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spk10: 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.
spk04: 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.
spk07: 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?
spk03: Thanks, Carla, and good morning, everyone. First, I'd like to congratulate Carla on assuming the role of CEO at Reliance. Carla and I have worked together since 2005 when Chapel Steel was acquired by Reliance and joined the family of companies. Carla is extremely well respected within our organization and throughout the industry, and I look forward to working more closely with her going forward. I'd also like to extend a sincere thank you to each member of our team of over 15,000 employees for showing up each day, working diligently and safely to ensure we exceed our customers' expectations. Our record-setting performance in 2022 is also made possible by our customers who count on us for quick deliveries of high-quality products at competitive prices, as well as our suppliers who continue to support us through challenging times and supply chain disruptions. Now we'll turn to our fourth quarter pricing and demand trends. Our fourth quarter time sold declined 8.2% compared to the third quarter of 2022, due to anticipated seasonal declines in line with our expectations of down 6.5% to 8.5% and improved 0.8% from the prior year quarter. Our performance was primarily driven by strong demand in broader manufacturing and non-residential construction, as well as robust aerospace and semiconductor shipments. Similar to the last several quarters, we believe our fourth quarter shipments could have been even stronger had it not been for persistent supply chain-related disruptions including labor shortages at our customers' facilities. Our fourth quarter average selling price per ton sold of $2,799 declined 7.9% compared to the third quarter of 2022, consistent with our expectation of down 6% to 8% that remained elevated by historical standards. Prices for the vast majority of the carbon steel products sold, along with the stainless and aluminum products, continued to decline throughout the fourth quarter. However, continued strong demand for higher-value products, both at the aerospace, semiconductor, and energy markets, helped offset some of the downward pricing pressure on our average selling price. We have been seeing signs of stabilization on certain products to date in 2023, as our average selling price per ton overall remained relatively flat in January compared to December. Arthur will cover our first quarter 2023 outlook in more detail. On a non-GAAP FIFO basis, which is how we monitor our day-to-day operating performance, our gross profit margin remained consistent with the prior quarter at 28.6%. Although the quarter-over-quarter trend was flat, it's important to note that our monthly FIFO gross profit margins improved throughout the fourth quarter in contrast to decreasing monthly FIFO gross profit margins in the third quarter of 2022. We are pleased to see continued FIFO gross profit margin improvement so far in 2023. The metals price volatility of 2022 tested our model with our sales and gross profit margins once again proving their resiliency. I'll now turn to a higher level overview of the trends we saw within our key end markets. Demand for non-residential construction, which includes infrastructure, and is the largest end market we've served, was at healthy levels and trended slightly above the fourth quarter of 2021. We're continuing to experience a healthy backlog of new projects, including renewable energy, and remain Optimistically, we will see improved activity in Q1 2023. Although not included in our tons sold, demand for the toll processing services we provide to the automotive market improved from both the third quarter of 2022 and the prior year quarter due to increased production rates by certain automotive manufacturers despite lingering supply chain challenges. Demand across the broader manufacturing sectors we serve, including our industrial machinery, consumer products, and heavy equipment, was consistent with last year's levels in the aggregate. Semiconductor demand trended well above the fourth quarter of 2021. Despite some short-term headwinds coming into 2023, demand remains elevated. Our long-term outlook for this market remains strong, and we're continuing to invest in increased capacity to service this significant expansion of semiconductor fabrication in the United States. Aerospace demand remained solid with our exposure split roughly 50-50 between commercial and descents. Commercial aerospace made a strong recovery in 2022 with all of our quarterly shipments increasing year over year. Demand in military, descents, and space also remained healthy. Finally, demand in the energy sector remained relatively stable compared to the fourth quarter of 2021. Overall, we are optimistic underlying demand will remain healthy across the majority of the end markets we serve throughout the first quarter of 2023. I will now turn the call over to Arthur to review our financial results and outlook.
