Reliance Q1 2025 Earnings Report

Reliance EPS Results

• Actual EPS: $3.77
• Consensus EPS: $3.66
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $5.30

Reliance Revenue Results

• Actual Revenue: $3.48 billion
• Expected Revenue: $3.44 billion
• Beat/Miss: Beat by +$47.45 million
• YoY Revenue Growth: -4.40%

Reliance Announcement Details

• Quarter: Q1 2025
• Date: 4/23/2025
• Time: After Market Closes
• Conference Call Date: Thursday, April 24, 2025
• Conference Call Time: 11:00AM ET

Reliance (NYSE:RS) (NYSE: RS) is a diversified metals service center company that purchases, processes and distributes metals and related industrial products. Its product portfolio includes carbon steel, aluminum, stainless steel, copper, brass, titanium and other specialty metals.

The company provides value-added processing services such as cutting, leveling, sawing, machining, forming and preparing materials to customer specifications. These services help manufacturers and other commercial users reduce material-handling requirements and obtain metals in ready-to-use forms.

Founded in 1939 and headquartered in Los Angeles, California, Reliance serves customers through a network of operations primarily across North America, with additional international capabilities. Its customer base spans the construction, industrial machinery, energy, aerospace, automotive, transportation, semiconductor and other manufacturing sectors. Karla R. Lewis serves as the company’s president and chief executive officer.

Reliance Q1 2025 Earnings Call Transcript

Key Takeaways

• Record Q1 shipments grew 12.8% sequentially and 9% year-over-year, driving non-GAAP earnings per share of $3.77, well above expectations.
• Non-GAAP FIFO gross profit margin expanded by 140 basis points to 30.4%, reflecting improved pricing and product mix.
• Revised full-year LIFO guidance to an expense of $100 million from a prior $60 million income estimate, due to rising carbon steel and aluminum costs.
• Generated $64.5 million in operating cash flow, invested $87 million in CapEx, paid $65 million in dividends and repurchased $253 million of stock, maintaining net debt/EBITDA below 1x.
• Q2 outlook calls for tons sold down 1% to up 1% sequentially, average selling price up 1%–3%, and non-GAAP EPS of $4.50–$4.70 amid continued macro uncertainty.

Presentation

[Operator]

Greetings and welcome to the Reliance First Quarter 2025 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kim Orlando with Addo Investor Relations. Please go ahead.

[Kimberly Orlando, Head of Investor Relations at Addo Investor Relations]

Thank you, Operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's First Quarter 2025 Financial Results. I am joined by Karla Lewis, President and Chief Executive Officer; Steve Koch, Executive Vice President and Chief Operating Officer; and Arthur Ajemyan, Senior Vice President and Chief Financial Officer. A recording of this call will be posted on the Investor section of our website at investor.reliance.com. Please read the forward-looking statement disclosures included in our earnings release issued yesterday 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 Karla Lewis, President and CEO of Reliance.

[Karla Lewis, President and, CEO at Reliance]

Good morning, everyone, and thank you all for joining us today to discuss our First quarter 2025 performance. We delivered stronger-than-expected results, once again demonstrating the resilience of our proven business model and ability of our teams to provide solutions to our customers in a backdrop of broad market uncertainty. By maintaining our commitment to growth and profitability, we shipped record tons while industry shipments declined and increased our gross profit margin by 140 basis points quarter-over-quarter, which drove non-GAAP earnings per share of $3.77, well ahead of our expectations. We generated cash flow from operations during the first quarter despite a working capital investment to support our successful growth efforts. Our 2025 capital expenditure budget remains $325 million, with an expected total cash outlay of approximately $375-$400 million, which includes carryover projects from prior years that will be completed this year.

[Karla Lewis, President and, CEO at Reliance]

Our first quarter results also benefited from our four 2024 acquisitions, and we remain in a position of financial strength to execute additional acquisitions that align with our disciplined and strategic criteria. While we continue to see new opportunities in the pipeline, the pace has slowed recently due to overall macroeconomic uncertainty, and we also funded stockholder return activities of $318 million. In summary, despite ongoing uncertainty in both domestic and international economic policy, we are encouraged by positive pricing momentum and continued solid demand conditions, most notably in the non-residential construction market. We applaud our team for their ability to execute on our strategic, profitable growth efforts in a disruptive market. We believe our long-standing model of both buying and selling metal primarily in the U.S. market is positive for Reliance, as well as our employees, customers, and suppliers.

