Exhibit 99.1
Reliance Steel & Aluminum Co. Reports 2005 Second Quarter Results;
Record Quarterly Sales
LOS ANGELES--(BUSINESS WIRE)--July 21, 2005--Reliance Steel &
Aluminum Co. (NYSE:RS) reported today its financial results for the
second quarter and six-months ended June 30, 2005. For the 2005 second
quarter, net income was $49.0 million, compared with record net income
of $52.8 million for the same period in 2004. Earnings per diluted
share were $1.48 for the quarter ended June 30, 2005, compared with
earnings of $1.62 per diluted share for the same period last year.
Sales for the 2005 second quarter were a record $816.3 million, up 7%,
compared with 2004 second quarter sales of $760.8 million. There was
no LIFO income or expense recorded in the 2005 second quarter,
compared with a pre-tax LIFO expense amount of $32.5 million, or $.60
per diluted share in the 2004 second quarter.
For the six-months ended June 30, 2005, net income amounted to a
record $95.4 million, up 16% compared with net income of $82.6 million
for the same period in 2004. Earnings per diluted share were $2.89 for
the six-months ended June 30, 2005, compared with earnings of $2.54
per diluted share for the six-months ended June 30, 2004. Sales for
the 2005 year-to-date period were a record $1.63 billion, an increase
of 15% compared with 2004 six-month sales of $1.42 billion. The 2005
six-month financial results include in cost of sales a pre-tax LIFO
expense amount of $12.5 million, or $.23 per diluted share, compared
with $60 million, or $1.12 per diluted share in the 2004 year-to-date
period.
David H. Hannah, Chief Executive Officer, said, "During the second
quarter we did not see any meaningful changes, up or down, in the
demand for our products when compared to the prior quarter. Our
product diversification continues to play an important role in our
financial results. Our toughest challenge during this last quarter was
managing through the decrease in carbon steel pricing, which we expect
to continue throughout the 2005 third quarter.
"We continue to believe that the operating environment, while
changing, is still very favorable by historical standards, and we are
encouraged by the opportunities we see for continued growth for our
Company. At this time, anticipating no significant changes from
existing business conditions, but expecting some softness in pricing
to continue, we estimate earnings per diluted share for the 2005 third
quarter will be in a range of $1.20 to $1.30," concluded Hannah.
In July of 2005, Reliance acquired Chapel Steel Corp.,
headquartered in Spring House (Philadelphia), Pennsylvania for $94.2
million in cash plus the assumption of approximately $16.8 million of
debt. Chapel was a privately held metals service center company
founded in 1972 specializing in high-strength carbon and alloy plate.
Chapel's net sales for the fiscal year ended December 31, 2004 were
approximately $273 million.
Also during the second quarter, the Company entered into a $600
million, five-year, unsecured revolving credit facility that replaced
its previous $335 million credit facility. The Company plans to use
its credit facility for working capital and general corporate
purposes, internal growth initiatives, and the funding of
acquisitions.
On April 20, 2005, the Company's Board of Directors declared a
regular quarterly cash dividend of $.09 per share of common stock. The
dividend was paid on June 3, 2005 to shareholders of record May 13,
2005. The Company has paid regular quarterly dividends for 45
consecutive years.
Reliance will host a conference call that will be broadcast live
over the Internet (listen only mode) regarding the 2005 second quarter
and six-months financial results for the period ended June 30, 2005.
All interested parties are invited to listen to the web cast on July
21, 2005 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
August 21, 2005 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 more than 100 locations in 31
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.
