Reliance Q1 2025 Earnings Report

Reliance EPS Results

• Actual EPS: $3.77
• Consensus EPS: $3.66
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A

Reliance Revenue Results

• Actual Revenue: $3.48 billion
• Expected Revenue: $3.44 billion
• Beat/Miss: Beat by +$47.45 million
• YoY Revenue Growth: N/A

Reliance Announcement Details

• Quarter: Q1 2025
• Date: 4/23/2025
• Time: After Market Closes
• Conference Call Date: Thursday, April 24, 2025
• Conference Call Time: 11:00AM ET

Reliance (NYSE:RS) operates as a diversified metal solutions provider and the metals service center company in the United States, Canada, and internationally. The company distributes a line of approximately 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium, and specialty steel products; and provides metals processing services to general manufacturing, non-residential construction, transportation, aerospace, energy, electronics and semiconductor fabrication, and heavy industries. It sells its products directly to original equipment manufacturers, which primarily include small machine shops and fabricators. The company was formerly known as Reliance Steel & Aluminum Co. and changed its name to Reliance, Inc. in February 2024. Reliance, Inc. was founded in 1939 and is based in Scottsdale, Arizona.

Reliance Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Greetings, and welcome to the Reliance, Inc. First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

[Operator]

It is now my pleasure to introduce Kim Orlando with ADDO Investor Relations. Please go ahead.

[Kimberly Orlando, Senior Managing Director at ADDO Investor Relations]

Thank you, operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's first quarter twenty twenty five financial results. I am joined by Carla Lewis, President and Chief Executive Officer Steve Cook, Executive Vice President and Chief Operating Officer and Arthur Ajeemian, Senior Vice President and Chief Financial Officer. A recording of this call will be posted on the Investors section of our website at investor.reliance.com. Please read the forward looking statement disclosures included in our earnings release issued yesterday and note that it applies to all statements made during this teleconference.

[Kimberly Orlando, Senior Managing Director at ADDO Investor Relations]

The reconciliations of the adjusted numbers are included in the non GAAP reconciliation part of our earnings release. I will now turn the call over to Carla Lewis, President and CEO of Reliance.

[Karla Lewis, President & CEO at Reliance]

Good morning, everyone, and thank you all for joining us today to discuss our first quarter twenty twenty five performance. We delivered stronger than expected results, once again demonstrating the resilience of our proven business model and ability of our teams to provide solutions to our customers in a backdrop of broad market uncertainty. By maintaining our commitment to growth and profitability, we shipped record tons while industry shipments declined and increased our gross profit margin by 140 basis points quarter over quarter, which drove non GAAP earnings per share of $3.77 well ahead of our expectations. We generated cash flow from operations during the first quarter despite a working capital investment to support our successful growth efforts. Our 2025 capital expenditure budget remains $325,000,000 with an expected total cash outlay of approximately $375,000,000 to $400,000,000 which includes carryover projects from prior years that will be completed this year.

[Karla Lewis, President & CEO at Reliance]

Our first quarter results also benefited from our 04/2024 acquisitions, and we remain in a position of financial strength to execute additional acquisitions that align with our disciplined and strategic criteria. While we continue to see new opportunities in the pipeline, the pace has slowed recently due to overall macroeconomic uncertainty. And we also funded stockholder return activities of $318,000,000 In summary, despite ongoing uncertainty in both domestic and international economic policy, we are encouraged by positive pricing momentum and continued solid demand conditions, most notably in the non residential construction market. We applaud our team for their ability to execute on our strategic profitable growth efforts in a disruptive market. We believe our long standing model of both buying and selling metal, primarily in The U.

[Karla Lewis, President & CEO at Reliance]

S. Market, is positive for Reliance as well as our employees, customers, and suppliers. We remain confident in our ability to maximize earnings power, while maintaining our consistent focus on increasing value for our stockholders. Thank you for your time today. I'll now turn the call over to Steve, who will review our demand and pricing trends.

[Stephen Koch, Executive VP & COO at Reliance]

Thanks, Carla, and good morning, everyone. I'd like to open by commending our dedicated team for upholding the highest standards of safety and driving operational success across the board. I'll now turn to our demand and pricing trends. Our first quarter tons sold were a record and increased 12.8% compared to the fourth quarter of twenty twenty four, surpassing our outlook of up 6% to 8%. Our tons sold increased 9% or 5.6% on a same store basis compared to the first quarter of twenty twenty four, significantly outperforming the service center industry's year over year decline of 05% as reported by the MSCI.

