Measured Approach

RELIANCE STEEL & ALUMINUM (NEW YORK: RS)

Data as of

: 12/04/09

Industry: Misc. Fabricated Products

Current Data

Current Price $42.14 PEG 0.4Market Cap ($M) $3,099.4 EPS TTM ($) $1.67Shares Outstanding (M) 73.4 P/E TTM 25.2Institutional Holdings % 75.2 EPS Estimated 2009 ($) $1.12Insider Holdings % 13.3 P/Estimated EPS 37.6Beta 1.47

MA Value ($) $87.56

Latest Quarter Reported 09/30/09 Dividend Yield % 0.9

Patience Will Be Rewarded

The patient, long term investor would rather be early to the party than late to it. The economy is strugglingthrough the early stages of recovery. Looking out beyond the next quarter or even the next year, thereindustrialization of America will come. With this in mind, we are initiating coverage of Reliance Steeland Aluminum Company with a buy opinion. Our target price is $87.56.Highlights

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For 3Q09, Reliance reported diluted earnings of $41.8 million, or $0.57 per diluted share ascompared to $152.5 million ($2.07/share) in 3Q08. Sales in 3Q09 were $1.24 billion, down from$2.57 billion in 3Q08.

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For the nine months ending September 30, 2009, net income amounted to $56.1 million($0.76/share), compared with net income of $416.5 million ($5.65/share) for the same period in2008.

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Reliance Steel and Aluminum (RS) Upgraded By UBS

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Reliance Steel & Aluminum Co. announced that on October 21, 2009, the Board of Directorsdeclared a regular quarterly cash dividend of $0.10 per share of common stock. The dividend ispayable on January 6, 2010 to shareholders of record December 4, 2009.

From the company’s website:

Reliance Steel & Aluminum Co. (NYSE:RS) is one of the largest metals service center companies in theUnited States. Through a network of more than 200 locations in 38 states, Belgium, Canada, China,Mexico, Singapore, South Korea and the United Kingdom, the Company provides value-added metalsprocessing services and distributes a full line of more than 100,000 metal products. These products includegalvanized, hot-rolled and cold-finished steel, stainless steel, aluminum, brass, copper, titanium and alloysteel sold to more than 125,000 customers in a broad range of industries. Some of these metals servicecenters provide processing services for specialty metals only. A summary of the Company's 2008 sales byproduct, commodity and region follows:

2008 Sales by Region

Midwest 26%Southeast 19%

West/Southwest 16%

California 14%Pacific Northwest 6%Northeast 6%Mid-Atlantic 5%

International 4%Mountain 4%

2008 Sales by Product

Carbon steel plate 13%Carbon steel tubing 12%Carbon steel bar 10%Carbon steel structurals 10%Hot rolled steel sheet & coil 5%Galvanized steel sheet & coil 3%Cold rolled steel sheet & coil 2%Aluminum bar & tube 6%

Heat treated aluminum plate 4%Common alloy aluminum sheet & coil 4%Common alloy aluminum plate 1%Heat treated aluminum sheet & coil 1%Stainless steel bar & tube 7%

Stainless steel sheet & coil 5%

Stainless steel plate 2%

Alloy bar, rod & tube 7%

Alloy, plate sheet & coil 1%

Miscellaneous, including brass, copper & titanium 5%Toll processing of aluminum, carbon and stainless steel 2%

2008 Sales by Commodity

Carbon steel 55%Aluminum 16%

Stainless steel 14%

Alloy 8%

Other 5%Toll processing 2%

Reliance Steel & Aluminum Co. is a metals service center company. The Company's network of metalsservice centers operates more than 200 locations in 38 states, Belgium, Canada, China, Mexico, Singapore,South Korea and the United Kingdom. Through this network, it provides metals processing services anddistributes a line of more than 100,000 metal products, including alloy, aluminum, brass, copper, carbonsteel, titanium, stainless steel and specialty steel products, to more than 125,000 customers in a range of industries. Many of the Company's metals service centers process and distribute only specialty metals.Reliance Steel & Aluminum Co. delivers products from facilities located across the United States andCanada. In March 2009, New Wave Holdings Ltd. completed the sale of the entire 30% interest in ReliancePan Pacific Pte. Ltd. (RPP) held by its wholly owned subsidiary, Manufacturing Network Pte Ltd, to theCompany.