The Company was named to the 2005 Forbes Platinum 400 List of
America's Best Big Companies and was also named as one of "America's
Most Admired Companies" listed in the diversified wholesaler's
category in the March 7, 2005 issue of Fortune. 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 Six Months
Ended June 30, Ended June 30,
------------------------------------------------
2005 2004 2005 2004
------------------------------------------------
Income Statement Data:
Net sales $816,342 $760,780 $1,628,249 $1,416,545
Gross profit 222,235 228,467 438,171 415,897
Operating profit(1) 88,241 97,478 172,018 156,174
EBITDA(2) 97,423 105,332 189,666 173,016
EBIT(2) 85,316 94,266 166,397 150,904
Pre-tax income 79,110 87,010 153,890 136,168
Net income 49,049 52,797 95,412 82,636
EPS - diluted $1.48 $1.62 $2.89 $2.54
Weighted average shares
outstanding -- diluted 33,086,102 32,674,395 33,023,552 32,564,497
Gross margin 27.2% 30.0% 26.9% 29.4%
Operating profit
margin(1) 10.8% 12.8% 10.6% 11.0%
EBITDA margin(2) 11.9% 13.8% 11.6% 12.2%
EBIT margin(2) 10.5% 12.4% 10.2% 10.7%
Pre-tax margin 9.7% 11.4% 9.5% 9.6%
Net margin 6.0% 6.9% 5.9% 5.8%
Cash dividends per
share $.09 $.06 $.18 $.12
June 30, December 31,
2005 2004
------------------------
Balance Sheet Data:
Current assets $787,680 $733,229
Working capital(3) 501,081 458,551
Net fixed assets 457,942 458,813
Total assets 1,617,072 1,563,331
Current liabilities 286,599 274,678
Long-term debt 325,475 380,850
Shareholders' equity 920,068 822,552
Capital expenditures 21,060 35,982
Net debt-to-total capital(4) 28.0% 33.6%
Return on equity(5) 22.2% 26.2%
Current ratio(3) 2.8 2.7
Book value per share $27.94 $25.18
Cash flow from operations per share(5) $6.11 $3.73
(1)Operating profit is calculated as net sales less cost of sales,
warehouse, delivery, selling, general and administrative expenses and
depreciation expense.
(2)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.
(3)The December 31, 2004 balances have been adjusted to reflect
balance sheet reclassifications made as of June 30, 2005.
(4)Net debt-to-total capital is calculated as total debt (net of
cash) divided by shareholders' equity plus total debt (net of cash).
(5)Calculations are based on the latest twelve months.
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
ASSETS
June 30, December 31,
2005 2004
----------- -----------
Current assets: (Unaudited)
Cash and cash equivalents $16,210 $11,659
Accounts receivable, less allowance for
doubtful accounts of $9,865 at June 30, 2005
and $8,699 at December 31, 2004, respectively 362,030 329,991
Inventories 369,665 349,779
Prepaid expenses and other current assets 15,183 17,216
Deferred income taxes 24,592 24,584
----------- -----------
Total current assets 787,680 733,229
Property, plant and equipment, at cost:
Land 58,887 57,982
Buildings 262,917 261,228
Machinery and equipment 383,521 370,229
Accumulated depreciation (247,383) (230,626)
----------- -----------
457,942 458,813
Goodwill 341,780 341,780
Other assets 29,670 29,509
----------- -----------
Total assets $1,617,072 $1,563,331
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $157,446 $140,323
Accrued expenses 19,066 17,561
Accrued compensation and retirement costs 36,922 49,959
Accrued insurance costs 24,502 20,297
Deferred income taxes 138 138
Current maturities of long-term debt 48,525 46,400
----------- -----------
Total current liabilities 286,599 274,678
Long-term debt 325,475 380,850
Long-term retirement costs 15,435 14,102
Deferred income taxes 55,613 55,613
Minority interest 13,882 15,536
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 -- 32,925,924
at June 30, 2005 and 32,669,967 at
December 31, 2004, respectively, stated
capital 320,402 313,953
Retained earnings 599,145 508,147
Accumulated other comprehensive income 521 452
----------- -----------
Total shareholders' equity 920,068 822,552
----------- -----------
Total liabilities and shareholders' equity $1,617,072 $1,563,331
=========== ===========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------------------------
