Ryerson Holding Corporation · NYSE:RYZ
Ryerson — J.P. Morgan Global High Yield & Leveraged Finance Conference 2020
44 slides from Ryerson's conference presentation, Feb 24, 2020
Slide 1: J.P. Morgan Global High Yield & Leveraged Finance Conference
J.P. Morgan Global High Yield & Leveraged Finance Conference February 24, 2020 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 – Intelligent, Fast, Complete, Consistent Customer Experiences 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 201
Slide 6: Metal Service Center Supply Chain
Metal Service Center Supply Chain SUPPLIERS RYERSON CUSTOMERS • Manufacture metals • 75,000+ 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 7: Delivering Value to Customers
Delivering Value to Customers Understanding the “Elements” Is Vital to Profitable Growth Metal Shape Processing Fabrication Burn/Cut As Is Carbon 54% Stainless 24% Aluminum 22% Flat Long Plate As Is 23% 60% 22% 18% Burn/Cut 67% Fabrication 10% *Product Mix and shape based on Dec. 31, 2018 10-K. Carb
Slide 8: 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 Polishing Beveling Precision Blanking Blanchard Grinding Machining and Profile Cutting Blasting Forming Plate Pun
Slide 9: Growing Diversified End-Markets with Significant Tailwinds
Growing Diversified End-Markets with Significant Tailwinds Industrial Machinery Metal Fabrication & & Equipment Machine Shops 18% Sales 22% Sales 1.4% (2017-2024 All Other Commercial N.A. 4% Sales Ground Commercial Oil & Transportation Truck 1.8% Gas 5% Sales 16% Sales Production (2017-2022 U.S. Vol
Slide 10: Current Macro Conditions
Current Macro Conditions Volatile Commodity U.S. Industrial Production Prices Since Dec. 2017 Dec.‘17- Jan.‘20 CRU HRC performance 1.8 LME Nickel Prices Indexed to Dec. 2017 1.6 LME Aluminum + Midwest Premium 1.4 1.2 +18.8% 1.0 -8.4% -8.6% 0.8 0.6 Jul-18 Jul-19 Jan-18 Jun-18 Jan-19 Jun-19 Jan-20 Dec
Slide 11: Contributing to our customers' success
INDUSTRY-LEADING PERFORMANCE Fundamentals First and Always 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 ope
Slide 12: 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 Centers Portfolio 5 6 7 8 Ryerson Virtual Ryerson A
Slide 13: Value-added Processing Shift
Value-added Processing Shift Ryerson targets increasing its fabrication mix to 15% of sales as a catalyst for expanded gross margins thru the cycle . Value-Added Sales Mix A shift in Ryerson’s fabrication mix from 10.2% to 15% is expected to positively impact Adj. EBITDA, excl. LIFO margins by ~30-5
Slide 14: Industry Leading Working Capital & Expense Management
Industry Leading Working Capital & Expense Management Proven Inventory & Operational Efficiency Industry Leadership Days of Supply Expense Percentage of Sales Excluding D&A and One-Time Items 18.9% 97 95 95 92 17.0% 17.0% 90 89 15.6% 15.8% 15.6% 82 14.2% 80 76 12.9% 12.9% 12.7% 12.7% 76 73 12.0% 71
Slide 15: Growing Market Share
Growing Market Share Higher Shipments from Organic Growth and Acquisitions – Enhanced Product Mix Ryerson Tons Sold (000’s) Ryerson U.S. Market Share Central Steel & Wire U.S. MSCI Market Share RYI U.S. MSCI Market Share 1.0% 1.0% 6.0% 2,268 2,024 2,000 4.2% 4.2% 4.5% 1,840 3.8% 2014 2017 2018 Q3 20
Slide 16: Building a Better Ryerson: Central Steel & Wire Acquisition
Building a Better Ryerson: Central Steel & Wire Acquisition Acquisition Closed on July 2, 2018 ✓ Recognized Gain from Bargain Purchase ✓ Increased Market Share ✓ Complementary Product Offering ✓ Leverage Ryerson’s Operational Strength Transaction ($M) Transformation ($M) Q3 2019 LTM Long-Term Goal F
Slide 17: Central Steel & Wire Integration Performance Update
Central Steel & Wire Integration Performance Update Leveraging synergies, streamlining processes while supporting commercial and cultural transformation Strategic Objectives & Targets CS&W Expenses excl. D&A and Integrate CS&W long & tube products, leverage expanded supply One-Time Items per day cha
