Q4 2022 Reliance Steel & Aluminum Co Earnings Call
Greetings and welcome to the reliance steel and aluminum company's fourth quarter 2022 earnings conference call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I'd now like to turn the conference over to your host Tim Orlando.
Investor Relations.
Thank you operator, good morning, and thanks to all of you for joining our conference call to discuss your alliances fourth quarter and full year 2022 financial results.
I am joined by Karla Lewis, President and Chief Executive Officer, he'd Cook Executive Vice President and Chief operating Officer, and Arthur Julien Senior Vice President and Chief Financial Officer.
A recording of this call will be posted on the investors section of our website at Investor Doc R. S AC dotcom.
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.
Conditions on our future operations, which may not be under the company's control and may cause the actual results performance or achievement of the company to be materially different from the results performance or other expectations implied by these forward looking statements.
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 31st 2021, and updated on Form 10-Q for the quarter ended September 30th 2022 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 on the information on this call speak only as of today's date and the company disclaims any duty to update the information provided therein in here.
I will now turn the call over to Karla Lewis President and CEO of reliance.
Thanks Kim.
Good morning, everyone and thank you all for joining us today to discuss our fourth quarter and full year 2022 financial results.
Before I begin I'd like to say that I'm honored to have the privilege to serve as CEO of this wonderful family of companies.
I look forward to continuing our long standing track record of industry, leading financial operational and safety performance growing our company and increasing stockholder value in the years ahead.
I would also like to acknowledge Jim Hoffman for his significant contributions to reliance both during his tenure as CEO and throughout his many years of service to the company on behalf of the management team here at reliance we wish him all the best in his upcoming retirement at the end of the year.
I will begin today with an overview of our 2022 performance and capital allocation strategy.
Steve will then speak to our operating results and demand trends by end market and Arthur will conclude with a review of our fourth quarter 2022 financial results.
As well as our outlook for the first quarter of 2023.
Turning to our results.
We're very pleased to have achieved record financial performance in 2022 across nearly every metric during a period of continued metal price volatility and broader economic uncertainty.
Our unique business model is designed to position reliance as the customer and supplier of choice throughout industry cycles.
We are differentiated by the diversity of our operations superior customer service and ability to generate significant cash to fuel our long standing commitment to both growth and stockholder returns are.
Our full year 2022, net sales were a record $17 billion driven by solid demand in the majority of our end markets along with favorable metals pricing.
In 2022 more than half of our orders included value added processing, which.
When combined with our product and end market diversification and focus on small orders with quick turnaround.
Drove our strong gross profit margin of 38% for the year, which was at the high end of our estimated sustainable annual range. Despite declining prices for most products in the second half of the year.
Effective expense management.
With our strong gross profit margin.
<unk> had record annual non-GAAP pretax income of $2.44 billion and record non-GAAP diluted earnings per share of $30.03.
And let me say that again record non-GAAP diluted earnings per share of $30.03.
We generated record annual cash flow from operations of.
$2.12 billion in 2022 far surpassing our prior record of $1 $3 billion in 2019 made possible by our record profitability and working capital management.
I applaud and thank our team on achieving these outstanding results and for doing so safely with 2022 marking an all time low for our total recordable incident rate.
Our strong cash generation and liquidity enables us to continue executing our disciplined capital allocation strategy with particular emphasis on both growth and stockholder returns, we invested nearly $342 million in capital expenditure.
Errors in 2022 setting a new annual record with the majority funding growth opportunities. Our full year 2023 capital expenditure budget is another new record at $500 million with an expected total cash outlay of approximately <unk>.
$400 million to $450 million in 'twenty, two 'twenty, three which includes some carryover from 2022 and prior year projects due to ongoing extended lead times throughout the supply chain.
We anticipate about two thirds of our budget will be focused on growth initiatives in areas, such as facility upgrades and expansions into new markets, new equipment to expand automate and improve the efficiency of our value added processing capabilities, along with creating safer.
And improved working environments for our valued employees.
