RS - Earnings call transcript Q1 2022 | Reliance Steel & Aluminum Co.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Reliance Steel & Aluminum Company First Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando with ADDO Investor Relations. Thank you, Kim.

You may begin.

Kimberly Orlando

operator. you, Thank thanks conference and financial of for you Good to to discuss our call XXXX Reliance's joining morning, all first results. quarter President; Vice joined CEO; am Jim and Lewis, Arthur I Ajemyan, and President by Senior CFO. Karla Hoffman, be A on section investor.rsac.com. the at posted recording website call our Investors this of will of known are uncertainties pandemic our information subject number and expectations different results, a performance not may of forward-looking other that are may by economic and The call the company GEO contain on or press the and impacts control release risks, actual from certain be the COVID-XX these politics based the the related materially may change performance and results, conditions future operations, and implied factors, including and statements. involve to be other this cause company's or or on forward-looking unknown statements, which achievement of assumptions on under the of which to the but the the to, XX-K for not include, in Commission. or other Form ended XX, December documents morning These limited year this Risk Exchange with on Reliance disclosed under Factors, release XXXX, those in company's furnishes our disclosure report the Securities factors or are and caption the annual press files factors information The the date, provided only information therein and press release herein. duty on today's update and and speak as the any of the this call to company disclaims CEO of I will now call turn Reliance. the Hoffman, Jim to over

James Hoffman

challenges, trends our review activities. will ongoing market, in first our and then in end improving month XXXX Arthur a durability model. shipment trends, financial our levels with pricing. quarter to conclude strength everyone, and continued underlying of Karla thank the with Notwithstanding effectiveness metals joining each Outstanding record an today Companies operational our by ongoing supported quarter with begin allocation results. achieved and and of and with operating of performance financial quarter business Family throughout and results we speak was morning, Good in demonstrating will our execution first for will XXXX capital continuation a demand positive our along performance again results, discuss macroeconomic representing I of including by the us performance demand of once to the of you results. strong our overview produced

diversification results our Our from ongoing also support as valued end customers. and domestic and benefited loyal well suppliers from geographies products, strategic as markets of with our our relationships strong

quick allows our These and locations, The order. Additionally, provide to our a delivered of of profit price our line environment with margin product it, an a pricing announcement customers. value we In our coupled profits the billion. provide gross record Approximately customers $X.XX our wide XX% quarterly volatile to implementing to within of orders by preserve to sales XX.X% time the characterized us net top improving limited and worked of our pricing footprint margins at strength proximity trends for geographic order close mill of fleet generate help led that XXX quarterly metals $X.XX another totaling hours hard record with placing our turnaround. trucks billion. increases managers availability, customers proprietary the and collectively of our gross resilient XX factors are of by appropriately

products, X of per fourth processing due increased of led a of small for compared from more through the cash than quarter last record million. us value-added key and look $X $X.XX years customers well management meet certain operations to quarterly provide to demand. to value Though to expense experienced replacement improve for we line gross size, billion profit quarter increased as over quick to We've inventory enabled industry-leading to costs XXXX approaching of first Our to the capabilities. as XXXX elements processing as earnings broad margin costs continue flow of us some bottom of quarter turnaround, to our $XXX our profitability compression the of careful range capabilities first share a invested order such record model, and

facility to in majority to significant recently existing Our U.S. and new million fabrication of semiconductor expand growth growth for directed remains our a our fuel brand-new capital $XXX the capital $XXX million, stockholder new both cash this XXXX with and capacity and allocation support Texas Reliance. in being our from budget generation continue and continues to see announced on focused which strategy, returns, increase towards the we expenditure to facilities opportunities built We exciting state-of-the-art increased

well additional XXXX reshoring positioned outlays of other the quarter throughout supply as The extended elevated fourth is a that With of as X in markets of volume we growth potential lead are to acquisitions completed and opportunities believe and see in will levels times end we of of XXXX XX. our the the support $XXX integration number the to in M&A, cash IPO considering semiconductor expenditures to million pipeline high for and remains to robust, We planned, themselves. $XXX chain, to regard acquisitions continue in In XXXX total brought opportunities. said, million since M&A our progressing the range. capital present the the be we

