EXHIBIT 99.1
Reliance Steel & Aluminum Co. Reports 2003 Third Quarter and
Year-to-Date Results; Net Income Up 24%; EPS Up 26%;
Sales Up 8% for the Quarter
LOS ANGELES--(BUSINESS WIRE)--Oct. 16, 2003--Reliance Steel &
Aluminum Co. (NYSE:RS) today reported its financial results for the
three and nine-months ended September 30, 2003. For the fiscal year
2003 third quarter, net income was $12.4 million, an increase of 24%
compared with net income of $10.0 million for the three months ended
September 30, 2002. Earnings per diluted share were $.39, up 26% for
the third quarter of 2003, compared with earnings of $.31 per diluted
share for the 2002 third quarter. Sales for the 2003 third quarter
totaled $490.6 million, an increase of 8% compared with 2002 third
quarter sales of $454.8 million.
For the nine-months ended September 30, 2003, net income amounted
to $24.3 million, compared with net income of $28.2 million for the
same period in 2002. Earnings per diluted share were $.77 for the
nine-months ended September 30, 2003, compared with earnings of $.89
per diluted share for the nine-months ended September 30, 2002. Sales
for the 2003 year-to-date period were $1.4 billion, an increase of 7%
compared with 2002 nine-month sales of $1.3 billion.
David H. Hannah, Reliance's Chief Executive Officer, said,
"Precision Strip, Inc., acquired on July 1, 2003, was an important
contributor to our third quarter earnings. Additionally, our overall
operating results from our other businesses improved over the prior
quarters of 2003. This improvement was mostly the result of increased
gross profit margins driven by a slight improvement in pricing and
lower costs for many of our products during the quarter."
"Net income and earnings per diluted share amounts improved 93%
and 95%, respectively, from the 2003 second quarter. Our gross profit
margins improved to 27.8% from 26.2% in the second quarter. We also
produced strong cash flow, paid down debt, controlled costs and
increased inventory turns during the third quarter. Our working
capital management has resulted in a strong balance sheet. We are
indeed positioned better than ever to prosper when the economic
recovery accelerates and expands into the industrial economy," Hannah
added.
"While we have not yet seen a significant and consistent change in
either market conditions or the operating environment, we do believe
that the business atmosphere is currently more conducive to improved
conditions. However, the fourth quarter has historically not been
known for positive growth, mainly due to the reduced number of
shipping days caused by the Holidays. In 2002, we experienced more
extended plant closures at the customer level during the fourth
quarter than in prior years, and we are expecting similar events in
the 2003 fourth quarter. With that in mind, we anticipate the earnings
per diluted share amount for the 2003 fourth quarter to be within a
range of $.25 to $.30," concluded Hannah.
On July 1, 2003, the Company purchased all of the stock of
Precision Strip, Inc., and its related entity for $220 million in
cash, plus the assumption of approximately $26 million of debt.
Precision Strip was founded in 1977 and is headquartered in Minster,
Ohio with eight facilities located in four states. The acquisition was
funded with borrowings on Reliance's existing $335 million syndicated
bank line of credit and a new private placement of $135 million of
senior secured notes. At September 30, 2003, the Company's
net-debt-to-total capital ratio was 43.9%.
Precision Strip's sales for the fiscal year ended December 31,
2002 were $121.8 million. Precision Strip now operates as a wholly
owned subsidiary of Reliance. Precision Strip's processing activities
consist primarily of slitting and blanking flat-rolled products and
include approximately 65% carbon steel, 20% aluminum and 15% stainless
steel products on a "toll" basis, processing the metal for a fee,
without taking ownership of the metal. Precision Strip's customers
include carbon steel, stainless steel and aluminum mills, as well as
companies in the automotive, appliance, metal furniture and capital
goods industries.
On July 23, 2003, the Company announced its regular quarterly cash
dividend payment of $.06 per share of common stock. The 2003 third
quarter cash dividend was paid on August 22, 2003 to shareholders of
record August 1, 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 third quarter and
nine-months financial results for the period ended September 30, 2003.