Although we did not complete any acquisitions in 'twenty to 'twenty two the pipeline remains healthy and we continue to evaluate many opportunities with the goal of pursuing those that meet our disciplined criteria.
We returned over $847 million to our stockholders in 2022 through dividends and share repurchases. Furthermore, as announced in our earnings release. This morning, we were pleased to increase our quarterly cash dividend by 14, 3%.
Two one dollar per share or $4 on an annualized basis underscoring our confidence in our long term strategy and outlook.
Over the last five years, we have allocated nearly $2 billion of capital towards organic growth and acquisitions and nearly $2 $7 billion towards stockholder returns in the form of dividends and share repurchases. Looking ahead, we believe our strong balance sheet.
She'd and liquidity will enable us to continue executing our capital allocation priorities no matter the operating environment in.
In closing I'm extremely pleased with our record setting 2022 performance.
These results were achieved in a highly challenging environment with ongoing inflationary headwinds recessionary concerns supply chain disruptions labor shortages and overall declining metal prices in the second half of the year our managers in the field have done a tremendous job.
Navigating these challenges supporting our confidence in our ability to deliver strong performance in the year ahead.
As we move into 2020 three we are optimistic the infrastructure Bill The chips Act and the inflation reduction act should serve as tailwind for growth in an environment of sustained higher metal pricing compare to historical levels.
I would like to thank everyone at reliance for their continuing and steadfast commitment to operational excellence and safety. Thank you all for your time today I'll now turn the call over to Steve who will review, our fourth quarter operating results and demand trends.
Thanks, Carlos and good morning, everyone first electric congratulate Carlisle and assuming the role of CEO at reliance Karla and I have worked together since 2005 when chapel steel was acquired by reliance and joined the family of companies carloads extremely well respected within our organization and throughout the industry and I look forward to working more closely with her going for.
Sure.
I'd also like to extend a sincere. Thank you to each member of our team of over 15000 employees, we're showing up each day working diligently and safely to ensure we exceed our customers' expectations a record setting performance. In 2022 is also made possible by our customers who count on us for quick deliveries of high quality products at competitive price.
Mrs as well as our suppliers, who continued to support us through challenging times and supply chain disruptions.
I'll turn to our fourth quarter pricing and demand trends.
Our fourth quarter tons sold declined eight 2% compared to the third quarter of 2022 due to anticipated seasonal declines in line with our expectations of down 6.5 to eight 5% and improved 8% from the prior year quarter.
Our performance was primarily driven by strong demand in broader manufacturing and nonresidential construction as well as robust aerospace and semiconductor shipments similar to the last several quarters, we believe our fourth quarter shipments could've been even stronger had it not been for a persistent supply chain related disruptions, including labor.
At our customers' facilities.
Our fourth quarter average selling price per tons sold of 2000 and $799 declined seven 9% compared to the third quarter of 2022, consistent with our expectation of down 6% to 8%, but remained elevated by historical standards.
Prices for the vast majority of the carbon steel products sold along with the stainless and aluminum products continued to decline throughout the fourth quarter. However.
However continued strong demand for higher value products.
The aerospace semiconductor and energy market has helped us offset some of the downward pricing pressure on our average selling price.
We've been seeing signs of stabilization on certain products to date in 2023, as our average selling price per ton overall remain relatively flat in January compared to December .
Arthur will cover our first quarter 2023 outlook in more detail.
On a non-GAAP FIFO basis, which is how we monitor our day to day operating performance. Our gross profit margin remained consistent with the prior quarter and 28, 6%.
Although the quarter over quarter trend was flat it's important to note that our monthly FIFO gross profit margins improved throughout the fourth quarter in contrast to decreasing monthly FIFO gross profit margins in the third quarter of 2022.
We are pleased to see continued FIFO gross profit margin improvement so far in 2023.
Metals price volatility in 2022 tested our model with our sales and gross profit margins once again proving the resiliency.
I'll now turn to a higher level overview of the trends we saw within our key end markets.