ANALYSIS OF THE BALANCE SHEET

The schedule presented below shows the year-end balance sheets for the years between December 31,2004 and December 31, 2008 and for the period ending September 30, 2009. Accounts receivable and

inventory comprise approximately 88 percent of the business’s current assets. The amount of current

assets increased steadily during the period 12/2004 to 12/2008. The period ending 9/2009 reflectsdeclines in both inventory and accounts receivable. Inventory levels declined approximately 38 percentand accounts receivables declined approximately 32 percent, roughly in line with the decline is sales.

Fixed assets (Net Property, Plant, Equipment) include all of the company’s production machinery and

equipment. On September 30, 2009, they made up approximately 34 percent of non-current assets.

Overall, RS’s total assets have nearly tripled during the nearly six year period under review. No single

category of asset is responsible for the baseline growth.

Accounts payable comprise the largest segment of current liabilities. As reliance’s business grew in sales,

so did its equity. The company increased book value per share by 169 percent during the period 12/2004to 9/2009.

Balance Sheet

(Amounts in Millions)

Assets

TTM09/30/09FYE12/2008FYE12/2007FYE12/2006FYE12/2005FYE12/2004Cash 87.9 52.0 77.0 57.5 35.0 11.7ST Investments 0.0 0.0 0.0 0.0 0.0 0.0Accounts Receivable 588.3 861.2 709.0 691.4 369.9 330.0Inventory 792.1 1,284.5 911.3 904.3 387.4 349.8Other Current Assets 107.9 104.7 24.0 22.2 55.0 41.8Total Current Assets 1,576.2 2,302.4 1,721.4 1,675.4 847.3 733.2Net Property,Plant & Equip. 987.7 998.7 824.6 742.7 479.7 458.8LT Investments 20.2 0.0 0.0 0.0 0.0 0.0Goodwill/Intangibles 1,810.8 1,807.2 1,350.4 1,139.1 429.1 358.5Other LT Assets 69.5 87.2 87.0 57.0 12.9 12.8

Total Assets 4,464.3 5,195.5 3,983.5 3,614.2 1,769.1 1,563.3Liabilities

Accounts Payable 221.8 248.3 334.0 340.4 188.6 140.3Short Term Debt 8.5 94.5 72.5 22.8 50.1 46.4Other Current Liabilities 218.0 307.3 193.4 187.6 95.2 88.0Total Current Liabilities 448.3 650.2 599.9 550.7 333.8 274.7LT Debt 1,065.7 1,675.6 1,013.3 1,088.1 306.8 380.9Other LT Liabilities 450.4 438.3 264.1 229.0 98.6 85.3

Total Liabilities

1,964.3 2,764.0 1,877.2 1,867.8 739.2 740.8Preferred Stock 0.0 0.0 0.0 0.0 0.0 0.0Common Stock Equity 2,500.0 2,431.4 2,106.2 1,746.4 1,029.9 822.6

Total Liabilities & Equity 4,464.3 5,195.4 3,983.4 3,614.2 1,769.1 1,563.4

Book Value Per Share 34.02 33.26 27.85 23.88 15.64 12.66

ANALYSIS OF THE INCOME STATEMENTS

Presented below are income statements for the five year period beginning December 31, 2004 and endingDecember 31, 2008. In addition, we show the income statement for the twelve month period endingSeptember 30, 2009.For the five year period ending December 2008, sales grew at the rate of 35.8 percent. During theeconomic meltdown reflected in the period ending 9/2009, sales declined 25.3 percent year-over-year.During this entire period, including the past year, gross margins remained remarkably stable.