stockholder growth, a remain returns addition priority. In to top

of and for since to focus continues dividends sustainable by buy cycles. ongoing years focus, service regular our as our execution evidenced reduction benefit customer from increased XX IPO. have our empower throughout operations and profitable relationships summary, including industry quarter throughout without dividend by XXXX cash our or suspension Reliance on operational We financial scale, diversification, supplier and business record quarterly our quarterly improvement our have and long-term the core domestic continuous first to philosophy continue In our model, paid The performance. unique tenets XXx consecutive

chain chain to environment, the Karla, and war to and able matter to help to metal customers' attributed demand COVID-XX secure supply disruptions remains you in macroeconomic who Ukraine. will been Karla? recently, our attention need will Thank the we America Reliance support review subsequent our your over supply and broader the request we've the for including and the to Importantly, consistently positioned despite more time call challenges, trends. pandemic well now operating No results today. I rebuild. turn disruptions

Karla Lewis

like quarter by family everyone. and Thanks, thanking colleagues contributions congratulating morning, Jim, challenging that Reliance a to all their and I'd the record-setting for begin good of environment. produced my another in amid

excellence drive to and quarter our dedication best-in-class operational to value Your at continue performance. turn perseverance Reliance, safety, our and to I'll our performance. now operational highest first

and labor and disruptions Reliance, surpassing the and, Our a Omicron to from first quarter surge supply customers from XX.X% our in range X% lesser our of our up the experienced chain suppliers sold quarter, tons up fourth guidance February. to were January extent, X%.

buying certain patterns few of uncertainty around our months the the year. first addition, impacted in metal customers In the of of prices

of strength onset average these our products believe of at As reflect in the significant we down we previous steel rapidly for We our Strength resulted levels headwinds with products sharply the in steel end products. key our March. the per serve. then shipment reversed in costs with subsided, shipment improved metal the selling in in guidance been Ukraine compared along increase in in first over our products and price of carbon and to our quarter improving months of X.X% across underlying in for certain Prices early the ton the of better the declined March for X X% stainless levels many crisis sold sell demand seeing and a markets to we've spiked the increases increased X%. majority vast XXXX, price aluminum demand,

exposure limited only As we a hot-rolled coil XX% the and which diversity total reminder, of given have products, product our sales to dollars. our sheet of mix, represent

for market general the the elevated we supportive second pricing, continuing ahead, of longer many products remain of lead sell, Looking conditions, quarter XXXX. of including times into

both products. from to basis, Jim gross our quarter quarter. the catch non-GAAP margin As average inventory a we certain compressed XX.X%, selling prior performance, with is achieved relative as to operating somewhat prior basis of down gross LIFO costs margin quarter FIFO price we began profit XXX noted, for the day-to-day our up measure and how our a On points on basis a which FIFO profit FIFO first

prior mainly during March. the United continued an one increased I'll in with turn the impact improve market overview demand of the to at a manufacturing States. the to including Reliance the trends. aluminum be fourth infrastructure demand serve, and end the now from in we're pandemic. in aerospace the machinery for year-over-year continues and Similarly, and with levels. quarter chain March of to market Demand to our healthy declining strength first end semiconductor levels construction equipment market we to first However, production continues key reversed improve. markets. on agricultural continues services invest despite the the which for remained nonresidential significant in levels increase quarter, quarter increases global sectors the processing Demand quarter to of ongoing since in onset Commercial for microchip notable continuing continuing industry in levels is our robust products of the the shortage Underlying largest demand and demand margins due broader underway quarter. the high-level our heavy shipment the of Semiconductor industrial serve, with first trend strongest expansion the area our we challenges, toll manufacturing stainless during prices. gross including improve steel both automotive is This remained consumer to in across provides to a service includes to shipments and strong profit end compared over significant to construction, improved supply

exposure defense aerospace portions roughly reminder, with half the a As backlogs. of in commercial. strong military, solid aerospace remains to business space our Demand of is and our

to These quarters. sector, the quarter energy our cautiously the at gas, continue Arthur of the most serve all to environments end our product of we prior the favorable our mainly higher suppliers the remain in to will which family our that model improve near markets service to review demand demand we shipments prices our focuses turn anticipate improve and pricing best especially in well-being define the natural historical with members. remain of term continued over elevated and with on of to key the We are Reliance and year. Reliance, nearly first metals now for remainder Further, the given Finally, financial results. we supporting we domestic on call year-over-year trends in I'll as will than providing optimistic, throughout the our every oil sell customers, highs. both

