Exhibit 99.1
Reliance Steel & Aluminum Co. Reports
2005 Third Quarter Results; Record Quarterly Sales, Net Income up 12%
LOS ANGELES--(BUSINESS WIRE)--Oct. 20, 2005--Reliance Steel &
Aluminum Co. (NYSE:RS) reported today its financial results for the
third quarter and nine-months ended September 30, 2005. For the 2005
third quarter, net income was $49.4 million, up 12% compared with net
income of $44.1 million for the same period in 2004. Earnings per
diluted share were $1.49 for the quarter ended September 30, 2005, up
10% compared with earnings of $1.35 per diluted share for the same
period last year. Sales for the 2005 third quarter were a record
$870.1 million, up 11% compared with 2004 third quarter sales of
$783.7 million. The 2005 third quarter financial results include in
cost of sales a pre-tax LIFO expense amount of $4.0 million, or $.07
per diluted share, compared with a pre-tax LIFO expense amount of
$32.5 million, or $.60 per diluted share in the 2004 third quarter.
For the nine-months ended September 30, 2005, net income amounted
to a record $144.8 million, up 14% compared with net income of $126.8
million for the same period in 2004. Earnings per diluted share were
$4.38 for the nine-months ended September 30, 2005, up 13% compared
with earnings of $3.88 per diluted share for the nine-months ended
September 30, 2004. Sales for the 2005 year-to-date period were a
record $2.5 billion, an increase of 14% compared with 2004 nine-month
sales of $2.2 billion. The 2005 nine-month financial results include
in cost of sales a pre-tax LIFO expense amount of $16.5 million, or
$.31 per diluted share, compared with a pre-tax LIFO expense amount of
$92.5 million, or $1.72 per diluted share in the 2004 year-to-date
period.
David H. Hannah, Chief Executive Officer, said, "Our products sold
into the aerospace industry continued to show strength during the
quarter. We also had the benefit of our Chapel Steel acquisition that
was completed on July 1, 2005. Additionally, we experienced a small
improvement in volume and pricing for our carbon steel products late
in August and through September, as a result of the producers' price
increase announcements. Customer demand and pricing for our other
metal products remained steady throughout all end markets.
"We do not expect any significant changes in either pricing or
demand for the fourth quarter other than the typical seasonal
slowdown. At this time, we estimate earnings per diluted share for the
2005 fourth quarter will be in a range of $1.10 to $1.20," concluded
Hannah.
On October 10, 2005, the Company announced that it reached an
agreement with New Wave Technologies Ltd. ("New Wave"), a Singapore
public company, and its associate, Manufacturing Network Pte. Ltd.
("MNPL"), based in Singapore, to form a joint venture company,
Reliance Pan Pacific, Pte. Ltd. Reliance Pan Pacific will be 70% owned
by Reliance Steel & Aluminum Co. and 30% owned by MNPL. Upon
completion of the transaction, it is expected that, subject to
regulatory approvals, MNPL will sell its 100% interest in Everest
Metals (Suzhou) Co., Ltd., a Chinese metals service center company, to
Reliance Pan Pacific.
Everest Metals was formed in 2001 and began processing and
distributing primarily aluminum products to the electronics industry
in 2002. Everest's 2004 revenues were approximately $2.5 million. The
transaction is expected to be finalized in early 2006, subject to the
successful completion of due diligence and regulatory approvals,
including the approvals of the People's Republic of China and the
shareholders of New Wave.
