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Sep 30, 2020
Reliance Steel Q3 2020 Earnings Report
Reported a record gross profit margin and increased earnings due to diverse product mix and end market exposures.
Key Takeaways
Reliance Steel & Aluminum Co. reported strong Q3 2020 financial results, driven by its resilient business model, diverse product mix, and decentralized operating structure. The company achieved a record gross profit margin of 32.4% and non-GAAP earnings per diluted share of $1.87.
Record gross profit margin of 32.4%.
EPS of $1.51, non-GAAP EPS of $1.87.
Pretax income of $127.0 million, non-GAAP pretax income of $158.0 million.
Generated cash flow from operations of $296.3 million.
Forward Guidance
Reliance management anticipates overall demand to continue its slow improvement in the fourth quarter of 2020. The Company estimates that tons sold will be down 4% to 6% and non-GAAP earnings per diluted share in the range of $1.30 to $1.40 for the fourth quarter of 2020.
Positive Outlook
- Overall demand to continue its slow improvement in the fourth quarter of 2020.
- The impact of seasonal factors could be less than in prior years.
- Metals pricing, primarily for carbon steel products, in the fourth quarter will improve due to mill price increases.
Challenges Ahead
- Macroeconomic uncertainty stemming from the COVID-19 pandemic continues.
- Due to normal seasonal factors including customer holiday-related shutdowns.
- Fewer shipping days in the fourth quarter of 2020 compared to the third quarter of 2020, the Company expects shipping volumes to decline.
- Price increases will be partially offset given Reliance’s diverse product mix and declining sales in certain markets such as aerospace which typically involve higher priced products.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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