8-K: Reliance, Inc. Reports Solid 2024 Financial Results, Fueled by Strategic Acquisitions and Strong Execution

Reliance, Inc. announces its fourth quarter and full year 2024 financial results, highlighting strong cash flow, strategic acquisitions, and increased shareholder returns despite a challenging market.

Summary

• Reliance, Inc. reported its fourth quarter and full year 2024 financial results on February 19, 2025.
• The company achieved its third highest annual cash flow from operations at $1.43 billion.
• Reliance repurchased a record $1.09 billion of common stock in 2024, reducing outstanding shares by 6%.
• Annual net sales reached $13.84 billion, with tons sold up 4.0% (same-store tons sold up 1.0%).
• The company maintained a strong annual gross profit margin of 29.7%.
• Annual earnings per share (EPS) were $15.56, with non-GAAP EPS at $15.92.
• Reliance completed four acquisitions in 2024, adding $286.2 million to net sales.
• The quarterly dividend was increased by 9.1% to $1.20 per share (annual: $4.80).
• Fourth quarter operating results were stronger than anticipated, excluding non-recurring and year-end LIFO adjustments.
• The company anticipates tons sold to be up 6.0% to 8.0% in the first quarter of 2025 compared to the fourth quarter of 2024.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While some financial metrics declined year-over-year, the company highlights strong cash flow, strategic acquisitions, and increased shareholder returns. The outlook for Q1 2025 is also positive.

Positives

• Strong cash flow from operations at $1.43 billion.
• Record share repurchases of $1.09 billion.
• Increase in tons sold by 4.0%.
• Solid gross profit margin of 29.7%.
• Successful completion of four acquisitions.
• Dividend increase of 9.1% to $1.20 per share quarterly.
• Stronger than anticipated fourth quarter operating results.
• The company's non-GAAP FIFO gross profit margin improved to 28.8% compared to 27.9% in the third quarter of 2024.
• The company's total tons sold increased 4.0% and 1.0% on a same-store basis, surpassing the industry-wide decline of 2.0% reported by the MSCI.

Negatives

• Net sales decreased by 6.6% year-over-year, from $14.8059 billion to $13.835 billion.
• Gross profit decreased by 9.7% year-over-year, from $4.5473 billion to $4.1066 billion.
• Pretax income decreased by 34.5% year-over-year, from $1.7407 billion to $1.1399 billion.
• Diluted EPS decreased by 31.3% year-over-year, from $22.64 to $15.56.
• Average selling price per ton sold decreased by 10.4% year-over-year.
• LIFO gross profit margin declined to 28.3% from 29.4% in the third quarter of 2024.
• Demand in the semiconductor market declined compared to both the fourth quarter and full year of 2023.

Risks

• Macroeconomic uncertainty persists, potentially impacting future performance.
• Reliance anticipates demand will remain under pressure in the first quarter of 2025 due to continued excess inventory in the semiconductor supply chain.
• The business outlook assumes no significant trade policy disruption to carbon steel, stainless steel and aluminum product markets and pricing.
• Deteriorations in economic conditions as a result of economic policies, inflation, economic recession, slowing growth, outbreaks of infectious disease, geopolitical conflicts such as in Ukraine and the Middle East, could lead to a decline in demand for the Company's products and services and negatively impact its business, and may also impact financial markets and corporate credit markets which could adversely impact the Company's access to financing, or the terms of any financing.

Future Outlook

Reliance anticipates underlying demand will improve modestly in the first quarter of 2025 and estimates tons sold will be up 6.0% to 8.0% compared to the fourth quarter of 2024. The company expects non-GAAP earnings per diluted share in the range of $3.30 to $3.50 for the first quarter of 2025.

Management Comments

• 'Our businesses demonstrated resilience in 2024 as strong execution of our model once again fueled solid financial results in a challenging market,' said Karla Lewis, President and Chief Executive Officer of Reliance.
• Mrs. Lewis continued, 'Our profitability and effective management of working capital led to the generation of the third highest annual cash flow from operations in our history of $1.43 billion.'

Industry Context

Reliance outperformed the industry in terms of tons sold, with a 4.0% increase compared to the industry-wide decline of 2.0% reported by the MSCI. Demand in non-residential construction, Reliance's largest end market, improved compared to both the fourth quarter and full year of 2023.

Comparison to Industry Standards

• Reliance's performance can be compared to other metal service center companies such as Ryerson, Russel Metals, and Olympic Steel.
• Reliance's gross profit margin of 29.7% is a key metric to compare against these competitors to assess its operational efficiency.
• The company's focus on small orders with quick turnaround and value-added processing services differentiates it from competitors that may focus on larger volume sales.
• The company's ability to increase tons sold by 4.0% while the industry declined by 2.0% suggests a competitive advantage in market share capture.

Management Changes

Stakeholder Impact

• Shareholders will benefit from increased dividends and share repurchases.
• Employees may see opportunities for growth and development within the company.
• Customers can expect continued value-added services and a wide range of metal products.
• Suppliers can anticipate continued business relationships with Reliance.
• Creditors can be reassured by the company's strong cash flow and balanced capital allocation strategy.

Next Steps

• Reliance will hold a conference call on February 20, 2025, to discuss the financial results and business outlook.
• The company will continue to execute its capital allocation strategy, focusing on growth and stockholder returns.
• Reliance anticipates underlying demand will improve modestly in the first quarter of 2025.

Key Dates