Reliance Steel & Aluminum Co. Q4 FY2025 earnings call

• In 2025, strong operational execution led to record tons sold and increased market share. Focus on smart, profitable growth with shipment growth in carbon products and improved gross profit margin. - COO Steve Koch noted improved total recordable incident rate, uninterrupted supply chain due to mill relationships, and demand and pricing trends with carbon volumes driving growth, and end markets like nonresidential construction, general manufacturing, aerospace, automotive, and semiconductor having specific demand dynamics. - CFO Arthur Ajemyan discussed strong fourth quarter financial results with record shipments, margin improvements, expense trends, balance sheet and cash flow, and outlook for first quarter 2026 including tons sold and average selling price expectations.

In 2025, tons shipped increased by 6.2% to 6.4 million, with U.S. market share rising to ~17% from 15% in 2024. Tolling tons increased by 1.2% to 7.4 million. Shipments grew in carbon long and flat-rolled products, with gross profit margin up year-over-year. Non-GAAP gross profit margin in 2025 was 28.8% due to tariff-driven LIFO expense of $114 million. Non-GAAP FIFO pretax income increased by $80 million in 2025, but earnings per diluted share declined 10.2% from 2024. Excluding LIFO adjustments, non-GAAP FIFO earnings per diluted share increased 13.5%. Operating cash flow in 2025 was $831 million. 2026 capital expenditure budget is $275 million, with total CapEx expected to be $300 million to $325 million, half for growth initiatives.

• Expect gross profit margin to improve in 2026 as tariff impact lessens, maintaining range of 29% to 31%. - 2026 capital expenditure budget is $275 million, with total CapEx $300 million to $325 million, half for growth. - Anticipate first quarter 2026 tons sold up 5% to 7% vs fourth quarter 2025, average selling price per ton sold to improve 3% to 5% vs fourth quarter 2025, and first quarter 2026 non-GAAP earnings per diluted share in range of $4.50 to $4.70.

• Tariff-related aluminum cost increases difficult to pass through due to plentiful supply and soft demand in commercial aerospace and semiconductor markets. - Supply chain and trade policy uncertainty could impact business. - Labor market challenges in filling certain positions like warehouse drivers with training requirements.

Q: Regarding gross profit margin improvement in first quarter and rest of year, Karla Lewis said margin may be near low end of range in Q1 2026 but expected to trend up as demand supports price increases.

Q: On M&A, Karla Lewis said active in 2025 looking for opportunities, organic growth was significant in 2025 with 6% tons growth being like acquiring a $650 million revenue plus company.

Q: On structural products, Stephen Koch said structural beams had price increase, high demand in non-res markets.

Q: On SG&A per ton, Arthur Ajemyan said SG&A per ton trended down full year despite Q4 impact from incentive comp, focus on leveraging cost structure.

Q: On substitution to/away from aluminum, Karla Lewis said not seeing material impact, Stephen Koch noted some architectural substitution from copper to aluminum.

Q: On headcount and hiring, Karla Lewis said headcount had modest change, labor market better but filling warehouse driver positions still challenging