What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 86 added, 65 removed, 301 unchanged (33% of the section changed)

3 unchanged sentences

(in millions, except number of shares which are reflected in thousands and par value)

September 30,

Current assets:

Cash and cash equivalents

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

Accounts receivable, less allowance for credit losses of $ 29.4 at September 30, 2022 and $ 26.7 at December 31, 2021

Prepaid expenses and other current assets

28 unchanged sentences

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

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

Issued and outstanding shares— 59,022 at September 30, 2022 and 61,806 at December 31, 2021

Retained earnings

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Costs and expenses:

3 unchanged sentences

Operating income

Other expense:

Other (income) expense:

Interest expense

Other expense, net

Other expense (income), net

Income before income taxes

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Other comprehensive (loss) income:

Foreign currency translation (loss) gain

Foreign currency translation loss

Postretirement benefit plan adjustments, net of tax

Total other comprehensive (loss) income

Total other comprehensive loss

Comprehensive income

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total equity, beginning balance

7 unchanged sentences

Beginning balance

Net income attributable to Reliance

Cash dividends and dividend equivalents

3 unchanged sentences

Beginning balance

Other comprehensive (loss) income

Other comprehensive loss

Ending balance

4 unchanged sentences

Capital contribution

Dividend paid

Dividends paid

Ending balance

5 unchanged sentences

(in millions)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

5 unchanged sentences

Net loss on life insurance policies and deferred compensation plan assets

Postretirement benefit plan settlement expense

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

9 unchanged sentences

Net short-term debt repayments

Principal payments on long-term debt

Dividends and dividend equivalents paid

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

6 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

The results of operations for the nine months ended September 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.

2 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes.

The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances.

Actual results could differ from those estimates.

8 unchanged sentences

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

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.

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 financial position, results of operations or cash flows.

2021 Acquisitions

2 unchanged sentences

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.

Included in our net sales for the nine months ended September 30, 2022 were combined net sales of $ 681.7 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

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2021

(in millions, except per share amounts)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in millions)

1 unchanged sentence

Toll processing and logistics

Copper and brass

Other and eliminations

4 unchanged sentences

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.

Balance at September 30, 2022

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

Intangible Assets, net

Intangible assets, net consisted of the following:

June 30, 2022

September 30, 2022

December 31, 2021

7 unchanged sentences

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 six months of 2022 and each of the succeeding five years:

Amortization expense for intangible assets was $ 36.3 million and $ 27.5 million for the nine months ended September 30, 2022 and 2021, respectively.

Foreign currency translation losses related to intangible assets, net were $ 5.0 million and $ 0.1 million for the nine months ended September 30, 2022 and 2021, respectively.

Backlog of orders intangible asset by $ 8.0 million and increased Customer lists/relationships intangible assets by $ 2.7 million.

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

(in millions)

2022 (remaining six months)

2022 (remaining three months)

Debt consisted of the following:

September 30,

(in millions)

8 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.

The weighted average interest rate on the Company’s outstanding borrowings as of September 30, 2022 and December 31, 2021 was 3.81 % 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 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.

As of September 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 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.

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

As of September 30, 2022 and December 31, 2021, we had $ 8.3 million and $ 8.9 million, respectively, of letters of credit outstanding under 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 $ 8.1 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 June 30, 2022, a total of $ 24.5 million of letters of credit/guarantee were issued on the facility.

A revolving credit facility with a credit limit of $ 7.7 million is in place for an operation in Asia with an outstanding balance of $ 3.5 million and $ 4.7 million as of September 30, 2022 and December 31, 2021, respectively.

Various industrial revenue bonds had combined outstanding balances of $ 7.7 million as of September 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 and/or letters of guarantee in an amount not to exceed $ 50.0 million in the aggregate.

As of September 30, 2022, a total of $ 21.7 million of letters of credit/guarantee were outstanding under this 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 June 30, 2022.

We were in compliance with all financial maintenance covenants in our Credit Agreement at September 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

Nine Months Ended

September 30,

(in millions)

1 unchanged sentence

Supplemental cash flow and balance sheet information is presented below:

Six Months Ended

Nine Months Ended

September 30,

(in millions)

2 unchanged sentences

Right-of-use assets obtained in exchange for operating lease obligations

September 30,

Other lease information:

1 unchanged sentence

Weighted average discount rate—operating leases

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

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

(in millions)

2022 (remaining six months)

2022 (remaining three months)

Total operating lease payments

1 unchanged sentence

Total operating lease liabilities

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.

Our effective income tax rate for each of the third quarter and nine months ended September 30, 2022 was 24.7 %, compared to 25.5 % in the same 2021 periods.

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 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.

On October 25, 2022, our Board of Directors declared the 2022 fourth quarter cash dividend of $ 0.875 per share of common stock, payable on December 2, 2022 to stockholders of record as of November 18, 2022.

During the third quarters of 2022 and 2021, we declared and paid quarterly dividends of $ 0.875 and $ 0.6875 per share, or $ 52.5 million and $ 43.6 million in total, respectively.

During the nine months ended September 30, 2022 and 2021, we declared and paid aggregate quarterly dividends of $ 2.625 and $ 2.0625 per share, or $ 160.6 million and $ 131.2 million in total, respectively.

In addition, we paid $ 2.9 million and $ 1.1 million in dividend equivalents with respect to vested restricted stock units during the nine months ended September 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.

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

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 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:

In the nine months ended September 30, 2022 and 2021, we made payments of $ 21.6 million and $ 9.2 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 September 30, 2022 and changes during the nine months then ended is as follows:

RSUs and PSUs

2 unchanged sentences

Cancelled or forfeited

Unvested at June 30, 2022

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

Share Repurchase Plan

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

Share Repurchases

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

(in millions)

2 unchanged sentences

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.

Third quarter

On July 26, 2022, our Board of Directors amended our share repurchase program to increase the remaining 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 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.

At September 30, 2022, $ 763.3 million of our common stock remained authorized for repurchase.

Accumulated Other Comprehensive Loss

8 unchanged sentences

Current-period change

Balance as of June 30, 2022

Balance as of September 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 June 30, 2022 and December 31, 2021.

Postretirement benefit plan adjustments are net of taxes of $ 3.3 million as of September 30, 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 loss as a result of a plan settlement.

9 unchanged sentences

We are not currently a party to any pending legal proceedings other than routine litigation incidental to the business.

We maintain general liability insurance against risks arising in the ordinary course of business.

We expect that these matters will be resolved without having a material adverse impact on our consolidated financial position, results of operations or cash flows.

We maintain general liability insurance against risks arising in the ordinary course of business.

Risks and Uncertainties

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(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 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.

The computations of earnings per share for the nine months ended September 30, 2022 and 2021 do not include 111,251 and 154,882 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