Reliance Inc (RS) 2024 Q3 法說會逐字稿

Ladies and gentlemen, good morning and welcome to the Reliance Inc third quarter 2024 earnings conference call at this time.

女士們、先生們，早安，歡迎此時參加信實公司 2024 年第三季財報電話會議。

(Operator Instructions) As a reminder, this conference is being recorded.

（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Kim Orlando, Addo Investor Relations.

現在我很高興向您介紹主持人，阿多投資者關係部的 Kim Orlando。

Please go ahead.

請繼續。

Thank you, operator.

謝謝你，接線生。

Good morning, and thanks to all of you for joining our conference call to discuss Reliance's third quarter 2024 financial results.

早安，感謝大家參加我們的電話會議，討論 Reliance 的 2024 年第三季財務業績。

I am joined by Karla Lewis, President and Chief Executive Officer; Steve Koch, Executive Vice President and Chief Operating Officer; and Arthur Ajemyan, Senior Vice President and Chief Financial Officer.

總裁兼執行長卡拉·劉易斯 (Karla Lewis) 也加入了我的行列； Steve Koch，執行副總裁兼營運長；以及資深副總裁兼財務長 Arthur Ajemyan。

A recording of this call will be posted on the Investors section of our website at investors.reliance.com. Please read the forward-looking statement disclosures included in our earnings release issued this morning and note that it applies to all statements made during this teleconference.

本次電話會議的錄音將發佈在我們網站 Investors.reliance.com 的投資者部分。請閱讀我們今天早上發布的收益報告中包含的前瞻性聲明披露內容，並注意它適用於本次電話會議期間發表的所有聲明。

The reconciliations of the adjusted numbers are included in the non-GAAP reconciliation part of our earnings release.

調整後數字的調節包含在我們收益發布的非公認會計準則調節部分。

I will now turn the call over to Karla Lewis, President and CEO of Reliance.

我現在將把電話轉給 Reliance 總裁兼執行長 Karla Lewis。

Good morning, everyone.

大家早安。

And thank you all for joining us today to discuss our third quarter 2024 results.

感謝大家今天加入我們討論我們 2024 年第三季的業績。

Our businesses continue to execute well through challenging market conditions in the third quarter, once again outperforming industry shipments while maintaining gross profit margin within our sustainable range, which we refer to as smart profitable growth.

我們的業務在第三季度充滿挑戰的市場條件下繼續表現良好，再次超過行業出貨量，同時將毛利率保持在我們的可持續範圍內，我們稱之為明智的盈利增長。

Although, metals pricing declined more than anticipated the inherent resilience of our business model servicing diverse end markets with expansive value-added processing capabilities and quick turn orders as well as increased volume from our targeted growth efforts helped mitigate the impact of lower pricing on our gross profit margin and on our earnings level resulting in non-GAAP earnings per diluted share of $3.64, in line with our guidance.

儘管金屬價格下降幅度超出預期，但我們的業務模式固有的彈性為不同的終端市場提供服務，具有廣泛的增值處理能力和快速週轉的訂單，以及我們目標增長努力增加的銷量，有助於減輕定價較低對我們總收入的影響利潤率和我們的盈利水平，導致非公認會計原則每股攤薄收益為 3.64 美元，符合我們的指導。

In the third quarter, we generated $463.9 million in cash flow from operations, underpinned by strong profitability and effective working capital management through cyclical markets.

第三季度，我們的營運現金流達到 4.639 億美元，這得益於強勁的獲利能力和透過週期性市場進行有效的營運資本管理。

Our consistently strong cash flow continues to fuel execution in all elements of our capital allocation strategy.

我們持續強勁的現金流持續推動我們資本配置策略所有要素的執行。

We invested $112.8 million in capital expenditures.

我們投資了 1.128 億美元的資本支出。

The majority of which was directed toward growth activities.

其中大部分用於增長活動。

Our CapEx budget for the calendar year 2024 remains $440 million with an expected total cash outlay of approximately $425 million to $450 million.

我們 2024 年的資本支出預算仍為 4.4 億美元，預計現金支出總額約為 4.25 億至 4.5 億美元。

Since our 1994 IPO, we have completed 76 acquisitions that support our growth strategy, expanding our product diversification and value-added processing capabilities.

自 1994 年 IPO 以來，我們已完成 76 項收購，支持我們的成長策略，擴大我們的產品多元化和增值加工能力。

We've completed four acquisitions to date in 2024 including our August acquisition of certain toll processing assets of the FerrouSouth division of Ferragon Corporation and the M&A pipeline remains active.

迄今為止，我們已在 2024 年完成了四筆收購，包括 8 月收購 Ferragon Corporation FerrouSouth 部門的某些來料加工資產，並且併購管道仍然活躍。

We will continue to seek acquisition candidates that align with our standards for well managed service centers and metals processors that possess strong brand equity and solid reputations in the marketplace and are immediately accretive to our earnings.

