UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-13122


(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		95-1142616 (I.R.S. Employer Identification No.)

~~350 South Grand Avenue,~~16100 N. 71st Street, Suite ~~5100~~400

~~Los Angeles~~Scottsdale, ~~California~~Arizona

~~90071~~85254

(Address of principal executive offices, including zip code)

((480)~~213~~) ~~687-7700~~564-5700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	RS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧☒ No ◻☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧☒ No ◻☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of October ~~29, 2021, 62,654,519~~28, 2022, 58,690,903 shares of the registrant’s common stock, $0.001 par value, were outstanding.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION			1

	Item 1.	Financial Statements
			1
		Unaudited Consolidated Balance Sheets	1

		Unaudited Consolidated Statements of Income	2

		Unaudited Consolidated Statements of Comprehensive Income	3

		Unaudited Consolidated Statements of Equity	4

		Unaudited Consolidated Statements of Cash Flows	5

		Notes to Unaudited Consolidated Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
			24
	Item 4.	Controls and Procedures	2624

PART II — OTHER INFORMATION			26

	Item 1.	Legal Proceedings	26
			24
	Item 1A.	Risk Factors	26
			24
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
			25
	Item 3.	Defaults Upon Senior Securities	27
			25
	Item 4.	Mine Safety Disclosures	27
			25
	Item 5.	Other Information	27
			25
	Item 6.	Exhibits	2826

~~SIGNATURES~~SIGNATURE			2927

Table of Contents

PART I --— FINANCIAL INFORMATION

Item 1. Financial Statements

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions, except number of shares which are reflected in thousands and par value)


	September 30,		December 31,		September 30,		December 31,
	2021		2020*		2022		2021*
ASSETS	ASSETS				ASSETS
Current assets:
Cash and cash equivalents	$	638.4	$	683.5	$	643.7	$	300.5
Accounts receivable, less allowance for credit losses of $28.0 at September 30, 2021 and $19.0 at December 31, 2020		1,693.5		926.3
Accounts receivable, less allowance for credit losses of $29.4 at September 30, 2022 and $26.7 at December 31, 2021						1,856.9		1,683.0
Inventories		1,877.8		1,420.4		2,175.8		2,065.0
Prepaid expenses and other current assets		74.3		80.5		87.3		111.6
Income taxes receivable		—		2.1		47.5		—
Total current assets		4,284.0		3,112.8		4,811.2		4,160.1
Property, plant and equipment:
Land		256.2		260.1		260.8		260.1
Buildings		1,266.2		1,240.0		1,338.1		1,285.0
Machinery and equipment		2,208.6		2,107.8		2,385.0		2,241.4
Accumulated depreciation		(1,928.4)		(1,815.7)		(2,054.1)		(1,949.7)
Property, plant and equipment, net		1,802.6		1,792.2		1,929.8		1,836.8

Operating lease right-of-use assets		199.8		204.0		217.6		224.6
Goodwill		1,935.3		1,935.2		2,103.9		2,107.6
Intangible assets, net		919.5		947.1		1,030.4		1,077.7
Cash surrender value of life insurance policies, net		30.8		43.7		26.9		44.9
Other assets		80.4		71.8		82.4		84.3
Total assets	$	9,252.4	$	8,106.8	$	10,202.2	$	9,536.0

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY				LIABILITIES AND EQUITY

Current liabilities:
Accounts payable	$	519.4	$	259.3	$	481.6	$	453.9
Accrued expenses		117.0		88.9		160.4		148.2
Accrued compensation and retirement costs		239.6		165.8		234.9		294.0
Accrued insurance costs		40.8		42.0		39.5		41.0
Current maturities of long-term debt and short-term borrowings		4.9		6.0		509.5		5.0
Current maturities of operating lease liabilities		48.9		51.0		53.3		58.6
Income taxes payable		36.5		—		—		64.3
Total current liabilities		1,007.1		613.0		1,479.2		1,065.0
Long-term debt		1,641.4		1,638.9		1,138.8		1,642.0
Operating lease liabilities		151.9		154.1		165.2		162.5
Long-term retirement costs		105.8		95.8
Deferred compensation and retirement costs						74.1		81.0
Other long-term liabilities		22.3		26.7		8.9		7.0
Deferred income taxes		456.0		455.6		480.5		484.8
Commitments and contingencies
Equity:
Preferred stock, $0.001 par value: 5,000 shares authorized; NaN issued or outstanding		—		—
Preferred stock, $0.001 par value: 5,000 shares authorized; none issued or outstanding						—		—
Common stock and additional paid-in capital, $0.001 par value and 200,000 shares authorized
Issued and outstanding shares — 62,694 at September 30, 2021 and 63,600 at December 31, 2020		0.1		0.1
Issued and outstanding shares—59,022 at September 30, 2022 and 61,806 at December 31, 2021						0.1		0.1
Retained earnings		5,943.5		5,193.2		6,960.5		6,155.3
Accumulated other comprehensive loss		(82.9)		(77.9)		(113.9)		(68.9)
Total Reliance stockholders’ equity		5,860.7		5,115.4		6,846.7		6,086.5
Noncontrolling interests		7.2		7.3		8.8		7.2
Total equity		5,867.9		5,122.7		6,855.5		6,093.7
Total liabilities and equity	$	9,252.4	$	8,106.8	$	10,202.2	$	9,536.0

* Amounts derived from audited financial statements.

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except number of shares which are reflected in thousands and per share amounts)


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Net sales	$	3,847.4	$	2,085.6	$	10,104.6	$	6,677.8	$	4,247.2	$	3,847.4	$	13,414.2	$	10,104.6

Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown below)		2,636.3		1,409.5		6,857.6		4,606.3		3,008.2		2,636.3		9,292.7		6,857.6
Warehouse, delivery, selling, general and administrative ("SG&A")		606.8		449.2		1,688.6		1,410.4
Warehouse, delivery, selling, general and administrative (SG&A)										630.1		606.8		1,890.6		1,688.6
Depreciation and amortization		56.7		56.4		172.1		170.8		60.4		56.7		178.8		172.1
Impairment of long-lived assets		—		10.0		—		107.9
		3,299.8		1,925.1		8,718.3		6,295.4		3,698.7		3,299.8		11,362.1		8,718.3

Operating income		547.6		160.5		1,386.3		382.4		548.5		547.6		2,052.1		1,386.3

Other (income) expense:
Interest expense		15.6		15.7		47.0		47.2		15.6		15.6		46.8		47.0
Other (income) expense, net		(0.6)		17.8		3.6		23.1
Other expense (income), net										8.9		(0.6)		21.5		3.6
Income before income taxes		532.6		127.0		1,335.7		312.1		524.0		532.6		1,983.8		1,335.7
Income tax provision		135.9		28.7		340.6		70.2		129.6		135.9		490.9		340.6
Net income		396.7		98.3		995.1		241.9		394.4		396.7		1,492.9		995.1
Less: net income attributable to noncontrolling interests		1.0		0.7		3.4		2.4
Less: Net income attributable to noncontrolling interests										0.9		1.0		3.3		3.4
Net income attributable to Reliance	$	395.7	$	97.6	$	991.7	$	239.5	$	393.5	$	395.7	$	1,489.6	$	991.7

Earnings per share attributable to Reliance stockholders:
Basic									$	6.55	$	6.25	$	24.35	$	15.61
Diluted	$	6.15	$	1.51	$	15.35	$	3.66	$	6.45	$	6.15	$	23.98	$	15.35
Basic	$	6.25	$	1.53	$	15.61	$	3.71

Shares used in computing earnings per share:
Basic										60,055		63,275		61,175		63,526
Diluted		64,350		64,688		64,617		65,503		60,984		64,350		62,114		64,617
Basic		63,275		63,758		63,526		64,578

Cash dividends per share	$	0.6875	$	0.6250	$	2.0625	$	1.8750

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Net income	$	396.7	$	98.3	$	995.1	$	241.9	$	394.4	$	396.7	$	1,492.9	$	995.1
Other comprehensive (loss) income:
Foreign currency translation (loss) gain		(8.3)		11.5		(5.0)		(11.2)
Foreign currency translation loss										(32.0)		(8.3)		(51.3)		(5.0)
Postretirement benefit plan adjustments, net of tax		—		15.8		—		19.5		6.4		—		6.3		—
Total other comprehensive (loss) income		(8.3)		27.3		(5.0)		8.3
Total other comprehensive loss										(25.6)		(8.3)		(45.0)		(5.0)
Comprehensive income		388.4		125.6		990.1		250.2		368.8		388.4		1,447.9		990.1
Less: comprehensive income attributable to noncontrolling interests		1.0		0.7		3.4		2.4
Less: Comprehensive income attributable to noncontrolling interests										0.9		1.0		3.3		3.4
Comprehensive income attributable to Reliance	$	387.4	$	124.9	$	986.7	$	247.8	$	367.9	$	387.4	$	1,444.6	$	986.7

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY

(in millions, except ~~number of shares which are reflected in thousands and~~ per share amounts)

Reliance Stockholders’ Equity

Common Stock and Additional

Accumulated Other

Paid-In Capital

Retained

Comprehensive

Noncontrolling

Shares

Amount

Earnings

(Loss) Income

Interests

Total
Balance at January 1, 2020
66,854

$
122.2

$
5,189.5

$
(105.1)

$
7.5

$
5,214.1
Net income
—

—

61.7

—

1.2

62.9
Other comprehensive loss
—

—

—

(31.4)

—

(31.4)
Noncontrolling interest purchased
—

(6.9)

—

—

(1.1)

(8.0)
Dividend to noncontrolling interest holder
—

—

—

—

(0.5)

(0.5)
Stock-based compensation, net
111

3.8

—

—

—

3.8
Stock options exercised
6

0.3

—

—

—

0.3
Repurchase of common shares
(3,330)

(119.3)

(180.7)

—

—

(300.0)
Cash dividends — $0.625 per share and dividend equivalents
—

—

(41.9)

—

—

(41.9)
Balance at March 31, 2020
63,641

0.1

5,028.6

(136.5)

7.1

4,899.3
Net income
—

—

80.2

—

0.5

80.7
Other comprehensive income
—

—

—

12.4

—

12.4
Stock-based compensation, net
13

9.0

—

—

—

9.0
Cash dividends — $0.625 per share and dividend equivalents
—

—

(39.9)

—

—

(39.9)
Balance at June 30, 2020
63,654

9.1

5,068.9

(124.1)

7.6

4,961.5
Net income
—

—

97.6

—

0.7

98.3
Other comprehensive income
—

—

—

27.3

—

27.3
Dividend to noncontrolling interest holder
—

—

—

—

(0.8)

(0.8)
Stock-based compensation, net
104

2.2

—

—

—

2.2
Repurchase of common shares
(2)

(0.2)

—

—

—

(0.2)
Cash dividends — $0.625 per share and dividend equivalents
—

—

(41.0)

—

—

(41.0)
Balance at September 30, 2020
63,756

$
11.1

$
5,125.5

$
(96.8)

$
7.5

$
5,047.3

Balance at January 1, 2021
63,600

$
0.1

$
5,193.2

$
(77.9)

$
7.3

$
5,122.7
Net income
—

—

266.9

—

1.3

268.2
Other comprehensive loss
—

—

—

(1.2)

—

(1.2)
Dividend to noncontrolling interest holder
—

—

—

—

(2.4)

(2.4)
Stock-based compensation, net
107

6.5

—

—

—

6.5
Cash dividends — $0.6875 per share and dividend equivalents
—

—

(44.8)

—

—

(44.8)
Balance at March 31, 2021
63,707

6.6

5,415.3

(79.1)

6.2

5,349.0
Net income
—

—

329.1

—

1.1

330.2
Other comprehensive income
—

—

—

4.5

—

4.5
Stock-based compensation, net
8

23.1

—

—

—

23.1
Repurchase of common shares
(147)

(24.0)

—

—

—

(24.0)
Cash dividends — $0.6875 per share and dividend equivalents
—

—

(43.8)

—

—

(43.8)
Balance at June 30, 2021
63,568

5.7

5,700.6

(74.6)

7.3

5,639.0
Net income
—

—

395.7

—

1.0

396.7
Other comprehensive loss
—

—

—

(8.3)

—

(8.3)
Dividend to noncontrolling interest holder
—

—

—

—

(1.1)

(1.1)
Stock-based compensation, net
12

16.3

—

—

—

16.3
Repurchase of common shares
(886)

(21.9)

(109.1)

—

—

(131.0)
Cash dividends — $0.6875 per share and dividend equivalents
—

—

(43.7)

—

—

(43.7)
Balance at September 30, 2021
62,694

$
0.1

$
5,943.5

$
(82.9)

$
7.2

$
5,867.9


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Total equity, beginning balance	$	6,863.1	$	5,639.0	$	6,093.7	$	5,122.7

Common stock and additional paid-in capital:
Beginning balance		0.1		5.7		0.1		0.1
Stock-based compensation		18.6		17.2		48.4		55.1
Common stock withheld related to net share settlements		(4.5)		(0.9)		(21.6)		(9.2)
Repurchase of common shares		(14.1)		(21.9)		(26.8)		(45.9)
Ending balance		0.1		0.1		0.1		0.1

Retained earnings:
Beginning balance		6,942.5		5,700.6		6,155.3		5,193.2
Net income attributable to Reliance		393.5		395.7		1,489.6		991.7
Cash dividends and dividend equivalents		(52.9)		(43.7)		(163.5)		(132.3)
Repurchase of common shares		(322.6)		(109.1)		(520.9)		(109.1)
Ending balance		6,960.5		5,943.5		6,960.5		5,943.5

Accumulated other comprehensive loss:
Beginning balance		(88.3)		(74.6)		(68.9)		(77.9)
Other comprehensive loss		(25.6)		(8.3)		(45.0)		(5.0)
Ending balance		(113.9)		(82.9)		(113.9)		(82.9)

Total Reliance stockholders' equity, ending balance		6,846.7		5,860.7		6,846.7		5,860.7

Noncontrolling interests:
Beginning balance		8.8		7.3		7.2		7.3
Comprehensive income		0.9		1.0		3.3		3.4
Capital contribution		—		—		0.3		—
Dividends paid		(0.9)		(1.1)		(2.0)		(3.5)
Ending balance		8.8		7.2		8.8		7.2

Total equity, ending balance	$	6,855.5	$	5,867.9	$	6,855.5	$	5,867.9

Dividends declared per share	$	0.875	$	0.6875	$	2.625	$	2.0625

See accompanying notes to unaudited consolidated financial statements.

