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RS Reliance Steel & Aluminum

Participants
Madeleine Crane Investor Relations
Jim Hoffman Chief Executive Officer
Karla Lewis President
Arthur Ajemyan Vice President and Chief Financial Officer
Martin Englert Seaport Research Partners
Emily Chieng Goldman Sachs
Sathish Kasinathan Deutsche Bank
Phil Gibbs Keybanc Capital Markets
Alex Hacking Citi
Timna Tanners Wolfe Research
Call transcript
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Operator

Greetings. Welcome to the Reliance Steel & Aluminum Company Third Quarter 2021 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Madeleine Crane, Investor Relations. Thank you.

You may begin.

Madeleine Crane

Operator. you, Thank thanks conference and financial of for you Good to to discuss our call XXXX Reliance’s joining morning, all third results. quarter President; President joined CEO; am Jim and Lewis, Arthur I Ajemyan, CFO. and by Vice Karla Hoffman, A the Section recording of on investor.rsac.com. Investor at of will website posted call this be our uncertainties subject on operations, and and release control based may of number implied on information by may related performance other to and economic actual of conditions certain on statements. cause known materially this or are forward-looking may these involve change press risks, to the The the be the forward-looking our including results, contain unknown company’s results, a future different pandemic the assumptions call company other or the COVID-XX and achievement impacts which the or under statements expectations are factors, that the which performance not and of be from the factors furnishes but These December are include release in or Risk year under the XX-K XX, Securities other factors report Factors, Exchange to XXXX, ended and our and Reliance the documents not those on this in the press for caption files Form disclosed company’s with disclosures Commission. limited morning annual therein the provided call and the of today’s herein. company The information date, on press information speak release and update to disclaims and this only the as any duty turn I Reliance. now the will of Jim call to CEO over Hoffman,

Jim Hoffman

throughout to will I Reliance by a priorities. family companies. high-level today of Karla end for results allocation third to of you will inspired us operational thank to our my performance a And the with of operating conclude outstanding joining continue results. everyone. by speak quarter colleagues by quarter review then and our XXXX overview XXXX performance morning, I our third discuss demand Good market. And begin will with the our trends third capital Arthur quarter financial financials. be and

combined metals results. to excellent favorable record pricing produce another trends, model, of execution setting financial and quarter business resilient Our

ensuring gratitude Beyond them and and their like every challenges have the that to recognize the excellence of our my were our of operational ongoing all that would of during persisted health safely the business priority colleagues operating I top execution safety of many to Reliance despite to model each pandemic. and unwavering I’d like of one month. extend includes our to Hurricane last by directly for commitment especially teams Ida impacted our

on personally. our Ida were While of impacted operations, our impact had minimal colleagues a some

and match that come of are example We’re together of in Reliance available company very safe to is Cares was is and family other. of care happy the support how Cares, program, assistance. that those Reliance everyone each need inspirational funded employee who take an our and and Reliance meaningfully of companies impacted

$X.XX metals billion. key we quarter, of carbon environment, steel and net the pricing of sales serve results, many underlying our through featured the at with most fundamentally quarterly mill price of increases the which strengthening stainless along record trends strong products. favorable demand third end to Turning multiple persisted pricing drove notably markets for The

million. in of led expense the us in Despite resulted metals strong, quarterly profit continued in control dollars record pricing quarter, XXXX. of $XXX.X of managers million third a of consecutive pretax quarter net drove record increases on our a third margin our In various pricing helped the and LIFO focus and of to sales gross with along our continued combined income third quarter profit gross addition, $X.XX our record, dollars expense that strict quarterly $XXX.X the record record discipline supply which field, XX.X%, gross by quarterly in sales of the profit billion with when in generate disruptions

EPS macroeconomic record highly changing circumstances. the an representing business per to result, and consensus. earnings substantially were from $X.XX performance our attribute increase diluted designed our also record of our analyst this perform guidance a prior our We resilient exceeded both in throughout which and a achieved model, of quarter share to strategically As XX.X% is

are end we and highly markets, products geographies. diversified First, by

proven, focus to tight pricing. ability purchase Further to our metal making volatile entrepreneurial structure important with unique despite our strong small Second, inventory pleased need our turnaround sell family to rely companies, cross a supply among with managers customers. rate just relationships value resources and source company close our tight our has appropriately as and us to third decentralized of that meet the secure a materials, for to environment need current the with raw market in We spot allows on were leaves and we provide, properly our the We to times end indicates which we our inventory with price and quarter in domestic to goal, In decision products inventory ability supply. came customer which mills, in continue metal also in demand turn localized levels, our below our is this inventory the the the the of the field the particularly on coupled demand. wide particularly we quick order services through in balanced we longstanding, is of effective.

