10-K: Reliance, Inc. Reports 2024 Annual Results: Sales Decline Amid Lower Metals Prices, Share Repurchases Surge

Reliance, Inc. reports a decrease in 2024 net sales to $13.84 billion due to lower metals prices, despite increased tons sold, while significantly boosting share repurchases.

Summary

• Reliance, Inc. reported net sales of $13.84 billion for 2024, a 6.6% decrease compared to $14.81 billion in 2023, primarily due to lower metals prices.
• Despite the sales decline, the company grew total tons sold by 4.0% and same-store tons sold by 1.0%, outperforming the Metals Service Center Institute (MSCI) reported industry decline of 2.0%.
• Gross profit margin was 29.7% in 2024, down from 30.7% in 2023, impacted by lower metals pricing but mitigated by effective inventory management and value-added services.
• Earnings per diluted share decreased by 31.3% to $15.56 in 2024, compared to $22.64 in 2023, mainly due to lower metals prices.
• Cash flow from operations decreased by 14.4% to $1.43 billion in 2024, primarily due to lower net income, partially offset by reduced working capital investment.
• The company returned $1.34 billion to stockholders in 2024, including a record $1.09 billion in share repurchases and $249.7 million in cash dividends.
• Reliance invested $430.6 million in capital expenditures and $364.6 million in four acquisitions during 2024.
• The company strategically focuses on organic growth and acquisitions to diversify its product mix, customer base, and geographic locations.
• As of December 31, 2024, Reliance operated 320 locations in 41 U.S. states and 10 foreign countries.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company highlights its growth in tons sold and returns to stockholders, the overall financial performance declined due to lower metals prices. The document also acknowledges several risks and uncertainties.

Positives

• The company grew total tons sold by 4.0% and same-store tons sold by 1.0%, outperforming the industry.
• Reliance returned $1.34 billion to stockholders, including a record $1.09 billion in share repurchases.
• The quarterly dividend was increased by 9.1% to $1.20 per share in February 2025.
• The company completed four acquisitions in 2024, enhancing product breadth and value-added processing capabilities.
• The company invested $430.6 million in capital expenditures, supporting organic growth and innovation.

Negatives

• Net sales decreased by 6.6% to $13.84 billion due to lower metals prices.
• Earnings per diluted share decreased to $15.56.
• Cash flow from operations decreased by 14.4% to $1.43 billion.

Risks

• Fluctuations in metals prices could adversely affect operating results.
• Global economic conditions, including inflation and supply chain disruptions, could continue to affect operations.
• Excess capacity and over-production by foreign metal producers could increase metal imports into the U.S., resulting in lower domestic prices.
• Cyclical fluctuations in the metals service center industry and downturns in customer-specific industries could negatively impact profitability and cash flows.
• Increased competition and pricing pressures from alternative materials could affect demand for metal products.
• Climate change might adversely impact the supply chain or operations.
• Cybersecurity incidents could disrupt and harm the business.
• Failure to attract, retain, and develop key personnel could adversely affect the business.

Future Outlook

The company expects to continue growing its business through acquisitions and internal growth initiatives, particularly those that diversify its product mix, customer base, and geographic locations and increase its sales of high-margin specialty products and value-added processing services.

Industry Context

Reliance operates in the highly fragmented metals service center industry, where it holds a relatively low market share, providing significant opportunity for further strategic growth. The company believes that metals service centers are generally less susceptible to market cycles than metals producers because service centers are generally able to pass on all or a portion of increases in metal costs to their customers.

Comparison to Industry Standards

• Reliance's 2024 tons sold from U.S. locations represented approximately 15% of the total tons sold by the U.S. metals service center industry, compared to approximately 14% for 2023, according to the MSCI reporting of industry tons sold in the U.S.
• The metals service center industry is highly fragmented and competitive within localized areas or regions.
• According to IBISWorld Inc.'s October 2024 report, there were approximately 10,700 metal wholesaling locations operated by approximately 8,400 companies in the U.S. in 2024.
• Reliance's 2024 TRIR (Total Recordable Incident Rate) of 1.75 is lower than the MSCI average of 3.5 as reported in their most recent survey conducted in 2020.

Legal Proceedings

• The company is from time to time involved in administrative and judicial proceedings and inquiries relating to environmental matters.
• The company is not currently a party to any pending legal proceedings other than routine litigation incidental to the business.

Stakeholder Impact

• Shareholders: Impacted by decreased earnings per share but benefited from increased dividends and share repurchases.
• Employees: Affected by wage inflation and potential changes in compensation structures.
• Customers: Benefit from the company's focus on customer service, quick turnaround, and value-added processing services.
• Suppliers: Reliance strategically purchases most of its inventory from major domestic mills, maintaining long-term relationships.

Next Steps

• The company expects to continue growing its business through acquisitions and internal growth initiatives.
• Further increases in the quarterly dividend rate will be evaluated by the Board based on conditions then existing.
• The company expects to make plan contributions of $0.8 million during 2025 related to pension and postretirement benefit plans.

Key Dates