spk02: Thanks, Steve. Good morning, everyone, and thank you for joining us today. My remarks this morning will mainly focus on the factors that drove our fourth quarter performance. Despite significant declines in metal pricing continuing from the third quarter of 2022, we experienced solid overall demand trends consistent with typical seasonal patterns. we achieved fourth quarter earnings per diluted share of $5.88, which, when combined with effective working capital management, resulted in record quarterly cash flow from operations of $808.7 million. While metro pricing continued to decline through the end of the year, the third quarter of 2022 represented the trough for our gross profit margin. And as Carla highlighted, Value-added processing continued to provide stability to our gross profit margin. In addition, our use of the LIFO inventory valuation method benefited our gross profit margin and earnings in the quarter. We recorded LIFO income of $99.1 million in the fourth quarter compared to $27.5 million of income in the third quarter of 2022. which drove a 210 basis point improvement in our gross profit margin for the prior quarter. We ended 2022 with a LIFO reserve of $744 million. As our inventory costs on hand continue to catch up with lower replacement costs, or should metal prices trend lower in fiscal 2023, this reserve will generate LIFO income and continue to support our gross profit margins and reduce the volatility of our earnings. Our current estimate of LIFO income for 2023 is $60 million. As always, we will update our expectations quarterly to account for actual inventory costs and metal pricing trends. Moving on to expenses. Our fourth quarter non-GAAP SG&A expenses decreased $17 million, or 2.7%, compared to the third quarter of 2022, mainly due to moderation and inflationary pressures, lower incentive-based compensation resulting from lower profitability, and lower variable warehousing and delivery expenses associated with lower tons shipped. On a year-over-year basis, our fourth quarter same-store non-GAAP SG&A expenses decreased $9 million, or 1.5%, as lower incentive-based compensation from lower FIFO pre-tax profits offset moderating inflationary factors, including higher wages, rate, fuel, and plant supply costs. Our fourth quarter 2022 diluted earnings per share, $5.88, benefited from the combination of a LIFO income impact of $1.25 per share compared to anticipated LIFO expense of $0.09 per share. and lower than anticipated tax rate of $0.24 per share. Excluding the benefits of both higher than expected LIFO income and lower than expected tax rate, our diluted earnings per share would have been $4.30, in line with our guidance of $4.30 to $4.50 per share. Turning to cash flow, our strong profitability and working capital release generated record quarterly cash flow from operations of $808.7 million in Q4. Our 2022 record annual operating cash flow of $2.12 billion funded a record $341.8 million in capital expenditures and the return of $847.4 million to our stockholders. comprised of $217 million of cash dividends and $630 million of share repurchases, resulting in nearly 6% reduction in common shares outstanding. We are very proud that our strong financial position enabled us to reinvest a record amount back into our business to support continuing organic growth and to return approximately 46% our full year net income to our stockholders. As previously announced, on January 15th, we redeemed our $500 million, 4.5% senior notes due April 15, 2023. I'll now turn to our first quarter outlook. We expect healthy demand trends to continue in the first quarter of 2023, which includes the normal seasonal increase in shipping volume compared to the fourth quarter. We estimate our tons sold will be up 11 or 13% in the first quarter of 2023 compared to the fourth quarter of 2022, which is better than a typical seasonal recovery. To date, pricing for many of our products has started to stabilize compared to December, which was the low point in the fourth quarter. And as a result, we estimate our average selling price per ton sold in the first quarter of 2023 will be down 3% to 5% compared to the fourth quarter of 2022. Based on these expectations, we anticipate non-GAAP earnings for diluted share in the range of $5.40 to $5.60 for the first quarter of 2023. In closing, I'd also like to acknowledge and thank everyone at Reliance for their contributions to our phenomenal performance in 2022. This concludes our prepared remarks. Thank you for your attention. At this time, we'd like to open the call up to questions.
spk09: Operator? Thank you. Ladies and gentlemen, we will now be conducting a question and answer session.
spk10: If you'd like to ask a question, please press star 1 on your telephone keypad. And your confirmation will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk09: One moment, please, while we call for questions. Our first question comes from the line of Emily Chang with Goldman Sachs.
spk10: Please proceed.
spk06: Good morning, Carla, Steve, and Arthur. Congratulations on a strong quarter. My first question is just around the M&A front. You mentioned that you hadn't done anything there in 2022, but curious what you were seeing there in the market that led to that sort of dry spell. Was it, you know, the bid ask spread being too high at that point in time, or were just the options available not as interesting to you at that point?
spk07: Hi, Emily. Thank you very much for joining the call today. So in 2022, we did continue to see a lot of opportunities in the market. You know, we try to be selective on which companies we look to acquire. We don't want to compete with our customers, so that, you know, pushes out a lot of potential opportunities. But we did see some good, interesting opportunities in 2022. We did do work on some companies, and there were some, in our opinion, elevated bid-ask prices. I think we're seeing some of those opportunities come back around at what are more reasonable levels to us, and we think the market is going to be pretty attractive this year for continued potential opportunities for us to look at. You know, we didn't not do acquisitions for any reason other than we didn't reach agreement, but we want to continue to grow the company both organically and through acquisitions, and we look to 2023 to potentially be a fairly active year.
