Exhibit 99.1
Reliance Steel & Aluminum Co. Reports 2003 Fiscal Year
and Fourth Quarter Results;
Net Income Up 13%; EPS Up 13%; Sales Up 8% for Fiscal 2003
LOS ANGELES--(BUSINESS WIRE)--Feb. 19, 2004--Reliance Steel & Aluminum Co.
(NYSE:RS) today reported its financial results for the fiscal year and fourth
quarter ended December 31, 2003.
For the 2003 fiscal year, net income was $34.0 million, or $1.07 earnings
per diluted share, up 13% compared with net income of $30.2 million, or $.95
earnings per diluted share, for the twelve months ended December 31, 2002. Sales
for 2003 totaled $1.88 billion, up 8% compared with 2002 sales of $1.75 billion.
For the 2003 fourth quarter, net income was $9.7 million, compared with net
income of $1.9 million for the same period last year. Earnings per diluted share
were $.30 for the fourth quarter of 2003 compared with earnings per diluted
share of $.06 for the 2002 fourth quarter. Sales for the 2003 fourth quarter
were up 12% to $485.2 million, compared with $434.5 million for the 2002 fourth
quarter.
Reliance's Chief Executive Officer, David H. Hannah, said, "Overall, we are
very pleased with our 2003 fourth quarter performance. Our earnings were at the
high end of our expectations in spite of a larger than anticipated LIFO charge
of $.06 per share for the quarter. Business levels were significantly better
than those in the 2002 fourth quarter. Our fiscal 2003 financial results
improved from 2002, mainly as a result of the significant contribution from our
acquisition of Precision Strip, Inc. in July 2003.
"2003 was a difficult year that began with the continuation of low volumes
and high metal prices and an extremely competitive marketplace. A slight
increase in demand for our products began in September of 2003 and has continued
into 2004. Additionally, after declining until late in the third quarter of
2003, the costs of most of the products that we sell started to increase rather
significantly during the fourth quarter and are continuing to rise. We are
working diligently to pass through these cost increases to our customers and to
continue to improve our gross profit margins and inventory turns. We are
committed to maximizing our operating profits and returns as we go forward into
2004," said Hannah.
"Business activity, overall, has most definitely improved from the low
levels experienced during the economic downturn that has negatively impacted our
industry since the second half of 2000. While the industrial economy still has
its challenges, most of the industries where we sell our products have begun to
recover. Consequently, if the operating environment remains healthy, we
anticipate meaningful improvements in sales volume, as demand increases and also
in our selling prices, driven by the higher costs of the materials we sell. As a
result of these cost increases, we expect our gross profit margins to be
impacted by a sizable LIFO expense component in our cost of goods sold for the
first quarter of 2004. With that in mind, we anticipate earnings per diluted
share for the 2004 first quarter to be within a range of $.40 to $.45,"
concluded Hannah.
During 2003, the Company acquired Precision Strip, Inc. that was founded in
1977 and is headquartered in Minster, Ohio, with eight facilities located in
four states. Precision Strip operates as a wholly owned subsidiary of Reliance.
The immediately accretive 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. Upon completion of the acquisition on
July 1, 2003, the Company's net-debt-to-total capital ratio was 46.2%. At
December 31, 2003, the net-debt-to-total capital ratio was 43.1%. The debt
reduction was achieved through strong cash flow from operations totaling $3.34
per share.
On October 22, 2003, the Company announced its regular quarterly cash
dividend payment of $.06 per share of common stock. The 2003 fourth quarter cash
dividend was paid on January 9, 2004, to shareholders of record December 5,
2003. Reliance has paid quarterly dividends to its shareholders for 43
continuous years.
