Ladies and gentlemen, good morning, and welcome to the Reliance, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando, ADDO Investor Relations. Please go ahead.

Thank you, operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's third quarter 2024 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 Investors section of our website at investor.reliance.com. Please read the forward-looking statement disclosures included in our earnings release issued this morning and note that it applies to all statements made during this teleconference. The reconciliations of the adjusted numbers are included in the non-GAAP reconciliation part of our earnings release. I will now turn the call over to Karla Lewis, President and CEO of Reliance.

Good morning, everyone and thank you all for joining us today to discuss our third quarter 2024 results. Our businesses continued to execute well through challenging market conditions in the third quarter, once again outperforming industry shipments, while maintaining gross profit margin within our sustainable range which we refer to as smart profitable growth. Although metals pricing declined more than anticipated the inherent resilience of our business model, servicing diverse end markets with expansive value-added processing capabilities and quick turn orders as well as increased volume from our targeted growth efforts helped mitigate the impact of lower pricing on our gross profit margin and on our earnings level resulting in non-GAAP earnings per diluted share of $3.64 in line with our guidance. In the third quarter, we generated $463.9 million in cash flow from operations, underpinned by strong profitability and effective working capital management through cyclical markets. Our consistently strong cash flow continues to fuel execution in all elements of our capital allocation strategy. We invested $112.8 million in capital expenditures, the majority of which was directed toward growth activities. Our CapEx budget for the calendar year 2024 remains $440 million with an expected total cash outlay of approximately $425 million to $450 million. Since our 1994 IPO, we have completed 76 acquisitions that support our growth strategy, expanding our product diversification and value-added processing capabilities. We've completed four acquisitions to date in 2024, including our August acquisition of certain toll processing assets of the FerrouSouth division of Ferragon Corporation and the M&A pipeline remains active. We will continue to seek acquisition candidates that align with our standards for well-managed service centers and metals processors that possess strong brand equity and solid reputations in the marketplace and are immediately accretive to our earnings. During the quarter, we repurchased $432 million of our common stock reducing our total shares outstanding by nearly 3% as we opportunistically repurchased shares amid the broader pullback in equity prices across the metal space. In addition, we paid $60.6 million in dividends, highlighting our ongoing commitment to our valued stockholders. Next, I'd like to acknowledge some previously announced updates regarding our Board of Directors. We appointed Jim Kamsickas as an Independent Director effective October 1, increasing our Board to nine members. We look forward to Jim's contributions from his experience and expertise in industrial manufacturing and safety. Consistent with corporate governance best practices and our strategic and deliberate long-term succession plan, Mark Kaminski will step down as our Nonexecutive Chair on January 1, 2025. Mark will continue to serve as an Independent Board member, and we thank him for his many contributions as Chair since 2016. Doug Stotlar, a Director since 2016 will succeed Mark as our Independent Nonexecutive Chair effective January 1, 2025. Before my closing remarks, I'd like to acknowledge all who have been impacted by the severe weather events these past few weeks. While Hurricane Helene and Hurricane Milton had minimal impacts on our consolidated results, many of our employees were personally impacted and we're very grateful to report that all Reliance personnel and their families are safe. In closing, I'd like to recognize our dedicated team at Reliance for their strong execution through challenging and increasingly competitive market dynamics and their continued commitment to working safely. Just last month, we celebrated 85 years in business and our 30th anniversary as a publicly traded company which would not have been possible without the daily focus and contributions from each member of our Reliance family. While heightened near-term uncertainty in the fourth quarter is contributing to headwinds in demand and pricing, our resilient business model and positive long-range view support our confidence in our ability to continue executing our strategic growth and stockholder return priorities. Thank you all for your time today. I'll now turn the call over to Steve, who will review our third quarter demand and pricing trends.

