Reliance Steel & Aluminum Co Reports Robust 2023 Financials Amidst Rebranding to Reliance, Inc.
Annual EPS: $22.64, marking the second highest in company history.
Quarterly Dividend: Increased by 10% to $1.10 per share, reflecting confidence in financial stability.
Annual Cash Flow: Generated $1.67 billion from operations, showcasing strong cash management.
Stock Repurchases: Bought back $479.5 million of common stock, signaling a shareholder-friendly capital allocation.
Acquisitions: Completed the acquisition of Cooksey Iron & Metal Company and announced the pending acquisition of American Alloy Steel, Inc., indicating strategic growth.
Corporate Rebranding: Transitioned to Reliance, Inc. to better represent the company's diversified growth and services.
Market Performance: Tons sold increased by 3.7% year-over-year, outperforming the broader service center industry.
On February 15, 2024, Reliance Steel & Aluminum Co (NYSE:RS) released its 8-K filing, announcing a strong finish to the year with robust fourth-quarter and full-year financial results. The company, a leading metal service center in the United States, also unveiled its corporate rebranding to Reliance, Inc., reflecting its evolution beyond metal distribution.
Financial Performance and Challenges
Reliance Steel & Aluminum Co (NYSE:RS) reported a second-highest annual EPS of $22.64 and a fourth-quarter EPS of $4.70. Despite a challenging environment, the company maintained a gross profit margin near the top of its sustainable range due to strong pricing discipline and capital reinvestment. The company's net sales for the fourth quarter were $3.34 billion, a 7.9% decrease from the third quarter, and a 7.6% decrease year-over-year. Full-year net sales reached $14.81 billion, a 13% decline from the previous year, reflecting the broader industry's pricing and demand challenges.
Financial Achievements and Industry Significance
The company's financial achievements, including a high gross profit margin of 30.6% and significant cash flow generation, underscore its operational efficiency and strategic focus on value-added processing. These achievements are particularly important in the steel industry, where margins can be thin and cash flow management is critical for sustaining operations and investing in growth.
Income Statement and Balance Sheet Highlights
Reliance Steel & Aluminum Co (NYSE:RS) reported a gross profit of $1.02 billion for the fourth quarter and $4.55 billion for the full year. The company's LIFO income, a measure of inventory accounting effects, was $(59.5) million for the quarter and $(164.5) million for the year. The balance sheet remains strong with $1.08 billion in cash and cash equivalents and a low net debt-to-total capital ratio of 0.8%.
Management Commentary
"We delivered strong operational and financial performance in 2023 in a challenging environment. Strategic organic volume growth coupled with a full year gross profit margin of 30.7% and effective expense management resulted in annual earnings per diluted share of $22.64, the second highest in our history," said Karla Lewis, President and Chief Executive Officer of Reliance.
End Market Commentary
Reliance Steel & Aluminum Co (NYSE:RS) experienced year-over-year growth in non-residential construction, aerospace, and general manufacturing markets. The company's tons sold in the fourth quarter increased by 4.9% year-over-year, with full-year tons sold up by 3.7%, surpassing industry growth.
Analysis of Company Performance
Reliance Steel & Aluminum Co (NYSE:RS)'s performance in 2023 demonstrates resilience and adaptability in a volatile market. The company's focus on value-added services, strategic acquisitions, and effective capital allocation has positioned it well for continued success. The rebranding to Reliance, Inc. aligns with its diversified offerings and growth trajectory, potentially opening new opportunities and markets.
For a detailed analysis of Reliance Steel & Aluminum Co (NYSE:RS)'s financial results and strategic initiatives, investors are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Reliance Steel & Aluminum Co for further details.
This article first appeared on GuruFocus.
