reliance steel & aluminum co. (rs)
☒Annual reports submitted under sections 13 or 15 (d)
Securities Trading Act for the fiscal year ended December 31, 2016☐Transition reports submitted under sections 13 or 15 (d)
Document Number of the 19-34 year Securities Trading Act on the transition period from commission to commission: 001-
13122 Reliance Steel(
The exact name of the registrant specified in the articles of association)Delaware(
State or other jurisdiction of company or organization)95-1142616(I. R. S.
Employee Identification Number)
350 South Avenue, Suite5100Los Angeles, California 90071 (213)687-7700(
Address and telephone number of main administrative office)
Securities registered under section 12th (b)
Title of the act: each class name of each exchange registered for common stock, $0.
001 New York Stock Exchange securities registered under section 12th (g)
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All reports requested in Section 13 or 15 have been submitted (d)
Securities Trading Act of 1934 within the first 12 months (
Or a short period of time required for the registrant to submit such reports), and (2)
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Or in such a short time that the registrant is required to submit and publish these documents).
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According to the closing price of the New York Stock Exchange on June 30, 2016, the registrant\'s affiliates were about $5,380,000,000.
For the purposes of this calculation, it is assumed that shares of voting shares held by directors and senior staff will be treated as shares held by subsidiaries.
As at February 21, 2017, 72,857,143 shares of the registrant\'s common stock were $0.
001 face value, excellent.
Documents incorporated in the reference section of the final proxy statement of the registrant\'s 2017 annual shareholders meeting (
\"Proxy Statement \")
Included as a reference in part II of this report.
Iitem 1 Table of Content index page. BusinessItem1A.
Risk factor 1b.
Unresolved employee reviewsProperty item3.
Part 3: mine safety
The market in which the registrant\'s common stock, related shareholder matters and the issuer purchase equity securities.
Selected Financial Data 7.
Management Discussion and Analysis of the financial status and results of the operating website 7a.
Quantitative and qualitative disclosure on the market riskitem8.
Financial statements and supplementary data 9.
Changes and disagreements with accountants on accounting and financial disclosure project 9a.
Control and procedures.
Iiiitem 10, other information section.
Directors, executives and corporate governance
Security ownership of certain beneficial owners and management and related shareholders mattersitem13.
Certain relationships and related party transactions, as well as independent programs for directors 14.
Main accounting fees and service fees
Exhibits, signature of schedule contents of financial statements-
It appears that there is a statement indicated or required by the context, the terms \"Company\", \"dependency\", \"our\", \"and\" we \"in this annual report regarding form 10-K refer to Reliance Steel and aluminum.
And all its subsidiaries in line with the United States. S.
Recognized accounting principles.
This annual report and reference document on form 10-K contains forward-looking statements in the sense of the Private Securities Litigation Reform Act of 1995.
We can also provide verbal or written forwarding-
Find information in other materials we publish to the public.
Our forward-looking statements include discussion of our business strategy and our expectations for future operations, profit margins, profitability, impairment charges, liquidity and capital resources.
In some cases, you can identify forward-looking statements in terms, such as \"may\", \"will\", \"should\", \"expects\", \"intends\", \"plans\" believe \",\" think \",\" estimate \",\" find \", \"Prediction\", \"potential\" and similar expressions.
These statements relate to future events or our future financial performance, to known and unknown risks, uncertainties and other factors that may lead to our actual results, level of activity, performance or achievement differ materially from the future implied by these forward-looking statements.
These risks and other factors include the risks described in the \"risk factor (
Item 1a for This Form 10 k)
And \"quantitative and qualitative disclosure of market risks \"(PartII, Item7A).
In addition, other factors may affect the accuracy of our progress.
Look at the information
These statements are not a guarantee of future performance, there are risks and uncertainties.
There may be a big difference between the actual event and the result of the operation.
We do not assume any responsibility to update any of our forwarding publicly
Whether or not the factors change due to new information, future events, or any other reason, look for a statement, unless it may be required by law.
You should review any additional disclosures we make in the press release and form 10K, 10-Q and 8-
K submitted or provided to SEC.
We also recommend that you listen to our quarterly earnings release call with financial analysts.
This annual report on form 10-K includes registered trademarks, trademarks and service marks of the company and its subsidiaries.
Accessibility of content.
Business SWE is the largest metal service center company in North America (U. S. and Canada).
Our network of metal Service Centers operates more than 300 locations in 39 states in the United StatesS.
In 12 other countries (
Australia, Belgium, Canada, China, France, Malaysia, Mexico, Singapore, South Korea, Turkey, UAE and UK).
Through this network, we provide metal processing services to distribute the whole line of more than 100,000 kinds of metal products including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium and special steel products, with more than 125,000 customers in a wide range of industries.
We focus on small orders with fast turnaround and increasing value --
In 2016, our average order size is $1,560, and about 47% of our orders include value-
Increased processing, and about 40% of our orders were delivered within 24 hours of receiving the order.
Many of our metal service centers only process and distribute specialty metals.
We selectively expand our international business to support the globalization of our customers.
Our net sales are $8.
61 billion in 2016, net income attributable to dependency was $304. 3million.
Our main business strategy is to provide customers with the highest level of quality and service in the most effective way of operating, enabling us to maximize financial performance.
Our growth strategy is based on improving our operational outcomes through organic growth activities and strategic acquisitions that enhance our product, customer and geographic diversity with a focus on improving profit margins
Processing services have been added.
We focus on promoting growth and efficiency by integrating the operational performance of acquisition locations into our operating models and providing them with access to capital and other resources.
