Good morning ladies and gentlemen and welcome to Reliance Steel and Aluminum 2008 First Quarter Financial Results. At this time all lines have been placed on a listen-only mode and we will open the floor for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host Chairman and CEO, David Hannah. Sir the floor is yours.

Thank you. Good morning and thank you all for taking the time to listen to our conference call for the first quarter ended March 31, 2008. Gregg Mollins our President and Chief Operating Officer and Karla Lewis our Executive Vice President and Chief Financial Officer are also here with me today. This conference call may contain forward-looking statements relating to future financial results. Our actual results may differ materially as a result of factors over which Reliance Steel and Aluminum Co. has no control. These risk factors and additional information are included in the company's annual report on Form 10-K for the year ended December 31, 2007 and other reports on file with the Securities and Exchange Commission. The transcript of this conference call including regulation G-reconciliation will be posted on our website at www.rsac.com/investorinformation. For the 2008 first quarter, net income was $107.4 million compared with net income of $111.7 million for the 2007 first quarter. Earnings per diluted share were $1.46 for both the 2008 first quarter and the 2007 first quarter. There were fewer shares outstanding for the 2008 first quarter due to our share repurchases during that quarter as well as in the 2007 third quarter. Our 2008 first quarter sales were a record at $1.91 billion, an increase of 4% compared with 2007 first quarter sales of $1.84 billion and up 12% from the 2007 fourth quarter. For the 2008 first quarter, our volume or tones decreased 1%, and average prices increased 5% compared to the 2007 first quarter. Our volume was up 9% and average pricing up 3% compared to the 2007 fourth quarter. For the 2008 first quarter, carbon steel products were 47% of our revenue dollars, aluminum with 19%, stainless 18%, alloy 9%, topaz I think 2% and the remaining 5% was…

Thank you Dave and good morning. We are pleased with our record sales in the first quarter. Our managers did an outstanding job navigating through a very difficult pricing market that is truly unprecedented. We were also very pleased to see improvement in our gross profit margins to a more normal range of 25.8%. We are working diligently to pass price increases onto our customers at the time of announcement. As all of you know for the most part we buy and sell in the spot market so we were expecting an increase in our margins as prices continue to rise. We did get a slight improvement in our inventory churn to 4.6 times from 4.4 turns in 2007. The EMJ Company and Yarde Metals, turning their inventory over 4.5 times in the first quarter a record for both of them. We expect them to be closer to five times in the near future. From a demand perspective, our same store console as compared with the first quarter of 2007, down 1.4% while the MSCI reported a number volumes down 4.8%. So, we are pleased with our volume in the quarter. We still see strength in many of the key industries that we support. These include aerospace, energy, electronics, wind towers, barge and ship building, rail car, agricultural equipment, non residential construction, infrastructure and heavy equipment. The industries that remained weak are domestic auto producers, appliance and residential construction. Fortunately we do very little volume in these three areas. The most significant change in the quarter was the increase in our cost of goods for most of the products we sell. Carbon steel prices will reach record levels in the second quarter, far off surpassing the 2004 levels. Skyrocketing raw material cost, low servicing on inventories, low imports, high freight…

Thanks Gregg. Our 2008 first quarter consolidated sales were a record $1.91 billion. Same store sales which exclude the sales of our 2007 acquisition were $1.75 billion and the 2008 first quarter, up 0.6% from the 2007 first quarter with a 1.4% decrease in our ton sold and a 2.2% increase in our average selling price per ton sold. Please note that our tons sold and average selling price for tons sold announced excludes the sales of precision script because of the total processing nature of its business. In the 2007 first quarter we experienced strong demand levels for most markets that we sell to. Although demand has continued what we consider to be healthy levels in the 2008 first quarter, demand levels have declined from the 2007 first quarter. We believe that the demand could decline further as 2008 progresses, but we do not currently expect any sudden insignificant changes in our current volumes. The increase in our average selling price per ton sold is due mainly to the significant increases in carbon steel prices that were affected in the 2008 first quarter and the further increases that's been announced for the second quarter. Our 2008 first quarter gross profit was $492.3 million. Our gross profit as a percentage of sales in the 2008 first quarter was 25.8%, compared to 25.7% in the 2007 first quarter and 25.1% in the 2007 fourth quarter. In the 2008 first quarter, LIFO expense was $17.5 million or $0.15 earnings per diluted share. We currently estimate our full year 2008 LIFO expense to be $70 million based on the significant increases in carbon steel cost in 2008, which we expect to be somewhat offset by flattened lower cost for stainless steel and aluminum products at the end of 2008 compared to the beginning…

Thank you. [Operator Instructions]. Our first question today is coming from Michelle Applebaum. Please announce your affiliation, then pose your question. Our first question today is coming from Brett Levy [ph]. Please announce your affiliation then pose your question.

Yes Jeffries and Company. Can you guys talk a little about the working capital build that you expect as prices move up in the second quarter and you expect on a working capital basis for the full year?

We had it quantified in a double increase certainly we would expect some increases due to the carbon pricing and what we really monitor are our day sales outstanding for our receivables which has been in good shape and then on inventory we really focus on our inventory turn. We are up to 4.6 times in the first quarter, which is an improvement. We hope to continue to improve that. We are not planning on anyone buying heavy so, we should see good results in that, so the dollars will be up, but we should collecting those dollars and paying down the debts that we need to fund the increased pricing on the inventory, so we will have a little more borrowings on our lines, but nothing that we think significant or certainly not troublesome especially given the significant availability that we have on our credit facilities.

