Reliance Steel & Aluminum Co. Reports Second Quarter 2020 Financial Results
07/23/2020 - 06:50 AM
- Strong gross profit margin of 30.4% - EPS of $1.24, non-GAAP EPS of $1.36 - Generated cash flow from operations of $475.7 million - Declared quarterly dividend of $0.625 per share
LOS ANGELES, July 23, 2020 (GLOBE NEWSWIRE) -- Reliance Steel & Aluminum Co. (NYSE: RS) today reported its financial results for the second quarter ended June 30, 2020 (in millions, except tons which are in thousands and per share amounts).
100%; border-collapse:collapse !important;"> Sequential Quarter Six Months Ended June 30, Year-Over-Year Year-Over-Year Q2 2020 Q1 2020 % Change 2020 2019 % Change Q2 2019 % Change Income Statement Data: 24%; width:24% ; min-width:24% ;">Net sales 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;">2,019.3 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;">2,572.9 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 6%; width:6% ; min-width:6% ;">(21.5 2%; width:2% ; min-width:2% ;">%) 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;">4,592.2 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;">5,840.1 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 6%; width:6% ; min-width:6% ;">(21.4 2%; width:2% ; min-width:2% ;">%) 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;">2,883.5 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 6%; width:6% ; min-width:6% ;">(30.0 2%; width:2% ; min-width:2% ;">%) Gross profit1 $ 614.7 $ 780.7 (21.3 %) $ 1,395.4 $ 1,720.5 (18.9 %) $ 853.6 (28.0 %) Gross profit margin1 30.4% 30.3% 0.1 % 30.4% 29.5% 0.9 % 29.6 % 0.8 % Non-GAAP gross profit margin1,2 30.4% 31.9% (1.5 %) 31.3% 29.5% 1.8 % 29.6 % 0.8 % Non-GAAP pretax income adjustments2 $ 10.4 $ 137.5 (92.4 %) $ 147.9 $ 1.2 12,225.0 % $ 1.2 766.7 % Pretax income $ 102.0 $ 83.1 22.7 % $ 185.1 $ 501.3 (63.1 %) $ 245.8 (58.5 %) Non-GAAP pretax income2 $ 112.4 $ 220.6 (49.0 %) $ 333.0 $ 502.5 (33.7 %) $ 247.0 (54.5 %) Net income attributable to Reliance $ 80.2 $ 61.7 30.0 % $ 141.9 $ 373.2 (62.0 %) $ 183.1 (56.2 %) Diluted EPS $ 1.24 $ 0.92 34.8 % $ 2.15 $ 5.49 (60.8 %) $ 2.69 (53.9 %) Non-GAAP diluted EPS2 $ 1.36 $ 2.45 (44.5 %) $ 3.84 $ 5.51 (30.3 %) $ 2.71 (49.8 %) Balance Sheet and Cash Flow Data: Cash provided by operations $ 475.7 $ 170.8 178.5 % $ 646.5 $ 463.2 39.6 % $ 346.0 37.5 % Free cash flow3 $ 434.7 $ 115.3 277.0 % $ 550.0 $ 339.3 62.1 % $ 275.1 58.0 % Net debt-to-total capital4 20.4% 25.4% 20.4% 27.4% 27.4% Capital Allocation Data: Capital expenditures $ 41.0 $ 55.5 $ 96.5 $ 123.9 $ 70.9 Acquisitions, net $ — $ — $ — $ 1.0 $ 1.0 Dividends $ 39.9 $ 41.9 $ 81.8 $ 76.5 $ 36.9 Share repurchases $ — $ 300.0 $ 300.0 $ 50.0 $ 50.0 Key Business Metrics: Tons sold 1,211.8 1,468.8 (17.5 %) 2,680.6 3,009.3 (10.9 %) 1,507.3 (19.6 %) Tons sold (same-store) 1,210.6 1,466.8 (17.5 %) 2,677.4 3,009.3 (11.0 %) 1,507.3 (19.7 %) Average selling price per ton sold $ 1,681 $ 1,742 (3.5 %) $ 1,714 $ 1,931 (11.2 %) $ 1,904 (11.7 %) Average selling price per ton sold (same-store) $ 1,668 $ 1,727 (3.4 %) $ 1,700 $ 1,931 (12.0 %) $ 1,904 (12.4 %) Please refer to the footnotes at the end of this press release for additional information.