[Karla Lewis, President and, CEO at Reliance]

We remain confident in our ability to maximize earnings power while maintaining our consistent focus on increasing value for our stockholders. Thank you for your time today, and I'll now turn the call over to Steve, who will review our demand and pricing trends.

[Stephen Koch, EVP and COO at Reliance]

Thanks, Karla, and good morning, everyone. I'd like to open by commending our dedicated team for upholding the highest standards of safety and driving operational success across the board. I'll now turn to our demand and pricing trends. Our first quarter tons sold were a record and increased 12.8% compared to the fourth quarter of 2024, surpassing our outlook of up 6%-8%. Our tons sold increased 9%, or 5.6% on a same-store basis compared to the first quarter of 2024, significantly outperforming the service center industry's year-over-year decline of one half of 1%, as reported by the MSCI. Our record shipments reflect market share gains across nearly every product group attributable to solid organic growth and contributions from our 2024 acquisitions.

[Stephen Koch, EVP and COO at Reliance]

We believe shipments during the first quarter may have also benefited somewhat from certain customers' acceleration of metal purchases in anticipation of carbon steel and aluminum product price increases. Our first quarter average selling price per ton sold declined 1.2% compared to the fourth quarter of 2024, which was consistent with our expected range of down 1% to up 1%. Despite rising metal prices, our modest average selling price decrease was mainly due to product mix, with strong tons growth and lower-priced carbon steel products. Next, I will review notable trends within our key end markets and products, beginning with non-residential construction. Carbon steel tubing, plate, and structural products, which we mainly sell into the non-residential construction market, represented roughly one-third of our Q1 2025 sales. All three products had significant year-over-year and sequential quarter shipment growth and substantially outperformed year-over-year industry shipments, as measured by the MSCI.

[Stephen Koch, EVP and COO at Reliance]

Our diversified exposure to the non-residential construction market, including heightened data center construction and related energy infrastructure, as well as publicly funded infrastructure projects, supported solid underlying demand for our products, as did contributions from our recent acquisitions. This healthy demand and a dynamic trade environment supported pricing improvements in March that have continued into April. Our general manufacturing business, which also represented roughly one-third of our total sales in Q1 2025, is highly diversified across geographies, products, and industries. Shipments increased both year-over-year and sequentially compared to the fourth quarter of 2024. Industrial machinery, military, shipbuilding, and heavy construction equipment demand remained strong in the first quarter. Demand in consumer products and heavy agricultural equipment was up also year-over-year, but was comparably weaker than in the other manufacturing sectors.

[Stephen Koch, EVP and COO at Reliance]

We believe a component of realized demand was attributable to demand pulled forward ahead of anticipated price increases and trade actions. Our industry outperformance across key product group shipping to general manufacturing applications highlights the strength and advantage of our diversified business model in a dynamic and uncertain demand environment. Aerospace products comprise approximately 10% of our Q1 2025 sales. Demand for commercial aerospace increased sequentially from the fourth quarter and was stable compared to the first quarter of 2024, despite continued supply chain challenges. Demand for defense-related aerospace and space programs remained consistent at strong levels. We primarily service the automotive market through our toll processing operations, which are not included in our tons sold. Our tolling business, which represented approximately 4% of our Q1 2025 sales, saw processed tons stay relatively consistent with the first quarter of 2024.

[Stephen Koch, EVP and COO at Reliance]

Semiconductor industry shipments remained under pressure in the first quarter with excess inventories in the supply chain. We are very proud of our team's extraordinary execution, which delivered another quarter of industry-leading financial performance. Reliance's unrivaled scale and strong balance sheet make us a highly attractive partner to our mill suppliers in all market conditions, and we continue to win new business from new and existing customers who value the breadth and depth of our product offerings and value-added processing capabilities and recognize the quality and reliability of our service. I will now turn the call over to Arthur to review our financial results and outlook.

