RS' Q4 Earnings Miss Estimates, Sales Up on Higher Price and Volume

Core Insights - Reliance, Inc. reported profits of $116.5 million or $2.22 per share for Q4 2025, an increase from $105.3 million or $1.93 per share in the same quarter last year, but fell short of the Zacks Consensus Estimate of $2.80 per share [1] - The company achieved net sales of $3,498.6 million, reflecting a year-over-year increase of approximately 11.9%, surpassing the Zacks Consensus Estimate of $3,382.4 million [1] Segment Performance - Shipments increased by 5.8% year-over-year to 1,528.7 thousand tons, exceeding the estimate of 1,522.5 thousand tons, with the average selling price per ton rising 5.6% to $2,292, above the estimate of $2,271 [2] - Demand for non-residential construction, Reliance's largest end market, strengthened compared to Q4 2024, with expectations for continued healthy demand through Q1 2026 due to investments in data centers and public infrastructure [3] - The broader manufacturing market saw improved demand year-over-year, driven by growth in military, industrial machinery, and construction machinery sectors, with expectations for continued strength in Q1 [4] - Aerospace demand increased compared to the prior-year quarter, with expectations for consistent commercial aerospace demand in Q1 due to build-rate increases [5] - Demand for automotive toll processing services remained flat year-over-year, with steady performance expected in Q1, influenced by North American trade policy [6] - The semiconductor market experienced soft demand relative to Q4 2024, with elevated inventory levels impacting activity, and these headwinds are expected to persist into Q1 [7] Financial Position - As of December 31, 2025, Reliance held $216.6 million in cash and cash equivalents, with total outstanding debt of $1.43 billion, including $277 million borrowed under a $1.5 billion revolving credit facility [8] - The company generated $276.1 million in operating cash flow during Q4, demonstrating strong cash flow generation across various market conditions [8] - Reliance repurchased approximately 716,000 shares of common stock in Q4 at an average price of $279.30 per share, totaling $200.1 million [9] Outlook - Reliance anticipates healthy demand across diverse end markets in Q1, projecting a 5% to 7% increase in tons sold from the prior quarter [12] - The average selling price per ton is expected to rise by 3% to 5% sequentially, with a modest improvement in FIFO gross profit margin anticipated [13] - The company forecasts adjusted earnings per share in the range of $4.50 to $4.70 for Q1, accounting for an estimated LIFO expense of $25 million [13] Stock Performance - Reliance's shares have gained 11.2% over the past year, compared to the industry growth of 44.8% [14]