What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 95 added, 85 removed, 271 unchanged (40% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, less allowance for credit losses of $ 29.6 at March 31, 2022 and $ 26.7 at December 31, 2021

Accounts receivable, less allowance for credit losses of $ 31.8 at June 30, 2022 and $ 26.7 at December 31, 2021

Prepaid expenses and other current assets

Income taxes receivable

Total current assets

26 unchanged sentences

Common stock and additional paid-in capital, $ 0.001 par value and 200,000 shares authorized

Issued and outstanding shares— 61,948 at March 31, 2022 and 61,806 at December 31, 2021

Issued and outstanding shares— 60,869 at June 30, 2022 and 61,806 at December 31, 2021

Retained earnings

9 unchanged sentences

Three Months Ended

Six Months Ended

Costs and expenses:

12 unchanged sentences

Shares used in computing earnings per share:

Cash dividends per share

See accompanying notes to unaudited consolidated financial statements.

3 unchanged sentences

Three Months Ended

Other comprehensive income (loss):

Foreign currency translation gain (loss)

Six Months Ended

Other comprehensive (loss) income:

Foreign currency translation (loss) gain

Postretirement benefit plan adjustments, net of tax

Total other comprehensive income (loss)

Total other comprehensive (loss) income

Comprehensive income

4 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except number of shares which are reflected in thousands and per share amounts)

Reliance Stockholders’ Equity

and Additional

Paid-in Capital

Comprehensive

Income (loss)

Balance at January 1, 2021

Other comprehensive loss

Dividend to noncontrolling interest holder

Stock-based compensation

Common stock withheld related to net share settlements

Cash dividends — $ 0.6875 per share and dividend equivalents

Balance at March 31, 2021

Balance at January 1, 2022

Other comprehensive income

Dividend to noncontrolling interest holder

(in millions, except per share amounts)

Three Months Ended

Six Months Ended

Total equity, beginning balance

Common stock and additional paid-in capital:

Beginning balance

Stock-based compensation

1 unchanged sentence

Repurchase of common shares

Cash dividends — $ 0.875 per share and dividend equivalents

Balance at March 31, 2022

Ending balance

Retained earnings:

Beginning balance

Cash dividends and dividend equivalents

Repurchase of common shares

Ending balance

Accumulated other comprehensive loss:

Beginning balance

Other comprehensive (loss) income

Ending balance

Total Reliance stockholders' equity, ending balance

Noncontrolling interests:

Beginning balance

Comprehensive income

Capital contribution

Dividend paid

Ending balance

Total equity, ending balance

Dividends declared per share

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(in millions)

Three Months Ended

Six Months Ended

Operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

Depreciation and amortization

Provision for credit losses

1 unchanged sentence

Stock-based compensation expense

Net loss on life insurance policies and deferred compensation plan assets

Changes in operating assets and liabilities (excluding effect of businesses acquired):

23 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Summary of Significant Accounting Policies

6 unchanged sentences

In the opinion of management, our financial statements reflect all material adjustments, which are of a normal recurring nature, necessary for presentation of financial statements for interim periods in accordance with U.S.

The results of operations for the quarter ended March 31, 2022 are not necessarily indicative of the results for the full year ending December 31, 2022.

The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results for the full year ending December 31, 2022.

These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto for the year ended December 31, 2021, included in the Reliance Steel & Aluminum Co.

12 unchanged sentences

The accounting changes may be applied prospectively through December 31, 2022.

The Company expects to adopt this guidance for any contracts that are modified as a result of reference rate reform.

We do not expect the transition from LIBOR to have a material impact on our consolidated financial statements.

To the extent that, prior to December 31, 2022, we enter into any contract modifications for which the optional expedients are applied, the adoption of this standard is not expected to have a material impact on our consolidated results of operations, financial position or cash flows.

2021 Acquisitions

On October 1, 2021, we acquired Merfish United, Inc.

(“Merfish United”), a leading master distributor of tubular building products that are distributed to its independent wholesale distributor customers across a variety of end markets in the United States.

Merfish United, headquartered in Ipswich, Massachusetts, serves 47 U.S.

states through its twelve strategically located distribution centers.

On December 10, 2021, we acquired Admiral Metals Servicenter Company, Incorporated (“Admiral Metals”), a leading distributor of non-ferrous metals products in the Northeastern U.S.

Admiral Metals, headquartered in Woburn, Massachusetts, serves a variety of end markets, including semiconductor, automotive, medical, infrastructure, aerospace and industrial markets through its eight strategically located service centers.

On December 10, 2021, we acquired Nu-Tech Precision Metals Inc.

(“Nu-Tech Precision Metals”), a custom manufacturer of specialty extruded metals, fabricated parts and welded components.

