Aug. 20, 2014
No. 1 Ranking Has a Nice Ring to Reliance
Reliance Steel and Aluminum's senior management team is set to ring the closing bell on the New York Stock Exchange today in commemoration of the service center giant's 20th anniversary as a publicly traded company.
Reliance stock debuted at $14.50 per share at its initial public offering on Sept. 14, 1994. Twenty years and three stock splits later, shares of Reliance are trading near $70. Including quarterly dividends, shareholders have enjoyed a compound annual growth rate of 17 percent.
Few other companies in American industry have applied the growth-through-acquisition strategy more effectively than Reliance. It has bought up 58 companies since its 1994 IPO, cherry-picking the market's strongest competitors to create a metals distribution and processing network of more than 300 locations in 39 states and 12 countries.
Not surprisingly, Reliance will once again be ranked No. 1 in MCN's Service Center Top 50 to be published in the September print edition. With more than $9.2 billion in sales last year, it is clearly taking advantage of its size and scale to continually capture more market share. Ryerson, its closest rival, reported 2013 revenues of $3.46 billion.
Reliance's sales improved by 9 percent last year, but it was the exception to the rule. The Top 50's combined revenues totaled about $51.1 billion in 2013, down 1.2 percent from the previous year. Of the 14 companies in this year's ranking that took in over a billion dollars from metals distribution and processing, only three reported a revenue gain versus 2012: Reliance, Russel and Alro. For the others, sales were flat or down.
Of course, sales revenue is not the only gauge of success. Profitability is the ultimate measure. While privately held companies will rarely discuss their earnings, it’s entirely possible that many companies outside the Top 50 are just as "successful" in terms of margin percentage. Despite the notoriety of a market leader like Reliance and the others in the Top 50, it's still the thousands of small, entrepreneurial, family-owned service centers that handle the majority of the market's metal each year.