Four purchases in six months have put Reliance Steel & Aluminum back on track toward its longtime strategy of growth by acquisition in the metal distribution industry.
The downtown L.A. company announced last week that a subsidiary, Bralco Metals, would acquire Airport Metals Pty. Ltd. in Melbourne, Australia. It is the company’s fourth purchase of the year and its first foray into Australia. Financial terms of the deal were not disclosed.
Reliance operates about 220 metal service centers that distribute steel, alloys and specialty metals in 38 states and nine countries. In total, the company sells sheets, ingots and rolled metals to more than 125,000 customers. Last year’s revenue was $8.7 billion.
Airport Metals supplies aluminum sheeting, metal tubing and welding rods for aviation manufacturers and repair shops in Australia and Oceania.
The recent spate of acquisitions marks a return to form for Reliance. From 1994 through 2009, the company completed 45 acquisitions. The pace slowed dramatically when the recession hit. From 2009 to 2011, the company only did three deals. Now, with the metals market in recovery, opportunities to buy companies on the cheap and Reliance’s strong balance sheet have sparked a comeback.
Karla Lewis, chief financial officer at Reliance, said the company’s Bralco subsidiary in La Mirada had been selling to the Australian market from the United States for several years and had been looking for a facility Down Under. The process led to talks with Airport; Reliance decided to buy into the market rather start from scratch.
“Airport’s business is totally consistent with our business model,” Lewis said. “This was a very important strategic purchase for Bralco’s business.”
In February, Reliance acquired McKey Perforating Co., a metal perforating and fabricating company in Berlin, Wis. In April, the company completed the acquisition of Worthington Steel’s plant in Vonore, Tenn. That same month, the company purchased National Specialty Alloys, a Houston processor and distributor of premium stainless steel and nickel used to make drills and valves for oil exploration equipment. Terms of the deals weren’t disclosed.
Time to buy
Mark Parr, an analyst at Keybanc Capital Markets in Cleveland, said that the weak economy has pushed down prices for metal companies, making it a good time for Reliance to get back into the buying game. Also, the company was prepared for the opportunity.
“Over the years the company has maintained its earning-to-debt leverage within a specific range,” Parr said. “They have money available for acquisitions.”
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Reliance Steel & Aluminum Continues to Roll Up Metal Firms
- Flexibility Gives Reliance Steel Opportunity to Prove Its Mettle
- Reliance Steel Acquires Two Metal Fabrication Companies
- Reliance Steel Makes Acquisition
- Reliance Steel to Acquire Wisconsin Company
- Reliance Buys East Coast Steel Co.
- Acquisitions Forged Metals Business
- Reliance Steels For Price Plunge