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

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.

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