Greetings, and welcome to the Reliance Steel & Aluminum Co. third quarter 2021 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. 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. It is now my pleasure to introduce your host, Madeleine Crane, Investor Relations. Thank you. You may begin. Thank you, operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's third quarter 2021 financial results. I'm joined by Jim Hoffman, CEO, Karla Lewis, President, and Arthur Ajemyan, Vice President and CFO. A recording of this call will be posted on the investors section of our website at investor.rsac.com. 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 the COVID-19 pandemic and related economic 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, 2020, under the caption risk factors, disclosures in our press release this morning, and other documents Reliance files or furnishes with the Securities and Exchange Commission. The press release and the information on this call speak only as of today's date, and the company disclaims any duty to update the information provided therein and herein. I will now turn the call over to Jim Hoffman, CEO of Reliance. Good morning, everyone, and thank you for joining us today to discuss our third quarter 2021 financial results. I will begin with a high-level overview of our third quarter performance and capital allocation priorities. Karla will then speak to our operating results and demand trends by end market, and Arthur will conclude with a review of our third quarter 2021 financials. I continue to be inspired by the outstanding operational performance by my colleagues throughout the Reliance family of companies. Our resilient business model, favorable metals pricing trends, and excellent execution combined to produce another quarter of record-setting financial results. Beyond execution and of our business model, operational excellence includes our top priority of ensuring the health and safety of all of our Reliance colleagues. I'd like to extend my gratitude to each and every one of them for their unwavering commitment to operating safely despite the many challenges that have persisted during the ongoing pandemic. I would especially like to recognize our teams that were directly impacted by Hurricane Ida last month. While Ida had a minimal impact on our operations, some of our colleagues were impacted personally. We're very happy that everyone is safe and that our employee-funded and company-matched program, Reliance Cares, was available to support those who were impacted and in need of assistance. Reliance Cares is an inspirational example of how the Reliance family of companies come together and meaningfully take care of each other. Turning to our results, the trends of strengthening metals pricing persisted through the third quarter, which featured multiple mill price increases, most notably for carbon and stainless steel products. The favorable pricing environment, along with fundamentally strong underlying demand in many of the key end markets we serve, drove record quarterly net sales of $3.85 billion. In addition, strict pricing discipline by our managers in the field helped us generate a strong gross profit margin of 31.5%, which, when combined with our record sales, resulted in a record quarterly gross profit dollars of $1.21 billion in the third quarter of 2021. Despite various supply disruptions and continued increases in metals pricing that drove LIFO expenses of $262.5 million in the third quarter, our record quarterly net sales, along with record gross profit dollars and our continued focus on expense control, led to the third consecutive quarter of record quarterly pre-tax income of $532.6 million. As a result, our earnings per diluted share of $6.15 were also a record, representing an increase of 21.1% from our record EPS achieved in the prior quarter and substantially exceeded both our guidance and analyst consensus. We attribute this performance to our highly resilient business model, which is strategically designed to perform throughout changing macroeconomic circumstances. First, we are highly diversified by end markets, products, and geographies. Second, our decentralized structure leaves the decision-making and resources close to the end customers. We rely on our managers in the field to appropriately price the value of the products and services we provide, which is particularly important in times of tight metal supply and volatile pricing. In this localized and entrepreneurial environment, our focus on small order sizes with quick turnaround has also proven particularly effective. Further, our ability to purchase inventory in a spot market through our long-standing strong relationships with our domestic mills, coupled with our unique ability to cross-sell inventory among the family of companies, allows us to source the metal we need despite tight supply. We were pleased our inventory turn rate for the third quarter came in just below our company-wide goal, which indicates that our inventory is properly balanced with current demand levels as we continue to secure the raw materials we need to meet customer demand. Third, our significant investment in organic growth and innovative technology has significantly expanded our value-added processing capabilities, empowering us to focus on higher quality, high-margin business, and enabling us to increase our estimated sustainable gross profit margin range. To expand on that last point, I'd like to emphasize that the strong cash flow generation our model provides fuels our flexible and dynamic capital allocation strategy that supports concurrent investments in growth and stockholder return activities. We believe that it is our resilient business model and our execution of our capital allocation strategy that sets Reliance apart. We estimate that approximately half of our $310 million capital expenditure