Greetings and welcome to Reliance Steel & Aluminum Company Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brenda Miyamoto, 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 our fourth quarter and full-year 2018 financial results. I'm joined by Jim Hoffman, our President and CEO; and Karla Lewis, our Senior Executive Vice President and CFO; Bill Sales, our Executive Vice President of Operations, will also be available during the question-and-answer portion of this call. 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, which may not be under the company's control, which 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 31, 2017 under the caption Risk Factors and other reports filed 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, President and CEO of Reliance.

Good morning everyone and thank you for joining us. I'm very pleased to discuss our fourth quarter and full-year financial results with you today. 2018 was an incredible year for Reliance, full of significant financial and operational milestones. But more importantly, I'm happy to say, we improved our safety performance and I would like to say thank you to each of our 15,000 plus employees for making safety part of our culture. In 2018, we achieved numerous earnings records invested in growth through both acquisitions and organic initiative and demonstrated our continued confidence in the strength of our business strategy and outlook by repurchasing a record $484.9 million of our common stock. Earlier this month, we celebrated Reliance's 80th anniversary. Reliance was founded in 1939 based on the core principles of providing outstanding service to our customers. We have grown tremendously in our 80-year history, made possible by our decade long course of expansion through organic growth and strategic acquisitions with emphasis on high margin, specialty products and value-added processing. Today, we are the largest metal service center country -- company in North America, servicing over 125,000 plus customers over 300 locations in 40 states and 13 countries outside of the US. Despite tremendous growth of our business and footprint, our founding commitment to customer service remains unchanged and our many accomplishments would not be possible without our folks in the field, across the entire Reliance family of companies. We thank each of you, not only for the contributions you have made to our growth, profitability and quality of earnings, but for your unwavering daily commitments to delivering unparalleled customer service enhancing Reliance's safety culture and giving back to the communities in which you live. I would also like to acknowledge Gregg Mollins, for his immense contributions to Reliance during…

Thanks, Jim, and good morning everyone. Our record sales of $11.53 billion in 2018, were up $1.81 billion from 2017 due to the healthy demand and improved pricing conditions that Jim discussed, as well as our focused pricing discipline and increased levels of value-added processing with 49% of our orders processed in 2018. Our tons sold were up 1% and our average selling price was up 17.9% increase in our average order size in 2018 to $2,130. Net sales in the fourth quarter of 2018 were $2.81 billion, up $437.6 million or 18.4% from the fourth quarter of 2017. And while our tons sold decreased 1.6% year-over-year, our average stock price per tons sold rose 20.4%. Our 2018 gross profit of $3.28 billion was a record and our gross profit margin of 28.4% was near the high end of our estimated sustainable range of 27% to 29% primarily due to the positive impact of increased metal pricing in 2018. However, the increased metal prices also negatively impacted our gross profit margin with our highest ever annual LIFO expense of $271.8 million or $2.81 earnings per diluted share compared to $30.7 million or $0.26 EPS in 2017. Because LIFO is an annual calculation that we estimate during the year and record to actual at the end of each year and because our LIFO expense was $51.8 million higher than we had estimated at the end of the third quarter of 2018. Our LIFO expense in the fourth quarter of 2018 was $106.8 million or $1.13 earnings per share. This is significantly higher than estimated LIFO expense along with the lack of mill price increases in the fourth quarter of 2018, combined to reduce our gross profit margins to 25.2% and was higher than our LIFO expense of $77.5 million in the…

Great, thank you. [Operator Instructions] Our first question is from Matthew Korn from Goldman Sachs. Please go ahead.

So I have like a micro question and then a macro question for you, in a way. We heard in the fourth quarter according to a lot of the steel mills, and they characterize the buyer strike, and they watched key prices to particularly decline, and that was on top of normal seasonality. And I'm looking at your expectations into 1Q19 is a little softer we expected, little bit below the double-digit growth we've been kind of used to in the last couple of years, going into the first quarter. Question there is, do you see any signs even given your optimism on the demand level that buyers for right now, are still holding out a little bit and going hand to mouth? Was it still the phenomenon that you're seeing.

Our business really doesn't change that much. We just kind of pay attention to what our customers need. They seem to be positive. Orders are coming in like they always have. As far as the buyer strike, one of the mills guys said that maybe a try, we don't know. We don't, we don't see those kind of things, but it's -- there are, we were conservative by nature, that's just what we do, but we really just pay attention what our customers are telling us and that's reflected in the orders they give us on a day-to-day basis. But we're -- what we said in the script and our release, we're optimistic, and we think it's going to prove out.

