-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CpkpUqYYEtsLvNY39hocRHVRXsnLK4rqyreE++9J5RPdA01h4tCIr84824/fdMDj i8WYIGmqknT4wUlfFvhnnA== 0001157523-07-001606.txt : 20070215 0001157523-07-001606.hdr.sgml : 20070215 20070215085021 ACCESSION NUMBER: 0001157523-07-001606 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070215 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070215 DATE AS OF CHANGE: 20070215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RELIANCE STEEL & ALUMINUM CO CENTRAL INDEX KEY: 0000861884 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-METALS SERVICE CENTERS & OFFICES [5051] IRS NUMBER: 951142616 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13122 FILM NUMBER: 07625466 BUSINESS ADDRESS: STREET 1: 350 S GRAND AVE STE 5100 CITY: LOS ANGELES STATE: CA ZIP: 90071 BUSINESS PHONE: 2136877700 MAIL ADDRESS: STREET 1: 350 S GRAND AVE STE 5100 CITY: LOS ANGELES STATE: CA ZIP: 90071 8-K 1 a5335225.txt RELIANCE STEEL & ALUMINUM CO. 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K ----------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ----------------------- Date of Report (Date of earliest event reported): February 15, 2007 ----------------------- RELIANCE STEEL & ALUMINUM CO. (Exact name of registrant as specified in its charter) California 001-13122 95-1142616 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification Number) 350 S. Grand Ave., Suite 5100 Los Angeles, CA 90071 (Address of principal executive offices) (213) 687-7700 (Registrant's telephone number, including area code) Not applicable. (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 2.02. Results of Operations and Financial Condition. On February 15, 2007, the Company issued a press release announcing financial results for the quarter and year ended December 31, 2006. Attached hereto as Exhibit 99.1 is a copy of the Company's press release dated February 15, 2007 announcing the Company's financial results for this period. The information contained in this report and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. Item 9.01. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. -------------------------------------------- Not Applicable. (b) Pro Forma Financial Information. Not Applicable. (c) Exhibits. Exhibit No. Description ----------- ------------------------------------------------ 99.1 Press Release dated February 15, 2007 (included herewith). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RELIANCE STEEL & ALUMINUM CO. Dated: February 15, 2007 By: /s/ Karla Lewis ------------------------------------ Karla Lewis Executive Vice President and Chief Financial Officer RELIANCE STEEL & ALUMINUM CO. FORM 8-K INDEX TO EXHIBITS Exhibit No. Description - ----------- ---------------------------------------------------------------- 99.1 Press Release dated February 15, 2007 (included herewith). EX-99.1 2 a5335225ex991.txt RELIANCE STEEL & ALUMINUM CO EXHIBIT 99.1 Exhibit 99.1 Reliance Steel & Aluminum Co. Reports Record 2006 Fiscal Year Results; Net Income up 73% LOS ANGELES--(BUSINESS WIRE)--Feb. 15, 2007--Reliance Steel & Aluminum Co. (NYSE:RS) reported today its financial results for the fiscal year and fourth quarter ended December 31, 2006. For the fiscal year ended December 31, 2006, net income amounted to a record $354.5 million, up 73% compared with net income of $205.4 million for the same period in 2005. Earnings per diluted share were a record $4.82 for the year ended December 31, 2006, compared with earnings of $3.10 per diluted share for the year ended December 31, 2005. Sales for the 2006 fiscal year were also a record at $5.7 billion, an increase of 71% compared with 2005 fiscal year sales of $3.4 billion. The 2006 fiscal year financial results include in cost of sales a pre-tax LIFO expense amount of $94.1 million, or $.79 per diluted share, compared with a pre-tax LIFO expense amount of $16.6 million, or $.15 per diluted share in the 2005 period. All share and per share amounts have been adjusted for the two-for-one common stock split effective July 19, 2006. The 2006 financial results include positive contributions to sales and earnings from the Company's 2006 acquisitions, primarily Yarde Metals, Inc. that was acquired on August 1, 2006 and Earle M. Jorgensen Company that was acquired on April 3, 2006. The Jorgensen acquisition included the issuance of approximately nine million shares of Reliance's common stock, representing a 14% increase in diluted shares outstanding. For the 2006 fourth quarter, net income was $74.6 million, up 23% compared with net income of $60.6 million for the 2005 fourth quarter. Earnings per diluted share were $.98 for the 2006 fourth quarter and $.91 for the 2005 fourth quarter. 