On July 20, 2005, the Company's Board of Directors declared an 11%
increase in the regular quarterly cash dividend to $.10 per share of
common stock. The dividend was paid on September 2, 2005 to
shareholders of record August 12, 2005. Over the past five quarters,
the regular quarterly dividend payment has increased in total $.04 per
share or 67%. 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 third quarter
and nine-months financial results for the period ended September 30,
2005. All interested parties are invited to listen to the web cast on
October 20, 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
November 20, 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 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 Nine Months
Ended September 30, Ended September 30,
-----------------------------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Income Statement Data:
Net sales $870,124 $783,670 $2,498,373 $2,200,215
Gross profit 228,728 214,922 666,899 630,819
Operating profit(1) 87,842 83,636 259,860 239,810
EBITDA(2) 98,058 91,005 287,724 264,021
EBIT(2) 86,521 79,971 252,918 230,875
Pre-tax income 79,738 72,891 233,628 209,059
Net income 49,437 44,140 144,849 126,776
EPS - diluted $1.49 $1.35 $4.38 $3.88
Weighted average shares
outstanding --
diluted 33,166,083 32,802,503 33,062,949 32,641,089
Gross margin 26.3% 27.4% 26.7% 28.7%
Operating profit
margin(1) 10.1% 10.7% 10.4% 10.9%
EBITDA margin(2) 11.3% 11.6% 11.5% 12.0%
EBIT margin(2) 9.9% 10.2% 10.1% 10.5%
Pre-tax margin 9.2% 9.3% 9.4% 9.5%
Net margin 5.7% 5.6% 5.8% 5.8%
Cash dividends per
share $.10 $.07 $.28 $.19
September 30, December 31,
2005 2004
-------------- -------------
Balance Sheet Data:
Current assets $814,061 $733,229
Working capital(3) 510,454 458,551
Net fixed assets 470,924 458,813
Total assets 1,728,216 1,563,331
Current liabilities 303,607 274,678
Long-term debt 370,817 380,850
Shareholders' equity 967,501 822,552
Capital expenditures 34,316 35,982
Net debt-to-total capital(4) 29.7% 33.6%
Return on equity(5) 22.8% 26.2%
Current ratio(3) 2.7 2.7
Book value per share $29.33 $25.18
Cash flow from operations per share(5) $7.74 $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 September 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
September 30, December 31,
2005 2004
------------- -------------
Current assets: (Unaudited)
Cash and cash equivalents $10,419 $11,659
Accounts receivable, less allowance for
doubtful accounts of $10,304 at
September 30, 2005 and $8,699 at
December 31, 2004, respectively 394,326 329,991
Inventories 367,112 349,779
Prepaid expenses and other current assets 17,631 17,216
Deferred income taxes 24,573 24,584
------------- -------------
Total current assets 814,061 733,229
Property, plant and equipment, at cost:
Land 59,176 57,982
Buildings 273,346 261,228
Machinery and equipment 395,827 370,229
Accumulated depreciation (257,425) (230,626)
------------- -------------
470,924 458,813
Goodwill 404,464 341,780
Other assets 38,767 29,509
------------- -------------
Total assets $1,728,216 $1,563,331
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $159,575 $140,323
Accrued expenses 22,784 17,561
Accrued compensation and retirement costs 47,255 49,959
Accrued insurance costs 24,691 20,297
Deferred income taxes 138 138
Current maturities of long-term debt and
capital leases 49,164 46,400
------------- -------------
Total current liabilities 303,607 274,678
Long-term debt 365,275 380,850
Capital lease obligations 5,542 --
Long-term retirement costs 16,030 14,102
Deferred income taxes 55,613 55,613
Minority interest 14,648 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 --
32,986,924 at September 30, 2005 and
32,669,967 at December 31, 2004,
respectively, stated capital 321,947 313,953
Retained earnings 645,905 508,147
Accumulated other comprehensive income
(loss) (351) 452
------------- -------------
Total shareholders' equity 967,501 822,552
------------- -------------
Total liabilities and shareholders' equity $1,728,216 $1,563,331
============= =============
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except share and per share amounts)
