– EPS of $2.40 increased 18.2% year-over-year
– Strong gross profit margin of 30.3%
– Generated significant cash flow from operations of $490.9 millionLOS ANGELES, Oct. 24, 2019 (GLOBE NEWSWIRE) — Reliance Steel & Aluminum Co. (NYSE: RS) today reported its financial results for the third quarter ended September 30, 2019 (in millions, except tons which are in thousands and per share amounts).Management Commentary
“We continued to execute our strategy of focusing on high levels of customer service across diverse products and end markets with increasing levels of value-added processing which once again produced strong financial results during the third quarter of 2019,” said Jim Hoffman, President and Chief Executive Officer of Reliance. “Demand was somewhat better than we had anticipated, which, along with outstanding performance by our managers in the field, generated quarterly net sales of $2.69 billion and a gross profit margin of 30.3%. Despite metal prices declining more than we had anticipated, our managers’ disciplined focus on high quality, high margin business, coupled with increased levels of value-added processing requested by our customers, enabled us to maintain a FIFO gross profit margin in-line with the second quarter of 2019 at 28.8%. We believe our third quarter 2019 financial results, including diluted earnings per share of $2.40, an increase of 18.2% year-over-year, further highlight our unique business model and improved earnings power as well as our increased resilience to fluctuations in metal pricing. Looking ahead, we will maintain our focus on maximizing earnings and delivering long-term shareholder value.”End Market Commentary
The Company’s shipments were higher than anticipated in the third quarter of 2019 as Reliance continued to benefit from its strategy of serving diverse end markets and providing a wide range of products and processing services, generally in small quantities on a just-in-time basis. While the Company experienced the typical seasonal slowdown during the third quarter resulting from customer shutdowns and vacation schedules, Reliance’s shipments in the third quarter of 2019 decreased only 2.0% compared to the second quarter of 2019, outpacing the Company’s expectations of a more typical seasonal decline of 4% to 6%.While shipment levels across all of Reliance’s major commodity groups were better than anticipated, the overall higher shipment levels were primarily due to increased demand in the non-residential construction (including infrastructure) market during the third quarter of 2019. Demand for the products and services Reliance provides to the aerospace and automotive markets remained strong. Reliance maintains its positive outlook for these end markets and continues to invest in growing its capabilities in these areas.Demand in the energy (oil and gas) market remains at low levels, which the Company expects to continue for the remainder of fiscal 2019.Balance Sheet & Cash Flow
Reliance ended the third quarter of 2019 with total debt outstanding of $1.65 billion, a decrease of $367.5 million compared to total debt outstanding of $2.02 billion at June 30, 2019. At September 30, 2019, Reliance’s net debt-to-total capital ratio was 22.6% compared to 27.4% at June 30, 2019. The Company had $1.05 billion available for borrowings on its $1.5 billion revolving credit facility at September 30, 2019. Reliance generated cash flow from operations of $490.9 million during the third quarter of 2019 and $954.1 million in the first nine months of 2019.“We remain very pleased with our overall financial position resulting from our strong profitability and effective working capital management including a focused reduction in inventory levels,” commented Karla Lewis, Senior Executive Vice President and Chief Financial Officer of Reliance. “We generated significant cash flow from operations during the quarter which allowed us to concurrently continue investing in the growth of our business, pay down debt, and return value to our stockholders. In the third quarter of 2019, we invested $58.9 million in capital expenditures, reduced our debt balance by $367.5 million and paid $36.8 million in quarterly cash dividends. We are very well positioned to continue executing all of our capital allocation strategies going forward.”Stockholder Return Activity
On October 22, 2019, the Board of Directors declared a quarterly cash dividend of $0.55 per share of common stock, payable on December 6, 2019 to stockholders of record as of November 15, 2019. Reliance has paid regular quarterly dividends for 60 consecutive years and has increased the dividend 26 times since its 1994 IPO.Reliance did not repurchase any shares of its common stock in the third quarter of 2019. In the first nine months of 2019, Reliance repurchased $50.0 million of its common stock at an average cost of $84.33 per share. At September 30, 2019, approximately 6.4 million shares remained available for repurchase under the Company’s stock repurchase program. Reliance expects to continue efficiently repurchasing shares of its common stock going forward.Corporate Developments
