RS earnings analysis
What we found in RS's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Reliance delivered a strong Q2, with revenue up 26.5% year over year to $4.630 billion and diluted EPS up 42.3% to $6.29, supported by record shipments, higher pricing and favorable operating leverage. Versus Q1, revenue rose approximately 14.9%, EPS rose approximately 23.6%, reported gross margin declined from approximately 29.1% to 28.1%, and operating margin improved from approximately 9.1% to 9.5%. The central offset is metal-cost inflation: LIFO expense increased $87.5 million year over year, but the border wall contract and broad-based end-market demand supported earnings and margin expansion.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Record volumes and pricing drove 26.5% sales growth
- Q2 net sales rose 26.5% year over year to $4.630 billion, driven by a 10.8% increase in tons sold to a record 1.7901 million and a 14.5% increase in average selling price per ton to $2,602. Sequentially, sales increased $604.0 million from implied Q1 sales of $4.026 billion.
- EPS and operating income accelerated
- Diluted EPS increased 42.3% year over year to $6.29 from $4.42, while operating income rose 41.4% to $441.6 million. EPS also increased from implied Q1 EPS of $5.09, a sequential gain of $1.20.
- Operating leverage offset cost pressures
- Operating margin expanded 100 basis points year over year to 9.5% from 8.5%, and SG&A declined to 17.0% of sales from 19.3%. The U.S. border wall project contributed approximately 30 basis points to Q2 pretax income margin and $0.41 to EPS.
- Market-share gains exceeded industry shipments
- Underlying shipment growth outpaced the industry: Reliance's tons sold increased 10.8% versus the Metals Service Center Institute's 5.5% industry-wide increase. The border wall project accounted for 5.2 percentage points of Reliance's volume growth.
- Cash generation supported shareholder returns
- First-half operating cash flow increased $20.1 million year over year to $313.6 million despite higher working-capital needs. Cash returns to shareholders totaled $364.6 million in the first six months, including $234.2 million of repurchases and $130.4 million of dividends.
- Liquidity supports capital allocation
- Liquidity remained substantial, with $235.4 million of cash and cash equivalents and $980.0 million of unused revolver capacity at June 30, 2026. The board declared a $1.25 per-share third-quarter dividend on July 17, 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- LIFO expense compressed reported gross margin
- Reported gross margin contracted 160 basis points year over year to 28.1% from 29.7% because LIFO expense increased to $112.5 million from $25.0 million. Management says FIFO gross margin improved only 10 basis points, underscoring the sensitivity of reported profits to metal-cost inflation.
- Leverage increased as working capital absorbed cash
- Net debt-to-total capital increased to 16.2% at June 30, 2026 from 14.4% at December 31, 2025, reflecting increased revolver borrowings. The company also had $400.0 million outstanding on its term loan.
- Working capital and taxes constrain cash conversion
- Cash flow faced increased working-capital requirements from higher pricing and volumes: first-half operating cash flow was $313.6 million despite materially higher profitability, and income taxes paid doubled to $142.7 million from $71.0 million. Net cash used in investing was $146.8 million, while the filing does not separately disclose absolute capital expenditures.
- No formal risk-factor update; trade risks persist
- Item 1A reports no material changes to the risk factors disclosed in the 2025 Form 10-K. Nonetheless, management explicitly identifies metals pricing, tariffs and trade policies, inflation, demand, supply-chain disruption and geopolitical conflicts as risks; aluminum prices remain elevated following the 50% Section 232 tariff imposed in June 2025.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $6.29
- Gross margin
- 28.1%
- Operating margin
- 9.5%
What they said about what is next.
The 10-Q does not provide a quantitative earnings or revenue outlook; management instead states that its existing liquidity sources should be sufficient for the next 12 months and foreseeable future.
The filing reads better than the one before it.
What came before.
- 10-Q · April 29, 2026
- Reliance, Inc. reported strong earnings for Q1 2026, with net sales reaching $4.03 billion, a 15.5% increase year-over-year, and diluted EPS of $5.10, up 36.4% from the prior year. The results reflect robust demand…
- 10-K · February 26, 2026
- Reliance positions itself as the largest North American metals service center with 2025 net sales of $14.29 billion and a U.S. tons-sold market share of ~17% (up from ~15% in 2024). Management highlights tons sold…
- 10-Q · May 2, 2024
- Reliance reported Q1 net sales of $3,644.8 million, down $320.5 million (8.1%) versus Q1 2023, with operating income declining to $393.1 million (10.8% operating margin) from $513.6 million (12.9% op. margin) a year…
- 10-Q · November 2, 2023
- Reliance reported Q3 net sales of $3,623.0 million, down vs prior-year net sales of $4,247.2 million, with operating income falling to $389.5 million and diluted EPS of $4.99. Management generated strong operating cash…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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