Reliance Inc (RS) 2021 Q3 法說會逐字稿

Greetings, and welcome to the Reliance Steel & Aluminum Company Third Quarter 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Reliance Steel & Aluminium Company 2021 年第三季度收益電話會議。 （操作員說明）作為提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Madeleine Crane, Investor Relations. Thank you. You may begin.

現在我很高興向您介紹投資者關係部的主持人 Madeleine Crane。謝謝你。你可以開始了。

Thank you, operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's third quarter 2021 financial results. I'm joined by Jim Hoffman, CEO; Karla Lewis, President; and Arthur Ajemyan, Vice President and CFO.

謝謝你，接線員。早上好，感謝大家參加我們的電話會議，討論 Reliance 的 2021 年第三季度財務業績。首席執行官 Jim Hoffman 也加入了我的行列。卡拉·劉易斯，總裁；和副總裁兼首席財務官 Arthur Ajemyan。

A recording of this call will be posted on the Investors section of our website at investor.rsac.com. The press release and the information on this call may contain certain forward-looking statements, which are based on a number of assumptions that are subject to change and involve known and unknown risks, uncertainties or other factors, including the impacts of the COVID-19 pandemic and related economic conditions on our future operations, which may not be under the company's control and may cause the actual results performance or achievement of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements.

本次電話會議的錄音將發佈在我們網站investor.rsac.com 的投資者部分。新聞稿和本次電話會議的信息可能包含某些前瞻性陳述，這些陳述基於一些可能發生變化的假設，涉及已知和未知的風險、不確定性或其他因素，包括 COVID-19 的影響大流行和相關經濟狀況對我們未來運營的影響，可能不受公司控制，並可能導致公司的實際業績或成就與這些前瞻性陳述所暗示的業績、業績或其他預期存在重大差異。

These factors include, but are not limited to, those factors disclosed in the company's annual report on Form 10-K for the year ended December 31, 2020, under the caption Risk Factors, disclosures in our press release this morning, and other documents Reliance files or furnishes with the Securities and Exchange Commission.

這些因素包括但不限於公司在截至 2020 年 12 月 31 日止年度的 10-K 表格年度報告中披露的那些因素，標題為風險因素、我們今天上午新聞稿中的披露以及其他文件 Reliance向證券交易委員會提交文件或提供。

The press release and the information on this call speak only as of today's date, and the company disclaims any duty to update the information provided therein and herein.

新聞稿和本次電話會議上的信息僅在今天發表，公司不承擔更新其中和此處提供的信息的義務。

I will now turn the call over to Jim Hoffman, CEO of Reliance.

我現在將把電話轉給 Reliance 的首席執行官 Jim Hoffman。

Good morning, everyone, and thank you for joining us today to discuss our third quarter 2021 financial results. I will begin with a high-level overview of our third quarter performance and capital allocation priorities. Karla will then speak to our operating results and demand trends by end market. And Arthur will conclude with a review of our third quarter 2021 financials.

大家早上好，感謝您今天加入我們討論我們 2021 年第三季度的財務業績。我將從對我們第三季度業績和資本分配優先事項的高級概述開始。然後，卡拉將按終端市場介紹我們的經營業績和需求趨勢。 Arthur 將以回顧我們 2021 年第三季度的財務狀況結束。

I continue to be inspired by the outstanding operational performance by my colleagues throughout the Reliance family of companies. Our resilient business model favorable metals pricing trends and excellent execution combined to produce another quarter of record-setting financial results. Beyond execution of our business model, operational excellence includes our top priority of ensuring the health and safety of all of our Reliance colleagues, and I'd like to extend my gratitude to each and every one of them for their unwavering commitment to operating safely despite the many challenges that have persisted during the ongoing pandemic.

Reliance 旗下公司的同事們出色的運營業績一直激勵著我。我們有彈性的商業模式有利於金屬定價趨勢和出色的執行力，共同創造了另一個季度創紀錄的財務業績。除了執行我們的商業模式之外，卓越運營還包括確保我們所有 Reliance 同事的健康和安全的首要任務，我要感謝他們每一個人，儘管他們堅定不移地致力於安全運營在持續的大流行期間持續存在的許多挑戰。

I would especially like to recognize our teams that were directly impacted by Hurricane Ida last month. While Ida had a minimal impact on our operations, some of our colleagues were impacted personally. We're very happy that everyone is safe and that our employee-funded and company match program, Reliance Cares was available to support those who are impacted and in need of assistance. Reliance Cares is an inspirational example of how the Reliance family of companies come together and meaningfully take care of each other.

我特別想感謝我們上個月直接受到颶風艾達影響的團隊。雖然 Ida 對我們的運營影響很小，但我們的一些同事個人受到了影響。我們很高興每個人都安全，並且我們的員工資助和公司匹配計劃 Reliance Cares 能夠為那些受到影響和需要幫助的人提供支持。 Reliance Cares 是一個鼓舞人心的例子，說明了 Reliance 公司家族如何走到一起並有意義地互相照顧。

Turning to our results. The trends of strengthening metals pricing persisted through the third quarter, which featured multiple mill price increases, most notably for carbon and stainless steel products. The favorable pricing environment, along with fundamentally strong underlying demand in many of the key end markets we serve drove record quarterly net sales of $3.85 billion. In addition, strict pricing discipline by our managers in the field helped us generate a strong gross profit margin of 31.5%, which, when combined with our record sales, resulted in a record quarterly gross profit dollars of $1.21 billion in the third quarter of 2021.

轉向我們的結果。金屬價格走強的趨勢持續到第三季度，其中鋼廠價格出現多次上漲，尤其是碳鋼和不銹鋼產品。有利的定價環境，以及我們服務的許多主要終端市場基本強勁的潛在需求推動了創紀錄的季度淨銷售額 38.5 億美元。此外，我們在該領域的管理人員嚴格的定價紀律幫助我們實現了 31.5% 的強勁毛利率，再加上我們創紀錄的銷售額，在 2021 年第三季度創造了創紀錄的 12.1 億美元的季度毛利潤.

Despite various supply disruptions and continued increases in metals pricing that drove LIFO expenses of $262.5 million in the third quarter, our record quarterly net sales, along with record gross profit dollars and our continued focus on expense control led to the third consecutive quarter of record quarterly pretax income of $532.6 million. As a result, our earnings per diluted share of $6.15 were also a record, representing an increase of 21.1% from our record EPS achieved in the prior quarter and substantially exceeded both our guidance and analyst consensus.

儘管各種供應中斷和金屬定價持續上漲導致第三季度 LIFO 費用達到 2.625 億美元，但我們創紀錄的季度淨銷售額、創紀錄的毛利潤美元以及我們對費用控制的持續關注導致連續第三個季度創紀錄的季度稅前收入 5.326 億美元。因此，我們每股攤薄收益 6.15 美元也創歷史新高，比上一季度創紀錄的每股收益增長了 21.1%，大大超出了我們的指引和分析師的共識。

We attribute this performance to our highly resilient business model, which is strategically designed to perform throughout changing macroeconomic circumstances. First, we are highly diversified by end markets, products and geographies. Second, our decentralized structure leaves the decision-making and resources close to the end customers. We rely on our managers in the field to appropriately price the value of the products and services we provide, which is particularly important in times of tight metal supply and volatile pricing.

我們將這種表現歸功於我們高度彈性的商業模式，該模式旨在在不斷變化的宏觀經濟環境中發揮作用。首先，我們在終端市場、產品和地域方面高度多樣化。其次，我們分散的結構使決策和資源接近最終客戶。我們依靠我們在該領域的經理對我們提供的產品和服務的價值進行適當定價，這在金屬供應緊張和價格波動的時期尤為重要。

In this localized and entrepreneurial environment, our focus on small order sizes with quick turnaround has also proven particularly effective. Further, our ability to purchase inventory in the spot market through our longstanding, strong relationships with our domestic mills coupled with our unique ability to cross-sell inventory among the family of companies allows us to source the metal we need despite tight supply. We were pleased our inventory turn rate for the third quarter came in just below our company-wide goal, which indicates that our inventory is properly balanced with current demand levels as we continue to secure the raw materials we need to meet customer demand.

在這種本地化和創業環境中，我們專注於小訂單和快速周轉也被證明特別有效。此外，我們通過與國內鋼廠長期牢固的關係在現貨市場購買庫存的能力，加上我們在公司家族之間交叉銷售庫存的獨特能力，使我們能夠在供應緊張的情況下採購我們需要的金屬。我們很高興第三季度的庫存周轉率略低於我們公司範圍的目標，這表明我們的庫存與當前需求水平適當平衡，因為我們繼續確保滿足客戶需求所需的原材料。

Third, our significant investment in organic growth and innovative technology has significantly expanded our value-added processing capabilities, empowering us to focus on higher quality high-margin business and enabling us to increase our estimated sustainable gross profit margin range. To expand on that last point, I'd like to emphasize that the strong cash flow generation our model provides fuels our flexible and dynamic capital allocation strategy that supports concurrent investments in growth and stockholder return activities.

