As previously reported, Longbow downgraded Reliance Steel to Neutral from Buy. Analyst Chris Olin lowered estimates to reflect near-term risks from unfavorable nonferrous demand/price momentum following a collection of relatively weak data points from the firm's carbon and stainless steel surveys. Reduced visibility into top-line growth and margin potential have led to Olin lowered estimates in-line with consensus saying he would wait for market stabilization.

Reliance expects a better than normal seasonal recovery in demand in the second quarter of 2024 despite prevailing macroeconomic uncertainty and geopolitical matters. Accordingly, the company estimates its tons sold will be up 2.5% to 4.5% in the second quarter of 2024 compared to the first quarter of 2024, with approximately 2% of the sequential growth coming from recently completed acquisitions on April 1, 2024. In addition, Reliance expects its average selling price per ton sold for the second quarter of 2024 to be down 1% to 3% compared to the first quarter of 2024. The company also anticipates short term gross profit margin pressure in the second quarter of 2024 as it works through higher cost inventory on hand. Based on these expectations, the company anticipates non-GAAP earnings per diluted share in the range of $4.70 to $4.90 for the second quarter of 2024.