Ryerson Holding Corporation · NYSE:RYZ
Ryerson — 2019 Global High Yield & Leveraged Finance Conference
44 slides from Ryerson's conference presentation, February 2019
Slide 1: 2019 Global High Yield & Leveraged Finance Conference
2019 Global High Yield & Leveraged Finance Conference February 2019 1 1
Slide 2: Important Information About Ryerson Holding Corporation
Important Information About Ryerson Holding Corporation These materials do not constitute an offer or solicitation to purchase or sell securities of Ryerson Holding Corporation (“Ryerson” or “the Company”) and no investment decision should be made based upon the information provided herein. Ryerson
Slide 3: Business Overview
Business Overview EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER 3
Slide 4: Ryerson: Built on 177 Years of Ingenuity
Ryerson: Built on 177 Years of Ingenuity From its modest start in 1842, Ryerson has grown into an intelligent network of service centers with leading capabilities to serve customers’ industrial metal supply chain needs. Ryerson has survived the Great Chicago Fire, weathered economic downturns, and e
Slide 5: Ryerson's North American Interconnected Network
Ryerson’s North American Interconnected Network Local Presence, National Scale – The Power of Smart Networks Over 100 locations across North America and China Value-Added Processing Next day delivery 24/7 customer service on Ryerson.com Sales product mix based on Q3 2018 10-Q results; 5 Carbon inclu
Slide 6: Current Macro Conditions
Current Macro Conditions Volatile, but Improved Commodity Strong U.S. Prices Since Dec. 2016 Industrial Production Dec.‘16-Jan.‘19 CRU HRC performance 2.0 LME Nickel Prices Indexed to Dec. 2016 1.8 LME Aluminum + Midwest Premium 1.6 1.4 +26% 1.2 +19% 1.0 +4% 0.8 0.6 Jul-17 Jul-18 Jan-17 Jun-17 Jan-1
Slide 7: Contributing to our customers' success
INDUSTRY-LEADING PERFORMANCE OPERATIONAL EFFICIENCY MARGIN EXPANSION PROFITABLE GROWTH Expense and working Optimize product and customer mix Growing share by leveraging scale capital leadership in highly fragmented market Value-added processing Significant operating leverage Multi-channe
Slide 8: 2019 Ryerson Key Quantitative Performance Drivers
2019 Ryerson Key Quantitative Performance Drivers Generate free cash flow from operations Gain profitable market share Reduce net leverage Explore opportunities to refinance 2022 Senior Secured Notes Realization of Central Steel & Wire synergies Grow value-added percentage of total revenue mix 8 8
Slide 9: Financial Highlights
Financial Highlights Revenue Growth with Industry Leading Expense & Working Capital Management $298 • Ryerson generated $4.1B in revenues, $298M in Adj. EBITDA, $218 excl. LIFO, and $105M in net income $178 $184 attributable to Ryerson Holding Corporation in Q3 2018 LTM. $109 $105 • Central Steel &
Slide 10: Ryerson's Improved Financial Metrics
Ryerson’s Improved Financial Metrics Since 2007, Ryerson has substantially improved our financial metrics, even with subdued industry demand and pricing conditions 2007 Q3 2018 LTM Change Gross Margin, excl. LIFO & purchase accounting 14.6% 19.6% 500 bps Adj. EBITDA, excl. LIFO Margin 3.6% 7.3%
Slide 11: Building a Better Ryerson: Central Steel & Wire Acquisition
Building a Better Ryerson: Central Steel & Wire (CS&W) Acquisition Acquired in July 2, 2018 Recognized Gain from Bargain Purchase Increased Market Share Complementary Product Offering Leverage Ryerson’s Operational Strength Long-Term Transaction Transformation Q3 2018 Objective Fair Value of
Slide 12: Ryerson 2018 Volume Mix Compared to the Industry
Ryerson 2018 Volume Mix Compared to the Industry Products Industry Volume Mix Ryerson Volume Mix Flat 68% 58% Carbon Flat Rolled 63% 29% Stainless Sheet & Coil 3% 15% Aluminum Sheet & Coil 2% 14% Long 21% 24% Plate 11% 18% Carbon Plate 10% 11% Stainless Plate 1% 4% Aluminum Plate 1% 3% Total Product
Slide 13: Growing Market Share in Diversified End-Markets
Growing Market Share in Diversified End-Markets Higher Baseline Revenue and Earnings Power Prospects Ryerson U.S. Market Share Diversified End-Markets Central Steel & Wire MSCI Market Share RYI U.S. MSCI Market Share Metal Fabrication Industrial Machinery & Machine Shops & Equipment 1.0% 20% 18% All
Slide 14: Higher Adj. EBITDA, excl. LIFO
Higher Adj. EBITDA, excl. LIFO Continued growth with margin expansion and industry-leading expense management Next Phase ($M, except ASP) Target $350- Tons Sold 2,800 Revenue $5,000 $298 $400 Average Selling Price $1,750-$1,800 Gross Margins, excl. LIFO 20% $178 $184 Expense % of Sales, excl. D&A 12