[Stephen Koch, Executive VP & COO at Reliance]

Our record shipments reflect market share gains across nearly every product group attributable to solid organic growth and contributions from our twenty twenty four acquisitions. We believe shipments during the first quarter may have also benefited somewhat from certain customers' acceleration of metal purchases in anticipation of carbon steel and aluminum product price increases. Our first quarter average selling price per ton sold declined 1.2% compared to the fourth quarter of twenty twenty four, which was consistent with our expected range of down 1% to up 1%. Despite rising metal prices, our modest average selling price decrease was mainly due to product mix, with strong tons growth and lower priced carbon steel products. Next, I will review notable trends within our key end markets and products, beginning with nonresidential construction.

[Stephen Koch, Executive VP & COO at Reliance]

Carbon steel tubing, plate and structural products, which we mainly sell into the nonresidential construction market, represented roughly onethree of our Q1 twenty twenty five sales. All three products had significant year over year and sequential quarter shipment growth and substantially outperformed year over year industry shipments as measured by the MSCI. Our diversified exposure to the nonresidential construction market, including heightened data center construction and related energy infrastructure, as well as publicly funded infrastructure projects supported solid underlying demand for our products, as did contributions from our recent acquisitions. This healthy demand and a dynamic trade environment supported pricing improvements in March that have continued into April. Our general manufacturing business, which also represented roughly one third of our total sales in Q1 twenty twenty five, is highly diversified across geographies, products and industries.

[Stephen Koch, Executive VP & COO at Reliance]

Shipments increased both year over year and sequentially compared to the fourth quarter of twenty twenty four. Industrial machinery, military, shipbuilding and heavy construction equipment demand remained strong in the first quarter. Demand in consumer products and heavy agricultural equipment was up also year over year, but was comparably weaker than in the other manufacturing sectors. We believe a component of realized demand was attributable to demand pull forward ahead of anticipated price increases and trade actions. Our industry outperformance across key product group shipping to general manufacturing applications highlights the strength and advantage of our diversified business model in dynamic and uncertain demand environment.

[Stephen Koch, Executive VP & COO at Reliance]

Aerospace products comprise approximately 10% of our Q1 twenty twenty five sales. Demand for commercial aerospace increased sequentially from the fourth quarter and was stable compared to the first quarter of twenty twenty four despite continued supply chain challenges. Demand for defense related aerospace and space programs remained consistent at strong levels. We primarily service the automotive market through our toll processing operations, which are not included in our tons sold. Our tolling business, which represented approximately 4% of our Q1 twenty twenty five sales, while processed tons stay relatively consistent with the first quarter of twenty twenty four.

[Stephen Koch, Executive VP & COO at Reliance]