我們將繼續尋找符合我們管理良好的服務中心和金屬加工商標準的收購候選者，這些候選者在市場上擁有強大的品牌資產和良好的聲譽，並能立即增加我們的收入。

During the quarter, we repurchased $432 million of our common stock, reducing our total shares outstanding by nearly 3% as we opportunistically repurchase shares amid the broader pullback in equity prices across the metal space.

本季度，我們回購了 4.32 億美元的普通股，使我們的流通股總數減少了近 3%，因為我們在整個金屬領域股價普遍回購的情況下機會回購股票。

In addition, we paid $60.6 million in dividends, highlighting our ongoing commitment to our valued stockholders.

此外，我們還支付了 6,060 萬美元的股息，突顯了我們對尊貴股東的持續承諾。

Next, I'd like to acknowledge some previously announced updates regarding our Board of Directors.

接下來，我想感謝之前宣布的有關我們董事會的一些最新情況。

We appointed Jim Kamsickas as an Independent Director effective October 1, increasing our board to nine members.

我們任命 Jim Kamsickas 為獨立董事，自 10 月 1 日起生效，使我們的董事會成員增加到九名。

We look forward to Jim's contributions from his experience and expertise in industrial manufacturing and safety.

我們期待 Jim 在工業製造和安全方面的經驗和專業知識做出貢獻。

Consistent with corporate governance best practices and our strategic and deliberate long-term succession plan, Mark Kaminski will step down as our Non-Executive Chair on January 1, 2025.

根據公司治理最佳實踐以及我們戰略性和深思熟慮的長期繼任計劃，馬克·卡明斯基 (Mark Kaminski) 將於 2025 年 1 月 1 日辭去我們的非執行主席職務。

Mark will continue to serve as an independent Board member and we thank him for his many contributions as Shair since 2016.

Mark 將繼續擔任獨立董事會成員，我們感謝他自 2016 年以來作為 Shair 的許多貢獻。

Doug Stotlar, our director since 2016 will succeed Mark as our independent non-executive chair, effective January 1, 2025.

自 2016 年起擔任我們董事的 Doug Stotlar 將接替 Mark 擔任我們的獨立非執行主席，自 2025 年 1 月 1 日起生效。

Before my closing remarks, I'd like to acknowledge all who have been impacted by the severe weather events these past few weeks.

在我致閉幕詞之前，我要向所有在過去幾週受到惡劣天氣事件影響的人們表示感謝。

While hurricane Helene and hurricane Milton had minimal impacts on our consolidated results, many of our employees were personally impacted and we're very grateful to report that Reliance personnel and their families are safe

雖然海倫颶風和米爾頓颶風對我們的綜合業績影響極小，但我們的許多員工個人都受到了影響，我們非常感激地報告 Reliance 人員及其家人都很安全

In closing, I'd like to recognize our dedicated team at Reliance for their strong execution through challenging and increasingly competitive market dynamics and their continued commitment to working safely.

最後，我要對 Reliance 的敬業團隊表示認可，他們在充滿挑戰和競爭日益激烈的市場動態中表現出強大的執行力，並持續致力於安全工作。

Just last month, we celebrated 85 years in business and our 30th anniversary as a publicly traded company, which would not have been possible without the daily focus and contributions from each member of our Reliance family.

就在上個月，我們慶祝了營業 85 週年和作為上市公司成立 30 週年，如果沒有 Reliance 家族每位成員的日常關注和貢獻，這是不可能實現的。

While heightened near term uncertainty in the fourth quarter is contributing to headwinds in demand and pricing, our resilient business model and positive long-range view support our confidence in our ability to continue executing our strategic growth and stockholder return priorities.

儘管第四季度近期不確定性加劇導致需求和定價面臨阻力，但我們富有彈性的業務模式和積極的長期觀點支持我們對繼續執行策略成長和股東回報優先事項的能力充滿信心。

Thank you all for your time today.

感謝大家今天抽出時間。

I'll now turn the call over to Steve, who will review our third quarter demand and pricing trends.

我現在將把電話轉給史蒂夫，他將回顧我們第三季的需求和定價趨勢。

Thanks, Karla, and good morning, everyone.

謝謝卡拉，大家早安。

I'd like to begin by expressing my gratitude to our dedicated team for their commitment to operating safely and executing our strategy.

首先，我要對我們的敬業團隊表示感謝，感謝他們致力於安全營運和執行我們的策略。

I'll now turn to our third quarter demand and pricing trends.

我現在將談談第三季的需求和定價趨勢。

Our ton sold increased 7.1% or 3.7% on a same-store basis compared to the third quarter of 2023, significantly outperforming the service center industry decrease of 1.2% as reported by the MSCI.

