UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-13122


(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		95-1142616 (I.R.S. Employer Identification No.)

~~350 South Grand Avenue,~~16100 N. 71st Street, Suite ~~5100~~400

~~Los Angeles~~Scottsdale, ~~California~~Arizona

~~90071~~85254

(Address of principal executive offices, including zip code)

((480)~~213~~) ~~687-7700~~564-5700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	RS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧☒ No ◻☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧☒ No ◻☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April ~~29, 2022, 61,948,113~~28, 2023, there were 58,793,188 shares of the registrant’s common stock, $0.001 par value, ~~were~~ outstanding.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	Item 1.	Financial Statements	1
		Unaudited Consolidated Balance Sheets	1
		Unaudited Consolidated Statements of Income	2
		Unaudited Consolidated Statements of Comprehensive Income	3
		Unaudited Consolidated Statements of Equity	4
		Unaudited Consolidated Statements of Cash Flows	5
		Notes to Unaudited Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1514
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2421
	Item 4.	Controls and Procedures	2421

PART II — OTHER INFORMATION
	Item 1.	Legal Proceedings	2421
	Item 1A.	Risk Factors	2421
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2421
	Item 3.	Defaults Upon Senior Securities	2522
	Item 4.	Mine Safety Disclosures	2522
	Item 5.	Other Information	2522
	Item 6.	Exhibits	2523

SIGNATURE			2624

Table of Contents

PART I --— FINANCIAL INFORMATION

Item 1. Financial Statements

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions, except number of shares which are reflected in thousands and par value)

March 31,

December 31,

2022

2021*
ASSETS
Current assets:

Cash and cash equivalents
$
548.0

$
300.5
Accounts receivable, less allowance for credit losses of $29.6 at March 31, 2022 and $26.7 at December 31, 2021

2,078.7

1,683.0
Inventories

2,010.3

2,065.0
Prepaid expenses and other current assets

107.0

111.6
Total current assets

4,744.0

4,160.1
Property, plant and equipment:

Land

259.1

260.1
Buildings

1,281.8

1,285.0
Machinery and equipment

2,292.1

2,241.4
Accumulated depreciation

(1,981.3)

(1,949.7)
Property, plant and equipment, net

1,851.7

1,836.8
Operating lease right-of-use assets

216.4

224.6
Goodwill

2,113.0

2,107.6
Intangible assets, net

1,059.9

1,077.7
Cash surrender value of life insurance policies, net

39.1

44.9
Other assets

90.1

84.3
Total assets
$
10,114.2

$
9,536.0

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable
$
636.2

$
453.9
Accrued expenses

132.1

148.2
Accrued compensation and retirement costs

184.6

294.0
Accrued insurance costs

44.2

41.0
Current maturities of long-term debt and short-term borrowings

5.0

5.0
Current maturities of operating lease liabilities

54.9

58.6
Income taxes payable

141.3

64.3
Total current liabilities

1,198.3

1,065.0
Long-term debt

1,642.8

1,642.0
Operating lease liabilities

159.2

162.5
Deferred compensation and retirement costs

85.2

81.0
Other long-term liabilities

6.8

7.0
Deferred income taxes

483.2

484.8
Commitments and contingencies

Equity:

Preferred stock, $0.001 par value: 5,000 shares authorized; NaN issued or outstanding

—

—
Common stock and additional paid-in capital, $0.001 par value and 200,000 shares authorized

Issued and outstanding shares—61,948 at March 31, 2022 and 61,806 at December 31, 2021

0.1

0.1
Retained earnings

6,599.5

6,155.3
Accumulated other comprehensive loss

(68.3)

(68.9)
Total Reliance stockholders’ equity

6,531.3

6,086.5
Noncontrolling interests

7.4

7.2
Total equity

6,538.7

6,093.7
Total liabilities and equity
$
10,114.2

$
9,536.0


	March 31,		December 31,
	2023		2022*
ASSETS
Current assets:
Cash and cash equivalents	$	816.2	$	1,173.4
Accounts receivable, less allowance for credit losses of $28.7 at March 31, 2023 and $26.1 at December 31, 2022		1,800.3		1,565.7
Inventories		1,981.4		1,995.3
Prepaid expenses and other current assets		114.2		115.6
Income taxes receivable		—		36.6
Total current assets		4,712.1		4,886.6
Property, plant and equipment:
Land		263.3		262.7
Buildings		1,381.0		1,359.3
Machinery and equipment		2,507.9		2,446.9
Accumulated depreciation		(2,127.4)		(2,094.3)
Property, plant and equipment, net		2,024.8		1,974.6
Operating lease right-of-use assets		217.3		216.4
Goodwill		2,106.1		2,105.9
Intangible assets, net		1,008.0		1,019.6
Cash surrender value of life insurance policies, net		37.6		42.0
Other assets		97.3		84.8
Total assets	$	10,203.2	$	10,329.9

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable	$	545.0	$	412.4
Accrued expenses		113.7		118.8
Accrued compensation and retirement benefits		143.7		240.0
Accrued insurance costs		45.2		43.4
Current maturities of long-term debt and short-term borrowings		8.2		508.2
Current maturities of operating lease liabilities		53.2		52.5
Income taxes payable		66.4		—
Total current liabilities		975.4		1,375.3
Long-term debt		1,140.2		1,139.4
Operating lease liabilities		165.5		165.2
Long-term retirement benefits		29.6		26.1
Other long-term liabilities		61.9		51.4
Deferred income taxes		476.2		476.6
Commitments and contingencies
Equity:
Preferred stock, $0.001 par value: 5,000 shares authorized; none issued or outstanding		—		—
Common stock and additional paid-in capital, $0.001 par value and 200,000 shares authorized
Issued and outstanding shares—58,840 at March 31, 2023 and 58,787 at December 31, 2022		0.1		0.1
Retained earnings		7,432.1		7,173.6
Accumulated other comprehensive loss		(86.5)		(86.3)
Total Reliance stockholders’ equity		7,345.7		7,087.4
Noncontrolling interests		8.7		8.5
Total equity		7,354.4		7,095.9
Total liabilities and equity	$	10,203.2	$	10,329.9

* Amounts derived from audited financial statements.

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except number of shares which are reflected in thousands and per share amounts)


	Three Months Ended
	March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Net sales	$	4,485.8	$	2,838.4	$	3,965.3	$	4,485.8

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		3,098.7		1,884.7		2,739.3		3,098.7
Warehouse, delivery, selling, general and administrative (SG&A)		611.9		518.5
Warehouse, delivery, selling, general and administrative (“SG&A”)						651.3		611.9
Depreciation and amortization		59.1		56.9		61.1		59.1
		3,769.7		2,460.1		3,451.7		3,769.7

Operating income		716.1		378.3		513.6		716.1

Other expense:
Other (income) expense:
Interest expense		15.6		15.7		10.9		15.6
Other expense, net		3.3		3.6
Other (income) expense, net						(5.8)		3.3
Income before income taxes		697.2		359.0		508.5		697.2
Income tax provision		172.6		90.8		124.1		172.6
Net income		524.6		268.2		384.4		524.6
Less: net income attributable to noncontrolling interests		1.3		1.3		1.3		1.3
Net income attributable to Reliance	$	523.3	$	266.9	$	383.1	$	523.3

Earnings per share attributable to Reliance stockholders:
Basic					$	6.51	$	8.46
Diluted	$	8.33	$	4.12	$	6.43	$	8.33
Basic	$	8.46	$	4.19

Shares used in computing earnings per share:
Basic						58,832		61,833
Diluted		62,784		64,711		59,534		62,784
Basic		61,833		63,645

Cash dividends per share	$	0.8750	$	0.6875

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	Three Months Ended
	March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Net income	$	524.6	$	268.2	$	384.4	$	524.6
Other comprehensive income (loss):
Foreign currency translation gain (loss)		0.7		(1.2)
Foreign currency translation gain						0.6		0.7
Postretirement benefit plan adjustments, net of tax		(0.1)		—		(0.8)		(0.1)
Total other comprehensive income (loss)		0.6		(1.2)
Total other comprehensive (loss) income						(0.2)		0.6
Comprehensive income		525.2		267.0		384.2		525.2
Less: comprehensive income attributable to noncontrolling interests		1.3		1.3		1.3		1.3
Comprehensive income attributable to Reliance	$	523.9	$	265.7	$	382.9	$	523.9

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except ~~number of shares which are reflected in thousands and~~ per share amounts)

Reliance Stockholders’ Equity

Common Stock

Accumulated

and Additional

Other

Non-

Paid-in Capital

Retained

Comprehensive

controlling

Shares

Amount

Earnings

Income (loss)

Interests

Total
Balance at January 1, 2021
63,600

$
0.1

$
5,193.2

$
(77.9)

$
7.3

$
5,122.7
Net income
—

—

266.9

—

1.3

268.2
Other comprehensive loss
—

—

—

(1.2)

—

(1.2)
Dividend to noncontrolling interest holder
—

—

—

—

(2.4)

(2.4)
Stock-based compensation
107

14.7

—

—

—

14.7
Common stock withheld related to net share settlements
—

(8.2)

—

—

—

(8.2)
Cash dividends — $0.6875 per share and dividend equivalents
—

—

(44.8)

—

—

(44.8)
Balance at March 31, 2021
63,707

$
6.6

$
5,415.3

$
(79.1)

$
6.2

$
5,349.0

Balance at January 1, 2022
61,806

$
0.1

$
6,155.3

$
(68.9)

$
7.2

$
6,093.7
Net income
—

—

523.3

—

1.3

524.6
Other comprehensive income
—

—

—

0.6

—

0.6
Dividend to noncontrolling interest holder
—

—

—

—

(1.1)

(1.1)
Stock-based compensation
255

11.8

—

—

—

11.8
Common stock withheld related to net share settlements
—

(17.1)

—

—

—

(17.1)
Repurchase of common shares
(113)

5.3

(22.4)

—

—

(17.1)
Cash dividends — $0.875 per share and dividend equivalents
—

—

(56.7)

—

—

(56.7)
Balance at March 31, 2022
61,948

$
0.1

$
6,599.5

$
(68.3)

$
7.4

$
6,538.7


	Three Months Ended March 31,
	2023		2022
Total equity, beginning balances	$	7,095.9	$	6,093.7

