RS Reliance Steel & Aluminum

Brenda Miyamoto VP, Corporate Initiatives
James Hoffman President, CEO & Director
Karla Lewis Senior EVP & CFO
William Sales EVP, Operations
Seth Rosenfeld Exane BNP Paribas
Timna Tanners Bank of America Merrill Lynch
Christopher Terry Deutsche Bank
Alexander Hacking Citigroup
Philip Gibbs KeyBanc Capital Markets
John Tumazos John Tumazos Very Independent Research
Call transcript
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Greetings, and welcome to Reliance Steel and Aluminum Company's First Quarter 2020 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brenda Miyamoto. Please go ahead.

Brenda Miyamoto

Operator. you, Thank thanks conference and financial of for you Good to to discuss our call XXXX our joining morning, all first results. quarter and during Executive by President Vice Bill President, joined Hoffman, also Karla portion Executive CEO; Lewis, be of will available call. I'm Sales, our our question-and-answer President Vice Jim Senior operations, and the CFO; and our this our will of posted on of this section call be website recording A Investors at the the or certain change contain statements information assumptions these risks, on known which results, results, company's the including this actual related based and from of materially expectations of factors, achievement press a which and the cause implied control, other by The and on forward-looking COVID-XX may which are conditions release the economic that call our are under future and may unknown performance on forward-looking number company or other of the operations, impacts different or statements. subject uncertainties to to the performance be be may not involve our caption morning in and Factors, but with Exchange December These disclosed those XX, factors year on company's under Securities for annual limited and report XXXX, other the to reports include, are Form in ended this not disclosure XX-K factors press the the release the Risk filed Commission. information today's The press the release and and therein the date, speak of disclaims and this company duty as on the update provided information herein. only any to call

President CEO I will call now of Reliance. Jim turn to and the over Hoffman,

James Hoffman

We were most following XXXX. performance to XXXX. response to in first Overall financial joining had to first of pandemic. our our XXXX of thank records demand quarter results for you morning, quarter COVID-XX start several and through levels the a strong and healthy, the us everyone, Good year, the discuss

and profit sales produce gross non-GAAP was above non-GAAP billion XX.X% on of of gross margin to net and profit non-GAAP estimated of $XXX.X XX% sustainable $XXX.X million. of million $X.XX range of XX% pretax strong income dollars our Our

earnings significantly Our share guidance. of first quarter non-GAAP $X.XX diluted per exceeded our

on But performance details how additional business, coronavirus extraordinary to would provide to moment. pandemic our is will like in a it Reliance drivers this actions expect taking I our QX impact we I situation. address and to address and the first,

Homeland go foremost, under our Infrastructure this around the locations to thoughts Security everyone at and people First reduced line, and as Agency, and who war, of our payers Department are Most world impacted. helping out those Cybersecurity the fighting directly the continue essential the Securities, United front on CISA of businesses guidance. operate, to levels albeit especially States

to continue suppliers circumstances. and We work partnership to withstand challenging closely their with are and support these our for grateful ongoing

and We are uncertain our engaged their with needs to time. this adapting support difficult to customers and and listening address and through

time rightsize our suppliers that come. the reductions current new prepared crisis employees our including up face and ramp ability to taken believe with reality, quickly emerge enable laid-off when including We to us workforce we intact, to business recall and the to to actions, levels customers sustainable have will difficult operations to from and this positioned

metal systems masks. converted metal the sanitize of supplying be supporting pleased to decontamination around aluminum are care aid to many being country. construction for Importantly, processed the facilities on patient NXX our necessary name for are to few, for in walls COVID-XX businesses ventilator projects we of mission-critical for a customers To production, hospital and and response doors

fight to equipment and and front which such we the care opportunities responders We the the glasses live as on communities safety and are personal proud work. contributions support other COVID-XX. many end, our providers lines to improve been and support many masks of in donating businesses that To and service our of these first health have to that protective against

the again, safety time is stated, health, As most Reliance. well-being core and of and at our value employees our I important have time

with heightened remote by We safety we employees We implemented comply immediate in and canceling impacted to their form improved or support to aid sanitation due social to from time temporary in the work away care distancing paid risk and and facilities. to took families. to such, measures the our our the lower workforce action standards. As employee routine, the visitors virus provided needed employees COVID-XX, whether by work our events for travel restricting promoting to exposure of to group

our to employees fund assistance Reliance employee COVID-XX. provide to impacted emergency our Cares We expanded grants have by

unwavering one our I at want communities dedication their to large. employees to of health take a for thank and each every at and our and safety and commitment minute to Reliance

the Finally, bad would support like model is throughout to we and our good history. both company designed operating times to I reinforce as XX-year have through our demonstrated that

in business the current Although unlike anything past. we experienced, believe our will model this the has us it particularly resilience as situation, we help have challenging the time just through of manage

to September XXXX. and These in allowed a Reliance need what fell doing through to and June the shipments For and by over price year. immediate declined X during We inventory stay from we We're our XX% XXXX actions safe to reducing us billion lowering month selling for by XXXX on our workforce average the of $X XXXX ensure period recession remain XX% healthy. great including do from XX.X% instance took XXXX. our profitable actions

concurrently solid focused our financial position. on maintaining We're

our very $XXX.X of a revolving credit balance of available as XX. sheet on borrowing have facility million with an investment-grade March strong $X.X rating for billion We credit

