Item 1. Financial Statements
Item 1. Financial Statements
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,
September 30,
2024
2023
2024
2023
Net sales
$
3,420.3
$
3,623.0
$
10,708.4
$
11,468.6
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)
2,414.0
2,546.0
7,487.9
7,942.9
Warehouse, delivery, selling, general and administrative
665.0
626.9
2,004.2
1,928.8
Depreciation and amortization
67.9
60.6
198.1
182.5
3,146.9
3,233.5
9,690.2
10,054.2
Operating income
273.4
389.5
1,018.2
1,414.4
Other (income) expense:
Interest expense
10.9
9.7
30.3
30.3
Other expense (income), net
2.0
( 8.2 )
( 18.5 )
( 23.3 )
Income before income taxes
260.5
388.0
1,006.4
1,407.4
Income tax provision
60.6
92.0
234.4
340.7
Net income
199.9
296.0
772.0
1,066.7
Less: net income attributable to noncontrolling interests
0.7
1.0
2.1
3.5
Net income attributable to Reliance
$
199.2
$
295.0
$
769.9
$
1,063.2
Earnings per share attributable to Reliance stockholders:
Basic
$
3.64
$
5.05
$
13.68
$
18.13
Diluted
$
3.61
$
4.99
$
13.55
$
17.92
Shares used in computing earnings per share:
Basic
54,691
58,427
56,297
58,648
Diluted
55,182
59,124
56,813
59,333
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE , INC.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$
199.9
$
296.0
$
772.0
$
1,066.7
Other comprehensive income (loss):
Foreign currency translation gain (loss)
19.3
( 11.9 )
( 3.8 )
( 10.7 )
Postretirement benefit plan adjustments, net of tax
( 0.9 )
( 0.9 )
( 2.6 )
( 2.4 )
Total other comprehensive income (loss)
18.4
( 12.8 )
( 6.4 )
( 13.1 )
Comprehensive income
218.3
283.2
765.6
1,053.6
Less: comprehensive income attributable to noncontrolling interests
0.7
1.0
2.1
3.5
Comprehensive income attributable to Reliance
$
217.6
$
282.2
$
763.5
$
1,050.1
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions, except number of shares which are reflected in thousands and par value)
September 30,
December 31,
2024
2023*
ASSETS
Current assets:
Cash and cash equivalents
$
314.6
$
1,080.2
Accounts receivable, less allowance for credit losses of $ 26.6 at September 30, 2024 and $ 24.9 at December 31, 2023
1,566.7
1,472.4
Inventories
2,205.8
2,043.2
Prepaid expenses and other current assets
123.5
140.4
Income taxes receivable
1.9
35.6
Total current assets
4,212.5
4,771.8
Property, plant and equipment:
Land
294.3
281.7
Buildings
1,648.1
1,510.9
Machinery and equipment
2,902.1
2,700.4
Accumulated depreciation
( 2,341.5 )
( 2,244.6 )
Property, plant and equipment, net
2,503.0
2,248.4
Operating lease right-of-use assets
271.0
231.6
Goodwill
2,170.9
2,111.1
Intangible assets, net
1,031.5
981.1
Cash surrender value of life insurance policies, net
29.8
43.8
Other long-term assets
82.1
92.5
Total assets
$
10,300.8
$
10,480.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
440.9
$
410.3
Accrued expenses
132.8
118.5
Accrued compensation and retirement benefits
194.1
213.9
Accrued insurance costs
45.1
44.4
Current maturities of long-term debt
399.5
0.3
Current maturities of operating lease liabilities
60.1
56.2
Total current liabilities
1,272.5
843.6
Long-term debt
867.8
1,141.9
Operating lease liabilities
210.8
178.9
Long-term retirement benefits
29.1
25.1
Other long-term liabilities
57.6
64.0
Deferred income taxes
501.8
494.0
Total liabilities
2,939.6
2,747.5
Commitments and contingencies
Equity:
Preferred stock, $ 0.001 par value: 5,000 shares authorized; none issued or outstanding
—
—
Common stock and additional paid-in capital, $ 0.001 par value and 200,000 shares authorized
Issued and outstanding shares— 54,119 at September 30, 2024 and 57,271 at December 31, 2023
0.1
0.1
Retained earnings
7,433.5
7,798.9
Accumulated other comprehensive loss
( 83.1 )
( 76.7 )
Total Reliance stockholders’ equity
7,350.5
7,722.3
Noncontrolling interests
10.7
10.5
Total equity
7,361.2
7,732.8
Total liabilities and equity
$
10,300.8
$
10,480.3
* Derived from audited financial statements.
See accompanying notes to unaudited consolidated financial statements .
