Reliance Steel & Aluminum ((RS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Reliance Steel & Aluminum’s recent earnings call painted a picture of resilience and strategic growth amidst challenging market conditions. The company demonstrated strong market share gains and effective cash flow management, even as it faced pricing pressures and excess inventories in certain segments. While the positive aspects of market share and operational performance were highlighted, the call also acknowledged the negative pressures on gross margins and specific market challenges.
Record Market Share Gain
Reliance Steel & Aluminum achieved a significant milestone by increasing its U.S. market share to 17.1%, up from 14.5% in 2023. This impressive gain is attributed to the company’s smart and profitable growth strategy, which has allowed it to capture a larger portion of the market.
Strong Operating Cash Flow
In the third quarter of 2025, Reliance generated approximately $262 million in operating cash flow. This robust cash flow was strategically redeployed into high-value initiatives, including investments in advanced processing equipment, underscoring the company’s commitment to long-term growth.
Tons Sold Outperformance
Reliance reported a record in tons sold during the third quarter, outperforming the industry by approximately 9 percentage points and marking a 6.2% increase compared to Q3 2024. This performance highlights the company’s ability to gain market share and deliver strong results.
Non-Residential Construction and General Manufacturing Growth
The company experienced year-over-year shipment increases in the non-residential construction and general manufacturing markets. This growth was driven by strong demand in public infrastructure and industrial sectors, showcasing the company’s adaptability to market demands.
Gross Profit Margin Pressure
Despite the positive developments, Reliance faced headwinds with its gross profit margin due to trade policy uncertainty and excess inventories, particularly affecting the aerospace and semiconductor markets.
Challenges in High-Value Specialty Products
The aerospace and semiconductor markets continued to underperform due to excess inventories, impacting Reliance’s high-value specialty products. This remains a challenge for the company as it navigates these market conditions.
LIFO Expense Impact
The third quarter saw a $25 million LIFO expense, contrasting with a $50 million LIFO income in Q3 2024. This resulted in a $1.03 per share unfavorable year-over-year impact, highlighting the volatility in inventory costs.
Forward-Looking Guidance
Looking ahead, Reliance provided several key metrics and guidance for the upcoming period. The company anticipates fourth-quarter tons sold to increase by 3.5% to 5.5% compared to Q4 2024, but decrease by 5% to 7% from Q3 2025 due to seasonal trends. They expect flat pricing for the fourth quarter, maintaining a long-term gross profit margin range of 29% to 31%. Additionally, Reliance plans a capital expenditure budget of $325 million for 2025 and has returned $124 million to shareholders through dividends and share repurchases.
In summary, Reliance Steel & Aluminum’s earnings call reflects a balanced approach to growth and market challenges. The company has successfully increased its market share and managed cash flow effectively, despite facing pressures on gross margins and specific market challenges. The forward-looking guidance suggests a cautious yet optimistic outlook, with expectations of continued growth in key areas.