Demand for nonresidential construction, which includes infrastructure and its largest end market. We serve was at healthy levels and trended slightly above the fourth quarter of 2021.
We're continuing to experience a healthy backlog of new projects, including renewable energy and remain optimistic that we will see improved activity in Q1 2023.
Although not included in our tons sold and for the toll processing services, we provide to the automotive market improved from both the third quarter of 2022 in the prior year quarter due to increased production rates by certain automotive manufacturers, despite lingering supply chain challenges.
The man across the broader manufacturing sectors, we serve including our industrial machinery consumer products and heavy equipment was consistent with last year's levels in the aggregate.
Semiconductor demand trended well above the fourth quarter of 2021, despite some short term headwinds coming into 2023 demand remains elevated.
Our long term outlook for this market remains strong we're continuing to invest in increased capacity to service a significant expansion of semiconductor fabrication in the United States.
Aerospace demand remained solid with her exposure split roughly 50 50 between commercial and defense commercial aerospace has been a strong recovery in 2022 with all of our quarterly shipments increasing year over year.
I had a military.
Sense and space also remained healthy finally demand in the energy sector remained relatively stable compared to the fourth quarter of 2021. Overall, we are optimistic underlying demand will remain healthy across the majority of the end markets. We serve throughout the first quarter of 2023.
I will now turn the call over to Arthur to review, our financial results and outlook.
Thanks, Steve.
Everyone and thank you for joining us today.
My remarks. This morning will mainly focus on the factors that drove our fourth quarter performance.
Despite significant declines in metal pricing continuing from the third quarter of 2022.
We experienced solid overall demand trends consistent with typical seasonal patterns.
We achieved fourth quarter earnings per diluted share of $5.88.
Which when combined with effective working capital management resulted in record quarterly cash flow from operations of $808 $7 million.
Well a matter of pricing continue to decline through the end of the year.
The third quarter of 2022 represented the trough for our gross profit margin.
And as Carlos highlighted value added processing continue to provide stability to our gross profit margin.
In addition, our use of the LIFO inventory valuation method benefit in our gross profit margin and earnings in the quarter.
We recorded LIFO income of $99 $1 million in the fourth quarter compared to $27 $5 million of income in the third quarter of 2022.
Drove a 210 basis point improvement in our gross profit margin or the prior quarter.
We ended 2022, and our LIFO reserve of $744 million.
As our inventory cost on hand continue to catch up with lower replacement costs or should metal prices trend lower in fiscal 2023.
This reserve will generate LIFO income and continue to support our gross profit margins and reduce the volatility of our earnings.
Our current estimate of.
LIFO income for 2023.
$60 million.
As always we will update our expectations quarterly to account for actual inventory cost and metal pricing trends.
Moving onto expenses.
Our fourth quarter, non-GAAP , SG&A expenses decreased $17 million or two 7%.
Paired to the third quarter of 2022, mainly due to a moderation in inflationary pressures lower incentive based compensation, resulting from lower profitability.
Lower variable warehousing and delivery expenses associated with lower tons shipped.
On a year over year basis.
Our fourth quarter same store non-GAAP , SG&A expenses decreased $9 million or 1.5%.
As lower incentive based compensation lower FIFO pretax profit offset moderating inflationary factors, including higher wages.
Right.
<unk> and plant supply costs.
Our fourth quarter 2022 diluted earnings per share of $5.88 benefit from the combination of our LIFO income impact of a dollar and 25 cents per share compared to anticipated LIFO expense of nine cents per share.
And lower than anticipated tax rate of 24 cents per share.
Excluding the benefits of both higher than expected LIFO income and lower than expected tax rate our diluted earnings per share would have been $4 30 in line with our guidance of $4 30 to $4.50 per share.
Turning to cash flow, our strong profitability and working capital release generated record quarterly cash flow from operations of $808 $7 million in Q4.
Our 2020 to record annual operating cash flow of $2, one $2 billion funded a record.
$341.8 million in capital expenditures and the return of 847 $4 million tourists stockholders comprised of $217 million of cash dividends and $630 million of share repurchases, resulting in nearly six.