2006 fourth quarter sales were $1.6 billion, an increase of 81% compared with 2005 fourth quarter sales of $868.7 million. The 2006 fourth quarter financial results include in cost of sales a pre-tax LIFO expense amount of $37.9 million, or $.31 per diluted share, compared with a pre-tax LIFO expense amount of $91,000 recorded in the 2005 fourth quarter. David H. Hannah, Chief Executive Officer of Reliance said, "We are very pleased with our fiscal year 2006 results. All of our end markets were strong with a very favorable operating environment throughout our network of facilities. We completed four acquisitions during 2006, including the acquisition of Earle M. Jorgensen Company on April 3, 2006 that was our largest acquisition to-date and our first acquisition of a public company. The purchase price consisted of approximately 50% common stock and 50% cash. We also acquired Yarde Metals, Inc. on August 1, 2006, our second largest acquisition. The combined sales of Jorgensen and Yarde contributed $1.6 billion to our 2006 revenues. "We have completed three additional acquisitions in January and February of 2007 that further increase our product and geographic diversification. We acquired Crest Steel Corporation with 2006 revenues of approximately $133 million and Industrial Metals and Surplus, Inc. with 2006 revenues of approximately $105 million, on January 2, 2007. Crest has facilities in California and Arizona and processes and distributes carbon steel products including flat-rolled, plate, bars and structurals. Industrial Metals is located in Georgia and specializes in the processing and distribution of carbon steel structurals, flat-rolled and ornamental iron products. We acquired the Encore Group of metals service centers located mainly in Western Canada as of February 1, 2007. Encore, with 2006 revenues of approximately C$259 million, specializes in the processing and distribution of alloy and carbon bar and tube, as well as stainless steel sheet, plate and bar and carbon steel flat-rolled products that serve, among others, the robust energy, oil and gas industries," Hannah said. "We experienced the normal seasonal slowdown during the 2006 fourth quarter. However, gross profit margins were slightly below our earlier expectations due to some inventory de-stocking that resulted in added competitive pressures. Also, our LIFO expense during the quarter was substantially higher than we anticipated, despite the fact that we reduced our inventories during that time. Stainless steel prices continued to increase from their historical highs in the third quarter which we did not expect to happen, resulting in the significant LIFO expense of $37.9 million, or $.31 per diluted share in the fourth quarter, exceeding our earlier estimate by $19.1 million, or $.16 per diluted share," said Hannah. "In November of 2006, we replaced our $700 million credit facility with a $1.1 billion five-year, unsecured syndicated credit facility that provides increased availability of funds and more favorable pricing. This facility may be increased to up to $1.6 billion at our request with approval from the lenders. We used funds from the increased line to purchase approximately $250 million of the Jorgensen 9.75% senior secured notes in a tender offer. We then issued $600 million of senior unsecured notes and used the proceeds to pay down the borrowings under our credit facility. This included $350 million of 10 year notes at 6.20% and $250 million of 30 year notes at 6.85%. The notes are investment grade rated Baa3 by Moody's and BBB- by Standard & Poor's. These activities lowered our cost of capital and significantly increased our availability to fund our working capital and general corporate needs, including acquisitions, capital expenditures, debt repayments, dividend payments and stock repurchases," Hannah stated. "We are optimistic regarding 2007 business conditions. We generally see continued growth in the markets we serve, but at a slower rate than in 2006. Pricing should be relatively stable with steel trending upwards and aluminum slightly softer as the year progresses. Our 2006 and 2007 acquisitions to-date should increase 2007 revenues by about $1 billion compared to 2006, assuming no significant changes in the operating environment. As a result, we expect record sales and earnings again in 2007 and currently estimate earnings per diluted share for the 2007 first quarter in a range of $1.25 to $1.35," Hannah concluded. On February 14, 2007, the Board of Directors declared a 33% increase in the regular quarterly cash dividend to $.08 per share of common stock. The 2007 first quarter dividend is payable on March 30, 2007 to shareholders of record March 9, 2007. The Company has paid regular quarterly dividend payments for 47 consecutive 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, 2006. All interested parties are invited to listen to the web cast on February 15, 2007 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 15, 2007 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 180 locations in 37 states and Belgium, Canada, China and South Korea, the Company provides value-added metals processing services and distributes a full line of over 100,000 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 125,000 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 Fortune 100 Fastest Growing Companies List and the 2007 Forbes Platinum 400 List of America's Best Big Companies. 