Item 1. Financial Statements
Item 1. Financial Statements
RELIANCE STEEL & ALUMINUM CO .
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except number of shares which are reflected in thousands and par value)
September 30,
December 31,
2022
2021*
ASSETS
Current assets:
Cash and cash equivalents
$
643.7
$
300.5
Accounts receivable, less allowance for credit losses of $ 29.4 at September 30, 2022 and $ 26.7 at December 31, 2021
1,856.9
1,683.0
Inventories
2,175.8
2,065.0
Prepaid expenses and other current assets
87.3
111.6
Income taxes receivable
47.5
—
Total current assets
4,811.2
4,160.1
Property, plant and equipment:
Land
260.8
260.1
Buildings
1,338.1
1,285.0
Machinery and equipment
2,385.0
2,241.4
Accumulated depreciation
( 2,054.1 )
( 1,949.7 )
Property, plant and equipment, net
1,929.8
1,836.8
Operating lease right-of-use assets
217.6
224.6
Goodwill
2,103.9
2,107.6
Intangible assets, net
1,030.4
1,077.7
Cash surrender value of life insurance policies, net
26.9
44.9
Other assets
82.4
84.3
Total assets
$
10,202.2
$
9,536.0
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
481.6
$
453.9
Accrued expenses
160.4
148.2
Accrued compensation and retirement costs
234.9
294.0
Accrued insurance costs
39.5
41.0
Current maturities of long-term debt and short-term borrowings
509.5
5.0
Current maturities of operating lease liabilities
53.3
58.6
Income taxes payable
—
64.3
Total current liabilities
1,479.2
1,065.0
Long-term debt
1,138.8
1,642.0
Operating lease liabilities
165.2
162.5
Deferred compensation and retirement costs
74.1
81.0
Other long-term liabilities
8.9
7.0
Deferred income taxes
480.5
484.8
Commitments and contingencies
Equity:
Preferred stock, $ 0.001 par value: 5,000 shares authorized; none issued or outstanding
—
—
Common stock and additional paid-in capital, $ 0.001 par value and 200,000 shares authorized
Issued and outstanding shares— 59,022 at September 30, 2022 and 61,806 at December 31, 2021
0.1
0.1
Retained earnings
6,960.5
6,155.3
Accumulated other comprehensive loss
( 113.9 )
( 68.9 )
Total Reliance stockholders’ equity
6,846.7
6,086.5
Noncontrolling interests
8.8
7.2
Total equity
6,855.5
6,093.7
Total liabilities and equity
$
10,202.2
$
9,536.0
* Amounts derived from audited financial statements.
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net sales
$
4,247.2
$
3,847.4
$
13,414.2
$
10,104.6
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)
3,008.2
2,636.3
9,292.7
6,857.6
Warehouse, delivery, selling, general and administrative (SG&A)
630.1
606.8
1,890.6
1,688.6
Depreciation and amortization
60.4
56.7
178.8
172.1
3,698.7
3,299.8
11,362.1
8,718.3
Operating income
548.5
547.6
2,052.1
1,386.3
Other (income) expense:
Interest expense
15.6
15.6
46.8
47.0
Other expense (income), net
8.9
( 0.6 )
21.5
3.6
Income before income taxes
524.0
532.6
1,983.8
1,335.7
Income tax provision
129.6
135.9
490.9
340.6
Net income
394.4
396.7
1,492.9
995.1
Less: Net income attributable to noncontrolling interests
0.9
1.0
3.3
3.4
Net income attributable to Reliance
$
393.5
$
395.7
$
1,489.6
$
991.7
Earnings per share attributable to Reliance stockholders:
Basic
$
6.55
$
6.25
$
24.35
$
15.61
Diluted
$
6.45
$
6.15
$
23.98
$
15.35
Shares used in computing earnings per share:
Basic
60,055
63,275
61,175
63,526
Diluted
60,984
64,350
62,114
64,617
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income
$
394.4
$
396.7
$
1,492.9
$
995.1
Other comprehensive (loss) income:
Foreign currency translation loss
( 32.0 )
( 8.3 )
( 51.3 )
( 5.0 )
Postretirement benefit plan adjustments, net of tax
6.4
—
6.3
—
Total other comprehensive loss
( 25.6 )
( 8.3 )
( 45.0 )
( 5.0 )
Comprehensive income
368.8
388.4
1,447.9
990.1
Less: Comprehensive income attributable to noncontrolling interests
