01—Abstract
Summary
Summary of the 10-Q filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Reliance, Inc. reported third-quarter 2024 net sales of $3.42 billiona, down from $3.62 billion in the prior-year quarter, and net income attributable to Reliance of $199.2 million, or $3.61 diluted earnings per share, versus $4.99 a year earlier.
The filing attributes the decline mainly to lower metals prices, partially offset by higher same-store and total tons sold and by contributions from four acquisitions completed in the first three quarters of 2024. Gross profit margin was 29.4%b for the quarter and 30.1% for the nine months, compared with 29.7% and 30.7% a year earlier. Same-store net sales fell 8.0% in the quarter as average selling price per ton dropped 11.4%, while same-store tons sold rose 3.7%.
Cash flow from operations was $956.5 millionc for the nine months ended September 30, 2024, down from $1.15 billion, mainly reflecting lower net income. The company returned $1.14 billion to stockholders in the period, consisting of $951.3 million in share repurchases and $188.5 million in cash dividends. Cash and cash equivalents fell to $314.6 million, and the net debt-to-total capital ratio rose to 11.5% from 0.8% at year-end 2023, after $125.0 million of revolver borrowings and $663.0 million of new long-term debt proceeds.
On October 22, 2024, the Board declared a fourth-quarter dividend of $1.10d per share and replenished the share repurchase authorization to $1.5 billion. The company stated that it had no material changes to its risk factors, and that it was in compliance with the financial maintenance covenant under its Credit Agreement at September 30, 2024. Management said liquidity from operations, cash, and its $1.5 billion revolving credit facility is sufficient for the next 12 months and beyond.
02—Key points
Key Highlights
- Third-quarter net sales were $3.42 billion versus $3.62 billion a year earlier; nine-month net sales were $10.71 billion versus $11.47 billion.
- Diluted EPS was $3.61 for the third quarter, compared with $4.99, and $13.55 for the nine months, compared with $17.92, which management attributes mainly to lower metals prices.
- Same-store average selling price per ton fell 11.4% in the quarter, while same-store tons sold rose 3.7%.
- Operating income was $273.4 million in the quarter, down 29.8% from $389.5 million, and $1.02 billion for the nine months, down 28.0%.
- Share repurchases totaled $951.3 million for the nine months, versus $239.2 million a year earlier, and quarterly dividends were raised to $1.10 per share.
- Net debt-to-total capital rose to 11.5% from 0.8% at December 31, 2023, with $125.0 million drawn on the new $1.5 billion revolving credit facility.
- Four acquisitions in 2024 (Cooksey Steel, American Alloy, MidWest Materials, FerrouSouth) cost $366.7 million in cash and contributed $203.9 million to nine-month net sales.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $3.42B$3.62B | −5.6% |
| SG&A Expenses | $665.00M$626.90M | +6.1% |
| Operating Expenses | $3.15B$3.23B | −2.7% |
| Operating Income | $273.40M$389.50M | −29.8% |
| Net Income | $199.20M$295.00M | −32.5% |
| EPS (Basic) | $3.64$5.05 | −27.9% |
| EPS (Diluted) | $3.61$4.99 | −27.7% |
| Shares Outstanding (Basic) | 54.69M58.43M | −6.4% |
| Shares Outstanding (Diluted) | 55.18M59.12M | −6.7% |
05—Questions
Frequently Asked Questions
Why did Reliance's earnings decline in the third quarter of 2024?
The filing attributes the decline mainly to lower metals prices. Average selling price per ton fell 11.4% on a same-store basis in the quarter, outweighing the benefit of a 3.7% increase in same-store tons sold and contributions from 2024 acquisitions. Gross profit margin also eased to 29.4% from 29.7%, and SG&A rose to 19.4% of net sales from 17.3%.
How is Reliance returning cash to shareholders?
In the nine months ended September 30, 2024, Reliance repurchased $951.3 million of common stock and paid $188.5 million in cash dividends. On October 22, 2024, the Board declared a fourth-quarter dividend of $1.10 per share payable December 6, 2024, and amended the share repurchase program to replenish the authorization to $1.5 billion.
Is Reliance's liquidity and debt position sufficient?
Management believes operating cash flow, cash on hand of $314.6 million, and its $1.5 billion revolving credit facility will meet cash requirements and stockholder return activities over the next 12 months and beyond. Approximately $1.37 billion was available under the revolver. The company had $401.4 million of debt coming due before the facility matures in September 2029, and it stated it was in compliance with its financial maintenance covenant at September 30, 2024.
What acquisitions did Reliance complete in 2024?
Reliance completed four 2024 acquisitions using cash on hand: Cooksey Steel (February 1), American Alloy Steel and MidWest Materials (both April 1), and certain assets of the FerrouSouth division of Ferragon Corporation (August 16). Preliminary purchase price allocations total $372.3 million in net assets acquired, and the company said these acquisitions expand capacity, product breadth, and geographic reach.
Has Reliance's operating cash flow changed materially?
Net cash provided by operating activities was $956.5 million for the nine months ended September 30, 2024, down $189.2 million from $1.15 billion a year earlier. The filing attributes the decrease mainly to a $294.7 million decline in net income, partly offset by lower working capital investment.
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