Arthur Ajemyan

morning, Thanks, everyone, for us. Good Karla. and joining you thank

to As strength improvements Karla our first in shipment levels demand quarter. throughout in highlighted, the incremental led ongoing daily

to $X.XX gross selling of Solid and profit earnings highest guidance quarterly the drive with $X.XX helped per $X.XX, share. margins trends, leverage Reliance's per higher demand surpassing prices, our expense coupled of history non-GAAP in strong operating share

was performance the philosophy, shorter a due prices levels model, market to of record Our and chain buy our elements industry-leading domestic higher geographic the selling during our processing all of capabilities, product, end pricing value-added first key and shipment elevated and specifically the direct result supported quarter. collectively diversification, which of discipline supply

record billion. sales we quarterly of result, generated a $X.XX As

Our first LIFO non-GAAP XX.X% despite near gross the of profit range and $XX.X margin high expense the sustainable strong remained quarter of of our for end million.

for of that our estimate included As guidance based XXXX. income $XX for on million you million our recall $XXX income may annual LIFO QX

the rata of revised higher-than-anticipated income million result million $XXX XXXX to first our nonferrous $XXX certain of in from and product LIFO a as we estimate quarter XXXX, our costs of we pro annual annual of carbon However, million. for LIFO XXXX LIFO current each expense. expense quarter estimate quarter. basis the on of Accordingly, second our Consistent allocate in a with $XX.X is for our policy, projection accounting

share by estimate, higher we diluted have income Now LIFO had first per original $X.XX. been our would XXXX our quarter recorded earnings

As based in revise trends. expectations we metal prior years, each and our inventory quarter our costs will pricing on

which As on declines metal to period and on LIFO mitigate our available results operating in million, sheet pretax and XXXX, balance March was the XX, impact benefit our the income. future prices of be $XXX.X potential reserve of profit will gross

expenses. to on Moving

million pay, incentive more the same-store X.X% variable compared SG&A of expenses of costs and costs fuel, year-over-year with fourth holiday higher compensation higher well majority first decreased or due attributable levels than volumes increased basis, of or wages, packaging incentive-based the higher to profit quarter our The million to and sales that despite levels. quarter XXXX increase inflationary quarter. including to for $XX.X same-store of income. SG&A impact a to XX.X%. Lower as first On as bonuses, gross freight incremental increases higher substantially was pretax expenses the offset $XX.X associated Our in

the As levels costs a of ability quarter. of margin XX% an despite combination SG&A majority earnings and leverage despite total To environment, on expense the with for our high to is record SG&A gross contributed our profit being reminder, related. selling to elevated headwinds the price our expenses sustain recap, of people record demand a approximately inflationary structure variable healthy

to outlook. our is confidence despite We and history. We under share. expenditures which a long-term also generating now million repurchases of typical quarter flow $XXX.XX working of million is seasonally converted second $XXX our authorization, increase our $XXX through $X our the cost highest first in I'll cash from quarterly outlook. our stockholders $XX.X remain the our amount record in and higher payment of $XX.X $XX.X earnings and quarter, returned average capital operations $XXX in cash million given We share which company billion into reflecting than to to by strategy million more dividends sales quarter first our capital, volumes. at per achieved million this share $XX.X million repurchase the through million, of in available turn the invested in Approximately an

We underlying continue expected of we demand to the about trends vast remain with in conditions continue the optimistic markets the in majority to solid current business serve. environment

to the sold the sold also quarter market we and we to we in to of thank share quarter X% we second flat of second pricing non-GAAP to closing, in our like for will per up by these expectations, on again will such, $X $X.XX mix per the to first we quarter flat the to selling the our concludes which XXXX product second once up of for average in Operator? into earnings XXXX all the products the the up end Based XXXX. for Further, estimate of And price sell. strength currently contributions you our would prepared these anticipate range In ton diluted diverse X% our the their remarks. this in like and As XXXX. open compared quarter the estimate fueled your quarter tons call of That be our of attention. time, to our for continued first we'd be questions. to majority at results. compared Reliance exceptional Thank colleagues to of

Operator

[Operator Instructions].

from Rosenfeld question BNP Seth Our is first with Paribas.