Semiconductor industry shipments remained under pressure in the fourth in the first quarter with excess inventories in the supply chain. We're very proud of our team's extraordinary execution, which delivered another quarter of industry leading financial performance. Reliance's unrivaled scale and strong balance sheet make us a highly attractive partner to our mill suppliers in all market conditions, and we continue to win new business from new and existing customers. We value the breadth and depth of our product offerings and value added processing capabilities and recognize the quality and reliability of our service. I will now turn the call over to Arthur to review our financial results and outlook.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Thanks, Steve, and thanks, everyone, for joining today's call. Our underlying operating performance for the first quarter was stronger than anticipated due to better than expected shipment levels and improved gross profit margin. Our first quarter non GAAP earnings per diluted share of 3.77 was above our guidance range despite higher than anticipated increases in carbon steel and aluminum product costs that resulted in LIFO expense of $25,000,000 or $0.35 per share compared to the $15,000,000 of LIFO income or $0.21 per share credit included in our guidance. As Steve mentioned, our tons sold were higher than we anticipated driven by improvements in shipments in the latter part of the first quarter. We experienced a slight sequential decline in our average selling price in the first quarter, mainly as a result of strong carbon steel product shipments, which are generally priced lower than our non ferrous products.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Pricing for most carbon steel products increased in March and entered the second quarter at higher levels. On a non GAAP FIFO basis, which is how we measure our day to day operating performance, our gross profit margin improved sequentially from 28.8% in the fourth quarter of twenty twenty four to 30.4% in the first quarter of twenty twenty five. Continued alignment of replacement costs with our inventory costs on hand, coupled with the rising selling price environment, contributed to the improvement in our gross profit margin. For the full year 2025, we revised our LIFO estimate to reflect LIFO expense of $100,000,000 from our prior estimate of $60,000,000 of income due to higher than anticipated carbon steel and aluminum product costs. As of the end of the first quarter, the LIFO reserve on our balance sheet was approximately $460,000,000 which remains available to benefit future period operating results and mitigate the impact of potential declines in metal prices.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Turning to expenses. Our first quarter same store non GAAP SG and A expense was down slightly from the first quarter of twenty twenty four despite a 5.6% increase in same store tons shipped, which contributed to a meaningful improvement in our operating leverage with same store non GAAP SG and A expense per ton declining approximately 5%. We will continue to maintain our focus on smart profitable growth throughout 2025. I'll now address our balance sheet and cash flow. We generated $64,500,000 of cash flow from operations in the first quarter of twenty twenty five.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Seasonally, the first quarter typically requires the largest working capital investment, and increasing metal costs and selling prices further contributed to our working capital investment in the first quarter. We put our capital to work in the first quarter, utilizing cash flow from operations, borrowing on our revolving credit facility and cash on hand to finance approximately $87,000,000 in capital expenditures, dollars 65,000,000 in dividends paid to our stockholders and $253,000,000 in share repurchases at an average cost of approximately $274 per share. As a reminder, we were pleased to increase our quarterly dividend by 9.1% in February 2025 to $1.2 per share of common stock, marking our thirty second dividend increase in the thirty years since our 1994 IPO. We have also repurchased approximately $80,000,000 worth of our shares since April 1 at an average cost of approximately $265 per share. Year to date in 2025, share repurchases have resulted in a cumulative 2.3% reduction in our total shares outstanding since 12/31/2024.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

We have $1,000,000,000 remaining for additional share repurchases under existing $1,500,000,000 share repurchase plan that we refreshed in October 2024. At 03/31/2025, our total debt outstanding was approximately $1,500,000,000 an increase of $330,000,000 from December 31 due to borrowings on our revolving credit facility. Our leverage position remains favorable with a net debt to EBITDA ratio of less than one, providing significant liquidity to continue executing our capital allocation priorities. Moving on to outlook for the second quarter of twenty twenty five. We anticipate demand across our diversified end markets to remain stable in the second quarter despite ongoing uncertainty regarding domestic and international economic policy.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Accordingly, we estimate our tons sold will be down 1% to up 1% compared to the first quarter of twenty twenty five, consistent with seasonal trends supported by healthy demand in the nonresidential construction market and continued targeted efforts to regain market share, and up 3% to 5% compared to the second quarter of twenty twenty four. On the pricing side, we anticipate pricing will stay relatively consistent with current levels throughout the second quarter, which will result in our average selling price per ton sold to be up 1% to 3% compared to the first quarter. We anticipate our FIFO gross profit margin will expand in the second quarter of twenty twenty five, following pricing improvements in March for certain products that have continued into April. Based on these expectations, we anticipate non GAAP earnings per diluted share in the range of $4.5 to $4.7 for the second quarter of twenty twenty five, which is inclusive of LIFO expense of $25,000,000 or $0.35 per share. This concludes our prepared remarks.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Thank you again for your time and participation, and we'll open the call for your questions. Operator?

[Operator]

Thank you. We'll now be conducting a question and answer session. Thank you. Our first question is from Martin Engler with Seaport Research Partners.

[Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners]

Hello. Good morning, everyone.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Morning, Mark.

[Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners]

Wanted to ask about if you can maybe discuss your exposure within COGS as well as CapEx to imports that might be impacted by tariffs? I know you buy the vast majority of your products domestically, but I just want to understand if maybe you can size it up with some goalposts on percentages for both COGS and CapEx maybe for the budget this year.

[Karla Lewis, President & CEO at Reliance]

Hi, Martin. From the cost of sales standpoint, as you mentioned in your question, we do buy the majority of our metal from The US domestic producers, which we've done for many, many years. We think that's a good strategy and certainly benefits us in times like we're in currently where metals a little tight in many areas. But we have those long time relationships to continue to be able to source the product. Over 95% of what we buy is from domestic producers.

[Karla Lewis, President & CEO at Reliance]

So very limited exposure to direct imports of metal into our cost of sales. From a CapEx perspective, again, most of what we source does come from companies based in The United States. However, we do have some pieces of equipment that are on order from foreign companies where they've got certain expertise in certain types of equipment. I don't know the percentage, but it's a small percentage that would be coming in and we are actively in conversations with those suppliers to figure out how to best mitigate any impact of tariffs.

[Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners]

I guess thinking longer term, have the tariffs and proposed tariffs influence your thoughts around longer term CapEx, looking out beyond this year? I'd just be curious to hear how you're thinking about it, both positives and negatives.

[Karla Lewis, President & CEO at Reliance]

Certainly tariffs can be a factor, but given predominantly most of what we buy is in The US, we would continue to source consistently. If there was equivalent equipment and one was produced in The US and one had a high tariff on it, that may sway our decision. But we're going to continue to invest in CapEx in a manner to support our customers and provide them the services that they want from us. So no big major shift in how we're gonna think about that.

[Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners]

What's the conversation been like with your customers and reshoring activity or improved opportunities since some of the tariffs have been rolled out?

[Karla Lewis, President & CEO at Reliance]

So we've had examples of some of our customers picking up business over the last couple of years from reshoring activity. You've seen in the non residential construction data, a lot of build of manufacturing space in The US for companies to be able to come here. So when we talk to our reliance companies, we hear them talking about certain customers who are already experiencing increased volume, a lot of the machine shops and people we sell to. But larger customers and customers in general, there are a lot of conversations going on right now where they're talking about bringing more business, bringing their supply chains back closer to their operations here. But I think there's still a lot more of that to come that we haven't seen actually in production mode yet in The US.

[Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners]

Okay, appreciate that. I guess conversely, have you noticed any red flags or cautious signs within the markets you serve either across demand, pricing, or within supply chains?

[Karla Lewis, President & CEO at Reliance]

Certainly there's always questions, there's a lot of uncertainty on all the areas you just mentioned. So probably a little more uncertainty in the market now than is typical in a more normal environment. I think we had really strong shipments in Q1. I think part of that is because our customers are confident in Reliance's ability to be able to source the metal that they need and provide the services that they also need. So I think we're in a favorable position and that we do see some customers coming to us because they know that we have strong relationships with The US producers and that we'll be able to service them.

[Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners]

Okay, appreciate all the color and congratulations on results in the guide.

[Karla Lewis, President & CEO at Reliance]

Thanks, Martin.

[Operator]

Our

[Operator]

next question is from Phil Gibbs with KeyBanc Capital Markets.

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

Hey, good morning.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Good morning, Tom.

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

The LIFO calculation was changed to a quarterly expense from some modest income. I think you did a good job explaining that a lot of that clearly was due to higher costs starting to flow through the system, notably in carbon products. But I wanted to get back actually the baseline initial assumption that you were going to have some LIFO income flow through the aerospace specific silo. Has that assumption changed at all? Are you more or less optimistic about that piece of it or is that baseline assumption unchanged?

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Relatively unchanged. Still income mid February. We wanted to see what's gonna happen with Paris in March and and, as, you know, price increases, took hold, certainly that required a reassessment of our of our estimates. And we'll continue to look at the payroll based business to see. You know, difference remains solid.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

That assumption holds true for the remainder of the year.

[Karla Lewis, President & CEO at Reliance]

And just as a reminder, you know, it's it's actually positive that we have LIFO expense because it means prices are going up, is a good environment for us.

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

Yes, absolutely. Going back off of Martin's question on reshoring or customers coming to you to make more first stage investments for them. I guess my sense from your answer was that since the kind of initiation of the tariff environment,

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

don't see anything

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

incremental, I guess, or more meaningful to that discussion, that whole discussion with or without tariffs, I guess, has continued to evolve for you to do more for your customers, and so on the tariff piece specifically, it's kind of more of a wait and see. Is that fair?

[Karla Lewis, President & CEO at Reliance]

Yeah, think for the most part, Phil. But even prior to the tariff investments, we had been seeing customers, it was more North America than just The US focus. We had been seeing customers looking to bring supply chains closer to their US operations. And I think that has, those discussions I think have accelerated a bit. And again, customers talking more specifically US instead of North America a little more broadly.

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

Thank you. And then lastly, I missed your comments earlier in the call about cash related capital spending for this year, but can you just reiterate that or provide us an update on that?

[Karla Lewis, President & CEO at Reliance]

Yes, it stayed consistent. We think probably $375,000,000 to $400,000,000 cash spend in 2025 for CapEx.

[Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets]

Thank you.

[Karla Lewis, President & CEO at Reliance]

Thanks, Phil.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Thanks, Phil.

[Operator]

Our next question is from Katya Janczyk with BMO Capital Markets.

[Katja Jancic, Analyst at BMO Capital Markets]

Hi, thank you for taking my questions. Maybe starting on the onshoring theme, is there an opportunity for you to potentially do more than just first stage value added processing? In other words, would you be willing to do some more fabricated type of processing? Is there an opportunity there?

[Karla Lewis, President & CEO at Reliance]

Hi, Katya. There could be. We will look at those opportunities selectively. We do have a few smaller fabrication operations currently. They will go a little further downstream, but we're very selective in where we choose to do that because we don't want to compete with our existing customer base.

[Karla Lewis, President & CEO at Reliance]

A lot of times existing customers might ask us to do overflow for them and that's where we get a lot of the increased value out of processing that we're doing. We will continue to look at Our customers are asking us to do more for them. You know with our financial strength and with the capabilities we have and our people and our knowledge of our companies to support our customers. As our customers ask us to do that we will be open to opportunities for that business.

[Katja Jancic, Analyst at BMO Capital Markets]

Okay. And maybe can you also talk a little bit about the current M and A environment? Are there any opportunity? What are the kind of size of the potential deals and how you're thinking about it?

[Karla Lewis, President & CEO at Reliance]

Yes. So as far as kind of the acquisition pipeline, a lot of that comes to us when owners of businesses are thinking about selling, whether it comes through bankers or it comes directly to us. That activity has been a little slower Q4, Q1 of this year, which is normal of what we typically see when there's uncertainty in the market. A lot of the owners hold off until they feel a little more confident, buyers would feel a little more confident in the outlook. And so we did see a little, we have seen a little slowness over the last two quarters.

[Karla Lewis, President & CEO at Reliance]

We're starting to see a little more activity, generally smaller to mid sized companies consistent with what we've seen the last few years.

[Katja Jancic, Analyst at BMO Capital Markets]

Perfect. Thank you so much.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Thank you.

[Operator]

Next question is from Mike Harris with Goldman Sachs.

[Mike Harris, Analyst at Goldman Sachs]

Good morning. Thanks for taking my question.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Good morning.

[Mike Harris, Analyst at Goldman Sachs]

Hey,

[Mike Harris, Analyst at Goldman Sachs]

on the same store sales, I mean, looks like the Q1 tons sold outpaced the industry by roughly six percentage points I think as you pointed out earlier. And I guess of that record amount how much would you attribute to market share gains versus contributions from the twenty twenty four acquisitions?

[Karla Lewis, President & CEO at Reliance]

So, of our consolidated tons increase, so we were up 9% in total, about 3.5% of that was due to the four acquisitions we completed last year. And then the other 5.5% roughly was same store. Michael, we saw strength in certain of our end markets, most notably construction, non residential construction related. There's a lot of activity out manufacturing there may have been a little demand pull forward by certain customers, but we really can't quantify that. And the strength we had, part of that we think is taking some share back from the market where our people are motivated to grow their tons profitably.

[Karla Lewis, President & CEO at Reliance]

And so we were really excited with how our teams performed to drive that above industry growth while maintaining our gross profit margin in our 29% to 31% gross profit margin range.

[Mike Harris, Analyst at Goldman Sachs]

Okay. That's helpful. And it kind of sounds like the market share gain could be sticky versus, you know, more of an opportunistic sale.

[Karla Lewis, President & CEO at Reliance]

Yes, we believe so.

[Mike Harris, Analyst at Goldman Sachs]

Okay. And a follow-up, just on current inventory levels, can you speak to kind of where they are versus target and maybe share any thoughts on the need to restock?

[Karla Lewis, President & CEO at Reliance]

So we manage and monitor our inventory levels at Reliance based on inventory terms. We try to buy based upon our shipment levels and maintain a consistent turn ratio. We don't try to go into the restocking, destocking that a lot of people like to talk about. That's not our strategy. But with the strong shipments, our inventory turns are actually slightly above our inventory turn goal.

[Karla Lewis, President & CEO at Reliance]

But with our strong relationships with the domestic mills, We have access to the inventory, which is a real positive in markets where there's a little tightness as we were experiencing in Q1. But we're very happy with where inventory levels are.

[Mike Harris, Analyst at Goldman Sachs]

Okay, perfect. Thanks for the insight.

