A Houston, TX-based jury returned a verdict against
Reliance Steel & Aluminum Co.
), Chapel Steel Corp. (Chapel) - a subsidiary of Reliance Steel -
and four other co-defendants in an antitrust lawsuit filed in the
U.S. District Court for the Southern District of Texas.
Reliance Steel has been involved in legal affairs with two
former employees of the company who started their own business
after leaving Reliance Steel. These former employees claim that
Reliance Steel and the co-defendants have engaged in
Reliance Steel has discussed about their involvement in the legal
proceedings in its Annual Report on Form 10-K for the period
ending Dec 31, 2013, filed with the Securities and Exchange
The TX-based jury has come up with a verdict in favor of the
claimants charging all six defendants jointly for an amount of
$52 million for the damages caused.
However, Reliance Steel and Chapel disagree with this outcome as
they believe that they acted appropriately and within their legal
rights. They are now ready to take the matter up on appeal or
find any other available remedies. Presently, the ultimate amount
of any final judgment that Reliance Steel may have to bear is
Reliance Steel posted its fourth-quarter 2013 results last
month. The company's profit fell roughly 23% year over year to
$61.8 million or 79 cents per share in the quarter from $80.4
million or $1.06 per share a year ago. Profits sagged in the
reported quarter as result of lower pricing and higher costs
which dragged down its bottom line.
Barring one-time items such as impairment and restructuring
charges, earnings were 92 cents per share, down from $1.08 per
share a year ago. It missed the Zacks Consensus Estimate by 6
Revenues, however, shot up roughly 22% year over year to
$2,306.7 million in the reported quarter, but missed the Zacks
Consensus Estimate of $2,375 million. Strength in the automotive
market coupled with Metals USA acquisition supported the top
line. Metals USA, which makes steel and aluminum components, is a
strategic fit with Reliance Steel's portfolio and complements its
existing customer base, product mix, and geographic
Looking ahead, Reliance Steel expects metals pricing and
demand environment to improve in first-quarter 2014, amid a slow
but steady recovery in the U.S. economy. The company expects
earnings per share for the quarter to be in the range of $1.20 to
Reliance Steel believes, there is continued strength in the
automotive market and expects healthy operating results across
end-markets such as aerospace, energy, semiconductor/electronics,
and manufactured goods in 2014. While pricing is expected to
remain under pressure, the company expects aerospace demand to
improve in 2014. Reliance Steel also foresees a modest recovery
in non-residential construction market in 2014.
Reliance Steel currently carries a Zacks Rank #3 (Hold).
Other metals companies having favorable Zacks Rank are
Mitsui & Co. Ltd.
Noranda Aluminum Holding Corp.
Worthington Industries, Inc.
). All of these stocks carry a Zacks Rank #2 (Buy).
MITSUI (MITSY): Get Free Report
NORANDA ALUMINM (NOR): Free Stock Analysis
RELIANCE STEEL (RS): Free Stock Analysis
WORTHINGTON IND (WOR): Free Stock Analysis
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