value-added model return We that our our estimate apart. capital strategy and believe and of of our half allocation We business growth that our sets it to that high our Reliance that resilient us activities. strengthen dynamic year expand technology enabling capital investment margin expanded Third, proposition to fuels quality, million strong emphasize innovative execution with in approximately is and our our supports the profit sustainable to in processing provides, concurrent organic focus stockholder will directed our significant $XXX innovative to overall equipment, value generation, on on investments margin be expenditure model to along offerings. allocation equipment towards strategy processing higher enhancements service budget and new, has significantly that our value-added last existing flexible cashflow range. I’d increase us that business, estimated, and empowering are growth capabilities, capital this point, like To and

earlier, ability value in the to I margin sustainable, provide support our these additional customers. help As highlighted our field, they our profit the offer as gross investments increased, range managers to

quarter, last discussed as opening many renewable will capital well maintaining at our upgrading, expanding, our operations, be energy expenditures and As investments facilities. on new of including facilities, as existing also focused XXXX

yet teams companies our geographical located diversification. a centers. U.S. in acquisition XX unique with Merfish customer, on management Merfish tubular based transaction master larger one growing with strategy in service The product center. not history. the two-pronged, of As in a that remain October in highly leading is aligns focused transaction focus our the Merfish company and acquisition significant we Massachusetts immediately company Merfish On of is our metal acquiring and acquisitions M&A. United, products distribution is XX strategically states distributor we of a building is the The through on The completed bit is accretive we services our the also X, the And have traditional strong and completed of

sales approximately Merfish the in XXXX. September annual XX, ending period net $XXX As XX-month in had million

the others, However, Merfish’s wholesale and in expands customers copper industrial building broad Merfish markets Among product spaces. end and offerings adjacent distribution Reliance’s residential, which municipal, commercial, in into plastic to sells exposure products.

a for in acquisitions. Reliance the provide area will broader organically in this as and through growth industrial as further expect Merfish help both We platform distribution well space, position further

for the the we in our stockholders per $XXX.XX million In average of share at of stock of and stock cost returned common last cost payment of $X.XX million years, $XX.XX at an an to of $XX.X five $XXX.X quarter XXXX, During also million $XX.X dividends per the average of through $XXX repurchase of repurchased of Reliance billion. shares a share. the Reliance third our million common total

pleased our stockholder and prudent dynamic We are on allocator approach to to maintain capital. capital have to and focus the moving extremely forward simultaneously growth both of expect the and returns flexibility remaining

states to headquarters Company’s Reliance Before I be Scottsdale expansion XX well office approximately Angeles, like our and the subsidiary Reliance’s and of outside I’d the executive Scottsdale, operating senior will new relocating a serve Reliance’s Los our half there. business practicalities. Scottsdale relocation operating the corporate office and first division in evaluation the reflects States, and countries as corporate opportunities of United XX our of Reliance officers as XXXX. principle have related that Arizona executive and principle The to in post-pandemic is Delaware offices through of will to will and as growth corporation office from locations conclude, California, XXX announce

corporate will the workplace maintain presence however Los that innovative redefined who the We California. of remain colleagues the offerings office will administrative needs in a Angeles complement revamp reflect our and meet and with in post-COVID and

for to like has addition, been Dave more extend XX valued Dellaquila. forward In partner a experience two and to strategic a expertise. and a is and independent our Frank to years both warm Reliance Dave his Financial Frank members, I’d Senior welcome in Seeger, benefiting than Board to Chief the respected We Officer. And and industry. metals public for and their of look company, unique perspectives, Executive involvement from seasoned new

they With provide addition less. sustained and continue of XX and am need and quarter to hard the the summary, that also third tight their generating again of once returning highly value in At colleagues consists the earnings Despite same our are Reliance’s while we disruptions strong to of record XX value members, quarter. to chain we hours to to efforts or and the financial metal focus unwavering Board pleased availability, I ongoing continued markets with Dave our the commend setting for during limited work of strategy Frank and ensure supply independent. growth my products execute In XX stockholders. labor challenges our often we our whom results all the share pandemic, customers and of successfully time,

review ongoing ahead, colleagues, chain look attention America and support communities, our operating need contributor to to for remain confident that remaining forward over the we through now will the to today. call key you to going Thank and the and we As demand and Karla? a Karla to trends. I value time Reliance is results our your suppliers, of turn rebuild. to customers, look

Karla Lewis

my Jim, again, to extending Reliance another everyone. our in extraordinary quarter companies believe to trust levels operational also demand performance. for as all family to through begin ongoing times. like like reflect. was their our support, shipment delivering good Once loyalty heartfelt of I for within and quarter would third as XXXX customers we Thanks, performance. quarter stronger continued the morning, underlying I’d my to turn third of consecutive Reliance well thanks I’ll our than for by and record their of suppliers that now colleagues our these thank

tons second guidance issues. chain supply below we Reliance decreased of up temporarily that the slow mainly disruptions, X.X% down our had continued seasonality believe sold for supply suppliers And due with our availability, customers typical metal well-positioned quarter, in our to future was quarter. X% various coupled X% which than the including with in demand more to shortages is from we combined Our the periods. anticipated demand to Reliance to all metal and experience satisfy limited pent-up labor third

