What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-11-02 · 100 added, 111 removed, 242 unchanged (47% of the section changed)

Financial Statements

RELIANCE STEEL & ALUMINUM CO .

RELIANCE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(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 $ 27.1 at September 30, 2023 and $ 26.1 at December 31, 2022

Accounts receivable, less allowance for credit losses of $ 27.2 at March 31, 2024 and $ 24.9 at December 31, 2023

Prepaid expenses and other current assets

8 unchanged sentences

Cash surrender value of life insurance policies, net

Other long-term assets

LIABILITIES AND EQUITY

4 unchanged sentences

Accrued insurance costs

Current maturities of long-term debt and short-term borrowings

Current maturities of long-term debt

Current maturities of operating lease liabilities

Income taxes payable

Total current liabilities

4 unchanged sentences

Deferred income taxes

Total liabilities

Commitments and contingencies

3 unchanged sentences

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

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

Issued and outstanding shares— 57,426 at March 31, 2024 and 57,271 at December 31, 2023

Retained earnings

3 unchanged sentences

Total liabilities and equity

* Amounts derived from audited financial statements.

* Derived from audited financial statements.

See accompanying notes to unaudited consolidated financial statements.

RELIANCE STEEL & ALUMINUM CO.

RELIANCE , INC.

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,

Three Months Ended March 31,

Costs and expenses:

Cost of sales (exclusive of depreciation and amortization shown below)

Warehouse, delivery, selling, general and administrative (“SG&A”)

Warehouse, delivery, selling, general and administrative

Depreciation and amortization

2 unchanged sentences

Interest expense

Other (income) expense, net

Other income, net

Income before income taxes

5 unchanged sentences

See accompanying notes to unaudited consolidated financial statements.

RELIANCE STEEL & ALUMINUM CO.

RELIANCE , INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

Other comprehensive (loss) income:

Foreign currency translation loss

Foreign currency translation (loss) gain

Postretirement benefit plan adjustments, net of tax

4 unchanged sentences

See accompanying notes to unaudited consolidated financial statements.

RELIANCE STEEL & ALUMI NUM CO.

RELIANCE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

Total equity, beginning balances

4 unchanged sentences

Repurchase of common shares

Excise tax on repurchase of common shares

Ending balances

3 unchanged sentences

Cash dividends and dividend equivalents

Taxes paid related to net share settlement of restricted stock units

Repurchase of common shares

8 unchanged sentences

Comprehensive income

Capital contribution

Dividends paid

3 unchanged sentences

See accompanying notes to unaudited consolidated financial statements.

RELIANCE STEEL & ALUMINUM CO.

RELIANCE , INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Nine Months Ended

September 30,

Three Months Ended March 31,

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):

6 unchanged sentences

Purchases of property, plant and equipment

Proceeds from sales of property, plant and equipment

Net cash used in investing activities

Financing activities:

Net short-term debt repayments

Principal payments on long-term debt

Principal payment on long-term debt

Cash dividends and dividend equivalents

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

4 unchanged sentences

See accompanying notes to unaudited consolidated financial statements.

RELIANCE STEEL & ALUMINUM CO.

RELIANCE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of Reliance Steel & Aluminum Co.

and its subsidiaries (collectively “Reliance”, the “Company”, “we”, “our” or “us”).

In February 2024, we changed our corporate name from Reliance Steel & Aluminum Co.

to Reliance, Inc.

We will not distinguish between our prior and current corporate name and will refer to our current corporate name throughout this Quarterly Report on Form 10-Q.

The accompanying unaudited consolidated financial statements include the accounts of Reliance, Inc.

(formerly Reliance Steel & Aluminum Co.) and its subsidiaries (collectively “Reliance”, the “Company”, “we”, “our” or “us”).

These financial statements have been prepared in accordance with U.S.

13 unchanged sentences

Actual results could differ from those estimates.

We have recast certain prior period amounts in the statement of equity for the three months ended March 31, 2023, to conform to the current presentation.

The recasting of the prior period information did not have an impact on the ending balances presented.

The majority of our inventory is valued using the last-in, first-out (“LIFO”) method, which is not in excess of market.

1 unchanged sentence

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.

Impact of Recently Issued Accounting Standards—Not Yet Adopted

Segment Reporting —In November 2023, the Financial Accounting Standards Board (“FASB”) issued changes that require disclosure of significant expenses and other segment items included in the measure of segment profitability that the chief operating decision maker uses to assess segment performance and make decisions about resource allocation.

Under these changes, companies like Reliance with a single reportable segment are required to provide the same disclosures as companies with multiple segments.

These changes will be effective for our fiscal years beginning January 1, 2024 and quarterly periods beginning January 1, 2025, with early adoption permitted.

As the guidance only requires additional disclosure, there will be no impact to our results of operations, financial condition or cash flows .

Improvement to Income Tax Disclosures —In December 2023, the FASB issued changes to expand the disclosure requirements for income taxes.

The changes require disaggregated information about our effective tax rate reconciliation and income taxes paid.

These changes will be effective for our fiscal years beginning January 1, 2025, with early adoption

As the guidance only requires additional disclosure, there will be no impact to our results of operations, financial condition or cash flows.

On February 1, 2024, we acquired, with cash on hand, Cooksey Iron & Metal Company (“Cooksey Steel”), a metals service center that processes and distributes finished steel products, including tubing, beams, plates and bars.

Headquartered in Tifton, Georgia, Cooksey Steel operates three locations, servicing a diverse range of customers.

Included in our net sales for the first quarter of 2024 were net sales of $ 16.1 million from Cooksey Steel.

On April 1, 2024, we acquired American Alloy Steel, Inc.

(“American Alloy”) with cash on hand.

American Alloy, headquartered in Houston, Texas, operates five metals service centers and a plate fabrication business in the U.S.

American Alloy is a distributor of specialty carbon and alloy steel plate and round bar, including pressure vessel quality (PVQ) material.

On April 1, 2024, we acquired, with cash on hand, Mid-West Materials, Inc.

(“MidWest Materials”), a flat-rolled steel service center that primarily services North American original equipment manufacturers.

Headquartered in Perry, Ohio, MidWest Materials provides steel products including hot-rolled, high strength hot-rolled, coated, and cold-rolled products that are sold into the trailer manufacturing, agriculture, metal fabrication, and building products markets.

No sales from American Alloy and MidWest Materials were included in our net sales for first quarter of 2024.

The allocation of the total purchase price for the acquisition of Cooksey Steel to the fair values of the assets acquired and liabilities assumed is not significant.

The aggregate allocation of the purchase prices for all acquisitions to the fair values of the assets acquired and liabilities assumed and supplemental pro forma information are not presented as the accounting for the acquisitions of American Alloy and MidWest Materials are incomplete due to their recency.

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

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

(in millions)

7 unchanged sentences

Effect of foreign currency translation

Balance at September 30, 2023

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

Balance at March 31, 2024

We had no accumulated impairment losses related to goodwill at March 31, 2024 and December 31, 2023.

Intangible Assets, Net

Intangible assets, net consisted of the following:

September 30, 2023

March 31, 2024

December 31, 2023

6 unchanged sentences

Intangible assets not subject to amortization:

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 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.

In connection with our acquisition of Cooksey Steel in the first quarter of 2024, we recorded $ 14.1 million of intangible assets, including $ 8.0 million allocated to the trade name acquired, which is not subject to amortization.

Amortization expense for intangible assets was $ 10.3 million and $ 11.8 million for the first quarters of 2024 and 2023, respectively.

Foreign currency translation losses related to Intangible assets, net were $ 1.0 million in the first quarter of 2024 compared to foreign currency translation gains of $ 0.2 million in the first quarter of 2023.

The following is a summary of estimated future amortization expense:

(in millions)

2023 (remaining three months)

2024 (remaining nine months)

Debt consisted of the following:

September 30,

(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 %, redeemed on January 15, 2023

Senior unsecured notes, interest payable semi-annually at 1.30 %, effective rate of 1.53 %, maturing August 15, 2025

1 unchanged sentence

Senior unsecured notes, interest payable semi-annually at 6.85 %, effective rate of 6.91 %, maturing November 15, 2036

Other notes and revolving credit facilities

unamortized discount and debt issuance costs

amounts due within one year and short-term borrowings

amounts due within one year

Total long-term debt

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.

The weighted average effective interest rate on the Company’s outstanding borrowings as of March 31, 2024 and December 31, 2023 was 3.02 %.

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 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.

As of March 31, 2024, borrowings under the Credit Agreement were available at variable rates based on the Secured Overnight Financing Rate (“ 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 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.

As of March 31, 2024 and December 31, 2023, we had no outstanding borrowings on the revolving credit facility.

We had $ 1.4 million of letters of credit outstanding under the revolving credit facility as of March 31, 2024 and December 31, 2023.

Senior Unsecured Notes

On January 15, 2023, we redeemed in full the $ 500.0 million aggregate outstanding principal amount of our 4.50 % senior notes due April 15, 2023 using cash on hand.

