Exhibit 99.1
Reliance Steel & Aluminum Co. Reports
Record 2005 Fiscal Year and Fourth Quarter Results; 2005 Sales up 14%
and Net Income up 21%
LOS ANGELES--(BUSINESS WIRE)--Feb. 16, 2006--Reliance Steel &
Aluminum Co. (NYSE:RS) reported today its financial results for the
fiscal year and fourth quarter ended December 31, 2005. For the 2005
year, net income was $205.4 million, or $6.21 earnings per diluted
share, the Company's best-ever financial results. This compares with
net income of $169.7 million, or $5.19 earnings per diluted share for
the 2004 fiscal year. Sales for 2005 totaled a record $3.37 billion,
an increase of 14% compared with 2004 sales of $2.94 billion. The 2005
fiscal year financial results include in cost of sales a pre-tax LIFO
expense amount of $16.6 million, or $.31 per diluted share, compared
with a pre-tax LIFO expense amount of $110.8 million, or $2.13 per
diluted share included in cost of sales in 2004.
For the 2005 fourth quarter, net income was a record $60.6
million, up 41% compared with net income of $43.0 million for the same
period in 2004. Earnings per diluted share were a record $1.81, up 38%
for the three months ended December 31, 2005 compared with earnings of
$1.31 per diluted share for the same period last year. Sales for the
2005 fourth quarter were $868.7 million, up 17% compared with 2004
fourth quarter sales of $742.8 million. The 2005 fourth quarter
financial results include in cost of sales a pre-tax LIFO expense
amount of $91,000, compared with a pre-tax LIFO expense amount of
$18.3 million, or $.39 per diluted share included in cost of sales in
the 2004 fourth quarter.
David H. Hannah, Chief Executive Officer of Reliance, said, "The
continuation of strong metals pricing and demand for our products
across the board in all the end markets that we support and the
acquisition of Chapel Steel contributed to our record-breaking results
for 2005. The fourth quarter's operating results were better than we
expected regarding both pricing and demand levels. The non-residential
construction, aerospace, electronics, semiconductor, truck trailer,
rail car and heavy machinery sectors are all performing quite well.
"We believe that we are well positioned to take advantage of a
favorable operating environment. We are optimistic about 2006 and the
opportunities that we envision for the continued successful growth of
our Company. At this time, we estimate earnings per diluted share for
the 2006 first quarter in a range of $1.90 to $2.00," said Hannah.
On January 17, 2006, Reliance announced that it had entered into a
definitive merger agreement with Earle M. Jorgensen Company
(NYSE:JOR), headquartered in Lynwood, California, pursuant to which
Reliance will acquire Jorgensen for $13.00 per share in cash and
stock, subject to a collar. The transaction is valued at approximately
$934 million, including the assumption of Jorgensen's net debt. This
significant transaction would be immediately accretive to Reliance and
is expected to be completed in the second quarter of 2006. Upon
completion of the acquisition, Reliance will have a network of more
than 140 facilities in 35 states and Belgium, Canada and South Korea
and total assets of approximately $3 billion and annual revenues of
more than $5 billion. For more information regarding the definitive
merger agreement with Jorgensen, please refer to the Company's press
release and SEC Form 8K dated January 17, 2006 posted on the Reliance
web site at: www.rsac.com.
Reliance and Jorgensen filed an SEC Form S-4 Registration
Statement and a preliminary proxy statement/prospectus on February 7,
2006. Investors and security holders are urged to read the proxy
statement/prospectus that will be sent to Jorgensen stockholders
regarding the proposed merger, when it becomes available, because it
will contain important information. Investors and security holders may
obtain a free copy of the proxy statement/prospectus, when it is
available, and other documents filed by Reliance and Jorgensen with
the Securities and Exchange Commission at the Commission's web site at
www.sec.gov. The proxy statement/prospectus and these other documents
may also be obtained, when available, free of charge from Reliance at
www.rsac.com. Jorgensen stockholders should read the definitive proxy
statement/prospectus carefully before making a decision concerning the
merger.
Reliance and Jorgensen, and their respective directors, executive
officers and certain other of their employees, may be soliciting
proxies from Jorgensen's stockholders in favor of the approval of the
merger. Information regarding the persons who may, under SEC rules, be
deemed to be participants in the solicitation of Jorgensen's
stockholders in connection with the merger is set forth in Reliance's
proxy statement for its 2005 annual meeting, filed with the SEC on
April 15, 2005 and in Jorgensen's proxy statement for its 2005 annual
meeting, filed with the SEC on July 21, 2005, and additional
information will be set forth in the definitive proxy
statement/prospectus referred to above when it is filed with the SEC.