While sell the products disruptive support helps during demand limited from availability many the a products. for third of and notably metal in metal quarter stainless escalation price the steel standpoint, market ongoing we carbon most

hot price all selling reached time average near XX.X% second products up $X,XXX high certain may that the rolled of XXXX is tons of of compared another quarter for at namely Our only of or sold significantly peak. to of and XX% of our our quarter in There X%. in sheet. I speculation third excess guidance from to you increase to would like and the flat coil remind be X% steel an carbon sales that rolled are their

for We products, we many and also products. strong of aluminum remains for seeing are the pricing stainless carbon steel continue very see strong pricing to pricing increased other

volatility non-residential in contributed third our field the record quarter performance. outstanding XXXX. and profit reflects at believe managers gross selling our reduces diversity in quality, a and quarterly turn now infrastructure well a end $X.XX high FIFO remained for basis. business, third sequential of capture market to consecutive a effort, managers the excess largest of at quarter efforts enhanced We strong of of is to and strong our selectively which XXXX into which quarter current gross the as margin. enabled by The on effective field levels. XX.X% relentless of pricing benefit to opportunities. margin our includes incremental levels. solid favorable profit with environment We product operating increases continued business record our execution gross the market family profit needs, and new coupled time cooperation on record better margin companies expect the our customers’ Demand valued Our high unwavering already applaud an which focus strong announcement, we Reliance supporting across of us dollars pricing further ensure meet servicing of as end high average I’ll we in basis, trends earnings, prices a construction, of serve And our mill billion level price to key at with margin these our a of profit achieved implementation for the FIFO their we XX.X%. overview in we On gross marking on of margin

in an third but And Due experience the completed for we supply manufacturing data quarter remained constraints utility centers, pricing, and and second projects tons to that quoting fulfillment areas uptick be sold continued can as to of see were Our well also processing solid distribution slightly shipments, compared and infrastructure. increased to near quickly. levels. we facilities, to down projects smaller continue pre-pandemic as activity quarter in

backlogs, the indicators, will healthy and to improve levels activity, our industry non-residential for as quarter optimistic certain XXXX. the Demand as and we shutdowns the positive to key second automotive Reliance customer due through of steadily seasonality, solid sentiment XXXX due into fell continue construction temporary shortage. chip provides are Given favorable slightly to quoting demand to the at remainder manufacturers services toll semiconductor automotive from processing market well normal

challenging investments, have by perform recent as transportation tolling our market and at purchasing facility and Our well facility our storage to in well increased include in and a Kentucky conditions greenfield as other Texas expansions despite support capacity new us opening our to needs. increasing Michigan new tolling allowed customers, a which Indiana,

continuing shortages in our business investments is given strong, area. certain production of to remain as that this term, confident We demand automotive processing subside. growth microchip we are on support we in the toll underlying markets recover will make optimistic level solid and to in and are are of significant levels Longer XXXX our impact will innovation global

remains and opportunities to tolling presence continue the automotive, remained during which both That of the manufacturing the for shutdowns strong. remains at third for underway some above see demand underlying We from benefit declined in to and many and equipment said, markets, appliance, come. us to seasonal industry broad supply quarter, beyond. will delayed, labor other strong. with in industry following expect the customer quarter and from of levels during new along and to and heavy packaging quarter not expand agricultural be and demand Demand a customers, already pre-pandemic constraints. exceptional our third chain combination and challenges shipments construction third end during demand improve equipment quarter quarters And XXXX heavy are we lost growth in the Semiconductor

is well we in half quarter. semiconductor aerospace roughly exposure the shipments were impacted one continue quarter factors markets supply third which was our to space With our into strongest XXXX. remains seasonal normal of our aerospace, issues. somewhat aerospace, in by The XXXX. impacted end in And third While demand global commercial by to this chain regard trend expect of

in Looking we We the XXXX. chain the and the commercial rates to in aerospace throughout our strong demand and levels. portions continue military, continues market solid in pre-pandemic the our XXXX decline. inventory increase build business Demand ahead, and as improve expect defense shipment in to excess aerospace demand anticipate exceeded space backlogs, will strong into supply of aerospace remains slowly non-commercial

the oil prices. in gas improve to demand gas higher define by as and Finally, we natural supported energy slowly oil mainly natural continue and which sector,

see were rig by the XXXX. increasing quarters levels inventory Looking summary, In into and today, financial modest markets the demand of will in first customer the into improvement quarters positive landscape XXXX, in replenishments three fourth distinguished underlying performance. quarter improving ahead, we a with consecutive early of we of anticipate demand record along a and counts, And in we heading XXXX strong XXXX serve. of with that most result

decline, and in positions will in opportunistic results. and dynamic you. once products team certain suppliers scale and set apart with proven, again, I’ll has strong begin and our performance call with even relationships the may solid markets to before the along best Arthur, resilient customers long-term review our financial our deliver optimize business industry to now our model, Continued who us and pricing, elevated if to are Thank metal the results. and turn our over diversity, us,

