Reliance Steel & Aluminum
Annual Report 2017

Plain-text annual report

STRENGTHENING OUR CORE RELIANCE STEEL & ALUMINUM CO. 2017 ANNUAL REPORT 4 RELIANCE STEEL & ALUMINUM CO. 2017 ANNUAL REPORT 1 THE CORE OF OUR BUSINESS Caring for our people and their safety, never becoming complacent. Increasing the value and service we provide to our customers while maximizing returns. Generating strong cash flows by improving our operational efficiences and working capital management. Plannning for the future with strategic investments in capital expenditures and seeking the right acquisition opportunities. Delivering exceptional results to our stockholders, customers, suppliers, employees, and communities. In 2017, we took the proper steps to strengthen our core. 2 RELIANCE STEEL & ALUMINUM CO. Reliance intentionally operates as a decentralized business of over 75 metal service center brands across 40 states and in 13 countries. Yet our managers in the field share a common goal: Reliance’s success. This is demonstrated through their excellent performance managing through pricing volatility, improving the quality and breadth of value- added services to customers, controlling expenses, and managing working capital. In 2017, this diligence contributed to the highest gross profit dollars in Reliance’s 78-year history and our second- highest net sales. We achieved a gross profit margin of 28.7% – near the high-end of our target range of 27% to 29% – and accomplished an inventory turn rate of 4.5 times, contributing to $399 million in cash flow from operations. THE HIGHEST STANDARDS ACHIEVING RESULTS: GROSS PROFIT: $2.79 B | NET SALES: $9.72 B | NET INCOME: $613.4 M* *Includes a $207.3 million, or $2.82 per share, income tax benefit as a result of the Tax Cuts and Jobs Act of 2017. 2017 ANNUAL REPORT 3 4 RELIANCE STEEL & ALUMINUM CO. Reliance prioritizes maintaining a strong balance sheet so that as we grow our business, we increase our capacity to give back and provide meaningful stockholder returns. Over $1 billion has been paid to stockholders through dividends and share repurchases during the past five years. In 2017, we achieved our second- highest annual diluted earnings per share of $5.52.* Confidence in Reliance’s outlook led us to repurchase $25 million of our company stock in the fourth quarter of 2017. And believing in our ability to execute profitably and grow our business has resulted in substantial dividend increases over the last several years. In 2017, we paid out $132 million in cash dividends; in the first quarter of 2018 we increased our regular quarterly dividend 11.1% to $0.50 per share, or an annual dividend of $2.00 per share. ONE BILLION RETURNED *See footnote on page 29. BEST IN CLASS: A 2018 FORTUNE WORLD’S MOST ADMIRED COMPANY | #320 ON FORTUNE 500 LIST 2017 ANNUAL REPORT 5 6 RELIANCE STEEL & ALUMINUM CO. Reliance is fully committed to growth. To this end, we have strategically invested $2.3 billion over the last five years. In 2017, we completed our 63rd acquisition since our 1994 IPO, further expanding our geographic presence with a high-value-added, niche player. We spent $162 million in capital expenditures to grow our value-added processing services and geographic coverage. New processing equipment improves the quality and service we provide to our customers which, in turn, increases our profitability. Further, we expanded our operations: a new location in Kentucky supports the increased use of aluminum in automotive; and another in India services global aerospace. In 2018, we are doubling our capacity in South Korea and China to meet the growing needs of our semiconductor customers. TWO BILLION INVESTED MAKING GAINS: PROCESSING SERVICES PERFORMED ON 48% OF ORDERS (UP FROM HISTORICAL 40%) 2017 ANNUAL REPORT 7 8 RELIANCE STEEL & ALUMINUM CO. The health and safety of our employees, customers, and neighbors is a Reliance core value. In 2017, we inaugurated an employee assistance program – Reliance Cares – to support the true source of our company’s success: our over 14,000 employees worldwide. Funded through voluntary contributions, mostly from employees themselves and matched by our company, Reliance Cares provides assistance to any Reliance employee who is impacted by a natural disaster. OUR BEST ASSETS 2017 ANNUAL REPORT 9 10 RELIANCE STEEL & ALUMINUM CO. 2017 ANNUAL REPORT 11 SELECTED CONSOLIDATED FINANCIAL DATA In millions, except share and per share data Year Ended December 31, Income Statement Data: Net sales Cost of sales (exclusive of depreciation and amortization expense) Gross profit(1) Warehouse, delivery, selling, general and administrative expense(2) Depreciation and amortization expense Impairment of long-lived assets Operating income Other expense (income): Interest expense Other expense (income), net(2) Income before income taxes (Benefit) provision for income taxes(3) Net income(3) Less: Net income attributable to noncontrolling interests 2017 2016 2015 2014 2013 $9,721.0 $8,613.4 $9,350.5 $10,451.6 $9,223.8 6,933.2 6,023.1 6,803.6 7,830.6 6,826.2 2,787.8 1,902.8 2,590.3 2,546.9 2,621.0 2,397.6 1,798.1 1,725.3 1,789.8 1,636.0 218.4 4.2 662.4 73.9 4.7 583.8 (37.2) 621.0 7.6 222.0 52.4 517.8 84.6 4.0 429.2 120.1 309.1 4.8 218.5 53.3 549.8 84.3 6.8 458.7 142.5 316.2 4.7 213.8 - 617.4 81.9 (10.8) 546.3 170.0 376.3 4.8 192.4 14.9 554.3 77.5 (1.5) 478.3 153.6 324.7 3.1 Net income attributable to Reliance(3) $613.4 $304.3 $311.5 $371.5 $321.6 Earnings Per Share: Diluted(3) Basic(3) $8.34 $8.42 $4.16 $4.21 $4.16 $4.20 $4.73 $4.78 $4.14 $4.19 Weighted average shares outstanding – diluted 73,539,424 73,120,918 74,902,064 78,615,939 77,646,192 Weighted average shares outstanding – basic 72,851,021 72,362,513 74,096,349 77,682,943 76,844,912 Other Data: Cash flow