第三，我們對有機增長和創新技術的重大投資顯著擴大了我們的增值處理能力，使我們能夠專注於更高質量的高利潤率業務，並使我們能夠提高我們估計的可持續毛利率範圍。為了擴展最後一點，我想強調的是，我們的模型提供的強大現金流生成為我們靈活和動態的資本分配策略提供了動力，該策略支持同時投資於增長和股東回報活動。

We believe that it is our resilient business model and our execution of our capital allocation strategy that sets Reliance apart. We estimate that approximately half of our $310 million capital expenditure budget this year will be directed towards new, innovative, value-added processing equipment, along with enhancements to existing equipment to strengthen our value proposition and overall service offerings. As I highlighted earlier, these investments helped support our increased sustainable gross profit margin range as they provide our managers in the field the ability to offer additional value to our customers. As discussed last quarter, our 2021 capital expenditures will also be focused on opening new facilities as well as expanding, upgrading and maintaining existing operations, including renewable energy investments at many of our facilities.

我們相信，使 Reliance 與眾不同的是我們富有彈性的商業模式和我們對資本配置戰略的執行。我們估計，今年我們 3.1 億美元的資本支出預算中約有一半將用於新的、創新的、增值加工設備，以及對現有設備的改進，以加強我們的價值主張和整體服務產品。正如我之前強調的那樣，這些投資有助於支持我們增加可持續的毛利率範圍，因為它們使我們在該領域的經理能夠為我們的客戶提供額外的價值。正如上個季度所討論的，我們 2021 年的資本支出也將集中在開設新設施以及擴展、升級和維護現有業務，包括我們許多設施的可再生能源投資。

As our focus on growing the company is two-pronged, we also remain highly focused on M&A. On October 1st, we completed our acquisition of Merfish United, a leading master distributor of tubular building products in the U.S. The company is based in Massachusetts and services 47 states through 12 strategically located distribution centers. The Merfish acquisition aligns with our strategy of acquiring immediately accretive companies with strong management teams and significant customer, product and geographical diversification.

由於我們對公司發展的關注是雙管齊下的，因此我們也仍然高度關注併購。 10 月 1 日，我們完成了對 Merfish United 的收購，後者是美國領先的管狀建築產品總經銷商。該公司總部位於馬薩諸塞州，通過 12 個戰略位置的配送中心為 47 個州提供服務。收購 Merfish 符合我們收購具有強大管理團隊和顯著客戶、產品和地域多元化的即時增值公司的戰略。

The Merfish transaction is a bit unique, in that Merfish is not a traditional metal service center and yet the transaction is one of the larger acquisitions that we have completed in our history, as Merfish had approximately $600 million in annual net sales in the 12-month period ending September 30, 2021. However, Merfish's broad product offerings expands Reliance's exposure into copper and plastic products among others, which Merfish sells to wholesale distribution customers in adjacent end markets in the commercial, residential, municipal and industrial building spaces. We expect Merfish will help position Reliance in the broader industrial distribution space as well as provide a platform for further growth in this area, both organically and through further acquisitions.

Merfish 的交易有點獨特，因為 Merfish 不是傳統的金屬服務中心，但該交易是我們歷史上完成的規模較大的收購之一，因為 Merfish 在 12-12 年的年淨銷售額約為 6 億美元。月期間截至 2021 年 9 月 30 日。然而，Merfish 廣泛的產品供應擴大了 Reliance 在銅和塑料產品等領域的業務，Merfish 將這些產品銷售給商業、住宅、市政和工業建築空間中相鄰終端市場的批發分銷客戶。我們預計 Merfish 將有助於將 Reliance 定位在更廣泛的工業分銷領域，並為該領域的進一步增長提供平台，無論是有機的還是通過進一步的收購。

During the third quarter of 2021, we also returned $174.7 million to our stockholders through the payment of $43.7 million in dividends and the repurchase of $131 million of Reliance common stock at an average cost of $147.89 per share. In the last 5 years, Reliance repurchased 11.7 million shares of our common stock at an average cost of $89.92 per share for a total of $1.05 billion. We are extremely pleased to have the capital and the flexibility to simultaneously focus on both growth and stockholder returns and expect to maintain our dynamic approach moving forward, remain prudent allocator of capital.

在 2021 年第三季度，我們還通過支付 4370 萬美元的股息和以每股 147.89 美元的平均成本回購 1.31 億美元的 Reliance 普通股，向股東返還了 1.747 億美元。在過去 5 年中，Reliance 以每股 89.92 美元的平均成本回購了 1170 萬股普通股，總計 10.5 億美元。我們非常高興擁有同時關注增長和股東回報的資本和靈活性，並期望保持我們的動態方法向前發展，保持審慎的資本分配。

Before I conclude, I'd like to announce that Reliance will be relocating our corporate headquarters from Los Angeles, California to Scottsdale, Arizona in the first half of 2022. The Scottsdale office will serve as Reliance's new principal executive office and the company's senior corporate officers will have offices there. Reliance is a Delaware corporation operating through approximately 300 divisions and subsidiary locations in 40 states and 13 countries outside of the United States, and the relocation of Reliance's principal executive office to Scottsdale reflects our growth and expansion as well as our evaluation of post-pandemic business opportunities and related operating practicalities. We will, however, maintain a presence in Los Angeles with revamped and innovative office offerings that reflect and complement the redefined post-COVID workplace and meet the needs of our corporate and administrative colleagues who remain in California.

在結束之前，我想宣布 Reliance 將於 2022 年上半年將我們的公司總部從加利福尼亞州洛杉磯遷至亞利桑那州斯科茨代爾。斯科茨代爾辦事處將作為 Reliance 的新首席執行辦公室和公司的高級公司官員將在那裡設有辦公室。 Reliance 是一家特拉華州公司，在美國以外的 40 個州和 13 個國家/地區設有約 300 個部門和子公司，Reliance 的主要執行辦公室遷至斯科茨代爾反映了我們的增長和擴張以及我們對大流行後業務的評估機會和相關的運營實踐。但是，我們將通過改進和創新的辦公產品在洛杉磯保持存在，以反映和補充重新定義的後 COVID 工作場所，並滿足留在加利福尼亞的公司和行政同事的需求。

In addition, I'd like to extend a warm welcome to our 2 new independent Board members, Dave Seeger and Frank Dellaquila. Dave has been a strategic and valued partner to Reliance for more than 30 years for his involvement in the metals industry, and Frank is a seasoned and respected public company senior executive and Chief Financial Officer. We look forward to benefiting from both of their unique perspectives, experience and expertise. With the addition of Dave and Frank, Reliance's Board consists of 12 members, 10 of whom are independent.

此外，我要熱烈歡迎我們的 2 位新的獨立董事會成員 Dave Seeger 和 Frank Dellaquila。 30 多年來，Dave 一直是 Reliance 的重要戰略合作夥伴，因為他參與了金屬行業，而 Frank 是一位經驗豐富且受人尊敬的上市公司高級管理人員和首席財務官。我們期待從他們獨特的視角、經驗和專業知識中受益。隨著 Dave 和 Frank 的加入，Reliance 的董事會由 12 名成員組成，其中 10 名是獨立的。

In summary, I am once again highly pleased to share our record-setting third quarter financial results and commend all of my colleagues for their hard work and unwavering focus during the quarter. despite the challenges of the ongoing pandemic, supply chain disruptions and tight labor markets and limited metal availability, we sustained our efforts to ensure that we continued to provide value customers with the products they need, often in 24 hours or less.

總之，我再次非常高興地分享我們創紀錄的第三季度財務業績，並讚揚我所有同事在本季度的辛勤工作和堅定不移的專注。儘管面臨持續的大流行、供應鏈中斷和勞動力市場緊張以及金屬供應有限的挑戰，我們仍繼續努力確保我們繼續為有價值的客戶提供他們需要的產品，通常在 24 小時或更短的時間內。

At the same time, we also continued to successfully execute our growth strategy while generating strong earnings and returning value to our stockholders. As we look ahead, we look forward to remaining a key contributor to the value chain through the ongoing support of our colleagues, customers, suppliers and communities and remain confident that America is going to need Reliance to rebuild.

與此同時，我們還繼續成功地執行我們的增長戰略，同時為我們的股東創造強勁的收益和回報價值。展望未來，我們期待通過我們的同事、客戶、供應商和社區的持續支持，繼續成為價值鏈的關鍵貢獻者，並對美國需要 Reliance 進行重建充滿信心。

Thank you for your time and attention today. I will now turn the call over to Karla to review our operating results and demand trends. Karla?

感謝您今天的時間和關注。我現在將把電話轉給 Karla，以審查我們的經營業績和需求趨勢。卡拉?

Thanks, Jim, and good morning, everyone. I would like to begin by extending my heartfelt thanks to all of my colleagues within the Reliance family of companies for delivering another consecutive quarter of record performance. I'd also like to thank our suppliers for their continued support as well as our customers for their ongoing loyalty and trust in Reliance through these extraordinary times.

