Reliance(RS) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and detailed explanatory notes Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Reliance, Inc., including statements of income, comprehensive income, balance sheets, cash flows, and equity. It is followed by detailed notes that provide explanations of significant accounting policies, recent acquisitions, revenue disaggregation, asset details, debt, leases, income taxes, equity changes, commitments, earnings per share, and segment information Unaudited Consolidated Statements of Income This section presents the unaudited consolidated statements of income for the periods ended June 30, 2025 and 2024 Consolidated Statements of Income (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $3,659.8 | $3,643.3 | $7,144.5 | $7,288.1 | | Operating income | $312.2 | $351.7 | $586.6 | $744.8 | | Net income attributable to Reliance | $233.7 | $267.8 | $433.4 | $570.7 | | Basic EPS | $4.44 | $4.71 | $8.20 | $9.99 | | Diluted EPS | $4.42 | $4.67 | $8.15 | $9.90 | Unaudited Consolidated Statements of Comprehensive Income This section presents the unaudited consolidated statements of comprehensive income for the periods ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $234.2 | $268.3 | $434.7 | $572.1 | | Foreign currency translation gain (loss) | $27.7 | $(7.4) | $31.0 | $(23.1) | | Total other comprehensive income (loss) | $26.6 | $(8.2) | $29.0 | $(24.8) | | Comprehensive income attributable to Reliance | $260.3 | $259.6 | $462.4 | $545.9 | Unaudited Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Total current assets | $4,293.1 | $3,895.5 | | Total assets | $10,490.0 | $10,021.8 | | Total current liabilities | $1,348.1 | $1,213.0 | | Total liabilities | $3,245.9 | $2,791.2 | | Total Reliance stockholders' equity | $7,234.1 | $7,219.6 | Unaudited Consolidated Statements of Cash Flows This section presents the unaudited consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 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, ending balance | $239.5 | $350.8 | Unaudited Consolidated Statements of Equity This section presents the unaudited consolidated statements of equity for the six months ended June 30, 2025 and 2024 Consolidated Statements of Equity (in millions, except per share amounts) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Total equity, beginning balance | $7,230.6 | $7,732.8 | | Net income attributable to Reliance | $433.4 | $570.7 | | Cash dividends | $(126.8) | $(125.7) | | Share repurchases | $(333.1) | $(519.3) | | Total equity, ending balance | $7,244.1 | $7,633.0 | | Cash dividends declared per common share | $2.40 | $2.20 | Notes to Unaudited Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited consolidated financial statements Note 1. Summary of Significant Accounting Policies This note outlines the significant accounting policies used in preparing the financial statements - Financial statements prepared in accordance with U.S. GAAP for interim information, reflecting management's estimates and assumptions[16][17] - Majority of inventory valued using the last-in, first-out (LIFO) method[18] - New FASB standards for income tax disclosures (effective 2025) and disaggregation of income statement expenses (effective 2027) will require additional disclosure but no impact on financial results[19][20] Note 2. Acquisitions This note details the company's acquisition activities in 2024 and their impact on financial results - Company completed four acquisitions in 2024 (Cooksey Iron & Metal, American Alloy Steel, Mid-West Materials, FerrouSouth division) to increase capacity and enhance product, customer, and geographic diversification within its core metal distribution business[21][23][79] Net Sales from 2024 Acquisitions (in millions) | Period | Net Sales | | :-------------------------- | :-------- | | 6 Months Ended June 30, 2025 | $193.9 | | 6 Months Ended June 30, 2024 | $115.1 | - Goodwill from 2024 acquisitions ($59.5 million) predominantly consists of expected strategic benefits, including enhanced financial and operational scale, and expansion of acquired product and processing know-how[24][26] Note 3. Revenues This note disaggregates net sales by product and service categories Net Sales Disaggregated by Product and Service (in millions) | Product/Service | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------- | :------ | :------ | :------- | :------- | | Carbon steel | $2,044.2 | $2,025.7 | $3,948.4 | $4,038.6 | | Aluminum | $619.9 | $587.8 | $1,225.5 | $1,183.9 | | Stainless steel | $489.2 | $521.8 | $992.4 | $1,081.7 | | Alloy | $167.5 | $166.8 | $325.9 | $338.7 | | Toll processing and logistics | $164.3 | $161.2 | $324.5 | $319.0 | | Copper and brass | $98.9 | $87.0 | $180.6 | $162.3 | | Miscellaneous and eliminations | $75.8 | $93.0 | $147.2 | $163.9 | | Total | $3,659.8 | $3,643.3 | $7,144.5 | $7,288.1 | Note 4. Property, Plant and Equipment, Net This note provides a breakdown of property, plant, and equipment, net of accumulated depreciation Property, Plant and Equipment, Net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Land | $298.9 | $297.2 | | Buildings | $1,754.7 | $1,689.2 | | Machinery and equipment | $2,713.1 | $2,643.2 | | Construction in progress | $296.9 | $297.0 | | Property, plant and equipment, gross | $5,063.6 | $4,926.6 | | Less: accumulated depreciation | $(2,458.0) | $(2,381.7) | | Property, plant and equipment, net | $2,605.6 | $2,544.9 | Note 5. Goodwill This note details the changes in the carrying amount of goodwill and related impairment information Change in Goodwill Carrying Amount (in millions) | Item | Amount | | :-------------------------- | :----- | | Balance as of January 1, 2025 | $2,161.8 | | Acquisitions | $2.8 | | Purchase price allocation adjustments | $0.7 | | Effect of foreign currency translation | $5.1 | | Balance as of June 30, 2025 | $2,170.4 | - No accumulated impairment losses related to goodwill as of June 30, 2025, and December 31, 2024[32] Note 6. Intangible Assets, Net This note presents the composition of intangible assets, net, and estimated future amortization expense Intangible Assets, Net (in millions) | Category | June 30, 2025 (Net) | December 31, 2024 (Net) | | :------------------------------------------ | :------------------ | :-------------------- | | Intangible assets subject to amortization | $187.9 | $207.2 | | Intangible assets not subject to amortization (Trade names) | $800.8 | $800.0 | | Total Intangible Assets, Net | $988.7 | $1,007.2 | Estimated Future Amortization Expense (in millions) | Year | Amount | | :--- | :----- | | 2025 (remaining six months) | $18.4 | | 2026 | $29.8 | | 2027 | $29.1 | | 2028 | $27.7 | | 2029 | $25.5 | | Thereafter | $57.4 | | Total | $187.9 | Note 7. Debt This note provides details on the company's debt composition, interest rates, and covenant compliance Debt Composition (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :-------------- | :---------------- | | Unsecured revolving credit facility | $282.0 | $— | | Senior unsecured notes (various maturities) | $1,151.1 | $1,151.1 | | Other notes | $1.1 | $1.1 | | Less: unamortized discount and debt issuance costs | $(7.4) | $(8.6) | | Less: amounts due within one year | $(400.2) | $(399.7) | | Total long-term debt | $1,025.5 | $742.8 | - Weighted average effective interest rate on outstanding borrowings increased to 3.48% as of June 30, 2025, from 3.02% as of December 31, 2024[35] - Company was in compliance with the financial maintenance covenant in its Credit Agreement as of June 30, 2025[42][107] Note 8. Leases This note presents information on total lease costs and operating lease details Total Lease Cost (in millions) | Period | 2025 | 2024 | | :---------------- | :----- | :----- | | Three Months Ended June 30, | $28.4 | $25.9 | | Six Months Ended June 30, | $56.5 | $51.1 | Operating Lease Information | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Weighted average remaining lease term | 6.7 years | 6.3 years | | Weighted average discount rate | 4.8% | 4.6% | Note 9. Income Taxes This note details the effective income tax rates and the impact of recent tax legislation Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Second Quarter | 23.0% | 23.3% | | First Six Months | 23.3% | 23.3% | - Differences from the U.S. federal statutory rate of 21.0% were mainly due to state income taxes[46] - The recently enacted One Big Beautiful Bill Act (OBBBA) is not expected to materially impact the effective tax rate but will affect deferred income taxes and income tax payments due to 100% bonus depreciation[47] Note 10. Equity This note provides information on equity, including restricted stock units, dividends, and share repurchases - Company makes annual grants of service-based restricted stock units (RSUs) and performance-based restricted stock units (PSUs) with approximately 3-year vesting periods[48] Unvested RSUs and PSUs Status (as of June 30, 2025) | Item | Aggregate Units | Weighted Average Grant Date Fair Value Per Unit | | :-------------------------- | :-------------- | :-------------------------------------------- | | Unvested as of January 1, 2025 | 327,017 | $267.96 | | Granted | 163,409 | $299.37 | | Vested | (1,260) | $263.38 | | Cancelled or forfeited | (5,792) | $273.86 | | Unvested as of June 30, 2025 | 483,374 | $278.52 | - Company has paid regular quarterly cash dividends for 66 consecutive years, increasing the quarterly dividend to $1.20 per share in February 2025 (from $1.10 in Feb 2024)[51][99] Share Repurchase Activity (in millions) | Period | Shares | Average Cost Per Share | Amount | | :-------------------------- | :------- | :--------------------- | :----- | | First six months 2025 | 1,223,935 | $272.13 | $333.1 | | First six months 2024 | 1,804,180 | $287.81 | $519.3 | Note 11. Commitments and Contingencies This note discusses environmental remediation projects and routine legal actions - Company is involved in an environmental remediation project related to former manufacturing operations, but insurance policies are expected to cover the majority of costs, with no material adverse impact anticipated[57] - Routine legal actions are not expected to have a material adverse impact on the company's financial position, results of operations, or cash flows[58] Note 12. Earnings Per Share This note presents basic and diluted earnings per share attributable to Reliance stockholders Earnings Per Share Attributable to Reliance Stockholders | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Basic EPS | $4.44 | $4.71 | $8.20 | $9.99 | | Diluted EPS | $4.42 | $4.67 | $8.15 | $9.90 | Note 13. Segment Information This note describes Reliance's operating segment and provides segment revenues - Reliance operates as one operating and reportable segment: metals service centers, primarily deriving revenue in the United States[60] Metals Service Centers Segment Revenues (in millions) | Period | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Three Months Ended June 30, | $3,659.8 | $3,643.3 | | Six Months Ended June 30, | $7,144.5 | $7,288.1 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Reliance, Inc.'s financial performance and condition for the second quarter and first six months of 2025. It details the results of operations, including net sales, gross profit, expenses, and operating income, highlighting the impact of record tons sold and fluctuating metals pricing. The discussion also covers financial condition, liquidity, capital resources, debt management, share repurchases, and compliance with financial covenants, along with critical accounting estimates and forward-looking statements Results of Operations This section analyzes the company's operational performance, covering net sales, cost of sales, expenses, and operating income Net Sales This section analyzes net sales performance, including tons sold and average selling prices Net Sales and Tons Sold Performance | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------------------------------------ | :-------- | :-------- | :------------- | :--------- | :--------- | :------------- | | Net sales (in millions) | $3,659.8 | $3,643.3 | 0.5% | $7,144.5 | $7,288.1 | (2.0)% | | Tons sold (in thousands) | 1,615.0 | 1,553.5 | 4.0% | 3,243.9 | 3,047.5 | 6.4% | | Average selling price per ton sold | $2,273 | $2,348 | (3.2)% | $2,208 | $2,394 | (7.8)% | - Tons sold in Q2 2025 surpassed the industry-wide decline of 3.1% reported by MSCI by over seven percentage points[73][81] - Metals pricing reversed declining trend in March 2025 due to trade actions, peaking in April before declining for the remainder of Q2[72] Cost of Sales and Gross Profit This section analyzes cost of sales and gross profit margins, including the impact of LIFO adjustments Cost of Sales and Gross Profit (in millions) | Metric | Q2 2025 | % of Net Sales | Q2 2024 | % of Net Sales | YTD 2025 | % of Net Sales | YTD 2024 | % of Net Sales | | :------------------------------------ | :-------- | :------------- | :-------- | :------------- | :--------- | :------------- | :--------- | :------------- | | Cost of sales | $2,571.9 | 70.3% | $2,557.3 | 70.2% | $5,023.3 | 70.3% | $5,073.9 | 69.6% | | Gross profit | $1,087.9 | 29.7% | $1,086.0 | 29.8% | $2,121.2 | 29.7% | $2,214.2 | 30.4% | - Gross profit margin remained strong at 29.7% for Q2 and YTD 2025, despite significant metals pricing volatility[74][86] - LIFO expense of $50.0 million for YTD 2025 (vs. $100.0 million income in YTD 2024) due to rising metals pricing environment[84][85] Expenses This section analyzes selling, general, and administrative (SG&A) expenses and their drivers SG&A Expense (in millions) | Metric | Q2 2025 | % of Net Sales | Q2 2024 | % of Net Sales | YTD 2025 | % of Net Sales | YTD 2024 | % of Net Sales | | :------------------------------------ | :-------- | :------------- | :-------- | :------------- | :--------- | :------------- | :--------- | :------------- | | SG&A expense | $706.0 | 19.3% | $667.7 | 18.3% | $1,396.2 | 19.5% | $1,339.2 | 18.4% | - Same-store SG&A expense increased by 5.3% in Q2 2025 and 2.3% in YTD 2025, mainly due to inflationary wage adjustments and increased variable warehousing/delivery expenses associated with higher tons sold[75][88] - On a per ton basis, same-store SG&A expense increased 1.0% in Q2 2025 but declined 2.5% for YTD 2025[75][88] Operating Income This section analyzes the company's operating income and its contributing factors Operating Income (in millions) | Metric | Q2 2025 | % of Net Sales | Q2 2024 | % of Net Sales | YTD 2025 | % of Net Sales | YTD 2024 | % of Net Sales | | :------------------------------------ | :-------- | :------------- | :-------- | :------------- | :--------- | :------------- | :--------- | :------------- | | Operating income | $312.2 | 8.5% | $351.7 | 9.7% | $586.6 | 8.2% | $744.8 | 10.2% | - Operating income declined due to lower average selling prices and gross profit margin, despite increased tons sold[90][91] Income Tax Rate This section discusses the effective income tax rates and factors influencing them Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Second Quarter | 23.0% | 23.3% | | First Six Months | 23.3% | 23.3% | - Differences from the U.S. federal statutory rate of 21.0% were mainly due to state income taxes[93] Financial Condition This section discusses the company's financial position, liquidity, and capital resources Operating Activities This section analyzes net cash provided by operating activities and its key drivers Net Cash Provided by Operating Activities (in millions) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | First Six Months | $293.5 | $492.6 | $(199.1) | - Decrease mainly due to $137.4 million decline in net income and increased working capital investment ($302.5 million in 2025 vs $240.3 million in 2024) driven by rising metals prices[95][96] - Income taxes paid decreased to $71.0 million in YTD 2025 from $147.7 million in YTD 2024 due to decreased pretax income and prior year tax overpayments[96] Investing Activities This section analyzes net cash used in investing activities, including acquisitions and capital expenditures Net Cash Used in Investing Activities (in millions) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | First Six Months | $(158.8) | $(562.0) | $403.2 | - Decrease mainly due to no acquisitions in YTD 2025 (vs. three acquisitions for $346.5 million in YTD 2024) and a $32.4 million decrease in capital expenditures[97] Financing Activities This section analyzes net cash used in financing activities, covering debt, dividends, and share repurchases Net Cash Used in Financing Activities (in millions) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | First Six Months | $(222.0) | $(654.1) | $432.1 | - Decrease mainly due to increased net debt borrowings ($282.0 million in YTD 2025 vs. no borrowings in YTD 2024) and decreased share repurchases ($333.1 million in YTD 2025 vs. $519.3 million in YTD 2024)[98] - Total dividend payments of $128.3 million in YTD 2025 were consistent with $127.9 million in YTD 2024, despite a 9.1% increase in quarterly dividend rate, due to reduced outstanding shares[98][99] Share Repurchase Plan This section provides an update on the company's share repurchase program and remaining authorization - As of June 30, 2025, $1.02 billion remained authorized for repurchase under the $1.5 billion share repurchase program[101] - The program is flexible, with no obligation to repurchase a specific number of shares or a specific expiration date[54][101] Debt This section details the company's debt obligations, credit facility, and liquidity position - Company has a $1.5 billion unsecured revolving credit facility with $282.0 million outstanding as of June 30, 2025 (vs. no outstanding borrowings as of Dec 31, 2024)[102] - Total debt obligations include $1.15 billion in senior unsecured notes, with $400.0 million due in August 2025[102][105] - Net debt-to-total capital ratio increased to 14.1% as of June 30, 2025, from 10.2% as of December 31, 2024[105] - Company believes it has sufficient liquidity from operations, cash, and the credit facility to satisfy cash requirements and debt obligations, including the August 2025 notes[104][106] Covenants This section confirms the company's compliance with financial maintenance covenants - Company was in compliance with the financial maintenance covenant (maximum total net leverage ratio) under its Credit