Company Overview - Reliance is a metal service center company focused on processing and distribution of metals, founded in Los Angeles in 1939, with over 85 years of experience [1] - The company operates approximately 320 locations, primarily in the U.S. and North America, with some international presence [1] - Reliance has diversified its offerings, selling over 100,000 metal products to more than 125,000 customers [1] Business Strategy - The company employs a decentralized operational model, often through acquisitions, while maintaining the brand names of acquired companies [1] - Reliance believes in the value of the companies it acquires and differentiates itself from larger service center companies through its focus on diversification [1]

Summary of Reliance Inc. Conference Call Company Overview - **Company Name**: Reliance Inc. - **Industry**: Metals and Mining - **Founded**: 1939 in Los Angeles - **Locations**: Approximately 320 locations, primarily in the US and North America, with some international presence - **Product Range**: Over 100,000 metal products sold to more than 125,000 customers - **Revenue**: $15 billion with an average order size of $3,000 [10] Core Business Model - **Decentralized Operations**: Focus on local relationships and decision-making to enhance customer service and profitability [5] - **Inventory Management**: Emphasis on spot pricing and limited long-term contracts, primarily in aerospace [7] - **Value-Added Processing**: Approximately 50% of orders involve value-added processing, leading to improved gross profit margins from 25%-27% to 29%-31% [11] Financial Performance - **Cash Flow**: Strong and consistent cash flows, even in down markets, with significant capital expenditures (CapEx) of about $1.8 billion over the last five years [13][11] - **Acquisitions**: Completed 76 acquisitions since IPO in 1994, with four acquisitions in 2024 [14] - **Dividends**: Regular quarterly dividends paid for 66 years, with a commitment to increase dividends sustainably [15] Market Demand and Trends - **Demand Stability**: Overall steady demand with strength in non-residential construction and data centers, while agriculture has been weaker [19][20] - **Reshoring Trends**: Increased discussions about bringing manufacturing back to the US and Mexico, particularly in the automotive and pharmaceutical sectors [23][26] - **Impact of Tariffs**: Tariffs have generally supported higher pricing levels by reducing imports, benefiting domestic mills and allowing Reliance to pass on costs to customers [27][28] Industry Dynamics - **Market Fragmentation**: Reliance represents only 16% of MSCI shipments, indicating significant growth opportunities through acquisitions and organic growth [14] - **Competitor Landscape**: Domestic mills have increased capacity, which could replace imports and maintain a balanced market [38] Challenges and Considerations - **Uncertainty in Trade Policies**: Ongoing uncertainty in trade policies is affecting customer investment decisions [17] - **Volatility in Metal Prices**: Reliance's earnings are significantly impacted by metal prices, which have been structurally higher since 2018 [57] Strategic Outlook - **Acquisition Strategy**: Focus on acquiring well-run, family-owned businesses that align with Reliance's decentralized model [42][46] - **Market Valuation**: Reliance aims to maintain a consistent valuation methodology based on normalized earnings rather than market cycles [46] Conclusion Reliance Inc. continues to navigate a complex metals and mining landscape with a strong focus on customer relationships, value-added services, and strategic acquisitions. The company is well-positioned to capitalize on market opportunities while managing the challenges posed by trade policies and metal price volatility.

Company Overview - Reliance, Inc. is a leading global diversified metal solutions provider and the largest metals service center company in North America, founded in 1939 [3] - The company operates approximately 320 locations across 41 states and 10 countries outside the United States, serving over 125,000 customers in various industries [3] - Reliance offers a full line of over 100,000 metal products and focuses on small orders with quick turnaround and value-added processing services [3] Financial and Operational Highlights - In 2024, Reliance's average order size was $2,980, with approximately 50% of orders including value-added processing [3] - Approximately 40% of orders were delivered within 24 hours, indicating a strong operational efficiency [3] Upcoming Events - Karla Lewis, President and CEO, and Stephen Koch, Executive Vice President and COO, will participate in the Jefferies Industrials Conference on September 3, 2025, at 3:30 p.m. ET [1] - The presentation will be webcast live and available for replay on the company's website for 90 days following the event [2]