provided by operations $399.0 $626.5 $1,025.0 $356.0 $633.3 Capital expenditures Cash dividends per share 161.6 1.80 154.9 1.65 172.2 1.60 190.4 1.40 168.0 1.26 Balance Sheet Data (December 31): Working capital Total assets Short-term debt Long-term debt(4) Reliance stockholders' equity $2,347.6 $2,032.5 $1,564.5 $2,458.3 $2,165.5 7,751.0 7,411.3 7,121.6 7,822.4 7,323.6 92.0 1,809.6 4,667.1 82.5 500.8 93.9 36.5 1,847.2 1,428.9 2,209.6 2,055.1 4,148.8 3,914.1 4,099.0 3,874.6 (1) Gross profit, calculated as net sales less cost of sales, is a non-GAAP financial measure as it excludes depreciation and amortization expense associated with the corresponding sales. The majority 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 as shown above as a measure of operating performance. Gross profit is an important operating and financial measure, as fluctuations in our gross profit can have a significant impact on our earnings. Gross profit, as presented, is not necessarily comparable with similarly titled measures for other companies. (2) The adoption of accounting rule changes in 2017 affected the presentation of pension costs. Prior year Warehouse, delivery, selling, general and administrative expense and Other expense (income), net have been retrospectively adjusted to conform to the current presentation. (3) In 2017, we recognized a $207.3 million income tax benefit as a result of the Tax Cuts and Jobs Act of 2017. (4) Long-term debt includes the long-term portion of capital lease obligations. 12 RELIANCE STEEL & ALUMINUM CO. 2017 ANNUAL REPORT 13 FELLOW STOCKHOLDERS 2017 was an exceptional year for Reliance. We focused on the core values that differentiate our company. Our commitment to maximizing gross profit margin, coupled with fantastic performance by our managers in the field, resulted in significant operational milestones. Notably, ongoing modest growth in demand along with a positive pricing environment throughout most of the year helped us grow 2017 net sales by $1.1 billion over 2016 to reach $9.7 billion, the second- highest ever for Reliance. Further, our annual gross profit margin of 28.7% was near the high-end of our target range of 27% to 29%, and produced gross profit dollars of $2.8 billion – the highest in Reliance history. As a result, we generated strong cash flow from operations that allowed us to execute on our growth strategy while also providing meaningful returns to our stockholders. The spring and summer months of 2017 were characterized by a high level of uncertainty related to the pending Section 232 investigation. This, in turn, contributed to increased imports in the marketplace, pressuring metal pricing. At the same time, however, customer demand grew steadily, with our same-store tons sold up 3.6% year-over-year. The improving demand environment along with increased raw material pricing and trade case resolutions in the second half of the year supported higher pricing on nearly every product we offer, resulting in a 9.1% increase in our average selling price in 2017 compared to 2016. 14 RELIANCE STEEL & ALUMINUM CO. NET SALES (IN MILLIONS) $10,451.6 $9,223.8 $9,350.5 $9,721.0 $8,613.4 2013 2014 2015 2016 2017 NET INCOME (IN MILLIONS) $613.4† $371.5 $321.6 $311.5 $304.3 2013 2014 2015 2016 2017 †Includes a $207.3 million, or $2.82 per share, income tax benefit as a result of the Tax Cuts and Jobs Act of 2017. Our managers in the field did an excellent job managing pricing fluctuations, growing our value-added service offerings to customers, controlling expenses, and managing working capital, all of which led to our second highest annual diluted earnings per share of $5.52,* surpassed only in 2008. We continue to be very proud of all of our employees’ hard work and personal commitment to safety and sustainability. Safety is one of Reliance’s core values; maintaining a safe and secure working environment is of the utmost importance. We are also committed to environmental sustainability and continue to work to mitigate the environmental impact of our business. Reliance is proud of our solid growth record, achieved through capital investments and acquisitions. Over the past five years, we have invested a total of $2.3 billion on a combination of capital expenditures – to support customer needs and further drive organic growth – as well as strategic acquisitions of well-managed metals service centers and processors. In 2017 alone, we spent $161.6 million in capital expenditures and completed the acquisition of Ferguson Perforating Company, a niche player in the perforated metals market providing highly-engineered specialty products. We expect 2018 to be no different. Our 2018 capital expenditure budget is $225 million – our highest-ever – with the majority of these investments targeting growth opportunities. We have already completed one acquisition this year: on March 1, 2018, we acquired DuBose National Energy Services, Inc. and its affiliate, DuBose National Energy Fasteners and Machined Parts, Inc., who provide specialty products and high levels of value-added processing to the nuclear industry. We continue to look for well-run businesses that further expand our existing footprint, complement our diversification of products and services, and increase our value-added processing capabilities. We are currently seeing more acquisition opportunities in the market. We believe our investments in cutting-edge, value-added processing equipment have enabled us to increase both our market share and gross profit margin. In 2017, we performed value-added processing services on 48% of our orders, compared to our historical rate of 40%. Additionally, we believe that an efficient inventory position benefits our gross profit margin by allowing us to focus on higher-margin