Reliance (NYSE:RS) executives highlighted market share gains, record shipments, and an improving pricing environment during the company’s fourth-quarter 2025 earnings call, while also pointing to tariff-driven aluminum cost volatility and continued softness in certain end markets such as commercial aerospace and semiconductors.
2025 volume growth, market share gains, and tariff-driven margin dynamics
President and CEO Karla Lewis said Reliance delivered “strong operational execution” in 2025 and continued to expand market share despite what she described as a complex macroeconomic backdrop and a competitive operating environment.
Lewis attributed shipment growth primarily to carbon long and flat-rolled products, adding that Reliance increased gross profit margin year-over-year in those categories. She said the company’s FIFO gross profit margin improved by 90 basis points in 2025 versus 2024 due to pricing discipline and increased mill prices for carbon products supported by “healthy demand.”
However, she said tariff-related aluminum cost increases were more difficult to pass through because of plentiful supply and soft demand, particularly in the company’s commercial aerospace and semiconductor markets. Lewis said Reliance’s 2025 non-GAAP gross profit margin of 28.8% was just outside its estimated sustainable range, primarily due to tariff-driven annual LIFO expense of $114 million. She said management expects gross profit margin to improve in 2026 as tariff and trade uncertainty lessens, with a targeted annual range of 29% to 31%.
Fourth-quarter results: record shipments, higher prices, and LIFO expense surprises
Executive Vice President and COO Steve Koch said fourth-quarter tons sold declined 5.4% from the third quarter of 2025 but increased 5.8% from the fourth quarter of 2024, outperforming the service center industry, which he said reported a 1.2% decline year-over-year. Koch said results exceeded Reliance’s prior expectation for fourth-quarter growth of 3.5% to 5.5%.
He said the company’s average selling price rose about 1% sequentially in the fourth quarter, above expectations for relatively flat pricing. Koch noted aluminum pricing continued trending upward due to tariffs that increased the Midwest Premium.
CFO Arthur Ajemyan said Reliance delivered a strong fourth quarter with record shipment levels, improved profitability, and solid cash flow. On a FIFO basis, he said fourth-quarter non-GAAP pretax income rose 28% year-over-year, driven by roughly 6% higher volumes and 6% higher selling prices. Ajemyan added that those gains more than offset a 30 basis point sequential decline in the non-GAAP FIFO gross profit margin.
Ajemyan reported non-GAAP fourth-quarter earnings per diluted share of $2.40, up 8% year-over-year. He said LIFO expense was $0.56 per share for the quarter, above the $0.35 assumption embedded in guidance, and that year-end LIFO and tax true-ups created a net unfavorable impact of $0.25 per share. Excluding those items, he said non-GAAP EPS would have been $2.65, within management’s guidance.
End-market demand: construction strength offsets aerospace and semiconductor softness
Koch said non-residential construction represented roughly one-third of fourth-quarter sales, supported by demand in heavy civil and public infrastructure work and “record levels of data center and related energy infrastructure builds,” which offset pockets of softness in private non-residential construction. General manufacturing was also about one-third of fourth-quarter sales, with year-over-year shipment increases driven by military, industrial machinery (including data center equipment), consumer products, rail, and shipbuilding. He added that Reliance is seeing higher nuclear-related demand tied to emerging small modular reactor activity and data center energy needs.
Aerospace accounted for about 10% of fourth-quarter sales, and Koch said commercial aerospace demand remained subdued due to elevated inventory levels in the supply chain, though he expects gradual improvement in 2026 as OEM backlogs convert to higher build rates. Defense and space-related aerospace programs remained consistent at strong levels, he said. Automotive represented about 4% of sales and is primarily served through cold processing operations, which are not included in tons sold. Koch said the semiconductor market remained under pressure due to excess inventory during the fourth quarter.
During the Q&A, management discussed strength in structural products and plate. Koch said structural beams experienced another price increase and that the base price is the highest recorded, citing demand across non-residential markets and lead times being pushed out. He also described strong demand for plate, citing customer restocking, mill price increases, extended lead times, and demand tied to energy infrastructure, onshore wind, shipbuilding, and defense work. He also noted substitution from sheet to plate in response to tightness in hot-rolled coil.
Capital allocation: lower base CapEx plan, continued buybacks and dividend growth
Lewis said Reliance generated $831 million in operating cash flow in 2025 and deployed capital toward investments in advanced processing equipment and other long-term growth projects. For 2026, she announced a capital expenditure budget of $275 million, with total spending expected at $300 million to $325 million including carryover, and about half directed toward growth initiatives. Lewis said management is focused on maximizing returns on capital deployed in recent years but remains open to increasing CapEx if attractive customer opportunities arise.
Ajemyan said fourth-quarter operating cash flow was $276 million. In the quarter, Reliance funded $73 million of capital expenditures, paid $64 million in dividends, and repurchased $200 million of common stock at an average price of roughly $279 per share. For 2025, he said repurchases reduced total shares outstanding by 4% and that the company has about $763 million available under its current repurchase program.
Management also reiterated its dividend growth track record. Ajemyan said Reliance increased the quarterly cash dividend rate by 4.2%, marking its 33rd increase since its 1994 IPO to a current annual rate of $5 per share. Lewis separately noted a 4% dividend increase to an annual dividend rate of $5 per share in the first quarter of 2026.
On the balance sheet, Ajemyan said total debt was $1.4 billion at year-end, with net debt to EBITDA less than one.
First-quarter 2026 outlook: higher volumes, higher prices, and EPS guidance
Looking ahead, Ajemyan said Reliance expects healthy overall demand in the first quarter of 2026, though he noted uncertainty tied to domestic and international trade policy. The company expects tons sold to rise 5% to 7% versus the fourth quarter of 2025, consistent with seasonal trends, and to be relatively flat versus the first quarter of 2025 due to tariff-related demand pull-forward last year. Average selling price per ton sold is expected to improve 3% to 5% sequentially due to healthy demand and higher mill pricing, contributing to a modest improvement in FIFO gross profit margin.
Reliance guided to first-quarter 2026 non-GAAP EPS of $4.50 to $4.70, inclusive of expected quarterly LIFO expense of $25 million, or $0.36 per diluted share. For full-year 2026, Ajemyan said the company currently estimates LIFO expense of $100 million, mainly from higher carbon and aluminum product costs.
In response to analyst questions, Lewis said the company expects margins to trend upward over the course of 2026 if demand supports price increases, and she described quoting activity and mill lead times as encouraging signals, particularly for carbon products. On M&A, Lewis said Reliance evaluated deals in 2025 but did not close any, citing valuation discipline, while emphasizing the scale of organic growth achieved through facility and processing investments.
About Reliance (NYSE:RS)
Reliance Steel & Aluminum Co (NYSE: RS) is a leading metals service center company that distributes and processes a broad array of metal products. The company offers cut-to-length, shearing, blanking, sawing, bending, machining and value-added services for carbon and alloy steel, stainless steel, aluminum, brass, titanium and specialty metal alloys. Its products serve diverse end markets, including energy, infrastructure, general manufacturing, transportation, aerospace and defense.
Founded in 1939 in Los Angeles, Reliance Steel & Aluminum has grown through a combination of organic expansion and strategic acquisitions.