And I think Matt those comments were a little more directed as you indicated toward the flat-rolled side of the business, and remember carbon flat-roll is only about 15% of our total sales dollars. So we see that enforcement of business and we think some of the recent price increase announcements may help spur some of those folks to start buying again.

Got it, appreciate that. And let me ask on, one more bigger picture question. In the wake of the higher steel prices that we've seen in flat loans, policy changes in the US, over this past year, there has been the number of mills expanding the capabilities, expanding the capacities. Many of these seemingly are in the regions where they feel underserved or whether as there is particular high growth potential. Do you see any kind of risk to your business from a broader steel mill reach or deeper availability of things like coated or painted or the types of processed steel, if these things really to come true?

I don't, -- again we run the business day-to-day, week-to-week, month-to-month and we just again service our customers where they want to be serviced, we listen to them, all the capacity is coming online. We know all those folks. We're a big customer of all of them. They all have very smart people running those companies, that's what they see is good, good for them and that will be good for us. So I really don't see any risk coming on board to that, we actually our customer and their customer of ours, we do a lot of -- as you've probably realize that we do call processing for a lot of those folks and they are positive. And we like it when our domestic partners are profitable and busy. So we applaud their decisions, because they make good decisions and we're going to be there for them and they will be there for us. So I don't see a big risk.

Our next question is from Martin Englert from Jefferies. Please go ahead.

Just wondering if you could touch on what you're seeing so far over the past month or so here with new order entries and maybe talk about what you believe could be driving lower year-on-year volumes more recently, as well as into 1Q here, which I think is implied by the guidance?

If I understand your question promptly, again we -- it just changes daily. We run the company day-to-day, week-to-week, month-to-month. We can have a good day, and not so good days. There's really nothing that I can really pin point.

Yes, I mean volumes were a little lighter, Q4'18 to '17, you know and I think the MSCI numbers for January came out, and they were down a little bit from January last year, but overall, even with the slight decrease, I mean, as Jim mentioned earlier, our customers are still optimistic. I think there's been a little uncertainty in the market from a pricing standpoint, and just general macro concerns out there, but as Jim indicated, I mean day-to-day our customers are busy, maybe not as busy as they were, maybe not buying as much as the year ago, but we're still positive on demand, the demand is supporting, helping pricing levels and we can do very well in this type of environment, even with demand down slightly.

And another thing to remember Martin, we have a really diverse group of customers going into a lot of different markets. And it's hard, it's even difficult for us to look at our company as this massive company. We don't run it that way, we run it like we have many customers and many markets and they all do different things and one market is up, very few times in my 38-year career has every market been up at the same time and every market has been down at the same time. So we've got it -- as part of our strategy also obviously the companies we buy and the products we sell, we like to spread it out as much as we can. So we're a little less of the target when things -- things change dramatically in the market as -- part of our market could be up.

Okay, thanks. I appreciate all that detail there. Maybe, if you can just provide an update also on your tolling business there. You touched on this briefly in prepared remarks and kind of continued strength within automotive and I guess what you're seeing at the start of this year, expectations on volumes as the year progresses, and maybe just review some of the past and future growth initiatives that you've had there?

Yes. We like that business. It's a good business for us. It continues to do well. We continue to invest, we've got nice company in Mexico with four locations and we've expanded that. We have a lead company in the U.S. that's extremely busy and as Karla mentioned our CapEx dollars, that they -- it's a capital-intensive business, and we continue to expand their offerings when the -- the number of units and the SARs report comes up, when it goes up or down, it's still at a really, really high number, which is good for us and over the last couple of years we picked up a lot of share, if you will, because of the exposed aluminum that happens to be going, and that's being designed into all kinds of different automobiles, particularly light trucks and what have you, SUVs, that's kind of our sweet spot. And again this one particular company has kind of one of a kind type equipment that we design and build ourselves and they've got a great relationship with -- in the market.

And we're also really excited about the new acquisition, All Metals. So that's going to add to the tolling part of our business.

