Reliance Steel & Aluminum Co. Reports 2012 Fourth Quarter and Full Year Financial Results

  Reliance Steel & Aluminum Co. Reports 2012 Fourth Quarter and Full Year
  Financial Results

  *Fourth Quarter EPS of $1.06, up 16.5% year-over-year
  *Anticipates First Quarter 2013 EPS of $1.05 - $1.15
  *Dividend Increased 20% to $.30 per Quarter

Business Wire

LOS ANGELES -- February 21, 2013

Reliance Steel & Aluminum Co. (NYSE:RS) today reported its financial results
for the fourth quarter and full year ended December 31, 2012.

Fourth Quarter 2012 Financial Highlights

  *Sales were $1.89 billion, down 7.1% from $2.03 billion in the fourth
    quarter of 2011 and down 8.1% from $2.06 billion in the third quarter of
    2012. Tons sold were down 3.9% from the fourth quarter of 2011 and down
    8.3% from the third quarter of 2012.
  *Net income was $80.4 million, up 18.4% from $67.9 million in the fourth
    quarter of 2011 and down 18.0% from $98.1 million in the third quarter of
    2012.
  *Earnings per diluted share were $1.06, up 16.5% from $0.91 in the fourth
    quarter of 2011 and down 18.5% from $1.30 in the third quarter of 2012.
  *A pre-tax LIFO credit, or income, of $37.1 million, is included in cost of
    sales compared to a pre-tax LIFO charge, or expense, of $17.8 million for
    the fourth quarter of 2011 and a credit of $27.0 million for the third
    quarter of 2012.
  *Cash flow from operations was $333.1 million in the 2012 fourth quarter,
    up from $217.5 million in the 2011 fourth quarter.
  *A quarterly cash dividend of $0.30 per share was declared on February 19,
    2013 for shareholders of record as of March 1, 2013. This represents a 20%
    increase.

Full Year 2012 Financial Highlights

  *Sales were $8.44 billion, up 3.8% from $8.13 billion in 2011. Tons sold
    increased 5.4% from the prior year.
  *Net income was $403.5 million, up 17.4% from $343.8 million in 2011.
  *Earnings per diluted share were $5.33, up 16.4% from $4.58 in 2011.
  *A pre-tax LIFO credit, or income, of $64.1 million, is included in cost of
    sales for 2012 compared to a pre-tax LIFO charge, or expense, of $85.3
    million for 2011.
  *Cash flow from operations was $601.9 million in 2012, up from $234.8
    million in 2011.

Management Commentary

“Our fourth quarter results reflect the impact of continued global economic
uncertainty on our industry coupled with normal seasonal trends including
fewer shipping days as a result of the holiday season and extended
holiday-related closures by various customers. However, our average price per
ton sold held steady on a sequential quarter basis in our fourth quarter,
allowing us to improve our gross profit margin. Our LIFO credit in the 2012
fourth quarter boosted our margins, but more importantly, our local managers
were able to improve our FIFO gross profit margins as demand declined,” said
David H. Hannah, Chairman and CEO of Reliance.

Mr. Hannah continued, “In February 2013, we announced our agreement to acquire
Metals USA for approximately $1.2 billion in an all cash transaction. Metals
USA will be our largest acquisition to date and nicely complements Reliance’s
existing customer base, product mix and geographic footprint. We expect to
close the transaction in the 2013 second quarter and it is expected to be
immediately accretive upon closing. Metals USA has demonstrated consistent
performance with solid returns and we believe that the combined company will
be well positioned to continue to outperform the broader metals service center
industry.”