Nu-Tech Precision Metals, services the nuclear energy, aerospace and defense end markets from its location near Ottawa, Ontario, Canada.

On December 17, 2021, we acquired Rotax Metals, Inc.

(“Rotax Metals”), a metals service center specializing in copper, bronze and brass alloys.

Located in Brooklyn, New York, Rotax Metals operates as a subsidiary of Yarde Metals, Inc., a wholly owned subsidiary of Reliance.

Included in our net sales for the quarter ended March 31, 2022 were combined net sales of $ 226.5 million from our 2021 acquisitions.

We funded our 2021 acquisitions with cash on hand.

In the fourth quarter of 2021, we acquired each of Merfish United, Inc., Admiral Metals Servicenter Company, Incorporated, Nu-Tech Precision Metals Inc.

and Rotax Metals Inc.

with cash on hand.

Included in our net sales for the six months ended June 30, 2022 were combined net sales of $ 473.7 million from our 2021 acquisitions.

The preliminary allocations of the total purchase for our 2021 acquisitions to the fair values of the assets acquired and liabilities assumed were as follows:

17 unchanged sentences

Three Months Ended

March 31, 2021

Six Months Ended

June 30, 2021

(in millions, except per share amounts)

3 unchanged sentences

Three Months Ended

Six Months Ended

(in millions)

6 unchanged sentences

Purchase price allocation adjustments

Foreign currency translation gain

Balance at March 31, 2022

We had no accumulated impairment losses related to goodwill at March 31, 2022 and December 31, 2021.

Foreign currency translation loss

Balance at June 30, 2022

We had no accumulated impairment losses related to goodwill at June 30, 2022 and December 31, 2021.

Intangible Assets, net

Intangible assets, net consisted of the following:

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

Intangible assets not subject to amortization:

Certain amounts in prior periods have been reclassified to conform with current period presentation.

Amortization expense for intangible assets was $ 12.2 million and $ 9.2 million for the quarters ended March 31, 2022 and 2021, respectively.

Foreign currency translation gains related to intangible assets, net, were $ 0.4 million and $ 0.1 million for the quarters ended March 31, 2022 and 2021, respectively.

Certain prior year amounts have been reclassified for consistency with the current period presentation.

Amortization expense for intangible assets was $ 24.3 million and $ 18.4 million for the six months ended June 30, 2022 and 2021, respectively.

Foreign currency translation losses related to intangible assets, net, were $ 1.6 million for the six months ended June 30, 2022 compared to foreign currency translation gains of $ 0.2 million for the six months ended June 30, 2021.

During the first quarter of 2022, we recorded purchase price adjustments relating to our 2021 acquisitions based on the finalization of intangible asset valuations that decreased trade name intangible assets for $ 16.9 million, increased the Backlog of orders intangible asset for $ 8.0 million and increased customer lists/relationships intangible assets for $ 2.7 million.

The following is a summary of estimated future amortization expense for the remaining nine months of 2022 and each of the succeeding five years:

The following is a summary of estimated future amortization expense for the remaining six months of 2022 and each of the succeeding five years:

(in millions)

2022 (remaining nine months)

2022 (remaining six months)

Debt consisted of the following:

9 unchanged sentences

Total long-term debt

The weighted average interest rate on the Company’s outstanding borrowings as of June 30, 2022 and December 31, 2021 was 3.82 % and 3.83 %, respectively.

Unsecured Credit Facility

On September 3, 2020, we entered into a $ 1.5 billion unsecured five-year Amended and Restated Credit Agreement (“Credit Agreement”) that amended and restated our then-existing $ 1.5 billion unsecured revolving credit facility and includes a $ 150.0 million letter of credit sublimit.

As of March 31, 2022, borrowings under the Credit Agreement were available at variable rates based on LIBOR plus 1.25 % or the bank prime rate plus 0.25 % and we currently pay a commitment fee at an annual rate of 0.20 % on the unused portion of the revolving credit facility.

As of June 30, 2022, borrowings under the Credit Agreement were available at variable rates based on LIBOR plus 1.00 % or the bank prime rate and we currently pay a commitment fee at an annual rate of 0.175 % on the unused portion of the revolving credit facility.

The applicable margins over LIBOR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our total net leverage ratio, as defined in the Credit Agreement.

1 unchanged sentence

Our Credit Agreement includes provisions to change the reference rate to the then-prevailing market convention for similar agreements if a replacement rate for LIBOR is necessary during its term.

As of March 31, 2022 and December 31, 2021, we had no outstanding borrowings on the revolving credit facility.

As of March 31, 2022 and December 31, 2021, we had $ 8.3 million and $ 8.9 million, respectively, of letters of credit issued on the revolving credit facility.

As of June 30, 2022 and December 31, 2021, we had no outstanding borrowings on the revolving credit facility.

