Reliance Steel & Aluminum Co. reports fourth quarter and full year 2014 financial results

Fourth Quarter 2014 Financial Highlights

• Sales were $2.58 billion, up 11.7% from $2.31 billion in the fourth quarter of 2013 and down 4.7% from $2.71 billion in the third quarter of 2014.
• Tons sold were up 4.4% from the fourth quarter of 2013 and down 4.9% from the third quarter of 2014, with the average selling price per ton sold up 6.4% from the fourth quarter of 2013 and down 0.1% from the third quarter of 2014.
• Net income attributable to Reliance was $92.3 million, up 49.4% from $61.8 million in the fourth quarter of 2013 and down 3.4% from $95.5 million in the third quarter of 2014.
• Earnings per diluted share were $1.18, up 49.4% from $0.79 in the fourth quarter of 2013 and down 2.5% from $1.21 in the third quarter of 2014.
• Non-GAAP earnings per diluted share were $1.01, up 7.4% from $0.94 in the fourth quarter of 2013 and down 24.1% from $1.33 in the third quarter of 2014.
• A pre-tax LIFO charge, or expense, of $24.5 million, is included in cost of sales compared to a pre-tax LIFO credit, or income, of $12.7 million in the fourth quarter of 2013 and an expense of $20.0 million for the third quarter of 2014.
• The effective tax rate was 26.6% compared to 33.0% in the fourth quarter of 2013 and 25.7% in the third quarter of 2014.
• Cash flow from operations was $193.2 million for the fourth quarter of 2014 and net debt-to-total capital was 35.0% at December 31, 2014.
• Completed the acquisition of Fox Metals and Alloys, Inc., effective December 1, 2014.
• Repurchased $50 million of Reliance common stock.
• Quarterly cash dividend increased to $0.40 per share, a 14% increase.

Full Year 2014 Financial Highlights
• Sales were a record $10.45 billion, up 13.3% from $9.22 billion in 2013.
• Tons sold were up 13.0% from 2013 and the average selling price per ton sold was up 0.4%.
• Net income attributable to Reliance was $371.5 million, up 15.5% from $321.6 million in 2013.
• Earnings per diluted share were $4.73, up 14.3% from $4.14 in 2013.
• Non-GAAP earnings per diluted share were $4.83, up 8.5% from $4.45 in 2013.
• A pre-tax LIFO charge, or expense, of $54.5 million, is included in cost of sales compared to a pre-tax LIFO credit, or income, of $50.2 million in 2013.
• The effective tax rate was 31.1% compared to 32.1% in 2013.
• Cash flow from operations was $356.0 million.

End-market Commentary

Reliance experienced steadily improving customer demand across most all of its end markets in 2014. While the Company does not expect any single end-market to deliver outsized growth in 2015, continued strength in the aerospace and automotive (through the Company's toll processing operations) markets are expected, along with further improvement in the non-residential construction market.

• Aerospace demand continued to improve during 2014 compared to 2013 levels, and is expected to further improve throughout 2015. Reliance expects pricing will improve as 2015 progresses.
• Automotive, supported mainly by the Company's toll processing operations in the U.S. and Mexico, is expected to continue at its current, strong production rates in 2015. The increase in aluminum usage in the automotive industry continues to represent a growth area for Reliance.
• Heavy industry continues to perform reasonably well, despite some recent downward pressure on agricultural and mining equipment and pricing.
• Non-residential construction continued to show improvement in 2014 but remains at significantly reduced demand levels from its peak. Reliance believes that this important end-market will show further signs of improvement throughout 2015.
• Energy (oil and gas) demand for the products Reliance sells is expected to remain under pressure in 2015 due to the current weak oil prices.