Reliance's (RS) Earnings & Revenues Miss Estimates in Q1

Core Viewpoint - Reliance, Inc. reported a decline in profits and net sales for the first quarter of 2024, missing consensus estimates, but anticipates a seasonal recovery in demand for the upcoming quarter [1][5]. Financial Performance - The company posted profits of $302.9 million or $5.23 per share, down from $383.1 million or $6.43 per share year-over-year [1]. - Net sales were $3,644.8 million, reflecting an 8.1% decrease year-over-year and falling short of the Zacks Consensus Estimate of $3,733.1 million [1]. - Barring one-time items, earnings were $5.30 per share, which also lagged behind the Zacks Consensus Estimate of $5.51 [1]. Volumes and Pricing - Shipments decreased by 1.7% year-over-year to 1,494 thousand tons sold, surpassing the estimate of 1,480.4 [2]. - The average selling price per ton dropped by 6.9% year-over-year to $2,442, lower than the estimate of $2,509 [2]. - Demand for non-residential construction is expected to remain strong, particularly in public infrastructure, manufacturing, and energy sectors [2]. Industry Trends - The broader manufacturing sector experienced a slight decline in demand, primarily due to downturns in agricultural equipment and consumer products, although industrial machinery activities rose [3]. - The semiconductor market showed seasonal improvement but remained below early 2023 levels, with a positive long-term outlook supported by the CHIPS Act [3]. Financial Position - At the end of Q1 2024, Reliance had $934.9 million in cash and cash equivalents and $1.15 billion in total outstanding debt, with no borrowings under its $1.5 billion revolving credit facility [4]. - The company generated cash flow from operations of $126.3 million in the first quarter [4]. Outlook - Reliance anticipates a stronger-than-usual seasonal recovery in demand for Q2 2024, projecting a 2.5-4.5% increase in tons sold, with about 2% growth from new acquisitions [5]. - The average selling price per ton is expected to decline by 1-3%, leading to short-term gross profit margin pressure [5]. - Adjusted earnings per share for Q2 2024 are forecasted to range between $4.70 and $4.90 [5]. Price Performance - Reliance's shares have increased by 21.6% over the past year, outperforming the industry average rise of 10.7% [6].