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DATE

Thursday, April 23, 2026 at 11 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Karla R. Lewis
  • Chief Operating Officer — Stephen P. Koch
  • Senior Vice President and Chief Financial Officer — Arthur Ajemyan

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TAKEAWAYS

  • Record Tons Sold -- Volume increased 9.4% sequentially from 2025 and 2.7% year over year, outpacing the service center industry’s 5.1% decline.
  • Revenue Growth -- Sales rose 15% year over year, powered by higher shipments and pricing across product lines.
  • Average Selling Price -- Rose 5.3% sequentially from 2025, surpassing management’s expectation of a 3%-5% increase.
  • Non-GAAP Pretax Income -- Increased 33% year over year to $354 million, with pretax margin expanding 120 basis points to 8.8%.
  • Non-GAAP EPS -- Grew nearly 37% year over year to $5.16 per diluted share.
  • Gross Profit -- Achieved $1.2 billion, up 23% year over year, and non-GAAP FIFO gross profit margin reached 30.1% versus 28.5% in 2025.
  • LIFO Expense -- Incurred $37.5 million, higher than the $25 million forecast, with full-year LIFO guidance raised to $150 million.
  • Aluminum Margin Dynamics -- 50% Section 232 tariffs created moderate gross margin pressure, but aluminum gross profit dollars increased approximately 18% year over year.
  • SG&A Expense -- Non-GAAP SG&A rose 6% year over year, predominantly due to incentive compensation and higher warehousing and delivery costs; on a per-ton basis, up 3% over 2025.
  • Cash from Operations -- Generated $151 million, reflecting working capital build tied to increased shipments and higher metals pricing.
  • Shareholder Returns -- Dividend rate increased 4% to $5 annualized per share; $234 million of share repurchases completed at an average price of $299 per share.
  • Debt and Liquidity -- Total debt stood at $1.7 billion, with a net debt to EBITDA ratio of 1, and $529 million remains on the repurchase authorization.
  • Major Contract Wins -- Awarded two significant government contracts in Q1—the Department of Homeland Security border wall and Joint Strike Fighter projects—collectively representing up to $3 billion in potential revenue (no contribution yet reflected in Q1 results).
  • Q2 2026 Outlook -- Second quarter non-GAAP EPS guidance set at $5.15-$5.35, up 16%-21% year over year, including estimated $37.5 million LIFO expense ($0.54 per diluted share).
  • End-Market Commentary -- Nonresidential construction and general manufacturing each comprised about one-third of sales, with aerospace at 10% and automotive at 4% (excluding toll-processed tons); early signs of improvement observed in the semiconductor segment.

SUMMARY

Reliance (RS 1.80%) delivered a record-breaking first quarter marked by broad-based volume and pricing growth, materially above internal projections. Management confirmed government contract wins worth up to $3 billion—with shipments commencing in April—which position the company for additional outperformance as these contracts ramp through 2026 and beyond. The company raised LIFO expense expectations for the full year, citing persistent cost inflation, but emphasized expanding gross profit dollars across all products, especially aluminum. A disciplined approach to capital deployment was reaffirmed, as evidenced by increased dividends, substantial share repurchases, and ongoing investments in processing capacity.

  • Arthur Ajemyan explained, “Despite the moderate negative impact on the gross profit margin, our aluminum gross profit dollars are up about 18% compared to 2025.”
  • Karla R. Lewis described their contract pipeline, stating, “We do expect that to increase as we move into Q3 and beyond as the program really gets up and running, but there is not a committed shipment schedule, so it could vary from quarter to quarter.”
  • Stephen P. Koch highlighted mill relationships, noting, “We really appreciate all of the support we have received from our domestic mill suppliers because, as everybody knows, supply is a little bit tight right now. Hot-rolled coil has limited availability, and we are able to get as much as we need to meet our customers’ demands.”
  • Execution against favorable end-market trends enabled the company to increase its market share for a thirteenth consecutive quarter.

