Reliance Steel & Aluminum Co

Greetings, and welcome to the Reliant Steel and Aluminum Company fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the conference over to your host, Tim Orlando. Mercado Investor Relations.

Thank you, Operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's fourth quarter and full year 2022 financial results. I am joined by Carla Lewis, President and Chief Executive Officer, Steve Cook, Executive Vice President and Chief Operating Officer, and Arthur Jemmian, Senior Vice President and Chief Financial Officer. 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 inflation, 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, and updated on Form 10-Q for the quarter ended September 30, 2022, under the caption Risk Factors, Disclosure in our press release this morning, and 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 inherent. I will now turn the call over to Carla Lewis, President and CEO of Reliance. Thanks, Kim.

Good morning, everyone, and thank you all for joining us today to discuss our fourth quarter and full year 2022 financial results. Before I begin, I'd like to say that I'm honored to have the privilege to serve as CEO of this wonderful family of companies. I look forward to continuing our long-standing track record of industry-leading financial, operational, and safety performance, growing our company, and increasing stockholder value in the years ahead. I would also like to acknowledge Jim Hoffman for his significant contributions to Reliance, both during his tenure as CEO and throughout his many years of service to the company. On behalf of the management team here at Reliance, we wish him all the best in his upcoming retirement at the end of the year. I will begin today with an overview of our 2022 performance and capital allocation strategy. Steve will then speak to our operating results and demand trends by end market, and Arthur will conclude with a review of our fourth quarter 2022 financial results as well as our outlook for the first quarter of 2023. Turning to our results, we're very pleased to have achieved record financial performance in 2022 across nearly every metric during a period of continued metal price volatility and broader economic uncertainty. Our unique business model is designed to position Reliance as the customer and supplier of choice throughout industry cycles. We are differentiated by the diversity of our operations, superior customer service, and ability to generate significant cash to fuel our longstanding commitment to both growth and stockholder returns. Our full-year 2022 net sales were a record $17 billion, driven by solid demand in the majority of our end markets, along with favorable metals pricing. In 2022, more than half of our orders included value-added processing, which, when combined with our product and end-market diversification and focus on small orders with quick turnaround, drove our strong gross profit margin of 30.8% for the year which was at the high end of our estimated sustainable annual range despite declining prices for most products in the second half of the year. Effective expense management, coupled with our strong gross profit margin, supported record annual non-GAAP pre-tax income of $2.44 billion and record non-GAAP diluted earnings per share of $30.03. And let me say that again, record non-GAAP diluted earnings per share of $30.03. We generated record annual cash flow from operations of $2.12 billion in 2022, far surpassing our prior record of $1.3 billion in 2019 made possible by our record profitability and working capital management. I applaud and thank our team on achieving these outstanding results and for doing so safely with 2022 marking an all-time low for our total recordable incident rate. Our strong cash generation and liquidity enables us to continue executing our disciplined capital allocation strategy with particular emphasis on both growth and stockholder returns. We invested nearly $342 million in capital expenditures in 2022, setting a new annual record with the majority funding growth opportunities. Our full year 2023 capital expenditure budget is another new record at $500 million with an expected total cash outlay of approximately $400 to $450 million in 2023, which includes some carryover from 2022 and prior year projects due to ongoing extended lead times throughout the supply chain. We anticipate about two-thirds of our budget will be focused on growth initiatives, in areas such as facility upgrades and expansions into new markets, new equipment to expand, automate, and improve the efficiency of our value-added processing capabilities, along with creating safer and improved working environments for our valued employees. Although we did not complete any acquisitions in 2022, the pipeline remains healthy, and we continue to evaluate many opportunities with the goal of pursuing those that meet our discipline criteria. We returned over $847 million to our stockholders in 2022 through dividends and share repurchases. Furthermore, as announced in our earnings release this morning, we were pleased to increase our quarterly cash dividend by 14.3% to $1 per share or $4 on an annualized basis underscoring our confidence in our long-term strategy and outlook. Over the last five years, we have allocated nearly $2 billion of capital towards organic growth and acquisitions and nearly $2.7 billion towards stockholder returns in the form of dividends and share repurchases. Looking ahead, we believe our strong balance sheet and liquidity will enable us to continue executing our capital allocation priorities no matter the operating environment. In closing, I'm extremely pleased with our record-setting 2022 performance. These results were achieved in a highly challenging environment with ongoing inflationary headwinds, recessionary concerns, supply chain disruptions, labor shortages, and overall declining metal prices in the second half of the year. Our managers in the field have done a tremendous job navigating these challenges, supporting our confidence in our ability to deliver strong performance in the year ahead. As we move into 2023, we are optimistic the infrastructure bill, the CHIPS Act, and the Inflation Reduction Act should serve as tailwinds for growth in an environment of sustained higher metal pricing compared to historical levels. I would like to thank everyone at Reliance for their continuing and steadfast commitment to operational excellence and safety. Thank you all for your time today. I'll now turn the call over to Steve, who will review our fourth quarter operating results and demand trends. Steve?