Reliance Steel & Aluminum Co has reported today its financial results for the third quarter and nine months ended September 30th 2009. For the 2009 third quarter, Reliance reported net income of USD 41.8 million as against USD 152.5 million in third quarter of 2008. For the 2009 second quarter, Reliance had a net loss of USD 5.8 million.
Sales for the 2009 third quarter were USD 1.24 billion, down from 2008 third quarter sales of USD 2.57 billion and flat with 2009 second quarter sales of USD 1.24 billion. The 2009 third quarter financial results include in cost of sales a pre tax LIFO income amount of USD 67.5 million as compared with a pre tax LIFO expense amount of USD 79.0 million for the 2008 third quarter and a pre tax LIFO income amount of USD 75 million in the 2009 second quarter.
For the 9 months ended September 30th 2009, net income amounted to USD 56.1 million as compared with net income of USD 416.5 million for the same period in 2008. Sales for the 2009 YTD were USD 4.04 billion, down 39% from 2008 nine month sales of USD 6.58 billion. The 2009 nine month financial results include in cost of sales a pre tax LIFO income amount of USD 217.5 million as compared with a pre tax LIFO expense amount of USD 136.5 million in the 2008 year to date period.
Reliance's tonnes sold for the 2009 third quarter were down 26% from the 2008 third quarter and down less than 1% from the 2009 second quarter. Average price per ton sold was down 34% compared to the 2008 third quarter and flat with the 2009 second quarter. For the nine months ended September 30th 2009, tonnes sold were down 13% and average pricing was down 29% compared to the same period of 2008.
Mr David H. Hannah chairman & CEO of Reliance Steel said that "The 2009 third quarter results improved substantially from the 2009 second quarter mainly due to higher gross profit margins. Because of mill price increases for most of our products during the third quarter and our significant inventory reductions over the past twelve months, our inventory costs on hand are now more in line with current replacement costs allowing us to improve our gross profit margins from the historically low margins experienced in the 2009 second quarter. We further reduced our FIFO inventory levels by USD 92 million in the quarter. Demand from our customers improved slightly during the quarter from the low levels experienced in July."
He added that "During the 2009 nine months, we generated record cash flow from operations of USD 807.2 million. We repaid USD 192 million of debt during the quarter. On September 28th 2009, we amended our existing USD 1.1 billion credit facility to adjust certain financial ratios and limit certain uses of cash through June 30th 2010. Pricing was adjusted and we also extended the maturity date on USD 1.02 billion of the USD 1.1 billion credit facility an additional year, through November 2012. Concurrent with the amendment and extension of the credit facility, we paid off and terminated our term loan that had an outstanding balance of USD 444 million, using USD 194 million of cash on hand and USD 250 million of borrowings on the credit facility. At September 30th 2009 we had cash on hand of USD 88 million. Our net debt to total capital ratio is 28% as of September 30th 2009."
Mr Hannah concluded that "We are pleased with the significant improvement in our gross profit margins; however, we are uncertain as to business activity in the 2009 fourth quarter. Although we believe that demand is fairly stable at low levels, the fourth quarter is typically seasonally slower for us. Pricing also seems to be more stable than it was earlier in the year; however, we believe there may be some slight downward pressure on pricing for many of our products in the coming months. Because of this, we are not comfortable providing earnings guidance for the 2009 fourth quarter. We will, as the quarter progresses, communicate any meaningful information regarding our operations as it becomes available. Reliance stands on solid financial footings and is well positioned for the eventual recovery in economic conditions."
