Reliance Steel & Aluminum Co. has been on an acquisition spree that has vaulted it to the top ranks of domestic metals distributors.
The downtown-based firm’s latest deal was its purchase of Providence, R.I.-based Ferguson Perforating Co. through one of its subsidiaries in October for an undisclosed amount.
Analysts said the transaction was relatively small – Ferguson’s revenue for fiscal year 2016 was $31 million compared with Reliance’s $8.6 billion. It’s the latest of eight acquisitions stretching back to 2013, however, a string that included its single largest purchase, a 2013 deal for a competitor for $1.24 billion.
“It’s already the biggest player in its industry, but there is a huge opportunity for them to grow even bigger if they keep making acquisitions like Ferguson,” said Chris Olin, analyst at Longbow Research, an asset management firm based in Independence, Ohio.
Reliance distributes steel, aluminum and other metals to manufacturers and other end users. The firm controls about 10 to 12 percent of the domestic metal distribution market, Olin said.
“Ferguson fits solidly into our growth strategy of acquiring companies with high value-added processing capabilities and furthers our product diversification,” Chief Executive Gregg Mollins said in a statement.
The company reported 2016 fiscal year revenue of $8.6 billion, an 8.1 percent decrease compared with $9.3 billion the year prior, which the company attributed to low metal prices. Income declined to $328 million from $348 million over the same period.
The company has turned things around this year, reporting earnings growth every quarter. Reliance reported last week that third-quarter net sales were up 12.1 percent to $2.45 billion from $2.19 billion over the same period a year earlier, while net income grew to $97.3 million from $49.5 million.
Reliance did not return calls for comment last week.
The publicly traded company has a market capitalization of $5.7 billion, but it started off as a much smaller, family-owned operation in 1939. It was founded by Thomas Neilan, and called Reliance Steel Products Co.
The company would make its first acquisition of Carthage Steel Strip in South Gate in 1952. That same year, amid the post-World War II manufacturing boom, the company recorded sales of $4 million, according to its website.
A string of acquisitions in the 1960s led to a statewide expansion, and then the company extended its reach nationwide over the next two decades.
Reliance went public in September 1994, offering 3.5 million new shares and raising $45.9 million, trading on the New York Stock Exchange.
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