EX-99.1 3 a4576365_ex991.txt RELIANCE STEEL EXHIBIT 99.1 Exhibit 99.1 Reliance Steel & Aluminum Co. Reports 2003 Fiscal Year and Fourth Quarter Results; Net Income Up 13%; EPS Up 13%; Sales Up 8% for Fiscal 2003 LOS ANGELES--(BUSINESS WIRE)--Feb. 19, 2004--Reliance Steel & Aluminum Co. (NYSE:RS) today reported its financial results for the fiscal year and fourth quarter ended December 31, 2003. For the 2003 fiscal year, net income was $34.0 million, or $1.07 earnings per diluted share, up 13% compared with net income of $30.2 million, or $.95 earnings per diluted share, for the twelve months ended December 31, 2002. Sales for 2003 totaled $1.88 billion, up 8% compared with 2002 sales of $1.75 billion. For the 2003 fourth quarter, net income was $9.7 million, compared with net income of $1.9 million for the same period last year. Earnings per diluted share were $.30 for the fourth quarter of 2003 compared with earnings per diluted share of $.06 for the 2002 fourth quarter. Sales for the 2003 fourth quarter were up 12% to $485.2 million, compared with $434.5 million for the 2002 fourth quarter. Reliance's Chief Executive Officer, David H. Hannah, said, "Overall, we are very pleased with our 2003 fourth quarter performance. Our earnings were at the high end of our expectations in spite of a larger than anticipated LIFO charge of $.06 per share for the quarter. Business levels were significantly better than those in the 2002 fourth quarter. Our fiscal 2003 financial results improved from 2002, mainly as a result of the significant contribution from our acquisition of Precision Strip, Inc. in July 2003. "2003 was a difficult year that began with the continuation of low volumes and high metal prices and an extremely competitive marketplace. A slight increase in demand for our products began in September of 2003 and has continued into 2004. Additionally, after declining until late in the third quarter of 2003, the costs of most of the products that we sell started to increase rather significantly during the fourth quarter and are continuing to rise. We are working diligently to pass through these cost increases to our customers and to continue to improve our gross profit margins and inventory turns. We are committed to maximizing our operating profits and returns as we go forward into 2004," said Hannah. "Business activity, overall, has most definitely improved from the low levels experienced during the economic downturn that has negatively impacted our industry since the second half of 2000. While the industrial economy still has its challenges, most of the industries where we sell our products have begun to recover. Consequently, if the operating environment remains healthy, we anticipate meaningful improvements in sales volume, as demand increases and also in our selling prices, driven by the higher costs of the materials we sell. As a result of these cost increases, we expect our gross profit margins to be impacted by a sizable LIFO expense component in our cost of goods sold for the first quarter of 2004. With that in mind, we anticipate earnings per diluted share for the 2004 first quarter to be within a range of $.40 to $.45," concluded Hannah. During 2003, the Company acquired Precision Strip, Inc. that was founded in 1977 and is headquartered in Minster, Ohio, with eight facilities located in four states. Precision Strip operates as a wholly owned subsidiary of Reliance. The immediately accretive 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. Upon completion of the acquisition on July 1, 2003, the Company's net-debt-to-total capital ratio was 46.2%. At December 31, 2003, the net-debt-to-total capital ratio was 43.1%. The debt reduction was achieved through strong cash flow from operations totaling $3.34 per share. On October 22, 2003, the Company announced its regular quarterly cash dividend payment of $.06 per share of common stock. The 2003 fourth quarter cash dividend was paid on January 9, 2004, to shareholders of record December 5, 2003. Reliance has paid quarterly dividends to its shareholders for 43 continuous years. Reliance will host a conference call that will be broadcast live over the Internet (listen only mode) regarding the fourth quarter and fiscal year financial results for the period ended December 31, 2003. All interested parties