Reliance Inc (RS) 2022 Q2 法說會逐字稿

Greetings, and welcome to the Reliance Steel & Aluminum Company Second Quarter 2022 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Reliance Steel & Aluminium Company 2022 年第二季度財報電話會議。 （操作員說明）作為提醒，本次會議正在錄製中。

I would now like to turn the conference over to your host, Kim Orlando with ADDO Investor Relations. Thank you. You may begin.

我現在想將會議轉交給您的主持人 Kim Orlando 和 ADDO 投資者關係部。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 second quarter 2022 financial results. I am joined by Jim Hoffman, CEO; Karla Lewis, President; and Arthur Ajemyan, Senior Vice President and CFO. Steve Koch, Executive Vice President and Chief Operating Officer, will also be available during the question-and-answer portion of today's call. A recording of this call will be posted on the Investors section of our website at investor.rsac.com.

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 2022 年第二季度的財務業績。首席執行官 Jim Hoffman 也加入了我的行列。卡拉·劉易斯，總裁；和高級副總裁兼首席財務官 Arthur Ajemyan。執行副總裁兼首席運營官史蒂夫·科赫（Steve Koch）也將出席今天電話會議的問答部分。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。

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 inflation, geopolitics and the COVID-19 pandemic and related economic conditions on our future operations, which may not be under the company's control and may cause 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.

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，包括通貨膨脹、地緣政治和COVID-19 大流行和我們未來運營的相關經濟狀況，可能不受公司控制，並可能導致公司的實際結果、業績或成就與這些前瞻性暗示的結果、業績或其他預期存在重大差異外觀聲明。

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, 2021, under the caption Risk Factors, disclosure in our press release this morning and other documents Reliance files or furnishes with the Securities and Exchange Commission. 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.

這些因素包括但不限於公司截至 2021 年 12 月 31 日止年度的 10-K 表格年度報告中披露的因素，標題為風險因素、我們今天上午的新聞稿中的披露以及其他文件 Reliance 文件或向證券交易委員會提供。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。

Thanks, Kim. Good morning, everyone, and thank you for joining us today to discuss our second quarter 2022 financial results. I will begin with an overview of our performance and capital allocation activities. Karla will then speak to our operating results and demand trends by end market, and Arthur will conclude with a review of our financials.

謝謝，金。大家早上好，感謝您今天加入我們討論我們 2022 年第二季度的財務業績。我將首先概述我們的業績和資本配置活動。然後，Karla 將按終端市場介紹我們的經營業績和需求趨勢，而 Arthur 將以審查我們的財務狀況結束。

Reliance delivered an exceptional second quarter with record-setting financial performance and outstanding operational execution. We achieved all-time high quarterly net sales of $4.68 billion, which, combined with an enhanced gross profit margin of 31.9% and continued strong operational leverage, resulted in record quarterly earnings per share of $9.15 as well as significant cash flow to fuel our growth and stockholder return priorities.

Reliance 以創紀錄的財務業績和出色的運營執行力實現了出色的第二季度。我們實現了 46.8 億美元的歷史新高季度淨銷售額，加上 31.9% 的毛利率提高和持續強勁的運營槓桿，創造了創紀錄的 9.15 美元的季度每股收益和大量現金流，推動了我們的增長和股東回報優先事項。

These results were supported by ongoing healthy demand in most of the end markets we serve and continued elevated pricing levels for the majority of the products we sell. Our earnings for the first half of 2022 of $17.49 per share were near the record annual earnings per share of $21.97 we attained in 2021, and we are on pace to achieve another year of record profitability.

這些結果得到了我們服務的大多數終端市場持續健康需求的支持，以及我們銷售的大多數產品的價格水平持續上漲。我們在 2022 年上半年的每股收益為 17.49 美元，接近我們在 2021 年達到的創紀錄的每股收益 21.97 美元，而且我們正在努力實現又一年創紀錄的盈利能力。

Our model continues to prove resilient amidst challenging macroeconomic circumstances bolstered by our diverse array of products, end markets, geographies as well as consistent support of our domestic suppliers to secure ample inventory for our customers. Our commitment to customer service has solidified our position as a partner of choice, with our deep-rooted relationships driving approximately 97% of our orders from repeat customers and 50% of our orders, including value-added processing.

在具有挑戰性的宏觀經濟環境中，我們的模型繼續證明具有彈性，這得益於我們多樣化的產品、終端市場、地域以及我們國內供應商的持續支持，以確保為我們的客戶提供充足的庫存。我們對客戶服務的承諾鞏固了我們作為首選合作夥伴的地位，我們根深蒂固的關係推動了大約 97% 的回頭客訂單和 50% 的訂單，包括增值處理。

Our broad geographic footprint of approximately 315 service centers strategically located in close proximity to our end customers provides us a unique competitive advantage by enabling quick turnaround of approximately 40% of our orders delivered within 24 hours. In addition, our proprietary fleet of over 1,700 trucks mitigates the impact of increased transportation cost in the current inflationary environment.

我們擁有約 315 個服務中心的廣泛地理足跡，戰略性地位於我們的最終客戶附近，通過實現約 40% 的訂單在 24 小時內交付的快速周轉，為我們提供了獨特的競爭優勢。此外，我們擁有超過 1,700 輛卡車的專有車隊減輕了當前通脹環境下運輸成本增加的影響。

Continued improvement in our strong gross profit margin combined with our record-setting quarterly sales produced record gross profit of $1.50 billion. Our managers in the field once again did a tremendous job of appropriately pricing the value we provided to our customers, even as we saw pricing begin to decline for many of our products in the latter parts of the second quarter.

我們強勁的毛利率持續提高，加上我們創紀錄的季度銷售額創造了創紀錄的 15 億美元的毛利潤。我們的現場經理再次為我們為客戶提供的價值合理定價做出了巨大的工作，即使我們看到我們的許多產品的定價在第二季度後期開始下降。

Looking ahead, as we begin to navigate an environment with overall declining metals pricing, the core tenets of our model, including our value-added processing capabilities, product, end markets and geographic diversity and smaller order sizes with quick turnaround supported by our proprietary fleet of trucks, will collectively help provide a stabilizing effect in our selling prices and margins.

