Reliance Steel & Aluminum Co

Greetings and welcome to the Reliance Steel and Aluminum Company first quarter 2022 earnings call. With this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando with Addo Investor Relations. Thank you, Kim. You may begin.

Thank you, Operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's first quarter 2022 financial results. I am joined by Jim Hoffman, CEO, Carla Lewis, President, and Arthur Jemmian, Senior Vice President and CFO. A recording of this call will be posted on the Investor section of our website at investor.rsac.com. The press release and the information on this call may contain certain forward-looking statements which are based on a number of assumptions that are subject to change and involve known and unknown risks, uncertainties, or other factors, including the impacts of geopolitics and the COVID-19 pandemic and related economic conditions on our future operations, which may not be under the company's control and may cause the actual results performance, or achievement of the company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those factors disclosed in the company's annual report on Form 10-K for the year ended December 31st, 2021 under the caption Risk Factors. Disclosure in our press release this morning or other documents Reliance files or furnishes with the Securities and Exchange Commission. The press release and the information on this call speak only as of today's date, and the company disclaims any duty to update the information provided therein and herein. I will now turn the call over to Jim Hoffman, CEO of Reliance.

Good morning, everyone. Thank you for joining us today to discuss our first quarter 2022 financial results. I will begin with an overview of our performance and capital allocation activities. Carla will then speak to our operating results and demand trends by end market. And Arthur will conclude with a review of our financial results. Outstanding operational execution throughout our family of companies produced first quarter results representing a continuation of the record performance we achieved in 2021. and once again demonstrating the durability and effectiveness of our business model. Notwithstanding ongoing macroeconomic challenges, our performance was supported by positive underlying trends, including continued strong demand with improving shipment levels in each month of the quarter, along with ongoing strength in metals pricing. Our results also benefited from our strategic diversification of products, and markets and geographies, as well as strong ongoing support from our domestic suppliers and valued relationships with our loyal customers. Additionally, our wide geographic footprint with our 315 locations, close proximity to our customers and proprietary fleet of trucks allows us to provide a quick order turnaround. Approximately 40% of the orders are delivered within 24 hours of our customers placing that order. These factors collectively help generate another record for quarterly net sales totaling $4.49 billion. The strength of our top line coupled with a resilient gross profit margin of 30.9% led to record quarterly gross profits of $1.39 billion. In an environment Characterized by improving yet volatile metals pricing trends and limited product availability, our managers worked hard to preserve our margins by implementing price increases at the time of mill announcement and appropriately pricing the value we provide our customers. Our customers continue to look to us to provide increased value through industry-leading processing capabilities. We have invested more than a billion dollars over the last five years to meet increased processing demand. Though we experienced some gross profit margin compression compared to the fourth quarter of 2021 due to inventory costs approaching replacement costs for certain of our products, key elements of our model, such as small order size, quick turnaround, a broad range of value added capabilities, and careful expense management enabled us to improve bottom line profitability and led to record quarterly earnings per share of $8.33 for the first quarter of 2022, as well as record first quarter cash flow from operations of $404 million. Our significant cash generation continues to fuel our capital allocation strategy, which remains focused on both growth and stockholder returns, and we continue to see new and exciting growth opportunities for Reliance. We recently increased our 2022 capital expenditure budget to $455 million from $350 million, with the majority of this increase directed towards a brand new state-of-the-art facility in Texas to expand our existing capacity and support announced new semiconductor fabrication facilities being built in the US. We are well positioned to support elevated levels of growth in the semiconductor and other end markets as additional reshoring opportunities present themselves. With that said, considering extended lead times throughout the supply chain, we believe our cash outlays for capital expenditures in 2022 will be in the $260 to $290 million range. In regard to M&A, the integration of the four acquisitions we completed in the fourth quarter of 2021 is progressing as planned. and brought the total number of acquisitions since our 1994 IPO to 71. The M&A pipeline remains robust and we continue to see a high volume of potential opportunities. In addition to growth, stockholder returns remain a top priority. We have paid regular quarterly cash dividends for 63 consecutive years without reduction or suspension and have increased the quarterly dividend 29 times since our 1994 IPO. In summary, Reliance continues to benefit from our ongoing focus on operational execution and continuous improvement throughout our business, as evident by our record first quarter financial performance. The core tenets of our unique and sustainable model, including our diversification, scale, customer service focus, long-term supplier relationships, and our bi-domestic philosophy, continue to empower profitable operations throughout industry cycles. Importantly, we've been able to consistently secure the metal we need to support our customers' requests despite broader macroeconomic challenges, including the COVID-19 pandemic and subsequent supply chain disruptions, and more recently, supply chain disruptions attributed to the war in Ukraine. No matter the environment, Reliance remains well-positioned to help America rebuild. Thank you for your time and attention today. I will now turn the call over to Carla, who will review our operating results and demand trends. Carla?