[Arthur Ajemyan, SVP and CFO at Reliance]

Thanks, Steve, and thanks to everyone for joining today's call. Our underlying operating performance for the first quarter was stronger than anticipated due to better-than-expected shipment levels and improved gross profit margin. Our first quarter non-GAAP earnings per diluted share of $3.77 was above our guidance range despite higher-than-anticipated increases in carbon steel and aluminum product costs that resulted in LIFO expense of $25 million, or $0.35 per share, compared to the $15 million of LIFO income, or $0.21 per share credit included in our guidance. As Steve mentioned, our tons sold were higher than we anticipated, driven by improvements in shipments in the latter part of the first quarter. We experienced a slight sequential decline in our average selling price in the first quarter, mainly as a result of strong carbon steel product shipments, which are generally priced lower than our non-ferrous products.

[Arthur Ajemyan, SVP and CFO at Reliance]

Pricing for most carbon steel products increased in March and entered the second quarter at higher levels. On a non-GAAP FIFO basis, which is how we measure our day-to-day operating performance, our gross profit margin improved sequentially from 28.8% in the fourth quarter of 2024 to 30.4% in the first quarter of 2025. Continued alignment of replacement costs with our inventory costs on hand, coupled with a rising selling price environment, contributed to the improvement in our gross profit margin. For the full year 2025, we revised our LIFO estimate to reflect LIFO expense of $100 million from our prior estimate of $60 million of income due to higher-than-anticipated carbon steel and aluminum product costs.

[Arthur Ajemyan, SVP and CFO at Reliance]

As of the end of the first quarter, the LIFO reserve on our balance sheet was approximately $460 million, which remains available to benefit future period operating results and mitigate the impact of potential decline in metal prices. Turning to expenses, our first quarter same-store non-GAAP SG&A expense was down slightly from the first quarter of 2024, despite a 5.6% increase in same-store tons shipped, which contributed to a meaningful improvement in our operating leverage, with same-store non-GAAP SG&A expense per ton declining approximately 5%. We will continue to maintain our focus on smart, profitable growth throughout 2025. I'll now address our balance sheet and cash flow. We generated $64.5 million of cash flow from operations in the first quarter of 2025.

[Arthur Ajemyan, SVP and CFO at Reliance]

Seasonally, the first quarter typically requires the largest working capital investment, and increasing metal costs and selling prices further contributed to our working capital investment in the first quarter. We put our capital to work in the first quarter, utilizing cash flow from operations, borrowing on our revolving credit facility, and cash on hand to finance approximately $87 million in capital expenditures, $65 million in dividends paid to our stockholders, and $253 million in share repurchases at an average cost of approximately $274 per share. As a reminder, we were pleased to increase our quarterly dividend by 9.1% in February 2025 to $1.20 per share of common stock, marking our 32nd dividend increase in the 30 years since our 1994 IPO. We have also repurchased approximately $80 million worth of our shares since April 1 at an average cost of approximately $265 per share.

[Arthur Ajemyan, SVP and CFO at Reliance]

Year-to-date in 2025, share repurchases have resulted in a cumulative 2.3% reduction in our total shares outstanding since December 31, 2024. We have $1 billion remaining for additional share repurchases under existing $1.5 billion share repurchase plan that we refreshed in October 2024. At March 31, 2025, our total debt outstanding was approximately $1.5 billion, an increase of $330 million from December 31 due to borrowings on our revolving credit facility. Our leverage position remains favorable, with a net debt-to-EBITDA ratio of less than 1, providing significant liquidity to continue executing our capital allocation priorities. Moving on to outlook for the second quarter of 2025, we anticipate demand across our diversified end markets to remain stable in the second quarter despite ongoing uncertainty regarding domestic and international economic policy.