Fourth Quarter 2012 Business Metrics
(tons in thousands)
                                    Sequential            
               Q4          Q3          Quarter      Q4          Year-Over-Year
             2012       2012       Change      2011       change
Tons sold      1,014.5   1,105.9  (8.3   %)    1,055.7  (3.9     %)
Tons sold      972.7     1,073.0  (9.3   %)    1,024.6  (5.1     %)
(same store)
                                                      
Avg. price    $ 1,847    $ 1,848    (0.1   %)   $ 1,927    (4.2     %)
per ton sold



Fourth Quarter 2012 Major Commodity Metrics
                                                            Average Selling Price
                                                              per Ton
          Tons Sold (tons in thousands; percent change)     Sold (percent change)
                          Sequential         Year-Over-   Sequential 
            Q4      Q3      Quarter      Q4      Year         Quarter      Year-Over-
            2012    2012                 2011                              Year
          Tons   Tons   Change      Tons   Change       Change      Change
            Sold    Sold                 Sold
Carbon     800.1  887.1  (9.8   %)   844.4  (5.2   %)    (1.7   %)   (7.5   %)
steel
Aluminum   57.1   59.4   (3.9   %)   54.8   4.2    %     1.6    %    (2.3   %)
Stainless  55.6   58.6   (5.1   %)   52.3   6.3    %     (3.8   %)   (8.0   %)
steel
Alloy      71.6   73.8   (3.0   %)   78.7   (9.0   %)    0.3    %    0.1    %


            
            Sales ($ in millions; percent change)
                                     Sequential              
                                        Quarter                    Year-Over-
            Q4 2012    Q3 2012      Change      Q4 2011      Year Change
              Sales       Sales                      Sales
Carbon       $  948.0   $  1,069.5   (11.4  %)   $  1,081.1   (12.3   %)
steel
Aluminum     $  315.8   $  323.3     (2.3   %)   $  310.0     1.9     %
Stainless    $  281.9   $  308.9     (8.7   %)   $  288.4     (2.3    %)
steel
Alloy        $  225.6   $  231.8     (2.7   %)   $  248.0     (9.0    %)



Full-Year 2012 Business Metrics
(tons in thousands)
                                               Year-
                                                  Over-Year
                        2012       2011       change
Tons sold                 4,440.3   4,213.5  5.4   %
Tons sold (same store)    4,299.1   4,157.0  3.4   %
                                            
Avg. price per ton sold  $ 1,894    $ 1,930    (1.9  %)



Full-Year 2012 Major Commodity Metrics
                                                          Average Selling
                                                            Price per
              Tons Sold (tons in thousands; percent       Ton Sold (percent
                change)                                     change)
                2012 Tons     2011 Tons   Year-Over-      Year-Over-Year
              Sold          Sold        Year Change     Change
Carbon steel   3,545.7       3,423.9     3.6      %      (3.7       %)
Aluminum       241.5         228.1       5.9      %      (2.1       %)
Stainless      234.1         207.0       13.1     %      (7.2       %)
steel
Alloy          310.2         268.9       15.4     %      4.1        %


                
                Sales ($ in millions; percent change)
                                         Year-Over-
                2012 Sales  2011 Sales  Year Change
Carbon steel     $  4,390.7  $  4,403.6  (0.3    %)
Aluminum         $  1,340.6  $  1,293.4  3.6     %
Stainless steel  $  1,241.3  $  1,183.4  4.9     %
Alloy            $  988.1    $  822.6    20.1    %


End-market Commentary

Relative strength in aerospace, energy (oil and gas), farm and heavy
equipment, and auto (through the Company’s toll processing business), continue
to offset weakness in non-residential construction.

  *Aerospace continued to be a strong end market for the Company during 2012,
    with strength in both demand and pricing. The Company expects the
    aerospace market to continue at strong levels and improve as the Company
    progresses into 2013.
  *Energy (oil and gas) continues to be among the Company’s strongest end
    markets, even though current demand levels are below those of a year ago.
    Demand and pricing for the products we sell are expected to remain solid
    in 2013.
  *Heavy industry was a relatively strong end market for us in 2012, albeit
    with some slowing beginning in mid-2012, due partly to increasingly
    conservative inventory management among industry OEM’s, as well as a
    general slowing in the industrial economy.
  *Automotive, supported by the Company’s toll processing businesses in the
    U.S. and Mexico, exhibited continued strong demand in 2012 and achieved a
    Company record for tons processed for the full year. Reliance anticipates
    continued strength in auto in 2013.
  *Non-residential construction continued to show modest signs of a recovery,
    although still at significantly reduced demand levels from its peak in
    2006. In 2012, North American industrial construction related to
    manufacturing and energy continued to exhibit the most improvement.