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RELIANCE STEEL & ALUMINUM CO.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020
��					2022		2021
Operating activities:
Net income	$	995.1	$	241.9	$	1,492.9	$	995.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		172.1		170.8
Impairment of long-lived assets		—		107.9
Depreciation and amortization						178.8		172.1
Provision for credit losses		10.6		8.3		5.6		10.6
Deferred income tax benefit		(0.2)		(26.7)		(1.1)		(0.2)
Stock-based compensation expense		55.1		29.9		48.4		55.1
Net loss on life insurance policies and deferred compensation plan assets						22.8		3.2
Postretirement benefit plan settlement expense		—		19.4		2.3		—
Other		(1.3)		10.3		1.7		(4.5)
Changes in operating assets and liabilities (excluding effect of businesses acquired):
Accounts receivable		(774.6)		114.4		(191.6)		(774.6)
Inventories		(453.3)		221.9		(126.6)		(453.3)
Prepaid expenses and other assets		47.7		81.9		20.0		47.7
Accounts payable and other liabilities		354.4		(37.2)		(143.3)		354.4
Net cash provided by operating activities		405.6		942.8		1,309.9		405.6

Investing activities:
Purchases of property, plant and equipment		(178.9)		(134.7)		(249.7)		(178.9)
Proceeds from sales of property, plant and equipment		26.8		6.2		9.8		26.8
Other		3.9		0.8		(4.5)		3.9
Net cash used in investing activities		(148.2)		(127.7)		(244.4)		(148.2)

Financing activities:
Net short-term debt (repayments) borrowings		(0.8)		0.7
Proceeds from long-term debt borrowings		—		1,673.7
Net short-term debt repayments						(0.8)		(0.8)
Principal payments on long-term debt		(0.3)		(1,615.4)		—		(0.3)
Debt issuance costs		—		(6.4)
Dividends and dividend equivalents paid		(132.3)		(122.8)		(163.5)		(132.3)
Share repurchases		(155.0)		(300.2)		(547.7)		(155.0)
Noncontrolling interest purchased		—		(8.0)
Payments for taxes related to net share settlements						(21.6)		(9.2)
Other		(13.4)		(16.5)		22.5		(4.2)
Net cash used in financing activities		(301.8)		(394.9)		(711.1)		(301.8)
Effect of exchange rate changes on cash and cash equivalents		(0.7)		(2.9)		(11.2)		(0.7)
(Decrease) increase in cash and cash equivalents		(45.1)		417.3
Increase (decrease) in cash and cash equivalents						343.2		(45.1)
Cash and cash equivalents at beginning of year		683.5		174.3		300.5		683.5
Cash and cash equivalents at end of period	$	638.4	$	591.6	$	643.7	$	638.4

Supplemental cash flow information:
Interest paid during the period	$	39.1	$	34.6	$	39.1	$	39.1
Income taxes paid during the period, net	$	297.3	$	68.3	$	596.8	$	297.3

See accompanying notes to unaudited consolidated financial statements.

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RELIANCE STEEL & ALUMINUM CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2021~~2022

Note 1. ~~Basis~~Summary of ~~Presentation~~Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, our financial statements reflect all material adjustments, which are of a normal recurring nature, necessary for presentation of financial statements for interim periods in accordance with U.S. GAAP. The results of operations for the nine months ended September 30, ~~2021~~2022 are not necessarily indicative of the results for the full year ending December 31, ~~2021.~~2022. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto for the year ended December 31, ~~2020,~~2021, included in the Reliance Steel & Aluminum Co. (“Reliance,” the “Company,” “we,” “our” or “us”) Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Our consolidated financial statements include the assets, liabilities and operating results of majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The ownership of the other interest holders of consolidated subsidiaries is reflected as noncontrolling interests. Our investments in unconsolidated subsidiaries are recorded under the equity method of accounting.

~~Note 2. Impact of Recently Issued Accounting Guidance~~Inventories

~~Impact~~The majority of ~~Recently Issued Accounting Standards—Adopted~~

~~Income Taxes~~~~—In December 2019,~~our inventory is valued using the ~~Financial Accounting Standards Board~~last-in, first-out (“~~FASB”~~LIFO”) ~~issued accounting changes that simplify~~method, which is not in excess of market. We estimate the ~~accounting for income taxes as part~~effect of LIFO on interim periods by allocating the ~~FASB’s overall initiative~~projected year-end LIFO calculation to ~~reduce complexity in accounting standards. We adopted the accounting changes~~interim periods on ~~January 1, 2021. The adoption of these accounting changes did not have~~ a ~~material impact on our consolidated financial statements.~~pro rata basis.

~~Impact of~~ Recently Issued Accounting Standards—Not Yet Adopted

Reference Rate Reform—In March 2020, the FASB issued accounting changes that provide optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The accounting changes may be applied prospectively through December 31, 2022. ~~The Company expects~~To the extent that, prior to ~~adopt~~December 31, 2022, we enter into any contract modifications for which the optional expedients are applied, the adoption of this ~~guidance for any contracts that are modified as a result of reference rate reform. We currently do~~standard is not ~~expect the transition from LIBOR~~expected to have a material impact on our consolidated financial ~~statements.~~position, results of operations or cash flows.

Note ~~3. Acquisition~~2. Acquisitions

~~On October 1,~~2021 Acquisitions

In the fourth quarter of 2021, we acquired Merfish United, Inc. (“Merfish United”), a leading master distributor of carbon steel pipes, copper tubing, plastic pipe, electrical conduit and related products that are distributed to its independent wholesale distributor customers across a variety of end markets in the United States. Merfish United, headquartered in Ipswich, Massachusetts, serves 47 U.S. states through its 12 strategically located distribution centers. Merfish United’s broad product offering includes full lines of steel pipe, copper tubing, plastic pipe, electrical conduit and related products for the

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~~commercial, residential, municipal and industrial building markets. NaN sales~~each of Merfish United, ~~were included~~Inc., Admiral Metals Servicenter Company, Incorporated, Nu-Tech Precision Metals Inc. and Rotax Metals Inc. with cash on hand. Included in our net sales for the nine months ended September 30, ~~2021. Merfish United’s unaudited total assets and revenues as of September 30, 2021 and for the twelve months then ended~~2022 were ~~approximately $215 million and $600 million, respectively.~~

The allocation of the total purchase price for our acquisition of Merfish United to the fair values of the assets acquired and liabilities assumed is not presented as the accounting is incomplete due to the transaction closing in the fourth quarter of 2021.

~~We funded our acquisition of Merfish United in the fourth quarter of 2021 with cash on hand.~~

~~Note 4. Revenues~~

~~The following table presents our~~combined net sales ~~disaggregated by product and service. Certain sales taxes and value-added taxes collected from customers are excluded~~of $681.7 million from our ~~reported net sales.~~

2021 acquisitions.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

(in millions)
Carbon steel
$
2,406.4

$
1,100.8

$
6,163.7

$
3,490.8
Stainless steel

621.3

341.8

1,613.7

1,083.1
Aluminum

534.9

394.3

1,496.5

1,299.9
Alloy

143.8

91.0

396.0

342.3
Toll processing and logistics

119.7

105.7

350.9

279.6
Other and eliminations

21.3

52.0

83.8

182.1
Total
$
3,847.4

$
2,085.6

$
10,104.6

$
6,677.8

~~Note 5. Goodwill~~

~~The change in the carrying amount of goodwill is as follows:~~

(in millions)
Balance at January 1, 2021
$
1,935.2
Foreign currency translation gain

0.1
Balance at September 30, 2021
$
1,935.3

~~We had 0 accumulated impairment losses related to goodwill at September 30, 2021.~~

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The preliminary allocations of the total purchase for our 2021 acquisitions to the fair values of the assets acquired and liabilities assumed were as follows:


	(in millions)
Cash	$	1.0
Accounts receivable		107.2
Inventories		134.4
Property, plant and equipment		33.6
Operating lease right-of-use assets		29.8
Goodwill		177.0
Intangible assets subject to amortization		116.3
Intangible assets not subject to amortization		51.2
Other current and long-term assets		4.0
Total assets acquired		654.5
Deferred taxes		49.3
Operating lease liabilities		24.6
Other current and long-term liabilities		140.3
Total liabilities assumed		214.2
Net assets acquired	$	440.3

The completion of the purchase price allocations for our 2021 acquisitions are pending the completion of pre-acquisition period tax returns.

Pro forma financial information for all acquisitions

The pro forma summary financial results present the consolidated results of operations as if our 2021 acquisitions had occurred as of January 1, 2021, after the effect of certain adjustments, including depreciation and amortization of certain identifiable property, plant and equipment and intangible assets, and lease cost fair value adjustments.

The pro forma results have been presented for comparative purposes only and are not indicative of what would have occurred had the 2021 acquisitions been made as of January 1, 2021, or of any potential results which may occur in the future.


	Three Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2021

	(in millions, except per share amounts)
Pro forma:
Net sales	$	4,100.8	$	10,780.4
Net income attributable to Reliance	$	435.5	$	1,091.2
Earnings per share attributable to Reliance stockholders:
Basic	$	6.88	$	17.18
Diluted	$	6.77	$	16.89

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Note 3. Revenues

The following table presents our net sales disaggregated by product and service.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

	(in millions)
Carbon steel	$	2,371.9	$	2,406.4	$	7,545.2	$	6,163.7
Stainless steel		712.7		621.3		2,284.7		1,613.7
Aluminum		660.3		534.9		2,069.9		1,496.5
Alloy		188.2		143.8		568.5		396.0
Toll processing and logistics		139.5		119.7		414.8		350.9
Copper and brass		81.0		18.1		260.4		49.6
Other and eliminations		93.6		3.2		270.7		34.2
Total	$	4,247.2	$	3,847.4	$	13,414.2	$	10,104.6

Note 4. Goodwill

The change in the carrying amount of goodwill is as follows:


	(in millions)
Balance at January 1, 2022	$	2,107.6
Purchase price allocation adjustments		5.0
Foreign currency translation loss		(8.7)
Balance at September 30, 2022	$	2,103.9

We had no accumulated impairment losses related to goodwill at September 30, 2022 and December 31, 2021.

Note 6.5. Intangible Assets, net

Intangible assets, net consisted of the following:


		September 30, 2021				December 31, 2020					September 30, 2022				December 31, 2021
	Weighted Average	Gross				Gross				Weighted Average	Gross				Gross
	Amortizable	Carrying		Accumulated		Carrying		Accumulated		Amortizable	Carrying		Accumulated		Carrying		Accumulated
	Life in Years	Amount		Amortization		Amount		Amortization		Life in Years	Amount		Amortization		Amount		Amortization

		(in millions)									(in millions)
Intangible assets subject to amortization:
Covenants not to compete	5.0	$	0.7	$	(0.5)	$	0.7	$	(0.5)
Customer lists/relationships	14.9		623.2		(424.1)		623.2		(396.7)	14.2	$	712.9	$	(467.7)	$	713.0	$	(435.1)
Software	10.0		8.1		(8.1)		8.1		(8.1)
Backlog of orders										7.9		22.0		(2.3)		15.8		(0.2)
Other	5.1		0.6		(0.6)		1.1		(0.9)	9.1		9.9		(9.7)		9.9		(9.4)
			632.6		(433.3)		633.1		(406.2)			744.8		(479.7)		738.7		(444.7)
Intangible assets not subject to amortization:
Trade names			720.2		—		720.2		—			765.3		—		783.7		—
		$	1,352.8	$	(433.3)	$	1,353.3	$	(406.2)		$	1,510.1	$	(479.7)	$	1,522.4	$	(444.7)

Certain prior year amounts have been reclassified for consistency with the current period presentation.