[Arthur Ajemyan, SVP and CFO at Reliance]

Accordingly, we estimate our tons sold will be down 1% to up 1% compared to the first quarter of 2025, consistent with seasonal trends supported by healthy demand in the non-residential construction market and continued targeted efforts to regain market share, and up 3%-5% compared to the second quarter of 2024. On the pricing side, we anticipate pricing will stay relatively consistent with current levels throughout the second quarter, which will result in our average selling price per ton sold to be up 1%-3% compared to the first quarter. We anticipate our FIFO gross profit margin will expand in the second quarter of 2025, following pricing improvements in March for certain products that have continued into April.

[Arthur Ajemyan, SVP and CFO at Reliance]

Based on these expectations, we anticipate non-GAAP earnings per diluted share in the range of $4.50-$4.70 for the second quarter of 2025, which is inclusive of LIFO expense of $25 million or $0.35 per share. This concludes our prepared remarks. Thank you again for your time and participation, and we'll open the call for your questions. Operator.

[Operator]

Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is on the question queue. You may press Star two 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. One moment, please, while we pull for questions. Thank you. Our first question is from Martin Englert with Seaport Research Partners.

[Martin Englert, Equity Research Analyst at Seaport Research Partners]

Hello. Good morning, everyone.

[Karla Lewis, President and, CEO at Reliance]

Morning, Martin.

[Martin Englert, Equity Research Analyst at Seaport Research Partners]

I wanted to ask about if you can maybe discuss your exposure within COGS as well as CapEx to imports that might be impacted by tariffs. I know you buy the vast majority of your products domestically, but I just want to understand if maybe you can size it up with some goalposts on percentages for both COGS and CapEx, maybe for the budget this year.

[Karla Lewis, President and, CEO at Reliance]

Hi, Martin. From the cost of sales standpoint, as you mentioned in your question, we do buy the majority of our metal from the U.S. or domestic producers, which we've done for many, many years. We think that's a good strategy and certainly benefits us in times like we're in currently where metal's a little tight in many areas, but we have those long-time relationships to continue to be able to source the product. Over 95% of what we buy is from domestic producers, so very limited exposure to direct imports of metal into our cost of sales. From a CapEx perspective, again, most of what we source does come from companies based in the United States. However, we do have some pieces of equipment that are on order from foreign companies where they've got certain expertise in certain types of equipment.

[Karla Lewis, President and, CEO at Reliance]

I don't know the percentage, but it's a small percentage that would be coming in, and we are actively in conversations with those suppliers to figure out how to best mitigate any impact of tariffs.

[Martin Englert, Equity Research Analyst at Seaport Research Partners]

I guess thinking longer term, have the tariffs and proposed tariffs influenced your thoughts around longer-term CapEx looking out beyond this year? I'd just be curious to hear how you're thinking about it, both positives and negatives.

[Karla Lewis, President and, CEO at Reliance]

Certainly, tariffs can be a factor, but given predominantly most of what we buy is in the U.S., we would continue to source consistently. If there was equivalent equipment and one was produced in the U.S. and one had a high tariff on it, that may sway our decision. We are going to continue to invest in CapEx in a manner to support our customers and provide them the services that they want from us. No big major shift in how we are going to think about that.

[Martin Englert, Equity Research Analyst at Seaport Research Partners]

What's the conversation been like with your customers and reshoring activity or improved opportunities since some of the tariffs have been rolled out?

[Karla Lewis, President and, CEO at Reliance]

We've had examples of some of our customers picking up business over the last couple of years from reshoring activity. You've seen in the non-residential construction data a lot of build of manufacturing space in the U.S. for companies to be able to come here. When we talk to our Reliance companies, we hear them talking about certain customers who are already experiencing increased volume, a lot of the machine shops and people we sell to. Larger customers and customers in general, there are a lot of conversations going on right now where they're talking about bringing more business, bringing their supply chains back closer to their operations here. I think there's still a lot more of that to come that we haven't seen actually in production mode yet in the U.S.

[Martin Englert, Equity Research Analyst at Seaport Research Partners]

Okay. Appreciate that. I guess conversely, have you noticed any red flags or cautious signs within the markets you serve, either across demand, pricing, or within supply chains?

