Reliance Steel & Aluminum tops Q1 estimates as aluminium prices and steel demand rise

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Reliance Steel & Aluminum Co. went into its first-quarter results with strong expectations, helped by rising aluminium prices and new government contracts. Analysts had forecast earnings of USD 4.67 per share on revenue of USD 3.92 billion, pointing to solid growth both sequentially and year-on-year.

Estimates had also moved higher in recent weeks, reflecting growing confidence as US aluminium premiums surged to record levels due to tight supply and tariffs. The company, with a market value of USD 17.2 billion, had also delivered a stronger-than-expected previous quarter, adding to the positive tone. Even so, while analysts largely rate the stock a Buy, the average price target still sits slightly below its current trading level.

Profit growth backed by pricing, margins ease

The results reflected the supportive pricing environment. Pretax income rose 33 per cent to USD 349.5 million, with higher realisations across key metals playing a central role. Average selling price per ton increased 12.6 per cent year on year to USD 2,414, helped by stronger carbon steel, aluminium and stainless steel prices.

Margins, however, did not move in the same direction. Gross profit margin slipped to 29.1 per cent from 29.7 per cent a year ago, indicating some pressure despite the pricing gains. On the financial side, the company kept a steady footing, ending the quarter with net debt-to-EBITDA at 1.0 times.

Cash returns remained part of the story. Around USD 301 million was returned to shareholders during the quarter, of which USD 234 million came through share buybacks.

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Contracts and market conditions shape the next phase

For the second quarter, Reliance is guiding earnings in the range of USD 5.15 to USD 5.35 per share. The outlook is supported by stable demand, firmer mill prices and early shipments tied to its US border wall steel contract. Shipment volumes are expected to rise modestly, by 1 - 3 per cent compared with the previous quarter.

Investors, however, are looking beyond just earnings. Margins are expected to improve from the prior quarter as mill price increases flow through, but volume growth remains below the company’s historical trend, pointing to some softness in end markets.

Longer term, recently announced agreements could add to growth visibility. These include projects with the US Department of Homeland Security and a five-year deal linked to Lockheed Martin platforms, together carrying a potential value of about USD 2.9 billion.

The broader aluminium market adds another layer of uncertainty. Supply has tightened following disruptions, yet demand remains uneven across sectors, leaving the overall outlook balanced between opportunity and caution.

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