Seth Rosenfeld

the more in the give If I you obviously prepared the detail that's question and for facility sounds the line more CapEx us question a time the can like that a first, Texas of on driving hike. of and back great. on inventory remarks? bulk CapEx, on location kick On that off, management us semiconductor-related you new just majority come tell ramp can margins. about Can for It would bit CapEx, bit mentioned a the be capacity up, the or you

James Hoffman

Ohio, about you've a that opportunity that's reshoring that there's Yes, in long and business of been Arizona, business places heard them. just a on -- seems dollars obviously, type up an Seth. like to lot which of coming exciting in It great. Sure, located U.S., us. I'm and for time. And there's the through is period and read that lot missing some about the We've of in billions of from a of sure it of Texas that going everywhere back billions in probably I'm

got I of think long chain. a little that people supply tired

So we're finally about something it. doing

So that it to Texas. in decided put operation, we

can mentioned. Just states, we makes different -- all of reach so those sense as we I that more

with We're we're changed. the folks clean goes making those chambers do Remember, we Our the also that that making you. rooms and into chips, not and have okay? business what really plumbing vacuum hasn't the

to because that them, game up more good a may to and great period with business along They've opportunity us it legs it's our Karla has and us our a producers. those for we're of do just with than for because a of time. kind have us it's relationships So happy step asked of for long more...

Karla Lewis

little a there. operations more Seth, business, so the the Yes. about

stainless the So construction steel we've electric of prior plant. one and of maintenance going since of subsidiary ongoing polished a fittings They go the companies Corp. owned and lot that that do chip semiconductor and manufacturing into repair our tubing the Valex to public,

think opportunity. that's happening Since some China. globally. one time, where is had the have growth really of location. it's that That's we've But as see Jim our the expanded which Korea, said, positioned. was the very initial X. seen or great that reshoring we U.S. here, And in exciting decade the They location us Valex well California, another of a that company over operation lot now in to a here. see in back with to specific the last we for with growth lot So South our We've they've coming

of our biggest spend So increased chunk the there. that is

a building of to about Texas, serve forward really our putting closer facility it to are expanding even that looking excited and new customers there. we're So market to in some

Seth Rosenfeld

And right? just I be think, below considerably to I Did $XXX you million. the said that cash would $XXX million, outlay that that clarify, Karla, hear

Karla Lewis

Yes.

as since years lot continue to of seeing X to last opportunity So has happened in we're the a grow. the pandemic,

to people customers We Our of their more budget. we're extended to think the labor But some streamline with, us be seeing to including chain customers. issues shortages, opportunity us have we've trying equipment of able that the that dealing disruptions labor the capital, do of our more. for cost it's and bring with lot in lead operations, more to the times whether in for and a higher more been seen shortages, our to asking continued CapEx supply we're keep do

more now. lead our there's So used extended annual times, a outlays our closely But cash budgets. little disconnect of with to match these more a

into trailing XXXX. we cash additional what that anticipate of with the than lighter be comments the So budget put our in spend this will that's we some why is

Seth Rosenfeld

with inventory Great. and separate one margins. And to regards management question, please,

think It to costs bit especially near recent on give will on can cost, earlier in gross how profit you like the the as more color commented into some margin began sounds QX? replacement inventory quarter. I develop that began compression, earlier the You margins please? and strength a will in late margin quarter, should in you strength commented aid and to we sequentially? How stainless development, more earlier, in the with also carbon the steel the about aid aluminum think now products,

Karla Lewis

Seth, yes.

pressure So certain February. during the quarter, January, prices on products, there carbon steel for was

quickly that March. products Ukraine, beginning in saw With for pretty in crisis the of reverse the we those

some A seeing the where still catch-up, and substantially cost aluminum that to more they're high pressure So little we on very but of were quarter. now, pretty prices the stainless levels. continue but was at increase inventory during aluminum

will pricing, products continue depending bit happening little up So vary again. because the a want what's were then we we add? on increases it see on carbon and to that spread goes with anything that some during the of quarter Arthur, -- but up the again picked they to you

