EX-99.1 2 a4680629ex991.txt PRESS RELEASE EXHIBIT 99.1 Reliance Steel & Aluminum Co. Reports Best-Ever 2004 Second Quarter and Year-to-Date Financial Results LOS ANGELES--(BUSINESS WIRE)--July 15, 2004--Reliance Steel & Aluminum Co. (NYSE:RS) today reported its best-ever financial results for the three and six-months ended June 30, 2004. For the 2004 second quarter, net income was a record $52.8 million, or $1.62 earnings per diluted share. This compares with net income of $6.4 million, or $.20 earnings per diluted share for the three-months ended June 30, 2003 and net income of $29.8 million, or $.92 earnings per diluted share for the first quarter ended March 31, 2004. Sales for the 2004 second quarter were also a record at $760.8 million, an increase of 67% compared with 2003 second quarter sales of $456.3 million, and up 16% compared with 2004 first quarter sales of $655.8 million. The 2004 second quarter financial results include a pre-tax LIFO expense amount of $32.5 million, or $.60 per diluted share. For the six-months ended June 30, 2004, net income amounted to a record $82.6 million compared with net income of $12.0 million for the same period in 2003. Earnings per diluted share were $2.54 for the six-months ended June 30, 2004, compared with earnings of $.38 per diluted share for the six-months ended June 30, 2003. Sales for the 2004 year-to-date period were a record $1.42 billion, compared with 2003 six-month sales of $907.2 million. Reliance's Chief Executive Officer, David H. Hannah, said, "The positive operating environment and healthy customer demand for our products along with tight supply levels for some of our products favorably contributed to our exceptionally strong and highest-ever quarterly and year-to-date results. As we stated in our press release on June 24, 2004, metals pricing increased significantly during the second quarter. Our gross profit margins also improved as a result of our focus on maximizing our financial profits and returns rather than focusing on volume. "We believe that customer demand will continue to grow at a modest rate through the remainder of 2004 and into 2005. However, certain metal prices may begin to contract slightly going forward with the potential for additional product availability, which along with some seasonal slowness during the summer months may cause our gross profit margins to decline somewhat in the 2004 third quarter. At this time, our best estimate for the 2004 third quarter earnings per diluted share is a range of $1.00 to $1.20," concluded Hannah. On April 20, 2004, the Company announced its regular quarterly cash dividend payment of $.06 per share of common stock. The 2004 second quarter cash dividend was paid on May 28, 2004 to shareholders of record May 7, 2004. 2004 marks the 44th consecutive year that Reliance has paid quarterly dividends to its shareholders. Reliance will host a conference call that will be broadcast live over the Internet (listen-only mode) regarding the second quarter and year-to-date financial results for the period ended June 30, 2004. All interested parties are invited to listen to the web cast on July 15, 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 August 15, 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. The Company was named as one of "America's Most Admired Companies" listed in the diversified wholesalers category in the March 8, 2004 issue of Fortune. 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 Six Months Ended June 30, Ended June 30, ----------------------------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Income Statement Data: Net sales $760,780 $456,329 $1,416,545 $907,152 Gross profit 228,467 119,372 415,897 238,775 Operating income(1) 97,478 15,005 156,174 29,326 EBITDA(2) 105,332 23,575 173,016 45,882 EBIT(2) 94,266 16,043 150,904 30,846 Pre-tax income 87,010 10,532 136,168 19,729 Net income 52,797 6,392 82,636 11,971 EPS - diluted $1.62 $.20 $2.54 $.38 Weighted average shares outstanding -- diluted 32,674,395 31,767,381 32,564,497 31,761,632 Gross margin 30.0% 26.2% 29.4% 26.3% Operating margin(1) 12.8% 3.3% 11.0% 3.2% EBITDA margin(2) 13.8% 5.2% 12.2% 5.1% EBIT margin(2) 12.4% 3.5% 10.7% 3.4% Pre-tax margin 11.4% 2.3% 9.6% 2.2% Net margin 6.9% 1.4% 5.8% 1.3% Cash dividends per share $.06 $.06 $.12 $.12 June 30, December 31, 2004 2003 ------------- ------------- Balance Sheet Data: Current assets $723,984 $544,586 Working capital 447,769 341,762 Net fixed assets 460,520 466,871 Total assets 1,557,844 1,369,424 Current liabilities 276,215 202,824 Long-term debt 492,000 469,250 Shareholders' equity 734,264 647,619 Capital expenditures 15,883 20,909 Net debt-to-total capital(3) 41.1% 43.1% Return on equity(4) 16.2% 5.6% Current ratio 2.6 2.7 Book value per share $22.58 $20.10 Cash flow from operations per share(4) $1.63 $3.34 (1) Operating income is calculated as net sales less gross profit, warehouse, delivery, selling, general and administrative expenses and depreciation expense. (2) 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. (3) Net debt-to-total capital is calculated as total debt (net of cash) divided by shareholders' equity plus total debt (net of cash). (4) Calculations are based on the latest twelve months. RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED BALANCE SHEETS (In thousands except share amounts) ASSETS June 30, December 31, 2004 2003 -------------- --------------- (Unaudited) Current assets: Cash and cash equivalents $2,592 $2,166 Accounts receivable, less allowance for doubtful accounts of $8,746 at June 30, 