Common stock and additional paid-in capital:
Beginning balances		0.1		0.1
Stock-based compensation		13.5		11.8
Taxes paid related to net share settlement of restricted stock units		(37.2)		(17.1)
Repurchase of common shares		23.7		5.3
Ending balances		0.1		0.1

Retained earnings:
Beginning balances		7,173.6		6,155.3
Net income attributable to Reliance		383.1		523.3
Cash dividends and dividend equivalents		(62.0)		(56.7)
Repurchase of common shares		(62.6)		(22.4)
Ending balances		7,432.1		6,599.5

Accumulated other comprehensive loss:
Beginning balances		(86.3)		(68.9)
Other comprehensive (loss) income		(0.2)		0.6
Ending balances		(86.5)		(68.3)

Total Reliance stockholders' equity, ending balances		7,345.7		6,531.3

Noncontrolling interests:
Beginning balances		8.5		7.2
Comprehensive income		1.3		1.3
Dividends paid		(1.1)		(1.1)
Ending balances		8.7		7.4

Total equity, ending balances	$	7,354.4	$	6,538.7

Cash dividends declared per common share	$	1.00	$	0.875

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Three Months Ended
	March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Operating activities:
Net income	$	524.6	$	268.2	$	384.4	$	524.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		59.1		56.9		61.1		59.1
Provision for credit losses		3.5		4.5
Deferred income tax benefit		(0.4)		(0.1)
Stock-based compensation expense		11.8		14.7		13.5		11.8
Other		4.9		0.4		(0.1)		8.0
Changes in operating assets and liabilities (excluding effect of businesses acquired):
Accounts receivable		(399.6)		(346.2)		(237.1)		(399.6)
Inventories		54.0		(50.4)		13.5		54.0
Prepaid expenses and other assets		19.5		(4.1)		50.0		19.5
Accounts payable and other liabilities		126.6		217.9		99.3		126.6
Net cash provided by operating activities		404.0		161.8		384.6		404.0

Investing activities:
Purchases of property, plant and equipment		(66.7)		(43.7)		(102.9)		(66.7)
Proceeds from sales of property, plant and equipment		8.2		20.6		8.3		8.2
Deferred compensation plan contributions, net						(7.4)		(7.5)
Other		(4.8)		(4.6)		(0.6)		2.7
Net cash used in investing activities		(63.3)		(27.7)		(102.6)		(63.3)

Financing activities:
Net short-term debt repayments		—		(0.8)
Dividends and dividend equivalents paid		(56.7)		(44.8)
Principal payment on long-term debt						(500.0)		—
Cash dividends and dividend equivalents						(62.0)		(56.7)
Share repurchases		(17.1)		—		(38.9)		(17.1)
Payments for taxes related to net share settlements		(17.1)		(8.2)
Taxes paid related to net share settlement of restricted stock units						(37.2)		(17.1)
Other		(1.1)		(2.6)		(1.1)		(1.1)
Net cash used in financing activities		(92.0)		(56.4)		(639.2)		(92.0)
Effect of exchange rate changes on cash and cash equivalents		(1.2)		(0.9)		—		(1.2)
Increase in cash and cash equivalents		247.5		76.8
(Decrease) increase in cash and cash equivalents						(357.2)		247.5
Cash and cash equivalents at beginning of year		300.5		683.5		1,173.4		300.5
Cash and cash equivalents at end of period	$	548.0	$	760.3
Cash and cash equivalents at end of the period					$	816.2	$	548.0

Supplemental cash flow information:
Interest paid during the period	$	9.6	$	9.5	$	14.4	$	9.6
Income taxes paid during the period, net	$	89.8	$	6.9	$	21.2	$	89.8

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2022~~2023

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of Reliance Steel & Aluminum Co. and its subsidiaries (collectively “Reliance”, the “Company”, “we”, “our” or “us”). These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, ~~our~~the consolidated financial statements reflect all material adjustments, which are of a normal recurring nature, necessary for presentation of financial statements for interim periods in accordance with U.S. GAAP. ~~The~~Interim results ~~of operations for the quarter ended March 31, 2022~~ are not necessarily indicative of the results for a full year. All significant intercompany accounts and transactions have been eliminated. The ownership of the ~~full year ending December 31, 2022.~~other interest holders of consolidated subsidiaries is reflected as noncontrolling interests. Investments in unconsolidated subsidiaries are recorded under the equity method of accounting. These consolidated financial statements and accompanying notes should be read in conjunction with the consolidated financial statements and ~~footnotes thereto~~accompanying notes included in Reliance’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021, included in the Reliance Steel & Aluminum Co. (“Reliance,” the “Company,” “we,” “our” or “us”) Annual Report on Form 10-K.~~2022.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Our consolidated financial statements include the assets, liabilities and operating results of majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The ownership of the other interest holders of consolidated subsidiaries is reflected as noncontrolling interests. Our investments in unconsolidated subsidiaries are recorded under the equity method of accounting.

Inventories

The majority of our inventory is valued using the last-in, first-out (“LIFO”) method, which is not in excess of market. Under this method, older costs are included in inventory, which may be higher or lower than current costs. We estimate the effect of LIFO on interim periods by allocating the projected year-end LIFO calculation to interim periods on a pro rata basis.

~~Recently Issued Accounting Standards—Not Yet Adopted~~

~~Reference Rate Reform~~—In March 2020, the FASB issued accounting changes that provide optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The accounting changes may be applied prospectively through December 31, 2022. The Company expects to adopt this guidance for any contracts that are modified as a result of reference rate reform. We do not expect the transition from LIBOR to have a material impact on our consolidated financial statements.

~~Note 2. Acquisitions~~

~~2021 Acquisitions~~

On October 1, 2021, we acquired Merfish United, Inc. (“Merfish United”), a leading master distributor of tubular building products that are distributed to its independent wholesale distributor customers across a variety of end markets in the United States. Merfish United, headquartered in Ipswich, Massachusetts, serves 47 U.S. states through its 12 strategically located distribution centers.

~~Table of Contents~~

On December 10, 2021, we acquired Admiral Metals Servicenter Company, Incorporated (“Admiral Metals”), a leading distributor of non-ferrous metals products in the Northeastern U.S. Admiral Metals, headquartered in Woburn, Massachusetts, serves a variety of end markets, including semiconductor, automotive, medical, infrastructure, aerospace and industrial markets through its 8 strategically located service centers.

On December 10, 2021, we acquired Nu-Tech Precision Metals Inc. (“Nu-Tech Precision Metals”), a custom manufacturer of specialty extruded metals, fabricated parts and welded components. Nu-Tech Precision Metals, services the nuclear energy, aerospace and defense end markets from its location near Ottawa, Ontario, Canada.

On December 17, 2021, we acquired Rotax Metals, Inc. (“Rotax Metals”), a metals service center specializing in copper, bronze and brass alloys. Located in Brooklyn, New York, Rotax Metals operates as a subsidiary of Yarde Metals, Inc., a wholly owned subsidiary of Reliance.

~~Included in our net sales for the quarter ended March 31, 2022 were combined net sales of $226.5 million from our 2021 acquisitions.~~

~~We funded our 2021 acquisitions with cash on hand.~~

~~The preliminary allocations of the total purchase for our 2021 acquisitions to the fair values of the assets acquired and liabilities assumed were as follows:~~

(in millions)
Cash
$
1.0
Accounts receivable

107.2
Inventories

134.4
Property, plant and equipment

33.6
Operating lease right-of-use assets

29.8
Goodwill

176.5
Intangible assets subject to amortization

116.3
Intangible assets not subject to amortization

51.2
Other current and long-term assets

4.0
Total assets acquired

654.0
Deferred taxes

49.3
Operating lease liabilities

24.6
Other current and long-term liabilities

139.8
Total liabilities assumed

213.7
Net assets acquired
$
440.3

~~The completion of the purchase price allocations for our 2021 acquisitions are pending the completion of pre-acquisition period tax returns.~~

~~Pro forma financial information for all acquisitions~~

The pro forma summary financial results present the consolidated results of operations as if our 2021 acquisitions had occurred as of January 1, 2021, after the effect of certain adjustments, including depreciation and amortization of certain identifiable property, plant and equipment and intangible assets, and lease cost fair value adjustments.

~~Table of Contents~~

The pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the 2021 acquisitions been made as of January 1, 2021, or of any potential results which may occur in the future.

Three Months Ended

March 31, 2021

(in millions except per share amounts)
Pro forma:

Net sales
$
3,017.3
Net income attributable to Reliance
$
284.0
Earnings per share attributable to Reliance stockholders:

Diluted
$
4.39
Basic
$
4.46

Note 3.2. Revenues

The following table presents our net sales disaggregated by product and ~~service.~~service:


	Three Months Ended
	March 31,				Three Months Ended March 31,
	2022		2021		2023		2022

	(in millions)				(in millions)
Carbon steel	$	2,547.5	$	1,659.2	$	2,128.5	$	2,547.5
Aluminum						670.2		692.8
Stainless steel		764.9		452.9		657.3		764.9
Aluminum		692.8		462.8
Alloy		183.7		117.3		191.4		183.7
Toll processing and logistics		135.1		115.6		155.4		135.1
Copper and brass						82.0		86.6
Other and eliminations		161.8		30.6		80.5		75.2
Total	$	4,485.8	$	2,838.4	$	3,965.3	$	4,485.8

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Note 4.3. Goodwill

The change in the carrying amount of goodwill is as follows:

(in millions)
Balance at January 1, 2022
$
2,107.6
Purchase price allocation adjustments

4.5
Foreign currency translation gain

0.9
Balance at March 31, 2022
$
2,113.0


	(in millions)
Balance at January 1, 2023	$	2,105.9
Effect of foreign currency translation		0.2
Balance at March 31, 2023	$	2,106.1

We had 0no accumulated impairment losses related to goodwill at March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

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Note 5.4. Intangible Assets, net

Intangible assets, net consisted of the following:

March 31, 2022

December 31, 2021

Weighted Average

Gross

Gross

Amortizable

Carrying

Accumulated

Carrying

Accumulated

Life in Years

Amount

Amortization

Amount

Amortization

(in millions)
Intangible assets subject to amortization:

