EX-99.1 2 a5381086ex991.txt EXHIBIT 99.1 Exhibit 99.1 Reliance Steel & Aluminum Co. Reports Record 2007 First Quarter Results LOS ANGELES--(BUSINESS WIRE)--April 19, 2007--Reliance Steel & Aluminum Co. (NYSE:RS) reported today its financial results for the first quarter ended March 31, 2007. For the 2007 first quarter, net income was a record $111.7 million, up 55% compared with net income of $71.9 million for the 2006 first quarter. Earnings per diluted share were a record $1.46 for the 2007 first quarter, compared with $1.07 for the 2006 first quarter. 2007 first quarter sales were $1.84 billion, an increase of 86% compared with 2006 first quarter sales of $988 million. The 2007 first quarter financial results include in cost of sales a pre-tax LIFO expense amount of $18.8 million, or $.15 per diluted share, compared with a pre-tax LIFO expense amount of $5.0 million, or $.05 per diluted share in the 2006 first quarter. All share and per share amounts have been adjusted for the two-for-one common stock split effective July 19, 2006. David H. Hannah, Chief Executive Officer of Reliance said, "We are very pleased with our 2007 first quarter results. Overall, customer demand was steady throughout the quarter at what we consider to be a healthy level. Our first quarter performance, as compared to 2006, was most significantly impacted by our 2006 and 2007 acquisitions that represented over $750 million of revenue in the 2007 first quarter." "During the quarter, we completed three acquisitions. They include the Encore Group of metals service center companies (Encore Metals, Encore Metals (USA), Inc., Encore Coils, and Team Tube in Canada) headquartered in Edmonton, Alberta, Canada; Crest Steel Corporation, a metals service center company headquartered in Carson, CA and Industrial Metals and Surplus, Inc. a metals service center company headquartered in Atlanta, GA and a related company, Athens Steel, Inc. located in Athens, GA," Hannah said. "We also managed our working capital well during the quarter that ended with net debt-to-total capital at 40.6%. Operating cash flow was strong at about $71 million, up 72% from the 2006 first quarter. In April of 2007, we exchanged the $600 million of notes that were issued in November of 2006 for publicly traded notes registered with the Securities and Exchange Commission," added Hannah. "We believe that our major markets including aerospace, energy, non-residential construction, electronics and semiconductors, as well as rail car and ship building will continue to grow, but at a slower rate than in 2006. Additionally, we do not expect our costs and pricing to change significantly as the year progresses. As a result, we expect record sales and earnings in 2007 and currently estimate earnings per diluted share for the 2007 second quarter in a range of $1.45 to $1.55," 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 was paid on March 30 to shareholders of record March 9. The Company has paid regular quarterly dividends for 47 consecutive years. Reliance will host a conference call that will be broadcast live over the Internet (listen only mode) regarding the first quarter financial results for the period ended March 31, 2007. All interested parties are invited to listen to the web cast on April 19, 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 May 19, 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 2007 List of "America's Most Admired Companies" by Fortune 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 Ended March 31, -------------------------------- 2007 2006 ---------------- --------------- Income Statement Data: Net sales $ 1,841,890 $ 987,986 Gross profit 472,452 270,185 Operating profit(1) 200,844 122,114 EBITDA(2) 217,274 134,368 EBIT(2) 198,823 122,547 Pre-tax income 178,713 116,838 Net income 111,696 71,855 EPS - diluted(3) $ 1.46 $ 1.07 Weighted average shares outstanding - Diluted(3) 76,452,752 67,196,664 Gross profit margin 25.7% 27.3% Operating profit margin(1) 10.9% 12.4% EBITDA margin(2) 11.8% 13.6% EBIT margin(2) 10.8% 12.4% Pre-tax margin 9.7% 11.8% Net margin 6.1% 7.3% Cash dividends per share(3) $ .08 $ .05 March 31, December 31, 2007 2006 ---------------- --------------- Balance Sheet and Other Data: Current assets $ 1,952,602 $ 1,675,389 Working capital 1,255,382 1,124,650 Net fixed assets 758,318 742,672 Total assets 4,075,325 3,614,173 Current liabilities 697,220 550,739 Long-term debt(4) 1,304,632 1,088,051 Shareholders' equity 1,864,258 1,746,398 Capital expenditures (year-to-date) 24,730 108,742 Net debt-to-total capital(5) 40.6% 37.6% Return on equity(6) 22.6% 27.3% Current ratio 2.8 3.0 Book value per share(3) $ 24.53 $ 23.07 Cash flow from operations per share(3), (7) $ 2.90 $ 2.59 (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 $5,004 and $4,956 as of March 31, 2007 and December 31, 2006, 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. The 2006 calculation adjusted beginning shareholders' equity for $360.5 million of common stock and stock options issued to fund an acquisition on April 3, 2006. (7) Calculations are based on the latest twelve months. RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) ASSETS March 31, December 31, 2007 2006 ---------------- --------------- Current assets: Cash and cash equivalents $ 28,578 $ 57,475 Accounts receivable, less allowance for doubtful accounts of $20,010 at March 31, 2007 and $16,755 at December 31, 2006 835,204 666,273 Inventories 1,063,840 904,318 Prepaid expenses and other current assets 24,980 22,179 Income taxes receivable -- 25,144 ---------------- --------------- Total