Balance Sheet & Liquidity

As of December 31, 2012, total debt outstanding at quarter end was $1.21
billion, or a net debt-to-total capital ratio of 23.8%. The Company currently
has about $1 billion available on its $1.5 billion credit facility. The
Company is pleased with its overall financial position and strong cash flow in
2012 and believes it has sufficient liquidity and financial flexibility. To
fund the announced acquisition of Metals USA, including the refinancing of
Metals USA’s existing debt, Reliance intends to access the bank credit market
and debt capital market for additional capital. Pro forma for the Metals USA
acquisition, net debt-to-total capital is expected to be approximately 42%, in
line with the Company’s targeted financial profile. During the fourth quarter,
the Company generated $333.1 million in cash flow from operating activities.
For the full year, the Company generated $601.9 million in cash flow from
operating activities.

Corporate Developments

On February 6, 2013, Reliance announced a definitive merger agreement whereby
Reliance will acquire all outstanding shares of Metals USA Holdings Corp.
(“Metals USA”) for $20.65 per share in cash, which, along with the assumption
of Metals USA’s debt represents an enterprise value of approximately $1.2
billion. The transaction is expected to close in the second quarter of 2013,
subject to certain regulatory approvals. Metals USA’s unaudited assets and
sales as of December 31, 2012 and for the year then ended were approximately
$1.0 billion and $2.0 billion, respectively.

On February 19, 2013, the Board of Directors declared a regular quarterly cash
dividend of $0.30 per share of common stock, an increase of 20%. The dividend
is payable on March 22, 2013 to shareholders of record March 1, 2013. The
Company has increased its dividend 19 times since its initial public offering
in 1994 and has paid regular quarterly dividends for 53 consecutive years.

Business Outlook

The Company expects that global economic and political uncertainty will
continue to negatively impact the industry in the 2013 first quarter,
pressuring both demand and pricing. However, the Company’s January tons sold
improved modestly from the 2012 fourth quarter and pricing has been generally
stable so far. As a result, for the first quarter ending March 31, 2013,
management currently expects earnings per diluted share to be in the range of
$1.05 to $1.15.

Conference Call Details

A conference call and simultaneous webcast to discuss fourth quarter and full
year financial results and business outlook will be held today, February 21,
2013, at 11:00 a.m. Eastern / 8:00 a.m. Pacific. David Hannah, Reliance Steel
& Aluminum Co.’s Chairman of the Board and Chief Executive Officer; Gregg
Mollins, President and Chief Operating Officer; and Karla Lewis, Executive
Vice President and Chief Financial Officer, will host the call. To listen to
the live call by telephone, please dial (888) 267-2845 (U.S. and Canada) or
(973) 413-6102 (International) approximately 10 minutes prior to the start
time and use the conference entry code: 1799. Additionally, a live webcast of
the call will be available on Reliance Steel & Aluminum Co.’s web site at
www.rsac.com. Participants are encouraged to visit the web site at least 15
minutes prior to the start of the call to register and to download and install
any necessary audio software.

For those unable to participate during the live broadcast, a replay of the
call will also be available beginning that same day at 1:30 p.m. Eastern Time
until 11:59 p.m. Eastern Time on Thursday, March 7, 2013 by dialing (973)
528-0005 and entering the conference entry code: 1799. The webcast will remain
posted on the investor relations portion of Reliance’s web site at
www.rsac.com for 30 days.

About Reliance Steel & Aluminum Co.

