Reliance Steel & Aluminum Co. (NYSE:RS) Q1 2024 Earnings Call Transcript

Reliance Steel & Aluminum Co. (NYSE:RS) Q1 2024 Earnings Call Transcript April 25, 2024

Reliance Steel & Aluminum Co. misses on earnings expectations. Reported EPS is $5.3 EPS, expectations were $5.51. Reliance Steel & Aluminum Co. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings, and welcome to Reliance, Inc. First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando with ADDO Investor Relations. Thank you, Ms. Orlando. You may begin.

Kim Orlando: Thank you, operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance’s first quarter 2024 financial results. I’m 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. A recording of this call will be posted on the Investors section of our website at investor.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. The reconciliations of the adjusted numbers are included in the non-GAAP reconciliation part of our earnings release. I will now turn the call over to Karla Lewis, President and CEO of Reliance.

Karla Lewis: Good morning, everyone, and thank you all for joining us today to discuss our first quarter 2024 results. Our resilient business model, most notably the diversity of our products, end markets and geography once again delivered strong performance in the first quarter. Despite a challenging pricing environment, we continue to drive smart profitable growth surpassing broader industry shipment levels and maintain pricing discipline and a strong gross profit margin, all of which collectively contributed to our first quarter non-GAAP earnings per diluted share of $5.30. Our significant investments in value-added processing capabilities continue to bolster our gross profit margin throughout market cycles. Our profitable operations and consistent ability to generate cash enable us to continue allocating capital across our core priorities.

We have completed three acquisitions to-date in 2024, expanding our product offerings, processing capabilities and geographic reach and collectively adding nearly $500 million in annualized sales based on 2023 results. We also invested $108.7 million back into our business through capital expenditures, predominantly targeted towards growth opportunities that increase capacity and value-added processing capabilities. Our CapEx budget for the calendar year 2024 is $440 million, with an expected total cash outlay of approximately $500 million which includes certain carryover projects from prior years. As previously noted, we expect approximately two-thirds of our CapEx spend will be used for growth projects. We also returned $65.3 million to our valued stockholders in dividends.

On the M&A side, in addition to acquiring Cooksey Steel on February 1, we completed two acquisitions earlier this month, American Alloy and Mid-West Materials. American Alloy brings specialty carbon steel plate to our product portfolio as well as new fabrication capabilities through the addition of six service center locations in the U.S. Mid-West Materials increases our flat-rolled presence in and around Ohio, primarily servicing North American OEMs. All of these transactions fit our acquisition strategy of acquiring immediately accretive, well-run companies with strong management teams. We have now completed 75 acquisitions since our 1994 IPO, and the M&A pipeline remains strong as we continue to evaluate a wide array of potential future opportunities.

And please note that our first quarter results include contributions from Cooksey that was acquired on February 1, but do not include American Alloy or Mid-West Materials, both of which closed on April 1. Before I close, I’d like to thank the entire Reliance team for a strong start to the year through their commitment to exceptional customer service, marked profitable growth and most importantly, their commitment to safety. In the medium to long-term, we believe the investments we have made and continue to make in our business position Reliance to benefit from growth opportunities under the infrastructure bill, the CHIPS Act and the Inflation Reduction Act along with the robust reshoring and near-shoring activity currently underway in several of the end markets we service.

Thank you all for your time today. I’ll now turn the call over to Steve, who will review our first quarter demand and pricing trends.

Steve Koch: Thanks, Karla, and good morning, everyone. I’d also like to express my gratitude to our strong team at Reliance for a great start to the year and the continued commitment to safety. Further, I’d like to extend a warm welcome to the Reliance family of companies, the teams at Cooksey, American Alloy and Mid-West Materials. I’ll now turn to our first quarter demand and pricing trends. Our tons sold increased 10.3% compared to the fourth quarter of 2023, in line with both our expectations of up 9% to 11% and typical seasonal trends. Compared to the prior year quarter, our tons sold were down 1.7%, but still well below the service center industry decrease of 4.2% as reported by the MSCI. We believe our continued outperformance of our MSCI peers is supported by both organic growth and strategic acquisitions.