We believe that we are focused on the growth strategy of product diversity, and that our customers and geographical location make us less vulnerable to regional or industry-specific economic fluctuations, to some extent, it reduces the negative impact of commodity pricing and periodic fluctuations in the customer terminal market, as well as the overall economic trend.
We also believe that we focus on providing services to customers with small orders and fast turnover, as we grow and diversify our strategy, we are able to generate industry-leading operating results in North American publicly traded metal service center companies.
At present, we have an operation department and a reporting Department, the metal service center.
More information about the section we can report, including geographic information, appears at Note16-
Part II \"segment information\" of item 8 \"financial statements and supplementary data \".
\"Industry Overview the metal service center obtains carbon steel, aluminum, stainless steel and alloy steel as well as other metal products from primary metal producers and then uses beams, rods, tubes and tubes to cut;
Bending, forming and forming;
Processing of rolls and flat rolls;
Cutting of plates and plates;
Machining and various other professional services such as laser cutting, manufacturing and mechanical polishing.
These processing services save our customers time, labor and cost, reducing their overall manufacturing costs.
Professional metal processing equipment requires cost-effective mass production.
Many manufacturers and their suppliers are unable or unwilling to invest in the necessary technology, equipment and stock warehousing to process metals for their own manufacturing or processing operations.
So industry dynamics create a niche in the market.
The metal service center purchases, processes and delivers metals to end users in a more efficient and cost-effective way than End Users deal directly with major producers.
The service center, the largest customer base in North American factories, purchased and resold almost 50% of carbon, alloy, stainless steel and specialty steel, aluminum, copper, brass, according to a report released by IBISWorldInc on November 2016, bronze and high temperature alloys produced in the United States.
Global intelligence publications.
Metal service centers are often less susceptible to market cycles than metal producers, because service centers are often able to pass on all or part of the increase in metal costs to customers, unless they sell to customers on a fixed price contract basis.
We believe that service center companies such as Reliance, which emphasize fast inventory turnover and minimum contract sales, are often less vulnerable to changes in metal prices than metal producers.
However, fluctuations in metal prices have a significant impact on our income and profits.
1 Content customer table purchased from the service center for various reasons, including the ability to obtain value-added metal processing, stock available at any time, reliable and timely delivery, flexible minimum order size, quality control.
Many customers deal exclusively with service centers because the number of metal products they purchase is less than the minimum order quantity specified by the factory, or because these customers need to deliver intermittently for a long or irregular period of time.
The metal service center should respond to niche markets created by focusing on timely inventory management and material management outsourcing in capital goods and related industries, as larger metal producers have reduced their internal direct sales efforts to small sporadic buyers to improve their productivity.
In general, customers in the metal service center are paying more and more attention to reducing inventory, especially in an environment where prices are falling.
Many customers have also reduced their income.
Housing processing, purchasing processed metals from service centers like ours, has stimulated some of our recent capital expenditures and has also helped raise gross margin.
The metal service center industry is highly dispersed in the local or regional, and the competition is fierce.
Many of our competitors operate a single, independent service center.
According to IBISWorldInc.
The number of metal wholesale centers in the United States decreased from about 11,000 locations operated by more than 8,300 companies in 2002 to about 9,200 locations operated by more than 6,300 companies in 2016.
This integration trend continues to create opportunities for us to expand through acquisitions.
According to IBISWorldInc.
Revenue from the metal wholesale industry in the United States is about $152.
7 billion in 2016, income was $ 17%, a decrease of 2015 from $183.
9 billion is mainly due to the decline in metal prices.
Five largest countries in the United StatesS.
IBISWorld Inc. is expected to have a metal service center
Accounted for more than 10% of the estimated $152.
Total industry in 2016 7 billion.
While we are still the largest metal service center company in the United States in terms of revenue, IBISWorldInc.
Estimated US $2016. S.
Income accounted for only 4.
8% of the United States. S. market.
History and overview of rare earth steel and aluminum
Established as a California company in February 3, 1939, and began production of steel bars in Los Angeles, California.
Within the ten years of our establishment, we have become a full-line distributor of steel and aluminum, operating a single metal Service Center in Los Angeles.
In the early 1950s, We automated material processing and began to provide processing services that meet customer needs.
In the 1960s, we began to acquire other companies to build more service centers and expand to other geographical areas.
In the mid-19th century, we began to build a professional metal center to reserve inventory of selected metals such as aluminum, stainless steel or brass and copper, it is equipped with automated material handling and precision cutting equipment specific to the selected metal.
In the mid-19th century, we began to expand across the country and focused on acquiring well-run, lucrative service center companies, and we continued to expand our network with a focus on improving value levels
Add services and professional products to our customers, not just distribution of metals.
Our common stock is listed on the New York Stock Exchange (“NYSE”)
Under the symbol \"RS\", the first transaction was made on September 16, 1994.
We re-registered in Delaware on 2015.
We continue to implement our growth strategy as the largest economy in North America. U. S. and Canada)
The revenue-based metal service center company has more than 300 locations with net sales of $2016. 61billion.
Although we continue to expand the types of metals we sell and the processing services we provide, we do not diversify beyond our core business, and we strive to maintain the best performance in our industry.
We focus on smaller customers and fast turnaround order size and steadily increase the percentage of orders through execution processing.
We currently operate the metal service center under the following trade names: TradeNameNo.
Oflocationsliance DivisionsBralco MetalsBralco metals6 aerotech1affiliated metal12table contentstradeneno.
Olympic metal of Zhongyuan Iron & Steel Co. , Ltd.
1 metalcenter1reliance Metalcenter8Reliance steel Company2Tube Service Co. , Ltd.