Arthur Ajemyan

Seth, just -- then Yes. near the margins sustainable FIFO out, of still reported Sure. our our end are high margins to the range. point

with really, that costs factor replacement just So a sustainable is cost essentially just this margin up and catching range. of maintaining

certainly, ahead, some -- In terms of looking nonferrous on there's momentum yes, products.

margins guidance So to somewhat quarter. gross second -- and our the slightly for profit implies consistent up

Operator

question comes next from Sachs. with Goldman Emily Our Chieng

Emily Chieng

question inflation good pressures to do concerned question cost at clip pricing maybe power, trend pass here? others, would some through that be you a ability to sounds on like your packaging. pretty quick a labor My you including diesel, of customers? there's these are Or pretty you're how have couple seeing. It particularly My just of headwinds, first to on the continues a relating been or higher

James Hoffman

it, little do we anybody -- It's mean these of do continue. we're right? model of geography product those takes we could right? anticipate and types we've more come effort When been If and issues I long to was just up, diversification to fine. Emily, time. and But our a and doing and things -- easy, and that's because Yes. it at so, to customers all it our that it part just a able things, function business,

come long our to They also be to to our They want sell They Reliance the us of business. looking we their the service. Reliance model, We lowest to -- ongoing come part due not come for majority they of they're a value-added Reliance -- for price. for capabilities. because customers, to

around the that. So we've our way modeled we company run

you're when the up, get way we they to. dealing customers, kind it right of goes with So us the price the performed just and they when want

and price right the we service the we provide the that products make So we way.

when nothing have So that? and to are it Karla, with. not do charging to that money. to anything comes add nonprofit There's wrong neither not business -- with we're We're you folks do to get for. the organization you we bashful a want making and

Karla Lewis

Yes.

been I on costs. successful accept. increasing passing input forward pricing and think to adjust years Jim based through. our we feel we what on the customers our have pretty the so our results levels we had it based have just now, expense But this the right and And with will we've costs, far the continuing over our model and confident

Arthur Ajemyan

And is thing the would with of smaller the only this sizes transactional the I business help situation. order and nature the Emily, add,

So...

James Hoffman

know has ask, fine but And retaining just one well company you. didn't there's I other really have getting people you in And our thing. difficult a talent. what done and it's -- really

and of proud things field -- it's I And from competitive to being at things out the attention they And a really the company. corporate. way folks safety and because the folks out like good really that. pay like of go for believe and we work I'm our think to in I So

retain talent. to able we're So

we off But they're methods got we've do do. to talent, a of new paying a of attracting have work Now new that lot lot whole to okay. and

customers. We do our have that. our continue and to it's us, to not suppliers is just It

in hard equipment in even it having do have that plants. to have plants our investment lot in can people. Our capital they a we better our do are customers getting And makes because expenditure, don't their getting look of or have because when -- they work and time you, time what people, we our a Reliance of

and continue something that's to focus of that So we'll something proud we're on. real

Emily Chieng

up helpful returns. around oil really That's color. My just capital full Great. is

seen or rate did from notice flow quarter, cash generation thinking half the the your in How the pace that year, of some Your of from And free had priority repurchases about buybacks has run away growth increased the the the we've spend be -- should of 'XX? still very of around but returns? the is second decreased during last throughout robust taking pace announcement we even year. capital

Arthur Ajemyan

Good question, Emily.