與 2023 年第三季相比，我們的噸銷量成長了 7.1%，同店成長了 3.7%，明顯優於 MSCI 報告的服務中心產業 1.2% 的下降幅度。

While ton decreased 2.1% compared to the second quarter of 2024, we beat our expectations of down 2.5% to 4.5% due to increased shipments of carbon steel plate and structural products to the non-residential construction market as the quarter progressed.

雖然噸數較 2024 年第二季下降 2.1%，但由於隨著本季的進展，非住宅建築市場碳鋼板和結構產品的出貨量增加，我們超出了下降 2.5% 至 4.5% 的預期。

We believe our growth and continued outperformance of our MSCI peers while maintaining industry leading profitability that are supported by our diversified business model, customer service and strategic investments in organic growth and acquisitions.

我們相信，我們的成長和持續超越 MSCI 同行的表現，同時保持行業領先的盈利能力，這得益於我們多元化的業務模式、客戶服務以及有機增長和收購的戰略投資。

Our third quarter average selling price per ton sold of $2,246 declined 4.3% compared to the second quarter of 2024, exceeding our expectations of down 2% to 4% as carbon steel product prices declined more than anticipated as the quarter progressed.

我們第三季的每噸平均售價為2,246 美元，與2024 年第二季相比下降了4.3%，超出了我們預期的下降2% 至4%，因為隨著本季的進展，碳鋼產品價格的降幅超過了預期。

Aluminum prices also declined as the global market corrected from the short-lived impact of Russian sanctions and the US market dealt with an abundance of low-priced imports.

隨著全球市場從俄羅斯制裁的短暫影響中恢復過來，以及美國市場應對大量低價進口產品，鋁價也出現下跌。

Stainless steel prices showed signs of stabilization.

不銹鋼價格出現穩定跡象。

Next, I will turn to an overview of notable third quarter trends within our key end markets and products.

接下來，我將概述我們的主要終端市場和產品中第三季的顯著趨勢。

Beginning with non-residential construction, carbon steel tubing, plate and structural products which are predominantly sold into the non-residential construction market represented about one-third of our sales in the third quarter.

從非住宅建築開始，主要銷往非住宅建築市場的碳鋼管材、板材和結構產品約占我們第三季銷售額的三分之一。

All three products had significant year-over-year growth, outperforming industry shipment levels.

所有三種產品均較去年同期顯著成長，優於產業出貨水準。

Our diversified exposure to the non-residential construction market including publicly funded infrastructure projects, data centers and related energy projects supported solid demand for these products as did contributions from our recent acquisitions despite macroeconomic uncertainty, delaying projects in certain areas of the market.

我們對非住宅建築市場的多元化投資，包括公共資助的基礎設施項目、資料中心和相關能源項目，支持了對這些產品的強勁需求，儘管宏觀經濟存在不確定性，但我們最近的收購也做出了貢獻，延後了某些市場領域的項目。

Our general manufacturing business which represents roughly one-third of our total sales is highly diversified across both products and industries, including industrial machinery, consumer products, heavy equipment and military.

我們的一般製造業務約佔總銷售額的三分之一，在產品和產業上高度多元化，包括工業機械、消費品、重型設備和軍事。

Shipments increased year-over-year across the broader manufacturing sector, primarily reflecting strength in industrial machinery, military, shipbuilding and rail offsetting weaker demand in agricultural, heavy equipment and household consumer products.

整個製造業的出貨量年增，主要反映了工業機械、軍事、造船和鐵路的強勁勢頭抵消了農業、重型設備和家庭消費品需求的疲軟。

Our industry outperformance across key product groups, shipping to general manufacturing applications highlights the benefits of our diversified business model in a dynamic and uncertain demand environment.

我們在關鍵產品組的產業表現優於一般製造應用，凸顯了我們在動態和不確定的需求環境中多元化業務模式的優勢。

Aerospace products comprise approximately 10% of our total sales.

航空航太產品約占我們總銷售額的 10%。

Commercial aerospace demand remains fundamentally healthy despite short-term production and supply chain challenges associated with the ongoing Boeing labor stoppage.

儘管波音持續停工導致生產和供應鏈面臨短期挑戰，但商業航空航太需求基本上保持健康。

Our defense related aerospace and space program demand remains stable at strong levels.

我們的國防相關航空航太和太空計畫需求維持穩定在強勁水準。

We primarily service the automotive market through our toll processing operations which are not included in our tons sold.

我們主要透過來料加工業務為汽車市場提供服務，這些業務不包括在我們的銷售中。

Our tolling business which represents 4% of our total sales improved demand in the third quarter of 2024 compared to the prior year due to healthy demand in both the US and Mexican automotive markets and our ongoing investments to increase capacity.

由於美國和墨西哥汽車市場的健康需求以及我們為增加產能而進行的持續投資，我們的來料加工業務占我們總銷售額的 4%，2024 年第三季的需求比前一年有所改善。

Semiconductor industry demand remains subdued with continued excess inventories in the supply chain but shows signs of stabilization in certain areas.