countercyclical promotes with effective which model business combined Our working when liquidity. enhances flow generation, management capital cash

of our being with In addition, expense our highly provides flexibility, variable cost SG&A people-related. XX% structure financial approximately

further As our including flow approximately in our we support decision our reduced Since we March reductions quickly stronger I further, have back if workforce to force. difficult These decisions a the by X,XXX workforce warranted made with X made cuts, X, and employees to have energy continues basis, as location-by-location earlier, provides reduce XX% to or either the by us to continue layoffs first, demand. flexibility permanently. reductions on changes of bringing the which closed at were to business businesses through people make going we mentioned or workforce,

we nature extended unique transitionary have past. health support their the impacted in downturn, to employees of benefits for never and we something period done Recognizing is a the families, which care this

to procedures hourly would reliance social this shift and well daily home, to sense, to we We situation, good most and practical other detailed see of times. unprecedented these in a monitor together continue safe all to application common sharing judgment first thank public of as working Perhaps to gears protect developments consistent including performance extraordinary in from importantly, colleagues recommendations workplace of emergency work the and orders I by discussion grateful as to of more actively of distancing and I'll as sanitation heightened drivers. healthy federal, each quarter health state the if authorities. practical. local and for practicing commitment promote my workforce unprecedented I our a the each and now am like

Our business. non-GAAP as of expectations, pricing of supported shipments healthy approach margin the management's overall our while high-margin compared generally a on FIFO environment, strong in a were XX.X% to pricing to softened metals by line gross prior disciplined our direct and focus levels high-quality, with pricing at demand result pressure, our profit remained Despite relatively quarter.

key conditions solid. in markets. to remain nonresidential our for Turning serve largest the construction, Demand end we end market market

products. volumes carbon of first of majority steel supported the tubing shipment strength by in the and quarter, structural For

supported some toll beginning to processing trends second market COVID-XX While for place the are in in in recover, Demand started we are ongoing activities projects the being by optimistic are the market for after cautiously construction automotive vehicles. the service off quarter once that we strength lifted. strong, orders construction up see aluminum shelter year demand deferred, related to nonresidential provide demand we will content the picks

of aluminum of mills many closure and mid-March these sudden in OEMs to and demand. COVID-XX the sharply automotive However, due reduced steel

the at us operations drastically workforce toll first of and XX%, immediate We toll our by processing decisive, by the Focusing took the both action, quarter. cut end to reducing our Mexico. almost U.S. at processing the production operations in

highly our processing toll volumes first ship the a quarter this of we demand be production processing Aerospace the level to recovers quarter. our relatively uncertain On against able are beverage the support investments market the shutdown as to market note, skilled as canned quickly already expectations end appliance more remains to was employees. remains throughout that well the And and automotive strong to during increased orders our the and highly in bring We value-added progress. and believe facilities While duration the positioned we steady positive in will for back at steady equipment. proactive time. continue backlogs we due fairly

flat. quarter With the XXXX our of first quarter to compared relatively down selling tons XXXX, only price X.X% aerospace first and our average of holding

as quarter commercial forward, are to for activity Going of in second direct COVID-XX. aerospace beginning we decline the result expecting the

aerospace defense-related aerospace air We for our February. the end steady has and Conversely, supporting throughout businesses evolving Demand into these the industry both in will given traffic situation January continue equipment markets, monitor April. impact. and stable to agriculture uncertain with heavy was regarding long-term and construction trends strong continuing remained demand

and However, both which point mainly markets and reductions for levels. in spending this remains in leaving uncertain outlook energy, these Demand oil our time. natural March significantly in in is declined of April, low at gas highly at

end of the market. in that close to in Given decision quarter our of drilling prices production lower oil and technology first the changes supporting permanently made the increased we've businesses, significantly oil X energy global led XXXX, to

We remaining business. energy our assessed also

Given path significantly charges which that as our closed with long-term market impairment recovery, as businesses outlook resulted unclear well has from reduced cycles energy those business. for in an prior of the

in steady for we semiconductor XXXX. on a will result, bright its recognized As was of quarter, improvement demand the with the shortly. XXXX, a and quarter restructuring Karla million spot of from charges continuing market first $XXX.X impairment which The elaborate

In X.X While were COVID-XX earlier ton. up in excluding of same processing our compared North the as first impacted the negatively by of to day semiconductor in compared operations tons American XX% quarter our our sold our the in March, the per Asia operations. down part toll overall, April, to period weeks were

nearly that end like uncertain diversification markets, and products decentralized will these While of geography unclear today. model well challenging operating intentional all difficult I'd end we that anticipate times. well as will as recovery follow highlight markets our serve remains of and that our and our through our for us outlook to

capital to Turning allocation.

strategy through has volatility sell into important and on demand is to cyclical overall on balanced believe like characterized capital philosophy challenging Our stockholder allocation maintain a and Because focus pricing it the flexible strategy. not growth times executing we same by we returns. changed. a these, market, this we're and opportunistic Even critically subject in

levels, cash as demand which in are needs to a current to continuing quarter, cash model, business generation our the continue Further, consistent which our the cash downturn. which capital during a result of even operations period rightsize into first free Our are flow with built typically up working helps generate countercyclical our a we our higher. to inventory during philosophy, ongoing reflect is

capital remain we position, comfortable reduced XXXX $XXX million. with $XXX Although have to liquidity our expenditure million from budget we current our

