Reliance Steel & Aluminum Co

Greetings and welcome to Reliant Steel and Aluminum Company second quarter 2023 earnings 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. It is now my pleasure to introduce your host, Kim Orlando, with Addo Investor Relations. Thank you. You may begin.

Thank you, Operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's second quarter 2023 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. The recording of this call will be posted on the Investors section of our website at investor.rsac.com. Please read the forward-looking statement disclosures included in our earnings release issued this morning and note that it applies to all statements made during this teleconference. 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.

Good morning, everyone, and thank you for joining us today to discuss our second quarter 2023 financial results. Reliance's business model is designed to provide resilient performance throughout economic cycles, including both pricing and end market demand fluctuations present in the metals industry. The unique facets of our business model, highlighted by diversification, small order sizes, quick delivery, and increased value-added processing, combined with strong execution by our full Reliance team support our ability to deliver consistent, profitable results. Overall activity at Reliance has remained healthy as evidenced by solid volume growth year over year. We are excited by the continued onshoring and infrastructure spend activities that are creating new opportunities for us. Turning to our results, Our second quarter net sales of $3.88 billion declined by 2.1% from the first quarter of 2023, with our tons sold down slightly more than anticipated and relatively flat selling prices that remain elevated by historical standards. Overall, customer activity in most of the end markets we serve remained healthy with solid underlying demand and customer activity levels driven in part by our investments in organic growth. We continue to focus on growing the business organically and through acquisitions while maintaining our pricing and margin discipline. As a result, we deliver diluted earnings per share of $6.49, which is within our expected range. Our strong profitability, along with effective working capital management, produced significant operating cash flow of $295.1 million in the second quarter. Investing for growth remains our top capital allocation priority with approximately $154.3 million invested in both capital expenditures and M&A in the second quarter. We increased our capital expenditure budget for the full year 2023 from $500 million to our record $520 million, and approximately two-thirds of our CapEx budget is focused on growth projects, including investments in advanced value-added processing capabilities, facility upgrades to enhance safety and efficiencies, and expansion into new markets. Our expected total cash outlay for capital expenditures in 2023 is approximately $425 to $475 million. We completed the acquisition of Southern Steel Supply LLC on May 1st, increasing the total number of businesses we have acquired since our 1994 IPO to 72. Southern Steel is a highly regarded 60-plus-year-old metal service center in Memphis, Tennessee that expands our geographic reach in the southern U.S. and extends our value-added processing services. Our M&A pipeline remains healthy, and we continue to evaluate various prospective opportunities. Our strong balance sheet and cash generation positions us well to pursue acquisitions that meet our discipline criteria for high quality growth. Our cash flow also continues to fuel our strategy of returning capital to our stockholders. During the second quarter, we returned $132.5 million to our stockholders through dividends and share repurchases. Since 2018, we have invested nearly $2.2 billion in organic growth and acquisitions, and return $2.9 billion to our stockholders through dividends and share repurchases. In summary, we are very pleased with the continued strong operating performance of our entire Reliance team to execute Reliance's consistent and resilient strategy on a day-to-day basis, operating safely and producing profitable results through all operating environments. Importantly, we remain in a position of strength to continue investing in and profitably growing our company, including new opportunities that include spending from the infrastructure bill, the CHIPS Act, the Inflation Reduction Act, and onshoring activities. Thank you all for your time today. I'll now turn the call over to Steve, who will review our second quarter demand and pricing trends.