What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 87 added, 66 removed, 325 unchanged (32% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Costs and expenses:

5 unchanged sentences

Interest expense

Other income, net

Other expense (income), net

Income before income taxes

9 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive (loss) income:

Foreign currency translation (loss) gain

Nine Months Ended

September 30,

Other comprehensive income (loss):

Foreign currency translation gain (loss)

Postretirement benefit plan adjustments, net of tax

Total other comprehensive loss

Total other comprehensive income (loss)

Comprehensive income

5 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 $ 27.6 at June 30, 2024 and $ 24.9 at December 31, 2023

Accounts receivable, less allowance for credit losses of $ 26.6 at September 30, 2024 and $ 24.9 at December 31, 2023

Prepaid expenses and other current assets

29 unchanged sentences

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

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

Issued and outstanding shares— 54,119 at September 30, 2024 and 57,271 at December 31, 2023

Retained earnings

8 unchanged sentences

(in millions)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

13 unchanged sentences

Net short-term debt repayments

Principal payment on long-term debt

Proceeds from long-term debt borrowings

Principal payments on long-term debt

Cash dividends and dividend equivalents

14 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total equity, beginning balances

15 unchanged sentences

Beginning balances

Other comprehensive loss

Other comprehensive income (loss)

Ending balances

32 unchanged sentences

Actual results could differ from those estimates.

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.

We have recast certain prior period amounts in the statement of equity for the third quarter and nine months ended September 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.

20 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.

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.

On August 16, 2024, with cash on hand, we completed the acquisition of certain assets of the FerrouSouth division of Ferragon Corporation (“FerrouSouth”).

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

Included in our net sales for the nine months ended September 30, 2024 were combined net sales of $ 203.9 million from our 2024 acquisitions.

Our 2024 acquisitions have increased our capacity and enhanced 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:

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

(in millions)

6 unchanged sentences

Total assets acquired

Deferred taxes

Deferred income taxes

Operating lease liabilities

7 unchanged sentences

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 consolidated balance sheets reflect the allocations of each acquisition’s purchase price as of September 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 $ 41.4 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 determined that each 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 $ 39.3 million with weighted average lives of 13.1 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.

The goodwill arising from our 2024 acquisitions predominantly consists 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 $ 34.1 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.

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 lease cost fair value adjustments, 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

Nine Months Ended

September 30,

(in millions, except per share amounts)

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

September 30,

(in millions)

8 unchanged sentences

Effect of foreign currency translation

Balance at June 30, 2024

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

Balance at September 30, 2024

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

Intangible Assets, Net

Intangible assets, net consisted of the following:

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

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.

Amortization expense for intangible assets was $ 32.1 million and $ 33.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Foreign currency translation loss on Intangible assets, net was $ 0.6 million for the nine

months ended September 30, 2024 compared to foreign currency translation gain of $ 0.1 million for the same period in 2023.

The following is a summary of estimated future amortization expense:

(in millions)

2024 (remaining six months)

2024 (remaining three months)

Debt consisted of the following:

September 30,

(in millions)

6 unchanged sentences

Total long-term debt

The weighted average effective interest rate on the Company’s outstanding borrowings as of June 30, 2024 and December 31, 2023 was 3.02 %.

The weighted average effective interest rate on the Company’s outstanding borrowings as of September 30, 2024 and December 31, 2023 was 3.32 % and 3.02 %, 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.

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.

On September 10, 2024, we entered into a $ 1.5 billion unsecured five-year Second Amended and Restated Credit Agreement (“Credit Agreement”) that amended and restated our then-existing $ 1.5 billion unsecured revolving credit facility.

As of September 30, 2024, borrowings under the Credit Agreement were available at variable rates based on the Secured Overnight Financing Rate (“ SOFR ”) plus 1.00 % or the bank prime rate and we currently pay a commitment fee at an annual rate of 0.10 % 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, 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.

The interest rate on the $ 125.0 million outstanding borrowing under the revolving credit facility as of September 30, 2024 was 6.01 %.

We had no outstanding borrowings under the revolving credit facility as of December 31, 2023.

We had $ 1.4 million of letters of credit outstanding under the revolving credit facility as of September 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.

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.

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.

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 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.

A wholly owned subsidiary in China has a revolving credit facility with a credit limit of $ 7.8 million as of September 30, 2024 with no outstanding balance as of September 30, 2024 and December 31, 2023.

Various industrial revenue bonds had combined outstanding balances of $ 1.4 million as of September 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 $ 42.6 million and $ 40.9 million were outstanding under this facility as of June 30, 2024 and December 31, 2023, respectively.

A total of $ 42.7 million and $ 40.9 million were outstanding under this facility as of September 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 June 30, 2024.

The covenants under the Credit Agreement include, among other things, a financial maintenance covenant that requires us to comply with a maximum total net leverage ratio.

We were in compliance with the financial maintenance covenant in our Credit Agreement at September 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.

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, 2024 are as follows:

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

(in millions)

2024 (remaining six months)

2024 (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, 2024 was 23.3 %, compared to 24.4 % for the same 2023 periods.

Our effective income tax rate for each of the third quarter and nine months ended September 30, 2024 was 23.3 %, compared to 23.7 % and 24.2 % for the third quarter and nine months ended September 2023, respectively.

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

5 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.

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:

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

Aggregate Units

1 unchanged sentence

Cancelled or forfeited

Unvested at June 30, 2024

Unvested at September 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 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.

As of September 30, 2024, there was $ 72.9 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.

We have paid regular quarterly cash dividends on our common stock for 65 consecutive years.

Our Board of Directors increased the quarterly dividend from $ 0.875 per share to $ 1.00 per share in February 2023 and to $ 1.10 per share in February 2024.

The holders of Reliance common stock are entitled to one vote per share on each matter submitted to a vote of stockholders.

On October 22, 2024 , our Board of Directors declared the 2024 fourth quarter cash dividend of $ 1.10 per share of common stock, payable on December 6, 2024 to stockholders of record as of November 22, 2024 .

Share Repurchases

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

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

(in millions)

2 unchanged sentences

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.

Third quarter

Our share repurchase amounts do not include shares withheld related to net share settlements upon the vesting of RSUs and PSUs to settle our employees’ estimated tax withholding obligations of $ 29.6 million and $ 41.3 million during the nine months ended September 30, 2024 and 2023, respectively.

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.

On October 22, 2024, our Board of Directors amended our share repurchase program to replenish the repurchase authorization to $ 1.5 billion.

Accumulated Other Comprehensive Loss

8 unchanged sentences

Current-period change

Balance as of June 30, 2024

Balance as of September 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 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.

Pension and postretirement benefit plan adjustments are net of taxes of $ 0.7 million as of September 30, 2024 and December 31, 2023.

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 .

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 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.

The computations of diluted earnings per share using the treasury stock method for the nine months ended September 30, 2024 and 2023 do not include 39,716 and 68,453 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 six months ended June 30, 2024, we recognized estimated withdrawal liabilities of $ 4.6 million based on our anticipated withdrawal from two multiemployer plans.

During the nine months ended September 30, 2024, we recognized estimated withdrawal liabilities of $ 4.8 million based on our anticipated withdrawal from certain multiemployer pension 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