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RI

RELIANCE, INC. (RS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net sales were $3.66B, up 5% q/q and 0.5% y/y, with record second‑quarter tons sold; diluted EPS was $4.42 and non‑GAAP EPS $4.43, up ~18% q/q but down vs Q2 2024 due to margin dynamics .
  • Average selling price per ton rose 6.1% q/q, well above guidance; non‑GAAP FIFO gross margin was 30.6% and non‑GAAP LIFO gross margin 29.9%, slightly below internal expectations due to inventory cost/replacement cost misalignment and pricing that peaked in April then declined .
  • Wall Street consensus for Q2 2025 was EPS $4.705* and revenue $3.680B*; RS delivered EPS $4.43 and revenue $3.660B, a modest miss on both; Q1 2025 had been a beat vs consensus* .
  • Management guided Q3 2025 non‑GAAP EPS to $3.60–$3.80 with tons sold down 1–3% q/q and ASP down 1% to up 1%, citing seasonal slowdowns and tariff uncertainty; dividend of $1.20/share was declared .
  • Capital allocation remained active: $80M repurchases, $63M dividends, $88M capex in Q2; net debt‑to‑EBITDA ~0.9x supports continued flexibility .

Values with asterisk (*) retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record second‑quarter tons sold (+4.0% y/y) and ASP +6.1% q/q, doubling the high end of guidance; management highlighted “resilience of our proven business model” and market share gains supported by domestic sourcing and value‑added processing .
  • FIFO gross margin expanded q/q to 30.6% despite mixed pricing; non‑GAAP EPS rose 17.5% q/q to $4.43, with cash from operations of $229M funding capex and buybacks .
  • Non‑residential construction demand improved, supported by data centers, energy infrastructure, manufacturing, and public infrastructure; aerospace defense/space demand remained strong .

Selected quote: “Our record second‑quarter tons sold once again significantly outperformed the industry due to our unparalleled scale, access to domestic metal and breadth of processing capabilities.” — Karla Lewis, CEO .

What Went Wrong

  • Pricing peaked in April and declined through the quarter for many carbon products; inventory cost exceeded replacement cost, pressuring gross margin vs internal expectations .
  • Tariff uncertainty led customers to hold back purchases, limiting pass‑through of mill price increases and keeping gross margin “under some pressure” into Q3 .
  • Semiconductor demand remained depressed due to supply chain inventory; stainless pricing declined modestly; Q2 diluted EPS down vs Q2 2024 ($4.42 vs $4.67) .

Financial Results

Core Financials (Sequential Trend)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Billions)$3.127 $3.485 $3.660
Diluted EPS ($)$1.93 $3.74 $4.42
Non-GAAP Diluted EPS ($)$2.22 $3.77 $4.43
Gross Profit Margin (LIFO, %)28.3% 29.7% 29.7%
Non-GAAP Gross Margin (LIFO, %)28.6% 29.7% 29.9%
Non-GAAP Gross Margin (FIFO, %)28.8% 30.4% 30.6%

Year-over-Year

MetricQ2 2024Q2 2025
Net Sales ($USD Billions)$3.643 $3.660
Diluted EPS ($)$4.67 $4.42
Non-GAAP Diluted EPS ($)$4.65 $4.43
Tons Sold (000)1,553.5 1,615.0
ASP ($/ton)$2,348 $2,273

Commodity/Product Sales Mix

Sales ($USD Millions)Q2 2024Q1 2025Q2 2025
Carbon Steel$2,025.7 $1,904.2 $2,044.2
Aluminum$587.8 $605.6 $619.9
Stainless Steel$521.8 $503.2 $489.2
Alloy$166.8 $158.4 $167.5