INDUSTRY GLOSSARY

  • LIFO: “Last In, First Out” inventory accounting method, under which the most recently acquired inventory is expensed first; significant when metal prices or tariffs fluctuate.
  • Section 232 Tariffs: U.S. government import tariffs levied on steel and aluminum products for national security considerations, currently at 50% for covered aluminum.
  • FIFO: “First In, First Out” inventory accounting, expensing oldest inventory first; used by the company for performance evaluation purposes.
  • SG&A: Selling, General & Administrative expenses, comprising overhead and operational costs not directly tied to production.
  • Hollow Structural Sections: Welded tubular steel products used in construction, cited as a primary product for the border wall contract.

Full Conference Call Transcript

Karla R. Lewis: Good morning, everyone, and thank you for joining us to discuss our first quarter 2026 results. Reliance Steel & Aluminum Co. is off to a strong start to 2026, capitalizing on favorable market fundamentals with first quarter volumes, pricing, and earnings exceeding our expectations. Strong pricing and demand momentum continued to build throughout the quarter across our diversified product and end market portfolio. Our first quarter tons sold were a record and were up both sequentially and year over year, a result that is especially notable given the unusually strong tariff-driven demand pull-forward in the prior-year period. For the 13th consecutive quarter, we significantly outperformed broader industry shipments.

Average selling price per ton sold also rose over the prior quarter, surpassing our expectations. Strong execution converted a 15% increase in sales, driven by higher shipments and prices, into significant operating leverage, driving over 30% year-over-year growth in our non-GAAP pretax income and nearly 37% year-over-year growth in non-GAAP earnings per share to $5.16. As previously announced, we also secured two significant government contracts in the first quarter to supply the Department of Homeland Security border wall and Joint Strike Fighter projects through our AMI Metals wholly owned subsidiary.

We were excited to win these contracts, which collectively represent up to approximately $3 billion in revenue and further reinforce Reliance Steel & Aluminum Co.’s role as a trusted partner on critical U.S. infrastructure and defense programs. These wins illustrate our ability to support large and complex projects by leveraging the scale, logistics capabilities, processing expertise, deep supply chain relationships, and existing operating infrastructure of the Reliance Steel & Aluminum Co. family of companies. Our diversified platform allows us to concurrently meet the needs of large program partners as well as small-order quick-turn customers. As a reminder, our first quarter results did not include any contributions from the border wall contract.

Our disciplined capital deployment and strong cash profile give us the flexibility to execute on both our growth and stockholder return activities concurrently. In the first quarter, we generated strong operating cash flow even with a typical seasonal build in working capital. Our full-year 2026 outlook for capital expenditures is approximately $300 million, with a little less than half directed towards strategic growth investments that enhance our processing capabilities, strengthen our ability to serve customers, expand our footprint, and grow volumes in attractive markets. In the first quarter, we increased our dividend rate by 4% to an annualized $5 per share and repurchased $234 million of our shares.

Our strong balance sheet and liquidity position remain key competitive advantages, affording us the ability to invest in our business, pursue strategic acquisitions, and return capital to our stockholders while maintaining our disciplined approach to capital deployment. In summary, we are encouraged by rising customer optimism and activity across our broad end markets, with continued momentum in the infrastructure, data center, energy, and defense sectors. As we enter the second quarter, extending lead times at our mill suppliers also bode well for a continued strong pricing environment where access to metal becomes a strategic advantage.

Reliance Steel & Aluminum Co.’s unique scale and capabilities, along with our domestic mill relationships and exceptional teams, position us well to further capitalize on the opportunities ahead in 2026. I will now turn the call over to our COO, Stephen P. Koch.

Stephen P. Koch: Thanks, Karla, and good morning, everyone. Our first quarter performance reflects strong execution across our operations and a continued commitment to safety and customer service. I want to thank our teams for their hard work and discipline, which continue to differentiate Reliance Steel & Aluminum Co. in the marketplace. Turning to our demand and pricing trends, record tons sold increased 9.4% from 2025, exceeding our expectations of up 5% to 7%. Year over year, tons sold increased 2.7%, significantly outperforming the service center industry, which reported a decline of 5.1% over the same period.