Customer lists/relationships
14.2

$
715.9

$
(446.2)

$
713.0

$
(435.1)
Backlog of orders
7.9

24.2

(1.0)

15.8

(0.2)
Other
9.2

10.0

(9.6)

9.9

(9.4)

750.1

(456.8)

738.7

(444.7)
Intangible assets not subject to amortization:

Trade names

766.6

—

783.7

—

$
1,516.7

$
(456.8)

$
1,522.4

$
(444.7)

~~Certain amounts in prior periods have been reclassified to conform with current period presentation.~~


		March 31, 2023				December 31, 2022
	Weighted Average	Gross				Gross
	Amortizable	Carrying		Accumulated		Carrying		Accumulated
	Life in Years	Amount		Amortization		Amount		Amortization

		(in millions)
Intangible assets subject to amortization:
Customer lists/relationships	14.2	$	713.8	$	(490.5)	$	713.6	$	(479.3)
Backlog of orders	7.9		22.3		(3.8)		22.3		(3.1)
Other	9.2		9.9		(9.5)		9.9		(9.5)
			746.0		(503.8)		745.8		(491.9)
Intangible assets not subject to amortization:
Trade names			765.8		—		765.7		—
		$	1,511.8	$	(503.8)	$	1,511.5	$	(491.9)

Amortization expense for intangible assets was ~~$12.2~~$11.8 million and ~~$9.2~~$12.2 million for the first quarters ~~ended March 31,~~of 2023 and 2022, ~~and 2021,~~ respectively. Foreign currency translation gains related to intangible assets, net were ~~$0.4~~$0.2 million and ~~$0.1~~$0.4 million for the first quarters ~~ended March 31,~~of 2023 and 2022, ~~and 2021,~~ respectively.

During the first quarter of 2022, we recorded purchase price adjustments relating to our 2021 acquisitions based on the finalization of intangible asset valuations that decreased trade name intangible assets for $16.9 million, increased the Backlog of orders intangible asset for $8.0 million and increased customer lists/relationships intangible assets for $2.7 million.

The following is a summary of estimated future amortization ~~expense for the remaining nine months of 2022 and each of the succeeding five years:~~expense:


	(in millions)		(in millions)
2022 (remaining nine months)	$	36.1
2023		44.0
2023 (remaining nine months)			$	31.8
2024		40.5		40.1
2025		36.3		35.9
2026		26.8		26.4
2027		26.1		25.8
Thereafter				82.2
			$	242.2

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Note 6.5. Debt

Debt consisted of the following:


	March 31,		December 31,		March 31,		December 31,
	2022		2021		2023		2022

	(in millions)				(in millions)
Unsecured revolving credit facility maturing September 3, 2025	$	—	$	—	$	—	$	—
Senior unsecured notes, interest payable semi-annually at 4.50%, effective rate of 4.63%, maturing April 15, 2023		500.0		500.0
Senior unsecured notes, interest payable semi-annually at 4.50%, effective rate of 4.63%, redeemed on January 15, 2023						—		500.0
Senior unsecured notes, interest payable semi-annually at 1.30%, effective rate of 1.53%, maturing August 15, 2025		400.0		400.0		400.0		400.0
Senior unsecured notes, interest payable semi-annually at 2.15%, effective rate of 2.27%, maturing August 15, 2030		500.0		500.0		500.0		500.0
Senior unsecured notes, interest payable semi-annually at 6.85%, effective rate of 6.91%, maturing November 15, 2036		250.0		250.0		250.0		250.0
Other notes and revolving credit facilities		12.4		12.4		9.6		9.6
Total		1,662.4		1,662.4		1,159.6		1,659.6
Less: unamortized discount and debt issuance costs		(14.6)		(15.4)		(11.2)		(12.0)
Less: amounts due within one year and short-term borrowings		(5.0)		(5.0)		(8.2)		(508.2)
Total long-term debt	$	1,642.8	$	1,642.0	$	1,140.2	$	1,139.4

The weighted average interest rate on the Company’s outstanding borrowings as of March 31, 2023 and December 31, 2022 was 2.89% and 3.37%, respectively.

Unsecured Credit Facility

On September 3, 2020, we entered into a $1.5 billion unsecured five-year Amended and Restated Credit Agreement ~~(“Credit Agreement”)~~ that amended and restated our then-existing $1.5 billion unsecured revolving credit ~~facility and includes a $150.0 million letter of credit sublimit.~~facility. On January 12, 2023, the agreement was further amended to change the reference rate from LIBOR to SOFR (as amended, the “Credit Agreement”). As of March 31, ~~2022,~~2023, borrowings under the Credit Agreement were available at variable rates based on ~~LIBOR~~SOFR plus ~~1.25%~~1.10% or the bank prime rate ~~plus 0.25%~~ and we currently pay a commitment fee at an annual rate of ~~0.20%~~0.175% on the unused portion of the revolving credit facility. The applicable margins over ~~LIBOR~~SOFR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our ~~total net~~ leverage ratio, as defined in the Credit Agreement. All borrowings under the Credit Agreement may be prepaid without penalty. Our Credit Agreement includes provisions to change the reference rate to the then-prevailing market convention for similar agreements if a replacement rate for LIBOR is necessary during its term.penalty.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had 0no outstanding borrowings on the revolving credit facility. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~$8.3~~$7.7 million ~~and $8.9 million, respectively,~~ of letters of credit ~~issued on~~outstanding under the revolving credit facility.

Senior Unsecured Notes

On January 15, 2023, we redeemed in full the $500.0 million aggregate outstanding principal amount of our 4.50% senior notes due April 15, 2023 using cash on hand.

Under the indentures for each series of our senior notes ~~(“Indentures”~~(the “indentures”), the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. If we experience a change in control accompanied by a downgrade in our credit rating, we will be required to make an offer to repurchase each series of the notes at a price equal to 101% of their principal amount plus accrued and unpaid ~~interest.~~interest.

Other Notes, Revolving Credit and Letter of Credit/Letters of Guarantee Facilities

A revolving credit facility with a ~~combined~~ credit limit of ~~$8.6~~$7.9 million is in place for an operation in Asia with an outstanding balance of ~~$4.7~~$2.2 million as of March 31, ~~2022~~2023 and December 31, ~~2021, respectively.~~

~~Various industrial revenue bonds had combined outstanding balances of $7.7 million as of March 31, 2022 and December 31, 2021 and have maturities through 2027.~~2022.

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Various industrial revenue bonds had combined outstanding balances of $7.4 million as of March 31, 2023 and December 31, 2022 and have maturities through 2027.

A standby letters of credit/letters of guarantee agreement with one of the lenders under our Credit Agreement provides letters of credit and/or letters of guarantee in an amount not to exceed $50.0 million in the aggregate. As of March 31, ~~2022,~~2023, a total of ~~$21.9~~$19.5 million of letters of credit/guarantee were ~~issued on the~~outstanding under this facility.

Covenants

The Credit Agreement and the ~~Indentures~~indentures include customary representations, warranties, covenants and events of default provisions. The covenants under the Credit Agreement include, among other things, 2two financial maintenance covenants that require us to comply with a minimum interest coverage ratio and a maximum leverage ratio. We were in compliance with all financial maintenance covenants in our Credit Agreement at March 31, ~~2022.~~2023.

Note 7.6. Leases

Our metals service center leases are comprised of processing and distribution facilities, equipment, trucks and trailers, ground leases and other leased spaces, such as depots, sales offices, storage and data centers. We also lease various office spaces. Our leases of facilities and other spaces expire at various times through 2045 and our ground leases expire at various times through 2068. Nearly all of our leases are operating leases; we have recognized finance right-of-use assets and obligations of less than $1.0 million.

The following is a summary of our lease cost:


	Three Months Ended
	March 31,				Three Months Ended March 31,
	2022		2021		2023		2022

	(in millions)				(in millions)
Operating lease cost	$	23.0	$	19.7	$	23.6	$	23.0

Supplemental cash flow and balance sheet information is presented below:

Three Months Ended

March 31,

2022

2021

(in millions)
Supplemental cash flow information:

Cash payments for operating leases
$
21.8

$
19.6
Right-of-use assets obtained in exchange for operating lease obligations
$
7.1

$
11.5

March 31,

December 31,

2022

2021
Other lease information:

Weighted average remaining lease term—operating leases

5.9 years

5.8 years
Weighted average discount rate—operating leases

3.3%

3.3%

~~Maturities of operating lease liabilities as of March 31, 2022 are as follows:~~

(in millions)
2022 (remaining nine months)
$
46.8
2023

52.3
2024

41.5
2025

29.3
2026

18.8
Thereafter

52.6
Total operating lease payments

241.3
Less: imputed interest

(27.2)
Total operating lease liabilities
$
214.1


	Three Months Ended March 31,
	2023		2022

	(in millions)
Supplemental cash flow information:
Cash payments for operating leases	$	23.5	$	21.8
Right-of-use assets obtained in exchange for operating lease obligations	$	15.6	$	7.1

	March 31,		December 31,
	2023		2022
Other lease information:
Weighted average remaining lease term—operating leases		6.5 years		6.6 years
Weighted average discount rate—operating leases		3.9%		3.8%

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Maturities of operating lease liabilities as of March 31, 2023 are as follows:


	(in millions)
2023 (remaining nine months)	$	46.3
2024		52.7
2025		39.9
2026		27.6
2027		19.6
Thereafter		68.5
Total operating lease payments		254.6
Less: imputed interest		(35.9)
Total operating lease liabilities	$	218.7

Note 8.7. Income Taxes

Our effective income tax rates for the first quarters of 2023 and 2022 were 24.4% and ~~2021 were~~ 24.8% ~~and 25.3%~~, respectively. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state income taxes and higher foreign income tax rates, partially offset by the effects of company-owned life insurance policies.

Note 9.8. Equity

Dividends

On April ~~26, 2022,~~25, 2023, our Board of Directors declared the ~~2022~~2023 second quarter cash dividend of ~~$0.8750~~$1.00 per share of common stock, payable on June ~~10, 2022~~9, 2023 to stockholders of record as of May ~~27, 2022.~~26, 2023.