0.9
1.0
3.3
3.4
Comprehensive income attributable to Reliance
$
367.9
$
387.4
$
1,444.6
$
986.7
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE STEEL & ALUMI NUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Total equity, beginning balance
$
6,863.1
$
5,639.0
$
6,093.7
$
5,122.7
Common stock and additional paid-in capital:
Beginning balance
0.1
5.7
0.1
0.1
Stock-based compensation
18.6
17.2
48.4
55.1
Common stock withheld related to net share settlements
( 4.5 )
( 0.9 )
( 21.6 )
( 9.2 )
Repurchase of common shares
( 14.1 )
( 21.9 )
( 26.8 )
( 45.9 )
Ending balance
0.1
0.1
0.1
0.1
Retained earnings:
Beginning balance
6,942.5
5,700.6
6,155.3
5,193.2
Net income attributable to Reliance
393.5
395.7
1,489.6
991.7
Cash dividends and dividend equivalents
( 52.9 )
( 43.7 )
( 163.5 )
( 132.3 )
Repurchase of common shares
( 322.6 )
( 109.1 )
( 520.9 )
( 109.1 )
Ending balance
6,960.5
5,943.5
6,960.5
5,943.5
Accumulated other comprehensive loss:
Beginning balance
( 88.3 )
( 74.6 )
( 68.9 )
( 77.9 )
Other comprehensive loss
( 25.6 )
( 8.3 )
( 45.0 )
( 5.0 )
Ending balance
( 113.9 )
( 82.9 )
( 113.9 )
( 82.9 )
Total Reliance stockholders' equity, ending balance
6,846.7
5,860.7
6,846.7
5,860.7
Noncontrolling interests:
Beginning balance
8.8
7.3
7.2
7.3
Comprehensive income
0.9
1.0
3.3
3.4
Capital contribution
—
—
0.3
—
Dividends paid
( 0.9 )
( 1.1 )
( 2.0 )
( 3.5 )
Ending balance
8.8
7.2
8.8
7.2
Total equity, ending balance
$
6,855.5
$
5,867.9
$
6,855.5
$
5,867.9
Dividends declared per share
$
0.875
$
0.6875
$
2.625
$
2.0625
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE STEEL & ALUMINUM CO.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Nine Months Ended
September 30,
2022
2021
Operating activities:
Net income
$
1,492.9
$
995.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
178.8
172.1
Provision for credit losses
5.6
10.6
Deferred income tax benefit
( 1.1 )
( 0.2 )
Stock-based compensation expense
48.4
55.1
Net loss on life insurance policies and deferred compensation plan assets
22.8
3.2
Postretirement benefit plan settlement expense
2.3
—
Other
1.7
( 4.5 )
Changes in operating assets and liabilities (excluding effect of businesses acquired):
Accounts receivable
( 191.6 )
( 774.6 )
Inventories
( 126.6 )
( 453.3 )
Prepaid expenses and other assets
20.0
47.7
Accounts payable and other liabilities
( 143.3 )
354.4
Net cash provided by operating activities
1,309.9
405.6
Investing activities:
Purchases of property, plant and equipment
( 249.7 )
( 178.9 )
Proceeds from sales of property, plant and equipment
9.8
26.8
Other
( 4.5 )
3.9
Net cash used in investing activities
( 244.4 )
( 148.2 )
Financing activities:
Net short-term debt repayments
( 0.8 )
( 0.8 )
Principal payments on long-term debt
—
( 0.3 )
Dividends and dividend equivalents paid
( 163.5 )
( 132.3 )
Share repurchases
( 547.7 )
( 155.0 )
Payments for taxes related to net share settlements
( 21.6 )
( 9.2 )
Other
22.5
( 4.2 )
Net cash used in financing activities
( 711.1 )
( 301.8 )
Effect of exchange rate changes on cash and cash equivalents
( 11.2 )
( 0.7 )
Increase (decrease) in cash and cash equivalents
343.2
( 45.1 )
Cash and cash equivalents at beginning of year
300.5
683.5
Cash and cash equivalents at end of period
$
643.7
$
638.4
Supplemental cash flow information:
Interest paid during the period
$
39.1
$
39.1
Income taxes paid during the period, net
$
596.8
$
297.3
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE STEEL & ALUMINUM CO.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. 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. GAAP. 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. (“Reliance,” the “Company,” “we,” “our” or “us”) Annual Report on Form 10-K.