展望未來，隨著我們開始應對金屬價格整體下滑的環境，我們模型的核心原則，包括我們的增值加工能力、產品、終端市場和地域多樣性，以及在我們專有車隊的支持下快速周轉的較小訂單規模卡車，將共同有助於穩定我們的銷售價格和利潤率。

Our customers also tend to hold less inventory in times of declining prices and increase their reliance on us to provide the metal they need quickly and more frequently as well as to fulfill their value-added processing needs. Our record second quarter earnings helped us generate strong cash flow from operations of $270.2 million, fueling our strategic priorities of growth and stockholder returns.

我們的客戶也傾向於在價格下跌時減少庫存，並增加他們對我們的依賴，以更快、更頻繁地提供他們需要的金屬，並滿足他們的增值加工需求。我們創紀錄的第二季度收益幫助我們從 2.702 億美元的運營中產生了強勁的現金流，推動了我們增長和股東回報的戰略重點。

We continue to see numerous organic growth and acquisition opportunities. The majority of our capital expenditures in 2022 target expansion in growing end markets, most notably the semiconductor industry. The additional reshoring opportunities come to fruition, we continue to believe our strong cash flow generation positions us well to support enhanced growth in the semiconductor space as well as other end markets.

我們繼續看到許多有機增長和收購機會。我們在 2022 年的大部分資本支出都針對不斷增長的終端市場的擴張，尤其是半導體行業。額外的回流機會實現了，我們仍然相信我們強大的現金流產生使我們能夠很好地支持半導體領域以及其他終端市場的增強增長。

While our full year capital expenditure budget is $455 million, we believe our cash outlays in 2022 will be in the $300 million to $350 million range given extended lead times throughout the supply chain. On the M&A front, the pipeline remains strong, and we continue to evaluate potential targets on a regular basis applying our stringent criteria.

雖然我們全年的資本支出預算為 4.55 億美元，但我們相信，鑑於整個供應鏈的交貨時間延長，我們在 2022 年的現金支出將在 3 億至 3.5 億美元之間。在併購方面，渠道仍然強勁，我們將繼續按照我們嚴格的標准定期評估潛在目標。

Turning to stockholder returns. We have returned over $2.3 billion in capital to our valued stockholders since 2017 through regular quarterly cash dividends and share repurchases. We have paid regular quarterly cash dividends for 63 consecutive years without reduction or suspension and have increased our quarterly dividend 29 times since our 1994 IPO. Arthur will elaborate on our stockholder return activity shortly.

轉向股東回報。自 2017 年以來，我們通過定期的季度現金股息和股票回購向我們重要的股東返還了超過 23 億美元的資本。自 1994 年首次公開募股以來，我們連續 63 年定期支付季度現金股息，沒有減少或暫停，並且已將我們的季度股息增加了 29 倍。 Arthur 將很快詳細說明我們的股東回報活動。

Before I conclude, I'd like to take a moment to recognize some well-deserved promotions as well as the retirement of Mike Shanley as Senior Vice President of Operations following his 44 years of service to Reliance. Mike transitioned to the role of Special Advisor at the beginning of July to facilitate the transition of his responsibilities and to support other special projects in advance of his retirement by the end of the year.

在結束之前，我想花一點時間來表彰一些當之無愧的晉升，以及在為 Reliance 服務 44 年後，Mike Shanley 作為運營高級副總裁退休。邁克於 7 月初轉任特別顧問，以促進其職責的過渡，並在年底退休前支持其他特殊項目。

On behalf of the entire Reliance team, I'd like to thank Mike for his tremendous efforts, including his strong leadership skills and dedication to growth, innovation and customer service, which have been integral to our success. We wish him all the best in his upcoming retirement.

我謹代表整個 Reliance 團隊感謝 Mike 所做的巨大努力，包括他強大的領導能力以及對增長、創新和客戶服務的奉獻精神，這些對我們的成功至關重要。我們祝愿他在即將退休的時候一切順利。

I'd also like to congratulate Steve Koch and Mike Hynes on their promotions. Consistent with our Board's strategic executive leadership succession plan, Steve was promoted from Senior Vice President of Operations to Executive Vice President and Chief Operating Officer effective July 1, 2022.

我還要祝賀 Steve Koch 和 Mike Hynes 升職。根據我們董事會的戰略執行領導繼任計劃，史蒂夫從運營高級副總裁晉升為執行副總裁兼首席運營官，自 2022 年 7 月 1 日起生效。

Steve's industry knowledge, passion for operational execution and exemplary leadership skills has earned him the respect of his colleagues throughout the Reliance Family of Companies as well as our key domestic suppliers. In his new role, Steve will oversee operations throughout our company with an emphasis on safety and organic growth.

Steve 的行業知識、對運營執行的熱情和堪稱楷模的領導技能為他贏得了整個 Reliance 公司家族的同事以及我們主要的國內供應商的尊重。在他的新職位上，史蒂夫將監督整個公司的運營，重點是安全和有機增長。

Mike Hynes was promoted from President of the Phoenix Metals, a Reliance subsidiary, to Senior Vice President of Operations effective July 1, 2022. In his new role, Mike will oversee the performance of a number of Reliance's operations as well as providing strategic direction and general management guidance drawing on his wealth of industry and product knowledge earned in his 34 years in the industry. I look forward to continuing to work closely with both Steve and Mike in their new roles.

Mike Hynes 從 Reliance 子公司 Phoenix Metals 的總裁晉升為運營高級副總裁，自 2022 年 7 月 1 日起生效。在他的新職位上，Mike 將監督 Reliance 的許多業務的績效，並提供戰略方向和憑藉他在行業 34 年中積累的豐富的行業和產品知識，提供了一般管理指導。我期待在史蒂夫和邁克的新角色中繼續與他們密切合作。

In summary, our relentless focus on operational execution produced another quarter of record financial performance. Looking ahead, we will continue to execute our model as we always have and maintain our focus on continuous improvement despite macroeconomic challenges, including inflation, recessionary concerns and labor and supply-related pressures.

