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RELIANCE, INC. (RS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered record third‑quarter tons sold (+6.2% YoY) and a revenue beat ($3.65B vs. $3.54B consensus), but non‑GAAP EPS of $3.64 was modestly below consensus ($3.73) as gross margin compressed on competitive pricing and LIFO expense . Revenue consensus and EPS consensus via S&P Global: $3.54B* and $3.73*.
  • Consolidated gross margin (LIFO) was 28.3% (down 160 bps QoQ), with FIFO gross margin at 29.0% as tariff-driven price momentum faded and specialty aerospace/semiconductor softness persisted .
  • Market share gains continued: management cited U.S. share at 17.1% (vs. 14.5% in 2023), supported by scale, domestic sourcing and value‑added processing; tons outperformed MSCI by ~9 pts .
  • Q4 2025 outlook implies a seasonal step‑down: tons down 5–7% QoQ (up 3.5–5.5% YoY), ASP flat, FIFO margin flat/slightly up, and non‑GAAP EPS $2.65–$2.85 (inclusive of $25M LIFO expense; ~$0.35/sh) – broadly in line with S&P Global EPS consensus of ~$2.78* midpoint .
  • Capital deployment remained active with $60.9M of buybacks (avg $287.71) and a $1.20 dividend; net leverage remained conservative (Net debt/EBITDA 0.9x) after refinancing $400M senior notes with a new $400M term loan maturing 2028 .

What Went Well and What Went Wrong

What Went Well

  • Market share and volume outperformance: “record” Q3 tons sold and ~9‑pt outperformance vs. MSCI drove share to 17.1% on a smart, profitable growth strategy focused on service and processing capabilities .
  • Resilient cash generation and balanced allocation: $262M operating cash flow funded $81M capex, $63M dividends and $61M buybacks; $964M remains on the repurchase authorization .
  • Strategic positioning: Management emphasized the competitive advantage of a primarily domestic supply chain and mill relationships, supporting dependable service levels and customer wins .

What Went Wrong

  • Margin compression: Gross margin (LIFO) fell to 28.3% (–140 bps YoY; –160 bps QoQ), with pressure from competitive pricing amid trade policy uncertainty and readily available inventories .
  • LIFO headwind: $25M LIFO expense in Q3 vs. $50M LIFO income in Q3’24 represented a ~$1.30/sh unfavorable YoY impact (CFO commentary), weighing on reported margins and EPS .
  • Specialty market softness: High‑value products into aerospace and semiconductors underperformed due to excess supply chain inventories, pressuring price/margin realization in <10% of sales .

Financial Results

Headline results vs. prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$3.420 $3.660 $3.651
Gross Profit Margin (LIFO)29.4% 29.7% 28.3%
Gross Profit Margin (FIFO, non‑GAAP)30.0% 30.6% 29.0%
Tons Sold (K)1,521.4 1,615.0 1,615.5
Avg Selling Price per Ton ($)$2,246 $2,273 $2,271
Diluted EPS (GAAP)$3.61 $4.42 $3.59
Diluted EPS (non‑GAAP)$3.64 $4.43 $3.64
Pretax Income Margin7.6% 8.3% 6.8%
Cash from Operations ($M)$463.9 $229.0 $261.8
Free Cash Flow ($M)$351.1 $141.4 $180.6

Notes: Gross profit margins shown on LIFO and FIFO (non‑GAAP) bases per company presentation .

Actual vs. S&P Global Wall Street Consensus (Q3 2025)

MetricConsensusActualSurprise
Revenue ($USD Billions)$3.537*$3.651 +$0.114B / +3.2%
Primary EPS (non‑GAAP)$3.729*$3.64 −$0.09 / −2.4%

Values marked with * retrieved from S&P Global.

Major commodity/product mix

CategoryTons Sold (K) Q3’24Tons Sold (K) Q2’25Tons Sold (K) Q3’25Sales ($M) Q3’24Sales ($M) Q2’25Sales ($M) Q3’25
Carbon Steel1,246.9 1,326.4 1,326.1 $1,856.2 $2,044.2 $2,032.5
Aluminum80.2 83.8 80.4 $576.3 $619.9 $621.5
Stainless Steel73.2 75.5 75.9 $513.9 $489.2 $489.9
Alloy30.2 31.1 29.7 $155.9 $167.5 $159.6