Our nearly eight-percentage-point outperformance in the first quarter and sustained outperformance over 13 consecutive quarters reflect the advantages of our operational scale, commercial diversification, and unmatched processing capabilities. Carbon volumes remained our primary growth driver with particular strength in nonresidential construction and manufacturing applications. Aluminum and stainless product volumes also contributed to year-over-year volume growth at higher per-ton profitability levels. Our first quarter average selling price increased 5.3% from 2025, exceeding our expectation of up 3% to 5%. Carbon steel, aluminum, and stainless steel product pricing all trended upward amid tight supply, extending lead times, and improving demand conditions.

As Arthur will discuss in our outlook, we believe that these market dynamics will continue to support strong pricing in 2026, elevating the strategic advantage we hold in accessing metal from our domestic mill partners. Turning to our end markets, nonresidential construction represented roughly one-third of our first quarter sales, primarily from carbon steel tubing, plate, and structural products. First quarter shipments remained strong, supported by data center and related energy infrastructure projects continuing at record levels along with overall strong demand in heavy civil and public infrastructure work. Our strong position in these markets outweighed lower activity in certain private nonresidential construction markets.

Our nonresidential construction market participation is further strengthened by our involvement in the Department of Homeland Security border wall project, with activity commencing this month. General manufacturing also represented about one-third of first quarter sales. Our participation in this market is highly diversified across products, industries, and geographies. Shipments grew year over year, driven by strength in industrial machinery including data center equipment, shipbuilding programs, military programs, consumer products, and construction machinery. We are also capturing rising nuclear-related demand driven by emerging small modular reactor programs and data center energy requirements. Aerospace products accounted for approximately 10% of our first quarter sales.

Commercial aerospace demand remained subdued as elevated inventories persist across the supply chain, though we expect conditions to gradually improve in 2026 as OEMs work through record backlogs and increase build rates. Defense- and space-related aerospace programs remained robust during the quarter. Automotive, which we primarily serve through our toll processing operations, represented 4% of our first quarter sales. As a reminder, our toll processing volumes are excluded from our tons sold. Underlying demand has remained stable, supported by our recent capacity investments and our ability to quickly adapt to the variable demand for the automotive market. Lastly, we are seeing encouraging improvement in demand in the semiconductor market, with momentum building in 2026.

In summary, Reliance Steel & Aluminum Co. continues to be defined by our people, our strong domestic mill relationships, and our focus on delivering unmatched customer service. The strategic investments we have made across our footprint are generating tangible returns, and our disciplined commercial and operational approach continues to drive the profitability that differentiates us. I will now turn the call over to our CFO, Arthur, to review our financial results and outlook.

Arthur Ajemyan: Thanks, Steve. Thanks, everyone, for joining today’s call. We delivered a strong first quarter with sales up 15% year over year on stronger-than-anticipated shipments and pricing. Our gross profit of $1.2 billion was up 23% compared to 2025 and up 13% compared to 2025. On a FIFO basis, which is how we evaluate our ongoing performance, non-GAAP FIFO gross profit margin expanded to 30.1% compared to 28.5% in 2025 and was only slightly below 30.4% in the prior-year quarter. Our pricing discipline enabled us to pass through higher mill pricing on most product in the first quarter and expand margins.

Higher-than-anticipated material costs resulted in first quarter LIFO expense of $37.5 million, above our $25 million estimate, prompting us to raise our full-year LIFO outlook to $150 million from the prior $100 million annual estimate. Accordingly, we expect LIFO expense of $37.5 million in the second quarter of 2026. I would like to also briefly address the impact of incremental Section 232 tariffs on our gross profit margins and profitability. The 50% Section 232 tariffs have had the most impact on aluminum gross profit margin as pricing for many common alloy aluminum products increased significantly without a corresponding significant increase in demand.

Despite the moderate negative impact on the gross profit margin, our aluminum gross profit dollars are up about 18% compared to 2025. Overall, the current pricing environment is resulting in higher gross profit dollars across our product portfolio and contributing to improved profitability despite variation in margin performance for certain products. Non-GAAP SG&A expense increased 6% compared to 2025, driven by higher incentive compensation from improved profitability, inflationary impacts on compensation and related benefits, and higher variable warehousing and delivery costs associated with our increased tons sold. On a per-ton basis, non-GAAP SG&A expense increased 3% due primarily to higher incentive compensation.