Amortization expense for intangible assets was ~~$27.5~~$36.3 million and ~~$30.3~~$27.5 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Foreign currency translation losses related to intangible assets, net were ~~$0.1~~$5.0 million and ~~$2.8~~$0.1 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

InDuring the ~~nine months ended September 30, 2020,~~first quarter of 2022, we ~~recognized impairment losses~~recorded purchase price adjustments relating to our 2021 acquisitions based on the finalization of ~~$67.8~~intangible asset valuations that decreased trade name intangible assets by $16.9 million, ~~on our trade names~~increased the

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Backlog of orders intangible asset by $8.0 million and ~~$30.7 million on our customer~~increased Customer lists/relationships intangible assets ~~mainly related to certain of our energy-related (oil and natural gas) businesses. See~~ ~~Note 13—~~“~~Impairment and Restructuring Charges”~~ ~~for further discussion.~~by $2.7 million.

The following is a summary of estimated future amortization expense for the remaining three months of ~~2021~~2022 and each of the succeeding five years:


	(in millions)		(in millions)
2021 (remaining three months)	$	9.0
2022		35.9
2022 (remaining three months)			$	11.8
2023		31.6		43.5
2024		28.1		40.0
2025		23.9		35.8
2026		14.4		26.3
2027				25.7

Note 7.6. Debt

Debt consisted of the following:

September 30,

December 31,

2021

2020

(in millions)
Unsecured revolving credit facility maturing September 3, 2025
$
—

$
—
Senior unsecured notes due April 15, 2023

500.0

500.0
Senior unsecured notes due August 15, 2025

400.0

400.0
Senior unsecured notes due August 15, 2030

500.0

500.0
Senior unsecured notes due November 15, 2036

250.0

250.0
Other notes and revolving credit facilities

12.6

13.7
Total

1,662.6

1,663.7
Less: unamortized discount and debt issuance costs

(16.3)

(18.8)
Less: amounts due within one year and short-term borrowings

(4.9)

(6.0)
Total long-term debt
$
1,641.4

$
1,638.9


	September 30,		December 31,
	2022		2021

	(in millions)
Unsecured revolving credit facility maturing September 3, 2025	$	—	$	—
Senior unsecured notes, interest payable semi-annually at 4.50%, effective rate of 4.63%, maturing April 15, 2023		500.0		500.0
Senior unsecured notes, interest payable semi-annually at 1.30%, effective rate of 1.53%, maturing August 15, 2025		400.0		400.0
Senior unsecured notes, interest payable semi-annually at 2.15%, effective rate of 2.27%, maturing August 15, 2030		500.0		500.0
Senior unsecured notes, interest payable semi-annually at 6.85%, effective rate of 6.91%, maturing November 15, 2036		250.0		250.0
Other notes and revolving credit facilities		11.2		12.4
Total		1,661.2		1,662.4
Less: unamortized discount and debt issuance costs		(12.9)		(15.4)
Less: amounts due within one year and short-term borrowings		(509.5)		(5.0)
Total long-term debt	$	1,138.8	$	1,642.0

~~Table~~The weighted average interest rate on the Company’s outstanding borrowings as of ~~Contents~~September 30, 2022 and December 31, 2021 was 3.81% and 3.83%, respectively.

Unsecured Credit Facility

On September 3, 2020, we entered into a $1.5 billion unsecured five-year Amended and Restated Credit Agreement (“Credit Agreement”) that amended and restated our ~~then existing~~then-existing $1.5 billion unsecured revolving credit ~~facility.~~facility and includes a $150.0 million letter of credit sublimit. As of September 30, ~~2021,~~2022, borrowings under the Credit Agreement were available at variable rates based on LIBOR plus ~~1.25%~~1.00% or the bank prime rate ~~plus 0.25%~~ and we currently pay a commitment fee at an annual rate of ~~0.20%~~0.175% on the unused portion of the revolving credit facility. The applicable margins over LIBOR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our total net leverage ratio, as defined in the Credit Agreement. All borrowings under the Credit Agreement may be prepaid without penalty. Our Credit Agreement includes provisions to change the reference rate to the then-prevailing market convention for similar agreements if a replacement rate for LIBOR is necessary during its term.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had 0no outstanding borrowings on the revolving credit facility. As of September 30, 2022 and December 31, 2021, we had ~~$16.0~~$8.3 million and $8.9 million, respectively, of letters of credit ~~issued on~~outstanding under the revolving credit facility.

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Senior Unsecured Notes

On November 20, 2006, we entered into an indenture (the “2006 Indenture”) for the issuance of $600.0 million of unsecured debt securities. The total issuance was comprised of (a) $350.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.20% per annum, which ~~matured~~ ~~and were~~ ~~repaid~~ ~~on November 15, 2016 and (b) $250.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.85% per annum, maturing on November 15, 2036.~~

On April 12, 2013, we entered into an indenture (the “2013 Indenture”) for the issuance of $500.0 million aggregate principal amount of senior unsecured notes at the rate of 4.50% per annum, maturing on April 15, 2023.

On August 3, 2020, we entered into an indenture (the “2020 Indenture” and, together with the 2013 Indenture and 2006 Indenture, the “Indentures”) for the issuance of $900.0 million of unsecured debt securities. The total issuance was comprised of (a) $400.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 1.30% per annum, maturing on August 15, 2025 and (b) $500.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 2.15% per annum, maturing on August 15, 2030.

Under the ~~Indentures,~~indentures for each series of our senior notes (“Indentures”), the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. If we experience a change in control accompanied by a downgrade in our credit rating, we will be required to make an offer to repurchase each series of the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest.

Other Notes, Revolving Credit and Letter of Credit/Letters of Guarantee Facilities

~~Revolving~~A revolving credit ~~facilities~~facility with a ~~combined~~ credit limit of ~~$13.4~~$7.7 million ~~are~~is in place for ~~operations~~an operation in Asia with ~~combined~~an outstanding ~~balances~~balance of ~~$4.6~~$3.5 million and ~~$5.4~~$4.7 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Various industrial revenue bonds had combined outstanding balances of ~~$8.0 million and $8.3~~$7.7 million as of September 30, ~~2021~~2022 and December 31, ~~2020, respectively,~~2021 and have maturities through 2027.

A standby letters of credit/letters of guarantee agreement with one of the lenders under our Credit Agreement provides letters of credit and/or letters of guarantee in an amount not to exceed $50.0 million in the aggregate. As of September 30, ~~2021,~~2022, a total of ~~$23.0~~$21.7 million of letters of credit/guarantee were ~~issued on the~~outstanding under this facility.

Covenants

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covenants that require us to comply with a minimum interest coverage ratio and a maximum leverage ratio. We were in compliance with all financial maintenance covenants in our Credit Agreement at September 30, ~~2021.~~2022.

Note 8.7. Leases

Our metals service center leases are comprised of processing and distribution facilities, equipment, trucks and trailers, ground leases and other leased spaces, such as depots, sales offices, storage and data centers. We also lease various office spaces. Our leases of facilities and other spaces expire at various times through 2045 and our ground leases expire at various times through 2068. Nearly all of our leases are operating ~~leases. Information regarding our insignificant~~leases; we have recognized finance ~~leases is not included as it is not meaningful to an understanding~~right-of-use assets and obligations of ~~our lease obligations.~~ less than $1.0 million.

The following is a summary of our lease cost:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	(in millions)								(in millions)
Operating lease cost	$	19.9	$	20.4	$	58.8	$	61.9	$	23.1	$	19.9	$	69.8	$	58.8

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Supplemental cash flow and balance sheet information is presented below:


	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2022		2021

	(in millions)				(in millions)
Supplemental cash flow information:
Cash payments for operating leases	$	58.9	$	61.5	$	65.4	$	58.9
Right-of-use assets obtained in exchange for operating lease obligations	$	36.6	$	35.8	$	39.0	$	36.6

	September 30,		December 31,		September 30,		December 31,
	2021		2020		2022		2021
Other lease information:
Weighted average remaining lease term—operating leases		6.1 years		5.7 years		6.3 years		5.8 years
Weighted average discount rate—operating leases		3.6%		3.7%		3.5%		3.3%

Maturities of operating lease liabilities as of September 30, ~~2021~~2022 are as follows:


	(in millions)		(in millions)
2021 (remaining three months)	$	14.7
2022		52.6
2022 (remaining three months)			$	15.8
2023		42.9		56.7
2024		34.4		46.4
2025		24.3		33.8
2026				22.6
Thereafter		61.1		71.6
Total operating lease payments		230.0		246.9
Less: imputed interest		(29.2)		(28.4)
Total operating lease liabilities	$	200.8	$	218.5

Note 9.8. Income Taxes

Our effective income tax rate for each of the third quarter and nine months ended September 30, ~~2021~~2022 was ~~25.5%~~24.7%, compared to ~~22.6% and 22.5%~~25.5% in the same ~~2020 periods, respectively. The increases in our effective income tax rates were mainly due to significant increases in our profitability in 2021.~~2021 periods. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state income taxes, partially offset by the effects of company-owned life insurance policies.

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Note ~~10.~~9. Equity

Dividends

On October ~~26, 2021,~~25, 2022, our Board of Directors declared the ~~2021~~2022 fourth quarter cash dividend of ~~$0.6875~~$0.875 per share of common stock, payable on December ~~3, 2021~~2, 2022 to stockholders of record as of November ~~19, 2021.~~18, 2022.

During the third quarters of ~~2021~~2022 and ~~2020,~~2021, we declared and paid quarterly dividends of ~~$0.6875~~$0.875 and ~~$0.625~~$0.6875 per share, or ~~$43.6~~$52.5 million and ~~$39.8~~$43.6 million in total, respectively. During the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, we declared and paid aggregate quarterly dividends of ~~$2.0625~~$2.625 and ~~$1.875~~$2.0625 per share, or ~~$131.2~~$160.6 million and ~~$120.7~~$131.2 million in total, respectively. In addition, we paid ~~$1.1~~$2.9 million and ~~$2.1~~$1.1 million in dividend equivalents with respect to vested restricted stock units ~~(“RSUs”)~~ during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Stock-Based Compensation

We make annual grants of long-term incentive awards to officers and key employees in the forms of service-based restricted stock units (“RSUs”) and performance-based ~~RSUs~~restricted stock units (“PSUs”) that have approximately 3-year vesting periods. The ~~performance-based RSU awards are subject~~PSUs include the right to ~~both service criteria and performance goals based on the Company’s return on assets. We also make annual grants~~receive a maximum payout of ~~stock to the non-employee members of the Board of Directors that vest immediately upon grant. The fair value of the RSUs and stock grants is determined based on the closing stock price~~two shares of our common stock based on performance goals tied to achieving a three-year return on assets result and include service criteria. We also grant the ~~grant date.~~

In the nine months ended September 30, 2021 and 2020, we made payments of $9.2 million and $14.9 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share settlements. These payments are reflected in the Stock-based compensation, net caption of our consolidated statements of equity.

~~A summary of the status of our unvested service-based and performance-based RSUs as of September 30, 2021 and changes during the nine-months then ended is as follows:~~

Weighted

Average

Grant Date

Fair Value
Unvested RSUs

Shares

Per RSU
Unvested at January 1, 2021

995,720

$
85.27
Granted⁽¹⁾

318,495

141.41
Vested

(7,812)

86.52
Cancelled or forfeited

(19,107)

89.99
Unvested at September 30, 2021

1,287,296

$
99.08
Shares reserved for future grants (all plans)

1,877,393

~~(1)~~

~~Comprised of 191,139 service-based RSUs and 127,356 performance-based RSUs granted in March 2021 with a fair~~ ~~value~~ ~~of $141.41 per RSU. The service-based RSUs~~ ~~cliff~~ ~~vest on December 1, 2023 and the performance-based RSUs are subject to a three-year performance period ending December 31, 2023.~~

~~Share Repurchase Plan~~

On July 20, 2021, our Board of Directors authorized a $1.0 billion share repurchase program that amended and restated our prior share repurchase program authorized in October 2018. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time.

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~~Act~~employee members of ~~1934,~~our Board of Directors stock awards that are fully vested on the grant date. The fair values of the RSUs, PSUs and stock awards are determined based on the closing stock price of our common stock on the grant date.

In the nine months ended September 30, 2022 and 2021, we made payments of $21.6 million and $9.2 million, respectively, to tax authorities on our employees’ behalf for shares withheld related to net share settlement of vested RSUs.

A summary of the status of our unvested RSUs and PSUs as ~~amended.~~of September 30, 2022 and changes during the nine months then ended is as follows:


		Weighted
		Average
		Grant Date		Aggregate
	RSUs and PSUs	Fair Value		Fair Value
				(in millions)
Unvested at January 1, 2022	831,597	$	105.12
Granted⁽¹⁾	305,249		187.31
Vested	(25,030)		95.98
Cancelled or forfeited	(24,461)		117.98
Unvested at September 30, 2022	1,087,355	$	128.11	$	170.7
Shares reserved for future grants (all plans)	1,592,761

(1)

Comprised of 56,452 RSUs granted in January 2022 with a fair value of $152.21 per unit, and 136,346 RSUs and 112,451 PSUs granted in March 2022 with a fair value of $195.28 per unit. The service-based RSUs cliff vest on December 1, 2024 and the performance-based RSUs are subject to a three-year performance period ending December 31, 2024.