總之，我們對運營執行的不懈關注創造了另一個季度創紀錄的財務業績。展望未來，我們將一如既往地執行我們的模式，並繼續專注於持續改進，儘管面臨包括通貨膨脹、衰退擔憂以及勞動力和供應相關壓力在內的宏觀經濟挑戰。

We're committed to our buy domestic philosophy and long-standing supplier relationships, which have supported our ability to uphold superior service standards by ensuring access to metal we need to support our customers' needs. Finally, I'd like to reiterate that Reliance remains well positioned to navigate challenging environments as we have done so successfully in the past, and we are prepared to help America rebuild as ever-increasing infrastructure needs persist.

我們致力於我們的採購國內理念和長期的供應商關係，這支持了我們通過確保獲得滿足客戶需求所需的金屬來維持卓越服務標準的能力。最後，我想重申，Reliance 仍然能夠很好地應對充滿挑戰的環境，因為我們過去已經成功地做到了這一點，並且隨著不斷增長的基礎設施需求持續存在，我們準備幫助美國重建。

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

感謝您今天的時間和關注。我現在將把電話轉給 Karla，她將審查我們第二季度的經營業績和需求趨勢。

Thanks, Jim, and good morning, everyone. Before I begin, I'd like to acknowledge the outstanding efforts of my colleagues throughout the Reliance Family of Companies that led to another record-setting quarter. Our performance would not have been possible without your unwavering commitment and dedication to safety and operational excellence.

謝謝，吉姆，大家早上好。在開始之前，我想感謝 Reliance 公司的同事們的傑出努力，他們創造了另一個創紀錄的季度。如果沒有您對安全和卓越運營的堅定承諾和奉獻精神，我們的業績將不可能實現。

Our safety performance improved in the quarter, thanks to your reenergized focus, while continuing to manage through COVID and other labor disruptions. Thank you. I'd also like to congratulate both Steve Koch and Mike Hynes on their well-deserved promotions and thank Mike Shanley for all of his contributions over the years.

由於您重新集中精力，我們的安全績效在本季度有所改善，同時繼續通過 COVID 和其他勞動力中斷進行管理。謝謝你。我還要祝賀史蒂夫·科赫和邁克·海因斯當之無愧的晉升，並感謝邁克·尚利多年來所做的所有貢獻。

Now I'll turn to our second quarter operational performance. Our tons sold were up 2.7% over the first quarter, surpassing our guidance range of flat to up 2%. As Jim highlighted, strength in underlying demand remained healthy throughout Q2 and our shipments increased quarter-over-quarter. We believe our first quarter shipments were somewhat held back by COVID issues in the beginning of the quarter and then increased significantly in March when the Ukraine crisis spurred a bit of panic in the industry with prices for many metals spiking and customers buying heavier volumes.

現在我將談談我們第二季度的運營業績。我們的銷售噸數比第一季度增長了 2.7%，超過了我們持平至增長 2% 的指導範圍。正如 Jim 強調的那樣，潛在需求的強勁勢頭在整個第二季度保持健康，我們的出貨量環比增長。我們認為，我們第一季度的出貨量在本季度初受到 COVID 問題的影響，然後在 3 月份大幅增加，當時烏克蘭危機引發了行業的一些恐慌，許多金屬價格飆升，客戶購買量增加。

Shipments during the second quarter leveled off at healthy levels, and we believe could have been stronger if not for labor shortages and other supply chain disruptions. Given the elevated pricing levels at the beginning of the second quarter that moderated for many products in the latter part of the quarter, our average selling price was a record $3,240 per ton sold. This reflects a 1.7% increase in our average selling price compared to the first quarter of 2022 and was at the high end of our outlook of flat to up 2%.

第二季度的出貨量穩定在健康水平，我們認為如果不是勞動力短缺和其他供應鏈中斷，出貨量可能會更強勁。鑑於第二季度初價格水平上漲，導致該季度後期許多產品的價格有所放緩，我們的平均售價達到了創紀錄的每噸 3,240 美元。這反映了我們的平均售價與 2022 年第一季度相比上漲了 1.7%，處於我們持平至上漲 2% 前景的高端。

Prices for the majority of our products peaked in May and began to decline in June. As Jim noted, record sales, supported by healthy demand and elevated pricing levels, contributed to record quarterly gross profit dollars in the second quarter of 2022, and a strong gross profit margin of 31.9%. On a non-GAAP FIFO basis, which is how we monitor our day-to-day operating performance, our gross profit margin was 32.2%, up 30 basis points from the prior quarter.

我們大部分產品的價格在 5 月達到頂峰，並在 6 月開始下降。正如 Jim 指出的那樣，在健康需求和較高定價水平的支持下，創紀錄的銷售額為 2022 年第二季度創紀錄的季度毛利潤和 31.9% 的強勁毛利率做出了貢獻。在非 GAAP FIFO 基礎上，這是我們監控日常經營業績的方式，我們的毛利率為 32.2%，比上一季度上升 30 個基點。

I'll now turn to a high-level overview of our key end market trends. Demand for nonresidential construction, which includes infrastructure, that is the largest end market we serve, improved steadily over the first quarter with notable strength in June. Demand for the toll processing services Reliance provides to the automotive market remained steady during the second quarter despite ongoing supply chain challenges, including the continuing impact of the global microchip shortage on new vehicle production levels.

我現在將轉向對我們主要終端市場趨勢的高級概述。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，在第一季度穩步改善，6 月份表現強勁。儘管供應鏈面臨持續挑戰，包括全球微芯片短缺對新車生產水平的持續影響，Reliance 向汽車市場提供的收費處理服務的需求在第二季度保持穩定。

We saw a demand decline compared to the first quarter across the broader manufacturing sectors we serve, including industrial machinery and consumer products. Nevertheless, our shipments related to industrial machinery still trended above that of the second quarter of 2021 and remain at healthy levels. Underlying demand in heavy industry was mixed in the second quarter, with construction equipment continuing to improve at a healthy rate.