Core Insights - Reliance, Inc. has secured a $400 million unsecured term loan facility, effective August 14, 2025, maturing in August 2028, to refinance existing debt [1][9] - The company's net debt-to-EBITDA ratio stands at 0.9x as of June 30, 2025, indicating a conservative debt structure [2][9] - Reliance aims to enhance financial flexibility to support organic growth, strategic acquisitions, and consistent returns to shareholders through dividends and share repurchases [3][9] Financial Performance - Reliance's stock has increased by 4.1% over the past year, compared to an 11.2% rise in the industry [5] - The company expects a 1% to 3% decrease in tons sold in Q3 2025 compared to Q2 2025, but a 3% to 5% increase compared to Q3 2024 [6] - Average selling price per ton is projected to fluctuate between a 1% decline and a 1% increase from the previous quarter, with adjusted earnings per share forecasted between $3.60 and $3.80 for Q3 2025 [7] Market Outlook - Overall demand is expected to remain steady in Q3 2025, influenced by seasonal trends and uncertainties in domestic and global trade policies [6] - The company is committed to maintaining a balanced capital deployment approach while investing in high-return opportunities [3]

Core Insights - Reliance, Inc. has entered into a $400 million unsecured term loan facility to refinance existing debt and optimize its capital structure [1][2] - The company aims to enhance liquidity and extend debt maturities while pursuing growth opportunities and shareholder returns [2] Financial Overview - The new loan facility matures in August 2028 and replaces $400 million in senior unsecured notes maturing August 15, 2025 [1] - Reliance's net debt-to-EBITDA ratio stands at 0.9x as of June 30, 2025, indicating a conservative leverage profile [2] Company Profile - Founded in 1939, Reliance, Inc. is a leading global diversified metal solutions provider and the largest metals service center company in North America [3] - The company operates approximately 320 locations across 41 states and 10 countries, serving over 125,000 customers with a wide range of metal products [3] - In 2024, the average order size was $2,980, with about 50% of orders including value-added processing and 40% delivered within 24 hours [3]

Core Viewpoint - Real Estate Split Corp. plans to extend its maturity date by an additional 5 years to December 31, 2030, allowing shareholders to continue benefiting from a diversified portfolio of North American real estate securities [1][2]. Group 1: Term Extension - The board of directors intends to approve the extension of the maturity date, which will be announced at least 60 days prior to the original maturity date of December 31, 2025 [1]. - The extension allows Class A shareholders to maintain exposure to a high-conviction, actively managed portfolio of leading North American real estate companies [2]. - The term extension is not a taxable event, enabling shareholders to defer potential capital gains tax liability until the shares are disposed of [3]. Group 2: Shareholder Returns - Since inception on November 19, 2020, Class A shares have delivered a total return of 5.4% per annum, including cash distributions of $6.94 per share [4]. - Preferred shareholders will benefit from preferential cash dividends until December 31, 2030, with Preferred shares delivering a total return of 5.3% per annum since inception [5]. Group 3: Company Background - Middlefield, founded in 1979, is a specialist equity income asset manager with a focus on high-quality global companies across various sectors [6].

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and detailed explanatory notes [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Reliance, Inc., including statements of income, comprehensive income, balance sheets, cash flows, and equity. It is followed by detailed notes that provide explanations of significant accounting policies, recent acquisitions, revenue disaggregation, asset details, debt, leases, income taxes, equity changes, commitments, earnings per share, and segment information [Unaudited Consolidated Statements of Income](index=3&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Income) This section presents the unaudited consolidated statements of income for the periods ended June 30, 2025 and 2024 Consolidated Statements of Income (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $3,659.8 | $3,643.3 | $7,144.5 | $7,288.1 | | Operating income | $312.2 | $351.7 | $586.6 | $744.8 | | Net income attributable to Reliance | $233.7 | $267.8 | $433.4 | $570.7 | | Basic EPS | $4.44 | $4.71 | $8.20 | $9.99 | | Diluted EPS | $4.42 | $4.67 | $8.15 | $9.90 | [Unaudited Consolidated Statements of Comprehensive Income](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the unaudited consolidated statements of comprehensive income for the periods ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $234.2 | $268.3 | $434.7 | $572.1 | | Foreign currency translation gain (loss) | $27.7 | $(7.4) | $31.0 | $(23.1) | | Total other comprehensive income (loss) | $26.6 | $(8.2) | $29.0 | $(24.8) | | Comprehensive income attributable to Reliance | $260.3 | $259.6 | $462.4 | $545.9 | [Unaudited Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) This section presents the unaudited consolidated balance sheets as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Total current assets | $4,293.1 | $3,895.5 | | Total assets | $10,490.0 | $10,021.8 | | Total current liabilities | $1,348.1 | $1,213.0 | | Total liabilities | $3,245.9 | $2,791.2 | | Total Reliance stockholders' equity | $7,234.1 | $7,219.6 | [Unaudited Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $293.5 | $492.6 | | Net cash used in investing activities | $(158.8) | $(562.0) | | Net cash used in financing activities | $(222.0) | $(654.1) | | Decrease in cash and cash equivalents | $(78.6) | $(729.4) | | Cash and cash equivalents, ending balance | $239.5 | $350.8 | [Unaudited Consolidated Statements of Equity](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Equity) This section presents the unaudited consolidated statements of equity for the six months ended June 30, 2025 and 2024 Consolidated Statements of Equity (in millions, except per share amounts) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Total equity, beginning balance | $7,230.6 | $7,732.8 | | Net income attributable to Reliance | $433.4 | $570.7 | | Cash dividends | $(126.8) | $(125.7) | | Share repurchases | $(333.1) | $(519.3) | | Total equity, ending balance | $7,244.1 | $7,633.0 | | Cash dividends declared per common share | $2.40 | $2.20 | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the unaudited consolidated financial statements [Note 1. Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the financial statements - Financial statements prepared in accordance with U.S. GAAP for interim information, reflecting management's estimates and assumptions[16](index=16&type=chunk)[17](index=17&type=chunk) - Majority of inventory valued using the **last-in, first-out (LIFO) method**[18](index=18&type=chunk) - New FASB standards for income tax disclosures (effective 2025) and disaggregation of income statement expenses (effective 2027) will require additional disclosure but no impact on financial results[19](index=19&type=chunk)[20](index=20&type=chunk) [Note 2. Acquisitions](index=8&type=section&id=Note%202.%20Acquisitions) This note details the company's acquisition activities in 2024 and their impact on financial results - Company completed **four acquisitions in 2024** (Cooksey Iron & Metal, American Alloy Steel, Mid-West Materials, FerrouSouth division) to increase capacity and enhance product, customer, and geographic diversification within its core metal distribution business[21](index=21&type=chunk)[23](index=23&type=chunk)[79](index=79&type=chunk) Net Sales from 2024 Acquisitions (in millions) | Period | Net Sales | | :-------------------------- | :-------- | | 6 Months Ended June 30, 2025 | $193.9 | | 6 Months Ended June 30, 2024 | $115.1 | - Goodwill from 2024 acquisitions (**$59.5 million**) predominantly consists of expected strategic benefits, including enhanced financial and operational scale, and expansion of acquired product and processing know-how[24](index=24&type=chunk)[26](index=26&type=chunk) [Note 3. Revenues](index=12&type=section&id=Note%203.%20Revenues) This note disaggregates net sales by product and service categories Net Sales Disaggregated by Product and Service (in millions) | Product/Service | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------- | :------ | :------ | :------- | :------- | | Carbon steel | $2,044.2 | $2,025.7 | $3,948.4 | $4,038.6 | | Aluminum | $619.9 | $587.8 | $1,225.5 | $1,183.9 | | Stainless steel | $489.2 | $521.8 | $992.4 | $1,081.7 | | Alloy | $167.5 | $166.8 | $325.9 | $338.7 | | Toll processing and logistics | $164.3 | $161.2 | $324.5 | $319.0 | | Copper and brass | $98.9 | $87.0 | $180.6 | $162.3 | | Miscellaneous and eliminations | $75.8 | $93.0 | $147.2 | $163.9 | | **Total** | **$3,659.8** | **$3,643.3** | **$7,144.5** | **$7,288.1** | [Note 4. Property, Plant and Equipment, Net](index=12&type=section&id=Note%204.%20Property,%20Plant%20and%20Equipment,%20Net) This note provides a breakdown of property, plant, and equipment, net of accumulated depreciation Property, Plant and Equipment, Net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Land | $298.9 | $297.2 | | Buildings | $1,754.7 | $1,689.2 | | Machinery and equipment | $2,713.1 | $2,643.2 | | Construction in progress | $296.9 | $297.0 | | Property, plant and equipment, gross | $5,063.6 | $4,926.6 | | Less: accumulated depreciation | $(2,458.0) | $(2,381.7) | | **Property, plant and equipment, net** | **$2,605.6** | **$2,544.9** | [Note 5. Goodwill](index=12&type=section&id=Note%205.%20Goodwill) This note details the changes in the carrying amount of goodwill and related impairment information Change in Goodwill Carrying Amount (in millions) | Item | Amount | | :-------------------------- | :----- | | Balance as of January 1, 2025 | $2,161.8 | | Acquisitions | $2.8 | | Purchase price allocation adjustments | $0.7 | | Effect of foreign currency translation | $5.1 | | **Balance as of June 30, 2025** | **$2,170.4** | - No accumulated impairment losses related to goodwill as of June 30, 2025, and December 31, 2024[32](index=32&type=chunk) [Note 6. Intangible Assets, Net](index=13&type=section&id=Note%206.%20Intangible%20Assets,%20Net) This note presents the composition of intangible assets, net, and estimated future amortization expense Intangible Assets, Net (in millions) | Category | June 30, 2025 (Net) | December 31, 2024 (Net) | | :------------------------------------------ | :------------------ | :-------------------- | | Intangible assets subject to amortization | $187.9 | $207.2 | | Intangible assets not subject to amortization (Trade names) | $800.8 | $800.0 | | **Total Intangible Assets, Net** | **$988.7** | **$1,007.2** | Estimated Future Amortization Expense (in millions) | Year | Amount | | :--- | :----- | | 2025 (remaining six months) | $18.4 | | 2026 | $29.8 | | 2027 | $29.1 | | 2028 | $27.7 | | 2029 | $25.5 | | Thereafter | $57.4 | | **Total** | **$187.9** | [Note 7. Debt](index=14&type=section&id=Note%207.