business. Further, our decentralized operating structure allows us to focus on fulfilling small order sizes for our customers, as the majority of our customers purchase in smaller quantities on a just-in-time basis. Our 2017 average order size was only $1,740 and we delivered approximately 40% of our orders within 24 hours. *See footnote on page 29. We continue to benefit from our longtime strategy of serving a broad spectrum of diverse end markets – namely aerospace, automotive, non-residential construction, heavy industry, and energy – which helps mitigate declines in any single end market. Demand for aerospace, one of our top-performing end markets, remains strong with increased activity from many of our defense customers. Our participation in the five-year, $350 million Joint Strike Fighter program that began in 2017 is now fully ramped, and we expect production levels to remain fairly steady in 10% 9% 2017 ANNUAL REPORT 15 RETURN ON EQUITY 15%* 2018. Demand for automotive, which we service mainly through our toll 8% 8% processing operations in the U.S. and Mexico, remains solid. In 2017, we continued to expand our facilities and equipment in order to increase our capacity to support both carbon and aluminum processing for the automotive market. Included in these initiatives was the opening of a new facility in Kentucky given increased activity in that region. Demand in the non-residential construction market – including infrastructure – grew at a steady rate throughout 2017, but still remains far below peak levels experienced in 2006. We are cautiously optimistic that domestic infrastructure spending will strengthen in 2018, with incremental upside possible from federal infrastructure spending. We are also encouraged by early signs of recovery in the heavy industry and energy markets. Importantly, Reliance businesses servicing the energy market contributed positively to our earnings in the first quarter of 2017 for the first time since the second quarter of 2015, and continued the trend for the rest of the year. The increased activity in energy is a positive sign and we are well positioned to support an upturn in demand as this market continues to recover. 2013 2014 2015 2016 2017 EARNINGS PER SHARE (DILUTED) $8.34† Because it provides the foundation for us to continue executing our growth and stockholder return activities, maintaining a strong balance $4.73 sheet and solid overall liquidity position remains a continual focus. In $4.14 $4.16 $4.16 2017, we used our strong cash flow from operations to fund $161.6 million in capital expenditures, $132.0 million in dividends, $37.8 million in acquisitions, and $25.0 million in share repurchases. We have paid regular quarterly dividends for 58 consecutive years and have increased our dividend 25 times since our IPO in 1994 – including our most recent increase of 11.1% to $0.50 per share, in the first quarter of 2018. We will continue to prioritize returning value to our stockholders through increased dividend payments and opportunistic share repurchases. On behalf of Reliance, we would like to express our gratitude to our loyal customers, suppliers, and stockholders for their continued support. We also thank our over 14,000 employees for their dedication to making Reliance a best-in-class company. As we often state, our employees 2013 2014 2015 2016 2017 †Includes a $207.3 million, or $2.82 per share, income tax benefit as a result of the Tax Cuts and Jobs Act of 2017. 16 RELIANCE STEEL & ALUMINUM CO. CASH FLOW FROM OPERATIONS (IN MILLIONS) $1,025.0 $633.3 $626.5 $356.0 $399.0 are our most important assets and we are proud to announce that in 2017, we launched Reliance Cares, an employee relief fund available to any of our employees, worldwide, impacted by a natural disaster. In the wake of Hurricanes Harvey and Irma, Reliance Cares provided financial assistance to several of our impacted employees. Both demand and pricing have been strong thus far in 2018. Given the steel and aluminum tariffs put into effect by the U.S. Government, purchasing patterns and pricing have been more volatile than typical. Reliance will continue to focus on our core values and will navigate the current market conditions with a focus on servicing our customers while maximizing our gross profit margins and leveraging our strong position with domestic producers to improve our profitability and strong cash flows. Our repurchase of $25.0 million of our common stock during the fourth quarter of 2017 and the 11.1% increase in our quarterly dividend to total $2.00 annually, effective for the first quarter of 2018, reflect the confidence our Board and management team have in our outlook and ability to execute in the current favorable environment. We look forward 2013 2014 2015 2016 2017 to a successful year ahead. Gregg J. Mollins | President and Chief Executive Officer Karla R. Lewis | Senior Executive Vice President and Chief Financial Officer James D. Hoffman | Executive Vice President and Chief Operating Officer EXECUTIVE LEADERSHIP: JIM HOFFMAN | KARLA LEWIS | GREGG MOLLINS 2017 ANNUAL REPORT 17 18 RELIANCE STEEL & ALUMINUM CO. SELECTED CONSOLIDATED FINANCIAL DATA In millions, other than per share data Year Ended December 31, 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Income Statement Data: Net sales Operating income(1) Pretax income(2) Income taxes(3) Net income attributable to Reliance(3) Weighted average shares outstanding – diluted Balance Sheet Data: Current assets Working capital Net fixed assets Total assets(4) Current liabilities Short-term debt Long-term debt(4) Total Reliance stockholders’ equity Per Share Data: Earnings – diluted(3) Dividends Book value(5) Ratio Analysis: $9,721.0 $8,613.4 $9,350.5 $10,451.6 $9,223.8 $8,442.3 $8,134.7 $6,312.8 $5,318.1 $8,718.8 $7,255.7 662.4 583.8 (37.2) 613.4 73.5 517.8 429.2 120.1 304.3 73.1 549.8 458.7 142.5 311.5 74.9 617.4 546.3 170.0 371.5 78.6 $3,051.3 $2,688.5 $2,554.2 $3,121.1 $2,738.9 $2,277.4 $2,274.7 $1,700.9 $1,390.9 $2,302.4 $1,721.4 2,347.6 1,656.3 7,751.0 703.7 92.0 1,809.6 4,667.1 2,032.5 1,662.2 7,411.3 656.0 82.5 1,847.2 4,148.8 1,564.5 1,635.5 7,121.6 989.7 500.8 1,428.9 3,914.1 2,458.3 1,656.4 7,822.4 662.8 93.9 2,209.6 4,099.0 $8.34 $1.80 $4.16 $1.65 $4.16 $1.60 $4.73 $1.40 $4.14 $1.26 $5.33 $0.80 $4.58 $0.48 $2.61 $0.40 $2.01 $0.40 $6.56 $0.40 $5.36 $0.32 $64.29 $57.07 $54.59 $53.03 $49.99 $46.82 $41.92 $37.83 $35.34 $33.17 $28.12 Return on Reliance stockholders’ equity(3), (6) Current ratio Net debt-to-total capital ratio(7) Gross profit margin(8) Operating income margin(1) Pretax income margin(2) Net income margin – Reliance(3) 14.8% 4.3 27.2% 28.7% 6.8% 6.0% 6.3% 7.8% 4.1 30.3% 30.1% 6.0% 5.0% 3.5% 8.0% 2.6 31.8% 27.2% 5.9% 4.9% 3.3% 9.6% 4.7 34.9% 25.1% 5.9% 5.2% 3.6% (1) Operating income represents net sales less cost of sales, warehouse, delivery, selling, general and administrative expense, depreciation and amortization expense and impairment of long-lived assets. Certain reclassifications were made to 2007 to include amortization expense in the calculation of Operating income. In 2017, 2016, 2015, 2014, 2013 and 2012, the calculation of Operating income includes various non-recurring charges and credits, including impairment charges in 2017, 2016, 2015, 2013 and 2012. Additionally, the adoption of an accounting rule change in 2017 affected the presentation of operating income. Prior year operating income and margin amounts have been retrospectively adjusted to conform to the current presentation. (2) The adoption of accounting rule changes in 2009 affected the presentation of noncontrolling interests. Prior year pretax income and margin amounts have been retrospectively adjusted to conform to the current presentation. (3) In 2017, we recognized a $207.3 million income tax benefit as a result of the Tax Cuts and Jobs Act of 2017. (4) Long-term debt includes the long-term portion of capital lease obligations. The adoption of accounting rule changes in 2015 affected the presentation of debt issuance costs. Prior year Total assets and Long-term debt amounts have been retrospectively adjusted to conform to the current presentation. (5) Book value per share is calculated as Reliance stockholders’ equity divided by number of common shares outstanding as of December 31 of each year. 554.3 478.3 153.6 321.6 77.6 2,165.5 1,603.9 7,323.6 573.4 36.5 2,055.1 3,874.6 661.6 609.4 201.1 403.5 75.7 1,699.2 1,240.7 5,846.7 578.2 83.6 1,113.0 3,558.4 574.8 511.6 162.4 343.8 75.0 1,698.3 1,105.5 5,592.3 576.4 12.2 1,306.9 3,143.9 364.6 296.5 98.6 194.4 74.5 1,192.3 1,025.3 4,659.1 508.6 86.2 848.0 858.5 766.6 282.9 482.8 73.6 1,652.2 998.7 650.2 93.9 1,664.9 2,431.4 727.4 654.7 246.4 408.0 76.1 1,121.5 824.6 599.9 71.8 1,004.0 2,106.2 4,293.5 5,184.8 3,974.2 2,823.7 2,606.4 9.0% 4.8 34.1% 26.0% 6.0% 5.2% 3.5% 12.8% 3.9 23.6% 26.1% 7.8% 7.2% 4.8% 12.2% 3.9 28.2% 24.4% 7.1% 6.3% 4.2% 7.5% 3.3 23.3% 25.1% 5.8% 4.7% 3.1% 22.9% 3.5 41.3% 24.8% 9.8% 8.8% 5.5% 23.4% 2.9 32.2% 25.3% 10.0% 9.0% 5.6% 254.8 195.5 46.3 148.2 73.7 973.3 981.3 417.6 86.4 839.3 6.1% 3.3 25.3% 26.3% 4.8% 3.7% 2.8% In millions, other than per share data Income Statement Data: Net sales Operating income(1) Pretax income(2) Income taxes(3) Net income attributable to Reliance(3) Weighted average shares outstanding – diluted Balance Sheet Data: Current assets Working capital Net fixed assets Total assets(4) Current liabilities Short-term debt Long-term debt(4) Per Share Data: Earnings – diluted(3) Dividends Book value(5) Ratio Analysis: Total Reliance stockholders’ equity 662.4 583.8 (37.2) 613.4 73.5 2,347.6 1,656.3 7,751.0 703.7 92.0 1,809.6 4,667.1 517.8 429.2 120.1 304.3 73.1 2,032.5 1,662.2 7,411.3 656.0 82.5 1,847.2 4,148.8 549.8 458.7 142.5 311.5 74.9 1,564.5 1,635.5 7,121.6 989.7 500.8 1,428.9 3,914.1 617.4 546.3 170.0 371.5 78.6 2,458.3 1,656.4 7,822.4 662.8 93.9 2,209.6 4,099.0 2017 ANNUAL REPORT 19 Year Ended December 31, 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 $9,721.0 $8,613.4 $9,350.5 $10,451.6 $9,223.8 $8,442.3 $8,134.7 $6,312.8 $5,318.1 $8,718.8 $7,255.7 554.3 478.3 153.6 321.6 77.6 661.6 609.4 201.1 403.5 75.7 574.8 511.6 162.4 343.8 75.0 364.6 296.5 98.6 194.4 74.5 254.8 195.5 46.3 148.2 73.7 858.5 766.6 282.9 482.8 73.6 727.4 654.7 246.4 408.0 76.1 $3,051.3 $2,688.5 $2,554.2 $3,121.1 $2,738.9 $2,277.4 $2,274.7 $1,700.9 $1,390.9 $2,302.4 $1,721.4 2,165.5 1,603.9 7,323.6 573.4 36.5 2,055.1 3,874.6 1,699.2 1,240.7 5,846.7 578.2 83.6 1,113.0 3,558.4 1,698.3 1,105.5 5,592.3 576.4 12.2 1,306.9 3,143.9 1,192.3 1,025.3 4,659.1 508.6 86.2 848.0 973.3 981.3 1,652.2 998.7 1,121.5 824.6 4,293.5 5,184.8 3,974.2 417.6 86.4 839.3 650.2 93.9 1,664.9 2,431.4 599.9 71.8 1,004.0 2,106.2 2,823.7 2,606.4 $8.34 $1.80 $4.16 $1.65 $4.16 $1.60 $4.73 $1.40 $4.14 $1.26 $5.33 $0.80 $4.58 $0.48 $2.61 $0.40 $2.01 $0.40 $6.56 $0.40 $5.36 $0.32 $64.29 $57.07 $54.59 $53.03 $49.99 $46.82 $41.92 $37.83 $35.34 $33.17 $28.12 Return on Reliance stockholders’ equity(3), (6) Current ratio Net debt-to-total capital ratio(7) Gross profit margin(8) Operating income margin(1) Pretax income margin(2) Net income margin – Reliance(3) 14.8% 4.3 27.2% 28.7% 6.8% 6.0% 6.3% 7.8% 4.1 30.3% 30.1% 6.0% 5.0% 3.5% 8.0% 2.6 31.8% 27.2% 5.9% 4.9% 3.3% 9.6% 4.7 34.9% 25.1% 5.9% 5.2% 3.6% 9.0% 4.8 34.1% 26.0% 6.0% 5.2% 3.5% 12.8% 3.9 23.6% 26.1% 7.8% 7.2% 4.8% 12.2% 3.9 28.2% 24.4% 7.1% 6.3% 4.2% 7.5% 3.3 23.3% 25.1% 5.8% 4.7% 3.1% 6.1% 3.3 25.3% 26.3% 4.8% 3.7% 2.8% 22.9% 3.5 41.3% 24.8% 9.8% 8.8% 5.5% 23.4% 2.9 32.2% 25.3% 10.0% 9.0% 