budget this year will be directed towards new, innovative, value-added processing equipment, along with enhancements to existing equipment to strengthen our value proposition and overall service offerings. As I highlighted earlier, these investments help support our increased sustainable gross profit margin range as they provide our managers in the field the ability to offer additional value to our customers. As discussed last quarter, our 2021 capital expenditures will also be focused on opening new facilities as well as expanding, upgrading, and maintaining existing operations, including renewable energy investments at many of our facilities. Our focus on growing the company is two-pronged. We also remain highly focused on M&A. On October 1st, we completed our acquisition of Merfish United, a leading master distributor of tubular building products in the U.S. The company is based in Massachusetts and services 47 states through 12 strategically located distribution centers. The Merfish acquisition aligns with our strategy of acquiring immediately accretive companies with strong management teams and significant customer, product, and geographical diversification. The Merfish transaction is a bit unique in that Merfish is not a traditional metal service center, and yet the transaction is one of the larger acquisitions that we have completed in our history. Merfish had approximately $600 million in annual net sales in the 12-month period ending September 30th, 2021. However, Merfish's broad product offerings expands Reliance's exposure into copper and plastic products, among others, which Merfish sells to wholesale distribution customers in adjacent end markets in the commercial, residential, municipal, and industrial building spaces. We expect Merfish will help position Reliance in the broader industrial distribution space, as well as provide a platform for further growth in this area, both organically and through further acquisitions. During the third quarter of 2021, we also returned $174.7 million to our stockholders through the payment of $43.7 million in dividends and the repurchase of $131 million of Reliance common stock at an average cost of $147.89 per share. In the last five years, Reliance repurchased $11.7 million shares of our common stock at an average cost of $89.92 per share, for a total of $1.05 billion. We are extremely pleased to have the capital and the flexibility to simultaneously focus on both growth and stockholder returns and expect to maintain our dynamic approach moving forward, remaining prudent allocator of capital. Before I conclude, I'd like to announce that Reliance will be relocating our corporate headquarters from Los Angeles, California, to Scottsdale, Arizona, in the first half of 2022. The Scottsdale office will serve as Reliance's new principal executive office, and the company's senior corporate officers will have offices there. Reliance is a Delaware corporation operating through approximately 300 division and subsidiary locations in 40 states and 13 countries outside of the United States, and the relocation of Reliance's principal executive office to Scottsdale reflects our growth and expansion as well as our evaluation of post-pandemic business opportunities and related operating practicalities. We will, however, maintain a presence in Los Angeles with revamped and innovative out-of-office offerings that reflect and complement the redefined post-COVID workplace and meet the needs of our corporate administrative colleagues who remain in California. In addition, I'd like to extend a warm welcome to our two new independent board members, Dave Seeger and Frank Dellaquila. Dave has been a strategic and valued partner to Reliance for more than 30 years through his involvement in the metals industry. Frank is a seasoned and respected public company senior executive and chief financial officer. We look forward to benefiting from both of their unique perspectives, experience, and expertise. With the addition of Dave and Frank, Reliance's board consists of 12 members, 10 of whom are independent. In summary, I am once again highly pleased to share our record-setting third quarter financial results and commend all of my colleagues for their hard work and unwavering focus during the quarter. Despite the challenges of the ongoing pandemic, supply chain disruptions, and tight labor markets, and limited metal availability, we sustained our efforts to ensure that we continued to provide valued customers with the products they need, often in 24 hours or less. At the same time, we also continued to successfully execute our growth strategy while generating strong earnings and returning value to our stockholders. As we look ahead, we look forward to remaining a key contributor to the value chain through the ongoing support of our colleagues, customers, suppliers, and communities, and remain confident that America is gonna need Reliance to rebuild. Thank you for your time and attention today. I will now turn the call over to Karla to review our operating results and demand trends. Karla. Thanks, Jim, and good morning, everyone. I would like to begin by extending my heartfelt thanks to all of my colleagues within the Reliance family of companies for delivering another consecutive quarter of record performance. I'd also like to thank our suppliers for their continued support, as well as our customers for their ongoing loyalty and trust in Reliance through these extraordinary times. I'll now turn to our third quarter operational performance. Once again, we believe that underlying demand was stronger than our third quarter 2021 shipment levels reflect. Our tons sold decreased 4.6% from the second quarter, which was below our guidance of down 1% to up 1%, mainly due to more typical seasonality than we had anticipated, combined with various supply chain issues. Reliance, our customers, and