6 all metal Service Co. , Ltd. (China)
1 all metal services France1All Metal Co. , Ltd (United Kingdom)
5 All metal services (Malaysia)Sdn. Bhd.
1 Allegheny steel distributor Co. , Ltd.
1 aluminum and stainless steel
American steel company American Metal Company
Haskins steel, Inc.
Month Lampros Steel 3 Ami Metal Co. , Ltd.
British metal Co. , Ltd. , European Metal Co. , Ltd (Belgium)
Ankara havacl k Anonim irketi (Turkish Airlines)Turkey)
1 Best Manufacturing Company1CCC Steel Co. , Ltd.
China Steel Co. , Ltd.
Moon Church steel.
Moon Chapel Steel Canada Ltd.
1 Chatham Steel Company 5 Clayton Metal Co. , Ltd.
Continental alloy & services
Continental alloy & services(Canada)
Middle East FZE (Continental alloy & services)Dubai)
1 Continental alloy and services (Malaysia)Sdn. Bhd.
1 Continental alloy and service Pte. Ltd. (Singapore)
1 crest steel company 1 Delta Steel Company
Delta Steel 6 Smith Pipe & Steel Company 1 Diamond Manufacturing Company
1 Maiji perforated Products Co. , Ltd.
Monthly perforated metal plus1durett Sheppard Steel Co. , Ltd. , Inc. 1Earle M.
Location. Jorgensen (Malaysia)Sdn. Bhd.
Encore metals, Bar1Feralloy, United States of Americade R. L. de C. V. (60%-owned)
4 Feralloy processing company (51%-owned)
1GH metal Solutions Co. , Ltd.
Indiana pickling processing company (56%-owned)
Partner Feralloy, Yuegang (40%-owned)
1Fox Metal & Alloy Co. , Ltd. 1Infra-Metals Co. Infra-
Athens steel 1-
Brother Metal/IMS Steel2Liebovich. , Inc.
Liebovich Steel & Aluminum Company 3 custom Fab company 1 good metal material
Eagle Steel Products Co. , Ltd. (45%-owned)
Gregor Marine ies1lynch metal materials usa28 ohio River Metal Services 1 Port City Metal Services 1 Richardson Trident company, llc3 national special Alloy Co. , Ltd.
National Specialty alloys3aleaconespecialesdemexico, S. deR. L. deC. V.
North Illinois Steel Supply Company
1 Pacific Metal Company 6 pdm steel service center Co. , Ltd.
PDM steel service center s9feralloy PDM Steel Service 1 Phoenix Metal Co. 13 precision flame cutting & Steel Co.
1 precision belt, company
Reliance metals Centre Asia Pacific Private Limited. Ltd. (Singapore)
Reliance Metals Canada LimitedJorgensen (Canada)
Tube5 serves steel airlines.
Service Steel Aerospace 3 Dynamic Metal International 1 Joint alloy aircraft metal s1 siskin Steel Supply Company
East Tennessee iron and steel supply company has 14 contents.
Texas sunshine Steel Co. , Ltd.
2 Sugar steel company 2 tubular steel company
Metal Products Enterprise Co. , Ltd. 1Valex Corp.
Valex1Valex China Limited, Ltd. 1 Valex Korea, Ltd. (95%-owned)
1 Viking Materials Co. , Ltd.
Yade Metal Co. , Ltd.
We mainly provide customers with fast delivery, metal processing and inventory management services.
We buy all kinds of metal from primary producers and sell these products in small quantities according to the customer\'s needs.
Prior to delivering the product to the customer, we did metal processing services or phase 1 processing on approximately 47% of sales orders in 2016.
In order to meet the customer\'s growing demand for processing services, we have increased the percentage of orders from a historical level of 40% to about 47% of sales orders in 2016.
We attribute this growth to our significant investments in the country. of-the-
Art processing equipment and the companies we acquire provide higher value
For about 40% of our 2016 orders, we delivered the metal to the customer within 24 hours of receiving the order.
These services save our customers time, labor and cost and reduce the overall manufacturing cost.
During the 2016 period, we handled a total of about 5,535,000 transactions, with an average of 21,960 transactions per working day and an average price of about $1,560 per transaction.
We believe that our focus on small orders with fast turnaround, the decentralized operational structure makes us different from many other large metal service center companies and enables us to better serve our customers, higher profits than other large metal service centers.
Historically, we have expanded through acquisitions and internal growth.
Since its initial public offering in September 1994, we have successfully acquired 62 companies, including tubular steel.
Best Manufacturing Company
And Alaska steel in 2016.
Our internal growth activities have been supported by capital expenditure over the past few years and have been at the highest level in history for us, including opening up new facilities and increasing our processing capacity, and move existing businesses to larger, more efficient facilities.
Our investment in processing equipment allows us to increase the value range --
The additional services we provide to our customers support us to raise gross margin.
These investments also differentiate us from our competitors and enable us to increase our market share.
We will continue to evaluate acquisition opportunities and expect to continue to grow our business through acquisitions and internal growth plans, especially those that will diversify our products. Customer base and location to increase sales and high profit, value of our professional products
Capital expenditure we maintained our focus on internal growth in 2016 by opening new facilities, building or expanding existing facilities and increasing processing equipment with a total capital expenditure of $154.
Growth of 9 million-related.
Our 2017 capital expenditure budget is approximately $0. 2 billion, most of which is related to internal growth activities, including the purchase of equipment and new facilities and the expansion of existing facilities.
This reflects our confidence in the long-term prospects;
However, we will continue to evaluate and implement each growth project, taking into account the economic situation and prospects when investing.
