What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 65 added, 60 removed, 268 unchanged (32% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, less allowance for credit losses of $ 28.7 at March 31, 2023 and $ 26.1 at December 31, 2022

Accounts receivable, less allowance for credit losses of $ 28.7 at June 30, 2023 and $ 26.1 at December 31, 2022

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— 58,840 at March 31, 2023 and 58,787 at December 31, 2022

Issued and outstanding shares— 58,536 at June 30, 2023 and 58,787 at December 31, 2022

Retained earnings

8 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Costs and expenses:

16 unchanged sentences

(in millions)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Other comprehensive income (loss):

Foreign currency translation gain

Foreign currency translation gain (loss)

Postretirement benefit plan adjustments, net of tax

Total other comprehensive (loss) income

Total other comprehensive loss

Comprehensive income

5 unchanged sentences

(in millions, except per share amounts)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Total equity, beginning balances

4 unchanged sentences

Repurchase of common shares

Excise tax on repurchase of common shares

Ending balances

7 unchanged sentences

Beginning balances

Other comprehensive (loss) income

Other comprehensive loss

Ending balances

3 unchanged sentences

Comprehensive income

Capital contribution

Dividends paid

6 unchanged sentences

(in millions)

Three Months Ended March 31,

Six Months Ended

Operating activities:

1 unchanged sentence

Depreciation and amortization expense

Provision for credit losses

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):

4 unchanged sentences

Investing activities:

Acquisition, net of cash acquired

Purchases of property, plant and equipment

Proceeds from sales of property, plant and equipment

Deferred compensation plan contributions, net

Net cash used in investing activities

Financing activities:

Principal payment on long-term debt

Net short-term debt repayments

Principal payments on long-term debt

Cash dividends and dividend equivalents

12 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

Summary of Significant Accounting Policies

21 unchanged sentences

The following table presents our net sales disaggregated by product and service:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

(in millions)

7 unchanged sentences

Effect of foreign currency translation

Balance at March 31, 2023

We had no accumulated impairment losses related to goodwill at March 31, 2023 and December 31, 2022.

Balance at June 30, 2023

We had no accumulated impairment losses related to goodwill at June 30, 2023 and December 31, 2022.

Intangible Assets, net

Intangible assets, net consisted of the following:

March 31, 2023

June 30, 2023

December 31, 2022

6 unchanged sentences

Intangible assets not subject to amortization:

Amortization expense for intangible assets was $ 11.8 million and $ 12.2 million for the first quarters of 2023 and 2022, respectively.

Foreign currency translation gains related to intangible assets, net were $ 0.2 million and $ 0.4 million for the first quarters of 2023 and 2022, respectively.

Amortization expense for intangible assets was $ 23.0 million and $ 24.3 million for the six months ended June 30, 2023 and 2022, respectively.

As part of the purchase price allocation of our acquisition of Southern Steel Supply, LLC on May 1, 2023, we allocated a total of $ 5.0 million to the intangible assets acquired.

Foreign currency translation gains related to intangible assets, net were $ 1.2 million for the six months ended June 30, 2023 compared to foreign currency translation losses of $ 1.6 million for the six months ended June 30, 2022.

The following is a summary of estimated future amortization expense:

(in millions)

2023 (remaining nine months)

2023 (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 March 31, 2023 and December 31, 2022 was 2.89 % and 3.37 %, respectively.

The weighted average interest rate on the Company’s outstanding borrowings as of June 30, 2023 and December 31, 2022 was 2.88 % and 3.37 %, respectively.

Unsecured Credit Facility

1 unchanged sentence

On January 12, 2023, the agreement was further amended to change the reference rate from LIBOR to SOFR (as amended, the “Credit Agreement”).

As of March 31, 2023, borrowings under the Credit Agreement were available at variable rates based on SOFR plus 1.10 % 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 June 30, 2023, borrowings under the Credit Agreement were available at variable rates based on SOFR plus 1.10 % 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 SOFR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our leverage ratio, as defined in the Credit Agreement.

All borrowings under the Credit Agreement may be prepaid without penalty .

