Reliance(RS) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview 1.1 Key Financial Highlights Reliance, Inc. achieved strong Q2 2025 financial results with $3.66 billion net sales, record quarterly shipments up 4.0% YoY, a 29.9% non-GAAP gross margin, and non-GAAP diluted EPS increasing 18% QoQ to $4.43 Key Financial Data for Q2 2025 | Metric | Q2 2025 | Q1 2025 | QoQ Change | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales (Millions USD) | $3,659.8 | $3,484.7 | 5.0% | $3,643.3 | 0.5% | | Gross Profit (Millions USD) | $1,087.9 | $1,033.3 | 5.3% | $1,086.0 | 0.2% | | Non-GAAP Gross Margin | 29.9% | 29.7% | 0.2% | 29.8% | 0.1% | | Pre-tax Income (Millions USD) | $304.3 | $262.4 | 16.0% | $349.7 | (13.0%) | | Diluted EPS (USD) | $4.42 | $3.74 | 18.2% | $4.67 | (5.4%) | | Non-GAAP Diluted EPS (USD) | $4.43 | $3.77 | 17.5% | $4.65 | (4.7%) | | Shipments (Thousand Tons) | 1,615.0 | 1,628.9 | (0.9%) | 1,553.5 | 4.0% | | Average Selling Price/Ton (USD) | $2,273 | $2,143 | 6.1% | $2,348 | (3.2%) | - The company achieved record shipments in Q2 2025, with a 4.0% year-over-year increase, reflecting continued market share growth[1][5] - Average selling price per ton exceeded expectations, increasing 6.1% quarter-over-quarter, double the high end of the company's guidance range[6] 1.2 Management Commentary CEO Karla Lewis emphasized the company's business model resilience, achieving robust performance and market share growth in a volatile environment while maintaining strong gross margins and returning capital to shareholders - CEO Karla Lewis stated that despite market uncertainties, the company achieved record Q2 shipments and significantly outperformed the industry through its unique scale, domestic metal sourcing, and extensive processing capabilities[9] - The company maintained a strong gross margin of 29% to 31%, aligning with its "smart, profitable growth" strategy, leading to an 18% QoQ increase in non-GAAP diluted EPS[9] - The company consistently returned capital to shareholders through dividends and stock repurchases, totaling $143 million in Q2 and repurchasing over 1.2 million shares[9] Detailed Financial Performance 2.1 Consolidated Income Statement In Q2 2025, net sales were $3.66 billion, operating income was $312.2 million, and net income was $233.7 million, showing a slight increase in net sales but a decrease in operating and net income compared to the prior year Consolidated Income Statement Summary (Millions USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $3,659.8 | $3,643.3 | $7,144.5 | $7,288.1 | | Cost of Sales | $2,571.9 | $2,557.3 | $5,023.3 | $5,073.9 | | Operating Income | $312.2 | $351.7 | $586.6 | $744.8 | | Pre-tax Income | $304.3 | $349.7 | $566.7 | $745.9 | | Net Income Attributable to Reliance | $233.7 | $267.8 | $433.4 | $570.7 | | Diluted EPS (USD) | $4.42 | $4.67 | $8.15 | $9.90 | 2.2 Consolidated Balance Sheet As of June 30, 2025, total assets reached $10.49 billion, up from $10.02 billion at year-end 2024, with cash and cash equivalents at $239.5 million, total liabilities at $3.25 billion, and stockholders' equity at $7.23 billion Consolidated Balance Sheet Summary (Millions USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $239.5 | $318.1 | | Accounts Receivable | $1,668.2 | $1,342.0 | | Inventory | $2,254.8 | $2,026.8 | | Total Current Assets | $4,293.1 | $3,895.5 | | Property, Plant, and Equipment, Net | $2,605.6 | $2,544.9 | | Goodwill | $2,170.4 | $2,161.8 | | Total Assets | $10,490.0 | $10,021.8 | | Total Current Liabilities | $1,348.1 | $1,213.0 | | Long-term Debt | $1,025.5 | $742.8 | | Total Liabilities | $3,245.9 | $2,791.2 | | Equity Attributable to Reliance Stockholders | $7,234.1 | $7,219.6 | | Total Equity | $7,244.1 | $7,230.6 | 2.3 Consolidated Cash Flow Statement In H1 2025, cash flow from operations was $293.5 million, investing activities used $158.8 million, and financing activities used $222 million, showing decreased operating cash flow but significantly reduced investing outflows YoY Consolidated Cash Flow Statement Summary (Millions USD) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $293.5 | $492.6 | | Net Cash Used in Investing Activities | ($158.8) | ($562.0) | | Net Cash Used in Financing Activities | ($222.0) | ($654.1) | | Decrease in Cash and Cash Equivalents | ($78.6) | ($729.4) | | Cash and Cash Equivalents at End of Period | $239.5 | $350.8 | - Operating cash flow in Q2 2025 was $229 million, a significant 255.0% increase from $64.5 million in Q1[3] - Free cash flow reached $141.4 million in Q2, compared to a negative $22.4 million in Q1[3] 2.4 Non-GAAP Reconciliations The company provided non-GAAP financial reconciliations to better