Share Repurchases

Our share repurchase activity during the nine months ended September 30, 2022 and 2021 was as follows:


	2022					2021
		Average Cost					Average Cost
	Shares	Per Share		Amount		Shares	Per Share		Amount
				(in millions)					(in millions)
First quarter	113,529	$	150.97	$	17.1	—	$	—	$	—
Second quarter	1,085,635		178.61		193.9	147,016		163.50		24.0
Third quarter	1,883,093		178.79		336.7	885,606		147.89		131.0
	3,082,257	$	177.70	$	547.7	1,032,622	$	150.12	$	155.0

On July 26, 2022, our Board of Directors amended our share repurchase program to increase the remaining repurchase authorization to $1.0 billion. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. Repurchased and subsequently retired shares are restored to the status of authorized but unissued shares. At September 30, 2022, $763.3 million of our common stock remained authorized for repurchase.

~~During the third quarter~~12

Table of 2021, we repurchased 885,606 shares at an average cost of $147.89 per share, for a total of $131.0 million, compared to 2,466 shares repurchased at an average cost of $100.00 per share, for a total of $0.2 million in the third quarter of 2020. In the nine months ended September 30, 2021, we repurchased approximately 1.0 million shares at an average cost of $150.12 per share, for a total of $155.0 million, compared to approximately 3.3 million shares repurchased at an average cost of $90.10 per share, for a total of $300.2 million in the nine months ended September 30, 2020.Contents

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss included the following:


	Foreign Currency		Postretirement Benefit		Accumulated Other		Foreign Currency		Postretirement Benefit		Accumulated Other
	Translation		Plan Adjustments,		Comprehensive		Translation		Plan Adjustments,		Comprehensive
	Loss		Net of Tax		Loss		Loss		Net of Tax		Loss
			(in millions)						(in millions)
Balance as of January 1, 2021	$	(52.7)	$	(25.2)	$	(77.9)
Balance as of January 1, 2022							$	(55.2)	$	(13.7)	$	(68.9)
Current-period change		(5.0)		—		(5.0)		(51.3)		6.3		(45.0)
Balance as of September 30, 2021	$	(57.7)	$	(25.2)	$	(82.9)
Balance as of September 30, 2022							$	(106.5)	$	(7.4)	$	(113.9)

Foreign currency translation adjustments have not been adjusted for income taxes. Postretirement benefit plan adjustments are net of taxes of ~~$5.8~~$3.3 million as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The income tax effects relating to our postretirement benefit plan adjustments are reflected in our income tax provision in future periods as the postretirement benefit plan adjustments are amortized over service periods and reflected in the amortization of net loss component of our net periodic benefit cost or are otherwise released and recognized as a ~~settlement~~ loss as a result of a plan ~~termination.~~ settlement.

Note ~~11.~~10. Commitments and Contingencies

Environmental Contingencies

We are currently involved with an environmental remediation project related to activities at former manufacturing operations of Earle M. Jorgensen Company (“EMJ”), our wholly owned subsidiary, that were sold many years prior to our acquisition of EMJ in 2006. Although the potential cleanup costs could be significant, EMJ maintained insurance policies during the time it owned the manufacturing operations that have covered costs incurred to date and are expected to continue to cover the majority of the related costs. We do not expect that this obligation will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

Legal Matters

From time to time, we are named as a defendant in legal actions. These actions generally arise in the ordinary course of business. We are not currently a party to any pending legal proceedings other than routine litigation incidental to the business. We ~~maintain general liability insurance against risks arising in the ordinary course of business. We~~ expect that these matters will be resolved without having a material adverse impact on our consolidated financial position, results of operations or cash flows. We maintain general liability insurance against risks arising in the ordinary course of business.

~~COVID-19~~ Risks and Uncertainties

~~The global COVID-19 outbreak and associated actions implemented by governments around~~We continue to monitor the ~~world, as well as increased business uncertainty and economic contraction, had an adverse~~ impact ~~on our financial results during 2020. We took a variety of actions during 2020 to help mitigate the financial impact, including rightsizing our inventory and reducing our workforce. Activity in many~~ of the ~~end markets we serve sequentially improved~~COVID-19 pandemic, and government actions and measures taken to prevent its spread, and the potential to affect our operations. In addition to COVID-19, the conflict between Russia and Ukraine and macroeconomic disruptions such as ~~2020 progressed, however we believe our financial results in~~inflation and the ~~nine months ended September 30, 2021~~ ~~were limited by impacts of the COVID-19~~

~~Table of Contents~~

pandemic, including labor shortages, raw material and other supply chain constraints on us, our customers and suppliers. While our financial performance improved in each quarter of 2021, evolving government requirements, including vaccination mandates, along with the broader impacts of the continuing pandemic,potential for an economic recession or slowdown could also significantly impact the demand for our ~~workforce~~products and ~~performance~~services, as well as those of our customers and suppliers, and our estimates and judgments may be subject to greater volatility than in the past. Refer to Part I, Item 1A“Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2021 for further discussion of risks that could adversely affect our estimates and judgments.

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Note ~~12.~~11. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	(in millions, except number of shares which are reflected in thousands and per share amounts)								(in millions, except number of shares which are reflected in thousands and per share amounts)
Numerator:
Net income attributable to Reliance	$	395.7	$	97.6	$	991.7	$	239.5	$	393.5	$	395.7	$	1,489.6	$	991.7
Denominator:
Weighted average shares outstanding		63,275		63,758		63,526		64,578		60,055		63,275		61,175		63,526
Dilutive effect of stock-based awards		1,075		930		1,091		925		929		1,075		939		1,091
Weighted average diluted shares outstanding		64,350		64,688		64,617		65,503		60,984		64,350		62,114		64,617

Earnings per share attributable to Reliance stockholders:
Basic									$	6.55	$	6.25	$	24.35	$	15.61
Diluted	$	6.15	$	1.51	$	15.35	$	3.66	$	6.45	$	6.15	$	23.98	$	15.35
Basic	$	6.25	$	1.53	$	15.61	$	3.71

~~Potentially dilutive securities were not significant for the third quarters of 2021 and 2020.~~ The computations of earnings per share for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 do not include ~~154,882~~111,251 and ~~244,006~~154,882 weighted average shares, respectively, in respect of RSUs, because their inclusion would have been anti-dilutive.

~~Note 13. Impairment and Restructuring Charges~~

~~Our impairment and restructuring charges consisted of the following:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

(in millions)
Intangible assets, net
$
—

$
9.5

$
—

$
98.5
Property, plant and equipment

—

0.5

—

9.2
Operating lease right-of-use assets

—

—

—

0.2
Total impairment charges

—

10.0

—

107.9
Restructuring––cost of sales

—

(0.2)

—

39.6
Restructuring––SG&A

—

4.8

0.1

10.2
Total impairment and restructuring charges
$
—

$
14.6

$
0.1

$
157.7

We recorded impairment and restructuring charges of $157.7 million in the nine months ended September 30, 2020 that were mainly comprised of a $137.5 million impairment and restructuring charge recognized during the first quarter of 2020 due to our reduced long-term outlook for our businesses serving the energy (oil and natural gas) market and charges at certain of our other businesses for which our outlook had turned negative based on impacts from the COVID-19 pandemic. Our first quarter of 2020 impairment and restructuring charge also included a property, plant and equipment impairment charge and an inventory provision related to the closure of certain locations where we anticipated losses on the disposition of certain real property, machinery and equipment and inventories.

~~Table of Contents~~

The measurement of intangible assets at fair value in each of the first three quarters of 2020 was determined using discounted cash flow techniques. The use of discounted cash flow models requires judgment and the use of inputs by management that are unobservable, including revenue forecasts, discount rates and long-term growth rates. Unobservable inputs are inputs that reflected the Company’s expectations of the assumptions market participants would use in pricing the eventual recovery of the oil and natural gas and aerospace industries based on the best information available in the circumstances at that time.

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RELIANCE STEEL & ALUMINUM CO.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our forward-looking statements may include, but are not limited to, discussions of our industry and end markets, our business strategies and our expectations concerning future demand and product pricing and our results of operations, margins, profitability, ~~impairment~~taxes, liquidity, macroeconomic conditions, including inflation and ~~restructuring charges, taxes, liquidity,~~the possibility of an economic recession or slowdown, litigation matters and capital resources. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “preliminary,” “range,” “intend” and “continue,” the negative of these terms, and similar expressions. All statements contained in this report, other than statements of historical fact, are forward-looking statements. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date of such statements. We caution readers not to place undue reliance on forward-looking statements.

Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in our forward-looking statements as a result of various important factors, including, but not limited to, actions taken by us, including restructuring ~~or cash-preservation initiatives,~~and impairment charges, as well as developments beyond our control, including, but not limited to, the impact of the COVID-19 pandemic, as well as the impact of actions taken or contemplated by government authorities to mitigate the spread of the COVID-19 pandemic, ~~(such as vaccine mandates and anticipated Occupational Health and Safety Administration safety directives, mask mandates, social distancing or other requirements)~~ and changes in worldwide and U.S. political and economic conditions (including as a result of COVID-19, rising interest rates, stock market volatility, an economic recession or the ongoing conflict between Russia and Ukraine) that materially impact our customers, the demand and availability of our products and services, including further or sustained supply disruptions, labor shortages and inflation. Other factors which could cause actual results to differ materially from our forward-looking statements include those disclosed in this report and in other reports we have filed with the United States Securities and Exchange Commission (the “SEC”). Important risks and uncertainties about our business can be found elsewhere in this Quarterly Report on Form 10-Q, including in Item 1A “Risk Factors,” and in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC and in other documents Reliance files or furnishes with the SEC.

The statements contained in this quarterly report on Form 10-Q speak only as of the date that they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based. You should review any additional disclosures we make in any subsequent press releases and Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC.

Overview

We ~~have generated record~~produced another quarter of solid financial performance through outstanding operational execution despite declining metal prices trends compared to the preceding quarter that led to a temporary contraction in ~~each~~our gross profit margin. We believe key elements of ~~the first three quarters of 2021. Our nimble and resilient~~our strategic business model ~~coupled with outstanding execution once again resulted in record profitability in~~helped stabilize our operating results during the ~~face~~quarter amid challenging macroeconomic circumstances, including value-added processing capabilities that support our sale of ~~operational challenges that included significant increases in metals prices and~~higher priced products, prioritizing purchases from our domestic suppliers to shorten the supply chain ~~disruptions.~~and ensure metal availability, and focus on smaller order sizes with quick turnaround.

Table of Contents

Certain key results for the third quarter and nine months ended September 30, ~~2021~~2022 included the following:

●

~~Sequential record quarterly~~Quarterly net sales of ~~$3.85~~$4.25 billion inwere up 10.4% from the third quarter of ~~2021 were up 84.5% from $2.09 billion in the third quarter of 2020. Record net~~2021. Net sales of ~~$10.10~~$13.41 billion in the nine months ended September 30, ~~2021~~2022 were up ~~51.3%~~32.8% from ~~$6.68 billion~~the same period in 2021.

●

Record third quarter earnings per share of $6.45 were up 4.9% from the third quarter of 2021. Earnings per share of $23.98 in the nine months ended September 30, ~~2020.~~2022 were up 56.2% from the same period in 2021.

●

~~Sequential record~~Record quarterly ~~gross profit~~cash flow from operations of ~~$1.21 billion~~$635.7 million in the third quarter of 2021 increased 79.1% and record gross profit of $3.25 billion in the nine months ending September 30, 2021 increased 56.7% as compared to the same periods in 2020. Our gross profit margins in the 2021 periods were strong and fell within an approximate range of 31% to 32%, generally consistent with the respective 2020 periods, despite significant last-in, first-out (“LIFO”) charges in the 2021 periods.2022.

~~Table of Contents~~

●

~~We generated sequential record quarterly pretax income and margin~~$547.7 million of ~~$532.6 million and 13.8% in the third quarter of 2021, and record pretax income and margin of $1.34 billion and 13.2%~~share repurchases in the nine months ended September 30, 2022 compared to $155.0 million in the same nine-month period in 2021. ~~Excluding $29.2~~Our third quarter of 2022 share repurchases were $336.7 million ~~and $177.1~~compared to $131.0 million ~~of impairment, restructuring and postretirement benefit plan settlement charges~~ in the third quarter ~~and nine months ended September 30, 2020, our third quarter~~ of 2021 pretax income and margin improved 241.0% and 630 basis points and our nine-month period ended September 30, 2021 pretax income and margin improved 173.0% and 590 basis points compared to the same periods in 2020. 2021.

●

Sequential record quarterly earnings per share of $6.15 for the third quarter and $15.35 for the nine months ended September 30, 2021 were each up over 300% compared to the same periods in 2020. As adjusted for the 2020 nonrecurring charges noted above, our third quarter and nine months ended September 30, 2021 earnings per share were up 232.4% and 170.2%, respectively, from the same periods in 2020.

●

We repurchased $131.0 million and $155.0 million of our common stock in the third quarter and nine months ended September 30, 2021, respectively, compared to $0.2 million and $300.2 million of share repurchases in the respective 2020 periods.