KPIs and Cash Flow

KPIQ2 2024Q1 2025Q2 2025
Tons Sold (000)1,553.5 1,628.9 1,615.0
ASP ($/ton)$2,348 $2,143 $2,273
LIFO Expense ($MM)(50.0) 25.0 25.0
Cash from Operations ($MM)366.3 64.5 229.0
Free Cash Flow ($MM)268.1 (22.4) 141.4
Share Repurchases ($MM)519.3 (YTD 2024) 253.2 79.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP EPSQ2 2025$4.50–$4.70 (incl. $25M LIFO; ASP +1–3%; tons -1% to +1%) Actual: $4.43; ASP +6.1%; tons -0.9% q/q Lower vs guide (delivered below)
Tons SoldQ2 2025Down 1% to up 1% q/q Actual: -0.9% q/q; +4.0% y/y In line (low end)
ASP per TonQ2 2025Up 1% to 3% q/q Actual: +6.1% q/q Beat (above guide)
FIFO Gross MarginQ2 2025Expected expansion Actual: 30.6% (modest increase, lower than internal expectations) Modest increase; below internal expectation
Non-GAAP EPSQ3 2025—$3.60–$3.80; ASP -1% to +1%; tons -1% to -3% q/q; LIFO expense $25M (~$0.36/share) New
LIFO Expense (Full Year)FY 2025—$100M estimate New/maintained
Capex BudgetFY 2025—$325M; total cash outlay $360–$380M Maintained
DividendQ2/Q3 2025$1.20 declared in Feb/Apr $1.20 declared July 22, payable Aug 29 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
Tariffs & Trade UncertaintyQ4: Outlook assumes no significant trade disruption ; Q1: Demand pull‑forward ahead of price/tariff actions Customers held back purchases; mills raised prices; margin pressure; cautious Q3 guide Elevated uncertainty; cautious near-term
Non‑residential Construction & Data CentersQ4: Healthy levels expected in Q1 ; Q1: Improved demand; data centers cited Improved y/y; strong across data centers/public infrastructure Strengthening
Pricing & MarginsQ4: FIFO margin improved to 28.8% ; Q1: FIFO margin 30.4% on March price improvements Pricing peaked in April then declined; FIFO 30.6%; margin realization slightly below expectations Mixed; modest q/q improvement with caution
AerospaceQ4: Stable commercial; strong defense/space ; Q1: Mildly weaker commercial expected Commercial stable; defense/space strong; mild weakness ahead due to inventory Stable to slightly softer commercial
SemiconductorQ4: Under pressure ; Q1: Remains under pressure Remained depressed; pressure to continue Ongoing weakness
M&A PipelineQ4: 4 acquisitions completed in 2024 ; Q1: Continued opportunities More deals coming to market; valuations better aligned Activity improving

Management Commentary

  • “Our solid results once again demonstrate the resilience of our proven business model in a volatile environment… we maintained a strong gross profit margin within our sustainable range of 29% to 31%” — Karla Lewis, CEO .
  • “Pricing for many carbon steel products peaked in April and retreated… shorter product lead times… accelerated our receipt of higher‑cost material… contributing to gross profit margin realization slightly lower than expected.” — Arthur Ajemyan, CFO .
  • “We anticipate pricing will stay relatively consistent… FIFO gross profit margin will remain under some pressure in Q3… non‑GAAP EPS $3.60–$3.80 inclusive of $25M LIFO expense (~$0.36/share).” — CFO .
  • “Our longstanding practice of primarily sourcing our metal from domestic mills and operating in the U.S. provides a strong competitive advantage in the current trade environment.” — CEO .

Q&A Highlights

  • Gross margin outlook: Management emphasized seasonal demand softness and tariff uncertainty driving conservative Q3 margin stance; difficulty passing through mill increases amid customer caution .
  • Market share gains: Sustained via high‑touch service, next‑day delivery, decentralized structure, and value‑added processing; balanced with maintaining 29–31% sustainable margin .
  • Aluminum pricing acceptance: Customers are accepting outsized increases; RS prices on all‑in cost basis (including Midwest premium); timing effects expected to flow through .
  • Aerospace supply chain: Noted inventory overhang in commercial; some improvement expected as OEM build rates rise; defense/space strong .

Estimates Context

MetricQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Actual
EPS ($)3.694*3.77 4.705*4.43
Revenue ($USD Billions)3.441*3.485 3.680*3.660
  • Q2 results were modest misses vs S&P consensus on both EPS and revenue; Q1 was a beat on both metrics*.
  • Q3 2025 consensus EPS was ~$3.73*, within management’s $3.60–$3.80 guidance range, reflecting expected seasonal and pricing pressure .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Near‑term caution: Expect Q3 seasonal volume decline (‑1–3% q/q) and margin pressure as tariff uncertainty limits price pass‑through; positioning for normalization once policy clarity improves .
  • Structural strengths: Domestic sourcing, scale, and processing breadth continue to drive share gains and support mid‑to‑high‑20s to low‑30s gross margins through cycles .
  • Capital deployment: Healthy FCF and sub‑1x net debt/EBITDA enable ongoing capex ($325M FY plan) and buybacks (~$1B authorization remaining), supporting EPS durability .
  • End‑market mix: Non‑res construction/data centers robust; aerospace defense/space strong; semi remains a drag—watch OEM build rates and inventory digestion .
  • Price dynamics: April peak then decline in carbon; aluminum and stainless increases holding—monitor ASP trajectory and replacement cost alignment for margin implications .
  • Estimate resets: Given Q2 modest miss and conservative Q3 guide, street models likely to trim near‑term margins/EPS while maintaining medium‑term resilience pending tariff clarity*.
  • Trading lens: Headlines around tariff resolution, data center project momentum, and aluminum/stainless pricing should be key catalysts; stable dividend ($1.20/qtr) adds carry .