[Karla Lewis, President and, CEO at Reliance]

Certainly, there's always questions. There's a lot of uncertainty on all the areas you just mentioned. There's probably a little more uncertainty in the market now than is typical in a more normal environment. I think we had really strong shipments in Q1. I think part of that is because our customers are confident in Reliance's ability to be able to source the metal that they need and provide the services that they also need. I think we're in a favorable position and that we do see some customers coming to us because they know that we have strong relationships with the U.S. producers and that we'll be able to service them.

[Martin Englert, Equity Research Analyst at Seaport Research Partners]

Okay. Appreciate all the color and congratulations on results in the guide.

[Karla Lewis, President and, CEO at Reliance]

Thanks, Martin.

[Operator]

Our next question is from Phil Gibbs with KeyBanc Capital Markets.

[Philip Gibbs, Managing Director and, Metals Equity Research Analyst at KeyBanc Capital Markets]

Hey, good morning.

[Karla Lewis, President and, CEO at Reliance]

Morning, Phil.

[Philip Gibbs, Managing Director and, Metals Equity Research Analyst at KeyBanc Capital Markets]

The LIFO calculation was changed to a quarterly expense from some modest income. I think you did a good job explaining that a lot of that clearly was due to higher costs starting to flow through the system, notably in carbon products. I wanted to get back actually to the baseline initial assumption that you were going to have some LIFO income flow through the aerospace-specific silo. Has that assumption changed at all? Are you more or less optimistic about that piece of it, or is that baseline assumption unchanged?

[Karla Lewis, President and, CEO at Reliance]

Yeah, relatively unchanged. We're still income mid-February. We wanted to see what was going to happen with Prices in March. As price increases took hold, certainly, that requires a reassessment of our estimates. We'll continue to look at the aerospace business to see if the shipments remain solid. That assumption should hold true for the remainder of the year. Just as a reminder, it's actually positive that we have LIFO expense because it means prices are going up, which is a good environment for us.

[Philip Gibbs, Managing Director and, Metals Equity Research Analyst at KeyBanc Capital Markets]

Yes, absolutely. Going back off of Martin's question on the reshoring or customers coming to you to make more first-stage investments for them, I guess my sense from your answer was that since the kind of initiation of the tariff environment, I do not see anything incremental, I guess, or more meaningful to that discussion. That whole discussion with or without tariffs, I guess, has continued to evolve for you to do more for your customers. On the tariff piece specifically, it is kind of more of a wait and see. Is that fair?

[Karla Lewis, President and, CEO at Reliance]

Yeah, I think for the most part, Phil. Even prior to the tariff announcements, we had been seeing customers, it was more, I guess, North America than just U.S. focused. We had been seeing customers looking to bring supply chains closer to their U.S. operations. I think those discussions have accelerated a bit. Again, customers are talking more specifically U.S. instead of North America a little more broadly.

[Philip Gibbs, Managing Director and, Metals Equity Research Analyst at KeyBanc Capital Markets]

Thank you. Lastly, I missed your comments earlier in the call about cash-related capital spending for this year, but just reiterate that or provide us an update on that.

[Karla Lewis, President and, CEO at Reliance]

Yeah, it stayed consistent. We think probably $375 million-$400 million cash spend in 2025 for CapEx.

[Philip Gibbs, Managing Director and, Metals Equity Research Analyst at KeyBanc Capital Markets]

Thank you.

[Karla Lewis, President and, CEO at Reliance]

Thanks, Phil.

[Karla Lewis, President and, CEO at Reliance]

Thanks, Phil.

[Operator]

Our next question is from Katja Jancic with BMO Capital Markets.

[Katja Jancic, Metal and Mining Analyst at BMO Capital Markets]

Hi. Thank you for taking my questions. Maybe starting on the onshoring theme, is there an opportunity for you to potentially do more than just first-stage value-added processing? In other words, would you be willing to do some more fabricated type of processing? Is there an opportunity there?

[Karla Lewis, President and, CEO at Reliance]

Hi, Katja. There could be. We will look at those opportunities selectively. We do have a few smaller fabrication operations currently. They will go a little further downstream, but we're very selective in where we choose to do that because we don't want to compete with our existing customer base. A lot of times, existing customers might ask us to do overflow for them in an effort where we get a lot of the increased value-added processing that we're doing. We will continue to look at those opportunities. Our customers are asking us to do more for them with our financial strength and with the capabilities we have in our people and their knowledge from other companies to support our customers. As our customers ask us to do that, we will be open to opportunities to grow that business.

