Reliance, Inc. RS posted profits of $199.2 million or $3.61 per share in the third quarter of 2024, down from $295 million or $4.99 per share in the year-ago quarter. Barring one-time items, RS recorded earnings of $3.64 per share, down from $5.00 a year ago. It lagged the Zacks Consensus Estimate of $3.69.
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The company recorded net sales of $3,420.3 million, down around 6% year over year. The top line beat the Zacks Consensus Estimate of $3,409.3 million. RS benefited from higher shipments amid headwinds from weaker metals pricing in the quarter.
Reliance, Inc. Stock Price, Consensus and EPS Surprise
Reliance, Inc. price-consensus-eps-surprise-chart | Reliance, Inc. Quote
Reliance's Volumes and Pricing
Reliance reported a roughly 7% year-over-year increase in shipments (thousand tons sold) to 1,521.4. The figure beat our estimate of 1,494.6. The average selling price per ton dropped 12% year over year to $2,246. It was lower than our estimate of $2,289.
Demand in non-residential construction, including infrastructure, Reliance's largest end market, saw an improvement from third-quarter 2023. Reliance continues to support new construction projects across various sectors, such as public infrastructure, manufacturing, data centers and energy infrastructure. The company expects demand in non-residential construction to remain relatively steady in the fourth quarter of 2024, subject to seasonality.
Commercial aerospace demand was stable compared with third-quarter 2023 levels. Reliance anticipates that this demand will remain stable in the fourth quarter, influenced by the impact on build rates, supply chain disruption and pricing. Demand for Reliance’s toll processing services in the automotive market increased from the third-quarter 2023 figure. The company expects this demand to stay stable in the fourth quarter, subject to typical seasonality.
Across the broader manufacturing sectors that Reliance serves, demand strengthened in the reported quarter compared with the third quarter of 2023. RS expects demand for its products across the broader manufacturing sector to see a seasonal slowdown in the fourth quarter.
Demand in the semiconductor market declined from the year-ago quarter. Reliance expects this demand to be under pressure in the fourth quarter due to excess inventory in the supply chain. Its long-term outlook for the semiconductor market remains positive.
RS’s Financial Position
At the end of the reported quarter, RS had cash and cash equivalents of $314.6 million while carrying $1.28 billion in total outstanding debt. Reliance generated cash flow from operations of $463.9 million in the third quarter.
Reliance’s Q4 Outlook
Reliance anticipates underlying demand to weaken across most of the end markets it serves in fourth-quarter 2024 factoring in the current significant uncertainty surrounding economic policy in the United States.
The company anticipates its tons sold to be down 6-8% in the fourth quarter compared to the third quarter of 2024 and up 4-6% from the year-ago quarter considering normal seasonal trends and increased macroeconomic and political uncertainty. RS expects its average selling price per ton sold to be down 1.5%-3.5% sequentially in the fourth quarter due to continued pricing pressure across carbon steel products. Based on these expectations, the company anticipates adjusted earnings per share to be in the range of $2.65-$2.85 for the fourth quarter.
RS Stock’s Price Performance
Reliance’s shares have rallied 18.8% in the past year compared with the Zacks Mining – Miscellaneous industry’s 2.8% rise.
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RS’s Zacks Rank & Other Key Picks
RS currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the Basic Materials space are IAMGOLD Corporation IAG, DuPont de Nemours, Inc. DD and AdvanSix Inc. ASIX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IAMGOLD is scheduled to release third-quarter results on Nov. 7. The Zacks Consensus Estimate for IAG’s third-quarter earnings is pegged at 11 cents. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 200%. Its shares have shot up roughly 142% in the past year.
DuPont is slated to release third-quarter results on Nov. 5. The consensus estimate for DD’s third-quarter earnings is pegged at $1.03. The company's shares have rallied roughly 17% in the past year.
AdvanSix is scheduled to release third-quarter results on Nov. 1. The Zacks Consensus Estimate for ASIX’s third-quarter earnings is pegged at 66 cents. ASIX has gained around 4% in the past year.
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