spk06: Understood. Thanks, Carla. And maybe as a follow-up on that page related to growth, can you remind us how much spend related to the semiconductor plants that you're constructing is still perhaps to flow into the 2024 period? And are there any other projects of this scope that you would consider executing given the demand outlook ahead?
spk07: Yeah, so we're always looking at opportunities. Our people working out in the field do a great job of staying close to their customers. and identifying opportunities for us to do more. We do have a couple green fields that we're working on currently at some of our companies. One of those is our company, Valix, that is really dialed into providing kind of the plumbing of the semiconductor fabrication companies. And so we're expanding in Texas. They have their first phase of their expansion into Texas that will be coming online anytime, but that's the smaller part of it. And then their larger expansion with increased capacity will come online, we're anticipating, in the first quarter of 2024. Great, thank you.
spk09: Our next question comes from the line of Phil Gibbs with KeyBank Capital Markets.
spk00: Please proceed. Hey, good morning.
spk02: Hey, Phil. Morning, Phil.
spk00: So you have a pretty hardy cash capex budget this year. I think you said about four and a quarter at the midpoint relative to maybe what you all were thinking six months ago, 12 months ago. What may have been added to that as you've seen? the needs internally change in terms of your own capabilities and or what your clients or customers rather are asking of you?
spk07: Yeah, so we do an annual CapEx budget. Last year we were at a record budget of $455 million. We only spent $342 million last year, mainly just because of supply chain constraints, but We have really long lead times on some of the opportunities we see now. This year our budget's $500 million. We think the actual cash spend, which will include some carryover from prior years, is probably only going to be like $400 to $450 million this year. But we, like I said, our folks stay close to their customers. They go out in their warehouses. They look for opportunities for us to do more for our customers. With the labor shortages, a lot of our customers have struggled with that. And if they have to invest money in newer machines, which have become more expensive, maybe they decide not to do that, and they ask Reliance to do that for them. So we have a couple hundred different types of processing equipment. the in the budget for this year same as last year so we've got over 300 locations and we're trying to grow all of them and give them more resources to be able to serve our customers better so Carla I this is rough math so there's seems like there's over 300 million of growth capex in your cash guidance this year of about four and a quarter
spk00: Do you see returns on those immediately, or is there a gestation period in terms of when you would realize a return? Because I know you all are good at adding capabilities and value add, and they end up being very accretive to your business and margins. But how long does that typically take for those to bear out?
spk07: Well, for all the Reliance people listening, we expect it immediately. And we do have a pretty short runway. With the equipment we put in, we have good, well-trained people out there. We're able to leverage people throughout our family. It's not a long lead time. We're putting a lot of CapEx items in place all the time, and it's a pretty short lead time, but it is hard to measure exactly what the... the return is on each individual piece of equipment.
spk03: Yeah, so Steve, I'd just like to add regarding CapEx, the CapEx budget that we're spending for 2023 is a good sign because the past spendings in 2021 and 2022, our customers have asked us for more capabilities. Whether it's plate burning machines or new saws or new cut-to-length lines, they're filling up pretty quickly, almost as soon as we install them. So lead times are extended, so we're just trying to get out in front and try to make sure we continue to exceed our customers' expectations.
spk00: Understood on that. And then you mentioned on automotive improvement year on year and sequentially, and I know the end market itself has been very choppy since the pandemic recovery. So what are you seeing now, looking ahead? Are you expecting business levels to improve, or with this little bit of improvement you saw in the back part of this year, do you basically just expect those levels to sustain? Thanks.
spk03: We have to give our companies that do the toll processing for automotive a lot of credit for working through the automakers' supply chain issues for probably the last at least two years. Whenever we think that things are kind of smooth, There's a step backward, but we think going into 2023, they're in much better shape from their component point of view, their labor point of view, and we're looking for a healthy 2023 from an auto toll point of view.
spk09: Our next question comes from one of Katya Jancic with BMO Capital Markets.
spk10: Please proceed.
spk05: Thank you for taking my question. Just maybe going on the first Q guide, can you talk a bit more about what is driving the above seasonal pickup in volumes? Maybe what markets or how are you looking at it, please?
