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    reliance steel & aluminum  92007_11_28_CIBC_Conference reliance steel & aluminum 92007_11_28_CIBC_Conference Presentation Transcript

    • Reliance Steel & Aluminum Co. CIBC World Markets Best Ideas Conference November 28, 2007 www.rsac.com
    • FORWARD-LOOKING STATEMENT AND NON-GAAP MEASURE This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Further information on factors that could affect the Company’s financial and other results are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 and other reports on file with the Securities and Exchange Commission. For data included within this presentation that is considered a “non- GAAP financial measure” any reconciliations required by Regulation G will be provided. 2
    • COMPANY PROFILE • Founded in 1939 in Los Angeles and went public in 1994 • NYSE company with $5.7 billion in 2006 annual net revenues and $5.5 billion in revenues for the nine months ended September 30, 2007 • One of the largest metals service center companies in the U.S. • Provides value added metals processing services • Distributes a full-line of over 100,000 products to more than 125,000 customers • More than 180 locations in 37 states and Belgium, Canada, China, South Korea and United Kingdom 3
    • THE ROLE OF RELIANCE Primary Producers Reliance Steel & Aluminum Co. End Users > Pre-production > Over 125,000 customers processing including: > Over 4,095,000 orders • Slitting (average order size $1,320) • Cutting in 2006 • Sawing > 17,275 transactions • Leveling per business day in 2006 • Shearing • Blanking > Just-in-time 24-hour delivery • Burning > No customer represented • Toll processing more than 1.5% of total > Inventory management 2006 sales > Just-in-time delivery > Over 100,000 products > Approximately 80% of sales from repeat customers 4
    • RECENT ACCOMPLISHMENTS • Best-ever 2006 annual financial results • Record 2006 sales of $5.7 billion, up 71% and net income of $354.5 million, up 73% and $4.82 earnings per diluted share (stock split adjusted) • Earle M. Jorgensen Company acquisition • Yarde Metals, Inc. acquisition • Completed five acquisitions in 2007 year-to-date • New $1.1 billion unsecured credit facility • Issued $600 million of 10 and 30 year senior unsecured notes with weighted average interest rate of 6.5% in 2006 5
    • AGGRESSIVE ACQUISITION STRATEGY • More than 40 acquisitions since 1994 IPO • Immediately accretive to shareholders • Minimum 15% pre-tax ROI • Current management and employees remain in place • Brand name stays in the community 6
    • EARLE M. JORGENSEN ACQUISITION APRIL 2006 • Metals service center company headquartered in Los Angeles, CA with 40 facilities • About 50% cash and 50% common stock total value of about $984 million, including Jorgensen’s net debt • Largest acquisition to-date and first acquisition of a publicly-held company • Immediately accretive to earnings • Leading North American metals distributor of specialty bar and tubing products • Revenues of $1.45 billion for the nine months ended December 31, 2006 7
    • YARDE METALS, INC. ACQUISITION AUGUST 2006 • Metals service center headquartered in Southington, CT • Founded in 1976 and specializes in stainless steel and aluminum plate, rod and bar products • Additional facilities in New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania and a sales office in Florida • Second largest acquisition to-date in terms of revenues and immediately accretive to earnings • Net sales of $182 million for the five months ended December 31, 2006 • Adds significantly to geographic network in the Northeastern U.S. 8
    • 2007 ACQUISITIONS • Encore Group (Encore Metals, Encore Metals (USA), Inc., Encore Coils and Team Tube in Canada) – 17 facilities mainly in Western Canada – 2006 revenues of C$259 million – Alloy and carbon bar and tube; stainless steel sheet, plate and bar; and carbon steel flat-rolled • Crest Steel Corporation – Headquartered in Carson, CA with facilities in Riverside, CA and Phoenix, AZ – 2006 revenues of $133 million – Carbon steel flat-rolled plate, bars and structurals 9
    • 2007 ACQUISITIONS (CONT.) • Industrial Metals and Surplus, Inc. (and Athens Steel, Inc.) – Atlanta and Athens, Georgia – 2006 revenues of $105 million – Carbon steel structurals, flat-rolled and ornamental iron products • Clayton Metals, Inc. – Headquartered in Wood Dale, IL with additional facilities in California, North Carolina and New Jersey – 2006 revenues of $123 million – Aluminum, stainless steel and red metal flat-rolled products, custom extrusions and aluminum circles 10
    • 2007 ACQUISITIONS (CONT.) • Metalweb plc – Headquartered in Birmingham, England with additional facilities in Manchester, London and Oxford, England – Revenues of about $53 million for the fiscal year ended May 31, 2007 – Primarily aluminum products for non-structural aerospace components and general engineering parts used in high-end industrial applications 11