We essential to effort innovative further will our and deploy cash strategic technology advanced our fund to projects customers an support capabilities. equipment through processing and the in additional strengthen value-added certain needs

will we prudent it nonessential that opportunities. these determine We CapEx invest is defer until to in

relates of on we As we number December given Fry surprised track. current on acquisition Meanwhile, remains the acquired in the to the are which the market, in Company, M&A, of integration reduction environment. it opportunities not to potential XX, a Steel see

by diverse is a delivery you service with bar long Santa As In to Fry California, will Fe general a driven Springs, Steel and return. distributor line, next-day commitment. regard in stockholder offerings brand strong superior product customer a reputation, recall,

continue for are done have pleased through our to XX quarterly consecutive a payment delivering the as dividend We years. to regular stockholders we value of

the XXx, increased the increase recent our most Since our we've quarter IPO dividend of first in XXXX, including XXXX. XX.X% in of

of also our repurchased in $XXX first stock the We million quarter. common

unwavering that concurrently focus results expect opportunistic markets the extraordinarily In near-term market directly delivered despite in circumstances approach cash from our as coronavirus difficult mid-March. empower in as the on and we customers the again their family we impact to each first would beginning must every through conditions in our quarter, repurchases, we for this solid preservation While in companies efforts to employee crisis. impacted we to ongoing and our summary, in hard COVID-XX. Reliance support business work operating as Their of a businesses flexibility thank collective their manage of remain recover were pandemic to generally our from and safe resulting I to us in essential unprecedented as our consider favorable like once environment. commitment the well

challenge result, continuous a to improvement As our aspects business. will we in ourselves drive all of

our of to in want and as I forward. will that safety However, make the reign health customers, suppliers moving always employees, we communities emphasize decisions supreme. and

diversification on of and help will our look businesses model our us will focusing recovery support follow value-added As the strategy processing that higher-margin through and this believe we forward, crisis. we

enables evaluate its Our up operations us decentralized ramp of each quickly. model to individual and merits operating on our to business own

sheet situation results innovative Our as Karla dedicated time laid a to strong employees our and will quarter We I company, currently preserve our of stronger jobs flow are are from and detail. the the operating off. Karla? bringing more attention once with over situation look financial this to emerge those you from future today. call enables help Thank and key forward our review employees, to today, our we XXXX and in support stabilizes. for cash now more we customers business and first positioned who back to for your turn us suppliers well balance partner believe to the continue demand strategically that majority our

Karla Lewis

Thanks, Jim, of reduction slight of X%. up good the quarter XXXX, sold, fourth down the X.X% first everyone. first shipment with selling our Compared the Net our average by driven due Demand XX%. prices, a sales of sales to morning, mainly of quarter increased with X.X% lower increase of XX% price for metal X.X%, guidance levels. net with billion was decreased in tons consistent XXXX XXXX, $X.XX and only from healthy quarter in a was X% which to to

to coronavirus and X%, quarter declined below a of selling to pressure result the guidance to X% sold pricing price due compared of as ton average up pandemic. XXXX, downward the Our mainly per our X.X% fourth of was

our gross on XX.X% to of basis for sustainable at Our first estimated the XX% profit GAAP margin of above range was XX%. was XXXX a strong quarter slightly and

the who, continue increased Our gross in of million strong margin performance value-added to this day-to-day level of processing of sales. related best profit our resulted profit of of of discipline direct in is our customers. maintain focusing basis, XXX services our excluded result in a gross higher-margin of on certain quarter energy On included inventory increasing non-GAAP a pricing that field, XX.X% despite the managers closure orders by LIFO the $XX a basis the by our income to This which is from provided of non-GAAP our margin and of cost the charge million to of businesses charges FIFO points circumstances, XX.X% and $XX.X measure to fourth outstanding operations, and XXXX. the challenging XX.X%

We are very proud of and grateful for their efforts.

per recorded As share of LIFO earnings XXXX. share or income per of the quarter $X.XX of income earnings $XX million $XX $XX.X LIFO I mentioned, quarter income of the fourth we of million or first first share in in XXXX of LIFO earnings in $X.XX diluted the million of of $X.XX per quarter to of or and XXXX compared

million uncertainty LIFO annual our to As $XX of and our a in decline adjustment prior our significant should estimate expense. metal environment, updated in continue metal to million have rightsize we pressure we the result of quantities pricing levels. estimated downward LIFO on LIFO demand from current and as Similar lower experienced annual pricing to reflect we XXXX, $XX what to of inventory income

generate expect benefit which our profit margin LIFO We income positively to and gross earnings. will

