Open main menu
Open main menu
45
RELIANCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
locations in U.S. states and foreign countries (Belgium, Canada, China, France, Malaysia, Mexico, Singapore, South Korea, the United Arab Emirates and the United Kingdom) at December 31, 2024 that provides value-added metals processing services and distributes a full line of more than metal products.
46
billion as of December 31, 2024 and 2023, respectively. The aggregate fair values of these senior unsecured notes based on quoted market prices were $ billion and $ billion at December 31, 2024 and 2023, respectively, compared to their aggregate carrying values of $ billion. The estimated fair values of our senior unsecured notes are based on Level 2 inputs, including benchmark yields, reported trades and broker/dealer quotes. Fair values of our other financial instruments, which include deferred compensation plan assets held within grantor trusts, are comprised of marketable securities that are generally based on quoted market prices for identical instruments that trade in active markets.
operating segment and reporting unit for goodwill impairment purposes. We calculate the fair value of the reporting unit using our market capitalization or the discounted cash flow method, as necessary, and compare the fair value to the carrying value of the reporting unit to determine if impairment exists. We perform our annual impairment evaluations of goodwill and other indefinite-lived intangible assets on November 1 of each year. impairment of goodwill was determined to exist in any of the years presented. We recorded an $ million impairment loss on a trade name intangible asset with an indefinite life in 2024. impairment losses were recognized related to other intangible assets with indefinite lives in 2023 and 2022. See Note 8—“Intangible Assets, Net” for further details of our impairment loss.
and machinery and equipment over three to .
Intangible assets with finite useful lives are amortized over their useful lives. We periodically review the recoverability of our property, plant and equipment and intangible assets subject to amortization whenever events or changes in
47
performance obligation: sale of processed or unprocessed metal product. Control of the metal products we sell transfers to our customers upon delivery for orders with free on board (“FOB”) destination terms or upon shipment for orders with FOB shipping point terms. Shipping and handling charges to our customers are included in net sales. We account for all shipping and handling of our products as fulfillment activities and not as a promised good or service. Costs incurred in connection with the shipping and handling of our products are typically included in operating expenses whether we use a third-party carrier or our own trucks. In 2024, 2023 and 2022, shipping and handling costs included in Warehouse, delivery, selling, general and administrative (“SG&A”) expenses were $ million, $ million and $ million, respectively. Shipment and delivery of our orders generally occur on the same day due to the close proximity of our customers and our metals service center locations.
Toll Processing and Logistics
Toll processing services relate to the processing of customer-owned metal. Logistics services primarily include transportation and storage services for metal we toll process. Revenue for these services is recognized over time as the toll processing or logistics services are performed. The toll processing services are generally short-term in nature with the service being performed in less than .
Seasonality
Some of our customers are in seasonal businesses, especially customers in the construction industry and related businesses. Our overall operations have not shown any material seasonal trends as a result of our geographic, product and customer diversity. Typically, revenues in the months of July, November and December have been lower than in other months because of a reduced number of working days for shipments of our products, resulting from holidays observed by
48
million, $ million and $ million in 2024, 2023 and 2022, respectively, and is included in the Warehouse, delivery, selling, general and administrative caption of our consolidated statements of income.
million in 2024, and losses of $ million and $ million in 2023 and 2022, respectively.
real and personal property tax abatements in Haralson County for the construction of49
locations, servicing a diverse range of customers.
On April 1, 2024, we acquired American Alloy Steel, Inc. (“American Alloy”) with cash on hand. American Alloy, headquartered in Houston, Texas, operates metals service centers and a plate fabrication business in the U.S. American Alloy is a distributor of specialty carbon and alloy steel plate and round bar, including pressure vessel quality (PVQ) material.
On April 1, 2024, we acquired, with cash on hand, Mid-West Materials, Inc. (“MidWest Materials”), a flat-rolled steel service center that primarily services North American original equipment manufacturers. Headquartered in Perry, Ohio, MidWest Materials provides steel products including hot-rolled, high strength hot-rolled, coated, and cold-rolled products that are sold into the trailer manufacturing, agriculture, metal fabrication, and building products markets.
On August 16, 2024, with cash on hand, we completed the acquisition of certain assets of the FerrouSouth division of Ferragon Corporation (“FerrouSouth”). FerrouSouth is a toll processing operation headquartered in Iuka, Mississippi, which provides flat-roll steel processing, logistics and warehousing services.
Included in our net sales for the year ended December 31, 2024 were combined net sales of $ million from our 2024 acquisitions.
Our 2024 acquisitions have increased our capacity and enhanced our product, customer and geographic diversification. We have not diversified outside our core business of providing metal distribution and processing solutions since our inception.
50
Accounts receivable
Inventories
Prepaid expenses and other current assets
Property, plant and equipment
Operating lease right-of-use assets
Goodwill
Intangible assets subject to amortization
Intangible assets not subject to amortization
Total assets acquired
Deferred income taxes
Operating lease liabilities
Other current and long-term liabilities
Total liabilities assumed
Noncontrolling interest
Net assets acquired
$
The completion of the purchase price allocations for our 2024 acquisitions are pending the completion of certain purchase price adjustments based on various pre-acquisition period income tax returns.
