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Reliance Steel (RS) Beats Earnings & Sales Estimates in Q2

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Reliance Steel & Aluminum Co. (RS - Free Report) posted a profit of $230.8 million or $3.16 per share in the second quarter of 2018, reflecting around a 124.1% rise from $103 million or $1.40 a year ago.

Barring one-time items, adjusted earnings were $3.10 per share for the quarter, which exceeded the Zacks Consensus Estimate of $2.71.

The company benefited from positive pricing momentum and continuing solid demand environment. The metal pricing environment drove pricing levels in each month of the quarter, contributing to the company’s earnings. The company saw continued strong demand across aerospace and automotive markets in the quarter.

Reliance Steel recorded net sales of $2.99 billion, up 20.8% year over year. It beat the Zacks Consensus Estimate of $2.98 billion.

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

 

Volumes and Pricing

Overall sales volume went up 2.9% year over year to around 1.6 million tons. Average prices per ton sold rose 18.1% from the prior-year quarter to $1,890.

Financials

Reliance Steel ended the quarter with cash and cash equivalents of $124.3 million, down roughly 15% year over year. Long-term debt was recorded at $1,933 million. Cash flow from operations was $83.7 million in the second quarter.

Reliance Steel repurchased shares worth $50 million in the first half of 2018 and had roughly 7.5 million shares available for repurchase under its share repurchase program at the end of the second quarter. The company also paid $74.6 million in dividends in the quarter under review.

Outlook

Reliance Steel is optimistic about business conditions for third-quarter 2018 and sees continued improvement in the end markets in which it operates. The company expects demand to remain strong in the third quarter.

Reliance Steel expects tons sold to decline 2% to 4% in the third quarter of 2018 on a sequential basis. Average selling price per ton is expected to be up 1% to 3% in the quarter from the second. Additionally, the company expects earnings per share in the band of $2.65 to $2.75 for the third quarter.

Price Performance

Reliance Steel’s shares have moved up 1.1% in the last six months against the industry’s 12.4% decline.

Zacks Rank & Other Stocks to Consider

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

Other top-ranked stocks in the basic materials space are Celanese Corporation (CE - Free Report) , Methanex Corporation (MEOH - Free Report) and BHP Billiton Limited (BHP - Free Report) .  

Celanese has an expected long-term earnings growth rate of 9.3% and a Zacks Rank #1 (Strong Buy). The company’s shares have moved up 22.6% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15% and flaunts a Zacks Rank #1. Its shares have rallied roughly 54.3% in a year’s time.

BHP Billiton has an expected long-term earnings growth rate of 5.3% and sports a Zacks Rank #1. Its shares have shot up roughly 23% over a year.

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