At method we earnings. reduce believe March million LIFO volatility XX, helps the and reserve our that was LIFO of our $XXX.X the

compared X.X% in to $XX.X in quarter headcount quarter. shipments, or of quarter the XXXX to same-store expenses XXXX first X.X% million first average the the a SG&A down X.X% on XXXX compared reduction quarter decreased our Our first first with

we the in I'll implementing. to discuss contributed also lower are expense shortly discuss process structure I reduction drivers of more in the detail compensation actions our when performance-based expenses. cost Our

certain for energy As Jim our significantly. our of deteriorated has businesses outlook noted, overall

in to over future have our the our quarter consistently assess energy reacted we we businesses years, the of the made X this close decision Although during market the outlooks declines first businesses servicing remaining to for market. to and

a per quarter and of $XX.X result, of in first charges inventory in share pretax included earnings cost of charge the $XX.X of XXXX. including write-downs million sales a As we $XXX.X $X.XX million or of million impairment recorded

of the income XXXX, non-GAAP proud we consistent quarter quarter these a for with with very margin first $XXX.X of was in and first of margin of Our pretax our pretax results. the X.X% million, pretax XXXX, are

Our per we quarter from down in first for XX.X%, for time, was tax effective At tax estimate quarter slightly our year be XX% X share $XXX. income first rate of approximately rate income the resulting for will this full of the of XXXX. effective earnings XXXX quarter in the the Non-GAAP $X.XX. XXXX non-GAAP attributable first was XX.X%. net to of Reliance diluted million,

from our to $X.XX, of out $X.XX. million earnings have to were our change non-GAAP which income been $X of per estimate exceeded in $XX our to have expense, XXXX quarter you would guidance $X million back If would of the range of share first LIFO approximately

earnings XXXX Our first $X.XX the pricing due quarter from restructuring first the of both charges. share diluted of in were impairment per metal $X.XX quarter and to down and XXXX, lower and in mainly the

We balance cash XXXX. a repurchased million approximately million $XXX.X the for operation generated of $XXX $XX.X expenditures, dividends Turning total common sheet to at our million flow. flow stock during from $XX.XX cash $XX.X capital shares our of paid an of and of in and quarter We million. X.X average invested cost million of stockholders to our first of

we cash nonessential preservation, pausing inventory have with As focus Jim including adjusted uncertainty currently to the mentioned, allocation expenditures. and our significant rightsizing priorities our capital that exists, capital on

ratio as XX, returns of investments stockholders. debt XX.X%. of Nevertheless, total our long-term sustainability outstanding $X.XX we March support as our that growth company capital concurrently in was At remain billion, well our provide continuing a making XXXX, to committed the and to net-debt-to-total resulting to

Our net-debt-to-EBITDA multiple was X.Xx.

our credit are support ratios our investment-grade well financial leverage below and rating covenants. Our

billion Due our we $XXX.X in we overall the which of this time. we uncertainty, end liquidity challenging credit trends, the at credit facility, future we to quarter, if XXXX could and lack conditions macroeconomic confident metal markets demand had for operate, needed. to additional we that end have in capital the continue believe the market markets quarter first this As not and and pricing pandemic and million available stemming of the coronavirus $X.X operating we through of guidance ample revolving second visibility of from into environment remain the on in will provide raise the

the take as we to actions will and expect this help However, general conditions market downturn. through us to we guidance provide overall manage to

of reduced our near-term levels, than which the by levels related under of decline profit further previously severance levels expenses pricing which from We increase we our In have To expect is competition the XX%, net shipment in currently SG&A remain extended coverage costs. pressure our fall that April the even anticipate further lead to could any erosion benefit some margin. strong approximately levels. that we to And gross could and lower expected metal shipment will second beginning and discussed. current offset reduce to this of quarter in type environment, could of XXXX, workforce

further levels to shipment expect decline. workforce reductions We if continue our

in In result performance-based addition, expense. will reduced profitability compensation levels lower

on also shipment our We focused inventory rightsizing are to meet current levels.

partners purchases the have certain worked and orders with our our in mill We near term. push reduce to cancel and mill out to expect

quantities bring from to down each leverage and our Reliance's We will look purchase levels. inventory to in overall inventory other company-wide smaller

However, a shipment lag to levels, rightsizing inventory. with will lower our there be

high are our In impact and help and operating to families, profitability. these take their to appropriate and non-GAAP along to a processing another by service value-added believe field we managers despite liquidity focus pricing employees strong never we our the quarter produced and execution long-term had the and Excellent we we lightly, suppliers, given also preserve results quarter resulted anticipated. our environment strong these softer efficiencies levels closing, of yet of necessary our earnings. steps to maintain with While strategic actions in customer on and than the in our first

to of excellence. safety family ongoing our Thank the and operational health, Reliance companies your to for you all again of commitment in employees

business spread ahead us taking than strategy model, slow we face our times and emerge the proactive I'd statement today will downturn proven we stronger together COVID-XX. from even of work difficult believe Jim's echo to help we we're While the as before. measures all like to this that

We remarks. like with business we impacted time, all. look you and Thank Our to our forward thoughts to can we attention. employees levels That up call concludes are and And that to activity we our this improved for work. back safely to wish open good our employees to your the would bring at so health their Operator? prepared families, questions.


