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Dec 31, 2020
Reliance Steel Q4 2020 Earnings Report
Reported strong Q4 2020 financial results with record gross profit margin.
Key Takeaways
Reliance Steel & Aluminum Co. reported strong fourth quarter results driven by favorable demand and pricing trends, effective expense management, and superior customer service. The company achieved a record gross profit margin and EPS of $2.01, exceeding expectations.
Achieved record fourth quarter gross profit margin of 33.0% on net sales of $2.13 billion.
Generated earnings per share of $2.01 in the fourth quarter of 2020, exceeding outlook.
Experienced ongoing improvements in demand in nearly all of the end markets served.
Increased quarterly dividend 10.0% to $0.6875 per share.
Reliance Steel
Reliance Steel
Forward Guidance
Reliance anticipates overall demand will continue to improve in the first quarter of 2021. Non-GAAP earnings per diluted share in the range of $3.40 to $3.50 for the first quarter of 2021 is expected.
Positive Outlook
- Tons sold will be up 10% to 12% in the first quarter of 2021 compared to the fourth quarter of 2020, which includes the normal seasonal increase in shipping volumes compared to the fourth quarter.
- The Company expects the currently favorable metals pricing environment, primarily for carbon and stainless steel products, to continue in the first quarter due to improving demand
- The significant mill price increases that took effect in the fourth quarter of 2020 with some continuing into early 2021.
- Management estimates its average selling price per ton sold for the first quarter of 2021 will be up 12% to 14% compared to the fourth quarter of 2020.
- The Company anticipates maintaining an elevated gross profit margin level in the first quarter of 2021.
Challenges Ahead
- Macroeconomic uncertainty stemming from the COVID-19 pandemic continues.
- Commercial aerospace continues to decline as a direct result of reduced air travel due to COVID-19.
- Demand in the energy (oil and natural gas) market remained under pressure in the fourth quarter of 2020
- The extent to which the continuing COVID-19 pandemic may negatively impact our operations will depend on future developments which are highly uncertain and cannot be predicted
- Further deteriorations in economic conditions, as a result of COVID-19 or otherwise, could lead to a further or prolonged decline in demand for our products and services and negatively impact our business, and may also impact financial markets and corporate credit markets which could adversely impact our access to financing, or the terms of any financing.