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Reliance Updates Q3 Outlook, Amends and Extends Credit Facility
09/30/2009 - Reliance Steel & Aluminum is updating its outlook for the third quarter that ended September 30. The company expects earnings for the third quarter to be in the range of $.40 to $.45 per diluted share.
Reliance Steel & Aluminum Co. is updating its outlook for the third quarter that ended September 30. The company expects earnings for the third quarter to be in the range of $.40 to $.45 per diluted share.
At the time of its July 23 press release and earnings conference call, the company was not comfortable providing earnings guidance for the 2009 third quarter due to uncertain business conditions, said Reliance’s Chairman and CEO, David H. Hannah.
“In our August 26, 2009 press release, we said that our July 2009 FIFO gross profit margins had increased from the historically low margins that we experienced in the 2009 second quarter,” Hannah continued. “The higher FIFO gross profit margins have continued into September, due to our inventory reflecting more current costs and due to mill price increases for many of our products. Overall, we still have not seen any meaningful improvement in demand, although average shipping volumes per day have improved slightly from our low in July. Our updated earnings guidance reflects our current expectations.”
Reliance also has entered into an amendment of its existing $1.1 billion revolving credit facility that adjusts certain financial covenant ratios and limits certain uses of cash through June 30, 2010. Pricing was adjusted as well, and the term for $1.02 billion of the current $1.1 billion revolving credit facility was extended for an additional year to November 2012.
Concurrent with the amendment and extension of the credit facility, Reliance paid off and terminated its term loan that had an outstanding balance of $444 million. Reliance used $194 million of cash on hand and $250 million of borrowings on the credit facility. The credit facility amendment and extension was led by Bank of America Merrill Lynch.
The company will announce its financial results for the third quarter and nine months ended September 30, on October 22.
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 U.K., the company provides value-added metals processing services and distributes more than 100,000 metal products to more than 125,000 customers in a broad range of industries.