are invited to listen to the web cast on February 19, 2004, 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 March 19, 2004, 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 106 processing and distribution centers in 30 states and Belgium, France and South Korea, the Company provides value-added metals processing services and distributes a full line of over 90,000 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 95,000 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 Twelve Months Ended December 31, Ended December 31, 2003 2002 2003 2002 ---- ---- ---- ---- Income Statement Data: Net sales $485,194 $434,513 $1,882,933 $1,745,005 Gross profit 130,167 113,647 505,152 476,754 Operating profit 22,291 7,728 80,130 70,275 EBITDA(1) 33,140 16,050 118,471 100,871 EBIT(1) 22,429 8,801 81,601 72,325 Pre-tax income 14,763 2,982 54,856 49,720 Net income 9,686 1,937 34,010 30,167 EPS - diluted $.30 $.06 $1.07 $.95 Weighted average shares outstanding -- diluted 32,215,680 31,795,337 31,866,334 31,798,801 Gross margin 26.8% 26.2% 26.8% 27.3% Operating profit margin 4.6% 1.8% 4.3% 4.0% EBITDA margin(1) 6.8% 3.7% 6.3% 5.8% EBIT margin(1) 4.6% 2.0% 4.3% 4.1% Pre-tax margin 3.0% 0.7% 2.9% 2.9% Net margin 2.0% 0.5% 1.8% 1.7% Cash dividends per share $.06 $.06 $.24 $.24 Balance Sheet Data: Current assets $544,586 $532,544 Working capital 341,762 389,620 Net fixed assets 466,871 306,189 Total assets 1,369,424 1,139,247 Current liabilities 202,824 142,924 Long-term debt 469,250 344,080 Shareholders' equity 647,619 609,854 Capital expenditures 20,909 18,658 Net debt-to-total capital(2) 43.1% 35.5% Return on equity 5.6% 5.2% Current ratio 2.7 3.7 Book value per share $20.10 $19.21 Cash flow from operations per share $3.34 $2.85 (1) See Consolidated Statements of Income for reconciliation of EBIT and EBITDA. EBIT is defined as the sum of income before interest expense and income taxes. EBITDA is defined as the sum of income before interest expense, income taxes, depreciation expense and amortization of intangibles. We believe that EBIT and EBITDA are commonly used as a measure of performance for companies in our industry and are frequently used by analysts, investors, lenders and other interested parties to evaluate a company's financial performance and its ability to incur and service debt. EBIT and EBITDA should not be considered as a measure of financial performance under accounting principles generally accepted in the United States. The items excluded from EBIT and EBITDA are significant components in understanding and assessing financial performance. EBIT or EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of operating performance or as a measure of liquidity. (2) Net debt-to-total capital is calculated as total debt (net of cash) divided by shareholders' equity plus total debt (net of cash). RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED BALANCE SHEETS (In thousands except share amounts) ASSETS December 31, 2003 2002 ---- ---- Current assets: Cash and cash equivalents $2,166 $9,305 Accounts receivable, less allowance for doubtful accounts of $4,716 in 2003 and $5,158 in 2002 221,793 190,191 Inventories 288,080 307,385 Prepaid expenses and other current assets 14,593 10,874 Deferred income taxes 17,954 14,789 ---------- ---------- Total current assets 544,586 532,544 Property, plant and equipment, at cost: Land 57,077 52,469 Buildings 256,708 180,995 Machinery and equipment 349,933 237,912 Accumulated depreciation (196,847) (165,187) ---------- ---------- 466,871 306,189 Goodwill 325,305 284,276 Other assets 32,662 16,238 ---------- ---------- Total assets $1,369,424 $1,139,247 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $98,438 $77,511 Accrued expenses 53,265 40,894 Wages and related accruals 22,696 20,160 Deferred income taxes 6,025 4,034 Current maturities of long-term debt 22,400 325 ---------- ---------- Total current liabilities 202,824 142,924 Long-term debt 469,250 344,080 Deferred income taxes 40,349 31,672 Minority interest 9,382 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 32,225,872 in 2003 and 31,752,087 in 2002, stated capital 303,587 294,503 Retained earnings 344,962 317,189 Accumulated other comprehensive loss (930) (1,838) ---------- ---------- Total shareholders' equity 647,619 609,854 ---------- ---------- Total