During the first quarters of ~~2022~~2023 and ~~2021,~~2022, we declared and paid quarterly dividends of ~~$0.8750~~$1.00 and ~~$0.6875~~$0.875 per share, or ~~$54.2~~$59.0 million and ~~$43.8~~$54.2 million in total, respectively. In addition, we paid ~~$2.5~~$3.0 million and ~~$1.0~~$2.5 million in dividend equivalents with respect to vested restricted stock units during the first quarters ~~ended March 31,~~of 2023 and 2022, ~~and 2021,~~ respectively.

Stock-Based Compensation

We make annual grants of long-term incentive awards to officers and key employees under our Second Amended and Restated 2015 Incentive Award Planin the forms of service-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) that each have approximately 3-year vesting periods. The PSUs include the right to receive a maximum payout of 2two shares of our common stock based on performance goals tied to achieving a ~~three-year~~3-year return on assets result and include service criteria. We also grant the ~~non-employee~~non-management members of our Board of Directors fully vested stock awards ~~that are fully vested on the grant date.~~under our Directors Equity Plan. The fair values of the RSUs, PSUs and stock awards are determined based on the closing stock price of our common stock on the grant date.

In the first quarters ~~ended March 31,~~of 2023 and 2022, ~~and 2021,~~ we made payments of ~~$17.1~~$37.2 million and ~~$8.2~~$17.1 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share ~~settlements.~~

settlement of vested restricted stock units.

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The following is a summary of ~~the status of~~changes in our unvested RSUs and PSUs ~~as of March 31, 2022 and changes~~ during the first quarter ~~then ended is as follows:~~of 2023:


		Weighted					Weighted
		Average					Average
		Grant Date		Aggregate		RSU and PSU	Grant Date
		Fair Value		Fair Value		Aggregate Units	Fair Value
	RSUs and PSUs	Per RSU		(in millions)
Unvested at January 1, 2022	831,597	$	105.12
Unvested at January 1, 2023						582,012	$	164.60
Granted⁽¹⁾	305,249		187.31			193,812		247.90
Vested	(23,280)		95.87			(870)		152.93
Cancelled or forfeited	(18,607)		114.28			(2,002)		170.84
Unvested at March 31, 2022	1,094,959	$	128.07	$	257.7
Unvested at March 31, 2023						772,952	$	185.48
Shares reserved for future grants (all plans)	1,569,117					1,457,448

(1)

Comprised of ~~56,452 RSUs granted in January 2022 with a fair value of $152.21 per unit, and 136,346~~109,683 RSUs and ~~112,451~~84,129 PSUs granted in ~~March 2022 with a fair~~ ~~value~~ ~~of $195.28 per unit.~~February 2023. The service-based RSUs cliff vest on December 1, ~~2024~~2025 and the performance-based RSUs are subject to a ~~three-year~~3-year performance period ending December 31, ~~2024.~~2025.

As of March 31, ~~2022, 59,135 equivalent~~2023, there was $123.9 million of total unrecognized compensation cost related to unvested RSUs and PSUs in an aggregate amount of 772,952 units that are expected to be settled through the issuance of 993,124 shares of our common ~~stock for vested RSUs and PSUs were unsettled.~~stock. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.0 years.

Share ~~Repurchase Plan~~Repurchases

Our share repurchase activity during the first quarters of 2023 and 2022 was as follows:


	2023					2022
		Average Cost					Average Cost
	Shares	Per Share		Amount		Shares	Per Share		Amount
				(in millions)					(in millions)
First quarter	160,224	$	242.86	$	38.9	113,529	$	150.97	$	17.1

On July ~~20, 2021,~~26, 2022, our Board of Directors ~~authorized a $1.0 billion~~amended our share repurchase ~~program. As of March 31, 2022, we had remaining~~program to increase the repurchase authorization ~~under the plan~~ to ~~repurchase $695.5 million of our common stock.~~ $1.0 billion. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. We may repurchase shares through open market purchases, privately negotiated transactions and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchased and subsequently retired shares are restored to the status of authorized but unissued shares.

~~During~~ As of March 31, 2023, we had remaining authorization under the ~~first quarter of 2022, we repurchased 113,529 shares at an average cost of $150.97 per share, for a total of $17.1 million. We had 0 repurchases~~program to repurchase $641.8 million of our common stock in. We repurchase shares through open market purchases and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 and/or Rule 10b-18 under the ~~first quarter of 2021.~~Exchange Act.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss included the following:


	Foreign Currency		Postretirement Benefit		Accumulated Other				Pension and
	Translation		Plan Adjustments,		Comprehensive		Foreign Currency		Postretirement Benefit		Accumulated Other
	(Loss) Gain		Net of Tax		(Loss) Income		Translation		Plan Adjustments,		Comprehensive
			(in millions)				(Loss) Gain		Net of Tax		Loss
Balance as of January 1, 2022	$	(55.2)	$	(13.7)	$	(68.9)
									(in millions)
Balance as of January 1, 2023							$	(84.0)	$	(2.3)	$	(86.3)
Current-period change		0.7		(0.1)		0.6		0.6		(0.8)		(0.2)
Balance as of March 31, 2022	$	(54.5)	$	(13.8)	$	(68.3)
Balance as of March 31, 2023							$	(83.4)	$	(3.1)	$	(86.5)

Foreign currency translation adjustments have not been adjusted for income taxes. ~~Postretirement benefit plan adjustments are net of taxes of $3.3 million as of March 31, 2022~~Pension and ~~December 31, 2021. The~~ ~~income tax effects relating to our postretirement benefit plan adjustments are reflected in our income tax provision in future periods as the~~ postretirement benefit plan adjustments are amortized over service periods and reflected in the amortization of net loss component of our net ~~periodic benefit cost or are otherwise released and recognized as a settlement loss as a result of a plan termination.~~

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periodic benefit cost or are otherwise recognized as a loss as a result of plan settlements. Pension and postretirement benefit plan adjustments are net of taxes of $1.3 million as of March 31, 2023 and December 31, 2022. The income tax effects are released from accumulated other comprehensive loss and included in our income tax provision as obligations under our pension and postretirement plans are settled.

Note ~~10.~~9. Commitments and Contingencies

Environmental Contingencies

We are currently involved with an environmental remediation project related to activities at former manufacturing operations of Earle M. Jorgensen Company (“EMJ”), our wholly owned subsidiary, that were sold many years prior to our acquisition of EMJ in 2006. Although the potential cleanup costs could be significant, EMJ maintained insurance policies during the time it owned the manufacturing operations that have covered costs incurred to date and are expected to continue to cover the majority of the related costs. We do not expect that this obligation will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

Legal Matters

From time to time, we are named as a defendant in legal actions. These actions generally arise in the ordinary course of business. We are not currently a party to any pending legal proceedings other than routine litigation incidental to the business. We ~~maintain general liability insurance against risks arising in the ordinary course of business. We~~ expect that these matters will be resolved without having a material adverse impact on our consolidated financial position, results of operations or cash flows. We maintain general liability insurance against risks arising in the ordinary course of business.

Risks and Uncertainties

We continue to monitor the impact of the COVID-19 pandemic, and government actions and measures taken to prevent its spread, and the potential to affect our operations. ~~The~~In addition to COVID-19, the conflict between Russia and Ukraine and macroeconomic disruptions such as inflation and the potential for an economic recession or slowdown could also significantly impact the demand for our products and services, as well as those of our customers and suppliers, and our estimates and judgments may be subject to greater volatility than in the past. Refer to Part I, Item 1A “Risk Factors” of our annual report on Form 10-K for the year ended December 31, ~~2021~~2022 for further discussion of ~~these risks.~~risks that could adversely affect our estimates and judgments.

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Note ~~11.~~10. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended
	March 31,				Three Months Ended March 31,
	2022		2021		2023		2022

	(in millions, except number of shares which are reflected in thousands and per share amounts)				(in millions, except number of shares which are reflected in thousands and per share amounts)
Numerator:
Net income attributable to Reliance	$	523.3	$	266.9	$	383.1	$	523.3

Denominator:
Weighted average shares outstanding		61,833		63,645		58,832		61,833
Dilutive effect of stock-based awards		951		1,066		702		951
Weighted average diluted shares outstanding		62,784		64,711		59,534		62,784

Earnings per share attributable to Reliance stockholders:
Basic					$	6.51	$	8.46
Diluted	$	8.33	$	4.12	$	6.43	$	8.33
Basic	$	8.46	$	4.19

The computations of earnings per share for the ~~quarter ended March 31,~~first quarters of 2023 and 2022 ~~and 2021~~ do not include ~~314,042~~194,304 and ~~452,124~~314,042 weighted average shares, respectively, in respect of outstanding RSUs and PSUs, because their inclusion would have been anti-dilutive.

Note 11. Subsequent Event

On May 1, 2023, we acquired Southern Steel Supply, LLC (“Southern Steel”), a metals service center that offers merchant and structural steel, pipe and tube, steel plate, ornamental products and laser cut and fabricated parts. Located in Memphis, Tennessee, Southern Steel will operate as a subsidiary of Siskin Steel & Supply Company, Inc., a wholly owned subsidiary of Reliance. The acquisition was funded with cash on hand. For the twelve months ended December 31, 2022, annual net sales for Southern Steel were $62.9 million.

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RELIANCE STEEL & ALUMINUM CO.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our forward-looking statements may include, but are not limited to, discussions of our industry and end markets, our business strategies and our expectations concerning future demand and ~~metal~~major commodity product pricing and our results of operations, margins, profitability, ~~impairment~~taxes, liquidity, macroeconomic conditions, including inflation and ~~restructuring charges, taxes, liquidity,~~the possibility of an economic recession or slowdown, litigation matters and capital resources. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “preliminary,” “range,” “intend” and “continue,” the negative of these terms, and similar expressions. All statements contained in this report, other than statements of historical fact, are forward-looking statements. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date of such statements. We caution readers not to place undue reliance on forward-looking statements.

Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in ~~our~~these forward-looking statements as a result of various important factors, including, but not limited to, actions taken by us, ~~including restructuring and impairment charges,~~ as well as developments beyond our control, including, but not limited to, the ~~impact~~impacts of labor constraints and supply chain disruptions, the ~~COVID-19 pandemic, as well as the impact of actions taken or contemplated by government authorities to mitigate the spread of the COVID-19~~continuing pandemic and changes in worldwide and U.S. political and economic conditions ~~(including~~such as inflation, a prolonged higher interest rate environment and the possibility of an economic recession that could materially impact us, our customers and suppliers and demand for our products and services. Deteriorations in economic conditions, as a result of inflation, elevated interest rates, economic recession, COVID-19, or the ~~ongoing~~ conflict between Russia and ~~Ukraine) that materially impact our customers, the~~Ukraine or otherwise, could lead to a decline in demand ~~and availability of~~for our products and services ~~including further supply disruptions, labor shortages~~ and ~~inflation.~~negatively impact our business, and may also impact financial markets and corporate credit markets which could adversely impact our access to financing, or the terms of any financing. Other factors which could cause actual results to differ materially from our forward-looking statements include those disclosed in this report and in other reports we have filed with the United States Securities and Exchange Commission (the “SEC”). Important risks and uncertainties about our business can be found elsewhere in this Quarterly Report on Form 10-Q and in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC and in other documents Reliance files or furnishes with the SEC.

The statements contained in this quarterly report on Form 10-Q speak only as of the date that they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based. You should review any additional disclosures we make in any subsequent press releases and Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC.

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Overview

We ~~generated record~~delivered solid financial performance in the first quarter of 2023. Our first quarter of 2023 results included an increase in tons sold, a strong gross profit margin that was consistent with the first quarter of 2022 and ~~in each of the previous four quarters. Outstanding~~strong operating cash flow through outstanding operational execution in an uncertain business environment. We believe our ability to maintain a strong gross profit margin in the first quarter of 2023 was supported by our ~~strategies under our resilient~~diversified business model, ~~during a quarter that included strong demand~~value-added processing capabilities and ongoing strength in metals pricing once again resulted in record profitability in the face of continuing operational challenges that included volatile (though improving) metals pricing trends and limited product availability.ability to service small order sizes with quick turnaround.

~~Certain key~~Key results for the first quarter of ~~March 31,~~2023 compared with the first quarter of 2022 ~~included the following:~~were as follows:

●

~~Record quarterly net sales of $4.49 billion were up 58.0% from $2.84 billion~~7.2% increase in ~~the first quarter of 2021.~~tons sold.

●

~~Record quarterly~~Net sales of $3.97 billion were down 11.6%; reflecting a 17.7% decrease in average selling price per ton ~~sold of $3,186.~~sold.

●

~~Record quarterly gross profit of $1.39 billion increased 45.4% from $953.7 million in the first quarter of 2021. Our strong first quarter of 2022 gross~~Gross profit margin of 30.9% ~~declined 270 basis points compared to~~.

●

Earnings per diluted share of $6.43.

●

Cash flow from operations of $384.6 million.

●

Inventory turnover rate (based on tons) of 4.9x exceeded our ~~record gross profit margin~~ Company-wide goal of 4.7x and our 4.4x ratein the ~~first quarter of 2021.~~ prior year quarter.

●

Returns to stockholders of $100.9 million, comprised of $62.0 million of cash dividends and $38.9 million of share repurchases.

Our net sales decline in the first quarter of 2023 was primarily due to a 17.7% decline in our average selling price per ton sold that offset a strong 7.2% increase in tons sold compared to the first quarter of 2022. The increase in tons sold was due to solid demand in the vast majority of our end markets, with particular strength in non-residential construction, the toll processing services we provide to the automotive market, general manufacturing and aerospace. We continued to execute our strategy in a dynamic operating environment featuring metal pricing volatility, ongoing inflationary headwinds, recessionary concerns, supply chain disruptions and labor shortages.

Our gross profit margin of 30.9% in the first quarter of 2023 was consistent with the first quarter of 2022. Pricing for most of the aluminum, carbon and stainless steel products we sell declined throughout the fourth quarter of 2022; however, early in the first quarter of 2023 the metals pricing declines had generally stabilized, and we operated in a relatively flat pricing environment during most of the quarter. We believe that announced carbon flat-rolled steel price increases during the quarter incentivized some of our customers to increase their purchases to buy ahead of further price increases. Our inventory turnover rate accelerated and our inventory costs on hand continued to align with lower replacement costs as our tons sold improved 17.7% compared to the fourth quarter of 2022, which was one of the best first quarter starts we have seen in our history.

Our SG&A expense in the first quarter of 2023 increased $39.4 million, or 6.4%, from the first quarter of 2022. The increase was primarily due to incremental variable costs associated with a strong 7.2% increase in tons sold, including headcount increases and inflationary pressure on wages, fuel, freight and warehouse costs, offset by decreased incentive-based compensation from lower profitability.

Our cash flow from operations of $384.6 million in the first quarter of 2023 decreased only $19.4 million, or 4.8%, compared to record first quarter levels in 2022 despite a 26.7% decline in net income. The decrease in our profitability in the first quarter of 2023 from then-record levels in the first quarter of 2022 was generally offset by decreased working capital requirements mainly due to lower metals pricing and volatility. Our strong cash flow generation enabled us to grow our business and increase returns to stockholders. During the first quarter of 2023, we invested in our future growth with a quarterly record $102.9 million invested in capital expenditures and we increased our returns to stockholders by 36.7%. Additionally, in the first quarter of 2023 we completed the redemption of $500.0 million aggregate principal amount of senior unsecured notes with cash on hand.

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●

~~Record quarterly pretax income and margin of $697.2 million and 15.5% increased $338.2 million and 290 basis points, respectively, compared to the first quarter of 2021.~~

●

~~Record quarterly earnings per share of $8.33 was more than double our earnings per share of $4.12 in the first quarter of 2021.~~

●

~~Record first quarter cash flow from operations of $404.0 million in the first quarter of 2022 increased $242.2 million, or 149.7%, from $161.8 million in the first quarter of 2021.~~

Our record quarterly net sales in the first quarter of 2022 were the result of a record quarterly average selling price per ton sold that increased 57.7% compared to the first quarter of 2021 and a 0.6% increase in tons sold.

Our record profitability in the first quarter of 2022 was driven by record metals prices, fundamentally strong underlying demand in most end markets, a strong gross profit margin and careful expense control. Our gross profit margin in the first quarter of 2022 of 30.9% was strong, but declined from record quarterly gross profit margin of 33.6% in the first quarter of 2021 as our inventory costs approached replacement costs. Our same-store SG&A expense in the first quarter of 2022 increased $70.1 million, or 13.5%, compared to the first quarter of 2021 due to higher variable expenses associated with inflationary impacts for wages, fuel, freight and packaging costs and to a lesser extent higher incentive-based compensation attributable to our record gross profit and pretax income.

We generated record first quarter cash flow from operations of $404.0 million in the first quarter of 2022 compared to $161.8 million of cash flow from operations in the first quarter of 2021 as a result of our increased profitability.

We believe our strong liquidity position that includes ~~significant~~substantial cash on hand, strong cash flow generation and $1.5 billion of availability under our revolving credit facility ~~with no borrowings outstanding~~ will support our continued prudent use of capital as we maintain a flexible approach focused on growth, both organically and through acquisitions, and stockholder return activities.

We believe our industry-leading results are due to our unique business model and the strong operational execution of our strategies. We believe our business model characteristics, including broad end market exposure, a wide geographical footprint, diverse product offerings, significant value-added processing capabilities, and focus on small order sizes and when-needed delivery differentiate us from our industry peers. We believe these unique business model characteristics and strong operational execution of our strategies that include pricing discipline, concentrating on higher margin business and cross selling inventory within our operating locations enabled us to persevere during the pandemic in 2020 and were the cornerstone of our record quarterly financial results in each of the past five quarters.

~~2021 Acquisitions~~

~~Table of Contents~~

~~Included in our net sales for the first quarter of 2022 were combined net sales of $226.5 million from our 2021 acquisitions.~~

~~We funded our 2021 acquisitions with cash on hand.~~

Results of Operations

The following ~~table~~ sets forth certain income statement data for the first quarters of ~~2022~~2023 and ~~2021~~2022 (dollars are shown in millions, except for per share amounts and certain amounts may not calculate due to rounding):


	Three Months Ended March 31,								Three Months Ended March 31,
	2022				2021				2023				2022
			% of				% of				% of				% of
	$		Net Sales		$		Net Sales		$		Net Sales		$		Net Sales
Net sales	$	4,485.8	100.0	%	$	2,838.4	100.0	%	$	3,965.3	100.0	%	$	4,485.8	100.0	%
Cost of sales (exclusive of depreciation and amortization expenses shown below)⁽¹⁾		3,098.7	69.1			1,884.7	66.4
Cost of sales (exclusive of depreciation and amortization expense shown below)⁽¹⁾										2,739.3	69.1			3,098.7	69.1
Gross profit⁽²⁾		1,387.1	30.9			953.7	33.6			1,226.0	30.9			1,387.1	30.9
Warehouse, delivery, selling, general and administrative expense (SG&A)		611.9	13.6			518.5	18.3
Depreciation expense		46.9	1.0			47.7	1.7
Amortization expense		12.2	0.3			9.2	0.3
Warehouse, delivery, selling, general and administrative expense (“SG&A”)										651.3	16.4			611.9	13.6
Depreciation and amortization expense										61.1	1.5			59.1	1.3
Operating income	$	716.1	16.0	%	$	378.3	13.3	%	$	513.6	13.0	%	$	716.1	16.0	%

Net income attributable to Reliance									$	383.1	9.7	%	$	523.3	11.7	%
Diluted earnings per share attributable to Reliance stockholders									$	6.43			$	8.33

(1)	Cost of sales in the first quarter of 2022 included $8.1 million of non-recurring amortization of inventory step-up to fair value adjustments for our 2021 acquisitions.

(2)

Gross profit, calculated as net sales less cost of sales, and gross profit margin, calculated as gross profit divided by net sales, are non-GAAP financial measures as they exclude depreciation and amortization ~~expenses~~expense associated with the corresponding sales. About half of our orders are basic distribution with no processing services performed. For the remainder of our sales orders, we perform “first-stage” processing, which is generally not labor intensive as we are simply cutting the metal to size. Because of this, the amount of related labor and overhead, including depreciation and amortization, is not significant and is excluded from ~~our~~ cost of sales. Therefore, our cost of sales is substantially comprised of the cost of the material we sell. We use gross profit and gross profit margin as shown above as measures of operating performance. Gross profit and gross profit margin are important operating and financial measures as their fluctuations can have a significant impact on our earnings. Gross profit and gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies.