On October 18, 2005, the Company's Board of Directors declared the
regular quarterly cash dividend of $.10 per share of common stock. The
2005 fourth quarter cash dividend was paid on January 6, 2006 to
shareholders of record December 9, 2005. 2006 marks the 46th
consecutive year that Reliance has paid quarterly dividends to its
shareholders.
Reliance will host a conference call that will be broadcast live
over the Internet (listen only mode) regarding the 2005 fiscal year
and fourth quarter financial results for the period ended December 31,
2005. All interested parties are invited to listen to the web cast on
February 16, 2006 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 16, 2006 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 32
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 2006 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 Twelve Months
Ended December 31, Ended December 31,
---------------------------------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Income Statement
Data:
Net sales $ 868,678 $ 742,819 $ 3,367,051 $ 2,943,034
Gross profit 251,152 201,367 918,051 832,186
Operating
profit(1) 107,780 67,070 367,640 306,880
EBITDA(2) 117,341 79,264 405,065 343,285
EBIT(2) 105,516 67,783 358,434 298,658
Pre-tax income 99,584 60,909 333,212 269,968
Net income 60,588 42,952 205,437 169,728
EPS -- diluted $ 1.81 $ 1.31 $ 6.21 $ 5.19
Weighted average
shares
outstanding --
diluted 33,382,812 32,878,774 33,097,362 32,675,379
Gross margin 28.9% 27.1% 27.3% 28.3%
Operating
margin(1) 12.4% 9.0% 10.9% 10.4%
EBITDA margin(2) 13.5% 10.7% 12.0% 11.7%
EBIT margin(2) 12.1% 9.1% 10.6% 10.1%
Pre-tax margin 11.5% 8.2% 9.9% 9.2%
Net margin 7.0% 5.8% 6.1% 5.8%
Cash dividends per
share $ .10 $ .07 $ .38 $ .26
December 31, December 31,
2005 2004
--------------- --------------
Balance Sheet Data:
Current assets $ 847,348 $ 733,229
Working capital(3) 513,529 458,551
Net fixed assets 479,719 458,813
Total assets 1,769,070 1,563,331
Current liabilities 333,819 274,678
Long-term debt 306,790 380,850
Shareholders' equity 1,029,865 822,552
Capital expenditures 53,740 35,982
Net debt-to-total capital(4) 23.8% 33.6%
Return on equity 25.0% 26.2%
Current ratio 2.5 2.7
Book value per share $ 31.11 $ 25.18
Cash flow from operations per share $ 8.22 $ 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 December 31, 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).
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
ASSETS
December 31, December 31,
2005 2004
--------------- --------------
Current assets:
Cash and cash equivalents $ 35,022 $ 11,659
Accounts receivable, less allowance
for doubtful accounts of $10,511
and $8,699 at December 31, 2005 and
2004, respectively 369,931 329,991
Inventories 387,385 349,779
Prepaid expenses and other current
assets 19,009 17,216
Deferred income taxes 36,001 24,584
--------------- --------------
Total current assets 847,348 733,229
Property, plant and equipment, at
cost:
Land 60,207 57,982
Buildings 281,986 261,228
Machinery and equipment 403,403 370,229
Accumulated depreciation (265,877) (230,626)
--------------- --------------
479,719 458,813
Goodwill 384,730 341,780
Other assets 57,273 29,509
--------------- --------------
Total assets $ 1,769,070 $ 1,563,331
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 188,584 $ 140,323
Accrued expenses 19,234 17,561
Accrued compensation and retirement
costs 52,354 49,959
Accrued insurance costs 23,372 20,297
Deferred income taxes 214 138
Current maturities of long-term debt 49,525 46,400
Current maturities of capital lease
obligations 536 --
--------------- --------------
Total current liabilities 333,819 274,678
Long-term debt 301,275 380,850
Capital lease obligations 5,515 --
Long-term retirement costs 15,660 14,102
Deferred income taxes 65,808 55,613
Minority interest 17,128 15,536
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
33,108,999 and 32,669,967 at
December 31, 2005 and 2004,
respectively, stated capital 325,010 313,953
Retained earnings 704,530 508,147
Accumulated comprehensive income 325 452
--------------- --------------
Total shareholders' equity 1,029,865 822,552
--------------- --------------
Total liabilities and shareholders'
equity $ 1,769,070 $ 1,563,331
=============== ==============
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,
------------------------- -------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $ 868,678 $ 742,819 $ 3,367,051 $ 2,943,034