Summary purchase price allocation information for all acquisitions
All of the acquisitions discussed in this note have been accounted for under the acquisition method of accounting and, accordingly, each purchase price has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of each acquisition. The accompanying consolidated statements of income include the revenues and expenses of each acquisition since its respective acquisition date. The consolidated balance sheets reflect the allocations of each acquisition’s purchase price as of December 31, 2024. The measurement periods for purchase price allocations do not exceed 12 months from the acquisition date.
As part of the purchase price allocations for the 2024 acquisitions, we allocated $ million to the trade names acquired. We determined that each of the trade names acquired in connection with these acquisitions had indefinite lives since their economic lives are expected to approximate the life of each company acquired. We recorded other identifiable intangible assets related to customer relationships for the 2024 acquisitions of $ million with weighted average lives of years and non-compete agreements of $ million with lives of years. The goodwill arising from our 2024 acquisitions predominantly consists of expected strategic benefits, including enhanced financial and operational scale, as well as expansion of acquired product and processing know-how across our enterprise. Goodwill of $ million from our 2024 acquisitions is expected to be deductible for income tax purposes.
Unaudited pro forma financial information for all acquisitions
The unaudited pro forma summary financial results present the consolidated results of operations as if our 2024 acquisitions had occurred as of January 1, 2023, after the effect of certain adjustments, including lease cost fair value adjustments, amortization of inventory step-down to fair value adjustments included in cost of sales, depreciation and amortization of certain identifiable property, plant and equipment and intangible assets.
Pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the 2024 acquisitions been made as of January 1, 2023, or of any potential results which may occur in the future.
51
Net income attributable to Reliance
$
Earnings per share attributable to Reliance stockholders:
Basic
$
Diluted
$
% to %. The financial results of investees are generally consolidated when the ownership interest is greater than %.
Operations that are majority owned by us are as follows: American Alloys North Inc. in which our recently acquired, wholly-owned subsidiary, American Alloys, has a % ownership interest; Indiana Pickling and Processing Company in which our wholly-owned subsidiary, Feralloy Corporation, has a % ownership interest; and Valex Corp.’s operations in South Korea, in which our wholly-owned subsidiary, Valex Corp., has a % ownership interest. The results of these majority-owned operations are consolidated in our financial results. The portion of the earnings related to the noncontrolling shareholder interests has been reflected in the Net income attributable to noncontrolling interests caption in the accompanying consolidated statements of income.
$
Cost on FIFO method higher than LIFO value
()
()
Inventories—stated on LIFO method
Inventories—stated on FIFO method
$
$
The changes in the LIFO inventory valuation reserve were as follows:
$
$
52
$
$
Aluminum
Stainless steel
Alloy
Toll processing and logistics
Copper and brass
Miscellaneous and eliminations
Total
$
$
$
$
Buildings
Machinery and equipment
Construction in progress
Property, plant and equipment, gross
Less: accumulated depreciation
()
()
Property, plant and equipment, net
$
$
As of December 31, 2024, 2023 and 2022, noncash investing activity included $ million, $ million and $ million of capital expenditures, respectively, included in accounts payable and accrued expenses.
Acquisition
Effect of foreign currency translation
Balance at December 31, 2023
Acquisitions
Effect of foreign currency translation
()
Balance at December 31, 2024
$
We had accumulated impairment losses related to goodwill at December 31, 2024 and 2023.
53
$
$
()
$
$
()
Backlog of orders
()
()
Other
()
()
()
()
Intangible assets not subject to amortization:
Trade names
—
—
$
$
()
$
$
()
Changes in the carrying amount of intangible assets, net are as follows:
Acquisition
Amortization expense
()
Effect of foreign currency translation
Balance at December 31, 2023
Acquisitions
Amortization expense
()
Impairment
()
Other
Effect of foreign currency translation
()
Balance at December 31, 2024
$
See Note 2—“Acquisitions” for further discussion of intangible assets recorded in the preliminary purchase price allocations of our 2024 acquisitions.
We recognized an impairment loss of $ million in 2024 related to the write-off of the carrying amount of a trade name intangible asset pursuant to its discontinued use resulting from an operational restructuring.
The following is a summary of estimated future amortization expense:
2026
2027
2028
2029
Thereafter
$
million and $ million as of December 31, 2024 and 2023, respectively.
54
We received proceeds from the redemption of life insurance policies of $ million, $ million and $ million in 2024, 2023 and 2022, respectively.
As of December 31, 2024 and 2023, loans and accrued interest outstanding on EMJ’s life insurance policies were $ million and $ million, respectively.
Payments for premiums and interest owed on policy loans, net of proceeds from policy borrowings and redemptions are included as other investing activities in the accompanying consolidated statements of cash flows.
