EX-99.1 2 a5082575ex991.txt EXHIBIT 99.1 Exhibit 99.1 Reliance Steel & Aluminum Co. Reports Record 2005 Fiscal Year and Fourth Quarter Results; 2005 Sales up 14% and Net Income up 21% LOS ANGELES--(BUSINESS WIRE)--Feb. 16, 2006--Reliance Steel & Aluminum Co. (NYSE:RS) reported today its financial results for the fiscal year and fourth quarter ended December 31, 2005. For the 2005 year, net income was $205.4 million, or $6.21 earnings per diluted share, the Company's best-ever financial results. This compares with net income of $169.7 million, or $5.19 earnings per diluted share for the 2004 fiscal year. Sales for 2005 totaled a record $3.37 billion, an increase of 14% compared with 2004 sales of $2.94 billion. The 2005 fiscal year financial results include in cost of sales a pre-tax LIFO expense amount of $16.6 million, or $.31 per diluted share, compared with a pre-tax LIFO expense amount of $110.8 million, or $2.13 per diluted share included in cost of sales in 2004. For the 2005 fourth quarter, net income was a record $60.6 million, up 41% compared with net income of $43.0 million for the same period in 2004. Earnings per diluted share were a record $1.81, up 38% for the three months ended December 31, 2005 compared with earnings of $1.31 per diluted share for the same period last year. Sales for the 2005 fourth quarter were $868.7 million, up 17% compared with 2004 fourth quarter sales of $742.8 million. The 2005 fourth quarter financial results include in cost of sales a pre-tax LIFO expense amount of $91,000, compared with a pre-tax LIFO expense amount of $18.3 million, or $.39 per diluted share included in cost of sales in the 2004 fourth quarter. David H. Hannah, Chief Executive Officer of Reliance, said, "The continuation of strong metals pricing and demand for our products across the board in all the end markets that we support and the acquisition of Chapel Steel contributed to our record-breaking results for 2005. The fourth quarter's operating results were better than we expected regarding both pricing and demand levels. The non-residential construction, aerospace, electronics, semiconductor, truck trailer, rail car and heavy machinery sectors are all performing quite well. "We believe that we are well positioned to take advantage of a favorable operating environment. We are optimistic about 2006 and the opportunities that we envision for the continued successful growth of our Company. At this time, we estimate earnings per diluted share for the 2006 first quarter in a range of $1.90 to $2.00," said Hannah. On January 17, 2006, Reliance announced that it had entered into a definitive merger agreement with Earle M. Jorgensen Company (NYSE:JOR), headquartered in Lynwood, California, pursuant to which Reliance will acquire Jorgensen for $13.00 per share in cash and stock, subject to a collar. The transaction is valued at approximately $934 million, including the assumption of Jorgensen's net debt. This significant transaction would be immediately accretive to Reliance and is expected to be completed in the second quarter of 2006. Upon completion of the acquisition, Reliance will have a network of more than 140 facilities in 35 states and Belgium, Canada and South Korea and total assets of approximately $3 billion and annual revenues of more than $5 billion. For more information regarding the definitive merger agreement with Jorgensen, please refer to the Company's press release and SEC Form 8K dated January 17, 2006 posted on the Reliance web site at: www.rsac.com. Reliance and Jorgensen filed an SEC Form S-4 Registration Statement and a preliminary proxy statement/prospectus on February 7, 2006. Investors and security holders are urged to read the proxy statement/prospectus that will be sent to Jorgensen stockholders regarding the proposed merger, when it becomes available, because it will contain important information. Investors and security holders may obtain a free copy of the proxy statement/prospectus, when it is available, and other documents filed by Reliance and Jorgensen with the Securities and Exchange Commission at the Commission's web site at www.sec.gov. The proxy statement/prospectus and these other documents may also be obtained, when available, free of charge from Reliance at www.rsac.com. Jorgensen stockholders should read the definitive proxy statement/prospectus carefully before making a decision concerning the merger. Reliance and Jorgensen, and their respective directors, executive officers and certain other of their employees, may be soliciting proxies from Jorgensen's stockholders in favor of the approval of the merger. Information regarding the persons who may, under SEC rules, be deemed to be participants in the solicitation of Jorgensen's stockholders in connection with the merger is set forth in Reliance's proxy statement for its 2005 annual meeting, filed with the SEC on April 15, 2005 and in Jorgensen's proxy statement for its 2005 annual meeting, filed with the SEC on July 21, 2005, and additional information will be set forth in the definitive proxy statement/prospectus referred to above when it is filed with the SEC. On October 18, 2005, the Company's Board of Directors declared the regular quarterly cash dividend of $.10 per share of common stock. The 2005 fourth quarter cash dividend was paid on January 6, 2006 to shareholders of record December 9, 2005. 