與第一季度相比，我們服務的更廣泛的製造業部門的需求下降，包括工業機械和消費品。儘管如此，我們與工業機械相關的出貨量仍高於 2021 年第二季度，並保持在健康水平。第二季度重工業的潛在需求喜憂參半，建築設備繼續以健康的速度改善。

Semiconductor demand remained robust during the second quarter and continues to be one of our strongest end markets. As Jim highlighted, we're continuing to make substantial investments in this space in order to capitalize on the semiconductor fabrication expansion underway in the United States.

第二季度半導體需求保持強勁，並繼續成為我們最強勁的終端市場之一。正如 Jim 強調的那樣，我們將繼續在這一領域進行大量投資，以利用美國正在進行的半導體製造擴張。

Commercial aerospace demand continued to recover with our shipments improving year-over-year for the second consecutive quarter since the onset of pandemic. As a reminder, roughly half of our exposure to aerospace is commercial. Demand in the military, defense and space portions of our aerospace business remains solid, with strong backlogs.

自大流行爆發以來，隨著我們的出貨量連續第二個季度同比增長，商業航空航天需求繼續復甦。提醒一下，我們接觸航空航天的大約一半是商業的。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。

Finally, demand in the energy sector, which we define as mainly oil and natural gas, continued to improve, with shipments increasing over both the previous quarter and prior year quarter. We remain cautiously optimistic. Demand trends in the third quarter will remain healthy across most of the end markets we serve. Despite declining pricing trends for many of our products, general market conditions remain supportive of elevated pricing compared to historical levels for the majority of our products into the third quarter of 2022.

最後，我們定義為主要是石油和天然氣的能源部門的需求繼續改善，出貨量比上一季度和上一季度都增加。我們保持謹慎樂觀。在我們服務的大多數終端市場中，第三季度的需求趨勢將保持健康。儘管我們的許多產品的價格趨勢下降，但總體市場狀況仍然支持我們的大多數產品到 2022 年第三季度的價格高於歷史水平。

We are confident our managers in the field will successfully navigate these pricing headwinds as they have done many times in the past and continue to deliver solid operating performance while keeping our colleagues and our communities safe and healthy.

我們相信，我們在該領域的管理人員將成功克服這些定價逆風，就像他們過去多次所做的那樣，並繼續提供穩健的運營業績，同時保證我們的同事和社區的安全和健康。

I will now turn the call over to Arthur to review our financial results and provide more details on our demand and pricing outlook for the third quarter. Arthur?

我現在將把電話轉給亞瑟，以審查我們的財務業績，並提供有關我們第三季度需求和定價前景的更多細節。亞瑟？

Thanks, Karla. Good morning, everyone, and thank you for joining us today. We set new records for financial performance during the second quarter from our record quarterly top line net sales of $4.68 billion to our bottom line earnings per share of $9.15. As Jim and Karla mentioned, positive demand and pricing conditions supported our record financial results during the second quarter.

謝謝，卡拉。大家早上好，感謝您今天加入我們。我們在第二季度創造了新的財務業績記錄，從創紀錄的季度淨銷售額 46.8 億美元到每股底線收益 9.15 美元。正如 Jim 和 Karla 所說，積極的需求和定價條件支持了我們第二季度創紀錄的財務業績。

While we are seeing declining pricing trends for many of our products into the third quarter, we believe our unique model, specifically the rich diversity of our product, end markets and geographies along with strong pricing discipline and operating leverage, will help mitigate the impact to our bottom line. More on our third quarter outlook later.

雖然我們看到我們許多產品的定價趨勢在第三季度出現下降，但我們相信我們獨特的模式，特別是我們產品、終端市場和地域的豐富多樣性以及強大的定價紀律和運營槓桿，將有助於減輕對我們的底線。稍後將詳細介紹我們的第三季度展望。

Turning to margin. Our non-GAAP gross profit margin trended up 80 basis points from the first quarter, supported by higher selling prices and lower LIFO expense. In June, we began to experience declining metal cost trends and selling prices for many of the products we sell, which resulted in a reduction of our annual LIFO expense estimate from $150 million to $100 million.

轉向邊緣。我們的非美國通用會計準則毛利率較第一季度上升 80 個基點，這得益於較高的售價和較低的 LIFO 費用。 6 月，我們銷售的許多產品的金屬成本趨勢和售價開始下降，這導致我們的年度 LIFO 費用估計從 1.5 億美元降至 1 億美元。

Consistent with our accounting policy, we allocate our annual LIFO estimate on a pro rata basis each reporting period, which resulted in LIFO expense of $12.5 million in the second quarter to true up to our new annual estimate through June 30, 2022. Based on our revised estimate, our current projection for LIFO expense in the third quarter of 2022 is $25 million.

根據我們的會計政策，我們在每個報告期按比例分配我們的年度 LIFO 估計，這導致第二季度的 LIFO 費用為 1250 萬美元，以符合我們到 2022 年 6 月 30 日的新年度估計。根據我們的修訂後的估計，我們目前對 2022 年第三季度 LIFO 費用的預測為 2500 萬美元。

As in prior years, we will revise our expectations each quarter based on our inventory cost and metal pricing trends. As of June 30, 2022, the LIFO reserve on our balance sheet was $870.4 million, which will be available to benefit future period operating results and mitigate the impact of potential declines in metal prices on our gross profit and pretax income.

與往年一樣，我們將根據我們的庫存成本和金屬定價趨勢在每個季度修改我們的預期。截至 2022 年 6 月 30 日，我們資產負債表上的 LIFO 儲備為 8.704 億美元，可用於使未來期間的經營業績受益，並減輕金屬價格可能下跌對我們的毛利潤和稅前收入的影響。

Moving on to expenses. Our second quarter non-GAAP SG&A expenses increased $35.5 million or 5.8% compared to the first quarter of 2022 due to higher-than-anticipated inflationary pressures for fuel, freight and packaging costs, along with higher incentive-based compensation associated with a 9.4% increase in pretax profits.

