Reliance (NYSE:RS) reported what executives described as another strong quarter, with record tons sold, sharply higher year-over-year sales and stronger profitability supported by favorable pricing, improving demand across several end markets and initial contributions from a U.S. Department of Homeland Security border wall contract.
On the company’s second-quarter 2026 earnings call, President and Chief Executive Officer Karla Lewis said Reliance achieved its “second highest quarterly revenue” and “record quarterly tons sold,” while continuing to outperform broader industry shipment trends. Lewis attributed the performance to the company’s scale, product and end-market diversification, value-added service offerings and relationships with domestic mills.
Shipments and Pricing Exceed Expectations
Executive Vice President and Chief Operating Officer Steve Koch said tons sold increased 7% from the first quarter and 10.8% from the second quarter of 2025, exceeding the company’s prior expectations for sequential growth of 1% to 3% and year-over-year growth of 4.5% to 6.5%.
Koch said the sequential increase included a 5.1 percentage point contribution from the U.S. border wall contract. Carbon steel products led shipment growth, while aluminum and stainless-steel products also contributed at higher per-ton profitability levels.
Reliance’s average selling price rose 7.8% from the first quarter, also exceeding the company’s forecast for a 1.5% to 3.5% increase. Koch said pricing for carbon steel and aluminum products continued to move higher amid constrained supply, extended lead times and strengthening demand.
Chief Financial Officer Arthur Ajemyan said sales increased 27% year over year. Gross profit was $1.3 billion, up 11% from the first quarter and 20% from the prior-year period. Non-GAAP pre-tax income rose 40% year over year to $429 million, and non-GAAP earnings per diluted share increased 42% to $6.27.
Border Wall Contract Adds to Earnings
The DHS border wall contract was a notable contributor to the quarter. Ajemyan said the project added $0.41 per share to second-quarter earnings. While the project created a roughly 40 basis point headwind to gross profit margin, he said lower-than-average operating costs per ton more than offset that impact and added about 30 basis points to pre-tax income margin.
Lewis said shipments under the contract began in April and ramped faster than expected. During the question-and-answer portion of the call, she said third-quarter shipments are expected to be higher and close to a full run rate, which she said could be sustained through following quarters, subject to metal supply and customer inventory pulls.
Lewis also said the first phase of the project is expected to generate about $1.4 billion in sales through mid-2027. A potential second phase of roughly $800 million to $900 million is subject to the customer opting in and is not guaranteed, though Lewis said Reliance believes the customer will “probably execute that extension.”
End-Market Demand Broadens
Reliance said non-residential construction and general manufacturing each represented about one-third of second-quarter sales. Koch said non-residential construction demand remained strong, driven by data center and related energy infrastructure projects, heavy civil work and public infrastructure. The border wall project also increased the company’s presence in the market.
In general manufacturing, Koch cited strong year-over-year shipment growth tied to industrial machinery, including data center equipment, along with shipbuilding, military, consumer products and construction machinery.
Aerospace products accounted for about 9% of second-quarter sales. Koch said commercial aerospace showed early improvement as OEM build rates increased, though elevated inventories persisted. Defense and space-related aerospace activity remained strong. Automotive represented about 4% of sales, and Koch said demand improved as the company’s toll processing operations adapted to variable market conditions.
Lewis said customer optimism is building across infrastructure, semiconductor, general manufacturing and aerospace markets. She also pointed to momentum from data centers, power infrastructure, military spending and reshoring.
LIFO Expense Rises on Higher Metal Costs
Higher carbon and aluminum product costs led Reliance to raise its full-year LIFO expense outlook to $300 million from $150 million. The company recorded second-quarter LIFO expense of $112.5 million, above its prior estimate of $37.5 million, and expects to record $75 million of LIFO expense in the third quarter.
Ajemyan said aluminum was a notable driver of the increase, with roughly $100 million of the updated $300 million annual LIFO estimate tied to aluminum. He said aluminum pricing has nearly doubled from pre-tariff levels and has created “some distortion” in percentage margins, though gross profit per unit and overall gross profit dollars have increased.
At the end of the quarter, Reliance’s LIFO reserve was approximately $700 million. Ajemyan said that reserve remains available to support future operating results and help mitigate the impact of future metal price declines.
Balance Sheet and Third-Quarter Outlook
Reliance generated about $162 million in operating cash flow during the second quarter despite higher working capital needs from increased shipments and metal pricing. The company funded $93 million of capital expenditures and paid $64 million in dividends. It did not repurchase shares during the quarter and had approximately $529 million remaining under its current buyback authorization.
Total debt was $1.7 billion at quarter-end, and net debt to EBITDA was 0.9. Lewis said the company’s balance sheet and liquidity remain competitive advantages, supporting growth investments, stockholder returns and disciplined capital deployment. Reliance maintained its full-year 2026 capital expenditure outlook of about $300 million, with roughly half allocated to strategic growth investments.
For the third quarter of 2026, Reliance expects non-GAAP earnings per diluted share of $6.40 to $6.60, including an estimated $75 million of LIFO expense, or about $1.10 per share. Ajemyan said the company expects demand and pricing to remain healthy, while noting risks tied to trade policy, the U.S.-Iran conflict and normal seasonality.
About Reliance (NYSE:RS)
Reliance Steel & Aluminum Co (NYSE: RS) is a leading metals service center company that distributes and processes a broad array of metal products. The company offers cut-to-length, shearing, blanking, sawing, bending, machining and value-added services for carbon and alloy steel, stainless steel, aluminum, brass, titanium and specialty metal alloys. Its products serve diverse end markets, including energy, infrastructure, general manufacturing, transportation, aerospace and defense.
Founded in 1939 in Los Angeles, Reliance Steel & Aluminum has grown through a combination of organic expansion and strategic acquisitions.