2004 and $4,716 at December 31, 2003, respectively 344,494 221,793 Inventories 342,114 288,080 Prepaid expenses and other current assets 16,837 14,593 Deferred income taxes 17,947 17,954 -------------- --------------- Total current assets 723,984 544,586 Property, plant and equipment, at cost: Land 56,803 57,077 Buildings 256,286 256,708 Machinery and equipment 359,608 349,933 Accumulated depreciation (212,177) (196,847) -------------- --------------- 460,520 466,871 Goodwill 341,780 325,305 Other assets 31,560 32,662 -------------- --------------- Total assets $1,557,844 $1,369,424 ============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $158,246 $98,438 Accrued expenses 56,620 53,265 Wages and related accruals 31,924 22,696 Deferred income taxes 6,025 6,025 Current maturities of long-term debt 23,400 22,400 -------------- --------------- Total current liabilities 276,215 202,824 Long-term debt 492,000 469,250 Deferred income taxes 40,349 40,349 Minority interest 15,016 9,382 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 32,518,892 at June 30, 2004 and 32,225,872 at December 31, 2003, respectively, stated capital 310,194 303,587 Retained earnings 424,902 344,962 Accumulated comprehensive loss (832) (930) -------------- --------------- Total shareholders' equity 734,264 647,619 -------------- --------------- Total liabilities and shareholders' equity $1,557,844 $1,369,424 ============== =============== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share amounts) Three Months Six Months Ended June 30, Ended June 30, ----------------------- ----------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Net sales $760,780 $456,329 $1,416,545 $907,152 Other income, net 1,386 1,141 1,893 1,704 ----------- ----------- ----------- ----------- 762,166 457,470 1,418,438 908,856 Costs and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 532,313 336,957 1,000,648 668,377 Warehouse, delivery, selling, general and administrative 120,723 97,146 239,229 195,030 Depreciation and amortization 11,066 7,532 22,112 15,036 Interest expense 7,256 5,511 14,736 11,117 ----------- ----------- ----------- ----------- 671,358 447,146 1,276,725 889,560 Income before minority interest and income taxes 90,808 10,324 141,713 19,296 Minority interest (3,798) 208 (5,545) 433 ----------- ----------- ----------- ----------- Income from continuing operations before income taxes 87,010 10,532 136,168 19,729 Provision for income taxes 34,213 4,140 53,532 7,758 ----------- ----------- ----------- ----------- Net income $52,797 $6,392 $82,636 $11,971 =========== =========== =========== =========== Earnings per share: Income from continuing operations - diluted $1.62 $.20 $2.54 $.38 =========== =========== =========== =========== Weighted average shares outstanding - diluted 32,674,395 31,767,381 32,564,497 31,761,632 =========== =========== =========== =========== Income from continuing operations - basic $1.63 $.20 $2.55 $.38 =========== =========== =========== =========== Weighted average shares outstanding - basic 32,446,394 31,766,497 32,369,777 31,761,083 =========== =========== =========== =========== Cash dividends per share $.06 $.06 $.12 $.12 =========== =========== =========== =========== Reconciliation of EBIT and EBITDA Income from continuing operations before income taxes $ 87,010 $ 10,532 $ 136,168 $ 19,729 Interest expense 7,256 5,511 14,736 11,117 ----------- ----------- ----------- ----------- EBIT $94,266 $16,043 $150,904 $30,846 =========== =========== =========== =========== Depreciation expense 10,266 7,221 20,494 14,419 Amortization expense 800 311 1,618 617 ----------- ----------- ----------- ----------- EBITDA $105,332 $23,575 $173,016 $45,882 =========== =========== =========== =========== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended June 30, ----------------------- 2004 2003 ----------- ----------- Operating activities: Net income $82,636 $11,971 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22,112 15,036 Gain on sales of machinery and equipment (667) (818) Minority interest 5,545 (433) Changes in operating assets and liabilities: Accounts receivable (122,701) (17,459) Inventories (54,034) 15,706 Prepaid expenses and other assets (2,743) 921 Accounts payable and accrued expenses 73,578 32,529 ----------- ----------- Net cash provided by operating activities 3,726 57,453 Investing activities: Purchases of property, plant and equipment, net (15,883) (7,939) Tax payments related to prior acquisition (16,475) -- Proceeds from sales of property and equipment 2,408 2,826 ----------- ----------- Net cash used in investing activities (29,950) (5,113) Financing activities: Proceeds from borrowings 144,000 8,305 Principal payments on long-term debt and short-term borrowings (120,250) (47,210) Payments to minority partner -- (378) Dividends paid (3,884) (3,812) Issuance of common stock 236 218 Exercise of stock options 6,371 -- ----------- ----------- Net cash provided by (used in) financing activities 26,473 (42,877) Effect of exchange rate changes on cash 177 295 ----------- ----------- Increase in cash and cash equivalents 426 9,758 Cash and cash equivalents at beginning of period 2,166 9,305 ----------- ----------- Cash and cash equivalents at end of period $2,592 $19,063 =========== =========== Supplemental cash flow information: Interest paid during the period $14,618 $11,258 Income taxes paid during the period $40,285 $3,771 CONTACT: Reliance Steel & Aluminum Co. Kim P. Feazle Investor Relations (713) 610-9937 (213) 576-2428 kfeazle@rsac.com investor@rsac.com