As previously announced, on October 22, 2019, Gregg Mollins, Reliance’s former President and Chief Executive Officer, stepped down from the Board of Directors. Mr. Mollins will continue to serve as Senior Advisor to the Chief Executive Officer until his retirement in December 2019.Jim Hoffman, the Company’s current President and Chief Executive Officer, was appointed to serve as a member of the Board upon Mr. Mollins’ resignation. In addition, Lisa Baldwin was appointed to serve as an independent director on Reliance’s Board, effective October 3, 2019. Ms. Baldwin has over 24 years of experience in the information technology field and currently serves as the Chief Information Officer of Tiffany & Co. Both Mr. Hoffman’s and Ms. Baldwin’s term as a director will expire at Reliance’s 2020 Annual Meeting of Stockholders.Business Outlook
Reliance management remains optimistic about business conditions in the fourth quarter of 2019. The Company expects that end demand in the fourth quarter of 2019 will remain relatively steady, excluding the impact of normal seasonal patterns, which generally includes a decline in shipping volume due to customer holiday-related shutdowns and fewer shipping days compared to the third quarter of 2019. As a result, the Company estimates tons sold will be down 4% to 7% in the fourth quarter of 2019 compared to the third quarter of 2019. The Company also expects that overall metals pricing will remain near current levels which is estimated to result in its average selling price per ton sold for the fourth quarter of 2019 declining 2% to 3% compared to the third quarter of 2019. Based on these expectations, Reliance management currently anticipates non-GAAP earnings per diluted share in the range of $1.60 to $1.70 for the fourth quarter of 2019.Conference Call Details
A conference call and simultaneous webcast to discuss Reliance’s third quarter 2019 financial results and business outlook will be held today, October 24, 2019 at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To listen to the live call by telephone, please dial (877) 407-0792 (U.S. and Canada) or (201) 689-8263 (International) approximately 10 minutes prior to the start time and use conference ID: 13695107. The call will also be broadcast live over the Internet hosted on the Investors section of the Company’s website at investor.rsac.com.For those unable to participate during the live broadcast, a replay of the call will also be available beginning that same day at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on Thursday, November 7, 2019 by dialing (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (International) and entering the conference ID: 13695107. The webcast will remain posted on the Investors section of Reliance’s website at investor.rsac.com for 90 days.About Reliance Steel & Aluminum Co.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, California, is the largest metals service center company in North America. Through a network of more than 300 locations in 40 states and thirteen countries outside of the United States, Reliance provides value-added metals processing services and distributes a full line of over 100,000 metal products to more than 125,000 customers in a broad range of industries. Reliance focuses on small orders with quick turnaround and increasing levels of value-added processing. In 2018, Reliance’s average order size was $2,130, approximately 49% of orders included value-added processing and approximately 40% of orders were delivered within 24 hours. Reliance Steel & Aluminum Co.’s press releases and additional information are available on the Company’s website at www.rsac.com. Forward-Looking Statements
This press release contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, discussions of Reliance’s industry, end markets, business strategies and expectations concerning future demand and metals pricing and the Company’s results of operations, margins, profitability, impairment charges, taxes, liquidity, litigation matters and capital resources. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “preliminary,” “range” and “continue,” the negative of these terms, and similar expressions.These forward-looking statements are based on management’s estimates, projections and assumptions as of today’s date that may not prove to be accurate. Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements as a result of various important factors, including, but not limited to, those disclosed in reports Reliance has filed with the United States Securities and Exchange Commission (the “SEC”). As a result, these statements speak only as of the date that they are made, and Reliance disclaims any and all obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important risks and uncertainties about Reliance’s business can be found in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC.
Brenda Miyamoto
Investor Relations
(213) 576-2428
investor@rsac.comor Addo Investor Relations
(310) 829-5400(Tables to follow)
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