LOS ANGELES--(BUSINESS WIRE)--February 18, 2010--Reliance Steel & Aluminum Co. (NYSE:RS) reported today its financial results for the fourth quarter and fiscal year ended December 31, 2009. For the 2009 fourth quarter, Reliance reported net income of $92.1 million, up 39% from 2008 fourth quarter net income of $66.3 million. Earnings per diluted share were $1.25 in the 2009 fourth quarter, also up 39% from 2008 fourth quarter earnings per diluted share of $.90. For the 2009 third quarter, Reliance’s net income was $41.8 million, or $.57 earnings per diluted share. Sales for the 2009 fourth quarter were $1.27 billion, down 41% from 2008 fourth quarter sales of $2.14 billion and up 2% from 2009 third quarter sales of $1.24 billion. The 2009 fourth quarter financial results include in cost of sales a pre-tax LIFO credit, or income, of $87.5 million, compared with pre-tax LIFO credits of $27.3 million in the 2008 fourth quarter, and $67.5 million in the 2009 third quarter. The 2009 fourth quarter results also include $.20 per diluted share from a favorable change in Reliance’s 2009 annual effective tax rate compared to the year-to-date rate used at September 30, 2009 mainly due to the favorable resolution of certain tax matters in the 2009 fourth quarter.

For the 2009 year, net income was $148.2 million, compared with record net income of $482.8 million for the 2008 year. Earnings per diluted share were $2.01 for the 2009 year, compared with record earnings per diluted share of $6.56 for 2008. Sales for the 2009 year were $5.32 billion, down 39% from record 2008 sales of $8.72 billion. The 2009 fiscal year financial results include in cost of sales a pre-tax LIFO credit of $305.0 million, compared with a pre-tax LIFO charge, or expense, of $109.2 million for the 2008 year. The LIFO adjustments, in effect, reflect cost of sales at current replacement costs.

Reliance’s tons sold for the 2009 fourth quarter and year were down 23% and 15%, respectively, from the corresponding 2008 periods. 2009 fourth quarter and annual average prices per ton sold were down 24% and 28%, respectively, compared to the 2008 periods. Business conditions during the fourth quarter improved as average pricing increased 5% compared to the 2009 third quarter, and tons sold decreased only 3%. For the 2009 year, carbon steel sales were 56% of revenues; aluminum sales were 18%; stainless steel sales were 13%; alloy sales were 7%; other sales were 4% and toll processing sales were 2%.

David H. Hannah, Chairman and CEO of Reliance, said, “As we stated in our fourth quarter earnings update, both demand and pricing were at better levels than expected, given the seasonal pressures that we typically experience in the fourth quarter. Our gross profit margins improved sequentially in the 2009 fourth quarter due to stronger pricing and a larger LIFO credit than in the 2009 third quarter. Our 2009 results for the quarter and the year also benefited from lower tax rates during those periods than we had originally estimated. Our FIFO gross profit margins troughed in the 2009 second quarter at just under 17% and then steadily improved through the remainder of the year to 25% in the 2009 fourth quarter. Although demand is still at relatively low levels, because pricing is more stable and our inventory costs are more current, we are now able to generate more consistent and higher FIFO gross profit margins which we expect to continue into the 2010 first quarter. Although we do not expect our 2010 earnings to have the benefit of LIFO credits, or income, which improved our earnings greatly last year, we also do not expect our FIFO gross profit margins to return to the low levels experienced during 2009.

“As we enter 2010, we are a financially stronger company than a year ago. During 2009, resulting from our focus on working capital management and expense reductions, we generated record cash flow from operations of $943 million and paid down approximately $830 million of debt, ending the year with a net debt-to-total capital ratio of only 25.6%, down from 41.4% at December 31, 2008. Additionally, at the end of 2009, we only had $115 million outstanding on our $1.1 billion credit facility,” commented Hannah.

“Currently, we anticipate that demand overall will recover slowly as the year progresses, and we also expect pricing to stay at or near current levels through the 2010 first quarter. Our January 2010 FIFO gross profit margins improved over 2009 fourth quarter levels, and revenues per day were up from December’s rate and were the highest since March 2009, but still below those of January a year ago. Although we do expect shipments in the 2010 first quarter to continue to increase and our FIFO gross profit margins to be at least at fourth quarter levels, we are not comfortable providing earnings guidance at this time because of our uncertainty regarding the extent of the demand improvement in the 2010 first quarter,” concluded Hannah.

On February 17, 2010, the Board of Directors declared a regular quarterly cash dividend of $.10 per share of common stock. The dividend is payable on March 26, 2010 to shareholders of record March 5, 2010. The Company has paid regular quarterly dividends for 50 consecutive years.