We estimate that our maintenance capital expenditure is approximately $80 to $90 million, which allows us to significantly reduce capital expenditure if necessary.
5 Content sheet operations strategy your executives maintain a control environment focused on integrity and ethical behavior, develop overall policies and operational guidelines, and monitor compliance with appropriate financial controls, while our department managers and subsidiaries have autonomy in their day-to-day operations.
This balanced approach to entrepreneur management enables us to increase the productivity and profitability of acquisitions and existing operations.
Key managers are eligible for incentive pay, based in part on the profitability of their particular department or subsidiary, and in part on the overall profitability of the company.
We seek to improve profitability by improving customer service, operational efficiency, pricing discipline and inventory management, and delivering higher levels of value
In addition, we hope to continue to increase our profit growth by expanding our existing business and acquisition business to diversify or enhance our customer base, product range, processing services and geographic coverage.
We will also continue to adapt our business practices to make the most of our scale and improve our profitability by improving efficiency.
We believe that we have a good reputation in the industry and are known for the quality and timeliness of our integrity and services.
Customers and markets our customers buy from us and other metal service centers for value added metal processing, ready stock, reliable and timely delivery, flexible minimum order size and quality control.
Many of our customers deal exclusively with service centers because the number of metal products they purchase is less than the minimum order set by the factory, because these customers need to deliver intermittently for a long or irregular period of time, or because these customers need special processing services.
We believe that the metal service center also enjoys an increase in the services requested by customers, as the focus of capital goods and other manufacturing industries is on timely inventory management as well as material management and outsourcing of metals.
We have more than 125,000 customers in many industries, including general manufacturing, non-residential buildings (
Rail, truck trailer and shipbuilding)
Aerospace, defense, energy, electronics, semiconductor manufacturing, heavy industry (
Agricultural, construction and mining equipment).
We also provide services to the automotive industry, mainly through the charge handling business that we do not have metal ownership.
Although we sell directly to many large OEMs (“OEM”)
Customers, most of our sales target are small machine stores and manufacturers, with a small number and frequent delivery, helping them manage working capital and credit needs more effectively.
Our metal service center wrote and delivered more than 5,535,000 orders in 2016 at an average price of about $1,560 per order.
Most of our metal service center customers are within a radius of the Reliance metal service center that serves them.
Our service center is very close to our customers, which helps us to provide timely services and increase the possibility of repeat business.
In 2016, about 96% of our orders came from repeat customers.
We have about 1,710 trucks in our fleet (
Some of them are leased)
We are able to serve many smaller customers and provide a fast turnaround time.
In addition, our computerized order entry system and flexible production scheduling enable us to meet customer requirements for short lead time and on-time delivery.
We believe that our long-term relationship with many customers has contributed significantly to the success of our business.
Providing prompt and efficient services and quality products at a reasonable price is an important factor in maintaining and expanding these relationships.
In recent years, our acquisition has increased our international exposure from the perspective of customers and actual positions.
In addition, in recent years, we have established and opened international venues for specific industries, often to support existing key customers operating in these international markets.
Net sales in our international region (
SOURCE based on shipments)
Of our combined 9% net sales, about 2016, or $746. 1million.
But our net sales to international customers (
Shipping destination based)
It\'s about 11% of our 2016 net sales, or $933.
2 million, of which approximately 23% is in sales, or $214.
8 million. Canadian clients. See Note16 —
Part II \"Segment Information\" of item 8 \"financial statements and supplementary data\" for further information on the United StatesS.
Foreign income and assets.
6 Content customer demand tables may change from time to time, inter alia, based on general economic conditions and industry capabilities.
Many industries where our customers compete are cyclical.
Because we sell to a wide variety of customers in various industries, we believe that the impact of this change on us is significantly reduced.
In addition, many of our customers are small work stores and manufacturers, they also have different customer groups and have the versatility to serve different end markets when the existing market slows down.
The diversity of our customer base reduces the impact of any single customer to a certain extent, as our largest customer represents only 1.
0% of net sales in 2016.
In 2016, we had only 20 customers with sales of over $25 m.
According to the location of our metal service center facilities, our sales in each of the three years have the following geographical breakthroughs: 201620152014 Midwest % Southeast % west/southwest % California % International % Central
We mainly buy our stock from major domestic metal producers. Pacific Northwest % mountain % Total % supplier.
However, we also buy certain products from foreign producers.
We have multiple suppliers for all our products.
The main suppliers of our domestic carbon steel products include ancelormittal;
California steel industry; Evraz NA; Gerdau; NLMK USA;
Steel Power Co. , Ltd. ; SSAB;
And American steel.
AK Steel, Allegheny Technologies Incorporated, North American Stainless Steel, Outokumpu and general purpose stainless steel are the main suppliers of our stainless steel products.
We are a recognized distributor of major aluminum companies including Aleris International, Inc. ; ArconicInc. ; Constellium N. V. ;
Kaiser Aluminum CorporationNovelisInc. ; and Sapa Group.
Our main suppliers of alloy products include ancelormittal;
Timken Company; Gerdau;
Due to our total purchase volume and long term relationship with suppliers, we believe that we are generally able to purchase inventory at the best price offered by our suppliers.
We believe that these relationships provide us with an advantage in enabling us to deliver products to our customers in an accelerated time frame when needed, and enabling us to manage our inventory more effectively.
We believe that our metal inventory does not depend on any one supplier.
We believe in our scale and our long term
The long term relationship with the supplier remains important as plant integration reduces the number of suppliers.
Due to on-time delivery and the short-time nature of our business, we do not believe that the information on the backlog of orders is critical to understanding our business.
