Key Highlights

● Record third quarter net sales were about $5.2 billion, up roughly 43% year over year.

● Non-GAAP diluted earnings per share of $8.02 beat guidance of $6.40 to $6.60.

● Tons sold rose about 16%, and the average realized price reached $2,815 per ton.

● The board raised the retirement authorization to $2.5 billion and declared a $1.25 dividend.

Reliance (NYSE:RS), the largest metals service center operator in North America, reported third quarter results on October 21 that came in well ahead of its own guidance. Net sales reached a record of about $5.2 billion, and non-GAAP diluted earnings per share were $8.02, compared with the $6.40 to $6.60 range management had set in July.

The company attributed the strength to a combination of higher volumes, a sharp rise in realized metal prices and a large government-related project. Chief executive officer Karla Lewis described the quarter as exceptional, with record quarterly net sales, according to the company's release.

The report also carried capital deployment news. The board declared its regular quarterly dividend and raised the share retirement authorization to $2.5 billion.

What Did Reliance Report For The Third Quarter Of 2026?

According to the company's release, Reliance generated net sales of roughly $5.21 billion in the quarter ended September 30. That was about 12.5% above the second quarter and about 43% above the year-earlier period, a rate of growth rarely seen in a mature distribution business.

Gross margin dollars were about $1.45 billion, equal to a gross margin of 27.9% after last-in, first-out inventory costing. On a non-GAAP first-in, first-out basis, the margin was 31.6%. Pretax earnings were about $532 million, and net earnings attributable to Reliance were about $403 million.

Diluted earnings per share were $7.84 on a reported basis and $8.02 on a non-GAAP basis. Non-GAAP earnings per share rose about 28% from the second quarter and more than doubled from the year-earlier quarter. For the nine months, net sales were about $13.9 billion, up about 28.5%.

How Far Above Its Own Guidance Did Reliance Land?

In July, management guided to non-GAAP diluted earnings per share between $6.40 and $6.60 for the third quarter. The reported figure of $8.02 exceeded the top of that range by more than a dollar per share, a substantial gap for a company that typically guides in tight bands.

The release points to two main drivers. Volume grew faster than the company had assumed, and metal prices moved higher over the summer, lifting the average realized price per ton. In a service center business, a rising price environment can widen gross margin because inventory bought at lower prices is sold at higher prices, although last-in, first-out accounting dampens this effect in the reported figures.

That accounting treatment was visible in the quarter. Reliance recorded last-in, first-out expense of about $187.5 million, or $2.74 per diluted share. Without that charge, reported earnings would have been materially higher, which illustrates how pricing swings pass through the earnings statement in different ways depending on the inventory method.

Were Tons Shipped Or Prices The Bigger Story For Reliance?

Both contributed. Tons sold were about 1.87 million, up about 4% from the second quarter and about 16% from a year earlier. The average realized price per ton was $2,815, up about 8% sequentially.

Management has frequently said that Reliance is not dependent on any single end market, with its customer base spanning non-residential construction, aerospace, semiconductors, energy, automotive and general manufacturing. A year-over-year volume gain of this size indicates the company benefited from a broader pickup in demand as well as from the specific government project discussed below, though the release itself does not break out every end market.

The pricing figure is the more volatile of the two. Metal prices respond to tariffs, import flows, mill capacity decisions and raw material costs, and Reliance does not control them. The company guided to a modest further rise in average realized price per ton in the fourth quarter, but a reversal in the metals market would flow through quickly to sales and margins.

How Large Is The Border Wall Contribution To Reliance Results?

A notable feature of the guidance is the contribution from a U.S. border wall project. Management said the fourth quarter earnings per share guidance includes about 70 cents from that project, and that the project adds roughly 9.5 percentage points to expected fourth quarter tons sold.

Excluding the project, the company expects tons sold to rise between four and 6% from the year-earlier quarter. Including it, the increase is projected at between 13.5% and 15.5%. The difference shows how much a single government-linked program can influence reported volume.

The key distinction is between recurring demand and project-driven demand. A project of this type has a defined timeline, so its contribution can fade once deliveries are complete. Management has been explicit about separating the effect in its guidance, which allows the underlying trend to be tracked, but it also means year-over-year comparisons later in the next year may look different once the project winds down.

What Does Reliance Guide For The Fourth Quarter?

For the fourth quarter, the company guided to non-GAAP diluted earnings per share between $7.40 and $7.60. That is below the third quarter result of $8.02 but still more than three times the year-earlier quarter, according to the release.