The real key there is the improvement in our inventory turns and our working capital increase during any first quarter is usually the most significant increase, because business tends to tail down in the fourth quarter, so we see a pretty good increase in receivables and then in inventories also to support those higher sales levels and actually the increase in working capital that we just had in the first quarter of '08, was less than we would have expected, but helping that was the improvement in our inventory turns and we would expect that to continue in a manageable way.

Al right and then get to a final level of granularity. Have you guys turned inventories little bit more than once a quarter each year which means intuitively your long carbon for the better part of the whole quarter. I am just wondering why margins wouldn't be up more. Is this is the carbon business turning faster than that. You just think if carbon prices go up 200 bucks this quarter. You would think that next quarter should be awesome?

First with carbon products we tend to turn them fasten then our specialty products, so carbon inventories are turning something, much better than five times if you add up all of our carbon businesses. So you're looking at about 2.5 month's worth of inventory on hand on an average basis for carbon. So, the other... the key in improving your margins is actually were at passing the increases through before your receive that high price material and with the magnitude of these recent increases it's more difficult to pass through a 170, $180 a ton increase today. We feel very confident that we can get some of that whether or not we can get it all on a 100% of our customers, that's not going to happen and so we were predicting some improvement in gross margins also the LIFO impact as these things turn through your inventory is a bigger deal.

And then the last question revolves around expansion, it looks as if you guys are doing some sort of organic expansions, are you building rather than buying, can you just add a little bit about were your priorities lie in terms of whether you are looking more to spend money to build or buy to expand?

You know I don't think we have any preference one over the other; it depends upon the opportunities that are out there. We have had more Greenfield type expansions in the last couple of years, really then we've had in quite some time. Because there has been some opportunities presented by some industry conditions that have allowed us to do that. I think you will see going forward that we will always have much activity on the acquisition side than on the Greenfield expansion type side, but we will where opportunity presents itself, go out and establish ourselves in new areas in a Greenfield type manner. But it's going to be quite a bit smaller.

We can get more... accretion more of an impact typically from the acquisition.

Right. Normally the organic growth that we've had as Dave described over the last few years, it's been as we have not been able to find a company that we were compelled to acquire in those particular regions and so the obvious thing to do was to open up in those regions ourselves when we did have a good acquisition opportunity.

Thanks very much guys.

Thanks.

Thank you. Our next question today is coming from Timna Tanner. Please announce your affiliations and then post your questions.

Hi, this is Timna.

Hi Timna how are you doing?.

I hope you didn't walk [ph]. With that can you clarify some of that plants that you went over specifically talking about demand and your outlook and in your guidance as I understand it you are talking about expecting flat demand and margin to improve type to startup up from those metals. We are a bit surprised that you would not had... you are making comments about end market demanding fairly solid and sill rising but also making comments about concerns. What... can you talk a little bit more what those concerns might be, do you see which price is heading as high as they are. Some push back or some industry, despite some strong fundamentals that might be more... but demand have more difficult time passing on this higher cost?

I think Timna, the first-half I think our comments for that... our demand has been steady. We didn't see it rising. We didn't... I think we said that we didn't expect, we have not seen and actually in quite some time, except for the seasonal turn down in the fourth quarter of last year. Demand has been just pretty steady and that's what we expect going forward. The second quarter outlook for us was... normally you would expect second quarter demand because historically it does go up business improves in the second quarter, maybe we're reading too many analysts reports or other things that are out there talking about the poor demand, but the fact of the matter is we're just being cautious and we're not anticipating the demand in the second quarter is going to increase the same amount that it normally does, simply because there are some tough spots in the economy out there, now I think you have talked about and some of your stuff and everyone else has talked about the potential for slow downs in certain other areas particularly non-res construction because of its' relationship to residential and certain another areas so, we are... we don't see any slow down happening at the time on the other hand we don't see anything taking off either, we think demand is going to be relatively steady through the second quarter. And we just don't feel comfortable reaching out and predicting that demand is going to increase in the next quarter like it normally does, simply because of all of the different economic uncertainty, things that are going on out there.

Okay that's reasonable and also wondering if you could comment on the potential for added volumes perhaps, since you mentioned that you didn't expected decline in your volumes and despite any weakness that you might see later on at least maybe that's what I interpreted from Karla's comment is that potentially from the opportunities from taking market share from smaller distributors that might be having credit problems, can you talk about that opportunity a bit?

Well I think yes. We've consistently been able to improve our share and we feel that through service and quality that we should be able to do that on a regular basis. The market now for metal is also is very tight, so there may be some opportunities for us to because of the size of the company to acquire metal from producers that may be some other people can't get their hands on. So, it's a combination of things that I think we've consistently been able to report volume changes that are better even if it's we are down, but we are down less than the industry as a whole. Also, I think the industry numbers are impacted quite a bit by the downturn in the auto and appliance and some of the other things that Gregg mentioned and we just don't deal in those markets.

Okay got it. Finally do you have any comments on the availability of import, has that changed any in late [ph]?

It's actually gotten a little tighter. There are very few offerings that are actually out there Timna. There, the pricing is not attractive A, and B, the quantities that we set they were offering are significantly lower in historical levels and so imports are virtually as far as we are concerned they are gone.

Okay, thank you.

Thank you. Our next question today is coming from Chris Olen [ph]. Please announce your affiliation and go forward with the question?

Hi Cleveland Research [ph]. Good morning.