謝謝，吉姆，大家早上好。首先，我要衷心感謝 Reliance 公司家族的所有同事，感謝他們連續一個季度創造了創紀錄的業績。我還要感謝我們的供應商的持續支持以及我們的客戶在這些特殊時期對 Reliance 的持續忠誠和信任。

I'll now turn to our third quarter operational performance. Once again, we believe that underlying demand was stronger than our third quarter 2021 shipment levels reflect. Our tons sold decreased 4.6% and from the second quarter, which was below our guidance of down 1% to up 1%, mainly due to more typical seasonality than we had anticipated combined with various supply chain issues. Reliance, our customers and our suppliers all continue to experience supply disruptions, including limited metal availability, coupled with labor shortages that temporarily slowed demand for metal in the third quarter, and we believe Reliance is well positioned to satisfy the pent-up demand in future periods.

我現在將轉向我們第三季度的運營業績。再一次，我們認為潛在需求強於我們反映的 2021 年第三季度出貨量水平。我們的銷售噸數從第二季度下降了 4.6%，低於我們預期的下降 1% 至上升 1% 的預期，這主要是由於比我們預期的更典型的季節性以及各種供應鏈問題。 Reliance、我們的客戶和供應商都繼續經歷供應中斷，包括有限的金屬供應，加上勞動力短缺導致第三季度金屬需求暫時放緩，我們相信 Reliance 有能力滿足未來被壓抑的需求期間。

While disruptive from a demand standpoint, limited metal availability in the market helped support ongoing metal price escalation during the third quarter for many of the products we sell most notably carbon and stainless steel products. Our average selling price per tons sold in the third quarter reached another all-time high of $2,862, an increase of 18.4% compared to the second quarter of 2021 and significantly in excess of our guidance of up 7% to 9%.

雖然從需求的角度來看具有破壞性，但市場上有限的金屬供應量有助於支撐第三季度我們銷售的許多產品（尤其是碳和不銹鋼產品）的持續金屬價格上漲。我們在第三季度的每噸平均售價再創歷史新高，達到 2,862 美元，與 2021 年第二季度相比增長 18.4%，大大超過我們 7% 至 9% 的指引。

There is speculation that certain carbon steel products, namely flat rolled, may be at or near their peak. I would like to remind you that only 11% of our sales are from hot-rolled coil and sheet. We continue to see strong pricing for many of the other carbon steel products. Stainless pricing remains very strong, and we are also seeing increased pricing for aluminum products. Our product diversity reduces pricing volatility on our earnings, and we expect continued strong average selling prices at Reliance into 2022.

有人猜測某些碳鋼產品，即扁平軋材，可能正處於或接近其峰值。我想提醒您，我們只有 11% 的銷售額來自熱軋捲板和薄板。我們繼續看到許多其他碳鋼產品的強勁定價。不銹鋼價格仍然非常強勁，我們也看到鋁產品價格上漲。我們的產品多樣性降低了我們收益的定價波動性，我們預計 Reliance 的平均售價將持續強勁到 2022 年。

The favorable pricing environment, coupled with outstanding execution by our managers in the field, contributed to record quarterly gross profit dollars of $1.21 billion in the third quarter of 2021 and a strong gross profit margin of 31.5%. On a FIFO basis, which we believe better reflects our current operating performance, we achieved a record gross profit margin of 38.3% marking our third consecutive quarter of record FIFO gross profit margin.

有利的定價環境，加上我們在該領域的管理人員的出色執行，促成了 2021 年第三季度創紀錄的 12.1 億美元的季度毛利潤和 31.5% 的強勁毛利率。在先進先出的基礎上，我們認為這更好地反映了我們當前的經營業績，我們實現了創紀錄的 38.3% 的毛利率，標誌著我們連續第三個季度創紀錄的先進先出毛利率。

We applaud our managers in the field for their unwavering effort, relentless focus on high-quality, high-margin business and effective implementation of price increases at the time of no announcement, which enabled us to capture an incremental margin benefit in excess of already strong levels, and further supporting these efforts, with the enhanced cooperation across our family of companies to ensure we meet our valued customers' needs as well as selectively servicing new business opportunities.

我們讚揚我們在該領域的經理們堅定不移的努力，堅持不懈地專注於高質量、高利潤的業務以及在未發佈公告時有效實施價格上漲，這使我們能夠獲得超過已經強勁的增量利潤收益水平，並進一步支持這些努力，加強我們公司家族之間的合作，以確保我們滿足我們尊貴客戶的需求，並有選擇地為新的商業機會提供服務。

I'll now turn to a high-level overview of our key end market trends on a sequential quarter basis. Demand for nonresidential construction, which includes infrastructure and is the largest end market we serve, remained at solid levels. Our third quarter tons sold were down slightly compared to second quarter shipments, but remain near pre-pandemic levels. We continued to experience solid quoting activity for projects in the areas of distribution and fulfillment centers, data processing and manufacturing facilities as well as utility infrastructure. Due to supply constraints and increased pricing, we also continue to see an uptick in smaller projects that can be completed quickly.

現在，我將按季度對我們的主要終端市場趨勢進行高級概述。包括基礎設施在內的非住宅建築需求是我們服務的最大終端市場，需求保持穩定。與第二季度的出貨量相比，我們第三季度的銷量略有下降，但仍接近大流行前的水平。我們繼續在分銷和履行中心、數據處理和製造設施以及公用事業基礎設施領域的項目中經歷可靠的報價活動。由於供應限制和價格上漲，我們還看到可以快速完成的小型項目繼續增加。

Given our healthy backlog, solid quoting activity, positive customer sentiment and favorable key industry indicators, we are optimistic nonresidential construction demand will continue to steadily improve through the remainder of 2021 and into 2022. Demand for the toll processing services Reliance provides to the automotive market fell slightly from second quarter levels due to normal seasonality as well as temporary shutdowns at certain automotive manufacturers due to the semiconductor chip shortage.

鑑於我們健康的積壓、穩健的報價活動、積極的客戶情緒和有利的關鍵行業指標，我們樂觀地認為，到 2021 年剩餘時間和 2022 年，非住宅建築需求將繼續穩步改善。對 Reliance 向汽車市場提供的收費處理服務的需求由於正常的季節性以及由於半導體芯片短缺導致某些汽車製造商暫時關閉，因此較第二季度的水平略有下降。

Our recent investments, which include purchasing a new facility in Michigan and opening a new tolling facility in Indiana as well as our other greenfield tolling expansions in Kentucky and Texas have allowed us to perform well despite challenging market conditions by increasing our capacity to support our customers' increased transportation and storage needs. We are optimistic that underlying automotive demand is solid and will recover in 2022 as the impact of global microchip shortages on production levels in certain markets subside.

我們最近的投資，包括在密歇根州購買一個新設施，在印第安納州開設一個新的收費設施，以及我們在肯塔基州和德克薩斯州的其他新建收費站擴建項目，通過提高我們為客戶提供支持的能力，儘管市場條件充滿挑戰，但我們仍能保持良好表現' 增加運輸和儲存需求。我們樂觀地認為，隨著全球微芯片短缺對某些市場生產水平的影響消退，潛在的汽車需求將在 2022 年復蘇。

Longer term, we are confident our toll processing business will remain strong, given the significant level of investments we are continuing to make to support our growth and innovation in this area. We continue to see new opportunities to expand our tolling presence for automotive, appliance, packaging and other end markets, some of which are already underway and will benefit us in 2022 and beyond.

從長遠來看，鑑於我們將繼續進行大量投資以支持我們在該領域的增長和創新，我們相信我們的收費處理業務將保持強勁。我們繼續看到新的機會來擴大我們在汽車、電器、包裝和其他終端市場的收費業務，其中一些已經在進行中，並將在 2022 年及以後使我們受益。

Demand in heavy industry for both agricultural and construction equipment declined during the third quarter following exceptional growth during the second quarter from a combination of seasonal shutdowns at many customers, along with broad customer supply chain challenges and labor constraints. That said, third quarter shipments remained above pre-pandemic levels, and underlying demand remains strong, and we expect demand from the heavy equipment and manufacturing industry to be delayed, not lost, and improve in the quarters to come.

由於許多客戶的季節性停工以及廣泛的客戶供應鏈挑戰和勞動力限制，在第二季度出現異常增長後，第三季度重工業對農業和建築設備的需求出現下降。儘管如此，第三季度的出貨量仍高於疫情前的水平，潛在需求依然強勁，我們預計重型設備和製造業的需求將在未來幾個季度有所延遲，而不是丟失，並有所改善。

Semiconductor demand during the third quarter remained strong. While our third quarter shipments were somewhat impacted by global supply chain issues, the semiconductor space remains one of our strongest end markets in 2021, and we expect this trend to continue well into 2022. With regard to aerospace, demand in commercial aerospace, which is roughly half of our aerospace exposure, was impacted by normal seasonal factors in the third quarter. Looking ahead, we expect demand in commercial aerospace to slowly improve throughout 2022 as build rates increase and excess inventory in the supply chain continues to decline.

第三季度的半導體需求依然強勁。雖然我們第三季度的出貨量在一定程度上受到全球供應鏈問題的影響，但半導體領域仍然是我們在 2021 年最強勁的終端市場之一，我們預計這一趨勢將持續到 2022 年。我們大約一半的航空航天業務受到第三季度正常季節性因素的影響。展望未來，我們預計隨著建造率的提高和供應鏈中的過剩庫存繼續下降，整個 2022 年商業航空航天的需求將緩慢改善。

Demand in the military, defense and space portions of our aerospace business remains solid with strong backlogs and exceeded our pre-pandemic shipment levels. We anticipate strong demand in the noncommercial aerospace market will continue into 2022. Finally, demand in the energy sector, which we define as mainly oil and natural gas, continue to slowly improve, supported by higher oil and natural gas prices. Looking ahead, we anticipate that increasing rig counts along with customer inventory replenishments will result in a modest improvement in demand levels into 2022.