●

~~We improved our inventory turnover rate to 4.9 times (based on tons) during the nine months ended September 2021, surpassing our 2020 annual rate and company-wide turn goal of 4.7 times.~~

~~Our record quarterly net sales in the third quarter~~We experienced ongoing healthy demand across a majority of ~~2021 were the result of a record average selling price per ton sold that increased 77.9% and a 5.8% increase in tons sold compared to the third quarter of 2020; however,~~ our third quarter of 2021 tons sold were below our third quarter of 2019 tons sold (the most recent comparable pre-pandemic period). Our net sales for the nine months ended September 30, 2021 increased due to a 44.5% increase in our average selling price and a 5.7% increase in our tons sold compared to the same period in 2020, which was adversely impacted by COVID-19. Weend markets. However, we believe our tons sold ~~in the third quarter~~ and ~~nine months ended September 30, 2021 in most end markets we served were~~tons toll processed continue to be limited by ~~factors that constrained economic activity such as metal~~continued supply ~~constraints, labor shortages and other supply chain disruptions.~~chain-related challenges.

Our record profitability in the third quarter and nine months ended September 30, 2021 was driven by record metals prices, fundamentally strong underlying demand in most end markets, strong gross profit margins, despite significant LIFO charges, and effective expense control. Our gross profit margins in the third quarter and nine months ended September 30, 2022 were lower compared to the same periods in 2021 mainly due to the 2021 periods benefiting from rapid and significant sequential quarterly increases in our average selling price per ton sold. In the 2022 periods, our inventory costs were ~~generally consistent~~more in-line with replacement costs with our ~~2020 gross profit margins~~average selling prices per ton sold peaking at record levels in the second quarter of 2022 and ~~fell within an approximate range~~declining throughout the third quarter of ~~31% to 32%, despite significant LIFO charges~~2022, with further decline expected in the fourth quarter of ~~$262.5 million and $562.5 million~~2022.

Our same-store SG&A expense in the third quarter and nine months ended September 30, ~~2021, respectively, compared to credits of $12.5~~2022 increased $2.3 million, or 0.4%, and ~~$37.5~~$137.2 million, ~~respectively, in~~or 8.1%, from the same periods in ~~2020.~~2021. Our third quarter SG&A expense reflected lower incentive-based compensation from lower first-in, first-out (FIFO) pretax income that offset inflationary impacts for wages, fuel and plant supply costs, while our nine-month increase was primarily due to these same inflationary cost increases. Despite increases in our SG&A expense, increased metals pricing decreased our SG&A expenses as a percentage of sales, resulting in ~~the third quarter~~our operating and nine months ended September 30, 2021 increased $157.6 million, or 35.1%, and $278.2 million, or 19.7%, respectively, over the same periods in 2020, mainly due to higher incentive-based compensation related to our record gross profit and pretaxnet income ~~higher variable expenses associated with increased shipment levels and to a lesser extent inflationary impacts on certain warehouse and delivery expenses, including fuel, freight and packaging costs.~~

Our business model enables us to increase our average selling price and gross profit margin during operating environments that include rising prices and low levels of metal inventories and availability. Consequently, we were able to generate strong gross profit margins in the third quarter and nine months ended September 30, 2021 during which we observed ongoing strength in metals pricing with historically high levels for carbon steel products (59% of our gross sales dollars for the nine months ended September 30, ~~2021) and stainless steel products (15%~~2022 remaining at record levels despite a lower gross profit margin.

Our cash flow from operations of ~~our gross sales dollars for~~$1.31 billion in the nine months ended September 30, ~~2021) due~~2022 increased $904.3 million compared to ~~solid demand, increased input costs~~the same period in 2021, driven by an increase in net income of $497.8 million and reduced investment in working capital during 2021, primarily accounts receivable and inventory. The working capital investment decline from the prior year was driven by declining metal pricing trends during the third quarter of 2022 compared to the rapid and significant increases in metals prices and limited metal ~~supply.~~

During the third quarter and nine months ended September 30, 2020, we recorded impairment and restructuring charges of $14.6 million and $157.7 million, respectively, mainly related to COVID-19 permanent headcount reductions, location closures and a revised negative long-term outlook for certain energy-related (oil and natural gas) businesses, and postretirement benefit plan settlement charges of $14.6 million and $19.4 million, respectively, mainly related to the termination of a frozen defined benefit plan. See ~~Note 13—~~~~“Impairment and Restructuring Charges” of our Unaudited Consolidated Financial Statements for further information on our 2020 impairment and restructuring charges.~~

~~Table of Contents~~

We generated cash flow from operations in the third quarter and nine months ended September 30, 2021 of $142.2 million and $405.6 million, respectively, compared to $296.3 million and $942.8 million, respectively, in the same periods in 2020, despite significant investments in working capital resulting from significantly higher metals prices.availability throughout 2021.

We believe our strong liquidity position that includes ~~significant~~substantial cash on hand, strong cash flow generation ~~an extended long-term debt maturity profile~~ and $1.5 billion of availability under our revolving credit facility ~~with no borrowings outstanding~~ will support our continued prudent use of capital as we maintain a flexible approach focused on growth, both organically and through acquisitions, ~~and organically,~~ and stockholder return activities.

We experienced the initial adverse impacts to our operations from COVID-19 during the final weeks of the first quarter of 2020. While our results of operations and customer demand in most of our end markets have returned or exceeded levels of that period, we will continue to evaluate the nature and extent of future impacts of COVID-19 on our business. Given the dynamic nature of COVID-19 and the related circumstances, including any potential resurgences of the virus or its variants or the failure to contain the spread of the pandemic by governments, we cannot reasonably estimate the full impact of the COVID-19 pandemic on our ongoing business, results of operations, and overall financial performance.

We believe our industry-leading results are ~~due~~attributable to our unique business model and strong ~~operational~~ execution of our strategies. We believe our business model characteristics, including broad end market exposure, a wide geographical footprint, diverse product offerings, ~~with~~ significant value-added processing capabilities, strong relationships with suppliers, and focus on small order sizes and when-needed delivery differentiate us from our industry peers. We believe these unique business model characteristics and strong operational execution of our strategies, ~~that include~~including pricing discipline, concentrating on higher margin business and ~~cross-selling~~cross selling inventory ~~throughout~~within our ~~network of metals service centers, enabled us to persevere during~~operating locations provide the ~~pandemic in 2020 and were the cornerstone~~foundation of our ~~record quarterly~~strong financial ~~results in each of the first three quarters of 2021.~~results.

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~~Acquisition~~2021 Acquisitions

~~On October 1,~~In the fourth quarter of 2021, we acquired Merfish United, Inc. (“Merfish United”), a leading master distributor of carbon steel pipes, copper tubing, plastic pipe, electrical conduit and related products that are distributed to its independent wholesale distributor customers across a variety of end markets in the United States. Merfish United, headquartered in Ipswich, Massachusetts, serves 47 U.S. states through its twelve strategically located distribution centers. Merfish United’s broad product offering includes full lines of steel pipe, copper tubing, plastic pipe, electrical conduit and related products for the commercial, residential, municipal and industrial building markets. No saleseach of Merfish United, ~~were included~~Inc., Admiral Metals Servicenter Company, Incorporated, Nu-Tech Precision Metals Inc. and Rotax Metals Inc. with cash on hand for a combined transaction value of $440.3 million. Included in our net sales for the nine months ended September 30, ~~2021. Merfish United’s unaudited total assets and revenues as~~2022 were combined net sales of ~~September 30,~~$681.7 million from our 2021 ~~and for the twelve months then ended were approximately $215 million and $600 million, respectively.~~acquisitions.

~~We funded our acquisition of Merfish United in the fourth quarter of 2021 with cash on hand.~~

~~Table of Contents~~

Results of Operations

The following table sets forth certain income statement data for the third quarter and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (dollars are shown in millions, except for per share amounts and certain amounts may not calculate due to rounding):

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

% of

% of

% of

% of

$

Net Sales


$

Net Sales


$

Net Sales


$

Net Sales

Net sales
$
3,847.4

100.0
%

$
2,085.6

100.0
%

$
10,104.6

100.0
%

$
6,677.8

100.0
%
Cost of sales (exclusive of depreciation and amortization expenses shown below)⁽¹⁾

2,636.3

68.5

1,409.5

67.6

6,857.6

67.9

4,606.3

69.0

Gross profit⁽²⁾

1,211.1

31.5

676.1

32.4

3,247.0

32.1

2,071.5

31.0

Warehouse, delivery, selling, general and administrative expense ("SG&A")

606.8

15.8

449.2

21.5

1,688.6

16.7

1,410.4

21.1

Depreciation expense

47.6

1.2

47.0

2.3

144.6

1.4

140.5

2.1

Amortization expense

9.1

0.2

9.4

0.5

27.5

0.3

30.3

0.5

Impairment of long-lived assets

—

—

10.0

0.5

—

—

107.9

1.6

Operating income
$
547.6

14.2
%

$
160.5

7.7
%

$
1,386.3

13.7
%

$
382.4

5.7
%


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2022				2021				2022				2021
			% of				% of				% of				% of
	$		Net Sales		$		Net Sales		$		Net Sales		$		Net Sales
Net sales	$	4,247.2	100.0	%	$	3,847.4	100.0	%	$	13,414.2	100.0	%	$	10,104.6	100.0	%
Gross profit⁽¹⁾		1,239.0	29.2			1,211.1	31.5			4,121.5	30.7			3,247.0	32.1
Warehouse, delivery, selling, general and administrative expense (SG&A)		630.1	14.8			606.8	15.8			1,890.6	14.1			1,688.6	16.7
Depreciation and amortization expense		60.4	1.4			56.7	1.5			178.8	1.3			172.1	1.7
Operating income		548.5	12.9			547.6	14.2			2,052.1	15.3			1,386.3	13.7
Net income attributable to Reliance		393.5	9.3	%		395.7	10.3	%		1,489.6	11.1	%		991.7	9.8	%
Diluted earnings per share attributable to Reliance Stockholders'	$	6.45			$	6.15			$	23.98			$	15.35

(1)	Cost of sales in the third quarter and nine months ended September 30, 2020 included ($0.2) million and $39.6 million inventory provisions relating to the planned closure of certain energy-related operations.

~~(2)~~

Gross profit, calculated as net sales less cost of sales, and gross profit margin, calculated as gross profit divided by net sales, are non-GAAP financial measures as they exclude depreciation and amortization expenses associated with the corresponding sales. About half of our orders are basic distribution with no processing services performed. For the remainder of our sales orders, we perform “first-stage” processing, which is generally not labor intensive as we are simply cutting the metal to size. Because of this, the amount of related labor and overhead, including depreciation and amortization, is not significant and is excluded from our cost of sales. Therefore, our cost of sales is substantially comprised of the cost of the material we sell. We use gross profit and gross profit margin as shown above as measures of operating performance. Gross profit and gross profit margin are important operating and financial measures, as their fluctuations can have a significant impact on our earnings. Gross profit and gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies. Gross profit in the nine months ended September 30, 2022 was reduced by $8.1 million of non-recurring amortization of inventory step-up to fair value adjustments for our 2021 acquisitions.

Table of Contents

Third Quarter and Nine Months Ended September 30, ~~2021~~2022 Compared to Third Quarter and Nine Months Ended September 30, ~~2020~~2021

Net Sales

September 30,

Dollar

Percentage

2021

2020

Change

Change

(in millions)

Net sales (three months ended)
$
3,847.4

$
2,085.6

$
1,761.8

84.5
%
Net sales (nine months ended)
$
10,104.6

$
6,677.8

$
3,426.8

51.3
%

September 30,

Percentage

2021

2020

    Change

Change

(tons in thousands)

Tons sold (three months ended)

1,358.2


1,283.5

74.7

5.8
%
Tons sold (nine months ended)

4,191.9


3,964.1


227.8

5.7
%
Average selling price per ton sold (three months ended)
$
2,862

$
1,609

$
1,253

77.9
%
Average selling price per ton sold (nine months ended)
$
2,428

$
1,680

$
748

44.5
%


	September 30,				Dollar		Percentage
	2022		2021		Change		Change

	(dollars in millions)
Net sales (three months ended)	$	4,247.2	$	3,847.4	$	399.8	10.4	%
Net sales, same-store (three months ended)	$	4,039.2	$	3,847.4	$	191.8	5.0	%
Net sales (nine months ended)	$	13,414.2	$	10,104.6	$	3,309.6	32.8	%
Net sales, same-store (nine months ended)	$	12,732.5	$	10,104.6	$	2,627.9	26.0	%

	September 30,				Tons		Percentage
	2022		2021		Change		Change

	(tons in thousands)
Tons sold (three months ended)		1,406.0		1,358.2		47.8	3.5	%
Tons sold, same-store (three months ended)		1,364.3		1,358.2		6.1	0.4	%
Tons sold (nine months ended)		4,279.6		4,191.9		87.7	2.1	%
Tons sold, same-store (nine months ended)		4,150.2		4,191.9		(41.7)	(1.0)	%

	September 30,				Price		Percentage
	2022		2021		Change		Change
Average selling price per ton sold (three months ended)	$	3,039	$	2,862	$	177	6.2	%
Average selling price per ton sold, same-store (three months ended)	$	2,972	$	2,862	$	110	3.8	%
Average selling price per ton sold (nine months ended)	$	3,156	$	2,428	$	728	30.0	%
Average selling price per ton sold, same-store (nine months ended)	$	3,083	$	2,428	$	655	27.0	%

~~Table of Contents~~

Our tons sold and average selling price per ton sold exclude ~~the volumes processed by~~ our tons toll ~~processing operations.~~processed. Our average selling price per ton sold includes ~~insignificant~~ intercompany transactions that are eliminated from our consolidated net sales.Same-store amounts exclude the results of our 2021 acquisitions.

