Reliance Steel & Aluminum Co. Reports
2003 First Quarter Financial Results;
Sales up 4%, Net Income up 188% from 2002 Fourth Quarter
LOS ANGELES--(BUSINESS WIRE)--April 17, 2003--Reliance Steel & Aluminum Co.
(NYSE:RS) today reported its financial results for the three months ended March
31, 2003. For the 2003 first quarter, net income was $5.6 million, or $.18
earnings per diluted share. This compares with net income of $7.5 million and
$.24 earnings per diluted share for the three months ended March 31, 2002. Sales
for the 2003 first quarter totaled $450.8 million, an increase of 11% compared
with 2002 first quarter sales of $405.5 million.
The first quarter of 2003 did represent a sequential improvement from the
fourth quarter of 2002. Compared to the prior quarter, sales were up 4% and net
income increased 188%. The higher net income amount was driven mainly by sales
growth and slightly better gross profit margins, along with some reduction in
operating expenses.
Reliance's Chief Executive Officer, David H. Hannah, said, "Our average
daily sales for the first quarter of 2003 returned to levels comparable to
October and November of 2002, after declining significantly in December of 2002.
However, business conditions remain challenging across most markets with
sluggish customer demand and increased competitive pressures. Economic
uncertainty is producing cautious buying patterns by customers throughout the
industry.
"We will continue with our strategies that have proven successful, including
diligent management of our working capital and seeking to acquire exceptional
companies that would be immediately accretive to our earnings. Additionally, we
will focus on managing well those things that we can control," stated Hannah.
"We have not seen, and do not expect to see in the 2003 second quarter, any
meaningful improvement in market conditions. Therefore, we do not expect the
2003 second quarter financial results to be materially higher or lower than the
2003 first quarter. If overall economic conditions should improve significantly,
then we would expect our financial results to follow suit," said Hannah.
On February 27, 2003, the Company announced its regular quarterly cash
dividend payment of $.06 per share of common stock. The 2003 first quarter cash
dividend was paid on March 31, 2003 to shareholders of record March 10, 2003.
2003 marks the 43rd consecutive year that Reliance has paid quarterly dividends
to its shareholders. The Company was also proud to announce that it was named to
the 2003 Forbes Platinum 400 List of America's Best Big Companies and ranked No.
1 in sales (five-year average) in the metals industry category and has also been
named to the 2002, 2001 and 2000 lists.
Reliance will host a conference call that will be broadcast live over the
Internet (listen only mode) regarding the first quarter financial results for
the period ended March 31, 2003. All interested parties are invited to listen to
the web cast on April 17, 2003 at 11:00 a.m. Eastern Time at:
http://www.rsac.com/investorinformation or http://www.streetevents.com. Player
format: Windows Media. The web cast will remain on the Reliance web site at:
www.rsac.com through May 17, 2003 and a printed transcript will be posted on the
Reliance web site after the completion of the conference call.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, California, is
one of the largest metals service center companies in the United States. Through
a network of 99 processing and distribution centers in 27 states and Belgium,
France and South Korea, the Company provides value-added metals processing
services and distributes a full line of over 85,000 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
85,000 customers in various industries. Reliance Steel & Aluminum Co.'s press
releases and additional information are available on the Company's web site at
www.rsac.com.
This release may contain forward-looking statements relating to future
financial results. Actual results may differ materially as a result of factors
over which Reliance Steel & Aluminum Co. has no control. These risk factors and
additional information are included in the Company's reports on file with the
Securities and Exchange Commission.
RELIANCE STEEL & ALUMINUM CO.
SELECTED FINANCIAL DATA
(In thousands except share and per share amounts)
Three Months
Ended March 31,
-----------------------
2003 2002
----------- -----------
Income Statement Data:
Net sales $450,823 $405,486
Gross profit 119,403 111,545
Operating income 14,321 17,443
EBITDA 22,307 24,594
EBIT 14,803 17,773
Pre-tax income 9,197 12,403
Net income 5,579 7,491
EPS -- diluted $.18 $.24
Weighted average shares
outstanding -- diluted 31,755,609 31,728,721
Gross margin 26.5% 27.5%
Operating margin 3.2% 4.3%
EBITDA margin 5.0% 6.1%
EBIT margin 3.3% 4.4%
Pre-tax margin 2.0% 3.1%
Net margin 1.2% 1.8%
Cash dividends per share $.06 $.06
March 31, Dec. 31,
2003 2002
----------- -----------
Balance Sheet and Other Data:
Current assets $553,301 $532,544
Working capital 362,280 389,620
Net fixed assets 302,222 306,189
Total assets 1,155,181 1,139,247
Current liabilities 191,021 142,924
Long-term debt 308,940 344,080
Shareholders' equity 614,121 609,854
Capital expenditures 3,296 18,658
Net debt-to-total capital(a) 34.2% 35.5%
Return on equity(b) 4.6% 5.2%
Current ratio 2.9 3.7
Book value per share $19.33 $19.21
Cash flow from operations per share(c) $3.26 $2.85
(a) Net debt-to-total capital is calculated as total debt (net of cash) divided
by shareholders' equity plus total debt (net of cash).
