Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The terms “Company,” “Reliance,” “we,” “our,” and “us” refer to Reliance, Inc. and all its subsidiaries that are consolidated in accordance with U.S. generally accepted accounting principles (“GAAP”), unless otherwise indicated.
This report contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our forward-looking statements may include, but are not limited to, discussions of our industry and end markets, business strategies, acquisitions, and expectations concerning our future growth and profitability and our ability to generate industry leading returns for our stockholders, as well as future demand and metals pricing and our results of operations, margins, profitability, taxes, liquidity, macroeconomic conditions, including inflation, and the possibility of an economic recession or slowdown, litigation matters and capital resources. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “preliminary,” “range,” “intend” and “continue,” the negative of these terms, and similar expressions. All statements contained in this report that are not statements of historical fact are forward-looking statements. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date of such statements. We caution readers not to place undue reliance on forward-looking statements.
Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements as a result of various important factors, including, but not limited to, actions taken by us, as well as developments beyond our control, including, but not limited to, changes in domestic and worldwide political and economic conditions due to, among other factors, U.S. and foreign trade policies and the related impact on economic conditions, inflation and the likelihood of an economic recession that could materially impact us, our customers and suppliers, metals pricing, and demand for our products and services; U.S. and foreign trade policies specifically affecting metals product markets and pricing; the possibility that the expected benefits of acquisitions and capital expenditures may not materialize as expected; and the impacts of labor constraints and supply chain disruptions. Deteriorations in economic conditions as a result of tariffs or trade barriers, economic policies, inflation, economic recession, slowing growth, outbreaks of infectious disease, or geopolitical conflicts such as in Ukraine and the Middle East, could lead to a decline in demand for our products and services and negatively impact our business, and may also impact financial markets and corporate credit markets which could adversely impact our access to financing, or the terms of any financing. Other factors which could cause actual results to differ materially from our forward-looking statements include those disclosed in this report and in other reports we have filed with the United States Securities and Exchange Commission (the “SEC”). Important risks and uncertainties about our business can be found elsewhere in this Quarterly Report on Form 10-Q and in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC and in other documents Reliance files or furnishes with the SEC. The Company cannot at this time predict all of the impacts of domestic and foreign tariffs and trade policies, inflation, product price fluctuations, economic recession, outbreaks of infectious disease, geopolitical conflicts and related economic effects, but these factors, individually or in any combination, could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.
The statements contained in this quarterly report on Form 10-Q speak only as of the date that they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based. You should review any additional disclosures we make in any subsequent press releases and Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC.
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This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 and other sections of this quarterly report on Form 10-Q, including the consolidated financial statements and related notes contained in Item 1.
Results of Operations
The following sets forth certain income statement data for the second quarters and first six months of 2025 and 2024 (dollars are shown in millions, except per share amounts, and certain percentages may not calculate due to rounding):
Three Months Ended
Six Months Ended
June 30,
June 30,
2025
2024
2025
2024
% of
% of
% of
% of
$
Net Sales
$
Net Sales
$
Net Sales
$
Net Sales
Net sales
$
3,659.8
100.0
%
$
3,643.3
100.0
%
$
7,144.5
100.0
%
$
7,288.1
100.0
%
Cost of sales (exclusive of depreciation and amortization expense shown below) (1)
2,571.9
70.3
2,557.3
70.2
5,023.3
70.3
5,073.9
69.6
Gross profit (2)
1,087.9
29.7
1,086.0
29.8
2,121.2
29.7
2,214.2
30.4
Warehouse, delivery, selling, general and administrative expense (“SG&A”)
706.0
19.3
667.7
18.3
1,396.2
19.5
1,339.2
18.4
Depreciation expense
59.3
1.6
55.8
1.5
117.6
1.6
109.1
1.5
Amortization expense
10.4
0.3
10.8
0.3
20.8
0.3
21.1
0.3
Operating income
$
312.2
8.5
%
$
351.7
9.7
%
$
586.6
8.2
%
$
744.8
10.2
%
Net income attributable to Reliance
$
233.7
6.4
%
$
267.8
7.4
%
$
433.4
6.1
%
$
570.7
7.8
%
Diluted earnings per share attributable to Reliance stockholders
$
4.42
$
4.67
$
8.15
$
9.90
(1) Cost of sales in the second quarter and first six months of 2025 included $6.3 million and $8.1 million of restructuring charges, respectively.
