SEC Filings

10-Q
RELIANCE STEEL & ALUMINUM CO filed this Form 10-Q on 11/13/2000
Entire Document
 
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                          RELIANCE STEEL & ALUMINUM CO.
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table sets forth certain income statement data for the three month
and nine month periods ended September 30, 2000 and September 30, 1999 (dollars
are shown in thousands and certain amounts may not calculate due to rounding):


<TABLE>
<CAPTION>
                                   THREE MONTHS ENDED SEPTEMBER 30,                     NINE MONTHS ENDED SEPTEMBER 30,
                              ---------------------------------------------     --------------------------------------------------
                                      2000                    1999                        2000                       1999
                              --------------------    ---------------------     -----------------------    -----------------------
                                           % OF                     % OF                       % OF                        % OF
                                  $      NET SALES       $        NET SALES          $        NET SALES        $         NET SALES
                              --------   ---------    --------    ---------     ----------    ---------    ----------    ---------
<S>                           <C>          <C>        <C>           <C>         <C>             <C>        <C>             <C>   
NET SALES ..................  $443,652     100.0%     $380,070      100.0%      $1,315,396      100.0%     $1,136,668      100.0%
GROSS PROFIT ...............   118,398      26.7       104,750       27.6          354,551       27.0         300,363       26.4
OPERATING EXPENSES .........    79,038      17.8        70,317       18.5          238,336       18.1         201,963       17.8
DEPRECIATION EXPENSE .......     5,345       1.2         4,923        1.3           15,697        1.2          14,077        1.2
                              --------     -----      --------      -----       ----------      -----      ----------      -----
INCOME FROM OPERATIONS .....  $ 34,015       7.7%     $ 29,510        7.8%      $  100,518        7.6%     $   84,323        7.4%
                              ========     =====      ========      =====       ==========      =====      ==========      =====
</TABLE>


THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1999 (DOLLAR AMOUNTS IN THOUSANDS OTHER THAN SHARE AND PER SHARE AMOUNTS)

In the three months ended September 30, 2000, consolidated net sales increased
16.7% to $443,652, from $380,070 in the same period of 1999, which reflects an
increase of 4.6% in tons sold and an increase in the average sales price per ton
of 11.2%. The increase in tons sold was primarily due to the inclusion during
the 2000 period of a full three months of the sales of Allegheny Steel
Distributors, Inc. ("Allegheny"), acquired September 1, 1999; Arrow Metals,
acquired October 1, 1999; Hagerty Steel & Aluminum Company ("Hagerty"), formed
February 5, 2000; and Toma Metals, Inc. ("Toma"), acquired June 1, 2000; along
with two months' sales of United Alloys Aircraft Metals, Inc. ("United"), formed
August 7, 2000 (collectively, along with Liebovich Bros., Inc. ("Liebovich")
acquired March 1, 1999, the "Acquisitions"). The increase also reflects
improvements in sales of the Company's products to the semiconductor,
electronics and related industries, along with increased sales to the aerospace
industry. These improvements were somewhat offset by continued weak sales to the
truck trailer and rail car markets and recent weakness in the Pacific Northwest
and Eastern regions of the United States. The average selling prices increased
for the 2000 period due mainly to a shift in product mix of approximately 4%
away from carbon steel products to stainless steel products. The stainless steel
products include products sold to the semiconductor industry, which are
typically among the most high priced products sold by the Company. There was
also an increase in tons sold to the aerospace industry of 12% during the third
quarter of 2000 that contributed to the increased average sales price, as the
products sold to the aerospace industry are among the higher priced products
sold by the Company.

Excluding the sales of the Acquisitions ("same store sales"), the Company
reported an increase in same store sales of $36,896, or 10.5% on a 1.6% decrease
in tons sold, with the average selling price per ton increasing 12.2%. The
decrease in tons sold was primarily due to softer demand, primarily for carbon
steel products, in the Eastern portion of the United States during the 2000
period. However, this decrease was offset by increased demand in the
semiconductor, electronics and aerospace industries. The increase in the average
selling price is primarily due to increased selling prices of most of the
Company's products related to increased metal costs during the 2000 period, as
compared to the 1999 period. Improved sales to the semiconductor, electronics
and related industries, and to the aerospace industry, also contributed to the
increase in the average selling price, due to the materials sold to these


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