由於供應鏈庫存持續過剩，半導體產業需求依然低迷，但在某些領域顯示出穩定的跡象。

Our long-term outlook for the semiconductor market remains positive.

我們對半導體市場的長期前景仍然樂觀。

Overall, we are experiencing relatively steady demand with continued strength in certain key end markets, counterbalancing pressures in other end markets.

整體而言，我們的需求相對穩定，某些關鍵終端市場持續強勁，抵消了其他終端市場的壓力。

Please refer to our earnings release for additional commentary on our end markets and product diversification.

請參閱我們的收益發布，以了解有關我們的終端市場和產品多元化的更多評論。

We are very proud of our team's outstanding efforts which enabled our continued industry leading performance.

我們為團隊的傑出努力感到非常自豪，這使我們能夠持續保持行業領先的業績。

Reliance's unrivaled scale and strong balance sheet makes us a highly attractive partner to our mill suppliers in all market conditions.

Reliance 無與倫比的規模和強大的資產負債表使我們在所有市場條件下都成為對工廠供應商極具吸引力的合作夥伴。

Reliance continues to win new business from new and existing customers to recognize the quality and reliability of our service as well as the breadth and depth of our product offerings and value-added service capabilities.

Reliance 不斷贏得新客戶和現有客戶的新業務，以認可我們服務的品質和可靠性以及我們產品和增值服務能力的廣度和深度。

I will now turn the call over to Arthur to review our financial results and outlook.

我現在將把電話轉給亞瑟，以審查我們的財務業績和前景。

Thanks, Steve, and thank you, everyone for joining today's call.

謝謝史蒂夫，也謝謝大家參加今天的電話會議。

Our third quarter 2024 non-GAAP diluted earnings per share of $3.64 came in toward the low end of our guided range.

我們的 2024 年第三季非 GAAP 攤薄每股收益為 3.64 美元，接近我們指引範圍的低端。

Despite the difficult pricing environment, which was the primary driver of a 21.7% decrease in our non-GAAP diluted earnings per share compared to the second quarter of 2024 our tons sold surpassed our expectations leading us to outperform industry shipment levels once again across nearly all products.

儘管定價環境困難，這是我們的非公認會計準則攤薄每股收益與2024 年第二季度相比下降21.7% 的主要原因，但我們的銷量超出了我們的預期，導致我們在幾乎所有領域的出貨量再次超過行業級產品。

The differentiating value of our significant scale and diversified product offerings to diverse end markets is made evident in the current choppy economic environment as they allow us to participate in the pockets of the economy where activity is strong.

在當前動盪的經濟環境中，我們向不同終端市場提供的巨大規模和多樣化產品的差異化價值顯而易見，因為它們使我們能夠參與經濟活動強勁的領域。

These factors along with our broad and expanding processing capabilities and industry leading quality of service contributed to our 3.7% year-over-year growth in tons sold on a same-store basis in the third quarter.

這些因素加上我們廣泛且不斷擴大的加工能力和行業領先的服務質量，促使我們第三季同店銷量年增 3.7%。

Our gross profit margin declined from 29.8% in the second quarter to 29.4% in the third quarter from continued pricing headwinds.

由於持續的定價逆風，我們的毛利率從第二季的 29.8% 下降至第三季的 29.4%。

Again, our value-added processing capabilities moderated the decline in gross profit margin as orders with value-added processing continue to experience significantly less gross profit margin contraction in times of declining prices versus orders without processing.

我們的增值處理能力再次減緩了毛利率的下降，因為與未處理的訂單相比，在價格下降時期，進行增值處理的訂單的毛利率收縮幅度繼續顯著減少。

Our LIFO inventory valuation method provides further stability to our gross profit margin by adjusting our cost of sales to align with current replacement costs.

我們的後進先出庫存估價方法透過調整我們的銷售成本以與當前的重置成本保持一致，進一步穩定了我們的毛利率。

Consistent with our guidance, we recorded LIFO income of $50 million in the third quarter and we continue to anticipate LIFO income of $200 million for the full year 2024, which implies $50 million of LIFO income for the fourth quarter of 2024.

根據我們的指引，我們第三季的後進先出收入為5000 萬美元，我們繼續預計2024 年全年的後進先出收入為2 億美元，這意味著2024 年第四季的後進先出收入為5000 萬美元。

As a reminder, LIFO for the fourth quarter will include a true up or interim annual LIFO estimate based on year-end inventory levels.

提醒一下，第四季的後進先出法將包括基於年終庫存水準的真實的年度後進先出法或中期後進先出法估計。

Factors such as inventory costs per ton trends along with changes in product mix and quantities will impact our annual LIFO calculation.

每噸庫存成本趨勢以及產品組合和數量的變化等因素將影響我們的年度後進先出計算。

As of September 30, 2024, the LIFO reserve on our balance sheet was $429.3 million, which remains available to generate LIFO income and benefit future period operating results by mitigating the impact of potential further declines in metal prices.