%20Debt) This note provides details on the company's debt composition, interest rates, and covenant compliance Debt Composition (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :-------------- | :---------------- | | Unsecured revolving credit facility | $282.0 | $— | | Senior unsecured notes (various maturities) | $1,151.1 | $1,151.1 | | Other notes | $1.1 | $1.1 | | Less: unamortized discount and debt issuance costs | $(7.4) | $(8.6) | | Less: amounts due within one year | $(400.2) | $(399.7) | | **Total long-term debt** | **$1,025.5** | **$742.8** | - Weighted average effective interest rate on outstanding borrowings increased to **3.48%** as of June 30, 2025, from 3.02% as of December 31, 2024[35](index=35&type=chunk) - Company was in compliance with the financial maintenance covenant in its Credit Agreement as of June 30, 2025[42](index=42&type=chunk)[107](index=107&type=chunk) [Note 8. Leases](index=16&type=section&id=Note%208.%20Leases) This note presents information on total lease costs and operating lease details Total Lease Cost (in millions) | Period | 2025 | 2024 | | :---------------- | :----- | :----- | | Three Months Ended June 30, | $28.4 | $25.9 | | Six Months Ended June 30, | $56.5 | $51.1 | Operating Lease Information | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Weighted average remaining lease term | 6.7 years | 6.3 years | | Weighted average discount rate | 4.8% | 4.6% | [Note 9. Income Taxes](index=17&type=section&id=Note%209.%20Income%20Taxes) This note details the effective income tax rates and the impact of recent tax legislation Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Second Quarter | 23.0% | 23.3% | | First Six Months | 23.3% | 23.3% | - Differences from the U.S. federal statutory rate of **21.0%** were mainly due to state income taxes[46](index=46&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) is not expected to materially impact the effective tax rate but will affect deferred income taxes and income tax payments due to **100% bonus depreciation**[47](index=47&type=chunk) [Note 10. Equity](index=17&type=section&id=Note%2010.%20Equity) This note provides information on equity, including restricted stock units, dividends, and share repurchases - Company makes annual grants of service-based restricted stock units (RSUs) and performance-based restricted stock units (PSUs) with approximately **3-year vesting periods**[48](index=48&type=chunk) Unvested RSUs and PSUs Status (as of June 30, 2025) | Item | Aggregate Units | Weighted Average Grant Date Fair Value Per Unit | | :-------------------------- | :-------------- | :-------------------------------------------- | | Unvested as of January 1, 2025 | 327,017 | $267.96 | | Granted | 163,409 | $299.37 | | Vested | (1,260) | $263.38 | | Cancelled or forfeited | (5,792) | $273.86 | | **Unvested as of June 30, 2025** | **483,374** | **$278.52** | - Company has paid regular quarterly cash dividends for **66 consecutive years**, increasing the quarterly dividend to **$1.20 per share** in February 2025 (from $1.10 in Feb 2024)[51](index=51&type=chunk)[99](index=99&type=chunk) Share Repurchase Activity (in millions) | Period | Shares | Average Cost Per Share | Amount | | :-------------------------- | :------- | :--------------------- | :----- | | First six months 2025 | 1,223,935 | $272.13 | $333.1 | | First six months 2024 | 1,804,180 | $287.81 | $519.3 | [Note 11. Commitments and Contingencies](index=19&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note discusses environmental remediation projects and routine legal actions - Company is involved in an environmental remediation project related to former manufacturing operations, but insurance policies are expected to cover the majority of costs, with no material adverse impact anticipated[57](index=57&type=chunk) - Routine legal actions are not expected to have a material adverse impact on the company's financial position, results of operations, or cash flows[58](index=58&type=chunk) [Note 12. Earnings Per Share](index=21&type=section&id=Note%2012.%20Earnings%20Per%20Share) This note presents basic and diluted earnings per share attributable to Reliance stockholders Earnings Per Share Attributable to Reliance Stockholders | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Basic EPS | $4.44 | $4.71 | $8.20 | $9.99 | | Diluted EPS | $4.42 | $4.67 | $8.15 | $9.90 | [Note 13. Segment Information](index=21&type=section&id=Note%2013.