First quarter 2024 volumes were also impacted by one less shipping day in the first quarter of 2023. Our first quarter average selling price per ton sold at $2,442 declined by 1% compared to the fourth quarter of 2023 below our expectations of up 1% to 3%. We experienced lower-than-anticipated pricing across carbon and stainless steel products as the quarter progressed. Pressure on carbon steel product pricing contributed to a temporary decline in shipment activity during March as some customers delayed orders in anticipation of lower prices. While carbon steel prices increased 1% compared to the fourth quarter, they nonetheless and in the second quarter trending down. Stainless steel prices were down 6.2% compared to the fourth quarter but stabilized heading into the second quarter.

Next, I will turn to an overview of trends we saw within our products in key end markets. Carbon steel tubing, plate and structurals represented about one-third of our first quarter sales. All these products experienced solid volume growth and outperformed industry shipment levels compared to the first quarter of 2023. During the first quarter of 2024, strong nonresidential construction activity supported healthy demand for carbon steel, structural and tubing products with plate demand softening due to declining prices. Aluminum stainless products represented just over 30% of our first quarter sales. While stainless shows more favorable volume trends than aluminum, we outperformed industry shipment levels across both product groups year-over-year.

Aerospace products comprise about 9% of our total sales and aerospace demand remained stable year-over-year. We primarily service the automotive market through our toll processing operations, which are not reflected in our tons sold. Our tolling business processed 4.8% more tons in the first quarter of 2024 than in the prior year, fueled by continuing strong demand from the automotive market and our significant investments to increase capacity. Our general manufacturing market business, which is roughly one-third of our total sales is highly diversified across products and includes industrial machinery, consumer products, heavy equipment and military. Shipments declined year-over-year driven by weakness in agricultural equipment and consumer products, partially offset by stronger industrial machinery shipments supported by military manufacturing demand.

Demand in the semiconductor industry has stabilized, but remained down year-over-year. Our long-term outlook for the semiconductor market remains positive reinforced by the CHIPS Act and significant semiconductor fabrication expansion underway in the United States, and we continue to invest in semiconductor capacity. Overall, we see demand across the end markets we serve remaining stable to strong in the second quarter of 2024. Please refer to our earnings release for additional commentary on our end markets and product diversification. I will now turn the call over to Arthur to review our financial results and outlook.

Arthur Ajemyan: Thanks, Steve and good morning, everyone. Our first quarter 2024 non-GAAP diluted earnings per share of $5.30 were at the low end of our guided range as our tons sold seasonally improved, but pricing softened more than we anticipated. We successfully outperformed industry shipment levels across nearly all products, which bolstered our quarterly earnings despite the challenging pricing environment. Our 31% gross profit margin for the first quarter was attributable in part to higher-than-anticipated LIFO benefit, better alignment of costs on hand and replacement costs and gross profit margin stability from our value-added processing capabilities. We recorded LIFO income of $50 million in the first quarter compared to our guidance of $20 million.

As prices declined more than we anticipated, we have increased our 2024 annual LIFO income estimate from $80 million to $200 million. Accordingly, we currently expect to record approximately $50 million of LIFO income in the second quarter of 2024. On a FIFO basis, which is how we monitor our day-to-day operating performance and which excludes the effect of our LIFO inventory valuation method our gross profit margin improved by roughly 80 basis points compared to the prior quarter to 29.6%, as we saw improved alignment of inventory cost on hand with replacement costs. This trend began to reverse in March and has continued in the second quarter. While most carbon product prices began to stabilize in April, we’ll continue to see short-term gross profit margin pressures throughout the second quarter as we get per alignment of costs on hand with replacement costs.

As of the end of the first quarter, the LIFO reserve on our balance sheet was $529 million, which will generate LIFO income and benefit future period operating results to mitigate the impact of potential further declines in metal prices. Moving along to expenses. On a year-over-year basis, same-store non-GAAP SG&A expenses increased $7.1 million or 1.1%, primarily due to the increased head count to accommodate organic growth, which was partially offset by lower incentive-based compensation resulting from lower profitability. As a reminder, our model normalizes expenses by rightsizing incentives as profits trend down. I’ll now move on to discuss balance sheet and cash flow. For the first quarter, we generated $126.3 million in operating cash flow, which helps fund $108.7 million in capital expenditures, $53.7 million for an acquisition and the return of $65.3 million to our stockholders through dividends.