Instructions]. [Operator

Rosenfeld Seth from with comes question first BNP. Exane Our

Seth Rosenfeld

of decline market to like operations. a of please, processing toll auto your impact get sense, on Just in sharp the the better the

terms compression earlier expect gross remarks, in of about the performance of that, the of in of to some have margin commented seen And or perhaps has headcount scale particularly business. been I you contribution we potential You outlook into believe, you should moving perhaps QX? that figure? in margins figure. lower toll part gross Or risk think the processing? going the Is into about decline the the in that you XX% under-absorption, we see reduced sharper from holding that costs should How the when the is in should robust. QX, representative commented fixed part witnessed? inventory by earlier believe volume much this losses of How about scale just of that compression in we a obviously, margin think roughly for your decline QX you think I prepared

James Hoffman


there. So a questions of couple in

the a happens market that's drop and start on having announcing when customers themselves, I'll our that you this a and who's doing closures and part jump to of talk We're remind not I'll the that that we the the in kind auto Let Bill suppliers is fulfilling to through about but in shutdowns. a -- part. automotive as XXXX what a good goes were schedule steel of to coming little and going up. metal. our to remind obligations to are bit and you in me We'll the down. The about our We they part. but reduction, good response that business nice of well, companies saw. certain sales, is on have I'm a are about before, we not Bill what started their partners. have we've automotive automotive first, we XX% example are room, when been the estimates those the see The ask market of they on aluminum reflective the

So again, invested simply customers it's we We money what lot react to us. But our strong a for speculate. We've don't in. are market us. a telling of

a And We great continue address giving Seth's automotive? to you that going to the question see I'm market going more as mind, don't forward. color, some to ask Bill, Bill, if on us

William Sales

Yes, really was Yes, to plant reduction tied Jim. auto the XX% those closures.

majority as so looks to back like going It early got where May. those ramp how are highly we've plants we And the got can as terms in a structured up. those start skilled layoff, employees, we plants Jim be of structure We've of those a place back to said, schedule. in in reopening a bring

to back the was on that time in we'll things reopen to they that be react ramp closures and based a meet able their requirements. start as think I up, and snapshot So to

Karla Lewis

gross are Karla is of of but cost a around questions with we some see XX% Seth, do SG&A variable can down, your our majority, Certainly, on And also, comment volumes outlook. decline structure. related. expenses there, with The we people this cost our to profit and

go that the a we're to we that to that big There out able when hope we, are did quickly, back very chunk we be of had system. up down, So up come very that as auto's of precision to takes while big take strip, But our ramp workforce but unfortunately, lot do along costs of with some a other variable quickly. reductions that. again cost

expenses one-for-one, of scaling. they're we've operate businesses. can essential bringing And as across impacted, our depending as done most that but continue there. out experiencing stop we auto, our other the that customers it So to which down certainly with but lower drastic We their of of are necessarily the can't sudden take in on we're we're volumes was businesses because

continue on focus focused We'll to that. we've So on that. been

LIFO method taking about buffer, You earnings. one from a reduce that of with losses somewhat prices inventory of coming the we the you volatility to our because in LIFO of asked down. have inventory costing and speak, the our so gives because losses reasons it helps That's inventory reserve that those

sell anticipating end hit we which, own not we're into, as we there. And in taking market So suddenly we the the said, hit is losses. inventory inventory remember has don't auto, hardest that

because there's out anything part aren't any of the happen can things we are weathered inventory can holding in there that there people those out just competitive impacted as to think much erode we're but landscape Often, doing, did don't in small that of explain cost delivery, there the just losses higher before, the are inventory. there by as get order -- We a we size. a downward when we're there's processing the our to our And supply things still business. the remarks bit. trying And still that So of that's could demand gains, margins value-add I and market, in first being some quarter. profit lot this related the have pressure. when prepared cautious we and less comment see We general be and marketplace in had gross margins competitors extremely strong others that the through more and next-day

James Hoffman


So not hold silverling, comment, just at inventory their automotive the companies plant. one more do

look up, to possible, start parts which very that. they to as quickly when supplying we get do they right to quickly to us ramp as in So can do back

Seth Rosenfeld

can that of still gross you're into confident guidance range are QX? least be bottom press just recently a revised quick follow-up. XX% But can The QX. I that now at one XX% to If margin. the expecting of greater end Obviously, with range you LIFO met going into tailwind

Karla Lewis

on as as period mean, I would we It could about QX, are you've now. depending I be work see. say think of things we anything try it's every this stay think time we extends, be -- hardest COVID-XX -- certainly anticipating should basis. crisis. the sure to how bump We But I'm a that sustainable there. But hit we're annual change on we right on range we seen things said, think should But we currently we day. we're this basis. that all that, currently, that think we'll through LIFO confident in about because an I kind unfold I within we as down?


from Tanners America comes Merrill question next Lynch. Timna of with Bank Our

Timna Tanners

just pretty I questions were all-encompassing. last was to the I So hoping clarify, think

a So and wanted I understand. little just down drill to bit

X/X. want think labor that variable? it's key for little Or that we a is understand about overhead. then to it I on your is how that? lot. operations X/X and But want and flexible just of provide us on less framework is -- think the you've If framework can how Is can rightsize more thing much you because X/X is I assume a done to the to other you bit ask to X/X fair the

James Hoffman

That's it. good way a look at

in know. a to is quite We of don't talking filling is. need of level are kind You challenging factor We're right how to I use mean, people this fill as -- certain we facilities. bit the now. and uncertainty keep our orders. you There we we're running a need we're the how word unusual about to when orders

we anticipate called up, come more. ramp businesses and them back. anticipate also -- of we be they because when quickly. people could additional part up ask that -- continually major a quickly that's us do remind we to able do laid business. We be I They these fairly value-added customers' more As But or are and off to why they ramp we'll back the our

don't to far now, the and of market go people that think the really with we headcount, kind are some as employment right right we we good of way choppy right now have So the elsewhere. want as have we level the we