So able a it when necessarily don't we be or mean, to capital it a quarter all. to at story. the isn't to basis look necessarily have certainly, on quarterly or yes. to even we it And an capacity do comes tell going I year allocation, annual the over

For us, the a have say, it's for that. then overall longer-term little And more and over allocation a a look returns heard -- at income. of you XX% us when you've our up period Reliance, net is balanced. X-year period shareholder We of capital for somewhat made

the heard half. before, for for and with growth half about that accounting returns You've us say other

Just repurchases. to billion numbers some And dividends capital to a acquisitions. via expenditures on invested to put $X in stockholders we've to the X-year growth it our period, and over close to side, returned stock $X.X and kind of billion close

about So that's think it. we how

more term, quarter guide necessarily next buyback over and year. But capitalizing practice being opportunities. and it's long of patient don't activity on really the right is the So we opportunistic our the to about

Operator

Timna with Wolfe is Research. question next Our from Tanners

Timna Tanners

though pretty to it's not we some how up as aluminum, falling prices and sharply aluminum it think sharply sharply, to on up. quarter-over-quarter about wanted basis, -- and went because I a sorry, ton were the asking stainless per So LME that start for on help even have and stainless stainless modeling close came to down aluminum just out

helpful. per prices going with the we thinking them to of the be these revenue sustainable commodity? just Or like Just think on levels about Should think would any contracts? moving should about a about think there about trajectory your guidance being So ton because how forward. bit recent more we at the

Karla Lewis

us us on levels doesn't you aerospace products. internally. remember with, on necessarily help the Yes. you those because about And aluminum that from for a heat-treated comment heard the aluminum really there announced plate aluminum side, we for Timna, one And as LME and And way increases of I we're improved which it's model heard have activity think are think don't a large to is others, thing pricing. little I coming the some we selling portion always follow seen there. to you've tough But

products a supportive lot -- is of We those pricing. expect the year, of throughout which be to so tight

historically, there's stainless stainless prices been aluminum remain side, if the some LME little LME we're the months, look recently, on volatile don't even that. will than out been you think that products, always aluminum one than is some even a occur to The back recent nickel, for of it. our in the volatile more good on decades. trading still more seen -- steady to we But follow So there's ever that. it's think we've We portion settling prices though few is pressure but not a exposure. for other on up We that

at a But level the trying to keep that's there. Our cost tight a stainless quarter demand reasonable continuing job producers, we during volatility us. has strong and while, with for we feel out have done a good that the been the that of for managing product this through see and

see the currently at very given term near we're the although underlying sustainable do So that we high in strong demand. prices, being

Timna Tanners

wanted I general And inflation cost And ask towards keep nice pretty those on with that guess to In the of about it's costs helpful. we of SG&A commentary, or administrative. as a containment year? to is is and lid how pretty possible question sustain. rest it to That's it's see warehouse the the past, the delivery I all fell. actually your then Okay. gone the up. Quarter-over-quarter, it impressive look

Arthur Ajemyan

Timna. question, Good Yes.

et slowdown story, rate start. for certainly, the sequentially different that's you a packaging, when Wages, of we right? fuel saw So inflation that's cetera. First quarter,

majority folks for our of cycle the We vast company. have in a the annual

recognize we'll day, LIFO to if here FIFO basis, $XXX to Yet majority a up pick profits. Now I in you it our -- end at when is million. effectively to results XXXX, report incentive, think at and expense vast on important about XXXX, think the tied were the was one incentives story of that is the our of LIFO look you about

more in on So incentives $XXX income were pretax based XXXX million our profit. gross of really, and

consider hard QX to to why really year. it's factor important of and the QX that's when to an sequential that that's decline, kind pointing but XXXX, the into of I'm headed thinking kind playing to overall we're somewhat into story. That's from as SG&A about So see

-- So of look but packaging, delivery et supplies, driving plant year, this well, cetera, as at and year-over-year when costs, is mean wages you versus a yes, year-over-year factor. increase. inflation primarily playing the that's inflation I last year what's QX

Timna Tanners

Helpful. Okay.

could So energy working cost you're inflation it like But some to like factors, labor, have it other through or sounds from we other potentially. or factors? from contain seems creep see you some

Arthur Ajemyan

Yes.

think I -- of inflation in said, at somewhat I from sequentially, worth mean, saw see year Wages, wage any I like of a QX sequentially. have -- slowed I the an predominantly will down not But QX. think et the we quarter's that's like impact fair. full fuel, full saying cetera, didn't that decline I'm same. which increasing, cost, were The we packaging, of rate inflation. at rate of

Operator

[Operator Instructions] KeyBanc is from Our Capital with Phil Markets. Gibbs next question

Philip Gibbs

that. new semi just $X.XX that the confirm wanted that investment you was I The in to Texas basically, say on side, did -- billion? is

Karla Lewis

We did no. say not that,

James Hoffman

No.