Agreement as of June 30, 2025[42][107] Seasonality This section discusses the seasonal trends affecting the company's operations - Overall operations have not shown material seasonal trends due to geographic, product, and customer diversity[108] - Revenues in July, November, and December are typically lower due to fewer working days from holidays and customer closures[108] Goodwill and Other Intangible Assets This section provides an overview of goodwill and other intangible assets and their impairment testing Goodwill and Intangible Assets (as of June 30, 2025) | Asset Type | Amount (in millions) | % of Total Assets | % of Total Equity | | :-------------------------- | :------------------- | :---------------- | :---------------- | | Goodwill | $2,170.4 | 21% | 30% | | Other intangible assets, net | $988.7 | 9% | 14% | - Goodwill and indefinite-lived intangible assets are not amortized but are subject to annual impairment tests[109] Critical Accounting Estimates This section identifies the most critical accounting estimates and any recent changes - Most critical accounting estimates relate to the recoverability of goodwill, other indefinite-lived intangible assets, and long-lived assets[111] - No material changes to critical accounting estimates during the quarter ended June 30, 2025[112] Website Disclosure This section describes the company's use of its website for material information disclosure - Company uses its website (www.reliance.com and investor.reliance.com) as a distribution channel for material company information, including financial and investor relations updates[113] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company refers to its Annual Report on Form 10-K for detailed disclosures regarding market risk and confirms that there have been no material changes to its exposures to market risk since December 31, 2024 - No material changes to the company's exposures to market risk as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[114] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. Furthermore, there have been no material changes in the company's internal control over financial reporting during the second quarter of 2025 - Disclosure controls and procedures were effective as of June 30, 2025[115] - No material changes in internal control over financial reporting during the second quarter of 2025[116] PART II — OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section incorporates by reference the information on "Legal Matters" and "Environmental Contingencies" from Note 11, indicating that no material adverse impact is expected from these proceedings - Information on legal proceedings and environmental contingencies is incorporated by reference from Note 11[117] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[118] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity during the second quarter of 2025, reporting the number of shares purchased, average price paid, and the remaining authorization under the existing share repurchase program Share Repurchase Activity for Q2 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value That May Yet Be Purchased (in millions) | | :-------------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------- | | April 1 - April 30, 2025 | 301,279 | $265.17 | $1,024.5 | | May 1 - May 31, 2025 | — | $— | $1,024.5 | | June 1 - June 30, 2025 | — | $— | $1,024.5 | | Total | 301,279 | $265.17 | | - All repurchases were made under the $1.5 billion share repurchase program authorized on October 22, 2024[120] Item 3. Defaults Upon Senior Securities The company reports that there were no defaults upon senior securities during the period - No defaults upon senior securities[121] Item 4. Mine Safety Disclosures This item is not applicable to Reliance, Inc - Not applicable[122] Item 5. Other Information During the second quarter of 2025, none of the company's directors or officers adopted, terminated, or modified any Rule 10b5-1 trading arrangements - No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during Q2 2025[123] Item 6. Exhibits This section lists the exhibits accompanying the Form 10-Q, including certifications from the CEO and CFO, and the iXBRL formatted financial information - Exhibits include CEO and CFO certifications (31.1, 31.2), Sarbanes-Oxley Act certification (32), and iXBRL formatted financial information (101, 104)[125] SIGNATURE The report is formally signed by Arthur Ajemyan, Senior Vice President, Chief Financial Officer, on behalf of Reliance, Inc - Report signed by Arthur Ajemyan, Senior Vice President, Chief Financial Officer, on July 30, 2025[129]