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, ------------------------- ------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Income Statement Data: Net sales $ 1,569,192 $ 868,678 $ 5,742,608 $ 3,367,051 Gross profit 389,095 251,152 1,511,222 918,051 Operating profit(1) 139,565 107,780 634,245 367,640 EBITDA(2) 156,775 117,341 695,298 405,065 EBIT(2) 139,433 105,516 632,824 358,434 Pre-tax income 119,737 99,584 571,132 333,212 Net income 74,642 60,588 354,507 205,437 EPS - diluted(3) $ 0.98 $ 0.91 $ 4.82 $ 3.10 Weighted average shares outstanding - Diluted(3) 76,053,725 66,765,624 73,599,681 66,194,724 Gross profit margin 24.8% 28.9% 26.3% 27.3% Operating profit margin(1) 8.9% 12.4% 11.0% 10.9% EBITDA margin(2) 10.0% 13.5% 12.1% 12.0% EBIT margin(2) 8.9% 12.1% 11.0% 10.6% Pre-tax margin 7.6% 11.5% 9.9% 9.9% Net margin 4.8% 7.0% 6.2% 6.1% Cash dividends per share(3) $ .06 $ .05 $ .22 $ .19 December 31, December 31, 2006 2005 ---------------- --------------- Balance Sheet Data: Current assets $ 1,675,389 $ 847,348 Working capital 1,124,650 513,529 Net fixed assets 742,672 479,719 Total assets 3,614,173 1,769,070 Current liabilities 550,739 333,819 Long-term debt(4) 1,088,051 306,790 Shareholders' equity 1,746,398 1,029,865 Capital expenditures 108,742 53,740 Net debt-to-total capital(5) 37.6% 23.8% Return on equity(6) 27.3% 25.0% Current ratio 3.0 2.5 Book value per share(3) $ 23.07 $ 15.56 Cash flow from operations per share(3) $ 2.59 $ 4.11 (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) All periods have been adjusted to reflect the two-for-one stock split effected in the form of a 100% stock dividend that was declared on May 17, 2006 and distributed on July 19, 2006 to shareholders of record on July 5, 2006. (4) Long-term debt includes capital lease obligations of $4,956 and $5,515 as of December 31, 2006 and December 31, 2005, respectively. (5) Net debt-to-total capital is calculated as total debt (net of cash) divided by shareholders' equity plus total debt (net of cash). (6) Calculations are based on the latest twelve months net income and beginning shareholders' equity, adjusted for $360.5 million of common stock and stock options issued to fund an acquisition on April 3, 2006. RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED BALANCE SHEETS (In thousands except share amounts) ASSETS December 31, December 31, 2006 2005 ---------------- --------------- Current assets: Cash and cash equivalents $ 57,475 $ 35,022 Accounts receivable, less allowance for doubtful accounts of $16,755 at December 31, 2006 and $10,511 at December 31, 2005 666,273 369,931 Inventories 904,318 387,385 Prepaid expenses and other current assets 22,179 19,009 Deferred income taxes -- 36,001 Income taxes receivable 25,144 -- ---------------- --------------- Total current assets 1,675,389 847,348 Property, plant and equipment, at cost: Land 108,022 60,207 Buildings 385,851 281,986 Machinery and equipment 565,951 403,403 Accumulated depreciation (317,152) (265,877) ---------------- --------------- 742,672 479,719 Goodwill 784,871 384,730 Intangible assets, net 354,195 44,384 Cash surrender value of life insurance policies, net 41,190 7,299 Other assets 15,856 5,590 ---------------- --------------- Total assets $ 3,614,173 $ 1,769,070 ================ =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 340,356 $ 188,584 Accrued expenses 36,481 19,234 Accrued compensation and retirement costs 92,905 52,354 Accrued insurance costs 34,475 23,372 Deferred income taxes 23,706 214 Current maturities of long-term debt 22,257 49,525 Current maturities of capital leases 559 536 ---------------- --------------- Total current liabilities 550,739 333,819 Long-term debt 1,083,095 301,275 Capital lease obligations 4,956 5,515 Long-term retirement costs and other long-term liabilities 46,111 15,660 Deferred income taxes 181,628 65,808 Minority interest 1,246 17,128 Commitments and contingencies -- -- 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 -- 75,702,046 at December 31, 2006 and 66,217,998 at December 31, 2005, respectively, stated capital 701,690 325,010 Retained earnings 1,046,339 704,530 Accumulated other comprehensive (loss)/income (1,631) 325 ---------------- --------------- Total shareholders' equity 1,746,398 1,029,865 ---------------- --------------- Total liabilities and shareholders' equity $ 3,614,173 $ 1,769,070 ================ =============== 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, ------------------------- ------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Net sales $ 1,569,192 $ 868,678 $ 5,742,608 $ 3,367,051 Other income, net 2,127 962 5,768 3,671 ------------ ------------ ------------ ------------ 1,571,319 869,640 5,748,376 3,370,722 Costs