Management Commentary 17.5% compared to the first quarter of 2020,” said Jim Hoffman, President and Chief Executive Officer of Reliance. “We maintained a strong gross profit margin of 30.4% on net sales of $2.02 billion , which, combined with reduced operating expenses, resulted in pretax income of $102.0 million and earnings per diluted share of $1.24. We adjusted our working capital in response to reduced activity levels and generated cash flow from operations of $475.7 million . We implemented enhanced health and safety practices to keep our employees and their families healthy and safe while continuing to provide exceptional customer service across our diversified customer base, which resulted in improved safety performance during the quarter. We sincerely thank our employees for their hard work and flexibility during these difficult times, especially our front-line Reliance employees.”
Mr. Hoffman continued, “Our ability to maintain a strong gross profit margin is the direct result of exceptional execution by our managers in the field. Our local managers continue to leverage the significant investments we have made in recent years to expand our value-added processing capabilities to focus on higher margin business, and appropriately price the value we provide our customers by delivering the highest quality products and services when needed. We reacted quickly to rapidly changing business conditions and reduced our SG&A expense 16.1% to offset the $553.6 million , or 21.5% , decline in sales compared to the prior quarter. We believe our operating performance in this unprecedented environment demonstrates the strength and resiliency of the Reliance model and our ability to successfully operate through all industry cycles.”
Mr. Hoffman concluded, “Although our outlook for nearly all of our end markets remains challenging and uncertain, we believe our diversification of end markets, products and geographies as well as our decentralized operating structure will continue to serve us well through the recovery that will follow these extraordinary times. In the second quarter, our decentralized model provided us the flexibility to ramp up individual operations quickly as demand trends improved and to restructure other businesses that were more severely impacted to ensure long-term profitability. This flexibility, coupled with our strong balance sheet and cash flow, enables us to remain profitable despite extraordinary market challenges, preserve jobs for the significant majority of our employees and provide enhanced solutions to our customers’ changing and growing needs.”
End Market Commentary 17.5% compared to the first quarter of 2020.
Demand in non-residential construction, Reliance’s largest end market, softened during the second quarter as shelter-in-place orders resulted in the deferral of numerous projects. However, as restrictions began to lift across the country in May, the Company experienced an increase in activity as customers focused on completing projects that had previously been put on hold. Reliance is cautiously optimistic that demand for non-residential construction activity will continue to improve in the second half of 2020 based on healthy backlogs and positive customer sentiment.
Demand for the toll processing services Reliance provides to the automotive market fell sharply in the second quarter following the mid-March closure of many automotive OEMs and steel and aluminum mills due to COVID-19. This resulted in significantly reduced processing volumes at Reliance’s toll processing operations in both the U.S. and Mexico. Demand increased following the reopening of automotive OEM’s in early June, and the Company was very pleased to recall the majority of its furloughed workforce servicing the automotive market. Reliance continues to focus on growth and innovation in toll processing, including expansion of its toll processing operations to support increased future demand.
While demand in the aerospace defense market remained fairly stable at solid levels during the second quarter of 2020, commercial aerospace demand declined considerably as a direct result of reduced air travel due to COVID-19. In response to reduced commercial airplane build rates, Reliance made significant workforce reductions and closed two of its smaller international locations supporting the commercial aerospace market. As Reliance’s outlook for the commercial aerospace market remains uncertain, the Company will continue to assess the health of its remaining businesses and take appropriate cost reduction actions if and when necessary to ensure the continued long-term profitability of these businesses.
Demand in heavy industry for both agricultural and construction equipment declined in the second quarter due to reduced production schedules and customer shutdowns related to COVID-19. Reliance is cautiously optimistic that demand should begin to recover in the second half of 2020 from current levels based on positive feedback from its diverse range of customers.