I wanted to take the non-residential construction question on a different angle. Can you talk a little bit about we get the sense that maybe beam and rebar and any other kind of long product demand, it has been pretty strong in the second quarter related to existing projects, but then you start getting to the point where... potentially higher raw material cost drive cancellation from your major customers. Can you talk a little bit about what your actual visibility is out there and you are hearing about cancellations etcetera.

As a matter or fact... where it's not necessarily hearing about cancellations but we are certainly, our customers are talking about delays and which should come as no surprise. Any project that doesn't have a time limitation needs to be met. They are basically discussing with us that they are going to probably take it off the table for a period of time and see where this levels out. I think what we are telling them is, is that... they may have to make their own decisions but where we are coming from we just don't believe that this is a bubble that's going to burst any time soon. So, how long they have it to delay projects, it just depends on the customer and the job, but yeah, when you're talking about $1000 a ton or $1200 a ton plus for plate when it was $800 four months ago, certainly delays are being considered, there is no question about that.

When would this is led to the delay is actually happened, when would they start hitting your volumes, would they be more of a third quarter fourth quarter 2009 type of impact.

If... that's you know is very difficult. So it depends on the jobs but, we would anticipate that there would be some delays in the third quarter and fourth quarter.

Okay. And then real quick can you talk little bit about what you are seeing from the quote smaller distributors out there, is there any kind of a rational pricing or rational landscape that could prevent you from pushing these prices increases through, I guess even further?

No, we buy on the spot. We sell on the spot and we have been through this, many times before certainly not at the levels that they are now but we explained to our customers. We provide them with documentation that supports the raw material increases the energy related cost that scrap being sold at levels that have never happened before and they recognized the fact that we are... we have no control what the prices and our sales people just... we explain to them and I think this is the most important thing for our customers to understand is that what's more important to them is the availability of this... of the mallow and we are very large buyer of all the part that we sell and we are... as Dave mentioned a minute ago we have the availability to product that probably more availability than most people in our industry have through the major mills in North America. So, we just explain to them are, what we are going to do is make sure that they have metal. We are going to protect them by not selling to opportunistic buyers and we are going to have metal for them when they need it.

Thanks a lot.

Thank you. Our next question today is coming from Phillips Gibb [ph]. Please announce your affiliation, then post your question.

Yes, hi. It's Mark Parr with Keybanc.

Mark, hi.

Hey, Mark.

Okay, good. I didn't get to talk to an operator ahead of time. So, I guess Phil set up the call so, anyway... So, once again you guys did a great job. Congratulations on the results.

Thanks.

And I will say that I appreciate your extreme need to remain conservative in this economic environment. I just... I want to ask a same question I asked on the last call. Because, I think Karla. Karla as either you or Dave had mentioned market share gains in your commentary, and I was wondering if you could talk about that in the context of just pure internal programs versus some of your smaller competitors may be running into some credit availability issues?

It's really hard to tell Mark and I'm not and I don't know if Gregg is aware. But I'm not aware of any of our smaller competitors that are singing the blues, because they are being squeezed from a credit standpoint or unable to pass through increases. The smaller service centers are all in the same boat that we're in and it might actually be more critical for them to get those increases passed through as soon as possible to their customers, because they are smaller and they do need to turn their cash and I don't think that circumstances that they have are really any different than ours that we are just two different sizes businesses. I don't think there are any under any more pressure or it is any easier for them with respect to get the increases through. The increases need to go through. If you don't get them through then you are going to be selling material for less than what it is costing you to replace it and that's not good for us, if we do it that way and then certainly not good for the smaller companies either.

I know that in the past 12 months you have mentioned on calls that the competitive environment had ticked up and you were seeing more competition or less discipline could you give us an update on what you've seen here over the last several months as a result of all the increase in pricing on the carbon side and also and update as far as competitive market conditions in the aluminum stainless market place.

Mark, we have seen more discipline in the pricing market, okay across all the regions that we're in the first quarter. I think everybody is little show shot about what these prices have done particularly in the carbon side. To go drop back just a minute to your question about our improvement in market share. Through the last few years, last year we spent about a 124 million in CapEx spending, we've opened new plants obviously in over the last few years. I think part of the reasons why our improvement in market shares has taken place because, we've got state of the art equipment in almost every operation that we have. Our quality is second to none. Our level of service out in the field is also second to none and you add all those together when there has been several large companies in our industry that have not afford in the capital into their... into their property plant and equipment that certainly our company has and eventually that takes... that provides us with a good opportunity. As far as stainless and aluminum is concerned, I don't know what to say there, I think there is some softness, there is... a little bit of softness in stainless, I think some of that has to do with A, hedging form the first half of the last year in anticipation of those major surcharge increases. The other thing is it appliances, stainless is massive in appliances as you all know and that the appliance business is certainly not what it was a year or two ago in today's environment, so.

I think what just to be clear what Gregg means when he says hedging last year, he meant that because of prices of stainless, because of the nickel surcharges were going up so fast, so high at this time last year.

Right.

That the people were buying as much as they could possibly buy they are building inventory because they knew that if they bought it today it would be cheaper than buying it tomorrow. So, that's the clarification on hedging as you know.

Throughout buying hedged contracts.

Okay. If I could just ask one more question. On the... if you could give us an update on the Aerospace market I know you'd said that was one of the markets that you characterized is a strong. Could you talk about is it... is the aerospace market strengthening. Is it staying the... is it growing the same way, does it growing on a faster rate and also what's the market look and like in heat treated aluminum plate. And thank you again congratulations on all the progress.