Slide 18: CS&W High Level Road Map and Timing to Steady State Targets
CS&W High Level Road Map and Timing to Steady State Targets Steady State Targets ❑ Complete resource optimization ❑ Reduce expenses excl. D&A and one-time ❑ Sustain inventory levels within range of items to ~$325-350 per day 70-75 days ❑ Achieve Adj. EBITDA, excl. LIFO of $50M 2017 > 2018 2019 > 202
Slide 19: Ryerson's Improved Financial Metrics
Ryerson’s Improved Financial Metrics Since 2007, Ryerson has substantially improved our financial metrics, even in subdued industry demand and pricing conditions 2007 2018 Change Gross Margin, excl. LIFO & purchase accounting 14.6% 19.4% 4.8% Adj. EBITDA, excl. LIFO Margin 3.6% 7.0% 3.4% Cash Co
Slide 20: Improved Book Value of Equity
Improved Book Value of Equity Significant Turnaround From an Equity Deficit to a Positive Equity Balance Book Value of Equity ($M) 20 20
Slide 21: Path to Achieving Long-Term Financial Goals
Path to Achieving Long-Term Financial Goals 20% Gross Margins, 70-75 Days of 2x Net Debt / excl. LIFO Supply EBITDA 16.7% Q3 2019 LTM 76 Days Q3 2019 5.2X Q3 2019 LTM Gaining Financial Strength Through Continuously Improving Operating and Financial Performance A reconciliation of non-GAAP financial
Slide 22: Financial Overview
Financial Overview MOLLY KANNAN │ CONTROLLER & CHIEF ACCOUNTING OFFICER 22
Slide 23: Financial Highlights
Financial Highlights Revenue In-line with Expectations, Continued Expense Management Focus $1,250 • Ryerson generated $1.1B in revenues in $1,231 $1,205 19.6% $1,160 the third quarter of 2019, with both $1,104 17.5% 17.2% 16.5% average selling prices and volumes in-line 15.8% with expectations. • Ce
Slide 24: Higher Adj. EBITDA, excl. LIFO
Higher Adj. EBITDA, excl. LIFO Continued growth with margin expansion and industry-leading expense management ($M) Next Phase ($M, except ASP) Target Tons Sold 2,800 $350- Revenue $5,000 $308 $400 Average Selling Price $1,750-$1,800 $178 $184 $194 Gross Margins, excl. LIFO 20% $109 Expense % of Sale
Slide 25: Current Capitalization
Current Capitalization Supporting Capital Structure with no Significant Maturities Until 2021 Current Capitalization ($M) Maturity Q3 2019 As of September 30, 2019, we ABL Revolver ($1.0B) Nov. 16, 2021 $441 maintained $455 million of total liquidity, Senior Secured Notes May 15, 2022 588 Foreign De
Slide 26: Current Asset Coverage
Current Asset Coverage Improved collateral and asset profile since refinances in 2012 & 2016 As of June 30, 2012 ($M) As of March 31, 2016 ($M) As of September 30, 2019 ($M) 1.6x 1.6x 2.0x Collateral Coverage Collateral Coverage Collateral Coverage Note: The June 30, 2012 other assets has been adjus
Slide 27: Continuing Improvement in Managing Fixed Cash Commitments
Continuing Improvement in Managing Fixed Cash Commitments With legacy liabilities declining, another important catalyst emerges to complement improved operating performance for shifting enterprise value from debt to equity Fixed Cash Commitments ($M) 2014 2015 2016 2017 2018 2019F Cash Interest 100
Slide 28: Reaching Financial Priorities: Net Leverage Multiple
Reaching Financial Priorities: Net Leverage Multiple Reducing multiple through cash generation and higher EBITDA Next Phase $M Targets Adj. EBITDA, excl. LIFO $350-$400 28 28
Slide 29: Pension Benefit Liability Declines Since 2014
Pension Benefit Liability Declines Since 2014 ($M) $96M The pension liability was 22 35% lower in 2018 277 compared to 2014, driven 238 216 by pension asset returns 165 159 and strategic participant reductions 2014 2015 2016 2017 2018 Ryerson Net Pension Liability CS&W Acquired Net Liability at 12/3