The guidance incorporates last-in, first-out expense of about $112.5 million, or $1.64 per share. On the volume side, tons sold excluding the border wall project are expected to fall between 5.5% and 7.5% from the third quarter, a typical seasonal pattern as fewer working days and holiday shutdowns reduce shipments.

Average realized prices are projected to be up between one and 3% from the third quarter.

How Strong Were Cash Flow And The Balance Sheet At Reliance?

Cash from operations was about $212 million in the quarter and about $526 million year to date. Capital expenditures were about $79 million in the quarter, leaving free cash flow of roughly $133 million. Year-to-date free cash flow was about $289 million.

Cash flow was lower than earnings would imply, which is normal when sales and prices rise quickly. Higher metal prices raise the cost of inventory and the amount customers owe, so working capital absorbs cash. For a distributor, that relationship tends to reverse when prices stabilize or decline.

The balance sheet remains moderately leveraged. Reliance had about $246 million in cash and carried total debt of about $1.6 billion, including $495 million drawn on its $1.5 billion revolving credit facility. Net debt to total capital was 15.3%, and net debt to EBITDA was eight-tenths of a turn.

Why Did The Reliance Board Raise The Share Retirement Authorization?

On October 20, the board declared a regular quarterly dividend of $1.25 per share, payable on December 4 to stock owners of record on November 20. It also increased the share retirement authorization to $2.5 billion, with no set expiration date.

During the third quarter, Reliance paid about $64 million in dividends and retired shares for about $45 million, bringing total cash distributed to stock owners in the quarter to about $109 million. Year-to-date retirement of shares totaled about $279 million.

The company noted that since 2021 it has retired about $3.4 billion of its shares, reducing shares outstanding by about 23%. A larger authorization gives flexibility, but it does not oblige the company to act, and the pace can vary with cash needs, acquisition chances and the share price.

How Does Reliance Fit Within The Metals Distribution Landscape?

Reliance is the largest metals service center company in North America, operating a network of locations that process and distribute carbon steel, stainless steel, aluminum and specialty metals. Its scale lets it source from many mills and serve small orders with quick turnaround, a service that smaller competitors find hard to match.

The industry is exposed to the rules and market conditions that shape domestic steel supply. Tariffs on imports can lift domestic prices, which benefits the value of inventory but can also dampen demand if customers delay orders. Mill capacity additions and changes in scrap costs add further variables.

Competitors such as Ryerson (NYSE:RYZ) and Worthington Steel (NYSE:WS) report on their own calendars, and comparisons between them need care because product mix, inventory accounting and end market exposure differ. A distributor with heavier exposure to aluminum or to stainless products will not move in step with one focused on carbon steel plate, so headline growth rates are rarely directly comparable. Reliance has been a consistent acquirer of smaller distributors, which supports its geographic reach and product breadth.

What Did Management Say On The Reliance Earnings Call?

The earnings call took place on October 22 at 11 a.m. Eastern time, according to a call transcript summary. Management walked through the quarter and the fourth quarter guidance, and discussed demand across the end markets the company serves.

The release quoted chief executive officer Karla Lewis as saying that Reliance delivered an exceptional third quarter with record quarterly net sales. She and the finance team also emphasized the company's strategy of diversified end markets, a broad product range and disciplined capital allocation.

What Uncertainties Does Reliance Face After Such A Strong Quarter?

The first is normalization. A quarter in which earnings per share more than doubled from the prior year is unlikely to be the new baseline, and management itself guided lower for the fourth quarter. Prices and volumes in the metals market tend to move in cycles, and the tailwinds of the summer can reverse.

The second is the weight of the border wall project. It adds meaningfully to tons sold and earnings in the fourth quarter, but it is finite, and the company has not described what replaces it once deliveries finish. Third, last-in, first-out charges can fluctuate sharply with the direction of prices, which affects reported figures.

Fourth, the pace of acquisitions and share retirement depends on cash generation, which was lower than earnings in the quarter because of working capital. None of these items is a sign of weakness; they are simply the ordinary moving parts of a cyclical distribution business, and management has acknowledged several of them directly in its guidance and call remarks. In addition, the borrowing under the revolving credit facility, while modest relative to its size, rose as inventory costs climbed, and the balance will be worth watching if metal prices keep moving higher.

Equally, if prices ease, the last-in, first-out charge would shrink and could ease the pressure on reported earnings, which shows how the same event can look different across lines of the statement. Taken together, these points explain why the company frames its guidance carefully and why quarter-to-quarter comparisons require context; they are the variables that management and market participants are tracking in coming quarters.