Reliance will host a conference call that will be broadcast live over the
Internet (listen only mode) regarding the fourth quarter and fiscal year
financial results for the period ended December 31, 2003. All interested parties
are invited to listen to the web cast on February 19, 2004, 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 March 19, 2004, 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 106 processing and distribution centers in 30 states and Belgium,
France and South Korea, the Company provides value-added metals processing
services and distributes a full line of over 90,000 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
95,000 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 Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
---- ---- ---- ----
Income Statement Data:
Net sales $485,194 $434,513 $1,882,933 $1,745,005
Gross profit 130,167 113,647 505,152 476,754
Operating profit 22,291 7,728 80,130 70,275
EBITDA(1) 33,140 16,050 118,471 100,871
EBIT(1) 22,429 8,801 81,601 72,325
Pre-tax income 14,763 2,982 54,856 49,720
Net income 9,686 1,937 34,010 30,167
EPS - diluted $.30 $.06 $1.07 $.95
Weighted average shares
outstanding --
diluted 32,215,680 31,795,337 31,866,334 31,798,801
Gross margin 26.8% 26.2% 26.8% 27.3%
Operating profit margin 4.6% 1.8% 4.3% 4.0%
EBITDA margin(1) 6.8% 3.7% 6.3% 5.8%
EBIT margin(1) 4.6% 2.0% 4.3% 4.1%
Pre-tax margin 3.0% 0.7% 2.9% 2.9%
Net margin 2.0% 0.5% 1.8% 1.7%
Cash dividends per share $.06 $.06 $.24 $.24
Balance Sheet Data:
Current assets $544,586 $532,544
Working capital 341,762 389,620
Net fixed assets 466,871 306,189
Total assets 1,369,424 1,139,247
Current liabilities 202,824 142,924
Long-term debt 469,250 344,080
Shareholders' equity 647,619 609,854
Capital expenditures 20,909 18,658
Net debt-to-total capital(2) 43.1% 35.5%
Return on equity 5.6% 5.2%
Current ratio 2.7 3.7
Book value per share $20.10 $19.21
Cash flow from operations per share $3.34 $2.85
(1) See Consolidated Statements of Income for reconciliation of
EBIT and EBITDA. EBIT is defined as the sum of income before
interest expense and income taxes. EBITDA is defined as the sum of
income before interest expense, income taxes, depreciation expense
and amortization of intangibles. We believe that EBIT and EBITDA
are commonly used as a measure of performance for companies in our
industry and are frequently used by analysts, investors, lenders
and other interested parties to evaluate a company's financial
performance and its ability to incur and service debt. EBIT and
EBITDA should not be considered as a measure of financial
performance under accounting principles generally accepted in the
United States. The items excluded from EBIT and EBITDA are
significant components in understanding and assessing financial
performance. EBIT or EBITDA should not be considered in isolation
or as an alternative to net income, cash flows generated by
operating, investing or financing activities or other financial
statement data presented in the consolidated financial statements
as an indicator of operating performance or as a measure of
liquidity.
(2) Net debt-to-total capital is calculated as total debt (net of
cash) divided by shareholders' equity plus total debt (net of
cash).
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
ASSETS
December 31,
2003 2002
---- ----
Current assets:
Cash and cash equivalents $2,166 $9,305
Accounts receivable, less allowance
for doubtful accounts of
$4,716 in 2003 and $5,158 in 2002 221,793 190,191
Inventories 288,080 307,385
Prepaid expenses and other current assets 14,593 10,874
Deferred income taxes 17,954 14,789
---------- ----------
Total current assets 544,586 532,544
Property, plant and equipment, at cost:
Land 57,077 52,469
Buildings 256,708 180,995
Machinery and equipment 349,933 237,912
Accumulated depreciation (196,847) (165,187)
---------- ----------
466,871 306,189
Goodwill 325,305 284,276
Other assets 32,662 16,238
---------- ----------
Total assets $1,369,424 $1,139,247
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $98,438 $77,511
Accrued expenses 53,265 40,894
Wages and related accruals 22,696 20,160
Deferred income taxes 6,025 4,034
Current maturities of long-term debt 22,400 325
---------- ----------
Total current liabilities 202,824 142,924
Long-term debt 469,250 344,080
Deferred income taxes 40,349 31,672
Minority interest 9,382 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
32,225,872 in 2003
