Yahoo Finance Reliance Steel (RS) Earnings and Revenues Top Estimates in Q1
Reliance Steel & Aluminum Co. RS posted profits of $383.1 million or $6.43 per share in the first quarter of 2023, down from $523.3 million or $8.33 per share in the year-ago quarter.
Barring one-time items, adjusted earnings were $6.37 per share. The bottom line topped the Zacks Consensus Estimate of $5.70.
The company recorded net sales of $3,965.3 million, down 11.6% year over year. The top line beat the Zacks Consensus Estimate of $3,945.7 million. The company benefited from strong demand in most of its end markets and its organic growth investments. It saw higher shipments in the quarter, partly offset by lower average selling prices.
Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise
Reliance Steel & Aluminum Co. price-consensus-eps-surprise-chart | Reliance Steel & Aluminum Co. Quote
Volumes and Pricing
Shipments increased 7.2% year over year in the reported quarter. Shipments also climbed 17.7% on a sequential comparison basis.
Demand in non-residential construction, the company’s biggest market, improved in the reported quarter. The company is optimistic that demand for non-residential construction activity in the areas in which it operates will remain at healthy levels in the second quarter of 2023.
Reliance Steel also witnessed higher year over year demand in the semiconductors market in the first quarter. Demand fell modestly on a sequential comparison basis. RS expects the semiconductor market to remain strong and its long-term outlook for semiconductor demand remains favorable.
Demand across the broader manufacturing sectors that it serves improved modestly and the company sees stable demand in the second quarter. Demand in energy (oil and natural gas) improved year over year in the first quarter and the company is cautiously optimistic that demand will remain steady in the second quarter.
The company also witnessed higher demand for the toll processing services that it provides to the automotive market and expects demand to increase in the second quarter. Additionally, demand in commercial aerospace improved during the reported quarter and the company is cautiously optimistic that demand will continue to improve in the second quarter.
Average prices per ton sold in the first quarter went down 17.7% year over year to $2,623. It also fell 6.3% sequentially.
Financials
Reliance Steel ended the quarter with cash and cash equivalents of $816.2 million, up roughly 48.9% year over year. Long-term debt was $1,140.2 million, down around 30.6% year over year.
The company generated cash flow from operations of $384.6 million in the quarter.
Reliance Steel repurchased shares worth $38.9 million in the first quarter.
Outlook
Reliance Steel envisions healthy demand to continue in the second quarter. The company estimates its tons sold to be up flat to down 2% in the second quarter compared with the prior quarter factoring in one less shipping day in the second quarter and the absence of the demand pull-forward witnessed in the first quarter of 2023. RS also anticipates its average selling price per ton sold to be flat to up 2% sequentially in the second quarter.
Reliance Steel expects adjusted earnings per share in the band of $6.40-$6.60 for the second quarter.
Price Performance
Reliance Steel’s shares have gained 24.7% in a year compared with the industry’s 11.4% decline.
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Zacks Rank & Other Key Picks
Reliance Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, PPG Industries, Inc. PPG and Linde plc LIN.
Steel Dynamics currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 24% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.7%, on average. STLD has gained around 25% in a year.
PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 5% in a year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 16% in the past year.
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