Reliance Steel & AluminumCo., headquartered in Los Angeles, California, is
the largest metals service center company in North America. Through a network
of more than 240 locations in 38 states and Australia, Belgium, Canada, China,
Malaysia, Mexico, Singapore, South Korea, the U.A.E. and the United Kingdom,
the Company 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 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 2012 “Fortune 500” List and the 2012 Fortune List of “The World’s Most
Admired Companies.”

Forward-Looking Statements

This release may contain forward-looking statements. Actual results and events
may differ materially as a result of a variety of factors, many of which are
outside of Reliance Steel & Aluminum Co.’s control. Risk factors and
additional information are included in Reliance Steel & Aluminum Co.’s reports
on file with the Securities and Exchange Commission, including Reliance Steel
& AluminumCo.’s Annual Report on Form 10-K for the year ended December 31,
2011 and Quarterly Reports on Form 10-Q for the quarters ended March31, 2012,
June 30, 2012 and September 30, 2012.


RELIANCE STEEL & ALUMINUM CO.
SELECTED UNAUDITED FINANCIAL DATA
(in millions, except share and per share amounts)

              Three Months                     Twelve Months
               Ended December 31,                Ended December 31,
               2012            2011             2012            2011^*
Income
Statement
Data:
Net sales      $ 1,889.0        $ 2,033.9        $ 8,442.3        $ 8,134.7
Gross            524.4            475.0            2,206.9          1,986.0
profit^1
Operating        135.8            112.3            659.2            572.8
income
Pre-tax          121.3            98.4             609.4            511.6
income
Net income
attributable     80.4             67.9             403.5            343.8
to Reliance
Diluted
earnings per
share          $ 1.06           $ 0.91           $ 5.33           $ 4.58
attributable
to Reliance
shareholders
Weighted
average
shares           76,124,260       75,026,062       75,694,212       75,041,753
outstanding
– diluted
Gross profit     27.8       %     23.4       %     26.1       %     24.4       %
margin^1
Operating
income           7.2        %     5.5        %     7.8        %     7.0        %
margin
Pre-tax
income           6.4        %     4.8        %     7.2        %     6.3        %
margin
Net income
margin –         4.3        %     3.3        %     4.8        %     4.2        %
Reliance
Cash
dividends      $ 0.25           $ 0.12           $ 0.80           $ 0.48
per share



                                           December 31,  December 31,
                                            2012           2011^*
Balance Sheet and Other Data:
Current assets                              $  2,277.4     $  2,274.7
Working capital                                1,699.2        1,698.3
Property, plant and equipment, net             1,240.7        1,105.5
Total assets                                   5,857.7        5,605.9
Current liabilities                            578.2          576.4
Long-term debt                                 1,123.8        1,319.0
Total Reliance shareholders’ equity            3,558.4        3,143.9
Capital expenditures                           214.0          156.4
Cash provided by operations                    601.9          234.8
Net debt-to-total capital^2                    23.8    %      28.4    %
Return on Reliance shareholders’ equity^3      12.8    %      12.2    %
Current ratio                                  3.9            3.9
Book value per share^4                      $  46.82       $  41.92

^* Amounts were derived from audited financial statements.


____________________________

^1 Gross profit, calculated as net sales less cost of sales, and gross profit
margin, calculated as gross profit divided by net sales, are non-GAAP
financial measures as they exclude depreciation and amortization expense
associated with the corresponding sales. The majority of our orders are basic
distribution with no processing services performed. For the remainder of our
sales orders, we perform “first-stage” processing which is generally not labor
intensive as we are simply cutting the metal to size. Because of this, the
amount of related labor and overhead, including depreciation and amortization,
are not significant and are excluded from our cost of sales. Therefore, our
cost of sales is primarily comprised of the cost of the material we sell. We
use gross profit and gross profit margin as shown above as measures of
operating performance. Gross profit and gross profit margin are important
operating and financial measures, as fluctuations in our gross profit margin
can have a significant impact on our earnings. Gross profit and gross profit
margin, as presented, are not necessarily comparable with similarly titled
measures for other companies.