Thanks, Karla, and good morning, everyone. I'd like to begin by expressing my gratitude to our dedicated team for their commitment to operating safely and executing our strategy. I'll now turn to our third quarter demand and pricing trends. Our tons sold increased 7.1% or 3.7% on a same-store basis compared to the third quarter of 2023, significantly outperforming the service center industry decrease of 1.2% as reported by the MSCI. While tons decreased 2.1% compared to the second quarter of 2024, we beat our expectations of down 2.5% to 4.5% due to increased shipments of carbon steel plate and structural products to the nonresidential construction market as the quarter progressed. We believe our growth and continued outperformance of our MSCI peers while maintaining industry-leading profitability are supported by our diversified business model, customer service and strategic investments in organic growth and acquisitions. Our third quarter average selling price per ton sold of $2,246 declined 4.3% compared to the second quarter of 2024, exceeding our expectations of down 2% to 4%, as carbon steel product prices declined more than anticipated as the quarter progressed. Aluminum prices also declined to the global market corrected from the short-lived impact of Russian sanctions and the U.S. market dealt with an abundance of low-priced imports. Stainless steel prices showed signs of stabilization. Next, I will turn to an overview of notable third quarter trends within our key end markets and products. Beginning with nonresidential construction. Carbon steel tubing, plate and structural products, which are predominantly sold into the nonresidential construction market, represented about one-third of our sales in the third quarter. All three products had significant year-over-year growth outperforming industry shipment levels. Our diversified exposure to the nonresidential construction market, including publicly funded infrastructure projects, data centers, and related energy projects supported solid demand for these products as its contributions from our recent acquisitions, despite macroeconomic uncertainty, delaying projects in certain areas of the market. Our General Manufacturing business, which represents roughly one-third of our total sales is highly diversified across both products and industries, including industrial machinery, consumer products, heavy equipment and military. Shipments increased year-over-year across the broader manufacturing sector, primarily reflecting strength in industrial machinery, military, shipbuilding, and rail offsetting weaker demand in agricultural, heavy equipment and household consumer products. Our industry outperformance across key product groups shipping to general manufacturing applications highlights the benefits of our diversified business model and a dynamic and uncertain demand environment. Aerospace products comprise approximately 10% of our total sales. Commercial aerospace demand remains fundamentally healthy despite short-term production and supply chain challenges associated with the ongoing Boeing labor stoppage. Our defense-related aerospace and space program demand remained stable 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 represents 4% of our total sales saw improved demand in the third quarter of 2024 compared to the prior year due to healthy demand in both the U.S. and Mexican automotive markets and our ongoing investments to increase capacity. Semiconductor industry demand remains subdued with continued excess inventories in the supply chain, but shows signs of stabilization in certain areas. Our long-term outlook for the semiconductor market remains positive. Overall, we are experiencing relatively steady demand with continued strength in certain key end markets, counterbalancing pressures in other end markets. Please refer to our earnings release for additional commentary on our end markets and product diversification. We are very proud of our team's outstanding efforts which enabled our continued industry-leading performance. Reliance's unrivaled scale and strong balance sheet makes us a highly attractive partner to our mill suppliers in all market conditions. Reliance continues to win new business from new and existing customers to recognize the quality and reliability of our service as well as the breadth and depth of our product offerings and value-added service capabilities. I will now turn the call over to Arthur to review our financial results and outlook.

