EX-99 3 a4494415_ex991.txt RELIANCE STEEL EXHIBIT 99.1 EXHIBIT 99.1 Reliance Steel & Aluminum Co. Reports 2003 Third Quarter and Year-to-Date Results; Net Income Up 24%; EPS Up 26%; Sales Up 8% for the Quarter LOS ANGELES--(BUSINESS WIRE)--Oct. 16, 2003--Reliance Steel & Aluminum Co. (NYSE:RS) today reported its financial results for the three and nine-months ended September 30, 2003. For the fiscal year 2003 third quarter, net income was $12.4 million, an increase of 24% compared with net income of $10.0 million for the three months ended September 30, 2002. Earnings per diluted share were $.39, up 26% for the third quarter of 2003, compared with earnings of $.31 per diluted share for the 2002 third quarter. Sales for the 2003 third quarter totaled $490.6 million, an increase of 8% compared with 2002 third quarter sales of $454.8 million. For the nine-months ended September 30, 2003, net income amounted to $24.3 million, compared with net income of $28.2 million for the same period in 2002. Earnings per diluted share were $.77 for the nine-months ended September 30, 2003, compared with earnings of $.89 per diluted share for the nine-months ended September 30, 2002. Sales for the 2003 year-to-date period were $1.4 billion, an increase of 7% compared with 2002 nine-month sales of $1.3 billion. David H. Hannah, Reliance's Chief Executive Officer, said, "Precision Strip, Inc., acquired on July 1, 2003, was an important contributor to our third quarter earnings. Additionally, our overall operating results from our other businesses improved over the prior quarters of 2003. This improvement was mostly the result of increased gross profit margins driven by a slight improvement in pricing and lower costs for many of our products during the quarter." "Net income and earnings per diluted share amounts improved 93% and 95%, respectively, from the 2003 second quarter. Our gross profit margins improved to 27.8% from 26.2% in the second quarter. We also produced strong cash flow, paid down debt, controlled costs and increased inventory turns during the third quarter. Our working capital management has resulted in a strong balance sheet. We are indeed positioned better than ever to prosper when the economic recovery accelerates and expands into the industrial economy," Hannah added. "While we have not yet seen a significant and consistent change in either market conditions or the operating environment, we do believe that the business atmosphere is currently more conducive to improved conditions. However, the fourth quarter has historically not been known for positive growth, mainly due to the reduced number of shipping days caused by the Holidays. In 2002, we experienced more extended plant closures at the customer level during the fourth quarter than in prior years, and we are expecting similar events in the 2003 fourth quarter. With that in mind, we anticipate the earnings per diluted share amount for the 2003 fourth quarter to be within a range of $.25 to $.30," concluded Hannah. On July 1, 2003, the Company purchased all of the stock of Precision Strip, Inc., and its related entity for $220 million in cash, plus the assumption of approximately $26 million of debt. Precision Strip was founded in 1977 and is headquartered in Minster, Ohio with eight facilities located in four states. The acquisition was funded with borrowings on Reliance's existing $335 million syndicated bank line of credit and a new private placement of $135 million of senior secured notes. At September 30, 2003, the Company's net-debt-to-total capital ratio was 43.9%. Precision Strip's sales for the fiscal year ended December 31, 2002 were $121.8 million. Precision Strip now operates as a wholly owned subsidiary of Reliance. Precision Strip's processing activities consist primarily of slitting and blanking flat-rolled products and include approximately 65% carbon steel, 20% aluminum and 15% stainless steel products on a "toll" basis, processing the metal for a fee, without taking ownership of the metal. Precision Strip's customers include carbon steel, stainless steel and aluminum mills, as well as companies in the automotive, appliance, metal furniture and capital goods industries. On July 23, 2003, the Company announced its regular quarterly cash dividend payment of $.06 per share of common stock. The 2003 third quarter cash dividend was paid on August 22, 2003 to shareholders of record August 1, 2003. 