Income earned on our life insurance policies and redemptions, interest expense on borrowings against cash surrender values and cost of insurance charges are included in the Other (income) expense, net caption in the accompanying consolidated statements of income as follows:
)
$
()
$
()
Interest expense on life insurance policy loans
Life insurance policy cost of insurance
Income from life insurance policy redemptions
()
()
()
Life insurance policy expense, net
$
$
$
55
%, effective rate of %, maturing August 15, 2025
Senior unsecured notes, interest payable semi-annually at %, effective rate of %, maturing August 15, 2030
Senior unsecured notes, interest payable semi-annually at %, effective rate of %, maturing November 15, 2036
Other notes
Total
Less: unamortized discount and debt issuance costs
()
()
Less: amounts due within one year
()
()
Total long-term debt
$
$
The weighted average effective interest rate on the Company’s outstanding borrowings as of December 31, 2024 and 2023 was %.
Unsecured Credit Facility
On September 10, 2024, we entered into a $ billion unsecured Second Amended and Restated Credit Agreement (“Credit Agreement”) that amended and restated our then-existing $ billion unsecured revolving credit facility. As of December 31, 2024, borrowings under the Credit Agreement were available at variable rates based on the Secured Overnight Financing Rate (“”) plus % or the bank and we currently pay a commitment fee at an annual rate of % on the unused portion of the revolving credit facility. The applicable margins over SOFR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our total net leverage ratio, as defined in the Credit Agreement. All borrowings under the Credit Agreement may be prepaid without penalty.
As of December 31, 2024 and 2023, we had outstanding borrowings on the revolving credit facility. We had $ million and $ million of letters of credit outstanding under the revolving credit facility as of December 31, 2024 and December 31, 2023, respectively.
Senior Unsecured Notes
Under the indentures for each series of our senior notes (the “indentures”), the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. If we experience a change in control accompanied by a downgrade in our credit rating, we will be required to make an offer to repurchase each series of the notes at a price equal to % of their principal amount plus accrued and unpaid interest.
Other Notes, Revolving Credit and Letter of Credit/Letters of Guarantee Facilities
A wholly owned subsidiary in China has a revolving credit facility with a credit limit of $ million as of December 31, 2024 with outstanding balance as of December 31, 2024 and 2023.
Various industrial revenue bonds had combined outstanding balances of $ million and $ million as of December 31, 2024 and 2023, respectively, bearing interest at variable rates and have maturities through 2027.
56
Covenants
The Credit Agreement and the indentures include customary representations, warranties, covenants and events of default provisions. The covenants under the Credit Agreement include, among other things, a financial maintenance covenant that requires us to comply with a maximum total net leverage ratio. We were in compliance with the financial maintenance covenant in our Credit Agreement at December 31, 2024.
Debt Maturities
The following is a summary of aggregate maturities of long-term debt for each of the next five years and thereafter:
2026
2027
2028
2029
Thereafter
$
$
$
Variable fees and other(1)
Total lease cost
$
$
$
| (1) | Includes variable lease payments and costs of short-term leases. |
57
$
$
Right-of-use assets obtained in exchange for operating lease obligations
$
$
$
December 31,
December 31,
2024
2023
Other lease information:
Weighted average remaining lease term—operating leases
years
years
Weighted average discount rate—operating leases
%
%
Maturities of operating lease liabilities as of December 31, 2024 are as follows:
2026
2027
2028
2029
Thereafter
Total operating lease payments
Less: imputed interest
()
Total operating lease liabilities
$
$
$
State
Foreign
Deferred:
Federal
()
State
()
Foreign
()
()
()
()
$
$
$
58
$
$
International
Income before income taxes
$
$
$
The reconciliation of income tax at the U.S. federal statutory tax rate to income tax expense is as follows:
%
%
%
State income tax, net of federal tax effect
Foreign earnings taxed at higher (lower) rates
()
Net effect of life insurance policies
()
()
()
Other, net
()
()
Effective tax rate
%
%
%
Significant components of our deferred tax assets and liabilities are as follows:
$
Inventory costs capitalized for tax purposes
Accrued expenses not currently deductible for tax
Stock-based compensation
Net operating loss carryforwards
Tax credits carryforwards
Total deferred tax assets
Deferred tax liabilities:
Property, plant and equipment, net
()
()
Goodwill and other intangible assets
()
()
LIFO inventories
()
()
Other
()
()
Total deferred tax liabilities
()
()
Net deferred tax liabilities
$
()
$
()
The Company believes it is more likely than not that it will generate sufficient future taxable income to realize its deferred tax assets.
Unrecognized Tax Benefits
We are under audit by various state jurisdictions for years 2020 through 2022, but do not anticipate any material adjustments from these examinations.