(2) Gross profit, calculated as net sales less cost of sales, and gross profit margin, calculated as gross profit divided by net sales, are non-GAAP financial measures as they exclude depreciation and amortization expense associated with the corresponding sales. About half of our orders are basic distribution with no processing services performed. For the remainder of our sales orders, we perform “first-stage” processing, which is generally not labor intensive as we are simply cutting the metal to size. Because of this, the amount of related labor and overhead, including depreciation and amortization, is not significant and is excluded from cost of sales. Therefore, our cost of sales is substantially comprised of the cost of the material we sell. We use gross profit and gross profit margin as shown above as measures of operating performance. Gross profit and gross profit margin are important operating and financial measures as their fluctuations can have a significant impact on our earnings. Gross profit and gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies.
Overview
Demand in the second quarter and first six months of 2025 was healthy in the majority of the end markets we serve, most notably in non-residential construction, despite the current uncertain trade environment. Our second quarter of 2025 tons sold were a second-quarter record following record quarterly tons sold in the first quarter of 2025; however, our operating results declined year-over-year mainly due to lower average selling prices. The declining metals pricing trend we experienced throughout 2024 and into February 2025 reversed in March 2025 when trade actions were announced. Given the strong tariff-driven momentum of both demand and metals pricing near the end of the first quarter of 2025, pricing for many carbon steel and aluminum products peaked in April, then declined for the remainder of the second quarter.
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Tons sold in the second quarter and first six months of 2025 were at record levels, with tons sold increasing 4.0% and 6.4%, respectively, compared to the same periods in 2024. We believe our broad range of product and service offerings to diverse industries, expansive value-added processing capabilities, focus on smart, profitable growth, and long-standing relationships with our domestic mill suppliers supported the increases in our tons sold. Compared to the second quarter of 2024, our increase in tons sold in the second quarter of 2025 surpassed the industry-wide decline of 3.1% reported by the Metals Service Center Institute (“MSCI”) by over seven percentage points.
Our gross profit margin of 29.7% for the second quarter and first six months of 2025 remained strong and within our estimated sustainable range despite significant metals pricing volatility.
Our same-store SG&A expense for the second quarter and first six months of 2025 increased $34.6 million, or 5.3%, and $30.3 million, or 2.3%, respectively, compared to the same periods in 2024 mainly due to inflationary wage adjustments, increased variable warehousing expenses and delivery expenses associated with increases in our tons sold. On a per ton basis, our same-store SG&A expense for the second quarter of 2025 increased only 1.0% while declining 2.5% for the first six months of 2025, compared to the same periods in 2024.
Cash flow from operations of $293.5 million in the first six months of 2025 decreased from $492.6 million in the same period in 2024 mainly due to lower net income and an increase in working capital investment. Consistent with higher seasonal volume trends, we typically invest in working capital in the first six months. The rising metals pricing environment in the first six months of 2025 also required a greater investment in working capital than in the same period in 2024 in which metals prices were declining.
Returns to stockholders in the first six months of 2025 totaled $461.4 million, comprised of $333.1 million of share repurchases and $128.3 million of cash dividends, compared to $647.2 million in the same period in 2024, comprised of $519.3 million of share repurchases and $127.9 million of cash dividends.
Cash used in investing activities in the first six months of 2025 was mainly comprised of organic growth activities related to capital expenditures of $174.5 million in the first six months of 2025, which declined from $206.9 million in the first six months of 2024. In the first six months of 2025, we did not complete any new acquisitions compared to three acquisitions completed for $346.5 million in the first six months of 2024.
Acquisitions
2024 Acquisitions
We acquired each of Cooksey Iron & Metal Company on February 1, 2024; American Alloy Steel, Inc. and Mid-West Materials, Inc. on April 1, 2024; and certain assets of the FerrouSouth division of Ferragon Corporation on August 16, 2024, with cash on hand. Included in our net sales for the first six months of 2025 and 2024 were combined net sales of $193.9 million and $115.1 million, respectively, from our 2024 acquisitions.