Demand in the energy (oil and gas) market remains under significant pressure with the second quarter marking the lowest level of activity the Company has seen in the past 25 years. In response to these conditions, Reliance continues to take proactive cost reduction measures including additional headcount reductions and closing three of its energy focused businesses in 2020. The Company believes its remaining businesses servicing the energy sector are well positioned to support any future recovery in energy.
Semiconductor demand in the second quarter of 2020 continued to improve steadily compared to the first quarter of 2020. Reliance remains cautiously optimistic that demand will remain strong in the second half of 2020.
Balance Sheet & Cash Flow $1.50 billion with $1.16 billion available for borrowing on its $1.5 billion revolving credit facility. The Company’s net debt-to-total capital ratio was 20.4% on June 30, 2020. During the second quarter of 2020, Reliance generated net cash provided by operating activities of $475.7 million , a year-over-year increase of 37.5% .
“The combination of our strong balance sheet, significant availability on our revolving credit facility, and effective working capital management bolsters our liquidity position and ensures continued execution of our business model through this extraordinary and challenging time,” commented Karla Lewis, Senior Executive Vice President and Chief Financial Officer of Reliance. “During the second quarter, we paid down $346.0 million of debt, invested $41.0 million in capital expenditures and returned $39.9 million to our stockholders in dividends. No matter the environment, we remain committed to investing in the long-term growth and sustainability of our company while concurrently providing returns to our stockholders.”
Stockholder Return Activity
Although Reliance did not repurchase any shares in the second quarter, the Company repurchased $300.0 million of its common stock, or 3.3 million shares, at an average cost of $90.09 per share in the first quarter of 2020. At June 30, 2020, approximately 3.1 million shares, or approximately 5% of the Company’s common shares currently outstanding, remained available for repurchase under the Company’s stock repurchase program.
Business Outlook 2% in the third quarter of 2020. In addition, Reliance management also expects its tolling volumes to increase meaningfully from second quarter levels to support current automotive production rates. This improvement is not reflected in the Company’s outlook for tons sold as tolling tons are not included in this metric. Further, the Company expects overall metals pricing in the third quarter will remain generally consistent with current levels. Given the resiliency of Reliance’s business model demonstrated in the second quarter of 2020 and the execution of its managers in the field, the Company anticipates that its gross profit margin will remain near the high end of its estimated sustainable range of 28% to 30% . While the magnitude and duration of the COVID-19 pandemic, including its impact on the Company’s operations, supply chain and customers remains fluid, management is continuing to focus on elements within its control as well as monitor the impact of the virus on its operations and financial condition.
Conference Call Details
For those unable to participate during the live broadcast, a replay of the call will also be available beginning that same day at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on Thursday, August 6, 2020 by dialing (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (International) and entering the conference ID: 13705692. The webcast will remain posted on the Investors section of Reliance’s website at investor.rsac.com for 90 days.
About Reliance Steel & Aluminum Co. 51% of orders included value-added processing and approximately 40% of orders were delivered within 24 hours.
Reliance Steel & Aluminum Co.’s press releases and additional information are available on the Company’s website at www.rsac.com
Forward-Looking Statements
These forward-looking statements are based on management's estimates, projections and assumptions as of today’s date that may not prove to be accurate. Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements as a result of various important factors, including, but not limited to, actions taken by us, including restructuring or cash-preservation initiatives, as well as developments beyond our control, including, but not limited to, the impact of COVID-19 and changes in worldwide and U.S. economic conditions that materially impact our customers and the demand for our products and services. The extent to which the COVID-19 pandemic will continue to negatively impact our operations will depend on future developments which are highly uncertain and cannot be predicted, including the duration of the outbreak, new information which may emerge concerning the severity or duration of the COVID-19 pandemic, the actions taken to control the spread of COVID-19 or treat its impact, and changes in worldwide and U.S. economic conditions. Further deteriorations in economic conditions, as a result of COVID-19 or otherwise, could lead to a further or prolonged decline in demand for our products and services and negatively impact our business, and may also impact financial markets and corporate credit markets which could adversely impact our access to financing, or the terms of any financing. We cannot at this time predict the extent of the impact of the COVID-19 pandemic and resulting economic impact, but it could have a material adverse effect on our business, financial position, results of operations and cash flows. Other factors which could cause actual results to differ materially from our forward-looking statements include those disclosed in reports Reliance has filed with the United States Securities and Exchange Commission (the “SEC”). As a result, these statements speak only as of the date that they are made, and Reliance disclaims any and all obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important risks and uncertainties about Reliance’s business can be found in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as updated in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in other documents Reliance files or furnishes with the SEC.