While we did not have any share repurchases in the first quarter of 2024, we have $1.44 billion remaining under our share repurchase authorization and ample liquidity for opportunistic repurchases. Turning now to our second quarter outlook. Overall, we expect a better-than-normal seasonal recovery in demand in the second quarter of 2024 despite prevailing macroeconomic uncertainty and geopolitical matters. We also expect shipping volumes to increase 2.5% to 4.5% sequentially in the second quarter with approximately 2% of the sequential growth coming from recently completed acquisitions. On the pricing side, we expect our average selling price per ton sold for the second quarter to be down 1% to 3% compared to the first quarter, which will generate some short-term pressure on our gross profit margin as we work through higher cost inventory on hand.

Based on these expectations, we anticipate non-GAAP earnings per diluted share in the range of $4.70 to $4.90 for the second quarter of 2024. This concludes our prepared remarks. Thank you for your participation. And at this time, we’ll now open the call up to questions. Operator?

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Q&A Session

Operator: [Operator Instructions] The first question comes from the line of Phil Gibbs with KeyBanc Capital Markets. Please go ahead.

Phil Gibbs: Good morning.

Karla Lewis: Good morning, Phil.

Arthur Ajemyan: Hey, Phil.

Phil Gibbs: You mentioned the short-term gross margin pressures in the second quarter from some of the higher cost inventory that you’ll have to let. Are you expecting or should we expect, assuming that prices generally level out for the product that you sell that FIFO gross margins will begin to improve in the third quarter.

Karla Lewis: Yes. So as has been consistent in our business for decades in the service center business, we have to manage through different pricing fluctuations and it’s part of what we do. Prices deteriorated a little more than we anticipated in the first quarter, but early in the quarter for certain products, there were some price hikes. So just with the normal lag we have to work through as we receive the higher priced material. And if selling prices continue to decline. And so that just takes a little bit for a correction, but we do expect it to be temporary, as you stated. As prices level out, then we should see some margin expansion. Also with our gross profit margins, they certainly are impacted by the base metal price.

However, as we have and do continue to increase the amount of value-added processing that we perform for our customers, we do have a little more cushion in there to make our margins a little more stable by taking – it’s not just the base price fluctuations. We can maintain a consistent margin on the value-added processing portion.

Phil Gibbs: Okay. And then when I look at operating expenses, they were a little bit higher than what we were anticipating. Do you have – do you have contractual resets or labor renegotiations that you do every January 1? Or is there insurance picking up or something along those lines? Or is it more of this – more of the same relative to the fourth quarter, where you talked about the fact that you do have some infrastructure in the form of new plans, which are not contributing to revenue quite yet. I’m just trying to understand that.

Karla Lewis: Yes. So we have different timing on kind of wage increases throughout the year. But GM1 is probably about half of our companies probably increased wages at that time. It’s a little more broad-based. Our volumes were up, so more expense comes along with increased volume just packaging supplies, various warehouse expenses, trucking, delivering more. So it was a little broad-based. I don’t think there was anything in particular, but your point is right too, Phil, that we commented before. We do have some greenfields and some expansions in process where it does take a little time to ramp up. So the expense load could be a little heavy. So there is a little bit of that. We also, I think, commented last quarter that safety is our number one priority, and that takes a lot of training, especially in today’s world with the workforce and so it probably takes us longer to onboard employees and you have to carry a little more to be able to get them properly trained.

Arthur Ajemyan: And Phil, this is Arthur. I’ll just add that year-over-year on a same-store basis, we’re only up 1%. So – and we talk about our incentive pay structure that kind of moderates expenses. So head count is up a little bit, but then incentive comp is down. So net-net, year-over-year, on a same-store basis, we’re only up 1%.

Phil Gibbs: And then when you exclude the same-store keep that out, what, I guess, is the incremental operating expense that may not be – that may not be completely, I guess, overcome through revenue at this point from some of these greenfield you’re talking about? I mean, is it upwards of $15 million to $20 million at this point that might be under absorbed?

Karla Lewis: No. It wouldn’t be that much though.