Our net sales in the third quarter and nine months ended September 30, ~~2021 were records for us and~~2022 increased from the same periods in ~~2020~~2021 due to ~~record~~increased average selling prices per ton sold and ~~higher~~modest increases in tons ~~sold. Underlying~~sold compared to the same periods in 2021. Our strong sales in the 2022 periods were supported by ongoing healthy demand ~~was fundamentally healthy~~ in most of the end markets we ~~served in the third quarter of 2021. However, we believe our tons sold in most end markets we served in the third quarter~~serve and ~~nine months ended September 30, 2021 were limited by factors that constrained economic activity such as metal supply constraints, labor shortages and other supply chain disruptions.~~elevated metals pricing.

Since we primarily purchase and sell our inventories in the ~~“spot”~~spot market, ~~the changes in~~ our average selling prices generally fluctuate in accordance with the changes in the costs of the various metals we purchase. ~~The mix of products sold can also have an impact on our average selling prices.~~

Our average selling ~~prices~~price per ton sold ~~increased significantly~~ in the third quarter and nine months ended September 30, 2021 compared to the same periods in 2020, mainly due to several announced mill price increases for carbon and stainless steel products in 2021. As carbon steel sales represented approximately 59% of our gross sales for the nine months ended September 30, 2022 was significantly higher than the comparable 2021 ~~changes~~period mainly due to significant mill price increases for our major product categories. However, our quarterly year-over-year average selling price per ton sold increase was more moderate mainly due to a 4.3% decline in pricing for the carbon steel ~~prices have the most significant~~products we sold.

Table of Contents

The mix of products sold has an impact on ~~changes in~~ our overall average selling prices per ton sold. Year-over-year changes in selling prices of our major commodity products and related mix of gross sales dollars are presented below:


	Three Months Ended				Nine Months Ended
	September 30				September 30
	Change in				Change in
	Average Selling				Average Selling
	Price Per		% of		Price Per		% of
	Ton Sold		Total Sales		Ton Sold		Total Sales
Carbon steel	(4.3)	%	54.2	%	21.5	%	54.6	%
Stainless steel	17.4	%	16.3	%	39.6	%	16.5	%
Aluminum	18.8	%	15.1	%	27.6	%	15.0	%
Alloy	31.0	%	4.3	%	33.7	%	4.1	%

Gross Profit and Cost of Sales


	September 30,
	2022				2021
			% of				% of		Dollar		Percentage
	$		Net Sales		$		Net Sales		Change		Change

	(dollars in millions)
Gross profit (three months ended)	$	1,239.0	29.2	%	$	1,211.1	31.5	%	$	27.9	2.3	%
Gross profit (nine months ended)	$	4,121.5	30.7	%	$	3,247.0	32.1	%	$	874.5	26.9	%
Cost of sales (three months ended)	$	3,008.2	70.8	%	$	2,636.3	68.5	%	$	371.9	14.1	%
Cost of sales (nine months ended)	$	9,292.7	69.3	%	$	6,857.6	67.9	%	$	2,435.1	35.5	%

Gross profit in the nine months ended September 30, 2022 increased from the same period in 2021 mainly due to a significant increase in our average selling price per ton sold that outpaced higher average cost per ton sold.

~~Our major commodity selling prices changed year-over-year as follows:~~

Average Selling Price per Ton Sold

Three Months Ended

Nine Months Ended

September 30

September 30

(percentage change)
Carbon steel

107.1
%

66.8
%
Stainless steel

62.6
%

34.2
%
Aluminum
��
23.7
%

10.3
%
Alloy

26.7
%

13.5
%

~~Cost of Sales~~

September 30,

2021

2020


% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)



Cost of sales (three months ended)
$
2,636.3

68.5
%

$
1,409.5

67.6
%

$
1,226.8

87.0
%
Cost of sales (nine months ended)
$
6,857.6

67.9
%

$
4,606.3

69.0
%

$
2,251.3

48.9
%

~~The increases in cost of sales in the third quarter and nine months ended September 30, 2021 compared~~Additionally, adjustments to ~~the same periods in 2020 were mainly due to higher average costs per ton sold and higher tons sold. See~~ ~~“Net Sales”~~ ~~above for trends in both demand and costs of our products~~.

~~Cost of sales included~~ ~~($0.2) million and~~ ~~$39.6 million net inventory provisions related to the planned closure of certain energy-related operations in the third quarter and nine months ended September 30, 2020. See~~ ~~Note 13—“~~~~Impairment and Restructuring Charges~~” ~~of our Unaudited Consolidated Financial Statements for further information on our 2020 restructuring charges.~~

~~In addition,~~ our LIFO method inventory valuation reserve, ~~adjustment,~~ which isare included in cost of sales and, in effect, reflects cost of sales at current replacement costs, resulted in ~~charges,~~a credit, or ~~expenses,~~an increase to gross profit, of $27.5 million in the third quarter of 2022 compared to a charge, or a decrease to gross profit, of $262.5 million in the third quarter of 2021. We recorded LIFO expense that lowered gross profit by $22.5 million and $562.5 million in the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the LIFO method inventory valuation reserve on our balance sheet was $842.9 million. Furthermore, gross profit in the nine months ended September 30, 2022 was reduced by $8.1 million of non-recurring amortization of inventory step-up to fair value adjustments related to our 2021 acquisitions.

Our gross profit margins in the third quarter and nine months ended September 30, 2022 were strong, but declined from the same periods in 2021 due to different product pricing trends during the periods. Our gross profit margins in the third quarter and nine months ended September 30, 2021 ~~respectively, compared to credits, or income, of $12.5 million~~benefited from the rapid and ~~$37.5 million~~significant increases in metal prices and limited metal supply throughout the periods, while our gross profit margins in the ~~same~~2022 periods compressed as our average selling price reached a peak in ~~2020, respectively. As~~the second quarter of ~~September 30, 2021,~~2022 and declined throughout the ~~LIFO method inventory valuation reserve~~third quarter of 2022.

See “Net Sales” for further discussion on ~~our balance sheet was $678.1 million.~~product pricing trends.

Table of Contents

~~Gross Profit~~Expenses

September 30,

2021

2020


% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)



Gross profit (three months ended)
$
1,211.1

31.5
%

$
676.1

32.4
%

$
535.0

79.1
%
Gross profit (nine months ended)
$
3,247.0

32.1
%

$
2,071.5

31.0
%

$
1,175.5

56.7
%


	September 30,
	2022				2021
			% of				% of		Dollar		Percentage
	$		Net Sales		$		Net Sales		Change		Change

	(dollars in millions)
SG&A expense (three months ended)	$	630.1	14.8	%	$	606.8	15.8	%	$	23.3	3.8	%
SG&A expense, same-store (three months ended)	$	609.1	15.1	%	$	606.8	15.8	%	$	2.3	0.4	%
SG&A expense (nine months ended)	$	1,890.6	14.1	%	$	1,688.6	16.7	%	$	202.0	12.0	%
SG&A expense, same-store (nine months ended)	$	1,825.8	14.3	%	$	1,688.6	16.7	%	$	137.2	8.1	%
Depreciation & amortization expense (three months ended)	$	60.4	1.4	%	$	56.7	1.5	%	$	3.7	6.5	%
Depreciation & amortization expense (nine months ended)	$	178.8	1.3	%	$	172.1	1.7	%	$	6.7	3.9	%

~~We generated record gross profits~~The increase in our same-store SG&A expense in the nine months ended September 30, 2022 was mainly due to higher variable expenses associated with inflationary impacts for wages, fuel, freight and packaging costs. Our same-store SG&A expense in the third quarter of 2022 included the same inflationary cost pressures, but was offset by a reduction in incentive compensation as a significant majority of our incentive compensation programs are tied to FIFO profitability, which declined from the same period in 2021. The decreases in our SG&A expense as a percentage of sales in the third quarter and nine months ended September 30, ~~2021 as a result of record average selling prices, strong gross profit margins and increases in tons sold~~2022 compared to the same periods in ~~2020. Throughout~~ 2021 ~~we experienced ongoing strength in metals pricing, led by several mill price increases for carbon steel products (59% of~~were due to our ~~gross~~higher sales ~~dollars for the nine-month period of 2021), and stainless steel products (15% of our gross sales dollars for the nine-month period of 2021), along~~providing us with ~~fundamentally strong underlying demand.~~better operating leverage.

~~Gross profit was reduced by ($0.2) million and $39.6 million net inventory provisions~~Operating Income


	September 30,
	2022				2021
			% of				% of		Dollar		Percentage
	$		Net Sales		$		Net Sales		Change		Change

	(dollars in millions)
Operating income (three months ended)	$	548.5	12.9	%	$	547.6	14.2	%	$	0.9	0.2	%
Operating income (nine months ended)	$	2,052.1	15.3	%	$	1,386.3	13.7	%	$	665.8	48.0	%

The increase in our operating income in the ~~third quarter and~~ nine months ended September 30, ~~2020. Excluding~~2022 compared to the ~~impact~~same period in 2021 was due to increased gross profit, mainly as a result of ~~the 2020 net inventory provisions~~a significant increase in average selling price per ton sold and ~~our LIFO inventory valuation method inventory reserve adjustments~~fundamentally strong demand that offset a decline in ~~the comparable periods,~~ our gross profit ~~margins improved 650 basis points~~margin and ~~660 basis points~~inflationary increases in certain SG&A expenses.

Our operating income margin in the third quarter ~~and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. See~~ ~~“Net Sales”~~ ~~and~~ ~~“Cost~~ of ~~Sales”~~ ~~abovefor further discussion on product pricing trends and our LIFO inventory valuation reserve adjustments, respectively.~~

~~Expenses~~

September 30,

2021

2020


% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)

SG&A expense (three months ended)
$
606.8

15.8
%

$
449.2

21.5
%

$
157.6

35.1
%
SG&A expense (nine months ended)
$
1,688.6

16.7
%

$
1,410.4

21.1
%

$
278.2

19.7
%
Depreciation & amortization expense (three months ended)
$
56.7

1.5
%

$
56.4

2.7
%

$
0.3

0.5
%
Depreciation & amortization expense (nine months ended)
$
172.1

1.7
%

$
170.8

2.6
%

$
1.3

0.8
%
Impairment of long-lived assets (three months ended)
$
—

—
%

$
10.0

0.5
%

$
(10.0)

(100.0)
%
Impairment of long-lived assets (nine months ended)
$
—

—
%

$
107.9

1.6
%

$
(107.9)

(100.0)
%

~~Our SG&A expenses were higher in~~2022 decreased 130 basis points from the third quarter ~~and nine months ended September 30,~~of 2021 ~~compared to the same periods in 2020~~ mainly due to ~~increases~~a 230 basis point decrease in ~~incentive compensation as a result of~~ our ~~record~~ gross profit ~~and earnings, higher variable expenses associated with increased shipment levels and to~~margin that was partially offset by a ~~lesser extent inflationary increases~~100 basis point decrease in ~~certain warehouse and delivery expenses, including fuel, trucking services and packaging costs. Our~~our SG&A expense as a percentage of sales ~~decreased~~due to our higher sales and better operating leverage. Our operating income margin in the ~~third quarter and~~ nine months ended September 30, ~~2021 compared to~~2022 was at a record level and increased 160 basis points from the same ~~periods~~period in ~~2020~~2021 mainly due to our higher ~~sales.~~

~~During the third quarter and nine months ended September 30, 2020, we recorded impairment and restructuring charges~~sales that decreased our SG&A expense as a percentage of $14.6 million and $157.7 million, respectively, mainly related to COVID-19 permanent headcount reductions, location closures and revised negative long-term outlook for certain energy-related (oil and natural gas) businesses. See ~~Note 13—“~~~~Impairment and Restructuring Charges~~” ofsales by 260 basis points, offsetting a 140 basis point decrease in our ~~Unaudited Consolidated Financial Statements for further information on our 2020 impairment and restructuring charges.~~

gross profit margin.

Table of Contents

~~Operating Income~~

September 30,

2021

2020

% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)

Operating income (three months ended)
$
547.6

14.2
%

$
160.5

7.7
%

$
387.1

241.2
%
Operating income (nine months ended)
$
1,386.3

13.7
%

$
382.4

5.7
%

$
1,003.9

262.5
%
Impairment and restructuring charges (three months ended)
$
—

—
%

$
14.6

0.7
%

$
(14.6)

(100.0)
%
Impairment and restructuring charges (nine months ended)
$
0.1

—
%

$
157.7

2.4
%

$
(157.6)

(99.9)
%

The increase in our operating income in the third quarter of 2021 compared to the same period in 2020 was due to record gross profit, as the result of a record average selling price per ton sold, fundamentally strong demand and a strong gross profit margin, that was partially offset by higher incentive compensation, increases in certain SG&A expenses related to our increased shipments and to a lesser extent inflationary increases for certain warehouse and delivery expenses. The increase in our operating margin in the third quarter of 2021 was mainly due to our significantly higher sales that decreased our SG&A expense as a percentage of sales, despite an increase in our SG&A expense.