我們航空業務的軍事、國防和太空部分的需求保持穩定，積壓量很大，超過了我們大流行前的出貨水平。我們預計非商業航空市場的強勁需求將持續到 2022 年。最後，在石油和天然氣價格上漲的支持下，我們定義為主要是石油和天然氣的能源行業的需求將繼續緩慢改善。展望未來，我們預計鑽機數量的增加以及客戶庫存的補充將導致到 2022 年的需求水平略有改善。

In summary, the first 3 quarters of 2021 were distinguished by consecutive quarters of record financial performance. And today, early in the fourth quarter of 2021, we see a positive landscape heading into 2022 with strong and improving underlying demand in most of the markets we serve, continued elevated metal pricing even if certain products may begin to decline and the best team in the industry. Our proven, resilient and opportunistic business model, along with our diversity, scale and solid long-term relationships with our suppliers and our customers have set us apart in dynamic markets before and positions us once again to optimize our performance and deliver strong results.

總之，2021 年前三個季度的特點是連續幾個季度的財務業績創紀錄。今天，在 2021 年第四季度初，我們看到進入 2022 年的積極形勢，我們服務的大多數市場的潛在需求強勁且不斷改善，即使某些產品可能開始下跌，金屬價格也會持續上漲，並且最好的團隊行業。我們經過驗證的、有彈性和機會主義的商業模式，以及我們與供應商和客戶的多樣性、規模和穩固的長期關係，使我們在充滿活力的市場中脫穎而出，並再次使我們能夠優化我們的績效並取得強勁的業績。

I'll now turn the call over to Arthur, who will review our financial results. Thank you.

我現在將把電話轉給亞瑟，他將審查我們的財務業績。謝謝你。

Thanks, Karla. Good morning, everyone, and thank you for joining us. I'll start with our sales trends. Favorable metals pricing fueled by limited availability and solid demand trends in the vast majority of key end markets we serve resulted in record quarterly sales of $3.85 billion, up 12.5% from the second quarter of 2021 and up 84.5% from the third quarter of 2020. Strong pricing momentum contributed to the 18.4% increase in our average selling price per tons sold over the second quarter of 2021. In comparison to the same period of the prior year, our average selling price per tons sold was up 77.9% due to increases in metal prices, but the vast majority of the products we sell, notably carbon and stainless steel products.

謝謝，卡拉。大家早上好，感謝您加入我們。我將從我們的銷售趨勢開始。在我們服務的絕大多數主要終端市場，有限的供應和強勁的需求趨勢推動了有利的金屬定價，導致季度銷售額達到創紀錄的 38.5 億美元，比 2021 年第二季度增長 12.5%，比 2020 年第三季度增長 84.5%。強勁的定價勢頭促使我們在 2021 年第二季度的每噸平均售價上漲了 18.4%。與去年同期相比，我們每噸的平均售價上漲了 77.9%，原因是金屬價格，但我們銷售的絕大多數產品，尤其是碳和不銹鋼產品。

As Karla noted, Reliance has limited exposure to the more volatile and lower-margin hot-rolled coil and sheet products that made up only about 11% of our third quarter sales. While benchmark pricing for hot-rolled coil products was up over 275% from the third quarter of 2020, Reliance's average selling price per tons sold for the same period was up 77.9%. This level of broad product diversification along with strong pricing discipline and significant investments in value-added processing capabilities have been instrumental in our ability to maintain both stable and industry-leading gross profit margins in both rising and falling price environment. These factors collectively resulted in record quarterly gross profit of $1.21 billion and a strong gross profit margin of 31.5% in the third quarter of 2021 despite including a significant LIFO charge.

正如 Karla 所指出的，Reliance 對波動性更大、利潤率更低的熱軋卷材和板材產品的敞口有限，這些產品僅占我們第三季度銷售額的 11% 左右。雖然熱軋卷材產品的基準價格較 2020 年第三季度上漲了 275% 以上，但 Reliance 同期的每噸平均售價上漲了 77.9%。這種廣泛的產品多樣化水平以及強大的定價紀律和對增值加工能力的大量投資，有助於我們在價格上漲和下跌的環境中保持穩定和行業領先的毛利率。這些因素共同導致了 2021 年第三季度創紀錄的 12.1 億美元的季度毛利潤和 31.5% 的強勁毛利率，儘管其中包括大量的 LIFO 費用。

Our non-GAAP FIFO gross profit margin of 38.3% in the third quarter of 2021 was a record and exceeded the prior quarter by 80 basis points and the prior year period by 650 basis points. Please refer to our earnings release where we provide a reconciliation of LIFO to non-GAAP FIFO gross profit margin for each reported period. We incurred LIFO expense of $262.5 million in the third quarter of 2021 compared to $200 million in the second quarter of 2021. LIFO expense in effect reflects our cost of sales at current replacement costs and removes inventory gains from our results in an environment of rising metal costs and conversely, removes inventory losses from our results in times of declining metal costs.

我們在 2021 年第三季度的非 GAAP FIFO 毛利率為 38.3%，創歷史新高，比上一季度高出 80 個基點，比上年同期高出 650 個基點。請參閱我們的收益發布，其中我們提供了每個報告期間的 LIFO 與非 GAAP FIFO 毛利率的對賬。與 2021 年第二季度的 2 億美元相比，我們在 2021 年第三季度發生了 2.625 億美元的 LIFO 費用。實際上，後進先出法費用反映了我們以當前重置成本計算的銷售成本，並在金屬上漲的環境中從我們的業績中消除了庫存收益成本，相反，在金屬成本下降時從我們的結果中消除庫存損失。

Our guidance for Q3 2021 assumed LIFO expense of $150 million based on our $600 million annual estimate. As a result of higher-than-anticipated costs for certain carbon and stainless steel products in the third quarter of 2021. We revised our 2021 annual LIFO expense estimate from $600 million to $750 million. Accordingly, we had to true up our third quarter 2021 LIFO expense by incurring an incremental charge of $112.5 million, which increased our total third quarter LIFO expense to $262.5 million. Based on our revised annual LIFO expense estimate, we now project LIFO expense for the fourth quarter of 2021 to be $187.5 million or $2.21 per share and $750 million or $8.73 per share for the full year.

根據我們 6 億美元的年度估計，我們對 2021 年第三季度的指導假設 LIFO 費用為 1.5 億美元。由於 2021 年第三季度某些碳鋼和不銹鋼產品的成本高於預期。我們將 2021 年的年度 LIFO 費用估計從 6 億美元修改為 7.5 億美元。因此，我們必須通過增加 1.125 億美元的費用來彌補 2021 年第三季度的 LIFO 費用，這將我們第三季度的 LIFO 總費用增加到 2.625 億美元。根據我們修訂後的年度 LIFO 費用估計，我們現在預計 2021 年第四季度的 LIFO 費用為 1.875 億美元或每股 2.21 美元，全年為 7.5 億美元或每股 8.73 美元。

As in prior years, we will true up to our actual annual LIFO expense calculation based on our on-hand inventory cost at the end of the year. As of today, the LIFO reserve on our balance sheet at the end of this year is expected to be $865.6 million based on our revised $750 million annual LIFO expense estimate. This provides $865.6 million available to benefit future period operating results, significantly mitigating the impact of declining metal prices on our gross profit and pretax income.

與往年一樣，我們將根據年底的現有庫存成本計算實際的年度 LIFO 費用。截至今天，根據我們修訂後的 7.5 億美元的年度 LIFO 費用估計，今年年底我們資產負債表上的 LIFO 儲備預計為 8.656 億美元。這提供了 8.656 億美元，可用於未來期間的經營業績，顯著減輕金屬價格下跌對我們的毛利潤和稅前收入的影響。

Now turning to our expenses. Our third quarter SG&A expense increased $43.5 million or 7.7% compared to the second quarter of 2021, and increased $157.6 million or 35.1% compared to the prior year period. The bulk of the sequential and prior quarter increases were attributable to higher incentive-based compensation resulting from our record gross profit and pretax income levels. Additionally, inflation continued to contribute to increased variable expenses, most notably for fuel and freight as well as packaging costs. Overall, our headcount increased slightly compared to both the second quarter of 2021 and the third quarter of 2020, but is nonetheless down approximately 11% from pre-pandemic levels at the end of the third quarter of 2019. As a reminder, approximately 65% of our total SG&A costs are people related.