繼續開支。與 2022 年第一季度相比，我們第二季度的非公認會計原則 SG&A 費用增加了 3550 萬美元或 5.8%，原因是燃料、貨運和包裝成本的通脹壓力高於預期，以及與 9.4% 相關的基於激勵的薪酬增加稅前利潤增加。

We believe our total transportation costs, which collectively make up approximately 18% to 20% of our total SG&A costs, would have increased at a much higher rate had we been more reliant on third-party carriers. On a year-over-year basis, our second quarter same-store non-GAAP SG&A expenses increased $63.2 million or 11.2%, mainly due to the same inflationary factors, including higher wages as well as incentive-based compensation due to significantly higher levels of gross profit and pretax income.

我們相信，如果我們更加依賴第三方承運人，我們的總運輸成本（合計約佔 SG&A 總成本的 18% 至 20%）將以更高的速度增長。與去年同期相比，我們第二季度的同店非 GAAP SG&A 費用增加了 6320 萬美元或 11.2%，主要是由於相同的通貨膨脹因素，包括更高的工資以及由於水平顯著提高而產生的基於激勵的薪酬毛利和稅前收入。

We generated record pretax income, record earnings and strong cash flow from operations totaling $270.2 million despite these prevailing headwinds and more than $400 million increase in working capital driven by higher inventory costs on hand as well as higher estimated income tax payments.

儘管存在這些普遍的不利因素，並且由於手頭庫存成本增加和估計的所得稅支付增加，營運資本增加了 4 億多美元，但我們仍創造了創紀錄的稅前收入、創紀錄的收益和強勁的運營現金流，總計 2.702 億美元。

During the quarter, we invested $87.5 million into the company through capital expenditures and returned nearly $250 million to our stockholders through $53.9 million of cash dividends and $193.9 million of share repurchases at an average cost of approximately $179 per share. Our repurchases in the period from July 1 through July 26 were an additional $100 million at an average cost of approximately $172 per share, bringing our total repurchases to $598.4 million at an average cost of approximately $164 per share under our $1 billion share repurchase authorization in July 2021.

在本季度，我們通過資本支出向公司投資了 8750 萬美元，並通過 5390 萬美元的現金股息和 1.939 億美元的股票回購向我們的股東返還了近 2.5 億美元，平均成本約為每股 179 美元。我們在 7 月 1 日至 7 月 26 日期間額外回購了 1 億美元，平均成本約為每股 172 美元，根據我們 10 億美元的股票回購授權，我們的回購總額達到 5.984 億美元，平均成本約為每股 164 美元2021 年 7 月。

As announced earlier today in our earnings release, our Board of Directors approved an amendment to our share repurchase plan, replenishing our repurchase authorization to $1 billion, reaffirming our collective confidence in our long-term strategy and outlook.

正如今天早些時候在我們的收益發布中宣布的那樣，我們的董事會批准了對我們的股票回購計劃的修訂，將我們的回購授權補充到 10 億美元，重申了我們對長期戰略和前景的集體信心。

I'll now turn to our third quarter outlook. We remain cautiously optimistic about business conditions in the third quarter of 2022. Although the effect of inflation, ongoing supply chain disruptions and geopolitical matters for both general macroeconomic uncertainty, we expect solid underlying demand trends to continue in the vast majority of the markets we serve.

我現在將轉向我們的第三季度展望。我們對 2022 年第三季度的商業狀況保持謹慎樂觀。儘管通貨膨脹、持續的供應鏈中斷和地緣政治問題對總體宏觀經濟不確定性的影響，但我們預計我們服務的絕大多數市場將繼續保持穩健的潛在需求趨勢.

However, we expect shipment levels to be impacted by normal seasonal patterns, including a decline in shipping volumes due to planned customer shutdowns and vacation schedules. Accordingly, we estimate our tons sold will be down 3% to 5% in the third quarter of 2022 compared to the second quarter of 2022.

然而，我們預計出貨量將受到正常季節性模式的影響，包括由於計劃中的客戶停工和假期安排導致的出貨量下降。因此，我們估計與 2022 年第二季度相比，我們在 2022 年第三季度的銷量將下降 3% 至 5%。

Further, we expect declines in pricing for many of our products, notably for carbon, stainless and aluminum flat-rolled product. Notwithstanding these challenges, we expect improving demand and pricing for certain higher value products sold into the aerospace, energy and semiconductor end markets will partially mitigate the overall decline in our average selling price per ton sold.

此外，我們預計我們的許多產品的價格都會下降，尤其是碳、不銹鋼和鋁平板軋材。儘管存在這些挑戰，我們預計航空航天、能源和半導體終端市場對某些更高價值產品的需求和定價的改善將部分緩解我們每噸銷售平均售價的整體下降。

As a result, we estimate our average selling price per ton sold in the third quarter of 2022 will be down 5% to 7% compared to the second quarter of 2022. We also expect our gross profit margin in the third quarter to temporarily trend down from second quarter levels as we work through higher cost inventory and a declining metal price environment.

因此，我們預計我們在 2022 年第三季度的每噸平均售價將比 2022 年第二季度下降 5% 至 7%。我們還預計我們在第三季度的毛利率將暫時下降從第二季度的水平開始，因為我們正在努力應對更高成本的庫存和不斷下跌的金屬價格環境。

Based on these expectations, we currently anticipate non-GAAP earnings per diluted share in the range of $6 to $6.20 for the third quarter of 2022. As a frame of reference, to date, our best-ever third quarter results were attained in the third quarter of 2021, with $6.15 of earnings per diluted share.

基於這些預期，我們目前預計 2022 年第三季度非 GAAP 攤薄後每股收益在 6 美元至 6.20 美元之間。作為參考，迄今為止，我們在第三季度取得了有史以來最好的第三季度業績2021 年第四季度，每股攤薄收益為 6.15 美元。

In closing, we were very pleased with our record financial and operational performance in the second quarter, and we would like to once again thank all of our Reliance colleagues for their contributions to these exceptional results.

最後，我們對第二季度創紀錄的財務和運營業績感到非常滿意，我們要再次感謝 Reliance 的所有同事對這些卓越業績的貢獻。

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 Emily Chieng with Goldman Sachs.

（操作員說明）我們的第一個問題來自高盛的 Emily Chieng。

Thank you for the update today. My first question is just around getting perhaps some additional color around the nonresidential construction end market there. Perhaps are you able to share what subsectors within that or what sort of components are seeing more of the strength versus others where maybe activity levels could be plateauing? How are activity levels trending currently in July from that strength that you noted in June as well?

