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    RS
    Earnings call· Mar 2026(Q1 FY26)

    RELIANCE Q1 FY26 earnings call RS

    Apr 23, 2026 Source

    Executive summary

    Reliance, Inc. Q1 FY26 — Record Volumes and Strong Earnings Outperformance

    Reliance, Inc. delivered a strong first quarter, driven by record tons sold and robust pricing across its diversified product portfolio. The company significantly outpaced industry shipments and secured major government contracts, leveraging its scale and operational capabilities. While tariffs continue to impact aluminum margins, the overall pricing environment and demand momentum in key end markets like infrastructure, data centers, energy, and defense position Reliance for continued strong performance, with management expressing confidence in the full-year outlook.

    Highlights

    5

    • First quarter tons sold were a record, up 9.4% sequentially and 2.7% year-over-year, significantly outperforming the industry's 5.1% decline.

    • Non-GAAP earnings per share grew nearly 37% year-over-year to $5.16.

    • Non-GAAP pretax income increased 33% year-over-year to $354 million, with an 8.8% pretax income margin, up 120 basis points.

    • Secured two significant government contracts (DHS border wall and Joint Strike Fighter) representing up to approximately $3 billion in revenue.

    • Non-GAAP FIFO gross profit margin expanded to 30.1% from 28.5% sequentially, demonstrating pricing discipline.

    Concerns

    4

    • Higher-than-anticipated material costs resulted in a Q1 LIFO expense of $37.5 million, above the $25 million estimate, leading to a full-year LIFO outlook increase to $150 million.

    • 50% Section 232 tariffs continue to moderately negatively impact aluminum gross profit margin percentage, despite higher gross profit dollars.

    • Commercial aerospace demand remains subdued due to elevated inventories, though gradual improvement is expected in 2026.

    • Lower activity in certain private nonresidential construction markets was noted.

    Guidance & targets

    6
    CategoryTargetConfidence
    Capital Expenditures
    approximately $300 million
    high materiality
    High
    LIFO Expense
    $150 million
    medium materiality
    High
    LIFO Expense
    $37.5 million
    medium materiality
    High
    Demand and Pricing Outlook
    remain healthy, generally in line with Q1
    high materiality
    Medium
    Non-GAAP Earnings Per Diluted Share
    $5.15 to $5.35
    high materiality
    High
    LIFO Expense Per Diluted Share
    $0.54
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Nonresidential Construction
    Primarily carbon steel tubing, plate, and structural products. Shipments remained strong, supported by Data Center and related energy infrastructure projects, heavy civil, and public infrastructure work. Strong position outweighed lower activity in certain private nonresidential construction markets.
    Share of Q1 Sales: ~1/3
    		————
    General Manufacturing
    Highly diversified across products, industries, and geographies. Shipments grew year-over-year, driven by strength in industrial machinery (including data center equipment), shipbuilding, military programs, consumer products, and construction machinery. Capturing rising nuclear-related demand.
    Share of Q1 Sales: ~1/3
    		—growth——
    Aerospace
    Commercial aerospace demand remains subdued due to elevated inventories, with gradual improvement expected in 2026. Defense and space-related aerospace programs remained robust.
    Share of Q1 Sales: ~10%
    		————
    Automotive
    Primarily served through toll processing operations. Underlying demand remained stable, supported by recent capacity investments and adaptability to variable demand.
    Share of Q1 Sales: 4%Toll processing volumes: Excluded from tons sold
    		————

    Operational metrics

    21
    Sales growth
    15%YoY
    Q1 FY26

    Sales increased year-over-year on stronger-than-anticipated shipments and pricing.

    Non-GAAP Pretax Income Growth
    30%YoY
    Q1 FY26

    Growth in non-GAAP pretax income.

    Non-GAAP Earnings Per Share Growth
    37%YoY
    Q1 FY26

    Growth in non-GAAP earnings per share.

    Non-GAAP Earnings Per Share
    $5.16
    Q1 FY26

    Non-GAAP earnings per diluted share for the first quarter.

    Dividend Rate
    $5up 4%
    Annualized

    Annualized dividend rate increased by 4%.

    Share Repurchases
    $234 million
    Q1 FY26

    Amount of shares repurchased during the first quarter at a stated average price.