And in addition to All Metals, we also increased our ownership of the Acero Prime, our toll processing business in Mexico during the fourth quarter that we now have a 100% ownership of that. So, and we see growth opportunities for them as well and also just to point out our -- the number of tons sold that we report do not include any of our tolling tons and we have seen increases in the number of tons that we've sold both in the fourth quarter of '18 versus the fourth quarter of '17 and in January so far we're also up compared to last year. So because of the investments that we've made in the growth we continue to see us doing more there and picking up the market share primarily -- especially with the aluminum forces.

Yes, another factor, remember, our customer base in that business, it really isn't the end user. It's the producers of the product, whether it be steel or aluminum. So that's kind of a unique relationship. We're their customer and they are our customer.

Thanks for all the detail there. I don't know if you'll touch on it at all, but are tolling volumes in excess of your reported volumes now.

Yes, they are, and they have been for quite some time.

Our next question is from Timna Tanners from Bank of America Merrill Lynch. Please go ahead.

Yes, hey, good morning, guys. And happy 80th anniversary.

Thank you.

Okay, so I wanted to ask a little bit more. First, on the year-over-year question that Matt asked earlier, I get the sequential improvement, but are there any areas in particular that are performing worse year-over-year or better if you could just give a little bit more color? And if you could talk a little bit more while you're at it about your key carbon products specifically plate and beams.

Like I said in the remarks. The one market that's not doing real well right now but does have legs going forward is the semiconductor business, it's good business for us. It's a little slow right now, what we anticipate that getting better at some point and then the rest of the markets that we're doing are at good ones. They're at good levels, and levels and they've been better and they've been worse, and so we're okay and we like -- we kind of like where it is. We like where it's going as far as the -- Bill, do you want to say anything about aerospace or anything --?

Aerospace continued strength as we said, we really watch lead times backlog and build rates, all those are very positive and our outlook for aerospace continues to be very fast.

And Timna, what was your question on the plate and beams?

Just a bit more color on those markets and non-res construction is big for you guys, within plate, beams and pipe, and I was just wondering if you could provide a little more color on those products in that market?

Yes, those are good markets for us. The non-res is chugging along kind of, and we also -- as you all know, we also grow infrastructure spending in there and so we haven't seen that yet, we're all like the rest of Americans are waiting to see if we're going to fix all those bridges that are falling down. So we're hoping that that will come, but as far as the business that we're participating in, it continues to go on in a good direction. We'll see there were some filings and some suits filed on -- let you know, about the product coming in from China into Canada being stock -- semi producers and shipped back into the U.S, which is absolute cheating by the way, and we don't appreciate that no American really should appreciate that. However, that's happening and I don't know -- I have no idea what's that -- what's that findings will be or what the penalties will be, but certainly if that does happen, then we will have a more of a fair -- our fabricators, domestic fabricators will have a fair, more even playing field to participate in. So that could give us a nice little bump. Plate -- plates are really good product for us, it's an unusual market to figure out what goes on. right now. I believe that plate pricing is, well, it's kind of just a little flat right now. And I -- with Korea being shut out for so long last year, there is an uptick -- the import is an uptick coming in, right now because they're -- they got shut out because of the quality. Now they're getting to catch up. That can't last long. So there may be a little down take in the pricing. I don't know, certainly the import pricing that we do see, it's not attractive. We're not participant but we get all of the offerings and this really not there to drag, I don't see what you can count on Reliance is not participating because we're still 95% huge fans for domestic partners. So we're going to continue to support them. So again, again kind of a boring answer because it continues to be just fine.

And I'm surprised you guys didn't mention in a while. I know you guys were involved in that. I think, you mentioned tubing was part of the walls initial phases years ago and now that it looks like it might be getting under way, again, is that an opportunity for you?

I know about as much as the wall -- about what's going to happen to more as you do, nobody knows. So all I know is that we sell metal and people talk metal going into that wall and we certainly will call on pieces and parts of that we have in the past. And if they decide to build some of it, I hope they call Reliance for their tubing in the flight that goes into it.

I could switch to Karla. I want to ask a couple of questions on cash flows and just what to expect for 2019. You should see a pretty big working capital release you had in this last couple of quarters. It sounds some pretty high days of inventory and then they kind of came down sharply by the end of the year. Any color you can give us on what kind of working capital release you might expect assuming kind of stable prices? And then on the buyback, is that a signal of more to come or will you capitalizing on a particularly weak market in Q4.

