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

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 at December 31, 2011

807.7

896.2

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, net 45.2 41.9
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 short-term borrowings 83.6 12.2
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, 2011, stated capital

722.2

657.1

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 amortization shown below)

1,364.6 1,558.9 6,235.4 6,148.7
Warehouse, delivery, selling, general and administrative

346.4

328.3

1,396.2

1,280.1

Depreciation and amortization   42.2     34.4     151.5     133.1  
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) income, net   (0.3 )   0.8     8.6     (1.4 )
Income before income taxes 121.3 98.4 609.4 511.6
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 noncontrolling interests  

0.4

   

1.2

   

4.8

   

5.4

 
Net income attributable to Reliance $ 80.4   $ 67.9   $ 403.5   $ 343.8  
 
Earnings per share:
Diluted earnings per common share attributable to Reliance shareholders

$

1.06

 

$

0.91

 

$

5.33

 

$

4.58

 
 
Basic earnings per common share attributable to Reliance shareholders

$

1.06

 

$

0.91

 

$

5.36

 

$

4.60

 
 
Cash dividends per share $ 0.25   $ 0.12   $ 0.80   $ 0.48  
 

* 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 investments 4.0 5.5
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 acquired (166.9 ) (313.3 )
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 policies   2.9     3.6  
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 metals service centers $ 59.4 $ 104.7
 

* Amounts were derived from audited financial statements.

 




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