As of June 30, 2022 and December 31, 2021, we had $ 8.3 million and $ 8.9 million, respectively, of letters of credit issued on the revolving credit facility.

Senior Unsecured Notes

2 unchanged sentences

Other Notes, Revolving Credit and Letter of Credit/Letters of Guarantee Facilities

A revolving credit facility with a combined credit limit of $ 8.6 million is in place for an operation in Asia with an outstanding balance of $ 4.7 million as of March 31, 2022 and December 31, 2021, respectively.

Various industrial revenue bonds had combined outstanding balances of $ 7.7 million as of March 31, 2022 and December 31, 2021 and have maturities through 2027.

A revolving credit facility with a combined credit limit of $ 8.1 million is in place for an operation in Asia with an outstanding balance of $ 3.7 million and $ 4.7 million as of June 30, 2022 and December 31, 2021, respectively.

Various industrial revenue bonds had combined outstanding balances of $ 7.7 million as of June 30, 2022 and December 31, 2021 and have maturities through 2027.

A standby letters of credit/letters of guarantee agreement with one of the lenders under our Credit Agreement provides letters of credit or letters of guarantee in an amount not to exceed $ 50.0 million in the aggregate.

As of March 31, 2022, a total of $ 21.9 million of letters of credit/guarantee were issued on the facility.

As of June 30, 2022, a total of $ 24.5 million of letters of credit/guarantee were issued on the facility.

The Credit Agreement and the Indentures include customary representations, warranties, covenants and events of default provisions.

The covenants under the Credit Agreement include, among other things, two financial maintenance covenants that require us to comply with a minimum interest coverage ratio and a maximum leverage ratio.

We were in compliance with all financial maintenance covenants in our Credit Agreement at March 31, 2022.

We were in compliance with all financial maintenance covenants in our Credit Agreement at June 30, 2022.

Our metals service center leases are comprised of processing and distribution facilities, equipment, trucks and trailers, ground leases and other leased spaces, such as depots, sales offices, storage and data centers.

5 unchanged sentences

Three Months Ended

Six Months Ended

(in millions)

1 unchanged sentence

Supplemental cash flow and balance sheet information is presented below:

Three Months Ended

Six Months Ended

(in millions)

5 unchanged sentences

Weighted average discount rate—operating leases

Maturities of operating lease liabilities as of March 31, 2022 are as follows:

Maturities of operating lease liabilities as of June 30, 2022 are as follows:

(in millions)

2022 (remaining nine months)

2022 (remaining six months)

Total operating lease payments

1 unchanged sentence

Total operating lease liabilities

Our effective income tax rates for the first quarters of 2022 and 2021 were 24.8 % and 25.3 %, respectively.

Our effective income tax rate for each of the second quarter and six months ended June 30, 2022 was 24.7 %, compared to 25.6 % and 25.5 % in the comparable 2021 periods, respectively.

The differences between our effective income tax rates and the U.S.

federal statutory rate of 21.0 % were mainly due to state income taxes, partially offset by the effects of company-owned life insurance policies.

On April 26, 2022, our Board of Directors declared the 2022 second quarter cash dividend of $ 0.8750 per share of common stock, payable on June 10, 2022 to stockholders of record as of May 27, 2022.

During the first quarters of 2022 and 2021, we declared and paid quarterly dividends of $ 0.8750 and $ 0.6875 per share, or $ 54.2 million and $ 43.8 million in total, respectively.

In addition, we paid $ 2.5 million and $ 1.0 million in dividend equivalents with respect to vested restricted stock units during the quarters ended March 31, 2022 and 2021, respectively.

On July 26, 2022, our Board of Directors declared the 2022 third quarter cash dividend of $ 0.875 per share of common stock, payable on September 2, 2022 to stockholders of record as of August 19, 2022.

During the second quarters of 2022 and 2021, we declared and paid quarterly dividends of $ 0.875 and $ 0.6875 per share, or $ 53.9 million and $ 43.8 million in total, respectively.

During the six months ended June 30, 2022 and 2021, we declared and paid aggregate quarterly dividends of $ 1.75 and $ 1.375 per share, or $ 108.1 million and $ 87.6 million in total, respectively.

In addition, we paid $ 2.5 million and $ 1.0 million in dividend equivalents with respect to vested restricted stock units during the six months ended June 30, 2022 and 2021, respectively.

Stock-Based Compensation

We make annual grants of long-term incentive awards to officers and key employees in the forms of service-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) that have approximately 3 -year vesting periods.

The PSUs include the right to receive a maximum payout of two shares of our common stock based on performance goals tied to achieving a three-year return on assets result and include service criteria.

The PSUs include the right to receive a maximum payout of two shares of our common stock based on

performance goals tied to achieving a three-year return on assets result and include service criteria.