Thanks, Steve, and thank you, everyone for joining today's call. Our third quarter 2024 non-GAAP diluted earnings per share of $3.64 came in toward the low end of our guided range. Despite the difficult pricing environment, which was the primary driver of a 21.7% decrease in our non-GAAP diluted earnings per share compared to the second quarter of 2024. Our tons sold surpassed our expectations, leading us to outperform industry shipment levels once again across nearly all products. The differentiating value of our significant scale and diversified product offerings to diverse end markets is made evident in the current choppy economic environment as they allow us to participate in the pockets of the economy where activity is strong. These factors, along with our broad and expanding processing capabilities and industry-leading quality of service contributed to our 3.7% year-over-year growth in tons sold on a same-store basis in the third quarter. Our gross profit margin declined from 29.8% in the second quarter to 29.4% in the third quarter from continued pricing headwinds. Again, our value-added processing capabilities moderated the decline in gross profit margin as orders with value-added processing continue to experience significantly less gross profit margin contraction in times of declining prices versus orders without processing. Our LIFO inventory valuation method provides further stability to our gross profit margin by adjusting our cost of sales to align with current replacement costs. Consistent with our guidance, we recorded LIFO income of $50 million in the third quarter, and we continue to anticipate LIFO income of $200 million for the full-year 2024, which implies $50 million of LIFO income for the fourth quarter of 2024. As a reminder, LIFO for the fourth quarter will include a true-up to our interim annual LIFO estimate based on year-end inventory levels. Factors such as inventory cost per ton trends along with changes in product mix and quantities will impact our annual LIFO calculation. As of September 30, 2024, the LIFO reserve on our balance sheet was $429.3 million, which remains available to generate LIFO income and benefit future period operating results by mitigating the impact of potential further declines in metal prices. Moving along to expenses. Same-store non-GAAP SG&A expenses increased approximately $17 million or 3% year-over-year as a result of slightly higher same-store headcount of 2% to support higher shipment levels and general wage inflation, offset by lower incentive compensation. Sequentially, same-store non-GAAP SG&A expenses declined approximately $4 million or less than 1%. Our model inherently normalizes expenses by rightsizing incentives as profits trend down. I'll now address our balance sheet and cash flow. Reliance generated operating cash flow of $463.9 million in the third quarter largely flat compared to $466 million generated in the third quarter of 2023. The decline in our profitability was offset by higher working capital release resulting in relatively consistent quarterly cash flow from operations. Our healthy inventory turn rate based on tons of 4.6x and accounts receivable DSO of 41 days also contributed to strong cash flow generation in the third quarter. Furthermore, our focus on inventory management helped lessen the impact of declining prices on our gross profit margin. During the quarter, we invested $112.8 million in capital expenditures, completed a $23 million acquisition, returned $60.6 million to our stockholders through cash dividends and repurchased $432 million worth of our shares at an average cost of approximately $281 per share. In the first nine months of 2024, we have repurchased $951.3 million worth of our shares at an average cost of approximately $285 per share resulting in nearly a 6% reduction in total shares outstanding. As announced in our release, our Board of Directors approved a $1.5 billion refresh of our share repurchase plan, which we will use for ongoing opportunistic repurchases. Our leverage position remains favorable with a net debt-to-EBITDA ratio of less than 1, providing ample liquidity to continue executing our capital allocation priorities. As previously announced in mid-September, we entered into an amended and restated $1.5 billion five-year unsecured revolving credit facility with more favorable pricing and fewer restrictive covenants reflecting our improved financial condition and upgraded credit ratings. Turning now to our fourth quarter outlook. As discussed in our release this morning, due to normal seasonal trends, and temporary headwinds from heightened macroeconomic and political uncertainty, we estimate our tons sold will be down 6% to 8% in the fourth quarter compared to the third quarter but up 4% to 6% compared to the fourth quarter of 2023 with 0.5% to 2.5% attributable to same-store growth. On the pricing side, we expect our average selling price per ton sold for the fourth quarter to be down 1.5% to 3.5% compared to the third quarter, reflecting continued pricing pressure across carbon steel products. Roughly a third of the expected quarterly pricing decline is due to the entry point in the fourth quarter being below the third quarter average. We anticipate our FIFO gross profit margins will stabilize in the fourth quarter from better alignment of replacement costs with inventory cost on hand as well as relatively lower anticipated selling price declines. Based on these expectations, we anticipate non-GAAP earnings per diluted share in the range of $2.65 to $2.85 for the fourth quarter of 2024. This concludes our prepared remarks. Thank you again for your time and participation, and we'll now open the call to questions.

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. The first question is from the line of Katja Jancic from BMO Capital Markets. Please go ahead.

Hi, thank you for taking my questions. Maybe starting on the commentary about 4Q being impacted by temporary factors. Can you talk a bit about what gives you confidence that some of the impact in 4Q is temporary? And what will drive better demand into next year?

Hi, Katja, thank you for joining the call today. As we connect with our teams close to our customers, we've noticed more uncertainty at the customer level compared to previous periods, with the Presidential election being a significant factor. Overall, we're optimistic about the long-term outlook since both administrations appear to support manufacturing and trade policy. Regardless of the direction of investments, whether in energy or other areas, most solutions require some form of steel. With our wide range of products, we believe we're well-positioned for whatever the policy landscape may look like. However, customers seem to have some apprehension about future directions and the timing of lower interest rates stimulating economic activity. The question remains, when will that actually happen? We anticipate a pickup in activity by 2025, although not necessarily on January 1st. We expect some recovery as we progress through the year. Additionally, we've heard from a few customers about potential extended shutdowns during the holidays in Q4. This leads us to take a cautious approach with our Q4 guidance due to many uncontrollable factors. Nonetheless, we think that with the Presidential election behind us, the onset of lower interest rates, and the strong economic tailwinds from unspent government stimulus, the industry is positioned well for 2025.

And then maybe just quickly on the auto side. And I know you're exposed to it through the tolling business. But are you hearing any slowdown in that market or that business?