現在轉向我們的開支。與 2021 年第二季度相比，我們第三季度的 SG&A 費用增加了 4350 萬美元或 7.7%，與去年同期相比增加了 1.576 億美元或 35.1%。連續和上一季度增長的大部分歸因於我們創紀錄的毛利潤和稅前收入水平導致的基於激勵的薪酬增加。此外，通貨膨脹繼續導致可變費用增加，尤其是燃料和運費以及包裝成本。總體而言，與 2021 年第二季度和 2020 年第三季度相比，我們的員工人數略有增加，但仍比 2019 年第三季度末的大流行前水平下降了約 11%。提醒一下，約 65%我們總的 SG&A 成本與人有關。

Our pretax income of $532.6 million in the third quarter of 2021 was the highest in our company's history. Our pretax income margin of 13.8% was also a record. Our effective income tax rate for the third quarter of 2021 was 25.5%, up from 22.6% in the third quarter of 2020, mainly due to higher profitability. We currently anticipate an effective income tax rate of 25.5% for the full year 2021. We generated record quarterly earnings per share of $6.15 in the third quarter of 2021 compared to $5.08 in the second quarter of 2021 and $1.51 in the third quarter of 2020. It's worth emphasizing again that our third quarter 2021 results were impacted by LIFO expense of $3.06 per share.

我們在 2021 年第三季度的稅前收入為 5.326 億美元，是我們公司歷史上最高的。我們 13.8% 的稅前利潤率也創歷史新高。我們 2021 年第三季度的有效所得稅率為 25.5%，高於 2020 年第三季度的 22.6%，主要是由於更高的盈利能力。我們目前預計 2021 年全年的有效所得稅率為 25.5%。我們在 2021 年第三季度創造了創紀錄的季度每股收益 6.15 美元，而 2021 年第二季度為 5.08 美元，2020 年第三季度為 1.51 美元。值得再次強調的是，我們 2021 年第三季度的業績受到每股 3.06 美元的 LIFO 費用的影響。

Turning now to our balance sheet and cash flow. Despite significantly higher working capital needs attributable to ongoing rising metal costs, our operations continue to fuel our cash flow. Our third quarter cash flow from operations was $142.2 million after servicing over $325 million in additional working capital requirements. As of September 30, 2021, our total debt outstanding was $1.66 billion with a net debt-to-EBITDA multiple of 0.6x. We had no borrowings outstanding on our $1.5 billion revolving credit facility and had $638.4 million of cash on hand, providing us with ample liquidity to continue executing on all areas of our capital allocation strategy, including funding our acquisition of Merfish United on October 1 and our record 2021 CapEx budget.

現在轉向我們的資產負債表和現金流。儘管由於金屬成本持續上漲導致營運資金需求顯著增加，但我們的運營繼續推動我們的現金流。在滿足超過 3.25 億美元的額外營運資金需求後，我們第三季度的運營現金流為 1.422 億美元。截至 2021 年 9 月 30 日，我們的未償債務總額為 16.6 億美元，淨債務與 EBITDA 的倍數為 0.6 倍。我們 15 億美元的循環信貸額度沒有未償還的借款，手頭有 6.384 億美元的現金，為我們提供充足的流動性來繼續執行我們的資本分配戰略的所有領域，包括為我們在 10 月 1 日收購 Merfish United 和我們的記錄 2021 年資本支出預算。

I'll now turn to our outlook. We remain optimistic about business conditions in the current environment with solid or recovering underlying demand across most of the key end markets we serve. However, we expect factors impacting shipment levels in the third quarter of 2021, such as metal supply constraints, labor shortages, and other supply chain disruptions will continue to persist in the fourth quarter of 2021. In addition, we anticipate demand will be impacted by normal seasonal factors including customer holiday-related shutdown and fewer shipping days in the fourth quarter compared to the third quarter.

我現在將轉向我們的前景。我們對當前環境下的商業狀況保持樂觀，我們所服務的大多數主要終端市場的潛在需求穩定或正在恢復。然而，我們預計影響 2021 年第三季度出貨量的因素，如金屬供應限制、勞動力短缺和其他供應鏈中斷將在 2021 年第四季度繼續存在。此外，我們預計需求將受到以下因素的影響與第三季度相比，第四季度的正常季節性因素包括客戶假期相關的停工和更少的運輸天數。

As such, we estimate tons sold will be down 5% to 8% in the fourth quarter compared to the third quarter of 2021. We expect pricing for certain stainless and aluminum products to increase in the fourth quarter, offsetting the impact of declining prices for certain carbon steel products. Also, as metal prices at the beginning of the fourth quarter are higher than the average for the third quarter, we estimate our average selling price per ton sold for the fourth quarter of 2021 will be up by 7%. Based on these expectations, we currently anticipate non-GAAP earnings per diluted share in the range of $5.05 to $5.15 for the fourth quarter of 2021.

因此，我們預計與 2021 年第三季度相比，第四季度的銷售噸數將下降 5% 至 8%。我們預計某些不銹鋼和鋁產品的價格將在第四季度上漲，以抵消不銹鋼和鋁材價格下跌的影響。某些碳鋼產品。此外，由於第四季度初的金屬價格高於第三季度的平均水平，我們估計 2021 年第四季度的每噸平均售價將上漲 7%。基於這些預期，我們目前預計 2021 年第四季度非 GAAP 攤薄後每股收益在 5.05 美元至 5.15 美元之間。

In closing, we are extremely pleased with our record third quarter operational and financial performance against the backdrop of challenging market dynamics despite ongoing strong pricing and healthy demand trends. Our record financial performance and strong cash flow enabled us to continue allocating capital to simultaneously invest in the growth of our business and return value to our stockholders. Thank you again to all of our colleagues in the field for your continued outstanding execution.

最後，儘管定價持續強勁且需求趨勢健康，但在充滿挑戰的市場動態背景下，我們對第三季度創紀錄的運營和財務業績感到非常滿意。我們創紀錄的財務業績和強勁的現金流使我們能夠繼續分配資金，同時投資於我們的業務增長並為我們的股東帶來價值回報。再次感謝我們在該領域的所有同事繼續出色的執行。

That concludes our prepared remarks. Thank you for your attention. And at this time, we'd like to open the call up to questions. Operator?

我們準備好的發言到此結束。感謝您的關注。在這個時候，我們想打開電話提問。操作員？

(Operator Instructions) Our first question comes from the line of Martin Englert with Seaport Research Partners.

（操作員說明）我們的第一個問題來自 Seaport Research Partners 的 Martin Englert。

Given Reliance's breadth across products and end markets, can you touch on some of the long lead time products where you're seeing some backlogs into end markets like construction or other leading indicator product lines? Are you getting -- I mean, in the prepared remarks, you provided a fair amount of commentary qualitatively on maybe how things are progressing into next year. But any sense of what this looks like on an overall demand environment, whether this is like close single digits or mid-single digit growth?

鑑於 Reliance 在產品和終端市場上的廣度，您能否談談您在終端市場（如建築或其他領先指標產品線）中看到一些積壓的一些長交貨期產品？你得到了 - 我的意思是，在準備好的評論中，你提供了大量關於明年事情進展情況的定性評論。但是，在整體需求環境中，無論是接近個位數還是中個位數增長，您都知道這是什麼樣的嗎？

Martin, it's Karla. So I think it's really hard for us to tell because of the diversity of the products, as we talked about the end markets and also our business where we focus on our small order sizes with next-day delivery. So we don't have that much visibility, which is typical for us. But certainly, we're seeing certain products like carbon flat rolled is becoming a little more available than it had been, but it's still pretty difficult. There are a lot of different issues impacting the supply chain out there. And so metal continues to be tight in most products that we sell. Lead times continue to be out there extending for some products, decreasing for others. But overall, we think underlying demand continues to be really strong, and we expect that to help us and others as we go into 2022.

馬丁，我是卡拉。因此，我認為由於產品的多樣性，我們真的很難說清楚，因為我們談到了終端市場以及我們專注於小訂單和次日交貨的業務。所以我們沒有那麼多能見度，這對我們來說很典型。但可以肯定的是，我們看到某些產品（如碳素扁軋）變得比以前更容易獲得，但這仍然相當困難。有很多不同的問題影響著供應鏈。因此，在我們銷售的大多數產品中，金屬繼續吃緊。一些產品的交貨時間繼續延長，而另一些產品的交貨時間則縮短。但總的來說，我們認為潛在需求仍然非常強勁，我們預計這將在我們進入 2022 年時對我們和其他人有所幫助。

Okay. Across the product lines, where you're seeing elongated or extending lead times and where you're seeing some contraction?

好的。在整個產品線中，您在哪些方面看到了延長或延長的交貨時間，以及您在哪些方面看到了一些收縮？

I mean, for the most part, we're seeing extended lead times for all the products. As I mentioned, carbon flat rolled is the one area where it's improved a bit recently, but still longer than what we've seen historically.

我的意思是，在大多數情況下，我們看到所有產品的交貨時間都在延長。正如我所提到的，碳扁平軋製是最近有所改進的一個領域，但仍然比我們歷史上看到的要長。

Yes. Martin, this is Jim. Just one other comment, tagging on to what Karla said that the most important thing is our customers are busy. And they're continuing to stay that way. Lead times, pricing, we don't control that. We just listen to our customers and provide values.

是的。馬丁，這是吉姆。只是另一條評論，附上卡拉所說的最重要的是我們的客戶很忙。他們將繼續保持這種狀態。交貨時間，定價，我們無法控制。我們只傾聽客戶的意見並提供價值。

Okay. That's helpful. If I could, one last one there. Within the release, you did note that the chip shortage inhibiting auto production and activity there. But do you get the sense that the semiconductor shortage is reducing demand across other end markets, like heavy industrial equipments, yellow goods, green goods, that sort of thing?