5.6% (6) Return on Reliance stockholders’ equity is based on the beginning of year equity amount, except for 2015, which is adjusted for $355.5 million of share repurchases. (7) Net debt-to-total capital ratio is calculated as total debt (net of cash) divided by Reliance stockholders’ equity plus total debt (net of cash). The adoption of accounting rule changes in 2015 affected the calculation of net-debt-to-total capital ratio. (8) 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 expense associated with the corresponding sales. The majority 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 margin as shown above as a measure of operating performance. Gross profit margin is an important operating and financial measure, as fluctuations in our gross profit margin can have a significant impact on our earnings. Gross profit margin, as presented, is not necessarily comparable with similarly titled measures for other companies. 20 RELIANCE STEEL & ALUMINUM CO. GEOGRAPHIC PRESENCE S TAT E S Alabama Arizona Arkansas California Colorado Georgia Idaho Illinois Indiana Iowa Louisiana Maryland Montana Nevada Ohio Oklahoma Massachusetts New Hampshire Oregon Texas Utah Virginia Michigan Minnesota New Jersey Pennsylvania Washington New Mexico Rhode Island Wisconsin Connecticut Kansas Mississippi New York South Carolina Florida Kentucky Missouri North Carolina Tennessee IN T E R N AT IO N A L Australia Mexico Belgium Canada China France India Malaysia Singapore South Korea Turkey The U.A.E. United Kingdom SALES BY PRODUCT Carbon steel plate Carbon steel structurals Carbon steel tubing Hot-rolled steel sheet & coil Carbon steel bar Galvanized steel sheet & coil Cold-rolled steel sheet & coil Heat-treated aluminum plate Aluminum bar & tube Common alloy aluminum sheet & coil Common alloy aluminum plate 11% 10% 10% 7% 6% 5% 3% 7% 6% 4% 1% Heat-treated aluminum sheet & coil Stainless steel bar & tube Stainless steel sheet & coil Stainless steel plate Alloy bar and rod Alloy tube Alloy plate, sheet & coil Toll processing – aluminum, carbon steel, and stainless steel* Miscellaneous, including brass, copper, titanium, manufactured parts and scrap 1% 6% 6% 2% 4% 1% 1% 4% 5% *Includes revenues for logistics services provided by our toll processing companies. SALES BY REGION SALES BY COMMODITY 2017 ANNUAL REPORT 21 TOLL PROCESSING & LOGISTICS OTHER ALLOY STAINLESS STEEL ALUMINUM 4% 5% 6% 14% 19% CARBON STEEL 52% MIDWEST WEST/SOUTHWEST SOUTHEAST INTERNATIONAL MID-ATLANTIC NORTHEAST PACIFIC NORTHWEST MOUNTAIN 32% 22% 18% 9% 6% 6% 4% 3% 22 RELIANCE STEEL & ALUMINUM CO. RELIANCE LOCATIONS R E L I A N CE DI V I S ION S Bralco Metals Los Angeles, CA – Headquarters 714-736-4800 Albuquerque, NM 505-345-0959 Dallas, TX 972-276-2676 Phoenix, AZ 602-252-1918 Seattle, WA 253-395-0614 Wichita, KS 316-838-9351 Aerotech Alloys A Bralco Metals Company Temecula, CA 951-694-1917 Affiliated Metals A Bralco Metals Company Salt Lake City, UT 801-363-1711 Olympic Metals A Bralco Metals Company Denver, CO 303-286-9700 Central Plains Steel Co. Wichita, KS 316-636-4500 MetalCenter Los Angeles, CA 562-944-3322 Reliance Aerospace Solutions Cypress, CA 877-727-6073 Reliance Metalcenter Colorado Springs, CO 719-390-4911 Dallas, TX 817-640-7222 Oakland, CA 510-476-4400 Phoenix, AZ 602-275-4471 Salt Lake City, UT 801-974-5300 San Antonio, TX 210-661-2301 San Diego, CA 619-263-2141 Reliance Steel Company Albuquerque, NM 505-247-1441 Los Angeles, CA 323-583-6111 Tube Service Co. Los Angeles, CA – Headquarters 562-695-0467 Denver, CO 303-321-9200 Phoenix, AZ 602-267-9865 Portland, OR 503-944-5420 San Diego, CA 619-579-3011 San Jose, CA 408-946-5500 S UB S IDI A R IE S All Metal Services Limited A Subsidiary of Reliance Metals UK Holding Limited — Holding Company London, United Kingdom – Headquarters 44 189 544 4066 Belfast, United Kingdom 44 289 073 9648 Birmingham, United Kingdom 44 167 543 0307 Bolton, United Kingdom 44 194 284 0777 Bristol, United Kingdom 44 117 982 2484 Losse, France 33 558 936 800 All Metal Services India Private Limited A Subsidiary of All Metal Services Limited Belagavi, India 91 802 837 9124 All Metal Services Ltd. (Xi’an) A Subsidiary of All Metal Services Limited Xi’an, People’s Republic of China 86 29 86125300 All Metal Services (Malaysia) Sdn. Bhd. A Subsidiary of All Metal Services Limited Selangor Darul Ehsan, Malaysia 60 378 035 643 Allegheny Steel Distributors, Inc. Pittsburgh, PA 412-767-5000 American Metals Corporation Doing Business as American Steel Portland, OR – Corporate Office 503-651-6700 Fresno, CA 559-266-0881 Sacramento, CA 916-371-7700 Seattle, WA 253-437-4080 Haskins Steel Company A Division of American Metals Corporation Spokane, WA 509-535-0657 Lampros Steel A Division of American Metals Corporation Portland, OR 503-285-6667 Alaska Steel Company A Subsidiary of American Metals Corporation Anchorage, AK – Headquarters 907-561-1188 Fairbanks, AK 907-456-2719 Kenai, AK 907-283-3880 AMI Metals, Inc. Nashville, TN – Corporate Office 615-377-0400 Fort Worth, TX 817-831-9586 Los Angeles, CA 909-429-1336 Seattle, WA – Sales Office 253-735-0181 Birmingham, AL 205-781-0317 Chicago, IL 815-937-1970 2017 ANNUAL REPORT 23 Continental Alloys & Services Limited A Subsidiary of Reliance Metals UK Holding Limited — Holding Company Brechin, Scotland 44 1356 625 515 Chicago, IL – Sales Office 708-429-2244 Peterhead, Scotland 44 1779 480 420 Spokane, WA 509-570-5880 St. Louis, MO 636-946-9492 Swedesboro, NJ 856-241-9180 Wichita, KS 316-945-7771 AMI Metals Aero Services Ankara Havacılık Anonim Şirketi A Subsidiary of AMI Metals, Inc. Ankara, Turkey 90 312 810 0000 AMI Metals Europe SPRL A Subsidiary of AMI Metals, Inc. Gosselies, Belgium 32 71 37 67 99 AMI Metals France A Subsidiary of AMI Metals, Inc. Figeac, France 