Ryerson Holding Corporation · NYSE:RYZ
Ryerson — Investor Presentation (August 2021)
39 slides from Ryerson's investor presentation, Aug 11, 2021
Slide 1: Ryerson Investor Presentation August 11, 2021
Ryerson Investor Presentation August 11, 2021 Eddie Lehner President & Chief Executive Officer Jim Claussen Executive Vice President & Chief Financial Officer Mike Burbach Chief Operating Officer Exhibit 99.1
Slide 2: Important Information About Ryerson Holding Corporation
31 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”) or its subsidiaries and no investment decision should be made based upon the information pr
Slide 3: Ryerson Investment Case
Ryerson Investment Case Leading metals service center Positive secular market dynamics Financial & operating model transformation Successful record of M&A and Organic Growth Initiatives Returning cash to shareholders Growing book value and strong free cash flow yield
Slide 4: Ryerson Holding Corporation – RYI (NYSE)
Ryerson Holding Corporation – RYI (NYSE) 179 years of continuous operations, based in Chicago Leading metals processor and distributor 100 locations across North America and China 40K+ customers 75K+ products 24/7 e-commerce platform Values represented above are approximations as of the end of Q2 20
Slide 5: At Nexus of Fragmented $250 Billion Industry
At Nexus of Fragmented $250 Billion Industry SUPPLIERS Manufacture metals Produce and ship large volumes Have long and potentially volatile lead times CUSTOMERS Require a variety of products/services Purchase in smaller quantities Seek value-added attributes-based partnership Inventory of 75k owned
Slide 6: Intelligent Network of Service Centers
Intelligent Network of Service Centers 100 Company Operated Locations Hundreds of "Virtual" Locations Dedicated Logistics Network Availability, Speed, Ease, Consistency Advanced Value-Add Diversified Creating great customer experiences at Speed, Scale, & Consistency in a fragmented industrial metals
Slide 7: Ryerson “Periodic Table”
Ryerson “Periodic Table” METAL SHAPE PROCESSING CARBON STAINLESS ALUMINUM FAB BURN/CUT AS IS CONTRACT TRANSACTIONAL FLAT LONG PLATE ATTRACTIVE PRICE MARGIN COMBINATIONS • CARBON, FLAT, CONTRACTUAL OR TRANSACTIONAL • PLATE, COMPLEX FABRICATION, TRANSACTIONAL • STAINLESS, ALUMINUM LONG, TRANSACTIONAL
Slide 8: Ryerson Diversified: Product Mix
Mix: Carbon 50% / Bright Metals 50% Ryerson Diversified Stainless Steel Aluminum Carbon & Alloy Nickel Alloys Brass & Copper Product percentages are based on 2020 sales as disclosed in Ryerson’s Annual Report on Form 10-K for the year ended December 31, 2020.
Slide 9: End Market Expertise
End Market Expertise Ryerson Diversified 25% Industrial Machinery & Equipment18% 14% 11% 9% 9% 6% 4%Oil & Gas 4%All Other Electric Vehicles Cloud Infrastructure Automation Renewable Energy E-Commerce Logistics Infrastructure Infrastructure investment and secular growth trends: End market percentages
Slide 10: Secular Trends Support Durable Recovery
Secular Trends Support Durable Recovery Above trend infrastructure investment Trade policy rebalancing ESG impacts on industry cost and price curve Decarbonization favoring North American manufacturing Growth and employment oriented monetary policy Reshoring/Onshoring Domestic supplier consolidation
Slide 11: Infrastructure Spend, Long Overdue
’30-’39 ’40-’49 ’50-’59 ‘60-’69 ’70-’79 ’80-’89 ’90-’99 ’00-’09 ’10-’19 Source: Standard & Poor’s Financial Services, “Infrastructure: What Once Was Lost Can Now Be Found — The Productivity Boost,” Beth Ann Bovino. Chart data from BEA and S&P Global Economics. Public Spend on Infrastructure as % Of
Slide 12: Market Conditions - More Than Meets The Eye
US Industrial Production & MSCI Tons (M) Commodity Prices Since Jan. 2020 Sources: Bloomberg: prices through July 31, 2021; Federal Reserve: industrial production index monthly year-over-year change. Market Conditions - More Than Meets The Eye +208%