Yes. So, hi Timna, first off on the cash flows, we had a strong cash flows in 2018, $665 million for the year and that was, as you commented with higher working capital requirements, primarily from the price standpoint of the metals. So, we anticipate given our guidance on LIFO and things that we would have a little relief, just from a price standpoint in 2019. And our inventories, we did end the year at a higher level than what our goal is inventories is still in decent shape, but a little higher than we prefer to see them. So, we do anticipate some relief from a quantity standpoint on the inventory this year. So, certainly we would anticipate being at a higher level than the $665 million of cash flow from our last year, what level, we are not really projecting or guiding toward that but certainly, we're expecting it to be stronger than in 2018. From a buyback standpoint, we're consistent with the way we're approaching buybacks, being opportunistic and really looking at where the stock was trading in the fourth quarter, there was a lot of volatility. They gave us a lot of opportunity, we looked at buying back shares of Reliance is being the most low risk acquisition that we can make. So we needed to see our stock trading there, but we're pleased we were able to repurchase the shares at that level because we think it's very positive for our shareholders on a long-term basis. So we took advantage of that and we'll continue to look at opportunities as we move forward. I think, I saw some hints of comments that maybe we bought back more stock because we didn't see other opportunities but we continue to see opportunities for all of our capital allocation levers, as Jim mentioned in his comments. There are still acquisition opportunity out there, we expect to continue to execute on that as we move forward as we did last year. Dividends, we just increase again in the first quarter of this year. So we're happy to do that for our shareholders and then we're continuing to invest in capital expenditures to grow the business, we're at our highest level last year and have a high budget for this year because we continue to see a lot of good opportunities to do more for our customers. So, we'll approach the share buybacks, the same way we have been doing.

Our next question is from Chris Terry from Deutsche Bank. Please go head.

Hi guys, thanks for taking my questions. Just two from me. Firstly, just to flesh out the capital management. Just a little bit further, basically in terms of buyback and dividend in total, you paid close to the net income of the company to 2018, understand you use buybacks opportunistically. Maybe you can just comment on the split of buybacks versus dividends and the -- the total amount that you willing to allocate. And the second question I had, it's probably for Karla as well. Just on the CapEx around the 230 level, 240 level over the last two years, a few years ago it used to be below the 200 level. Should we eventually expect that you glide down to that point or how do we think about forward CapEx. Thank you.

Yes. Hi, Chris. So first off on kind of the capital allocation and the split between buybacks and dividends. We did have a fairly high shareholder return cash amount out last year but as we commented, we think it was good execution on that. Dividends, we did not have a formal policy that -- what we try to do is make sure we're returning from a yield standpoint, kind of at or above markets levels for our best-in-class type of stock. We also don't want to make sure that our quarterly dividend rate is at a long-term sustainable level because we have never and do not want to in the future have to reduce or start paying a dividend. So that's kind of how we manage the dividend there as the company continues to grow, we're able to increase our dividend rate periodically which we have to continue to do going forward, but want to keep it at that sustainable level. And then as we mentioned on the share buyback, it's really opportunistic. We look at where the stock's trading. We look at other opportunities and we'll execute with that. So we don't have a set target, we want the flexibility to be able to jump into the market, and we think it makes the most sense for us. And then on -- from a CapEx standpoint, you've seen our gross profit margin improve our sustainable range, which we think the sustainable part of that has really been due to the additional value-added processing that we're doing, and where we can provide more value to our customers. So we're able to get paid for that and so our people out in this field work very closely with their customers and we are always looking for opportunities of how can we do more for our existing customers and some prospective customers. And so with the opportunities we've seen, we have been at higher levels of capital expenditures over the last few years, we've also taken advantage of some of the -- of our operations center in leased facilities. If there are good operations for our businesses we prefer to own those. So we've also bought out some of our leased properties and those indeed bigger ticket items for us, but again remember that we were doing in that $230 million, there are a lot of different CapEx items, there are 300 different -- 300 plus different operating locations out there and we're continuing to invest in all of them with equipment and facility upgrade.

Yes, Chris, Karla is right. Our customers are asking us to do more and more. They are just -- they are -- whatever their business plan is, they seems to be shifting a bit and we're kind of known for being a value-added type of business and when they ask and that makes sense for us, we'll buy, technology certainly changes a lot of the equipment we buy. Saws and lasers and all the different things where we get into now are frankly better than they were X amount of years ago, they hold tighter tolerances, they are faster, they are safer, and when we see an opportunity like that we can -- like Karla said offer something different to our customer base and make money on it, then we're going to do it and we've got a lot of really bright operators out in the field. And when they ask, we listen.