reflect core operating performance, excluding items like restructuring charges and non-core asset sale gains, with non-GAAP gross margin (FIFO) at 30.6% and non-GAAP pre-tax income at $305.4 million Non-GAAP Net Income and Diluted EPS Reconciliation (Millions USD, except per share amounts) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income Attributable to Reliance | $233.7 | $199.7 | $267.8 | | Restructuring Charges | $10.2 | $2.3 | $0.4 | | Gain on Sale of Non-Core Assets | ($9.1) | — | — | | Non-GAAP Net Income Attributable to Reliance | $234.6 | $201.4 | $266.6 | | Diluted EPS (USD) | $4.42 | $3.74 | $4.67 | | Non-GAAP Diluted EPS (USD) | $4.43 | $3.77 | $4.65 | Non-GAAP Pre-tax Income Reconciliation (Millions USD) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Pre-tax Income | $304.3 | $262.4 | $349.7 | | Restructuring Charges | $10.2 | $2.3 | $0.4 | | Gain on Sale of Non-Core Assets | ($9.1) | — | — | | Non-GAAP Pre-tax Income | $305.4 | $264.7 | $348.1 | Non-GAAP Gross Margin Reconciliation | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Gross Margin - LIFO | 29.7% | 29.7% | 29.8% | | Non-GAAP Gross Margin | 29.9% | 29.7% | 29.8% | | Non-GAAP Gross Margin - FIFO | 30.6% | 30.4% | 28.4% | Leverage Ratios | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Net Debt/Total Capital | 14.1% | 14.4% | 9.4% | | Net Debt/EBITDA | 0.9x | 0.9x | 0.5x | | Total Debt/EBITDA | 1.1x | 1.1x | 0.7x | Operational Performance and Market Trends 3.1 Key Business Metrics In Q2 2025, the company achieved record shipments, increasing 4.0% YoY but slightly decreasing 0.9% QoQ, while the average selling price per ton grew 6.1% QoQ, exceeding expectations Key Business Metrics | Metric | Q2 2025 | Q1 2025 | QoQ Change | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments (Thousand Tons) | 1,615.0 | 1,628.9 | (0.9%) | 1,553.5 | 4.0% | | Same-Store Shipments (Thousand Tons) | 1,560.1 | 1,565.7 | (0.4%) | 1,496.3 | 4.3% | | Average Selling Price/Ton (USD) | $2,273 | $2,143 | 6.1% | $2,348 | (3.2%) | | Same-Store Average Selling Price/Ton (USD) | $2,292 | $2,166 | 5.8% | $2,371 | (3.3%) | - The company's Q2 shipments increased 4.0% year-over-year, significantly outperforming the industry's overall 3.1% decline[10] 3.2 End Market Commentary Non-residential construction demand improved and is expected to remain healthy, while broad manufacturing demand anticipates a seasonal slowdown, aerospace demand is stable but commercial may weaken, automotive processing services are stable, and semiconductor demand remains pressured - Non-residential construction (including infrastructure) demand improved from Q2 2024 and is expected to remain healthy in Q3 2025, supported by new projects in data centers, energy infrastructure, manufacturing, and public infrastructure[11] - Demand in the broad manufacturing sector increased from Q2 2024 but is expected to experience a seasonal slowdown in Q3 2025[12] - Aerospace demand is stable, but commercial aerospace demand is expected to slightly weaken in Q3, while military and space-related business demand remains strong[13] - Automotive market processing services demand is stable but impacted by North American trade policy uncertainties; semiconductor market demand remains sluggish and is expected to remain pressured in Q3[14][15] 3.3 Major Commodity Metrics In Q2 2025, carbon steel shipments increased 4.1% YoY with an 8.8% QoQ price increase, aluminum saw YoY growth in both shipments and price, stainless steel shipments grew 2.6% YoY but prices declined 8.7% YoY, and alloy shipments decreased 4.3% YoY Q2 2025 Major Commodity Shipments and Average Selling Price | Commodity Type | Q2 2025 Shipments (Thousand Tons) | QoQ Change | YoY Change | Q2 2025 Average Selling Price/Ton (USD) | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Carbon Steel | 1,326.4 | (1.3%) | 4.1% | $1,541 | 8.8% | (3.1%) | | Aluminum | 83.8 | (0.4%) | 3.1% | $7,397 | 2.6% | 2.4% | | Stainless Steel | 75.5 | (0.7%) | 2.6% | $6,479 | (2.3%) | (8.7%) | | Alloy | 31.1 | (1.3%) | (4.3%) | $5,386 | 6.9% | 4.8% | Q2 2025 Major Commodity Net Sales (Millions USD) | Commodity Type | Q2 2025 Net Sales | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Carbon Steel | $2,044.2 | 7.4% | 0.9% | | Aluminum | $619.9 | 2.4% | 5.5% | | Stainless Steel | $489.2 | (2.8%) | (6.2%) | | Alloy | $167.5 | 5.7% | 0.4% | H1 2025 Major Commodity Net Sales Mix | Commodity Type | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Carbon Steel | 54% | 53% | 54% | 53% | 54% | | Aluminum | 16% | 17% | 16% | 17% | 16% | | Stainless Steel | 13% | 14% | 14% | 13% | 14% | | Alloy | 4% | 4% | 4% | 4% | 5% | | Other (Miscellaneous, Processing