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RELIANCE , INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Nine Months Ended
September 30,
2024
2023
Operating activities:
Net income
$
772.0
$
1,066.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense
198.1
182.5
Stock-based compensation expense
43.0
48.4
Other
5.0
7.5
Changes in operating assets and liabilities (excluding effect of businesses acquired):
Accounts receivable
( 51.9 )
( 102.0 )
Inventories
( 52.3 )
( 113.5 )
Prepaid expenses and other assets
105.7
91.1
Accounts payable and other liabilities
( 63.1 )
( 35.0 )
Net cash provided by operating activities
956.5
1,145.7
Investing activities:
Acquisitions, net of cash acquired
( 366.7 )
( 24.1 )
Purchases of property, plant and equipment
( 319.7 )
( 358.6 )
Other
13.0
14.9
Net cash used in investing activities
( 673.4 )
( 367.8 )
Financing activities:
Net short-term debt repayments
—
( 2.2 )
Proceeds from long-term debt borrowings
663.0
—
Principal payments on long-term debt
( 538.0 )
( 505.7 )
Cash dividends and dividend equivalents
( 188.5 )
( 179.3 )
Share repurchases
( 951.3 )
( 239.2 )
Taxes paid related to net share settlement of restricted stock units
( 29.6 )
( 41.3 )
Other
( 4.3 )
( 3.0 )
Net cash used in financing activities
( 1,048.7 )
( 970.7 )
Effect of exchange rate changes on cash and cash equivalents
—
( 3.7 )
Decrease in cash and cash equivalents
( 765.6 )
( 196.5 )
Cash and cash equivalents at beginning of year
1,080.2
1,173.4
Cash and cash equivalents at end of the period
$
314.6
$
976.9
Supplemental cash flow information:
Interest paid during the period
$
27.7
$
32.5
Income taxes paid during the period, net
$
197.1
$
305.2
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Total equity, beginning balances
$
7,633.0
$
7,625.5
$
7,732.8
$
7,095.9
Common stock and additional paid-in capital:
Beginning balances
0.1
0.1
0.1
0.1
Stock-based compensation
16.1
16.8
43.0
48.4
Taxes paid related to net share settlement of restricted stock units
( 5.3 )
( 4.0 )
( 18.5 )
( 11.5 )
Repurchase of common shares
( 10.8 )
( 12.8 )
( 24.5 )
( 36.9 )
Ending balances
0.1
0.1
0.1
0.1
Retained earnings:
Beginning balances
7,724.4
7,702.1
7,798.9
7,173.6
Net income attributable to Reliance
199.2
295.0
769.9
1,063.2
Cash dividends and dividend equivalents
( 60.6 )
( 58.7 )
( 188.5 )
( 179.3 )
Taxes paid related to net share settlement of restricted stock units
( 0.2 )
—
( 11.1 )
( 29.8 )
Repurchase of common shares
( 421.2 )
( 113.6 )
( 926.8 )
( 202.3 )
Excise tax on repurchase of common shares
( 8.1 )
( 1.2 )
( 8.9 )
( 1.8 )
Ending balances
7,433.5
7,823.6
7,433.5
7,823.6
Accumulated other comprehensive loss:
Beginning balances
( 101.5 )
( 86.6 )
( 76.7 )
( 86.3 )
Other comprehensive income (loss)
18.4
( 12.8 )
( 6.4 )
( 13.1 )
Ending balances
( 83.1 )
( 99.4 )
( 83.1 )
( 99.4 )
Total Reliance stockholders' equity, ending balances
7,350.5
7,724.3
7,350.5
7,724.3
Noncontrolling interests:
Beginning balances
10.0
9.9
10.5
8.5
Comprehensive income
0.7
1.0
2.1
3.5
Acquisition
—
—
0.3
—
Dividends paid
—
—
( 2.2 )
( 1.1 )
Ending balances
10.7
10.9
10.7
10.9
Total equity, ending balances
$
7,361.2
$
7,735.2
$
7,361.2
$
7,735.2
Cash dividends declared per common share
$
1.10
$
1.00
$
3.30
$
3.00
See accompanying notes to unaudited consolidated financial statements.
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RELIANCE, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation
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. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the consolidated financial statements reflect all material adjustments, which are of a normal recurring nature, necessary for presentation of financial statements for interim periods in accordance with U.S. GAAP. Interim results are not necessarily indicative of the results for a full year. All significant intercompany accounts and transactions have been eliminated. The ownership of the other interest holders of consolidated subsidiaries is reflected as noncontrolling interests. Investments in unconsolidated subsidiaries are recorded under the equity method of accounting. These consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and accompanying notes included in Reliance’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.
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.
