Reliance Steel & Aluminum Co. (RS) reported net income of $39.5 million or 53 cents per share in the fourth quarter of 2010 compared with $92.1 million or $1.25 per share in the prior-year quarter. Results surpassed the Zacks Consensus Estimate by 8 cents.

The fourth-quarter results included a pre-tax accounting charge of $10.0 million compared with a pre-tax accounting credit of $87.5 million in the fourth quarter of 2009.

In fiscal 2010, net income was $194.4 million or $2.61 per share compared with $148.2 million or $2.01 in the prior year.

Revenue

Quarterly sales were $1.58 billion, up 24% year over year. Results were above the Zacks Consensus Estimate of $1.54 billion.

In fiscal 2010, Reliance’s tons sold were up 6% and the average price per ton sold was up 12% compared with 2009. Carbon steel sales were 52% of revenues; aluminum sales were 18%; stainless steel sales were 16%; alloy sales were 8%; toll processing sales were 2% and other sales were 4%.

Financial Position

Cash and cash equivalents was $72.9 at the end of December 31, 2010 versus $43.0 million at the end of December 31, 2009. Net debt-to-total capital ratio was only 23.5% as of December 31, 2010; down from 25.6% at the end of December 31, 2009. Reliance Steel has about $860 million available on its $1.1 billion credit facility.

Cash flow from operations was $214.1 million at the end of December 31, 2010 versus $943.0 million at the end of December 31, 2009. Capital expenditure was $111.4 million versus $69.9 million at the end of December 31, 2009.

Dividend

On February 16, 2011, the board of directors increased the regular quarterly cash dividend by 20% to $.12 per share from $.10 per share. The board declared the 2011 first quarter cash dividend of $.12 per share of common stock payable on March 25, 2011 to shareholders of record as of March 4, 2011. The company has paid regular quarterly dividends for 51 consecutive years and has increased its dividend 16 times since its 1994 IPO.

Outlook

For first-quarter 2011, Reliance Steel expects pricing to remain at strong levels. Earnings per diluted share are expected to be in the range of $.90 to $1.00.

We maintain our Neutral recommendation on Reliance Steel. Currently, it holds a Zacks  #3 Rank (Hold) on the stock.

 
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