10-K: Reliance, Inc. Navigates Metal Market Shifts in 2025

Reliance, Inc. reported increased net sales and record tons sold in 2025, despite a decline in diluted earnings per share and challenges from tariff-related gross profit margin pressure.

Summary

• Net sales increased 3.3% to $14.29 billion in 2025, up from $13.835 billion in 2024.
• Tons sold increased 6.2% in 2025, significantly outperforming the industry-wide decline of 1.0% reported by the Metals Service Center Institute (MSCI).
• The average selling price per ton sold declined by 2.6% in 2025.
• Diluted earnings per share decreased 10.2% to $13.98 in 2025, compared to $15.56 in 2024.
• Net income attributable to Reliance was $739.4 million in 2025, down from $875.2 million in 2024.
• Operating income declined 12.7% to $1,012.7 million in 2025 from $1,160.0 million in 2024.
• LIFO gross profit margin was 28.7% in 2025, a 100-basis point decrease year-over-year, mainly due to a $113.7 million LIFO expense (compared to $144.4 million LIFO income in 2024).
• FIFO gross profit margin, excluding LIFO impacts, improved 80 basis points to 29.5% due to higher metal prices supported by tariff actions.
• Cash flow from operations decreased by $598.4 million to $831.4 million in 2025, primarily due to higher working capital requirements related to increased tons sold volume and higher metals pricing.
• The net debt-to-total capital ratio increased to 14.4% as of December 31, 2025, from 10.2% as of December 31, 2024.
• Total outstanding indebtedness was approximately $1.43 billion as of December 31, 2025.
• The company repurchased approximately 2.2 million shares of common stock for $594.1 million in 2025 at an average cost of $276.05 per share.
• The regular quarterly dividend was increased by 4.2% to $1.25 per share, marking 66 consecutive years of dividend payments.
• Capital expenditures were $328.9 million in 2025, a decrease of $101.7 million from 2024, with no acquisition activity in 2025 compared to four acquisitions totaling $361.8 million in 2024.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a mixed report. While the company demonstrated strong operational performance with record tons sold and market share gains, the decline in net income and EPS, coupled with reduced operating cash flow and increased debt, presents financial headwinds.

Positives

• Record tons sold in 2025, increasing 6.2% and significantly outperforming the industry-wide decline of 1.0% reported by the MSCI.
• Net sales increased 3.3% to $14.29 billion in 2025.
• FIFO gross profit margin improved by 80 basis points to 29.5% due to higher metal prices supported by tariff actions.
• Improved operating leverage with same-store SG&A expense per ton sold declining 1.0% in 2025.
• Reduced outstanding shares by 4% through repurchases, partially mitigating the decline in earnings per share.
• Increased the regular quarterly dividend by 4.2% to $1.25 per share, marking 66 consecutive years of dividend payments.
• Maintained a strong liquidity position with approximately $1.22 billion available under the revolving credit facility and investment-grade credit ratings.
• Holds an industry-leading market share in the U.S. metals service center industry at approximately 17% in 2025, up from 15% in 2024.
• Achieved high customer retention, with over 90% of sales orders received from repeat customers.
• Demonstrated quick delivery capabilities, with approximately 40% of orders delivered within 24 hours.
• Reported a Total Recordable Incident Rate (TRIR) of 1.62 in 2025, which is lower than the MSCI average of 3.19, indicating strong safety performance.

Negatives

• Diluted earnings per share decreased 10.2% to $13.98 in 2025 from $15.56 in 2024.
• Net income attributable to Reliance decreased to $739.4 million in 2025 from $875.2 million in 2024.
• Operating income declined 12.7% to $1,012.7 million in 2025.
• LIFO gross profit margin declined 100 basis points to 28.7% due to a $113.7 million LIFO expense, a significant swing from $144.4 million LIFO income in 2024.
• Cash flow from operations decreased by $598.4 million to $831.4 million in 2025, primarily due to higher working capital requirements.
• The net debt-to-total capital ratio increased to 14.4% as of December 31, 2025, from 10.2% in 2024.
• The average selling price per ton sold declined by 2.6% in 2025.
• Experienced soft demand and ample supply in commercial aerospace and semiconductor markets, impacting aluminum product margins.
• Interest expense increased to $55.7 million in 2025 from $40.3 million in 2024.
• Recorded impairment losses on trade name intangible assets of $9.9 million in 2025.

