Financial Data and Key Metrics Changes - Non-GAAP earnings per diluted share for Q3 2025 were reported at $3.64, consistent with expectations and the same quarter in 2024 [7][15] - Operating cash flow generated in Q3 was approximately $262 million, with capital expenditures budgeted at $325 million for 2025 [7][19] - The company returned $124 million to shareholders through dividends and share repurchases during the quarter [8] Business Line Data and Key Metrics Changes - Tons sold in Q3 reached a record high, increasing by 6.2% compared to Q3 2024, outperforming the service center industry which reported a decrease of 2.9% [9][11] - Non-residential construction accounted for roughly one-third of Q3 sales, with strong demand driven by public infrastructure projects [11] - Aerospace products represented about 9% of total sales, with demand on the commercial side slightly down due to excess inventory [13] Market Data and Key Metrics Changes - U.S. market share increased to 17.1%, up from 14.5% in 2023, attributed to a profitable growth strategy [4] - The competitive market environment has led to pricing pressures, particularly in carbon steel products, impacting gross profit margins [10][16] - The semiconductor market remains under pressure from excess inventory, affecting pricing and margins [13][16] Company Strategy and Development Direction - The company focuses on smart, profitable growth strategies, emphasizing customer service and operational efficiency to capture market share [4][26] - Investments in advanced processing equipment and growth initiatives are prioritized to strengthen long-term growth [7][19] - The company remains committed to returning capital to shareholders while pursuing M&A opportunities to enhance geographic reach and capabilities [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying margin profile despite recent gross profit margin headwinds due to trade policy uncertainty and inventory levels [5][21] - The expectation for Q4 is stable demand across diversified end markets, with tons sold anticipated to increase by 3.5% to 5.5% compared to Q4 2024 [21] - Management believes that pricing for most products has stabilized entering Q4, with expectations for flat to slightly improved gross profit margins [21] Other Important Information - The company generated strong cash flow from operations, allowing for strategic capital allocation [19] - The net debt to EBITDA ratio remains favorable at less than 1, providing significant liquidity for capital allocation priorities [20][21] - The company is navigating a competitive environment while maintaining high levels of customer service [9][10] Q&A Session Summary Question: Is any of the gross margin compression attributable to the focus on growing volumes? - Management acknowledged that while there may be some impact from growing volumes, the primary reason for margin compression is the unique market conditions and excess inventory in specialty products [24][26] Question: Can you talk about the inventory levels on your balance sheet? - Management indicated that inventory levels have increased partly due to mill price increases and a slight uptick in tons sold, allowing the company to better service customers [28] Question: How close are we to seeing appropriate levels of inventory? - Management believes that destocking is progressing, with lead times for certain products beginning to extend, indicating a potential inflection point [33][34] Question: How does Reliance win new business? - The company focuses on execution and customer service rather than price, leveraging expanded processing capabilities and strong relationships with customers [36][37] Question: What is the outlook for LIFO accounting impacts? - Management explained that LIFO expenses are based on annual estimates and will likely continue into Q4, but expect to see improvements as costs stabilize [39][40] Question: What is the current state of the M&A landscape? - Management noted a steady flow of M&A opportunities, with valuations generally reasonable and activity levels returning to normal [66] Question: How do you view capital allocation between share buybacks and business investments? - Management considers share buybacks a low-risk use of capital and adjusts activity based on market conditions while also investing in business growth [94][95]

Financial Data and Key Metrics Changes - Non-GAAP earnings per diluted share for the third quarter of 2025 were reported at $3.64, consistent with expectations and the same quarter in 2024 [5][14] - Operating cash flow generated in the third quarter was approximately $262 million, reflecting strong financial performance [5][18] - The company maintained a long-term sustainable gross profit margin range of 29% to 31% despite experiencing short-term headwinds [4][19] Business Line Data and Key Metrics Changes - Tonnes sold reached a record for the third quarter, increasing by 6.2% compared to the same quarter in 2024, significantly outperforming the service center industry which reported a decrease of 2.9% [3][8] - Non-residential construction accounted for roughly one-third of third quarter sales, driven by strong demand in public infrastructure projects [10] - Aerospace products represented approximately 9% of total sales, with demand in defense and space-related programs remaining strong despite slight declines in commercial demand [11] Market Data and Key Metrics Changes - The company's U.S. market share increased to 17.1%, up from 14.5% in 2023, attributed to a smart growth strategy and high levels of customer service [3][10] - The competitive market environment has led to pricing pressures, particularly in carbon steel products, impacting gross profit margins [4][9] - Demand in the semiconductor market remained under pressure due to excess inventory, affecting pricing and margins [11][15] Company Strategy and Development Direction - The company is focused on investing for growth and delivering value to customers and stockholders, supported by strong cash generation [7][19] - A balanced capital allocation strategy is in place, with $124 million returned to stockholders through dividends and share repurchases during the quarter [5][6] - The company is pursuing M&A opportunities to enhance geographic reach and expand value-added capabilities [5][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying margin profile of the business despite current market challenges, anticipating stabilization in pricing for most products entering the fourth quarter [4][19] - The company expects overall demand in the fourth quarter to remain stable, with tons sold estimated to increase by 3.5% to 5.5% compared to the fourth quarter of 2024 [19][20] - Management highlighted the importance of maintaining service levels and operational efficiency to navigate the competitive environment [57] Other Important Information - The company generated $81 million in capital expenditures during the third quarter, with a total capital expenditure budget of $325 million for 2025 [5][18] - The net debt to EBITDA ratio remains favorable at less than 1, providing significant liquidity for capital allocation priorities [18][19] Q&A Session Summary Question: Is any of the gross profit margin compression attributable to the focus on growing volumes? - Management acknowledged the unique market conditions affecting margins and emphasized that while volume growth is important, the primary impact on margins has been from market dynamics and specialty product performance [23][24] Question: Can you discuss the inventory levels on the balance sheet? - Management explained that inventory levels have increased due to pricing and higher tonnes sold, allowing the company to better service customers while competitors have pulled back on inventory [27] Question: When do you expect to see appropriate levels of inventory? - Management indicated that destocking is ongoing, with signs of improvement in lead times for certain products, suggesting a potential inflection point in inventory levels [31][32] Question: How does Reliance win new business? - Management highlighted that winning new business is primarily through execution and service rather than price, with a focus on expanding processing capabilities and customer education [33][34] Question: What is the outlook for the aerospace and semiconductor markets? - Management expects continued improvement in the supply chain for high-value products in aerospace and semiconductors, with a positive long-term outlook [39][40] Question: How do you view the M&A landscape? - Management noted a steady flow of M&A opportunities, with reasonable valuations and a favorable environment for potential acquisitions [55] Question: How are you managing SG&A expenses amidst gross profit margin headwinds? - Management is focused on operational efficiencies and has reduced headcount while maintaining service levels to protect operating margins [57][58] Question: What is the expected impact of seasonality on the business? - Management anticipates typical seasonal trends, with Q1 and Q2 being the strongest quarters, and expects a bounce back in Q1 2026 after the usual Q4 decline [81][82]