Reliance Steel & Aluminum delivers strong performance in Q2 FY16

Reliance Steel & Aluminum Co., the largest metals service centre corporation in North America, has reported its financial results for the second quarter ended June 30, 2016. Sales were $2.20 billion, down 9.1 per cent from $2.42 billion in the second quarter of 2015 and up 1.9 per cent from $2.16 billion in the first quarter of 2016. Net income attributable to Reliance was $100.9 million, up 11.9 per cent from $90.2 million in the second quarter of 2015 and up 9.4 per cent from $92.2 million in the first quarter of 2016. Cash flow from operations was $49.8 million in the second quarter of 2016 and net debt-to-total capital was 33.4 per cent at June 30, 2016.

"We had an outstanding second quarter with strong financial performance characterized by gross profit margin expansion, as well as diligent expense and inventory management to drive improved profitability. Going forward, we will continue executing our strategy with the goal of extending our track record of delivering industry leading results," said Gregg Mollins, President and Chief Executive Officer of Reliance.

 

End User Segment Performance

Although overall industry shipments were lower in 2016 than in 2015, Reliance continues to benefit from its model of servicing diverse end markets and providing increased levels of quality and service through capital investments.

According to the company sources, automotive demand, supported mainly by the company's toll processing operations in the U.S. and Mexico, remains robust and is expected to continue at current production rates.  Reliance has increased its toll processing volume through investments in this business primarily to support incremental processing from the increased usage of aluminium by the automotive industry.

Aerospace demand, company sources say, has improved further in the second quarter of 2016 and is expected to continue at current demand levels throughout the remainder of the year.  Reliance maintains its positive outlook in this end market and expects to continue growing its market share in aerospace given the capital investments and key acquisitions it has made in this space.

Reliance management believes the U.S. economy is generally healthy and anticipates a continued slow recovery in demand, subject to normal seasonal factors.  Management is optimistic that metals pricing is sustainable at current levels through the third quarter of 2016 and is confident in the company's ability to execute well in this environment.