Arthur Ajemyan

Thanks, Strong solid second XX.X% the the in of Karla. quarter of third demand Good the average to comparison I’ll pricing XXXX selling availability limited to sold price price of $X.XX and sell, the record joining everyone, the and sold markets XX.X% we our contributed majority quarter majority morning steel the and carbon vast period In of billion, sales no vast of per our thank sales in due momentum increase end was same the key increases start up selling the trends. we metals to us. with up by you pricing XX.X% second prices XXXX. for of fueled quarterly prior, from quarter stainless from XXXX. the resulted ton of ton XX.X%, notably, with up in in trends and serve Favorable product over our average product. per

volatile that quarter only limited and made noted, of about coil Karla our the XX% sheet Reliance product, up has lower margin to As exposure and sale. more hot-rolled third

in This capabilities was investments along price falling While sold and environment. selling a average of from discipline instrumental profit up our over third with in level was in price broad and XXXX, pricing of strong diversification, quarterly third quarter benchmark period rising These gross quarter XXXX, pricing added the processing of gross same stable factors for industry to despite XX.X% both XX.X%. significant significant of been maintain strong product ton hot-rolled and charge. LIFO including value per leading have the coil margins for billion a profit resulted margin product XXX% and gross of collectively ability record Reliance’s both in the up $X.XX profit and

Our expense current the second quarter in metal third and LIFO inventory prior a reconciliation in expense we non-GAAP We removes of for FIFO with cost period quarter non-GAAP environment our in quarter the incurred by removes from LIFO gross compared and declining costs profit margin where to by XX.X% and points conversely replacement XX LIFO of $XXX our LIFO each $XXX.X the quarter at our points. release, gains in third from provide rising sales gross prior the of profit margin inventory XXXX record the period. XXXX. exceeded XXX metal refer effect our times of of earnings of reported XXXX reflects of of was basis the million Please basis of cost. results in an in losses costs results and to

LIFO QX $XXX for assumed estimate. expense guidance Our annual based million XXXX $XXX our million of on

for of of we $XXX.X project LIFO $XXX.X quarter or share, per expense year. LIFO million, $X.XX annual carbon Based certain incurring $XXX per As the the $XXX.X product up result and $XXX estimate than XXXX, a quarter XXXX had LIFO for Accordingly expense expense million. annual quarter anticipated we third our third for the incremental million revised now $XXX full our estimate higher XXXX to on expense our increased stainless million. steel we our or of share million an to and to total from by of XXXX which quarter to $X.XX be in cost fourth expense true third million LIFO LIFO charge revised

the cost end As years, hand year. in calculation inventory on our our the on expense to true annual we prior of based LIFO up will at actual

$XXX operating expense provides of to the the today, our year to our $XXX.X of sheet the million significantly annual profit LIFO impact LIFO million $XXX.X declining on is income. benefit prices be This on period on based estimate. available future mitigating balance our results, at of million expected gross metal As pre-tax revised reserve end and this

turning Now to our expenses.

record bulk of SG&A income attributable compared based incentive XX.X% million year quarter quarter and third gross $XX.X compensation The and or quarter or compared from our sequential of higher to X.X% XXXX prior increased profit resulting million and to prior pretax levels. increased $XXX.X increases to were expense Our period. the the second

is Additionally, to inflation as the slightly for to continue most our second compared and and well variable expenses, to costs. freight Overall, headcount both increased the third increased XXXX notably as contribute XX% at quarter levels quarter of XXXX, but fuel XX% related. packaging nonetheless are our of people reminder, pandemic of pre down total approximately third of as SG&A quarter XXXX, the approximately from end of cost a the

quarter income highest of history. Our of the in XXXX our pretax $XXX.X million the company’s third was in

Our pretax margin of record. was a also income XX.X%

effective It’s the $X.XX an third tax in mainly XXXX, in second quarter third again the Our by LIFO XX.X% were the for share generated and expense XXXX, quarter $X.XX third in from XX.X%, was for effective rate to of third rate quarter quarterly that the earnings to of anticipate year of emphasizing third We compared XXXX XXXX due quarter XX.X% the $X.XX XXXX. quarter results of of income tax of higher worth income per impacted of $X.XX quarter profitability. the up in per currently share. XXXX. of We record XXXX our full

out our to fuel sheet balance flow. attributable ongoing our needs Despite operations working flow. to and cash higher cash costs, capital continue to rising significantly metal our Turning

in flow million $XXX from Our operation requirements. after additional million $XXX.X servicing over capital cash working quarter was

