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Reliance Steel's (RS) Q1 Earnings Beat, Sales Lag Estimates
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Reliance Steel & Aluminum Co. (RS - Free Report) posted profits of $61.7 million or 92 cents per share in the first quarter of 2020, down from $190.1 million or $2.80 in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) came in at $2.45 that beat the Zacks Consensus Estimate of $2.10.
Reliance Steel recorded net sales of $2,572.9 million, down around 13% year over year. The figure missed the Zacks Consensus Estimate of $2,653 million.
Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise
Shipments rose 6.8% sequentially owing to a relatively healthy demand environment. Moreover, demand in non-residential construction was solid during the first quarter with ongoing strength in shipment volumes of tubing and carbon steel structural products.
Average prices per ton sold in the first quarter fell 11% year over year to $1,742. Prices also declined 1.2% on a sequential-comparison basis.
Financials
Reliance Steel ended the first quarter with cash and cash equivalents of $172.1 million, up 28.4% year over year. Long-term debt was $1,772.3 million, down 21.5% year over year.
The company generated cash flow from operations of $170.8 million, up 45.7% year over year.
The company repurchased $300 million of its common stock or 3.3 million shares in the first quarter. As of Mar 31, it had around 3.1 million shares available for repurchase under the stock repurchase program. The company’s board declared a quarterly cash dividend of 62.5 cents per share on Apr 21, which is payable on Jun 12 to stockholders of record as of May 29.
Outlook
Reliance Steel did not provide any projections for the second quarter due to macroeconomic uncertainty stemming from the coronavirus pandemic. Per the company, future demand trends, metal pricing and conditions in the end markets that it serves could not be predicted at present.
However, the company believes that demand trends may recover once construction activities increase after coronavirus-related restrictions are lifted. The sudden closure of many automotive OEMs as well as steel and aluminum mills in mid-March has considerably reduced demand. This resulted in cutting production at the company’s toll processing operations in the United States and Mexico. Further, the duration of closures is uncertain at present. Notably, Reliance Steel believes that it is well positioned to support higher production levels when the automotive market recovers.
Price Performance
Reliance Steel’s shares have lost 5.9% in the past year compared with the industry’s 30.4% decline.
Zacks Rank & Key Picks
Reliance Steel currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp. , Silgan Holdings Inc. (SLGN - Free Report) and Intellicheck, Inc. (IDN - Free Report) . While Sharps Compliance sports a Zacks Rank #1 (Strong Buy), Silgan and Intellicheck carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Sharps Compliance has an estimated earnings growth rate of 800% for fiscal 2020. In a year's time, the company’s shares have soared 118.6%.
Silgan has an estimated earnings growth rate of 7.4% for 2020. In the past year, the company’s shares have gained 13.9%.
Intellicheck has an estimated earnings growth rate of 112.5% for 2020. In the past year, the company’s shares have gained 40.1%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Reliance Steel's (RS) Q1 Earnings Beat, Sales Lag Estimates
Reliance Steel & Aluminum Co. (RS - Free Report) posted profits of $61.7 million or 92 cents per share in the first quarter of 2020, down from $190.1 million or $2.80 in the year-ago quarter.
Barring one-time items, adjusted earnings per share (EPS) came in at $2.45 that beat the Zacks Consensus Estimate of $2.10.
Reliance Steel recorded net sales of $2,572.9 million, down around 13% year over year. The figure missed the Zacks Consensus Estimate of $2,653 million.
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 rose 6.8% sequentially owing to a relatively healthy demand environment. Moreover, demand in non-residential construction was solid during the first quarter with ongoing strength in shipment volumes of tubing and carbon steel structural products.
Average prices per ton sold in the first quarter fell 11% year over year to $1,742. Prices also declined 1.2% on a sequential-comparison basis.
Financials
Reliance Steel ended the first quarter with cash and cash equivalents of $172.1 million, up 28.4% year over year. Long-term debt was $1,772.3 million, down 21.5% year over year.
The company generated cash flow from operations of $170.8 million, up 45.7% year over year.
The company repurchased $300 million of its common stock or 3.3 million shares in the first quarter. As of Mar 31, it had around 3.1 million shares available for repurchase under the stock repurchase program. The company’s board declared a quarterly cash dividend of 62.5 cents per share on Apr 21, which is payable on Jun 12 to stockholders of record as of May 29.
Outlook
Reliance Steel did not provide any projections for the second quarter due to macroeconomic uncertainty stemming from the coronavirus pandemic. Per the company, future demand trends, metal pricing and conditions in the end markets that it serves could not be predicted at present.
However, the company believes that demand trends may recover once construction activities increase after coronavirus-related restrictions are lifted. The sudden closure of many automotive OEMs as well as steel and aluminum mills in mid-March has considerably reduced demand. This resulted in cutting production at the company’s toll processing operations in the United States and Mexico. Further, the duration of closures is uncertain at present. Notably, Reliance Steel believes that it is well positioned to support higher production levels when the automotive market recovers.
Price Performance
Reliance Steel’s shares have lost 5.9% in the past year compared with the industry’s 30.4% decline.
Zacks Rank & Key Picks
Reliance Steel currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp. , Silgan Holdings Inc. (SLGN - Free Report) and Intellicheck, Inc. (IDN - Free Report) . While Sharps Compliance sports a Zacks Rank #1 (Strong Buy), Silgan and Intellicheck carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Sharps Compliance has an estimated earnings growth rate of 800% for fiscal 2020. In a year's time, the company’s shares have soared 118.6%.
Silgan has an estimated earnings growth rate of 7.4% for 2020. In the past year, the company’s shares have gained 13.9%.
Intellicheck has an estimated earnings growth rate of 112.5% for 2020. In the past year, the company’s shares have gained 40.1%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>