So them best and take to we can. the we them laid try care keep off of

as good So this we'll well you Timna, before, but our we've it. when comes to is to rightsizing SG&A done decisions this And cost. good it we're know, unusual, at make continue

Karla Lewis


we've plug give in through -- a different model past. so is Timna, this you into been a because than and And I formula that this can't on the one to downturns

earlier, I list. a short As we think mentioned fairly it's

differently U, long, B back came a different a a been has approach slow we because from very in of we than our 'XX, come the this. So nature improvement. was it little If where in back of or

a bring employees lot expect to those of We back.

billion from our XXXX But we approached that we've inventory, period, which so putting did. more them where during a opposed and again, period. took structure. go, over our XXXX on this separating was out than workforce. a of 'XX, half at temporary far $X out has way we different XX% workforce reduction We to employment the is people over as took even letting a of layoff X-month in been So were X-month over it our the actually That time. Previously, -- was over downturn

have this evolves. of do lot have So to percent variable. how we give versus of don't we not fixed We for are we of to have go. businesses our our costs, -- how lot a could a A but cookie-cutter differently, lot see a structured you model exactly but far variable a it's

as I mean out said, there. that's Jim So looking are [indiscernible] certainly we at

James Hoffman

their what is that on depending what location operation [Indiscernible] particular is. operation, order count by

Timna Tanners


within kind X like we depressed And of could this -- if for become So about it a being to summarize, QX gross margins is margins [indiscernible]. time maybe in talking I 'XX saying. row, gross why thinking you if QX that's QX or to you understood what full quarters look year you're the the you're had range that's which I or at profit 'XX, guess

how the negotiations Are mean, to are just you a that's when Just those unusual just when understanding wanted as more wanted delay if color And to those I demand is then understand recoup well. can working little how going? you'll that. And that it volumes So they mills? back? I and you go just is clarify to extend?

Karla Lewis


first right. question, part your of yes, you're the to So,

time we little this a reacting we're different are today. the way with know the of we this said, we more because like think what short-term actions based on Our nature is

the is. and And we're to business years. value with that's at that in but we've over deliveries, anticipate think able last our I actions, high-value maintaining with few activity the coming gross with our the we and those positive customers provide profit appropriate of So risen quickly we're add the anticipation that increased there whatever taking we that our of model, level be being out to our able fairly margins quick get to to it the this that support taking being

James Hoffman

mills, the as doing. like far we do as And obviously, to Yes. don't what we're

supported year we with relationships situations, to basis, support And X% with domestic I going a year them. going be them almost a is that buyer. ramp chain them us, They in, than to each domestic. both even a up. and for this remind do daily support they with good folks. time. less a we're period we've when We've we're our you they're these partner on in supply that. appreciate out appreciate And been communication got long We're in we're these the However, everything to other of spend Reliance. know long-standing our does can I'll of in times normal them here to -- and need we has

to according plan. going they're So

Karla Lewis

to import. clarify X% just domestic, And XX%

James Hoffman

around? Oh, what The I way point. Yes, say? did good other


Next question Deutsche with Bank. Terry from comes Chris

Christopher Terry

And on on any working getting wanted bit ground. are more of things think any any Or Are The there just you to customers? from issues just with a first about capital question I expectations. just had your sense to cash the there get collection


Karla Lewis

[Indiscernible] seen yet. fall a on of it. And we've top

coming expectation metal -- receivable. year capital with shipment liquidity accounts the is and this down quickly as next do very working reduces normal are down because to of a patterns. haven't think source that continuing So little inventory. -- be in yet. Therefore that could look really at our seen we customers us in could the And we're our a but the pay losses there slowing positive anything quarter, being We pricing come more we that than do during

bringing about, that Both we're pricing, cash. also As metal to lower down inventory inventory those we looking factors, down. throws of our shipment bring to talked and off levels lower

to So anticipate cash flow contributions reductions good we some capital do year. from this working

Christopher Terry

you shipments. Okay. I decline the just -- you I market. if in talked April if in you I And XX% think heard wondered said then specifically -- correctly, auto about

market, talk just could seeing excluding more you're particular, on about you the that's in a wondered I I bit that XX% decline, aerospace what granularity assume. So if there? there's tolling, And maybe

if talk of just the splits? aerospace context the market you So in about could different

James Hoffman

Bill, why that take one? don't you

William Sales

rates could historically, of backlog time as in that backlog look kind X- is that if used monitoring And to that That shrink brings like the the we've over lead an has we we are think supercycle not aerospace announced cancellations. They're a we're Boeing from But a to there. times X-year like I are the be and been been seeing but much has We their and on us to much there. negatively auto. that indication time, basis, going adjusting go staffing build of before back build auto you that that's be build XX%. this. probably always The is know of us still to as backlog as is said where Backlogs and we're inventory we're in. picture see health and rates track business, mean, that quite We've this down Airbus much program-by-program the situation order we are down business. to mill based Chris, what rates, obviously, shrinking. give doing, by of frame. what coming the Okay. impacted backlogs about X/X. on clear,

to cloudy a how go quickly is in think this, So is miles. and commercial And bit as we'll -- business have we just we still it's passenger the of picture of by flying aerospace -- terms to need I see people driven come wait that out again. little back to

that, close So accordingly what will see based watch adjust we we'll keep we happening. on but a on