截至2024 年9 月30 日，我們資產負債表上的後進先出準備金為4.293 億美元，該準備金仍然可用於產生後進先出收入，並透過減輕金屬價格潛在進一步下跌的影響，使未來期間的經營業績受益。

Moving along to expenses.

繼續支出。

Same-store non-GAAP SG&A expenses increased approximately [$17 million] or 3% year-over-year as a result of slightly higher same-store headcount of 2% to support higher shipment levels and general wage inflation, offset by lower incentive compensation.

同店非GAAP SG&A 費用年增約[1,700 萬美元]，即3%，原因是同店員工人數略有增加2%，以支持更高的出貨水平和總體工資上漲，但被較低的激勵薪酬所抵消。

Sequentially, same-store non-GAAP SG&A expenses declined approximately $4 million or less than 1%.

隨後，同店非 GAAP SG&A 費用下降了約 400 萬美元或不到 1%。

Our model inherently normalizes expenses by right sizing incentives as profits trend down.

當利潤下降時，我們的模型本質上是透過適當調整激勵措施來使支出正常化。

I'll now address our balance sheet and cash flow.

我現在將討論我們的資產負債表和現金流。

Reliance generated operating cash flow of $463.9 million in the third quarter, largely flat compared to $466 million generated in the third quarter of 2023.

Reliance 第三季營運現金流為 4.639 億美元，與 2023 年第三季的 4.66 億美元基本持平。

The decline in our profitability was offset by higher working capital release resulting in relatively consistent quarterly cash flow from operations.

我們獲利能力的下降被營運資金釋放的增加所抵消，導致季度營運現金流相對穩定。

Our healthy inventory turn rate based on tons of 4.6 times and the accounts receivable DSO of 41 days also contributed to strong cash flow generation in the third quarter.

我們健康的庫存週轉率（4.6 噸）和 41 天的應收帳款 DSO 也為第三季度強勁的現金流產生做出了貢獻。

Furthermore, our focus on inventory management helped lessen the impact of declining prices on our gross profit margin.

此外，我們對庫存管理的關注有助於減輕價格下跌對毛利率的影響。

During the quarter, we invested $112.8 million in capital expenditures, completed a $23 million acquisition, returned $60.6 million to our stockholders through cash dividends and repurchased $432 million worth of our shares at an average cost of approximately $281 per share.

本季度，我們投資了1.128 億美元的資本支出，完成了2,300 萬美元的收購，透過現金股利向股東返還6,060 萬美元，並以每股約281 美元的平均成本回購了價值4.32 億美元的股票。

In the first nine months of 2024, we have repurchased $951.3 million worth of our shares at an average cost of approximately $285 per share, resulting in nearly a 6% reduction in total shares outstanding.

2024 年前 9 個月，我們以每股約 285 美元的平均成本回購了價值 9.513 億美元的股票，導致流通股總數減少近 6%。

As announced in our release, our Board of Directors approved a $1.5 billion refresh of our share repurchase plan which we will use for ongoing opportunistic repurchases.

正如我們在新聞稿中宣布的那樣，我們的董事會批准了 15 億美元的股票回購計畫更新，我們將利用該計畫進行持續的機會性回購。

Our leverage position remains favorable with a net debt to EBITDA ratio of [less than 1], providing ample liquidity to continue executing our capital allocation priorities.

我們的槓桿狀況仍然有利，淨債務與 EBITDA 的比率[小於 1]，為繼續執行我們的資本配置優先事項提供了充足的流動性。

As previously announced in mid-September, we entered into an amended and restated $1.5 billion five-year unsecured revolving credit facility with more favorable pricing and fewer restrictive covenants reflecting our improved financial condition and upgraded credit ratings.

正如先前在9 月中旬宣布的那樣，我們簽訂了一項修訂並重述的15 億美元五年期無擔保循環信貸額度，其定價更優惠，限制性條款更少，反映出我們財務狀況的改善和信用評級的升級。

Turning now to our fourth quarter outlook.

現在轉向我們的第四季展望。

As discussed in our release this morning, due to normal seasonal trends and temporary headwinds from heightened macroeconomic and political uncertainty, we estimate our tons sold will be down 6% to 8% in the fourth quarter compared to the third quarter, but up 4% to 6% compared to the fourth quarter of 2023 with 0.5% to 2.5% attributable to same-store growth.

正如我們今天早上發布的報告中所討論的，由於正常的季節性趨勢以及宏觀經濟和政治不確定性加劇帶來的暫時阻力，我們估計第四季度的銷量將比第三季度下降6% 至8 %，但成長4%與 2023 年第四季相比成長 6%，其中同店成長導致成長 0.5% 至 2.5%。

On the pricing side, we expect our average selling price per ton sold for the fourth quarter to be down 1.5% to 3.5% compared to the third quarter, reflecting continued pricing pressure across carbon steel products.