Thanks Mark. Mark, the aerospace business, you have to recognize that Reliance, okay, our major market in aerospace is in the defense and military part of aerospace. When you get into the commercial end of the business we do very little commercial business with Boeing. We do with Airbus but the majority of our business in that area is with the regional jets and the private jets Embraer, Bom-bardier Gulfstreams, Sasnut Beach [ph], that.. those are the private jet makers and regionals that we are doing business with quite a bit. This 787 program as it applies to Reliance from the aluminum standpoint is really more of a non-event okay for us. Now, when you get into titanium, which is a little less than 1% of our sales. Okay it does have an impact there, because obviously the 787 will probably use about twice the amount of titanium than any other jet will use and so we are anxious for that program to get off the ground for that very reason in that product, but from our standpoint what's happening at the 787 is not a big deal. Now from the heat treated aluminum plate standpoint what we've seen is the Alcoas the Kaisers etcetera. What they are not being able to ship into Boeing for the 787 program. They've made that up because of armor requirements with the government. So, that it really our conversations with Alcoa and Kaiser which are and we are extremely close with them is that they've been able to pick up this slack on the 787 with armor requirements, so heat treat plate sheath there was a reason to heat treat sheath announcement just on Monday a 5% increase on the price of heat treat sheath but we are not seeing discounts or its still heat treat plate is still pretty tight.

Okay terrific. Thanks again Greg.

Hey you bet Mark.

Thank you. Our next question today is coming from Sal Tharani. Please announce you affiliation and then post the question.

Hi it's Sal Tharani from Goldman Sachs. Hi guys how are you?

Hey Sal, how are you doing?

Can you just give us some color on which part of your business. I mean you already mentioned which one do you have in business but where do you see further vulnerability business in which or the end markets which are strong right now. Is it the Aerospace or non-res where you think will be the next sort of stressful [ph] weakness you will see, specific from the others.

I think Sal the, our anticipation is in the major markets that we sell to the strongest is probably the energy oil and gas markets and that is actually getting stronger and it got stronger last year and continues to gain strength so far this year and we expected that's going to continue. Everything else has been pretty steady Aerospace for us as Gregg just mentioned is we think steady on the strong side and there are different pieces moving in different directions there of course with respect that.. our major exposure there is in the aluminum products and with respect to the Airbus activity that should be improving as the year progresses and with respect to the Boeing side of things then as Gregg pointed out, we are mostly military and defense there, we expect that that's going to continue at a pretty steady pace. So, the other major markets that we sell to the farm equipment, heavy machinery and that seems to be pretty steady and wind towers seems to be pretty steady. The one that maybe is most vulnerable and we've talked about this I think on our... on our few calls... the last few calls that we've had is in the non-res construction side and as Gregg also mentioned earlier we don't see anything at the moment that's been cancelled there... are projects that we expect will be delayed, if they can be delayed simply because of the pricing. So, we have that exposure on to the non-res side which is really an issue caused by the rise in prices and maybe the postponement of certain projects and then we would still have to remember that there is a part of non-res that's connected to residential. So, some of the later commercial type projects and while we haven't seen a big drop off in that... that's also an area where we would expect that in due time, we're are going to see less activity because if they are not building communities or people aren't moving in to newly built communities, then you don't need all of the support structures around those communities and logic tells us that that part of the business might slow down.

And Sal one other thing that's working to our advantage is the weak dollar, okay. So a lot of the company's that are manufacturing big pieces of equipment that they have never been able to export in the past or cost effectively are able to do that now and so with... what happened with ethanol what is going on with ethanol I should say, there is a lot of Ag [ph] type equipment that's is being purchased by farmers throughout the United States and so our plate business, this link of our business is absolutely huge. And obviously the mills participate that more on a direct basis, but we will also participate in quite a bit of that ourselves so the company's that are manufacturing goods that could be exported, they are doing it just the same way as the mills that our producing more metal then they can sell domestically they are exporting. So weak dollar is actually helping it is used to our advantage.

Okay and on the business offset we currently see the, service center data which appears to be... continues to decline but are you are seeing it at the end user side it's also very lean?

From an inventory at our customer level, yeah the customers have really for quite sometime just been buying what they need, they have been pretty cautious all along we don't see our customers building inventory, this environment is different in many that we have seen on the past if not all of we have seen in the past. That the opportunity to buy more inventory than you need is not really there, whether you are a service center or whether you are one of our service center customers.

And Sal that really plays to the advantage of Reliance. We pride ourselves in having the shortest lead times in the industry, okay we count that everyday of our lives and so when customers are living hand to mouth they are more inclined to call you at 4 o'clock in the afternoon with a need for tomorrow and they need that metal tomorrow or otherwise they are not going to have anything to keep their people and their shops busy. And we are able to provide them process material and deliver it to them the next day and do it consistently. So, whenever the metal goes up and customers are only buying what they need per job. That really works to our advantage.

How you said that you are seeing some hedging?

I think his comment was respect to hedging on stainless Sal was really last year. It meant that, we had customers and also service centers last year at this time because of the rapid and large price increases that were building inventories. So, and its certainly that's not happening, now.

Got it. And also on the stainless steel side, the nickel surcharge you have been able to have everything in terms of surcharge and now they have a comp surcharge and energy surcharge.

