October 27, 2022 6:50 AM ET | Source: Reliance Steel & Aluminum Co. Reliance Steel & Aluminum Co.
- Record operating cash flow of $635.7 million for the quarter and $1.31 billion for the first nine months.
- Approximately 1.9 million shares of common stock were repurchased during the quarter for a total of $336.7 million.
Scottsdale, AZ, Oct. 27, 2022 (GLOBE NEWSWIRE) — Reliance Steel and Aluminum Corporation (NYSE: RS) today reported financial results for the third quarter ended September 30, 2022. Achievement.
Management Comment “Reliance’s proven business model, including our diversified operations and commitment to best-in-class customer service, delivered another quarter of strong financial results,” said Reliance CEO Jim Hoffman. “Demand was slightly better than we expected, coupled with excellent operating performance, resulting in strong quarterly net sales of $4.25 billion, our highest third-quarter revenue ever. Rates have been temporarily cut but we posted strong diluted earnings per share of $6.45 and record quarterly operating cash flow of $635.7 million funding our dual equity allocation priorities related to growth and shareholder return “.
Mr. Hoffman continued: “We believe our third quarter results highlight the resilience of our unique business model in a variety of pricing and demand environments. Specific elements of our model, including our value-added processing capabilities, domestic purchasing philosophy, and a focus on small, urgent orders, have helped us stabilize our operating performance in a challenging macro environment. In addition, our products, end market, and geographic Diversity continues to benefit our operations as we serve Recovery in some of our end markets such as aerospace and power, and continued strong performance in the semiconductor market helped mitigate declines in average selling price per tonne, gross margin and tons sold in the third quarter.”
Hoffman concluded: “Despite the increased uncertainty, we are confident that our managers in this area will successfully manage pricing headwinds and inflationary pressures on operating costs, as they have done in the past, to achieve superior results. Our record operating cash flow puts us in a good position to continue investing and growing our business as we look forward to additional opportunities stemming from the infrastructure bill and US reshoring trends.”
End Market Comments Reliance provides a wide range of processing products and services for a wide variety of end markets, often in small quantities upon request. Compared to the second quarter of 2022, the company’s sales in the third quarter of 2022 decreased by 3.4%, which is in line with the lower limit of the company’s forecast of a decline from 3.0% to 5.0%. The company continues to believe that underlying demand remains solid and higher than third-quarter shipments as many customers continue to face supply chain challenges.
Demand in Reliance’s largest end market, non-residential construction (including infrastructure), remains solid and roughly in line with Q2 2022. Reliance is cautiously optimistic that demand for non-residential construction in key segments of the company will remain stable until the fourth quarter of 2022.
Demand trends across the broader manufacturing industries served by Reliance, including industrial equipment, consumer goods and heavy equipment, are in line with expected seasonal declines in the third quarter compared to the second quarter of 2022. Compared to last year, broader manufacturing supplies have improved and underlying demand has remained stable. Reliance expects manufacturing demand for its products to experience a consistent seasonal slowdown in the fourth quarter of 2022.
Despite current supply chain issues, demand for Reliance’s toll processing services in the automotive market has increased since the second quarter of 2022 as some vehicle OEMs ramped up production volumes. Payment processing volumes typically decline in the third quarter compared to the second quarter. Reliance is cautiously optimistic that demand for its toll processing services will remain stable through the fourth quarter of 2022.
Semiconductor demand remained strong in the third quarter and continues to be one of Reliance’s strongest end markets. This trend is expected to continue through the fourth quarter of 2022, despite some chip makers announcing production cuts. Reliance continues to invest in expanding its ability to service the vastly expanding semiconductor manufacturing industry in the United States.
Demand for commercial aerospace products continued to recover in the third quarter, with shipments up quarter-on-quarter, which is atypical given historical seasonal trends. Reliance is cautiously optimistic that aerospace commercial demand will continue to grow steadily in the fourth quarter of 2022 as the pace of construction picks up. Demand for the military, defense and space segments of Reliance’s aerospace business remains strong, with a significant backlog expected to continue into the fourth quarter of 2022.
Demand in the energy (oil and gas) market was characterized by normal seasonal fluctuations compared to the second quarter of 2022. Reliance is cautiously optimistic that demand will continue to moderately improve in the fourth quarter of 2022.
Balance Sheet and Cash Flow As of September 30, 2022, Reliance had $643.7 million in cash and cash equivalents. As of September 30, 2022, Reliance’s total outstanding debt was flat at $1.66 billion, had a net debt to EBITDA ratio of 0.4 times, and had no outstanding loans from a $1.5 billion revolving credit facility. Thanks to the company’s strong earnings and effective working capital management, Reliance generated a record quarterly and nine-month operating cash flow of $635.7 million for the third quarter and nine months ended September 30, 2022 and $1.31 billion .
Shareholder Return Event On October 25, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.875 per ordinary share, payable on December 2, 2022 to shareholders registered on November 18, 2022. Reliance paid a regular quarterly cash dividend in for 63 consecutive years without reduction or suspension and has increased its dividend 29 times since its IPO in 1994 to its current annual rate of $3.50 per share.
Under the $1 billion share repurchase program approved on July 26, 2022, the company repurchased approximately 1.9 million shares of common stock for a total of $336.7 million during the third quarter of 2022 at an average price of $178.79 per share . Since 2017, Reliance has repurchased about 15.9 million shares of common stock at an average price of $111.51 per share for a total of $1.77 billion and $547.7 million in the first nine months of 2022.
