Ryerson Holding Corporation · NYSE:RYZ
Ryerson — Goldman Sachs Leveraged Finance Conference 2018
40 slides from Ryerson's conference presentation, May 2018
Slide 1: Goldman Sachs Leveraged Finance Conference
Goldman Sachs Leveraged Finance Conference May 2018 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 MIKE BURBACH │ PRESIDENT NORTH / WEST REGION 3
Slide 4: Iconic Industrial Metals Company Founded in 1842
Iconic Industrial Metals Company Founded in 1842 Processes and distributes carbon, aluminum, and stainless products Distributes 65,000+ products to 40,000 manufacturing customers 100 interconnected facilities located in North America and China Sales of $3.4 billion and shipments of 2 million tons in
Slide 5: Local Presence, National Scale
Local Presence, National Scale Leading North American metals processor and distributor optimizing customer supply chains with tailored solutions, services, and products 24/7 customer access through local sales, customer development centers, and e-commerce Intelligently networked locations sharing as
Slide 6: The DNA of Our Success
The DNA of Our Success ANALYTICS SPEED CULTURE VALUE-ADD SCALE 6
Slide 7: Prices Indexed to Dec. 31, 2015
Prices Indexed to Dec. 31, 2015 7 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 CRU HRC LME Nickel Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Prices Since Dec. 31, 2015 Jan-1
Slide 8: MSCI Demand Gap Persisting
MSCI Demand Gap Persisting U.S. Carbon and Stainless Average Monthly Shipments 5.0 Tons Per Month Jan. '93 - Oct. '08 = 4.2M/mo. Nov. '08 - Present = 3.2M/mo. 4.5 Average Monthly Tons in Millions 4.0 3.5 3.0 2.5 2.0 Source: Average annual shipments calculated using monthly Metals Service Center Inst
Slide 9: Diverse End-Markets
Diverse End-Markets All Other, Oil & 4% Gas, 5% Commercial Ground Food Transportation, Processing 16% & Ag., 10% Construction Equipment, 9% Metal Fabrication & Machine Shops, 20% HVAC, 7% Consumer Durable, 11% Industrial Machinery & Equipment, 18% Percentages are based on 2017 sales as disclosed in
Slide 10: Driving Market Share Growth
Driving Market Share Growth 4.21% Highly fragmented 3.78% U.S. industry with: 17.3% • 7,000 service centers 16.4% • 1 million customers • 30 million transactions per year 2014 2017 RYI U.S. MSCI Market Share Gross Margin Sources: Metals Service Center Institute and IBISWorld Estimated market data ba
Slide 11: Ryerson's Growth Drivers
Ryerson’s Growth Drivers 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 Ryerson Advanced Ryerson E-Commerce Long Products Depots Warehouse – Mapped Processing – Value-Add Bui
Slide 12: Ryerson's Processing Capabilities
Ryerson’s Processing Capabilities Perforating Bending Precision Blanking Beveling Polishing Blanchard Grinding Machining and Profile Cutting Blasting Forming Plate Punching Burning Rolling Centerless Grinding Sawing Cutting-to-Length Beveling Scribing Drilling Shearing Embossing Slitting Flattening
Slide 13: Optimizing Mix to Drive Margin Expansion
Optimizing Mix to Drive Margin Expansion Gross Profit per Ton Fabrication % of Sales 17.3% 13.9% $240 $263 $291 $301 6.7% 9.8% 2010 2017 2010 2017 Gross Profit Per Ton ($M) Gross Profit Per Ton, excl. LIFO ($M) Gross Margin $M, Tons 000's Tons Sold 2010 2,252 2017 2,000 % Change -11% Ryerson process
Slide 14: Financial Overview
Financial Overview ERICH SCHNAUFER │ CHIEF FINANCIAL OFFICER 14
Slide 15: Ryerson Financial Priorities