%20Segment%20Information) This note describes Reliance's operating segment and provides segment revenues - Reliance operates as one operating and reportable segment: **metals service centers**, primarily deriving revenue in the United States[60](index=60&type=chunk) Metals Service Centers Segment Revenues (in millions) | Period | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Three Months Ended June 30, | $3,659.8 | $3,643.3 | | Six Months Ended June 30, | $7,144.5 | $7,288.1 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Reliance, Inc.'s financial performance and condition for the second quarter and first six months of 2025. It details the results of operations, including net sales, gross profit, expenses, and operating income, highlighting the impact of record tons sold and fluctuating metals pricing. The discussion also covers financial condition, liquidity, capital resources, debt management, share repurchases, and compliance with financial covenants, along with critical accounting estimates and forward-looking statements [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section analyzes the company's operational performance, covering net sales, cost of sales, expenses, and operating income [Net Sales](index=28&type=section&id=Net%20Sales) This section analyzes net sales performance, including tons sold and average selling prices Net Sales and Tons Sold Performance | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YoY) | | :------------------------------------ | :-------- | :-------- | :------------- | :--------- | :--------- | :------------- | | Net sales (in millions) | $3,659.8 | $3,643.3 | 0.5% | $7,144.5 | $7,288.1 | (2.0)% | | Tons sold (in thousands) | 1,615.0 | 1,553.5 | 4.0% | 3,243.9 | 3,047.5 | 6.4% | | Average selling price per ton sold | $2,273 | $2,348 | (3.2)% | $2,208 | $2,394 | (7.8)% | - Tons sold in Q2 2025 surpassed the industry-wide decline of **3.1%** reported by MSCI by over seven percentage points[73](index=73&type=chunk)[81](index=81&type=chunk) - Metals pricing reversed declining trend in March 2025 due to trade actions, peaking in April before declining for the remainder of Q2[72](index=72&type=chunk) [Cost of Sales and Gross Profit](index=30&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) This section analyzes cost of sales and gross profit margins, including the impact of LIFO adjustments Cost of Sales and Gross Profit (in millions) | Metric | Q2 2025 | % of Net Sales | Q2 2024 | % of Net Sales | YTD 2025 | % of Net Sales | YTD 2024 | % of Net Sales | | :------------------------------------ | :-------- | :------------- | :-------- | :------------- | :--------- | :------------- | :--------- | :------------- | | Cost of sales | $2,571.9 | 70.3% | $2,557.3 | 70.2% | $5,023.3 | 70.3% | $5,073.9 | 69.6% | | Gross profit | $1,087.9 | 29.7% | $1,086.0 | 29.8% | $2,121.2 | 29.7% | $2,214.2 | 30.4% | - Gross profit margin remained strong at **29.7%** for Q2 and YTD 2025, despite significant metals pricing volatility[74](index=74&type=chunk)[86](index=86&type=chunk) - LIFO expense of **$50.0 million** for YTD 2025 (vs. $100.0 million income in YTD 2024) due to rising metals pricing environment[84](index=84&type=chunk)[85](index=85&type=chunk) [Expenses](index=31&type=section&id=Expenses) This section analyzes selling, general, and administrative (SG&A) expenses and their drivers SG&A Expense (in millions) | Metric | Q2 2025 | % of Net Sales | Q2 2024 | % of Net Sales | YTD 2025 | % of Net Sales | YTD 2024 | % of Net Sales | | :------------------------------------ | :-------- | :------------- | :-------- | :------------- | :--------- | :------------- | :--------- | :------------- | | SG&A expense | $706.0 | 19.3% | $667.7 | 18.3% | $1,396.2 | 19.5% | $1,339.2 | 18.4% | - Same-store SG&A expense increased by **5.3%** in Q2 2025 and **2.3%** in YTD 2025, mainly due to inflationary wage adjustments and increased variable warehousing/delivery expenses associated with higher tons sold[75](index=75&type=chunk)[88](index=88&type=chunk) - On a per ton basis, same-store SG&A expense increased **1.0%** in Q2 2025 but declined **2.5%** for YTD 2025[75](index=75&type=chunk)[88](index=88&type=chunk) [Operating Income](index=31&type=section&id=Operating%20Income) This section analyzes the company's operating income and its contributing factors Operating Income (in millions) | Metric | Q2 2025 | % of Net Sales | Q2 2024 | % of Net Sales | YTD 2025 | % of Net Sales | YTD 2024 | % of Net Sales | | :------------------------------------ | :-------- | :------------- | :-------- | :------------- | :--------- | :------------- | :--------- | :------------- | | Operating income | $312.2 | 8.5% | $351.7 | 9.7% | $586.6 | 8.2% | $744.8 | 10.2% | - Operating income declined due to lower average selling prices and gross profit margin, despite increased tons sold[90](index=90&type=chunk)[91](index=91&type=chunk) [Income Tax Rate](index=31&type=section&id=Income%20Tax%20Rate) This section discusses the effective income tax rates and factors influencing them Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Second Quarter | 23.0% | 23.3% | | First Six Months | 23.3% | 23.3% | - Differences from the U.S. federal statutory rate of **21.0%** were mainly due to state income taxes[93](index=93&type=chunk) [Financial Condition](index=31&type=section&id=Financial%20Condition) This section discusses the company's financial position, liquidity, and capital resources [Operating Activities](index=31&type=section&id=Operating%20Activities) This section analyzes net cash provided by operating activities and its key drivers Net Cash Provided by Operating Activities (in millions) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | First Six Months | $293.5 | $492.6 | $(199.1) | - Decrease mainly due to **$137.4 million decline in net income** and