Yes, we look at the all in cost of the metal and we expect to get our gross profit margin on that total cost.

we don't separate as a line item to surcharge. We roll the surcharge into the base price of the stainless and then market up from there. So, yes we are able to pass along those prices and as evident by last year... last year nickel surcharges they did at high end $2.28 a pound in July and throughout that entire cycle, when they began at about in the $1.20 a pound neighborhood all the way up to $2.28 a pound surcharge only, we were able to pass all those surcharges on.

Okay and I also heard that some of the service centers may have... I mean like you guys always push the prices as soon as the company announces the price... or the mill announces price increase and maybe a month latter they have announced that's an excellent to price will go up. You generally price or get your prices up ahead of that but I heard that some of the service center may have been selling appears [ph] sort of current cost... due you think if that's the case and when they go back to the place to their inventory you may even gain more market share from these people.

What happens there Sal is that when they are selling... given the fact that metal is so tight. When we raise our prices and they sell at their existing cost. They run out of inventory when they run out of inventory then they come to us and that's why our margin is still low, we are not going to sell off of existing cost, we are going to sell off replacement costs and that's what we do... does that mean we loose some business here in that, yes it does. But we are very, very disciplined, on our gross profit margin management and we are not going to take what we consider to be business that is... not intelligently priced. And there seem to be lot of discussion or speculation that there is a bunch of little service centers out there selling at lower replacement cost and I got to tell you we just don't see that. It's not an issue that we're fighting everyday. You always have some players out there that have lower prices, pretty much through all different market conditions, but I don't think it's any different now than it is normal, is it correct?

No, not really Dave, and as a matter of fact, they keep talking about small service centers. They're some large service centers.

Okay, that have that problem.

And that can be... last year, we were going through something like that, and that can be actually more disruptive than these little guys right so, but we haven't really... it's not really an issue that's the top of our list, its been a problem Sal.

Your second quarter is generally yield better demand than the first quarter in general?

In general, that's true.

Okay. And lastly, is on the pricing you mentioned flat to slightly up, I just want to make sure, is that's being very conservative, because prices are rising as you said almost every week, and carbon is still 50% of that?

If you remember Sal, that only a little under 50% of our business is carbon, and there's breakout within the various carbon products within that, so we are a little conservative on our ability to pass... of when we'll be able to pass those increases through, but we do expect, carbon increases that are on stainless and aluminum, and we're thinking flat possibly down by the end of the year.

Okay. Great, thank you very much.

Thanks.

Thank you. [Operator Instructions]. Our next question today is coming from Lloyd O'Carroll. Our next question today is coming from Bob Richard. Please announce your affiliation then post your question.

Good morning, and thanks for taking my call.

Sure, hi Bob.

I appreciate the color you gave on working capital just as a point of interest that your $950 million in inventory at the end of the quarter can you give me a just a rough breakdown on what the product types those are like between carbon and aluminum and stainless?

Yeah, hold on just for a second.

That's over the 900... it's going to be tough because yes its kind of somewhat a breakout, probably about half is in carbon, and then a quarter of let say in stainless. Actually it totaled about 15% to 20% in stainless, and about 10% in alloy, and then the remainder in aluminum.

It's very similar, Bob, to the distribution of our sales by dollars. So, somewhere a little less than half, I think our 47% with carbon last quarter, and so it's very consistent with that.

Okay, that's helpful. Thank you. I... I guess we could take this conversation offline, but I guess... with the previous caller, your sales price is up... only up 3% from fourth quarter if I... if I heard you right, and with what aluminum and slight pricing has done quarter-over-quarter, I guess I'm kind of surprised that it didn't improve more, and with... well I guess we will take a look at what it does in the second quarter, but I would have expected your average price to come up even more than what it did.

Well keep in mind we've got a lot of different products out there, and as probably just pointed out, we've got a little less than half of our mix is carbon steel products, the biggest increases have been mostly in the flat roll side, flat roll is only about 8% of our business, we've got some stainless products where the average cost actually came down during the quarter, titanium the prices have come down consistently and when you throw all of these things into possibly mix them up that's kind how that all comes down. Now that the increase in the carbon side if you look at that separately we also would expect that it's going to be a bigger number. But we are giving you an overall number based upon really the mix of our entire book of business.

The major price increases are in the carbon area are taking price lower and are hitting our inventory in the March, April, May timeframe and June. So, that those are the huge increases that was added and then the first two months out of the year as they were going up, as they were going up as ridiculously as they have the past couple of months.

I appreciate your color there and I'm not completely divorced, but aluminum was up pretty good over quarter-over-quarter too. What are your expectations for aluminum pricing again. I think the last quarter you have kind hope that it was going to be 110 to 120 for the year. Are your expectations up a little more than that or can you add anything to that.

Well we didn't think that Midwest spot was going to go up to a $1.40 a pound [ph] I'll tell you that so, but we don't expected to hold there either. So I would say the answer to your question, do we think its going to be 110 to 120, maybe it will be 120 to 130 instead of 110. Because it went up about $0.10 to $0.15 a pound frankly than what we have thought that but we just take educated guesses on these things we are not traders or anything like that. So, we had no idea frankly that we see a $1.44 a pound Midwest spot.