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Second Quarter and Six Months Ended June 30, 2025 Compared to Second Quarter and Six Months Ended June 30, 2024
Net Sales
June 30,
Dollar
Percentage
2025
2024
Change
Change
(dollars in millions)
Net sales (three months ended)
$
3,659.8
$
3,643.3
$
16.5
0.5
%
Net sales, same-store (three months ended)
$
3,565.3
$
3,544.3
$
21.0
0.6
%
Net sales (six months ended)
$
7,144.5
$
7,288.1
$
(143.6)
(2.0)
%
Net sales, same-store (six months ended)
$
6,950.6
$
7,173.0
$
(222.4)
(3.1)
%
June 30,
Tons
Percentage
2025
2024
Change
Change
(tons in thousands)
Tons sold (three months ended)
1,615.0
1,553.5
61.5
4.0
%
Tons sold, same-store (three months ended)
1,560.1
1,496.3
63.8
4.3
%
Tons sold (six months ended)
3,243.9
3,047.5
196.4
6.4
%
Tons sold, same-store (six months ended)
3,125.8
2,979.6
146.2
4.9
%
June 30,
Price
Percentage
2025
2024
Change
Change
Average selling price per ton sold (three months ended)
$
2,273
$
2,348
$
(75)
(3.2)
%
Average selling price per ton sold, same-store (three months ended)
$
2,292
$
2,371
$
(79)
(3.3)
%
Average selling price per ton sold (six months ended)
$
2,208
$
2,394
$
(186)
(7.8)
%
Average selling price per ton sold, same-store (six months ended)
$
2,229
$
2,410
$
(181)
(7.5)
%
Our tons sold and average selling price per ton sold exclude our toll processed tons. Our average selling price per ton sold includes intercompany transactions that are eliminated from our consolidated net sales. Same-store amounts exclude the results of our 2024 acquisitions.
We grew our tons sold in the second quarter and first six months of 2025 to record levels. Our tons sold increases reflect healthy demand in the majority of the end markets we serve, most notably in non-residential construction, despite an uncertain trade environment. Compared to the second quarter of 2024, our tons sold increase in the second quarter of 2025 surpassed the industry-wide decline of 3.1% reported by the MSCI by over seven percentage points.
Net sales for the first six months of 2025 decreased year-over-year due to a lower average selling price per ton sold. Since we primarily purchase and sell our inventories in the spot market, our average selling prices generally fluctuate with the changes in replacement costs of the various metals we purchase. The mix of products sold can also have an impact on our average selling price per ton sold. As c arbon steel sales represent a majority of our gross sales, changes in carbon steel prices have the most significant impact on changes in our average selling price per ton sold.
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The mix of our total sales by major commodity products and year-over-year changes in selling prices are presented below:
Three Months Ended
Six Months Ended
June 30, 2025
June 30, 2025
Sales by
Average Selling
Sales by
Average Selling
Product
Price Per
Product
Price Per
(% of
Ton Sold
(% of
Ton Sold
Total Sales)
(% Change)
Total Sales)
(% Change)
Carbon steel
54%
(3.1)
%
53%
(8.9)
%
Aluminum
16%
2.4
%
17%
0.6
%
Stainless steel
13%
(8.7)
%
13%
(9.7)
%
Alloy
4%
4.8
%
4%
0.6
%
Our 2024 acquisitions did not significantly impact the selling prices of our major commodity products.
Cost of Sales and Gross Profit
June 30,
2025
2024
% of
% of
Dollar
Percentage
$
Net Sales
$
Net Sales
Change
Change
(dollars in millions)
Cost of sales (three months ended)
$
2,571.9
70.3
%
$
2,557.3
70.2
%
$
14.6
0.6
%
Cost of sales (six months ended)
$
5,023.3
70.3
%
$
5,073.9
69.6
%
$
(50.6)
(1.0)
%
Gross profit (three months ended)
$
1,087.9
29.7
%
$
1,086.0
29.8
%
$
1.9
0.2
%
Gross profit (six months ended)
$
2,121.2
29.7
%
$
2,214.2
30.4
%
$
(93.0)
(4.2)
%
LIFO expense (income), included in cost of sales (three months ended)
$
25.0
0.7
%
$
(50.0)
(1.4)
%
$
75.0
LIFO expense (income), included in cost of sales (six months ended)
$
50.0
0.7
%
$
(100.0)
(1.4)
%
$
150.0
The decrease in gross profit for the first six months of 2025 compared to the same period in 2024 was mainly due to a lower average selling price per ton sold that outweighed an increase in tons sold to record levels.
We record, in cost of sales, non-cash adjustments to our LIFO method inventory valuation reserve that, in effect, reflects cost of sales at current replacement costs. The changes in LIFO expense (income) were due to the rising metals pricing environment in the first six months of 2025 compared to the declining metals pricing trend in the same period in 2024. As of June 30, 2025, the inventory caption in our consolidated balance sheet includes a LIFO method inventory valuation reserve of $484.9 million.