Ryerson Financial Priorities 70-75 20% 3x Days of Gross Margins, Debt / Supply excl. LIFO EBITDA Building a strong financial profile upon an iconic history 15
Slide 16: Annual Financial Highlights
Annual Financial Highlights $178.0 $184.1 • Adj. EBITDA, excluding LIFO increased 3.4% to $184M in 2017 • Average selling prices per ton increased 11.9%, tons sold increased 5.1%, and revenues grew by 17.7% vs. 2016 $18.7 $17.1 • Operating expenses as a percentage of sales declined to 14.0% compared
Slide 17: Proven Inventory & Operational Efficiency
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 information disclosed in peer groups’ annual reports. Ryerson’s peer
Slide 18: First Quarter 2018 Financial Highlights
First Quarter 2018 Financial Highlights $62.2 • Achieved Adjusted EBITDA, excluding $54.3 $51.5 LIFO of $62M, compared to $54M in Q1 ‘17 $40.6 $37.7 • Average selling prices per ton increased 9.2%, tons sold increased 5.8%, and revenues grew by 15.6% $14.8 compared to Q1 ‘17 $10.4 • Ryerson North Am
Slide 19: Gross Profit per Ton Expansion with Improving Industry Conditions
Gross Profit per Ton Expansion with Improving Industry Conditions Ryerson’s strategic efforts to optimize our margins coupled with improved industrial demand and pricing conditions $323 $322 $271 $298 $282 $278 $290 $308 $313 $338 experienced in the past 2 quarters increased our Q1 '17 Q2 '17 Q3 '17
Slide 20: Deleveraging to Drive Increased Free Cash Flow
Deleveraging to Drive Increased Free Cash Flow Total Debt ($M) Annual Fixed Cash $1,242 Commitments ($M) Reduced total Cash Interest $ 87M debt ~$200M Pension and OPEB 35M since IPO Maintenance Capital $1,046 15M Expenditures Taxes and Other 8M Annual Fixed Cash $ 145M Commitments Dec. 31, 2014 Dec.
Slide 21: Improving Credit Profile
Improving Credit Profile Net Debt to Adj. EBITDA, excl. LIFO 5.3X Ryerson has improved 5.0X our Net Debt to EBITDA ratio, working toward our goal of 3X 2017 TTM Q1 '18 $M 2017 TTM Q1 '18 Adj. EBITDA, excl. LIFO 184 192 Ending Net Debt 968 967 Net Debt to Adj. EBITDA, excl. LIFO 5.3X 5.0X TTM - Trail
Slide 22: Investing to Drive Increased Free Cash Flow
Investing to Drive Increased Free Cash Flow • $50 million in capital investment since 2016 to expand value-added capabilities • Enhanced intelligent systems to connect people, supply chains, inventory, fixed assets, and logistics • Nine bolt-on acquisitions since 2010 22
Slide 23: Liquidity to Fund Operations and Investments
Liquidity to Fund Operations and Investments Liquidity ($M) $381 $338 39 19 Ryerson’s ability to maintain 49 25 ample liquidity allows us to $162.9 invest in working capital to 323 maintain high service levels 264 for our customers. Dec. 31, 2017 Mar. 31, 2018 North American Availability Foreign Ava
Slide 24: Conclusion
Conclusion MIKE BURBACH │ PRESIDENT NORTH / WEST REGION 24
Slide 25: Our Commitment, Our Culture
Our Commitment, Our Culture Say Yes, Figure It Out 25
Slide 26: Appendix
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Slide 27: 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 75% of products sold and services • Have long lead times with
Slide 28: Our Culture: Contributing to our customers' success
INDUSTRY-LEADING PERFORMANCE OPERATIONAL EFFICIENCY MARGIN EXPANSION PROFITABLE GROWTH Expense and working Optimize product and customer Growing share by leveraging capital leadership mix scale in highly fragmented market Significant operating leverage Value-added processing Multi-channe