(b) Return on equity calculation is based on latest twelve months.
(c) 2003 cash flow from operations per share calculation is based on latest
twelve months.
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
ASSETS
March 31, Dec. 31,
2003 2002
---------- ----------
(Unaudited)
Current assets:
Cash and cash equivalents $12,168 $9,305
Accounts receivable, less allowance
for doubtful accounts of $5,536
at March 31, 2003 and $5,158
at December 31, 2002, respectively 209,186 190,191
Inventories 305,449 307,385
Prepaid expenses and other current assets 11,709 10,874
Deferred income taxes 14,789 14,789
---------- ----------
Total current assets 553,301 532,544
Property, plant and equipment, at cost:
Land 52,479 52,469
Buildings 181,491 180,995
Machinery and equipment 239,759 237,912
Accumulated depreciation (171,507) (165,187)
---------- ----------
302,222 306,189
Goodwill, net of accumulated amortization
of $33,024 at March 31, 2003
and December 31, 2002 284,276 284,276
Other assets 15,382 16,238
---------- ----------
Total assets $1,155,181 $1,139,247
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $105,524 $77,511
Accrued expenses 44,512 40,894
Wages and related accruals 14,626 20,160
Deferred income taxes 4,034 4,034
Current maturities of long-term debt 22,325 325
---------- ----------
Total current liabilities 191,021 142,924
Long-term debt 308,940 344,080
Deferred income taxes 31,117 31,672
Minority interest 9,982 10,717
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, no par value:
Authorized shares -- 5,000,000
None issued or outstanding -- --
Common stock, no par value:
Authorized shares -- 100,000,000
Issued and outstanding shares --
31,766,497 at March 31, 2003 and
31,752,087 at December 31, 2002,
respectively, stated capital 294,721 294,503
Retained earnings 320,862 317,189
Accumulated other comprehensive loss (1,462) (1,838)
---------- ----------
Total shareholders' equity 614,121 609,854
---------- ----------
Total liabilities and shareholders' equity $1,155,181 $1,139,247
========== ==========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share amounts)
Three Months
Ended March 31,
---------------------
2003 2002
--------- ----------
Net sales $450,823 $405,486
Cost of sales 331,420 293,941
---------- ----------
Gross profit 119,403 111,545
Operating expenses:
Warehouse, delivery, selling, general
and administrative 97,884 87,709
Depreciation 7,198 6,393
---------- -----------
Income from operations 14,321 17,443
Other income (expense):
Interest expense (5,606) (5,370)
Amortization expense (306) (428)
Other income, net 563 634
---------- ----------
Income before equity in earnings
of 50%-owned company, minority
interest and income taxes 8,972 12,279
Equity in earnings of 50%-owned company -- 124
Minority interest 225 --
---------- ----------
Income before provision for income taxes 9,197 12,403
Provision for income taxes 3,618 4,912
---------- ----------
Net income $5,579 $7,491
========== ==========
Earnings per share - diluted $.18 $.24
========== ==========
Weighted average shares outstanding - diluted 31,755,609 31,728,721
========== ==========
Earnings per share - basic $.18 $.24
========== ==========
Weighted average shares outstanding - basic 31,755,609 31,590,853
========== ==========
Cash dividends per share $.06 $.06
========== ==========
Reconciliation of EBIT and EBITDA
Income before provision for income taxes $9,197 $12,403
Interest expense 5,606 5,370
---------- ----------
EBIT $14,803 $17,773
========== ==========
Depreciation 7,198 6,393
Amortization expense 306 428
---------- ----------
EBITDA $22,307 $24,594
========== ==========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
March 31,
-------------------
2003 2002
-------- --------
Operating activities:
Net income $5,579 $7,491
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,504 6,821
Gain on sales of machinery and equipment (45) (4)
Equity in earnings of 50%-owned company -- (124)
Minority interest (225) --
Changes in operating assets and liabilities:
Accounts receivable (18,995) (25,656)
Inventories 1,936 15,733
Prepaid expenses and other assets (286) 200
Accounts payable and accrued expenses 26,097 3,963
-------- --------
Net cash provided by operating activities 21,565 8,424
Investing activities:
Purchases of property, plant and equipment, net (3,296) (3,936)
Proceeds from sales of property and equipment 110 54
Dividends received from 50%-owned company -- 438
-------- --------
Net cash used in investing activities (3,186) (3,443)
Financing activities:
Proceeds from borrowings 4,035 5,000
Principal payments on long-term debt
and short-term borrowings (17,175) (18,175)
Payments to minority shareholders (378) --
Dividends paid (1,905) (1,896)
Issuance of common stock 218 883
-------- --------
Net cash used in financing activities (15,205) (14,188)
Effect of exchange rate changes on cash (311) (37)
-------- --------
Increase (decrease) in cash and cash equivalents 2,863 (9,244)
Cash and cash equivalents at beginning of period 9,305 9,931
-------- --------
Cash and cash equivalents at end of period $12,168 $687
======== ========
Supplemental cash flow information:
Interest paid during the period $995 $560
Income taxes paid during the period $309 $53
CONTACT: Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
713/610-9937
213/576-2428
kfeazle@rsac.com
investor@rsac.com