Products and processing services we offer a wide range of processing services to meet customer specifications and deliver products to manufacturers, manufacturers and other end users.
We have a wide range of products in stock, which we believe is different from all other North American service centers.
About half of our orders do not require extensive or specialized processing, allowing delivery to customers within 24 hours of receipt of the order.
This provides us with the content competitive advantage of a7Table, and, considering our decentralized structure and investment in processing equipment, in our remaining orders, we usually mention more than our competitors.
Due to our targeted growth strategy, our product portfolio has changed, acquiring companies that specialize in inventory and increase in value levels
Processing services have been added.
In addition, we have invested about $1 billion in capital expenditures in six projects.
For the year ended December 31, 2016, the cost of processing equipment was approximately EUR 50%.
Due to the higher value levels required by our existing and potential customers, we have increased our investment in processing equipment
In addition to our focus on improving profitability, processing has been added.
Compared to the historical level of 47%, we now provide processing services for 40% of orders.
We believe in our investment in the country. of-the-
Art processing equipment and maintaining pricing discipline related to these services are important reasons for our substantial increase in gross profit margin over the past few years.
We also believe that the enhancement of our processing capacity allows us to increase our market share, especially for higher market share.
Products and services.
Hot rolled carbon steel products (i. e.
Hot rolled, cold rolled and galvanized steel sheet and roll)
Of our 15% sales, the most volatile and competitive products are usually only 2016.
Our sales amount by product type as a percentage of the total sales as of the three years ended is as follows: 201620152014% % carbon steel plate % carbon steel structure % carbon steel pipe % carbon steel rod % hot-
Cold rolled sheet and coil % galvanized sheet and coil %
% Heat of rolled steel plate and coilsteel-
Treated aluminum sheet % aluminum bar and tube % ordinary alloy aluminum sheet and coil % ordinary alloy aluminum sheet % hot-
Treated aluminum plate and coilalal % stainless steel rod and tube % stainless steel plate and coil % stainless steel non flat table steel % alloy rod and Rod plate and coilAlloy % of aluminum, carbon steel and stainless steel are processed for a fee, including brass, we do not rely on any particular customer base or industry as we process and distribute a wide range of metals.
The diversity of this product type and material reduces fluctuations or other weaknesses in our financial or economic stability 8 content tables for specific customers or industries.
Due to the diversity of our products, we are also less dependent on any particular supplier.
For coil products, we purchase coil metal from the main producer in the form of continuous sheets, usually with a width of 36 to 60 inch, between 0. 015 and 0.
25 inch thick, rolled into 320 ton coils.
The size and weight of these coils require specialized equipment to move the material into smaller sizes and various products for processing.
Many other products we carry also require specialized material handling and processing equipment.
We believe that very few of our customers have the ability to process the metal into the required size or capital to obtain the necessary equipment.
We believe that very few metal service centers offer a wide range of processing services and metals that we offer.
In addition to focusing on increasing revenue from professional products, we have also improved the level of value-added processing services we provide through recent acquisitions and significant investments in new equipment over the past few years, in particular, we provide services for the aerospace market and the automotive industry to process aluminum for a fee.
Upon receipt of the order, we enter it into our computerized order entry system and select the appropriate inventory and progress processing to meet the specified delivery date.
In 2016, we delivered about 40% of orders within 24 hours of the customer placing an order with us.
We try to maximize the use of each product we purchase by combining customer orders, thereby maximizing the production of the various metals we handle.
In 2016, we provide processing services for about 47% of sales orders.
Our main processing services range from complete processes such as cutting, leveling or sawing to machining or polishing.
Throughout our service center, we perform most of the processes offered within the industry without infringing on the services provided by our customers.
As part of our growth strategy, we have been expanding to higher value-added services, including certain manufacturing processes required by our customers.
We usually only process specific metals into non-standard sizes according to customer purchase order specifications.
In addition, we usually get products of standard size and grade that can be processed into many different sizes to meet the needs of many different customers.
We do not have a large inventory of finished products, but we have a wide range of metals to meet the customer\'s short lead time and on-time delivery requirements.
Our metal Service Center maintains the inventory and equipment selected to meet the needs of the facility\'s customers.
We work with our customers to understand their needs and identify areas where we can provide additional value to increase our importance to them.
As of December 31, 2016, we have about 2,100 sales staff in 44 states in the United StatesS.
13 other countries offer sales and marketing services in these areas.
Our sales staff sell and sell our products and we believe our sales staff has a wealth of product and customer knowledge.
The sales staff are organized by department or subsidiary in our profit center and divided into two groups.
External sales people travel in specific geographical areas, maintain relationships with our existing customers, and develop new customers.
Internal sales staff stay at the factory to price and write orders.
External sales staff usually receive incentive pay based on gross profit in their specific geographic area.
Internal sales staff usually receive incentive compensation based on gross profit and/or pre-tax profit at their particular profit center.
Our business is based on relationships, and because of this, we operate under many different trade names.
We got it.
Strong customer relationship and strong reputation in the market.
Because of this, we found the value in the name of the item we obtained and continue to use the enterprise name and maintain the customer relationship.
The metal distribution industry is a highly fragmented and competitive industry.
We have many competitors in each product line and location, and the most frequent competition is local or regional competition.
Our domestic service centers generally have smaller competitors than us, but we also face fierce competition from independent metal dealers and producers themselves, some of which have more resources than us.
IBISWorld Inc. in their report on the metal wholesale industry in November 2016
It is estimated that about 9,200 companies operated about 6,300 wholesale metal locations in the United States in 2016.
Still, the five largest economies in the United StatesS.