Logistics, Copper & Brass) | 13% | 12% | 12% | 13% | 11% | | Total | 100% | 100% | 100% | 100% | 100% | Capital Allocation and Shareholder Returns 4.1 Capital Allocation Activities The company completed $2.8 million in acquisitions and incurred $87.6 million in capital expenditures in Q2 2025, continuously generating strong operating cash flow to fund opportunistic capital allocation strategies including investments in value-added processing equipment, organic growth, and accretive acquisitions Capital Allocation Data (Millions USD) | Metric | Q2 2025 | Q1 2025 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Acquisitions | $2.8 | — | $2.8 | $346.5 | | Capital Expenditures | $87.6 | $86.9 | $174.5 | $206.9 | - The company consistently generates strong cash flow from operations, which is deployed to invest in value-added processing equipment, organic growth, and accretive acquisitions[9][17] 4.2 Stockholder Return Activity The Board declared a quarterly cash dividend of $1.20 per common share, and the company repurchased $79.9 million of common stock at an average price of $265.17 per share in Q2, with $1.02 billion remaining under the stock repurchase program as of June 30, 2025 Stockholder Return Data (Millions USD) | Metric | Q2 2025 | Q1 2025 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Dividends | $63.1 | $65.2 | $128.3 | $127.9 | | Stock Repurchases | $79.9 | $253.2 | $333.1 | $519.3 | - The Board of Directors declared a quarterly cash dividend of $1.20 per common share, payable on August 29, 2025[18] - In Q2 2025, the company repurchased 301,279 shares of common stock totaling $79.9 million, with $1.02 billion remaining under the repurchase program as of June 30[19] Business Outlook 5.1 Third Quarter 2025 Guidance Reliance anticipates stable overall demand in Q3 2025, influenced by seasonal patterns and trade policy uncertainties, with shipments expected to decrease 1.0% to 3.0% QoQ but increase 3.0% to 5.0% YoY, average selling price to be flat or slightly down QoQ, and non-GAAP diluted EPS projected between $3.60 and $3.80 - Q3 2025 shipments are expected to decrease 1.0% to 3.0% quarter-over-quarter but increase 3.0% to 5.0% year-over-year compared to Q3 2024[20] - Average selling price per ton in Q3 2025 is projected to decrease 1.0% to increase 1.0% quarter-over-quarter, primarily due to lower carbon steel prices, partially offset by higher aluminum and stainless steel prices[20] - Non-GAAP diluted EPS for Q3 2025 is anticipated to be between $3.60 and $3.80, including a $25 million LIFO expense (or $0.36 per share)[20] Additional Information 6.1 About Reliance, Inc. Founded in 1939, Reliance, Inc. is North America's leading global diversified metal solutions provider and largest metal service center company, offering value-added processing and distributing over 100,000 metal products to more than 125,000 customers through approximately 320 locations across 41 states and 10 countries - Reliance, Inc. is North America's largest metal service center company, with approximately 320 locations serving over 125,000 customers[23] - The company focuses on small orders, quick turnaround, and value-added processing services, with an average order size of $2,980 in 2024, approximately 50% of orders including value-added processing, and about 40% delivered within 24 hours[23] 6.2 Forward-Looking Statements This press release contains forward-looking statements regarding the company's industry, markets, business strategy, acquisitions, future growth, and profitability, which are based on management's estimates and assumptions, but actual results may differ materially due to various factors including trade policies, inflation, recessions, metal pricing volatility, labor constraints, and supply chain disruptions - Forward-looking statements cover Reliance's industry, end markets, business strategy, acquisitions, and expectations for future growth, profitability, demand, and metal pricing[24][25] - Actual results may differ materially due to various important factors, including changes in domestic and international political and economic conditions, trade policies, inflation, recessions, labor constraints, and supply chain disruptions[26] 6.3 Conference Call Details The company will host a conference call and webcast on July 24, 2025, to discuss Q2 2025 financial results and business outlook, with a replay available for a specified period - Reliance will host a conference call and webcast on July 24, 2025, at 11:00 a.m. ET / 8:00 a.m. PT to discuss Q2 financial results and business outlook[21] - A replay of the conference call will be available from 2:00 p.m. ET on the same day until 11:59 p.m. ET on August 7, 2025[22]