Reliance Improves Earnings, Expects Demand to Increase

Reduced demand during the quarter required a reduction in workforce of 2,100 employees in late March and early April. To date, Reliance has recalled 900 of those workers.

Reliance’s toll processing services fell sharply as the automotive market shut down in mid-March, necessitating a 50 percent cut in staffing at Reliance operations in the U.S. and Mexico. OEMs reopened in early June and Reliance was able to recall most of its furloughed workforce that services the auto market. Tolling volumes rebounded to 66 percent of January/February levels by the end of June and are expected to continue to increase in the third quarter in support of automotive production rates.

Aerospace demand remained solid during the second quarter in the defense market, but commercial demand declined considerably due to air travel restrictions and reduced commercial build rates. The company closed two of its related international locations and will continue to assess the profitability of its remaining commercial aerospace businesses. The commercial aerospace market is expected to remain challenged for the rest of the year and into 2021.

Agricultural and construction equipment declined sharply in the second quarter, but is expected to recover in the second half of the year.

The energy market remained weak in the second quarter “marking the lowest level of activity the company has seen in the past 25 years,” said the company. Reliance cut staffing and closed three of its energy-focused businesses in 2020. Further declines in the sector are anticipated in the third quarter.

The semiconductor market was a bright spot for Reliance, improving from first to second quarter and expected to remain strong in the second half.

Reliance executives noted an increase in acquisition opportunities compared to Q1. Hoffman said the company will continue to be selective and disciplined in its M&A activity.

Inventory levels are in good shape and lead times with domestic suppliers are very manageable, said Hoffman. “In my estimation to get America up and going again, they will need Reliance, and we need to be there for them,” he added.

Looking forward, Reliance expects that tons sold will be flat to up 2 percent in the third quarter. Overall metals pricing was better than anticipated in the second quarter and is expected to remain generally consistent with current levels.

“Although our outlook for nearly all of our end markets remains challenging and uncertain, we believe our diversification of end markets, products and geographies as well as our decentralized operating structure will continue to serve us well through the recovery that will follow these extraordinary times,” said Hoffman.