In 2016, the metal service center company is expected to account for more than 10% of the expected industry revenue. IBISWorldInc.
Estimated US $2016. S.
Income accounted for only 4.
8% of the United States. S. market.
We are the largest in North America (U. S. and Canada)
Metal service center company based on revenue.
We compete with other companies in terms of price, service, quality, processing capacity and product availability.
We maintain relationships with key suppliers at the administrative and local levels.
We believe that this division of responsibility increases our ability to obtain competitive metal prices by leveraging our total size, and provide more purchasing decisions to our customers by allowing our local management team.
In addition, we believe that the size of our inventory, the diversity of our existing metals and products, and the variety of processing services that we can offer, distinguish us from our competitors.
We believe that our competitors do not have the financial ability or risk tolerance to develop their business, and they have a hard time competing with our country --of-the-
Art processing equipment.
We believe that due to our strong financial position, significant investments in equipment and facilities, and our acquisitions, we have increased our market share in recent years, and we continue to focus on small orders with fast turnaround.
Quality control continuous sourcing of high-quality metals from suppliers is critical to our business.
We have developed strict quality control measures to ensure that the quality of the purchased raw materials can meet the customer\'s specification requirements and reduce the cost of production interruption.
In some cases, we usually perform physical and chemical analysis of selected raw materials through a third-party testing laboratory to verify mechanical and dimensional performance, cleanliness and surface properties meet our requirements and customer specifications.
Prior to delivery to the customer, we also perform a certain surface feature analysis of the selected processed metal.
We believe that maintaining a high standard of acceptance of metals will ultimately reduce the return on customers.
We maintain a variety of quality certifications throughout our operations.
About 60% of our operating sites have passed ISO9001: 2008 certification.
Many of our locations have additional certifications specifically for their service industries, such as aerospace, automotive, nuclear, and so on, including certain international certifications.
Use the SystemsA public financial reporting system within the company as well as certain other accounting, tax and HR information systems.
However, we maintain a variety of transactional software applications throughout our operations that meet these operational needs.
Typically, these systems provide real-time information such as inventory availability, location, and cost, and can customize features to suit the product, automation device interface, or other professional requirements carried by their respective operations.
With this information, our marketing and sales staff can respond more effectively to the needs of our customers.
We have begun efforts to customize and implement a common ERP platform in our operating company to maximize the functionality and efficiency of the entire organization while reducing risk.
We are also evaluating tools to help us integrate data more effectively.
These are multi-stage, multi-year projects that will be implemented and implemented in a manner that limits operational and financial risks.
Government regulations our metal service centers are subject to the requirements of many foreign, federal, state and local environmental protection, including hazardous waste disposal and underground storage tank regulations.
The only harmful substances we usually use in our operations are lubricants, cleaning solvents, and oil that refuels trucks.
We pay for the transportation and disposal of our hazardous waste to private companies that have passed the national certification.
Our business is also subject to laws and regulations related to workplace safety and workers\' health, mainly the Occupational Safety and Health Act and relevant regulations, these regulations and regulations dust and safety standards, among other requirements.
We maintain a comprehensive health and safety policy and encourage employees to follow established safety practices.
The safety of our employees and others is critical to our success.
We continue to expand and improve our internal security resources, which contribute positively to our safety indicators and financial results.
We encourage social welfare by setting these high quality labor, health and safety standards.
We expect that continued compliance with these laws and regulations will not have a significant adverse effect on our operational results or on our financial position.
We are bound by the conflict minerals provisions of the 2010 Frank Wall Street Reform and Consumer Protection Act.
We need to conduct due diligence to disclose and report whether the products we sell come from the Democratic Republic of the Congo and neighbouring countries.
We verify with the supplier the source of all metals used in the product.
We sell metals to foreign customers and operate abroad, in compliance with national trade regulations on import and export of materials and finished products.
Our business is subject to the laws and regulations of the jurisdictions in which we conduct our business, which are designed to prevent corruption and bribery in the market, including the United States Foreign Corrupt Practices Act (the “FCPA”)
And Britain\'s Bribery Act 2010.
We have developed and implemented a company-wide export and anti-corruption policy designed to provide our employees with clear declaration of compliance requirements and to ensure compliance with applicable export and anti-corruption laws.
For information on risks related to government regulation, see the risk factors listed under the heading Item 1A.
Including the title \"we are affected by various environmental, employee safety and health, and customs and export laws and regulations, which may result in significant liability and compliance expenditures for us;
\"We operate at the international level and are affected by exchange rate fluctuations, foreign exchange controls, political risks and other risks related to international operations;
Our growing international presence puts us at greater risk.
\"Environment some of the properties we own or rent are located in industrial areas with a history of heavy industry use.
Due to the location of these properties, we may take some environmental responsibility.
In addition, we are currently involved in an environmental remediation project related to Earle M\'s pre-manufacturing business activities
Jorgenson company (“EMJ”)
Our wholly owned subsidiary, sold many years before Reliance 2006 acquired EMJ.
Although the potential clean-up costs may be substantial, EMJ retained insurance policies during the period of owning the manufacturing business, which essentially covered all of our expenditures to date in relation to this matter, most of the related costs are expected to continue to be paid.
We do not expect these obligations to have a significant adverse effect on our financial position, operating results or cash flow.
We believe that all scrap metals produced by our business are recycled by independent scrap metal companies and producers that we sell scrap metals.
To reduce pollution and improve our environmental impact, we continue to evaluate and implement energy conservation and other initiatives.
The development of stricter environmental regulations may adversely affect our financial results.
