Reliance Steel & Aluminum, Los Angeles, reported fourth-quarter net sales of $2.1 billion and net income of $129.6 million, down 12.8 and 21.7 percent, respectively, compared with the same quarter last year.
However, the company’s sales were up 2.3 percent and income up 32.8 percent compared with the prior quarter.
For the full year, Reliance’s sales of $8.8 billion were down 19.7 percent compared with 2019, while net-income $369.1 million was down 47.4 percent from the pre-pandemic previous year.
“We achieved record gross profit margins for both the full year and fourth quarter of 2020,” said Jim Hoffman, CEO of Reliance. “During the fourth quarter, favorable demand and pricing trends collectively helped us generate a record fourth-quarter gross profit margin of 33 percent.”
During the fourth quarter, the company experienced ongoing improvements in demand in nearly all of the end markets it serves. Reliance’s shipments declined only 1.3 percent compared to the third quarter of 2020, outperforming Reliance’s expectations of a 4 to 6 percent decline consistent with the typical fourth-quarter seasonal slowdown from customer holiday-related shutdowns and fewer shipping days.
Nonresidential construction, Reliance’s largest end market, remained relatively steady during the fourth quarter of 2020 due to strong product pricing and healthy bidding activity. Reliance is cautiously optimistic that demand for nonresidential construction activity in Reliance’s space will continue at these levels through the first quarter of 2021.
While macroeconomic uncertainty stemming from the COVID-19 pandemic continues, Reliance management remains optimistic about business conditions in the majority of the end markets in which it operates. Reliance anticipates overall demand will continue to improve in the first quarter. The company estimates tons sold will be up 10 to 12 percent in the first quarter of 2021 compared with the fourth quarter of 2020, which includes the normal seasonal increase in shipping volumes compared with the fourth quarter.
Reliance also expects the currently favorable metals pricing environment, primarily for carbon and stainless steel products, to continue in the first quarter. As such, management estimates its average selling price per ton sold for the first quarter of 2021 will be up 12 to 14 percent compared with the fourth quarter.