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Reliance, Inc. Acquires Mid-West Materials, Inc.

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Rhea-AI Summary
Reliance, Inc. (RS) acquires Mid-West Materials, Inc., a steel service center, for approximately $87 million. The acquisition expands Reliance's flat-rolled presence in Ohio, serving North American OEMs, and aligns with their strategy of acquiring well-run, accretive companies. MidWest Materials' emphasis on customer service and quality products complements Reliance's model, leading to potential growth opportunities.
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The acquisition of Mid-West Materials by Reliance, Inc. represents a strategic expansion within the steel service center industry. From an M&A perspective, the deal appears to be a move to consolidate Reliance's presence in the flat-rolled steel segment, particularly in the Ohio region which is a hub for North American OEMs. The retention of Mid-West's management team suggests a seamless integration process, maintaining operational stability and preserving industry expertise.

While financial terms were not disclosed, the reported annual net sales of Mid-West Materials at approximately $87 million indicate a significant revenue stream that could be accretive to Reliance's earnings. The emphasis on 'immediately accretive' earnings suggests that Reliance anticipates a quick financial return on investment. However, without the transaction details, it's challenging to assess the impact on Reliance's balance sheet and any potential changes in their debt-to-equity ratio.

Furthermore, the acquisition can be seen as a move to enhance Reliance's value proposition to customers through expanded processing capabilities and services. The synergy between Mid-West's customer service approach and Reliance's business model may lead to increased customer retention and potentially attract new clients seeking high-quality steel products.

The steel service industry is highly responsive to market demands, particularly in sectors like trailer manufacturing, agriculture and building products. Mid-West Materials' product offerings, including high-strength and coated steel, are critical components for these industries. The acquisition could provide Reliance with a competitive edge in these markets by diversifying its product range and reinforcing its supply chain.

Strategically, the focus on modern, high-performance processing capabilities could enhance operational efficiency and product quality, which are vital in the OEM supply chain. The potential for scale economies and capital investments in processing technology, as mentioned by Reliance's CEO, could lead to cost savings and innovation, giving Reliance an advantage over competitors.

In the long term, the integration of Mid-West's expertise and customer service ethos within the larger Reliance framework might result in enhanced market share and brand reputation. However, it is essential to monitor how Reliance manages the integration process to avoid disruption to existing customer relationships and ensure the realization of projected synergies.

Investors will be looking at how this acquisition impacts Reliance's financial health. The lack of disclosed terms makes it difficult to evaluate the immediate financial implications, but the $87 million in net sales from Mid-West Materials suggests a potential boost in Reliance's revenue stream. The strategic importance of the acquisition for Reliance lies in the expansion of their product line and customer base, which could lead to increased market share and revenue diversification.

It will be important to track the post-acquisition performance of Reliance to assess whether the integration of Mid-West Materials contributes positively to earnings as projected. The move should ideally result in operational synergies, cost efficiencies and revenue growth. Investors should also consider the potential risks associated with mergers and acquisitions, such as integration challenges and the costs associated with potential investments in Mid-West Materials' processing capabilities.

Overall, the acquisition could be seen as a positive development for Reliance's growth trajectory, provided it aligns with their strategic goals and is managed effectively. Close attention to future earnings reports and management commentary will be important for evaluating the success of this transaction.

SCOTTSDALE, Ariz., April 02, 2024 (GLOBE NEWSWIRE) -- Reliance, Inc. (NYSE: RS) announced that it has acquired all the outstanding equity interests of Mid-West Materials, Inc. (“MidWest Materials”), a premier flat-rolled steel service center primarily servicing North American OEMs. Headquartered in Perry, OH and founded in 1952, MidWest Materials provides a wide breadth of 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. The current management team will remain in place. For the twelve months ended December 31, 2023, annual net sales for MidWest Materials were approximately $87 million. The terms of the transaction were not disclosed.

“The Reliance family is thrilled to welcome MidWest Materials,” commented Karla Lewis, President and Chief Executive Officer of Reliance. “The addition of MidWest Materials increases our flat-rolled presence in the critical markets in and around Ohio which primarily service North American OEMs. MidWest Materials aligns well with our acquisition criteria of a well-run company that is immediately accretive to our earnings and expands our offerings to customers with modern, high-performance processing capabilities. MidWest Materials' emphasis on superior customer service and its strong reputation for quality products strongly correlates with the Reliance model. MidWest Materials will benefit from our scale as well as access to capital for investments in value-added processing capabilities and the knowledge base and breadth of expertise throughout our extensive family of companies.”

About Reliance, Inc.
Founded in 1939, Reliance, Inc. (NYSE: RS) is a leading global diversified metal solutions provider and the largest metals service center company in North America. Through a network of more than 315 locations in 40 states and 12 countries outside of the United States, Reliance provides value-added metals processing services and distributes a full-line of over 100,000 metal products to more than 125,000 customers in a broad range of industries. Reliance focuses on small orders with quick turnaround and value-added processing services. In 2023, Reliance’s average order size was $3,210, approximately 51% of orders included value-added processing and approximately 40% of orders were delivered within 24 hours. Reliance, Inc.’s press releases and additional information are available on the Company’s website at reliance.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expect,” “anticipate,” “believe,” and similar words. These forward-looking statements may include statements concerning Reliance’s acquisition of Mid-West Materials Inc. and discussions of Reliance’s future performance. Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. The expected benefits of the transaction may not materialize as expected. Actual outcomes and results may differ materially from these forward-looking statements as a result of various important factors, including, but not limited to, those disclosed in our most recent Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) and subsequent reports. These forward-looking statements are based on management's expectations and assumptions as of today’s date and Reliance disclaims any obligation to publicly update or revise any forward-looking statements.

CONTACT :
(213) 576-2428
investor@reliance.com

or Addo Investor Relations
(310) 829-5400


FAQ

What did Reliance, Inc. (RS) acquire?

Reliance acquired all the outstanding equity interests of Mid-West Materials, Inc., a premier flat-rolled steel service center.

Where is Mid-West Materials headquartered?

Mid-West Materials is headquartered in Perry, OH.

What steel products does Mid-West Materials provide?

Mid-West Materials offers a wide range of steel products including hot-rolled, high strength hot-rolled, coated, and cold-rolled products.

Which markets does Mid-West Materials primarily service?

Mid-West Materials primarily services the trailer manufacturing, agriculture, metal fabrication, and building products markets.

What were the annual net sales for Mid-West Materials for the twelve months ended December 31, 2023?

The annual net sales for Mid-West Materials were approximately $87 million.

Who commented on the acquisition of Mid-West Materials?

Karla Lewis, President and CEO of Reliance, expressed excitement about welcoming Mid-West Materials to the Reliance family.

Reliance, Inc.

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About RS

reliance steel & aluminum co. (nyse:rs) headquartered in los angeles, california, is the largest metals service center company in north america. through a network of more than 300 locations in 39 states and 12 countries outside of the united states, the company provides value-added metals processing services and distributes a full line of over 100,000 metal products. these products include galvanized, hot-rolled and cold-finished steel, stainless steel, aluminum, brass, copper, titanium and alloy steel sold to more than 125,000 customers in a broad range of industries. some of these metals service centers provide processing services for specialty metals only. in the mid-1970's, the company began to establish specialty metals centers stocked with inventories of selected metals and equipped with automated materials handling and precision cutting equipment. beginning in the early 1990's, owners of successful service center companies started to sell these companies as they were reaching re