[Karla Lewis, President & CEO at Reliance]

Thank you.

[Arthur Ajemyan, CFO & Senior VP at Reliance]

Thanks.

[Operator]

Our next question is from John Tumazos with John Tumazos Very Independent.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Thank you very much, and congratulations on your great results in the context of the steel market. I may, I'd like to ask just some general questions about the steel market. Domestic output is down 1.3% year to date. Imports are up seven

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

up year to date.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Apparent demand had fallen five out of the last six years, only rising in 'twenty one. In the AISI annual statistical report published in the middle of last year for 'twenty three, AISI shipments to distributors at 20,200,000 tons were the lowest in thirty two years. Even though your company, Ryerson, etcetera, say they're doing better and I'm sure you're doing better. Please understand, please explain how the total steel market is so lethargic when the government reports positive GDP, etcetera?

[Karla Lewis, President & CEO at Reliance]

Well, that's a good question, John. Certainly a lot of macro statistics and factors there. And yes, there are shipments overall, consumption in The US, shipments through service centers. We have seen that trend decline from a macro level. But at Reliance, we really focus on our business and obviously we're aware of those trends, but we just look at how we can continue to grow reliance, how we can do more to service our customers, gain new customers.

[Karla Lewis, President & CEO at Reliance]

And I think it makes the performance of our teams even that much more positive, the fact that they've been able to do that in a backdrop that you talked about.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Do you think the small customers important to your company are getting hurt by imported goods even if we don't take things from China by substitution, they drive European, Latin American, other Asian companies to export more to The US because China hits them in their home markets? Or are the auto companies outsourcing more of the components or other U. S. Manufacturers outsourcing more of the components to account for the lower reported shipments to distributors in the ISI data?

[Karla Lewis, President & CEO at Reliance]

Yeah, I mean, John, again, we can really only comment to reliance and specific to our company. But certainly if any incremental US manufacturing of metals is positive potentially for us and for our customers. So to the extent reshoring is happening, there's more manufacturing being done in The US or in North America that is positive for us. As far as your question on auto and is that part of the reason mills aren't sending as much through distribution? As you may recall, we don't generally sell metal direct to the automotive industry.

[Karla Lewis, President & CEO at Reliance]

We do process quite a bit of metal for the automakers on beat. And our customers in that space are generally the mills, carbon and aluminum. And we've continued to invest in those businesses and we've picked up more and more processing with our increased capacity. So we're continuing to see the mills rely on us to support them in their shipments to automotive the way that we always have.

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

Just to share with you, Carla, I think inflation has been 3% more than reported for the last generation every year. And The US GDP hasn't grown in twenty years. And the government data is just a bunch of lies. And witness housing starts last year were 32% below peak and auto sales about 10% below all time peaks. So I'm just sharing

[John Tumazos, Owner and CEO at John Tumazos Very Independent Research]

And you guys are doing great in the context of tough markets. And if markets were good, just think how much better you'd do. Thank you.

[Karla Lewis, President & CEO at Reliance]

Yep, absolutely. Thanks, John.

[Operator]

Thank you. There are no further questions at this time. I would like to hand the floor back over to Carla Lewis for any closing comments.

[Karla Lewis, President & CEO at Reliance]

All right. Thanks again to all of you for joining our call today and for your continued support of Reliance and to all of our teams making up the Reliance family for safe and strong performance through uncertain market conditions. We're excited by the energy of our people to continuously improve as we service our customers and partner with our mill suppliers. Before we close out the call, I'd like to remind everyone that later next month we'll be presenting at the KeyBanc Industrials and Basic Materials Conference in Boston, and we hope to meet with many of you there. Thank you.

[Operator]

Thank you. This concludes today's conference. Thank you again for your participation. You may now disconnect your lines.

Participants

Executives

• Karla Lewis, President & CEO
• Stephen Koch, Executive VP & COO
• Arthur Ajemyan, CFO & Senior VP

Analysts

• Kimberly Orlando, Senior Managing Director at ADDO Investor Relations
• Martin Englert, Senior Equity Research Analyst - Metals & Mining at Seaport Research Partners
• Phil Gibbs, Director, Metals Equity Research Analyst at KeyBanc Capital Markets
• Katja Jancic, Analyst at BMO Capital Markets
• Mike Harris, Analyst at Goldman Sachs
• John Tumazos, Owner and CEO at John Tumazos Very Independent Research