Slide 13: Ryerson Foundational Pillars
Ryerson Foundational Pillars INDUSTRY-LEADING PERFORMANCE MARGIN EXPANSION OPERATIONAL EFFICIENCY Market share growth through redefining the customer experience Multi-channel sales and distribution platform Investment in value-added capabilities Strategic acquisitions Digitalization roadmap PROFITAB
Slide 14: Financial Transformation
Financial Transformation $M *Net debt is calculated as total debt less cash & cash equivalents and fair value of AM Castle shares. Net Debt* Pension Benefit Liability Annual Fixed Cash Commitments $572 $147 $112 Decreased net debt, legacy liabilities and fixed cash commitments since IPO $M $M
Slide 15: Improved Operating Model
Improved Operating Model Adjusted EBITDA excl. LIFO Cash Conversion Cycle Gross Margin excl. LIFO $167 34 Days Improved EBITDA generation, cash conversion cycle and margins while continuing to maintain best in class expense leverage since IPO Days $M $M 4.5%
Slide 16: Where’s the EV?
Where’s the EV? $M Enterprise Value EV/EBITDA Multiple This frames the equity alpha opportunity especially with shareholder returns established *IPO defined as Q3 2014 TTM
Slide 17: Growth and Digital Investments
New or expanded value-add capabilities Digital evolution through e-commerce, pricing analytics, and quoting tools Leveraging industry and functional expertise across the company Supply chains – visualization/virtualization Inventory – offering more selection of in-house and mapped products Strategic
Slide 18: Successful Record of M&A
12 strategic acquisitions since 2010 Acquired capabilities that enhance the customer experience Accretive to gross margin & Adj. EBITDA excl. LIFO Focus on value-added processing Broaden transactional customer portfolio Enhance supply chain network and service points Successful Record of M&A Accreti
Slide 19: CS&W Transformative Acquisition
2021 > 2022 2023 CS&W Transformative Acquisition Mid-cycle targets Revenue $600M Adj. EBITDA excl. LIFO $50M A stronger brand that has repaid $164M purchase price; $30M of Adj. EBITDA excl. LIFO in H1 2021 2019 > 2020 2018 Rationalize Phase I expense synergies Revenue retention focus Stabilize & Opt
Slide 20: Valuation Comparison
Valuation Comparison High leverage contributed to an EV/EBITDA multiple that lagged industry, despite a strong free cash flow yield Ryerson valuation has averaged 5.9x EV/EBITDA over the past five years (excl. 2020 pandemic year) On declining debt and legacy liabilities, coupled with higher EBITDA a
Slide 21: Returning Cash to Shareholders
Enterprise Value shift from debt to equity underway Returning Cash to Shareholders $0.08 per Share Quarterly return of capital to investors and $50M Option to repurchase outstanding shares from excess liquidity Enabled by: +$100M Reduction in annual fixed cash commitments since IPO achieved via debt
Slide 22: Industry Leading Free Cash Flow Yield
Free cash flow yield over past 26 quarters was well above our publicly-traded peers and compares favorably to S&P 500 composite yield, which did not exceed 4% during this time Industry Leading Free Cash Flow Yield Growing BV and Strong Free Cash Flow Yield *Free cash flow calculated as net cash flow
Slide 23: Shifting EV Mix Enables Higher Equity
Shifting EV Mix Enables Higher Equity IPO* Q2 2021 Expected Outlook TTM Adj. EBITDA, excl. LIFO $219 $386 EV Multiple 7.8x 3.7x EV $1,715 $1,414 Net debt $1,135 $563 Pension/OPEB Liability* $170 $95 Equity Value $410 $756 Share Price $12.80 $19.66 Shares Outstanding 32.0 38.5 - *IPO defined as Q3 20
Slide 24: Cash Flow Funds Dividend and Operations
