Reliance Steel & Aluminum shares were up Friday after its issuer default rating was affirmed at ‘BBB’ by Fitch Ratings, which cited the company’s flexible, scalable operating model, its stable and leading operating margins, strong working capital management and cost control.
The outlook on the assessment is stable. The ratings affect roughly $1.4 billion in debt and $1.5 billion in other commitments, Fitch said.
Despite exposure to construction and manufacturing end-markets, the company’s gross margins have been relatively stable since 2009 ranging between 25% and 30%. EBITDA margins have ranged between about 7% and about 10% over the same period, Fitch said, adding it expects gross profit margins of about 30%.
Sales volumes are down 2% in 2016 and Fitch expects a recovery to 1%-2% growth rate in 2017 and thereafter. Selling prices have been weak in 2016 and will show gradual improvement thereafter, Fitch said.