Reliance steel & aluminum co. reports first quarter 2014 financial
results
Los angeles--(business wire)--reliance steel & aluminum co. (nyse: rs) today reported its financial results for the first quarter ended march 31, 2014. first quarter 2014 financial highlights sales were $2.55 billion, up 26.1% from $2.03 billion in the first quarter of 2013 and up 10.7% from $2.31 billion in the fourth quarter of 2013. tons sold were up 38.6% from the first quarter of 2013 and up 8.9% from the fourth quarter of 2013, with the average selling price per ton sold down 8.7% from the first quarter of 2013 and up 1.7% from the fourth quarter of 2013. net income attributable to reliance was $87.2 million, up 4.2% from $83.7 million in the first quarter of 2013 and up 41.1% from $61.8 million in the fourth quarter of 2013. earnings per diluted share were $1.11, up 1.8% from $1.09 in the first quarter of 2013 and up 40.5% from $0.79 in the fourth quarter of 2013. non-gaap earnings per diluted share were $1.19, up 5.3% from $1.13 in the first quarter of 2013 and up 29.3% from $0.92 in the fourth quarter of 2013. a pre-tax lifo charge, or expense, of $5.0 million, is included in cost of sales compared to a pre-tax lifo credit, or income, of $5.0 million in the first quarter of 2013 and a credit of $12.7 million for the fourth quarter of 2013. the effective tax rate was 34.5%, compared to 29.5% in the first quarter of 2013 and 33.0% in the fourth quarter of 2013. cash flow from operations was $68.8 million for the first quarter of 2014 and net debt-to-total capital was 33.8% at march 31, 2014. quarterly cash dividend increased to $0.35 per share during the quarter. management commentary “during the first quarter, the overall improvement in demand that we experienced in the second half of 2013 continued, in addition to the normal seasonal pick-up compared to the fourth quarter, with tons sold up 8.9%. our average selling price per ton sold increased 1.7% compared to the prior quarter,” said david h. hannah, chairman and ceo of reliance. “both demand and pricing increased sequentially for three months in a row during the first quarter, a trend we have not experienced since early 2012.” “however, notwithstanding the positive trends during the quarter, pricing remains lower on a year-over-year basis which resulted in a 4.4% reduction in our average price per ton sold (same store) and somewhat offsets the 8.4% year-over-year improvement in total tons sold (same store). our consolidated sales increased 26.1% over the year ago quarter due to our acquisition activity, including metals usa that we closed in april 2013. our non-gaap earnings per diluted share of $1.19 for the first quarter were slightly below our guidance range due to more volatile metals pricing than we had anticipated. our gaap earnings per share included $0.08 of charges related to a previously disclosed litigation matter. also impacting our earnings as compared to the first and fourth quarters were lifo charges and a higher effective tax rate which, together, reduced earnings per diluted share by approximately $0.16 compared to each of those periods. we continue to be pleased with the operational execution of our managers in the field as demonstrated by reliance’s relatively consistent fifo gross profit margin that helps to mitigate the impact of the lower pricing on our profitability.” mr. hannah concluded, “reliance continues to operate from a position of financial strength as evidenced by our strong balance sheet and cash flow generation. as of the end of the first quarter, our net debt-to-total capital ratio improved to 33.8% with over $900 million available on our $1.5 billion revolving credit facility. our financial position and liquidity provides a strong foundation for re-investment in our business—both organically and through strategic acquisitions—to create long-term shareholder value.” first quarter 2014 business metrics first quarter 2014 major commodity metrics end-market commentary as noted above, same-store tons sold increased 8.4% compared to the first quarter of 2013. the increase was spread across all of the company’s product groups and related end markets. while the company does not expect any single end-market to deliver outsized growth in 2014, reliance does expect ongoing strength in automotive (through the company’s toll processing operations) along with solid operating results in aerospace, energy (oil and gas), semiconductor/electronics and manufactured goods. the company also anticipates a mild recovery in non-residential construction in 2014. aerospace demand is expected to improve in 2014, although reliance expects pricing will remain under some pressure due to excess mill capacity and higher industry-wide aluminum plate inventory levels. automotive, supported mainly by the company’s toll processing operations in the u.s. and mexico, is expected to generate solid performance again in 2014. energy (oil and gas) demand for the products reliance sells is expected to modestly improve in 2014, along with slightly better pricing. heavy industry continues to perform reasonably well. reliance expects modest improvement