好的。這很有幫助。如果可以的話，最後一個。在發布中，您確實注意到芯片短缺抑制了那裡的汽車生產和活動。但是您是否感覺到半導體短缺正在減少其他終端市場的需求，例如重工業設備、黃色商品、綠色商品等？

Yes. So we are certainly seeing the semiconductor chip shortage impact more than just the automotive industry. I think automotive has had the most coverage about it and maybe have been the most impacted. But we're also seeing in other end markets that we sell into. It's not just the semiconductor chips where there have been some supply shortages. Various different components are hard to get these days. So we're seeing impact across a lot of different customers of ours. But again, the underlying demand is strong. So we view that as positive for future periods on shipments, even though we're impacted a bit right now.

是的。因此，我們當然看到半導體芯片短缺的影響不僅僅是汽車行業。我認為汽車領域對此的報導最多，而且可能受到的影響最大。但我們也看到了我們銷售的其他終端市場。供應短缺的不僅僅是半導體芯片。如今，很難獲得各種不同的組件。因此，我們看到了對我們許多不同客戶的影響。但同樣，潛在需求強勁。因此，我們認為這對未來的出貨量是積極的，儘管我們現在受到了一些影響。

Okay. Congratulations on the result, guidance and navigating the supply chain headwinds.

好的。祝賀結果，指導和導航供應鏈逆風。

Our next question comes from the line of Emily Chieng with Goldman Sachs.

我們的下一個問題來自高盛的 Emily Chieng。

My first question is around sort of forward-looking guidance on shipments. I know there's usually a normal seasonal factor impact in the fourth quarter, and you mentioned fewer numbers of shipping days during the quarter. But can you perhaps highlight what the percentage impact from the various different buckets of labor, metal supply and supply chain disruptions could be impacting that number? And is there a way to think about which 1 of those 3 is sort of the gating hurdle here?

我的第一個問題是關於貨運的前瞻性指導。我知道第四季度通常會有正常的季節性因素影響，並且您提到該季度的運輸天數較少。但是，您能否強調一下各種不同的勞動力、金屬供應和供應鏈中斷對這一數字的影響百分比？有沒有辦法考慮這三個中的哪一個是這裡的門障礙？

Yes. So I think as we look into the fourth quarter, the first off, in the third quarter, which we just reported on, we -- when we gave our guidance for the third quarter at the end of the second quarter, we thought that we were going to have less seasonal shutdowns in Q3 than typical, that ended up not being the case. And we did see kind of the normal seasonal falloff in demand in Q3 versus Q2 even though we had thought that we wouldn't see as much because of the strong underlying demand. But we think because of all the different factors out there, labor, supply chain, logistics, et cetera, that we did end up with customers doing their normal shutdowns.

是的。所以我認為，當我們回顧第四季度，第一季度，在我們剛剛報告的第三季度時，我們 - 當我們在第二季度末給出第三季度的指導時，我們認為我們第三季度的季節性停工將比典型情況少，但最終並非如此。我們確實看到第三季度與第二季度的需求出現了正常的季節性下降，儘管我們認為由於潛在需求強勁，我們不會看到那麼多。但我們認為，由於所有不同的因素，勞動力、供應鏈、物流等，我們最終確實讓客戶正常關閉。

So our volume guidance going into Q4 does reflect primarily just the normal seasonal trend going down. Since we saw it being more normal in Q3, that's what we're guiding to in Q4. We typically -- we know we have fewer shipping days because of certain holidays where our locations are shut down, but we never really know is what our customers are going to do. And sometimes it will be the last minute, they decide to shut down for a week or 2 weeks or they only do 2 days. We can't quantify really the different elements that are impacting businesses or driving our customers' decisions. So our overall guidance was for a more typical Q4.

因此，我們進入第四季度的銷量指導確實主要反映了正常的季節性下降趨勢。由於我們在第三季度看到它更加正常，這就是我們在第四季度的指導。我們通常 - 我們知道由於某些假期我們的地點關閉，我們的運輸天數更少，但我們永遠不知道我們的客戶會做什麼。有時這將是最後一分鐘，他們決定關閉一周或兩週，或者只關閉 2 天。我們無法真正量化影響業務或推動客戶決策的不同因素。因此，我們的總體指導是針對更典型的第四季度。

Got it. That's really helpful context there. And maybe just a follow-up around the Merfish acquisition. Congratulations on completing that one now. It's interesting to note that they do have a plastics and a little bit more of a copper exposure than what Reliance has in your existing portfolio. Can you maybe talk about your plans to perhaps grow that? Or how do you view those sort of incremental businesses that you've now acquired?

知道了。這真的很有幫助。也許只是圍繞 Merfish 收購的後續行動。恭喜你現在完成了那個。有趣的是，與 Reliance 在您現有的投資組合中相比，它們確實有塑料和更多的銅暴露。你能談談你可能發展它的計劃嗎？或者您如何看待您現在收購的那些增量業務？

Yes. Emily, well, first and foremost, it's a really cool company. And we're glad we got to bring them to the family of companies. It's a little different, but it's still distribution, some different products. They go to market differently. And as you well know, we don't buy good companies and change the name and screw them up in any way. We like them for a reason. So we think this is a really good company. We have opportunities to perhaps do acquisitions. We'll see how that all works out. But they complement our company because they serve the same markets, but they do it differently.

是的。艾米麗，嗯，首先，這是一家非常酷的公司。我們很高興能夠將它們帶到公司大家庭中。它有點不同，但它仍然是分銷，一些不同的產品。他們以不同的方式進入市場。眾所周知，我們不會收購好公司，也不會以任何方式更改名稱和搞砸它們。我們喜歡他們是有原因的。所以我們認為這是一家非常好的公司。我們有機會進行收購。我們將看看這一切是如何進行的。但他們補充了我們的公司，因為他們服務於相同的市場，但他們的做法不同。

It's an adjacent business. I've said that before. I hope nobody takes that as that's all we're going to do. We're going to continue to look for really fine companies. And this happens to be one of them. And we hope that they'll grow and they have a great management team and the way they go to market is a little bit different, and that's okay. But the products they sell are into the similar markets, the rest of the FOC sells into, but the products are different. You mentioned copper and plastic. They also do conduit and a couple of other things into the -- not only just nonres, but they also do residential and those type of things. So I mean that would be my comments. But Karla runs it, so if you could probably add to that.

這是一個相鄰的業務。我以前說過。我希望沒有人接受這一點，因為這就是我們要做的。我們將繼續尋找真正優秀的公司。而這恰好是其中之一。我們希望他們會成長，他們有一個優秀的管理團隊，他們進入市場的方式有點不同，這沒關係。但是他們銷售的產品是進入類似的市場，FOC的其餘部分銷售進入，但產品不同。你提到了銅和塑料。他們還做管道和其他一些事情——不僅是非資源，而且他們還做住宅和那些類型的事情。所以我的意思是這將是我的評論。但是 Karla 運行它，所以如果你可以添加它。

Yes, and we're excited about the business, but also, as Jim said, being able to grow it. We think where they operate is also a very fragmented industry. So we think there's a lot of potential opportunity for growth through acquisitions, but also organically, them on their own expanding into more locations, more products, but also getting to know our other Reliance companies and seeing how they can leverage each other and create some growth opportunities there. But it's early on, we just closed it October 1, but we're excited to look for more opportunities to grow them.

是的，我們對這項業務感到興奮，而且正如吉姆所說，能夠發展它。我們認為他們經營的地方也是一個非常分散的行業。所以我們認為通過收購有很多潛在的增長機會，而且有機地，他們自己擴展到更多的地點，更多的產品，而且還了解我們的其他 Reliance 公司，看看他們如何相互利用並創造一些那裡的增長機會。但現在還為時過早，我們剛剛在 10 月 1 日關閉了它，但我們很高興能找到更多發展它們的機會。

Our next question comes from the line of Sathish Kasinathan with Deutsche Bank.

我們的下一個問題來自德意志銀行的 Sathish Kasinathan。

My first question is on the auto tolling business. You mentioned that the tolling volumes declined slightly in third quarter. I was just wondering if you could provide a bit more color in terms of whether your current shipping volumes match with the actual automotive production rate? Or do you sense some inventory building of intermediate parts by the OEMs before it is being assembled into a finished vehicle?

我的第一個問題是關於汽車收費業務。您提到第三季度的收費量略有下降。我只是想知道您是否可以提供更多顏色，以說明您當前的出貨量是否與實際的汽車生產率相匹配？或者您是否感覺到原始設備製造商在將中間零件組裝成成品車之前對其進行了一些庫存建設？

Yes. Sathish, I don't know that we can answer that broadly because I think each of the end-use customers that we sell into from our tolling businesses with a good portion of that being automotive, they've each been impacted a little differently. They've taken different approaches. So certainly, when they have shut down production, that's impacted us a little bit. But we're generally on the more popular platforms of the different vehicles that they sell, a lot of the trucks and light-body SUVs. And so we feel that it's been a little less than impact. We will say that in the U.S., the impact has been less than what we've seen in Mexico.

