SEC Filings

10-Q
RELIANCE STEEL & ALUMINUM CO filed this Form 10-Q on 05/02/2019
Entire Document
 

On March 1, 2018, we acquired DuBose National Energy Services, Inc. (“DuBose Energy”) and its affiliate, DuBose National Energy Fasteners & Machined Parts, Inc. (“DuBose Fasteners” and, together with DuBose Energy, “DuBose”). DuBose is headquartered in Clinton, North Carolina. DuBose specializes in fabrication, supply and distribution of metal and metal products to the nuclear industry, including utilities, component manufacturers and contractors. DuBose’s net sales were $9.7 million for the first quarter of 2019.

 

We funded our 2018 acquisitions with borrowings on our revolving credit facility and cash on hand.

 

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

 

The following table sets forth certain income statement data for the first quarters of 2019 and 2018, respectively (dollars are shown in millions and certain amounts may not calculate due to rounding):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

2019

 

 

2018

 

 

 

 

 

% of

 

 

 

 

 

% of

 

 

$

   

Net Sales

 

   

$

   

Net Sales

 

Net sales

$

2,956.6

 

100.0

%

 

$

2,757.1

 

100.0

%

Cost of sales (exclusive of depreciation and amortization expenses shown below)

 

2,089.7

 

70.7

 

 

 

1,937.2

 

70.3

 

Gross profit(1)

 

866.9

 

29.3

 

 

 

819.9

 

29.7

 

Warehouse, delivery, selling, general and administrative expense ("S,G&A")

 

532.1

 

18.0

 

 

 

519.4

 

18.8

 

Depreciation expense

 

43.2

 

1.5

 

 

 

42.3

 

1.5

 

Amortization expense

 

10.8

 

0.4

 

 

 

11.8

 

0.4

 

Operating income

$

280.8

 

9.5

%

 

$

246.4

 

8.9

%


(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 expenses associated with the corresponding sales. About half of our orders are basic distribution with no processing services performed. For the remainder of our sales orders, we perform “first-stage” processing, which is generally not labor intensive as we are 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 our cost of sales. Therefore, our cost of sales is substantially comprised of the cost of the material we sell. We use gross profit and gross profit margin as shown above 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 our earnings. Gross profit and gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies.

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Dollar

 

Percentage

 

 

2019

   

2018

 

Change

 

Change

 

 

(in millions)

 

 

 

 

 

 

Net sales

$

2,956.6

 

$

2,757.1

 

$

199.5

   

7.2

%

Net sales, same-store

$

2,930.5

 

$

2,754.8

 

$

175.7

   

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Tons

 

Percentage

 

 

2019

   

2018

 

    Change    

 

Change

 

 

(in thousands)

 

 

 

 

 

 

Tons sold

   

1,502.0

   

 

1,595.7

   

 

(93.7)

   

(5.9)

%

Tons sold, same-store

   

1,499.4

   

 

1,595.4

   

 

(96.0)

   

(6.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

   

Price

   

Percentage

 

 

2019

   

2018

   

Change

   

Change

 

Average selling price per ton sold

$

1,958

   

$

1,724

   

$

234

   

13.6

%

Average selling price per ton sold, same-store

$

1,944

   

$

1,723

   

$

221

   

12.8

%

15