All interested parties are invited to listen to the web cast on
October 16, 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
November 16, 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 107 processing and
distribution centers in 29 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 Nine Months
Ended September 30, Ended September 30,
------------------ ------------------
2003 2002 2003 2002
---- ---- ---- ----
Income Statement Data:
Net sales $490,587 $454,840 $1,397,739 $1,310,492
Gross profit 136,210 125,519 374,985 363,107
Operating income 28,513 22,082 57,839 62,546
EBITDA (1) 39,449 29,613 85,331 84,821
EBIT (1) 28,326 22,248 59,172 63,524
Pre-tax income 20,364 16,499 40,093 46,738
Net income 12,353 9,965 24,324 28,230
EPS - diluted $.39 $.31 $.77 $.89
Weighted average shares
outstanding -- diluted 31,857,794 31,815,003 31,785,626 31,816,566
Gross margin 27.8% 27.6% 26.8% 27.7%
Operating margin 5.8% 4.9% 4.1% 4.8%
EBITDA margin (1) 8.0% 6.5% 6.1% 6.5%
EBIT margin (1) 5.8% 4.9% 4.2% 4.8%
Pre-tax margin 4.2% 3.6% 2.9% 3.6%
Net margin 2.5% 2.2% 1.7% 2.2%
Cash dividends per share $.06 $.06 $.18 $.18
Sept. 30, Dec. 31,
2003 2002
---- ----
Balance Sheet Data:
Current assets $565,048 $532,544
Working capital 330,213 389,620
Net fixed assets 469,673 306,189
Total assets 1,391,812 1,139,247
Current liabilities 234,835 142,924
Long-term debt 483,655 344,080
Shareholders' equity 632,241 609,854
Capital expenditures 13,433 18,658
Net debt-to-total capital (2) 43.9% 35.5%
Return on equity (3) 4.3% 5.2%
Current ratio 2.4 3.7
Book value per share $19.83 $19.21
Cash flow from operations per share (4) $3.75 $2.85
(1) See Consolidated Statements of Income for reconciliation of EBIT
and EBITDA.
(2) Net debt-to-total capital is calculated as total debt (net of
cash) divided by shareholders' equity plus total debt (net of
cash).
(3) Return on equity calculation is based on latest twelve months.
(4) 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
Sept. 30, Dec. 31,
2003 2002
---- ----
Current assets: (Unaudited)
Cash and cash equivalents $11,183 $$9,305
Accounts receivable, less allowance for
doubtful accounts of $6,137 at September
30, 2003 and $5,158 at December 31, 2002 233,468 190,191
Inventories 292,514 307,385
Prepaid expenses and other current assets 12,929 10,874
Deferred income taxes 14,954 14,789
---------- ----------
Total current assets 565,048 532,544
Property, plant and equipment, at cost:
Land 57,088 52,469
Buildings 253,657 180,995
Machinery and equipment 346,273 237,912
Accumulated depreciation (187,345) (165,187)
---------- ----------
469,673 306,189
Goodwill 333,026 284,276
Other assets 24,065 16,238
---------- ----------
Total assets $1,391,812 $1,139,247
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $132,328 $77,511
Accrued expenses 54,888 40,894
Wages and related accruals 21,185 20,160
Deferred income taxes 4,034 4,034
Current maturities of long-term debt 22,400 325
---------- ----------
Total current liabilities 234,835 142,924
Long-term debt 483,655 344,080
Deferred income taxes 31,193 31,672
Minority interest 9,888 10,717
Commitments -- --
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 31,855,747 at
September 30, 2003 and 31,752,087 at
December 31, 2002, stated capital 297,017 294,503
Retained earnings 335,955 317,189
Accumulated comprehensive loss (731) (1,838)
---------- ----------
Total shareholders' equity 632,241 609,854
---------- ----------
Total liabilities and shareholders' equity $1,391,812 $1,139,247
========== ==========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share amounts)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
---------------- ---------------
2003 2002 2003 2002
---- ---- ---- ----
Net sales $490,587 $454,840 $1,397,739 $1,310,492
Cost of sales 354,377 329,321 1,022,754 947,385
---------- ---------- ---------- ----------
Gross profit 136,210 125,519 374,985 363,107
Operating expenses
Warehouse, delivery,
selling, general and