our suppliers all continue to experience supply disruptions, including limited metal availability coupled with labor shortages that temporarily slowed demand for metal in the third quarter. We believe Reliance is well-positioned to satisfy the pent-up demand in future periods. While disruptive from a demand standpoint, limited metal availability in the market helped support ongoing metal price escalation during the third quarter for many of the products we sell, most notably carbon and stainless steel products. Our average selling price per ton sold in the third quarter reached another all-time high of $2,862, an increase of 18.4% compared to the second quarter of 2021, and significantly in excess of our guidance of up 7%-9%. There is speculation that certain carbon steel products, namely flat-rolled, may be at or near their peak. I would like to remind you that only 11% of our sales are from hot-rolled coil and sheet. We continue to see strong pricing for many of the other carbon steel products. Stainless pricing remains very strong, and we are also seeing increased pricing for aluminum products. Our product diversity reduces pricing volatility on our earnings, and we expect continued strong average selling prices at Reliance into 2022. The favorable pricing environment, coupled with outstanding execution by our managers in the field, contributed to record quarterly gross profit dollars of $1.21 billion in the third quarter of 2021, and a strong gross profit margin of 31.5%. On a FIFO basis, which we believe better reflects our current operating performance, we achieved a record gross profit margin of 38.3%, marking our third consecutive quarter of record FIFO gross profit margin. We applaud our managers in the field for their unwavering effort, relentless focus on high quality, high margin business, and effective implementation of price increases at the time of no announcement, which enabled us to capture an incremental margin benefit in excess of already strong levels. Further supporting these efforts was the enhanced cooperation across our family of companies to ensure we meet our valued customers' needs, as well as selectively servicing new business opportunities. I'll now turn to a high-level overview of our key end market trends on a sequential quarter basis. Demand for non-residential construction, which includes infrastructure and is the largest end market we serve, remained at solid levels. Our third quarter tons sold were down slightly compared to second-quarter shipments, but remained near pre-pandemic levels. We continued to experience solid quoting activity for projects in the areas of distribution and fulfillment centers, data processing, and manufacturing facilities, as well as utility infrastructure. Due to supply constraints and increased pricing, we also continued to see an uptick in smaller projects that can be completed quickly. Given our healthy backlogs, solid quoting activity, positive customer sentiment, and favorable key industry indicators, we are optimistic non-residential construction demand will continue to steadily improve through the remainder of 2021 and into 2022. Demand for the toll processing services Reliance provides to the automotive market fell slightly from second-quarter levels due to normal seasonality, as well as temporary shutdowns at certain automotive manufacturers due to the semiconductor chip shortage. Our recent investments, which include purchasing a new facility in Michigan and opening a new tolling facility in Indiana, as well as our other greenfield tolling expansions in Kentucky and Texas, have allowed us to perform well despite challenging market conditions by increasing our capacity to support our customers' increased transportation and storage needs. We are optimistic that underlying automotive demand is solid and will recover in 2022 as the impact of global microchip shortages on production levels in certain markets subside. Longer-term, we are confident our toll processing business will remain strong given the significant level of investments we are continuing to make to support our growth and innovation in this area. We continue to see new opportunities to expand our tolling presence for automotive, appliance, packaging, and other end markets, some of which are already underway and will benefit us in 2022 and beyond. Demand in heavy industry for both agricultural and construction equipment declined during the third quarter, following exceptional growth during the second quarter from a combination of seasonal shutdowns at many customers, along with broad customer supply chain challenges and labor constraints. That said, third quarter shipments remained above pre-pandemic levels. Underlying demand remains strong, and we expect demand from the heavy equipment and manufacturing industry to be delayed, not lost, and improve in the quarters to come. Semiconductor demand during the third quarter remained strong. While our third quarter shipments were somewhat impacted by global supply chain issues, the semiconductor space remains one of our strongest end markets in 2021, and we expect this trend to continue well into 2022. With regard to aerospace, demand in commercial aerospace, which is roughly half of our aerospace exposure, was impacted by normal seasonal factors in the third quarter. Looking ahead, we expect demand in commercial aerospace to slowly improve throughout 2022 as build rates increase and excess inventory in the supply chain continues to decline. Demand in the military, defense, and space portions of our aerospace business remained solid with strong backlogs and exceeded our pre-pandemic shipment levels. We anticipate strong demand in the non-commercial aerospace market will continue into 2022. Finally, demand in the energy sector, which we define as mainly oil and natural gas, continued to slowly improve, supported by higher oil