Phil Gibbs: Okay. And then lastly, as you guys look at CapEx, you talked about the $440 million and then some carryover getting it to $500 million [ph] cash. Is the two-thirds growth CapEx based on the $440 million number – what you lease on to maintenance level?

Karla Lewis: Yes. And that’s been pretty consistent. The last, at least, I’d say, probably four or five years, the majority of our CapEx spend is growth related.

Phil Gibbs: Thank you.

Operator: Thank you. Next question comes from the line of Martin Englert with Seaport Search Partners. Please go ahead.

Martin Englert: Hello, good morning, how are you?

Karla Lewis: Good.

Arthur Ajemyan: Good morning, Martin.

Martin Englert: What were the same-store volumes in 2Q and 3Q of last year? I think you reported them again this quarter. I think it might have gone a couple of quarters where it wasn’t reported or perhaps they didn’t differ from the reported tons sold.

Arthur Ajemyan: Martin, probably only had one relatively small acquisition last year and so – and another one, they’re not sort of story-changing numbers, at least the two completed ones that would affect the same-store numbers. I don’t have that number handy. But if you go to our public filings, you’ll see it.

Karla Lewis: Yes. I mean, yes, we reported if it’s – I mean we always reported in the SEC filings, but we don’t necessarily talk about it if it’s – if there’s not a meaningful difference as Arthur indicated.

Martin Englert: Okay. So pretty – something pretty close to what the volumes were that were reported. When you look at the midpoint of the volume guide. I think it implied around 4% growth year-on-year at the group level, including acquisitions versus the negative contraction of 2% for 1Q. Is that right?

Arthur Ajemyan: Yes. I think you’re in the right ballpark. That’s correct.

Karla Lewis: Yes. And Martin, maybe one of the things if you’re kind of focusing on our shipment levels. And certainly, the acquisitions will add to that. Q1, like we felt pretty good about I looked at our stock price this morning, but we thought we had a good first quarter, absent it being a little more difficult from a pricing standpoint than we had anticipated. From a shipment standpoint, something we saw and we’ve heard from others in our industry in the broader industrials, we’re probably a little surprised in March. March is typically a pretty strong shipment month for us and in the industry. And really, the second half of March, we saw more of a falloff in our tons shipped that we had anticipated. Good Friday actually fell in March this year, which, obviously, we can look at the calendar, we understood that.

But it seemed that like spring break, Easter, buyers waiting for prices to go down, especially on the carbon flat rolled side, they kind of pulled back a bit. They were on vacation. We just saw – we were a little surprised by those last couple of weeks of March. The good news is, right, that pushes into April and the second quarter, which is why we feel that we are anticipating more than seasonal improvement in our second quarter tons ship this year.

Arthur Ajemyan: And typically, the second quarter is somewhat flat with the first quarter. So and our guidance implies on a same-store basis, some uptick in sequential tons shipped.

Martin Englert: When you look at it on a same-store basis, the growth rate, its still pivots positive, which, I think a couple percent, which aligns with what you’re seeing or expecting with a sequential uptick and then the 2% growth from acquisition on the quarter, I think that implies something like 29,000 tons from the acquisition like a quarterly number? Is that reasonable for modeling purposes?

Arthur Ajemyan: That’s not unreasonable, yes.

Martin Englert: For the repurchase – no repurchases in the quarter was this mostly due because of the acquisition opportunities and any other color you can provide on the acquisition pipeline?

Karla Lewis: Yes. So I think kind of two things in there in that question, Martin. So from a repurchase standpoint, we continue to monitor the market and opportunistically repurchase our shares. The fact that we acquired acquisitions that we did complete some acquisitions in the first quarter didn’t impact our repurchase activity. Our balance sheet is strong enough that as we’ve said for the last couple of years, we’re able to execute on all four of our capital allocation buckets at the same time. And so we just – we’re not in the market for repurchases in Q1, but we will continue to opportunistically repurchase our shares. Again, irrespective of what we have going on, on the acquisition side, we were very happy to welcome Cooksey, American Alloy and Mid-West Materials to the Reliance family.

So far this year in 2024, we’ve seen good activity. We continue to see good activity opportunities out there in the acquisition market. So we expect to continue to be active there as well.