Yes, for the most part, from the platforms we're on with our automotive toll processing customers, we have not seen a pullback. We think it will be normal seasonality for those businesses. In Q4 and generally stable demand, our platforms were on a lot of the SUVs and light trucks. Even some of the Super Duty trucks where there is a lot of demand and some ramp-up coming. So we read the headlines. We hear people are concerned. Also, again, the lower interest rates could help with consumer activity in the automotive market. So we have not experienced a slowdown yet and currently expect stable activity.

Thank you very much.

Thanks, Katja.

Thank you. The next question comes from the line of Phil Gibbs from KeyBanc Capital Markets. Please go ahead.

Yes, good morning.

Good morning.

Hi, Phil.

So the pricing and mix in the third quarter was a little bit below what you all were anticipating with the guidance and completely understandable with the market dynamics. But I guess, try to help me a little bit why the LIFO reserve wasn't changed to reflect that?

Yes. Good question, Phil. So we spoke to this briefly at the last call, but I'll provide some additional color as we're seeing some things play out as the year is progressing. So we're having some interesting mix impact this year that we really haven't seen in the past. There's some specialty aerospace products that have really long lead times. And while the rest of our inventory cycling through and getting the lower replacement costs, some of these products have 50 to 70 week long lead times. So we're basically going to see the benefit of lower cost of those products in 2025. So what's effectively happening is that is shifting some of that LIFO income from 2024 into 2025. And that's the primary reason why you haven't really seen us up our LIFO estimate for the year as the years progressed because some of that impact is going to be felt or realized in 2025.

Yes, and Phil, I would just add that this is quite a unique situation. I've been here for over 30 years, and this is the first time we've experienced anything like this. The pricing of those products has essentially doubled, and they are high-priced items. We've never encountered lead times like this for such a significant portion of our inventory. The dollar amounts are higher even with a relatively lower volume due to the nature of the product. We have been learning about this throughout the year and observing its impact on LIFO because of these unique characteristics of the products.

Well, you're not alone. I've never seen it either. So we're aligned. Question on the gross margins that you made about the fourth quarter, you said you expected things to better align and stabilize in the fourth quarter. Does that mean that you expect the fourth quarter to be the trough? Or are you saying you already saw the trough in the third quarter?

Good question, Phil. So it depends on what pricing does in the first quarter, right? So if you are forecasting that pricing in the first quarter will go up, then that would imply that Q4 would be a trough. But just to be clear, we're not putting guidance out for Q1 for our views for pricing for Q1. But if, again depending on what pricing does in 2025, then yes, I mean if there's some tailwinds in the beginning of the year then presumably, that would be true, the Q4 could be the trough.

I appreciate that. Are you suggesting that the third quarter will be lower than the third quarter but stabilizing? Or will it remain consistent?

It should be consistent based on our guidance, we're staying consistent with the third quarter.

Okay. That's helpful. And then last question for me on the semi side. You largely do semi's infrastructure from what I remember, not semis consumables, but been a little bit squishy, but saying maybe seeing some signs that, that might be stabilizing. What does that mean from year-end? Is it just that the supply chain feels a little bit over inventoried now that some of these projects have been a little bit deferred and that might be breaking after the Election cycle? Just trying to get some kind of context behind that. Appreciate it. Thanks.

Yes, Phil, on the semiconductor, we do sell some into the consumables, to the equipment manufacturers and then the infrastructure, as you mentioned. And at one of our companies selling more into the consumables. We did see a little more activity in Q3 than we had seen through the last I guess, several quarters as we see customers working through the inventory glut that they had, still some room to go on the equipment manufacturers, some activity there, but not really picking up yet. And then on the infrastructure side, the new chip build, there are a lot of factors, I think, impacting timing. We're still very bullish long-term. I don't know how much of that is the election. We hear about permitting slowdowns, getting construction workers just different reasons why it's starting to stop on some of the projects. And most of the projects, you see the big headline numbers, but a lot of them were planned in different phases where it wasn't all going to come immediately, which is quite honestly a better environment where it's spread out a little bit.

Thank you.

Yes. Thanks, Phil.

Thank you.

Thank you. As there are no further questions, I now hand the conference over to Karla Lewis, President and CEO for our closing comments.

Thank you, and thanks again to everyone who joined our call today. I would like to remind everyone that next month we'll be in Chicago presenting at Baird's Global Industrials Conference, and we hope to meet with many of you there. I also want to just reiterate our confidence in the ability of the Reliance team to operate well through all market conditions even with some potential temporary headwinds in Q4, and we're confident with our team moving into 2025. And we'd like to thank our customers, our suppliers and our stockholders for all of your support. Thank you.

Thank you. The conference of Reliance, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.