What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 72 added, 52 removed, 281 unchanged (31% 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 $ 28.7 at June 30, 2023 and $ 26.1 at December 31, 2022

Accounts receivable, less allowance for credit losses of $ 27.1 at September 30, 2023 and $ 26.1 at December 31, 2022

Prepaid expenses and other current assets

16 unchanged sentences

Current maturities of operating lease liabilities

Income taxes payable

Total current liabilities

9 unchanged sentences

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

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

Issued and outstanding shares— 58,090 at September 30, 2023 and 58,787 at December 31, 2022

Retained earnings

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Costs and expenses:

17 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income (loss):

Foreign currency translation gain (loss)

Nine Months Ended

September 30,

Other comprehensive (loss) income:

Foreign currency translation loss

Postretirement benefit plan adjustments, net of tax

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total equity, beginning balances

29 unchanged sentences

(in millions)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

31 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

Summary of Significant Accounting Policies

20 unchanged sentences

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.

Inflation Reduction Act

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted.

The IRA includes a new 15% minimum tax on book income of certain large corporations.

Additionally, the IRA imposes a 1% excise tax, which is paid annually and recorded in paid-in-capital, on the excess of the fair market value of our share repurchases over the fair market value of share issuances, made after December 31, 2022.

See our consolidated statements of equity for further information on our accrued 2023 excise tax.

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in millions)

7 unchanged sentences

Effect of foreign currency translation

Balance at June 30, 2023

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

Balance at September 30, 2023

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

Intangible Assets, net

Intangible assets, net consisted of the following:

June 30, 2023

September 30, 2023

December 31, 2022

6 unchanged sentences

Intangible assets not subject to amortization:

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

Amortization expense for intangible assets was $ 33.6 million and $ 36.3 million for the nine months ended September 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 $ 4.0 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.

Foreign currency translation gain related to Intangible assets, net was $ 0.1 million for the nine months ended September 30, 2023 compared to foreign currency translation loss of $ 5.0 million for the nine months ended September 30, 2022.

The following is a summary of estimated future amortization expense:

(in millions)

2023 (remaining six months)

2023 (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, 2023 and December 31, 2022 was 2.88 % and 3.37 %, respectively.

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

Unsecured Credit Facility

On September 3, 2020, we entered into a $ 1.5 billion unsecured five-year Amended and Restated Credit Agreement that amended and restated our then-existing $ 1.5 billion unsecured revolving credit facility.

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 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.

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

As of September 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 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.

As of September 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 September 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 $ 7.5 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.

A revolving credit facility with a credit limit of $ 7.5 million is in place for an operation in Asia with no outstanding balance as of September 30, 2023 and $ 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 September 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.

A total of $ 41.4 million and $ 18.7 million were outstanding under this facility as of September 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 June 30, 2023.

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

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, 2023 are as follows:

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

(in millions)

2023 (remaining six months)

2023 (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, 2023 was 24.4 %, compared to 24.7 % for the same 2022 periods.

Our effective income tax rates for the third quarter and nine months ended September 30, 2023 were 23.7 % and 24.2 %, respectively, 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.

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.

On October 24, 2023, our Board of Directors declared the 2023 fourth quarter cash dividend of $ 1.00 per share of common stock, payable on December 1, 2023 to stockholders of record as of November 17, 2023.

During the third quarters of 2023 and 2022, we declared and paid quarterly dividends of $ 1.00 and $ 0.875 per share, or $ 58.5 million and $ 52.5 million in total, respectively.

During the nine months ended September 30, 2023 and 2022, we declared and paid aggregate quarterly dividends of $ 3.00 and $ 2.625 per share, or $ 176.1 million and $ 160.6 million in total, respectively.

In addition, we paid $ 3.2 million and $ 2.9 million in dividend equivalents with respect to vested restricted stock units during the nine months ended September 30, 2023 and 2022, respectively.

Stock-Based Compensation

We make annual grants of long-term incentive awards to officers and key employees under our Second Amended and Restated 2015 Incentive Award Plan in the forms of service-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) that each have approximately 3 -year vesting periods.

We make annual grants of long-term equity incentive awards to officers and key employees under our Second Amended and Restated 2015 Incentive Award Plan in the forms of service-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) that each 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 3 -year return on assets result and include service criteria.

We also grant the non-management members of our Board of Directors fully vested stock awards under our Directors Equity Plan .

We also grant the non-management members of our Board of

Directors fully vested stock awards under our Directors Equity Plan .

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, 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:

In the nine months ended September 30, 2023 and 2022, we made payments of $ 41.3 million and $ 21.6 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 September 30, 2023, and changes during the nine months then ended is as follows:

Aggregate Units

1 unchanged sentence

Cancelled or forfeited

Unvested at June 30, 2023

Unvested at September 30, 2023

Shares reserved for future grants (all plans)

(1) Comprised of 109,683 RSUs and 84,129 PSUs granted in February 2023.

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 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.

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

As of September 30, 2023, there was $ 82.5 million of total unrecognized compensation cost related to unvested RSUs and PSUs that is expected to be recognized, net of actual forfeitures and cancellations, over a weighted average period of 1.7 years.

Share Repurchases

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

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

(in millions)

2 unchanged sentences

Second quarter

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

Third quarter

From October 2, 2023 through October 24, 2023, we repurchased 575,060 shares at an average cost per share of $ 255.15 , for a total of $ 146.7 million, resulting in $ 294.8 million of our common stock remaining available for repurchase under our July 2022 authorization.

O ur Board of Directors subsequently amended our share repurchase program to increase the repurchase authorization to $ 1.5 billion effective October 30, 2023.

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.

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 June 30, 2023

Balance as of September 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 June 30, 2023 and December 31, 2022.

Pension and postretirement benefit plan adjustments are net of taxes of $ 1.3 million as of September 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 .

14 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, 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.

The computations of earnings per share for the nine months ended September 30, 2023 and 2022 do not include 68,453 and 111,251 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