2006 marks the 46th 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 2005 fiscal year and fourth quarter financial results for the period ended December 31, 2005. All interested parties are invited to listen to the web cast on February 16, 2006 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 16, 2006 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 more than 100 locations in 32 states and Belgium 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 to the 2006 Forbes Platinum 400 List of America's Best Big Companies and was also named as one of "America's Most Admired Companies" listed in the diversified wholesaler's category in the March 7, 2005 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 Twelve Months Ended December 31, Ended December 31, --------------------------------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Income Statement Data: Net sales $ 868,678 $ 742,819 $ 3,367,051 $ 2,943,034 Gross profit 251,152 201,367 918,051 832,186 Operating profit(1) 107,780 67,070 367,640 306,880 EBITDA(2) 117,341 79,264 405,065 343,285 EBIT(2) 105,516 67,783 358,434 298,658 Pre-tax income 99,584 60,909 333,212 269,968 Net income 60,588 42,952 205,437 169,728 EPS -- diluted $ 1.81 $ 1.31 $ 6.21 $ 5.19 Weighted average shares outstanding -- diluted 33,382,812 32,878,774 33,097,362 32,675,379 Gross margin 28.9% 27.1% 27.3% 28.3% Operating margin(1) 12.4% 9.0% 10.9% 10.4% EBITDA margin(2) 13.5% 10.7% 12.0% 11.7% EBIT margin(2) 12.1% 9.1% 10.6% 10.1% Pre-tax margin 11.5% 8.2% 9.9% 9.2% Net margin 7.0% 5.8% 6.1% 5.8% Cash dividends per share $ .10 $ .07 $ .38 $ .26 December 31, December 31, 2005 2004 --------------- -------------- Balance Sheet Data: Current assets $ 847,348 $ 733,229 Working capital(3) 513,529 458,551 Net fixed assets 479,719 458,813 Total assets 1,769,070 1,563,331 Current liabilities 333,819 274,678 Long-term debt 306,790 380,850 Shareholders' equity 1,029,865 822,552 Capital expenditures 53,740 35,982 Net debt-to-total capital(4) 23.8% 33.6% Return on equity 25.0% 26.2% Current ratio 2.5 2.7 Book value per share $ 31.11 $ 25.18 Cash flow from operations per share $ 8.22 $ 3.73 (1) Operating profit is calculated as net sales less cost of sales, 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) The December 31, 2004 balances have been adjusted to reflect balance sheet reclassifications made as of December 31, 2005. (4) 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, December 31, 2005 2004 --------------- -------------- Current assets: Cash and cash equivalents $ 35,022 $ 11,659 Accounts receivable, less allowance for doubtful accounts of $10,511 and $8,699 at December 31, 2005 and 2004, respectively 369,931 329,991 Inventories 387,385 349,779 Prepaid expenses and other current assets 19,009 17,216 Deferred income taxes 36,001 24,584 --------------- -------------- Total current assets 847,348 733,229 Property, plant and equipment, at cost: Land 60,207 57,982 Buildings 281,986 261,228 Machinery and equipment 403,403 370,229 Accumulated depreciation (265,877) (230,626) --------------- -------------- 479,719 458,813 Goodwill 384,730 341,780 Other assets 57,273 29,509 --------------- -------------- Total assets $ 1,769,070 $ 1,563,331 =============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 188,584 $ 140,323 Accrued expenses 19,234 17,561 Accrued compensation and retirement costs 52,354 49,959 Accrued insurance costs 23,372 20,297 Deferred income taxes 214 138 Current maturities of long-term debt 49,525 46,400 Current maturities of capital lease obligations 536 -- --------------- -------------- Total current liabilities 333,819 274,678 Long-term debt 301,275 380,850 Capital lease obligations 5,515 -- Long-term retirement costs 15,660 14,102 Deferred income taxes 65,808 55,613 Minority interest 17,128 15,536 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 33,108,999 and 32,669,967 at December 31, 2005 and 2004, respectively, stated capital 325,010 313,953 Retained earnings 704,530 508,147 Accumulated comprehensive