Phil Gibbs: The revenue splice between these two deals is largely in carbon or mixed amongst metals?
Karla Lewis: Yes, primarily carbon. And just a reminder, Cooksey, we did already close February 1, so they come into our numbers – they’re in our numbers now. American Alloy has to go through regulatory approval. So that is not yet closed. And at the time that we are able to close that, we’ll make an announcement and then their numbers would begin rolling in then.
Phil Gibbs: Okay. Perfect. Thanks so much.
Karla Lewis: Thanks, Phil.
Arthur Ajemyan: Thank you.
Operator: [Operator Instructions] Our next question comes from the line of Martin Englert with Seaport Research Partners. Please proceed with your question.
Martin Englert: Hello. Good morning everyone.
Karla Lewis: Hey, Martin.
Arthur Ajemyan: Hey, Martin.
Martin Englert: Question on sequential volume guidance at the high end of the range. I think that it implies that it would be down marginally year-on-year with volumes. The end market commentary was generally positive in the release and prepared remarks. Could you just touch on where that weakness could be year-on-year? Or am I misinterpreting that?
Arthur Ajemyan: No, you asked a very good question, Martin. As you may recall, last year, our first quarter increase sequentially from the fourth quarter was unusually strong, and we called it out as we had some demand pull forward in the first quarter from rising carbon flat-rolled prices. So going from Q4 of 2022 to Q1 of 2023, our tons increased almost 18%. And then sequentially as we navigated the rest of the year, there were declines, which were sort of a little atypical from a seasonality perspective. So when you look at it from Q1 of 2024 to Q1 of 2023 perspective, you’re going to see a little bit of that decline, which is again due to that unusually really strong Q1 of 2023.
Karla Lewis: Yes. I would say it was more buying patterns of some of our customers. And I just want to make sure we’re not implying weakness. We still see healthy demand in Q1 2024.
Martin Englert: I guess, following on that, okay. So there was noise in the comparison year-on-year in 1Q. And some atypical seasonal trend after that. But based on what you see today, would you expect, I guess, more fundamental underlying demand to be exhibited in the volumes in the remaining quarters? Meaning if it was comparing negatively marginally in 1Q and you’re rather positive on these end markets, meaning we should expect some growth in volumes year-on-year?
Karla Lewis: I mean, that’s certainly our intent and what we’re pushing for. We’ve been making investments to continue to grow organically. And our teams out in the field did a great job in 2023. We outperformed the MSCI shipment levels. That was strategic. It was because of investments we’ve made because of our companies going after smart profitable business that’s out there, and they were very successful in doing that. We think underlying demand at this time, we are positive. We think there are a lot of good tailwinds coming through the infrastructure, the chip, the reshoring and nearshoring, that is all still out there. So we only give guidance a quarter out, but we are positive about the opportunities that are out there that we expect to see in 2024, but we’ve also been in this business long enough that we know there are certain things we can’t control, but we’re excited and we’re positive at this time.
Martin Englert: Okay. Thank you for that. That’s very helpful. Can you touch on the corresponding volumes to the sales of the two acquisitions? And I understand one of them is pending, but what you saw in 2023 for each?
Karla Lewis: Yes. I mean, we’ve disclosed their sales numbers, Martin, but nothing beyond that, nothing on volumes at this time. And it won’t be – overall, we’re – they are important businesses, important additions to the family, and we’re excited about that. But it’s not going to materially move our tons.
Martin Englert: Are you able to qualitatively comment on the gross margin profile relative to Reliance?
Karla Lewis: Yes. I mean, we don’t – we do not typically talk about individual companies unless it’s a very material transaction. But we – I will say that they are good performing profitable businesses. But we do – we’re excited that there – we do see some opportunities to help expand their gross profit margins from where they are currently. Some of the expertise we have throughout the Reliance family and value-added processing, we think we can bring to the companies and really help them work on that and pricing discipline. So, we think there’s upside to their already solid profitability levels, but we’re not going to give specific numbers.
Martin Englert: Okay. That’s helpful. If I could, one last one on the repurchases. The average repurchase price is lower quarter-on-quarter in 4Q. The volume repurchase increased to $0.9 million versus $0.5 million. And I think earlier in your prepared remarks, you did highlight you typically opportunistically repurchase, but how are you thinking about repurchases looking ahead, both in the near term and 1Q with more of the share prices today?
Karla Lewis: Yes. So Martin, we look at share repurchases like all of our – all of our capital allocation buckets where we try to opportunistically be active in each of those buckets. And we don’t have any one holding back another one. The fact that we have announced a couple of acquisitions doesn’t change. We’ve got the – we’re in a financial position where that doesn’t impact our ability to repurchase shares or how we view that. So we expect to continue to be active when we think it’s the right timing in the market, which is consistent with Q3, Q4, a lot depends on how the stock trades during that period.