spk07: Hi, Katya. You know, we've been... pleased to see the way that we've rebounded in Q1. We're used to the normal seasonal downturn in Q4 and certainly Q4 shipments were at the low end of our guidance and so we're seeing a little bit better than typical bounce back in Q1. We think we have our people excited to to pick up some market share and to be out there selling. We're just out there to service our customers well. And overall, there are a couple of markets down, potentially down a little bit, but overall our customers are busy. We've been telling you guys this for a while and our customers truly do still have backlogs. They just need people and all their components and underlying demand remains pretty healthy. So we're seeing generally across most of the markets we serve with our small customers, quick turnaround, we see continued strong demand coming from them.
spk05: Okay, and maybe just on the tolling business, can you remind us how much is auto? I think there's also other business in that outside of auto.
spk07: Yeah, so our tolling businesses, we have a company in the U.S. with about 13 locations. They're very good at what they do. And then we have another company down in Mexico with four locations. We've expanded their operations, continue to expand them for both of our companies. They see a lot of opportunity out there because they're really good at what they do, and their customers keep asking them to do more. About 65% of our tolling business is automotive related. And remember on tolling, we don't own the metal, so we have no price risk on there. We don't have to deal with the volatility from metal prices. We charge a fee for processing, delivery, storage, which has been in high demand the last couple of years through all the supply chain disruptions. And then the next biggest market in our tolling business behind automotive is appliance. And we have seen some weakness on some of the residential appliance recently, but we're able to make that up with increased business with automotive and also some beverage can and other applications.
spk09: Okay. Thank you very much. Thanks, Katya. Our next question comes from the line of Lawson Winder with Bank of America Securities.
spk10: Please proceed.
spk08: Thank you, operator. Good morning, Carlos, Stephen, and Arthur. Nice to hear from you all. ask about the capital deployment in another way. So net debt is very low, which you've referred to several times on this call. How should we think about capital deployment in terms of the buyback versus, you know, the now higher dividend and the capex that you've discussed?
spk02: Yeah, morning, Lawson. Yeah, so as we've said before, you know, we're very aware of where we are from a balance sheet perspective. And then as Carla alluded to earlier, we've been pretty active on the M&A front looking for potential deals. And just because we didn't close any doesn't mean we're not active on that front. So our capital allocation is largely opportunistic on both fronts, whether that's growth or returns. And we ask that we kind of measure capital allocation for us with a five-year look back. And there's going to be some periods where there's a lull, and that doesn't mean we're not deploying capital. We're just being very patient and disciplined with our deployment. And we're kind of very proud where we are with our balance sheet and how we navigated the last couple of years and positioned the company today. in an environment where there's going to be some opportunities, both on the growth side and on the shareholder return side. And we've been pretty consistent with our returns or balanced capital allocation. You know, when you do a five-year look back, it's pretty balanced, Lawson, with about 50% of capital being dedicated towards growth and the other 50 towards returns.
spk08: Okay. That's a helpful context. Thanks very much, Heather. And then could I also ask about the year-over-year stainless volumes being down 10% and the carbon was up too. Alley was off a bit. Any color on the weakness in those volumes in Q4?
spk07: Steve can fill in maybe a little more specifically, but we don't think it was weak. We had a really strong 2021 on the stainless front. It's been a good, strong market for us over the years, and I think the fluctuation you see is probably based on dollars, so obviously pricing impacts that, but our stainless business demand there continues to remain pretty strong. Steve, anything to add?
spk03: Yeah, I would just say that as far as the stainless prices dropped a little bit, but our people in the field did a great job of cycling through their inventory. There were some import that came into the market towards the second half of the year, which we did not participate in, so we got a little bit of, just a little bit of a correction in the market, but we're going into 2023 with good inventories at a good cost and ready for business.
spk08: Okay, maybe just to drill down a little bit on that last point, when you say ready for business, could you maybe elaborate on kind of the outlook for full year in terms of sort of volumes directionally, maybe even some sort of range of growth?
spk03: Yeah, I wouldn't say we'd give directives for the rest of the year, but I would say that we think that a lot of the import has worked its way through the system and that the market is normalizing a little bit more.
spk07: Yeah, and Lawson, you know, just as a reminder, you know, Reliance is really kind of a spot business and our customers call us and we ship them what they need. So we're, you know, pretty dependent on our customers' needs and We're ready to do that for them continuing throughout 2023, and we see our customers continuing to be busy. In the stainless market, with pricing, they oftentimes have a little more visibility of where prices are heading, so you see a little more fluctuation in our customer buying patterns than in some of the other products we sell, but we're bullish as our customers on demand in 2023.
spk08: Okay, that's great.
spk09: Thank you. Nice work in the quarter. Thanks. Thank you. Our next question is a follow-up from the line of Phil Gibbs with KeyBank Capital Markets. Please proceed.
