Financial Data and Key Metrics Changes - The company reported non-GAAP earnings per diluted share of $3.64, consistent with expectations and guidance for the quarter [6][17][24] - Operating cash flow generated in the third quarter was approximately $262 million, which was strategically redeployed into high-value initiatives [7][21] - The capital expenditure budget for 2025 remains at $325 million, with more than half directed towards growth initiatives [7][22] Business Line Data and Key Metrics Changes - Tons sold in the third quarter reached a record high, increasing by 6.2% compared to 2024, significantly outperforming the service center industry, which reported a decrease of 2.9% [11][12] - Non-residential construction represented roughly one-third of third-quarter sales, driven by strong demand in public infrastructure projects [13] - Aerospace products comprised approximately 9% of total sales, with demand in defense and space-related programs remaining strong despite slight declines in commercial demand [14][15] 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 profitable growth strategy [5][4] - The aerospace and semiconductor markets continue to face challenges due to excess inventories, impacting pricing and margins [6][18] - The overall demand in the fourth quarter is anticipated to remain stable across diversified end markets, with tons sold expected to increase by 3.5% to 5.5% compared to 2024 [23][24] Company Strategy and Development Direction - The company emphasizes a capital allocation strategy designed to drive growth and deliver strong returns to stockholders, including investments in advanced processing equipment [7][8] - The focus remains on investing for growth and delivering value to customers and stockholders, supported by strong cash generation [10] - The company is committed to maintaining a long-term sustainable gross profit margin range of 29% to 31% despite short-term headwinds [6][27] Management's Comments on Operating Environment and Future Outlook - Management noted that trade policy uncertainty and excess inventory have created a competitive market, making it difficult to increase selling prices [5][18] - The company remains confident in its underlying margin profile and expects pressure on gross profit margins to ease as market conditions improve [18][24] - Management anticipates a potential recovery in demand and pricing stability entering 2026, particularly in the aerospace and semiconductor markets [52][54] Other Important Information - The company returned $124 million through dividends and share repurchases during the quarter, with year-to-date repurchases totaling over 1.4 million shares [9][22] - The net debt to EBITDA ratio remains favorable at less than one, providing significant liquidity for capital allocation priorities [22] Q&A Session Summary Question: Is any of the gross margin compression attributable to the focus on growing volumes? - Management acknowledged that while there is some impact from growing volumes, the primary reason for margin compression is the unique market conditions and excess inventory affecting specialty products [26][27] Question: Can you discuss the inventory levels on the balance sheet? - Management explained that the increase in inventory is partly due to mill price increases and a slight uptick in tons sold, allowing the company to better service customers [30][31] Question: How close are we to resolving excess inventory issues? - Management indicated that while destocking is ongoing, there are signs of improvement, and they believe gross profit margins have likely troughed in Q3 [36][37] Question: How does Reliance win new business? - Management emphasized that winning new business is primarily through execution and high levels of customer service rather than price competition [38][39] Question: What is the outlook for the semiconductor and aerospace markets? - Management expects continued improvement in these markets as excess inventories are worked through, with a positive long-term outlook [52][53] Question: What is the anticipated capital expenditure for 2026? - Management indicated that the 2026 capital expenditure budget is expected to be lower than 2025, focusing on better utilization of existing equipment [54][56] Question: How does the company view share buybacks versus investing in the business? - Management views share buybacks as a low-risk use of capital and adjusts their activity based on market conditions [95][96] Question: Is the company impacted by aluminum supply disruptions in New York State? - Management confirmed that there have been disruptions but emphasized their collaborative efforts to mitigate the impact [99][100] Question: What is the expected seasonality for the business going forward? - Management expects typical seasonality patterns to continue, with Q1 and Q2 being the strongest quarters, followed by declines in Q3 and Q4 [102][104]