2005 2004 2005 2004
--------------------------------------------
Net sales $816,342 $760,780 $1,628,249 $1,416,545
Other income, net 699 1,386 1,364 1,893
--------------------------------------------
817,041 762,166 1,629,613 1,418,438
Costs and expenses:
Cost of sales (exclusive
of depreciation and
amortization shown
below) 594,107 532,313 1,190,078 1,000,648
Warehouse, delivery,
selling, general and
administrative 123,571 120,723 245,353 239,229
Depreciation and
amortization 12,107 11,066 23,269 22,112
Interest expense 6,206 7,256 12,507 14,736
--------------------------------------------
735,991 671,358 1,471,207 1,276,725
Income before minority
interest and income taxes 81,050 90,808 158,406 141,713
Minority interest (1,940) (3,798) (4,516) (5,545)
--------------------------------------------
Income from continuing
operations before
income taxes 79,110 87,010 153,890 136,168
Provision for income taxes 30,061 34,213 58,478 53,532
--------------------------------------------
Net income $49,049 $52,797 $95,412 $82,636
============================================
Earnings per share:
Income from continuing
operations - diluted $1.48 $1.62 $2.89 $2.54
============================================
Weighted average shares
outstanding - diluted 33,086,102 32,674,395 33,023,552 32,564,497
============================================
Income from continuing
operations - basic $1.49 $1.63 $2.90 $2.55
============================================
Weighted average shares
outstanding -
basic 32,915,847 32,446,394 32,848,990 32,369,777
============================================
Cash dividends per share $.09 $.06 $.18 $.12
============================================
Reconciliation of EBIT and EBITDA
Income from continuing
operations before income
taxes $79,110 $87,010 $153,890 $136,168
Interest expense 6,206 7,256 12,507 14,736
--------------------------------------------
EBIT $85,316 $94,266 $166,397 $150,904
--------------------------------------------
Depreciation expense 10,423 10,266 20,800 20,494
Amortization expense 1,684 800 2,469 1,618
--------------------------------------------
EBITDA $97,423 $105,332 $189,666 $173,016
============================================
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
June 30,
-------------------
2005 2004
--------- ---------
Operating activities:
Net income $95,412 $82,636
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 23,269 22,112
Loss (Gain) on sales of machinery and equipment 2 (667)
Deferred taxes (14) --
Minority interest 4,516 5,545
Tax benefit of stock options exercised 1,509 1,188
Changes in operating assets and liabilities:
Accounts receivable (32,039) (122,701)
Inventories (19,886) (54,034)
Prepaid expenses and other assets (597) (2,743)
Accounts payable and accrued expenses 11,129 72,390
--------- ---------
Net cash provided by operating activities 83,301 3,726
Investing activities:
Purchases of property, plant and equipment, net (21,060) (15,883)
Tax payments related to prior acquisition -- (16,475)
Proceeds from sales of property and equipment 1,129 2,408
--------- ---------
Net cash used in investing activities (19,931) (29,950)
Financing activities:
Proceeds from borrowings 187,000 144,000
Principal payments on long-term debt and
short-term borrowings (240,250) (120,250)
Payments to minority partner (6,170) --
Dividends paid (5,923) (3,884)
Issuance of common stock 246 236
Exercise of stock options 6,203 6,371
--------- ---------
Net cash (used in) provided by financing
activities (58,894) 26,473
Effect of exchange rate changes on cash 75 177
--------- ---------
Increase in cash and cash equivalents 4,551 426
Cash and cash equivalents at beginning of period 11,659 2,166
--------- ---------
Cash and cash equivalents at end of period $16,210 $2,592
========= =========
Supplemental cash flow information:
Interest paid during the period $12,372 $14,618
Income taxes paid during the period $57,994 $40,285
CONTACT: Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
713-610-9937
213-576-2428
kfeazle@rsac.com
investor@rsac.com