Although we have implemented policies and procedures to comply with these regulations, we cannot guarantee that we will not be subject to any violations and penalties for these activities.
We have about 14,500 employees in December 31, 2016.
About 11% of our employees are covered by collective bargaining agreements that expire at different times over the next five years.
The collective bargaining agreement, which expired in 2017, covered approximately 600 employees.
We have entered into collective bargaining agreements with 41 union locals in our 52 locations.
These collective bargaining agreements do not have a significant or adverse impact on our income or profitability at different locations.
Our goal is to always maintain a good relationship with our employees and never experience a major shutdown.
Over the years, we have experienced small stoppages for our employees in some places, but due to the small number of employees and short time, these stoppages have no significant impact on our operations.
Some of our clients are engaged in seasonal business, especially in construction and related business.
Due to our geographic, product and customer diversity, our overall operations do not show any substantial seasonal trends.
Typically, in July, Novemberand decembers earned less than in the other months, as the number of working days on which our products were shipped was reduced due to some of our clients taking time off and extended holiday closures.
Reducing shipping days also has a significant impact on our profitability at any given period.
We can\'t predict the period. to-
Periodic fluctuations will be consistent with historical patterns.
Therefore, the results of any one or more quarters do not necessarily indicate the annual results.
Available information we submit annual, quarterly and current reports, agency statements and other documents to the Securities and Exchange Commission (“SEC”)
Under the revised Securities Trading Act of 1934 (
The SEC maintains a website that contains reports, agency statements and other information relating to the issuer (including our company) that electronically submits the report to the SEC.
The public can obtain any reports we submit to the SEC.
Our investor relations website is located.
Our annual report on Form10
Quarterly Report on Form10
Q: Current Report of Form 8
K and any amendments to these reports submitted or provided under section 13 (a)
According to the Securities Trading Act of 1934, after we submit a report to the SEC electronically or provide it, it can be obtained through our website as long as it is reasonably practicable.
We encourage investors to visit our website. Item1A.
The risk factors listed below are the ones we think are important to our investors.
Due to any of the following risks, our business, operational results and financial position may be materially adversely affected.
The risks described below are not the only ones we face.
Additional risks that we do not currently know or that we currently consider irrelevant may also harm our business.
Risks related to our business and industry the costs we pay for metals fluctuate due to some factors beyond our control, and such fluctuations may adversely affect our operating results, especially if we can\'t pass higher metal prices to our customers.
We purchase a large number of metals such as aluminum, carbon, alloy and stainless steel and sell them to various customers.
The cost of these metals and the price of the products we charge to our customers may vary due to many factors beyond our control, including general economic conditions (
Domestic and International)
Competition, production levels, raw material costs, customer demand levels, import taxes and other trade restrictions, currency fluctuations and surcharges implemented by our suppliers.
We try to pass the cost increase to our customers at a higher sales price, but we may not always be able to do so, especially when the cost increase is not demand-driven.
When metal prices drop, we may not be able to replace our higher cost inventory with lower cost metals at a price that allows us to maintain a consistent gross profit margin, which will reduce our profitability during this period.
Among other things, due to fluctuations in domestic and foreign production capacity, raw material supply and related pricing, metal consumption, US import levels, metal price fluctuationsS.
And the strength of the United States. S.
The dollar is relative to other currencies.
The overall global economic situation or future changes in metal production, consumption or exports may lead to fluctuations in global metal prices, which may adversely affect our profitability and cash flow.
We generally do not enter into long-term agreements or hedging arrangements with suppliers to mitigate the impact of fluctuations in metal prices.
We maintain a large stock of metal to meet the customer\'s short lead time and delivery requirements.
Our customers usually purchase products from US based on purchase orders and usually do not enter into long-term purchase agreements or arrangements with us.
Therefore, based on the information we obtain from customers, market conditions, historical uses and industry research, we purchase metals in quantities that we deem appropriate to meet the expected needs of our customers.
The commitment to purchase metal is usually the current market price that is valid when placing an order or when shipping.
During the metal price increase, we may be negatively affected by the delay between the increase in metal costs and the increase in the price of our products, if we are unable to pass on these increased costs to our customers
In addition, when the metal price drops, this can lead to a lower selling price for our products, and, when we use the existing stock we buy at a higher metal price, the gross profit margin decreases
Therefore, during the period when we sell our existing inventory, the impact of changes in metal prices may adversely affect our operating results.
Our business may be adversely affected by the decline in economic activity.
The demand for our products is affected by many general economic factors.
The decline in American economic activity. S.
The international market we operate in may have a significant impact on our financial position and results.
During the recent U. S.
In the recession, demand and price levels for our products have fallen sharply.
In addition to reducing our direct business activities, many of our customers are unable to pay us the amount when they are due, which further affects our financial position and results of operations.
The market economic downturn in our services may lead to a decline in sales and pricing of our products, which may have a significant adverse impact on our potential revenue and future operating results.
Although we have experienced a slow economic recovery since the latest US economic crisis. S.
In the recession, the overall demand for our products continues to be below what we think is more normal, especially for non-residential building activities.
Moreover, the sudden sharp fall in oil prices in 2014 has had a significant impact on our energy.
Related businesses due to the reduction in drilling activities, 2016 of the production we provide for these businesses is 60% lower than in 2014.
This resulted in a significant reduction in profits for these businesses, as well as impairment and closure-
The costs associated with certain businesses in these businesses further reduce our profits by 2016.
Currency fluctuations and changes in the global balance of supply and demand may have a negative impact on our profitability and cash flow.
Major currency fluctuations in the US or abroad may have a negative impact on our metal costs and product pricing.
Decline in the US economyS.