[Katja Jancic, Metal and Mining Analyst at BMO Capital Markets]

Okay. Maybe can you also talk a little bit about the current M&A environment? Are there any opportunities? What are the kind of size of the potential deals and how you're thinking about it?

[Karla Lewis, President and, CEO at Reliance]

Yeah. As far as kind of the acquisition pipeline, a lot of that comes to us when owners of businesses are thinking about selling, whether it comes through bankers or it comes directly to us. That activity has been a little slower Q4, Q1 of this year, which is normal of what we typically see when there's uncertainty in the market. A lot of the owners hold off until they feel a little more confident. I think buyers would feel a little more confident in the outlook. We did see a little—we have seen a little slowness over the last two quarters. We're starting to see a little more activity, generally smaller to mid-sized companies, consistent with what we've seen the last few years.

[Katja Jancic, Metal and Mining Analyst at BMO Capital Markets]

Perfect. Thank you so much.

[Karla Lewis, President and, CEO at Reliance]

Thank you.

[Karla Lewis, President and, CEO at Reliance]

Thanks, Katja.

[Operator]

Our next question is from Mike Harris with Goldman Sachs.

[Mike Harris, Backup Administrator at Goldman Sachs]

Good morning. Thanks for taking my question.

[Karla Lewis, President and, CEO at Reliance]

Good morning.

[Mike Harris, Backup Administrator at Goldman Sachs]

Hey, on the same store sales, I mean, it's like the Q1 tons sold outpaced the industry by roughly 6 percentage points, I think, as you pointed out earlier. I guess of that record amount, how much would you attribute to market share gains versus contributions from the 2024 acquisitions?

[Karla Lewis, President and, CEO at Reliance]

Of our consolidated tons increase, we were up.

[Karla Lewis, President and, CEO at Reliance]

9%.

[Karla Lewis, President and, CEO at Reliance]

9% in total. About 3.5% of that was due to the four acquisitions we completed last year. The other 5.5% roughly was same store. Michael, we saw strength in certain of our end markets, most notably construction, non-residential construction related. There is a lot of activity out there. We think in general manufacturing, there may have been a little demand pull forward by certain customers, but we really can't quantify that. The strength we had, part of that we think is taking some share back from the market where our people are motivated to grow their tons profitably. We were really excited with how our teams performed to drive that above-industry growth while maintaining our gross profit margin in our 29-31% gross profit margin range.

[Mike Harris, Backup Administrator at Goldman Sachs]

Okay. That's helpful. It kind of sounds like the market share gain could be sticky versus more of an opportunistic sale.

[Karla Lewis, President and, CEO at Reliance]

Yes, yeah, we believe so.

[Mike Harris, Backup Administrator at Goldman Sachs]

Okay. The follow-up, just on current inventory levels, can you speak to kind of where they are versus target and maybe share any thoughts on the need to restock?

[Karla Lewis, President and, CEO at Reliance]

Yeah. We manage and monitor our inventory levels at Reliance based on inventory turns. We try to buy based upon our shipment levels and maintain a consistent turn ratio. We do not try to go into the restocking, destocking that a lot of people like to talk about. That is not our strategy. With the strong shipments, our inventory turns are actually slightly above our inventory turn goal. With our strong relationships with the domestic mills, we have access to the inventory, which is a real positive in markets where there is a little tightness as we were experiencing in Q1. We are very happy with where our inventory levels are.

[Mike Harris, Backup Administrator at Goldman Sachs]

Okay. Perfect. Thanks for the insight.

[Karla Lewis, President and, CEO at Reliance]

Thank you.

[Karla Lewis, President and, CEO at Reliance]

Thanks.

[Operator]

Our next question is from John Tumazos with John Tumazos, Very Independent.