Martin Englert: I wanted to come back one last one on the expectation of there was some delay at the end of the quarter with demand maybe and in March and maybe some of it was pushed. So do you anticipate instead of maybe historically flattish Q-on-Q, you expect some improvement because of that dynamic? Are you seeing that in your order entry and your order intake so far, I guess maybe another way to ask is, how are you seeing activity in April to date here as far as volumes?

Karla Lewis: Yes. And that’s Martin, a good point because remember, 40% of our orders, the customer calls us today, we’ve delivered tomorrow. So we don’t have backlogs and things that other people talk about. Certain of our companies, depending on the end markets they sell into, they may have a little more backlog visibility. So we have seen a little bump in April from March levels. I think general sentiment across a lot of our FOCs is pretty positive coming into the second quarter.

Martin Englert: Okay. I appreciate that. And it was a nice job managing the FIFO gross margins on the quarter.

Karla Lewis: Thanks, Martin. Appreciate that.

Operator: Thank you. [Operator Instructions] Next question comes from the line of Timna Tanners with Wolfe Research. Please go ahead.

Timna Tanners: Hey. Good morning everyone. I wanted to follow up with the second quarter outlook and kind of ask what drives the low end versus the high end of how you’re looking at the guidance?

Karla Lewis: Hi Timna. Yes, I mean, in general, it’s kind of with our business model, we think, and we do our best to generally anticipate both volumes and pricing dynamics. And we never know with our broad product mix, our next-day orders. So it’s really just that combination of within that range of shipments, within that range of pricing. How much pressure is there on margins? Margin is a big driver, getting down to the EPS line as well as pricing. So we just try to give a little room in there for those different variables.

Timna Tanners: Okay. In terms of trying to manage some of that variation, as you mentioned, do you ever consider either the futures market to kind of temper some of that volatility at least on the carbon flat-rolled side? And do you think about the stronger dollar changing your appetite for imports?

Steve Koch: Timna, hi, it’s Steve. As you know, 95% at least of our material that we purchase is domestically sourced. So that’s kind of our natural hedge. We feel like the lead times that we received our inventory management by our leaders in the field, which we think they’re doing a great job because there’s been a lot of pricing challenges over the last year or so. So I think that in this type of a market, I think that we thrive and on people in the field thrive.

Arthur Ajemyan: Yes. And then Timna, in terms of pricing forecast a lot of – there’s product where you certainly – you kind of look at the futures market. But to Steve’s point, being a domestic buyer, you have a lot of visibility to those products and their pricing. So especially for a quarter out, but then with that said, there’s always – there’s volatility that could be unexpected, so that happens. And just like we had this quarter where we thought pricing was going to be up a little bit, but we ended up down a little. So – but I mean, again, yes, we consider all that information and then make some informed decisions based on what we see with the lead times and demand and with the different geographies and the products that we have. So all of that gets factored into our forecast.

Karla Lewis: Yes. And I would also just add to that, we’re primarily buying and selling in the spot market. We don’t have a lot of longer-term fixed sale price contracts, which if that’s your model, you probably do need to consider hedging more, but that’s just not our model.

Timna Tanners: Okay. Fair enough. And just one more if I could. I thought it would be interesting to touch on the labor market. I thought it was interesting to hear you talk about incentive comp and how you adjust for that. Given that the labor market is tighter, how do you manage in a softer market or a period of lower profitability, less incentive comp, but also the challenges of retaining and hiring people?

Karla Lewis: Yes. I mean, Timna, certainly it’s been one more challenge all of our people out in the field have had to deal with over the last few years. We have seen the labor market improve a bit as far as seeing more candidates, more people interested in jobs, but we’re not always the sexiest industry to some of the people out there when they’re looking at opportunities. But we have been more successful bringing people in. We think we do a good job of retaining people. Good people once we have them in, we want to treat them fairly, provide them with good benefits, pay them fairly. Certainly, when things get a little tougher, they may be bringing less home, but we’ve also had some pretty good years the last couple of years too where our people have done really well, doing more value-added processing also provides a little more stability for our workforce and the profitability and their incentives that they may take home, growing the business, which we’ve been focused on.

