Reliance Steel & Aluminum Co has announced its financial results for the second quarter and six months ended June 30th 2011. For the 2011 second quarter, Reliance reported net income of USD 98.7 million, up by 60% from 2010 second quarter net income of USD 61.5 million, and up by 7% from USD 92.3 million in the 2011 first quarter.
Earnings per diluted share were USD 1.31 in the 2011 second quarter, up by 58% from 2010 second quarter earnings per diluted share of USD 0.83 and up by 7% from USD 1.23 for the 2011 first quarter. Sales for the 2011 second quarter were USD 2.05 billion, up by 26% from 2010 second quarter sales of USD 1.62 billion and up 7% from 2011 first quarter sales of USD 1.91 billion.
The 2011 second quarter financial results include in cost of sales a pre tax LIFO charge or expense of USD 25 million compared with a pre tax LIFO charge of USD 10 million for the 2010 second quarter and a charge of USD 20 million for the 2011 first quarter.
For the six months ended June 30th 2011, net income amounted to USD 191.0 million, up by 80% compared with net income of USD 106.2 million for the 2010 six month period. Earnings per diluted share were USD 2.54 for the six months ended June 30th 2011, up by 78% compared with earnings of USD 1.43 per diluted share for the six months ended June 30th 2010.
Sales for the 2011 six months were USD 3.96 billion, up by 29% from 2010 six month sales of USD 3.07 billion. The 2011 six months financial results include in cost of sales a pre tax LIFO charge or expense of USD 45 million compared with a pre tax LIFO charge of USD 15 million for the 2010 six months. The LIFO adjustments, in effect, reflect cost of sales at current replacement costs.
Reliance's tonnes sold for the 2011 second quarter were up by 10% from the 2010 second quarter and up 1% from the 2011 first quarter. Average prices per tonne sold in the 2011 second quarter were up 16% compared to the 2010 second quarter and up 6% compared to the 2011 first quarter. For the 2011 second quarter, carbon steel sales were 54% of net sales; aluminum sales were 16%; stainless steel sales were 15%; alloy sales were 9%; toll processing sales were 2%; and other sales were 4%.
Mr David H Hannah chairman & CEO of Reliance Steel said that "We are pleased with our 2011 second quarter results, which were slightly better than we originally expected given our somewhat higher LIFO charge in the quarter. Sales volume and average pricing held up reasonably well given that mill prices for most of the metals we sell declined as the quarter progressed, which also caused our gross profit margins to contract a bit, as we expected. Consistent with the first quarter of 2011, our strongest markets were in energy, oil & gas, farm and heavy equipment, mining, general manufacturing, aerospace, semiconductor and electronics. Non residential construction was still weak, but showed some signs of life with spotty improvements. Our auto related toll processing volumes were negatively impacted by the crisis in Japan but are now recovering nicely."
Mr Hannah said that "As mentioned earlier, prices for most of our metal products have softened from the recent highs early in the 2011 second quarter, and may decrease a little more during the 2011 third quarter, but not to the extent that we are overly concerned. Also, we do not expect any significant changes in demand other than some normal seasonal third quarter slowing. Given these expectations, we anticipate earnings per diluted share in a range of USD 1.05 to USD 1.15 for the 2011 third quarter."
He added that "Our balance sheet is in excellent shape, with net debt to total capital at 25.2% at June 30th 2011. Effective July 26th 2011, we renewed our credit facility for a five year term and increased the size to USD 1.5 billion from USD 1.1 billion, providing even more capital to fund the growth of our existing operations as well as anticipated acquisition opportunities. We are very excited about our agreement to acquire Continental Alloys & Services and look forward to completing that transaction soon. Continental brings a great management team and expands our exposure to the attractive energy, oil and gas markets with new products, processing capabilities, and international locations."