We also grant the non-employee members of our Board of Directors stock awards that are fully vested on the grant date.

The fair values of the RSUs, PSUs and stock awards are determined based on the closing stock price of our common stock on the grant date.

In the quarters ended March 31, 2022 and 2021, we made payments of $ 17.1 million and $ 8.2 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share settlements.

A summary of the status of our unvested RSUs and PSUs as of March 31, 2022 and changes during the quarter then ended is as follows:

In the six months ended June 30, 2022 and 2021, we made payments of $ 17.1 million and $ 8.3 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share settlement of vested RSUs.

A summary of the status of our unvested RSUs and PSUs as of June 30, 2022 and changes during the six months then ended is as follows:

RSUs and PSUs

2 unchanged sentences

Cancelled or forfeited

Unvested at March 31, 2022

Unvested at June 30, 2022

Shares reserved for future grants (all plans)

1 unchanged sentence

The service-based RSUs cliff vest on December 1, 2024 and the performance-based RSUs are subject to a three-year performance period ending December 31, 2024.

As of March 31, 2022, 59,135 equivalent shares of our common stock for vested RSUs and PSUs were unsettled.

As of June 30, 2022, 58,618 equivalent shares of our common stock for vested RSUs and PSUs were unsettled.

Share Repurchase Plan

On July 20, 2021, our Board of Directors authorized a $ 1.0 billion share repurchase program.

As of March 31, 2022, we had remaining authorization under the plan to repurchase $ 695.5 million of our common stock.

Our share repurchase activity during the six months ended June 30, 2022 and 2021 was as follows:

(in millions)

First quarter

Second quarter

Our share repurchases in the six months ended June 30, 2022 were made under the $ 1.0 billion share repurchase program authorized by our Board of Directors on July 20, 2021.

Subsequent to quarter end, we repurchased an additional 581,648 shares at an average cost of $ 171.94 per share, for a total of $ 100.0 million, resulting in $ 401.6 million remaining authorized under the plan as of July 25, 2022;

on July 26, 2022, our Board of Directors again increased the repurchase authorization to $ 1.0 billion.

The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time.

We may repurchase shares through open market purchases, privately negotiated transactions and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 or Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

We may repurchase shares through open market purchases, privately negotiated transactions and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

Repurchased and subsequently retired shares are restored to the status of authorized but unissued shares.

During the first quarter of 2022, we repurchased 113,529 shares at an average cost of $ 150.97 per share, for a total of $ 17.1 million.

We had no repurchases of our common stock in the first quarter of 2021.

Accumulated Other Comprehensive Loss

5 unchanged sentences

Comprehensive

(Loss) Income

(in millions)

1 unchanged sentence

Current-period change

Balance as of March 31, 2022

Balance as of June 30, 2022

Foreign currency translation adjustments have not been adjusted for income taxes.

Postretirement benefit plan adjustments are net of taxes of $ 3.3 million as of March 31, 2022 and December 31, 2021.

The income tax effects relating to our postretirement benefit plan adjustments are reflected in our income tax provision in future periods as the postretirement benefit plan adjustments are amortized over service periods and reflected in the amortization of net loss component of our net periodic benefit cost or are otherwise released and recognized as a settlement loss as a result of a plan termination.

Postretirement benefit plan adjustments are net of taxes of $ 3.3 million as of June 30, 2022 and December 31, 2021.

Commitments and Contingencies

12 unchanged sentences

We continue to monitor the impact of the COVID-19 pandemic, and government actions and measures taken to prevent its spread, and the potential to affect our operations.

The conflict between Russia and Ukraine, could also significantly impact the demand for our products and services, as well as those of our customers and suppliers, and our estimates and judgments may be subject to greater volatility than in the past.

Refer to Part I, Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2021 for further discussion of these risks.

In addition to COVID-19, the conflict between Russia and Ukraine and macroeconomic disruptions such as inflation and the potential for an economic recession or slowdown could also significantly impact the demand for our products and services, as well as those of our customers and suppliers, and our estimates and judgments may be subject to greater volatility than in the past.

Refer to Part I, Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2021 for further discussion of risks that could adversely affect our estimates and judgments.

Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

(in millions, except number of shares which are reflected in thousands and per share amounts)

4 unchanged sentences

Earnings per share attributable to Reliance stockholders:

The computations of earnings per share for the quarter ended March 31, 2022 and 2021 do not include 314,042 and 452,124 weighted average shares, respectively, in respect of RSUs, because their inclusion would have been anti-dilutive.

The computations of earnings per share for the six months ended June 30, 2022 and 2021 do not include 162,116 and 230,186 weighted average shares, respectively, in respect of RSUs, because their inclusion would have been anti-dilutive.

RELIANCE STEEL & ALUMINUM CO.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements