What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 158 added, 109 removed, 233 unchanged (53% of the section changed)

1 unchanged sentence

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

Six Months Ended

Costs and expenses:

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

Warehouse, delivery, selling, general and administrative

Depreciation and amortization

Operating income

Other (income) expense:

Interest expense

Other income, net

Income before income taxes

Income tax provision

net income attributable to noncontrolling interests

Net income attributable to Reliance

Earnings per share attributable to Reliance stockholders:

Shares used in computing earnings per share:

See accompanying notes to unaudited consolidated financial statements.

RELIANCE , INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

Three Months Ended

Six Months Ended

Other comprehensive (loss) income:

Foreign currency translation (loss) gain

Postretirement benefit plan adjustments, net of tax

Total other comprehensive loss

Comprehensive income

comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Reliance

See accompanying notes to unaudited consolidated financial statements.

RELIANCE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

2 unchanged sentences

Cash and cash equivalents

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

Accounts receivable, less allowance for credit losses of $ 27.6 at June 30, 2024 and $ 24.9 at December 31, 2023

Prepaid expenses and other current assets

17 unchanged sentences

Current maturities of operating lease liabilities

Income taxes payable

Total current liabilities

10 unchanged sentences

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

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

Issued and outstanding shares— 55,627 at June 30, 2024 and 57,271 at December 31, 2023

Retained earnings

6 unchanged sentences

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 March 31,

Costs and expenses:

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

Warehouse, delivery, selling, general and administrative

Depreciation and amortization

Operating income

Other (income) expense:

Interest expense

Other income, net

Income before income taxes

Income tax provision

net income attributable to noncontrolling interests

Net income attributable to Reliance

Earnings per share attributable to Reliance stockholders:

Shares used in computing earnings per share:

See accompanying notes to unaudited consolidated financial statements.

RELIANCE , INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Three Months Ended March 31,

Other comprehensive (loss) income:

Foreign currency translation (loss) gain

Postretirement benefit plan adjustments, net of tax

Total other comprehensive loss

Comprehensive income

comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Reliance

Six Months Ended

Operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

Stock-based compensation expense

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

Accounts receivable

Prepaid expenses and other assets

Accounts payable and other liabilities

Net cash provided by operating activities

Investing activities:

Acquisitions, net of cash acquired

Purchases of property, plant and equipment

Net cash used in investing activities

Financing activities:

Net short-term debt repayments

Principal payment on long-term debt

Cash dividends and dividend equivalents

Share repurchases

Taxes paid related to net share settlement of restricted stock units

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of the period

Supplemental cash flow information:

Interest paid during the period

Income taxes paid during the period, net

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(in millions, except per share amounts)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Total equity, beginning balances

11 unchanged sentences

Repurchase of common shares

Excise tax on repurchase of common shares

Ending balances

13 unchanged sentences

RELIANCE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Three Months Ended March 31,

Operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

Stock-based compensation expense

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

Accounts receivable

Prepaid expenses and other assets

Accounts payable and other liabilities

Net cash provided by operating activities

Investing activities:

Acquisition, net of cash acquired

Purchases of property, plant and equipment

Net cash used in investing activities

Financing activities:

Principal payment on long-term debt

Cash dividends and dividend equivalents

Share repurchases

Taxes paid related to net share settlement of restricted stock units

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of the period

Supplemental cash flow information:

Interest paid during the period

Income taxes paid during the period, net

See accompanying notes to unaudited consolidated financial statements.

RELIANCE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

21 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.

We have recast certain prior period amounts in the statement of equity for the six months ended June 30, 2023, to conform to the current presentation.

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

13 unchanged sentences

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.

5 unchanged sentences

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.

Included in our net sales for the six months ended June 30, 2024 were combined net sales of $ 115.1 million from our completed 2024 acquisitions.

On July 15, 2024, we announced that we had reached an agreement to acquire the toll processing assets of the FerrouSouth division of Ferragon Corporation (“FerrouSouth”), subject to customary closing conditions.

FerrouSouth is a toll processing operation headquartered in Iuka, Mississippi, which provides flat-rolled steel processing and logistics services.

No sales of FerrouSouth were included in our net sales for the six months ended June 30, 2024.

Our completed acquisitions increase our capacity and enhance our product, customer and geographic diversification.

We have not diversified outside our core business of providing metal distribution and processing solutions since our inception.

The preliminary allocations of the purchase prices for our completed 2024 acquisitions to the fair values of the assets acquired and liabilities assumed were as follows:

(in millions)

Accounts receivable

Prepaid expenses and other current assets

Property, plant and equipment

Operating lease right-of-use assets

Intangible assets subject to amortization

Intangible assets not subject to amortization

Total assets acquired

Deferred taxes

Operating lease liabilities

Other current and long-term liabilities

Total liabilities assumed

Noncontrolling interest

Net assets acquired

The completion of the purchase price allocations for our 2024 acquisitions are pending the completion of certain purchase price adjustments based on intangible asset valuations and various pre-acquisition period income tax returns.

Summary purchase price allocation information for all acquisitions

All of the acquisitions discussed in this note have been accounted for under the acquisition method of accounting and, accordingly, each purchase price has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of each acquisition.

The accompanying consolidated statements of income include the revenues and expenses of each acquisition since its respective acquisition date.

The consolidated balance sheets reflect the allocations of each acquisition’s purchase price as of June 30, 2024.

The measurement periods for purchase price allocations do not exceed 12 months from the acquisition date.

As part of the purchase price allocations for the 2024 acquisitions, we allocated $ 38.9 million to the trade names acquired.

We determined that all of the trade names acquired in connection with these acquisitions had indefinite lives since their economic lives are expected to approximate the life of each company acquired.

We recorded other identifiable intangible assets related to customer relationships for the 2024 acquisitions of $ 36.3 million with weighted average lives of 13.3 years and non-compete agreements of $ 0.2 million with lives of 5.0 years.

The goodwill arising from our 2024 acquisitions consists largely of expected strategic benefits, including enhanced financial and operational scale, as well as expansion of acquired product and processing know-how across our enterprise.

Goodwill of $ 28.8 million from our 2024 acquisitions is expected to be deductible for income tax purposes.

Unaudited pro forma financial information for all acquisitions

The pro forma summary financial results present the consolidated results of operations as if our 2024 acquisitions had occurred as of January 1, 2023, after the effect of certain adjustments, including amortization of inventory step-down to fair value adjustments included in cost of sales, depreciation and amortization of certain identifiable property, plant and equipment and intangible assets.

The pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the 2024 acquisitions been made as of January 1, 2023, or of any potential results which may occur in the future.

Three Months Ended

Six Months Ended

(in millions, except per share amounts)

Net income attributable to Reliance

Earnings per share attributable to Reliance stockholders:

The pro forma amounts presented for the second quarter and six months ended June 30, 2023 include $ 2.2 million and $ 4.7 million, respectively, of non-recurring inventory step-down to fair value adjustments amortization credits.

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)

6 unchanged sentences

Balance at January 1, 2024

Purchase price allocation adjustments

Effect of foreign currency translation

Balance at March 31, 2024

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

Balance at June 30, 2024

We had no accumulated impairment losses related to goodwill at June 30, 2024 and December 31, 2023.

Intangible Assets, Net

Intangible assets, net consisted of the following:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Intangible assets not subject to amortization:

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.

Intangible assets recorded in connection with our 2024 acquisitions were $ 75.4 million, including $ 38.9 million allocated to the trade names acquired, which are not subject to amortization.

See Note 2—“Acquisitions” for further discussion of intangible assets recorded in the preliminary purchase price allocations for our 2024 acquisitions.

Amortization expense for intangible assets was $ 21.1 million and $ 23.0 million for the six months ended June 30, 2024 and 2023, respectively.

Foreign currency translation loss on Intangible assets, net was $1.4 million for the six months ended June 30, 2024 compared to foreign currency translation gain of $ 1.2 million for the six months ended June 30, 2023.

The following is a summary of estimated future amortization expense:

(in millions)

2024 (remaining nine months)

2024 (remaining six months)

Debt consisted of the following:

7 unchanged sentences

Total long-term debt

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

The weighted average effective interest rate on the Company’s outstanding borrowings as of June 30, 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.

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.

As of June 30, 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 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.

As of June 30, 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 June 30, 2024 and December 31, 2023.

Senior Unsecured Notes

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.

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 interes t.

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 interes t.

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 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.

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 June 30, 2024 and December 31, 2023.

Various industrial revenue bonds had combined outstanding balances of $ 1.4 million as of June 30, 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 $ 40.5 million and $ 40.9 million were outstanding under this facility as of March 31, 2024 and December 31, 2023, respectively.

A total of $ 42.6 million and $ 40.9 million were outstanding under this facility as of June 30, 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 March 31, 2024.

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

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, 2024 are as follows:

Maturities of operating lease liabilities as of June 30, 2024 are as follows:

(in millions)

2024 (remaining nine months)

2024 (remaining six months)

Total operating lease payments

1 unchanged sentence

Total operating lease liabilities

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

Our effective income tax rate for each of the second quarter and six months ended June 30, 2024 was 23.3 %, compared to 24.4 % for the same 2023 periods.

The differences between our effective income tax rates and the U.S.

1 unchanged sentence

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 make annual grants of long-term equity 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 each have approximately 3 -year vesting periods.

Each PSU includes the right to receive, based on a sliding scale, up to a maximum of two shares of our common stock for each vested PSU, that is tied to achieving a return on assets target over a 3-year measurement period and continued service.

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

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.

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

A summary of the status of our unvested RSUs and PSUs as of June 30, 2024 and changes during the six months then ended is as follows:

Aggregate Units

1 unchanged sentence

Cancelled or forfeited

Unvested at March 31, 2024

Unvested at June 30, 2024

Shares reserved for future grants (all plans)

1 unchanged sentence

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.

As of June 30, 2024, there was $ 88.0 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 1.8 years.

On July 23, 2024 , our Board of Directors declared the 2024 third quarter cash dividend of $ 1.10 per share of common stock, payable on August 30, 2024 to stockholders of record as of August 16, 2024 .

During the second quarters of 2024 and 2023, we declared and paid quarterly dividends of $ 1.10 and $ 1.00 per share, or $ 62.5 million and $ 58.6 million in total, respectively.

During the six months ended June 30, 2024 and 2023, we declared and paid aggregate quarterly dividends of $ 2.20 and $ 2.00 per share, or $ 125.7 million and $ 117.6 million in total, respectively.

In addition, we paid $ 2.2 million and $ 3.0 million in dividend equivalents with respect to vested RSUs and PSUs during the six months ended June 30, 2024 and 2023, respectively.

Share Repurchases

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 .

Our share repurchase activity during the six months ended June 30, 2024 and 2023 was as follows:

(in millions)

First quarter

Second quarter

Our share repurchase amounts do not include the taxes we paid of $ 24.1 million and $ 37.3 million during the six months ended June 30, 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.

Subsequent to quarter end, we repurchased an additional 637,669 shares at an average cost of $ 285.36 , for a total of $ 182.0 million, resulting in $ 738.5 million remaining as of July 25, 2024 under our $ 1.5 billion share repurchase program authorized by our Board of Directors 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.

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.

Accumulated Other Comprehensive Loss

8 unchanged sentences

Current-period change

Balance as of March 31, 2024

Balance as of June 30, 2024

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

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 net of taxes of $ 0.7 million as of June 30, 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.

14 unchanged sentences

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 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.

The computations of diluted earnings per share using the treasury stock method for the six months ended June 30, 2024 and 2023 do not include 56,217 and 100,326 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.

During the six months ended June 30, 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