[John Tumazos, CEO and Owner at John Tumazos Very Independent]

Thank you very much and congratulations on your great results in the context of the steel market. If I may, I'd like to ask just some general questions about the steel market. Domestic output is down 1.3% year to date. Imports are up 7.8 million tons or 7.8 million tons up year to date. Apparent demand had fallen five out of the last six years, only rising in 2021. In the AISI annual statistical report published in the middle of last year for 2023, AISI shipments to distributors at 20.2 million tons were the lowest in 32 years, even though your company, Ryerson, etc., say they're doing better, and I'm sure you're doing better. Please explain how the total steel market is so lethargic when the government reports positive GDP, etc.

[Karla Lewis, President and, CEO at Reliance]

That is a good question, John. Certainly, a lot of macro statistics and factors there. Yes, there are shipments overall, consumption in the U.S., shipments through service centers. We have seen that trend decline from a macro level. At Reliance, we really focus on our business and obviously, we are aware of those trends, but we just look at how we can continue to grow Reliance, how we can do more to service our customers, gain new customers. I think it makes the performance of our teams even that much more positive, the fact that they have been able to do that in a backdrop that you talked about.

[John Tumazos, CEO and Owner at John Tumazos Very Independent]

Do you think the small onesie-twosie customers important to your company are getting hurt by imported goods? Even if we do not take things from China by substitution, they drive European, Latin American, and other Asian companies to export more to the U.S. because China hits them in their home markets. Are the auto companies outsourcing more of the components or other U.S. manufacturers outsourcing more of the components to account for the lower reported shipments to distributors in the AISI data?

[Karla Lewis, President and, CEO at Reliance]

Yeah. I mean, John, again, we can really only comment to Reliance and specific to our company. Certainly, if any incremental U.S. manufacturing of metals is positive potentially for us and for our customers. To the extent reshoring is happening, there is more manufacturing being done in the U.S. or in North America. That is positive for us. As far as your question on auto and is that part of the reason mills are not sending as much to the distribution? As you may recall, we do not generally sell metal direct to the automotive industry. We do process quite a bit of metal for the automakers, and our customers in that space are generally the mills, carbon and aluminum. We have continued to invest in those businesses, and we have picked up more and more processing with our increased capacity.

[Karla Lewis, President and, CEO at Reliance]

We're continuing to see the mills rely on us to support them in their shipments to automotive the way that we always have.

[John Tumazos, CEO and Owner at John Tumazos Very Independent]

Just to share with you, Karla, I think inflation has been 3% more than reported for the last generation every year. The U.S. GDP has not grown in 20 years. The government data is just a bunch of lies. Witness housing starts last year were 32% below peak, and auto sales about 10% below all-time peaks. I am just sharing my perspective. You guys are doing great in the context of tough markets. If markets were good, just think how much better you would do. Thank you.

[Karla Lewis, President and, CEO at Reliance]

Yep. Absolutely. Thanks, John.

[Operator]

Thank you. There are no further questions at this time. I would like to hand the floor back over to Karla Lewis for any closing comments.

[Karla Lewis, President and, CEO at Reliance]

All right. Thanks again to all of you for joining our call today and for your continued support of Reliance and to all of our teams making up the Reliance family for safe and strong performance through uncertain market conditions. We're excited by the energy of our people to continuously improve as we service our customers and partner with our mill suppliers. Before we close out the call, I'd like to remind everyone that later next month we'll be presenting at the KeyBanc Industrials and Basic Materials Conference in Boston. We hope to meet with many of you there. Thank you.

[Operator]

Thank you. This concludes today's conference. Thank you again for your participation. You may now disconnect your lines.

Participants

Executives

• Stephen Koch, EVP and COO
• Arthur Ajemyan, SVP and CFO
• Karla Lewis, President and, CEO

Analysts

• Katja Jancic, Metal and Mining Analyst at BMO Capital Markets
• Kimberly Orlando, Head of Investor Relations at Addo Investor Relations
• Martin Englert, Equity Research Analyst at Seaport Research Partners
• John Tumazos, CEO and Owner at John Tumazos Very Independent
• Philip Gibbs, Managing Director and, Metals Equity Research Analyst at KeyBanc Capital Markets
• Mike Harris, Backup Administrator at Goldman Sachs