By Metal Center News Staff
on Oct 22, 2012
MCN Top 50 Service Center Industry Giants In its annual survey, Metal Center News ranks the largest, most successful service centers in North America. By Tim Triplett, Editor-in-Chief Click Here for the 2012 complete Top 50 List Revenues among the industry’s Top 50 service center companies jumped by about 10 percent last year as the industry, and the country, continued their recovery from recession. The Top 50’s combined revenues totaled approximately $51.6 billion in 2011, up from $46.8 billion the previous year. The Top 50 range from over $8 billion in annual sales down to $122 million, including 15 companies that took in a billion dollars or more last year, according to the findings of the latest Metal Center News survey. For its annual Top 50, MCN polled the industry’s largest players in July and August and ranked them based on total revenues for their last completed fiscal year, which for most was calendar year 2011. With half the current fiscal year in the books, respondents also were in a good position to forecast their expectations for the remainder of 2012. If their estimates for the second half prove accurate, the Top 50 will see their revenues grow by another 10 percent this year, to over $57 billion. That will still leave them more than 6 percent below their $60 billion peak in 2008, however, (see Top 50 Combined Revenues chart). Once again, Los Angeles-based Reliance Steel & Aluminum Co. ranked as the market leader with $8.1 billion in 2011 revenues. Ryerson Inc. of Chicago took the No. 2 spot with over $4.7 billion in sales, followed by Kloeckner Metals Corp. (the merger of Macsteel and Namasco) with $3.3 billion. Rounding out the Top 10, in order, were: Samuel, Son & Co. Ltd. and ThyssenKrupp Materials NA, both reporting revenues of about $3.1 billion; Russel Metals, $2.7 billion; O’Neal Industries, $2.5 billion; Metals USA Holdings Corp., $1.9 billion; Steel Technologies LLC, $1.7 billion; and Worthington Steel, $1.6 billion. The industry’s efforts to “rightsize” operations appears to be an ongoing trend. In total, this year’s Top 50 now operate about 1,300 stocking locations with over 112 million square feet of space—down from 1,650 stocking locations totaling over 130 million square feet reported last year. These facilities are staffed by a combined workforce numbering about 56,200, down slightly from the 57,000 employed last year. Though consolidation has been ongoing for years, many in the industry believe the lack of clarity around the current economy is slowing down dealmaking in the service center sector. “The problem is with uncertainty, and how it affects sellers’ expectations vs. buyers that want to be reasonably conservative in what they’re paying for,” says Wayne Bassett, president and CEO of Samuel, Son & Co. Noteworthy transactions M&A activity has been heating up in the past year, but the number of deals consummated has been relatively modest. The notable exception is the mega-merger between Namasco and Macsteel Service Centers USA in the first quarter, which created Kloeckner Metals, now the third ranked service center organization in North America. At press time, the market was keeping a close eye on Platinum Equity, the investment group that owns Ryerson Inc. Platinum purchased a 6 percent stake in A.M. Castle & Co. last month, fueling speculation that it might acquire the company and merge it with Ryerson’s operations. Both companies are based in Chicago, and Castle’s strength in nonferrous markets such as aerospace would make it a good addition for Ryerson, analysts say. A combination of the two would create an enterprise with over $6 billion in annual revenues, but would still leave Ryerson in the No. 2 spot behind Reliance. Market leader Reliance continues its growth through acquisition strategy, but has expanded its focus to achieve greater regional and product diversification. For example, its purchases in the past year have included Airport Metals, an Australian specialty metals distributor; Worthington Steel’s Vonore, Tenn., plant, which will be used for toll processing; National Specialty Alloys and Continental Alloys and Services, both based in Houston’s thriving energy market; and McKey Perforating Co., which manufactures perforated metal products. All total, Reliance has completed 51 acquisitions since its 1994 public offering. As large as it is, Reliance still only claims about a 6 percent share of what remains a highly fragmented service center industry. Ryerson grew its international footprint in February by acquiring a 50 percent stake in Açofran Aços e Metais LTDA, a steel service center based in São Paulo, Brazil. Last December, the company acquired Turret Steel Industries Inc. and Sunbelt-Turret Steel Inc., expanding its presence in the long-products market. Most recently, Ryerson opened a new bar processing depot and service center in DeKalb, Ill., following closely on the opening of a new plate processing facility in Eldridge, Iowa. Canada’s Samuel, Son & Co. Ltd. expanded its service center holdings in the past year with the purchase of Doral Steel and Basic Stainless, as well as opening two new service centers in the U.S. and Canada. Wayne Bassett, Samuel president and CEO, says he has never seen more inquiries from sellers whose companies are in the $25 million to $150 million range, yet it is yielding few transactions. “It’s difficult to get pricing together right now between the two sides. The problem is with all the uncertainty. Buyers still want to be reasonably conservative in what they pay.” Methodology To rank the Top 50, Metal Center News conducted a fax and e-mail survey in July and August of the magazine’s largest subscribers. Where available, secondary sources were used to confirm information. In most cases, however, figures from privately held companies are presented without independent verification. Companies are ranked based on total revenues from metals processing and distribution during their last completed fiscal year, which for most was calendar 2011. Service