investor@rsac.com
or Addo Investor Relations
(Tables to follow)
100%; border-collapse:collapse !important;"> Second Quarter 2020 Major Commodity Metrics Tons Sold (tons in thousands; % change) Average Selling Price per Ton Q2 2020 Tons Sold Q1 2020 Tons Sold Sequential Quarter Change Q2 2019 Tons Sold Year-Over- Year Sequential Quarter Change Year-Over- Year 24%; width:24% ; min-width:24% ;">Carbon steel 1%; width:1% ; min-width:1% ;"> 9%; width:9% ; min-width:9% ;">987.3 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 9%; width:9% ; min-width:9% ;">1,183.1 1%; width:1% ; min-width:1% ;"> 8%; width:8% ; min-width:8% ;">(16.5 2%; width:2% ; min-width:2% ;">%) 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 9%; width:9% ; min-width:9% ;">1,207.9 1%; width:1% ; min-width:1% ;"> 8%; width:8% ; min-width:8% ;">(18.3 2%; width:2% ; min-width:2% ;">%) 1%; width:1% ; min-width:1% ;"> 8%; width:8% ; min-width:8% ;">(2.2 2%; width:2% ; min-width:2% ;">%) 1%; width:1% ; min-width:1% ;"> 8%; width:8% ; min-width:8% ;">(14.3 2%; width:2% ; min-width:2% ;">%) Aluminum 68.1 85.4 (20.3 %) 87.7 (22.3 %) (3.7 %) (10.2 %) Stainless steel 67.1 79.2 (15.3 %) 77.8 (13.8 %) (1.9 %) (4.2 %) Alloy 29.2 45.7 (36.1 %) 49.3 (40.8 %) 3.4 % (0.6 %) Sales ($'s in millions; % change) Q2 2020 Sales Q1 2020 Sales Sequential Quarter Change Q2 2019 Sales Year-Over- Year Carbon steel $ 1,073.8 $ 1,316.2 (18.4 %) $ 1,532.7 (29.9 %) Aluminum $ 393.4 $ 512.2 (23.2 %) $ 564.4 (30.3 %) Stainless steel $ 336.4 $ 404.9 (16.9 %) $ 407.2 (17.4 %) Alloy $ 99.9 $ 151.4 (34.0 %) $ 170.0 (41.2 %)
100%; border-collapse:collapse !important;"> Year-to-Date (6 months) 2020 Major Commodity Metrics Tons Sold (tons in thousands; % change) Average Selling Price per Ton Sold (% change) 2020 2019 Year-Over-Year Year-Over-Year 24%; width:24% ; min-width:24% ;">Carbon steel 1%; width:1% ; min-width:1% ;"> 9%; width:9% ; min-width:9% ;">2,170.4 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 9%; width:9% ; min-width:9% ;">2,403.9 1%; width:1% ; min-width:1% ;"> 8%; width:8% ; min-width:8% ;">(9.7 2%; width:2% ; min-width:2% ;">%) 1%; width:1% ; min-width:1% ;"> 8%; width:8% ; min-width:8% ;">(15.4 2%; width:2% ; min-width:2% ;">%) 6%; width:6% ; min-width:6% ;"> 2%; width:2% ; min-width:2% ;"> 6%; width:6% ; min-width:6% ;"> 6%; width:6% ; min-width:6% ;"> 6%; width:6% ; min-width:6% ;"> 7%; width:7% ; min-width:7% ;"> Aluminum 153.5 176.6 (13.1 %) (7.8 %) Stainless steel 146.3 156.5 (6.5 %) (2.6 %) Alloy 74.9 104.8 (28.5 %) (0.8 %) Sales ($'s in millions; % change) 2020 2019 Year-Over-Year Carbon steel $ 2,390.0 $ 3,126.3 (23.6 %) Aluminum $ 905.6 $ 1,130.2 (19.9 %) Stainless steel $ 741.3 $ 813.7 (8.9 %) Alloy $ 251.3 $ 354.3 (29.1 %)
100%; border-collapse:collapse !important;">RELIANCE STEEL & ALUMINUM CO. 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 June 30, June 30, 2020 2019 2020 2019 62%; width:62% ; min-width:62% ;">Net sales 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;"> 2,019.3 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;"> 2,883.5 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;"> 4,592.2 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 7%; width:7% ; min-width:7% ;"> 5,840.1 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> Costs and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 1,404.6 2,029.9 3,196.8 