Reliance Steel & Aluminum Co. reported its financial results for the second quarter and six months ended 30 June 2012. For the 2012 second quarter, Reliance reported net income of $108.8 million, up 10% from 2011 second quarter net income of $98.7 million, and down 6% from 2012 first quarter net income of $116.2 million. Earnings per diluted share were $1.44 in the 2012 second quarter, up 10% from 2011 second quarter earnings per diluted share of $1.31 and down 6% from $1.54 in the 2012 first quarter. Sales for the 2012 second quarter were $2.21 billion, up 8% from 2011 second quarter sales of $2.05 billion, and down 3% from 2012 first quarter sales of $2.29 billion. The 2012 second quarter financial results include in cost of sales a pre-tax LIFO credit, or income, of $7.5 million, compared with a pre-tax LIFO charge, or expense, of $25.0 million for the 2011 second quarter and a charge of $7.5 million for the 2012 first quarter.
For the six months ended June 30, 2012, net income amounted to $225.0 million, up 18% compared with net income of $191.0 million for the 2011 six-month period. Earnings per diluted share were $2.98 for the six months ended June 30, 2012, up 17% compared with earnings of $2.54 per diluted share for the six months ended June 30, 2011. Sales for the 2012 six months were $4.50 billion, up 14% from 2011 six-month sales of $3.96 billion. The 2012 six-month financial results include no charge related to LIFO compared with a pre-tax LIFO charge of $45.0 million for the 2011 six months. LIFO adjustments, in effect, reflect cost of sales at current replacement costs.
Reliance’s tons sold for the 2012 second quarter were up 10% from the 2011 second quarter and down 2% from the 2012 first quarter. The average price per ton sold in the 2012 second quarter was down 2% compared to both the 2011 second quarter and the 2012 first quarter. For the 2012 second quarter, carbon steel sales were 52% of net sales; aluminum sales were 15%; stainless steel sales were 15%; alloy sales were 11%; toll processing sales were 2%; and other sales were 5%.
David H. Hannah, Chairman and CEO of Reliance, said, "We were pleased with our 2012 second quarter results which were in line with our expectations, although general economic uncertainty in the marketplace along with declining costs for most all of our products negatively pressured both volumes and pricing. At the operating income level, our 2012 second quarter was up 1% over the 2012 first quarter, and up 12% compared to the 2011 second quarter. Underlying demand slowed slightly from the 2012 first quarter, but still represents solid improvement when compared to the 2011 periods. The declines in the costs of our products were supply, not demand, driven, as underlying cost inputs at the producer level decreased, imports were plentiful, and domestic overcapacity persisted."
"We continue to see strength in energy (oil and gas), aerospace, farm and heavy equipment, and auto (through our toll processing business), and expect continued growth in these markets. Additionally, we grew further with our 2012 acquisitions of National Specialty Alloys, LLC (effective 3 April 2012) and McKey Perforating Co., Inc. (effective 1 February 2012) plus two strategic asset purchases. We grew in specialty products and high value-added processing, as well as expanded into Australia," Hannah continued.
"Our balance sheet remains strong, with only $845 million outstanding on our $1.5 billion credit facility and net debt-to-total capital at 30% at 30 June 2012. We have ample liquidity to continue our growth strategies as well as enhance our return to shareholders with our increased dividend," Hannah further commented.
"At this time, we expect economic uncertainty to persist through the 2012 third quarter, which is seasonally softer from a demand perspective even under normal circumstances. Additionally, we do not expect any significant pricing changes for our products during the 2012 third quarter. Given these expectations, and considering there will be one less shipping day than in the 2012 second quarter, we currently estimate earnings per diluted share in a range of $1.15 to $1.25 for the 2012 third quarter," concluded Hannah.
Effective 3 April 2012, the company further extended its footprint in the energy market with the acquisition of National Specialty Alloys, LLC, a processor and distributor of premium stainless steel and nickel alloy bars and shapes based in Houston, Texas. Also in April, the assets of the Vonore, Tenn., Worthington Steel plant were purchased by the company’s Precision Strip, Inc. subsidiary, which expanded our toll processing network into that area.
Effective 30 June 2012, Reliance, through its newly-formed subsidiary Bralco Metals (Australia) Pty Ltd, acquired substantially all of the assets of Airport Metals (Australia) Pty Ltd, a subsidiary of Samuel Son & Co., Limited. Airport Metals, based in Melbourne, Australia, operates as a stocking distributor of aircraft materials and supplies. Terms were not disclosed.
On 24 July 2012, the Board of Directors increased the regular quarterly cash dividend 67%, declaring a dividend of $.25 per share of common stock, up from $.15 per share in the 2012 first half and $.12 per share in 2011. The dividend is payable on 14 September2012 to shareholders of record 17 August 2012. The company has increased its dividend 18 times since the IPO in 1994 and has paid regular quarterly dividends for 53 consecutive years.
Reliance Steel & Aluminum Co., headquartered in Los Angeles, Calif., is the largest metals service center company in North America. Through a network of more than 220 locations in 38 states and Australia, Belgium, Canada, China, Malaysia, Mexico, Singapore, South Korea, the U.A.E. 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.