59
$
$
Increases (decreases) in tax positions for prior years
()
Increases in tax positions for current year
—
—
Settlements
—
()
()
Lapse of statute of limitations
()
()
()
Unrecognized tax benefits at December 31
$
$
$
As of December 31, 2024, $ million of unrecognized tax benefits would impact the effective tax rate if recognized. Accrued interest and penalties, net of applicable tax effect, related to uncertain tax positions were $ million and $ million as of December 31, 2024 and 2023, respectively. Although the timing, settlement or closure of audits is not certain, we do not anticipate our unrecognized tax benefits will increase or decrease significantly over the next twelve months.
shares were authorized for future grant under our various stock-based compensation plans. Awards that expire or are canceled without delivery of shares of our common stock and shares withheld related to net share settlements of vested restricted stock units generally become available for issuance under the plans. As RSUs and PSUs vest, we issue new shares of Reliance common stock.
Restricted Stock Units
$
2026
2023
$
2025
2022
$
2024
Each RSU and PSU includes a service-based condition and consists of a right to receive shares of our common stock and dividend equivalent rights, subject to forfeiture, equal to the accrued cash or stock dividends where the record date for such dividends is after the grant date but before the award is settled. The RSUs provide the right to receive share of our common stock and cliff vest on December 1 upon satisfaction of an approximately service-based condition. The PSUs include performance goals and the right to receive a maximum of shares of our common stock and vest only upon the satisfaction of the service-based condition and certain performance targets for 3-year periods ending December 31.
60
$
Granted
Vested
()
Cancelled or forfeited
()
Unvested at December 31, 2024
$
Shares reserved for future grants (all plans)
The fair values as of the respective vesting dates of RSUs and PSUs vested during 2024, 2023 and 2022 were $ million, $ million and $ million, respectively. PSUs granted in 2022 totaling units that vested on December 31, 2024 were settled in February 2025 through the issuance of shares of our common stock.
Stock Awards
In 2024, 2023 and 2022, we granted , and stock awards, in total, respectively, to the non-employee members of the Board of Directors that were fully vested on the grant date. The fair values of the stock awards granted in 2024, 2023 and 2022, were $ per share, $ per share and $ per share, respectively, determined based on the closing price of our common stock on the respective grant dates.
Unrecognized Compensation Cost and Tax Benefits
As of December 31, 2024, there was $ million of total unrecognized compensation cost related to unvested RSUs and PSUs that is expected to be recognized, net of actual forfeitures and cancellations, over a weighted average period of years.
The tax benefit realized from our stock-based compensation plans in 2024, 2023 and 2022 was $ million, $ million and $ million, respectively.
of service and the Company contribution vests at % per year. We have other defined contribution plans that include the Precision Strip Retirement and Savings Plan and plans at certain domestic and foreign subsidiaries that have not merged their plans into the Master 401(k) Plan as of December 31, 2024 (collectively, the “Other Defined Contribution Plans”).
We also sponsor the Reliance, Inc. Employee Stock Ownership Plan, a tax-qualified noncontributory employee stock ownership plan, for certain salaried and hourly employees of the Company. The plan is closed to new enrollees and the Company is not currently making annual contributions to the plan.
61
Life insurance policies were purchased for most individuals covered by the Reliance SERP and held within a grantor trust. See Note 9—“Cash Surrender Value of Life Insurance Policies, Net” for further discussion of our life insurance policies. Separate supplemental executive retirement plans exist for certain wholly owned subsidiaries of the Company (together with the Reliance SERP, the “SERPs”), each of which provides postretirement pension benefits to certain former key employees. All SERPs have been frozen to new participants since 2009.
Deferred Compensation Plan
In December 2008, the Reliance Deferred Compensation Plan (the “DCP”) was established for certain officers and key employees of the Company. Account balances from various compensation plans of subsidiaries were contributed and consolidated into this new deferred compensation plan. Plan participants may contribute a portion of their eligible compensation to the plan and Reliance currently makes contributions to the plan for certain participants.
An irrevocable grantor trust is in place to which we may contribute assets for the purpose of funding the DCP. Although we may not use the assets of the grantor trust for any purpose other than meeting our obligations under the DCP, the assets of the grantor trust remain subject to the claims of our creditors. The aggregate fair value of the marketable securities held by the grantor trust as of December 31, 2024 and 2023 were $ million and $ million, respectively, and the amount of our obligations to the participants under the DCP on those dates were also $ million and $ million, respectively. The grantor trust assets and our liability under the DCP are included in the Other long-term assets and Other long-term liabilities captions of our consolidated balance sheets. The Company expects to contribute $ million to the plan during 2025.
Multiemployer Plans
Certain of our union employees participate in plans collectively bargained and maintained by multiple employers and a labor union. We do not recognize on our balance sheet any amounts relating to these plans. For 2024, 2023 and 2022 our contributions to these plans were $ million, $ million and $ million, respectively. Some of the plans we participate in are in endangered, critical or critical and declining status and have adopted rehabilitation plans. If we were to withdraw our participation from these plans, we would be required to recognize a liability on our balance sheet and the amount could be significant. During the year ended December 31, 2024, we recognized liabilities of $ million for our withdrawal from certain multiemployer pension plans.