4,119.6 Warehouse, delivery, selling, general and administrative 438.5 531.4 961.2 1,063.5 Depreciation and amortization 57.4 54.4 114.4 108.4 Impairment of long-lived assets 0.2 1.2 97.9 1.2 1,900.7 2,616.9 4,370.3 5,292.7 Operating income 118.6 266.6 221.9 547.4 Other (income) expense: Interest expense 14.6 23.7 31.5 47.9 Other expense (income), net 2.0 (2.9 ) 5.3 (1.8 ) Income before income taxes 102.0 245.8 185.1 501.3 Income tax provision 21.3 61.5 41.5 125.4 Net income 80.7 184.3 143.6 375.9 Less: Net income attributable to noncontrolling interests 0.5 1.2 1.7 2.7 Net income attributable to Reliance $ 80.2 $ 183.1 $ 141.9 $ 373.2 Earnings per share attributable to Reliance stockholders: Diluted $ 1.24 $ 2.69 $ 2.15 $ 5.49 Basic $ 1.26 $ 2.73 $ 2.18 $ 5.56 Shares used in computing earnings per share: Diluted 64,582 67,977 65,915 67,951 Basic 63,647 67,045 64,992 67,086 Cash dividends per share $ 0.625 $ 0.55 $ 1.25 $ 1.10
100%; border-collapse:collapse !important;"> RELIANCE STEEL & ALUMINUM CO. UNAUDITED CONSOLIDATED BALANCE SHEETS (in millions, except number of shares which are reflected in thousands and par value) June 30, December 31, 2020 2019* ASSETS Current assets: 1%; width:1% ; min-width:1% ;"> 76%; width:76% ; min-width:76% ;">Cash and cash equivalents 1%; width:1% ; min-width:1% ;">$ 9%; width:9% ; min-width:9% ;"> 222.7 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 9%; width:9% ; min-width:9% ;"> 174.3 1%; width:1% ; min-width:1% ;"> Accounts receivable, less allowance for credit losses of $22.4 at June 30, 2020 and $17.8 at December 31, 2019 922.5 1,067.8 Inventories 1,492.6 1,645.7 Prepaid expenses and other current assets 88.9 85.2 Income taxes receivable — 37.2 Total current assets 2,726.7 3,010.2 Property, plant and equipment: Land 256.7 239.8 Buildings 1,215.8 1,195.1 Machinery and equipment 2,075.2 2,044.4 Accumulated depreciation (1,738.4 ) (1,684.1 ) Property, plant and equipment, net 1,809.3 1,795.2 Operating lease right-of-use assets 200.5 201.5 Goodwill 1,923.7 2,003.8 Intangible assets, net 974.3 1,031.1 Cash surrender value of life insurance policies, net 33.2 42.7 Other assets 56.4 46.6 Total assets $ 7,724.1 $ 8,131.1 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 247.1 $ 275.0 Accrued expenses 76.8 67.4 Accrued compensation and retirement costs 135.1 172.1 Accrued insurance costs 45.2 43.4 Current maturities of long-term debt and short-term borrowings 64.9 64.9 Current maturities of operating lease liabilities 51.7 52.5 Income taxes payable 21.2 — Total current liabilities 642.0 675.3 Long-term debt 1,426.9 1,523.6 Operating lease liabilities 149.6 149.5 Long-term retirement costs 85.9 87.0 Other long-term liabilities 21.9 12.3 Deferred income taxes 436.3 469.3 Commitments and contingencies Equity: Preferred stock, $0.001 par value: Authorized shares — 5,000 None issued or outstanding — — Common stock and additional paid-in capital, $0.001 par value: Authorized shares — 200,000 Issued and outstanding shares — 63,654 at June 30, 2020 and 66,854 at December 31, 2019 9.1 122.2 Retained earnings 5,068.9 5,189.5 Accumulated other comprehensive loss (124.1 ) (105.1 ) Total Reliance stockholders’ equity 4,953.9 5,206.6 Noncontrolling interests 7.6 7.5 Total equity 4,961.5 5,214.1 Total liabilities and equity $ 7,724.1 $ 8,131.1 * Amounts were derived from audited financial statements.