    Non-GAAP FIFO Gross Profit Margin
    30.1%up from 28.5% QoQ, slightly below 30.4% YoY
    Q1 FY26

    Non-GAAP FIFO gross profit margin expanded sequentially and was slightly below prior year.

    LIFO Expense
    $37.5 millionabove $25 million estimate
    Q1 FY26

    First quarter LIFO expense, higher than estimated.

    Aluminum Gross Profit Dollars Growth
    18%YoY
    Q1 FY26

    Aluminum gross profit dollars increased despite moderate negative impact on gross profit margin from tariffs.

    Non-GAAP SG&A Expense Growth
    6%YoY
    Q1 FY26

    Non-GAAP SG&A expense increased due to higher incentive compensation, inflationary impacts, and variable warehousing/delivery costs.

    Non-GAAP SG&A Expense Per Ton Growth
    3%
    Q1 FY26

    Non-GAAP SG&A expense increased on a per ton basis, primarily due to higher incentive compensation.

    Non-GAAP Pretax Income
    $354 million
    Q1 FY26

    Non-GAAP pretax income for the first quarter.

    Pretax Income Margin
    8.8%up 120 bps
    Q1 FY26

    Pretax income margin for the first quarter, showing significant improvement.

    LIFO Expense Per Share
    $0.54vs $0.35 in prior year
    Q1 FY26

    LIFO expense per share for the quarter, stemming from higher-than-anticipated carbon steel and aluminum product cost increases.

    Inventory Turn Rate (Tons)
    5xvs 4.9x a year ago
    Q1 FY26

    Inventory turn rate based on tons improved.

    Accounts Receivable DSO
    42 daysconsistent with prior year
    Q1 FY26

    Accounts receivable Days Sales Outstanding.

    Capital Expenditures
    $64 million
    Q1 FY26

    Capital expenditures funded during the quarter.

    Dividends Paid
    $67 million
    Q1 FY26

    Cash paid for dividends during the quarter.

    Remaining Share Repurchase Authorization
    $529 million
    As of March 31

    Amount remaining available under the current share repurchase program.

    Net Debt to EBITDA Ratio
    1
    As of March 31

    Leverage position remains very strong.

    LIFO Expense Allocation
    over 1/3vs nearly half last year
    FY26 YTD

    Aluminum's contribution to total LIFO expense.

    Industry KPIs

    1
    MetricValueDetails
    Production sales volume by metal and by mineRecord tons soldtons

    Deals & partnerships

    2
    Department of Homeland SecuritySupply contract for border wall project$1.4 billion (Phase 1), $2.2 billion (Total)through mid-2027 (Phase 1)

    Secured contract to supply the Department of Homeland Security border wall project through AMI Metals subsidiary. Phase 1 is $1.4 billion, total contract value is $2.2 billion, running through mid-2027. Shipping began in April 2026, with volumes expected to increase in Q3 and beyond. Utilizes multiple Reliance locations for storage and logistics, keeping costs low. Majority of products are Apollo structural sections and sheet.

    Lockheed MartinSupply contract for Joint Strike Fighter and other programsbegins 2027

    Secured contract to supply the Joint Strike Fighter project and other programs through AMI Metals subsidiary. This is an upsized renewal of existing programs, with the new contract beginning in 2027. Expected to add about 10% higher volumes.

    Risks & headwinds

    6
    LIFO Expense VolatilityQ1 2026, Full Year 2026

    Q1 LIFO expense of $37.5 million, above $25 million estimate; full year outlook raised to $150 million from $100 million.

    Mitigation: Management notes LIFO expense increases LIFO reserve, which can come back into income in future periods when prices decline. Focus on pricing discipline to pass through costs.

    Section 232 Tariffs on AluminumOngoing

    50% Section 232 tariffs; moderate negative impact on aluminum gross profit margin percentage.

    Mitigation: Company has been able to push through the 50% tariff cost to customers, leading to significantly higher gross profit dollars for aluminum, which helps cover SG&A and contributes to earnings. Expects this to be transitory while tariffs are in place.

    Commercial Aerospace Demand Subdued2026

    Elevated inventories persisted across the supply chain.

    Mitigation: Expects conditions to gradually improve in 2026 as OEMs work through record backlogs and increase build rates.

    Margin Dilution from Border Wall ContractQ2 2026 and beyond

    Gross profit margins for the border wall contract will bring consolidated number down a bit.