current assets 1,952,602 1,675,389 Property, plant and equipment, at cost: Land 108,994 108,022 Buildings 396,412 385,851 Machinery and equipment 586,100 565,951 Accumulated depreciation (333,188) (317,152) ---------------- --------------- 758,318 742,672 Goodwill 932,281 784,871 Intangible assets, net 371,061 354,195 Cash surrender value of life insurance policies, net 44,162 41,190 Other assets 16,901 15,856 ---------------- --------------- Total assets $ 4,075,325 $ 3,614,173 ================ =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 445,002 $ 340,356 Accrued expenses 58,662 36,481 Accrued compensation and retirement costs 63,613 92,905 Accrued insurance costs 36,673 34,475 Income taxes payable 36,741 -- Deferred income taxes 23,707 23,706 Current maturities of long-term debt 32,257 22,257 Current maturities of capital leases 565 559 ---------------- --------------- Total current liabilities 697,220 550,739 Long-term debt 1,266,806 1,083,095 Capital lease obligations 5,004 4,956 Long-term retirement costs and other long-term liabilities 52,233 46,111 Deferred income taxes 188,468 181,628 Minority interest 1,336 1,246 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 -- 76,005,439 at March 31, 2007 and 75,702,046 at December 31, 2006, respectively, stated capital 709,122 701,690 Retained earnings 1,154,352 1,046,339 Accumulated other comprehensive income/(loss) 784 (1,631) ---------------- --------------- Total shareholders' equity 1,864,258 1,746,398 ---------------- --------------- Total liabilities and shareholders' equity $ 4,075,325 $ 3,614,173 ================ =============== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) Three Months Ended March 31, -------------------------------- 2007 2006 ---------------- --------------- Net sales $ 1,841,890 $ 987,986 Other income, net 374 1,278 ---------------- --------------- 1,842,264 989,264 Costs and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 1,369,438 717,801 Warehouse, delivery, selling, general and administrative 255,552 137,095 Depreciation and amortization 18,451 11,821 Interest expense 20,110 5,709 ---------------- --------------- 1,663,551 872,426 ---------------- --------------- Income from continuing operations before income taxes 178,713 116,838 Provision for income taxes 67,017 44,983 ---------------- --------------- Net income $ 111,696 $ 71,855 ================ =============== Earnings per share: Income from continuing operations - diluted $ 1.46 $ 1.07 ================ =============== Weighted average shares outstanding - diluted 76,452,752 67,196,664 ================ =============== Income from continuing operations - basic $ 1.47 $ 1.08 ================ =============== Weighted average shares outstanding - basic 75,862,219 66,279,524 ================ =============== Cash dividends per share $ .08 $ .05 ================ =============== Reconciliation of EBIT and EBITDA Income from continuing operations before income taxes $ 178,713 $ 116,838 Interest expense 20,110 5,709 ---------------- --------------- EBIT 198,823 122,547 ---------------- --------------- Depreciation expense 16,147 11,023 Amortization expense 2,304 798 ---------------- --------------- EBITDA $ 217,274 $ 134,368 ================ =============== RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended March 31, -------------------------------- 2007 2006 ---------------- --------------- Operating activities: Net income $ 111,696 $ 71,855 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,451 11,821 Deferred income taxes (238) (436) Gain on sales of property and equipment (591) (527) Minority interest 90 47 Stock based compensation expense 1,812 1,132 Excess tax benefits from stock based compensation (2,390) (963) Increase in cash surrender value of life insurance policies (118) -- Changes in operating assets and liabilities (excluding effect of businesses acquired): Accounts receivable (113,562) (66,261) Inventories (61,299) (53,935) Prepaid expenses and other assets (1,335) (2,180) Accounts payable and accrued expenses 118,253 80,486 ---------------- --------------- Net cash provided by operating activities 70,769 41,039 Investing activities: Purchases of property, plant and equipment, net (24,730) (26,109) Acquisitions of metals service centers and net asset purchases of metals service centers, net of cash acquired (217,348) (34,826) Proceeds from sales of property and equipment 823 1,678 Net investment in life insurance policies (64) -- ---------------- --------------- Net cash used in investing activities (241,319) (59,257) Financing activities: Proceeds from borrowings 450,375 170,000 Principal payments on long-term debt and short-term borrowings (310,610) (150,457) Payments to former minority shareholders -- (1,291) Dividends paid (6,073) (3,316) Excess tax benefits from stock based compensation 2,390 963 Exercise of stock options 5,339 1,236 Issuance of common stock 281 222 ---------------- --------------- Net cash provided by financing activities 141,702 17,357 Effect of exchange rate changes on cash (49) 298 ---------------- --------------- Increase in cash and cash equivalents (28,897) (563) Cash and cash equivalents at beginning of period 57,475 35,022 ---------------- --------------- Cash and cash equivalents at end of period $ 28,578 $ 34,459 ================ =============== Supplemental cash flow information: Interest paid during the period $ 5,304 $ 4,112 Income taxes paid during the period $ 2,514 $ 5,427 CONTACT: Reliance Steel & Aluminum Co. Kim P. Feazle, Investor Relations (713) 610-9937 (213) 576-2428 kfeazle@rsac.com investor@rsac.com