to $154.9 million, an increase of 176% compared to 2009 nine-month net income of $56.1 million. Earnings per diluted share were $2.08 for the nine months, compared with earnings of $.76 per diluted share for the same period in 2009.
Sales for the nine months were $4.73 billion, up 17% from 2009 sales of $4.04 billion. The 2010 nine-month financial results include in cost of sales a pre-tax LIFO charge of $24.75 million, compared with a pre-tax LIFO credit of $217.5 million in the 2009 nine months.
Reliance’s tons sold for the 2010 third quarter increased 11% from the 2009 third quarter and 1% from the 2010 second quarter. Average prices per ton sold in the third quarter were up 20% compared to the 2009 third quarter and up 1% compared to the 2010 second quarter. For the 2010 Q3, carbon steel sales were 52% of net sales; aluminum sales were 18%; stainless steel sales were 16%; alloy sales were 8%; other sales were 4%; and toll processing sales were 2%.
David H. Hannah, Chairman and CEO of Reliance, said: “The operating environment during the 2010 third quarter was pretty steady with the 2010 second quarter. Mill pricing declined a bit more than we had anticipated during the quarter, pressuring our selling prices and causing our gross profit margins to narrow somewhat. Demand was a little better than we had expected as we typically see a seasonal decline in the third quarter compared to the second quarter. Overall, we are pleased with our performance during the quarter in light of the existing market conditions.
“Our balance sheet continues to be strong with our net debt-to-capital ratio at 25% as of September 30, 2010. We generated cash from operations of $83 million in the 2010 third quarter due to our stable profit levels and stringent working capital management.”
Hannah noted that the nonresidential construction market is still the company’s weakest end market, below even last year’s poor levels. “It appears, though, that we have reached bottom. Business activity in most all of our other markets is better than a year ago; especially in the semiconductor and electronics, energy, agriculture, and aerospace industries. Acquisition opportunities have also improved,” he said.
“In the 2010 fourth quarter, we expect demand to decline somewhat due to normal holiday closures at our customers, and we expect pricing to be steady to down for most products that we sell. Given these expectations, at this time, we estimate earnings per diluted share in a range of $.35 to $.45 for the 2010 fourth quarter,” Hannah concluded.
On October 1, 2010, Reliance acquired the outstanding capital securities of Diamond Consolidated Industries, Inc. and affiliated companies. The operating entities consist of Diamond Manufacturing Co. located in Wyoming, Pa., and Diamond Manufacturing Midwest in Michigan City, Ind., that specialize in the manufacture and sale of specialty engineered perforated materials; Perforated Metals Plus, a distributor of perforated metals located in Charlotte, N.C.; and Dependable Punch Corp., a manufacturer of custom punches for tools and dies also located in Wyoming, Pa.
The combined sales of Diamond and its affiliated companies for the nine months ended September 30, 2010, were approximately $75 million.
On October 20, 2010, the Board of Directors declared a regular quarterly cash dividend of $.10 per share of common stock. The dividend is payable on December 22, 2010, to shareholders of record December 3, 2010. The company has paid regular quarterly dividends for 51 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, Malaysia, Mexico, Singapore, South Korea, and the United Kingdom, the company provides value-added metals processing services and distributes a full line of more than 100,000 metal products to more than 125,000 customers in a range of industries.