The preparation of financial statements in conformity with U.S. 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.
Our consolidated financial statements include the assets, liabilities and operating results of majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The ownership of the other interest holders of consolidated subsidiaries is reflected as noncontrolling interests. Our investments in unconsolidated subsidiaries are recorded under the equity method of accounting.
Inventories
The majority of our inventory is valued using the last-in, first-out (“LIFO”) method, which is not in excess of market. We estimate the effect of LIFO on interim periods by allocating the projected year-end LIFO calculation to interim periods on a pro rata basis.
Recently Issued Accounting Standards—Not Yet Adopted
Reference Rate Reform —In March 2020, the FASB issued accounting changes that provide optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. 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 financial position, results of operations or cash flows.
Note 2. Acquisitions
2021 Acquisitions
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 nine months ended September 30, 2022 were combined net sales of $ 681.7 million from our 2021 acquisitions.
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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:
(in millions)
Cash
$
1.0
Accounts receivable
107.2
Inventories
134.4
Property, plant and equipment
33.6
Operating lease right-of-use assets
29.8
Goodwill
177.0
Intangible assets subject to amortization
116.3
Intangible assets not subject to amortization
51.2
Other current and long-term assets
4.0
Total assets acquired
654.5
Deferred taxes
49.3
Operating lease liabilities
24.6
Other current and long-term liabilities
140.3
Total liabilities assumed
214.2
Net assets acquired
$
440.3
The completion of the purchase price allocations for our 2021 acquisitions are pending the completion of pre-acquisition period tax returns.
Pro forma financial information for all acquisitions
The pro forma summary financial results present the consolidated results of operations as if our 2021 acquisitions had occurred as of January 1, 2021, after the effect of certain adjustments, including depreciation and amortization of certain identifiable property, plant and equipment and intangible assets, and lease cost fair value adjustments.
The pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the 2021 acquisitions been made as of January 1, 2021, or of any potential results which may occur in the future.
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2021
(in millions, except per share amounts)
Pro forma:
Net sales
$
4,100.8
$
10,780.4
Net income attributable to Reliance
$
435.5
$
1,091.2
Earnings per share attributable to Reliance stockholders:
Basic
$
6.88
$
17.18
Diluted
$
6.77
$
16.89
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Note 3. Revenues
The following table presents our net sales disaggregated by product and service.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(in millions)
Carbon steel
$
2,371.9
$
2,406.4
$
7,545.2
$
6,163.7
Stainless steel
712.7
621.3
2,284.7
1,613.7
Aluminum
660.3
534.9
2,069.9
1,496.5
Alloy
188.2
143.8
568.5
396.0
Toll processing and logistics
139.5
119.7
414.8
350.9
Copper and brass
81.0
18.1
260.4
49.6
Other and eliminations
93.6
3.2
270.7
34.2
Total
$
4,247.2
$
3,847.4
$
13,414.2
$
10,104.6
Note 4. Goodwill
The change in the carrying amount of goodwill is as follows:
(in millions)
Balance at January 1, 2022
$
2,107.6
Purchase price allocation adjustments
5.0
Foreign currency translation loss
( 8.7 )
Balance at September 30, 2022
$
2,103.9
We had no accumulated impairment losses related to goodwill at September 30, 2022 and December 31, 2021.