Karla Lewis

budget. $XXX it big it less of of significantly that, was majority million a chunk but the said was the It's a than in incremental Phil, overall CapEx No. increase we the --

Philip Gibbs

didn't Okay. was I know I that what million. to. thought related $XXX I heard

Karla Lewis

we The estimated. $XXX cash outlay Phil, million, that was Sorry.

the times, extended will to So last cash some our spending -- approved quantify budget But budget. be year's spend were million. in for we'll think well our we now XXXX XXXX for budget that cash CapEx for what as budget we -- because year in lead tried in be, projects our which this $XXX as of we approved XXXX, the is

some of equipment estimated and things pushed be $XXX getting $XXX delays we then just million of cash the So our that CapEx. of for XXXX And long spend for in days. into because million there'll spend XXXX cash these in other to

Philip Gibbs

And this Okay. a stay investment or you of overseas, similar in it how the facility just meaningful a that is to and Texas, terms in is And that there footprint? to the does size compare then that facilities for California size minute, of have? more

James Hoffman

look wouldn't I at the really size.

deal, the to the size with the honest size that you're talking building the of big about If be building, you. of isn't a

the going a today the we're that state-of-the-art, really really it. of a run. but lot in run But activity on help to long more need the It's will be doing people way a ones. robotic-type in bigger We kind very is it, advanced have of lot going and of us it's to expensive, of technology

to bigger, So this going we've real into it's building, we're things the Family not and to building. good of it's the is It's the The well. size of well. But all Companies a our But proud be of -- going that throughout one. place. this built be go more equipment so elaborate facilities as much built size the

Karla Lewis

time to as over for during location period few a the California especially we'll will the be significant pretty strength ramp comparable announced it company to that. similar capacity and Korea in our be and as to to this that's support actually past increased both China Texas operations our an and expanded there compared the to U.S. the pretty in continuing South And individual But see this an for of long those demand we've have as and be so to here, current -- with both U.S. build we years, tapping able facility. operate

Philip Gibbs

Okay.

at sounds this in add guys it's it for you XX% So capacity like business? least a

Karla Lewis

on through it. hit you number Whatever

Philip Gibbs

in something box big a sequentially aerospace one of that you think terms ramp, to there place stood We'll year-over-year. way increase, that it think for out of Any said I in in The I commercial frame the that your now. the increase because the size pretty was and release? was

Karla Lewis

holes of that But 'XX, of saw actually Phil. didn't quarter we we remember quantify that fourth think we some on said Well, QX, that our at and starting if I seeing customers in quarter there's fourth inventory. continuing increased QX rates sporadically had it, happening. their part activity, We've in been in activity with into improved you build like And our come time.

So market customers now, more seeing that regularly our global the that's whole our in other we're affecting both and U.S. chain. in and buy the European And in here operations.

So seen. also are Backlogs that's the we've increasing. trend

improvement. be back this to to to we but levels to see that not steady pre-pandemic So continue year, with going we're we're think a progression going that

Operator

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

John Tumazos

quarter, to the hot-rolled then, sanctions. the after rebounded sheet fell and $XXX in course, Midwest Early features the wonderfully of almost

realizations, seem steel quarter. ever in Your rolled Which and something along to CRU that than the better price other suffer just decline understand we Midwest to your business features? first the watch should prices didn't or than

Karla Lewis

going we've And of of shipments actually John, the we were dollars, price coil, see mix carbon, quite saw that XX% we tubing wait thought really product those some hot-rolled of diversity we our with helps I asked We to they other shipment some been saw. they certainly But impacted had a think plate trying for for as is steel us think like were out did price and model and customers some our of And our that. time. in question the products. by we only They down. continue be said, impact. that's really, QX that declines to our might carbon an in on as about of declines So did lot our part that plate not of structural fall. We a but

reversed, prices March. bookings strong when saw we So really in

people. stainless that little a impact that, our we I because it We I carbon for But with HRC prefer don't with that color business an We around following aluminum from been our think pricing, reflective. just We the that's years. the price the for on us ask expectations. our and part because So of us see model not you've rest that's the of to people based mean, did pricing think business.