感謝您今天的更新。我的第一個問題是圍繞那裡的非住宅建築終端市場獲得一些額外的色彩。也許您能否分享其中的哪些子行業，或者與其他活動水平可能趨於平穩的組件相比，哪些組件的實力更強？與您在 6 月注意到的強度相比，目前 7 月的活動水平趨勢如何？

So for the non-res sector, as we commented on, our shipments were very healthy at good levels during the second quarter. But in particular, in June, we saw increased activity in bookings. We do service many different types of projects. If you recall, we typically are on projects that are like 4- to 5-story buildings or lower. We continue to see strength in like data centers, schools, hospitals. There's airport work going on.

因此，對於非資源行業，正如我們評論的那樣，我們的出貨量在第二季度非常健康，處於良好的水平。但特別是在 6 月，我們看到預訂活動有所增加。我們為許多不同類型的項目提供服務。如果您還記得，我們通常從事 4 到 5 層或更低的建築項目。我們繼續在數據中心、學校、醫院等領域看到實力。機場工作正在進行中。

So just a lot of various types of structures. And we had seen the Northeast and the East Coast has been a little stronger in the first quarter with the West Coast lagging a bit, but we saw the West Coast also start to pick up a bit more in the second quarter compared to the first quarter. So again, smaller projects with a variety of different types of projects in there.

所以只是很多各種類型的結構。我們已經看到第一季度東北部和東海岸稍強，西海岸略有滯後，但與第一季度相比，我們看到第二季度西海岸也開始回升一點.再說一次，那裡有各種不同類型的項目的小型項目。

Great. That's really helpful color. I appreciate the color there. And then maybe my second question is just around realized pricing expectations for 3Q. And I appreciate that part of that is product mix shift as some of the higher value products start to see some demand strength, but is there any sort of color you could provide as to what some of the price differentials could look like just to help us paint a picture of what that could go -- look like on a go-forward basis as well?

偉大的。這顏色真的很有幫助。我很欣賞那裡的顏色。然後也許我的第二個問題是關於第三季度的已實現定價預期。我很欣賞這部分是產品組合的轉變，因為一些更高價值的產品開始看到一些需求強度，但是您是否可以提供任何顏色來說明一些價格差異可能看起來像什麼，只是為了幫助我們描繪出可能發生的事情——在前進的基礎上看起來像嗎？

Yes. I think, Emily, again, our product breadth is so diverse, which is part of the strategy and the design. So it's a little difficult to comment on, but I think a lot of times, as much as we try to remind people, we have a limited exposure to carbon flat-rolled, especially hot-rolled coil, which is where you saw the most kind of price destruction during the quarter with prices falling back down to where they had been prior to the Russia-Ukraine crisis. And so we have limited exposure to that.

是的。我認為，艾米麗，我們的產品廣度如此多樣化，這是戰略和設計的一部分。所以有點難以評論，但我想很多時候，就像我們試圖提醒人們一樣，我們接觸到的碳素扁鋼，尤其是熱軋卷材是有限的，這是你看到最多的地方本季度出現了某種價格破壞，價格回落至俄羅斯-烏克蘭危機之前的水平。因此，我們對此的了解有限。

So I think our Q2 price held up better than maybe a lot of people expected. A lot of the other carbon steel products maintained pricing levels or came down a bit. There were some downward revisions in scrap, but not all the carbon products followed that, we think, partly because we do have healthy demand out there. There was a decrease again today for carbon steel plate, which we've got decent exposure to. But overall, the pricing levels are, we think, still good compared to historical standards.

所以我認為我們第二季度的價格比很多人預期的要好。許多其他碳鋼產品保持價格水平或略有下降。廢鋼有一些下調，但我們認為並非所有碳產品都跟隨下調，部分原因是我們確實有健康的需求。今天碳鋼板再次下跌，我們已經獲得了不錯的敞口。但總體而言，我們認為，與歷史標準相比，定價水平仍然不錯。

Within aluminum, we've got some common alloy exposure where we've seen prices trend down. But we also, on the heat treat aerospace products, there's continued strength in those prices. Also on the stainless side, again, we've seen some decline, but not too significant at this point. So we think pricing levels are still good, but do anticipate that they could soften a bit next quarter. But we think a lot of the price correction has already occurred for most of the products that we carry.

在鋁中，我們有一些常見的合金敞口，我們看到價格呈下降趨勢。但我們也在熱處理航空航天產品方面，這些價格持續走強。同樣在不銹鋼方面，我們再次看到了一些下降，但在這一點上並不太顯著。因此，我們認為定價水平仍然不錯，但預計下個季度它們可能會有所放緩。但我們認為，我們攜帶的大多數產品已經發生了很多價格調整。

Our next question comes from the line of Seth Rosenfeld with BNP Paribas.

我們的下一個問題來自法國巴黎銀行的 Seth Rosenfeld。

First will be a follow-up to Emily's question on the product mix impact on ASP. When you think about aerospace, energy and semis, can you just remind us kind of what portion of mix those 3 segments currently represent and how that compares to past upcycles? (inaudible) continuation of the diverting demand trends, how much further could that run that's still a benefit to mix, say, into 2023?

首先是對 Emily 關於產品組合對 ASP 影響的問題的跟進。當您考慮航空航天、能源和半成品時，您能否提醒我們這三個細分市場目前代表的混合比例以及與過去的上升週期相比如何？ （聽不清）轉移需求趨勢的延續，那麼到 2023 年，這仍然有利於混合運行多遠？

Yes. Seth, so aerospace and energy in kind of prior normal to strong cycles for them had represented about 10% of our sales dollars. But if you recall, in early 2020, we did some restructuring to our energy businesses. And so energy now is typically about 3% to 4% of our total sales dollars.