Slide 15: Value-Added Processing Shift
Value-Added Processing Shift Goal to change Ryerson’s fabrication mix from ~10% to ~15% leads to expanded EBITDA margins and less earnings volatility Value-Added Sales Mix A shift in Ryerson’s fabrication mix from 9.8% to 15% would positively impact Adj. EBITDA, excl. LIFO margins by ~30-50 bps 6.7%
Slide 16: Central Steel & Wire Next Phase Target
Central Steel & Wire Next Phase Target: Achieving annual revenue of $600M and Adj. EBITDA, excl. LIFO of $50M, which would improve Ryerson’s total company Adj. EBITDA, excl. LIFO margin by 40 bps Central Steel & Wire EBITDA Transformation Transformation Drivers: • Customer Retention • Expense Manage
Slide 17: Competitive Advantages in Working Capital & Expense Management
Competitive Advantages in Working Capital & Expense Management Proven Inventory & Operational Efficiency Industry Leadership Days of Supply Expense Percentage of Sales Excluding D&A and One-Time Items Ryerson Competitor Averages Competitor averages are based on Ryerson’s analysis of financial inform
Slide 18: Improved Book Value of Equity
Improved Book Value of Equity Book Value of Equity ($M) 102 (49) (7) Ryerson’s strong income (141) generation and the net book gain on the acquisition of CS&W led to 2015 2016 2017 Q3 2018 positive book value of equity of EV / Adj. EBITDA, excl. LIFO $102M as of Q3 ‘18. Despite our improved balance
Slide 19: Financial Overview
Financial Overview ERICH SCHNAUFER │ CHIEF FINANCIAL OFFICER 19
Slide 20: Path to Achieving Financial Goals
Path to Achieving Financial Goals 20% Gross Margins, 70-75 Days of 2x Net Debt / excl. LIFO Supply EBITDA 19.6% Q3 2018 LTM 75 Days Q3 2018 LTM 4.1X Q3 2018 LTM Gaining Financial Strength Through Continuously Improving Operating and Financial Performance 20 20
Slide 21: Strong Collateral and Asset Profile
Strong Collateral and Asset Profile Supporting Capital Structure with no Significant Maturities Until 2021 Capitalization Asset Coverage of 1.8X Capitalization ($M) Q3 2018 $2,297 ABL Revolver ($1.0B) due 2021 589 Cash and Equivalents $31 Other $243 Senior Secured Notes due 2022 650 Foreign Debt and
Slide 22: Working Capital Normalization
Working Capital Normalization: Price and demand moderation with CS&W synergies and working capital efficiencies driving additional working capital release, similar to trend from 2014 to 2015 2014 2015 Q3 2018 LTM 2019 Financial Metrics Rising Deflationary Rising Price Prices Pricing Prices Normaliza
Slide 23: Declining Fixed Cash Commitments Leads to Significant Deleveraging
Declining Fixed Cash Commitments Leads to Significant Deleveraging With legacy liabilities declining, another important catalyst emerges to complement improved operating performance and prospective refinancing drivers for shifting enterprise value from debt to equity $183 $156 $150 $145 $136 $134 20
Slide 24: Reaching Financial Priorities: Net Leverage Multiple
Reaching Financial Priorities: Net Leverage Multiple Reducing multiple through cash generation and higher EBITDA 8.8X 5.0X 5.3X 4.1X 2.0X 2015 2016 2017 Q3 2018 LTM Next Phase Target Next Phase ($M, except ASP) Target Adj. EBITDA, excl. LIFO $350-$400 2019F Fixed Cash Commitments $145 Note: Targets
Slide 25: Pension Benefit Liability Declines Since 2014
Pension Benefit Liability Declines Since 2014 ($M) $112M The pension liability was 40% lower in 2017 $277 compared to 2014, driven $238 $216 by pension asset returns $165 and strategic participant reductions 2014 2015 2016 2017 25 25
Slide 26: Strong Liquidity to Fund Operations and Investments
Strong Liquidity to Fund Operations and Investments Ryerson has significant liquidity to deleverage, pursue strategic investments, and fund operations ($M) 26 26
Slide 27: Conclusion
Conclusion EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER 27 27
Slide 28: 2019 Ryerson Key Quantitative Performance Drivers
2019 Ryerson Key Quantitative Performance Drivers Generate free cash flow from operations Gain profitable market share Reduce net leverage Explore opportunities to refinance 2022 Senior Secured Notes Realization of Central Steel & Wire synergies Grow value-added percentage of total revenue mix 28 28
Slide 29: An Intelligent Network of Service Centers At Speed and Scale
