Despite policy uncertainty, Reliance upbeat on '25

Reliance Inc. expects demand to tick up in the first quarter of 2025, despite “continued uncertainty regarding domestic and international economic policy,” the company said in its quarterly earnings report.

Though the service center giant has operations in Mexico and Canada, as well as other countries, Reliance noted that it is about 95% domestically sourced, which will help insulate it from tariffs.

In addition, those North American locations are typically buying domestically, Karla Lewis, president and CEO, said Thursday.

“We’re typically shipping within about a 150-mile radius, so we don’t anticipate a significant impact, but we could see some disruptions in that part of our business that flows across the borders,” Lewis said.

Stephen Koch, chief operations officer, added: “We think that an overall strong US steel market with higher prices supports the companies that are investing billions and billions of dollars into our infrastructure. We will deal on a case-by-case basis with some tariff tariff disruptions, but overall, we’re very positive.”

During the year, the Scottsdale, Ariz.-based company reported annual net sales of $13.84 billion with tons sold up 4.0% and same-store tons sold up 1.0%.

For the fourth quarter, tons sold increased 6.7% compared to the prior year quarter but decreased 5.1% compared to the third quarter of 2024, exceeding management’s expectations of down 6% to 8%.

The average selling price per ton sold fell 3.4% compared to the third quarter of 2024, within management’s expectations of down 1.5% to 3.5%.

Demand in non-residential construction – Reliance’s largest end-market by tons – improved compared to both the fourth quarter and full year of 2023.

The company said it expects non-residential construction demand to remain “at healthy levels in the first quarter of 2025, supported by new construction projects in diverse sectors including data centers, energy infrastructure, manufacturing, and public infrastructure.”

Demand across the broader manufacturing sectors also increased compared to Q4’23. Industrial machinery, military, shipbuilding, and rail demand were strong.

But weaker demand in heavy equipment, particularly in the agricultural sector, offset stronger demand in other manufacturing sectors. Reliance expects demand across the broader manufacturing sector will remain relatively stable in Q1’25.

Demand in the semiconductor market declined compared to both the fourth quarter and full-year 2023. Reliance expects demand will remain under pressure in Q1’25 due to excess inventory in the supply chain.

During the year, Reliance acquired four companies, adding $286.2 million to its 2024 net sales. Those companies are Cooksey Iron & Metal Co., MidWest Materials Inc., American Alloy and Ferragon Corp.’s FerrouSouth division.

Lewis said the company will prioritize increasing volumes through “our smart profitable growth strategy.” Asked if that will be driven by organic growth or acquisitions, Lewis said it will be both.

“A little more than half of our bump up in 2024 was from the four acquisitions we completed in the year, but we also grew our same-store tons,” Lewis said. “That’s we mean when we talk about smart profitable growth – which is go after more volume, while also maintaining your margins. Don’t take every order, but take those that will be accretive.”