Note 5. Intangible Assets, net
Intangible assets, net consisted of the following:
September 30, 2022
December 31, 2021
Weighted Average
Gross
Gross
Amortizable
Carrying
Accumulated
Carrying
Accumulated
Life in Years
Amount
Amortization
Amount
Amortization
(in millions)
Intangible assets subject to amortization:
Customer lists/relationships
14.2
$
712.9
$
( 467.7 )
$
713.0
$
( 435.1 )
Backlog of orders
7.9
22.0
( 2.3 )
15.8
( 0.2 )
Other
9.1
9.9
( 9.7 )
9.9
( 9.4 )
744.8
( 479.7 )
738.7
( 444.7 )
Intangible assets not subject to amortization:
Trade names
765.3
—
783.7
—
$
1,510.1
$
( 479.7 )
$
1,522.4
$
( 444.7 )
Certain prior year amounts have been reclassified for consistency with the current period presentation.
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.
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 by $ 16.9 million, increased the
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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 three months)
$
11.8
2023
43.5
2024
40.0
2025
35.8
2026
26.3
2027
25.7
Note 6. Debt
Debt consisted of the following:
September 30,
December 31,
2022
2021
(in millions)
Unsecured revolving credit facility maturing September 3, 2025
$
—
$
—
Senior unsecured notes, interest payable semi-annually at 4.50 %, effective rate of 4.63 %, maturing April 15, 2023
500.0
500.0
Senior unsecured notes, interest payable semi-annually at 1.30 %, effective rate of 1.53 %, maturing August 15, 2025
400.0
400.0
Senior unsecured notes, interest payable semi-annually at 2.15 %, effective rate of 2.27 %, maturing August 15, 2030
500.0
500.0
Senior unsecured notes, interest payable semi-annually at 6.85 %, effective rate of 6.91 %, maturing November 15, 2036
250.0
250.0
Other notes and revolving credit facilities
11.2
12.4
Total
1,661.2
1,662.4
Less: unamortized discount and debt issuance costs
( 12.9 )
( 15.4 )
Less: amounts due within one year and short-term borrowings
( 509.5 )
( 5.0 )
Total long-term debt
$
1,138.8
$
1,642.0
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 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. All borrowings under the Credit Agreement may be prepaid without penalty. 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 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.
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Senior Unsecured Notes
Under the indentures for each series of our senior notes (“Indentures”), the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. If we experience a change in control accompanied by a downgrade in our credit rating, we will be required to make an offer to repurchase each series of the notes at a price equal to 101 % of their principal amount plus accrued and unpaid interest.
Other Notes, Revolving Credit and Letter of Credit/Letters of Guarantee Facilities
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.
Covenants
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 September 30, 2022.
Note 7. Leases
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. We also lease various office spaces. Our leases of facilities and other spaces expire at various times through 2045 and our ground leases expire at various times through 2068. Nearly all of our leases are operating leases; we have recognized finance right-of-use assets and obligations of less than $ 1.0 million.
