April 28, 2022 06:50 ET | Source: Reliance Steel & Aluminium Co. Reliance Steel & Aluminium Co.
- Record quarterly sales of $4.49 billion, ton sales up 10.7% over Q4 2021 – Record quarterly gross profit of $1.39 billion, driven by strong gross margin of 30.9% – Record quarterly pre-tax Revenue of $697.2 million and 15.5% margin – record quarterly EPS of $8.33, non-GAAP EPS of $8.42 – record first-quarter cash flow from operations of $404 million
LOS ANGELES, April 28, 2022 (GLOBE NEWSWIRE) — Reliance Steel & Aluminium Co. (NYSE: RS) today reported financial results for the first quarter ended March 31, 2022.
“The excellent operational execution of our family of companies in the first quarter continued our record performance in 2021 and once again demonstrated the durability and effectiveness of our business model,” said Jim Hoffman, CEO of Reliance. Despite continued macroeconomic challenges, our results were supported by positive underlying trends, including continued strong demand and improved monthly shipments during the quarter, as well as continued strength in metals pricing. Our results were also driven by Our strategic diversification into products, end markets and geographies, as well as strong ongoing support from domestic suppliers and valuable relationships with loyal customers. Together, these factors contributed to another record quarterly net sales of $4.49 billion.”
Mr. Hoffman continued: “Our strong revenue, coupled with a resilient gross margin of 30.9%, resulted in a record quarterly gross profit of $1.39 billion. Although compared to the fourth quarter of 2021, as inventory costs were close to replacement cost, We experienced some gross margin compression, but key elements of our model, such as small orders, quick turnaround, broad accretive capabilities and careful expense management, led to a record EPS of $8.33 in the first quarter of 2022.”
Mr. Hoffman concluded: “Our improved profitability helped us generate $404 million in cash flow from operations – the highest number in our history for the first quarter. Our substantial cash generation drives our capital allocation strategy , the strategy remains focused on growth and shareholder returns. We recently increased our 2022 capex budget from $350 million to $455 million, primarily to capture emerging opportunities to support the U.S. semiconductor industry as well as certain other organic growth opportunities, to meet the growing needs of our customers.”
End Market Reviews Reliance serves diverse end markets and offers a wide range of products and processing services, usually in small quantities when required.The company’s sales tonnage in the first quarter of 2022 was up 10.7% from the fourth quarter of 2021; it beat Reliance’s 5% to 7% forecast due to the gradual increase in daily shipment levels.Reliance believes that its shipment levels in the first quarter reflect strong underlying demand in most of the end markets it serves, and remains cautiously optimistic that shipment levels will continue to improve throughout 2022.
Demand for non-residential buildings, including infrastructure, in Reliance’s largest end market, improved in the first quarter after a strong March.Reliance remains cautiously optimistic that demand for non-residential construction activity will continue to strengthen in 2022 in key areas in which the company is involved, supported by strong booking trends.
Demand for Reliance’s toll processing services to the automotive market remained healthy in the first quarter despite supply chain challenges, including the ongoing impact of a global microchip shortage on production levels.Reliance is cautiously optimistic that demand for its toll processing services will remain stable throughout 2022.
Underlying demand for agricultural and construction equipment in heavy industry continued to improve from strong levels, with Reliance’s shipments significantly increasing compared to the fourth quarter of 2021.Likewise, demand in the broader manufacturing sector, including industrial machinery and consumer goods, continued to improve.Reliance expects positive underlying demand trends in these industries to continue through most of 2022.
Semiconductor demand remained strong in the first quarter and continues to be one of Reliance’s strongest end markets, which is expected to continue into 2022.As such, Reliance will continue to invest in increasing its capacity in this area to serve the significant semiconductor manufacturing expansion in the United States.
Commercial aerospace demand continued to improve in the first quarter compared to the first and fourth quarters of 2021, as increased activity resulted in significantly higher shipments compared to the first and fourth quarters of 2021.Reliance is cautiously optimistic that demand from commercial aerospace will continue to improve steadily throughout 2022 as construction speeds up.Demand in the military, defense and space segments of Reliance’s aerospace business remained stable with a large backlog that is expected to continue throughout the year.
Demand in the energy (oil and gas) market continued to improve in the first quarter due to increased activity due to higher oil and gas prices.Reliance is cautiously optimistic that demand will continue to recover throughout 2022.
Balance Sheet and Cash Flow As of March 31, 2022, Reliance had cash and cash equivalents of $548 million, total debt outstanding of $1.66 billion, and a net debt-to-EBITDA ratio of 0.4 times, on its $1.5 billion basis. No outstanding borrowings under the revolving credit facility. Despite over $200 million in additional working capital requirements, Reliance generated the highest first-quarter cash flow of $404 million from operations in the first quarter of 2022, thanks to the company record earnings.
