01—Abstract
Summary
Summary of the 10-K filed February 28, 2023. Cited figures are marked; the original filing is the authoritative source.
Reliance Steel & Aluminum Co. reported record financial performance for 2022, with net sales of $17.03 billiona, up from $14.09 billion in 2021, and diluted earnings per share of $29.92, compared with $21.97 in 2021.
Gross profit was $5.25 billionb, with a gross profit margin of 30.8%, versus 31.9% in 2021. Operating income rose to $2.51 billion from $1.95 billion, and net income attributable to Reliance was $1.84 billion. Management attributes the results to record average selling prices per ton sold of $3,073, up 18.5%, while tons sold rose 1.8% to 5,570.8 thousand.
Gross profit margin declined from the 2021 record as metals pricing peaked in the second quarter of 2022 and fell over the rest of the year. Cash generation and shareholder returns were also strong. Net cash provided by operations was $2.12 billionc, compared with $799.4 million in 2021, aided by reduced working capital investment.
The company returned $847.4 milliond to stockholders through $217.1 million of dividends and $630.3 million of share repurchases. The quarterly dividend was raised 14.3% to $1.00 per share in February 2023. Capital expenditures were $341.8 million in 2022, and the 2023 capital expenditure budget is $500 million.
Net debt-to-total capital fell to 6.3% from 18.1%, and the company had $1.2 billion in cash and cash equivalents at year end. The filing also highlights risks tied to metals price volatility, inflation, the Russia-Ukraine conflict, tariffs and foreign imports, and dependence on a limited number of suppliers. The company does not use derivatives to hedge metal prices.
Total debt was $1.66 billion at December 31, 2022, reduced to $1.16 billion in January 2023 after the redemption of $500.0 million of senior notes. The company had $1.5 billion available under its revolving credit facility.
02—Key points
Key Highlights
- Record net sales of $17.03 billion in 2022, up from $14.09 billion in 2021, with a 16.1% increase on a same-store basis.
- Diluted earnings per share of $29.92, up from $21.97 in 2021; net income attributable to Reliance was $1.84 billion.
- Gross profit margin of 30.8% in 2022, down from 31.9% in 2021 as metals pricing declined in the second half of 2022.
- Net cash provided by operations of $2.12 billion, a record, compared with $799.4 million in 2021.
- Total stockholder returns of $847.4 million, including $217.1 million in dividends and $630.3 million in share repurchases.
- Quarterly dividend increased 14.3% to $1.00 per share from $0.875, effective in 2023, marking the 30th increase since the 1994 IPO.
- Net debt-to-total capital ratio decreased to 6.3% from 18.1%; the company redeemed $500.0 million of 4.50% senior notes in January 2023.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $17.02B$14.09B | +20.8% |
| SG&A Expenses | $2.50B$2.31B | +8.6% |
| Operating Expenses | $14.52B$12.14B | +19.5% |
| Operating Income | $2.51B$1.95B | +28.6% |
| Interest Expense | $62.30M$62.70M | −0.6% |
| Net Income | $1.84B$1.42B | +29.8% |
| EPS (Basic) | $30.39$22.35 | +36.0% |
| EPS (Diluted) | $29.92$21.97 | +36.2% |
| Shares Outstanding (Basic) | 60.56M63.22M | −4.2% |
| Shares Outstanding (Diluted) | 61.49M64.33M | −4.4% |
05—Questions
Frequently Asked Questions
How did Reliance's profitability change in 2022?
Operating income rose to $2.51 billion from $1.95 billion, and diluted EPS rose to $29.92 from $21.97. Higher average selling prices per ton, which reached $3,073, more than offset a lower gross profit margin of 30.8% compared with 31.9% in 2021.
How strong is the company's balance sheet and liquidity?
At December 31, 2022, the company had $1.2 billion in cash and cash equivalents, a $1.5 billion revolving credit facility with no outstanding borrowings, and a net debt-to-total capital ratio of 6.3%. Total debt of $1.66 billion was reduced to $1.16 billion in January 2023 after the redemption of $500.0 million of senior notes.
What are the main risks to the business?
The filing cites metals price volatility, which affects revenue and profit, along with inflation, supply chain disruptions, the Russia-Ukraine conflict, tariff changes and import levels, and limited long-term supplier contracts. The company does not use derivatives to hedge metal prices.
How much is the company returning to shareholders?
In 2022 the company returned $847.4 million through dividends and share repurchases, and $680.7 million of repurchase authorization remained at year end. The quarterly dividend was raised to $1.00 per share for 2023, and the company has paid dividends for 63 consecutive years.
What are the company's growth and investment plans?
The company plans to grow through acquisitions and internal investment. Its 2023 capital expenditure budget is $500 million, the highest in its history, following $341.8 million spent in 2022. The company acquired four businesses in the fourth quarter of 2021 for $440.3 million.
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