increased working capital investment (**$302.5 million in 2025** vs $240.3 million in 2024) driven by rising metals prices[95](index=95&type=chunk)[96](index=96&type=chunk) - Income taxes paid decreased to **$71.0 million** in YTD 2025 from $147.7 million in YTD 2024 due to decreased pretax income and prior year tax overpayments[96](index=96&type=chunk) [Investing Activities](index=33&type=section&id=Investing%20Activities) This section analyzes net cash used in investing activities, including acquisitions and capital expenditures Net Cash Used in Investing Activities (in millions) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | First Six Months | $(158.8) | $(562.0) | $403.2 | - Decrease mainly due to no acquisitions in YTD 2025 (vs. three acquisitions for **$346.5 million** in YTD 2024) and a **$32.4 million decrease in capital expenditures**[97](index=97&type=chunk) [Financing Activities](index=33&type=section&id=Financing%20Activities) This section analyzes net cash used in financing activities, covering debt, dividends, and share repurchases Net Cash Used in Financing Activities (in millions) | Period | 2025 | 2024 | Change | | :-------------------------- | :----- | :----- | :----- | | First Six Months | $(222.0) | $(654.1) | $432.1 | - Decrease mainly due to increased net debt borrowings (**$282.0 million** in YTD 2025 vs. no borrowings in YTD 2024) and decreased share repurchases (**$333.1 million** in YTD 2025 vs. $519.3 million in YTD 2024)[98](index=98&type=chunk) - Total dividend payments of **$128.3 million** in YTD 2025 were consistent with $127.9 million in YTD 2024, despite a **9.1% increase in quarterly dividend rate**, due to reduced outstanding shares[98](index=98&type=chunk)[99](index=99&type=chunk) [Share Repurchase Plan](index=33&type=section&id=Share%20Repurchase%20Plan) This section provides an update on the company's share repurchase program and remaining authorization - As of June 30, 2025, **$1.02 billion** remained authorized for repurchase under the $1.5 billion share repurchase program[101](index=101&type=chunk) - The program is flexible, with no obligation to repurchase a specific number of shares or a specific expiration date[54](index=54&type=chunk)[101](index=101&type=chunk) [Debt](index=33&type=section&id=Debt) This section details the company's debt obligations, credit facility, and liquidity position - Company has a **$1.5 billion unsecured revolving credit facility** with **$282.0 million outstanding** as of June 30, 2025 (vs. no outstanding borrowings as of Dec 31, 2024)[102](index=102&type=chunk) - Total debt obligations include **$1.15 billion in senior unsecured notes**, with **$400.0 million due in August 2025**[102](index=102&type=chunk)[105](index=105&type=chunk) - Net debt-to-total capital ratio increased to **14.1%** as of June 30, 2025, from 10.2% as of December 31, 2024[105](index=105&type=chunk) - Company believes it has sufficient liquidity from operations, cash, and the credit facility to satisfy cash requirements and debt obligations, including the August 2025 notes[104](index=104&type=chunk)[106](index=106&type=chunk) [Covenants](index=35&type=section&id=Covenants) This section confirms the company's compliance with financial maintenance covenants - Company was in compliance with the financial maintenance covenant (maximum total net leverage ratio) under its Credit Agreement as of June 30, 2025[42](index=42&type=chunk)[107](index=107&type=chunk) [Seasonality](index=35&type=section&id=Seasonality) This section discusses the seasonal trends affecting the company's operations - Overall operations have not shown material seasonal trends due to geographic, product, and customer diversity[108](index=108&type=chunk) - Revenues in July, November, and December are typically lower due to fewer working days from holidays and customer closures[108](index=108&type=chunk) [Goodwill and Other Intangible Assets](index=35&type=section&id=Goodwill%20and%20Other%20Intangible%20Assets) This section provides an overview of goodwill and other intangible assets and their impairment testing Goodwill and Intangible Assets (as of June 30, 2025) | Asset Type | Amount (in millions) | % of Total Assets | % of Total Equity | | :-------------------------- | :------------------- | :---------------- | :---------------- | | Goodwill | $2,170.4 | 21% | 30% | | Other intangible assets, net | $988.7 | 9% | 14% | - Goodwill and indefinite-lived intangible assets are not amortized but are subject to annual impairment tests[109](index=109&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) This section identifies the most critical accounting estimates and any recent changes - Most critical accounting estimates relate to the recoverability of goodwill, other indefinite-lived intangible assets, and long-lived assets[111](index=111&type=chunk) - No material changes to critical accounting estimates during the quarter ended June 30, 2025[112](index=112&type=chunk) [Website Disclosure](index=37&type=section&id=Website%20Disclosure) This section describes the company's use of its website for material information disclosure - Company uses its website (www.reliance.com and investor.reliance.com) as a distribution channel for material company information, including financial and investor relations