33 565 503 460 AMI Metals UK Limited A Subsidiary of Reliance Metals UK Holding Limited — Holding Company Milton Keynes, United Kingdom – Headquarters 44 845 853 6149 Ellesmere Port, United Kingdom 44 151 355 6035 Cleveland, OH 216-446-6840 Houston, TX 713-462-4449 Philadelphia, PA 610-705-0477 Portland, OR 503-228-3355 Chapel Steel Canada, Ltd. A Subsidiary of Reliance Metals Canada Holding – Holding Company Hamilton, Ontario, Canada 289-780-0570 Chatham Steel Corporation Savannah, GA – Headquarters 912-233-4182 Birmingham, AL 205-791-2261 Columbia, SC 803-799-8888 Durham, NC 919-682-3388 Orlando, FL 407-859-0310 Best Manufacturing, Inc. Jonesboro, AR 870-931-9533 Clayton Metals, Inc. Chicago, IL – Headquarters 630-860-7000 Bralco Metals (Australia) Pty Ltd Doing Business as Airport Metals (Australia) Melbourne, Australia 61 3 9310 5566 Los Angeles, CA 562-921-7070 Newark, NJ 973-588-1100 CCC Steel, Inc. Los Angeles, CA 310-637-0111 IMS Steel A Division of CCC Steel, Inc. Salt Lake City, UT 801-973-1000 Chapel Steel Corp. Philadelphia, PA – Corporate Office 215-793-0899 Continental Alloys & Services Inc. Houston, TX – Headquarters 281-376-9600 Lafayette, LA 337-837-9311 Continental Alloys & Services, Inc. A Subsidiary of Reliance Metals Canada Holding Limited — Holding Company Calgary, Alberta, Canada 403-216-5150 Continental Alloys & Services Pte. Ltd. A Subsidiary of Reliance Asia Holding Pte. Ltd. — Holding Company Jurong, Singapore 65 6690 0178 Continental Alloys & Services (Malaysia) Sdn. Bhd. A Subsidiary of Continental Alloys & Services, Pte. Ltd. Senai, Johor, Malaysia 6 07 599 9975 Continental Alloys Middle East FZE A Subsidiary of Reliance Steel & Aluminum Co. Dubai, United Arab Emirates 971 4 8809770 Crest Steel Corporation Riverside, CA 951-727-2600 Delta Steel, Inc. Houston, TX – Headquarters 713-635-1200 Cedar Hill, TX 817-701-5213 Cedar Hill, TX 972-299-6497 Chicago, IL 708-757-7198 Fort Worth, TX 817-293-5015 San Antonio, TX 210-661-4641 Smith Pipe & Steel Company A Subsidiary of Delta Steel, Inc. Phoenix, AZ 602-257-9494 Diamond Manufacturing Company Wyoming, PA – Headquarters 800-233-9601 Cedar Hill, TX 972-291-8800 Michigan City, IN 219-874-2374 112411_2017_Reliance_Text_R1.indd 23 3/23/18 10:50 PM 24 RELIANCE STEEL & ALUMINUM CO. McKey Perforating Co. A Division of Diamond Manufacturing Company New Berlin, WI 800-233-9601 Manchester, TN 931-723-3636 Perforated Metals Plus A Division of Diamond Manufacturing Company Charlotte, NC 704-598-0443 Ferguson Perforating Company A Subsidiary of Diamond Manufacturing Company Providence, RI – Headquarters 800-233-9601 New Castle, PA 401-941-8876 DuBose National Energy Fasteners & Machined Parts, Inc. Cleveland, OH 216-362-1700 DuBose National Energy Services, Inc. Clinton, NC 910-590-2151 Durrett Sheppard Steel Co., Inc. Baltimore, MD 410-633-6800 Earle M. Jorgensen Company Los Angeles, CA – Headquarters 323-567-1122 Atlanta, GA 678-894-7241 Birmingham, AL 205-814-0043 Boston, MA 508-435-6854 Charlotte, NC 704-588-3001 Chicago, IL 847-301-6100 Cincinnati, OH 513-771-3223 Cleveland, OH 330-425-1500 Cleveland, OH (Plate) 330-963-8150 Dallas, TX 214-741-1761 Denver, CO 303-287-0381 Detroit, MI 734-402-8110 Hartford, CT 508-435-6854 Houston, TX 713-672-1621 Indianapolis, IN 317-838-8899 Kansas City, MO 816-483-4140 Lafayette, LA 713-672-1621 Memphis, TN 901-317-4300 Minneapolis, MN 763-784-5000 Oakland, CA 510-487-2700 Orlando, FL 704-421-7227 Philadelphia, PA 215-949-2850 Phoenix, AZ 602-272-0461 Portland, OR 503-283-2251 Quad Cities, IA 563-285-5340 Richmond, VA 804-732-7491 Rochester, NY 585-475-1050 Salt Lake City, UT 330-425-1500 Seattle, WA 253-872-0100 St. Louis, MO 314-291-6080 Tulsa, OK 918-835-1511 Steel Bar A Division of Earle M. Jorgensen Company Charlotte, NC 336-294-0053 Reliance Metals Canada Limited A Subsidiary of Earle M. Jorgensen Company Edmonton, Alberta, Canada – Corporate Office 780-801-4114 Earle M. Jorgensen (Canada) A Division of Reliance Metals Canada Limited Edmonton, Alberta, Canada – Headquarters 780-801-4015 Montreal, Quebec, Canada 450-661-5181 North Bay, Ontario, Canada 705-474-0866 Quebec City, Quebec, Canada 418-870-1422 Toronto, Ontario, Canada 905-564-0866 Encore Metals A Division of Reliance Metals Canada Limited Vancouver, British Columbia, Canada – Headquarters 604-940-0439 Calgary, Alberta, Canada 403-236-1418 Edmonton, Alberta, Canada 780-436-6660 Prince George, British Columbia, Canada 250-563-3343 Winnipeg, Manitoba, Canada 204-663-1450 Team Tube A Division of Reliance Metals Canada Limited Vancouver, British Columbia, Canada – Headquarters 604-468-4747 Calgary, Alberta, Canada 403-279-8131 Edmonton, Alberta, Canada 780-462-7222 Montreal, Quebec, Canada 450-978-8877 Toronto, Ontario, Canada 905-878-1156 Encore Metals USA A Division of Earle M. Jorgensen Company Portland, OR 503-620-8810 Salt Lake City, UT 801-383-3808 Earle M. Jorgensen (Asia) Sdn. Bhd. A Subsidiary of Reliance Asia Holding Pte. Ltd. — Holding Company Nusajaya, Malaysia 60 7 531 9155 Feralloy Corporation Chicago, IL – Corporate Office 773-380-1500 Charleston, SC 843-336-4107 Decatur, AL 256-301-0500 Portage, IN 219-787-9698 GH Metal Solutions, Inc. A Subsidiary of Feralloy Corporation Fort Payne, AL – Headquarters 256-845-5411 Charleston, SC 843-336-4107 Decatur, AL 256-845-5411 Fort Payne, AL (East) 256-845-5411 Acero Prime S. de R.L. de C.V A Joint Venture of Feralloy Corporation 60% Owned San Luis Potosí, Mexico – Headquarters 52 444 870 7700 Monterrey, Mexico 52 818 000 5300 Ramos Arizpe, Mexico 52 844 450 6400 Toluca, Mexico 52 722 262 5500 Feralloy Processing Company A Joint Venture of Feralloy Corporation 51% Owned Portage, IN 219-787-8773 Indiana Pickling & Processing Company A Joint Venture of Feralloy