So there are ways to manage around that. But it’s not easy these days, but I don’t know that we’ve seen any significant reaction to those factors.

Timna Tanners: Okay. Thank you again. Best wishes.

Karla Lewis: Thanks, Timna.

Arthur Ajemyan: Thanks, Timna.

Operator: Thank you. Next question comes from the line of Phil Gibbs with KeyBanc Capital Markets. Please go ahead

Phil Gibbs: Yes. My follow-up was based largely on what you’re seeing in both the aerospace and defense side. I know you’ve got kind of a balanced mix within your portfolio. I think we’re trying to parse through all the headlines on the commercial aerospace volatility with Boeing, but also trying to recognize the strength in the defense market. So just curious in terms of what your – what your forward expectations are, what you’re seeing? I know you’re serving some specific programs as well. So just curious. Thanks.

Karla Lewis: Yes, Phil, on the aerospace side, our Q1 sales, aerospace represented about 9% of that. About half of that commercial, about half defense and space. On the defense and Space side, space is a little smaller, but it’s strong and growing. The defense continues to be strong. We’re seeing increased demand, whether they’re specifically our aerospace business in that 9% where we’re participating on several key programs, both the U.S. and internationally, and we see order activity picking up there, but not included in the 9%. A lot of our companies we’ll sell into like missiles, munitions, that doesn’t all get picked up in that number. And that continues to be strong, and we see with the unfortunate circumstances around the world today, we see some continued demand strength in that area.

And then on the commercial side, which you know we have companies both servicing in the U.S. and Europe, the airplane manufacturers, build rates actual is much less than what is announced and what the targets are right now. So we do see some buildup, a little pressure starting in the supply chain on the commercial side as the whole supply chain has to really kind of correct for what the actual build rates are. So we do anticipate some near-term pressure on the commercial aerospace side. However, long term, there are just a lot of orders out there. We’re participating on pretty much all programs. And we’re still bullish for the long term on aerospace, but expect a little pressure in the near term.

Phil Gibbs: Thank you. And then just one more for me, on this solid CapEx budget that you have for this year? I know you’ve said in the past that they’re there’s hundreds of projects in there, but maybe if you could call out some of the larger ones that you either started or in the process of either this year or last year. And maybe where they are in the stages of maturation or commercial development? Thanks.

Karla Lewis: Yes. I mean a couple of the big ones we’ve talked about semiconductor down in Texas. We’ve got a big build there to add more capacity. That one probably maybe later this year, we’ve kind of pulled back and have had some slight delays on that, which is okay because as you’re probably aware, the actual semiconductor plants themselves, they’ve had starts and stops. And so we – so we’ve slowed a little bit there, but still long term, very bullish on that. We have, for one of our kind of specially long product companies in the Atlanta area. They’re about ready to ramp up service center business that they increase their capacity significantly moving into a newer building. On our tolling operations in the U.S., we’ve added a couple of lines that have started up recently.

They’re still ramping Mexico and our tolling businesses. Since we’ve also added some equipment down there. We’ve got a greenfield that’s still a little early in the stages for some of our like heavier carbon products down in the Atlanta area. Steve, any?

Steve Koch: I would just add, it’s not a big headliner Phil, but we do a lot of upgrades. It doesn’t have to be greenfield, but we’ll upgrade some of our really important cut the light material for we’re doing that in Decatur, Alabama and Fort Wayne Indiana. So that was offline for a little bit in the first quarter, and we’re seeing a nice bounce back in production in those two key facilities.

Phil Gibbs: Thanks team. Have a good day.

Karla Lewis: You too.

Steve Koch: Thanks, Phil.

Operator: Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Karla Lewis for closing comments.

Karla Lewis: Thank you, and thanks again to everyone for joining our call today. And I would like to tell our Reliance family that we think you guys did a really good job managing through a tough environment in the first quarter, and we’re very proud of what you did. And I’d also like to remind everyone that next month, we’ll be in Miami, presenting at the BofA Global Metals, Mining and Steel Conference and in Boston presenting at the KeyBanc Basic Materials Conference, and we hope to see many of you there. And thanks again, everyone, for your continued support of Reliance.

Operator: Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.