Reliance Steel Corporate Profile
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  • 1. KeyBanc Capital Markets 2011 Basic Materials & Packaging Conference September 13, 2011 www.rsac.com
  • 2. FORWARD-LOOKING STATEMENT AND NON-GAAP MEASURE NON GAAPThis presentation may contain forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. These forward-looking statementsare subject to risks and uncertainties that could cause actual results to differmaterially f from those projected in these statements.Further information on factors that could affect the Company’s financial and otherresults are included in the Company’s Annual Report on Form 10 K for the year Company s 10-Kended December 31, 2010 and other reports on file with the Securities andExchange Commission.For data included within this presentation that is considered a “non-GAAP financialmeasure” any reconciliations required by Regulation G will be provided.
  • 3. COMPANY PROFILE• A Fortune 500 company founded in 1939 in Los Angeles that went public i 1994 h bli in• NYSE company with $6.31 billion in 2010 annual net sales and $3.96 billion in net sales for the six months ended June 30 2011 30,• The largest metals service center company in North America• Provides value added metals processing services• Distributes a full-line of over 100,000 products to more than 125,000 customers• More than 200 locations in 38 states and Belgium, Canada, China, Malaysia, Mexico, Singapore, South Korea, the U.A.E. and the U.K.
  • 4. THE ROLE OF RELIANCE RELIANCEPRIMARY PRODUCERS STEEL & ALUMINUM CO. END USER •P Pre-production d ti •O Over 125,000 customers 125 000 t processing including: • Over 4,840,000 orders - Slitting (average order size $1,300) - Cutting in 2010 - Sawing S i - Leveling • 19,220 transactions per - Shearing business day in 2010 - Blanking • Just-in-time 24-hour - Burning delivery - Toll processing • No customer represented • Inventory management more than 1% of 2010 total sales • Just-in-time delivery Just in time • Over 100,000 products • Approximately 97% of sales from repeat customers
  • 5. RECENT ACCOMPLISHMENTS • 2010 sales of $6.31 billion, up 19%, net income of $194.4 million $194 4 million, up 31% and $2 61 earnings per diluted 31%, $2.61 share, up 30%, from 2009 • Acquired Continental Alloys & Services on August 1, 2011 for $415 million, subject to certain adjustments $ , j j • Acquired Lampros Steel, Inc. and Diamond Manufacturing Company in 2010 • Expanded both domestically and internationally with 2010 capital expenditures of $111 million and $66 million in the six months ended June 30, 2011 • Increased the regular quarterly cash dividend by 20% in the 2011 1Q to $.12 per share from $.10 per share • Amended and restated the syndicated credit facility for five years and increased the size from $1.1 billion to $1.5 billion
  • 6. AGGRESSIVE ACQUISITION STRATEGY • Completed 48 acquisitions since the 1994 IPO • Immediately accretive to shareholders • Minimum 15% pre-tax ROI, excluding our cost of capital • Strong management teams with high levels of integrity that remain in place • Brand name stays in the community • Businesses that provide high levels of quality and customer service
  • 7. CONTINENTAL ALLOYS & SERVICES, INC. AUGUST 2011 • Metals service center headquartered in Houston, TX • A leading global materials management company focused on high-end steel and alloy pipe, tube and bar products and precision manufacturing of various tools designed for well completion programs of global energy service companies • 12 locations in seven countries • $196 million net sales for the six months ended June 30, 2011 (unaudited) • Expands our geographical coverage into the U.A.E. and our product breadth with th addition of oil country d t b dth ith the dditi f il t tubular goods (“OCTG”)
  • 8. LAMPROS STEEL, INC. DECEMBER 2010 • Metals service center headquartered in Portland, OR • Specializes in structural steel shapes and carbon steel plate • Outstanding reputation for customer service g p • Lampros Steel’s products complement those of American Metals based in the Pacific Northwest • $17 million net sales for the six months ended June 30 30, 2011
  • 9. DIAMOND MANUFACTURING COMPANY OCTOBER 2010 • Metals service center headquartered near Philadelphia, Phil d l hi PA • Specializes in the manufacture and sales of specialty engineered perforated metals and has three other locations • A high value-added, high margin business • Major end-markets are agriculture, office equipment, electronics, appliance, auto and architectural • $52 million net sales for the six months ended June 30, 2011
