Thursday, April 19, 2007 6:47:31 PM
* RS $52-$57 Reliance Steel beats by $0.14, beats on revs, issues upside Q2 EPS guidance (51.84 )
Reports Q1 (Mar) earnings of $1.46 per share, $0.14 better than the Reuters Estimates consensus of $1.32; revenues rose 86.4% year/year to $1.84 bln vs the $1.7 bln consensus. Co issues upside guidance for Q2, sees EPS of $1.45-1.55 vs. $1.46 consensus.
RS Reliance Steel Conference Call Summary: co asked a lot about M&A (55.30 +3.46) -Update-
On conf call, co says overall pricing is improving. Inventory levels at customer locations have been declining and are now back to normal levels after higher levels in Q4. Co also says imports are not likely to be a big factor this year as the weak dollar makes it less attractive for foreign competitors to sell into the US.... Co believes its major markets including aerospace, energy, non-residential construction will continue to grow in 2007, but at a slower rate than in 2006. Co does not expect costs and pricing to change significantly as the year progresses... During Q&A, there was quite a bit of merger discussion: In 2006, the co closed 4 deals and 3 so far this year. Co does expect some margin improvment as a result...... Co was asked whether it would makes sense for a domestic steel mill to own a service center like RS. Co responds by saying that most are not big enough to matter much, including RS. Granted, RS has a $7 bln run-rate, but half of this is non-ferrous which is not what the mills make. Also, it might anger other service centers who may decide to take their business elsewhere. RS sounds like the benefits of a deal may not outweigh the potential problems. (BriefingNote: However, stock seems to be moving up on this, perhaps because co did not flat out say it would not be interested in being acquired)... As for deals RS may make, co says there is a lot of opportunity out there. Co says it's looking at a lot of deals. As for pricing, co says its recent deals have been bought at multiples they have historically been able to get, so co not seeing a big increase in prices they have to pay... For financing a deal, co says it could use stock or pay cash then do a follow-on offering.
Reports Q1 (Mar) earnings of $1.46 per share, $0.14 better than the Reuters Estimates consensus of $1.32; revenues rose 86.4% year/year to $1.84 bln vs the $1.7 bln consensus. Co issues upside guidance for Q2, sees EPS of $1.45-1.55 vs. $1.46 consensus.
RS Reliance Steel Conference Call Summary: co asked a lot about M&A (55.30 +3.46) -Update-
On conf call, co says overall pricing is improving. Inventory levels at customer locations have been declining and are now back to normal levels after higher levels in Q4. Co also says imports are not likely to be a big factor this year as the weak dollar makes it less attractive for foreign competitors to sell into the US.... Co believes its major markets including aerospace, energy, non-residential construction will continue to grow in 2007, but at a slower rate than in 2006. Co does not expect costs and pricing to change significantly as the year progresses... During Q&A, there was quite a bit of merger discussion: In 2006, the co closed 4 deals and 3 so far this year. Co does expect some margin improvment as a result...... Co was asked whether it would makes sense for a domestic steel mill to own a service center like RS. Co responds by saying that most are not big enough to matter much, including RS. Granted, RS has a $7 bln run-rate, but half of this is non-ferrous which is not what the mills make. Also, it might anger other service centers who may decide to take their business elsewhere. RS sounds like the benefits of a deal may not outweigh the potential problems. (BriefingNote: However, stock seems to be moving up on this, perhaps because co did not flat out say it would not be interested in being acquired)... As for deals RS may make, co says there is a lot of opportunity out there. Co says it's looking at a lot of deals. As for pricing, co says its recent deals have been bought at multiples they have historically been able to get, so co not seeing a big increase in prices they have to pay... For financing a deal, co says it could use stock or pay cash then do a follow-on offering.
Know how to make God laugh?
Tell Her your plans ....
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