income 325 452 --------------- -------------- Total shareholders' equity 1,029,865 822,552 --------------- -------------- Total liabilities and shareholders' equity $ 1,769,070 $ 1,563,331 =============== ============== 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, ------------------------- ------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Net sales $ 868,678 $ 742,819 $ 3,367,051 $ 2,943,034 Other income, net 962 1,792 3,671 4,168 ----------- ----------- ----------- ----------- 869,640 744,611 3,370,722 2,947,202 Costs and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 617,526 541,452 2,449,000 2,110,848 Warehouse, delivery, selling, general and administrative 132,292 123,611 507,905 483,887 Depreciation and amortization 11,825 11,481 46,631 44,627 Interest expense 5,932 6,874 25,222 28,690 ----------- ----------- ----------- ----------- 767,575 683,418 3,028,758 2,668,052 Income before minority interest and income taxes 102,065 61,193 341,964 279,150 Minority interest (2,481) (284) (8,752) (9,182) ----------- ----------- ----------- ----------- Income from continuing operations before income taxes 99,584 60,909 333,212 269,968 Provision for income taxes 38,996 17,957 127,775 100,240 ----------- ----------- ----------- ----------- Net income $ 60,588 $ 42,952 $ 205,437 $ 169,728 =========== =========== =========== =========== Earnings per share: Income from continuing operations -- diluted $ 1.81 $ 1.31 $ 6.21 $ 5.19 =========== =========== =========== =========== Weighted average shares outstanding -- diluted 33,382,812 32,878,774 33,097,362 32,675,379 =========== =========== =========== =========== Income from continuing operations -- basic $ 1.83 $ 1.32 $ 6.24 $ 5.23 =========== =========== =========== =========== Weighted average shares outstanding -- basic 33,072,448 32,632,453 32,935,034 32,480,101 =========== =========== =========== =========== Cash dividends per share $ .10 $ .07 $ .38 $ .26 =========== =========== =========== =========== Reconciliation of EBIT and EBITDA Income from continuing operations before income taxes $ 99,584 $ 60,909 $ 333,212 $ 269,968 Interest expense 5,932 6,874 25,222 28,690 ----------- ----------- ----------- ----------- EBIT 105,516 67,783 358,434 298,658 ----------- ----------- ----------- ----------- Depreciation expense 11,080 10,686 42,506 41,419 Amortization expense 745 795 4,125 3,208 ----------- ----------- ----------- ----------- EBITDA $ 117,341 $ 79,264 $ 405,065 $ 343,285 =========== =========== =========== =========== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Twelve Months Ended December 31, -------------------------------- 2005 2004 --------------- -------------- Operating activities: Net income $ 205,437 $ 169,728 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 46,631 44,627 Deferred taxes (1,059) 2,726 Gain on sales of machinery and equipment -- (660) Minority interest 8,751 9,182 Tax benefit of stock options exercised 3,476 1,905 Changes in operating assets and liabilities: Accounts receivable (15,391) (108,198) Inventories (11,345) (61,699) Prepaid expenses and other assets (2,624) (3,584) Accounts payable and accrued expenses 38,343 67,741 --------------- -------------- Net cash provided by operating activities 272,219 121,768 Investing activities: Purchases of property, plant and equipment, net (53,740) (35,982) Proceeds from sales of property and equipment 1,485 3,281 Acquisitions of metals service centers, net of cash acquired and debt assumed (94,377) -- Purchase of minority interest in foreign subsidiary -- (473) Tax reimbursements made related to prior acquisition -- (16,475) --------------- -------------- Net cash used in investing activities (146,632) (49,649) Financing activities: Proceeds from borrowings 393,000 209,000 Principal payments on long-term debt and short-term borrowings (486,511) (273,400) Payments to minority shareholders (7,159) (1,709) Dividends paid (12,530) (8,448) Exercise of stock options 10,811 10,130 Issuance of common stock 246 236 --------------- -------------- Net cash used in financing activities (102,143) (64,191) Effect of exchange rate changes on cash (81) 1,565 --------------- -------------- Increase in cash and cash equivalents 23,363 9,493 Cash and cash equivalents at beginning of period 11,659 2,166 --------------- -------------- Cash and cash equivalents at end of period $ 35,022 $ 11,659 =============== ============== Supplemental cash flow information: Interest paid during the period $ 25,309 $ 28,525 Income taxes paid during the period $ 118,909 $ 100,589 CONTACT: Reliance Steel & Aluminum Co. Kim P. Feazle Investor Relations (713) 610-9937 (213) 576-2428 kfeazle@rsac.com investor@rsac.com