Defined Benefit Plan
Our wholly owned subsidiary, EMJ, maintains a qualified defined benefit pension plan (the “DB Plan”) for certain union employees. The plan generally provides benefits of stated amounts for each year of service or provides benefits based on the participant’s hourly wage rate and years of service. The plan permits the sponsor, at any time, to amend or terminate the plan.
62
$
$
$
Service cost
Interest cost
Actuarial (gain) loss(1)
()
()
Benefits paid
()
()
()
()
Plan amendment
—
—
—
Benefit obligation at end of year
$
$
$
$
Change in plan assets:
Fair value of plan assets at beginning of year
N/A
N/A
$
$
Actual return on plan assets
N/A
N/A
Benefits paid
N/A
N/A
()
()
Fair value of plan assets at end of year
N/A
N/A
$
$
Funded status:
Funded status of the plans
$
()
$
()
$
$
Items not yet recognized as component of net periodic pension expense:
Unrecognized net actuarial losses (gains)
$
$
$
()
$
()
Unamortized prior service cost
—
—
$
$
$
()
$
| (1) | Actuarial gains in 2024 for the DB Plan were primarily due to the actual return on plan assets exceeding the expected return on plan assets and increases in the discount rate used to measure the obligations. |
As of December 31, 2024 and 2023, the following amounts were recognized on the balance sheet:
$
Current liabilities
()
()
—
—
Noncurrent liabilities
()
()
—
—
Accumulated other comprehensive loss (gain)
()
Net amount recognized
$
()
$
()
$
$
The accumulated benefit obligation for the SERPs was $ million and $ million as of December 31, 2024 and 2023, respectively.
63
$
$
$
$
$
Interest cost
Expected return on plan assets
—
—
—
()
()
()
Settlement loss
—
—
—
—
—
Prior service cost
—
—
—
Amortization of net loss
—
—
—
—
$
$
$
$
$
$
Net periodic benefit cost related to the SERPs, and the DB Plan is presented in our consolidated statements of income, as summarized below:
| | | | | | | | | | | | | | | | | |
| SERPs | | DB Plan | ||||||||||||||
| Year Ended December 31, | | Year Ended December 31, | ||||||||||||||
| 2024 |
| 2023 |
| 2022 |
| 2024 |
| 2023 |
| 2022 | ||||||
| (in millions) | | (in millions) | ||||||||||||||
Amounts recognized in the statement of income: | | | | | | | | | | | | | | | | | |
Warehouse, delivery, selling, general and administrative expense | $ |
| | $ |
| | $ |
| | $ |
| | $ |
| | $ |
|
Other expense (income), net | |
| | |
| | |
| | | () | | | () | | | () |
| $ |
| | $ |
| | $ |
| | $ |
| | $ |
| | $ |
|
Assumptions used to determine net periodic benefit cost are detailed below:
%
%
%
%
%
%
Expected long-term rate of return on plan assets
N/A
N/A
N/A
%
%
%
Rate of compensation increase
%
%
%
N/A
N/A
N/A
Assumptions used to determine the benefit obligation are detailed below:
%
%
%
%
Expected long-term rate of return on plan assets
N/A
N/A
%
%
Rate of compensation increase
%
%
N/A
N/A
64
$
2026
2027
2028
2029
2030-2034
Company contributions of $ million are expected during 2024 to the SERPs and ne for the DB Plan.
Plan Assets and Investment Policy
Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term. The investment goal is a return on assets that is at least equal to the assumed actuarial rate of return over the long-term within reasonable and prudent levels of risk. We establish our estimated long-term return on plan assets assumption considering various factors including the targeted asset allocation percentages, historic returns and expected future returns. The plan assets are largely comprised of commingled funds which are allocated across return-seeking assets (%-%) and liability-hedging assets (%-%). Asset allocation targets are reviewed periodically with investment advisors to determine the appropriate investment strategies for acceptable risk levels.
The fair value measurements of the investments held by our DB Plan fall within the following levels of the fair value hierarchy as of December 31, 2024 and 2023:
$
—
$
—
$
Mutual funds(1)
—
—
Total assets in the fair value hierarchy
—
—
Commingled funds measured at NAV(2)
—
—
—
Total investments at fair value
$
$
—
$
—
$
December 31, 2023
Common stock(3)
$
$
—
$
—
$
U.S. government, state and agency
—
—
Corporate debt securities(4)
—
—
Mutual funds(1)
—
—
Interest bearing cash
—
—
Total investments at fair value
$
$
$
—
$
| (1) | Mutual funds held are registered with the United States Securities and Exchange Commission. These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held are deemed to be actively traded. |
| (2) | Investments in commingled funds are measured at fair value using NAV as a practical expedient. The fair value of these assets is excluded from the fair value hierarchy and is presented in the tables above to permit reconciliation of the investments classified with the fair value hierarchy to the total investments at fair value. |
| (3) | Comprised primarily of securities of large domestic and foreign companies. Valued at the closing price reported on the active market on which the individual securities are traded on national exchanges. |
| (4) | Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing values on a combination of inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. |
65
Contributions to Reliance Sponsored Retirement Plans
Our expense for Reliance-sponsored retirement plans was as follows:
$
$
Precision Strip Retirement and Savings Plan
DCP
Other Defined Contribution Plans
DB Plan
SERPs
$
$
$
consecutive years. Our Board of Directors increased the quarterly dividend from $ to $ per share in February 2022, to $ per share in February 2023, to $ per share in February 2024 and to $ per share in February 2025. The holders of Reliance common stock are entitled to vote per share on each matter submitted to a vote of stockholders.