Inventories
The majority of our inventory is valued using the last-in, first-out (“LIFO”) method, which is not in excess of market. Under this method, older costs are included in inventory, which may be higher or lower than current costs. 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.
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
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permitted. As the guidance only requires additional disclosure, there will be no impact to our results of operations, financial condition or cash flows.
Note 2. Acquisitions
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.
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.
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 2024 acquisitions to the fair values of the assets acquired and liabilities assumed were as follows:
(in millions)
Cash
$
5.6
Accounts receivable
44.9
Inventories
109.9
Prepaid expenses and other current assets
1.0
Property, plant and equipment
106.7
Operating lease right-of-use assets
19.2
Goodwill
59.3
Intangible assets subject to amortization
39.5
Intangible assets not subject to amortization
41.4
Total assets acquired
427.5
Deferred income taxes
7.0
Operating lease liabilities
15.1
Other current and long-term liabilities
32.8
Total liabilities assumed
54.9
Noncontrolling interest
0.3
Net assets acquired
$
372.3
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.
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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 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 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 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.
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
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
(in millions, except per share amounts)
Pro forma:
Net sales
$
3,422.4
$
3,744.0
$
10,816.9
$
11,874.4
Net income attributable to Reliance
$
197.9
$
304.6
$
769.7
$
1,090.1
Earnings per share attributable to Reliance stockholders:
Basic
$
3.62
$
5.21
$
13.67
$
18.59
Diluted
$
3.59
$
5.15
$
13.55
$
18.37
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Note 3. Revenues
The following table presents our net sales disaggregated by product and service:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
(in millions)
Carbon steel
$
1,856.2
$
1,996.9
$
5,894.8
$
6,266.6
Aluminum
576.3
592.6
1,760.2
1,902.5
Stainless steel
513.9
557.5
1,595.6
1,818.8
Alloy
155.9
174.4
494.6
552.6
Toll processing and logistics
157.1
154.3
476.1
464.2
Copper and brass
78.4
72.2
240.7
232.1
Other and eliminations
82.5
75.1
246.4
231.8
Total
$
3,420.3
$
3,623.0
$
10,708.4
$
11,468.6
Note 4. Goodwill
The change in the carrying amount of goodwill is as follows:
(in millions)
Balance at January 1, 2024
$
2,111.1
Acquisitions
59.3
Purchase price allocation adjustments
2.1
Effect of foreign currency translation
( 1.6 )
Balance at September 30, 2024
$
2,170.9
We had no accumulated impairment losses related to goodwill at September 30, 2024 and December 31, 2023.
Note 5. Intangible Assets, Net
Intangible assets, net consisted of the following:
September 30, 2024
December 31, 2023
Weighted Average
Gross
Gross
Amortizable
Carrying
Accumulated
Carrying
Accumulated
Life in Years
Amount
Amortization
Amount
Amortization
(in millions)
Intangible assets subject to amortization:
Customer lists/relationships
14.0
$
755.1
$
( 550.5 )
$
716.0
$
( 520.5 )
Backlog of orders
7.9
22.4
( 8.0 )
22.9
( 6.0 )
Other
9.3
10.2
( 9.6 )
10.0
( 9.5 )
787.7
( 568.1 )
748.9
( 536.0 )
Intangible assets not subject to amortization:
Trade names
811.9
—
768.2
—
$
1,599.6
$
( 568.1 )
$
1,517.1
$
( 536.0 )
Intangible assets recorded in connection with our 2024 acquisitions were $ 80.9 million, including $ 41.4 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 $ 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
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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 three months)
$
10.6
2025
39.3
2026
29.8
2027
29.2
2028
27.7
Thereafter
83.0
$
219.6
Note 6. Debt
Debt consisted of the following:
September 30,
December 31,
2024
2023
(in millions)
Unsecured revolving credit facility maturing September 10, 2029
$
125.0
$
—
Senior unsecured notes, interest payable semi-annually at 1.30 %, effective rate of 1.53 %, maturing August 15, 2025
400.0
400.0
Senior unsecured notes, interest payable semi-annually at 2.15 %, effective rate of 2.27 %, maturing August 15, 2030
500.0
500.0
Senior unsecured notes, interest payable semi-annually at 6.85 %, effective rate of 6.91 %, maturing November 15, 2036
250.0
250.0
Other notes
1.4
1.4
Total
1,276.4
1,151.4
Less: unamortized discount and debt issuance costs
( 9.1 )
( 9.2 )
Less: amounts due within one year
( 399.5 )
( 0.3 )
Total long-term debt
$
867.8
$
1,141.9
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 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.
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.
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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.
Other Notes, Revolving Credit and Letter of Credit/Letters of Guarantee Facilities
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 $ 42.7 million and $ 40.9 million were outstanding under this facility as of September 30, 2024 and December 31, 2023, respectively.