An Intelligent Network of Service Centers At Speed and Scale Profitably Delivering Consistently Great Customer Experiences Ryerson is positioned to generate free cash flow that affords us the opportunity to significant deleverage the balance sheet, thus effecting the enterprise value shift from debt
Slide 30: Appendix
Appendix 30
Slide 31: Quarterly Financial Highlights
Quarterly Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 515 470 526 543 622 $1,678 $1,725 $1,790 $1,947 $2,010 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Gross Margin & Gross Margin, excl. LIFO Adjusted EBITDA Margin % Gross Margin % Gross
Slide 32: Annual Financial Highlights
Annual Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 2,024 1,897 1,903 2,000 2,161 $1,790 $1,670 $1,503 $1,682 $1,878 2014 2015 2016 2017 Q3 2018 LTM 2014 2015 2016 2017 Q3 2018 LTM Gross Margin & Gross Margin, excl. LIFO Adjusted EBITDA Margin % & Purchase Accounting Adjustme
Slide 33: Same-Store Financial Metrics Reconciliation
Same-Store Financial Metrics Reconciliation Central Steel & Wire contributed $9M in Adj. EBITDA, excl. LIFO to Ryerson’s Q3 2018 LTM results $M, Tons 000's Central Steel & Wire Company Ryerson Same-Store Ryerson Holding Corporation Q3 2018 Q3 2018 LTM Q3 2018 LTM Tons Shipped 94 2,067 2,161 Net Sale
Slide 34: The DNA of Our Success
The DNA of Our Success ANALYTICS SPEED CULTURE VALUE-ADD SCALE 34 34
Slide 35: Ryerson's Targeted Commercial Initiatives
Ryerson’s Targeted Commercial Initiatives Optimizing the Customer Experience Through Intelligently Networked Service Centers 1 2 3 4 Develop & Diversify Coil & Sheet Franchise Stainless Products Scale Prospecting & Vertical Markets Renewal Leadership Call Centers Portfolio 5 6 7 8 Ryerson Virtual Ry
Slide 36: Delivering Value to Customers: Understanding the "Elements"
Delivering Value to Customers: Understanding the “Elements” Is Vital to Profitable Growth Metal Shape Processing As Is Burn/Cut Fabrication Carbon 55% Stainless 23% Aluminum 22% *Based on Q3 2018 10-Q Flat Long Plate 36 36
Slide 37: Macro Outlook – Leading and Lagging Indicators
Macro Outlook – Leading and Lagging Indicators The relationship between U.S. Industrial Production Growth and the Bloomberg Commodity Index over the past two years showing counter-cyclical inflection lead-lags. Sources: Bloomberg Commodity Index (BCOM); Federal Reserve; industrial production index m
Slide 38: Metal Service Center Supply Chain
Metal Service Center Supply Chain SUPPLIERS RYERSON CUSTOMERS • Manufacture metals • 65,000+ aluminum, carbon, and • Purchase smaller quantities stainless products • Produce & ship large volumes • Require a variety of products • Processes over 75% of products and services • Have long lead times with
Slide 39: Ryerson's Processing Capabilities = Value-Add
Ryerson’s Processing Capabilities = Value-Add Fully integrated into our customer’s supply chain, delivering value-add products that exceed our customers’ expectations Perforating Bending Precision Beveling Blanking Blanchard Grinding Polishing Machining and Blasting Profile Cutting Forming Plate Bur
Slide 40: Experienced Management Team
Experienced Management Team Years at Years in Executive Title Years in Position Ryerson Industry Eddie Lehner* President & Chief Executive Officer 4 7 29 Erich Schnaufer** Chief Financial Officer 4 13 13 Executive Vice President, General Counsel Mark Silver 6 6 6 & Secretary Kevin Richardson Preside
Slide 41: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA represents net income before interest and other expense on debt, provision (benefit) for income taxes, depreciation, and amortization. Adjusted EBITDA gives further effect to, among other things, impairment charges on assets, reorganization expenses, gain on bargain pu
Slide 42: Non-GAAP Reconciliation: Annual
Non-GAAP Reconciliation: Annual ($M) 2014 2015 2016 2017 Q3 2018 LTM Tons Sold (000's) 2,024 1,897 1,903 2,000 2,161 Net Sales 3,622.2 3,167.2 2,859.7 3,364.7 4,059.0 Gross Profit 593.8 567.7 570.6 582.5 694.9 Gross Profit per Ton 293 299 300 291 322 Gross Margin 16.4% 17.9% 20.0% 17.3% 17.1% LIFO E
Slide 43: Non-GAAP Reconciliation: Quarterly
Non-GAAP Reconciliation: Quarterly ($M) Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Tons Sold (000's) 515 470 526 543 622 Net Sales 864.2 810.6 941.3 1,057.1 1,250.0 Gross Profit 145.0 136.5 164.9 185.3 208.2 Gross Profit per Ton 282 290 313 341 335 Gross Margin 16.8% 16.8% 17.5% 17.5% 16.7% LIFO Expense (In
Slide 44: Ryerson
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