Reliance Improves Earnings, Expects Demand to Increase

Reliance Steel & Aluminum, the industry’s largest service center organization, is expecting a slight increase in demand during the third quarter of 2020 after sales dropped 21.5 percent from the first to the second quarter to $2.02 billion. Shipments for the second quarter declined 17.5 percent to 1.2 million tons with an average selling price per ton sold of $1,681. The company posted net income of $80.2 million, a 30 percent increase from $61.7 million in the first quarter, through reduction of SG&A expenses.

Demand declined in nearly all end markets served by Reliance due to COVID-19-related customer shutdowns and project delays. The company’s key market, nonresidential construction, softened during the quarter, but activity increased in May as coronavirus restrictions were lifted in much of the country. CEO Jim Hoffman said the sweet spot for Reliance in the construction market is smaller projects of 3-4 stories or below. Distribution center projects are strong now along with assisted living, schools and data centers. Healthy backlogs and positive customer sentiment suggest continued improvement for the second half of 2020.