Reliance, Inc. (RS) has a rich history that spans over 85 years, making it a true veteran in the metals service center industry. Founded in 1939 in Los Angeles, California, the company has evolved from a single steel reinforcing bar fabrication facility to a diversified global network of 320 locations across 41 U.S. states and 10 foreign countries. Reliance's remarkable journey is a testament to its ability to adapt, innovate, and capitalize on emerging opportunities, cementing its position as a leading provider of comprehensive metal solutions.
The company's growth strategy has been predicated on a dual approach of organic expansion and strategic acquisitions. Over the past three decades, Reliance has successfully completed 76 acquisitions, each carefully selected to enhance its product breadth, processing capabilities, geographic reach, and customer diversity. This disciplined acquisition strategy has been a key driver of the company's consistent financial performance, even during periods of economic volatility. As the largest metals service center company in North America based on revenues, Reliance has demonstrated its ability to navigate industry challenges and maintain a competitive edge.
One of the significant milestones in Reliance's history was its initial public offering in 1994 when the company listed its common stock on the New York Stock Exchange under the ticker symbol RS. This move provided Reliance with additional resources to fuel its expansion strategy and pursue further acquisitions. The company's ability to adapt to changing market conditions has been evident throughout its history, particularly in addressing challenges such as industry consolidation, which reduced the number of suppliers available. Reliance successfully leveraged its scale and long-standing relationships to maintain a competitive advantage in sourcing metal products.
Business Overview
Reliance operates as a global diversified metal solutions provider, with its metals service center segment accounting for 100% of its net sales in 2024. The company distributes a full line of over 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and other specialty steel products. These products are sold to more than 125,000 customers across various industries, such as consumer products, general manufacturing, non-residential construction, transportation, aerospace, energy, electronics, and industrial machinery.
The company's product mix consists of 53% carbon steel, 16% aluminum, 14% stainless steel, and 5% alloy products. Reliance also generates revenue from toll processing and logistics services, which accounted for 4% of total sales in 2024. Toll processing services involve processing customer-owned metal, while logistics services primarily include transportation and storage for metal that Reliance toll processes.
Reliance maintains a decentralized operating structure to keep decision-making close to customers, allowing for rapid response to local market conditions and customer needs. This approach, combined with the company's focus on value-added processing services and maintaining a strong financial position, has been key to its success in the highly competitive metals service center industry.
Financials
Reliance's financial strength is exemplified by its robust balance sheet and ample liquidity. As of December 31, 2024, the company had $318.1 million in cash and cash equivalents, and a net debt-to-total capital ratio of just 10.2%. This strong financial position has enabled Reliance to continue making strategic investments in its business, while also returning significant capital to shareholders through a consistent dividend and aggressive share repurchase program.
In 2024, Reliance reported annual net sales of $13.84 billion, a decline of 6.6% compared to the prior year. This decrease was primarily attributable to lower average selling prices, which decreased by 10.4% year-over-year. However, the company's total tons sold increased by 4.0%, or 1.0% on a same-store basis, outperforming the industry's 2.0% decline. The company's diverse product mix helped to mitigate the impact of pricing pressures in any one commodity.
Reliance's commitment to operational excellence is evident in its industry-leading gross profit margin of 29.7% for the full year 2024, which remained within the company's estimated sustainable range of 29% to 31%. This performance was driven by Reliance's focus on value-added processing services, which accounted for approximately 50% of its total sales in 2024. The company's strategic investments in state-of-the-art equipment and advanced technology have enabled it to deliver a consistently high level of service and quality to its diverse customer base.
For the full year 2024, Reliance reported net income of $875.2 million and operating cash flow of $1.43 billion. The company's free cash flow for the year was $999.2 million. Reliance recorded $268.7 million in depreciation and amortization expense in 2024, up 9.5% from 2023, as it continues to invest in its processing capabilities and facilities to support organic growth.
In the most recent quarter (Q4 2024), Reliance reported revenue of $3,126.6 million and net income of $105.3 million. The year-over-year revenue decrease of 6.6% was due to lower metals prices, while tons sold increased 6.7% (2.8% on a same-store basis), outperforming the industry's 3.6% decline.
Geographical Performance
Reliance's operations are primarily concentrated in the United States, which accounted for 93% of the company's 2024 revenue. The remaining 7% was generated from international markets, primarily Canada. This geographic distribution underscores Reliance's strong presence in its core North American market while also highlighting potential opportunities for international expansion.
Liquidity
Despite the challenging market conditions, Reliance generated $1.43 billion in cash flow from operations in 2024, the third-highest annual figure in the company's history. This strong cash flow, coupled with the company's disciplined capital allocation strategy, allowed Reliance to invest $430.6 million in capital expenditures, complete four strategic acquisitions for $364.6 million, and return a record $1.1 billion to shareholders through share repurchases, which reduced the outstanding share count by 6% year-over-year. Additionally, Reliance increased its quarterly dividend by 9.1% to $1.20 per share, marking the 32nd time the company has raised its dividend since its 1994 IPO.
As of December 31, 2024, Reliance maintained a strong liquidity position with a debt-to-equity ratio of 0.20, a current ratio of 3.21, and a quick ratio of 1.54. The company also has access to a $1.5 billion revolving credit facility maturing in September 2029, providing additional financial flexibility to support its growth initiatives and navigate potential market uncertainties.
Outlook and Guidance
Looking ahead, Reliance remains well-positioned to capitalize on growth opportunities across its diverse end markets. For the first quarter of 2025, the company expects to see a modest improvement in demand across its end markets, with a projected 6% to 8% increase in tons sold compared to the fourth quarter of 2024, and a 3% to 5% year-over-year increase, including 1.5% to 2.5% of same-store growth. The company also anticipates its average selling price per ton to remain relatively flat compared to Q4 2024.
Reliance has provided guidance for non-GAAP earnings per diluted share in the range of $3.30 to $3.50 for Q1 2025. The company estimates its LIFO income to be approximately $60 million for the full year of 2025, down from $144.4 million in 2024, due to the timing of receiving certain specialty stainless steel and alloy products.
It's worth noting that Reliance outperformed its Q4 2024 guidance, with tons sold decreasing 5.1% sequentially (better than the 6% to 8% guidance) and average selling price per ton declining 3.4% (within the 1.5% to 3.5% guidance range).
Capital Expenditure and Acquisition Strategy
Reliance's long-term growth strategy remains focused on smart, profitable growth, which encompasses both organic and inorganic initiatives. The company plans to invest approximately $375 million to $400 million in capital expenditures in 2025, with a particular emphasis on expanding its value-added processing capabilities and enhancing operational efficiency. This includes a capital expenditure budget of $325 million for 2025, with the total cash outlay accounting for carryover projects from prior years.
In 2024, Reliance completed four acquisitions, adding approximately $400 million of net sales on an annualized basis. The company's robust acquisition pipeline and ample financial resources position it to continue growing through targeted, value-accretive transactions that complement its existing operations.
In conclusion, Reliance, Inc. (RS) is a well-diversified, financially strong, and operationally agile metals solutions provider that has consistently delivered industry-leading results. The company's disciplined approach to growth, commitment to customer service, and focus on safety and sustainability position it for continued success in the years ahead, solidifying its status as a premier investment opportunity in the metals industry.