and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 1,180,097 617,526 4,231,386 2,449,000 Warehouse, delivery, selling, general and administrative 234,368 132,292 821,386 507,905 Depreciation and amortization 17,342 11,825 62,474 46,631 Interest expense 19,696 5,932 61,692 25,222 ------------ ------------ ------------ ------------ 1,451,503 767,575 5,176,938 3,028,758 Income before minority interest and income taxes 119,816 102,065 571,438 341,964 Minority interest (79) (2,481) (306) (8,752) ------------ ------------ ------------ ------------ Income from continuing operations before income taxes 119,737 99,584 571,132 333,212 Provision for income taxes 45,095 38,996 216,625 127,775 ------------ ------------ ------------ ------------ Net income $ 74,642 $ 60,588 $ 354,507 $ 205,437 ============ ============ ============ ============ Earnings per share: Income from continuing operations - diluted $ .98 $ .91 $ 4.82 $ 3.10 ============ ============ ============ ============ Weighted average shares outstanding - diluted 76,053,725 66,765,624 73,599,681 66,194,724 ============ ============ ============ ============ Income from continuing operations - basic $ .99 $ .92 $ 4.85 $ 3.12 ============ ============ ============ ============ Weighted average shares outstanding - basic 75,562,384 66,144,896 73,134,102 65,870,068 ============ ============ ============ ============ Cash dividends per share $ .06 $ .05 $ .22 $ .19 ============ ============ ============ ============ Reconciliation of EBIT and EBITDA Income from continuing operations before income taxes $ 119,737 $ 99,584 $ 571,132 $ 333,212 Interest expense 19,696 5,932 61,692 25,222 ------------ ------------ ------------ ------------ EBIT 139,433 105,516 632,824 358,434 ------------ ------------ ------------ ------------ Depreciation expense 15,162 11,080 55,591 42,506 Amortization expense 2,180 745 6,883 4,125 ------------ ------------ ------------ ------------ EBITDA $ 156,775 $ 117,341 $ 695,298 $ 405,065 ============ ============ ============ ============ RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Twelve Months Ended December 31, -------------------------------- 2006 2005 ---------------- --------------- Operating activities: Net income $ 354,507 $ 205,437 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 62,474 46,631 Debt premium amortization (2,149) -- Deferred income taxes 7,295 (1,059) Gain on sales of property and equipment (723) -- Gain on debt extinguishment (2,264) -- Minority interest 306 8,751 Stock based compensation expense 6,060 -- Tax benefit of stock options exercised -- 3,476 Excess tax benefits from stock based compensation (3,447) -- Increase in cash surrender value of life insurance policies (582) -- Changes in operating assets and liabilities (excluding effect of businesses acquired): Accounts receivable (50,565) (15,391) Inventories (89,414) (11,345) Prepaid expenses and other assets 6,569 (2,624) Accounts payable and accrued expenses (97,103) 38,343 ---------------- --------------- Net cash provided by operating activities 190,964 272,219 Investing activities: Purchases of property, plant and equipment, net (108,742) (53,740) Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired (542,604) (94,377) Tax distributions made related to a prior acquisition (894) -- Proceeds from sales of property and equipment 3,487 1,485 Proceeds from redemption of life insurance policies 1,415 -- Net investment in life insurance policies (3,096) -- ---------------- --------------- Net cash used in investing activities (650,434) (146,632) Financing activities: Proceeds from borrowings 2,547,316 393,000 Principal payments on long-term debt and short-term borrowings (2,063,656) (486,511) Debt issue costs (8,170) -- Payments to former minority shareholders (1,291) (7,159) Net refunds from letters of credit 12,919 -- Dividends paid (16,145) (12,530) Excess tax benefits from stock based compensation 3,446 -- Exercise of stock options 7,115 10,811 Issuance of common stock 222 246 ---------------- --------------- Net cash provided by (used in) financing activities 481,756 (102,143) Effect of exchange rate changes on cash 167 (81) ---------------- --------------- Increase in cash and cash equivalents 22,453 23,363 Cash and cash equivalents at beginning of period 35,022 11,659 ---------------- --------------- Cash and cash equivalents at end of period $ 57,475 $ 35,022 ================ =============== Supplemental cash flow information: Interest paid during the period $ 70,306 $ 25,309 Income taxes paid during the period $ 213,234 $ 118,909 Non-cash investing and financing activities: Issuance of common stock and stock options in connection with acquisition of metals service center $ 360,453 $ -- Issuance of common stock to employee retirement savings plan $ 2,830 $ -- CONTACT: Reliance Steel & Aluminum Co. Kim P. Feazle, Investor Relations (713) 610-9937 (213) 576-2428 kfeazle@rsac.com investor@rsac.com -----END PRIVACY-ENHANCED MESSAGE-----