Shares Outstanding
Issued and outstanding common shares were as follows:
Issued to settle RSUs and PSUs, net of withheld shares
Repurchased
()
()
()
Issued and outstanding common shares, ending balance
Share Repurchases
On October 22, 2024, our Board of Directors amended our share repurchase program to replenish the repurchase authorization to $ billion. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. Repurchased and subsequently retired shares are restored to the status of authorized but unissued shares.
Our share repurchase activity for the past three years consisted of the following:
$
$
2023
$
$
2022
$
$
66
In 2025, we repurchased an additional shares at an average cost of $, for a total of $ million, resulting in $ billion remaining available for repurchase as of February 25, 2025.
Preferred Stock
We are authorized to issue shares of preferred stock, par value $ per share. shares of our preferred stock are issued and outstanding. Our restated articles of incorporation provide that shares of preferred stock may be issued from time to time in or more series by the Board. The Board can fix the preferences, conversion and other rights, voting powers, restrictions and limitations as to dividends, qualifications and terms and conditions of redemption of each series of preferred stock. The rights of preferred stockholders may supersede the rights of common stockholders.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss included the following:
)
$
()
$
()
Current-year change
()
()
Balance as of December 31, 2024
$
()
$
$
()
Foreign currency translation adjustments have not been adjusted for income taxes. Pension and postretirement benefit plan adjustments are amortized over service periods and reflected in the amortization of net loss component of our net periodic benefit cost or recognized as a non-operating gain or loss as result of plan settlements.
Pension and postretirement benefit adjustments are net of deferred tax liability of $ million as of December 31, 2024 and deferred tax asset of $ million as of December 31, 2023. As our pension and postretirement benefit plan obligations are settled, the related income tax effect is released from accumulated other comprehensive loss and included in our income tax provision.
)
$
()
$
()
(Income) loss on deferred compensation plan assets
()
()
Life insurance policy expense, net
Foreign currency transaction (gains) losses
()
All other, net
()
()
()
$
()
$
()
$
67
Collective Bargaining Agreements
As of December 31, 2024, approximately , or %, of our total employees were covered by collective bargaining agreements at of our different locations, which expire at various times over the next . Approximately % of our employees are covered by different collective bargaining agreements that will expire during 2025, if not renewed.
Environmental Contingencies
We are subject to extensive and changing federal, state, local and foreign laws and regulations designed to protect the environment, including those relating to the use, handling, storage, discharge and disposal of hazardous substances and the remediation of environmental contamination. Our operations use minimal amounts of such substances.
We believe we are in material compliance with environmental laws and regulations; however, we are from time to time involved in administrative and judicial proceedings and inquiries relating to environmental matters. Some of our owned or leased properties are located in industrial areas with histories of heavy industrial use. We may incur some environmental liabilities because of the location of these properties. In addition, we are currently involved with an environmental remediation project related to activities at former manufacturing operations of EMJ, our wholly owned subsidiary, that were sold many years prior to our acquisition of EMJ in 2006. Although the potential cleanup costs could be significant, EMJ maintained insurance policies during the time it owned the manufacturing operations that have covered costs incurred to date and are expected to continue to cover the majority of the related costs. We do not expect that this obligation will have a material adverse impact on our consolidated financial position, results of operations or cash flows.
Legal Matters
From time to time, we are named as a defendant in legal actions. These actions generally arise in the ordinary course of business. We are not currently a party to any pending legal proceedings other than routine litigation incidental to the business. We expect that these matters will be resolved without having a material adverse impact on our consolidated financial position, results of operations or cash flows. We maintain general liability insurance against risks arising in the ordinary course of business.
68
$
$
Denominator:
Weighted average shares outstanding
Dilutive effect of stock-based awards
Weighted average diluted shares outstanding
Earnings per share attributable to Reliance stockholders:
Basic
$
$
$
Diluted
$
$
$
The computations of diluted earnings per share using the treasury stock method for 2024, 2023 and 2022 do not include , and weighted average shares, respectively, in respect of outstanding RSUs and PSUs, because their inclusion would have been anti-dilutive.
operating and reportable segment—metals service centers. Reliance derives revenue primarily in the United States and manages its business activities on a consolidated basis.
Reliance is organized as a network of metals service centers under a decentralized operating structure. Reliance provides metal solutions from this network under its operating strategies that include organic growth and acquisitions that enhance the metals service center network’s diversification of products, geographies and customers.