~~Table of Contents~~

First Quarter Ended March 31, ~~2022~~2023 Compared to First Quarter Ended March 31, ~~2021~~2022

Net Sales


	Three Months Ended
	March 31,				Dollar		Percentage		Three Months Ended March 31,						Percentage
	2022		2021		Change		Change		2023		2022		Change		Change

	(in millions)								(dollars in millions, tons in thousands)
Net sales	$	4,485.8	$	2,838.4	$	1,647.4	58.0	%	$	3,965.3	$	4,485.8	$	(520.5)	(11.6)	%
Net sales, same-store	$	4,259.3	$	2,838.4	$	1,420.9	50.1	%

	Three Months Ended
	March 31,						Percentage
	2022		2021		Change		Change

	(tons in thousands)
Tons sold		1,417.7		1,409.7		8.0	0.6	%		1,520.1		1,417.7		102.4	7.2	%
Tons sold, same-store		1,374.2		1,409.7		(35.5)	(2.5)	%

	Three Months Ended
	March 31,				Price		Percentage
	2022		2021		Change		Change
Average selling price per ton sold	$	3,186	$	2,020	$	1,166	57.7	%	$	2,623	$	3,186	$	(563)	(17.7)	%
Average selling price per ton sold, same-store	$	3,116	$	2,020	$	1,096	54.3	%

Our tons sold and average selling price per ton sold exclude our tons toll processed. Our average selling price per ton sold includes ~~insignificant~~ intercompany transactions that are eliminated from our consolidated net sales.~~Same-store amounts exclude the results of our 2021 acquisitions.~~

Our net sales ~~in the~~decreased from record first quarter levels of 2022 ~~were the highest in our history~~ due to a ~~record quarterly~~significant decline in our average selling price per ton sold ~~and~~that was partially offset by a ~~modest~~strong increase in tons ~~sold compared~~sold. Demand was healthy in the vast majority of our end

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markets, with particular strength in non-residential construction, the toll processing services we provide to the ~~first quarter of 2021. During the months of January~~automotive market, general manufacturing and February, prices for certain carbon and stainless steel products fell sharply, and certain customers adjusted their purchasing patterns due to the uncertainty surrounding the direction of metals prices. The Omicron surge in January and to a lesser extent in February further decreased demand by exacerbating existing labor and other supply chain disruptions on us, our customers and suppliers. In early March, these trends and headwinds subsided and metal prices increasing significantly, mainly for the aluminum and stainless steel products we sell, and our shipment levels accelerated with our March daily tons sold being the highest since the start of the pandemic.aerospace.

Since we primarily purchase and sell our inventories in the spot market, ~~the changes in~~ our average selling prices generally fluctuate ~~in accordance~~similarly with the changes in the costs of the various metals we purchase. Our ~~same-store~~ average selling price ~~per ton sold~~ in the first quarter of 2022 was ~~significantly~~a quarterly record for us, which peaked at an ultimate record in the second quarter of 2022 and then declined for the subsequent three quarters mainly due to mill price decreases for our major product categories; however, metals pricing remained relatively higher ~~than~~versus historical levels throughout the first quarter of ~~2021 mainly due to several significant mill price increases for our major product categories.~~2023.

The mix of products sold can also have an impact on our overall average selling ~~prices.~~ price per ton sold. As carbon steel sales represented approximately ~~55%~~52% of our gross sales for the first quarter of ~~2022,~~2023, changes in carbon steel prices have the most significant impact on changes in our overall average selling price per ton sold.Year-over-year changes in the selling prices of our major commodity products and related mix of our tons sold are presented below:


	Change in		Change in
	Average Selling		Percentage of
	Price Per		Total
	Ton Sold		Tons Sold
Carbon steel	(23.6)	%	1.6	%
Aluminum	(1.3)	%	(0.5)	%
Stainless steel	(2.9)	%	(1.1)	%
Alloy	13.9	%	(0.4)	%

Cost of Sales and Gross Profit


	Three Months Ended March 31,
	2023				2022
			% of				% of		Dollar		Percentage
	$		Net Sales		$		Net Sales		Change		Change

	(dollars in millions)
Cost of sales	$	2,739.3	69.1	%	$	3,098.7	69.1	%	$	(359.4)	(11.6)	%
Gross profit	$	1,226.0	30.9	%	$	1,387.1	30.9	%	$	(161.1)	(11.6)	%
LIFO (income) expense	$	(15.0)	(0.4)	%	$	37.5	0.8	%	$	(52.5)	*

* Not meaningful.

~~Our major commodity selling prices changed year-over-year as follows:~~

Same-store

Average Selling

Average Selling

Price per Ton Sold

Price per Ton Sold

(percentage change)

Carbon steel
56.3
%
55.8
%
Stainless steel
57.4
%
57.7
%
Aluminum
32.8
%
33.7
%
Alloy
35.5
%
35.5
%

~~Table of Contents~~

~~Cost of Sales~~

~~The increase in cost of sales~~Gross profit in the first quarter of ~~2022 compared to the first quarter of 2021 was mainly due to a higher average cost per ton sold and to a lesser extent, higher tons sold. See~~ ~~“Net Sales”~~ ~~above for trends in both demand and costs of our products~~.

~~Cost of sales in~~2023 decreased from the first quarter of 2022 ~~included $8.1 million~~mainly due to lower sales as a result of ~~non-recurring amortization of~~ ~~inventory step-up to fair value adjustments related to our 2021 acquisitions.~~a decrease in average selling price per ton sold that outpaced an increase in tons sold.

In addition, we record non-cash adjustments to our LIFO method inventory valuation reserve, which are included in cost of sales and, in effect, reflects cost of sales at current replacement ~~costs, resulted in expenses~~costs. The inventory caption of ~~$37.5 million and $100.0 million in the first quarters of 2022 and 2021, respectively.~~ ~~As of March 31, 2022, the~~our consolidated balance sheet included a LIFO method inventory valuation reserve ~~on our balance sheet was $857.9 million.~~

~~Gross Profit~~

~~We generated record gross profit in the first quarter~~ of ~~2022 mainly as a result~~$728.8 million at March 31, 2023. Furthermore, cost of ~~a record quarterly average selling price per ton sold, a strong gross profit margin and a slight increase in tons sold compared to the first quarter of 2021.~~

~~Gross profit~~sales in the first quarter of 2022 was reduced by $8.1 million of non-recurring amortization of inventory step-up to fair value adjustments related to our 2021 ~~acquisitions. Excluding the impact of the non-recurring amortization, our~~acquisitions that decreased gross profit margin ~~declined 250~~20 basis ~~points~~points.

Our gross profit margin in the first quarter of ~~2022 compared to~~2023 was strong and unchanged from the first quarter of ~~2021. The decline in~~2022. We believe our strong and consistent gross profit margin was ~~mainly due to our inventory costs approaching replacement costs.~~ supported by investments in value-added processing equipment in recent years, relatively higher metal pricing versus historical levels and healthy demand.

See “Net Sales” ~~and~~ ~~“Cost of Sales”~~ abovefor further discussion on product pricing ~~trends and our LIFO inventory valuation reserve adjustments, respectively.~~trends.

~~Expenses~~

Three Months Ended

March 31,

2022

2021


% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)

SG&A expense
$
611.9

13.6
%

$
518.5

18.3
%

$
93.4

18.0
%
SG&A expense, same-store
$
588.6

13.8
%

$
518.5

18.3
%

$
70.1

13.5
%
Depreciation & amortization expense
$
59.1

1.3
%

$
56.9

2.0
%

$
2.2

3.9
%

Our same-store SG&A expense increase was due to higher variable expenses associated with inflationary impacts for wages, fuel, freight and packaging costs and to a lesser extent higher incentive-based compensation attributable to our

1917

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~~record~~Expenses


	Three Months Ended March 31,
	2023				2022
			% of				% of		Dollar		Percentage
	$		Net Sales		$		Net Sales		Change		Change

	(dollars in millions)
SG&A expense	$	651.3	16.4	%	$	611.9	13.6	%	$	39.4	6.4	%
Depreciation & amortization expense	$	61.1	1.5	%	$	59.1	1.3	%	$	2.0	3.4	%

The increase in our SG&A expense was mainly due to higher variable costs associated with higher tons sold and inflationary wage increases, which were partially offset by lower incentive-based compensation that is primarily tied to first-in, first-out (“FIFO”) pretax income profitability, which declined 32.8%. Our SG&A expense as a percentage of sales mainly increased due to lower sales levels.

See “Cost of Sales and Gross Profit” above for discussion of our LIFO method inventory valuation reserve.

Operating Income


	Three Months Ended March 31,
	2023				2022
			% of				% of		Dollar		Percentage
	$		Net Sales		$		Net Sales		Change		Change

	(dollars in millions)
Operating income	$	513.6	13.0	%	$	716.1	16.0	%	$	(202.5)	(28.3)	%

The decrease in our operating income was mainly a result of lower gross profit, ~~and pretax income. The decrease~~driven by lower sales due mainly to lower metals prices along with a moderate increase in SG&A expense that was generally consistent with the increase in our tons sold. Our operating income margin decline was consistent with the increase in our SG&A expense as a percentage of sales ~~in the first quarter of 2022 compared to the first quarter of 2021~~that was mainly due to our ~~record net~~lower sales.

~~Operating Income~~

The increase in our operating income in the first quarter of 2022 compared to the first quarter of 2021 was due to record gross profit, as a result of a record quarterly average selling price per ton sold, fundamentally strong demand and a strong gross profit margin, that was partially offset by inflationary increases in certain SG&A expenses and higher incentive compensation. The increase in our operating margin in the first quarter of 2022 was mainly due to our significantly higher sales that decreased our SG&A expense as a percentage of sales, despite an increase in our SG&A expense.

Income Tax Rate

Our effective income tax ~~rate~~rates for the first ~~quarter~~quarters of 2023 and 2022 ~~was~~were 24.4% and 24.8%, ~~compared to 25.3% in the same 2021 period.~~respectively. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state income taxes and higher foreign income tax rates, partially offset by the effects of company-owned life insurance policies.