是的。賽斯，因此航空航天和能源在之前的正常到強勁週期中占我們銷售額的 10% 左右。但是，如果您還記得，在 2020 年初，我們對能源業務進行了一些重組。因此，現在能源通常占我們總銷售額的 3% 到 4%。

And then aerospace, like I said, had generally been closer to 10%. That's come down kind of in the 6% to 8% range now. But as we continue to recover, that could trend up again, especially -- it's hard to, because with sales dollars and with carbon steel prices being much higher than they had been historically, that shifted a little more of our sales dollars into some of those products and away from energy and aerospace.

然後，就像我說的，航空航天通常接近 10%。現在已經下降了 6% 到 8% 的範圍。但隨著我們繼續復甦，這可能會再次呈上升趨勢，尤其是 - 很難，因為銷售收入和碳鋼價格遠高於歷史水平，這會將我們的銷售收入轉移到一些這些產品遠離能源和航空航天。

Semiconductor, we're not sure exactly what that percent is but probably somewhere in between energy and aerospace currently. Yes, and we see those 3 markets continuing to recover. We talked about -- through the third quarter, we didn't give a lot more guidance beyond that except that aerospace, we think, based on build rates by the airplane manufacturers, if those hold, that we'll continue to see recovery through 2023 as well.

半導體，我們不確定這個百分比到底是多少，但目前可能介於能源和航空航天之間。是的，我們看到這三個市場繼續復甦。我們談到了——到第三季度，我們沒有給出更多的指導，除了航空航天，我們認為，基於飛機製造商的建造速度，如果這些保持不變，我們將繼續看到復蘇2023 年也是如此。

Perfect. And the second question, please, with regards to cost inflation. Can you give us a quick reminder of the cost elements between logistics, labor and energy? By how much have you seen those increase year-over-year? And in your prepared remarks, you touched on some of the mitigating factors for logistics of trucking, but can you walk through any other mitigating factor to be aware of for labor and energy as well, please?

完美的。第二個問題，關於成本通脹。您能否快速提醒我們物流、勞動力和能源之間的成本要素？你看到這些同比增長了多少？在您準備好的評論中，您談到了卡車運輸物流的一些緩解因素，但您能否介紹一下其他任何緩解因素，以了解勞動力和能源方面的因素？

Seth, this is Arthur. Good question. So we commented on our sequential SG&A increase. It was about $35 million that it went up sequentially. And about 1/3 of that was inflationary, I would say, due to -- tied to transportation costs, higher -- we had record high levels of fuel prices. and partly -- and we say that, that impact was somewhat mitigated by our own fleet of trucks where we're not necessarily exposed as much to increase transportation costs.

賽斯，這是亞瑟。好問題。因此，我們評論了我們的連續 SG&A 增長。環比上漲約 3500 萬美元。其中大約 1/3 是通貨膨脹，我想說，由於 - 與運輸成本相關，更高 - 我們的燃料價格處於創紀錄的高位。部分 - 我們說，我們自己的卡車車隊在一定程度上減輕了這種影響，我們不一定會增加運輸成本。

So yes, I mean, when you look at our own fleet and the rental cost that we pay for our trucks and trailers, the wages for our drivers, et cetera, those don't necessarily move up with inflationary factors, just general freight rates, right? So that kind of mitigates the impact of higher transportation costs on our P&L. And both -- just to give you an idea about, 18% to 20% of our total SG&A costs are transportation-related and a good chunk of that, a little over half, is our own internal fleet cost. So I hope that gives you some color.

所以，是的，我的意思是，當您查看我們自己的車隊以及我們為卡車和拖車支付的租金、司機的工資等等時，這些不一定會隨著通貨膨脹因素而上漲，只是一般運費， 正確的？因此，這可以減輕較高的運輸成本對我們的損益表的影響。兩者——只是為了讓你知道，我們總 SG&A 成本的 18% 到 20% 與運輸相關，其中很大一部分，略高於一半，是我們自己的內部車隊成本。所以我希望這能給你一些顏色。

That's great. Maybe any other comments on just general wage inflation you're seeing not just on the transport side, but within your warehouses and processing centers as well?

那太棒了。也許您不僅在運輸方面看到了關於一般工資上漲的任何其他評論，而且在您的倉庫和加工中心也看到了？

Seth, it's Karla. So the -- at Reliance, we give annual increases. We've done that consistently over the years. Typically, our increases were about 3% a year in a normal year. This year, they were up a bit more in kind of the 4% to 5% range. So -- I mean, certainly, there are some crazy numbers being talked about out there, but overall, we boosted the wages a bit, but nothing too significant.

賽斯，是卡拉。所以 - 在 Reliance，我們每年都會增加。多年來，我們一直在這樣做。通常情況下，我們在正常年份的增長率約為每年 3%。今年，它們在 4% 到 5% 的範圍內上漲了一點。所以——我的意思是，當然，有一些瘋狂的數字正在被談論，但總的來說，我們稍微提高了工資，但沒有什麼太大的影響。

Yes, for us, it's -- yes, it's been mainly incentive-based compensation driving the increase in SG&A that's tied to record profitability level.

是的，對我們來說，這主要是基於激勵的薪酬推動了與創紀錄的盈利水平相關的 SG&A 的增長。

(Operator Instructions) Our next question comes from the line of Timna Tanners with Wolfe Research.

（操作員說明）我們的下一個問題來自於沃爾夫研究公司的 Timna Tanners。

I wanted to follow up on the pricing question, just to clarify. So when you talk about the change in your LIFO outlook and the 5% to 7% decline in average selling prices, is that a snapshot of what you're seeing today? Because you also said that you think a lot of the price correction has already occurred. So quarter-over-quarter is more to reflect the exit Q2? Or what you're seeing today in July?

我想跟進定價問題，只是為了澄清。因此，當您談論 LIFO 前景的變化以及平均售價下降 5% 至 7% 時，這是您今天所看到的快照嗎？因為您還說您認為已經發生了很多價格調整。那麼季度環比更能反映第二季度的退出？或者你在七月的今天看到了什麼？

Yes, it's kind of a combination, Timna. So as we said, we do think that we could see some more decreases on some of the products, but not to the extent that we saw the corrections in the second quarter. Yes.