Other thing too, Bob keep in mind that just if you look at aluminum we sell a bit more than half of our aluminum sales are in heat treat products and the rest is in common alloy products and there is quite a difference in price between those two so if our inventories are a little heavier or a little lighter in heat treat versus common alloy or if we sell a little more heat treat versus common alloy or if we are selling more wrought bars and we or replace then we are cheap product all of that comes in to play and has a pretty big impact on our of the average cost of our inventory as well as the average cost in our sales prices. We also in the aluminum side have contracts with a lot of Aerospace customers and those contracts are at fixed prices and so as the prices are going up we are buying at a fix price from our mill supplier for that piece of business that contractual business. And we are selling in agreed price to our customer, so you might not see those increases in those prices in that part of the business because it's already booked at fixed stock prices. So there is a lot of moving pieces when you look at this its very difficult to sit back and say carbon is up X percent so we expect revenues to be up X percent at Reliance because that much of their business is in carbon products, the distribution of the different carbon products as well as in the non ferrous side all the different alloys can have a really, it can make it do funny things so there is a lot of moving pieces is what I am trying to say.

and the real way that we monitor and measure whether or not we are getting our prices up appropriately is via gross profit margin, our gross margin did improve in the first quarter so we are comfortable that we were raising our pricing the way we needed to.

Okay I appreciate the color and great quarter and best of luck, thanks.

Thanks.

Thank you. Our next question today is coming from Evon Moranno [ph]. Please announce your affiliation and then post your question.

Thanks Jefferies, Gregg it seems that you indicated that prices on the carbon side are likely to hold here and there are couple of things I hear you keep saying, you are getting pushed back from customers and that... the availability for you guys and we have heard this from others out there still and I guess I am just trying to understand if anticipation is the demand could come down now what really keeps, prices up here?

Itsreally... its all the raw materials I am sure you saw the other day that there was a shipment made of scrap to Turkey at $650 a ton, there has been, China has been buying it at $620 a ton scrap you got the iron ore components, the coke components all those commodities I just personally don't see anything on that horizon that would make those go down, coupled with the lack of imports coming into the country. I mean in normal times with prices going out like this, service centers across the country would be running off shore and buying this much material as they possibly could. They are not doing that now it doesn't make any sense to do it and that's why all the statistics at the MSCI [ph] report that industry inventories are at record lows, yes they are at record lows because nobody can go offshore and buy any material so given all of that you would think given what you are suggesting supply demand fundamentals you think that there would be a pinnacle here shortly and prices would begin to go down as they have it years passed in the summer months they are heading in towards the balance of the year. I would suggest that I really don't think that that's going to be the case this year only because of all these cost that are better go into effect and lack of imports and as long as we don't open up the mills don't open up that the gates by pricing and material higher than what is available in the world market and I think they are smart enough not to do that and I don't think we're going to see imports coming in this country, and I don't think we're going to see raw material prices, transportation prices, energy prices going down any time soon.

Yes. And on the import side, what's the differential that you think you need to invite imports and...

I'd say about 8%.

So it needs to be 8% higher on a pricing?

Yeah, we would need to be 8%.

Right you are.

Yes. The domestics.

And where are we now.

We're still... our prices here in the United States are still in most cases, okay, lower than... what they're buying globally.

Okay. And then I think you said earlier that the volume just aren't available and not as attractive prices on the imports?

Right. Let us... let's few offerings and I underline the word "few" offerings that are out there Evon [ph] they're... they're just not at attractive prices, and even if they were, the quantities that are being offered are very, very small.

Where do you see offering are being made from?

Asia.

Anything on Russia?

Very little.

Okay. Thank you very much.

Thank you.

Thank you. Our next question today is coming from Michelle Applebaum. Please mention your affiliation and pose your question.

Hi it's Michelle from Applebaum Research. Hi, I figured out how to use my phone now.

Congratulation.

It's only been five year so... so I handled that myself. So the questions I have remaining are the original LIFO forecast was 60 million for the year and you've raised it to 70?

Yeah basically Michelle what we do is... each quarter we have to look out... during the year we have to look at what... we think our annual LIFO expense will be and then book radically [ph] to that annual amount. So in... in February we were thinking probably 60 million was a good number for the year, because of the carbon price increases mainly being higher than we had anticipated... I mean we were expecting prices to go up but not to the level that are currently announced and because of that we had a decreased our annual expectation

Okay and the first quarter didn't have the correct number and if you don't need to adjust that right?

Right, we estimated at... in February we were estimating that in the first quarter we book $15 million and we booked 2.5 million more.

Okay so you've beat the number even with more LIFO, that's pretty cool. Then my next question is, and I know this has been asked around and I was having some trouble with the call, so I am not sure if its been asked quite as exclusively but is this... but when I take my handy little model here and keep demand the same in the second quarter and ignore price increases and ignore the comments that you made about improving growth margin, I still get a higher number than you guidance for the quarter.

I didn't do that.

Okay.

Same number say in the next... in the next of our perspective, we have the same number of days, shipping days in the second quarter.

I guess... I guess one question is, your other income usually ranges between 2, 3, 4, 5 million and nobody had similar [ph] charge.

What that was, Michelle you know our international business mainly in Canada is increased and with changes in the Canadian dollar this quarter that reversed.

Okay and what would you expected to do in the second quarter, the other income?

I was thinking... probably a couple $100,000s of income. I mean your... last year third and fourth quarter we were getting some pretty significant gains from... on the Canadian dollar and part of that is that I don't want to get technical but its timing because of some debt they are repaying and that's treated differently, so it doesn't always follow exactly the current currency fluctuation.

Okay I understand that question, I mean that answer. Okay then my other question is that I am preempting need I was going to ask this but, since I got in first, you talk a lot about same store sales, so how has that trended during the first quarter and we seem to be at least partly through the second house at looking for April.

