Reliance Steel & Aluminum Q2 Results Miss Estimates, Sees Q3 Profit Below View

(RTTNews) - Metal processor Reliance Steel & Aluminum Co. (RS) on Thursday reported a 26 percent decline in profit for the second quarter, reflecting weaker than anticipated pricing and demand for its products. Both revenues and adjusted earnings per share for the quarter missed analysts' estimates. The company increased its quarterly dividend by 10 percent.

Looking ahead, the company forecast earnings for the third quarter below Street expectations, saying it expects only slight improvements in demand, with pricing remaining relatively unchanged from second-quarter levels.

Reliance sold 1.43 million tons in the quarter, up 24 percent percent from the year-ago period. However, average price per ton sold dropped 11 percent from the prior-year period to $1,718.

Second-quarter same store tons sold declined 0.9 percent from the prior-year quarter. However, same store tons sold increased 3.7 percent sequentially, partly due to an extra shipping day in the latest quarter along with slight improvement in overall demand levels.

The weak pricing environment continued, leading to a 2.7 percent reduction in the company's same store average price per ton sold, relative to the first quarter.

David Hannah, Chairman and CEO of Reliance said, "In general for the 2013 second quarter, both demand and pricing were a bit weaker than we anticipated at the end of the previous quarter. We remain highly focused on managing all aspects of the business that are within our control, which continues to mitigate much of the impact from these challenging market conditions."

Los Angeles, California-based Reliance's second-quarter net income was $81.0 million or $1.05 per share, down from $108.8 million or $1.44 per share in the prior-year period.

Excluding charges, adjusted net income for the latest quarter was $88.3 million or $1.14 per share. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $1.19 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter increased 11 percent to $2.45 billion from $2.21 billion in the same period last year. Analysts had a consensus revenue estimate for the quarter of $2.48 billion.

Reliance said that on July 23, its board of directors declared a regular quarterly cash dividend of $0.33 per share. This represents a 10 percent increase, and is payable on September 13 to shareholders of record as of August 16.

Looking ahead to the third quarter, Reliance forecasts reported earnings in a range of $1.15 to $1.25 per share. Analysts expect the company to earn $1.34 per share for the quarter.

Reliance said it expects the global economic uncertainty will continue to present challenges to industrial growth in the third quarter and expects only slight improvements in demand with pricing remaining relatively unchanged from second-quarter levels.

The company noted that additionally, third-quarter business activity was typically negatively impacted by some seasonal slowness as compared to the second quarter.

In Thursday's regular trading session, RS is trading at $68.56, down $0.23 or 0.33 percent on a volume of 8,380 shares.