是的，這是一種組合，蒂姆納。因此，正如我們所說，我們確實認為某些產品可能會出現更多下降，但不會達到我們在第二季度看到修正的程度。是的。

And when it comes to LIFO, Timna, as you know, there's a lag there, right? For current prices to be reflected in your inventory costs, that takes about a full turn. So let's say, 3 months at a minimum, right? 2 to 3 months. So LIFO in a way is a bit tricky because you kind of have to focus on what costs are going to be on hand at the end of the year and not so much your selling prices.

說到後進先出，蒂姆納，你知道，那裡有一個滯後，對吧？要將當前價格反映在您的庫存成本中，這大約需要一個完整的周期。所以我們說，至少 3 個月，對吧？ 2到3個月。所以 LIFO 在某種程度上有點棘手，因為你必須關注年底手頭的成本，而不是你的售價。

So -- I mean when we're guiding to declining prices in the quarter and have LIFO expense, we certainly understand that creates some confusion, but that's just part of the accounting convention where you're booking your annual estimate on a pro rata basis. But LIFO will make much more sense on an annual basis when you have your actual LIFO income for a year, and then it will basically adjust for pricing, inventory gains, losses, so to speak, on an annual basis.

所以——我的意思是，當我們指導本季度價格下降並有 LIFO 費用時，我們當然理解這會造成一些混亂，但這只是會計慣例的一部分，您按比例預訂年度估計.但是，當你有一年的實際 LIFO 收入時，LIFO 每年會更有意義，然後它基本上會根據定價、庫存收益、損失進行調整，可以說是每年一次。

No, I got that. What I was trying to figure out is if it's an annualized assumption of $100 million versus $150 million, is that a snapshot based on June -- end of June, of the quarter? Or is that a snapshot that's already including also your assumption into Q3? Like could it actually shrink further as the year progresses given -- assuming prices continue to slip a bit?

不，我明白了。我想弄清楚的是，如果它是 1 億美元與 1.5 億美元的年化假設，那是基於 6 月 - 6 月底，本季度的快照嗎？還是那張快照已經包含了您對第三季度的假設？假設價格繼續下滑一點，隨著時間的推移，它實際上會進一步縮小嗎？

No. We look at the forward curve where prices are headed and then look at our cost and where the forward curve is and estimate as best as we can where we think our costs will end up at the end of the year.

不。我們查看價格走向的遠期曲線，然後查看我們的成本以及遠期曲線的位置，並儘可能地估計我們認為我們的成本將在年底結束的位置。

Got it. Okay. And then my other question was really about working capital and how to think about that unwind. We've talked over the years about the advantage in the falling price environment of in the past at least pretty big working capital unwind, so obviously raises the question of how you see that cadence. And then any updated thoughts on uses of cash, M&A attractiveness, et cetera.

知道了。好的。然後我的另一個問題實際上是關於營運資金以及如何考慮放鬆。多年來，我們一直在談論在過去價格下跌環境中的優勢，至少有相當大的營運資金撤出，因此顯然提出了您如何看待這種節奏的問題。然後是關於現金使用、併購吸引力等的任何最新想法。

Yes. So working capital, Timna, I think you saw Q3 inventories came in a little higher than expected. Some of that is just a factor of overall kind of supply chain and mills catching up. But I think on the Q3 guidance, it's just typical seasonality. So really in terms of trending working capital, it should sort of trend with historical seasonal patterns.

是的。所以營運資金，蒂姆納，我認為你看到第三季度的庫存略高於預期。其中一些只是整體供應鍊和工廠迎頭趕上的一個因素。但我認為在第三季度的指導中，這只是典型的季節性。因此，實際上就趨勢營運資金而言，它應該具有歷史季節性模式的趨勢。

I mean when you have pricing decline, your receivables, et cetera trend down and basically level off to current price levels. But nothing out of the ordinary in terms of substantial working capital releases outside of seasonal patterns.

我的意思是，當您的價格下降時，您的應收賬款等會趨於下降並基本穩定到當前的價格水平。但就季節性模式之外的大量營運資金釋放而言，沒有什麼不尋常的。

Timna, this is Jim. Yes, about M&A, we continue to do what we've always done. There's a target-rich environment out there with really fine companies, and we'll continue to look at those. And if we find a good one, we'll buy it. So if you're asking how that is looking right now, it really doesn't change much for Reliance. We buy good companies and there's plenty of them out there.

蒂姆娜，這是吉姆。是的，關於併購，我們將繼續做我們一直在做的事情。那裡有一個目標豐富的環境，擁有非常優秀的公司，我們將繼續關注這些。如果我們找到一個好的，我們會買它。因此，如果您要問現在情況如何，那麼對於 Reliance 來說並沒有太大變化。我們買了好公司，那裡有很多。

Yes. And on cash use, we think we continued to buy good companies during the quarter with our share repurchases of buying back our Reliance stock, so you saw a little increased activity in that for the quarter. So we were glad to be able to take advantage of that.

是的。在現金使用方面，我們認為我們在本季度繼續通過股票回購回購我們的 Reliance 股票來購買優質公司，因此您看到本季度的活動略有增加。所以我們很高興能夠利用這一點。

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Hoffman for any final comments.

謝謝你。女士們，先生們，我們的問答環節到此結束。最後請霍夫曼先生髮表意見。

Yes. Thank you. Thanks again to all of you for your time and attention today. Before we close out the call, I'd like to sincerely thank all of my colleagues throughout the Reliance Family of Companies for their fantastic second quarter performance, which led to record financial results.

是的。謝謝你。再次感謝大家今天的時間和關注。在結束電話會議之前，我要衷心感謝 Reliance 公司大家庭的所有同事，感謝他們出色的第二季度業績，這導致了創紀錄的財務業績。

You all continue to inspire me through your commitments to superior customer service, operational excellence, including preserving our highest core value of safety in the workplace. Thank you all for your continued support of and commitment to Reliance.

你們都繼續通過你們對卓越客戶服務、卓越運營的承諾來激勵我，包括保持我們在工作場所安全的最高核心價值。感謝大家一直以來對 Reliance 的支持和承諾。

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

謝謝你。今天的會議到此結束。此時您可以斷開線路。感謝您的參與。