Reliance (RS) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were $3.64 billion, down 6.1% year-over-year, with tons sold up 4% sequentially and 4.7% year-over-year, outperforming industry shipment levels.

• Net income attributable to Reliance for Q2 2024 was $267.8 million, down from $385.1 million in Q2 2023, as lower metals prices and margins offset acquisition gains.

• Diluted EPS was $4.67 (non-GAAP $4.65), down sequentially and year-over-year due to lower carbon steel prices.

• Completed three acquisitions YTD, including American Alloy Steel and Mid-West Materials, and announced a fourth to expand toll processing.

• Repurchased $519.3 million in shares in Q2 and $165.4 million in July, reducing shares outstanding by over 4%.

Financial highlights

• Gross profit margin for Q2 2024 was 29.8%, down from 31% in Q1 and 31.5% in Q2 2023, but within the long-term sustainable range.

• Operating cash flow was $366.3 million in Q2, funding $292.8 million in acquisitions and $98.2 million in CapEx.

• Returned $62.6 million in dividends and repurchased $519.3 million in shares at ~$288/share.

• Net debt-to-total capital was 9.4% at June 30, 2024; no outstanding borrowings on the $1.5B credit facility.

• Free cash flow for the first half of 2024 was $285.7 million.

Outlook and guidance

• Q3 2024 tons sold expected to decline 2.5%-4.5% sequentially but rise 4.5%-6.5% year-over-year, with 4% of growth from acquisitions.

• Average selling price per ton expected to decrease 2%-4% sequentially, mainly due to lower carbon steel prices.

• Gross profit margin to remain under pressure; Q3 non-GAAP EPS guidance is $3.60-$3.80.

• Management expects continued healthy demand in most end markets but ongoing pressure from lower metals prices.

• No material changes to risk factors or market risk exposures since the last annual report.