    Mitigation: The contract has extremely low operating costs, which will help leverage the expense line and drive very strong earnings, despite the lower gross profit margin percentage.

    Delays in U.S. Chip Plant ConstructionOngoing

    Pullbacks by customers or delays in building chip plans, especially in the U.S.

    Mitigation: Company's specialty semiconductor business is exploring increased activity around the data center market in the near term to offset this.

    Geopolitical and Trade Policy RisksQ2 2026 and beyond

    Ongoing risks from domestic international trade policy and the conflict in the Middle East.

    Mitigation: Not explicitly stated, but implied by diversified portfolio and strong balance sheet.

    What to watch in Q2 FY26

    4

    DHS Border Wall Contract Volume Ramp

    Q3 FY26
    CurrentShipping began in April, included in Q2 guide
    TargetIncreased activity in Q3 and beyond

    Why it matters

    The border wall contract is a significant revenue opportunity, and its ramp-up will materially impact future earnings, especially given its low operating cost structure.

    We do expect that to increase as we move into Q3 and beyond as the program really gets up and running.

    Q&A highlights

    5

    Given improving pricing and volumes, is the implicit Q2 FIFO gross margin guidance conservative, or are there other factors like lagging cost catch-up or the DHS contract impacting it?

    Karla Lewis explained that Q1 had strong pricing increases, which drove margins up temporarily. While Q2 expects continued price improvement, it won't be at the same pace as Q1, and higher cost metal will normalize margins. The border wall contract, while highly profitable on an earnings basis due to low operating costs, will dilute the consolidated gross profit margin percentage due to product mix.

    “Q1 was a good strong pricing environment with a lot of products having price increases, which gives us an opportunity to drive our margins up a bit for a temporary period. We expect some continued price improvement in Q2, but not to the level of Q1. So we will start to see the higher cost metal hit the inventory and kind of normalize a bit towards -- we believe, towards the end of the quarter.”

    asked by Martin Englert · answered by Karla Lewis

    2 min read5 chapters

    Detailed Narrative

    01

    End-Market Demand and Diversification

    Reliance reported continued momentum in infrastructure, data center, energy, and defense sectors, contributing to strong first-quarter performance. The company's diversified product and end-market portfolio allowed it to capitalize on favorable market fundamentals. Nonresidential construction and general manufacturing each represented approximately one-third of Q1 sales, with strength in industrial machinery, shipbuilding, military programs, and construction machinery. The company also noted rising nuclear-related demand from small modular reactor programs and data center energy requirements.

    02

    Strategic Capital Deployment and Shareholder Returns

    The company maintains a disciplined approach to capital deployment, balancing growth investments with shareholder returns. In Q1, Reliance increased its annualized dividend rate by 4% to $5 per share and repurchased $234 million of shares at an average price of $299 per share. The strong balance sheet and liquidity position, with a net debt-to-EBITDA ratio of 1, provide flexibility for continued investments and strategic acquisitions.

    03

    Semiconductor Market Improvement

    After a period of lagging performance, the semiconductor market is showing encouraging signs of improvement, with momentum building in 2026. While a small part of the business, the company's niche semiconductor operations, including sales to chip equipment manufacturers and interior plumbing for chip facilities, are seeing positive activity. The company's specialty semiconductor unit, with locations in the U.S., South Korea, and China, is also exploring increased activity in the data center market.

    04

    Acquisition Strategy and Pipeline

    Reliance's acquisition pipeline remains consistent, with a steady stream of opportunities. The company continues to evaluate potential targets, primarily privately owned family businesses, based on strategic fit and valuation. Management emphasized its consistent appetite for acquisitions, noting that its strong financial position allows it to pursue inorganic growth concurrently with organic growth and shareholder returns, without having to choose between capital allocation priorities.

    05

    Solar Market Exposure and Mill Relationships

    The company has limited direct exposure to the solar market. However, its domestic mill suppliers are experiencing significant demand from solar-related projects, which are consuming substantial amounts of tube and hot-rolled coil. This strong demand from mill suppliers helps keep mills busy and supports a favorable pricing environment for the broader market, indirectly benefiting Reliance's access to metal and pricing power.

    AI-generated summary of the company’s earnings call. Not investment advice.