在定價方面，我們預計第四季每噸平均售價將比第三季下降1.5%至3.5%，反映出碳鋼產品持續的定價壓力。

Roughly, a third of the expected quarterly pricing decline is due to the entry point in the fourth quarter being below the third quarter average.

粗略地說，預期季度定價下降的三分之一是由於第四季度的切入點低於第三季度的平均值。

We anticipate our FIFO gross profit margins will stabilize in the fourth quarter from better alignment of replacement costs with inventory costs on hand as well as relatively lower anticipated selling price declines.

我們預計，由於重置成本與現有庫存成本更好地協調以及預期售價下降相對較低，我們的先進先出毛利率將在第四季度趨於穩定。

Based on these expectations, we anticipate non-GAAP earnings per diluted share in the range of $2.65 to $2.85 for the fourth quarter of 2024.

根據這些預期，我們預計 2024 年第四季的非 GAAP 攤薄每股收益將在 2.65 美元至 2.85 美元之間。

This concludes our prepared remarks.

我們準備好的演講到此結束。

Thank you again for your time and participation and we'll now open the call to questions.

再次感謝您的時間和參與，我們現在將開始提問。

Operator?

操作員？

(Operator Instructions) Katja Jancic, BMO Capital Markets.

（操作員指示）Katja Jancic，BMO 資本市場。

Hi.

你好。

Thank you for taking my questions.

感謝您回答我的問題。

Maybe starting on the commentary about 4Q being impacted by temporary factors, can you talk a bit about what gives you confidence that some of the impact in 4Q is temporary and what will drive better demand into next year?

也許從關於第四季度受到臨時因素影響的評論開始，您能否談談是什麼讓您有信心第四季度的一些影響是暫時的，以及什麼將推動明年的需求更好？

Hi, Katja.

嗨，卡佳。

Thanks for joining the call today.

感謝您今天加入通話。

We just -- as we reach out to our different teams running our businesses who are close to our customers as we talked with them over the past week or two, there just seems to be more uncertainty at the customer level then we have seen in prior periods, the Presidential election being cited as quite a bit of that.

我們只是——當我們接觸到經營我們業務的不同團隊時，他們在過去一兩週與我們的客戶進行了交談，他們與我們的客戶關係密切，客戶層面的不確定性似乎比我們之前看到的要多。

I would say, overall, we're confident long-term because (technical difficulty) administration seems to be supporting manufacturing and trade policy.

我想說，總的來說，我們對長期充滿信心，因為（技術難度）政府似乎正在支持製造業和貿易政策。

And even if investments had in different directions, whether on energy or different areas, most of those products, those solutions require steel of one kind or another.

即使投資方向不同，無論是在能源或不同領域，大多數這些產品、這些解決方案都需要一種或另一種鋼材。

And with our diversified breadth of products, we expect to have a position wherever the policy may go.

憑藉我們多元化的產品，我們希望無論政策走向如何，我們都能佔有一席之地。

It just seems that there's more trepidation of our customers trying to understand where is it headed?

只是我們的客戶似乎更惶恐不安，試圖了解它的發展方向？

What impact and when the lower interest rates will help spur economic activity?

較低的利率會產生什麼影響以及何時有助於刺激經濟活動？

The question is at what point does that really kick in?

問題是什麼時候真正開始發揮作用？

We believe in 2025, maybe not January 1.

我們相信 2025 年，也許不是 1 月 1 日。

But with the trajectory as we move through 2025, we expect some pickup in activity related to that.

但隨著 2025 年的發展軌跡，我們預計與此相關的活動將會回升。

So again, we also have heard of a few customers taking extended shutdowns, maybe over the holidays in Q4.

同樣，我們也聽說一些客戶延長了關閉時間，可能是在第四季的假期期間。

So we're being probably a little cautious with our Q4 guide just because there are a lot of factors that we can't control.

因此，我們可能對第四季度的指南持謹慎態度，因為有很多因素是我們無法控制的。

But we do think having the Presidential election behind us, the lower interest rates, the continued strong tailwinds that are there with a lot of unspent dollars still under the different government stimulus products set us and the industry up well for 2025.

但我們確實認為，總統選舉的結束、較低的利率、持續強勁的推動力以及在不同的政府刺激產品下仍有大量未支出的美元，將使我們和整個行業在 2025 年表現良好。

And then maybe just quickly on the auto side.

然後也許很快就在汽車方面。

And I know you're exposed to it through the tolling business.

我知道您透過收費業務接觸到它。

But are you hearing any slowdown in that market or that business?

但您是否聽說該市場或該業務有放緩的跡象？

For the most part from the platforms we're on with our automotive toll processing customer, we have not seen a pullback.