Our gross profit margins in the second quarter and first six months of 2025 remained strong and within our estimated sustainable range despite significant metals pricing volatility.
See “Net Sales” above for trends in both demand and costs of our products, and product pricing.
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Expenses
June 30,
2025
2024
% of
% of
Dollar
Percentage
$
Net Sales
$
Net Sales
Change
Change
(dollars in millions)
SG&A expense (three months ended)
$
706.0
19.3
%
$
667.7
18.3
%
$
38.3
5.7
%
SG&A expense, same-store (three months ended)
$
682.3
19.1
%
$
647.7
18.3
%
$
34.6
5.3
%
SG&A expense (six months ended)
$
1,396.2
19.5
%
$
1,339.2
18.4
%
$
57.0
4.3
%
SG&A expense, same-store (six months ended)
$
1,348.0
19.4
%
$
1,317.7
18.4
%
$
30.3
2.3
%
Same-store SG&A expense increases in the second quarter and first six months of 2025 were mainly due to inflationary wage adjustments, increased variable warehousing expenses and delivery expenses associated with increases in our tons sold. On a per ton basis, our same-store SG&A expense for the second quarter of 2025 increased only 1.0% while declining 2.5% for the first six months of 2025, compared to the same periods in 2024.
Our same-store SG&A margin increased in the second quarter and first six months of 2025 compared to the same period in 2024 due to increases in same-store SG&A expense and a lower average selling price per ton sold.
Operating Income
June 30,
2025
2024
% of
% of
Dollar
Percentage
$
Net Sales
$
Net Sales
Change
Change
(dollars in millions)
Operating income (three months ended)
$
312.2
8.5
%
$
351.7
9.7
%
$
(39.5)
(11.2)
%
Operating income (six months ended)
$
586.6
8.2
%
$
744.8
10.2
%
$
(158.2)
(21.2)
%
Operating income for the second quarter declined mainly due to consistent gross profit and margin coupled with an increase in volume-related expenses. Operating income for the first six months of 2025 declined mainly due to lower metals pricing and gross profit margin that outweighed an increase in tons sold to record levels.
The decline in our operating income margin for the second quarter of 2025 compared to the same period in 2024 was mainly due to a lower average selling price per ton sold. Our operating income margin for the first six months of 2025 declined from the same period in 2024 as a result of a lower average selling price per ton sold and gross profit margin that outweighed improved operational leverage.
See “Net Sales” above for discussion of trends in demand, product costs and pricing, and “Expenses” for trends in our operating expenses.
Income Tax Rate
Our effective income tax rates for the second quarter and first six months of 2025 were 23.0% and 23.3%, respectively, compared to 23.3% for the same 2024 periods. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state income taxes.
Financial Condition
Operating Activities
Net cash provided by operations of $293.5 million in the first six months of 2025 decreased $199.1 million from $492.6 million in the same period in 2024. The decrease was mainly due to a $137.4 million decline in net income and changes in operating assets and liabilities. Changes in operating assets and liabilities used cash of $302.5 million in the
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first six months of 2025 compared to $240.3 million in the first six months of 2024. The rising metals pricing environment in the first six months of 2025 required a greater working capital investment than in the same period in 2024 during which metals prices were declining.
In the first six months of 2025, we paid income taxes of $71.0 million compared to $147.7 million in the same period in 2024. The decrease was mainly due to decreased pretax income and the impact of prior year tax overpayments.
Investing Activities
Net cash used in investing activities of $158.8 million in the first six months of 2025 decreased $403.2 million from $562.0 million in the same period in 2024. The decrease was mainly due to no acquisitions in the first six months of 2025 compared to three acquisitions completed in the same period in 2024 for $346.5 million and, to a lesser extent, a $32.4 million decrease in capital expenditures. The majority of our capital expenditures in the first six months of 2025 and 2024 related to growth activities.
Financing Activities
Net cash used in financing activities of $222.0 million in the first six months of 2025 decreased $432.1 million from $654.1 million in the same period in 2024. The decrease was mainly the result of increased net debt borrowings on our revolving credit facility and decreased share repurchases. Net debt borrowings were $282.0 million in the first six months of 2025 compared to no net debt borrowings in the same period in 2024. In the first six months of 2025, we repurchased $333.1 million of our common stock compared to $519.3 million in the same period in 2024. Our returns to stockholders also included a 9.1% increase in our quarterly dividend rate effective in the first quarter of 2025; however, our total dividend payments of $128.3 million in the first six months of 2025 were consistent with the $127.9 million paid in the first six months of 2024 as a result of a reduction in outstanding shares due to share repurchase activity.