administrative 100,198 96,375 295,228 280,297
Depreciation 7,499 7,062 21,918 20,264
---------- ---------- ---------- ----------
Income from operations 28,513 22,082 57,839 62,546
Other income (expense):
Interest expense (7,962) (5,749) (19,079) (16,786)
Amortization expense (872) (303) (1,489) (1,033)
Other income, net 585 384 2,289 1,620
---------- ---------- ---------- ----------
Income before equity in
earnings of 50%-owned
company, minority
interest and income taxes 20,264 16,414 39,560 46,347
Equity in earnings of 50%-
owned company -- -- -- 263
Minority interest 100 85 533 128
---------- ---------- ---------- ----------
Income before provision
for income taxes 20,364 16,499 40,093 46,738
Provision for income taxes 8,011 6,534 15,769 18,508
---------- ---------- ---------- ----------
Net income $12,353 $9,965 $24,324 $28,230
========== ========== ========== ==========
Earnings per share -
diluted $.39 $.31 $.77 $.89
========== ========== ========== ==========
Weighted average shares
outstanding -
diluted 31,857,794 31,815,003 31,785,626 31,816,566
========== ========== ========== ==========
Earnings per share - basic $.39 $.31 $.77 $.89
========== ========== ========== ==========
Weighted average shares
outstanding -
basic 31,815,214 31,719,972 31,779,325 31,665,281
========== ========== ========== ==========
Cash dividends per share $.06 $.06 $.18 $.18
========== ========== ========== ==========
Reconciliation of EBIT and EBITDA
Income before provision
for income taxes $20,364 $16,499 $40,093 $46,738
Interest expense 7,962 5,749 19,079 16,786
---------- ---------- ---------- ----------
EBIT $28,326 $22,248 $59,172 $63,524
========== ========== ========== ==========
Depreciation 7,499 7,062 21,918 20,264
Depreciation included in
cost of sales 2,752 -- 2,752 --
Amortization expense 872 303 1,489 1,033
---------- ---------- ---------- ----------
EBITDA $39,449 $29,613 $85,331 $84,821
========== ========== ========== ==========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
-----------------
2003 2002
---- ----
Operating activities:
Net income $24,324 $28,230
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 26,159 21,297
Deferred taxes (165) --
(Gain) loss on sales of machinery and equipment (764) 183
Equity in earnings of 50%-owned company -- (263)
Minority interest (533) 41
Other comprehensive income -- (381)
Changes in operating assets and liabilities:
Accounts receivable (23,316) (26,261)
Inventories 15,561 16,744
Prepaid expenses and other assets (2,542) (1,643)
Accounts payable and accrued expenses 60,754 32,972
--------- ---------
Net cash provided by operating activities 99,478 70,917
Investing activities:
Purchases of property, plant and equipment, net (13,433) (12,426)
Proceeds from sales of property and equipment 2,896 331
Acquisitions of metals service centers and net
asset purchases of metals service centers,
net of cash acquired and debt assumed (245,850) (53,318)
Dividends received from 50%-owned company -- 444
--------- ---------
Net cash used in investing activities (256,387) (64,969)
Financing activities:
Proceeds from borrowings 262,195 96,825
Principal payments on long-term debt
and short-term borrowings (100,545) (100,155)
Payments to minority shareholders (378) (2,251)
Dividends paid (5,719) (5,700)
Issuance of common stock 2,675 4,241
--------- ---------
Net cash provided by (used in) financing
activities 158,228 (7,040)
Effect of exchange rate changes on cash 559 438
--------- ---------
Increase (decrease) in cash and cash equivalents 1,878 (654)
Cash and cash equivalents at beginning of period 9,305 9,931
--------- ---------
Cash and cash equivalents at end of period $11,183 $9,277
--------- ---------
Supplemental cash flow information:
Interest paid during the period $12,511 $11,609
Income taxes paid during the period $4,014 $18,689
CONTACT: Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
713-610-9937
213-576-2428
kfeazle@rsac.com
investor@rsac.com