The following is a summary of our lease cost:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(in millions)
Operating lease cost
$
23.1
$
19.9
$
69.8
$
58.8
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Supplemental cash flow and balance sheet information is presented below:
Nine Months Ended
September 30,
2022
2021
(in millions)
Supplemental cash flow information:
Cash payments for operating leases
$
65.4
$
58.9
Right-of-use assets obtained in exchange for operating lease obligations
$
39.0
$
36.6
September 30,
December 31,
2022
2021
Other lease information:
Weighted average remaining lease term—operating leases
6.3 years
5.8 years
Weighted average discount rate—operating leases
3.5 %
3.3 %
Maturities of operating lease liabilities as of September 30, 2022 are as follows:
(in millions)
2022 (remaining three months)
$
15.8
2023
56.7
2024
46.4
2025
33.8
2026
22.6
Thereafter
71.6
Total operating lease payments
246.9
Less: imputed interest
( 28.4 )
Total operating lease liabilities
$
218.5
Note 8. Income Taxes
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.
Note 9. Equity
Dividends
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-
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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 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:
Weighted
Average
Grant Date
Aggregate
RSUs and PSUs
Fair Value
Fair Value
(in millions)
Unvested at January 1, 2022
831,597
$
105.12
Granted (1)
305,249
187.31
Vested
( 25,030 )
95.98
Cancelled or forfeited
( 24,461 )
117.98
Unvested at September 30, 2022
1,087,355
$
128.11
$
170.7
Shares reserved for future grants (all plans)
1,592,761
(1) Comprised of 56,452 RSUs granted in January 2022 with a fair value of $ 152.21 per unit, and 136,346 RSUs and 112,451 PSUs granted in March 2022 with a fair value of $ 195.28 per unit. 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.
Share Repurchases
Our share repurchase activity during the nine months ended September 30, 2022 and 2021 was as follows:
2022
2021
Average Cost
Average Cost
Shares
Per Share
Amount
Shares
Per Share
Amount
(in millions)
(in millions)
First quarter
113,529
$
150.97
$
17.1
—
$
—
$
—
Second quarter
1,085,635
178.61
193.9
147,016
163.50
24.0
Third quarter
1,883,093
178.79
336.7
885,606
147.89
131.0
3,082,257
$
177.70
$
547.7
1,032,622
$
150.12
$
155.0
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. 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.
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Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss included the following:
Foreign Currency
Postretirement Benefit
Accumulated Other
Translation
Plan Adjustments,
Comprehensive
Loss
Net of Tax
Loss
(in millions)
Balance as of January 1, 2022
$
( 55.2 )
$
( 13.7 )
$
( 68.9 )
Current-period change
( 51.3 )
6.3
( 45.0 )
Balance as of September 30, 2022
$
( 106.5 )
$
( 7.4 )
$
( 113.9 )
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 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.
Note 10. Commitments and Contingencies
Environmental Contingencies
We are currently involved with an environmental remediation project related to activities at former manufacturing operations of Earle M. Jorgensen Company (“EMJ”), our wholly owned subsidiary, that were sold many years prior to our acquisition of EMJ in 2006. Although the potential cleanup costs could be significant, EMJ maintained insurance policies during the time it owned the manufacturing operations that have covered costs incurred to date and are expected to continue to cover the majority of the related costs. We do not expect that this obligation will have a material adverse impact on our consolidated financial position, results of operations or cash flows.
Legal Matters
From time to time, we are named as a defendant in legal actions. These actions generally arise in the ordinary course of business. We are not currently a party to any pending legal proceedings other than routine litigation incidental to the 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
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. 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.
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Note 11. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(in millions, except number of shares which are reflected in thousands and per share amounts)
Numerator:
Net income attributable to Reliance
$
393.5
$
395.7
$
1,489.6
$
991.7
Denominator:
Weighted average shares outstanding
60,055
63,275
61,175
63,526
Dilutive effect of stock-based awards
929
1,075
939
1,091
Weighted average diluted shares outstanding
60,984
64,350
62,114
64,617
Earnings per share attributable to Reliance stockholders:
Basic
$
6.55
$
6.25
$
24.35
$
15.61
Diluted
$
6.45
$
6.15
$
23.98
$
15.35
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.
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RELIANCE STEEL & ALUMINUM CO.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.