As of March 31, 2023 and December 31, 2022, we had no outstanding borrowings on the revolving credit facility.

As of March 31, 2023 and December 31, 2022, we had $ 7.7 million of letters of credit outstanding under the revolving credit facility.

As of June 30, 2023 and December 31, 2022, we had no outstanding borrowings on the revolving credit facility.

We had $ 1.7 million and $ 7.7 million of letters of credit outstanding under the revolving credit facility as of June 30, 2023 and December 31, 2022, respectively.

Senior Unsecured Notes

3 unchanged sentences

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

A revolving credit facility with a credit limit of $ 7.9 million is in place for an operation in Asia with an outstanding balance of $ 2.2 million as of March 31, 2023 and December 31, 2022.

Various industrial revenue bonds had combined outstanding balances of $ 7.4 million as of March 31, 2023 and December 31, 2022 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 March 31, 2023, a total of $ 19.5 million of letters of credit/guarantee were outstanding under this facility.

A revolving credit facility with a credit limit of $ 7.5 million is in place for an operation in Asia.

This facility had no outstanding borrowings as of June 30, 2023 and had $ 2.2 million outstanding as of December 31, 2022.

Various industrial revenue bonds had combined outstanding balances of $ 1.7 million and $ 7.4 million as of June 30, 2023 and December 31, 2022, respectively, and have maturities through 2027.

We have a $ 50.0 million standby letters of credit/letters of guarantee agreement with one of the lenders under our Credit Agreement.

A total of $ 19.5 million and $ 18.7 million were outstanding under this facility as of June 30, 2023 and December 31, 2022, respectively.

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, 2023.

We were in compliance with all financial maintenance covenants in our Credit Agreement at June 30, 2023.

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.

4 unchanged sentences

The following is a summary of our lease cost:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

(in millions)

1 unchanged sentence

Supplemental cash flow and balance sheet information is presented below:

Three Months Ended March 31,

Six Months Ended

(in millions)

5 unchanged sentences

Weighted average discount rate—operating leases

Maturities of operating lease liabilities as of March 31, 2023 are as follows:

Maturities of operating lease liabilities as of June 30, 2023 are as follows:

(in millions)

2023 (remaining nine months)

2023 (remaining six months)

Total operating lease payments

1 unchanged sentence

Total operating lease liabilities

Our effective income tax rates for the first quarters of 2023 and 2022 were 24.4 % and 24.8 %, respectively.

Our effective income tax rate for each of the second quarter and six months ended June 30, 2023 was 24.4 %, compared to 24.7 % for the same 2022 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 and higher foreign income tax rates, partially offset by the effects of company-owned life insurance policies.

On April 25, 2023, our Board of Directors declared the 2023 second quarter cash dividend of $ 1.00 per share of common stock, payable on June 9, 2023 to stockholders of record as of May 26, 2023.

During the first quarters of 2023 and 2022, we declared and paid quarterly dividends of $ 1.00 and $ 0.875 per share, or $ 59.0 million and $ 54.2 million in total, respectively.

In addition, we paid $ 3.0 million and $ 2.5 million in dividend equivalents with respect to vested restricted stock units during the first quarters of 2023 and 2022, respectively.

federal statutory rate of 21.0 % were mainly due to state income taxes.

On July 25, 2023, our Board of Directors declared the 2023 third quarter cash dividend of $ 1.00 per share of common stock, payable on September 1, 2023 to stockholders of record as of August 18, 2023.

During the second quarters of 2023 and 2022, we declared and paid quarterly dividends of $ 1.00 and $ 0.875 per share, or $ 58.6 million and $ 53.9 million in total, respectively.

During the six months ended June 30, 2023 and 2022, we declared and paid aggregate quarterly dividends of $ 2.00 and $ 1.75 per share, or $ 117.6 million and $ 108.1 million in total, respectively.

In addition, we paid $ 3.0 million and $ 2.5 million in dividend equivalents with respect to vested restricted stock units during the six months ended June 30, 2023 and 2022, respectively.