2003 marks the 43rd consecutive year that Reliance has paid quarterly dividends to its shareholders. The Company was also proud to announce that it was named to the 2003 Forbes Platinum 400 List of America's Best Big Companies and ranked No. 1 in sales (five-year average) in the metals industry category and has also been named to the 2002, 2001 and 2000 lists. Reliance will host a conference call that will be broadcast live over the Internet (listen only mode) regarding the third quarter and nine-months financial results for the period ended September 30, 2003. All interested parties are invited to listen to the web cast on October 16, 2003 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 November 16, 2003 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 107 processing and distribution centers in 29 states and Belgium, France and South Korea, the Company provides value-added metals processing services and distributes a full line of over 85,000 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 85,000 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. 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 Nine Months Ended September 30, Ended September 30, ------------------ ------------------ 2003 2002 2003 2002 ---- ---- ---- ---- Income Statement Data: Net sales $490,587 $454,840 $1,397,739 $1,310,492 Gross profit 136,210 125,519 374,985 363,107 Operating income 28,513 22,082 57,839 62,546 EBITDA (1) 39,449 29,613 85,331 84,821 EBIT (1) 28,326 22,248 59,172 63,524 Pre-tax income 20,364 16,499 40,093 46,738 Net income 12,353 9,965 24,324 28,230 EPS - diluted $.39 $.31 $.77 $.89 Weighted average shares outstanding -- diluted 31,857,794 31,815,003 31,785,626 31,816,566 Gross margin 27.8% 27.6% 26.8% 27.7% Operating margin 5.8% 4.9% 4.1% 4.8% EBITDA margin (1) 8.0% 6.5% 6.1% 6.5% EBIT margin (1) 5.8% 4.9% 4.2% 4.8% Pre-tax margin 4.2% 3.6% 2.9% 3.6% Net margin 2.5% 2.2% 1.7% 2.2% Cash dividends per share $.06 $.06 $.18 $.18 Sept. 30, Dec. 31, 2003 2002 ---- ---- Balance Sheet Data: Current assets $565,048 $532,544 Working capital 330,213 389,620 Net fixed assets 469,673 306,189 Total assets 1,391,812 1,139,247 Current liabilities 234,835 142,924 Long-term debt 483,655 344,080 Shareholders' equity 632,241 609,854 Capital expenditures 13,433 18,658 Net debt-to-total capital (2) 43.9% 35.5% Return on equity (3) 4.3% 5.2% Current ratio 2.4 3.7 Book value per share $19.83 $19.21 Cash flow from operations per share (4) $3.75 $2.85 (1) See Consolidated Statements of Income for reconciliation of EBIT and EBITDA. (2) Net debt-to-total capital is calculated as total debt (net of cash) divided by shareholders' equity plus total debt (net of cash). (3) Return on equity calculation is based on latest twelve months. (4) 2003 cash flow from operations per share calculation is based on latest twelve months. RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED BALANCE SHEETS (In thousands except share amounts) ASSETS Sept. 30, Dec. 31, 2003 2002 ---- ---- Current assets: (Unaudited) Cash and cash equivalents $11,183 $$9,305 Accounts receivable, less allowance for doubtful accounts of $6,137 at September 30, 2003 and $5,158 at December 31, 2002 233,468 190,191 Inventories 292,514 307,385 Prepaid expenses and other current assets 12,929 10,874 Deferred income taxes 14,954 14,789 ---------- ---------- Total current assets 565,048 532,544 Property, plant and equipment, at cost: Land 57,088 52,469 Buildings 253,657 180,995 Machinery and equipment 346,273 237,912 Accumulated depreciation (187,345) (165,187) ---------- ---------- 469,673 306,189 Goodwill 333,026 284,276 Other assets 24,065 16,238 ---------- ---------- Total assets $1,391,812 $1,139,247 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $132,328 $77,511 Accrued expenses 54,888 40,894 Wages and related accruals 21,185 20,160 Deferred income taxes 4,034 4,034 Current maturities of long-term debt 22,400 325 ---------- ---------- Total current liabilities 234,835 142,924 Long-term debt 483,655 344,080 Deferred income taxes 31,193 31,672 Minority interest 9,888 10,717 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 31,855,747 at September 30, 2003 and 31,752,087 at December 31, 2002, stated capital 297,017 294,503 Retained earnings 335,955 317,189 Accumulated comprehensive loss (731) (1,838) ---------- ---------- Total shareholders' equity 632,241 609,854 ---------- ---------- Total liabilities and