and natural gas prices. Looking ahead, we anticipate that increasing rig counts, along with customer inventory replenishments, will result in a modest improvement in demand levels into 2022. In summary, the first three quarters of 2021 were distinguished by consecutive quarters of record financial performance. Today, early in the fourth quarter of 2021, we see a positive landscape heading into 2022, with strong and improving underlying demand in most of the markets we serve, continued elevated metal pricing, even if certain products may begin to decline, and the best team in the industry. Our proven, resilient, and opportunistic business model, along with our diversity, scale, and solid long-term relationships with our suppliers and our customers, have set us apart in dynamic markets before and positions us once again to optimize our performance and deliver strong results. I'll now turn the call over to Arthur, who will review our financial results. Thank you. Thanks, Karla. Good morning, everyone, and thank you for joining us. I'll start with our sales trends. Favorable metals pricing, fueled by limited availability and solid demand trends in the vast majority of key end markets we serve, resulted in record quarterly sales of $3.85 billion, up 12.5% from the second quarter of 2021, and up 84.5% from the third quarter of 2020. Strong pricing momentum contributed to the 18.4% increase in our average selling price per ton sold over the second quarter of 2021. In comparison to the same period of the prior year, our average selling price per ton sold was up 77.9% due to increases in mill prices for the vast majority of the products we sell, notably carbon and stainless steel products. As Karla noted, Reliance has limited exposure to the more volatile and lower-margin hot-rolled coil and sheet products that made up only about 11% of our third quarter sales. While benchmark pricing for hot-rolled coil products was up over 275% from the third quarter of 2020, Reliance's average selling price per ton sold for the same period was up 77.9%. This level of broad product diversification, along with strong pricing discipline and significant investments in value-added processing capabilities, have been instrumental in our ability to maintain both stable and industry-leading gross profit margins in both rising and falling price environments. These factors collectively resulted in record quarterly gross profit of $1.21 billion and a strong gross profit margin of 31.5% in the third quarter of 2021, despite including a significant LIFO charge. Our non-GAAP, FIFO gross profit margin of 38.3% in the third quarter of 2021 was a record, and exceeded the prior quarter by 80 basis points, and the prior year period by 650 basis points. Please refer to our earnings release, where we provide a reconciliation of LIFO to non-GAAP, FIFO gross profit margin for each reported period. We incurred LIFO expense of $262.5 million in the third quarter of 2021, compared with $200 million in the second quarter of 2021. LIFO expense, in effect, reflects our cost of sales at current replacement costs and removes inventory gains from our results in an environment of rising metal costs, and conversely, removes inventory losses from our results in times of declining metal costs. Our guidance for Q3 2021 assumed LIFO expense of $150 million based on our $600 million annual estimate. As a result of higher than anticipated costs for certain carbon and stainless steel products in the third quarter of 2021, we revised our 2021 annual LIFO expense estimate from 600 to $750 million. Accordingly, we had to true up our third quarter 2021 LIFO expense by incurring an incremental charge of $112.5 million, which increased our total third quarter LIFO expense to $262.5 million. Based on our revised annual LIFO expense estimate, we now project LIFO expense for the fourth quarter of 2021 to be $187.5 million, or $2.21 per share, and $750 million or $8.73 per share for the full year. As in prior years, we will true up to our actual annual LIFO expense calculation based on our on-hand inventory costs at the end of the year. As of today, the LIFO reserve on our balance sheet at the end of this year is expected to be $865.6 million based on our revised $750 million annual LIFO expense estimate. This provides $865.6 million available to benefit future period operating results, significantly mitigating the impact of declining metal prices on our gross profit and pre-tax income. Now turning to our expenses. Our third quarter SG&A expense increased $43.5 million or 7.7% compared to the second quarter of 2021, and increased $157.6 million or 35.1% compared to the prior period. The bulk of the sequential and prior quarter increases were attributable to higher incentive-based compensation resulting from our record gross profit and pre-tax income levels. Additionally, inflation continued to contribute to increased variable expenses, most notably for fuel and freight as well as packaging costs. Overall, our headcount increased slightly compared to both the second quarter of 2021 and the third quarter of 2020, but is nonetheless down approximately 11% from pre-pandemic levels at the end of the third quarter of 2019. As a reminder, approximately 65% of our total SG&A costs are people-related. Our pre-tax income of $532.6 million in the third quarter of 2021 was the highest in our company's history. Our pre-tax income margin of 13.8% was also a record. Our effective income tax rate for the third quarter of 2021 was 25.5%, up from 22.6% in the third quarter of 2020, mainly due to higher profitability. We currently anticipate an effective income tax rate of 25.5% for the full year 2021. We generated record quarterly earnings per share of $6.15 in the third quarter of 2021, compared with $5.08 in the second quarter of 2021, and $1.51 in the third quarter of 2020. It's worth emphasizing