Reliance Steel & Aluminum Co. Reports Second Quarter 2016 Financial Results

LOS ANGELES, July 21, 2016

Second Quarter 2016 Financial Highlights

• Sales were $2.20 billion, down 9.1% from $2.42 billion in the second quarter of 2015 and up 1.9% from $2.16 billion in the first quarter of 2016.
• Tons sold were up 0.7% from the second quarter of 2015 and up 1.1% from the first quarter of 2016, with the average selling price per ton sold down 10.1% from the second quarter of 2015 and up 0.9% from the first quarter of 2016.
• Net income attributable to Reliance was $100.9 million, up 11.9% from $90.2 million in the second quarter of 2015 and up 9.4% from $92.2 million in the first quarter of 2016.
• Earnings per diluted share were $1.38, up 15.0% from $1.20 in the second quarter of 2015 and up 8.7% from $1.27 in the first quarter of 2016.
• Non-GAAP earnings per diluted share were $1.36, up 12.4% from $1.21 in the second quarter of 2015 and up 32.0% from $1.03 in the first quarter of 2016.
• Reliance did not record a pre-tax LIFO inventory valuation adjustment in the second quarter of 2016.   The second quarter of 2015 included a pre-tax LIFO credit, or income, of $32.5 million in cost of sales.  In the first quarter of 2016, Reliance did not record a pre-tax LIFO inventory valuation adjustment.
• The effective tax rate was 32.7%, compared to 32.6% in the second quarter of 2015 and 14.4% in the first quarter of 2016.  
• Cash flow from operations was $49.8 million in the second quarter of 2016 and net debt-to-total capital was 33.4% at June 30, 2016.
• A quarterly cash dividend of $0.425 per share, an increase of 6.3%, was declared on July 20, 2016 for stockholders of record as of August 12, 2016 and will be payable on September 9, 2016.

Management Commentary

"I am extremely proud of our managers in the field and their outstanding execution which contributed to our sixth consecutive quarter of FIFO gross profit margin expansion to 31.1%," said Gregg Mollins, President and Chief Executive Officer of Reliance. "Our team has done an excellent job providing higher value to our customers through our significant investments in cutting-edge, value-added processing equipment, and effectively managing our inventory. These efforts, along with recent mill price increases in the marketplace, resulted in further improvement of our gross profit margin in the second quarter of 2016."

Mr. Mollins continued, "The metals pricing environment for carbon steel products was favorable in the second quarter of 2016, with continued mill price increases throughout the quarter.  These increases were supported by stable demand, trade case filings by U.S. steel producers, disciplined domestic mill production capacity behavior, and increased raw material costs. However, the overall pricing environment remains below 2015 levels and far below peak levels, with our average selling price per ton sold in the second quarter of 2016 down 10.1% compared to the second quarter of 2015."

Mr. Mollins concluded, "Both strategic M&A opportunities and organic investments will continue to be integral drivers of future growth for Reliance.  We've maintained a strong balance sheet and believe our managers have done a great job at right-sizing our inventory levels over the past 18 months.  These actions have produced high levels of cash flow, enabling us to execute our balanced capital allocation strategy, allowing for growth of the business as well as stockholder returns, through an increased regular quarterly dividend.  We had an outstanding second quarter with strong financial performance characterized by gross profit margin expansion, as well as diligent expense and inventory management to drive improved profitability. Going forward, we will continue executing our strategy with the goal of extending our track record of delivering industry leading results."