100%; border-collapse:collapse !important;"> RELIANCE STEEL & ALUMINUM CO. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Six Months Ended June 30, 2020 2019 Operating activities: 77%; width:77% ; min-width:77% ;">Net income 1%; width:1% ; min-width:1% ;">$ 9%; width:9% ; min-width:9% ;"> 143.6 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;">$ 9%; width:9% ; min-width:9% ;"> 375.9 1%; width:1% ; min-width:1% ;"> Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 114.4 108.4 Impairment of long-lived assets 97.9 1.2 Provision for uncollectible accounts 7.0 3.8 Deferred income tax benefit (33.3 ) (0.2 ) Stock-based compensation expense 18.0 22.1 Other 13.3 1.8 Changes in operating assets and liabilities (excluding effect of businesses acquired): Accounts receivable 136.0 (111.1 ) Inventories 150.5 31.2 Prepaid expenses and other assets 55.5 35.3 Accounts payable and other liabilities (56.4 ) (5.2 ) Net cash provided by operating activities 646.5 463.2 Investing activities: Purchases of property, plant and equipment (96.5 ) (123.9 ) Acquisitions, net of cash acquired — (1.0 ) Other 0.1 7.0 Net cash used in investing activities (96.4 ) (117.9 ) Financing activities: Proceeds from long-term debt borrowings 770.0 616.0 Principal payments on long-term debt (868.0 ) (811.0 ) Dividends and dividend equivalents paid (81.8 ) (76.5 ) Share repurchases (300.0 ) (50.0 ) Noncontrolling interest purchased (8.0 ) — Other (5.8 ) (11.6 ) Net cash used in financing activities (493.6 ) (333.1 ) Effect of exchange rate changes on cash and cash equivalents (8.1 ) 1.1 Increase in cash and cash equivalents 48.4 13.3 Cash and cash equivalents at beginning of year 174.3 128.2 Cash and cash equivalents at end of period $ 222.7 $ 141.5 Supplemental cash flow information: Interest paid during the period $ 30.1 $ 46.8 Income taxes paid during the period, net $ 16.1 $ 123.9
100%; border-collapse:collapse !important;">RELIANCE STEEL & ALUMINUM CO. NON-GAAP EARNINGS AND GROSS PROFIT RECONCILIATION (in millions, except per share amounts) Net Income Diluted EPS Three Months Ended Three Months Ended June 30, March 31, June 30, June 30, March 31, June 30, 41%; width:41% ; min-width:41% ;"> 1%; width:1% ; min-width:1% ;"> 7%; width:7% ; min-width:7% ;">2020 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 7%; width:7% ; min-width:7% ;">2020 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 7%; width:7% ; min-width:7% ;">2019 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 7%; width:7% ; min-width:7% ;">2020 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 7%; width:7% ; min-width:7% ;">2020 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 7%; width:7% ; min-width:7% ;">2019 Net income attributable to Reliance $ 80.2 $ 61.7 $ 183.1 $ 1.24 $ 0.92 $ 2.69 Impairment and restructuring charges 5.6 137.5 1.2 0.09 2.04 0.02 Non-recurring settlement charge 4.8 — — 0.07 — — Income tax benefit related to above items (2.6 ) (34.4 ) (0.3 ) (0.04 ) (0.51 ) — Non-GAAP net income attributable to Reliance $ 88.0 $ 164.8 $ 184.0 $ 1.36 $ 2.45 $ 2.71 Net Income Diluted EPS Six Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 Net income attributable to Reliance $ 141.9 $ 373.2 $ 2.15 $ 5.49 Impairment and restructuring charges 143.1 1.2 2.18 0.02 Non-recurring settlement charge 4.8 — 0.07 — Income tax benefit related to above items (37.0 ) (0.3 ) (0.56 ) — Non-GAAP net income