NewsArticles
Minimize


Oct. 30, 2013

Reliance: 'Third Quarter Demand Better than Anticipated'
 
Reliance Steel and Aluminum Co. reported net income of $95.1 million in the third quarter, down 3.1 percent from third-quarter 2012. Income was up 17.4 percent compared to the previous quarter.

The Los Angeles-based service center chain reported net sales of $2.44 billion during the quarter, up 18.9 percent from last year, but down 0.2 percent compared to the second quarter. Tons sold were up 31.1 percent compared to third-quarter 2012 and 2.0 percent better than the second quarter.

"Overall demand in the third quarter was a bit better than anticipated," said Chairman and CEO David H. Hannah during the company’s quarterly conference call with analysts and investors. "Although a significant portion of the increase was due to an additional two weeks of Metals USA activity in the third quarter, our same-store tons sold were up 0.4 percent."

Reliance's normal seasonal trend is for third-quarter demand to be down from the second quarter. The company’s second-quarter demand was lower than expected, however. Also, metals pricing was weaker than the company anticipated, with the average selling price per ton sold down 2.3 percent from the prior quarter, and down 9.5 percent compared to the third quarter last year.

"Despite the persistently soft pricing environment, which weighs heavily on our net sales and profitability, the strong operational execution by our managers in the field partially offset the pricing impact as demonstrated by Reliance’s increase in gross profit margin," Hannah said.

For the year to date, Reliance's net earnings totaled $259.8 million, down 21.7 percent from 2012. Net sales through three quarters increased 5.5 percent to $6.9 billion. Much of the sales gain was due to the second-quarter acquisition of Metals USA.

"We continue to profitably grow through successful M&A activity to supplement organic growth. This solid growth was driven primarily by the acquisition of Metals USA, which was completed early in the second quarter this year and has been accretive to our earnings. We are very pleased with the Metals USA integration progress and our ability to grow despite economic and cyclical challenges," Hannah said.

Reliance officials noted their desire to further grow through acquisition, whether it is a deal like the Metals USA acquisition or a more typical purchase of a smaller service center company. "We like to do the larger ones when they're available, but our industry is made up mostly of a large number of smaller companies. So more small deals has been the case for the last 20 years, and it'll probably be the case going forward," Hannah said.

Among end markets, Reliance sees continued strength in automotive, along with solid but lower operating results in aerospace, energy and manufactured goods, including agriculture and heavy equipment. These continue to offset the slow recovery in nonresidential construction.

The company expects that global economic and political uncertainty, complicated further by political issues in the U.S., will continue to present challenges to industrial growth in the fourth quarter. In addition, fewer shipping days due to the holiday season and extended holiday-related closures at many customers' facilities are expected to reduce tons sold in the fourth quarter as compared to the third quarter, a typical seasonal trend.

"Although price increases were announced for certain carbon and stainless steel products during the quarter, the pricing environment continues to be challenging. In addition to lower carbon steel pricing, we've experienced significant pressure on stainless and aluminum pricing in 2013, as well as for alloy steel. Our expectation is that, overall, we're not likely to see prices strengthen between now and year-end," Hannah said.

From the Editor's Desk
Minimize
Feb 2014: Wage Inequality Affects Us All
More...
 
Pause
Business Practices and Technologies
Minimize
Feb 2014: Kuehl: Expect More of the Same for American Economy in 2014
More...
The Cutting Edge, a service center technology supplement to Metal Center News
More...
Summer 2013
More...
 
Pause
New Products
Minimize
Trumpf Expands Range on TruMark 5000 Series
More...
Koike Aronson Debuts New Plasma Cutter
More...
Miyachi Unitek's Sigma XY
More...
New TMC is Messer's Largest Cutting Machine
More...
Laserdyne 795 XLZ Designed for 3D Parts
More...
Mazak's STX Champion Cuts Thick Sheets
More...
 
Pause
Directories
Minimize

 
Metal Distribution 2013  is your on-line guide to Metal Producers, Equipment Manufacturers and Software companies.
 



 
2013 Directory of Master Distributors
Not Published on This Web site
The Metal Center News Directory of Master Distributors—distributors who sell to other distributors—is an invaluable tool for service centers seeking new sources for special or hard-to-find products. Master distributors play an important role in the marketplace, giving service centers an alternative to buying in mill quantities and helping to remove redundant and excess inventories from the distribution channel.


Print copies are available for $85 U.S. for each copy.
Download Order Form.
 
2013 Directory of Toll Processors
Not Published on This Web site
Metal Center News'
annual toll processing directory is a simple-to-use resource to help companies locate service providers that can meet their specific processing needs.


Print copies are available for $85 U.S. for each copy. Download Order Form.
Privacy Statement  |  Terms Of Use
Copyright by Metal Center News



Friday, April 18, 2014