Were sent reduction in common shares outstanding.
We are very proud that our strong financial position enabled us to reinvest.
A record amount back into our business to support continuing organic growth and to return approximately 46% of our full year net income to our stockholders.
As previously announced on January 15th.
Redeemed our $500 million four 5% senior notes due April 15 2023.
I'll now turn to our first quarter outlook.
We expect healthy demand trend to continue in the first quarter of 2023, which includes the normal seasonal increase in shipping volume compared to the fourth quarter.
We estimate our tons sold will be up 11, and 13% in the first quarter of 2023 compared to the fourth quarter of 2022, which is better than a typical seasonal recovery.
To date pricing for many of our product is starting to stabilize compared with December which was the low point in the fourth quarter and as a result, we estimate our average selling price per ton sold in the first quarter of 2023 will be down 3% to 5% compared to the fourth quarter of 2022.
Based on these expectations, we anticipate non-GAAP earnings per diluted share in the range of $5 40 to $5.60 for the first quarter of 2023 and.
In closing.
I'd also like to acknowledge and thank everyone at relying for their contributions to our phenomenal performance in 2022.
This concludes our prepared remarks. Thank you for your attention at this time I'd like to open the call up to questions operator.
Thank you.
Ladies and gentlemen, we will now be conducting a question and answer session.
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One moment, please open the call for questions.
Our first question comes from the line of Emily Chang with Goldman Sachs. Please proceed.
Good morning, Carlos Dave on and Arthur Congratulations on a strong quarter. My first question is just around the M&A front, you mentioned that you hadn't done anything there in 2022, but curious what you are seeing there in the market that led to that sort of dry spell was it you know is a bit off.
Spread being too high at that point in time, all well just the options available not as interesting to you at that point.
Hi, Emily and thank you very much for joining the call today. So Ah in 2022, we did continue to see a lot of opportunities in the market.
We try to be selective on which companies, we look to acquire or we don't want to compete with our customers. So that you know pushes out a lot of potential opportunities, but we did see some good interesting opportunities in 2022, we did do work on.
You know some some companies.
And there were some in our opinion elevated a bid ask prices I think we're seeing some of those opportunities come back around at what are more reasonable levels to us and we think the market is going to be pretty attractive. This year four continue.
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Potential opportunities for us to look at and you know we we did we didn't not do acquisitions for any reason other than we didn't reach agreement, but we want to continue to grow the company, both organically and through acquisitions and we look to two.
<unk> 23 to potentially be a fairly active year.
Understood. Thanks, Carla and maybe as a follow up on that pace related to cross then can you remind us how much spend related to the semiconductor plants that you're constructing is still pops to flow into the 2020 full period and all that.
Any other projects of this scope that you would consider executing given the demand outlook ahead.
Yeah. So we're always looking at opportunities are people working out in the field do a great job of staying close to their customers and identifying opportunities for us to do more we do have a couple of greenfields that were working on currently.
Some of our companies.
One of those is our company's Alex it is really dialed into providing kind of the plumbing of the semiconductor fabrication companies and so we're expanding in Texas.
They have their first phase of their expansion into Texas.
That will be coming online any time, but that's the smaller part of it and then there are larger expansion with increased capacity will come online we're anticipating in the first quarter of 2024.
Great.
Yeah.
Our next question comes from the line of Phil Gibbs with Keybanc capital markets. Please proceed.
Hey, good morning.
Good morning, Thank you Phil.
So you have a pretty hardy cash capex budget. This year I think you said about four and a quarter at the midpoint.
Relative to maybe what you all were thinking six months ago.
12 months ago, what may have been added to that as you've seen.
The the needs internally changed in terms of your own capabilities into or what your your clients or customers rather asking of you.
Yeah. They fell so we you know we do an annual Capex budget.
Last year, we were at a record budget at $455 million, we only spent $342 million last year, mainly just because of you know supply chain.
Constraints, but you know we have to we have a really long lead times on some of the opportunities. We see now this year. Our budget is 500 million, we think the actual cash cash spend which will include some carryover from prior years is probably only get going to be like.