The metals service centers segment primarily operates in the spot market, distributing a full line of over metals products, about half of which include value-added processing services to meet customer specifications, from a network of locations.
The following is a summary of our sales by product and service (gross sales as a % of total sales) for each of the three years ended December 31:
%
%
%
Aluminum
Stainless steel
Alloy
Toll processing and logistics
Copper and brass
Miscellaneous
Total
%
%
%
The accounting policies of the metals service center segment are the same as those described in Note 1—“Summary of Significant Accounting Policies.”
The Company's chief operating decision maker (“CODM”) is the chief executive officer.
69
The measure of segment assets is reported on the accompanying consolidated balance sheet as total assets.
The measure of segment profit and loss is net income reported on the accompanying consolidated income statements.
Information about our segment revenue, profit or loss, significant expenses and other quantitative profit or loss information is presented below:
$
$
Less:
Cost of sales (exclusive of depreciation and amortization shown below)
Compensation expense
Other segment items(a)
Depreciation and amortization expense
Impairment
—
—
Interest expense
Income tax provision
Segment net income
Reconciliation
Adjustments and reconciling items
—
—
—
Consolidated net income
$
$
$
Other Segment Disclosures:
Purchases of property, plant and equipment
$
$
$
| (a) | Other segment items included in Segment net income mainly includes warehousing and delivery related expenses, which include among others, 3rd party freight, gas and oil, utilities & rent, plant supplies, and repairs and maintenance. |
The following table summarizes consolidated financial information of our U.S. and foreign operations:
$
$
Long-lived assets
Year Ended December 31, 2023:
Net sales
Long-lived assets
Year Ended December 31, 2022:
Net sales
Long-lived assets
70
$
$
$
$
Year Ended December 31, 2023:
Allowance for credit losses
$
$
$
$
—
$
Year Ended December 31, 2022:
Allowance for credit losses
$
$
$
$
—
$
| (1) | Uncollectible accounts written off. |
See accompanying report of independent registered public accounting firm.
71
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (“CEO”), and chief financial officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of the Company’s management, including our CEO and CFO, an evaluation was performed on the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to and as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our management, including the CEO and the CFO, concluded, as of the end of the period covered in this report, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (ii) that it is accumulated and communicated to our management, including the CEO and our CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
An evaluation was also performed under the supervision and with the participation of our management, including our CEO and CFO, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their audit report, which is included in Item 9A.
72
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Reliance, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Reliance, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and equity for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedule II of valuation and qualifying accounts (collectively, the consolidated financial statements), and our report dated February 27, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
73
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| |
| /s/ KPMG LLP |
Los Angeles, California
February 27, 2025
74
Item 9B. Other Information
During the fourth quarter ended December 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) , or modified a trading arrangement or trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
We have an Insider Trading and Securities Compliance Policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers, and employees, and have implemented processes for the Company, that we believe are designed to promote compliance with insider trading laws, rules, and regulations and any applicable listing standards. A copy of our Insider Trading Policy is filed with this Annual Report on Form 10-K as Exhibit 19.
Information about our Code of Conduct, which applies to our executive officers and senior management, our directors, including our audit committee and audit committee financial experts and the procedures by which stockholders can recommend director nominees, and our executive officers will be in our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders to be filed within 120 days after the close of the Company’s fiscal year (the “Proxy Statement”) and is incorporated herein by reference.
Item 11. Executive Compensation
Information relating to our executive officer and director compensation and the compensation committee of the Board of Directors will be included in the Proxy Statement and is incorporated herein by reference (excluding the information contained under the heading “Executive Compensation Tables—Pay Versus Performance”).
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information relating to security ownership of certain beneficial owners of our common stock and information relating to the security ownership of our management will be included in the Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information regarding certain relationships and related transactions and director independence will be included in the Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information regarding principal accountant fees and services will be included in the Proxy Statement and is incorporated herein by reference.
75
PART IV
Item 15. Exhibits and Financial Statement Schedules
| (a) | The following documents are filed as part of this report: |
| (1) | Financial Statements (included in Item 8). |
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Equity
Notes to Consolidated Financial Statements
| (2) | Financial Statement Schedules |
Schedule II—Valuation and Qualifying Accounts
All other schedules have been omitted since the required information is not significant or is included in the consolidated financial statements or notes thereto or is not applicable.