in the including with across providing key total or We with no liquidity X.X a borrowings outstanding demand debt-to-EBITDA record recovering credit net XXXX, underlying our our optimistic us markets our most of October of We on CapEx XXXX funding areas I’ll our budget. serve. $X.X outstanding times. million had all strategy, ample conditions of executing we debt current the XX, of Merfish September cash capital United to about on billion billion of solid continue As now multiple turn environment to remain on and was with and hand our facility acquisition our business Xst outlook. $X.XX end revolving $XXX.X had on of allocation

persist labor continue XXXX, disruptions the factors supply in chain fourth supply third constraints, and However, levels the of metal in shortages, of we to XXXX. expect will quarter as impacting quarter other such shipment

the be customer shutdown shipping quarter. anticipate in compare demand we normal to related seasonal by addition, fewer days factors In will third quarter fourth impacted and holiday including the

As such of quarter X% be sold the to in fourth ton we XXXX. estimate compared X% the quarter third will to down

will for diluted challenging be prices range carbon currently with of quarter in impact are per our products per on of ongoing pricing up to We ton stainless the $X.XX steel certain prices we trend. fourth quarter declining than the Based Also these fourth healthy against expect beginning certain quarter, for of pricing quarter X%. XXXX fourth X% product. as increase non-GAAP the the we we expectations XXXX. in third aluminum our record for Closing, selling market price backdrop anticipate higher average of estimate and dynamics, and offsetting the demand at to performance the of despite are operational financial fourth and quarter the to quarter, average metal extremely strong the share for third pleased earnings of sold $X.XX for the the

Thank flow and we’d up to simultaneously open Operator? question. to our the That our like concludes performance time for strong to call Thank continue you the your business of prepared invest growth again our for execution. you outstanding at value enabled And attention. return Our of colleagues your and to continued us in field financial stockholders. this remarks. to the record our all to cash in capital allocating

Operator

the question. with from with Please comes Seaport Thank Research Martin of Englert you. your first line question Instructions] Partners. Our proceed [Operator

Martin Englert

morning, Hi. everyone. Good

Jim Hoffman

Martin. Hello

Martin Englert

construction how lead markets. Can touch of the you’re across into time in on or amount on digits I fair looks we things end single products [indiscernible] year. But indicator on demand any like backlogs prepared a is this seeing close what provided and of next Are Reliance’s whether you growth? getting, the commentary products mid-single or some markets breath other sense overall into end where this like progressing you maybe leading some like digits product mean, marks are lines? qualitatively long of an environment,

Karla Lewis

its Yes. Hi Martin Karla.

tell our the talked focus end diversity sizes also small for because of to the really we think So where products the day next I us we order it’s our as of business markets, delivery. with hard on about and

we’re been, the don’t certain it’s than is a lot it issues visibility, still certainly available of little have difficult, supply products much which flat but that like rolled becoming is So chain seeing pretty us, different more out but we a had for there impacting typical there. are carbon

to tight some times and expect continues be sell, products really be we go for continues so for most demand we we as But there that we to into help think and extending products continue us that lead to out be underlying others and And to decreasing others. strong metal overall XXXX.

Martin Englert

Across the were some elongated for seeing the Okay. lead you Thanks color lines there. times product contraction? you seeing were and extending or

Karla Lewis

seeing times products. I all mean, for for extended the most the part we’re lead

carbon we’ve is mentioned, flat As I what where than longer seen historically. one bit the rolled area it’s improved a recently, but still

Jim Hoffman

onto what listen Lead customers important they’re that. and just most is busy comment Karla control continuing stay to thing the to is customers don’t one pricing Yes. our We said times other that we are tagging just Jim, way. and value. our provide This that

Martin Englert

helpful. last I Okay, excellent. could That’s one one there. If

shortage you and auto-production But release demand thing? reducing there. inhibiting the semiconductor the shortage equipments, markets? across other you do end that get sort the Like heavy green note industrial chip of the sense did activity goods, is that yellow Within goods,

Karla Lewis

Yes.

chip the certainly So are automotive seeing shortage industry. just we impact more than the semiconductor

It’s had some the there components semiconductor into. just it have markets days. coverage has impacted, the been that but and other where are get not we these chips automotive most it’s shortages, sell the think most been about seeing various we’re different supply end also in to I maybe hard

of strong. but of underlying ours, different lot a is across customers again impacts seeing we’re So demand the

periods future as a impacted now. for on positive bit that we’re view even right we So shipments, though

Martin Englert

you the the headwinds. the supply there. result, and Thank all for chain Congratulations guidance Okay. navigating detail on

Karla Lewis

very you Thank much.

Jim Hoffman

Thank you.

