Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 22, 2026 · Beat 2 of last 7 quarters
The Buildout is a website built on agentic AI tools, currently in beta, and could have factual errors.
Reliance's strong results underscore the sustained demand for metals tied to AI infrastructure, particularly data center construction and related energy infrastructure, which remain key drivers in nonresidential construction and general manufacturing. The company's ability to secure domestic mill supply and leverage its scale positions it to capture growth from data center equipment and semiconductor end markets, reinforcing the broader AI infrastructure buildout thesis.
Reliance delivered record quarterly tons sold and its second-highest quarterly revenue, with sales up 27% YoY. The U.S. border wall contract contributed 5.1% of Q2 volumes and $0.41 per share to EPS, exceeding expectations. Non-GAAP pretax income rose 40% YoY to $429 million, and FIFO gross profit margin expanded to 30.5%. LIFO expense of $112.5 million was well above guidance due to higher carbon and aluminum costs, prompting a raise in the full-year LIFO outlook to $300 million. Cash flow from operations improved sequentially to ~$162 million despite working capital build.
Management guided Q3 2026 non-GAAP EPS to $6.40–$6.60, up 76%–81% YoY, including $75M of LIFO expense (~$1.10 per share). They expect demand and pricing to remain healthy with continued improvement across key products and end markets, though subject to normal seasonality and risks from trade policy and the U.S.-Iran conflict. The border wall contract is expected to contribute higher shipments in Q3, near a full run rate, with potential for phase 2 extension beyond mid-2027. Full-year capex outlook remains ~$300 million, with about half for strategic growth. Management expressed optimism about data centers, infrastructure, power, military spending, and reshoring, and expects to continue gaining market share.
“We believe that is close to a full shipment run rate. And should be close to that going through the middle of next year.”
on Border wall contract volume outlook
“Our gross profit per unit and overall gross profit dollars are up significantly from, you know, a year or 2 years ago. So that is kinda the additional color on LIFO, aluminum, and impact on LIFO and margins.”
on Aluminum LIFO impact and profitability
“What we are seeing is a lot of our competitors with higher interest rates and the higher cost of carrying inventory that there is a lot of, holes in inventories, and our inventory levels are pretty robust. So I think that there is just great opportunity for us to capture more market share.”
on Market share opportunity
On the border wall contract, shipments accounted for 5.1% of Q2 volumes, and you expect an additional 2% improvement in Q3. Is there potential for further upside, or should we assume volumes to be fairly consistent through the remainder of phase 1?
Karla Lewis said Q3 shipments are expected to be higher and represent close to a full run rate, sustainable through mid-2027, though dependent on metal supply and customer pull. She noted the contract is very significant and there may not be more of that size, but highlighted capabilities for large contracts and positive momentum across data centers, infrastructure, power, and military spending.
Quarter-end inventory increased less than $100 million despite a $600 million increase in revenue. Could you talk about inventory positioning given many orders are just-in-time?
Karla Lewis said inventory turns were a bit above 5x, faster than the 4.7x goal, but they are comfortable with inventory levels. Steve Koch added that domestic buying with extended lead times still offers an advantage over imports, and robust inventories position them well to capitalize on growing demand.
Excluding the DHS contract, shipments were guided down 2% to 4% sequentially. Given incrementally positive commentary and market share gains, what level of conservatism is baked into the guide?
Karla Lewis confirmed the guide reflects typical seasonality and limited supply availability. Arthur Ajemyan explained that aluminum is disproportionately driving LIFO expense, contributing about a third of the annual estimate, and that aluminum alone introduces roughly 100 basis points of margin compression noise, though gross profit per unit is up significantly.