Under the indentures for each series of our senior notes (the “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.

1 unchanged sentence

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 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.

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 March 31, 2024 and December 31, 2023.

Various industrial revenue bonds had combined outstanding balances of $ 1.4 million as of March 31, 2024 and December 31, 2023 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 $ 41.4 million and $ 18.7 million were outstanding under this facility as of September 30, 2023 and December 31, 2022, respectively.

A total of $ 40.5 million and $ 40.9 million were outstanding under this facility as of March 31, 2024 and December 31, 2023, 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 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.

We were in compliance with all financial maintenance covenants in our Credit Agreement at March 31, 2024.

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

We also lease various office spaces.

1 unchanged sentence

Nearly all of our leases are operating leases;

we have recognized finance right-of-use assets and obligations of less than $ 1.0 million.

we have an insignificant amount of recognized finance right-of-use assets and obligations.

The following is a summary of our lease cost:

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

(in millions)

1 unchanged sentence

Supplemental cash flow and balance sheet information is presented below:

Nine Months Ended

September 30,

Three Months Ended March 31,

(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 September 30, 2023 are as follows:

Maturities of operating lease liabilities as of March 31, 2024 are as follows:

(in millions)

2023 (remaining three months)

2024 (remaining nine months)

Total operating lease payments

1 unchanged sentence

Total operating lease liabilities

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.

Our effective income tax rates for the first quarters of 2024 and 2023 were 23.3 % and 24.4 %, 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.

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

Stock-Based Compensation Plans

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 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:

A summary of the status of our unvested RSUs and PSUs and changes during the first quarter of 2024 is as follows:

Aggregate Units

1 unchanged sentence

Cancelled or forfeited

Unvested at September 30, 2023

Unvested at March 31, 2024

Shares reserved for future grants (all plans)

(1) Comprised of 100,669 RSUs and 69,942 PSUs granted in February 2024.

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.

The RSUs cliff vest on December 1, 2026 and the PSUs vest upon the completion of a 3 -year performance period ending December 31, 2026.

As of March 31, 2024, there was $ 102.8 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 2.0 years.

On April 23, 2024, our Board of Directors declared the 2024 second quarter cash dividend of $ 1.10 per share of common stock, payable on June 7, 2024 to stockholders of record as of May 24, 2024.

During the first quarters of 2024 and 2023, we declared and paid quarterly dividends of $ 1.10 and $ 1.00 per share, or $ 63.2 million and $ 59.0 million in total, respectively.

In addition, we paid $ 2.1 million and $ 3.0 million in dividend equivalents with respect to vested RSUs and PSUs during the first quarters of 2024 and 2023, respectively.

Share Repurchases

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

(in millions)

First quarter

Second quarter

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.

We did no t repurchase any shares of our common stock in the first quarter of 2024.

In the first quarter of 2023, we repurchased 160,224 shares at an average cost per share of $ 242.86 for a total of $ 38.9 million.

The amounts of our share repurchases do not include the taxes we paid of $ 23.9 million and $ 37.2 million in the first quarters of 2024 and 2023, respectively, for shares withheld to settle our employees’ tax withholding obligations related to net share settlements upon the vesting of RSUs and PSUs.

As of March 31, 2024, we had remaining authorization under our $ 1.5 billion share repurchase program authorized by our Board of Directors on October 24, 2023 to repurchase $ 1.44 billion of our common stock .

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.

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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Accumulated Other Comprehensive Loss

8 unchanged sentences

Current-period change

Balance as of September 30, 2023

Balance as of March 31, 2024

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 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 .

Pension and postretirement benefit plan adjustments are net of taxes of $ 0.7 million as of March 31, 2024 and December 31, 2023.

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 recognized as a non-operating loss as result of plan settlements.

As our pension and postretirement benefit plan obligations are settled, the related income tax effect is released from accumulated other comprehensive loss and included in our income tax provision .

Commitments and Contingencies

12 unchanged sentences

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

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31,

(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 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.

The computations of earnings per share for the first quarters of 2024 and 2023 do not include 103,700 and 194,304 weighted average shares, respectively, in respect of outstanding RSUs and PSUs, because their inclusion would have been anti-dilutive.

Employee Benefits

Certain of our union employees participate in plans collectively bargained and maintained by multiple employers and a labor union.

During the first quarter of 2024, we recognized estimated withdrawal liabilities of $ 4.6 million based on our anticipated withdrawal from two multiemployer plans.

RELIANCE, INC.

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