The US dollar relative to foreign currency may lead to higher prices for US metals and metal products and reduce the number of metals imported to the USS.
The price of imported metal is relatively high.
We may not be able to pass on these increased costs to our customers.
If the value of AmericaS.
The dollar has appreciated against foreign currencies, which may lead to an increase in metal imports from the United States. S.
This, in turn, could put pressure on existing domestic metal prices.
This could happen if the global economy is weaker than the US. S.
Economy, creating a significant price difference between the United StatesS.
And foreign markets.
These factors have been around for a while, importing from the United StatesS.
Reached a record high in 2014 and continued until 2016, leading to a sharp drop in metal prices.
The industry we operate in is affected by cyclical fluctuations, and the general economic situation or any downturn in the customer-specific industry will have a negative impact on our profitability and cash flow.
The metal service center industry is cyclical and influenced by market demand and metal supply.
Periods of economic slowdown or recession in the United States or other countries, or periods that the public believes may occur, may reduce demand for our products and adversely affect our pricing.
If demand or price falls from the current level, it may reduce our profitability and cash flow.
We sell many products to the cyclical industry, such as non-residential buildings, semiconductors, energy, aerospace and heavy equipment industries.
Although many of our direct sales are for subcontractors or work stores that may serve many customers and industries, the demand for our products is directly related to and quickly affected by the following factors: the customer demand for finished products in these industries may change due to changes in the general industry in the United States. S.
The global economy, domestic exchange rates, energy prices or other factors beyond our control.
For example, oil prices continued to fall at the end of 2014 and continued to fall until 2016, negatively affecting our energy market sales, with our sales estimated to be around 8-10% prior to the decline.
In addition, the continued strength of the United States. S.
The dollar has led to an increase in US imports. S.
Put pressure on our sales price and profit margin.
We compete with a large number of companies in the metal service center industry, and if we can\'t compete effectively, our profitability and cash flow may decline.
We compete with a large number of other general dealers and processors and professional dealers in the metal service center industry.
Competition is based primarily on price, stock availability, timely delivery, customer service, quality and handling capabilities.
The competition in the various markets we participate in comes from companies of all sizes, some of which have more mature brands in the local markets we serve.
These competitors may be able to better withstand adverse changes in customer industry conditions and may have greater operational and financial flexibility than we do.
In order to compete for the sales of our customers, we may reduce the price or provide more services at a higher cost, which may reduce our profitability and cash flow.
A rapid decline in prices and/or demand levels can exacerbate competitive pressures, with sales prices in service centers falling sharply and sometimes losing money in order to reduce their high-cost inventory and generate cash.
At present, the level of imported materials in the United States has increasedS.
As supply exceeds demand, competition between metal service centers has intensified.
If demand, particularly prices, falls sharply from current levels, these competitive pressures may be further exacerbated.
Any increased and/or ongoing competitive pressures can lead to a decline in our share of sales in the industry as profitability and cash flow decline.
If we lose any of our major suppliers or are unable to obtain sufficient quantities of the necessary metals in a timely manner, we may not be able to meet the needs of our customers and sales may be reduced.
We have very few long-term contracts to buy metal.
Therefore, our main suppliers are carbon steel, alloy steel, stainless steel, aluminum or other metals that may, with little or no notice, limit or stop delivering these metals to us in the quantity we need.
Our ability to meet customer needs and provide value-added inventory management services depends on whether we can maintain an uninterrupted supply of high-quality metal products from our suppliers.
If our suppliers encounter production problems, insufficient capacity or disruption of transportation, the lead time for us to receive the supply of metal products may be extended and the cost of inventory may increase.
If in the future we will not be able to obtain a sufficient number of necessary metals from our traditional suppliers in a timely manner at competitive prices, we may not be able to obtain these metals from acceptable alternative sources at competitive prices to meet our delivery schedule.
Even if we do find an acceptable alternative supplier, the process of finding and ensuring that these alternative products can cause disruption to our business, this may adversely affect our ability to meet customer needs, reduce profitability and cash flow.
In addition, if an important source of domestic supply is interrupted and we cannot find an acceptable domestic alternative, we may need to find a source of foreign supply.
The use of foreign sources of supply may result in longer lead times, increased price volatility, non-preferential terms of payment, increased risk of foreign exchange movements, and certain tariffs and tariffs, and the need for more working capital.
Alternative supply sources may not be able to maintain the quality standards of our current suppliers, which may affect our ability to provide our customers with the same quality products as in the past, this may lead to the transfer of their business to our competitors by our customers or the filing of claims against us, which may be more difficult to pass on to foreign suppliers.
Both the global and domestic levels of metal producers have been significantly integrated. S.
This merger reduces the number of suppliers we can get, which may lead to an increase in our metal costs and we may not be able to pass on to our customers, it may also limit our ability to get the metal we need to serve our customers.
If the economy as a whole enters another recession, the number of available suppliers may decrease further.
Lower metal prices and lower levels of demand may lead to the reduction of production capacity in some factories, in which case the factory may lose operation and if the loss lasts for a long time, or if the plant is unable to obtain the necessary financing to cover the operating costs, this may result in one or more plants stopping operations.
For the specifications of the metal we buy from our suppliers, we rely on them.
We rely on factory certification to demonstrate the physical and chemical specifications of metals received from our suppliers for resale, and are generally consistent with industry practices, unless the customer requires independent testing, otherwise do not test these metals independently.
We rely on our customers to inform us of any metal that does not meet the certified specifications of the supply plant.
While our main source of products is domestic factories, we have and will continue to purchase products from foreign suppliers when we think it is appropriate.