Excluding the impact of significant impairment and restructuring charges in the nine months ended September 30, 2020, our operating income of $1.39 billion in the nine months ended September 30, 2021 increased $846.2 million, or 156.7%, compared to $540.1 million in the same period in 2020, and our operating income margin improved 560 basis points. The increase in our operating income margin, as adjusted, was mainly due to our significantly higher sales that decreased our SG&A expense as a percentage of sales, despite an increase in our SG&A expense. See ~~Note 13—“~~~~Impairment and Restructuring Charges~~” ~~of our Unaudited Consolidated Financial Statements for further information on our 2020 impairment and restructuring charges.~~

~~Other (Income) Expense, Net~~

September 30,

2021

2020

% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)

Other (income) expense, net (three months ended)
$
(0.6)

—
%

$
17.8

0.9
%

$
(18.4)

(103.4)
%
Other expense, net (nine months ended)
$
3.6

—
%

$
23.1

0.3
%

$
(19.5)

(84.4)
%

The changes in other (income) expense, net in the third quarter and nine months ended September 30, 2021 compared to the same periods in 2020 were mainly due to postretirement benefit plan settlement charges of $14.6 million and $19.4 million in the respective 2020 periods.

Income Tax Rate

Our effective income tax rate of 24.7% for each of the third quarter and nine months ended September 30, 2022 declined from 25.5% in each of the same 2021 ~~was 25.5%, compared~~periods due to ~~22.6% and 22.5%~~lower state income taxes as a result of changes in the ~~same 2020 periods, respectively. The increases~~allocation of our U.S. income to the states in ~~our effective income tax rates were mainly due to significant increases in our profitability in 2021.~~ which we operate.

The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state income taxes, partially offset by the effects of ~~company-owned~~Company-owned life insurance policies.

~~Table of Contents~~

~~Net Income~~

September 30,

2021

2020

% of

% of

Dollar

Percentage

$

Net Sales


$

Net Sales


Change

Change

(dollars in millions)

Net income attributable to Reliance (three months ended)
$
395.7

10.3
%

$
97.6

4.7
%

$
298.1

305.4
%
Net income attributable to Reliance (nine months ended)
$
991.7

9.8
%

$
239.5

3.6
%

$
752.2

314.1
%

The increases in our net income and net income margin in the third quarter of 2021 compared to the same period in 2020 were mainly due to increased operating income and operating income margin as a result of record gross profit and a strong gross profit margin partially offset by higher SG&A expense and effective income tax rate.

Our net income in the nine months ended September 30, 2021 increased $619.4 million, or 166.4%, and our net income margin increased from 5.6% to 9.8%, as adjusted for pretax impairment, restructuring and postretirement benefit plan settlement charges that totaled $177.1 million ($132.8 million after-tax) in the nine months ended September 30, 2020. The increase in our net income and net income margin, as adjusted, were mainly due to record gross profit and a strong gross profit margin partially offset by higher SG&A expense and effective income tax rate.

~~Liquidity and Capital Resources~~Financial Condition

Operating Activities

Net cash provided by operations of ~~$405.6 million~~$1.31 billion in the nine months ended September 30, ~~2021 decreased $537.2~~2022 increased $904.3 million, or ~~57.0%~~223.0%, from ~~$942.8 million in~~ the same period in ~~2020. Our decreased operating cash flow~~2021. The increase was mainly ~~the result of significantly increased~~due to a $497.8 million, or 50.0%, increase in net income that required moderate additional working capital ~~requirements~~investment in the ~~2021 nine-month period~~nine months ended September 30, 2022 when compared to the same period in ~~2020, mainly due to strong demand~~2021 which had significant and ~~rising~~rapid increases in metals pricing ~~during the 2021 nine-month period~~and limited metal availability that achieved record levels compared to the declining demand and pricing trends in the same period in 2020 due to the COVID-19 pandemic. The strong and rising metals pricing environment combined with healthy demand during the nine months ended September 30, 2021 required ~~more~~a significantly higher investment in ~~accounts receivable and inventories.~~working capital. To manage our working capital, we focus on our days sales outstanding and ~~on our~~ inventory turnover rate as receivables and inventory are the two most significant elements of our working capital. As of September 30, ~~2021~~2022 and ~~2020,~~2021, our days sales outstanding rate was ~~39.1~~39.6 days and ~~42.4~~39.1 days, respectively. Our inventory ~~turn~~turnover rate (based on tons) during the nine months ended September 30, ~~2021~~2022 was ~~4.9~~4.3 times (or ~~2.4~~2.8 months on hand), compared to ~~4.7~~4.9 times (or ~~2.6~~2.4 months on hand) in the same period in ~~2020.~~2021.

Income taxes paid were ~~$297.3~~$596.8 million in the nine months ended September 30, ~~2021, a~~2022 compared to $297.3 million in the same period in 2021. The significant increase ~~from $68.3~~in our tax payments was mainly due to higher estimated tax payments in the nine months ended September 30, 2022 compared to the same period in 2021, as a result of our significantly higher pretax income.

Investing Activities

Net cash used in investing activities was $244.4 million in the nine months ended September 30, ~~2020, due to our significantly higher pretax income.~~

~~Investing Activities~~

~~Net cash used in investing activities was $148.2 million in the nine months ended September 30, 2021~~2022 compared to ~~$127.7~~$148.2 million in the same period in ~~2020~~2021 and was substantially comprised of ~~our~~ capital expenditures partially offset by proceeds from sales of property, plant and equipment. ~~Capital~~The majority of our capital expenditures in the nine months ended September 30, 2022 and 2021 were ~~$178.9~~related to growth initiatives.

Financing Activities

Net cash used in financing activities was $711.1 million in the nine months ended September 30, ~~2021~~2022, compared to $134.7 million in the same period in 2020. The majority of our 2021 and 2020 capital expenditures related to growth initiatives. Proceeds from sales of property, plant and equipment were $26.8 million in the nine months ended September 30, 2021 compared to $6.2 million in the same period in 2020 and included $24.4 million from the sale of non-core assets for which we recognized $3.3$301.8 million of ~~gains.~~

~~Table of Contents~~

~~Financing Activities~~

~~Net~~net cash used in financing activities ~~of $301.8 million in the nine months ended September 30, 2021 decreased from $394.9 million net cash used in~~for the same period in ~~2020~~2021, mainly due to ~~decreased~~increased share ~~repurchases and net debt repayments.~~repurchases. In the nine months ended September 30, ~~2021,~~2022, we spent ~~$155.0~~$547.7 million to repurchase shares of our common stock compared to ~~$300.2~~$155.0 million in the same period in ~~2020. We had $1.1~~2021. Our other stockholder return activities included an increase in our quarterly dividend rate with total dividend payments of $163.5 million ~~of net debt repayments~~ in the nine months ended September 30, ~~2021~~2022 compared to ~~$59.0~~$132.3 million ~~of net debt repayments~~ in the same period in ~~2020.~~2021.

On October ~~26, 2021,~~25, 2022, our Board of Directors declared the ~~2021~~2022 fourth quarter cash dividend of ~~$0.6875~~$0.875 per share. We have increased our quarterly dividend 2829 times since our IPO in 1994, with the most recent increase of ~~10.0%~~27.3% from ~~$0.625~~$0.6875 per share to ~~$0.6875~~$0.875 per share effective in the first quarter of ~~2021.~~2022. We have paid quarterly cash dividends on our common stock for 6263 consecutive years and have never reduced or suspended our regular quarterly dividend.

See Note 9—“Equity” to our consolidated financial statements in Part I, Item 1 “Financial Statements” for information on our stock repurchases.

Table of Contents

On July ~~20, 2021,~~26, 2022, our Board of Directors ~~authorized a $1.0 billion~~amended our share repurchase program ~~that amended and restated~~to increase the remaining repurchase authorization to $1.0 billion. At September 30, 2022, $763.3 million of our ~~prior share repurchase program~~common stock remained authorized ~~in October 2018.~~for repurchase. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time.

We repurchase shares through open market purchases, privately negotiated transactions and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchased and subsequently retired shares are restored to the status of authorized but unissued shares.

~~During the third quarter of 2021,~~Since 2017, we repurchased 885,606 shares at an average cost of $147.89 per share, for a total of $131.0 million, compared to 2,466 shares repurchased at an average cost of $100.00 per share, for a total of $0.2 million in the third quarter of 2020. In the nine months ended September 30, 2021, wehave repurchased approximately ~~1.0~~15.9 million shares at an average cost of ~~$150.12~~$111.51 per share, for a total of ~~$155.0 million, compared to approximately 3.3 million~~$1.77 billion, resulting in a 21.8% reduction in our common shares repurchased at an average cost of $90.10 per share, for a total of $300.2 million in the nine months ended September 30, 2020. Through September 30, 2021, we have repurchased approximately 33.8 million shares at an average cost of $51.32 per share, for a total of $1.74 billion since the inception of our share repurchase programs in 1994, including approximately 11.7 million shares repurchased at an average cost of $89.92, for a total of $1.05 billion since 2017.issued and outstanding. We expect to continue to be opportunistic in our approach to repurchasing shares of our common stock.

~~Liquidity~~Purchase Obligations

During the first quarter of 2022, we increased our 2022 capital expenditure budget, including unspent amounts from prior years, to $455 million from $350 million. Our actual capital expenditure spending over the next 12 months is ultimately dependent on market conditions, lead times and availability of property, plant and equipment when the capital project is initiated.

Debt

The Company’s debt obligations have not changed significantly since December 31, 2021. See Note 6—“Debt” to our consolidated financial statements in Part I, Item 1 “Financial Statements” for further information on our debt obligations.

Liquidity and Capital Resources

We believe our primary sources of liquidity, ~~are~~including funds generated from operations, cash ~~on hand~~and cash equivalents and our $1.5 billion revolving credit ~~facility. Our total outstanding debt at September 30, 2021~~facility, will be sufficient to satisfy our cash requirements and ~~December 31, 2020 was $1.66 billion.~~ stockholder return activities over the next 12 months and beyond. As of September 30, ~~2021~~2022, we had $643.7 million in cash and ~~December 31, 2020, we had~~cash equivalents with no outstanding borrowings on the revolving credit ~~facility. As of September 30, 2021, we had $638.4 million in cash and cash equivalents~~facility and our net debt-to-total capital ratio (net debt-to-total capital is calculated as ~~total~~carrying amount of debt, net of cash, divided by total Reliance stockholders’ equity plus ~~total~~carrying amount of debt, net of cash) was ~~14.7%~~12.8%, down from ~~15.8%~~18.1% as of December 31, ~~2020.~~2021.

On September 3, 2020, we entered into a $1.5 billion unsecured five-year Amended and Restated Credit Agreement (“Credit Agreement”) that amended and restated our then existing $1.5 billion unsecured revolving credit facility. As of September 30, 2021, borrowings under the Credit Agreement were available at variable rates based on LIBOR plus 1.25% or the bank prime rate plus 0.25% and we currently pay a commitment fee at an annual rate of 0.20% on the unused portion of the revolving credit facility. The applicable margins over LIBOR and base rate borrowings, along with commitment fees, are subject to adjustment every quarter based on our leverage ratio, as defined in the Credit Agreement. All borrowings under the Credit Agreement may be prepaid without penalty. Our Credit Agreement includes provisions to change the reference rate to the then-prevailing market convention for similar agreements if a replacement rate for LIBOR is necessary during its term.

~~Table of Contents~~

Revolving credit facilities with a combined credit limit of $13.4 million are in place for operations in Asia with combined outstanding balances of $4.6 million and $5.4 million as of September 30, 2021 and December 31, 2020, respectively.

~~Capital Resources~~

On November 20, 2006, we entered into an indenture (the “2006 Indenture”) for the issuance of $600.0 million of unsecured debt securities. The total issuance was comprised of (a) $350.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.20% per annum, which matured and were repaid on November 15, 2016 and (b) $250.0 million aggregate principal amount of senior unsecured notes bearing interest at the rate of 6.85% per annum, maturing on November 15, 2036.

Under the Indentures, the notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. If we experience a change in control accompanied by a downgrade in our credit rating, we will be required to make an offer to repurchase each series of the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest.

~~Various industrial revenue bonds had combined outstanding balances of $8.0 million and $8.3 million as of September 30, 2021 and December 31, 2020, respectively, and have maturities through 2027.~~

~~As of September 30, 2021,~~2022, we had ~~$911.5~~$910.1 million of debt obligations coming due before our $1.5 billion revolving credit facility expires on September 3, 2025.

We believe that we will continue to have sufficient liquidity to fund our future operating needs and to repay our debt obligations as they become ~~due.~~due, including $500.0 million of senior notes that mature in April 2023. In addition to funds generated from operations and ~~funds~~nearly $1.5 billion available under our revolving credit facility, we expect to continue to be able to access the capital markets to raise funds, if desired. We believe our sources of liquidity will continue to be adequate to maintain operations, make necessary capital expenditures, finance strategic growth through acquisitions and internal initiatives, pay dividends and opportunistically repurchase ~~shares.~~shares of our common stock. Additionally, we believe our investment grade credit ratings enhance our ability to effectively raise capital, if needed. We expect to continue our acquisition and internal growth and stockholder return activities and anticipate that we will be able to fund such activities as they arise.

Covenants

The Credit Agreement and the Indentures include customary representations, warranties, covenants and events of default provisions. The covenants under the Credit Agreement include, among other things, two financial maintenance covenants that require us to comply with a minimum interest coverage ratio and a maximum ~~total net~~ leverage ratio.