updates[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company refers to its Annual Report on Form 10-K for detailed disclosures regarding market risk and confirms that there have been no material changes to its exposures to market risk since December 31, 2024 - No material changes to the company's exposures to market risk as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[114](index=114&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. Furthermore, there have been no material changes in the company's internal control over financial reporting during the second quarter of 2025 - Disclosure controls and procedures were effective as of June 30, 2025[115](index=115&type=chunk) - No material changes in internal control over financial reporting during the second quarter of 2025[116](index=116&type=chunk) [PART II — OTHER INFORMATION](index=37&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the information on "Legal Matters" and "Environmental Contingencies" from Note 11, indicating that no material adverse impact is expected from these proceedings - Information on legal proceedings and environmental contingencies is incorporated by reference from Note 11[117](index=117&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[118](index=118&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activity during the second quarter of 2025, reporting the number of shares purchased, average price paid, and the remaining authorization under the existing share repurchase program Share Repurchase Activity for Q2 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value That May Yet Be Purchased (in millions) | | :-------------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------- | | April 1 - April 30, 2025 | 301,279 | $265.17 | $1,024.5 | | May 1 - May 31, 2025 | — | $— | $1,024.5 | | June 1 - June 30, 2025 | — | $— | $1,024.5 | | **Total** | **301,279** | **$265.17** | | - All repurchases were made under the **$1.5 billion share repurchase program** authorized on October 22, 2024[120](index=120&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports that there were no defaults upon senior securities during the period - No defaults upon senior securities[121](index=121&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Reliance, Inc - Not applicable[122](index=122&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, none of the company's directors or officers adopted, terminated, or modified any Rule 10b5-1 trading arrangements - No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during Q2 2025[123](index=123&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits accompanying the Form 10-Q, including certifications from the CEO and CFO, and the iXBRL formatted financial information - Exhibits include CEO and CFO certifications (31.1, 31.2), Sarbanes-Oxley Act certification (32), and iXBRL formatted financial information (101, 104)[125](index=125&type=chunk) [SIGNATURE](index=41&type=section&id=SIGNATURE) The report is formally signed by Arthur Ajemyan, Senior Vice President, Chief Financial Officer, on behalf of Reliance, Inc - Report signed by Arthur Ajemyan, Senior Vice President, Chief Financial Officer, on July 30, 2025[129](index=129&type=chunk)

Company Overview - Reliance is the largest metals service center company in North America, operating a network of 320 locations across 41 states and 10 countries outside the US [1] - The company serves more than a significant number of clients, indicating a robust market presence [1] Analyst Background - The analyst has over 10 years of experience researching companies across various sectors, including commodities and technology [1] - The focus has been on value investing, with a particular interest in metals and mining stocks, as well as other industries like consumer discretionary, REITs, and utilities [1]

Financial Data and Key Metrics Changes - The company reported non-GAAP earnings per share of $4.43, an increase of over 17% compared to the prior quarter [5][17] - Non-GAAP pre-tax income increased by more than 15% sequentially [5] - Gross profit margin was maintained within the sustainable range of 29% to 31% [4][5] - Operating cash flow for the second quarter was $229 million, supporting investments and shareholder returns [5][19] Business Line Data and Key Metrics Changes - Tons sold in the second quarter decreased by 0.9% compared to the first quarter but increased by 4% year-over-year [10][11] - The average selling price per ton sold increased by 6.1% compared to the first quarter [11] - Shipments in non-residential construction, which represented roughly one-third of sales, increased year-over-year [12] - Aerospace products accounted for approximately 10% of sales, with stable demand in commercial aerospace [13] Market Data and Key Metrics Changes - The company outperformed the service center industry's year-over-year decline of 3.1% [10] - Demand for carbon steel products peaked in April but declined for the remainder of the second quarter [11] - The semiconductor industry faced pressure due to excess inventories, impacting related shipments [15] Company Strategy and Development Direction - The company focuses on smart profitable growth, maintaining gross profit margins while gaining market share [4][39] - Continued investments in advanced