Operator

you. Thank

question. Sachs. with Emily with your question Chieng comes Goldman next of the Please Our from line proceed

Emily Chieng

days you Jim, disruptions labor, of those about And and fewer Karla way supply from fourth metal the that here? perhaps during first around percentage the which of could supply a there’s is normal and number? the impact shipping think sort you bucket quarter. the different numbers is impact know one Arthur. to mentioned Good highlight of various be guidance there question a chain in factor a impacting three is looking morning, the hurdle My of but gating can seasonal what the forward of And shipments. sort usually quarter, I on

Karla Lewis

Hi, Yes. Emily.

see QX so quarter as at had did have in think their thought different – of think as versus that which seasonal much than up doing reported quarter off that we we normal look labor, quarter, the we we first of shutdowns supply cetera, we we we And in less to did we see gave I not typical, ended because second the the out factors we QX the strong, were fall up normal for because thought there, going in But that even guidance that just QX on, into fourth we demand. underlying the though logistics, chain, et the shutdowns. kind end wouldn’t of customers with demand the end when third all our case. quarter, being third in seasonal So the the we of off

know customers what we to But we we days holidays QX. in saw going our really normal down the typically do. into know to thought trend shutdown. our We where going guidance shipping because primarily certain guiding are That’s are of being going fewer seasonal normal QX QX. since what just does locations never more is we’re in volume have of our we So reflect

that they last for And to decide the or driving two sometimes can’t really only minute our or shut week do customers’ businesses a and they down We be are quantify days. two impacting elements decisions. different weeks, or it’ll

typical So was more QX. for guidance a overall our

Emily Chieng

that really that interesting that sorts a to those context copper maybe do portfolio. congratulations your or than the helpful just your in talk It’s there. grow now that, Reliance completing of incremental on Merfish And acquired? view exposure more That’s follow-up one it. perhaps around to Got how have and plans than, a you maybe of existing do little to now. has plastics acquisition, businesses about know you’ve bit they a Can you what

Jim Hoffman

cool a and foremost, really first Yes. Emily, well, it’s company.

them products. a as reason. the up companies still different, name buy them well into the and for them some way. They go-to-market companies. a we you and family know, bring and change any to We’re in glad got good little of but we it’s don’t differently different We screw distribution It’s

a think we company. good is So, really this

perhaps to I It’s do. all that serve adjacent We’ll they as, the oh, an out. takes do do to that how before. that’s see but markets, company we’re But that differently. hope complement said I’ve nobody opportunities all works going it have they our We acquisitions. because business. they same

a to different. really We’re of them. be And going grow. they they’ll management look And one that And into go-to-market the markets. fine to they happens little are hope products But okay. great a way continue this rest to is The products into. of different that’s and we are companies. have for The But sell team. similar FOC they the bit the sells

of type do and and residential things. You but couple also into do things mentioned other copper also and the conduit just not those they they plastic, – only non-res, a

you Karla So, I if runs probably that. be mean, comments. that But would it to add so could my

Karla Lewis

Yes, the grow able Emily, think, also about Jim operate said, where it, to but industry. we’re business, very a being they we as is fragmented excited also

each we’ve look opportunities it’s but But there. other to So, our some they organically on and acquisitions closed just we think on, them can growth also leverage how opportunities early we’re also excited locations, seeing there’s Reliance into potential more but products, grow X, of opportunity more through create October to growth more getting but for to their for other a expanding own it lot companies know and them.

Emily Chieng

looking Great. appreciate I color it. to forward the and

Operator

you. Thank

next line Bank. Deutsche with comes from of proceed with Sathish your Our question Please question. Kasinathan the

Sathish Kasinathan

question morning. taking first the tolling My auto on Hi, business. Yes. is Thanks good questions. my for

into slightly you could tolling declined building it with a the was I volume that by match vehicle? a rate, or quarter. in volumes third some inventory production more shipping color you finish actual if terms just is wondering send before automotive provide current intermediate of the mentioned whether your assembled being You bit OEMs parts the of in do

Karla Lewis

I know taken approaches. good customers different our sell broadly I end Yes, they of hi being been that Satish, have think automotive, because use little each a answer we businesses impacted differently, the don’t into tolling of with from can that portion they’ve each that we that a

that we’re on they the lot when So down generally popular sell bit. a trucks shut little vehicles a platforms body and production, the of that’s impacted have they But certainly, SUVs. us different the light more of

And an so, little less a been we feel that impact.

the less U.S. well. and of through more We has they sedans, chip more it in small bit of servicing been from impact an we’ve Mexico. In impact Mexico seem there the the will say seen in But that than shortage. a be working to what we’ve the are tolling our seen fairly operations

inventory certain don’t. For those a end customers, we others, up have use of built little we

hard say opportunities, demand lot production, strong companies been automotive from of some so in other seeing our broad where have tolling automotive, fill lost are to they plus other is also markets able end to opportunities. speak but not it’s So, based that there just very with a to the in of

We that in think fewer shutdowns impact that have minimal U.S. So we’ll us. the we’re – improving that the outlook forward. on is going