Shareholder Return Event On February 15, 2022, the company increased its regular quarterly dividend by 27.3% to $0.875 per common share.On April 26, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.875 per common share, payable on June 10, 2022 to shareholders of record as of May 27, 2022.Reliance has paid 63 regular quarterly cash dividends since its 1994 IPO, with no reductions or suspensions in consecutive years, and has increased its dividend 29 times.
During the first quarter of 2022, the company repurchased approximately 114,000 shares of common stock at an average cost of $150.97 per share, for a total of $17.1 million.As of March 31, 2022, $695.5 million remained available for repurchase under Reliance’s share repurchase authorization.Reliance did not repurchase any common stock in the first quarter of 2021.
Business Outlook Reliance remains optimistic about business conditions in 2022, expecting solid underlying demand trends to continue in the vast majority of the major end markets it serves.As such, the company estimates that ton sales in the second quarter of 2022 will be flat to 2.0% compared to the first quarter of 2022.In addition, Reliance expects its ASP per ton in the second quarter of 2022 to increase by 2.0% compared to the first quarter of 2022, driven by the company’s diversified product portfolio and continued strong demand and prices.Based on these expectations, Reliance estimates non-GAAP earnings per diluted share in the second quarter of 2022 to be between $9.00 and $9.10.
Conference Call Details A conference call and simultaneous webcast will be held today, April 28, 2022 at 11:00AM ET/8:00AM PT to discuss Reliance’s first quarter 2022 financial results and business outlook.To listen to the live call by phone, please dial (877) 407-0792 (US and Canada) or (201) 689-8263 (international) approximately 10 minutes before the start time and use meeting ID: 13728592.The call will also be broadcast live over the Internet hosted on the investor section of the company’s website, investor.rsac.com.
For those unable to attend the live broadcast, the conference call can also be replayed by dialing (844) 512-2921 (2:00 PM ET today to 11:59 PM ET on May 12, 2022).United States and Canada) or (412) 317-6671 (International) and enter Conference ID: 13728592.The webcast will continue to be posted on the Investors section of the Reliance website (Investor.rsac.com) for 90 days.
About Reliance Steel & Aluminium Co. Founded in 1939 and headquartered in Los Angeles, California, Reliance Steel & Aluminium Co. (NYSE: RS) is a leading global provider of diversified metal solutions and the largest metal services provider in North America Center Company.Through a network of approximately 315 locations in 40 states and 12 countries outside the United States, Reliance provides value-added metalworking services and distributes a full line of more than 100,000 metal products to more than 125,000 customers in a variety of industries.Reliance focuses on small orders, providing fast turnaround and value-added processing services.In 2021, Reliance’s average order size is $3,050, with about 50% of orders including value-added processing, and about 40% of orders delivered within 24 hours.
Press releases and other information from Reliance Steel & Aluminium Co. are available on the company’s website at www.rsac.com.
Forward-Looking Statements Certain statements contained in this press release 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 industries, end markets, business strategies, acquisitions and expectations about the company’s future growth and profitability and its ability to generate industry-leading returns for shareholders, as well as future demand and metals pricing and the company’s Operating performance, profit margins, profitability, taxes, liquidity, litigation matters and capital resources.In some cases, you can identify forward looking by terms such as “may,” “will,” “should,” “could,” “will,” “expect,” “plan,” “anticipate,” “believe,” etc. sexual statement.”estimate,” “predict,” “potential,” “preliminary,” “scope,” “intend,” and “continue,” the negative forms of these terms, and similar expressions.
These forward-looking statements are based on management’s estimates, projections and assumptions as of today that may not be accurate.Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance.Due to various important factors, including but not limited to actions taken by Reliance, and developments beyond its control, including but not limited to the possibility that the expected benefits of Reliance’s acquisition may not materialize as expected, labor constraints and supply chain disruptions the impact of the pandemic, the ongoing pandemic, and changes in global and U.S. political and economic conditions that could materially affect the Company, its customers, and suppliers of and demand for the Company’s products and services.The extent to which the ongoing COVID-19 pandemic may negatively impact company operations will depend on highly uncertain and unpredictable future developments, including the duration of the pandemic, the re-emergence or mutation of the virus, actions taken to control COVID-19 The spread of -19 or the impact of its treatment, including the speed and effectiveness of vaccination efforts, and the direct and indirect effects of the virus on global and U.S. economic conditions.Deterioration of economic conditions due to COVID-19, the conflict between Russia and Ukraine, or other reasons, could lead to a further or prolonged decline in demand for the company’s products and services, negatively affect its business, and could also affect financial markets that could affect the company’s access to Financing or any financing terms adversely affect the credit market for businesses.The company cannot currently predict all the effects of the COVID-19 pandemic or the Russia-Ukraine conflict and the associated economic impact, but they could materially and adversely affect the company’s business, financial condition, results of operations and cash flows.
The statements contained in this press release speak only as of the date of their publication, and Reliance undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or for any other reason, other than as may be required by law except.Important risks and uncertainties regarding Reliance’s business are set out in “Item 1A. The Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and other documents Reliance files or provides with the Securities and Exchange Commission” “Risk Factors”.