~~Net Income~~

The increase in our net income and net income margin in the first quarter of 2022 compared to the first quarter of 2021 were mainly due to increased operating income and operating income margin as a result of record gross profit and a strong gross profit margin partially offset by higher SG&A expense.

~~Liquidity and Capital Resources~~Financial Condition

Operating Activities

Net cash provided by operations of ~~$404.0~~$384.6 million in the first quarter of ~~2022~~2023 was ~~the highest~~slightly less than record first quarter ~~result~~cash flow of $404.0 million in 2022. We were able to achieve consistent operating cash flow as the decline in our ~~history; increasing $242.2 million, or 149.7%, from $161.8 million~~net income required a similar decrease in working capital investment in the first quarter of ~~2021. The increase~~2023 compared to the same period in 2022, due to the relatively flat pricing environment in the first quarter of 2023 compared to the same period in 2022 in which our ~~operating cash flow was mainly the result of cash generated from our~~average selling price had increased significantly to a record ~~profitability.~~level. To manage our working capital, we focus on our days sales outstanding and ~~on our~~ inventory turnover rate as receivables and inventory are the two most significant elements of our working capital. As of March 31, ~~2022~~2023 and ~~2021,~~2022, our days sales outstanding rate was ~~39.1~~40.0 days and ~~41.1~~39.1 days, respectively. Our inventory ~~turn~~turnover rate (based on tons) during the first quarter of ~~2022~~2023 was ~~4.4~~4.9 times (or ~~2.7~~2.4 months on hand), compared to ~~5.4~~4.4 times (or ~~2.2~~2.7 months on hand) in the first quarter of ~~2021.~~2022.

Income taxes paid were $21.2 million in the first quarter of 2023 compared to $89.8 million in the first quarter of ~~2022, a significant increase from $6.9 million~~2022. The decrease in our taxes paid was mainly due to income tax extension payments in the first quarter of ~~2021, mainly due to~~2022 which were not required in the first quarter of ~~2022 including income tax extension payments for the 2021 tax year compared to the first quarter of 2021 that did not include similar income tax extension payments.~~ 2023.

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Investing Activities

Net cash used in investing activities was $102.6 million in the first quarter of 2023 compared to $63.3 million in the first quarter of 2022 ~~compared to $27.7 million in the first quarter~~and were substantially comprised of ~~2021 and was substantially comprised~~capital expenditures. The majority of our capital expenditures ~~partially offset by proceeds from sales of property, plant and equipment. Capital expenditures were $66.7 million~~ in the first ~~quarter~~quarters of 2023 and 2022 ~~compared to $43.7 million in the first quarter of 2021. The majority of our first quarter 2022 and 2021 capital expenditures~~were related to growth initiatives. Proceeds from sales of property, plant and equipment were $8.2 million in the first quarter of 2022 compared to $20.6 million in the same period in 2021. Our proceeds from sales of property, plant and equipment included $7.4 million of proceeds and $2.0 million of gains from sales of non-core assets in the first quarter of 2022 compared to $20.0 million of proceeds and $2.0 million of gains from similar sales in the first quarter of 2021.

Financing Activities

Net cash used in financing activities was $639.2 million in the first quarter of 2023 compared to $92.0 million in the first quarter of 2022, ~~decreased from $56.4 million net cash used in the first quarter of 2021~~ mainly due to ~~share repurchases and increased payments for dividends and taxes relating to net share settlements~~the redemption of ~~restricted stock units.~~ $500.0 million aggregate outstanding principal amount of senior notes in January 2023. In the first quarter of ~~2022,~~2023, we spent ~~$17.1~~$38.9 million to repurchase shares of our common stock compared to ~~no repurchases~~$17.1 million in the first quarter of ~~2021.~~2022. Our other ~~shareholder~~stockholder return activities included ~~increased~~an increase in our quarterly dividend rate with total dividend payments of $62.0 million in the first quarter of 2023 compared to $56.7 million in the first quarter of ~~2022 compared to $44.8 million in the first quarter of 2021. In addition, in the first quarter of 2022, we~~ 2022. We also spent ~~$17.1~~$37.2 million on taxes relating to net share ~~settlements~~settlement of performance-based restricted stock units in the first quarter of 2023 compared to ~~$8.2~~$17.1 million in the first quarter of ~~2021.~~2022.

On April ~~26, 2022,~~25, 2023, our Board of Directors declared the ~~2022~~2023 second quarter cash dividend of ~~$0.8750~~$1.00 per share. We have increased our quarterly dividend 2930 times since our IPO in 1994, with the most recent increase of ~~27.3%~~14.3% from ~~$0.6875~~$0.875 per share to ~~$0.8750~~$1.00 per share effective in the first quarter of ~~2022.~~2023. We have paid quarterly cash dividends on our common stock for 6364 consecutive years and have never reduced or suspended our regular quarterly dividend.

See Note 8—“Equity” to our consolidated financial statements in Part I, Item 1 “Financial Statements” for further information on our stock repurchases.

On July ~~20, 2021,~~26, 2022, our Board of Directors ~~authorized a $1.0 billion~~amended our share repurchase ~~program. As of~~program to increase the repurchase authorization to $1.0 billion. At March 31, ~~2022, we had remaining authorization under the plan to repurchase $695.5~~2023, $641.8 million of our common ~~stock.~~stock remained authorized for repurchase. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. We may repurchase shares through open market purchases, privately negotiated transactions and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchased and subsequently retired shares are restored to the status of authorized but unissued shares.

During the first quarter of 2022, we repurchased 113,529 shares of our common stock at an average cost of $150.97 per share, for a total of $17.1 million, compared to no repurchases in the first quarter of 2021.

Since ~~the inception of our share repurchase programs in 1994 through March 31, 2022,~~2018, we have repurchased approximately ~~35.0~~16.1 million shares at an average cost of ~~$54.88~~$115.65 per share, for a total of ~~$1.92~~$1.86 billion, ~~including approximately 12.9 million~~resulting in a 22.2% reduction in our common shares ~~repurchased over the past five years at an average cost of $96.02, for a total of $1.24 billion.~~outstanding. We expect to continue to be opportunistic in our approach to repurchasing shares of our common stock.

Debt

We have a $1.5 billion unsecured revolving credit facility with no outstanding borrowings at March 31, 2023 under our Amended and Restated Credit Agreement (as amended, the “Credit Agreement”). We also had an aggregate of $1.15 billion principal amount of senior unsecured note obligations with various maturities through 2036 issued under indentures as of March 31, 2023.

On January 15, 2023, we redeemed in full the $500.0 million aggregate outstanding principal amount of our 4.50% senior notes due April 15, 2023 using cash on hand. See Note 5—“Debt” to our consolidated financial statements in Part I, Item 1 “Financial Statements” for further information on our debt obligations.

Liquidity and Capital Resources

We believe our primary sources of liquidity, including funds generated from operations, cash and cash equivalents and our $1.5 billion revolving credit facility, will be sufficient to satisfy our cash requirements and ~~shareholder~~stockholder return activities over the next 12 months and beyond. ~~Our total outstanding debt~~ ~~as of March 31, 2022 was $1.66 billion, which was consistent with December 31, 2021.~~ As of March 31, ~~2022,~~2023, we had ~~no outstanding borrowings on the revolving credit facility. As of March 31, 2022, we had $548.0~~$816.2 million in cash and cash equivalents and our net debt-to-total capital ratio (net debt-to-total capital is calculated as ~~total~~carrying amount of debt, net of cash, divided by total Reliance stockholders’ equity plus ~~total~~carrying amount of debt, net of cash) was ~~14.4%~~4.3%, down from ~~18.1%~~6.3% as of December 31, ~~2021.~~2022.

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On September 3, 2020, we entered into a $1.5 billion unsecured five-year Amended and Restated Credit Agreement (“Credit Agreement”) that amended and restated our then-existing $1.5 billion unsecured revolving credit facility and includes a $150.0 million letter of credit sublimit. As of March 31, 2022, borrowings under the Credit Agreement were available at variable rates based on LIBOR plus 1.25% or the bank prime rate plus 0.25% and we currently pay a commitment fee at an annual rate of 0.20% on the unused portion of the revolving credit facility. The applicable margins over LIBOR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our total net leverage ratio, as defined in the Credit Agreement. All borrowings under the Credit Agreement may be prepaid without penalty. Our Credit Agreement includes provisions to change the reference rate to the then-prevailing market convention for similar agreements if a replacement rate for LIBOR is necessary during its term.

A revolving credit facility with a combined credit limit of $8.6 million is in place for an operation in Asia with an outstanding balance of $4.7 million as of March 31, 2022 and December 31, 2021, respectively.

During the first quarter of 2022, we increased our 2022 capital expenditure budget, including unspent amounts from prior years, to $455 million from $350 million. Our actual capital expenditure spending over the next 12 months is ultimately dependent on market conditions, lead times and availability of property, plant and equipment when the capital project is initiated.

~~Capital Resources~~

On November 20, 2006, we entered into an indenture (the “2006 Indenture”) for the issuance of $600.0 million of unsecured debt securities. The total issuance was comprised of (a) $350.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.20% per annum, which matured and were repaid on November 15, 2016 and (b) $250.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.85% per annum, maturing on November 15, 2036.

On April 12, 2013, we entered into an indenture (the “2013 Indenture”) for the issuance of $500.0 million aggregate principal amount of senior unsecured notes at the rate of 4.50% per annum, maturing on April 15, 2023.

On August 3, 2020, we entered into an indenture (the “2020 Indenture” and, together with the 2013 Indenture and 2006 Indenture, the “Indentures”) for the issuance of $900.0 million of unsecured debt securities. The total issuance was comprised of (a) $400.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 1.30% per annum, maturing on August 15, 2025 and (b) $500.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 2.15% per annum, maturing on August 15, 2030.

Under the Indentures, the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. If we experience a change in control accompanied by a downgrade in our credit rating, we will be required to make an offer to repurchase each series of the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest.

~~Various industrial revenue bonds had combined outstanding balances of $7.7 million as of March 31, 2022 and December 31, 2021 and have maturities through 2027.~~

~~As of March 31, 2022,~~2023, we had ~~$911.4~~$408.5 million of debt obligations coming due before our $1.5 billion revolving credit facility expires on September 3, 2025.

