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01/11 16:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed outlook. While there are positive signs like improved inventory management and strong market share gains, concerns remain about unresolved aerospace inventory issues and vague management responses. Additionally, the impact of external factors like the government shutdown and aluminum supply disruption adds uncertainty. The absence of significant financial metrics or guidance changes suggests a neutral stock price movement in the near term.
Tons Sold Third quarter tons sold increased 6.2% compared to the third quarter of 2024, significantly outperforming the service center industry which reported a decrease of 2.9% in the same comparative period. This was driven by a smart, profitable growth strategy and investments in growth.
Market Share U.S. market share increased to 17.1% in Q3 2025, up from 14.5% in 2023, due to a smart, profitable growth strategy and high levels of customer service.
Non-GAAP Earnings Per Diluted Share Non-GAAP earnings per diluted share were $3.64 in Q3 2025, consistent with Q3 2024. However, Q3 2024 benefited from $50 million of LIFO income, compared with $25 million of expense in Q3 2025, equating to a $1.03 per share unfavorable year-over-year LIFO impact.
Operating Cash Flow Generated approximately $262 million in operating cash flow in Q3 2025, which was strategically redeployed into high-value initiatives, including investments in advanced processing equipment and other growth projects.
Capital Expenditures 2025 capital expenditure budget remains at $325 million, with more than half directed towards growth initiatives. Including carryover spending, total cash outlays are expected to be between $340 million and $360 million in 2025.
Dividends and Share Repurchases Returned $124 million to stockholders in Q3 2025 through dividends and share repurchases. Year-to-date repurchases total more than 1.4 million shares, reducing total shares outstanding by 2%.
Gross Profit Margin Gross profit margin on a FIFO basis was 29% in Q3 2025, up from Q3 2024. However, trade policy uncertainty and excess inventories in aerospace and semiconductor supply chains contributed to margin compression.
SG&A Expenses Same-store non-GAAP SG&A expenses were up 4.8% for Q3 2025 compared to Q3 2024, due to inflationary wage adjustments and higher variable costs. However, on a per ton basis, expenses were slightly lower, demonstrating operating leverage.
Debt and Leverage Total debt was $1.4 billion as of September 30, 2025, with a net debt-to-EBITDA ratio of less than 1, providing significant liquidity for capital allocation priorities.
New business opportunities: Reliance offset declining industry shipment trends by winning new business opportunities, leveraging operating expenses, and contributing to profitability.
Investments in advanced processing equipment: Reliance strategically redeployed $262 million in operating cash flow into high-value initiatives, including investments in advanced processing equipment to strengthen long-term growth.
Market share growth: Reliance increased its U.S. market share to 17.1% in 2025, up from 14.5% in 2023, outperforming the industry by 9 percentage points.
Geographic reach expansion: Reliance is pursuing M&A opportunities to enhance geographic reach, expand value-added capabilities, and strengthen margin profile.
Operational cash flow: Generated $262 million in operating cash flow in Q3 2025, redeployed into growth initiatives and shareholder returns.
Cost management: Achieved lower same-store non-GAAP SG&A expenses per ton in Q3 and first 9 months of 2025 compared to 2024, demonstrating operating leverage.
Capital allocation strategy: Reliance maintained a balanced approach by investing in growth initiatives, pursuing M&A opportunities, and returning $124 million to shareholders through dividends and share repurchases in Q3 2025.
Focus on diversified end markets: Reliance emphasized its diversified product mix and domestic supply chain to navigate market challenges and position for future growth.
Trade policy uncertainty: Trade policy uncertainty and readily available inventory are causing buyers to be hesitant, creating an extremely competitive market. This environment makes it more difficult to immediately increase selling prices to fully offset mill price increases, contributing to short-term gross profit margin headwinds.
Aerospace and semiconductor markets: The aerospace and semiconductor markets continue to underperform due to excess inventories within these supply chains, which impacts the profitability of high-value specialty products.
Pricing pressure on carbon steel and stainless steel products: Pricing for most carbon steel and stainless steel products has been declining due to industry overbuying, readily available inventory, and stable to declining end demand, leading to a very competitive market and gross profit margin pressure.
LIFO accounting impact: The LIFO accounting method has contributed to margin pressure, with $25 million of LIFO expense in the third quarter, reflecting cost increases from earlier in the year.
Agricultural machinery sector weakness: Relative weakness in the agricultural machinery sector continues, impacting shipments and overall performance in this segment.
Excess inventory in semiconductor supply chain: The semiconductor market remains under pressure from ongoing excess inventory in the supply chain, affecting demand and pricing.
Inflationary wage adjustments and higher variable costs: Inflationary wage adjustments and higher variable warehousing and delivery costs have increased SG&A expenses, though operating leverage has mitigated some of the impact.
Gross Profit Margin: The company maintains its long-term annual sustainable gross profit margin range of 29% to 31%. Pricing for most products is expected to stabilize entering the fourth quarter of 2025, with flat to slightly improved FIFO gross profit margin in Q4.
Capital Expenditures: The 2025 capital expenditure budget remains at $325 million, with total cash outlays expected between $340 million and $360 million in 2025, including carryover spending. More than half of the budget is directed towards growth initiatives.
Market Demand and Sales: Overall demand in the fourth quarter is anticipated to remain stable across diversified end markets. Tons sold are expected to increase 3.5% to 5.5% compared to Q4 2024 but decrease 5% to 7% compared to Q3 2025 due to seasonal trends.
Earnings Per Share (EPS): Q4 non-GAAP earnings per diluted share are projected to range between $2.65 and $2.85, reflecting typical sequential seasonality with a 20% to 25% decline in EPS compared to Q3 2025.
Market Trends: Demand in the aerospace and semiconductor markets is expected to remain under pressure due to excess inventories, with improvement anticipated as the company moves through 2026. Public infrastructure and general manufacturing sectors are expected to remain strong.
Dividends paid in Q3 2025: $63 million
Year-to-date dividends: Not explicitly mentioned
Share repurchases in Q3 2025: $61 million at an average price of approximately $288 per share
Year-to-date share repurchases: Reduced total shares outstanding by 2%, with approximately $964 million remaining under the $1.5 billion share repurchase plan.
The earnings call summary presents a mixed outlook. While there are positive signs like improved inventory management and strong market share gains, concerns remain about unresolved aerospace inventory issues and vague management responses. Additionally, the impact of external factors like the government shutdown and aluminum supply disruption adds uncertainty. The absence of significant financial metrics or guidance changes suggests a neutral stock price movement in the near term.
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