Slide 30: Strong Liquidity to Fund Operations and Investments
Strong Liquidity to Fund Operations and Investments Ryerson has significant liquidity to deleverage, pursue strategic investments, and fund operations ($M) 30 30
Slide 31: Conclusion
Conclusion EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER 31 31
Slide 32: 2020 Ryerson Key Quantitative Performance Drivers
2020 Ryerson Key Quantitative Performance Drivers Generate free cash flow from operations Gain profitable market share and expand gross margins Reduce net leverage Explore opportunities to refinance 2022 Notes Realization of Central Steel & Wire synergies Increase Net Book Value 32 32
Slide 33: An Intelligent Network of Service Centers At Speed and Scale
An Intelligent Network of Service Centers At Speed and Scale Delivering Consistently Great Customer Experiences Ryerson is positioned to generate free cash flow, affording the opportunity to significantly deleverage the balance sheet and shift enterprise value from debt to equity. 33 33
Slide 34: Appendix
Appendix 34
Slide 35: The DNA of Our Success
The DNA of Our Success ANALYTICS SPEED CULTURE VALUE-ADD SCALE 35 35
Slide 36: 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% 60% Carbon Flat Rolled 63% 29% Stainless Sheet & Coil 3% 16% Aluminum Sheet & Coil 2% 15% Long 21% 22% Plate 11% 18% Carbon Plate 9% 11% Stainless Plate 1% 4% Aluminum Plate 1% 3% Total Products
Slide 37: Experienced Management Team
Experienced Management Team Years in Years at Years in Executive Title Position Ryerson Industry Eddie Lehner(1) President & Chief Executive Officer 5 8 30 Mike Burbach President - North / West Region 12 36 36 Kevin Richardson President - South / East Region 12 35 35 Molly Kannan(2) Controller and C
Slide 38: Quarterly Financial Highlights
Quarterly Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 622 577 619 623 598 $2,010 $2,010 $1,988 $1,934 $1,847 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Gross Margin & Gross Margin, excl. LIFO Adjusted EBITDA, excl. LIFO Margin % & Purchas
Slide 39: Annual Financial Highlights
Annual Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 2,024 1,897 1,903 2,000 2,268 $1,790 $1,670 $1,503 $1,682 $1,944 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Gross Margin & Gross Margin, excl. LIFO Adjusted EBITDA, excl. LIFO Margin % & Purchase Accounting Adjustment
Slide 40: Same-Store Financial Metrics Reconciliation
Same-Store Financial Metrics Reconciliation Central Steel & Wire contributed $630M in net sales to Ryerson’s Q3 2019 LTM results Q3 2019 LTM Central Steel & Wire Ryerson Same Ryerson Holding $M, Tons 000's Company Store Corporation Tons Shipped 362 2,055 2,417 Net Sales $630 $4,070 $4,700 Gross Marg
Slide 41: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA represents net income before interest and other expense on debt, provision (benefit) for income taxes, depreciation, and amortization. Adjusted EBITDA gives further effect to, among other things, impairment charges on assets, reorganization expenses, gain on bargain pu
Slide 42: Non-GAAP Reconciliation: Quarterly
Non-GAAP Reconciliation: Quarterly ($M) Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Tons Sold (000's) 622 577 619 623 598 Net Sales 1,250.0 1,160.0 1,230.8 1,204.9 1,104.4 Gross Profit 208.2 199.7 231.3 211.8 204.4 Gross Profit per Ton 335 346 374 340 342 Gross Margin 16.7% 17.2% 18.8% 17.6% 18.5% LIFO (Inco
Slide 43: Non-GAAP Reconciliation: Annual
Non-GAAP Reconciliation: Annual ($M) 2014 2015 2016 2017 2018 Tons Sold (000's) 2,024 1,897 1,903 2,000 2,268 Net Sales 3,622.2 3,167.2 2,859.7 3,364.7 4,408.4 Gross Profit 593.8 567.7 570.6 582.5 758.1 Gross Profit per Ton 293 299 300 291 334 Gross Margin 16.4% 17.9% 20.0% 17.3% 17.2% LIFO Expense
Slide 44: Ryerson
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