again that our third quarter 2021 results were impacted by LIFO expense of $3.06 per share. Turning now to our balance sheet and cash flow. Despite significantly higher working capital needs attributable to ongoing rising metal costs, our operations continue to fuel our cash flow. Our third quarter cash flow from operations was $142.2 million after servicing over $325 million in additional working capital requirements. As of September 30, 2021, our total debt outstanding was $1.66 billion, with a net debt to EBITDA multiple of 0.6x. We had no borrowings outstanding on our $1.5 billion revolving credit facility and had $638.4 million of cash on hand, providing us with ample liquidity to continue executing on all areas of our capital allocation strategy, including funding our acquisition of Merfish United on October 1st and our record 2021 CapEx budget. I'll now turn to our outlook. We remain optimistic about business conditions in the current environment with solid or recovering underlying demand across most of the key end markets we serve. However, we expect factors impacting shipment levels in the third quarter of 2021, such as metal supply constraints, labor shortages, and other supply chain disruptions, will continue to persist in the fourth quarter of 2021. In addition, we anticipate demand will be impacted by normal seasonal factors, including customer holiday-related shutdowns and fewer shipping days in the fourth quarter compared to the third quarter. As such, we estimate tons sold will be down 5%-8% in the fourth quarter compared to the third quarter of 2021. We expect pricing for certain stainless and aluminum products to increase in the fourth quarter, offsetting the impact of declining prices for certain carbon steel products. Also, as metal prices at the beginning of the fourth quarter are higher than the average for the third quarter, we estimate our average selling price per ton sold for the fourth quarter of 2021 will be up 5%-7%. Based on these expectations, we currently anticipate non-GAAP earnings per diluted share in the range of $5.05-$5.15 for the fourth quarter of 2021. In closing, we are extremely pleased with our record third quarter operational and financial performance against the backdrop of challenging market dynamics despite ongoing strong pricing and healthy demand trends. Our record financial performance and strong cash flow enabled us to continue allocating capital to simultaneously invest in the growth of our business and return value to our stockholders. Thank you again to all of our colleagues in the field for your continued outstanding execution. That concludes our prepared remarks. Thank you for your attention. At this time, we'd like to open the call up to questions. Operator? Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first question comes from the line of Martin Englert with Seaport Research Partners. Please proceed with your question. Hi. Good morning, everyone. Hello, Martin. Given Reliance's breadth across products and end markets, can you touch on some of the long lead time products, where you're seeing some backlogs into end markets like construction or other leading indicator product lines? Are you getting, I mean, in the prepared remarks, you provided a fair amount of commentary, qualitatively on maybe how things are progressing into next year? Any sense of what this looks like, on an overall demand environment, whether this is like low single digits or mid-single digits growth? Yeah. Hi, Martin. It's Karla. I think it's really hard for us to tell because of the diversity of the products as we talked about, the end markets. You know, also our business where we focus on our small order sizes with next day delivery. We don't have that much visibility, which is typical for us. You know, certainly we're seeing certain products like carbon flat-rolled is becoming a little more available than it had been, but it's still, you know, pretty difficult. There are a lot of different issues impacting the supply chain out there. Metal continues to be tight in most products that we sell. You know, lead times continue to be out there, extending for some products, decreasing for others. Overall, we think underlying demand continues to be really strong, and we expect that to help us and others as we go into 2022. Okay. Thanks for the color there. Across the product lines, were you seeing elongated or extending lead times, and were you seeing some contraction? I mean, for the most part, we're seeing extended lead times for all the products. As I mentioned, carbon flat-rolled is the one area where it's improved a bit recently, but still longer than what we've seen historically. Yeah. Martin, just this is Jim. Just one other comment, tagging on to what Karla said. The most important thing is our customers are busy and they're continuing to stay that way. Lead times, pricing, we don't control that. We just listen to our customers and provide value. Okay. Excellent. That's helpful. If I could one last one there. Within the release, you did note the chip shortage inhibiting auto production and activity there. Do you get the sense that the semiconductor shortage is reducing demand across other end markets, like heavy industrial equipment, yellow goods, green goods, that sort of thing? Yeah. We are certainly seeing the semiconductor chip shortage impact more than just the automotive industry. I think, you know, automotive has had the most coverage about it and maybe been the most impacted. We're also seeing in, you know, other end markets that we sell into. It's not just the semiconductor chips where there have been some supply shortages. You know, various different components are hard to get these days. We're seeing impacts across a lot of different customers of ours. Again, the underlying demand is strong, so we view that as positive for future periods on shipments, even