Reliance Steel & Aluminum (RS) said its third-quarter profit surged 17% on slightly improved demand and prices, though shares still tumbled on missed expectations and a bleak outlook.
The Los Angeles-based company posted net income of $48.7 million, or 65 cents a share, compared with $41.8 million, or 57 cents, in the same quarter last year, widely missing the Street’s view of 73 cents.
Revenue for the nation’s largest metal servicer was $1.65 billion, up 33% from $1.24 billion a year ago, far below average analyst estimates polled by Thomson Reuters of $1.56 billion.
The higher year-over-year earnings were driven by 11% growth in tons sold and 20% improvement in average prices per ton sold.
Reliance CEO David H. Hannah said the operating environment in the quarter was “pretty steady,” despite a greater-than-expected decline in mill pricing that pressured selling prices.
“Demand was a little better than we had expected as we typically see a seasonal decline in the third-quarter compared to the second-quarter," he said. “Overall we are pleased with our performance during the quarter in light of the existing market condition.”
The company’s weakest market was its non-residential construction market which fell even below last year’s worse-than-expected results, however, Hannah said that declining trend may have finally hit a bottom.
Looking toward the future, the company expects fourth-quarter demand to decline “somewhat” due to typical holiday closures, while prices either remain steady or fall slightly.
Also Thursday, the company’s board of directors declared a quarterly dividend of 10 cents a share, payable on Dec. 22 to shareholders of record Dec. 3.
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