Slide 29: 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 50% Stainless 26% Aluminum 22% Flat Long Plate Percent of 2017 Sales 29
Slide 30: Experienced Management Team
Experienced Management Team Years in Years at Years in Executive Title Position Ryerson Industry Eddie Lehner* President & Chief Executive Officer 3 6 29 Erich Schnaufer** Chief Financial Officer 3 13 13 Executive Vice President, General Mark Silver 5 5 5 Counsel & Secretary Kevin Richardson Preside
Slide 31: Annual Financial Highlights
Annual Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 2,000 $1,682 1,903 $1,503 2016 2017 2016 2017 Gross Margin & Gross Margin, excl. LIFO Expense Percentage of Sales excl. D&A Gross Margin % Gross Margin, excl. LIFO % 20.0% 19.7% 13.8% 17.3% 17.9% 12.6% 2016 2017 2016 2017 A
Slide 32: Quarterly Financial Highlights
Quarterly Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 526 $1,790 497 518 515 $1,725 470 $1,690 $1,678 $1,639 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Gross Margin & Gross Margin, excl. LIFO Expense Percentage of Sales excl. D&A Gross Margin % Gro
Slide 33: Metal Commodity Price Movements Impact LIFO Expense
Metal Commodity Price Movements Impact LIFO Expense 22% $2 $9 $14 $19 $0 $7 $25 $23 $14 $8 ($12) ($37) ($30) ($18) ($27) 11% ($2) 9% 7% 4% 2% 2% 1% -1% -3% -2% -6% -8% -12% -12% -13% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 LIFO
Slide 34: Deferred Retiree Benefit Liability Declines Since 2015
Deferred Retiree Benefit Liability Declines Since 2015 Pension and OPEB liability has declined 27% over the past 2 years driven by stronger pension asset returns and strategic participant reductions Sources: Federal Reserve treasury rates; Yahoo Finance daily adjusted stock price 34
Slide 35: Industry Math: 2017 MSCI Shipped Tonnage Mix
Industry Math: 2017 MSCI Shipped Tonnage Mix 2017 Industry Tons Mix Total Shapes 100% Flat 68% Carbon Flat Rolled 63% Stainless Sheet & Coil 3% Aluminum Sheet & Coil 2% Long 20% Plate 12% Carbon Plate 10% Stainless Plate 1% Aluminum Plate 1% 35
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA represents net income before interest and other expense on debt, provision for income taxes, depreciation, and amortization. Adjusted EBITDA gives further effect to, among other things, impairment charges on assets, reorganization expenses, and foreign currency transac
Slide 37: Non-GAAP Reconciliation: Annual
Non-GAAP Reconciliation: Annual ($M) 2013 2014 2015 2016 2017 Net Sales 3,460.3 3,622.2 3,167.2 2,859.7 3,364.7 Gross Profit 616.6 593.8 567.7 570.6 582.5 Gross Profit per Ton 302 293 299 300 291 Gross Margin 17.8% 16.4% 17.9% 20.0% 17.3% LIFO Expense (Income) (33.0) 42.3 (59.5) (6.6) 19.9 Gross Pro
Slide 38: Non-GAAP Reconciliation: Quarterly
Non-GAAP Reconciliation: Quarterly ($M) Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Tons Sold (000's) 497 518 515 470 526 Net Sales 814.5 875.4 864.2 810.6 941.3 Gross Profit 160.6 140.4 145.0 136.5 164.9 Gross Profit per Ton 323 271 282 290 313 Gross Margin 19.7% 16.0% 16.8% 16.8% 17.5% LIFO Expense (Income
Slide 39: Metal Commodity Price Movements Impact LIFO Expense
Metal Commodity Price Movements Impact LIFO Expense 22% $9 $14 $19 $0 $7 $25 $2 $23 $14 $8 ($12) ($37) ($30) ($18) ($27) 11% ($2) 9% 7% 4% 2% 2% 1% -1% -3% -2% -6% -8% -12% -12% -13% Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 LIFO
Slide 40: RYERSON
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