liabilities and shareholders' equity $1,369,424 $1,139,247 ========== ========== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share amounts) Three Months Twelve Months Ended December 31, Ended December 31, 2003 2002 2003 2002 ---- ---- ---- ---- Net sales $485,194 $434,513 $1,882,933 $1,745,005 Other income 548 1,646 2,837 3,266 ---------- ---------- ---------- ---------- 485,742 436,159 1,885,770 1,748,271 Costs and expenses: Cost of sales 355,027 320,866 1,377,781 1,268,251 Warehouse, delivery, selling, general and administrative 100,699 98,991 395,927 379,288 Depreciation and amortization 7,992 7,249 31,399 28,546 Interest 7,666 5,819 26,745 22,605 ---------- ---------- ---------- ---------- 471,384 432,925 1,831,852 1,698,690 ---------- ---------- ---------- ---------- Income before equity in earnings of 50%-owned company, minority interest and income taxes 14,358 3,234 53,918 49,581 Equity in earnings of 50%-owned company -- -- -- 263 Minority interest 405 (252) 938 (124) ---------- ---------- ---------- ---------- Income before income taxes 14,763 2,982 54,856 49,720 Income taxes 5,077 1,045 20,846 19,553 ---------- ---------- ---------- ---------- Net income $9,686 $1,937 $34,010 $30,167 ========== ========== ========== ========== Earnings per share: Income from continuing operations - diluted $.30 $.06 $1.07 $.95 ========== ========== ========== ========== Weighted average shares outstanding - diluted 32,215,680 31,795,337 31,866,334 31,798,801 ========== ========== ========== ========== Income from continuing operations - basic $.30 $.06 $1.07 $.95 ========== ========== ========== ========== Weighted average shares outstanding - basic 32,070,996 31,752,087 31,852,842 31,687,161 ========== ========== ========== ========== Cash dividends per share $.06 $.06 $.24 $.24 ========== ========== ========== ========== Reconciliation of EBIT and EBITDA Income before provision for income taxes $14,763 $2,982 $54,856 $49,720 Interest expense 7,666 5,819 26,745 22,605 ---------- ---------- ---------- ---------- EBIT $22,429 $8,801 $81,601 $72,325 ========== ========== ========== ========== Depreciation 7,177 6,928 29,095 27,191 Depreciation included in cost of sales 2,719 -- 5,471 -- Amortization expense 815 321 2,304 1,355 ---------- ---------- ---------- ---------- EBITDA $33,140 $16,050 $118,471 $100,871 ========== ========== ========== ========== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2003 2002 ------- ------- Operating activities: Net income $34,010 $30,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 36,870 28,546 Deferred taxes 8,120 3,577 Gain on sales of property and equipment (701) (784) Equity in earnings of 50%-owned company -- (263) Minority interest (938) 124 Changes in operating assets and liabilities: Accounts receivable (11,641) (5,951) Inventories 19,995 30,150 Prepaid expenses and other assets (4,517) (2,700) Accounts payable and accrued expenses 25,216 7,878 ------- ------- Net cash provided by operating activities 106,414 90,744 Investing activities: Purchases of property, plant and equipment, net (20,909) (18,658) Proceeds from sales of property and equipment 3,020 3,298 Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired (245,850) (53,321) Dividends received from 50%-owned company -- 444 ------- ------- Net cash used in investing activities (263,739) (68,237) Financing activities: Proceeds from borrowings 299,785 104,115 Principal payments on long-term debt and short-term borrowings (152,540)(121,755) Payments to minority shareholders (378) (2,252) Dividends paid (7,643) (7,605) Issuance of common stock 218 235 Exercise of stock options 8,866 3,470 Tax benefit of stock options exercised 1,406 536 ------- ------- Net cash provided by (used in) financing activities 149,714 (23,256) Effect of exchange rate changes on cash 472 123 ------- ------- Decrease in cash and cash equivalents (7,139) (626) Cash and cash equivalents at beginning of period 9,305 9,931 ------- ------- Cash and cash equivalents at end of period $2,166 $9,305 ======= ======= Supplemental cash flow information: Interest paid during the period $23,391 $22,116 Income taxes paid during the period $10,346 $20,101 CONTACT: Reliance Steel & Aluminum Co. Kim P. Feazle Investor Relations 713-610-9937 213-576-2428 kfeazle@rsac.com investor@rsac.com