Covenants
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, 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.
Note 7. Leases
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. Our leases of facilities and other spaces expire at various times through 2045, and our ground leases expire at various times through 2068. Nearly all of our leases are operating leases; 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,
September 30,
2024
2023
2024
2023
(in millions)
Operating lease cost
$
27.4
$
25.0
$
78.5
$
72.0
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Supplemental cash flow and balance sheet information is presented below:
Nine Months Ended
September 30,
2024
2023
(in millions)
Supplemental cash flow information:
Cash payments for operating leases
$
78.0
$
70.6
Right-of-use assets obtained in exchange for operating lease obligations
$
66.3
$
55.6
September 30,
December 31,
2024
2023
Other lease information:
Weighted average remaining lease term—operating leases
5.9 years
5.8 years
Weighted average discount rate—operating leases
4.5 %
4.3 %
Maturities of operating lease liabilities as of September 30, 2024 are as follows:
(in millions)
2024 (remaining three months)
$
18.7
2025
68.2
2026
55.6
2027
44.8
2028
36.7
Thereafter
93.6
Total operating lease payments
317.6
Less: imputed interest
( 46.7 )
Total operating lease liabilities
$
270.9
Note 8. Income Taxes
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. federal statutory rate of 21.0 % were mainly due to state income taxes.
Note 9. Equity
Stock-Based Compensation Plans
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.
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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:
Weighted
Average
Grant Date
RSU and PSU
Fair Value
Aggregate Units
Per Unit
Unvested at January 1, 2024
437,239
$
213.06
Granted (1)
170,611
289.07
Vested
( 6,527 )
207.83
Cancelled or forfeited
( 33,708 )
227.78
Unvested at September 30, 2024
567,615
$
235.10
Shares reserved for future grants (all plans)
1,357,738
(1) Comprised of 100,669 RSUs and 69,942 PSUs granted in February 2024. 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 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.
Common Stock
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 nine months ended September 30, 2024 and 2023 was as follows:
2024
2023
Average Cost
Average Cost
Shares
Per Share
Amount
Shares
Per Share
Amount
(in millions)
(in millions)
First quarter
—
$
—
$
—
160,224
$
242.86
$
38.9
Second quarter
1,804,180
287.81
519.3
308,454
239.55
73.9
Third quarter
1,535,266
281.37
432.0
467,213
270.49
126.4
3,339,446
$
284.85
$
951.3
935,891
$
255.56
$
239.2
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.
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Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss included the following:
Pension and
Foreign Currency
Postretirement Benefit
Accumulated Other
Translation
Plan Adjustments,
Comprehensive
Loss
Net of Tax
Loss
(in millions)
Balance as of January 1, 2024
$
( 75.7 )
$
( 1.0 )
$
( 76.7 )
Current-period change
( 3.8 )
( 2.6 )
( 6.4 )
Balance as of September 30, 2024
$
( 79.5 )
$
( 3.6 )
$
( 83.1 )
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 September 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 gain or 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 .
Note 10. Commitments and Contingencies
Environmental Contingencies
We are currently involved with an environmental remediation project related to activities at former manufacturing operations of Earle M. Jorgensen Company (“EMJ”), our wholly owned subsidiary, that were sold many years prior to our acquisition of EMJ in 2006. Although the potential cleanup costs could be significant, EMJ maintained insurance policies during the time it owned the manufacturing operations that have covered costs incurred to date and are expected to continue to cover the majority of the related costs. We do not expect that this obligation will have a material adverse impact on our consolidated financial position, results of operations or cash flows.
Legal Matters
From time to time, we are named as a defendant in legal actions. These actions generally arise in the ordinary course of business. We are not currently a party to any pending legal proceedings other than routine litigation incidental to the business. We expect that these matters will be resolved without having a material adverse impact on our consolidated financial position, results of operations or cash flows. We maintain general liability insurance against risks arising in the ordinary course of business.
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Note 11. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
(in millions, except number of shares which are reflected in thousands and per share amounts)
Numerator:
Net income attributable to Reliance
$
199.2
$
295.0
$
769.9
$
1,063.2
Denominator:
Weighted average shares outstanding
54,691
58,427
56,297
58,648
Dilutive effect of stock-based awards
491
697
516
685
Weighted average diluted shares outstanding
55,182
59,124
56,813
59,333
Earnings per share attributable to Reliance stockholders:
Basic
$
3.64
$
5.05
$
13.68
$
18.13
Diluted
$
3.61
$
4.99
$
13.55
$
17.92
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.
Note 12. Employee Benefits
Certain of our union employees participate in plans collectively bargained and maintained by multiple employers and a labor union. 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.
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RELIANCE, INC.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.