是的。 Sathish，我不知道我們可以廣泛回答這個問題，因為我認為我們從收費業務中銷售的每個最終用途客戶，其中很大一部分是汽車，他們各自受到的影響都略有不同。他們採取了不同的方法。因此，當然，當他們關閉生產時，這對我們產生了一點影響。但我們通常在他們銷售的不同車輛的更受歡迎的平台上，很多卡車和輕型 SUV。所以我們覺得它的影響略小。我們會說，在美國，影響比我們在墨西哥看到的要小。

In Mexico, our tolling operations are servicing more of the small sedans, and we've seen a bit more of an impact there from the chip shortage, but they seem to be working through it fairly well. For certain of those end-use customers, we have a low inventory built up, others, we don't. So it's hard to say broad-based plus our tolling companies are seeing a lot of opportunities, not just in automotive, but also in other end markets where there's very strong demand that they've been able to fill some of the lost production, so to speak, from automotive with other opportunities. So minimal impact on us. We think in the U.S. that we're -- that the outlook is improving, that we'll have fewer shutdowns going forward.

在墨西哥，我們的收費業務正在為更多的小型轎車提供服務，我們已經看到芯片短缺對那裡的影響更大，但他們似乎做得很好。對於某些最終用途客戶，我們的庫存很低，而其他客戶則沒有。所以很難說基礎廣泛，再加上我們的收費公司看到了很多機會，不僅在汽車領域，而且在其他需求非常強烈的終端市場，他們已經能夠填補一些損失的產量，所以說起來，汽車還有其他機會。所以對我們的影響很小。我們認為在美國，我們的前景正在改善，我們未來的停工將減少。

Okay. My next question is on the SG&A, which increased 8% quarter-on-quarter versus a 5% decline in shipments. Is there any way you can bifurcate the increase between higher incentive-based comp and inflationary pressures?

好的。我的下一個問題是關於 SG&A，其環比增長 8%，而出貨量下降 5%。有什麼辦法可以將更高的基於激勵的薪酬與通脹壓力之間的增長分流？

Yes. Sathish, this is Arthur. Good question. So half of that increase, we said -- a majority of it is incentive-based comp, and that's just attributable to the increase in pretax income levels and gross profit. And then when you look at the remainder, a lot of that is just different factors. You have some slight increase in headcount. You have some inflationary pressures on shipping, packaging costs. That's probably a portion of that remainder, and then you -- perhaps you have some additional extra expense from higher utilization on our health benefit plan, just people starting to go in front of the doctors. So I think overall, the sequential increase, I think it's fair to say, predominantly incentive comp driven. And as we noted in our commentary, our headcount levels have stayed relatively flat over the last 12 to 18 months, and we sold about 10% to 11% below pre-pandemic level.

是的。 Sathish，這是亞瑟。好問題。因此，我們說，增長的一半——其中大部分是基於激勵的薪酬，這僅歸因於稅前收入水平和毛利潤的增加。然後，當您查看其餘部分時，其中很多只是不同的因素。您的員工人數略有增加。你對運輸、包裝成本有一些通脹壓力。這可能是剩餘部分的一部分，然後你——也許你有一些額外的額外費用來自我們的健康福利計劃的更高利用率，只是人們開始走在醫生面前。所以我認為總體而言，連續增長，我認為可以公平地說，主要是激勵補償驅動的。正如我們在評論中指出的那樣，我們的員工人數在過去 12 到 18 個月內保持相對平穩，我們的銷售額比大流行前水平低 10% 到 11%。

And congrats on a great quarter.

並祝賀一個偉大的季度。

Our next question comes from the line of Phil Gibbs with KeyBanc Capital Markets.

我們的下一個問題來自 KeyBanc Capital Markets 的 Phil Gibbs。

On the tolling side, just in automotive specifically, are you anticipating that the fourth quarter for the auto segment in general is going to stabilize? Or is the fourth quarter in your mind going to be kind of the last of the downdraft in the supply chain?

在收費方面，特別是在汽車行業，您是否預計第四季度汽車行業總體上會趨於穩定？還是您認為第四季度會是供應鏈中的最後一個下降趨勢？

Yes. Phil, so fourth quarter, we do expect the normal seasonal impact, where there'll be shut downs in front of the holidays. We're anticipating some continued disruption from the semiconductor chip shortage through the fourth quarter, but we believe in the U.S., that's going to start to subside as we go into 2022. Mexico, we're not sure yet, and if we're out of that are not.

是的。菲爾，所以第四季度，我們確實預計會出現正常的季節性影響，假期前會停工。我們預計到第四季度半導體芯片短缺會繼續造成一些破壞，但我們相信美國，隨著我們進入 2022 年，這種情況將開始消退。墨西哥，我們還不確定，如果我們是出來的都不是。

On the new plants in Kentucky and Texas, where do those stand in terms of construction and completion? And when do you think you could start getting some earnings stream from those?

在肯塔基州和德克薩斯州的新工廠中，這些工廠的建設和竣工情況如何？你認為什麼時候可以開始從中獲得一些收入流？

Yes. Good question, Phil. We're pleased with both of them. The one in Kentucky is up and operational and doing quite well. The one in Texas is coming along as anticipated. I literally can't tell you when it's going to be up and operational. But we're on our game and so are they. And as soon as that thing starts cracking, we will too. Karla, you have something more color, I'm sure.

是的。好問題，菲爾。我們對他們倆都很滿意。肯塔基州的那個已經啟動並且可以運行並且做得很好。得克薩斯州的那個正在如預期的那樣出現。我真的不能告訴你它什麼時候會啟動和運行。但我們在比賽中，他們也是。一旦那東西開始破裂，我們也會。卡拉，你有更多的顏色，我敢肯定。

Yes. I mean, Texas, we've been able to start to process some metal down there. But certainly, as we're on campus with one of our key suppliers and as they ramp up, we'll continue to ramp up more. But we're ready and we're processing a small amount of volume there currently.

是的。我的意思是，德克薩斯州，我們已經能夠開始在那里處理一些金屬。但可以肯定的是，由於我們與我們的主要供應商之一在校園內，並且隨著他們的增加，我們將繼續增加更多。但是我們已經準備好了，我們目前正在那里處理少量的交易量。

Okay. That's helpful. And then I missed the first part of the call, but in terms of Merfish, is there anything that you can provide us in terms of what you expect either the EBITDA or the earnings accretion to be from this? Obviously, big in terms of revenue, but it's a different business and it's obviously, when you want to get your arms around. So just curious in terms of thoughts on that as we try to model profit expectations.

好的。這很有幫助。然後我錯過了電話會議的第一部分，但就 Merfish 而言，您有什麼可以提供給我們的，就您期望的 EBITDA 或由此帶來的收益增長而言？顯然，在收入方面很大，但這是一項不同的業務，很明顯，當你想要得到你的手臂時。因此，當我們嘗試對利潤預期建模時，對此的想法只是好奇。

Well, I mean, we certainly expect it to be good or we wouldn't have done it. So it is a bit of a different model. They're not doing the value-added processing to the extent that we do in a lot of our operations. But -- and as is typical, we haven't really disclosed it, but it's very profitable, strong EBITDA. They sell a lot of metal products that are at high price levels right now, the same as our businesses. So we're seeing really strong earnings from them throughout this year, and we expect that to continue. But you have to make -- unfortunately, you have to make your own assumptions right now on their contribution.

好吧，我的意思是，我們當然希望它是好的，否則我們就不會這樣做。所以它是一個有點不同的模型。他們沒有像我們在許多業務中那樣進行增值處理。但是——通常情況下，我們還沒有真正披露它，但它非常有利可圖，EBITDA 強勁。他們現在賣很多高價位的金屬產品，和我們的生意一樣。因此，我們在今年全年看到他們的收益非常強勁，我們預計這種情況會持續下去。但是你必須做出——不幸的是，你現在必須對他們的貢獻做出自己的假設。

But Phil, they will add to our mojo.

但是菲爾，他們會增加我們的魔力。

(Operator Instructions) Our next question comes from the line of Alex Hacking with Citi.

（操作員說明）我們的下一個問題來自花旗銀行的 Alex Hacking。

In terms of metal shortages, is that still predominantly concentrated in carbon flat rolled? Or are you starting to see that creep into some of the other categories as well?

就金屬短缺而言，是否仍主要集中在碳扁鋼？或者您是否開始看到這種情況也蔓延到其他一些類別？

Alex, good question. No, it's all products. I mean, everybody has got the same issues. It's going to be Reliance because we have this model that we've been improving for decades and literally have added to recently. And when you support the domestic folks like we have, they support you. But it's basically every product. Karla, do you have anything to add to that?

亞歷克斯，好問題。不，都是產品。我的意思是，每個人都有同樣的問題。這將是 Reliance，因為我們擁有這個模型，我們已經改進了幾十年，並且最近確實增加了。當你像我們一樣支持國內的人時，他們也會支持你。但它基本上是每一種產品。卡拉，你有什麼要補充的嗎？

Yes. I mean, not really. As we said, carbon flat rolled is the one area where lead times came in just a little bit recently. But most of the other products are extended on lead times. There's still tight supply. There's a lot going on in the aluminum world now, even if carbon started to loosen up a little bit. Stainless is still very, very tight and has been. And on the aluminum side with some of the issues going on. Globally right now, we're expecting more tightness in price increases there as well.

