April 28, 2022 06:50 ET | Source: Reliance Steel & Aluminum Co. Reliance Steel & Aluminum Co.
Los Angeles, California, UNITED STATES
- Record quarterly sales of $4.49 billion, tons sold up 10.7% from Q4 2021 - Record quarterly gross profit of $1.39 billion driven by strong gross profit margin of 30.9% - Record quarterly pretax income of $697.2 million and margin of 15.5% - Record quarterly EPS of $8.33, non-GAAP EPS of $8.42 - Record first quarter cash flow from operations of $404.0 million
LOS ANGELES, April 28, 2022 (GLOBE NEWSWIRE) -- Reliance Steel & Aluminum Co. (NYSE: RS) today reported its financial results for the first quarter ended March 31, 2022.
Management Commentary “Outstanding operational execution throughout our Family of Companies in the first quarter led to a continuation of the record results we achieved in 2021 and once again demonstrated the durability and effectiveness of our business model,” said Jim Hoffman, Chief Executive Officer of Reliance. “Notwithstanding ongoing macroeconomic challenges, our performance was supported by positive underlying trends including continued strong demand with improving shipment levels in each month of the quarter, along with ongoing strength in metals pricing. Our results also benefitted from our strategic diversification of products, end markets and geographies, as well as strong ongoing support from our domestic suppliers and valued relationships with our loyal customers. These factors collectively contributed to another quarterly net sales record of $4.49 billion.”
Mr. Hoffman continued, “The strength in our top-line, coupled with a resilient gross profit margin of 30.9%, led to record quarterly gross profit of $1.39 billion. Though we experienced some gross profit margin compression compared to the fourth quarter of 2021 due to inventory costs approaching replacement costs, key elements of our model such as small order sizes, quick turnaround, a broad range of value-added capabilities and careful expense management, enabled the achievement of record quarterly earnings per share of $8.33 for the first quarter of 2022.”
Mr. Hoffman concluded, “Our improved earnings power helped us generate cash flow from operations of $404.0 million -- the highest first quarter figure in our history. Our significant cash generation fuels our capital allocation strategy which remains focused on both growth and stockholder returns. We recently increased our 2022 capital expenditure budget to $455 million from $350 million, largely to capture emerging opportunities supporting the U.S. semiconductor industry as well as certain other organic growth opportunities to meet our customers’ growing needs.”
End Market Commentary Reliance services diverse end markets and provides a wide range of products and processing services, generally in small quantities on a when-needed basis. The Company’s tons sold in the first quarter of 2022 increased 10.7% compared to the fourth quarter of 2021; surpassing Reliance’s expectations of up 5% to 7% due to incremental improvements in daily shipment levels. Reliance believes its first quarter shipment levels reflect strength in underlying demand across the majority of the end markets it serves, and remains cautiously optimistic that shipment levels will continue to improve throughout 2022.
Demand in non-residential construction (including infrastructure), Reliance’s largest end market, improved in the first quarter, with notable strength in March. Reliance remains cautiously optimistic that demand for non-residential construction activity in the key areas in which the Company participates will continue to strengthen in 2022, supported by strong booking trends.
Demand for the toll processing services Reliance provides to the automotive market remained healthy during the first quarter despite supply chain challenges, including the continued impact of the global microchip shortage on production levels. Reliance is cautiously optimistic that demand for its toll processing services will remain solid throughout 2022.
Underlying demand in heavy industry for both agricultural and construction equipment continues to improve from strong levels, with a significant increase in Reliance’s shipment levels compared to the fourth quarter of 2021. Similarly, demand across broader manufacturing sectors, including industrial machinery and consumer products, continues to improve. Reliance expects positive underlying demand trends in these industries to continue through most of 2022.
Semiconductor demand remained robust during the first quarter and continues to be one of Reliance’s strongest end markets, which is expected to continue throughout 2022. As a result, Reliance is continuing to invest in increasing its capacity in this area to service the significant semiconductor fabrication expansion in the United States.
Demand in commercial aerospace continued to improve during the first quarter as increased activity led to meaningfully higher shipment levels compared to both the first and fourth quarters of 2021. Reliance is cautiously optimistic that demand in commercial aerospace will continue to steadily improve throughout 2022 as build rates increase. Demand in the military, defense and space portions of Reliance’s aerospace business remained solid with strong backlogs, which is expected to continue throughout the year.
Demand in the energy (oil and natural gas) market experienced continued improvement in the first quarter due to increased activity resulting from higher oil and natural gas prices. Reliance is cautiously optimistic demand will continue to recover throughout 2022.
