Reliance, Inc. RS posted profits of $272.7 million or $4.70 per share in fourth-quarter 2023, down from $350.5 million or $5.88 per share in the year-ago quarter.

Barring one-time items, the company recorded earnings of $4.73 per share. It topped the Zacks Consensus Estimate of $3.86.

The company recorded net sales of $3,337.3 million, down around 7.6% year over year. The top line beat the Zacks Consensus Estimate of $3,275.1 million.

The company officially rebranded as Reliance, Inc., departing from its former identity as Reliance Steel & Aluminum Co. This strategic shift mirrors the company's transformation into a multifaceted entity, embodying the ethos of being ‘More than Metal.’

Volumes and Pricing

Reliance reported a 4.9% year-over-year increase in shipments (thousand tons sold) to 1,354.2, driven by robust performance in non-residential construction, aerospace and general manufacturing. The figure beat our estimate of 1,343.8. The average selling price per ton dropped by 11.9% year over year to $2,466. It was higher than our estimate of $2,427.

Non-residential construction, Reliance's primary market, saw a notable improvement in 2023, with optimism for continued growth in the first quarter of 2024. Commercial aerospace demand remained strong, supported by defense appropriations. Toll processing services for the automotive sector witnessed growth, with expectations for further improvement. Overall manufacturing demand improved modestly, driven by organic growth investments.

Although the semiconductor market declined due to inventory issues, stability was observed in the fourth quarter. Reliance remains optimistic about long-term prospects, buoyed by the CHIPS Act and investments in capacity expansion in the United States.

Financial Position

At the end of 2023, Reliance had $1.08 billion in cash and cash equivalents while carrying $1.15 billion in total outstanding debt. There were no borrowings under its $1.5-billion revolving credit facility. In the fourth quarter and full year 2023, Reliance generated cash flow from operations of $525.6 million and $1.67 billion, respectively.

FY23 Results

Earnings for full-year 2023 were $22.64 per share compared with $29.92 per share a year ago. Net sales fell 13% year over year to $14,805.9 million.

Outlook

Reliance anticipates continued healthy demand trends in the first quarter of 2024 despite ongoing macroeconomic uncertainties and geopolitical issues. The company projects a 9% to 11% increase in tons sold compared to the fourth quarter of 2023, in line with typical seasonal patterns. Reliance expects the average selling price per ton sold to rise 1-3% compared with the previous quarter’s levels, driven by stabilized pricing trends across many product lines. As a result, the company forecasts adjusted earnings per share to be between $5.30 and $5.50 for the first quarter of 2024.