Reliance (RS) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 were $3.42 billion, with tons sold up 7.1% year-over-year, outperforming industry shipment trends despite lower metals prices and challenging market conditions.

• Gross profit margin was 29.4% in Q3 2024, supported by increased volume and value-added processing, but declined from 2023 due to pricing headwinds.

• Non-GAAP earnings per diluted share were $3.64, in line with guidance, while diluted EPS was $3.61, both down year-over-year due to lower metals prices and increased share repurchases.

• Cash flow from operations was $463.9 million in Q3 and $956.5 million for the nine months, reflecting resilient business model and reduced working capital investment.

• Celebrated 85 years in business and 30 years as a public company, with continued focus on safety and operational excellence.

Financial highlights

• Q3 2024 net income attributable was $199.2 million, with operating income of $273.4 million (8.0% margin); year-to-date net sales were $10.71 billion, down 6.6% from 2023.

• Tons sold increased 7.1% year-over-year (3.7% same-store), outperforming industry decline of 1.2%.

• Average selling price per ton sold was $2,246 in Q3, down 12.0% year-over-year and 4.3% sequentially, mainly due to carbon steel price declines.

• LIFO income included in cost of sales was $50 million in Q3 and $150 million for the nine months.

• SG&A expense increased as a percentage of sales due to lower sales and wage inflation, with $5.1 million in non-recurring settlement expenses.

Outlook and guidance

• Q4 2024 tons sold expected to be down 6%-8% sequentially, but up 4%-6% year-over-year; average selling price per ton expected to decline 1.5%-3.5% sequentially.

• Non-GAAP EPS guidance for Q4 2024 is $2.65-$2.85; gross profit margins expected to stabilize.

• Management expects temporary Q4 demand weakness from seasonality and macro uncertainty, with recovery anticipated in 2025.

• Liquidity remains strong, with $314.6 million in cash and $1.37 billion available under the revolving credit facility.

• Long-term outlook remains positive, with anticipated demand pickup in 2025 as macro uncertainties subside.