在我們與汽車收費處理客戶合作的平台上，大部分情況下，我們都沒有看到回調。

We think it'll be normal seasonality for those businesses in Q4 and generally stable demand.

我們認為第四季這些業務將屬於正常季節性，需求整體穩定。

Our platforms were on a lot of the SUVs and light trucks, even some of the super duty trucks where there's a lot of demand and some ramp up coming.

我們的平台適用於許多 SUV 和輕型卡車，甚至是一些需求量大且即將增加的超級卡車。

So we read the headlines.

所以我們讀了頭條新聞。

We hear people are concerned also again the lower interest rates could help with consumer activity in the automotive market.

我們聽說人們再次擔心較低的利率可能有助於汽車市場的消費者活動。

So we have not experienced a slowdown yet and currently expect stable activity.

因此，我們尚未經歷經濟放緩，目前預期經濟活動穩定。

(Operator Instructions) Phil Gibbs Keybanc, Capital Markets.

（操作員指示）Phil Gibbs Keybanc，資本市場。

Hey, good morning.

嘿，早安。

So the pricing and mix in the third quarter was a little bit below what you all were anticipating with the guidance and completely understandable with the market dynamics.

因此，第三季的定價和組合略低於大家對指引的預期，並且完全可以理解市場動態。

But I guess just try to help me a little bit why the LIFO reserve wasn't changed to reflect that?

但我想請試著幫我一點，為什麼 LIFO 儲備沒有改變以反映這一點？

Yeah.

是的。

Good question, Phil.

好問題，菲爾。

So we spoke to this briefly at the last call, but I'll provide some additional color as we're seeing some things play out as the year is progressing.

因此，我們在上次電話會議中簡要討論了這一點，但我將提供一些額外的信息，因為我們看到隨著這一年的進展，一些事情正在發生。

So we're having some interesting mix impact this year that we really haven't seen in the past.

因此，今年我們產生了一些有趣的混合影響，這是我們過去從未見過的。

There's some specialty aerospace products that have really long lead times and while the rest of our inventory cycling through and getting the lower replacement cost, some of these products have 50 to 70 week long lead time.

有些特種航空航太產品的交貨時間非常長，雖然我們的其餘庫存會循環使用並獲得較低的更換成本，但其中一些產品的交貨時間長達 50 至 70 週。

So we're basically in the seat of the benefit of lower cost of those products in 2025.

因此，到 2025 年，我們基本上可以享受這些產品成本降低的好處。

So what's effectively happening is that it's shifting some of that LIFO income from 2024 into 2025.

因此，實際上正在發生的事情是將部分 LIFO 收入從 2024 年轉移到 2025 年。

And that's the primary reason why you haven't really seen us up our LIFO estimate for the year as the years progress because some of that impact is going to be felt or realized in 2025.

這就是為什麼你沒有真正看到我們隨著時間的推移而提高今年的 LIFO 估計的主要原因，因為其中一些影響將在 2025 年感受到或實現。

And so, I would just add, this is kind of a unique phenomenon.

因此，我想補充一點，這是一種獨特的現象。

I've been here over 30 years, and this is the first time we've really had something like this happen because the pricing of those products had basically doubled and they're high-priced products and we've never seen lead times like that for -- especially for that large of a chunk of our inventory.

我在這裡已經 30 多年了，這是我們第一次真正發生這樣的事情，因為這些產品的定價基本上翻了一番，而且它們是高價產品，我們從未見過像這樣的交貨時間尤其是我們庫存的很大一部分。

The dollars are higher on a relatively lower volume just because of the type of product.

產品類型不同，銷售量相對較低，但美元卻較高。

So this is something we've been kind of learning as we've gone through the year, this year and seeing the impact on LIFO of those unique characteristics on those products.

因此，這是我們在這一年中一直在學習的事情，並看到了這些產品的這些獨特特徵對後進先出法的影響。

Well, you're not alone.

嗯，你並不孤單。

I've never seen it either.

我也從來沒見過。

We're aligned.

我們是一致的。

Question on the gross margins that you made about the fourth quarter, you said you expected things to better align and stabilize in the fourth quarter.

關於第四季毛利率的問題，您說預計第四季情況會更好地協調和穩定。

Does that mean that you expect the fourth quarter to be the trough?

這是否意味著您預計第四季將是低谷？

Or are you saying you already saw the trough in the third quarter?

還是你是說你已經在第三季看到低谷了？

Good question, Phil.

好問題，菲爾。

So it depends what pricing does in the first quarter, right?

所以這取決於第一季的定價情況，對吧？

So if you are forecasting the pricing in the first quarter, we'll go up, then that would imply that Q4 would be a trough.

因此，如果您預測第一季的定價，我們會上漲，那麼這意味著第四季度將是一個低谷。

But just to be clear, we're not putting a guidance out for Q1 or our views for pricing for Q1.