though we're impacted a bit right now. Okay. Thank you for all the detail there. Congratulations on the result, guidance and navigating the supply chain headwinds. Thank you. Great. Thank you very much. Thank you. Our next question comes from the line of Emily Chieng with Goldman Sachs. Please proceed with your question. Good morning, Jim, Karla, and Arthur. My first question is around sort of the forward-looking guidance on shipments. I know there's usually a normal seasonal factor impact in the fourth quarter, and you mentioned, you know, fewer numbers of shipping days during the quarter. But can you perhaps highlight, you know, what the percentage impact from the various different buckets of labor, metal supply, and supply chain disruptions could be impacting that number? And is there a way to think about which one of those three is sort of the gating hurdle here? Hi, Emily. I think, you know, as we look into the fourth quarter, first off, in the third quarter, which we just reported on, when we gave our guidance for the third quarter at the end of the second quarter, we thought that we were gonna have less seasonal shutdowns in Q3 than typical. That ended up not being the case, and we did see kind of the normal seasonal falloff in demand in Q3 versus Q2, even though we had thought that we wouldn't see as much because of the strong underlying demand. But we think because of all the different factors out there, labor, you know, supply chain, logistics, et cetera, that we did end up with customers doing their normal shutdowns. Our volume guidance going into Q4 does reflect, you know, primarily just the normal seasonal trend of going down. Since we saw it being more normal in Q3, that's what we're guiding to in Q4. You know, we typically know we have fewer shipping days, because of certain holidays where our locations are shut down. What we never really know is what our customers are going to do. And, you know, sometimes it'll be last minute and they decide to shut down for a week or two weeks, or they only do two days. We can't quantify really the different elements that are impacting businesses or driving our customers' decisions. Our overall guidance was for a more typical Q4. Got it. That's really helpful context there. Maybe just a follow-up around the Merfish acquisition. Congratulations on completing that one now. It's interesting to note that they do have a plastics and a little bit more of a copper exposure than what Reliance has in your existing portfolio. Can you maybe talk about your plans to, you know, perhaps grow that, or how do you view those sort of incremental businesses that you've now acquired? Yeah, Emily. Well, first and foremost, it's a really cool company. We're glad we got to bring them into the family of companies. It's a little different, but it's still distribution. Some different products. They go to market differently and, as you well know, we don't buy good companies and change the name and screw them up in any way. We like them for a reason. We think this is a really good company. We have opportunities to perhaps do acquisitions. We'll see how that all works out. But they complement our company, because they serve the same markets, but they do it differently. It's an adjacent business. I've said that before. I hope nobody takes that as, oh, that's all we're gonna do. We're gonna continue to look for really fine companies, and this happens to be one of them. We hope that they'll grow. They have a great management team. The way they go to market's a little bit different, and that's okay. The products they sell are into similar markets the rest of the FOC sells into, but the products are different. You mentioned copper and plastic. They also do conduit and a couple other things into the not only just non-res, but they also do residential and those type of things. I mean, that would be my comments. Karla runs it, so she could probably add to that. Yeah, Emily, we're excited about the business, but also, as Jim said, being able to grow it. We think, you know, where they operate is also a very fragmented industry. We think there's a lot of potential opportunity for growth through acquisitions, but also organically, them on their own expanding into, you know, more locations, more products, but also getting to know our other Reliance companies and seeing how they can leverage each other and create some growth opportunities there. But, you know, it's early on. We've just closed it October 1st, but we're excited to look for more opportunities to grow them. Great. I appreciate the color. I'm looking forward to it. Thank you. Our next question comes from the line of Sathish Kasinathan with Deutsche Bank. Please proceed with your question. Yeah. Hi. Good morning. Thanks for taking my questions. My first question is on the auto tolling business. You mentioned that the tolling volumes declined slightly in third quarter. I was just wondering if you could provide a bit more color in terms of whether your current shipping volumes match with the actual automotive production rate, or do you sense some inventory building of intermediate parts by the OEMs before it is being assembled into a finished vehicle? Yeah. Hi, Sathish. You know, I don't know that we can answer that broadly because I think each of the end-use customers that we sell into from our tolling businesses with a good portion of that being automotive, you know, they've each been impacted a little differently. They've taken different approaches. Certainly when they have, you know, shut down production, that's impacted us a little bit. You know, we're generally on the more popular platforms of the different vehicles that they sell, a lot of the trucks and light-duty SUVs. We feel that it's been a little less of an impact. We will say that in the U.S., the impact has been less than what we've seen in Mexico. In Mexico, our tolling