Other income, net 962 1,792 3,671 4,168
----------- ----------- ----------- -----------
869,640 744,611 3,370,722 2,947,202
Costs and
expenses:
Cost of sales
(exclusive of
depreciation and
amortization
shown below) 617,526 541,452 2,449,000 2,110,848
Warehouse,
delivery,
selling, general
and
administrative 132,292 123,611 507,905 483,887
Depreciation and
amortization 11,825 11,481 46,631 44,627
Interest expense 5,932 6,874 25,222 28,690
----------- ----------- ----------- -----------
767,575 683,418 3,028,758 2,668,052
Income before
minority interest
and income taxes 102,065 61,193 341,964 279,150
Minority interest (2,481) (284) (8,752) (9,182)
----------- ----------- ----------- -----------
Income from
continuing
operations before
income taxes 99,584 60,909 333,212 269,968
Provision for
income taxes 38,996 17,957 127,775 100,240
----------- ----------- ----------- -----------
Net income $ 60,588 $ 42,952 $ 205,437 $ 169,728
=========== =========== =========== ===========
Earnings per
share:
Income from
continuing
operations --
diluted $ 1.81 $ 1.31 $ 6.21 $ 5.19
=========== =========== =========== ===========
Weighted average
shares
outstanding --
diluted 33,382,812 32,878,774 33,097,362 32,675,379
=========== =========== =========== ===========
Income from
continuing
operations --
basic $ 1.83 $ 1.32 $ 6.24 $ 5.23
=========== =========== =========== ===========
Weighted average
shares
outstanding --
basic 33,072,448 32,632,453 32,935,034 32,480,101
=========== =========== =========== ===========
Cash dividends per
share $ .10 $ .07 $ .38 $ .26
=========== =========== =========== ===========
Reconciliation of EBIT and EBITDA
Income from
continuing
operations before
income taxes $ 99,584 $ 60,909 $ 333,212 $ 269,968
Interest expense 5,932 6,874 25,222 28,690
----------- ----------- ----------- -----------
EBIT 105,516 67,783 358,434 298,658
----------- ----------- ----------- -----------
Depreciation
expense 11,080 10,686 42,506 41,419
Amortization
expense 745 795 4,125 3,208
----------- ----------- ----------- -----------
EBITDA $ 117,341 $ 79,264 $ 405,065 $ 343,285
=========== =========== =========== ===========
RELIANCE STEEL & ALUMINUM CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months Ended
December 31,
--------------------------------
2005 2004
--------------- --------------
Operating activities:
Net income $ 205,437 $ 169,728
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 46,631 44,627
Deferred taxes (1,059) 2,726
Gain on sales of machinery and
equipment -- (660)
Minority interest 8,751 9,182
Tax benefit of stock options
exercised 3,476 1,905
Changes in operating assets and
liabilities:
Accounts receivable (15,391) (108,198)
Inventories (11,345) (61,699)
Prepaid expenses and other assets (2,624) (3,584)
Accounts payable and accrued
expenses 38,343 67,741
--------------- --------------
Net cash provided by operating
activities 272,219 121,768
Investing activities:
Purchases of property, plant and
equipment, net (53,740) (35,982)
Proceeds from sales of property and
equipment 1,485 3,281
Acquisitions of metals service
centers, net of cash acquired and
debt assumed (94,377) --
Purchase of minority interest in
foreign subsidiary -- (473)
Tax reimbursements made related to
prior acquisition -- (16,475)
--------------- --------------
Net cash used in investing activities (146,632) (49,649)
Financing activities:
Proceeds from borrowings 393,000 209,000
Principal payments on long-term debt
and short-term borrowings (486,511) (273,400)
Payments to minority shareholders (7,159) (1,709)
Dividends paid (12,530) (8,448)
Exercise of stock options 10,811 10,130
Issuance of common stock 246 236
--------------- --------------
Net cash used in financing activities (102,143) (64,191)
Effect of exchange rate changes on
cash (81) 1,565
--------------- --------------
Increase in cash and cash equivalents 23,363 9,493
Cash and cash equivalents at
beginning of period 11,659 2,166
--------------- --------------
Cash and cash equivalents at end of
period $ 35,022 $ 11,659
=============== ==============
Supplemental cash flow information:
Interest paid during the period $ 25,309 $ 28,525
Income taxes paid during the period $ 118,909 $ 100,589
CONTACT: Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
(713) 610-9937
(213) 576-2428
kfeazle@rsac.com
investor@rsac.com