processing equipment and organic growth are prioritized [5][6] - The company is actively pursuing acquisition opportunities to expand geographic footprint and processing capabilities [6][42] Management's Comments on Operating Environment and Future Outlook - Management anticipates some weakness in the third quarter due to seasonal patterns but remains confident in long-term growth [8][21] - The current trade environment provides a competitive advantage due to the company's domestic sourcing strategy [8] - Management noted that uncertainty around tariffs is affecting customer buying behavior, but they expect a return to normal patterns once resolved [50] Other Important Information - The company returned $143 million to shareholders in dividends and share repurchases during the second quarter [7] - The capital expenditure budget for 2025 is set at $325 million, with over 50% allocated to growth projects [5][6] Q&A Session Summary Question: Guidance on FIFO gross margin pressure - Management indicated that Q3 typically sees demand weakness due to seasonal patterns, but they expect year-over-year strength [27][28] Question: Customer sentiment regarding tariffs - Management noted continued activity in non-residential construction and confidence in project pipelines despite tariff uncertainties [34][35] Question: Market share gains sustainability - Management expressed confidence in sustaining market share gains through superior customer service and operational efficiency [38][39] Question: Acquisition opportunities in the current market - Management observed an uptick in acquisition activity and noted that seller expectations are aligning more closely with their valuation perspectives [41][42] Question: Aluminum pricing acceptance by customers - Management confirmed that customers are accepting higher aluminum prices, although they may be purchasing less frequently [60][61]

Financial Data and Key Metrics Changes - The company reported non-GAAP earnings per share of $4.43, an increase of more than 17% compared to the prior quarter [5] - Non-GAAP pre-tax income increased by over 15% sequentially [5] - Gross profit margin was maintained within the sustainable range of 29% to 31% [4][5] - Operating cash flow for the second quarter was $229 million, supporting investments and shareholder returns [5][20] Business Line Data and Key Metrics Changes - Tons sold decreased by 0.9% compared to the first quarter of 2025 but increased by 4% year-over-year [10] - The non-residential construction market, which includes carbon steel tubing, plate, and structural products, represented roughly one-third of Q2 sales, with shipments up year-over-year [12] - Aerospace products accounted for approximately 10% of Q2 sales, with stable demand in commercial aerospace [14] Market Data and Key Metrics Changes - The company outperformed the service center industry's year-over-year decline of 3.1% [10] - Average selling price per ton sold increased by 6.1% compared to the first quarter of 2025 [11] - Pricing for carbon and aluminum products peaked in April but declined for the remainder of the second quarter [11] Company Strategy and Development Direction - The company remains focused on smart profitable growth, maintaining gross profit margins while expanding market share [4][39] - Capital expenditure budget for 2025 is set at $325 million, with over 50% dedicated to growth projects [5] - The company is actively pursuing M&A opportunities that align with its growth strategy and financial discipline [6][41] Management's Comments on Operating Environment and Future Outlook - Management anticipates some weakness in the third quarter but remains confident in the ability to grow amid market uncertainty [7][21] - The company expects demand to remain stable in the third quarter, with tons sold projected to be down 1% to 3% compared to Q2 [21] - Management highlighted the competitive advantage of sourcing metal from domestic mills in the current trade environment [8] Other Important Information - The company returned $143 million to shareholders in the second quarter through dividends and share repurchases [6] - The total debt as of June 30 was $1.43 billion, with a favorable net debt to EBITDA ratio of less than one [20] Q&A Session Summary Question: Guidance on FIFO gross margin pressure - Management indicated that Q3 typically sees demand weakness due to seasonal patterns, but year-over-year demand remains strong [26][31] Question: Customer sentiment regarding the tariff environment - Management noted continued activity in non-residential construction and confidence in project pipelines despite tariff uncertainties [32][34] Question: Market share gains sustainability - Management emphasized that market share gains are sustainable due to superior customer service and a decentralized structure that allows quick responses to market opportunities [39][54] Question: Acquisition opportunities in the current market - Management observed an uptick in acquisition activity in Q2 and noted that seller expectations are aligning more closely with their valuation perspectives [40][42] Question: Aluminum pricing acceptance by customers - Management confirmed that customers are accepting higher aluminum prices, although they may buy less and more frequently [58][60]