operations are servicing more of the small sedans, and we've seen a bit more of an impact there from the chip shortage. They seem to be working through it, you know, fairly well. For certain of those end-use customers we have a little inventory built up, others we don't. It's hard to say broad-based. Plus, our tolling companies are seeing a lot of opportunities, not just in automotive, but also in other end markets where there's very strong demand that they've been able to fill some of the, you know, lost production, so to speak, from automotive with other opportunities. Minimal impact on us. We think in the U.S. that we're, you know, that the outlook is improving, that we'll have fewer shutdowns going forward. Thanks for the color. My next question is on the SG&A, which increased 8% quarter-over-quarter versus a 5% decline in shipments. Is there any way you can bifurcate the increase between higher incentive-based comp and inflationary pressures? Yeah. Hi, Sathish. This is Arthur. Good question. Half of that increase, we said, you know, majority of it is incentive-based comp, and that's just attributable to the increase in, you know, pre-tax income levels, and in gross profit. Then when you look at the remainder, a lot of that is just different factors. You have some slight increase in headcount. You have some inflationary pressures on shipping, packaging costs. That's probably, you know, a portion of that remainder. Then you perhaps maybe have some additional extra expense from higher utilization of our- health benefit plan just you know people started to go on to the doctors. I think overall, it's the sequential increase. I think it's fair to say predominantly, incentive comp driven. As we noted in our commentary, our head count levels have stayed relatively flat over the last 12 - 18 months, and we're still about 10%-11% below pre-pandemic levels. Okay. Thank you, and congrats on a great quarter. Thank you. Thank you. Our next question comes from the line of Phil Gibbs with KeyBanc Capital Markets. Please proceed with your question. Hey, good morning. Morning. Hello, Phil. On the tolling side, just in automotive specifically, are you anticipating that the fourth quarter for the auto segment in general is going to stabilize? Or is the fourth quarter, in your mind, gonna be kind of the last of the downdraft in the supply chain? Yeah. Hi, Phil. Fourth quarter, we do expect kind of the normal seasonal impact where there'll be shutdowns with respect to the holidays. You know, we're anticipating some continued disruption from the semiconductor chip shortage through the fourth quarter. We believe in the U.S., that's gonna start to subside as we go into 2022. You know, Mexico, we're not sure yet if we're out of that or not. Thanks, Karla. On the new plants in Kentucky and Texas, where do those stand in terms of construction and completion? When do you think you could start getting some earnings stream from those? Yeah, good question, Phil. We're pleased with both of them. The one in Kentucky is up and operational and doing quite well. The one in Texas is coming along as anticipated. I literally can't tell you when it's gonna be up and operational. We're on our game, and so are they. As soon as that thing starts cranking, we will too. Karla can have some more color, I'm sure. Yeah. I mean, Texas, we've been able to start to process some metal down there. Certainly as you know, we're on campus with one of our key suppliers, and as they ramp up, we'll continue to ramp up more. We're ready, and we're processing, you know, a small amount of volume there currently. Okay, that's helpful. Then I missed the first part of the call, but in terms of Merfish, is there anything that you can provide us in terms of what you expect either the, you know, the EBITDA or the earnings accretion to be from this? Obviously, you know, big in terms of revenue, but it's a different business, and it's obviously one you wanna get your arms around, so just curious in terms of thoughts on that as we, you know, try to model profit expectations. Thanks. Well, I mean, we certainly expect it to be good or we wouldn't have done it. You know, it is a bit of a different model. They're not doing the value-added processing to the extent that we do in a lot of our operations. You know, as is typical, we haven't really disclosed it. You know, it's very profitable, strong EBITDA. They sell a lot of metal products that are at high price levels, you know, right now, the same as our businesses. We're seeing really strong earnings from them throughout this year, and we expect that to continue. You know, unfortunately, you're gonna have to make your own assumptions right now on their contribution. Phil, they will add to our mojo. Gotta love that. Can never have too much. Thanks. Right on. Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Alex Hacking with Citi. Please proceed with your question. Yeah, morning, and thanks for the question. In terms of metal shortages, is that still predominantly concentrated in carbon flat-rolled, or are you starting to see that creep into some of the other categories as well? Thanks. Hey, Alex. Good question. No. It's all products. I mean, it's, you know, everybody's got the same issues. It's good to be Reliance because we have this model we've been improving for decades and literally have added to recently. When you support the domestic folks like we have, they support you. It's basically every product. Karla, you have anything to add to that? Yeah. I mean, not really. As we said, you know, carbon flat-rolled is the one area where lead times came in just a little bit recently, but most of the other products are extended on lead times. There's still tight supply. You know, there's a lot going on in the aluminum world now, even if carbon is starting to loosen up a little bit. Stainless is still very, very tight and has