01—Abstract
Summary
Summary of the 8-K filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Reliance, Inc. reported second quarter 2024 results for the quarter ended June 30, 2024, in a press release furnished as Exhibit 99.1.
Net sales were $3.64 billiona, essentially flat sequentially (0.0%) and down 6.1% year over year from $3,880.3 million. Diluted EPS was $4.67 versus $5.23 in the first quarter 2024 and $6.49 in the second quarter 2023, while non-GAAP diluted EPS was $4.65. Management attributed the decline mainly to lower carbon steel pricing, which reduced gross profit margin to 29.8% from 31.0% in the prior quarter.
Tons sold rose 4.0% sequentially to 1,553.5 thousand, helped by the April 1, 2024 acquisitions of American Alloy Steel, Inc. and Mid-West Materials, Inc. Cash flow from operations was $366.3 millionb in the quarter, and the company repurchased $519.3 million of stock in the second quarter and $165.4 million in July 2024. Cash and cash equivalents were $350.8 million at June 30, 2024, against total debt of $1.15 billion, with no borrowings under its $1.5 billion revolving credit facility. The Board declared a quarterly dividend of $1.10 per share payable August 30, 2024.
For the third quarter of 2024, Reliance expects tons sold to decline 2.5% to 4.5% sequentially and average selling price per ton to fall 2% to 4%, with gross profit margin under some pressure. Non-GAAP diluted EPS is expected in the range of $3.60 to $3.80c.
02—Key points
Key Highlights
- Net sales of $3.64 billion were flat sequentially and down 6.1% year over year from $3,880.3 million in Q2 2023.
- Diluted EPS of $4.67 compared with $5.23 in Q1 2024 and $6.49 in Q2 2023; non-GAAP diluted EPS was $4.65.
- Gross profit margin was 29.8%, down from 31.0% in Q1 2024, which management attributed to declining carbon steel pricing; management described this as within its long-term sustainable range of 29-31%.
- Tons sold increased 4.0% sequentially to 1,553.5 thousand, with same-store tons up 0.9% sequentially; average selling price per ton fell 3.8% sequentially to $2,348.
- Cash flow from operations was $366.3 million in Q2 2024, and free cash flow was $268.1 million.
- The company repurchased $519.3 million of common stock in Q2 2024 and $165.4 million through July 23, 2024, with $755.0 million remaining under its $1.5 billion program; a $1.10 quarterly dividend was declared.
- Q3 2024 guidance calls for tons sold down 2.5% to 4.5% and average selling price down 2% to 4% sequentially, with non-GAAP diluted EPS of $3.60 to $3.80.
03—Questions
Frequently Asked Questions
How did Reliance perform in the second quarter of 2024?
Net sales were $3.64 billion, flat sequentially and down 6.1% year over year. Diluted EPS was $4.67, compared with $5.23 in the first quarter of 2024 and $6.49 in the second quarter of 2023. Management said declining metal pricing, particularly carbon steel, drove the lower gross profit margin and earnings.
What is the outlook for the third quarter of 2024?
Reliance expects tons sold to fall 2.5% to 4.5% sequentially and average selling price per ton to decline 2% to 4%, mainly from lower carbon steel prices. The company anticipates gross profit margin will remain under some pressure and expects non-GAAP diluted EPS of $3.60 to $3.80.
What acquisitions did Reliance complete, and what do they add?
Reliance completed the acquisitions of American Alloy Steel, Inc., a distributor of specialty carbon and alloy steel plate and round bar, and Mid-West Materials, Inc., a flat-rolled steel service center, both effective April 1, 2024, using cash on hand. American Alloy's 2023 net sales were approximately $310 million and Mid-West Materials' were approximately $87 million. A separate agreement to acquire certain FerrouSouth toll processing assets was reached on July 15, 2024.
How is Reliance returning capital to stockholders?
In Q2 2024 Reliance repurchased about 1.8 million shares for $519.3 million, and through July 23, 2024 it repurchased 582,311 more shares for $165.4 million. The Board declared a quarterly dividend of $1.10 per share, payable August 30, 2024 to holders of record on August 16, 2024. Second-quarter dividends paid totaled $62.6 million.
What is Reliance's balance sheet position?
At June 30, 2024, cash and cash equivalents were $350.8 million and total debt was $1.15 billion, with no borrowings under the $1.5 billion revolving credit facility. Net debt-to-total capital was 9.4%, and net debt-to-EBITDA was 0.5x for the twelve months ended June 30, 2024.
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