^2 Net debt-to-total capital is calculated as total debt (net of cash) divided
by total Reliance shareholders’ equity plus total debt (net of cash).

^3 Calculations are based on the latest twelve months net income attributable
to Reliance and beginning total Reliance shareholders’ equity.

^4 Book value per share is calculated as total Reliance shareholders’ equity
divided by outstanding common shares.


RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)

ASSETS
                                                  December 31,  December 31,
                                                   2012           2011*
Current assets:
Cash and cash equivalents                          $  97.6        $  84.6
Accounts receivable, less allowance for doubtful
accounts of $20.5 at December 31, 2012 and $22.2      807.7          896.2
at December 31, 2011
Inventories                                           1,272.3        1,212.8
Prepaid expenses and other current assets             40.9           47.8
Income taxes receivable                               28.4           --
Deferred income taxes                                30.5         33.3    
Total current assets                                  2,277.4        2,274.7
Property, plant and equipment:
Land                                                  155.6          145.8
Buildings                                             725.1          656.8
Machinery and equipment                               1,124.7        982.9
Accumulated depreciation                             (764.7  )     (680.0  )
                                                      1,240.7        1,105.5
                                                                  
Goodwill                                              1,314.6        1,244.3
Intangible assets, net                                936.5          895.9
Cash surrender value of life insurance policies,      45.2           41.9
net
Investments in unconsolidated entities                15.5           16.2
Other assets                                         27.8         27.4    
Total assets                                       $  5,857.7    $  5,605.9 
                                                                  
LIABILITIES AND EQUITY
                                                                  
Current liabilities:
Accounts payable                                   $  255.6       $  335.2
Accrued expenses                                      87.4           54.0
Accrued compensation and retirement costs             112.8          111.0
Accrued insurance costs                               38.8           42.1
Current maturities of long-term debt and              83.6           12.2
short-term borrowings
Income taxes payable                                 --           21.9    
Total current liabilities                             578.2          576.4
Long-term debt                                        1,123.8        1,319.0
Long-term retirement costs                            94.9           88.6
Other long-term liabilities                           27.1           30.1
Deferred income taxes                                 466.3          439.8
Commitments and contingencies
Equity:
Preferred stock, no par value:
Authorized shares — 5,000,000
None issued or outstanding                            --             --
Common stock, no par value:
Authorized shares — 200,000,000                                  
Issued and outstanding shares – 76,042,546 at
December 31, 2012 and 75,007,694 at December 31,      722.2          657.1
2011, stated capital
Retained earnings                                     2,837.7        2,495.6
Accumulated other comprehensive loss                 (1.5    )     (8.8    )
Total Reliance shareholders’ equity                   3,558.4        3,143.9
Noncontrolling interests                             9.0          8.1     
Total equity                                         3,567.4      3,152.0 
Total liabilities and equity                       $  5,857.7    $  5,605.9 

^* Amounts were derived from audited financial statements.



RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)

                        Three Months               Twelve Months
                         Ended December 31,          Ended December 31,
                         2012         2011          2012         2011^*
Net sales                $ 1,889.0     $ 2,033.9     $ 8,442.3     $ 8,134.7
                                                                   
Costs and expenses:
Cost of sales
(exclusive of
depreciation and           1,364.6       1,558.9       6,235.4       6,148.7
amortization shown
below)
Warehouse, delivery,
selling, general and       346.4         328.3         1,396.2       1,280.1
administrative
Depreciation and          42.2        34.4        151.5       133.1   
amortization
                           1,753.2       1,921.6       7,783.1       7,561.9
                                                                   