Reliance will host a conference call that will be broadcast live over the Internet (listen only mode) regarding the fourth quarter and 12 months financial results for the period ended December 31, 2009. All interested parties are invited to listen to the web cast on February 18, 2010 at 11:00 a.m. Eastern Time at: http://www.rsac.com on the Investor Information section or http://www.streetevents.com. Player format: Windows Media and RealPlayer. The web cast will remain on the Reliance web site at: www.rsac.com on the Investor Information section through March 18, 2010 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 the largest metals service center company in North America. Through a network of more than 200 locations in 38 states and Belgium, Canada, China, Mexico, Singapore, South Korea, and the United Kingdom, the Company provides value-added metals processing services and distributes a full line of over 100,000 metal products to more than 125,000 customers in a broad range of 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 2008 “Fortune 500” List, the 2008 Forbes “America’s Best Managed Companies” List and the 2009 Fortune List of “The World’s Most Admired Companies.”

This release may contain forward-looking statements. Actual results and events may differ materially as a result of a variety of factors, many of which are outside of Reliance Steel & Aluminum Co.’s control. Risk factors and additional information are included in Reliance Steel & Aluminum Co.’s reports on file with the Securities and Exchange Commission, including Reliance Steel & Aluminum Co.’s Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009.



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,
	2009			2008			2009			2008
Income Statement Data:
Net sales	$	1,273,246		$	2,142,770		$	5,318,132		$	8,718,844
Gross profit¹		405,725			458,835			1,399,521			2,162,096
Operating income		122,718			126,554			250,392			852,971
Pre-tax income		112,849			97,766			195,493			766,556
Net income attributable to Reliance		92,070			66,288			148,158			482,777
Diluted earnings per share attributable to Reliance shareholders	$	1.25		$	0.90		$	2.01		$	6.56
Weighted average shares outstanding – diluted		73,919,206			73,303,839			73,701,979			73,597,717
Gross profit margin¹		31.9	%		21.4	%		26.3	%		24.8	%
Operating income margin		9.6	%		5.9	%		4.7	%		9.8	%
Pre-tax income margin		8.9	%		4.6	%		3.7	%		8.8	%
Net income margin - Reliance		7.2	%		3.1	%		2.8	%		5.5	%
Cash dividends per share	$	.10		$	.10		$	.40		$	.40

¹ Gross profit, calculated as Net sales less Cost of sales, and Gross profit margin, calculated as Gross profit divided by Net sales, are non-GAAP financial measures as they exclude depreciation and amortization expense associated with the corresponding sales. The majority of our orders are basic distribution with no processing services performed. For the remainder of our sales orders, we perform “first-stage” processing which is generally not labor intensive as we are simply cutting the metal to size. Because of this, the amount of related labor and overhead, including depreciation and amortization, are not significant and are excluded from our Cost of sales. Therefore, our Cost of sales is primarily comprised of the cost of the material we sell. We use Gross profit and Gross profit margin as shown above as measures of operating performance. Gross profit and Gross profit margin are important operating and financial measures, as fluctuations in our Gross profit margin can have a significant impact on our earnings. Gross profit and Gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies.

² Long-term debt includes capital lease obligations of $3,182 and $3,833 as of December 31, 2009 and December 31, 2008, respectively.

³ Net debt-to-total capital is calculated as total debt (net of cash) divided by total Reliance shareholders’ equity plus total debt (net of cash).

⁴ Calculations are based on the latest twelve months net income and beginning total Reliance shareholders’ equity.



RELIANCE STEEL & ALUMINUM CO. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)

ASSETS
	December 31,			December 31,
	2009			2008
	(Unaudited)
Current assets:
Cash and cash equivalents	$	43,002		$	51,995
Accounts receivable, less allowance for doubtful accounts of $21,269 at December 31, 2009 and $22,018 at December 31, 2008		533,871			851,214
Inventories		719,915			1,284,468
Prepaid expenses and other current assets		37,855			33,782
Income taxes receivable		54,020			9,980
Deferred income taxes		2,241			70,933
Total current assets		1,390,904			2,302,372
Property, plant and equipment:
Land		131,009			125,096
Buildings		543,590			506,781
Machinery and equipment		829,154			810,054
Accumulated depreciation		(522,494	)		(443,225	)
		981,259			998,706

Goodwill		1,081,324			1,065,527
Intangible assets, net		726,255			741,681
Cash surrender value of life insurance policies, net		92,860			57,410
Investments in unconsolidated entities		20,880			20,605
Other assets		13,295			9,184
Total assets	$	4,306,777		$	5,195,485
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	169,113		$	248,312
Accrued expenses		51,730			59,982
Deferred revenue		3,534			82,949
Accrued compensation and retirement costs		67,012			123,707
Accrued insurance costs		39,134			40,700
Current maturities of long-term debt		86,383			93,877
Current maturities of capital lease obligations		663			638
Total current liabilities		417,569			650,165
Long-term debt		849,375			1,671,732
Capital lease obligations		3,182			3,833
Long-term retirement costs and other long-term liabilities		92,632			94,361
Deferred income taxes		335,897			340,326
Commitments and contingencies
Reliance shareholders’ equity:
Common stock, no par value:
Authorized shares — 100,000,000
Issued and outstanding shares —73,750,771 at December 31, 2009 and 73,312,714 at December 31, 2008, stated capital		587,612			563,092
Retained earnings		2,020,343			1,900,360
Accumulated other comprehensive loss		(1,523	)		(32,016	)
Total Reliance shareholders’ equity		2,606,432			2,431,436
Noncontrolling interests		1,690			3,632
Total equity		2,608,122			2,435,068
Total liabilities and equity	$	4,306,777		$	5,195,485