Risks

• Fluctuations in metals prices, particularly if increases cannot be fully passed on to customers or during periods of declining prices with high-cost inventory, could adversely affect operating results.
• Global economic conditions, including inflation, elevated interest rates, infectious disease outbreaks, and supply chain disruptions, could negatively impact demand and selling prices for products.
• Excess capacity and over-production by foreign metal producers or decreases in tariffs could increase metal imports into the U.S., leading to lower domestic prices and adversely affecting sales, margins, and profitability.
• The Supreme Court ruling on the International Emergency Economic Powers Act's tariff authority creates uncertainty, though it does not directly impact Section 232 tariffs on steel and aluminum.
• The metals service center industry is cyclical, and any downturn in general economic conditions or in customer-specific industries (e.g., non-residential construction, automotive, aerospace) could negatively impact profitability and cash flows.
• Intense competition from a large number of other general-line and specialty distributors, as well as mills, could lead to lower prices or higher costs, reducing profitability.
• Loss of primary suppliers or inability to obtain sufficient amounts of necessary metals on a timely basis, exacerbated by mill consolidation, could disrupt operations and reduce sales.
• Reliance on mill certifications for metal specifications, with limited independent testing, poses risks if quality issues arise, particularly with foreign suppliers where recourse may be more difficult.
• Climate change and related new legal and regulatory requirements could result in higher prices for metals, utilities, and fuel, increased compliance costs, and potential supply chain disruptions.
• Increased competition and pricing pressures from alternative materials (e.g., composites, plastics, glass, carbon fiber) could adversely affect demand for metal products.
• Insurance coverage, vendor indemnifications, or other liability protections may be unavailable or inadequate to cover all significant risks, or insurers may deny coverage or be unable to pay for material losses.
• Failure to achieve expected operating efficiencies and sustain cost reductions from restructuring, realignment, and cost reduction activities could lead to business disruptions.
• Acquisitions present risks such as failure to realize expected benefits, integration challenges, increased interest expense and leverage, diversion of management's attention, and potential unexpected liabilities.
• The decentralized operating structure may lead to slower detection of compliance-related problems and make company-wide business initiatives more challenging and costly to implement.
• Exposure to various environmental, employee safety and health, and customs and export laws and regulations could subject the company to significant liabilities and compliance expenditures.
• International operations are subject to changes in tax rates, exchange rate fluctuations, exchange controls, political risks, and anti-bribery laws (e.g., FCPA, UK Bribery Act 2010).
• Reliance on information management systems makes the company vulnerable to damage, interruption, or compromise from cybersecurity threats, including sophisticated attacks and the evolving use of artificial intelligence.
• Increasingly complex, restrictive, and punitive global data privacy and data protection regulations could result in consumer complaints, regulatory inquiry, civil or criminal penalties, and reputational damage.
• Various legal and regulatory proceedings, including those involving antitrust, tax, or environmental matters, could result in significant fines, penalties, or damages.
• Volatility of the stock market could result in a material impairment of goodwill or indefinite-lived intangible assets.
• Changes in relationships with employees or changes to U.S. or foreign employment regulations (e.g., minimum wage, overtime) could adversely affect operating costs.
• Potential labor disruptions, such as work stoppages or strikes, from collective bargaining agreements could adversely affect business operations.
• Inability to attract, retain, and develop key personnel could materially adversely affect the business.
• Substantial debt service obligations ($1.43 billion outstanding as of December 31, 2025) could impair financial condition, reduce funds available for other purposes, and increase vulnerability to economic downturns.
• Vulnerability to increases in interest rates due to a substantial portion of indebtedness bearing variable interest rates (e.g., $677.0 million at variable rates, a 100-basis point increase in SOFR would result in approximately $6.8 million of additional annual interest expense).
• Participation in multiemployer pension plans, some of which are in endangered or critical status, could result in significant liabilities if the company were to withdraw.

Future Outlook

The company expects to continue growing its business through strategic acquisitions and internal growth initiatives, particularly those that broaden its geographic footprint and processing capabilities in new and existing markets. Management believes its primary sources of liquidity, including funds from operations, cash, and the revolving credit facility, will be sufficient to satisfy cash requirements and stockholder return activities over the next 12 months and beyond. The company also anticipates continued access to capital markets to raise funds, if desired, supported by its investment-grade credit ratings.

Management Comments

• "We believe our diversification strategy has contributed to our ability to remain profitable every year since our initial public offering in 1994, even during recessions and a global pandemic."
• "We believe our ability to continue to grow our tons sold even in periods where overall industry volumes decline has been supported by our scale, processing capabilities, customer service levels, product and geographic diversity."
• "We believe that our focus on small order sizes and customer service, including inventory availability and quick turnaround, earns customer loyalty, and, along with our growth and diversification strategy, has been instrumental in our ability to produce industry-leading operating results."
• "We believe our relatively low market share in the highly fragmented metals service center industry leaves significant opportunity for further strategic growth."
• "We believe our focus on maintaining pricing discipline related to our processing services, coupled with our investments in state-of-the-art equipment and advanced technology, contribute to higher sustainable gross profit margin levels."
• "We believe that maintaining our own fleet of trucks and drivers provides a competitive advantage as there has been a shortage of qualified drivers and third-party freight costs have been at elevated levels in recent years."
• "We believe our industry-leading financial results in recent years are attributable to our strong financial condition, the high quality of products and services we are able to offer as a result of our significant investments in the facilities and equipment of our existing and acquired businesses, as well as our continued focus on small order sizes with quick turnaround."
• "We believe recent inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and our operations."
• "We believe our investment grade credit ratings enhance our ability to effectively raise capital."