| (3) | Exhibits |
| | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | | Incorporated by Reference | ||||
Exhibit |
| Description |
| Form |
| Exhibit |
| Filing Date/ Period End Date |
3.01 | | | 8-K | | 3.1 | | 6/1/2015 | |
3.02 | | | 8-K | | 3.1 | | 2/15/2024 | |
3.03 | | | 8-K | | 3.2 | | 2/15/2024 | |
4.01 | | | 8-K | | 10.01 | | 11/20/2006 | |
4.02 | | Forms of the Notes and the Exchange Notes under the Indenture. | | 8-K | | 10.02 | | 11/20/2006 |
4.03 | | | 8-K | | 4.1 | | 4/12/2013 | |
4.04 | | | 8-K | | 4.2 | | 4/12/2013 | |
4.05 | | Description of Registrant’s Securities Registered Pursuant to Section 12 of the Exchange Act. | | 10-K | | 4.05 | | 12/31/2019 |
4.06 | | | 8-K | | 4.1 | | 8/3/2020 | |
76
| | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | | Incorporated by Reference | ||||
Exhibit |
| Description |
| Form |
| Exhibit |
| Filing Date/ Period End Date |
4.07 | | | 8-K | | 4.2 | | 8/3/2020 | |
10.01† | | | 10-K | | 10.15 | | 12/31/2008 | |
10.02† | | | DEF 14A | | Appendix A | | 4/1/2011 | |
10.03† | | Registrant’s Amended and Restated Deferred Compensation Plan effective January 1, 2013. | | 10-K | | 10.09 | | 12/31/2012 |
10.04† | | Registrant’s Form of Indemnification Agreement for officers and directors. | | 8-K | | 10.1 | | 2/16/2016 |
10.05† | | Form of Restricted Stock Unit Award Agreement – ROA Performance. | | 10-Q | | 10.3 | | 3/31/2016 |
10.06† | | | 10-Q | | 10.4 | | 3/31/2016 | |
10.07† | | Registrant’s Second Amended and Restated 2015 Incentive Award Plan. | | 8-K | | 10.1 | | 5/22/2020 |
10.08† | | | 8-K | | 10.2 | | 5/22/2020 | |
10.09 | | | 8-K | | 10.1 | | 9/16/2024 | |
10.10† | | Registrant’s First Amendment to Deferred Compensation Plan effective December 22, 2020. | | 10-K | | 10.15 | | 12/31/2020 |
10.11† | | | 10-Q | | 10.1 | | 3/31/2023 | |
10.12† | | Amendment No. 2 to the Reliance, Inc. Second Amended and Restated 2015 Incentive Award Plan. | | 8-K | | 10.1 | | 5/16/2024 |
10.13†* | | Registrant’s Third Amendment to Deferred Compensation Plan dated as of July 24, 2023. | | | | | | |
19* | | Registrant’s Insider Trading and Securities Compliance Policy | | | | | | |
21* | | | | | | | | |
23* | | Consent of Independent Registered Public Accounting Firm—KPMG LLP. | | | | | | |
24* | | | | | | | | |
31.1* | | | | | | | | |
31.2* | | | | | | | | |
32** | | | | | | | | |
97.1† | | Registrant’s Amended and Restated Compensation Recovery Policy. | | 10-K | | 91.1 | | 12/31/2023 |
101* | | The following financial information from Reliance, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Income and Comprehensive Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Equity, and (v) related notes to these consolidated financial statements. | | | | | | |
77
| | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | | Incorporated by Reference | ||||
Exhibit |
| Description |
| Form |
| Exhibit |
| Filing Date/ Period End Date |
104 | | The cover page from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in Inline XBRL (included in Exhibit 101). | | | | | | |
| | | | | | | | |
* Filed herewith. | | | | | | | ||
** Furnished herewith. | | | | | | | ||
† Indicates management contract or compensatory plan or arrangement | | | | | | | ||
Item 16. Form 10-K Summary
None.
78
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on February 27, 2025.
| RELIANCE, INC. | |
| By: | /s/ Arthur Ajemyan |
| | Arthur Ajemyan |
| | Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
POWER OF ATTORNEY
The officers and directors of Reliance, Inc. whose signatures appear below hereby constitute and appoint Karla R. Lewis and Arthur Ajemyan, or any of them, to act severally as attorneys-in-fact and agents, with power of substitution and resubstitution, for each of them in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities and on the dates indicated.
Signatures |
| Title |
| Date |
|---|---|---|---|---|
| | | | |
/s/ Douglas W. Stotlar | | Chair of the Board; Director | | February 27, 2025 |
Douglas W. Stotlar | ||||
| | | | |
/s/ Karla R. Lewis | | President and Chief Executive Officer (Principal Executive Officer); Director | | February 27, 2025 |
Karla R. Lewis | ||||
| | | | |
/s/ Lisa L. Baldwin | | Director | | February 27, 2025 |
Lisa L. Baldwin | ||||
| | | | |
/s/ Karen W. Colonias | | Director | | February 27, 2025 |
Karen W. Colonias | ||||
| | | | |
/s/ Frank J. Dellaquila | | Director | | February 27, 2025 |
Frank J. Dellaquila | ||||
| | | | |
/s/ Mark V. Kaminski | | Director | | February 27, 2025 |
Mark V. Kaminski | ||||
| | | | |
/s/ James K. Kamsickas | | Director | | February 27, 2025 |
James K. Kamsickas | ||||
| | | | |
/s/ Robert A. McEvoy | | Director | | February 27, 2025 |
Robert A. McEvoy | ||||
| | | | |
/s/ David W. Seeger | | Director | | February 27, 2025 |
David W. Seeger | ||||
| | | | |
79