Our growth in shipments from continued market share gains and improved gross profit dollars drove improved operating leverage and resulted in a 33% year-over-year increase in non-GAAP pretax income to $354 million, with an 8.8% pretax income margin, which was up 120 basis points. Our non-GAAP first quarter earnings per diluted share grew nearly 37% year over year to $5.16. For reference purposes, LIFO expense per share amounted to $0.54 for the quarter, compared to the $0.36 assumption in our guidance and $0.35 in the prior-year quarter, stemming from higher-than-anticipated carbon steel and aluminum product cost increases.

Moving on to our balance sheet and cash flow, cash flow from operations in the first quarter was approximately $151 million, reflecting typical seasonal working capital build from increased shipment activity as well as the impact of higher metals pricing. Our inventory turn rate based on tons improved to approximately five times compared to 4.9 times a year ago, while accounts receivable DSO of 42 days was consistent with the prior year. During the quarter, we funded $64 million of capital expenditures, paid $67 million in dividends, and repurchased $234 million of our common stock at an average price of $299 per share. We have approximately $529 million remaining available under our current share repurchase program.

As of March 31, our total debt was $1.7 billion. Our leverage position remains very strong, with a net debt to EBITDA ratio of 1, giving us substantial liquidity and flexibility to continue executing on our capital allocation priorities. Looking ahead, we expect both demand and pricing to remain healthy in the second quarter of 2026, generally in line with Q1, subject to ongoing risks from domestic and international trade policy and the conflict in the Middle East. We anticipate second quarter 2026 non-GAAP earnings per diluted share in the range of $5.15 to $5.35, up 16% to 21% year over year, including an estimated $37.5 million of LIFO expense, or about $0.54 per diluted share.

Please refer to our first quarter earnings release for further details on our Q2 outlook as well as anticipated contributions from the border wall contract. In closing, we are very pleased with our first quarter performance. Our solid volume growth, continued market share gains, and disciplined pricing supported improved operating leverage and stronger earnings. This concludes our prepared remarks. Thank you again for your time and participation. We will now open the call for questions.

Operator: Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star key. And again, that is 1 if you would like to ask a question. Our first question will come from Martin Englert with Seaport Research Partners.

Martin Englert: Hello. Good morning, everyone. Good morning. Some questions on the guidance here and just looking at the current quarter, FIFO gross profit margins improved to about 30% from 28.5% last quarter. Even accounting for the new DHS contract in the mix for Q2, given the improving broader price backdrop as well as volumes, do you think you are being conservative with the implicit Q2 FIFO gross margins in guidance, or are there other factors to be considering here, like a lagging catch-up in margins and the inflationary price factors with aluminum here?

Arthur Ajemyan: Yeah. Hi, Martin. So on the guide for Q2 around gross profit margin, which we do not explicitly provide guidance on, 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. We will start to see the higher-cost metals hit the inventory and kind of normalize a bit, we believe, towards the end of the quarter. So probably, from a price increase dynamic, we have less upside than in Q1.

On the border wall, the gross profit margins will bring our consolidated number down a bit, just based on the product mix of what we are selling and the services we are providing. But as we mentioned, extremely low operating cost on the volume there will help us leverage our expense line and give us very strong earnings from the border wall project.

Martin Englert: I guess looking another step ahead here and coming back to your comment on maybe by the end of the quarter, so not as much of a price increase or momentum quarter on quarter, but maybe things begin to normalize relative to the inventory costs coming through. So looking further ahead then, does it offer some opportunity for some partial normalization in FIFO gross margins, understanding that you will have this contract in the mix, and that will be something that is dilutive but not additive to the bottom line?

Arthur Ajemyan: Yeah. I think that is right, Martin. That is the way the dynamics typically work. Pricing drives a lot of the margin upside, and then to the extent pricing normalizes or comes down, you also need the underlying demand there as well to support that, which we, at this time, feel really good about in 2026 across demand for most of the products and end markets we are selling into, which provides a good backdrop from a pricing standpoint. So it was good strong price increases in Q1. We expect prices to remain at good levels, just again maybe not increasing at the same pace.