Operating income           135.8         112.3         659.2         572.8
                                                                   
Other income
(expense):
Interest                   (14.2   )     (14.7   )     (58.4   )     (59.8   )
Other (expense)           (0.3    )    0.8         8.6         (1.4    )
income, net
Income before income       121.3         98.4          609.4         511.6
taxes
Income tax provision      40.5        29.3        201.1       162.4   
Net income                 80.8          69.1          408.3         349.2
Less: Net income
attributable to           0.4         1.2         4.8         5.4     
noncontrolling
interests
Net income
attributable to          $ 80.4       $ 67.9       $ 403.5      $ 343.8   
Reliance
                                                                   
Earnings per share:
Diluted earnings per
common share             $ 1.06       $ 0.91       $ 5.33       $ 4.58    
attributable to
Reliance shareholders
                                                                   
Basic earnings per
common share             $ 1.06       $ 0.91       $ 5.36       $ 4.60    
attributable to
Reliance shareholders
                                                                   
Cash dividends per       $ 0.25       $ 0.12       $ 0.80       $ 0.48    
share

^* Amounts were derived from audited financial statements.



RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

                                                      Twelve Months Ended
                                                       December 31,
                                                       2012        2011^*
Operating activities:
Net income                                             $ 408.3      $ 349.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense                    151.5        133.1
Deferred income tax provision (benefit)                  2.8          (27.2  )
Gain on sales of property, plant and equipment           (2.9   )     (2.6   )
Equity in earnings of unconsolidated entities            (2.2   )     (2.2   )
Dividends received from unconsolidated entities          2.9          3.9
Share-based compensation expense                         23.0         21.3
Tax deficit from share-based compensation                0.4          0.3
Net loss from life insurance policies and other          4.0          5.5
investments
Changes in operating assets and liabilities
(excluding effects of businesses acquired):
Accounts receivable                                      123.1        (145.9 )
Inventories                                              (1.3   )     (231.0 )
Prepaid expenses and other assets                        (18.9  )     22.8
Accounts payable and other liabilities                  (88.8  )    107.6  
Net cash provided by operating activities                601.9        234.8
                                                                    
Investing activities:
Purchases of property, plant and equipment               (214.0 )     (156.4 )
Acquisitions of metals service centers, net of cash      (166.9 )     (313.3 )
acquired
Proceeds from sales of property, plant and equipment     8.2          9.0
Net investment in marketable securities                  (0.7   )     (8.5   )
Net investment in life insurance policies                (11.2  )     (9.0   )
Net proceeds from redemptions of life insurance         2.9        3.6    
policies
Net cash used in investing activities                    (381.7 )     (474.6 )
                                                                    
Financing activities:
Net short-term debt repayments                           (63.2  )     (104.7 )
Proceeds from long-term debt borrowings                  641.0        995.0
Principal payments on long-term debt                     (763.0 )     (606.6 )
Debt issuance costs                                      —            (7.3   )
Payments to noncontrolling interest holders              (3.1   )     (3.7   )
Dividends paid                                           (60.2  )     (35.9  )
Tax deficit from share-based compensation                (0.4   )     (0.3   )
Exercise of stock options                                42.1         11.1
Noncontrolling interests purchased                      (0.8   )    —      
Net cash (used in) provided by financing activities      (207.6 )     247.6
Effect of exchange rate changes on cash                 0.4        3.9    
Increase in cash and cash equivalents                    13.0         11.7
Cash and cash equivalents at beginning of year          84.6       72.9   
Cash and cash equivalents at end of year               $ 97.6      $ 84.6   
                                                                    
Supplemental cash flow information:
Interest paid during the year                          $ 58.7       $ 57.4
Income taxes paid during the year                      $ 245.7      $ 149.2
                                                                    
Non-cash investing and financing activities:
Debt assumed in connection with acquisitions of        $ 59.4       $ 104.7
metals service centers

^* Amounts were derived from audited financial statements.


Contact:

Reliance Steel & Aluminum Co.
Brenda Miyamoto, 213-576-2428
Investor Relations
investor@rsac.com
or
Addo Communications
310-829-5400
 
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