Sathish Kasinathan

the question for “versus My any bifurcate increased and Okay. there increase higher can color. comp Is you a in which between X% way inflationary X% Thanks pressures? the on shipments”. incentive-based SG&A, next the decline is

Arthur Ajemyan

different Hi, just plans, you going so then and shipping, have perhaps the increase to of comp headcount, majority when of additional, of probably utilization inflationary or is health just portion you flat expense remainder, half that to and question, have level you in That’s and to in at is attributable starting people said, that gross are on some you Arthur. benefit is incentive-based this increase you have And the profit. higher we that then of lot that’s packaging pretax the from look The factors, costs. some doctors. a it Yes. pressures a some just extra increase, remainder, income

over sequential about I noted we last And our below XX increase, pre-pandemic to So, XX% driven. stayed still in our have months. overall we’re the XX% predominantly I as think XX commentary, levels headcount comp incentive the to think, relatively fair it’s And to flat say level.

Sathish Kasinathan

Okay. Thank you. And congrats on a great quarter.

Jim Hoffman

Thank you.

Operator

Thank you.

from Our Markets. with Keybanc next Gibbs the question. with Please Phil line comes proceed question Capital of your

Phil Gibbs

morning. good Hey,

Jim Hoffman

Good morning, Phil.

Karla Lewis

Good morning.

Phil Gibbs

is in the quarter mind general going quarter the just supply side going the fourth your be last to the chain? the kind tolling segment auto of or in to is specifically, stabilize a automotive you in that are fourth anticipating for in the On downdraft of

Karla Lewis

do quarter, expect the Yes. where shut seasonal for normal be Hi fourth down Phil, so holidays. impact they’ll we certain of the

chip if subside from semiconductor not Mexico XXXX. we not. the out go sure anticipating We’re to we believe start disruption some but we’re quarter, continued that or shortage to the of U.S. into the in we’re yet as that’s going through fourth

Phil Gibbs

you getting Thanks, plants And terms where do Karla. Kentucky think stream earning in I’m those? a completion? some and in do new of Texas, when from you and could start those construction stand And

Jim Hoffman

Good Phil. Yes. question,

operational anticipated. Kentucky I both quite with and going when pleased Texas – in our The I’m on but of and up can’t is them. up one operational, be We’re tell well. along literally it’s is in doing not one and we’re you The coming to as game.

are that they, more probably as of that’s thing sure. will we And and so I’m cranking, soon starts as color

Karla Lewis

up, there, processing ramp amount to we’re we’re we’ve of suppliers. process more, ramp able start on small continue some volume to Texas, our down we’ll metal but of key to as they are mean, you know and currently. I up ready as with And but we’re a Yes. one been campus certainly there

Phil Gibbs

helpful. what Okay. in call, then in anything can you the you different I or first of a that obviously to be from terms Merfish, the missed you provide of of of us part the EBITDA but get when in big And there but revenue, this terms to either business and accretion expect it’s earnings That’s obviously, your want it’s arms around. the terms is

terms So on that just try of Thanks. profit model in curious we expectations. as thoughts to

Karla Lewis

wouldn’t it it. certainly mean, done we to have expect we I Well, be good or

it we a our extent that processing value-added model. the a to doing and not lot EBITDA. as very that They’re of lot it, high is our They operations. sell So products a typical, right the But in disclosed – the bit but now different of a haven’t is as do of level, we it’s it’s price at really are businesses. profitable, strong same metal

to from earnings to and this that unfortunately, own – seeing assumptions you throughout make continue, we you year, but really have we’re your So on them right strong have to contribution. their now make expect

Jim Hoffman

to will add But Phil, mojo. our they

Phil Gibbs

love have to Got too I much. that. never Thanks.

Jim Hoffman

on. Right

Operator

Thank from with question with you. Citi. Our your Hacking of Alex Please [Operator comes the line Instructions] proceed question. next

Alex Hacking

thanks the Yes. Morning and question. for

well? Thanks. to that still predominantly metal in concentrated of see starting into of other as shortages, you or that some carbon terms the In is creep flat old categories

Jim Hoffman

been same to all you good – have you because good every It’s for mean, issues. but it’s be this the improving products. basically model added support we we’ve Reliance question. And when and have decades support I that’s have No, product. have, got add Hey like you, Alex, it’s folks, we literally domestic recently. to it’s Karla, anything to the that? they everybody’s

Karla Lewis

where starts some Globally side the going extended flat lead little there times tightness and not a and to price and on as the tight now still supply. very with carbon if products came rolled on the up I times. the has even now of a world still on. most There’s aluminum more of are mean, aluminum been we’re loosen in bit right the tight well. we going They’re area bit. is Yes, issues recently, other very, really, a little carbon lead one lot Stainless as said, on but just is increases expecting in