RELIANCE STEEL & ALUMINUM CO. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts)

	Three Months						Twelve Months
	Ended December 31,						Ended December 31,
	2009			2008			2009			2008

Net sales	$	1,273,246		$	2,142,770		$	5,318,132		$	8,718,844

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		867,521			1,683,935			3,918,611			6,556,748
Warehouse, delivery, selling, general and administrative		253,975			304,177			1,030,245			1,211,201
Depreciation and amortization		29,032			28,104			118,884			97,924
		1,150,528			2,016,216			5,067,740			7,865,873

Operating income		122,718			126,554			250,392			852,971

Other income (expense):
Interest		(15,593	)		(25,902	)		(67,523	)		(82,575	)
Other income (expense), net		5,724			(2,886	)		12,624			(3,840	)
Income before income taxes		112,849			97,766			195,493			766,556
Income tax provision		20,582			31,316			46,317			282,921
Net income		92,267			66,450			149,176			483,635
Less: Net income attributable to noncontrolling interests		197			162			1,018			858
Net income attributable to Reliance	$	92,070		$	66,288		$	148,158		$	482,777

Earnings per share:
Diluted earnings per common share attributable to Reliance shareholders	$	1.25		$	0.90		$	2.01		$	6.56
Weighted average shares outstanding - diluted		73,919,206			73,303,839			73,701,979			73,597,717

Basic earnings per common share attributable to Reliance shareholders	$	1.25		$	0.90		$	2.02		$	6.60
Weighted average shares outstanding - basic		73,607,423			73,293,047			73,445,583			73,102,215

Cash dividends per share	$	.10		$	.10		$	.40		$	.40

RELIANCE STEEL & ALUMINUM CO. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

	Twelve Months Ended December 31,
	2009			2008
Operating activities:
Net income	$	149,176		$ 483,635
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		118,884		97,924
Provision for deferred income taxes		58,016		22,720
Loss on sales of property, plant and equipment		138		2,658
Equity in earnings of unconsolidated entities		(1,395	)	(565	)
Dividends received from unconsolidated entities		1,120		—
Stock based compensation expense		15,530		13,189
Excess tax benefits from stock based compensation		(1,533	)	(9,693	)
Net (gain) loss from life insurance policies		(10,482	)	4,373
Changes in operating assets and liabilities (excluding effect of businesses acquired):
Accounts receivable		322,163		166,025
Inventories		569,943		191,472
Prepaid expenses and other assets		(56,439	)	(9,121	)
Accounts payable and other liabilities		(222,125	)	(297,933	)
Net cash provided by operating activities		942,996		664,684

Investing activities:
Purchases of property, plant and equipment		(69,901	)	(151,890	)
Acquisitions of metals service centers and net asset purchases of metal service centers, net of cash acquired		—		(330,249	)
Tax distributions related to prior acquisitions		—		(1,155	)
Proceeds from sales of property, plant and equipment		1,284		19,116
Net proceeds from redemptions of life insurance policies		6,576		1,634
Net (investment in) borrowings from life insurance policies		(31,544	)	4,890
Net cash used in investing activities		(93,585	)	(457,654	)

Financing activities:
Proceeds from borrowings		357,286		1,687,691
Principal payments on long-term debt and short-term borrowings		(1,188,454	)	(1,798,602	)
Debt issuance costs		(6,841	)	(3,313	)
Dividends paid		(29,383	)	(29,229	)
Payments to noncontrolling interest holders		(2,057	)	(1,225	)
Excess tax benefits from stock based compensation		1,533		9,693
Exercise of stock options		10,490		17,987
Issuance of common stock		258		284
Noncontrolling interests purchases		(2,661	)	—
Common stock repurchases		—		(114,774	)
Net cash used in financing activities		(859,829	)	(231,488	)
Effect of exchange rate changes on cash		1,425		(570	)
Decrease in cash and cash equivalents		(8,993	)	(25,028	)
Cash and cash equivalents at beginning of period		51,995		77,023
Cash and cash equivalents at end of period	$	43,002		$ 51,995

Supplemental cash flow information:
Interest paid during the period	$	76,050		$ 74,654
Income taxes paid during the period	$	49,099		$ 267,224

CONTACT:
Reliance Steel & Aluminum Co.
Kim P. Feazle
Investor Relations
713-610-9937
213-576-2428
kfeazle@rsac.com
investor@rsac.com