Back to top

Image: Bigstock

Reliance Steel (RS) Q1 Earnings and Revenues Surpass Estimates

Read MoreHide Full Article

Reliance Steel & Aluminum Co. (RS - Free Report) posted profits of $266.9 million or $4.12 per share in the first quarter of 2021, up from $61.7 million or 92 cents per share in the year-ago quarter.

Barring one-time items, adjusted earnings were $4.10 per share, up from $2.45 in the year-ago quarter. The figure topped the Zacks Consensus Estimate of $3.69.

The company recorded net sales of $2,838.4 million, up around 10% year over year. The figure surpassed the Zacks Consensus Estimate of $2,721.3 million. The company saw improved demand in many of its end markets and strong metals pricing in the quarter.

 

Reliance Steel & Aluminum Co. Price, Consensus and EPS Surprise

 

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 fell roughly 4% year over year, but rose around 11% sequentially in the first quarter. The sequential rise is attributable to healthy demand.

Demand in non-residential construction, the company’s biggest market, improved during the reported quarter and is approaching pre-pandemic levels. Moreover, the company witnessed improved demand for the toll processing services that it provides to the automotive market as automotive original equipment manufacturers and steel and aluminum mills continue to ramp up production. Reliance Steel also witnessed strength across semiconductor and aerospace defense markets along with continued improvement in heavy industry in the first quarter.

Average prices per ton sold in the first quarter went up 16% year over year to $2,020. Prices also rose around 20% on a sequential comparison basis.

Financials

Reliance Steel ended the quarter with cash and cash equivalents of $760.3 million, a more than four-fold year-over-year increase. Long-term debt was $1,639.7 million, down around 7% year over year.

The company generated cash flow from operations of $161.8 million in the first quarter.

Outlook

Moving ahead, Reliance Steel remains optimistic about business conditions in the majority of its end markets. However, it sees factors that affected shipment levels in the first quarter such as supply chain disruptions for many of its customers and metal supply constraints to continue in the second quarter. Notwithstanding these issues, Reliance Steel expects tons sold to be flat to up 2% in the second quarter compared to the prior quarter.

Moreover, the company expects metal pricing to remain near current levels with the potential for further upside in specific products. Reliance Steel anticipates its average selling price per ton sold for the second quarter to be up 5-7% on a sequential comparison basis.

Factoring in these expectations, the company expects adjusted earnings per share in the band of $4.20-$4.40 for the second quarter.

Price Performance

Reliance Steel’s shares are up 74.5% over a year against the industry’s 91.5% rise.

 

 

Zacks Rank & Key Picks

Reliance Steel currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Dow Inc. (DOW - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .

Nucor has a projected earnings growth rate of 190.4% for the current year. The company’s shares have rallied around 92% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Dow has a projected earnings growth rate of 179.5% for the current year. The company’s shares have shot up around 68% in a year. It currently sports a Zacks Rank #1.

Impala Platinum has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have surged around 242% in the past year. It currently carries a Zacks Rank #1.

Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.  

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>