Stock-Based Compensation

3 unchanged sentences

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 first quarters of 2023 and 2022, we made payments of $ 37.2 million and $ 17.1 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share settlement of vested restricted stock units.

The following is a summary of changes in our unvested RSUs and PSUs during the first quarter of 2023:

In the six months ended June 30, 2023 and 2022, we made payments of $ 37.3 million and $ 17.1 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share settlement of vested restricted stock units.

A summary of the status of our unvested RSUs and PSUs as of June 30, 2023, and changes during the six months then ended is as follows:

Aggregate Units

1 unchanged sentence

Cancelled or forfeited

Unvested at March 31, 2023

Unvested at June 30, 2023

Shares reserved for future grants (all plans)

1 unchanged sentence

The service-based RSUs cliff vest on December 1, 2025 and the performance-based RSUs are subject to a 3 -year performance period ending December 31, 2025.

As of March 31, 2023, there was $ 123.9 million of total unrecognized compensation cost related to unvested RSUs and PSUs in an aggregate amount of 772,952 units that are expected to be settled through the issuance of 993,124 shares of our common stock.

The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.0 years.

As of June 30, 2023, there was $ 115.4 million of total unrecognized compensation cost related to unvested RSUs and PSUs that is expected to be recognized over a weighted average period of 1.8 years.

Share Repurchases

Our share repurchase activity during the first quarters of 2023 and 2022 was as follows:

Our share repurchase activity during the six months ended June 30, 2023 and 2022 was as follows:

(in millions)

1 unchanged sentence

First quarter

Second quarter

On July 26, 2022, our Board of Directors amended our share repurchase program to increase the repurchase authorization to $ 1.0 billion.

1 unchanged sentence

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

As of March 31, 2023, we had remaining authorization under the program to repurchase $ 641.8 million of our common stock .

We repurchase shares through open market purchases and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 and/or Rule 10b-18 under the Exchange Act.

As of June 30, 2023, we had remaining authorization under the program to repurchase $ 567.9 million of our common stock .

We may repurchase shares through a variety of methods including, but not limited to, open market purchases, accelerated share repurchases, negotiated block purchases and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 and/or Rule 10b-18 under the Exchange Act.

The Inflation Reduction Act of 2022 imposed a nondeductible, 1 % excise tax on the excess of the fair value of our share repurchases, net of our share issuances, made after December 31, 2022.

Accumulated Other Comprehensive Loss

8 unchanged sentences

Current-period change

Balance as of March 31, 2023

Balance as of June 30, 2023

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

Pension and 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 recognized as a loss as a result of plan settlements.

Pension and postretirement benefit plan adjustments are net of taxes of $ 1.3 million as of March 31, 2023 and December 31, 2022.

Pension and 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 recognized as a loss as a result of plan settlements.

Pension and postretirement benefit plan adjustments are net of taxes of $ 1.3 million as of June 30, 2023 and December 31, 2022.

The income tax effects are released from accumulated other comprehensive loss and included in our income tax provision as obligations under our pension and postretirement plans are settled .

11 unchanged sentences

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, 2022 for further discussion of risks that could adversely affect our estimates and judgments.

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended March 31,

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 first quarters of 2023 and 2022 do not include 194,304 and 314,042 weighted average shares, respectively, in respect of outstanding RSUs and PSUs, because their inclusion would have been anti-dilutive.

Subsequent Event

On May 1, 2023, we acquired Southern Steel Supply, LLC (“Southern Steel”), a metals service center that offers merchant and structural steel, pipe and tube, steel plate, ornamental products and laser cut and fabricated parts.

Located in Memphis, Tennessee, Southern Steel will operate as a subsidiary of Siskin Steel & Supply Company, Inc., a wholly owned subsidiary of Reliance.

The acquisition was funded with cash on hand.

For the twelve months ended December 31, 2022, annual net sales for Southern Steel were $ 62.9 million.

The computations of earnings per share for the six months ended June 30, 2023 and 2022 do not include 100,326 and 162,116 weighted average shares, respectively, in respect of outstanding RSUs and PSUs, 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