I think same stores sales, it's what we look at it as... the volume intake, the pricing out of it for same store.

Yes you take same store first quarter this year compared to first quarter of last year, we were down 1.4%.

Okay.

If you look at first quarter, well it's hard if look at first quarter '07 to fourth quarter of 08 fourth quarter '07 because the seasonal doubt.

I wouldn't even do that.

Yeah.

Okay and then, how did the trend month to month in the quarter with March?

March was the weakest of the quarters Michelle. We were actually ahead and bear with me and I'll grab something here and answer that.

And then April still far?

Well April so far is being consistent with what was going on in March, in terms of volume but it's hard to tell this early in the month... really, exactly what's going on. But in January our end, we mentioned on our February call by the way I think you probably remember that, our January volume was a record for the company that in any given month even on a same store basis. So January our volume just pure ton ship [ph] was up 3.7% over January of the prior year. February we were up 2.7% in tons over February of 07 and March we were actually down 8.1% compared to March of last year.

Okay.

I think also with.

But that's for the month.

That's for the month.

Did we have fewer days?

We had fewer days. Easter was earlier this year and March had a different days and I think February very honestly had four [ph] days.

Had an extra day. February...

Had a little bit of a flip between February and March.

Yeah, February had 21 business days this year and March had 20.

Yeah.

Which I don't know that has ever happened before.

Right.

It's just four years ago.

I'm sorry? What?

Four years ago, when there was one another leap year here four years prior.

Okay. No, it's not just the leap year, its all for Easter, the confluence of events.

But February and March were pretty close. January was definitely the strongest on our same store.

And on an average daily basis, because I do know you look at those things.

Yeah, we do.

Can you give me those same numbers, adjusting for the month?

Don't have them in hand.

Okay. Was... was March on a daily basis down from the year ago?

March on a daily... sales outlook [ph]?

No, volume.

Yeah, yeah.

Yeah, we had a lot of heavy stainless volumes in March.

Yeah, it was.

Okay, because that's what the MSDI numbers were I think down 11% year-on-year, but then on a daily basis I think it was 2.5.

Yeah.

So there was a big difference between... if there was found but the industry, but nowhere near as bad as the headlines read.

Right.

Okay. But April looks to be down versus April.

April, as so far as about even with March. It's running at the same rate.

So that would be down again last April, right?

Probably, yeah.

Probably.

Although Easter was in last April, so... if you adjust for all of that stuff, you know the whole thing was... we... we ended up down 0.72% in our tons for the first quarter compared to the first quarter last year. We are pretty happy about that, because last year there was... some pretty heavy buying going on, primarily in the... in the stainless side of that.

Okay.

So, and then there was a lot of inventory that was being liquidated. If you remember last year at this time, the industry had what was too much inventory in it, not only just in the stainless side, but in the carbon flat-rolled side and...

In the second quarter?

It was there in the first quarter.

In the first quarter?

Yeah, actually they are in the fourth quarter.

It was a lot of the import material that came in late in 2006 and it really took the industry almost the first two quarters to get rid of that. So there was some heavy selling at that point. So the volumes were boosted up by that. So we are pretty happy with our volume very honestly. We think it's relative to what we read about the industry and just from our own expectations we have been pleased with it.

Okay. So your second quarter guidance of kind of flat demand isn't just being conservative, you are actually reflecting some trends towards the end of the quarter and... I'm having done this for a long time, the unsorted [ph] year to second quarter being the great quarter.

We are too, but we're little uncomfortable at this point expecting that the demand increases that we have traditionally received during the second quarter because of what we have been seeing from a trend line which is I know what your point is.

And the other thing there for us too Michelle is... companies Georg Jensen and some other companies that we had acquired they have currently had their first quarter as their strongest quarter. So, you know there is been just within the company too, there is been a little bit of a change because for our mix of companies.

It seems as though Michelle but Midwest and the Northeastern markets for whatever reasons, that's their strongest quarters is the first quarter. So that will be like the Yarde Metals and Georg Jensen Steel, both of those companies strongest of that quarters is the first. And that's about $2.5 billion of sales.

And do you know why that is?

No.

I was afraid to ask that question. I love your business.

Based on it was, alright both those companies though it was... or have been our second quarter was the strongest, okay and we said while there is more snow back there, January, February, March, wiring shipping more product and again it's a typical adds to what its depends on the industry that you are supporting, it depends on the region and it depends on that at the end of the day working use.

At the end of the day most of us don't understand know or how the product ends up, is that fair.

That's a very fair statement

Okay, been there done that. Next question, your were... I was listening to lot of the commentary about small service centers not having problems and maybe some big service centers have had problems and we're dancing around in this show in Detroit. There's been visibility of the scary situation which is a large service center and I think that people would not be assuming that's a tip of an iceberg. And I am just wondering because I have gotten mix signal, is that sort of a unique situation, cause he was taking big debt.

We think so.

Okay.

We don't think that's... an indicative of what's going to go on through the rest of the country. We think that's unique to itself.

Because others in your business are kind of telling me that there are more situation like that coming, but you don't get that sense, your credit department doesn't get that sense?

No we don't.

No. No we don't.

Interesting.

I think that there are certainly aware of what's going on, in the economy, that's not our customers working capital, needs in our competitors working capital needs are increasing, banks are probably little more cautious that we're aware of all of that and trying to be very alert to it, but we're not seeing things to be concerned about. It is current.