$400 million to $450 million this year, but we you know like I said, our folks stay close to their customers. They go out in their warehouses. They look for opportunities for us to do more for our customers with the labor shortages I'm you know a lot of our customers have struggled with that.
And if they have to invest money in in newer machines, which have become more expensive.
Maybe they decide not to do that and they ask reliance to do that for them.
So we have you know a couple of hundred different types of processing equipment in our in the budget for this year same as last year. So we've got over 300 locations and we're trying to grow all of them and give them more resources to be able to serve our customers better.
So Carla I. This is rough math, so there's it seems like theres over $300 million of growth Capex.
Capex and your cash guidance this year of about four and a quarter do.
Do you see returns on those immediately or is there a gestation period in terms of when you you would realize a return because you know I know you all are good at it adding capabilities and value add in and they end up being very accretive to your business and margins, but how long does that typically take for those to bear.
Out.
Well for all of their reliance people listening we expected immediately.
And we do have a pretty sharp anyway, you know what.
The equipment, we put in.
We have good well trained people out there, we're able to leverage our people throughout our families.
Oh Boy you know, it's not a long lead time, we're putting a lot of capex items in place all the time and it's a pretty short lead time, but it is hard to measure exactly what you know the the return is on each individual pieces.
Equipment and felt its not Steve I'd, just like to add regarding capex.
The Capex budget that we're spending for 2023 is a good sign because it's past spendings in 2021 2022 our customers have asked us for more capabilities and we have whether it's a plate burning machines or new solves or new cut to length lines, they're filling up pretty quickly on this as soon as we install.
Then so lead times are extended so we're just trying to get out in front and try to make sure we continue to exceed our customers' expectations.
Under understood on that and then you mentioned on automotive improvement year on year and sequentially and I know that the end market itself has been very choppy.
Since Ms since the pandemic recovery.
So what what are you seeing now looking ahead are you are you expecting business levels to improve or with this is a little bit of improvement you saw in the back part of this year do you should basically just expect those levels to sustain.
Oh, we have to give our our companies to do the co processing for automotive a lot of credit for working through the automakers are supply chain issues or you know.
Probably the last you know at least two years.
Whenever we think that things are kind of smooth theres, a step backward, but we think going into 2023, there are much better shape from there component point of view the labor point of view and were looking for a healthy 2020 through from an auto talk point of view.
Our next question comes from Nevada, Cacciari younger Johnson with BMO capital markets. Please proceed.
Oh, Hey, Thank you for taking my question.
Just maybe going on the first Q guide can you talk a bit more about what is driving the above seasonal pick up and volumes.
Maybe what markets or how are you looking at it.
I Gotcha mm yeah, we've been.
Pleased to see the way that we've rebounded in Q1, where it used to the normal seasonal downturn in Q4, and certainly you know Q4 shipments were at the low end of our guidance and so we're seeing a little bit better than typical bounce back in.
In Q1, we have our we think we have our people excited to to pick up some some market share and to be out there selling them. You know, we're just out there to service our customers well and overall you know there are a couple of markets down.
And our customers truly do still have backlogs them. They just need people and all their components and underlying demand remains pretty healthy. So we're seeing generally across most of the markets. We serve with our you know small customers quick turnaround.
We see continued strong demand coming from them.
Okay, and maybe just on the tolling business can you remind us how much is auto I think theres also other business in that outside of auto.
Yeah. So our tolling businesses, we have a company in the U S. With about 13 locations are very good at what they do and then we have another company down in Mexico with four locations are we've expanded their operations continue to expand to expand them for both of our companies.
They see a lot of opportunity out there because they're really good at what they do and their customers keep asking them to do more and about 65% of our tolling business is automotive related.
And remember on tolling, we don't own the metal. So we have no price risk on there, but we don't have to deal with the volatility from metal prices, we charge a fee for processing deliveries storage, which has been in high demand in the last couple of years through all the supply chain disruptions and then.