Karla Lewis

just Bill strong. exposure we've the been that the the that's address also defense Chris, And We some got see commercial continuing quarters, We've on about talked primarily strong side. market. And at last few levels. good Yes. as

Fighter that years a We actually up. were just that, got initially that time big over we program. we just awarded for that X extension announced frame. has through far So Strike about X-year a us, April, when And and about defense ago million held It's we program extended program. on our Joint $XXX

James Hoffman

remember Yes. that. of thing probably business part then would commercial then aerospace around of is through XX% That being us the we're less about than the be that with out will aerospace, aerospace XXXX. and big XX%, other defense to And a balance take our program noncommercial

Christopher Terry

energy more, one if about energy just in X And supporting may. the The -- I market you Okay. release. businesses the your talked

Just as those that of to put see just on facilities any energy that? your total color percentage how Can to give context, exposure, in you a big are. maybe

Karla Lewis

Chris. Yes,

revenue down. So total, $XXX those rate currently, three is businesses annual In the that we about -- shut run million.

to around our last X%. downturn, coming revenue of used of XX% the within about we out X% were So we were total to to dollars down energy we be --

to X% about it's now So X%.

us, exposure. it still of the see continue struggling But of hope part huge we in to energy the levels So really we businesses exposure. that I got we felt the been there needed, to see recovering not we a what's going the good so for a remains service been what still We're portion. energy -- are a consistent better decision. relatively market future. improvements to had think We've didn't couple But the -- at made we we and have was that our and

James Hoffman

some comments drilling for The Those has under been quite consideration decisions just prepared made. Chris my and in I time. changed. And have technology

piece at smaller, in market, energy-related intention is pie, to So the that leading which if every patch, consumption it And a that fine and and has in the the of shrunk. from we of look are. that in have a it smaller companies in We have player pie support strong you metals be oil continue we them still we'll some and very market. to be player a


from Next Hacking Citi. question with comes Alex

Alexander Hacking

utilization at? would your closures the of Just operating follow-up kind energy residual question. facilities, what guess, after last those rate the business of energy two on I be

James Hoffman

but soon customers I intent. other can't business. absorb you a those that number. we the companies to is to percent, through I our too shut. able the tell, decided energy that That's in give what firmly to we serviced have but can't say We're that

what So be operations. But I it say, just it percent the was. it in new be. would to what will suffice know don't better don't the be utilization I than know the will

Karla Lewis

too. not of Alex, the And business, remaining They energy. parts of of they're part the is the have remaining businesses, are reason of them other because energy some XXX% some

years, last rate seen would difficult. declines, utilization as We've, businesses pure be over a you giving we've as those So different right-sized the of all few appropriate.

a usually capacity. of might about company-wide during utilization think I times, normal little So we average be less operate X/X

but little businesses energy the we significantly below or at have not that, looked would So probably are it differently. a

James Hoffman

that now with of with right in going the oil. pretty whole on what's And market shock much is price

we'll you fog So when know clears. let the

Alexander Hacking

guess the I that? within than I then would how April, And Okay. early fit a in of the down better assume average. that XX% fair? holding being little construction construction your into shipments it does is around that context Is

James Hoffman

that become are quarter. sudden, slow that's burn-up, continued said don't be that okay, and canceled. until all deferred. first we a they been We point, nice the call jobs they've -- Yes, fair. after these majority know already And to the long, the have for of fair. it's a I of call, how That's were but Up that in books,

can't cancel midstream. project an big a order or You

guess, always a So I than though we end -- happens, big in I as user, cash an for kind will when us. spend good And that will we -- hope that's anticipate some the a business flow. infrastructure be be of participant that come on perhaps on others, the most their likely for And market And good their that sooner there they see business a to back there's the strategy we're we're don't had business the just and now and of is even hope, that there. horizon. way But right it that slow well. a the drag think based

do when monitoring put daily equipment us and ask that go that we of when actually to to history money -- we've customers recessions, increase they of again, these of the do obviously over anticipate And And value-added our on this the more years end that, you you on to through have that year, spent business, that allow the when positioned in needs. to the a innovative we're I'll us our basis. in to kind a lot back. and a come customers' we and exceed that So we're spent sudden lot do meet money remind

Alexander Hacking

there but And are about I one, already between I aerospace, apologize. quick the into this, then I transportation other? more split I know and know one the X/X roughly shipments if may. just Okay. sector, should autos your what's of

Karla Lewis

Yes, Alex.

of X/X We about is majority various Outside about just what truck auto. the think then break is is probably category. little there's XX%. is into railcar, This dollars. out processing is that got barge, things of metals X% our on total sold aerospace, we yes, identify very shipbuilding, averages around transportation, that, which within auto can revenue we that total So trailer, the where And you toll revenues. other based in


Instructions]. [Operator

Our question with from comes Markets. KeyBanc next Phil Capital Gibbs

Philip Gibbs

projects? keeping essential year? thinking growth the for the this you're that CapEx specifically Anything in of terms we of Some that should be