shareholders' equity $1,391,812 $1,139,247 ========== ========== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share amounts) Three Months Nine Months Ended Sept. 30, Ended Sept. 30, ---------------- --------------- 2003 2002 2003 2002 ---- ---- ---- ---- Net sales $490,587 $454,840 $1,397,739 $1,310,492 Cost of sales 354,377 329,321 1,022,754 947,385 ---------- ---------- ---------- ---------- Gross profit 136,210 125,519 374,985 363,107 Operating expenses Warehouse, delivery, selling, general and administrative 100,198 96,375 295,228 280,297 Depreciation 7,499 7,062 21,918 20,264 ---------- ---------- ---------- ---------- Income from operations 28,513 22,082 57,839 62,546 Other income (expense): Interest expense (7,962) (5,749) (19,079) (16,786) Amortization expense (872) (303) (1,489) (1,033) Other income, net 585 384 2,289 1,620 ---------- ---------- ---------- ---------- Income before equity in earnings of 50%-owned company, minority interest and income taxes 20,264 16,414 39,560 46,347 Equity in earnings of 50%- owned company -- -- -- 263 Minority interest 100 85 533 128 ---------- ---------- ---------- ---------- Income before provision for income taxes 20,364 16,499 40,093 46,738 Provision for income taxes 8,011 6,534 15,769 18,508 ---------- ---------- ---------- ---------- Net income $12,353 $9,965 $24,324 $28,230 ========== ========== ========== ========== Earnings per share - diluted $.39 $.31 $.77 $.89 ========== ========== ========== ========== Weighted average shares outstanding - diluted 31,857,794 31,815,003 31,785,626 31,816,566 ========== ========== ========== ========== Earnings per share - basic $.39 $.31 $.77 $.89 ========== ========== ========== ========== Weighted average shares outstanding - basic 31,815,214 31,719,972 31,779,325 31,665,281 ========== ========== ========== ========== Cash dividends per share $.06 $.06 $.18 $.18 ========== ========== ========== ========== Reconciliation of EBIT and EBITDA Income before provision for income taxes $20,364 $16,499 $40,093 $46,738 Interest expense 7,962 5,749 19,079 16,786 ---------- ---------- ---------- ---------- EBIT $28,326 $22,248 $59,172 $63,524 ========== ========== ========== ========== Depreciation 7,499 7,062 21,918 20,264 Depreciation included in cost of sales 2,752 -- 2,752 -- Amortization expense 872 303 1,489 1,033 ---------- ---------- ---------- ---------- EBITDA $39,449 $29,613 $85,331 $84,821 ========== ========== ========== ========== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended September 30, ----------------- 2003 2002 ---- ---- Operating activities: Net income $24,324 $28,230 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 26,159 21,297 Deferred taxes (165) -- (Gain) loss on sales of machinery and equipment (764) 183 Equity in earnings of 50%-owned company -- (263) Minority interest (533) 41 Other comprehensive income -- (381) Changes in operating assets and liabilities: Accounts receivable (23,316) (26,261) Inventories 15,561 16,744 Prepaid expenses and other assets (2,542) (1,643) Accounts payable and accrued expenses 60,754 32,972 --------- --------- Net cash provided by operating activities 99,478 70,917 Investing activities: Purchases of property, plant and equipment, net (13,433) (12,426) Proceeds from sales of property and equipment 2,896 331 Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired and debt assumed (245,850) (53,318) Dividends received from 50%-owned company -- 444 --------- --------- Net cash used in investing activities (256,387) (64,969) Financing activities: Proceeds from borrowings 262,195 96,825 Principal payments on long-term debt and short-term borrowings (100,545) (100,155) Payments to minority shareholders (378) (2,251) Dividends paid (5,719) (5,700) Issuance of common stock 2,675 4,241 --------- --------- Net cash provided by (used in) financing activities 158,228 (7,040) Effect of exchange rate changes on cash 559 438 --------- --------- Increase (decrease) in cash and cash equivalents 1,878 (654) Cash and cash equivalents at beginning of period 9,305 9,931 --------- --------- Cash and cash equivalents at end of period $11,183 $9,277 --------- --------- Supplemental cash flow information: Interest paid during the period $12,511 $11,609 Income taxes paid during the period $4,014 $18,689 CONTACT: Reliance Steel & Aluminum Co. Kim P. Feazle Investor Relations 713-610-9937 213-576-2428 kfeazle@rsac.com investor@rsac.com