And the next biggest market in our tolling business behind automotive is appliance and we have seen some weakness on some of the residential appliance recently, but we're able to make that up with our increased business with automotive and also some beverage.
Can and other applications.
Okay. Thank you very much.
Gotcha.
Our next question comes from the line of Lawson Winder with Bank of America Securities. Please proceed.
Thank you operator, and good morning, Carlos Stephen and Arthur Nice to hear from you all I wanted to.
Ask about.
The the capital deployment in another way. So so net debt is very low which you've referred to several times on this call. How should we think about capital deployment in terms of the buyback versus you know the now higher dividend and the Capex that you've discussed.
Yeah morning loss in yet so as we said before.
We're very aware of where we are from a balance sheet perspective, and as karla alluded to earlier you know we've been pretty active on the M&A front looking for yeah.
You know potential deals and just because we didn't close any doesn't mean you know we're not active on that front, so or capital allocation is largely opportunistic on both fronts right, whether that's growth or or returns.
And we asked that we kind of measure capital allocation for us with a five year look back and there's going to be some periods, where there's a law and that doesn't mean, we're not deploying capital would just be in.
Yeah, Yeah, very patient and disciplined with our with our deployment and you know we're kind of very proud of where we are with our balance sheet and.
You know, where how we navigated the last couple of years and positioned the company today are in an environment, where there's going to be some opportunities both on the growth side and on the shareholder return side and yeah, and we've been pretty consistent with our returns our balanced capital allocation you know when.
You do a five year look back.
It's pretty it's pretty balanced last time, it was about 50% of capital being dedicated towards growth and the other 50.
Towards returns.
Okay. That's helpful context, thanks, very much rather and then got it.
Can I also ask about the year over year stainless volumes being down 10% like carbon was up to Ali was off a bit any color on the weakness in those volumes.
Four.
Yeah.
Steve can fill in maybe a little more specifically, but we don't think it was weak and you know we had a really strong 2021 on the stainless front and it's been a good strong market for us over the years and I think the you know the.
We shouldn't you see is probably based on dollars. So obviously pricing impacts that but our seamless mm business demand. There continues to remain pretty strong beat anything that yeah, I would just say that.
As far as the steel prices dropped a little bit, but our people in the field did a great job of cycling through their inventory there were some important that came into the market towards the second half of the year, which we did not participate in so we got a little bit of I just said.
A little bit of a correction in the market, but we're going into 2023 with good inventories at good cost and ready for business.
Okay, maybe just to drill down a little bit on that last point when you say ready for business could you maybe elaborate on kind of the outlet look for a full year in terms of sort of volumes Directionally, maybe maybe even some sort of range of growth.
Yeah, I wouldn't say, we'd give them.
As for the rest of the year, but I would say that we think there are a lot of the important has worked its way through the system and that the market is normalizing a little bit more yeah in law Skinny that just as a reminder, you know.
Reliance is really kind of a spot business and our customers call us and we ship them what they need so were you know pretty dependent on our customers' needs and we're ready to do that for them continuing throughout 2023, and we see our customers you know continuing to be busy in the stainless.
Market with pricing they oftentimes have a little more visibility of where prices are heading so you see a little more fluctuation in our customer buying patterns.
Some of the other products, we sell but we're we're bullish as are our customers on demand in 2023.
Okay. That's great. Thank you nice work in the quarter.
Thank you.
Our next question is a follow up from the line of Phil Gibbs with Keybanc capital markets. Please proceed.
Hi, there I was I was curious on I'm not working capital is as you look out to twenty-three versus maybe 'twenty. Two I think we were looking for it to be a pretty decent source, but you did bleed down a lot of Oh.
Net working capital in the fourth quarter. So I'm just looking for some thoughts there.
Sure and I'll speak to the first quarter guide so so based on our pricing.
And volume assumptions.
They build working capital build in the first quarter should be seasonal and kind of an absolute numbers you should come in below.
The levels are released that we had in the fourth quarter.
Yeah.
Okay.