spk00: Hi there. I was curious on networking capital as you look out to 23 versus maybe 22. I think we were looking for it to be a pretty decent source, but you did bleed down a lot of networking capital in the fourth quarter. So I'm just looking for some thoughts there.
spk02: Sure. And I'll speak to the first quarter guide, Phil. So based on our pricing and volume assumptions, The build, working capital build in the first quarter should be seasonal and kind of in absolute numbers. It should come in below the levels of the release that we had in the fourth quarter.
spk00: Okay. That's helpful, and I think the rest of the year obviously will depend on, for the most part, on pricing as things progress. Absolutely. Carla, just on the infrastructure, Bill, are you seeing anything in terms of asks or requirements for some of the stuff, or is it largely still in bidding and design?
spk07: Yeah. So, Phil, the majority we think is still in bidding and design. You know, with our customer base, which is so diversified, and, you know, we're going to get some of those projects. We're not always going to be... the main supplier of those, but we get a lot of good activity of infrastructure projects. We haven't seen them really start to flow through the books yet. We're hearing more on the bidding and design phase right now, so we think that's probably a little later in 2023 when we and others really start to see the benefits of those projects.
spk00: And then I appreciate that. And then lastly, can you just remind us where, where you, where you all are on the buyback? And, you know, if you, if you were to increase, increase the amount under authorization, when, when would you typically do that? Thanks.
spk02: Yeah. So we, we just did that a few months ago, reset the authorization to a billion and we have a, know six hundred and eighty million or so remaining under our program so I mean that authorization the billion that we had was roughly about 10 percent so and we've been we've been active since then so and as you know we don't necessarily provide forward-looking guidance but in 2022 we were pretty active on that front so In the last 12 months, we reduced our share count by about 6%.
spk07: And we as management and our board think reliance is a pretty good buy. And so our board's very supportive. If we do opportunistically increase our activity under that, we'll certainly look to refresh as needed.
spk09: Thanks, everyone. Our next question comes from one of John Tomazos with John Tomazos Vary Independent Research.
spk10: Please proceed.
spk01: Congratulations on everything, Carla. I'm trying to understand the tremendous performance where adjusted for LIFO, the margins were the same in a falling steel price environment where average distributors have holding losses, which you managed to avoid. Did your inventory turnovers rise materially in the third or fourth quarters first? And for the 8% of your sales that were hot rolled or 15% total flat rolled steel, are those differentiated flat rolled tons in particular ways?
spk07: So... Hi, John. At Reliance, I think one of the things we try to do is be pretty consistent with our expectations of how we perform out in the field. And we try to give our leadership teams out there consistent guidance. So we always push for strong inventory turns. We do have different expectations based upon the product mix of each of our companies. For our flat-rolled companies, we do expect them to turn their inventories faster just because of the lead times with the mills and them servicing their customers. So we do have higher expectations for them. Steve and his team really worked with our FOCs. When prices are down, we will see some of our customers somewhat adjust their buying patterns But overall, I think we try to be pretty consistent and have been with the way we manage our inventories. Our companies are working better together now. We call it, you know, FOC collaboration. And they're able to offload inventory to each other if one of them is a little heavier than others. So we also have the benefit of our large network of companies where they can step in help each other out. Steve, anything?
spk03: Yeah, I would just add to being a domestic buyer for the most part. Our domestic mills have done a great job and we understand that they're working through supply chain issues and they've been really good partners making sure that we have enough steel, not too much steel, very flexible with the order books and I think that overall our business models worked by buying close to our locations.
spk02: John, the only thing I would add is our value-added processing capabilities. The margin volatility on that part of the business is much lower than the stock pool business. So that's another dimension to the story. The smaller order sizes, quick turnaround, transactional nature of the business. that also contributes to the relatively stable margin profile. So it's not one thing, it's a combination of multiple factors that contribute to that relatively stable margin profile.
spk01: Thank you and congratulations. I'm in awe of the great results.
spk09: Thanks, John. Thank you, John. There are no further questions at this time.
spk10: I'd like to turn the call back to Carla Lewis for any closing remarks.
spk07: Thank you, operator. Thanks again to all of you for your time and attention today. Before we close out the call, I'd like to remind everyone that we will be in Hollywood, Florida in early March presenting at the BMO Global Metals Mining and Critical Minerals Conference. And we hope to see many of you there. And to our Reliance family, thank you again to everyone throughout the Reliance family of companies for your record-setting 2022 performance. And thank you all for your continued support of and commitment to Reliance.
spk09: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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