但需要明確的是，我們不會為第一季提供指導或我們對第一季定價的看法。

But if again, depending on what pricing does in 2025, then yeah, I mean, if there's some tailwinds in the beginning of the year, then presumably that would be true that the Q4 could be the trough.

但如果再說一遍，取決於 2025 年的定價情況，那麼是的，我的意思是，如果年初出現一些順風，那麼第四季度可能會是低谷。

I appreciate that.

我很欣賞這一點。

I'm just saying, relative to the third quarter.

我只是說，相對於第三季。

Are you saying the third quarter, you're saying it's going to be lower than the third quarter but stabilizing or is it going to be consistent with the fourth quarter

你是說第三季度，你是說它會低於第三季度但趨於穩定，還是會與第四季保持一致

--

--

I think, it should be consistent.

我想，應該是一致的。

Based on our guidance, we're saying consistent with the third quarter.

根據我們的指導，我們認為與第三季一致。

Okay.

好的。

That's helpful.

這很有幫助。

And then last question for me on the semi side, you largely do semi's infrastructure from what I remember not semi consumables but been a little bit squishy, but maybe seeing some signs that that might be you stabilizing.

然後是我在半成品方面的最後一個問題，您主要是通過我記得不是半消耗品而是有點軟的半成品基礎設施來完成半成品的基礎設施，但也許看到一些跡象表明這可能是您穩定下來的。

What does that mean from your end?

從你的角度來看，這代表什麼？

Is it just that the supply chain feels a little bit over inventoried now that some of these projects have been a little bit deferred and that might be breaking after the election cycle?

難道只是供應鏈感覺庫存有點過剩，因為其中一些項目已經被推遲了一些，並且可能在選舉週期後被打破？

Just trying to get some kind of context behind that.

只是想了解背後的某種背景。

Appreciate it.

欣賞它。

Thanks.

謝謝。

So on the semiconductor, we do sell some into the consumables, to the equipment manufacturers and then the infrastructure as you mentioned, and at one of our companies selling more into the consumables.

因此，在半導體方面，我們確實將一些產品銷售給消耗品，然後賣給設備製造商，然後是您提到的基礎設施，而我們的一家公司則將更多的產品銷售給消耗品。

We did see a little more activity in Q3 than we had seen for the last I guess several quarters as we see customers working through the inventory glut that they had, still some room to go on the equipment manufacturers, some activity there but not really picking up yet.

我們確實看到第三季的活動比過去幾季要多一些，我猜是因為我們看到客戶正在解決庫存過剩的問題，設備製造商仍有一些空間，那裡有一些活動，但沒有真正挑選還沒起來。

And then on the infrastructure side, the new chip builds.

然後在基礎設施方面，新晶片的建構。

There are a lot of factors I think impacting timing.

我認為影響時機的因素很多。

We're still very bullish long-term.

我們仍然非常看好長期前景。

I don't know how much of that is the election.

我不知道其中有多少是選舉造成的。

We hear about permitting slowdowns, getting construction workers, just different reasons why it's start and stop on some of the projects.

我們聽說允許放慢速度，僱用建築工人，只是某些項目開始和停止的不同原因。

And most of the projects, you see the big headline numbers, but a lot of them were planned in different phases where it wasn't all going to come immediately, which is quite honestly a better environment where it's spread out a little bit.

大多數項目，你都會看到大標題數字，但其中許多都是在不同階段計劃的，並不是所有項目都會立即完成，老實說，這是一個更好的環境，它可以稍微分散一些。

(Operator Instructions) As there are no further questions, I now hand the conference over to Karla Lewis, President and CEO for her closing comments.

（操作員指示）由於沒有其他問題，我現在將會議交給總裁兼首席執行官卡拉·劉易斯（Karla Lewis）進行總結評論。

Thank you.

謝謝。

And thanks again to everyone who joined our call today.

再次感謝今天加入我們電話會議的所有人。

I would like to remind everyone that next month, we'll be in Chicago presenting at Baird's Global Industrial Conference and we hope to meet with many of you there.

我想提醒大家，下個月，我們將在芝加哥出席貝爾德全球工業會議，我們希望在那裡與你們中的許多人見面。

I also want to just reiterate our confidence in the ability of the Reliance team to operate well through all market conditions, even with some potential temporary headwinds in Q4.

我還想重申，我們對 Reliance 團隊在所有市場條件下良好運作的能力充滿信心，即使第四季可能出現一些暫時的不利因素。

And we're confident with our team moving into 2025.

我們對我們的團隊進入 2025 年充滿信心。

And we'd like to thank our customers, our suppliers and our stockholders for all of your support.

我們要感謝我們的客戶、供應商和股東的所有支持。

Thank you.

謝謝。

Thank you.

謝謝。

The conference of Reliance Inc has now concluded.

Reliance Inc 的會議現已結束。

Thank you for your participation.

感謝您的參與。

You may now disconnect your lines.

現在您可以斷開線路。