Reliance Steel Aluminum Co. Thursday reported a drop of more than $44 million in its third-quarter earnings, in part because of reduced activity in the oil industry.
Sales were $2.29 billion, down 15.5 percent from $2.71 billion in the third quarter of 2014 and down 5.7 percent from the $2.42 billion recorded in the second quarter of 2015, Los Angeles-based Reliance said in an earnings statement.
But net income was $51.4 million, or 69 cents per diluted share, compared to $95.5 million, or $1.21, in the third quarter of 2014 and $90.2 million, or $1.20 per diluted share, in the second quarter of 2015, it said. Reliance’s net income figures included a pre-tax impairment and restructuring charge of $55.5 million, or 47 cents per diluted share, in the third quarter of 2015, which was primarily related to businesses serving the energy industry.
Reliance repurchased $142.3 million of its common stock, or 2.5 million shares, at an average price of $56.60 per share during the third quarter of 2015, plus 5.95 million shares at an average price of $57.50 per share during the nine months ended Sept. 30, 2015.
“Once again, our operational performance was outstanding despite significant industry-wide challenges that continued to put pressure on metals pricing,” said Reliance President and Chief Executive Officer Gregg Mollins. “While we sense some hesitation in the market at this time, we believe customer demand across our businesses is relatively healthy outside of the energy industry and we continue to increase our overall market share.”
Mollins said the company is constantly evaluating its more than 300 operations “to determine if they meet our profitability standards.
“Given our current outlook that oil prices will remain depressed for longer than we had previously anticipated, we recorded a pre-tax impairment and restructuring charge of $55.5 million in the third quarter of 2015 primarily related to certain of our operations servicing the energy end-market.
“This includes the planned closure of a few of our locations, which we believe is necessary to enhance our overall operating efficiencies and long- term profitability,” Mollins said.
Reliance Steel describes itself as the largest metals service center company in North America, serving more than 125,000 customers in a broad range of industries through a network of more than 300 locations in 39 U.S. states and 12 foreign countries.
—City News Service