Reliance Steel & Aluminum, Los Angeles, reported net sales of $9.72 billion, a 12.9 percent increase from 2016 and the second-highest total in company history. Tons sold increased 3.8 percent from last year, while the company’s average selling price was up 9.1 percent.
The company’s net income of $613.4 million was more than double the total from 2016. Excluding the impact of the recently enacted tax reform plan, the company’s net earnings were still up 33.5 percent from the previous year.
“2017 was a fantastic year for Reliance,” said President and CEO Gregg Mollins during the company’s year-end conference call with investors and analysts. “Our strong annual gross profit margin of 28.7 percent is near the high-end of our target range and produced the highest gross profit dollars in our history of $2.79 billion.”
For the quarter, Reliance’s net income totaled $301.4 million, compared with $61.7 million in the prior-year quarter. The enactment of the Tax Cuts and Jobs Act in December resulted in a provisional/one-time income tax benefit of $207.3 million in the fourth quarter of 2017.
Net sales totaled $2.38 billion, up 15.3 percent from the fourth quarter of 2016, but down 3 percent from the previous quarter. Tons sold increased 6.3 percent from fourth-quarter 2016, but declined 4.6 percent from the third quarter. The average selling price was up 8.8 percent over fourth-quarter 2016.
“Although we experienced the normal seasonality we had expected in the fourth quarter, overall demand remained stronger than in 2016. Our average selling price in the fourth quarter was higher than we had anticipated, increasing 1.8 percent compared to the third quarter of 2017 and outperforming our guidance of flat to down 2 percent,” Mollins said. “The higher selling prices resulted from continued mill price increases in the fourth quarter that have continued into 2018 and contributed to our stronger than anticipated earnings.
“Looking ahead, while uncertainty still exists in the market, overall customer sentiment and demand have been substantially improving, and we anticipate that an ongoing reduction in imports will continue to support higher metal pricing. We believe these factors, as well as the potential for meaningful infrastructure spending, would increase metal demand and pricing, which we expect will enhance our profitability and strong cash flows,” Mollins said.