Okay I am trying to remember in '04 did you guys have bad debt right of expense. What was '04?

Nothing significant.

Yeah I was going to say, because others did, others had exposure to... in '04 we had that problem right, the sudden need for working capital when people couldn't do it and we had a blow outs.

I think that the difference then Michelle was the industry was coming our of 2001, 2002 and 2003 which was very painful and most companies in our industries lost money and their balance sheet became significant weaker during 2001, 2002 and 2003 and so they entered this period of 2004 from a weaker position than they are entering 2008 because the last few years in our industry has been pretty good and most people have made money and done well and strengthened their balance sheet, so it's a different... there are some different.

Okay yeah. That makes a lot of sense. Okay and then its good to hear that, I just couldn't remember if you had exposure, so when you have a good credit department, I am not going to worry about that.

We do.

Or multiple good credit.

Yeah.

Okay one more is that okay.

Sure

M&A, I don't know how to ask the question anymore Dave.

He doesn't have the list

I don't have the list.

Yeah I know that and so one question is why don't you have the list?

He ate is a really good answer.

I don't need it. I can remember what we are doing now again so.

Can you.

Run through of periods there were, maybe I wasn't remembering it well.

I see.

No there is still a lot of opportunities out there Michelle. We continued the things we continue to get call... really does a week go on without at least one of the three of us getting a call from someone... asking about our interest in their business so, there is still lot out there and we will continue to be as selective as we've ever been and will try to take advantage of the opportunities that make sense to us.

In terms of... are you not giving that list out because for a compliance legal forward-looking reasons.

No, truly I stopped keeping that list. That... just don't...

Okay.

I mean Michelle I think we were, we would ask the question and we would then have almost every investor that we though came, asked us about the list and we were afraid they had the expectation that we were very actively pursuing all the companies on that list and the expectation was that... whatever $6 billion or whatever should be happening within the next twelve months and that's not the case till as you know some of those companies are on there for twelve years.

So it was a forward-looking issue. I got it. So let me ask the question a different way. Can you tell me how many companies... privately owned companies are left in the over 500 million range?

No, simply because there's probably some out there that we don't know.

Okay so how many, let me ask you in a different way? How many that you know are, because I know, everyone knows Purchasing Magazine was... is Metal Service center, whatever the magazine is called. They are good listers [ph], good as it gets, but they always and just keep on, we laugh about the ones down the road from the outgrow village that I met okay, so that's a disclosure. So how many at least do you know?

At least would be the number in the Metal Center News and Purchasing magazine.

I'm going to kill you guys. Okay, alright and what was that number?

I don't know, I don't have it with me Michelle I have to go in my room and come.

Find the magazine.

You can guess. I have a magazine in my office.

Okay, some people would call this your pipeline, so it's kind of important things given... I mean you have proven, believe me, but its what we kind of have to do as analyst sort of look forward and say what's up and to the extent there, its very opaque and if I am sitting here in the middle Chicago going through the Boy Scouts and going to the ASD kind of stuff and I still miss a lot than, we know we are missing a lot and I would think they are little bit closer than I am.

But we miss it too and I think you've heard her saying that past Michelle that Gregg and I will be out in some area and we'll see a truck with a name on it that we don't recognize or we will get a call from somebody or will meet somebody in an MSCI meeting and we don't, we really didn't know the size of their business. So...

And that's not happening?

Yes, it happens all the time.

And some...

So, suffice it to say that we have been able to consistently grow the company through all market conditions with acquisitions and I don't see that stopping [ph] I don't see that...

Yes.

I like it.

And I don't see that ending Michelle anybody.

And you will tell us when you do right? So we don't have to worry about it.

That's right.

Okay. So we'll see that press release. Valuation expectations with private equity a little bit wraps at a deck at least?

I don't think from our perspective Michelle that... that had any impact on the way that we valued our transaction any way and I don't see that any perceived credit tightness if there is some on the private equity books is had any impact on their participation in our space or any certainly evaluations. So we are going to continue to evaluate things the way that we traditionally have valued them. We will only do accretive deals and deals that culturally fit and that's -- that's what we focus on, and there is a lot of stuff yet to do.

Okay. And you have done... is it up to 40 now?

Its over 40, I think the last one was 43.

Okay 11 million, got it. Okay. I think I'm done. Thank you so much.

Okay, thanks!

Thank you. [Operator Instructions] Our next question today is coming from Lloyd O'Kiel [ph]. Please announce your affiliation and pose your question.

Yes, good morning. It's actually Tim Hayes at Davenport.

Hi Tim.

Just a couple of questions. We aren't used to giving the same store figures on a sequential basis, could you just give the revenue volume and then unit pricing changes from Q4 please?

Yeah, as the same store sales for the first quarter were $1.75 billion, and on from the fourth quarter are up 9.8% and our average selling prices is up 2.7%.

Okay, and then the overall revenues were up how much?

I think they were 0.6%, I'm sorry, that was from the 2007 first quarter. From the fourth quarter, they were up 12.6%.

Right. Okay, and then the last question, here we've seen the... the stainless mills raised base pricing in early April, only some have. And then we have seen reports that maybe there is stake... not staking or maybe are, we are not sure. What is from your perspective what is happening with base prices from flat-rolled stainless, are they staking or not?

They are not.

Thank you.

Your welcome Tim.

There are no further questions in queue this time.

Okay, great. We will talk to you all again in July and it looks it will be a fun quarter. Thank you.

Ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time and wonderful day. Thank you for your participation.