That's helpful and I think the rest of the you're obviously well will depend on them for the most part on pricing as things progress and then.
And then Carr.
Carla just on the infrastructure.
Bill.
Are you seeing anything.
Are you seeing anything in terms of asps or requirements for some of this stuff or is it largely still in and bidding and design.
Yeah.
So the majority we think is still in bidding and design you know with our customer base, which is so diversified and.
We're going to get some of those projects are we're not always going to see the main supplier of those but we get a lot of good activity infrastructure projects, we haven't seen them really start to flow through the books, yet we're hearing more on the bidding in design phase right now so we think that.
It's probably a little later in 2023, when we we and others really start to see the benefit of those.
And then I appreciate that and then lastly can you just remind us.
Where were you where you all are on the buyback and.
If you if you were to increase increase the amount under authorization one when would you typically do that thanks.
Yeah. So.
We just did that a few months ago reset the authorization of 1 billion and we have a $680 million or so remaining under our program. So.
I mean that authorization. The 1 billion that we had was roughly about 10% and so and we've been we've been active since then so.
And as you know, we don't necessarily provide forward looking guidance, but Ah in 2022, we were pretty active on that front, so and the the last 12 months, we reduced our share count by about 6%.
And we as management and our board think reliance is a pretty good buy and so oh Ford's very supportive if we do it opportunistically increase our activity under that we'll certainly look to refresh as as needed.
Thanks, everyone.
Uh huh.
Our next question comes from a lot of John Tumazos with Johnson also has very independent research. Please proceed.
Congratulations on everything Carla.
Trying to.
I understand the tremendous performance, where adjusted for why frozen margins were the same.
In a falling steel price environment, where average distributors have holding losses, which managed to avoid.
Did your inventory turnovers.
Rise materially.
In the third or fourth quarters first.
And.
For the 8% of your sales that were hot rolled or 15%.
Oh total flat rolled steel are those differentiated flat rolled tons in particular ways.
So Oh, hi, John Yeah.
You know at reliance I think one of the things we tried to do is be pretty consistent with our expectations of how we perform out in the field and we tried to give her a leadership teams out there consistent guidance. So we always push for you know strong.
<unk> turns we do have different expectations based upon the product mix of each of our companies.
For our flat rolled companies, we do expect them to turn their inventories faster just because of the lead times with the mills and you know them servicing their customers. So we do have higher expectations for them, Steve and his team are really worked with our.
Our F O sees them when prices are down we will see some of our customers.
Somewhat adjust their buying patterns.
But overall I think we are trying to be pretty consistent and have been with the way. We manage our inventories are companies are working better together now we call. It you know FSC collaboration.
And they're able to offload inventory to each other if one of them a little heavier than others. So we also have the benefit of a large network of companies, where they can step in and help each other out Steve anything yeah, I would just add to being a domestic buyer for the most part our domestic mills have done a great.
Job.
We understand that they're working through supply chain issues and they've been a really good partners, making sure that we have enough steel not too much feel very flexible with the order books and I think that over our overall our business model has worked by buying close to our locations.
And John the only thing I would add is you know our value added processing capabilities that margin volatility on the on that part of the business is.
Much lower than that.
This thoughtful business. So that you know that's another dimension to the to the story the smaller order sizes quick turn around transactional nature of the business that also contributes to the relatively stable margin profile. So it's not one thing it's a combination of multiple factors that contribute to that.
It's relatively stable margin profile.
Thank you and congratulations on the great results.
Thanks, Chad Thank you John .
There are no further questions at this time I'd like to turn the call back to Carl Lewis for any closing remarks.
Thank you operator, and thanks again to all of you for your time and attention today before we close out the call I'd like to remind everyone that we will be in Hollywood, Florida in early March presenting at the BMO global metals mining and critical minerals.
Conference and we hope to see many of you there.
And so our reliance family. Thank you again to everyone throughout the reliance family of companies for your record setting 2022 performance and thank you all.
For your continued support of and commitment to reliance thank you.
Yeah.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Yeah.