Reliance Sales, Income Jump in 2010
Reliance Steel & Aluminum Co., Los Angeles, reported net income of $39.5 million for the fourth quarter ended Dec. 31, compared to 2009 fourth-quarter net income of $92.1 million, and net income of $48.7 million for the 2010 third quarter. Sales for the 2010 fourth quarter totaled $1.58 billion, up 24 percent from 2009 fourth-quarter sales of $1.27 billion, but down 4 percent from 2010 third-quarter sales of $1.65 billion.
For the 2010 year, the company’s net income totaled $194.4 million, up 31 percent from net income of $148.2 million for the 2009 year. Sales for the 2010 year hit $6.31 billion, up 19 percent from 2009 sales of $5.32 billion.
Reliance’s tons sold rose 6 percent in 2010, while the average price per ton sold was up 12 percent compared to 2009. For the 2010 year, carbon steel sales represented 52 percent of revenues; aluminum sales 18 percent; stainless steel sales 16 percent; alloy sales 8 percent; toll processing sales 2 percent; and other sales 4 percent. Its 2010 inventory turn rate was 4.8 times, improved from 3.7 times in 2009.
“Our guidance for the 2010 fourth quarter did not anticipate the carbon steel price increases that were announced by the carbon steel producers consistently throughout December,” said David H. Hannah, Reliance chairman and CEO. “Demand during the quarter was seasonably lower than the 2010 third quarter, but not by as much as we expected, as some customers purchased a little more during December to get ahead of further price increases. As a result, we sold a little more steel at generally higher prices and margins that resulted in the quarter finishing up better than we originally expected.”
The company’s strongest markets in 2010 were energy, oil and gas, semiconductor and electronics, aerospace, agriculture and toll processing, which is primarily related to the auto and appliance industries. “Nonresidential construction was our most difficult area last year,” Hannah noted.
Reliance executives expect the prices of most metals to continue their upward trend and remain at strong levels at least through the 2011 first quarter. “The recent rapid price increases can cause changes in our customers’ buying patterns that can make it difficult to determine what real end-use demand is doing. While there is certainly some buying ahead of the announced increases, we believe that real underlying demand is steadily improving, but not at a large or rapid rate. We expect this slow and steady growth pattern to continue as the year progresses. Given these expectations, 2011 looks like a much better year than 2010,” Hannah said.
Reliance finalized the acquisitions of Diamond Manufacturing and Lampros Steel in the fourth quarter. It also spent much of the year focusing on internal growth initiatives, spending over $110 million on property, plant and equipment, added Gregg Mollins, Reliance president and COO. “We opened new facilities in Malaysia, Orlando and Philadelphia and are in the process of expanding several of our existing locations. Our board recently approved $200 million for our capital expenditure budget for 2011. We are excited about our future growth.”