    • INTERNAL GROWTH ACCOMPLISHMENTS • Liebovich Bros. opened a new facility in Green Bay, WI • Siskin Steel & Supply expanded facility in Chattanooga, TN • Phoenix Metals added a new location in Philadelphia and moved into larger, more efficient facilities in Birmingham and Charlotte • EMJ opened a satellite facility in Lafayette, Louisiana; relocated its Portland, Oregon operation to a larger facility; and relocated its Kansas City facility • SSA moved its Los Angeles titanium operation into a larger, more efficient facility • Precision Strip expanded facility in Talladega, AL • Increased the size of Allegheny Steel Distributors facility in PA • Toma Metals expanded its facility in Johnstown, PA • Doubled the size of AMI Metals facility in Belgium 12 • Expanded the Valex Korea operation
    • 2007 YTD SALES BY PRODUCT 1 % Carbo n Steel P late 1 1 Carbo n Steel B ar 0% 1 Carbo n Steel Tubing 0% 7% Carbo n Steel Structurals 4% Galvanized Steel S & C 3% Ho t Ro lled Steel S & C 1 Co ld Ro lled Steel S & C % 7% A luminum B ar & Tube 5% Heat Treated A luminum P late 4% Co mmo n A llo y A luminum S & C 2% Co mmo n A llo y A luminum P late 1 Heat Treated A luminum S & C % 1 % Stainless Steel B ar & Tube 1 6% Stainless Steel S & C 3% Stainless Steel P late 1 Electro po lished S S Tubing % 6% A llo y B ar & Tube 1 A llo y P late, S & C % 3% To ll P ro cessing 4% Other 14
    • 2007 YTD SALES BY COMMODITY Toll Other 3% 4% Alloy 7% Carbon Steel 46% Stainless Steel 21% Aluminum 19% 15
    • 2007 YTD SALES BY REGION Mid-Atlantic Mountain Int'l 4% 4% 5% Midwest Northeast 23% 6% Pacific NW 8% West / SW Southeast 14% 20% California 16% 16
    • BROAD GEOGRAPHIC COVERAGE National Network More than 180 locations in 37 states and Belgium, Canada, China, South Korea and United Kingdom 17
    • GEOGRAPHIC, PRODUCT AND CUSTOMER DIVERSITY • More than 180 locations in 37 states and Belgium, Canada, China, South Korea and United Kingdom • Full range of over 100,000 products – Non-residential construction, general manufacturing and transportation, primarily the aerospace, truck trailer and rail car markets – Diversified customer base of more than 125,000 customers – No customer represented more than 1.5% of 2006 sales – Toll processing 3% of sales – Began servicing the energy market through our acquisitions of Jorgensen and Encore 18
    • MARKET CONDITIONS • Proven ability to perform in all types of operating environments • Healthy metals pricing on historical basis • Aerospace and other end markets doing well • Geographic regions remain healthy • Favorable industry consolidation and acquisition opportunities 19
    • SELECTED FINANCIAL DATA (in thousands, except per share data) Nine Months Ended September 30: 2007 2006 Sales $5,550,018 $4,173,416 Net Income $328,045 $279,865 $3.83 (1) Earnings Per Share - diluted $4.28 Weighted Average 72,985 (1) Shares Outstanding - diluted 76,613 $.16 (1) Cash Dividends Per Share $.24 At Sept. 30, 2007 At Dec. 31, 2006 Working Capital $1,317,548 $1,124,650 Total Assets $4,151,071 $3,614,173 Long-term Debt $1,244,208 $1,088,051 Shareholders’ Equity $2,023,993 $1,746,398 20 Adjusted for the 2-for-1 stock split effective July 19, 2006 (1)
    • NET SALES (Millions of $) $5,550 $5,743 6000 5000 $4,173 $3,367 4000 $2,943 3000 $1,883 $1,745 2000 1000 0 2002 2003 2004 2005 2006 2006 2007 September 30 21
    • NET INCOME (Millions of $) $354.5 400 $328.0 350 $279.9 300 $205.4 250 $169.7 200 150 $30.2 $34.0 100 50 0 2002 2003 2004 2005 2006 2006 2007 September 30 22
    • EARNINGS PER SHARE DILUTED (1) Dollars ($) $4.82 5.00 $4.28 $3.83 4.00 $3.10 $2.60 3.00 2.00 $.47 $.53 1.00 0.00 2002 2003 2004 2005 2006 2006 2007 September 30 Adjusted for the 2-for-1 stock split effective July 19, 2006 (1) 23
    • Stock Price Performance $ 350 Reliance Steel & 300 Aluminum Co. 250 S & P 500 200 Russell 2000 150 New Peer Group(1) 100 Old Peer Group(1) 50 0 12/01 12/02 12/03 12/04 12/05 12/06 * $100 Invested on December 31, 2001 in stock or index – including reinvestment of dividends. Fiscal Year ending December 31. 24 (1) See Proxy Statement dated May 16, 2007 for listing of companies included in this Group
    • SHAREHOLDER VALUE • 47 years of consecutive quarterly cash dividends • 33% dividend rate increase effective 2007 1Q to $.08 per share • 2-for-1 stock split in July 2006 • Committed to shareholder value - 2006 ROE of 27% • Dividend payments increased 1,300% (since 1994 IPO) • Stock value compound annual growth rate of 25% at September 30, 2007 (since 1994 IPO) • Actively repurchasing Company stock in 2007 under the Stock Repurchase Plan 25
    • INVESTMENT HIGHLIGHTS • A market leader within the metals service center industry • Diversification of products, customers and geography serve to reduce volatility in operating performance • Favorable industry dynamics supported by healthy end use markets • Unique, decentralized operating structure focused on profitability and working capital management • Demonstrated ability to grow existing businesses and also identify and make accretive acquisitions • Experienced management team with solid track record 26
    • Reliance Steel & Aluminum Co. www.rsac.com