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Reliance's (RS) Earnings Miss, Revenues Beat Estimates in Q2
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Reliance, Inc. (RS - Free Report) posted profits of $267.8 million or $4.67 per share in the second quarter of 2024, down from $385.1 million or $6.49 per share in the year-ago quarter.
Barring one-time items, the company recorded earnings of $4.65 per share. It lagged the Zacks Consensus Estimate of $4.73.
The company recorded net sales of $3,643.3 million, down around 6.1% year over year. The top line beat the Zacks Consensus Estimate of $3,603.9 million.
Reliance reported a 4.7% year-over-year increase in shipments (thousand tons sold) to 1,553.5. The figure beat our estimate of 1,532.6. The average selling price per ton dropped 10.6% year over year to $2,348. It was lower than our estimate of $2,380.
Demand in non-residential construction, including infrastructure, Reliance's largest end market, saw an improvement from the second-quarter 2023 tally. 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 third quarter of 2024 despite pricing pressure on carbon steel tubing, plate and structural products primarily sold into this market.
Commercial aerospace demand improved from second-quarter 2023 levels. Reliance anticipates that this demand will remain stable in the third quarter. However, it may be influenced by changes in build rates affecting the supply chain and potential pricing pressure. RS’ aerospace business's military and space-related segment is also expected to remain strong in the third quarter. Demand for Reliance’s toll processing services in the automotive market increased from the second-quarter figure. The company expects this demand to stay stable in the third quarter, subject to typical seasonal fluctuations.
Across the broader manufacturing sectors that Reliance serves, demand remained consistent overall compared with the second quarter of 2023 figure. Increased activity in industrial machinery and military spending offset declines in demand for consumer products and heavy equipment, mainly agricultural machinery. Reliance anticipates a customary seasonal slowdown in demand for its products across the broader manufacturing sector in the third quarter.
Demand in the semiconductor market declined from the second quarter of 2023 figure. Reliance expects this demand to be under pressure in the third quarter due to excess inventory in the supply chain. However, the company's long-term outlook for the semiconductor market remains positive, supported by the CHIPS Act and significant semiconductor fabrication expansion underway in the United States.
Financial Position
At the end of the second quarter of 2024, Reliance had $350.8 million in cash and cash equivalents while carrying $1.15 billion in total outstanding debt. There were no outstanding borrowings under its $1.5-billion revolving credit facility. In the second quarter of 2024, RS generated cash flow from operations of $366.3 million.
Outlook
Reliance anticipates that underlying demand will remain relatively stable across most of the end markets it serves in third-quarter 2024. However, shipment levels are expected to be impacted by normal seasonal patterns, including a decline in shipping volumes due to planned customer shutdowns and vacation schedules.
As a result, the company estimates that its tons sold will decline 2.5-4.5% in the third quarter of 2024 from the second-quarter tally but increase 4.5-6.5% year over year. The company expects its average selling price per ton sold in the third quarter of 2024 to be down 2-4% from second-quarter figures, mainly due to lower prices for carbon steel products. It anticipates some pressure on its gross profit margin in the third quarter of 2024. Based on these expectations, the company anticipates adjusted earnings per share to be in the range of $3.60-$3.80 for the third quarter of 2024.
Price Performance
Reliance’s shares have rallied 9.8% in the past year compared with a 6% fall in the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Reliance currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for ASH’s current-year earnings is pegged at $4.56, indicating a year-over-year rise of 12%. ASH’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 5.3%. The company’s shares have increased 3.4% in the past year. It is slated to report fiscal third-quarter results on Aug 6.
The Zacks Consensus Estimate for Kinross's current-year earnings is pegged at 57 cents, indicating a rise of 30% from year-ago levels. KGC beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 79% in the past year. It will report second-quarter results on Jul 31.
The Zacks Consensus Estimate for AEM’s current-year earnings is pegged at $3.42, indicating a year-over-year rise of 53%. The consensus estimate for AEM’s earnings has increased 8% in the past 60 days. AEM beat the consensus estimate in the last four quarters, with the average earnings surprise being 16.5%. The stock has rallied 44.4% in the past year.It is scheduled to release second-quarter results on Jul 31.
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Reliance's (RS) Earnings Miss, Revenues Beat Estimates in Q2
Reliance, Inc. (RS - Free Report) posted profits of $267.8 million or $4.67 per share in the second quarter of 2024, down from $385.1 million or $6.49 per share in the year-ago quarter.