Alex Hacking

I your conducive Okay. on needs Are the your for and meet environment to I and assume current value-add accelerate Thanks. are to in that customers? you of this you’ve value-add, is Reliance mean, think Thanks. And still more do before, given I probably looking accurate value discussed then the outside, on the is the customers to in all issues everything. there investments the with – looking to labor

Jim Hoffman

it mean this of supply in this around Yes. Good us just going there but $XXX hard, is Answer they equipment, that unfortunately spend because but question. more our CapEx million. evolve interruptions can yes. them. tell budget and it love more. on is We’d I year us it all, chain our be asking I ask you to we’re to to all customers continue do it’s to for do to

spend and Karla, Yes. we And where so powder going that’s anything internal our one else? of keep money. that, have dry strategy to fueling got a we’re you if it’s It’s buckets it. lot you We an growth worked have will obviously and we of far cash.

no, so we’re far So, good.

And change now, so why right.

Alex Hacking

environment. Thanks. difficult good and and Yes. congrats Thanks, in luck this operating

Jim Hoffman

you. Thank

Operator

you. Thank

the question Tanners with comes next Please with from of proceed line Timna your Our question. Wolfe Research.

Timna Tanners

well. morning, you’re good everyone. Hope Hey,

Jim Hoffman

from Timna, to hear you. good

Timna Tanners

shorter. acquisitions name I your some like if and wanted being to more, a a think And think, But get, from to course, Reliance bit just little Aluminum I something first, this high acquisitions thought deal the departure. to quality have Merfish changing process moving of you announcements This second, seems just I I your is big traditional and big plastic universe. your or outside about under want of start you relative do LA. just of Arizona what’s about Steel to about into more maybe & to to you’re ask, bit and delve I you’re because addressable broadly. more potential problem market, the mean, metals how levered further wanted little

Jim Hoffman

Well, Timna, great question.

– to best seemed the like it to how big like did take attract that – really talent? It’s it. learned we flexible a of and decided thing the figure part, to On seems being you And on do and it’s out is the not just it the researched retain and try nobody’s we move. – pandemic first place do best and lot decided just through what deal. do to didn’t work, lightly, the a Scottsdale a where lot We moving. It

to a business. of a and you Now it’s well. Merfish, Karla, I it’s think you us do that the adjacent can we bit don’t for to We add because bad good talk – Timna, can little company. about companies. company really kind our but All that bought it’s say as I’d different, platform company, a you, a good Merfish. cool know buy tell We

Karla Lewis

merged just I In their facilities would share. they and prior add, by gain They And acquisitions maintaining they to efficiencies, market through were two their owner. consolidate some been together Merfish Timna, XXXX, United, separate actually while so had companies. able

positive in So that to really for space. do it them that was

larger other that fragmented. I of mentioned the there companies one still as of earlier, it’s aware They fairly out companies. We’re were are

within largest the think acquisition. their I space after the

We for or them there. growth invest that we’ve to United, more ability get and invest them and in the geographic to we’ve find at equipment growth. their so they organically, got that Also in their opportunities for them to and and see Merfish done where opportunity good let we’ll companies years, bring what Reliance the similar think do many, there into open that other a And we broader reach to family. is many may to locations in either things for to or need space fuel

Timna Tanners

is industrial So has signal like this metals opportunities. to for broader looking beyond, that were distribution conclude Reliance if traditional fair that I I conclusion? a that be Would a universe said, it’s

Jim Hoffman

this one space, just been upstream buy in going a in at competing experience the happens looking not has And a you really actually more. good who be and keep company. just when company good That’s good space, but to folks make companies looking. and company, to opportunities going we part and distribution those, adders. of of distribution came business really metals there’s a a plenty plenty they’re keep buy But a traditional good one But plan. be good happens in companies. practice and value There’s look company but of up fine the a of at our made just to we’re our This good it’s This we’ve with And in really just we’ll to – metal. get company.

Timna Tanners

I’ll it Okay. Thank there. leave you.

Jim Hoffman

you. Thank Timna. Thanks,

the the back turn question-and-answer like reached Mr. call remarks. I’d for Hoffman to over closing to our end have any Jim session. We of

Jim Hoffman

attention Hey, time today. Yes. everybody and your for thanks

up, of continued and wellbeing to our like promote to Reliance moment dedication hard we take their for of our all daily and work to thank a Before colleagues company. wrap health, safety, I’d

literally, financial setting without record all. Our results not possible they’re you

to Conference And virtually, your not we’ll I’m like commitment look be stay Mining very Stay Reliance. So to support I’d we’ll November Global last, face inspired but day. performance and face, every you forward for to it’s healthy. screen. thank you on going your on Metals at Sachs see thanks. to your just much to Goldman Love happen you and seeing the but safe in announce, XX. And And to virtually participating &

Operator

Thank concludes teleconference. you. today’s This

time. at lines your have you disconnect participation for day. a your Thank may wonderful You this and