Industry Context

StockSavvy.ai notes that Reliance, Inc.'s significant outperformance in tons sold (6.2% increase vs. 1.0% industry decline reported by MSCI) highlights its strong competitive position and market share gains in a fragmented industry. The company's diversified business model, focus on value-added services, and customer service capabilities appear to be effective strategies in mitigating market volatility and tariff impacts, contrasting with broader industry trends.

Comparison to Industry Standards

• Reliance's 2025 tons sold increased 6.2%, significantly outperforming the Metals Service Center Institute (MSCI) reported industry-wide decline of 1.0% by over 7 percentage points.
• Reliance's U.S. locations represented approximately 17% of the total tons sold by the U.S. metals service center industry in 2025, an increase from 15% in 2024, reflecting its position as the industry leader in a highly fragmented market.
• Reliance's 2025 Total Recordable Incident Rate (TRIR) of 1.62 is lower than the MSCI average of 3.19 as reported in their most recent 2024 survey, indicating superior safety performance.
• The company's peer group for stock performance comparison includes Olympic Steel Inc., Ryerson Holding Corporation, Worthington Enterprises, Inc., and Russel Metals Inc., with Reliance's stock performance showing a cumulative total return of $261.72 from an initial $100 investment over five years, outperforming the S&P 500 ($196.16) and Russell 2000 ($134.40), but slightly underperforming the Industry Peer Group ($214.99) in 2025.

Management Changes

Corporate Governance

Legal Proceedings

• Currently involved with an environmental remediation project related to activities at former manufacturing operations of Earle M. Jorgensen Company (EMJ), a wholly-owned subsidiary, that were sold many years prior to its acquisition in 2006. Potential cleanup costs could be significant, but EMJ maintained insurance policies expected to cover the majority of related costs.
• Not currently a party to any other pending legal proceedings other than routine litigation incidental to the business, with expectations that these matters will be resolved without material adverse impact.

Stakeholder Impact

• Shareholders: Experienced a decrease in diluted EPS and net income, but benefited from a 4.2% increase in the quarterly dividend and share repurchases totaling $594.1 million. The net debt-to-total capital ratio increased, which could be a concern.
• Employees: Subject to inflationary wage adjustments and potential labor disruptions from expiring collective bargaining agreements. The company emphasizes safety, with a TRIR lower than the industry average, and offers competitive compensation and benefits.
• Customers: Benefit from the company's diversified product offerings, extensive value-added processing capabilities, quick turnaround times (40% of orders within 24 hours), and high customer retention (over 90% repeat customers).
• Suppliers: The company maintains long-standing relationships and significant purchasing power with North American primary metals producers, which is important given mill consolidation.
• Creditors: The company's total outstanding indebtedness increased to approximately $1.43 billion, and the net debt-to-total capital ratio rose. However, the company maintains investment-grade credit ratings and believes it has sufficient liquidity to meet obligations.

Next Steps

• File definitive Proxy Statement for the 2026 annual meeting of stockholders within 120 days after the fiscal year end.
• Hold the 2026 annual meeting of stockholders on May 20, 2026.
• Continue growing the business through acquisitions and internal growth initiatives, particularly those that broaden geographic footprint and processing capabilities.
• Evaluate further increases in the quarterly dividend rate based on existing conditions, including earnings, cash flows, financial condition, and capital requirements.
• Potentially repurchase common stock under the remaining $763.5 million authorization of the share repurchase program.
• Make expected payments of $81.4 million for operating lease obligations in 2026.
• Pay $38.3 million in capital expenditures related to contracts entered into as of December 31, 2025, during 2026.
• Renegotiate or renew 15 collective bargaining agreements covering approximately 2% of employees that expire during 2026.
• Contribute $0.9 million to the Deferred Compensation Plan during 2026.
• Contribute $0.8 million to the Supplemental Executive Retirement Plans (SERPs) during 2026, with no expected contributions to the Defined Benefit Plan (DB Plan).
• Update the materiality assessment for environmental issues on a periodic basis to reflect changes in the business and external environment.

Key Dates

Recommendation

Reliance, Inc. demonstrates strong operational execution with record tons sold and market share gains in a challenging industry. However, the decline in net income and EPS, coupled with a significant reduction in operating cash flow and an increase in the net debt-to-total capital ratio, presents financial concerns. The company's ability to pass on costs and its diversified model are strengths, but the LIFO impact and tariff-related pressures highlight volatility. A "hold" recommendation is appropriate as investors should monitor how the company manages these financial headwinds and leverages its operational strengths in the coming quarters.

Keywords

Metals service center, Steel, Aluminum, Distribution, Processing, Industrial, Manufacturing, Non-residential construction, Aerospace, Energy, Transportation, Supply chain, Tariffs, LIFO, Dividends, Share repurchases, Acquisitions, Corporate governance, Cybersecurity, SEC filing, 10-K, Financial results