Corporation 56% Owned Portage, IN 219-787-8889 Oregon Feralloy Partners A Joint Venture of Feralloy Corporation 40% Owned Portland, OR 503-286-8869 Fox Metals and Alloys, Inc. Houston, TX 281-890-6666 Infra-Metals Co. Philadelphia, PA – Corporate Office 215-741-1000 Baltimore, MD 410-355-1664 Hallandale, FL – Sales Office 954-454-1564 Marseilles, IL 815-795-5002 New Boston,OH 740-353-1350 Petersburg, VA 804-957-5900 Tampa, FL 813-626-6005 Wallingford, CT 203-294-2980 Athens Steel A Division of Infra-Metals Co. Atlanta, GA 706-552-3850 IMS Steel Co. A Division of Infra-Metals Co. Atlanta, GA 404-577-5005 Liebovich Bros., Inc. Rockford, IL – Corporate Office 815-987-3200 Custom Fab Company A Division of Liebovich Bros., Inc. Rockford, IL 815-987-3210 Good Metals Company A Division of Liebovich Bros., Inc. Grand Rapids, MI 616-241-4425 Hagerty Steel & Aluminum Company A Division of Liebovich Bros., Inc. Peoria, IL – Headquarters 309-699-7251 Bridgeton, MO 309-699-7251 Liebovich Steel & Aluminum Company A Division of Liebovich Bros., Inc. Rockford, IL – Headquarters 815-987-3200 Cedar Rapids, IA 319-366-8431 Green Bay, WI 920-759-3500 Rockford, IL 815-964-9471 Rockford, IL 815-874-8536 2017 ANNUAL REPORT 25 Metals USA, Inc. Ft. Lauderdale, FL – Corporate Office 954-202-4000 Metals USA Carbon Flat Rolled, Inc. A Subsidiary of Metals USA, Inc. Germantown, WI 262-255-4444 Horicon, WI 920-485-9750 Jeffersonville, IN 812-288-8906 Liberty, MO 816-415-0004 Madison, IL 618-452-6000 Northbrook, IL 847-291-2400 Randleman, NC 336-498-8900 Springfield, OH 937-882-6354 Walker, MI 616-453-9845 Wooster, OH 330-264-8416 Lynch Metals A Division of Metals USA Carbon Flat Rolled, Inc. Union, NJ – Headquarters 908-686-8401 Anaheim, CA 714-238-7240 Ohio River Metal Services, Inc. A Subsidiary of Metals USA Carbon Flat Rolled, Inc. Jeffersonville, IN 812-282-4770 Metals USA Plates and Shapes, Inc. A Subsidiary of Metals USA, Inc. Ambridge, PA 724-266-7708 Fairless Hills, PA 215-337-7000 Greensboro, NC 336-674-7991 Jacksonville, FL 904-766-0003 Langhorne, PA 267-580-2100 Mobile, AL 251-456-4531 26 RELIANCE STEEL & ALUMINUM CO. Newark, NJ 973-242-1000 Oakwood, GA 770-536-1214 Philadelphia, PA 215-673-9300 Seekonk, MA 508-399-8500 Waggaman, LA 504-431-7010 York, PA 717-757-3549 Gregor Technologies, LLC A Subsidiary of Metals USA Plates and Shapes, Inc. Torrington, CT 860-482-2569 Metals USA Plates and Shapes Southcentral, Inc. A Subsidiary of Metals USA, Inc. Enid, OK 580-233-0411 Muskogee, OK 918-487-6800 Tulsa, OK 918-583-2222 The Richardson Trident Company, LLC A Subsidiary of Metals USA Plates and Shapes Southcentral, Inc. Richardson, TX – Headquarters 972-231-5176 Odessa, TX 432-561-5446 Tulsa, OK 918-252-5781 Metalweb Limited Birmingham, United Kingdom – Headquarters 44 121 328 7700 Kilkeel, United Kingdom 44 284 176 3050 London, United Kingdom 44 199 245 0300 Manchester, United Kingdom 44 161 483 9662 Oxford, United Kingdom 44 186 588 4499 National Specialty Alloys, Inc. Houston, TX – Headquarters 281-345-2115 Anaheim, CA 714-870-7800 Buford, GA 770-945-9255 PDM (Feralloy) A Division of PDM Steel Service Centers, Inc. Stockton, CA 209-234-0548 Aleaciones Especiales de México S. de R.L. de C.V. A Subsidiary of National Specialty Alloys, Inc. Cuautitlán, Mexico 52 55 2225 0835 Phoenix Corporation Doing Business as Phoenix Metals Company Atlanta, GA – Headquarters 770-447-4211 Northern Illinois Steel Supply Co. Channahon, IL 815-467-9000 Pacific Metal Company Portland, OR – Headquarters 503-454-1051 Billings, MT 406-245-2210 Boise, ID 208-323-8045 Eugene, OR 541-485-1876 Seattle, WA 253-796-2840 Spokane, WA 509-535-0326 PDM Steel Service Centers, Inc. Elk Grove, CA – Headquarters 916-513-4548 Denver, CO 303-297-1456 Fresno, CA 559-442-1410 Grand Junction, CO – Sales Office 970-858-3441 Las Vegas, NV 702-413-0067 Provo, UT 801-798-8676 Reno, NV 775-358-1441 Santa Clara, CA 408-988-3000 Stockton, CA 209-943-0513 Vancouver, WA 360-225-1133 Birmingham, AL 205-841-7477 Charlotte, NC 704-588-7075 Cincinnati, OH 513-727-4763 Gary, IN 219-886-2777 Kansas City, KS 913-321-5200 Nashville, TN 931-486-1456 Philadelphia, PA 215-295-9512 Philadelphia, PA – Sales Office 610-321-0866 Richmond, VA 804-222-5052 Russellville, AR 479-452-3802 St. Louis, MO 636-379-4050 Tampa, FL 813-626-8999 Aluminum & Stainless A Division of Phoenix Corporation Lafayette, LA – Headquarters 337-837-4381 New Orleans, LA 504-586-9191 Precision Flamecutting and Steel, Inc. Houston, TX 281-477-1600 Precision Strip Inc. Minster, OH – Headquarters 419-628-2343 Bowling Green, KY 270-282-8420 Dayton, OH 937-667-6255 Indianapolis, IN 765-778-4452 Kenton, OH 419-674-4186 Middletown, OH 513-423-4166 Portage, IN 219-850-5080 Rockport, IN 812-362-6480 Talladega, AL 256-315-2345 Toledo, OH 419-661-1100 Vonore, TN 423-884-2450 Woodburn, KY 270-542-6100 Woodhaven, MI 734-301-4001 Reliance Metalcenter Asia Pacific Pte. Ltd. A Subsidiary of Reliance Asia Holding Pte. Ltd. — Holding Company Jurong, Singapore 65 6265 1211 Service Steel Aerospace Corp. Seattle, WA – Headquarters 253-627-2910 Canton, OH 330-833-5800 Wichita, KS 316-838-7737 2017 ANNUAL REPORT 27 Spartanburg, SC 864-599-9988 Viking Materials, Inc. Minneapolis, MN – Headquarters 612-617-5800 East Tennessee Steel Supply A Division of Siskin Steel & Supply Company, Inc. Morristown, TN 423-587-3500 Chicago, IL 847-451-7171 Yarde Metals, Inc. Hartford, CT – Headquarters 860-406-6061 Greensboro, NC 336-500-0535 Long Island, NY 631-232-1600 Mansfield, MA 508-261-1142 Morristown, NJ 973-463-1166 Nashua, NH 603-635-1266 Philadelphia, PA 610-495-7545 Sugar Steel Corporation Chicago, IL – Headquarters 708-757-9500 Evansville, IN 812-428-5490 Sunbelt Steel Texas, Inc. Houston, TX – Headquarters 713-937-4300 