Reliance, Inc. Quarterly Report (Form 10-Q)
Reliance, Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 12% to $123.6 million, driven by growth in its core business segments. Net income rose to $21.4 million, or $0.41 per diluted share, compared to $15.2 million, or $0.29 per diluted share, in the same period last year. The company’s gross margin expanded to 34.5% from 32.1% due to improved pricing and cost control measures. Operating expenses increased by 10% to $64.2 million, primarily due to higher research and development expenses. The company’s cash and cash equivalents stood at $143.8 million as of March 31, 2025, providing a strong liquidity position.
Overview
Reliance Steel & Aluminum Co. reported a strong first quarter of 2025, with record tons sold despite ongoing economic uncertainty. However, the company’s operating results declined year-over-year mainly due to lower metals prices and gross profit margin.
Key Highlights:
- Tons sold reached a new quarterly record of 1.63 million, up 9% year-over-year, driven by solid organic growth and contributions from 2024 acquisitions.
- Gross profit margin was 29.7%, down from 31.0% in the prior year quarter, as lower metals prices outweighed the increase in tons sold.
- Earnings per diluted share were $3.74, down from $5.23 in the first quarter of 2024, primarily due to the lower metals prices.
- Cash flow from operations was $64.5 million, down from $126.3 million in the prior year quarter, mainly due to lower net income.
- The company returned $318.4 million to shareholders through $253.2 million in share repurchases and $65.2 million in cash dividends.
Acquisitions
Reliance completed four acquisitions in 2024, which contributed $99.4 million in net sales in the first quarter of 2025, up from $16.1 million in the prior year quarter.
Results of Operations
Net Sales:
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Net Sales ($ millions) | $3,484.7 | $3,644.8 | (4.4)% |
| Net Sales - Same-Store ($ millions) | $3,385.3 | $3,628.7 | (6.7)% |
| Tons Sold (thousands) | 1,628.9 | 1,494.0 | 9.0% |
| Tons Sold - Same-Store (thousands) | 1,565.7 | 1,483.3 | 5.6% |
| Average Selling Price per Ton Sold | $2,143 | $2,442 | (12.2)% |
| Average Selling Price per Ton Sold - Same-Store | $2,166 | $2,449 | (11.6)% |
The decline in net sales was due to lower average selling prices for major commodity products, which offset the increase in record tons sold. Same-store tons sold grew 5.6%, outpacing the industry-wide decline of 0.5% reported by the Metals Service Center Institute.
Cost of Sales and Gross Profit:
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Cost of Sales ($ millions) | $2,451.4 | $2,516.6 | (2.6)% |
| Gross Profit ($ millions) | $1,033.3 | $1,128.2 | (8.4)% |
| Gross Profit Margin | 29.7% | 31.0% | - |
| LIFO Expense (Income) ($ millions) | $25.0 | $(50.0) | - |
Gross profit declined due to the lower average selling prices, which outweighed the increase in tons sold. Gross profit margin decreased as LIFO expense of $25.0 million in Q1 2025 compared to LIFO income of $50.0 million in the prior year quarter.
Expenses:
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| SG&A Expense ($ millions) | $690.2 | $671.5 | 2.8% |
| SG&A Expense - Same-Store ($ millions) | $665.7 | $670.0 | (0.6)% |
| SG&A Expense as % of Net Sales | 19.8% | 18.4% | - |
SG&A expense increased due to higher costs associated with wage inflation and increased headcount, partially offset by lower incentive-based compensation.
Operating Income:
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Operating Income ($ millions) | $274.4 | $393.1 | (30.2)% |
| Operating Income Margin | 7.9% | 10.8% | - |
Operating income declined due to the lower gross profit, which outweighed the increase in tons sold and improved operational leverage.
Financial Condition
Cash flow from operations was $64.5 million in Q1 2025, down from $126.3 million in the prior year quarter, mainly due to lower net income. Capital expenditures declined to $86.9 million from $108.7 million.
Reliance had $277.8 million in cash and cash equivalents as of March 31, 2025, and $401.1 million in debt obligations coming due before its $1.5 billion revolving credit facility matures in 2029. The company’s net debt-to-total capital ratio was 14.4%, up from 10.2% at the end of 2024.
Reliance returned $318.4 million to shareholders in Q1 2025 through $253.2 million in share repurchases and $65.2 million in cash dividends. The company’s Board of Directors also declared a 9.1% increase in the quarterly dividend to $1.20 per share.
Outlook
Reliance remains well-positioned to navigate the current economic environment. The company’s strong liquidity, diversified end markets, and focus on operational efficiency should allow it to continue delivering value to shareholders. However, the company’s financial performance will continue to be impacted by fluctuations in metals prices and overall economic conditions.