Martin Englert: Okay. So some transitory items normalizing, some of the pricing moving through the distribution channel as it relates to the costs pushing through, but not too different than what we saw in recent quarters here, given the inflationary impact of 232 tariffs.

Arthur Ajemyan: Correct. Yes.

Martin Englert: Okay. If I could one more, I was just curious on your thoughts for it seems like areas of the defense are strong, semiconductor improving, which I think it has been a while since we have seen any positive news on that front. And I think I have also heard, like, within oil and gas, maybe if you could just touch on the margin profile of these product lines that serve these end markets and potential mix implications as we are moving through 2026.

Karla R. Lewis: Yeah. We do not really talk about how they affect gross profit margin by product, Martin. It does vary, and it also depends on how much value-added processing we are doing. You are right, defense continues to remain strong across a lot of the different products we sell. Semiconductor is a small part of the business, but it has been lagging. We have talked about some of our niche semiconductor business being very high-value types of products, and that has been down, but we are happy to see some improvement beginning. But as far as a consolidated level, nothing really to comment on as far as change in product mix or financial guidance.

Stephen P. Koch: And, Martin, I would add that from an end market perspective, we saw the ISM Manufacturing Index for three consecutive months stay above 50, and we saw that translate into some increased activity in the first quarter. We noted in our release that the manufacturing end market saw increased year-over-year tons. We are looking at that as a good tailwind, and we have a lot of different products with value-added processing that go into that end market, which, as we all know, has not been doing really all that great for the past three years. So there are some potential tailwinds there.

Martin Englert: Yeah. It is nice to see some nascent signs of recovery with activity amongst the end users there. Congratulations on the results and the contract wins there. Thanks.

Arthur Ajemyan: Thank you.

Operator: Our next question comes from Bennett Moore with JPMorgan.

Bennett Moore: Good morning, Karla, Steve, Arthur. Thank you for taking my questions, and congrats on the strong quarter. I guess I wanted to get a better idea of how we should think about the cadence of these DHS volumes ramping throughout the year. And is the pricing structured such that if broader market pricing were to fall, you could actually offer downside protection to gross margins in such a scenario?

Karla R. Lewis: Yeah. Good morning, Bennett. As far as the cadence on the border wall project, as we mentioned, we began shipping this month in April, and so we are still in a bit of startup ramp-up phase. So we included in our Q2 guide our current estimate of volume activity in the quarter. We do expect that to increase as we move into Q3 and beyond as the program really gets up and running, but there is not a committed shipment schedule, so it could vary from quarter to quarter. We do anticipate higher activity as we move into Q3 than what we projected for Q2.

As far as the pricing, we cannot get into the specifics, but we do have the contract volume up to certain dollar amounts over the period through 2027.

Bennett Moore: Understood. Thanks for that color. Coming to aluminum, we have certainly seen another spike in pricing. I am just wondering if you are still able to cover your costs at this stage. Is 50 bps still the right way to think about the margin impact? And if possible, could you share what share of aluminum was in relation to the LIFO expense this past quarter?

Karla R. Lewis: Yeah. So, Bennett, you are correct. The dynamics in aluminum, in particular, continue. Unlike this time last year, our companies now have been able to push through the 50% tariff to our customers, but we are not necessarily getting a full margin on that 50% tariff cost, which puts a little pressure on the overall gross profit margin from our aluminum products compared to periods where we did not have a 50% tariff that we had to cover and try to push to our customers.

And then you are right, it also gives us kind of a double hit on LIFO because, in our view, LIFO was not intended for periods with a 50% tariff, and so we have to take a LIFO charge on top of the tariff costs that we need to push through. So while these 50% tariffs are in place, it is a bit of a drag. We think that is transitory. However, aluminum prices are significantly higher, so even though we are not getting the percentage margin on that, we are getting significantly higher gross profit dollars on our sales of aluminum that then help cover our SG&A and other costs and contribute at a higher level to earnings dollars.