and 31,752,087 in 2002, stated capital 303,587 294,503
Retained earnings 344,962 317,189
Accumulated other comprehensive loss (930) (1,838)
---------- ----------
Total shareholders' equity 647,619 609,854
---------- ----------
Total liabilities and shareholders' equity $1,369,424 $1,139,247
========== ==========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
---- ---- ---- ----
Net sales $485,194 $434,513 $1,882,933 $1,745,005
Other income 548 1,646 2,837 3,266
---------- ---------- ---------- ----------
485,742 436,159 1,885,770 1,748,271
Costs and expenses:
Cost of sales 355,027 320,866 1,377,781 1,268,251
Warehouse, delivery,
selling, general and
administrative 100,699 98,991 395,927 379,288
Depreciation and
amortization 7,992 7,249 31,399 28,546
Interest 7,666 5,819 26,745 22,605
---------- ---------- ---------- ----------
471,384 432,925 1,831,852 1,698,690
---------- ---------- ---------- ----------
Income before equity in
earnings of 50%-owned company,
minority interest and
income taxes 14,358 3,234 53,918 49,581
Equity in earnings
of 50%-owned company -- -- -- 263
Minority interest 405 (252) 938 (124)
---------- ---------- ---------- ----------
Income before
income taxes 14,763 2,982 54,856 49,720
Income taxes 5,077 1,045 20,846 19,553
---------- ---------- ---------- ----------
Net income $9,686 $1,937 $34,010 $30,167
========== ========== ========== ==========
Earnings per share:
Income from continuing
operations - diluted $.30 $.06 $1.07 $.95
========== ========== ========== ==========
Weighted average shares
outstanding -
diluted 32,215,680 31,795,337 31,866,334 31,798,801
========== ========== ========== ==========
Income from continuing
operations - basic $.30 $.06 $1.07 $.95
========== ========== ========== ==========
Weighted average shares
outstanding -
basic 32,070,996 31,752,087 31,852,842 31,687,161
========== ========== ========== ==========
Cash dividends
per share $.06 $.06 $.24 $.24
========== ========== ========== ==========
Reconciliation of EBIT and EBITDA
Income before provision
for income taxes $14,763 $2,982 $54,856 $49,720
Interest expense 7,666 5,819 26,745 22,605
---------- ---------- ---------- ----------
EBIT $22,429 $8,801 $81,601 $72,325
========== ========== ========== ==========
Depreciation 7,177 6,928 29,095 27,191
Depreciation included
in cost of sales 2,719 -- 5,471 --
Amortization expense 815 321 2,304 1,355
---------- ---------- ---------- ----------
EBITDA $33,140 $16,050 $118,471 $100,871
========== ========== ========== ==========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
2003 2002
------- -------
Operating activities:
Net income $34,010 $30,167
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 36,870 28,546
Deferred taxes 8,120 3,577
Gain on sales of property and equipment (701) (784)
Equity in earnings of 50%-owned company -- (263)
Minority interest (938) 124
Changes in operating assets and liabilities:
Accounts receivable (11,641) (5,951)
Inventories 19,995 30,150
Prepaid expenses and other assets (4,517) (2,700)
Accounts payable and accrued expenses 25,216 7,878
------- -------
Net cash provided by operating activities 106,414 90,744
Investing activities:
Purchases of property, plant and equipment, net (20,909) (18,658)
Proceeds from sales of property and equipment 3,020 3,298
Acquisitions of metals service centers and net asset
purchases of metals service centers, net of cash
acquired (245,850) (53,321)
Dividends received from 50%-owned company -- 444
------- -------
Net cash used in investing activities (263,739) (68,237)
Financing activities:
Proceeds from borrowings 299,785 104,115
Principal payments on long-term debt
and short-term borrowings (152,540)(121,755)
Payments to minority shareholders (378) (2,252)
Dividends paid (7,643) (7,605)
Issuance of common stock 218 235
Exercise of stock options 8,866 3,470
Tax benefit of stock options exercised 1,406 536
------- -------
Net cash provided by (used in) financing activities 149,714 (23,256)
Effect of exchange rate changes on cash 472 123
------- -------
Decrease in cash and cash equivalents (7,139) (626)
Cash and cash equivalents at beginning of period 9,305 9,931
------- -------
Cash and cash equivalents at end of period $2,166 $9,305
======= =======
Supplemental cash flow information:
Interest paid during the period $23,391 $22,116
Income taxes paid during the period $10,346 $20,101
CONTACT: Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
713-610-9937
213-576-2428
kfeazle@rsac.com
investor@rsac.com