Barring one-time items, the company recorded earnings of $4.65 per share. It lagged the Zacks Consensus Estimate of $4.73.
The company recorded net sales of $3,643.3 million, down around 6.1% year over year. The top line beat the Zacks Consensus Estimate of $3,603.9 million.
Reliance, Inc. Price, Consensus and EPS Surprise
Reliance, Inc. price-consensus-eps-surprise-chart | Reliance, Inc. Quote
Volumes and Pricing
Reliance reported a 4.7% year-over-year increase in shipments (thousand tons sold) to 1,553.5. The figure beat our estimate of 1,532.6. The average selling price per ton dropped 10.6% year over year to $2,348. It was lower than our estimate of $2,380.
Demand in non-residential construction, including infrastructure, Reliance's largest end market, saw an improvement from the second-quarter 2023 tally. 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 third quarter of 2024 despite pricing pressure on carbon steel tubing, plate and structural products primarily sold into this market.
Commercial aerospace demand improved from second-quarter 2023 levels. Reliance anticipates that this demand will remain stable in the third quarter. However, it may be influenced by changes in build rates affecting the supply chain and potential pricing pressure. RS’ aerospace business's military and space-related segment is also expected to remain strong in the third quarter. Demand for Reliance’s toll processing services in the automotive market increased from the second-quarter figure. The company expects this demand to stay stable in the third quarter, subject to typical seasonal fluctuations.
Across the broader manufacturing sectors that Reliance serves, demand remained consistent overall compared with the second quarter of 2023 figure. Increased activity in industrial machinery and military spending offset declines in demand for consumer products and heavy equipment, mainly agricultural machinery. Reliance anticipates a customary seasonal slowdown in demand for its products across the broader manufacturing sector in the third quarter.
Demand in the semiconductor market declined from the second quarter of 2023 figure. Reliance expects this demand to be under pressure in the third quarter due to excess inventory in the supply chain. However, the company's long-term outlook for the semiconductor market remains positive, supported by the CHIPS Act and significant semiconductor fabrication expansion underway in the United States.
Financial Position
At the end of the second quarter of 2024, Reliance had $350.8 million in cash and cash equivalents while carrying $1.15 billion in total outstanding debt. There were no outstanding borrowings under its $1.5-billion revolving credit facility. In the second quarter of 2024, RS generated cash flow from operations of $366.3 million.
Outlook
Reliance anticipates that underlying demand will remain relatively stable across most of the end markets it serves in third-quarter 2024. However, shipment levels are expected to be impacted by normal seasonal patterns, including a decline in shipping volumes due to planned customer shutdowns and vacation schedules.
As a result, the company estimates that its tons sold will decline 2.5-4.5% in the third quarter of 2024 from the second-quarter tally but increase 4.5-6.5% year over year. The company expects its average selling price per ton sold in the third quarter of 2024 to be down 2-4% from second-quarter figures, mainly due to lower prices for carbon steel products. It anticipates some pressure on its gross profit margin in the third quarter of 2024. Based on these expectations, the company anticipates adjusted earnings per share to be in the range of $3.60-$3.80 for the third quarter of 2024.
Price Performance
Reliance’s shares have rallied 9.8% in the past year compared with a 6% fall in the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Reliance currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Ashland Inc. (ASH - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) . Ashland, Kinross and Agnico hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ASH’s current-year earnings is pegged at $4.56, indicating a year-over-year rise of 12%. ASH’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 5.3%. The company’s shares have increased 3.4% in the past year. It is slated to report fiscal third-quarter results on Aug 6.
The Zacks Consensus Estimate for Kinross's current-year earnings is pegged at 57 cents, indicating a rise of 30% from year-ago levels. KGC beat the consensus in the last four quarters, with the average earnings surprise being 46%. The stock has surged nearly 79% in the past year. It will report second-quarter results on Jul 31.
The Zacks Consensus Estimate for AEM’s current-year earnings is pegged at $3.42, indicating a year-over-year rise of 53%. The consensus estimate for AEM’s earnings has increased 8% in the past 60 days. AEM beat the consensus estimate in the last four quarters, with the average earnings surprise being 16.5%. The stock has rallied 44.4% in the past year.It is scheduled to release second-quarter results on Jul 31.