Los Angeles-based Reliance Steel & Aluminum Co. announced in a press release that its net sales increased 12.3 percent to $2.48 billion in Q2 2017 compared to $2.2 billion in the same quarter the prior year.
While tons sold were only slightly up 1.4 percent from the same quarter in 2016 and flat with Q1 in 2017, the improved financial results were attributed to an increase in the average selling price per ton which increased by 11.3 percent from Q2 2016 and 2.4 percent from Q1 2017. Approximately 85 percent of the tonnage sold by the company in Q2 2017 was carbon steel while the remaining 15 percent was comprised of aluminum, stainless steel and alloy products.
Despite a lower gross margin of 28.4 percent in Q2 2017 compared to 31.7 percent in the same quarter in 2016 and 29.8 percent in Q1 2017, the increase in the average selling price also helped the company achieve its second highest quarterly profit of $702.1 million. Gregg Mollins, President and CEO of Reliance, stated in the press release, “The absence of meaningful price increases, higher metal costs during the second quarter of 2017, uncertainty around possible Section 232 action, and increased imports in the marketplace, collectively pressured our gross profit margin more than we had anticipated.”
An additional benefit to its financial results was attributed to an improved effective tax rate of 31.2 percent in Q2 2017 compared to the 32.7 percent effective tax rate in both Q2 2016 and Q1 2017.