Service centre behemoth Reliance Steel & Aluminum remains highly focused on growth through the opening of new facilities, expansion and upgrading of current facilities, and merger and acquisition activities.
Executives discussed the company’s growth goals and their excitement over the recent acquisition of master tubular distributor Merfish United on their third quarter earnings conference call last week.
“First and foremost, [Merfish is] a really cool company. And we’re glad we got to bring them to the family of companies. It’s a little different, but it’s still distribution, some different products. They go to market differently,” ceo James Hoffman says of the Merfish acquisition.
Hoffman says the Merfish purchase is in line with Reliance’s strategy of “acquiring immediately accretive companies with strong management teams and significant customer, product and geographical diversification.”
Merfish, a master distributor of tubular building products, is not a traditional service centre, but the transaction is one of the larger acquisitions ever completed by Reliance, Kallanish understands.
“We think where [Merfish] operate[s] is also a very fragmented industry,” Reliance president Karla Lewis notes on the call. “So we think there’s a lot of potential opportunity for growth through acquisitions, but also organically, them on their own expanding into more locations, more products, but also getting to know our other Reliance companies and seeing how they can leverage each other and create some growth opportunities there.”
In addition to M&A activity, the company’s “2021 capital expenditures will also be focused on opening new facilities as well as expanding, upgrading and maintaining existing operations, including renewable energy investments at many of our facilities,” Hoffman says.
Hoffman estimates that half of Reliance’s $310 million capex budget will be used to purchase new processing equipment or upgrade existing equipment.
Reliance is one of the largest service centre chains in North America, operating more than 300 locations in 40 states and in 13 countries outside the US.
Laura Miller USA