  • 10. 10
  • 11. 2011 JUNE Y-T-D SALES BY PRODUCT Carbon Steel Plate ‐ 13% Carbon Steel Tubing ‐ 10% Carbon Steel Structurals ‐ 10% Carbon Steel Bar ‐ 9% Hot Rolled Steel S & C ‐ 6% Galvanized Steel S & C ‐ 4% Cold Rolled Steel S & C ‐ 2% Aluminum Bar & Tube ‐ 6% Heated Treated Aluminum Plate ‐ 5% Common Alloy Aluminum S & C ‐ 3% Heat Treated Aluminum S & C ‐ 1% Common Alloy Aluminum Plate ‐ 1% C All Al i Pl t 1% Stainless Steel Bar & Tube ‐ 8% Stainless Steel S & C ‐ 5% Stainless Steel Plate ‐ 2% Alloy Bar, Rod and Tube ‐ 8% Alloy Plate, S & C ‐ 1% Other ‐ 4% Toll Processing ‐ 2%
  • 12. 2011 JUNE Y-T-D SALES BY COMMODITY Carbon Steel ‐ 54% Aluminum ‐ 16% Stainless Steel ‐ 15% Alloy  9% Alloy ‐ 9% Other ‐ 4% Toll ‐ 2%
  • 13. 2011 JUNE Y-T-D SALES BY REGION Midwest ‐ 28% Southeast ‐ 17% West/SW ‐ 16% West/SW 16% California ‐ 12% Northeast ‐ 7% Mid‐Atlantic ‐ 7% Pacific NW ‐ 5% Foreign ‐ 5% Mountain ‐ 3%
  • 14. BROAD GEOGRAPHIC COVERAGE Belgium South Korea United Kingdom China U.A.E. Singapore MalaysiaINTERNATIONAL NETWORKMore t a 200 locations in 38 states a d Belgium, Ca ada, C a, o e than 00 ocat o s and e g u , Canada, China,Malaysia, Mexico, Singapore, South Korea, the U.A.E. and the U.K.
  • 15. MARKET CONDITIONS • Metal pricing has been volatile in 2011 with downward pressure from new domestic mill capacity and increased imports b t supported by hi h raw material costs i t but t d b high t i l t • Real demand has continued its steady growth • Energy, oil and gas; farm and heavy equipment; mining; rail cars; barges; general manufacturing; semiconductor and electronics; and aerospace markets are strong • Non-residential construction remains our weakest market with some signs of modest i k t ith i f d t improvement seen t recently • Favorable industry consolidation and acquisition opportunities • Proven ability to outperform peers in all types of operating environments and successfully manage through difficult times
  • 16. NET SALESMillions of $ $10,000 $8,719 $8,000 $7,256 $6,313 $6 313 $5,743 $6,000 $5,318 $3,962 $4,000 $ , $3,074 $2,000 $0 2006 2007 2008 2009 2010 2010 2011 June 30
  • 17. NET INCOMEMillions of $ $600 $482.8 $500 $408.0 $400 $354.5 $ $300 $194.4 $191.0 $200 $148.2 $106.2 $100 $0 2006 2007 2008 2009 2010 2010 2011 June 30
  • 18. EARNINGS PER SHARE DILUTED ars ($) $7.00 $6.56Dolla $6.00 $5.36 $4.82 $5.00 $4.00 $3.00 $2.61 $2.54 $ 0 $2.01 $2.00 $1.43 $1.00 $0.00 $0 00 2006 2007 2008 2009 2010 2010 2011 June 30
  • 19. 2011 YEAR-TO-DATE FINANCIAL HIGHLIGHTS• Net Income $191 million, up 80%; sales of $3.96 billion, up 29%; EPS of $2.54 up 78%, for the 2011 first half compared to the 2010 fi h lf 8% f h fi h lf d h first half• 2011 first half tons sold up 11% and average selling price up 17% compared to 2010 first half• June 2011 highest monthly sales per day since November 2008 but still 29% below August 2008 sales per day and 24% below August 2008 tons sold per day• Inventory turnover rate of 4.9 times based on tons and 4.7 times based on dollars• Net debt-to-total capital ratio of 25.2% at June 30, 2011• 2011 first half gross profit margin of 25.7% within our historical range of 25% – 27%• Managed working capital well with a strong financial position and ready access to capital
  • 20. STOCK PRICE PERFORMANCE$ * $100 Invested on December 31 2005 in stock or index – including reinvestment of 31, dividends. Fiscal Year ending December 31.
  • 21. SHAREHOLDER VALUE• 52 years of consecutive quarterly cash dividends• Increased regular dividend 16 times (since 1994 IPO)• Committed to shareholder value• Dividend payments increased 2,000% (since 1994 IPO) 2 000%• Stock value compound annual growth rate of 18% at June 30, 2011 (since 1994 IPO)• Named to the 2010 “Fortune 500” list and the 2010 Fortune list of “The World’s Most Admired Companies”
  • 22. INVESTMENT HIGHLIGHTS• The largest metals service center company in North America• Diversification of products, customers and geography serve to reduce volatility in operating performance• Focus on maximizing p g profits and manage working capital to maximize cash flow g g p and reduce debt• Well positioned to take advantage of opportunities• Demonstrated ability to grow existing businesses and also identify and make accretive acquisitions• Experienced management team with solid track record
  • 23. www.rsac.com