Reliance Steel & Aluminum, Los Angeles, reported net sales of $2.1 billion in the third quarter, a slight increase from the second quarter, but down 22.4 percent compared with the same quarter in 2019.
Net income totaled $97.6 million, up 21.7 percent from the prior quarter but down 40 percent from the same quarter last year.
“Our third-quarter results once again demonstrate the strength of Reliance’s resilient business model. Our diverse product mix and end market exposures, along with our decentralized operating structure, enabled us to quickly respond to varied and fluid market conditions,” said Jim Hoffman, president and CEO of Reliance.
During the quarter, Reliance’s tons sold increased 5.9 percent over the second quarter to 1,285, exceeding company expectations. The increase was attributed to improved demand in many of the company’s end markets. The average selling price of $1,609 per ton was down 4.3 percent compared with the second quarter, and off 11 percent from the same quarter last year.
Demand in nonresidential construction, Reliance’s largest end market, continued to slowly increase during the third quarter due to healthy bidding activity for new projects and the restart of projects that had previously been put on hold. Reliance is cautiously optimistic that demand for non-residential construction activity will continue to improve in the fourth quarter of 2020 based on healthy backlogs and positive customer sentiment.
Demand for the toll processing services Reliance provides to the automotive market rebounded significantly in the third quarter as automotive OEMs and steel and aluminum mills continued to ramp production following COVID-19 shutdowns in the second quarter. Reliance increased its processing volumes at its toll processing operations in both the U.S. and Mexico to support increased activity.
Demand in heavy industry for both agricultural and construction equipment remained generally consistent with second quarter levels.
Looking ahead, while macroeconomic uncertainty stemming from the COVID-19 pandemic continues, based on current expectations and market conditions, Reliance management anticipates overall demand to continue its slow improvement in the fourth quarter of 2020. However, due to normal seasonal factors including customer holiday-related shutdowns and fewer shipping days in the fourth quarter of 2020 compared with the third quarter of 2020, the company expects shipping volumes to decline but believes the impact of seasonal factors could be less than in prior years.