been. On the aluminum side, with some of the issues going on globally right now, we're expecting more tightness and price increases there as well. Okay, thanks. Then on the value add, I mean, I think you've, you know, discussed before, and I assume this is still accurate, that, you know, the current environment is probably, you know, conducive to your customers looking, you know, for Reliance to do more on the value add side, you know, given all the issues with, you know, labor and everything. Are you looking to accelerate, you know, investments in value add, you know, to meet the, you know, the needs of your customers? Thanks. Yeah, good question. Answer is yes. I mean, our CapEx budget this year is $310 million. We'd love to spend it all, but unfortunately, because of interruptions in the supply chain on equipment, it's just hard. It all revolves around our customers asking us to do more. I can tell you they continue to ask us to do more, and we're gonna be there for them. We obviously have a lot of dry powder, if you will, cash. That's one of our buckets where we spend money. It's an internal growth strategy, and it's worked so far, and we're gonna keep fueling it. Carly, you got anything else? Okay. Yeah. No, we're so far so good. Why change now, right? Yeah, thanks. You know, congrats and good luck in this, you know, difficult operating environment. Thanks. Thank you. Thank you. Our next question comes from the line of Timna Tanners with Wolfe Research. Please proceed with your question. Hey, good morning, everyone. Hope you're well. Timna, good to hear from you. Howdy. Seems like some big announcements, and I just wanted to delve into a little bit more. First, you're moving to Arizona from L.A. The second, I think you're changing your name to Reliance Steel and Aluminum and Plastic or maybe something shorter. I just wanted to get how big a deal is this Merfish departure? I mean, what's the addressable market if you do start to think about acquisitions more broadly? I ask, of course, 'cause you have the high quality problem of being relatively underlevered. Just wondered a little bit more about your thought process about potential further acquisitions outside of your traditional metals universe. Well, Timna, great question. On the first part, it's not really a big deal. It's nobody's moving. We just decided and learned a lot through the pandemic on what how do you retain and attract talent. We decided that being flexible is the best thing to do, and we researched it and didn't take it lightly. Did a lot of work trying to figure out where to move. It just seemed like the Scottsdale seemed like the best place to do it. Now, Merfish, Karla, you can talk about Merfish. All I can tell you, Timna, is you know our company well. We don't buy bad companies. We bought a really good company. I say it's a cool company because it's a little bit different, but we think it's a good platform for us to add to that and kind of, you know, do that adjacent business. I would just add, you know, Timna, Merfish United, they had been two separate companies. They actually merged together through acquisitions by their prior owner in 2019. They were able to consolidate some facilities and gain efficiencies while maintaining their market share. It was really positive for them to do that. In that space, we're aware of other companies that are out there. As I mentioned earlier, it's still fairly fragmented. They were one of the larger companies, I think the largest within their space, after the acquisition. Similar to what we've done at Reliance for many, many years, where we find good companies and bring them into the family, we think there is opportunity to do that for Merfish United and in their space, and that we'll see opportunities for growth there. Also organically, you know, we've got the ability to invest in them and let them either open more locations to get a broader geographic reach or to invest in equipment or other things that they may need to fuel their growth. If I were to conclude that this is a signal that Reliance is looking beyond, like I said, its traditional metals universe for, you know, broader industrial distribution opportunities, would that be a fair conclusion? That's part of the plan. We just look at good companies. This just happens to be a really good company. There's plenty of really fine companies in, you know, traditional metals distribution value adders. There's plenty of those. This one just came up, and it's a good company, and they're in the distribution business. We've made a practice of not going upstream and competing with the folks who actually make metal. You know, in our space, we're gonna keep looking. This just happens to be a good company. When you buy one good company in a space, our experience has been you get opportunities to buy more, and we'll just keep looking at really good companies. Okay. I'll leave it there. Thank you. Thanks, Timna. Thank you. We have reached the end of our question and answer session. I'd like to turn the call back over to Mr. Jim Hoffman for any closing remarks. Yeah. Hey, thanks, everybody, for your time and attention today. Before we wrap up, I'd like to take a moment to thank all of our Reliance colleagues for their continued hard work and daily dedication to promote health, safety, and well-being of our company. Our record-setting financial results, literally, they're not possible without you all, so thanks. I'm just inspired by your performance every day. Last, I'd like to announce we'll be participating virtually in the Goldman Sachs Global Metals & Mining Conference on November 18th. Love to see you face-to-face, but it's not gonna happen, it's virtually. We'll look forward to seeing you on screen. Thank you very much for your support and your commitment to Reliance. Stay safe and stay healthy. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.