Balance Sheet & Cash Flow At March 31, 2022, Reliance had cash and cash equivalents of $548.0 million, total debt outstanding of $1.66 billion and a net debt-to-EBITDA ratio of 0.4x, with no outstanding borrowings under its $1.5 billion revolving credit facility. Reliance generated its highest first quarter cash flow from operations of $404.0 million in the first quarter of 2022, driven by the Company’s record earnings despite over $200 million in additional working capital requirements.
Stockholder Return Activity On February 15, 2022, the Company increased its regular quarterly dividend 27.3% to $0.875 per share of common stock. On April 26, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.875 per share of common stock, payable on June 10, 2022 to stockholders of record as of May 27, 2022. Reliance has paid regular quarterly cash dividends for 63 consecutive years without reduction or suspension and has increased the dividend 29 times since its 1994 IPO.
In the first quarter of 2022, the Company repurchased approximately 114,000 shares of its common stock at an average cost of $150.97 per share, for a total of $17.1 million. At March 31, 2022, $695.5 million remained available for repurchase under Reliance’s stock repurchase authorization. Reliance did not repurchase any shares of its common stock during the first quarter of 2021.
Business Outlook Reliance remains optimistic about business conditions in 2022 with solid underlying demand trends expected to continue across the vast majority of the key end markets it serves. As a result, the Company estimates tons sold will be flat to up 2.0% in the second quarter of 2022 compared to the first quarter of 2022. In addition, Reliance expects its average selling price per ton sold for the second quarter of 2022 to be flat to up 2.0% compared to the first quarter of 2022 driven by the Company’s diverse product mix and continued strength in demand and pricing. Based on these expectations, Reliance estimates non-GAAP earnings per diluted share in the range of $9.00 to $9.10 for the second quarter of 2022.
Conference Call Details A conference call and simultaneous webcast to discuss Reliance’s first quarter 2022 financial results and business outlook will be held today, April 28, 2022 at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To listen to the live call by telephone, please dial (877) 407-0792 (U.S. and Canada) or (201) 689-8263 (International) approximately 10 minutes prior to the start time and use conference ID: 13728592. The call will also be broadcast live over the Internet hosted on the Investors section of the Company's website at investor.rsac.com.
For those unable to participate during the live broadcast, a replay of the call will also be available beginning today at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on May 12, 2022, by dialing (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (International) and entering the conference ID: 13728592. The webcast will remain posted on the Investors section of Reliance’s website at investor.rsac.com for 90 days.
About Reliance Steel & Aluminum Co. Founded in 1939 and headquartered in Los Angeles, California, Reliance Steel & Aluminum Co. (NYSE: RS) is a leading global diversified metal solutions provider and the largest metals service center company in North America. Through a network of approximately 315 locations in 40 states and 12 countries outside of the United States, Reliance 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 focuses on small orders with quick turnaround and value-added processing services. In 2021, Reliance’s average order size was $3,050, approximately 50% of orders included value-added processing and approximately 40% of orders were delivered within 24 hours.
Reliance Steel & Aluminum Co.’s press releases and additional information are available on the Company’s website at www.rsac.com.
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 industry, end markets, business strategies, acquisitions, and expectations concerning the Company’s future growth and profitability and its ability to generate industry leading returns for its stockholders, as well as future demand and metals pricing and the Company’s results of operations, margins, profitability, taxes, 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,” “preliminary,” “range,” “intend” 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, actions taken by Reliance, as well as developments beyond its control, including, but not limited to, the possibility that the expected benefits of acquisitions may not materialize as expected, the impacts of labor constraints and supply chain disruptions, the continuing pandemic and changes in worldwide and U.S. political and economic conditions that could materially impact the Company, its customers and suppliers and demand for the Company’s products and services. The extent to which the continuing COVID-19 pandemic may negatively impact the Company’s operations will depend on future developments which are highly uncertain and cannot be predicted, including the duration of the pandemic, any reemergence or mutations of the virus, the actions taken to control the spread of COVID-19 or treat its impact, including the speed and effectiveness of vaccination efforts, and direct and indirect effects of the virus on worldwide and U.S. economic conditions. Deteriorations in economic conditions, as a result of COVID-19, the conflict between Russian and Ukraine or otherwise, could lead to a further or prolonged decline in demand for the Company’s products and services and negatively impact its business, and may also impact financial markets and corporate credit markets which could adversely impact the Company’s access to financing, or the terms of any financing. The Company cannot at this time predict all of the impacts of the COVID-19 pandemic or the Russia-Ukraine conflict and related economic effects, but they could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.
The statements contained in this press release 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 for any other reason, except as may be required by law. Important risks and uncertainties about Reliance’s business can be found in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and in other documents Reliance files or furnishes with the United States Securities and Exchange Commission.
CONTACT: (213) 576-2428 investor@rsac.com
or Addo Investor Relations (310) 829-5400