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $870,124 $783,670 $2,498,373 $2,200,215
Other income, net 1,345 483 2,709 2,376
----------- ----------- ----------- -----------
871,469 784,153 2,501,082 2,202,591
Costs and expenses:
Cost of sales
(exclusive of
depreciation and
amortization shown
below) 641,396 568,748 1,831,474 1,569,396
Warehouse, delivery,
selling, general and
administrative 130,260 121,047 375,613 360,276
Depreciation and
amortization 11,537 11,034 34,806 33,146
Interest expense 6,783 7,080 19,290 21,816
----------- ----------- ----------- -----------
789,976 707,909 2,261,183 1,984,634
Income before minority
interest and income
taxes 81,493 76,244 239,899 217,957
Minority interest (1,755) (3,353) (6,271) (8,898)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 79,738 72,891 233,628 209,059
Provision for income
taxes 30,301 28,751 88,779 82,283
----------- ----------- ----------- -----------
Net income $49,437 $44,140 $144,849 $126,776
=========== =========== =========== ===========
Earnings per share:
Income from continuing
operations - diluted $1.49 $1.35 $4.38 $3.88
=========== =========== =========== ===========
Weighted average
shares outstanding -
diluted 33,166,083 32,802,503 33,062,949 32,641,089
=========== =========== =========== ===========
Income from continuing
operations - basic $1.50 $1.36 $4.40 $3.91
=========== =========== =========== ===========
Weighted average
shares outstanding -
basic 32,966,902 32,545,999 32,888,726 32,428,946
=========== =========== =========== ===========
Cash dividends per
share $.10 $.07 $.28 $.19
=========== =========== =========== ===========
Reconciliation of EBIT and EBITDA
Income from continuing
operations before
income taxes $79,738 $72,891 $233,628 $209,059
Interest expense 6,783 7,080 19,290 21,816
----------- ----------- ----------- -----------
EBIT $86,521 $79,971 $252,918 $230,875
----------- ----------- ----------- -----------
Depreciation expense 10,626 10,239 31,426 30,733
Amortization expense 911 795 3,380 2,413
----------- ----------- ----------- -----------
EBITDA $98,058 $91,005 $287,724 $264,021
=========== =========== =========== ===========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
-------------------
2005 2004
--------- ---------
Operating activities:
Net income $144,849 $126,776
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 34,806 33,146
Loss (Gain) on sales of machinery and equipment 30 (585)
Minority interest 6,271 8,898
Tax benefit of stock options exercised 2,130 1,532
Changes in operating assets and liabilities:
Accounts receivable (39,786) (136,781)
Inventories 8,928 (88,629)
Prepaid expenses and other assets (2,438) (1,630)
Accounts payable and accrued expenses 10,378 88,443
--------- ---------
Net cash provided by operating activities 165,168 31,170
Investing activities:
Purchases of property, plant and equipment, net (34,314) (27,695)
Acquisition of metal service center, net of cash
acquired (94,383) --
Tax reimbursements made related to prior
acquisition -- (16,475)
Purchase of equity interest in foreign subsidiary -- (473)
Proceeds from sales of property and equipment 1,191 2,590
--------- ---------
Net cash used in investing activities (127,506) (42,053)
Financing activities:
Proceeds from borrowings 372,000 193,000
Principal payments on long-term debt, capital
lease obligations and short-term borrowings (402,381) (182,400)
Payments to minority partner (7,159) (1,709)
Dividends paid (9,220) (6,162)
Issuance of common stock 246 236
Exercise of stock options 7,748 7,758
--------- ---------
Net cash (used in) provided by financing
activities (38,766) 10,723
Effect of exchange rate changes on cash (136) 219
--------- ---------
(Decrease) increase in cash and cash equivalents (1,240) 59
Cash and cash equivalents at beginning of period 11,659 2,166
--------- ---------
Cash and cash equivalents at end of period $10,419 $2,225
========= =========
Supplemental cash flow information:
Interest paid during the period $16,710 $19,001
Income taxes paid during the period $86,148 $69,120
CONTACT: Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
713-610-9937
213-576-2428
kfeazle@rsac.com
investor@rsac.com