And to your longer term question Chris, I mean, I think coming back down to $200 million for an average longer term CapEx level is probably reasonable.

[Operator Instructions]. My next question is from Chris Olin from Longbow Research. Please go ahead.

Curious, given your view on kind of the short-term -- shorter-term order trends, was the business or any of the stores impacted by either weather in the fourth quarter, particularly on the construction markets? Or did you see any kind of abnormal order activity during the government shutdown that could've support the business?

Chris, we don't -- we never blame our business on the weather or on something and that we can't control. Because what happens is -- if they need the product or the part and they can't get it today or tomorrow because of weather or government shutdown or some, they're eventually going to need, it. So if we may -- the timing may move, sometimes the timing moves month-to-month or over a quarter, but eventually it comes back. So we don't -- we don't, the weather and the government shutdown, things like that we do not -- we don't control that, but all we can really control is that we can provide on an uninterrupted flow of really good product to our customer bases. So when they do open back up or when they're able to receive the material -- we'll get it to. So it could be delayed by a couple of days, sometimes a week, I don't know how bad the situation is, but we've been out that long time. So doesn't really change.

And I guess my second question is, can you talk a little bit more about aerospace? I guess, specifically, I'm curious if you anticipate any type of negative impact on, say, the aluminum plate market given the news about Airbus canceling its A380 program, that's a pretty big consumer of material, just any risk of inventory management or something like that?

We really don't -- if you look at the aerospace plate market right now on the supply side, it's extremely tight. And again, when we look at the future, and we look at where mill lead times are, backlogs and build rates, it's very positive. Long-term, I mean if you look at what will happen with the cancellation, our eventual cancellation of that plane that will take obviously some capacity or some need out of the market, but overall that's being built back with conversions to other planes. So I think, if we look at -- right now on the aerospace side, the outlook continues to be very positive. We've had tremendous strength in North America and maybe the rest of the world wasn't quite as strong. Now we're seeing the rest of the world improve a bit too. So all of that leads to a real positive outlook on the aerospace side.

Can I just ask what percentage of your business now is aerospace related?

On the sales dollar basis, it's probably around 12%.

Our next question is from Phil Gibbs from KeyBanc Capital Markets. Please go ahead.

Sometimes of a little bit more, maybe a little bit more color on the CapEx budget this year pretty healthy again has we noted a couple of times, but any big projects in particular, in that number. I know you talked about some of the value-added processes and a lot of your customers pulling you in those directions, which is a good problem to have, but any notable pieces in there?

I think, Phil, as I mentioned, we've got a couple of facilities where we are buying out the leases. So that takes up a chunk of the CapEx. We announced last year that we were expanding our aluminum -- our toll processing business down in Kentucky to support a lot of the growth of aluminum down there. So that was a big item for last year carrying over into this year, it's really a lot of equipment and it's really spread out.

They're all bigger clients. I mean, tube lasers are, $2 million plus. Flat lasers are well over $1 million. Those are, those are big ticket items. So we take them over a very seriously. So those that we have, I guess that we have a lot of big events that roll up into that large number. And if you would see as the front-out of our CapEx you'd be amazed how many line items are on that thing. But they all add up, and they're all expenses.

Then Karla your share count for the first quarter. Can you give us just exactly what that number is, I think you had pushed us some direction there?

Yes, so basically our actual shares outstanding at the end of 2018, we're at just over or just under 67 million shares and we generally have about a 1 million more shares that gets added to our diluted earnings per share. So right around 68-ish million shares.

Okay, that's helpful. And just want to say Greg if you're out there, I hope you're on the beach somewhere.

He's probably sleeping, he is trying to get that fish in the boat.

Thanks, Bill.

Our next question is from Tyler Kenyon from Cowen and Company. Please go ahead.

Just wanted to touch on SG&A, a little bit. So we have seen some inflation labor transportation costs. Just curious if you can update on some of the inflationary pressures that you're seeing there, is that abating, getting worse and what appreciated? Thanks.

