Ryerson Holding Corporation · NYSE:RYZ
Ryerson — Deutsche Bank Leveraged Finance Conference 2019
42 slides from Ryerson's conference presentation, September 2019
Slide 1: Deutsche Bank Leveraged Finance Conference
Deutsche Bank Leveraged Finance Conference September 2019 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: 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 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 2018 10-K results; 5 Carbon includes other metal sales representin
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: Understanding the Elements
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 60% 22% 18% As Is ~23% Burn/Cut ~67% Fabrication ~10% *Product Mix and shape based on Dec. 31, 2018 10-K.
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
Growing Diversified End-Markets Industrial Metal Machinery & 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. Volume Market HVAC Consumption
Slide 10: Current Macro Conditions
Current Macro Conditions Volatile Commodity U.S. Industrial Production Prices Since Dec. 2016 Dec.‘16-Aug.‘19 CRU HRC performance 1.8 LME Nickel Prices Indexed to Dec. 2016 1.7 LME Aluminum + Midwest Premium 1.6 1.5 +43.9% 1.4 1.3 1.2 1.1 +12.9% 1.0 -0.2% 0.9 0.8 Jul-17 Jul-18 Jul-19 Jan-17 Jun-17 J
Slide 11: 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 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 Call Centers Portfolio 5 6 7 8 Ryerson Virtual Ry
Slide 13: 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 10.2% to 15% would positively impact Adj. EBITDA, excl. LIFO margins by ~30-50 bps 6.7
Slide 14: 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 18.9% 97 95 92 17.0% 17.0% 90 89 15.6% 15.8% 82 14.2% 80 76 12.9% 12.9% 12.7% 73 12.0% 71 2014 2015
Slide 15: Growing Market Share
Growing Market Share Higher Shipments from Organic Growth and Acquisitions 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% 1,897 1,903 3.8% 2014 2015 2016 2017 2018 2014 2017 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 ($M) Transaction Transformation Q2 2019 LTM Long-Term Goal Fair V
Slide 17: Financial Overview
Financial Overview ERICH SCHNAUFER │ CHIEF FINANCIAL OFFICER 17
Slide 18: 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 19: 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 17.6% Q2 2019 LTM 75 Days Q2 2019 4.3X Q2 2019 LTM Gaining Financial Strength Through Continuously Improving Operating and Financial Performance Q2 2019 LTM Gross Margins, excl. LIFO a
Slide 20: Financial Highlights
Financial Highlights Revenue Growth with Industry Leading Expense & Working Capital Management $107 • Ryerson generated $1.2B in revenues, $51M in Adj. EBITDA, excl. LIFO, and $89 $16M in net income in Q2 2019. $77 • Central Steel & Wire contributed $62 $63 $154M in revenues to Ryerson’s $50 $51 res
Slide 21: Higher Adj. EBITDA, excl. LIFO
Higher Adj. EBITDA, excl. LIFO Continued growth with margin expansion and industry-leading expense management ($M) Next Phase ($M, except ASP) Target Tons Sold 2,800 $350- Revenue $5,000 $308 $400 Average Selling Price $1,750-$1,800 Gross Margins, excl. LIFO 20% $178 $184 Expense % of Sales, excl. D
Slide 22: Current Capitalization
Current Capitalization Supporting Capital Structure with no Significant Maturities Until 2021 Current Capitalization ($M) Maturity Q2 2019 As of June 30, 2019, we maintained ABL Revolver ($1.0B) Nov. 16, 2021 $512 $450 million of total liquidity, including: Senior Secured Notes May 15, 2022 588 Fore
Slide 23: Current Asset Coverage
Current Asset Coverage Robust Collateral and Asset Profile As of June 30, 2019 ($M) 2.0x Collateral Coverage Total Assets $2,196 Cash and Equivalents $23 Total Debt $1,116 Other $313 Net PP&E Foreign Debt and Other $16 $483 Accounts ABL Revolver Receivable $512 $553 Senior Inventories Secured Notes
Slide 24: Continuing Improvement in Managing Fixed Cash Commitments
Continuing Improvement in Managing Fixed Cash Commitments Fixed Cash Commitments ($M) 2014 2015 2016 2017 2018 2019F Cash Interest 100 87 89 85 93 88 Pension & Retiree Medical 66 51 30 30 34 34 Maintenance Capex 15 15 15 17 21 21 Taxes/Other 2 3 2 2 2 7 Total Fixed Cash Commitments 183 156 136 134 1
Slide 25: 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-$400 25 25
Slide 26: Pension Benefit Liability Declines Since 2014
Pension Benefit Liability Declines Since 2014 ($M) $96M The pension liability was 22 35% lower in 2018 277 compared to 2014, driven 238 216 by pension asset returns 165 159 and strategic participant reductions 2014 2015 2016 2017 2018 Ryerson Net Pension Liability CS&W Acquired Net Liability at 12/3
Slide 27: Strong Liquidity to Fund Operations and Investments
Strong Liquidity to Fund Operations and Investments Ryerson has significant liquidity to deleverage, pursue strategic investments, and fund operations ($M) 27 27
Slide 28: Conclusion
Conclusion MIKE BURBACH │ PRESIDENT NORTH / WEST REGION 28 28
Slide 29: 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 Realization of Central Steel & Wire synergies Grow value-added percentage of total revenue mix 29 29
Slide 30: 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 that affords us the opportunity to significantly deleverage the balance sheet, thus effecting the enterprise value shift from debt to equit
Slide 31: Appendix
Appendix 31
Slide 32: The DNA of Our Success
The DNA of Our Success ANALYTICS SPEED CULTURE VALUE-ADD SCALE 32 32
Slide 33: 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 34: 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 35: Experienced Management Team
Experienced Management Team Years in Years at Years in Executive Title Position Ryerson Industry Eddie Lehner* President & Chief Executive Officer 4 7 30 Erich Schnaufer** Chief Financial Officer 4 14 14 Executive Vice President, General Mark Silver 7 7 7 Counsel & Secretary Kevin Richardson Preside
Slide 36: Quarterly Financial Highlights
Quarterly Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 543 622 577 619 623 $1,947 $2,010 $2,010 $1,988 $1,934 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Gross Margin & Gross Margin, excl. LIFO Adjusted EBITDA, excl. LIFO Margin % & Purchas
Slide 37: 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 38: Same-Store Financial Metrics Reconciliation
Same-Store Financial Metrics Reconciliation Central Steel & Wire contributed $16M in Adj. EBITDA, excl. LIFO to Ryerson’s Q2 2019 LTM results Q2 2019 LTM Central Steel & Wire Ryerson Same Ryerson Holding $M, Tons 000's Company Store Corporation Tons Shipped 375 2,066 2,441 Net Sales $674 $4,172 $4,8
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA represents net income before interest and other expense on debt, provision (benefit) for income taxes, depreciation, and amortization. Adjusted EBITDA gives further effect to, among other things, impairment charges on assets, reorganization expenses, gain on bargain pu
Slide 40: Non-GAAP Reconciliation: Quarterly
Non-GAAP Reconciliation: Quarterly ($M) Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Tons Sold (000's) 543 622 577 619 623 Net Sales 1,057.1 1,250.0 1,160.0 1,230.8 1,204.9 Gross Profit 185.3 208.2 199.7 231.3 211.8 Gross Profit per Ton 341 335 346 374 340 Gross Margin 17.5% 16.7% 17.2% 18.8% 17.6% LIFO (Inco
Slide 41: 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 42: Ryerson
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