We were in compliance with all financial maintenance covenants in our Credit Agreement at September 30, ~~2021.~~

~~Off-Balance Sheet Arrangements~~

We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities, which are typically established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.2022.

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As of September 30, 2021 and December 31, 2020, we were contingently liable under standby letters of credit and letters of guarantee in the aggregate amount of $30.9 million and $27.8 million, respectively. The letters of credit/guarantee relate to insurance policies and construction projects.

~~Contractual Obligations and Other Commitments~~

We had no material changes in commitments for capital expenditures or purchase obligations as of September 30, 2021, as compared to those disclosed in our table of contractual obligations included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Seasonality

Some of our customers are in seasonal businesses, especially customers in the construction industry and related businesses. However, our overall operations have not shown any material seasonal trends as a result of our geographic, product and customer diversity. Typically, revenues in the months of July, November and December have been lower than in other months because of a reduced number of working days for shipments of our products, resulting from holidays observed by the Company as well as vacation and extended holiday closures at some of our customers. The number of shipping days in each quarter also has ~~a significant~~an impact on our quarterly sales and profitability. Particularly in light of the COVID-19 pandemic, we cannot predict whether period-to-period fluctuations will be consistent with historical patterns. Results of any one or more quarters are therefore not necessarily indicative of annual results.

Goodwill and Other Intangible Assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to ~~$1.94~~$2.10 billion at September 30, ~~2021,~~2022, or approximately 21% of total assets and ~~33%~~31% of total equity. Additionally, other intangible assets, net amounted to ~~$919.5 million~~$1.03 billion at September 30, ~~2021,~~2022, or approximately 10% of total assets and ~~16%~~15% of total equity. Goodwill and other intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests and further evaluation when certain events occur. Other intangible assets with finite useful lives are amortized over their useful lives. We review the recoverability of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In the nine months ended September 30, 2020, we recorded impairment losses of $67.8 million on our intangible assets with indefinite lives and $30.7 million on our intangible assets subject to amortization. See ~~Note 13—~~“~~Impairment and Restructuring Charges”~~~~of our Unaudited Consolidated Financial Statements for further information on our 2020 impairment charges.~~

Critical Accounting ~~Policies and~~ Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Unaudited Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of our accounting policies require that we make subjective judgments, including estimates that involve matters that are inherently uncertain. Our most critical accounting estimates include those related to goodwill and other indefinite-lived intangible assets and long-lived assets. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. The impacts of the COVID-19 pandemic increase uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than in the past.

~~See “~~During the quarter ended September 30, 2022, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in ~~Critical Accounting Policies~~Management’s Discussion and ~~Estimates~~Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further information regarding the accounting policies that we believe to be critical accounting policies and that affect our more significant judgments and estimates used in preparing our consolidated financial statements. We do not believe that the new accounting guidance implemented in 2021 changed our critical accounting policies.

~~Table of Contents~~

~~New Accounting Guidance~~

~~See~~ ~~Note 2—“Impact of Recently Issued Accounting Guidance”~~ ~~of our Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for disclosure on new accounting guidance issued or implemented.~~2021.

Website Disclosure

The Company may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at ~~investor.rsac.com~~www.investor.rsac.com. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section at ~~investor.rsac.com~~www.investor.rsac.com. The website is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, we are exposed to various market risk factors, including fluctuations in interest rates, changes in general economic conditions, domestic and foreign competition, foreign currency exchange rates and metals pricing, demand and availability. See Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for further discussion on quantitative and qualitative disclosures about market risk.

Item 4. Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to and as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of the end of the period covered in this report, the Company’s disclosure controls and procedures are effective to ensure information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the third quarter ~~ended September 30, 2021~~of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information contained under the heading “Legal Matters” in Note ~~11—~~10—“Commitments and Contingencies” to our Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q is incorporated by reference into this Item 1.

Item 1A. Risk Factors

~~There~~Except as discussed below, there have not been noany material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. These risks are not exclusive and additional risks to which we are subject include the factors mentioned under “Forward-Looking Statements” and the risks described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

A period of sustained inflation in operating costs and declining metals pricing could negatively impact our profitability and cash flows.

We have experienced higher variable costs in 2022 resulting from inflationary impacts to wages, fuel, freight and packaging costs, among others. To date, these increased costs have been offset by significantly larger increases in our gross profit mainly as a result of elevated metals prices. We expect that a period of sustained, elevated and/or worsening inflation during periods of declining metals prices could result in decreased earnings. As we primarily purchase and sell our inventories in the spot market, our selling prices are mainly influenced by changes in replacement costs for the metal products we carry in our inventory and to a lesser extent changes in our SG&A expense to fulfill our customers’ orders. During periods exhibiting significantly declining metal replacement costs and sustained inflation across our significant operations, we may be unable to pass along our increased SG&A expense to our customers through higher pricing for the products we sell, which would decrease our earnings. In addition, significant inflation throughout the economy could impact our customers’ access to capital, leading to a decrease in their ordering volume and frequency. If we are unable to increase our product pricing or take other actions to increase our gross profit at the same rate as our higher SG&A costs,

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or if our tons sold or tons toll processed decline as a result of inflationary pressures on our customers, our profitability and financial position would decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We repurchase shares of our common stock from time to time pursuant to a combination of one or more open market repurchases and transactions structured through investment banking institutions in reliance upon Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934.

Our share repurchase activity for the third quarter of ~~2021~~2022 is ~~presented below.~~as follows:


										Total Number of	Maximum Dollar
							Total Number	Average Price		Shares Purchased	Value That May
							of Shares	Paid		as Part of Publicly	Yet Be Purchased
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Dollar Value That May Yet Be Purchased Under the Plan⁽¹⁾		Purchased	Per Share		Announced Plan	Under the Plan⁽¹⁾
July 1 - July 31, 2021	94,768	$	148.38	94,768	$	998,000,094
August 1 - August 31, 2021	170,728	$	149.66	170,728	$	972,449,048
September 1 - September 30, 2021	620,110	$	147.33	620,110	$	881,085,737
											(in millions)
July 1 - July 31, 2022							581,648	$	171.94	581,648	$	1,000.0
August 1 - August 31, 2022							408,719	$	191.61	408,719	$	921.7
September 1 - September 30, 2022							892,726	$	177.38	892,726	$	763.3
Total	885,606	$	147.89	885,606			1,883,093	$	178.79	1,883,093

(1)

Share repurchases were made through a combination of one or more open market repurchases and transactions structured through investment banking institutions in reliance upon Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934. OnOur $1.0 billion share repurchase program authorized by our Board of Directors on July 20, 2021 had remaining repurchase authorization of $401.6 million following our July 2022 repurchases presented above. On July 26, 2022, our Board of Directors amended ~~and restated~~ our share repurchase program ~~increasing~~to increase the remaining repurchase authorization to $1$1.0 billion. ~~Our~~The share repurchase ~~plan~~program does not obligate us to ~~acquire~~repurchase any specific number of ~~shares.~~shares, does not have a specific expiration date and may be suspended or discontinued at any time. Under the share repurchase plan, shares may be repurchased pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 and/or 10b-18 under the Securities Exchange Act of 1934, in the open market, in privately negotiated transactions or otherwise.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit ~~No.~~ Number		Description

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32**		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following unaudited financial information from Reliance Steel & Aluminum Co.’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2021~~2022 formatted in iXBRL (Inline eXtensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these consolidated financial statements.

101.SCH*		~~XBRL Taxonomy Extension Schema Document.~~

101.CAL*		~~XBRL Taxonomy Calculation Linkbase Document.~~

101.DEF*		~~XBRL Taxonomy Extension Definition Linkbase Document.~~

101.LAB*		~~XBRL Taxonomy Label Linkbase Document.~~

101.PRE*		~~XBRL Taxonomy Presentation Linkbase Document.~~

104*		Cover Page Interactive Data File (formatting as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

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~~SIGNATURES~~SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	RELIANCE STEEL & ALUMINUM CO.
	(Registrant)


Date: November ~~4, 2021~~3, 2022	By:	/s/ Arthur Ajemyan

		Arthur Ajemyan
		Senior Vice President and Chief Financial Officer
		(Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

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	Reliance Stockholders’ Equity
	Common Stock and Additional					Accumulated Other
	Paid-In Capital			Retained		Comprehensive		Noncontrolling
	Shares	Amount		Earnings		(Loss) Income		Interests		Total
Balance at January 1, 2020	66,854	$	122.2	$	5,189.5	$	(105.1)	$	7.5	$	5,214.1
Net income	—		—		61.7		—		1.2		62.9
Other comprehensive loss	—		—		—		(31.4)		—		(31.4)
Noncontrolling interest purchased	—		(6.9)		—		—		(1.1)		(8.0)
Dividend to noncontrolling interest holder	—		—		—		—		(0.5)		(0.5)
Stock-based compensation, net	111		3.8		—		—		—		3.8
Stock options exercised	6		0.3		—		—		—		0.3
Repurchase of common shares	(3,330)		(119.3)		(180.7)		—		—		(300.0)
Cash dividends — $0.625 per share and dividend equivalents	—		—		(41.9)		—		—		(41.9)
Balance at March 31, 2020	63,641		0.1		5,028.6		(136.5)		7.1		4,899.3
Net income	—		—		80.2		—		0.5		80.7
Other comprehensive income	—		—		—		12.4		—		12.4
Stock-based compensation, net	13		9.0		—		—		—		9.0
Cash dividends — $0.625 per share and dividend equivalents	—		—		(39.9)		—		—		(39.9)
Balance at June 30, 2020	63,654		9.1		5,068.9		(124.1)		7.6		4,961.5
Net income	—		—		97.6		—		0.7		98.3
Other comprehensive income	—		—		—		27.3		—		27.3
Dividend to noncontrolling interest holder	—		—		—		—		(0.8)		(0.8)
Stock-based compensation, net	104		2.2		—		—		—		2.2
Repurchase of common shares	(2)		(0.2)		—		—		—		(0.2)
Cash dividends — $0.625 per share and dividend equivalents	—		—		(41.0)		—		—		(41.0)
Balance at September 30, 2020	63,756	$	11.1	$	5,125.5	$	(96.8)	$	7.5	$	5,047.3

Balance at January 1, 2021	63,600	$	0.1	$	5,193.2	$	(77.9)	$	7.3	$	5,122.7
Net income	—		—		266.9		—		1.3		268.2
Other comprehensive loss	—		—		—		(1.2)		—		(1.2)
Dividend to noncontrolling interest holder	—		—		—		—		(2.4)		(2.4)
Stock-based compensation, net	107		6.5		—		—		—		6.5
Cash dividends — $0.6875 per share and dividend equivalents	—		—		(44.8)		—		—		(44.8)
Balance at March 31, 2021	63,707		6.6		5,415.3		(79.1)		6.2		5,349.0
Net income	—		—		329.1		—		1.1		330.2
Other comprehensive income	—		—		—		4.5		—		4.5
Stock-based compensation, net	8		23.1		—		—		—		23.1
Repurchase of common shares	(147)		(24.0)		—		—		—		(24.0)
Cash dividends — $0.6875 per share and dividend equivalents	—		—		(43.8)		—		—		(43.8)
Balance at June 30, 2021	63,568		5.7		5,700.6		(74.6)		7.3		5,639.0
Net income	—		—		395.7		—		1.0		396.7
Other comprehensive loss	—		—		—		(8.3)		—		(8.3)
Dividend to noncontrolling interest holder	—		—		—		—		(1.1)		(1.1)
Stock-based compensation, net	12		16.3		—		—		—		16.3
Repurchase of common shares	(886)		(21.9)		(109.1)		—		—		(131.0)
Cash dividends — $0.6875 per share and dividend equivalents	—		—		(43.7)		—		—		(43.7)
Balance at September 30, 2021	62,694	$	0.1	$	5,943.5	$	(82.9)	$	7.2	$	5,867.9


	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
			% of				% of				% of				% of
	$		Net Sales		$		Net Sales		$		Net Sales		$		Net Sales
Net sales	$	3,847.4	100.0	%	$	2,085.6	100.0	%	$	10,104.6	100.0	%	$	6,677.8	100.0	%
Cost of sales (exclusive of depreciation and amortization expenses shown below)⁽¹⁾		2,636.3	68.5			1,409.5	67.6			6,857.6	67.9			4,606.3	69.0
Gross profit⁽²⁾		1,211.1	31.5			676.1	32.4			3,247.0	32.1			2,071.5	31.0
Warehouse, delivery, selling, general and administrative expense ("SG&A")		606.8	15.8			449.2	21.5			1,688.6	16.7			1,410.4	21.1
Depreciation expense		47.6	1.2			47.0	2.3			144.6	1.4			140.5	2.1
Amortization expense		9.1	0.2			9.4	0.5			27.5	0.3			30.3	0.5
Impairment of long-lived assets		—	—			10.0	0.5			—	—			107.9	1.6
Operating income	$	547.6	14.2	%	$	160.5	7.7	%	$	1,386.3	13.7	%	$	382.4	5.7	%


		Average Selling Price per Ton Sold
		Three Months Ended		Nine Months Ended
		September 30		September 30

		(percentage change)
Carbon steel		107.1	%	66.8	%
Stainless steel		62.6	%	34.2	%
Aluminum	��	23.7	%	10.3	%
Alloy		26.7	%	13.5	%