Center Top 10 Profiles No. 1 Reliance Steel & Aluminum Co., Los Angeles—With over $8.1 billion in revenues last year—70 percent more than its closest competitor—Reliance continued to lead the industry. Reliance’s 2011 sales improved by 29 percent over the previous year. Much of its sales growth is the result of an aggressive acquisition strategy. The company has completed 51 acquisitions since its 1994 public offering, including a handful of relatively small deals in the past year. They included the purchase of Australia’s Airport Metals from Samuel, Son & Co.; Worthington Steel’s Vonore, Tenn., processing plant; National Specialty Alloys of Houston; McKey Perforating Co., New Berlin, Wis.; and Continental Alloys & Services, also based in Houston. Reliance now operates over 220 locations with more than 10,000 employees in 38 states and nine foreign countries. As large as it is, Reliance still only claims about a 6 percent share of what remains a highly fragmented service center industry. No. 2 Ryerson Inc., Chicago—Ryerson’s revenues grew to $4.7 billion in 2011, up from about $3.9 billion the prior year. Ryerson now operates 102 stocking locations with over 4,000 employees. Owned by the Platinum Equity investment group, Ryerson has made a few acquisitions and opened up a few new locations in the past year or so. In February, Ryerson expanded its international footprint by acquiring a 50 percent stake in Açofran Aços e Metais LTDA, a steel service center based in São Paulo, Brazil. Last December, Ryerson acquired Turret Steel Industries Inc. and Sunbelt-Turret Steel Inc., steel service centers headquartered in Pittsburgh, expanding the company’s presence in the long-products market. The company also purchased Streetsboro, Ohio-based Singer Steel in March 2011. Most recently, Ryerson opened a new, 150,000-square-foot bar processing depot and full-line service center in DeKalb, Ill., 50 miles west of Chicago. This investment followed the opening of a new plate processing facility in Eldridge, Iowa. No. 3 Kloeckner Metals, Roswell, Ga.—Formed through the merger of Namasco and Macsteel early last year, Germany’s Klöckner & Co. created the industry’s third-largest general-line service center chain with $3.3 billion in 2011 sales, up from about $2.5 billion the previous year. Kloeckner supplies steel and nonferrous metals from 57 distribution locations across North America. Most recently, Kloeckner announced plans to build a 100,000-square-foot light-gauge flat-rolled processing center on the campus of ThyssenKrupp’s carbon mill in Calvert, Ala. No. 4 Samuel, Son & Co. Ltd., Mississauga, Ont.—Although based in Canada, Samuel is a major player on both sides of the border, and most of its growth in recent years has been in the United States. Its deals over the past year have included the purchase of Stanrail Corp., an Indiana maker of railcar components; Doral Steel, a distributor with locations in Ohio and Tennessee; and Basic Stainless, a specialty distributor based in Wisconsin. The company also has opened new service centers in Dartmouth, Nova Scotia, and Tampa, Fla. One of the largest family-owned enterprises in North America, Samuel saw $3.1 billion in revenues in 2011, up from $2.5 billion in 2010. The company now operates over 100 stocking locations with over 4,600 employees in the U.S and Canada, as well as Mexico, Australia, China and the United Kingdom. No. 5 ThyssenKrupp Materials NA, Southfield, Mich.—The North American distribution arm of the German steel giant reported $3.1 billion in 2011 revenues, up from $2.4 billion in 2010. It currently operates 80 stocking locations manned by 3,100 employees. The company is focused on value-added processing and distribution of aluminum, copper, brass, specialty metals, steel and plastic products. No. 6 Russel Metals, Mississauga, Ont.—The second-largest distributor in Canada, behind Samuel, Russel carries on business in three distribution segments: metals service centers, energy tubular products and steel distributors. The company currently operates 69 locations with over 2,500 employees. Russel finished 2011 with $2.7 billion in sales, up from $2.1 billion in 2010. Recent acquisitions by Russel include distributor Alberta Industrial Metals, Red Deer, Alberta, and Siemens Laserworks, a value-added laser processing with facilities in Saskatoon, Saskatchewan, and Edmonton, Alberta. No. 7 O’Neal Steel, Birmingham, Ala.—The largest family-owned service center based in the U.S., O’Neal reported revenues of $2.5 billion in 2012, up from $1.9 billion in 2010. O’Neal has been relatively quiet on the acquisition front over the past year. The company now has over 90 locations with 3,700 employees. No. 8 Metals USA Holdings Corp.—Metals USA, Ft. Lauderdale, Fla., reported 2011 revenues of $1.9 billion, up from $1.3 billion the year before. Historically one of the nation’s most aggressive acquirers, Metals USA bought Dallas-based Richardson Trident Co. last year in its largest deal since the company’s 2010 IPO. Metals USA now operates 64 stocking locations manned by 2,200 employees across North America. No. 9 Steel Technologies, Louisville, Ky.—Steel Technologies, a major processor of flat-rolled steel, reported nearly $1.7 billion in 2012 revenues, up from $1.5 billion in 2010. Its 21 facilities, with 1,450 employees, are located throughout the United States, Mexico and Canada. Of recent note, the company is expanding operations in Mexico with plans for new flat-rolled steel processing facilities in Monterrey, Celaya and Bajio. Steel Technologies is owned as a 50-50 joint venture between U.S. steelmaker Nucor Corp. and Japan’s Mitsui & Co. (U.S.A.), Inc. No. 10 Worthington Steel—Both a manufacturer and a distributor, Worthington reported revenues from distribution of nearly $1.6 billion in 2011, up from $1.4 billion in 2010. The company operates 11 stocking locations manned by 1,300 employees. Worthington’s distribution growth in 2011 was aided by a deal with MISA Metals that included the acquisition of three steel processing facilities.