Lafayette, LA 337-330-4140 Tubular Steel, Inc. St. Louis, MO – Headquarters 314-851-9200 Katy, TX 281-371-5200 Hazelwood, MO 314-524-6600 Rialto, CA 909-429-6900 Savannah, GA 912-748-2405 Staunton, IL 618-635-3695 Westmont, IL – Sales Office 630-515-5500 Dynamic Metals International A Division of Service Steel Aerospace Corp. Bristol, CT 860-688-8393 Valex Corp. Ventura, CA 805-658-0944 United Alloys Aircraft Metals A Division of Service Steel Aerospace Corp. Los Angeles, CA 323-588-2688 Valex China Co., Ltd. A Subsidiary of Valex Corp. Shanghai, People’s Republic of China 86 21 5818 3189 Siskin Steel & Supply Company, Inc. Chattanooga, TN – Headquarters 423-756-3671 Louisville, KY 502-716-5140 Nashville, TN 615-242-4444 Valex Semiconductor Materials (Zhejiang) Co., Ltd. A Subsidiary of Valex Corp. Haiyan Economic Development Zone, People’s Republic of China 86 21 5818 3189 Valex Korea Co., Ltd. A 95% Owned Subsidiary of Valex Corp. Seoul, Republic of Korea 82 31 683 0119 28 RELIANCE STEEL & ALUMINUM CO. CORPORATE DIRECTORY D I R E C T O R S O F F I C E R S Gregg J. Mollins President and Chief Executive Officer Karla R. Lewis Senior Executive Vice President and Chief Financial Officer James D. Hoffman Executive Vice President and Chief Operating Officer William K. Sales, Jr. Executive Vice President, Operations Stephen P. Koch Senior Vice President, Operations Michael P. Shanley Senior Vice President, Operations William A. Smith II Senior Vice President, General Counsel, and Corporate Secretary Arthur Ajemyan Vice President and Corporate Controller Brenda S. Miyamoto Vice President, Corporate Initiatives Donald J. Prebola Vice President, Health, Safety, and Human Resources John A. Shatkus Vice President, Internal Audit Silva Yeghyayan Vice President, Tax Mark V. Kaminski(1), (2), (3), (4) Chairman of the Board Executive Chairman and Director Graniterock Gregg J. Mollins President and Chief Executive Officer Sarah J. Anderson(1), (2), (4) Former Partner Ernst & Young LLP A public accounting firm Karen W. Colonias(1), (2), (3) President and Chief Executive Officer Simpson Manufacturing Co., Inc. John G. Figueroa(1), (3), (4) Chief Executive Officer Genoa Healthcare Thomas W. Gimbel(1), (4) Former Trustee The Florence Neilan Trust David H. Hannah Former Executive Chairman of the Board Reliance Steel & Aluminum Co. Douglas M. Hayes(1), (2), (3), (4) President Hayes Capital Corporation An investment banking firm Robert A. McEvoy (1), (3), (4) Former Managing Director Goldman Sachs Andrew G. Sharkey III(1), (2), (3), (4) Former President and Chief Executive Officer American Iron and Steel Institute Douglas W. Stotlar(1), (2), (3) Former President and Chief Executive Officer Con-way Inc. (1) Independent Director (2) Member of the Audit Committee (3) Member of the Compensation Committee (4) Member of the Nominating and Governance Committee CORPORATE INFORMATION T R A N S F E R A G E N T & R E G I S T R A R American Stock Transfer & Trust Company 6201 15th Avenue Brooklyn, NY 11219 800-937-5449 718-921-8124 www.amstock.com I N D E P E N D E N T A U D I T O R S KPMG LLP Los Angeles, CA R E L I A N C E S T E E L & A L U M I N U M C O. C O R P O R AT E H E A D Q U A R T E R S 350 South Grand Avenue Suite 5100 Los Angeles, CA 90071 213-687-7700 www.rsac.com A N N U A L M E E T I N G 10:00 a.m. (Pacific) Wednesday, May 16, 2018 Omni Los Angeles Hotel at California Plaza 251 South Olive Street Los Angeles, CA 90012 All stockholders are invited to attend. F O R M 10-K A copy of the Annual Report on Form 10-K, filed with the Securities and Exchange Commission, is available at: http://www.sec.gov or http://investor.rsac.com or upon request to: Karla R. Lewis Senior Executive Vice President and Chief Financial Officer Reliance Steel & Aluminum Co. 350 South Grand Avenue Suite 5100 Los Angeles, CA 90071 I N V E S T O R R E L AT I O N S C O N TA C T Brenda S. Miyamoto 213-576-2428 investor@rsac.com S E C U R I T IE S L I S T IN G Reliance Steel & Aluminum Co.’s common stock is traded on the New York Stock Exchange under the symbol “RS.” M A R K E T P R I C E O F C O M M O N S T O C K The high and low sales prices for the Company’s common stock in 2017 were $88.58 and $68.46. The table below sets forth the high and low reported sale prices of the Company’s common stock for the stated calendar quarters. LOW 2017 HIGH 1Q 2Q 3Q 4Q $88.58 $76.18 $69.31 $82.28 $76.98 $68.46 $87.33 $72.69 S T O C K H O L D E R S O F R E C O R D A N D D I V I D E N D P O L I C Y As of February 23, 2018, there were approximately 203 record holders of our common stock. We have paid quarterly cash dividends on our common stock for 58 consecutive years. Our Board of Directors has increased the quarterly dividend rate on a periodic basis 25 times since our IPO in 1994. F O R WA R D -L O O K I N G S TAT E M E N T S This Annual Report includes statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Reliance’s current expectations and assumptions. For a discussion identifying important factors that could cause actual results to vary materially from those anticipated in the forward- looking statements, see Reliance’s 2017 Form 10-K. *This Annual Report includes references to earnings per diluted share, excluding the impact of the Tax Cuts and Jobs Act of 2017, which is a non-GAAP financial measure. As earnings per diluted share, excluding the impact of the Tax Cuts and Jobs Act of 2017, is not intended to be considered in isolation or as a substitute for GAAP EPS, you should carefully read the 2017 Form 10-K, which includes our consolidated financial statements prepared in accordance with U.S. GAAP. 350 SOUTH GRAND AVENUE, SUITE 5100 | LOS ANGELES, CA 90071 | 213-687-7700 | WWW.RSAC.COM 

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