Reliance’s Sales Dip in Third Quarter
By Metal Center News Staff
on Oct 29, 2019
Reliance Steel & Aluminum Co., Los Angeles, reported net sales of $2.7 billion in the third quarter, a 6.9 percent decline from the previous quarter and down 9.7 percent from the third quarter of 2018. For the year to date, Reliance’s sales were down 2.2 percent to $8.5 billion.
The company’s net income totaled $162.7 million, an 11.1 percent decline from the prior quarter, but up 9.7 percent from the same quarter in 2018. Year-to-date net income was down 2.2 percent to $535.9 million.
“We continued to execute our strategy of focusing on high levels of customer service across diverse products and end markets with increasing levels of value-added processing which once again produced strong financial results during the third quarter of 2019,” said Jim Hoffman, president and CEO of Reliance. “Demand was somewhat better than we had anticipated, which, along with outstanding performance by our managers in the field, generated quarterly net sales of $2.69 billion and a gross profit margin of 30.3 percent.
The company’s shipments were higher than anticipated in the third quarter as Reliance continued to benefit from its strategy of serving diverse end markets and providing a wide range of products and processing services, generally in small quantities on a just-in-time basis, executives claimed. While the company experienced the typical seasonal slowdown during the third quarter resulting from customer shutdowns and vacation schedules, Reliance's shipments in the third quarter decreased only 2 percent compared with the second quarter, outpacing the company’s expectations of a more typical seasonal decline of 4-6 percent.
While shipment levels across all of Reliance’s major commodity groups were better than anticipated, the overall higher shipment levels were primarily due to increased demand in the nonresidential construction (including infrastructure) market during the third quarter.
The company expects that end demand in the quarter will remain relatively steady, excluding the impact of normal seasonal patterns, which generally includes a decline in shipping volume due to customer holiday-related shutdowns and fewer shipping days compared to the third quarter of 2019. As a result, the company estimates tons sold will be down 4-7 percent in the fourth quarter compared with the third quarter of 2019. Reliance also expects overall metals pricing will remain near current levels, which is estimated to result in its average selling price per ton sold for the fourth quarter of 2019 declining 2-3 compared with the third quarter.