Arthur Ajemyan: Despite the margin distortion that Karla mentioned, the gross profit dollars are up year over year, almost 17% to 18%. It shows that profitability has improved significantly on those sales. When you introduce a 50% tariff, that creates some noise, and the LIFO noise is also substantial from aluminum. Last year, nearly half of our LIFO expense was related to aluminum. This year, it is tracking at a little less than half, maybe over a third. If prices level off and stay where they are, come next year, you are not going to have that headwind from LIFO on aluminum contributing to this temporary margin compression dynamic.

Net-net, these tariffs have contributed to higher profitability across our product portfolio, including aluminum. And on the LIFO side, just as a reminder, when we book expense, it increases our LIFO reserve that is then available to come back into income in future periods when prices come down.

Bennett Moore: Karla, Arthur, thank you. Back in the queue.

Operator: Thanks, Bennett. We will go next to Samuel McKinney with KeyBanc Capital Markets.

Samuel McKinney: Hey. Good morning.

Stephen P. Koch: Morning.

Samuel McKinney: I know we have talked about the rapid rise in aluminum pricing being a drag on gross margin, given it has been tough to get ahead of that, and I know tariffs are still impacting that market. But am I wrong in my thinking that the first quarter sequential gross margin expansion does seem to reflect a better job of navigating that market versus the back half of last year?

Karla R. Lewis: Yes, I think that is fair. And again, we want to be clear it is a drag on the gross profit margin percent, but not on the gross profit dollars. You are thinking about that correctly that incrementally each quarter, coming out of Q2 last year when the tariffs hit, we have made progress against that. Overall demand is improving a bit too, including for some of the aluminum products, which helps us on passing through costs if demand is stronger. So we would agree with the way you are thinking about that.

Samuel McKinney: Okay. And then on the border wall contract, you are expecting it to be a solid earnings contributor despite the relatively lower selling price versus the rest of your business. When you talk about the operating network, if you could just discuss with us some of the operating levers you think you can pull as these tons grow over the course of this year and probably into next.

Karla R. Lewis: Yes. Prices are lower on those products, but with services that we are providing—which on the tons for the border wall is a lot of storage and handling—we are doing some value-added processing, but our operating costs are pretty low based on the volume. The SG&A percent is lower than it is in the rest of our business. So at these volumes and low cost structure, it is a good driver to earnings.

One of the reasons we believe that Reliance Steel & Aluminum Co. was awarded this contract—and by the way, back in 2008, our AMI business secured a smaller, but a pretty decent-sized, border wall (they called it the fence then) contract and performed very well—this is much larger in scale with the tonnage and a short time period to be able to provide these services. We need multiple locations to store and provide the logistics under the contract to really meet their requirements, and with the Reliance Steel & Aluminum Co. network of companies, AMI is working with other Reliance companies utilizing some of their property, which also keeps our costs lower.

We did not have to go out and secure new equipment or property to be able to service the project.

Stephen P. Koch: I would like to add that the majority of the products being shipped into are hollow structural sections, but there is also a lot of sheet, and we are utilizing one of our processing plants in Sinton, Texas. Like Karla mentioned, we have plants set up all along the border, so we are going to be shipping products out of Texas and out of California. We really appreciate all of the support we have received from our domestic mill suppliers because, as everybody knows, supply is a little bit tight right now. Hot-rolled coil has limited availability, and we are able to get as much as we need to meet our customers’ demands.

Samuel McKinney: Well, thank you. I appreciate all the color on that contract, and best of luck.

Stephen P. Koch: Thank you.

Operator: We will go next to Nick Cash with Goldman Sachs.

Nick Cash: Hi. Thank you so much for taking my question. Just a quick one on the current inorganic growth pipeline. It has been a little bit since you guys have done pretty much meaningful acquisitions. Just wondering how the pipeline currently looks and how you are thinking of capital allocation between organic and inorganic growth going forward?

Karla R. Lewis: Yeah. Hi, Nick. From an acquisition pipeline, I would say it remains pretty consistent with what we have talked about the last few quarters.