Reliance beats Q2 estimates as record shipments lift earnings 42%

Reliance posted Q2 non-GAAP EPS of $6.27, beating guidance, as record shipments and border wall work drove revenue 26.5% higher to $4.63 billion.

"Our teams delivered another excellent quarter, building on the positive momentum of the first quarter," President and Chief Executive Officer Karla Lewis said.

Tons sold reached a record 1.79 million, up 7% sequentially and 10.8% year over year, outperforming the industry-wide increase of 5.5% by more than 5 percentage points. Average selling price per ton rose 7.8% sequentially, also surpassing management's expectations. Pretax income increased 41% year over year to $429.8 million.

The border wall contract contributed $0.41 per share, more than double the $0.15 to $0.20 management had expected, with activity levels well above initial projections. For the third quarter, Reliance guided non-GAAP EPS of $6.40 to $6.60, implying year-over-year growth of 76% to 81%, including approximately $0.60 from border wall shipments.

The company generated $162.2 million in cash from operations during the quarter despite a significant working capital increase tied to higher shipment volumes and metals pricing. Reliance returned $63.8 million to stockholders through dividends and ended the quarter with $235.4 million in cash and $1.7 billion in total debt, including $520 million drawn on its $1.5 billion revolving credit facility.

Carbon steel, the company's largest product category, saw sales rise 28.2% year over year to $2.62 billion, with tons sold up 11.6%. Aluminum sales climbed 35.2% to $837.9 million, while stainless steel revenue increased 21.7% to $595.2 million. Gross profit margin on a FIFO basis — which management uses to assess ongoing performance — expanded to 30.5% from 30.1% in the first quarter.

The guidance raise signals management expects demand to remain healthy across non-residential construction, aerospace, and semiconductor end markets. Investors will watch third-quarter results for continued margin expansion and further contributions from the border wall project.

This article is for informational purposes only and does not constitute investment advice.