is there. base than assumptions our from might individual average looking that probably better probably in index to using and prices a follow at think as I bake that quarter-to-quarter selling your out any you

James Hoffman

spot to, the with indexes -- they're those the you trail, basically those John, actual referred indexes price. are that Yes.

to it said, business So willing know of attention do add far customers attention they're like as and pay literally pay to kind on we very We at for well. do -- what we them. value all. can that for as what Karla can our you Again, for our we don't pay what to

to from to it probably they buy what it with us. going time deliver truckloads Someone form not of they're plate sheet, it, and or the do in buy going is on that's going they're to to us. If want want they

at attention those, don't but price time. maybe to sure the will they're pay -- uses willing be I'm indexes We who they're those contract folks, So know. them. not the are But to don't much I pay whatever

Operator

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

Philip Gibbs

a That those assuming Texas second was to what exactly on new or fast. And whether impact, not assuming had have the question just or starting was Kentucky I crank in and you're are terms whether toll in quarter? contribute? guidance The but up to and processing -- not contributing you facilities the not in financial of that or the it's

James Hoffman

they're when lot don't type bit I we're okay? can build hoping -- they're on disappointed signed I -- of on They're quarter obviously, they but they mills, mean but we if those ramp types thing, It's we up. they're factoring to little Yes, the of and built So for always continue on, long to track control not But those they'll we partners go I'm well, what them, mills with of it they're as those a that difficult or a those run. second to sure going little X guys kind mills, are friends, over we're week-to-week in have they're not the not. do. up. But can go? I'm -- day-to-day, partner how a behind to bring to on quickly We're believe sure a

ramped ahead them. -- we'll I we're they're think So up, of up and when them. we're we're And I to going -- with ready know ramp

we'll ready, doing they're whenever our start thing. So

Karla Lewis

Yes. started I one mean, that earlier. Kentucky, In

location not our has ramped, been has the levels but big at positively are guidance. so to positive fully contributing, that it's So it -- those when not QX it that expect the in But mill been and our are we far. factors

with the factor to us both are many those not very quarter. while guidance operations, a individual second and company in the of important our it's Our size so big the for meaningful, and --

Philip Gibbs

a processing. Okay. then just And follow-up on toll

as choppy, a are volatility plays read, major a your been supplier everything upside a are Aluminum automotive to expectations of itself lot aluminum year signals, automotive, obviously And automotive? a seeing? excuse what You're like you else. lot lot -- and very me, downs, steel. what has both of the to of out mixed for and But tough

Karla Lewis

Yes.

But impact we platforms multiple well supply up opportunity that, we a They've also lot we whichever from it's need business So a with operations able probably But of done times support listened their certainly, of bit other it's to we there's from the with had seen of been lot their that nonautomotive locations issues. businesses, folks hear a lot impact quite -- they've business managing around just They're an their to pick there. to. We're think with that. say lines. some to folks. -- least the reacting they've there's our getting I we're other to We of time lot of been others. a is out or through little improve there Phil. they're the to visibility operating chain week-to-week to in continue think on what and still would what support move hearing to chips have those other their biggest thing in would It -- with customers. our from uncertainty a that and seems expect be of to we But better, a

Operator

over like time. back at remarks. no the I'd Jim closing are to further questions to There for floor Hoffman any this turn

James Hoffman

much very and today. you attention for Thank your Yes. time

of record gratitude see I most highest of Before we by all close to I'd your excellence, commitments colleagues out safety. inspired to throughout yet operational the Reliance like our Family to my importantly, another our call, for continuous my the Companies value to remain extend and improvement of core quarter. our contribution

Materials in & Goldman New York Conference be participating in Industrial in May. Sachs will We the

in to Reliance. early and Conference KeyBanc the there. all Thank Materials also We Basic in to Boston in see very you June. will much hope commitment be continued support of a lot for We participating your you

Operator

conference. This today's concludes

participation. lines your disconnect this you your Thank at may for You time.

Reliance Steel & Aluminum (RS) 30 Apr 222022 Q1 Earnings call transcript