Reliance Steel & Aluminum ((RS)) has held its Q1 earnings call. Read on for the main highlights of the call.
Reliance Steel & Aluminum Co.’s recent earnings call conveyed a mixed sentiment. The company celebrated notable achievements, such as record shipment volumes and improved financial performance, largely driven by strategic acquisitions. However, challenges like declining selling prices, increased costs due to LIFO expenses, and macroeconomic uncertainties were also highlighted.
Record Tons Sold
Reliance Steel & Aluminum Co. reported a remarkable 12.8% increase in tons shipped compared to the fourth quarter of 2024. This achievement significantly outperformed the service center industry’s year-over-year decline of 0.5%, showcasing the company’s robust operational capabilities and market share gains.
Strong Gross Profit Margin Improvement
The company achieved a sequential improvement in its gross profit margin, rising from 28.8% in the fourth quarter of 2024 to 30.4% in the first quarter of 2025. This enhancement reflects effective cost management and strategic pricing initiatives.
Financial Strength and Stockholder Returns
Reliance Steel & Aluminum Co. demonstrated its financial strength by funding stockholder return activities totaling $318 million, which included dividends and share repurchases. Additionally, the company increased its quarterly dividend by 9.1%, underscoring its commitment to delivering shareholder value.
Successful Acquisitions
The company completed four acquisitions in 2024, which positively contributed to the first quarter results. These acquisitions have bolstered the company’s financial position, providing a solid foundation for pursuing further strategic opportunities.
Decline in Average Selling Price
Despite the positive performance, the average selling price per ton sold declined by 1.2% compared to the fourth quarter of 2024. This decrease was attributed to a shift in product mix and lower-priced carbon steel products.
Increased LIFO Expense
Higher than anticipated increases in carbon steel and aluminum product costs resulted in a LIFO expense of $25 million, contrasting with the $15 million of LIFO income included in prior guidance. This unexpected cost increase impacted the company’s financial results.
Macroeconomic Uncertainty
The overall macroeconomic uncertainty has slowed the pace of new acquisition opportunities, affecting the company’s growth pipeline. This external challenge poses a potential risk to future expansion plans.
Forward-Looking Guidance
Reliance Steel & Aluminum Co. provided forward-looking guidance for the second quarter of 2025, anticipating stable demand with tons sold expected to range from down 1% to up 1% compared to the first quarter. The company projects an average selling price per ton increase of 1% to 3% and non-GAAP earnings per diluted share between $4.50 and $4.70, inclusive of $25 million in LIFO expense.
In summary, the earnings call for Reliance Steel & Aluminum Co. highlighted a blend of achievements and challenges. While the company celebrated record shipment volumes and financial strength, it also faced hurdles such as declining selling prices and macroeconomic uncertainties. Looking ahead, the company remains optimistic about stable demand and continued financial performance improvements.