in both demand and pricing in 2014. non-residential construction is showing the beginning signs of a possible recovery, albeit at significantly reduced demand levels from its peak. reliance is cautiously optimistic that this important end-market will show further improvement throughout 2014. balance sheet & liquidity as of march 31, 2014, total debt outstanding was $2.13 billion, for a net debt-to-total capital ratio of 33.8%, down from 34.3% at december 31, 2013. the company had $505.0 million outstanding on the $1.5 billion revolving credit facility at march 31, 2014. the company generated $68.8 million in cash flow from operating activities in the first quarter of 2014, compared to cash flow from operating activities of $72.2 million during the same period in the prior year. reliance remains pleased with its overall financial position and strong cash flow. corporate developments on april 22, 2014, the board of directors declared a regular quarterly cash dividend of $0.35 per share of common stock. the dividend is payable on june 20, 2014 to shareholders of record as of may 30, 2014. the company has paid regular quarterly dividends for 55 consecutive years. cash dividends per share paid in 2013 were up 57.5% compared to 2012. business outlook as the u.s. economy maintains its slow but steady recovery, reliance expects metals pricing and demand to continue to improve throughout the second quarter. as a result, assuming increased tons sold and average pricing up modestly, for the second quarter ending june 30, 2014, management currently expects earnings per diluted share to be in the range of $1.30 to $1.40. conference call details a conference call and simultaneous webcast to discuss first quarter 2014 financial results and business outlook will be held today, april 24, 2014, at 11:00 a.m. eastern time / 8:00 a.m. pacific time. david hannah, reliance steel & aluminum co.'s chairman of the board and chief executive officer, gregg mollins, president and chief operating officer and karla lewis, executive vice president and chief financial officer, will host the call. to listen to the live call by telephone, please dial (877) 407-0789 (u.s. and canada) or (201) 689-8562 (international) approximately 10 minutes prior to the start time and use conference id: 13579752. the call will also be broadcast live over the internet hosted on the investors section of the company's website at investor.rsac.com. participants are encouraged to visit the web site at least 15 minutes prior to the start of the call to register and to download and install any necessary audio software. for those unable to participate during the live broadcast, a replay of the call will also be available beginning that same day at 2:00 p.m. eastern time until 11:59 p.m. eastern time on thursday, may 8, 2014 by dialing (877) 870-5176 and entering the conference id: 13579752. the webcast will remain posted on the investors section of reliance’s web site at investor.rsac.com for 90 days. about reliance steel & aluminum co. 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 290 locations in 39 states and eleven countries outside of the united states, 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. forward-looking statements this press release contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of the private securities litigation reform act of 1995. forward-looking statements may include, but are not limited to, discussions of reliance's business strategies and its expectations concerning future metals pricing and demand and the company's results of operations, margins, profitability, liquidity, litigation matters and capital resources. in some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" and "continue," the negative of these terms, and similar expressions. these forward-looking statements are based on management's estimates, projections and assumptions as of today’s date that may not prove to be accurate. forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements as a result of various important factors, including, but not limited to, those disclosed in reports we have filed with the securities and exchange commission (the "sec"). as a result, these statements speak only as of the date that they are made, and reliance disclaims any and all obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. important risks and uncertainties about reliance's business can be found in the company's annual report on form 10-k for the year ended december 31, 2013 filed with the sec. reliance steel & aluminum co. * amounts were derived from audited financial statements. * amounts were derived from audited financial statements. our presentation of adjusted net income and adjusted eps over certain periods is an attempt to provide meaningful comparisons to our historical performance for our existing and future shareholders. adjustments exclude charges for transaction costs related to our april 2013 acquisition of metals usa and legal costs and accruals related to the houston, texas anti-trust litigation matter, which make comparisons of our operating results between periods difficult using gaap measures.