attributable to Reliance $ 252.8 $ 374.1 $ 3.84 $ 5.51 Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019 Pretax income $ 102.0 $ 83.1 $ 245.8 $ 185.1 $ 501.3 Impairment and restructuring charges 5.6 137.5 1.2 143.1 1.2 Non-recurring settlement charge 4.8 — — 4.8 — Non-GAAP pretax income $ 112.4 $ 220.6 $ 247.0 $ 333.0 $ 502.5 Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019 Gross profit - LIFO $ 614.7 $ 780.7 $ 853.6 $ 1,395.4 $ 1,720.5 Restructuring charge — 39.8 — 39.8 — Non-GAAP gross profit 614.7 820.5 853.6 1,435.2 1,720.5 LIFO income (5.0 ) (20.0 ) (22.5 ) (25.0 ) (35.0 ) Non-GAAP gross profit - FIFO $ 609.7 $ 800.5 $ 831.1 $ 1,410.2 $ 1,685.5 Gross profit margin - LIFO 30.4 % 30.3 % 29.6 % 30.4 % 29.5 % Restructuring charge as a % of sales — 1.6 % — 0.9 % — Non-GAAP gross profit margin 30.4 % 31.9 % 29.6 % 31.3 % 29.5 % LIFO income as a % of sales (0.2 %) (0.8 %) (0.8 %) (0.6 %) (0.6 %) Non-GAAP gross profit margin - FIFO 30.2 % 31.1 % 28.8 % 30.7 % 28.9 % Reliance Steel & Aluminum Co.'s presentation of non-GAAP pretax income, net income and EPS over certain time periods is an attempt to provide meaningful comparisons to the Company's historical performance for its existing and future stockholders. Adjustments include impairment and restructuring charges, mainly related to certain of the Company's energy-related businesses, closure of some of its locations and costs relating to COVID-19 downsizing, and a pension settlement charge which make comparisons of the Company's operating results between periods difficult using GAAP measures. Reliance Steel & Aluminum Co.'s presentation of gross profit margin - FIFO, which is calculated as gross profit plus LIFO expense (or minus LIFO income) divided by net sales, is presented in order to provide a means of comparison amongst its competitors who may not use the same inventory valuation method. Please see footnote 1 below for additional information on the Company's gross profit and gross profit margin. Footnotes 1 Gross profit, calculated as net sales less cost of sales, and gross profit margin, calculated as gross profit divided by net sales, are non-GAAP financial measures as they exclude depreciation and amortization expense associated with the corresponding sales. About half of Reliance's orders are basic distribution with no processing services performed. For the remainder of its sales orders, Reliance performs “first-stage” processing, which is generally not labor intensive as it is simply cutting the metal to size. Because of this, the amount of related labor and overhead, including depreciation and amortization, is not significant and is excluded from cost of sales. Therefore, Reliance's cost of sales is substantially comprised of the cost of the material it sells. Reliance uses gross profit and gross profit margin, as shown, as measures of operating performance. Gross profit and gross profit margin are important operating and financial measures, as their fluctuations can have a significant impact on Reliance's earnings. Gross profit and gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies.2 See accompanying Non-GAAP Earnings and Gross Profit Reconciliation.3 Free cash flow is calculated as cash provided by operations reduced by capital expenditures.4 Net debt-to-total capital is calculated as total debt (net of cash) divided by total Reliance stockholders’ equity plus total debt (net of cash).
