01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Reliance, Inc. (formerly Reliance Steel & Aluminum Co.; NYSE: RS) reported 2023 net sales of $14.81 billiona, down 13.0% from $17.03 billion in 2022, as the average selling price per ton sold fell 16.4% while tons sold rose 3.7%.
Diluted earnings per share were $22.64b, compared with a record $29.92 in 2022. Operating income declined to $1.74 billion from $2.51 billion, and gross profit margin held steady at 30.7% versus 30.8%. Net income attributable to Reliance was $1.34 billion.
The filing describes the company as the largest metals service center company in North America based on revenues, with operations in over 315 locations across 40 U.S. states and 12 foreign countries. Cash flow from operations was $1.67 billionc, the second highest in the company's history, compared with $2.12 billion in 2022. The company spent $468.8 million on capital expenditures and returned $717.6 million to stockholders through $238.1 million of dividends and $479.5 million of share repurchases.
Cash and cash equivalents were $1.08 billiond at year-end, and the net debt-to-total capital ratio was 0.8%, down from 6.3%. The board raised the quarterly dividend 10.0% to $1.10 per share in February 2024.
In early 2024 the company completed the acquisition of Cooksey Iron & Metal Company and agreed to acquire American Alloy Steel, Inc., subject to regulatory approval. Combined unaudited revenues for the two businesses were approximately $400 million for the twelve months ended December 31, 2023.
02—Key points
Key Highlights
- Net sales of $14.81 billion in 2023, down 13.0% from $17.03 billion in 2022, driven by a 16.4% decline in average selling price per ton sold partially offset by a 3.7% increase in tons sold.
- Diluted EPS of $22.64 in 2023, the second highest in company history, versus a record $29.92 in 2022; net income attributable to Reliance was $1.34 billion.
- Gross profit margin of 30.7% in 2023 compared with 30.8% in 2022, with value-added processing performed on approximately 50% to 51% of shipped orders.
- Operating cash flow of $1.67 billion in 2023, down from $2.12 billion in 2022, and capital expenditures of $468.8 million.
- Returned $717.6 million to stockholders in 2023 ($238.1 million in dividends and $479.5 million in share repurchases); $1.44 billion of repurchase authorization remained at year-end.
- Balance sheet strength: $1.08 billion in cash and cash equivalents, net debt-to-total capital of 0.8%, and an interest coverage ratio of 45.9 times versus a 3.0 times covenant minimum.
- Quarterly dividend increased 10.0% to $1.10 per share in February 2024, marking 64 consecutive years of regular quarterly dividends.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $14.81B$17.02B | −13.0% |
| SG&A Expenses | $2.56B$2.50B | +2.3% |
| Operating Expenses | $13.07B$14.52B | −10.0% |
| Operating Income | $1.74B$2.51B | −30.6% |
| Interest Expense | $40.10M$62.30M | −35.6% |
| Net Income | $1.34B$1.84B | −27.4% |
| EPS (Basic) | $22.90$30.39 | −24.6% |
| EPS (Diluted) | $22.64$29.92 | −24.3% |
| Shares Outstanding (Basic) | 58.33M60.56M | −3.7% |
| Shares Outstanding (Diluted) | 59.02M61.49M | −4.0% |
05—Questions
Frequently Asked Questions
How did revenue and profitability change in 2023?
Net sales fell 13.0% to $14.81 billion because the average selling price per ton sold dropped 16.4%, which outweighed a 3.7% increase in tons sold. Operating income declined to $1.74 billion from $2.51 billion, and diluted EPS fell to $22.64 from $29.92. The filing attributes the decline mainly to lower metals prices following record 2022 pricing.
Is the company's balance sheet and liquidity position strong?
Yes. At December 31, 2023, cash and cash equivalents were $1.08 billion and the net debt-to-total capital ratio was 0.8%, down from 6.3%. The company had approximately $1.5 billion available under its revolving credit facility, no outstanding borrowings on it, and was in compliance with all financial maintenance covenants. Total debt was $1.15 billion, with $400.3 million due in 2025.
What acquisitions did the company make or announce?
The company acquired Southern Steel Supply, LLC in May 2023 and Cooksey Iron & Metal Company in February 2024. On February 14, 2024, it announced a definitive agreement to acquire American Alloy Steel, Inc., subject to regulatory approval and other customary closing conditions. Combined unaudited revenues for Cooksey Steel and American Alloy were approximately $400 million for 2023.
What are the company's capital allocation priorities?
The company spent $468.8 million on capital expenditures in 2023 and budgets approximately $425 million for 2024. It paid $238.1 million in dividends and repurchased $479.5 million of stock, reducing shares outstanding by 3.2% in 2023. The repurchase authorization was increased to $1.5 billion in October 2023, with $1.44 billion remaining at year-end.
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