Additional KPIs and balance sheet

KPIQ3 2024Q2 2025Q3 2025
Net Debt / EBITDA0.6x 0.9x 0.9x
Net Debt / Total Capital11.5% 14.1% 13.3%
Total Debt ($B)$1.276 $1.433 $1.389
Cash & Equivalents ($M)$314.6 $239.5 $261.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non‑GAAP EPSQ3 2025$3.60–$3.80 (incl. $25M LIFO) Delivered $3.64 In line
Tons Sold (YoY)Q4 2025n/aUp 3.5%–5.5% New
Tons Sold (QoQ)Q4 2025n/aDown 5%–7% New
Avg Selling PriceQ4 2025n/aRelatively flat QoQ New
FIFO Gross MarginQ4 2025n/aFlat to slightly improved QoQ New
Non‑GAAP EPSQ4 2025n/a$2.65–$2.85 (incl. $25M LIFO; ~$0.35/sh) New
DividendQ4 2025$1.20 (Q2/Q3) $1.20 declared for Dec 5, 2025 Maintained
LIFO ExpenseQ4 2025n/a$25M (≈$0.35/sh) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Tariffs / Trade Policy & PricingQ1: Dynamic trade backdrop; ASP up in March/April; expected FIFO margin expansion . Q2: Tariffs spiked prices in April, then declined; competitive environment emerging .Trade policy uncertainty + ample inventory made price pass‑through harder; competitive pricing pressured margins .Headwind intensified in Q2–Q3; stabilizing into Q4 .
Market Share / VolumesQ1: Record tons, outperformed industry . Q2: Record Q2 tons, +4% YoY, ~7 pts outperformance vs. MSCI .Record Q3 tons, ~9 pts outperformance; U.S. share to 17.1% .Positive, accelerating share gains.
Aerospace & SemiconductorQ1: Stability with excess inventories; near‑term softness expected . Q2: Stable to softer; excess inventory persists .High‑value products pressured by excess inventories; improvement expected through 2026 .Prolonged digestion, easing into 2026.
Non‑Residential Construction / Data CentersQ1: Healthy, supported by data centers/infra . Q2: Healthy levels maintained .Improved vs. Q3’24; healthy into Q4 (seasonal) with data centers, manufacturing, public infra .Stable to improving.
Cost & SG&A LeversQ1/Q2: Focus on profitable growth; leverage on fixed costs .Headcount reductions with maintained service; ongoing ops rationalization .Active efficiency push.
Capital Allocation / LeverageQ1: Buybacks $253M; net debt/EBITDA 0.9x . Q2: Buybacks $80M; net debt/EBITDA 0.9x .Buybacks $61M; term loan refi; net debt/EBITDA <1x .Consistent, balanced deployment.

Management Commentary

  • “Our third quarter results demonstrate how Reliance’s scale, diversification, and high‑performing management teams deliver strong financial performance and capture market share in a uniquely challenging market environment… increasing our U.S. market share to 17.1%, up from 14.5% in 2023” – Karla Lewis, CEO .
  • “Trade policy uncertainty and readily available inventory… more difficult to immediately increase selling prices to fully offset mill price increases. These factors have contributed to short‑term gross profit margin headwinds… We remain confident… and we maintain our long‑term annual sustainable gross profit margin range of 29% to 31%.” .
  • “On a FIFO basis, our gross profit margin was 29% in the third quarter, up from the third quarter of 2024, and our FIFO pre‑tax income increased 30%.” – CFO .
  • “We think our gross profit margin troughed in Q3 based on the factors we see today.” – CEO (Q&A) .

Q&A Highlights

  • Margin dynamics and LIFO: Management attributed margin compression to competitive pricing amid inventory‑heavy markets; LIFO expense reflects 1H cost increases spread pro rata through 2025; with flat costs in 2026, LIFO should normalize .
  • Inventory and destocking: Elevated inventories at mills and service centers earlier in the year created pressure; lead times for certain products are extending and momentum is improving; management believes Q3 likely marked a margin trough .
  • Pricing puts/takes: Structural shapes and plate attempted increases; common alloy aluminum pricing benefited from Midwest premium; carbon products show signs of stabilization .
  • Cost control: Headcount peaked in Q2 and trended down while protecting service levels; ongoing rationalization and leverage of fixed costs .
  • Capital plan and taxes: 2025 cash capex outlays $340–$360M; 2026 capex likely lower than 2025 budget; new tax bill (bonus depreciation) could reduce cash taxes by ~$30–$40M .

Estimates Context

  • Q3 2025: Revenue beat ($3.651B vs. $3.537B*), while non‑GAAP EPS missed modestly ($3.64 vs. $3.73*) as margin pressure and LIFO expense offset volume outperformance . Values marked with * retrieved from S&P Global.
  • Q4 2025: Guide $2.65–$2.85 aligns with S&P EPS consensus of ~$2.78* (midpoint); revenue not guided explicitly. Values marked with * retrieved from S&P Global.
  • Potential estimate revisions: Street may trim near‑term margin/EPS assumptions given competitive pricing and specialty headwinds, partially offset by continued share gains and stable ASP guidance .

Key Takeaways for Investors

  • Reliance continues to gain share and drive volume despite a challenging pricing backdrop; data center and infrastructure exposure remain tailwinds .
  • The revenue beat and EPS miss reflect margin pressure (carbon/stainless/aero/semis) and LIFO timing; management expects margins to stabilize/slightly improve in Q4, with structural improvement into 2026 as specialty inventories clear .
  • Guidance implies a typical seasonal EPS step‑down and is effectively in line with consensus; watch execution on stable ASPs and flat/slightly better FIFO margin in Q4 .
  • Net leverage remains low (0.9x), providing capacity for buybacks, capex and M&A; refinancing extended maturities to 2028 without materially altering leverage .
  • Tactical focus: Monitor plate/structural price hikes, Midwest aluminum premium pass‑through, and any improvement in aero/semiconductor order patterns; an inflection in those specialty lines would be a positive margin catalyst .
  • Medium‑term thesis: Diversified end markets, value‑added processing, and domestic sourcing support outperformance through cycles; sustained 29–31% long‑term gross margin target underscores margin quality once near‑term pressures abate .

Source Documents

  • Q3 2025 8‑K press release, tables and outlook .
  • Q3 2025 earnings call transcript (prepared remarks and Q&A) .
  • Q2 2025 8‑K press release and tables for prior‑quarter comparisons .
  • Q1 2025 8‑K press release and tables for trend analysis .
  • Term loan press release (capital structure) .

Values retrieved from S&P Global:

  • Q3 2025 consensus revenue $3.537B and EPS $3.729; Q4 2025 EPS $2.775; Q2 2025 consensus revenue $3.680B and EPS $4.705; associated actuals shown above were compared to these S&P Global consensus inputs.*