Cash Flow Funds Dividend and Operations * Free Cash Flow does not include growth capex **Share price as of 8/9/2021. ***Estimated depreciation and amortization of $55M ****Q3 ‘21 TTM based on guidance issued in Q2 ‘21 earnings release Based on four-year average Adj. EBITDA, Ryerson's free cash flows
Slide 25: The time to invest in infrastructure is now
The time to invest in the renewal and modernization of our infrastructure is now. That goes beyond the clichés of potholes and traffic jams, extending out to the mobility, energy, communications, and wellness infrastructures that we all rely on for every interaction with the world today. Metal provi
Slide 26: Next Phase Targets
Next Phase Targets 6% N.A. Market Share 15% Value-Add Sales Mix 20% Gross Margin excl. LIFO 1.5x Net Debt / Adj. EBITDA excl. LIFO $600M|$50M CS&W Net Sales & Adj. EBITDA excl. LIFO Note: Targets are based on 3-year window; Service center industry growth assumed consistent with 2018 tons shipped and
Slide 27: Experienced Management Team
Eddie Lehner President and Chief Executive Officer | 6 years 9 years at Ryerson 32 years of industry experience Mike Burbach Chief Operating Officer | <1 year 37 years at Ryerson 37 years of industry experience Molly Kannan Controller and Chief Accounting Officer | 6 years 13 years at Ryerson 13 yea
Slide 28: Ryerson Investment Case Conclusion
Ryerson Investment Case Conclusion Leading metals service center Positive secular market dynamics Financial & operating model transformation Successful record of M&A and Organic Growth Initiatives Returning cash to shareholders Growing book value and strong free cash flow yield Creating great custom
Slide 29: Appendix
Appendix
Slide 30: Deleveraging Drives Shareholder Value
Deleveraging Drives Shareholder Value *Net debt calculated as total debt less cash & cash equivalents, fair value of AM Castle shares, and restricted cash. Reduced net debt by $116M in the first half of 2021 to $563M Achieved a leverage ratio of 1.5x, well within the Company’s long-term target range
Slide 31: Reduction in Fixed Cash Commitments
Since 2014, fixed cash commitments are down +$100M per year Reduction in Fixed Cash Commitments $M 2021F Includes $12M of deferred pension allowed under the CARES Act
Slide 32: Generating Significant Free Cash Flow Through the Cycle
Generated $1.2B of FCF 2008-2020 despite business cycles and capital expenditures of $390M Generating Significant Free Cash Flow Through the Cycle Improved operating profile expected to generate higher through-the-cycle quality of earnings & less cash flow generation volatility to fuel value shift t
Slide 33: EPS & Operating Cash Flow per Share
Generated significant EPS in Q2 2021 while using less cash flow from operations vs 3Q 2018, a relevant comparison from the last cyclical upturn of 2016-2018 EPS & Operating Cash Flow per Share
Slide 34: EBITDA and Adjusted EBITDA definitions
31 Note: 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, reorganization expenses, gain or loss on retirement of debt, loss on pension settlement, purchase
Slide 35: Non-GAAP Reconciliation: Adjusted EBITDA, excl. LIFO
Non-GAAP Reconciliation: Adjusted EBITDA, excl. LIFO *Provision (benefit) for income taxes includes reversals for valuation allowance related to deferred tax assets
Slide 36: Non-GAAP Reconciliation: Adjusted EBITDA, excl. LIFO - Annual
Non-GAAP Reconciliation: Adjusted EBITDA, excl. LIFO - Annual
Slide 37: Non-GAAP Reconciliation: Adjusted EBITDA, excl. LIFO – Annual Continued
Non-GAAP Reconciliation: Adjusted EBITDA, excl. LIFO – Annual Continued Net income includes gain on bargain purchase of $70M in 2018 for acquisition of CS&W and includes a favorable vacation accrual adjustment of $11M in 2019.
Slide 38: Non-GAAP Reconciliations: Net Debt
Non-GAAP Reconciliations: Net Debt Quarterly Annual
Slide 39: Ryerson
Ryerson Holding — Investor Presentation (August 2021) on 6ix