Company Development On October 11, 2022, the company announced that James D. Hoffman would step down as CEO December 31, 2022 The Reliance Board of Directors unanimously appointed Carla R. Lewis to replace Mr. Hoffman as CEO Effective date 2023 Mr. Hoffman will continue to serve on the Reliance Board of Directors and as Chief Executive Officer until the end of 2022, after which he will move to the position of Senior Advisor to the Chief Executive Officer until his retirement in December 2023.
Business Outlook Reliance expects healthy demand trends to continue in the fourth quarter despite prevailing macroeconomic uncertainties as well as other factors such as inflation, ongoing supply chain disruptions and geopolitical challenges. The company also expects shipment volume to be affected by normal seasonal factors, including fewer days shipped in the fourth quarter than in the third quarter, and the additional impact of extended shutdowns and holidays associated with customer holidays. As a result, the company estimates that its sales in the fourth quarter of 2022 will fall by 6.5-8.5% compared to the third quarter of 2022, or grow by 2% compared to the fourth quarter of 2021. In addition, Reliance expects its average realized price per tonne to decline by 6.0% to 8.0% in the fourth quarter of 2022 compared to the third quarter of 2022 due to continued price declines for many of its products, especially carbon , stainless steel and aluminum Flat products offset in part by stable prices for more expensive products sold in aerospace, power and semiconductor end markets. In addition, the company expects its gross margin to remain under pressure in the fourth quarter, which is temporary as a result of the sale of higher-cost existing inventory in an environment of lower metal prices. Based on these expectations, Reliance estimates Q4 2022 non-GAAP diluted earnings per share in the range of $4.30 to $4.50.
Conference call detailsToday (October 27, 2022) at 11:00 AM ET / 8:00 AM PT, there will be a conference call and webcast simulcast to discuss Reliance’s 2022 Q3 financial results and business outlook. To listen to the live broadcast by phone, dial (877) 407-0792 (U.S. and Canada) or (201) 689-8263 (international) approximately 10 minutes before the start and enter the conference ID: 13733217. The conference will also be broadcast live via Internet in the “Investors” section of the company’s website at Investor.rsac.com.
For those unable to attend during the live stream, a replay of the conference call will also be available from 2:00 pm ET today until 11:59 pm ET on November 10, 2022 at (844) 512-2921 (U.S. and Canada) ). ) or (412) 317-6671 (international) and enter conference ID: 13733217. The webcast will be available in the Investors section of the Reliance website at Investor.rsac.com for 90 days.
About Reliance Steel & Aluminum Co. Founded in 1939, Reliance Steel & Aluminum Co. (NYSE: RS) is the world’s leading provider of diverse metalworking solutions and the largest metal service center in North America. Through a network of approximately 315 offices in 40 states and 12 countries outside of the US, Reliance provides value-added metalworking services and distributes a full range of over 100,000 metal products to over 125,000 customers in a variety of industries. Reliance specializes in small orders with fast turnaround times and additional processing services. In 2021, Reliance’s average order size is $3,050, about 50% of orders include value-added processing, and about 40% of orders ship within 24 hours. Press Releases Reliance Steel & Aluminum Co. and other information is available on the corporate website at 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 the Reliance industry, end markets, business strategy, acquisitions, and expectations regarding the company’s future growth and profitability, as well as its ability to generate industry-leading shareholder returns, and the future. demand and prices for metals and the company’s operating performance, margins, profitability, taxes, liquidity, litigation and capital resources. In some cases, you may identify forward-looking statements by terminology such as “may”, “will”, “should”, “may”, “will”, “foresee”, “plan”, “foresee”, “believes”. “, “estimates”, “anticipates”, “potential”, “preliminary”, “range”, “intends” and “continues”, the negation of these terms and similar expressions.
These forward-looking statements are based on management’s estimates, forecasts and assumptions to date, which may not be accurate. Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future results. Actual results and results could differ materially from those expressed or forecast in these forward-looking statements as a result of a variety of important factors, including, but not limited to, actions taken by Reliance and events beyond its control, including, but not limited to, acquisition expectations. The likelihood that benefits may not materialize as expected, the impact of labor shortages and supply chain disruptions, ongoing pandemics, and changes in global and US political and economic conditions such as inflation and economic downturns, could materially impact the Company, its Clients and suppliers and demand for the company’s products and services. The extent to which the ongoing COVID-19 pandemic could adversely affect the Company’s operations will depend on highly uncertain and unpredictable future events, including the duration of the pandemic, any re-emergence or mutation of the virus, actions taken to contain the spread of COVID-19, or its impact on treatment, including the speed and effectiveness of vaccination efforts, and the direct and indirect impact of the virus on the global and US economic situation. A deterioration in economic conditions due to inflation, the economic downturn, COVID-19, the conflict between Russia and Ukraine or otherwise may lead to a further or prolonged decrease in demand for the Company’s products and services and adversely affect the Company’s operations, and may also affect financial markets and corporate lending markets, which could adversely affect the company’s access to funding or the terms of any funding. The Company cannot currently predict the full impact of inflation, product price fluctuations, the economic downturn, the COVID-19 pandemic or the Russian-Ukrainian conflict and related economic impacts, but these factors, individually or in combination, could have an impact on the business, financial activity of the company. condition, material adverse effect on results of operations and cash flows.
The statements contained in this press release are current only as of the date of its publication, and Reliance disclaims any 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 when required by law. The significant risks and uncertainties associated with Reliance’s business are set out in “Paragraph 1A” of the company’s annual report on Form 10-K for the year ended December 31, 2021, and other filings Reliance has filed with the Securities and Exchange Commission. “.
Post time: Jan-29-2023