Reliance earnings fall 21% in tough pricing environment

First quarter ended March 31	2024	2023	% Change
Net sales	$3,644.8	$3,965.3	-8.1%
Net income (loss)	$302.9	$383.1	-20.9%
Per diluted share	$5.23	$6.43	-18.7%

(in millions of dollars except per share)

Reliance Inc.’s earnings slumped in the first quarter of 2024, but the company expects better-than-normal seasonal recovery in demand in the second quarter.

“Our resilient business model, most notably the diversity of our products, end markets and geography, once again delivered strong performance in a more challenging pricing environment than we anticipated in the first quarter,” Karla Lewis, president and CEO, said in a statement on Thursday.

“We have completed three acquisitions to date in 2024, expanding our product offerings, processing capabilities, and geographic reach, and collectively adding nearly $500 million in annualized net sales to the Reliance family,” she added.

Those acquisitions include finished steel products distributor Cooksey Iron & Metal Co., completed on Feb.1; flat-rolled steel service center MidWest Materials, completed on April 1; and American Alloy Steel Inc., a distributor of specialty carbon and alloy steel plate and round bar, also completed on April 1.

In a Q1’24 earnings call on Thursday, Lewis said, “Our cap-ex budget for calendar-year 2024 is $440 million, with an expected total cash outlay of ~$500 million, which includes certain carryover projects from prior years.”

She noted that approximately two-thirds of Reliance’s cap-ex will be used for growth projects.

The Scottsdale, Ariz.-based service center reported net income of $302.9 million in Q1’24, down 21% from $383.1 million a year earlier, on net sales that slumped 8% to $3.64 billion.

The company logged a total of 1,494,000 short tons sold in the first quarter, down 1.7% from Q1’23 but up 10.3% from the prior quarter.

Looking ahead, the company expects there will be continued strength in non-residential construction activity in Q2’24. Additionally, Reliance is seeing continuing strong demand for automotive toll processing.

Reliance said it expects a better-than-normal seasonal recovery in demand in Q2, “despite prevailing macroeconomic uncertainty and geopolitical matters.”

The company estimates its tons sold will be up 2.5-4.5% in Q2 vs.Q1, “with ~2% of the sequential growth coming from recently completed acquisitions on April 1.”

Finally, Reliance anticipates non-GAAP earnings per diluted share in the range of $4.70-4.90 for Q2’24.

Ethan Bernard

Ethan Bernard is managing editor for Steel Market Update. He previously worked for American Metal Market as a copy editor in the New York office for two years, starting in 2008. Later, he copy edited AMM’s monthly magazine on a freelance basis from 2015 until 2017. With experience in financial copywriting and textbook publishing, he holds a BA in Comparative Literature from UC Berkeley, and an MFA. in Creative Writing from New York University. He can be reached at ethan@steelmarketupdate.com or 724-759-7871.