Reliance Steel and Aluminum reported major gains in sales and income during the first quarter. The Los Angeles-based service center company enjoyed record quarterly gross profit margin and record pretax income margin.
Net sales in the quarter totaled $2.1 billion, a 33 percent increase from the prior quarter and up 10.3 percent from the first quarter of 2020. Net income jumped 105.9 percent to $266.9 million compared with the fourth quarter, and was up more than 300 percent against Q1 2020.
“Our resilient business model coupled with outstanding execution in a favorable market resulted in record financial performance during the first quarter of 2021,” said Jim Hoffman, CEO of Reliance. "We experienced ongoing strength in metals pricing, led by multiple price increases for carbon steel products, along with improving demand in many markets, and leveraged our decentralized operating structure, small order sizes, and diversification of products, end markets and geographies, to achieve a record gross profit margin of 33.6 percent.”
Reliance’s tons sold in the quarter increased 11.3 percent from the prior quarter to 1.27 million, though tons sold remained down 4 percent from last year’s first quarter. The average price per ton totaled $1,683, an increase of 20 percent from the prior quarter and up 16 percent from first-quarter 2020.
While demand is healthy and continues to improve in most markets, the company’s tons sold have not yet reached pre-pandemic levels. Reliance believes underlying demand is stronger than its first quarter shipment levels reflect due to factors holding back economic activity such as metal supply constraints, labor shortages and supply chain disruptions for the company, its customers and its suppliers, executives claimed.
Demand in nonresidential construction, Reliance’s largest end market, continued to improve, approaching pre-pandemic levels. Reliance is cautiously optimistic that demand for nonresidential construction activity will remain steady at current solid levels based on healthy backlogs and quoting activity along with positive customer sentiment.
While macroeconomic uncertainty stemming from the COVID-19 pandemic continues, Reliance management continues to remain optimistic about business conditions and strong underlying demand in the majority of the end markets in which it operates. However, factors impacting shipment levels in the first quarter of 2021 such as metal supply constraints and supply chain disruptions for many of Reliance’s customers will continue to persist in the second quarter.