是的。我的意思是，不是真的。正如我們所說，碳板軋材是最近交貨時間縮短的一個領域。但大多數其他產品的交貨時間都延長了。供應依然緊張。現在鋁世界發生了很多事情，即使碳開始有點鬆動。不銹鋼仍然非常非常緊，並且一直如此。在鋁方面，一些問題正在發生。目前在全球範圍內，我們預計那裡的價格上漲也會更加緊張。

Okay. And then on the value add, I mean, I think you've discussed before, and I assume this is still accurate that the current environment is probably conducive to your customers looking for Reliance to do more on the value-add side, given all the issues with labor and everything. Are you looking to accelerate investments in value-add to meet the needs of your customers?

好的。然後關於增值，我的意思是，我認為您之前已經討論過，並且我認為這仍然是準確的，因為當前環境可能有利於您的客戶尋求 Reliance 在增值方面做更多的事情，考慮到所有勞動力和一切的問題。您是否希望加快增值投資以滿足客戶的需求？

Yes, a good question. The answer is yes. I mean our CapEx budget this year is $310 million. We'd love to spend it all. But unfortunately, because of interruptions in the supply chain on equipment, it's just -- it's hard. But it all evolves around our customers asking us to do more. I can tell you they continue to ask us to do more, and we're going to be there for them. We obviously have a lot of dry powder, if you will, cash, and we are -- that's one of our buckets where we spend money. It's an internal growth strategy, and it's worked so far, and we're going to keep feeling it. Karla, have you got anything else? No, we're -- so far so good. And so why change now, right?

是的，一個好問題。答案是肯定的。我的意思是我們今年的資本支出預算是 3.1 億美元。我們很願意花光所有的。但不幸的是，由於設備供應鏈的中斷，這只是——這很難。但這一切都圍繞著我們的客戶要求我們做得更多而發展。我可以告訴你，他們繼續要求我們做更多的事情，我們會為他們服務。我們顯然有很多乾粉，如果你願意的話，現金，我們是——這是我們花錢的桶之一。這是一項內部增長戰略，到目前為止它已經奏效，我們將繼續感受它。卡拉，你還有別的事嗎？不，我們 - 到目前為止一切都很好。那麼為什麼現在改變，對吧？

Our next question comes from the line of Timna Tanners with Wolfe Research.

我們的下一個問題來自於 Wolfe Research 的 Timna Tanners。

Seems like some big announcements, and I just wanted to delve into a little bit more. First, you're moving to Arizona from LA. And the second I think you're changing your name to Reliance Steel & Aluminum Plastic or maybe something shorter. But I just wanted to get, how big a deal is this the Merfish departure? I mean, what's the addressable market if you do start to think about acquisitions more broadly? I ask, of course, because you have the high-quality problem of being relatively underlevered and just wanted a little bit more about your thought process about potential further acquisitions outside of your traditional metals universe?

似乎是一些重大公告，我只是想深入研究一點。首先，你要從洛杉磯搬到亞利桑那州。第二個我認為您正在將您的名稱更改為 Reliance Steel & Aluminium Plastic 或者更短的名稱。但我只是想知道，Merfish 的離開有多大意義？我的意思是，如果你開始更廣泛地考慮收購，那麼潛在的市場是什麼？我問，當然，因為你有一個高質量的問題，即相對較低的槓桿率，只是想更多地了解你對傳統金屬領域之外潛在的進一步收購的思考過程？

Well, Timna, great question. On the first part, that's not really a big deal. It's -- nobody is moving. We just decided and learned a lot through the pandemic on what -- how do you retain and attract talent. And we decided that being flexible is the best thing to do. And we researched it and didn't take it lightly. We did a lot of work, trying to figure out where to move. It just seemed like the Scottsdale seemd like the best place to do it.

好吧，蒂姆納，好問題。在第一部分，這並不是什麼大不了的事。這是——沒有人在動。我們剛剛決定並通過大流行學到了很多東西——你如何留住和吸引人才。我們認為靈活是最好的選擇。我們對其進行了研究，並沒有掉以輕心。我們做了很多工作，試圖找出搬家的地方。看起來斯科茨代爾似乎是最好的地方。

Now Merfish, Karla, you can talk about Merfish. All I can tell you, Timna, is you know our company well. We don't buy bad companies. We bought a really good company. I'd say it's a cool company because it's a little bit different. But we think it's a good platform for us to add to that and kind of do that adjacent business.

現在 Merfish，Karla，你可以談談 Merfish。 Timna，我只能告訴你，你很了解我們公司。我們不買壞公司。我們買了一家非常好的公司。我會說這是一家很酷的公司，因為它有點不同。但我們認為這是一個很好的平台，可以讓我們增加這一點並開展相關業務。

And I would just add, Timna, so Merfish United, they had been 2 separate companies. They actually merged together through acquisitions by their prior owner in 2019. They were able to consolidate some facilities and gain efficiencies while maintaining their market share. So it was really positive for them to do that. In that space, we're aware of other companies that are out there, as I mentioned earlier, is still fairly fragmented. They were one of the larger companies, I think the largest within their space after the acquisition.

我想補充一下，Timna，所以 Merfish United，他們是兩家獨立的公司。他們實際上是在 2019 年通過其前任所有者的收購合併在一起的。他們能夠整合一些設施並提高效率，同時保持其市場份額。所以他們這樣做真的很積極。正如我之前提到的，在那個領域，我們知道其他公司仍然相當分散。他們是較大的公司之一，我認為是收購後他們所在領域內最大的公司。

And so similar to what we've done at Reliance for many, many years, where we find good companies and bring them into the family, we think there is opportunity to do that for Merfish United and in their space and that we'll see opportunities for growth there. Also organically, we've got the ability to invest in them and let them either open more locations to get a broader geographic reach or to invest in equipment or other things that they may need to fuel their growth.

就像我們在 Reliance 所做的很多很多年一樣，我們找到好的公司並將他們帶入這個大家庭，我們認為 Merfish United 和他們的空間有機會這樣做，我們會看到那裡的增長機會。同樣有機地，我們有能力投資他們，讓他們要么開設更多地點以獲得更廣泛的地理範圍，要么投資他們可能需要的設備或其他東西來推動他們的增長。

So if I were to conclude that this is a signal that Reliance is looking beyond, like I said, it's traditional metals universe for broader industrial distribution opportunities. Would that be a fair conclusion?

因此，如果我得出結論，這是 Reliance 正在超越的信號，就像我說的那樣，它是傳統金屬領域，以獲得更廣泛的工業分銷機會。這會是一個公平的結論嗎？

That's part of the plan. But we just look at good companies. This just happens to be a really good company, but there's plenty of really fine companies in traditional metals distribution value adders. There's plenty of those, but this one just came up and it's a good company, and they're in the distribution business. And we've made a practice of not going upstream and competing with the folks, who actually make metal. But in our space, we're going to keep looking. This just happens to be a good company. And when you buy one good company in the space, our experience has been you get opportunities to buy more, and we'll just keep looking at a really good company.

這是計劃的一部分。但我們只看好公司。這恰好是一家非常好的公司，但是在傳統的金屬分銷增值器中有很多非常好的公司。有很多這樣的，但這個剛剛出現，這是一家很好的公司，他們從事分銷業務。我們已經養成了不逆流而上與實際製造金屬的人競爭的做法。但在我們的空間中，我們將繼續尋找。這恰好是一家好公司。當您在該領域購買一家好公司時，我們的經驗是您有機會購買更多，我們將繼續尋找一家非常好的公司。

Thank you. We have reached the end of our question-and-answer session. I'd like to turn the call back over to Mr. Jim Hoffman for any closing remarks.

謝謝你。我們的問答環節已經結束。我想將電話轉回給吉姆霍夫曼先生，以聽取任何結束語。

Yes. Hey, thanks, everybody, for your time and attention today. Before I wrap up, I'd like to take a moment to thank all of our Reliance colleagues for their continued hard work and daily dedication to promote health, safety and well-being of our company. Our record-setting financial results literally -- they're not possible without you all. So thanks. And I'm just inspired at the performance every day.

是的。嘿，謝謝大家，今天的時間和注意力。在結束之前，我想花一點時間感謝我們所有的 Reliance 同事，感謝他們持續的辛勤工作和每天為促進我們公司的健康、安全和福祉所做的奉獻。從字面上看，我們創紀錄的財務業績——沒有你們就不可能實現。那謝謝啦。我只是每天都受到表演的啟發。

And lastly, I'd like to announce we'll be participating virtually in the Goldman Sachs Global Metals and Mining Conference on November 18. Love to see you face-to-face, but it's not going to happen. It's virtually, but we'll look forward to seeing you on screen. And thank you very much for your support and your commitment to Reliance. Stay safe and stay healthy.

最後，我想宣布我們將參加 11 月 18 日舉行的高盛全球金屬和礦業會議。很高興見到你，但它不會發生。它實際上是，但我們期待在屏幕上見到你。非常感謝您對 Reliance 的支持和承諾。保持安全並保持健康。

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

謝謝你。今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有美好的一天。