James Hoffman

You -- Capex. in could our general, look, talk we about again,

CapEx all on. year mandatory. that. and of we things hold need probably just to lease we We've not redecorating parking are to what defer those on resurfacing, It's up and are CapEx offices types do our lots that basically we focus we've another on that keep buyouts, that kept Our that's that's of we ones type piece forward. year growth maintenance. equipment, we call innovative line replacement a if can to piece it maintenance. every need is already XXX we've of placed There we have Remember, items. There's decided that That's going that were equipment. orders they're new like holding And up things to could and the easier to equipment, projects or next or There decided things that.

tooth to these before, during more. So do a when like come comment that a the on mentioned recessions ask end, we I've we lot our with other us fine customers out went through realizing

allows the equipment We've kept us equipment the we've that allows to do be that us that going. equipment And -- to more. innovative more maintenance kept efficient. So

originally -- that the degree CapEx So we're going thought. a not going still to to to and be participant had the we're spend in we

Philip Gibbs

value-added your next adamant people as That out now, basing makes survival decisions and their from the sense, need on We the happened diversify are preservation. here X look more you to of what saying supply moving and over being shouldn't Jim. chain need are the Because more anyone. we these When and these from China. years, acceptable months components. make about But steps last customers X be in We clearly, away start cash to I a our specialized them. we to know several lot think need of you to or away

James Hoffman

hope -- of turn that I way I listening. agree. to a be a more are there'll We've reshoring. with I for seen of lot hope that. guess, I

back I how see that anticipate we on only the Our that. modeled not operate strategy one not And but of is I one how and what's coming how future. the of that see goes. more want about in we front of to are to to and was the be change, now, going be operate talk considerations, would as to see and and of business more we And do North is concerned. we companies, that we I'm good those certainly world, we'll if for going be America, running do -- and to our we mean, going as U.S. be certainly, that now look should that, on how model in our will it far of

for As that Reliance certainly and for be domestic domestic an the our back country good American, will the come does suppliers. good manufacturing and more

Karla Lewis

few broad-based has been over can't the say But this past all years. that trade at Phil, And this certainly, point. we the with issues

within overall shipment for and new new take are we that help them and up opportunities some now are customers talked and to some further their to adjusting seen But that, partners do we've look products. have breach seeing have some levels where of the our some fact that. actions have business pieces We about of to down. downstream And customers some picked

Philip Gibbs

If terms off. on But are readiness? I then your telling you I in more one customers in just and seeing of Bill, hop could. in sneak there? terms I'll I you And what could are of market, semiconductor and appreciate that. Bill, what momentum If the just for

William Sales

as through of China did The And Asia, Jim first in the earlier, been said from a the I year. Phil. close balance see about customers still will are spot. a we're and virus. COVID semiconductor our optimistic that. kind you, the the tell Sure, watch talking Yes. in on we demand that's keeping But of early a good rebounded, has little market, bright quarter impact still primarily and

As you a can on dime. know, that stop market

good very closely. the far, balance all through so watching very we're of So indications it should continue the the year. be it are, to But


from comes Tumazos John Research. question Very Next with Independent

John Tumazos

a little since acquisitions? operations smaller with lot revenue inventory there more to could would the and here for elaborate have be because below volume be have some you a It less more like could sell book less Could And chances that on willing value much? there and so buy tangible fallen to maybe things outlook they seem even values debt?

James Hoffman

And requirements is a of doesn't what December there. We've large out buy far We've We at. nice say. look have And over for bought it's a year, hasn't uppers. this we fixer that couple meets And And time, for see But fancy, immediately and profitability interest, look the open there. Yes, work of years -- I remain it only small this to They of extremely got was they're furious is. or how realized, business M&A significant of sure I'm pulled you we our amount they involved can John, we've we've period has side. of be of -- fast There's Nothing seen don't Yes, what pretty the on our or changed. in been on we company the a last companies our bought we of but the one. tell that Jim. as companies. XXXX. small over We acquisition regardless large tickle trigger bought strategy just companies. you really accretive. them. there's fewer so been we small

John Tumazos

you receivable little cash explanation there seasonal a in that are up some million a or paying the to accounts $XXX March The about quarter. bit Is do slower? of used that have category customers

Karla Lewis

our along holidays because that's the customer around during with that John, Yes. No, and typical closures of sales QX. the seasonality,

sales pretty then the outstanding levels days. And stays and -- shipment that up XX-ish QX, around seasonality kind in days of we quarter-over-quarter, are consistent back -- our monitor receivables comes normally Our down. down, we with go

so seen so that stay consistent. we've pretty And far,


I for to There you. closing like Thank no Jim floor are questions. to over turn the would comments. further

James Hoffman

responders, health, you thank our taking the always Thank to has reiterate on suppliers, to Okay. time those the I'd I'd serving families, much employees, the And customers today. And care their our lines priority. and safety very of for our sincerely the front especially like been that our the to our and needs. top health for like care first workers attention communities

you prayers thoughts through and are of Our all this with difficult time.

that conclude, of I Global the before Steel Merrill Conference I'd will we plan conference and which to both be of Metals May, everybody KeyBanc B&A participate to in as Mining Lynch Now a well like held remind Basic in virtually. as Materials

So to for reliance, you all continued like to commitment much. I'd all healthy. thank and your very and and stay safe support Thank I hope you you


This concludes today's teleconference.

at for participation. time, your disconnect You may you this thank lines and your