We believe that we will continue to have sufficient liquidity to fund our future operating needs and to repay our debt obligations as they become ~~due.~~due. In addition to funds generated from operations and ~~funds~~nearly $1.5 billion available under our revolving credit facility, we expect to continue to be able to access the capital markets to raise funds, if desired. We believe our sources of liquidity will continue to be adequate to maintain operations, make necessary capital expenditures, finance strategic growth through acquisitions and internal initiatives, pay dividends and opportunistically repurchase ~~shares of our common stock.~~shares. Additionally, we believe our investment grade credit ratings enhance our ability to effectively raise capital, if needed. ~~We expect to continue our acquisition and internal growth and stockholder return activities and anticipate that we will be able to fund such activities as they arise.~~

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Covenants

The Credit Agreement and ~~the Indentures~~indentures governing our debt securities include customary representations, warranties, covenants and events of default provisions. The covenants under the Credit Agreement include, among other things, two financial maintenance covenants that require us to comply with a minimum interest coverage ratio and a maximum leverage ratio.

We were in compliance with all financial maintenance covenants in our Credit Agreement at March 31, ~~2022.~~2023.

Seasonality

Some of our customers are in seasonal businesses, especially customers in the construction industry and related businesses. However, our overall operations have not shown any material seasonal trends as a result of our geographic, product and customer diversity. Typically, revenues in the months of July, November and December have been lower than in other months because of a reduced number of working days for shipments of our products, resulting from holidays observed by the Company as well as vacation and extended holiday closures at some of our customers. The number of shipping days in each quarter also has an impact on our quarterly sales and profitability. ~~Particularly in light of the COVID-19 pandemic, we cannot predict whether period-to-period fluctuations will be consistent with historical patterns.~~ Results of any one or more quarters are therefore not necessarily indicative of annual results.

Goodwill and Other Intangible Assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $2.11 billion at March 31, ~~2022,~~2023, or approximately 21% of total assets and ~~32%~~29% of total equity. Additionally, other intangible assets, net amounted to ~~$1.06~~$1.01 billion at March 31, ~~2022,~~2023, or approximately 10% of total assets and ~~16%~~14% of total equity. Goodwill and other intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests and further evaluation when certain events occur. Other intangible assets with finite useful lives are amortized over their useful lives. We review the recoverability of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Unaudited Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of our accounting policies require that we make subjective judgments, including estimates that involve matters that are inherently uncertain. Our most critical accounting estimates include those related to goodwill and other indefinite-lived intangible assets and long-lived assets. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. The impacts of the COVID-19 pandemic increase uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than in the past.

During the quarter ended March 31, ~~2022,~~2023, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition

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and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Website Disclosure

The Company may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website

~~Table of Contents~~

at www.investor.rsac.com. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section at www.investor.rsac.com. The website is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, we are exposed to various market risk factors, including fluctuations in interest rates, changes in general economic conditions, domestic and foreign competition, foreign currency exchange rates and metals pricing, demand and availability. See Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for further discussion on quantitative and qualitative disclosures about market risk.

Item 4. Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, ~~the Company carried out an evaluation of~~we have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to and as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the end of the period covered in this report, the Company’s disclosure controls and procedures are effective to ensure information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the first quarter of ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information contained under the heading “Legal Matters” in Note ~~10—~~9—“Commitments and Contingencies” to our Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We repurchase shares of our common stock from time to time pursuant to a combination of one or more open market repurchases and transactions structured through investment banking institutions in reliance upon Rule 10b5-1 and/or Rule 10b-18 under the ~~Securities~~ Exchange ~~Act of 1934.~~

Act.

2421

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Our share repurchase activity for the first quarter of ~~2022~~2023 was as follows:


										Total Number of	Maximum Dollar
							Total Number	Average Price		Shares Purchased	Value That May
							of Shares	Paid		as Part of Publicly	Yet Be Purchased
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Dollar Value That May Yet Be Purchased Under the Plan⁽¹⁾		Purchased	Per Share		Announced Plan	Under the Plan⁽¹⁾
January 1 - January 31, 2022	102,858	$	149.05	102,858	$	697,285,313
February 1 - February 28, 2022	10,671	$	169.53	10,671	$	695,476,225
March 1 - March 31, 2022	—	$	—	—	$	695,476,225
											(in millions)
January 1 - January 31, 2023							3,860	$	199.85	3,860	$	680.0
February 1 - February 28, 2023							52,190	$	245.06	52,190	$	667.2
March 1 - March 31, 2023							104,174	$	243.35	104,174	$	641.8
Total	113,529	$	150.97	113,529			160,224	$	242.86	160,224

(1)

Share repurchases were made through a combination of one or more open market repurchases and transactions structured through investment banking institutions in reliance upon Rule 10b5-1 or Rule 10b-18 under the Securities Exchange Act of 1934. All repurchases shown above were made under the $1.0 billion share repurchase program authorized by our Board of Directors on July 20, 2021. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. Under the share repurchase plan, shares may be repurchased pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 and/or 10b-18 under the Securities Exchange Act of 1934, in the open market, in privately negotiated transactions or otherwise.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit Number		Description
10.1†*		Registrant’s Second Amendment to Deferred Compensation Plan (Amended and Restated Effective January 1, 2013) dated as of February 14, 2023.
10.2		Amendment No. 1, dated as of January 12, 2023, to Amended and Restated Credit Agreement, dated as of September 3, 2020, among Reliance Steel & Aluminum Co., as Borrower, Bank of America N.A., as the Administrative Agent, and each of the lenders party thereto (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed on February 28, 2023).
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32**		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following unaudited financial information from Reliance Steel & Aluminum Co.’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022~~2023 formatted in iXBRL (Inline eXtensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these consolidated financial statements.
104*		Cover Page Interactive Data File (formatting as Inline XBRL and contained in Exhibit 101).

† Indicates management contract or compensatory plan or arrangement.

* Filed herewith.

** Furnished herewith.

2523

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	RELIANCE STEEL & ALUMINUM CO.
	(Registrant)


Date: May ~~5, 2022~~4, 2023	By:	/s/ Arthur Ajemyan

		Arthur Ajemyan
		Senior Vice President and Chief Financial Officer
		(Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

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	Reliance Stockholders’ Equity
	Common Stock					Accumulated
	and Additional					Other		Non-
	Paid-in Capital			Retained		Comprehensive		controlling
	Shares	Amount		Earnings		Income (loss)		Interests		Total
Balance at January 1, 2021	63,600	$	0.1	$	5,193.2	$	(77.9)	$	7.3	$	5,122.7
Net income	—		—		266.9		—		1.3		268.2
Other comprehensive loss	—		—		—		(1.2)		—		(1.2)
Dividend to noncontrolling interest holder	—		—		—		—		(2.4)		(2.4)
Stock-based compensation	107		14.7		—		—		—		14.7
Common stock withheld related to net share settlements	—		(8.2)		—		—		—		(8.2)
Cash dividends — $0.6875 per share and dividend equivalents	—		—		(44.8)		—		—		(44.8)
Balance at March 31, 2021	63,707	$	6.6	$	5,415.3	$	(79.1)	$	6.2	$	5,349.0

Balance at January 1, 2022	61,806	$	0.1	$	6,155.3	$	(68.9)	$	7.2	$	6,093.7
Net income	—		—		523.3		—		1.3		524.6
Other comprehensive income	—		—		—		0.6		—		0.6
Dividend to noncontrolling interest holder	—		—		—		—		(1.1)		(1.1)
Stock-based compensation	255		11.8		—		—		—		11.8
Common stock withheld related to net share settlements	—		(17.1)		—		—		—		(17.1)
Repurchase of common shares	(113)		5.3		(22.4)		—		—		(17.1)
Cash dividends — $0.875 per share and dividend equivalents	—		—		(56.7)		—		—		(56.7)
Balance at March 31, 2022	61,948	$	0.1	$	6,599.5	$	(68.3)	$	7.4	$	6,538.7


	(in millions)
Cash	$	1.0
Accounts receivable		107.2
Inventories		134.4
Property, plant and equipment		33.6
Operating lease right-of-use assets		29.8
Goodwill		176.5
Intangible assets subject to amortization		116.3
Intangible assets not subject to amortization		51.2
Other current and long-term assets		4.0
Total assets acquired		654.0
Deferred taxes		49.3
Operating lease liabilities		24.6
Other current and long-term liabilities		139.8
Total liabilities assumed		213.7
Net assets acquired	$	440.3


	Three Months Ended
	March 31, 2021
	(in millions except per share amounts)
Pro forma:
Net sales	$	3,017.3
Net income attributable to Reliance	$	284.0
Earnings per share attributable to Reliance stockholders:
Diluted	$	4.39
Basic	$	4.46


	(in millions)
Balance at January 1, 2022	$	2,107.6
Purchase price allocation adjustments		4.5
Foreign currency translation gain		0.9
Balance at March 31, 2022	$	2,113.0


		March 31, 2022				December 31, 2021
	Weighted Average	Gross				Gross
	Amortizable	Carrying		Accumulated		Carrying		Accumulated
	Life in Years	Amount		Amortization		Amount		Amortization

		(in millions)
Intangible assets subject to amortization:
Customer lists/relationships	14.2	$	715.9	$	(446.2)	$	713.0	$	(435.1)
Backlog of orders	7.9		24.2		(1.0)		15.8		(0.2)
Other	9.2		10.0		(9.6)		9.9		(9.4)
			750.1		(456.8)		738.7		(444.7)
Intangible assets not subject to amortization:
Trade names			766.6		—		783.7		—
		$	1,516.7	$	(456.8)	$	1,522.4	$	(444.7)


	(in millions)
2022 (remaining nine months)	$	46.8
2023		52.3
2024		41.5
2025		29.3
2026		18.8
Thereafter		52.6
Total operating lease payments		241.3
Less: imputed interest		(27.2)
Total operating lease liabilities	$	214.1


			Same-store
	Average Selling		Average Selling
	Price per Ton Sold		Price per Ton Sold

	(percentage change)
Carbon steel	56.3	%	55.8	%
Stainless steel	57.4	%	57.7	%
Aluminum	32.8	%	33.7	%
Alloy	35.5	%	35.5	%