Yes, so I think one thing on the SG&A, Tyler that we had commented on earlier in 2018 and as you've seen in -- our profitability levels, especially our pre-tax levels were up significantly in 2018 compared to prior years, and our compensation structure is very performance-based, not just here in our corporate office but also out in all of our management teams that are different operations. So, our elevated pre-tax income levels in '18, drove our compensation expense up because of that, which we think, it's kind of a good problem to have. So, in '19 even though we expect continued high levels of profitability as a percent the margins and with some expectation that prices might come down a bit and not having the consistent mill increases that allow us to pop up our gross profit margin. We would expect some of that comp expense to potentially come down. We could get normal raises in 2019 as we normally do. So there is some inflation that you need to build in and I think the transportation costs, we did see a big ramp up last year, it's still a tight market out there for us to hire drivers and then also for our third-party carriers. But we're not expecting increases the rates that we had last year.

Great. Yeah, thanks for all that color. So I guess the other, the last question I had was just on -- and I think you alluded to it earlier, but the M&A opportunities that you're seeing out there in -- at least, still aggressively pursuing that growth angle. Just curious, if you could provide us an update with -- what kind of opportunities you're seeing, right now. What are you seeing in terms of valuation and where would you be more positively disposed to in terms of expanding your reach from an end market or product category perspective?

Yeah, with the -- let's call it a target-rich environment. There's a lot of opportunities coming our way. We looked at lot of them last year. We pulled the trigger on -- how many, we did about three. But we don't change our kind of game plan when it comes to look at M&A, you have to -- you have to reach a certain point. We don't buy fixer-uppers. We like -- we only buy companies that are immediately accretive. They have to have the right people involved, they have to fit our culture. They have to good succession planning in place, and if you have those things and you make money and we like it. There's pretty good chance we'll talk to you and visit and see if we can't work something out so they're not there. Over the last couple of years this is my opinion. I think that the tax reform kind of answered a lot of questions for these kind of family owned companies that are out there, that have been launched, they that want to sell because of the generational thing. Grandpa started the business, dad ran it, the kids don't want to be part of it and that's kind of companies it seems like we talked to a lot of I think. So there are more willing to engage with us and in kind of more willing to sell at reasonable price, sometimes people think their companies are off worth a lot more than we may think there were, but there's lot of out there. We stay busy. There's not a week doesn't come by that, Karla doesn't walk down the hall and hand me a several other than say, hey look, these guys. So it's busy.

And I think on valuation, we have not changed the way we value companies that we try to look over a cycle and understand what we think the right normalized level of future earnings is for them and then we value the company based upon that. 2018 was a really good year for Reliance. It was also a good year for a lot of other companies out there, and we understand that. So, when we look at opportunities. We understand what happened in '18 and we believe we're still evaluating consistently and we hope that other potential buyers out there are sharp enough to also understand, that 2018 created some really strong earnings from our companies. And then also Tyler, you asked about if there are any specific targets. You know, it really, other than the fact that what Jim mentioned about. We look for good companies. We do like kind of the higher margin specialty products and higher value add type companies but we look at every opportunity that's out there and determine if we think it's the right fit for Reliance or not.

Our next question is from Martin Englert from Jefferies. Please go ahead.

Thanks. Just one quick follow-up on Aerospace Aluminium heat-treated plate. Can you talk about how the lead times compare today versus where they were at in fourth quarter and maybe touch on the inventory trends there, whether there's any kind of destocking that still persist?

Yes, happy to do that Martin. This is Bill. The lead times, I mean we've gone -- just recently, we've seen some of the domestic mills. The lead times have moved out one completely sold out through 2019. So, the supply side of that continues to be on the type side and as I mentioned, we receive the rest of the world that we're in the market was not as strong. We are seeing that improve. So, those lead times from those suppliers are starting to move out and so again, we see continued strength on the aerospace side.

Thanks for that. And the inventory trends there, what are you seeing?

There is some talk in the market about destocking. I think that's really more at the OEM level, it's really not an issue in terms of our business. See in a couple of reports where that the position was that destocking or the inventory in the system was moderating or there was less of it. I think that's specific to a couple of situations overall from our inventory standpoint, we're in good shape. We are not overstocked by any means.

Thank you. This concludes the question-and-answer session. I'd like to turn the floor back to Mr. Hoffman for any closing comments.

Yes, thank you very much for participating on the call of today. And once again, I'd like to thank our employees and customers and suppliers and stockholders for your continued support and your commitment to relapse. So thank you very much and have a good day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.