On July 22, 2025, our Board of Directors declared the 2025 third quarter cash dividend of $1.20 per share. We have increased our quarterly dividend 32 times since our 1994 IPO, with the most recent increase of 9.1% from $1.10 to $1.20 per share effective in the first quarter of 2025. We have paid quarterly cash dividends on our common stock for 66 consecutive years and have never reduced or suspended our regular quarterly dividend.
Share Repurchase Plan
See Note 10—“Equity ” to our consolidated financial statements for information on our share repurchases.
As of June 30, 2025, we had remaining authorization to repurchase $1.02 billion of our common stock under our $1.5 billion share repurchase program authorized by our Board of Directors on October 22, 2024. The share repurchase program does not obligate us to repurchase any specific number of shares in any prescribed period, does not have a specific expiration date and may be suspended or discontinued at any time.
Debt
We have a $1.5 billion unsecured revolving credit facility with $282.0 million of outstanding borrowings as of June 30, 2025 compared to no outstanding borrowings as of December 31, 2024. We also have an aggregate of $1.15 billion principal amount of senior unsecured note obligations with various maturities through 2036 issued under indentures, including $400.0 million of senior notes due in August 2025 .
See Note 7—“Debt ” to our consolidated financial statements for further information on our amended credit agreement and indentures governing our debt securities.
Liquidity and Capital Resources
We believe our primary sources of liquidity, including funds generated from operations, cash and cash equivalents and our $1.5 billion revolving credit facility, will be sufficient to satisfy our cash requirements and stockholder return
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activities over the next 12 months and beyond. As of June 30, 2025, we had $239.5 million in cash and cash equivalents and our net debt-to-total capital ratio was 14.1%, up from 10.2% as of December 31, 2024.
As of June 30, 2025, we had $401.1 million of debt obligations coming due before our $1.5 billion unsecured revolving credit facility matures on September 10, 2029, including $400.0 million of senior notes due in August 2025.
We believe that we will continue to have sufficient liquidity to fund our future operating needs and to repay our debt obligations as they become due, including $400.0 million of senior notes due in August 2025. In addition to funds generated from operations and approximately $1.22 billion available for borrowing on our unsecured revolving credit facility, we expect to continue to be able to access the capital markets to raise funds, if desired. We believe our investment grade credit ratings enhance our ability to effectively raise capital. We believe our sources of liquidity will continue to be adequate to maintain operations, make necessary capital expenditures, finance strategic growth through acquisitions and internal initiatives, pay dividends and repurchase our common stock.
Covenants
The Credit Agreement and indentures governing our debt securities include customary representations, warranties, covenants and events of default provisions. The covenants under the Credit Agreement include, among other things, a financial maintenance covenant that requires us to comply with a maximum total net leverage ratio.
We were in compliance with the financial maintenance covenant under our Credit Agreement as of June 30, 2025.
Seasonality
Some of our customers are in seasonal businesses, especially customers in the construction industry and related businesses. Our overall operations have not shown any material seasonal trends as a result of our geographic, product and customer diversity. Typically, revenues in the months of July, November and December have been lower than in other months because of a reduced number of working days for shipments of our products, resulting from holidays observed by the Company as well as vacation and extended holiday closures at some of our customers. The number of shipping days in each quarter also has an impact on our quarterly sales and profitability. We cannot predict whether period-to-period fluctuations will be consistent with historical patterns. Results of any one or more quarters are therefore not necessarily indicative of annual results.
Goodwill and Other Intangible Assets
Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $2.17 billion as of June 30, 2025, or approximately 21% of total assets and 30% of total equity. Additionally, other intangible assets, net amounted to $988.7 million as of June 30, 2025, or approximately 9% of total assets and 14% of total equity. Goodwill and other intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests and further evaluation when certain events occur. Other intangible assets with finite useful lives are amortized over their estimated useful lives. We review the recoverability of our long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with GAAP. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of our accounting policies are critical due to the fact that they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. Our most critical accounting estimates include those related to the recoverability of goodwill and other indefinite-lived intangible assets, and long-lived assets. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that
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are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
During the quarter ended June 30, 2025, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Website Disclosure
The Company may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at www.reliance.com , and our investors relations website, https://investor.reliance.com . In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section at https://investor.reliance.com . Our website address is for informational purposes only and is not intended for use as a hyperlink. We are not incorporating any material on our website into this quarterly report on Form 10-Q.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.