Ryerson Holding Corporation · NYSE:RYZ
Ryerson — BAML Leveraged Finance Conference 2018
45 slides from Ryerson's conference presentation, December 2018
Slide 1: BAML Leveraged Finance Conference
BAML Leveraged Finance Conference December 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 EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER 3
Slide 4: Iconic Industrial Metals Company Founded in 1842
Iconic Industrial Metals Company Founded in 1842 Distribution, processing, and fabrication of industrial metals centered on carbon, aluminum, and stainless steel products Distributes 65,000+ products to 40,000 manufacturing customers 100 interconnected facilities located in North America and China 4
Slide 5: Local Presence, National Scale
Local Presence, National Scale 2nd Largest North American metals processor and distributor optimizing customer supply chains with tailored solutions, services, and products 24/7 customer access through omni-channel sales networks Intelligently networked locations sharing knowledge, assets, and inven
Slide 6: Delivering Value to Customers: Ryerson's Periodic Table
Delivering Value to Customers: Understanding Ryerson’s Periodic Table 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 6
Slide 7: The DNA of Our Success
The DNA of Our Success ANALYTICS SPEED CULTURE VALUE-ADD SCALE 7
Slide 8: Ryerson's Strategic Drivers – Optimizing the Customer Experience
Ryerson’s Strategic Drivers – 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 Ryerson Advanc
Slide 9: 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 10: Current Macro Conditions
Current Macro Conditions Volatile but Improved Commodity Strong U.S. Prices Since Dec. 2015 Industrial Production Dec.‘15-Nov.‘18 CRU HRC performance 5.4 5.6 LME Nickel Prices Indexed to Dec. 2015 2.8 LME Aluminum + Midwest Premium 4.1 4.1 3.7 3.6 3.8 3.6 3.4 2.0 2.8 3.0 2.7 2.3 +126% 1.9 2.1 1.8 1.
Slide 11: Macro Outlook – Leading and Lagging Indicators
Macro Outlook – Leading and Lagging Indicators Bloomberg Commodity U.S. Industrial Price Index Production Growth 92 6.0 5.6 90.7 5.0 90 4.0 88 4.1 3.0 86 85.3 2.0 84 1.0 0.0 82 83.2 -1.0 80 -1.7 -2.0 78 -3.0 May-17 May-18 Feb-17 Mar-17 Apr-17 Jul-17 Oct-17 Feb-18 Mar-18 Apr-18 Jul-18 Oct-16 Oct-18 N
Slide 12: Diverse End-Market Exposure
Diverse End-Market Exposure Metal Fabrication & Industrial Machinery Machine Shops & Equipment 20% 18% All Other 4% Commercial Oil & Ground Gas 5% Transportation 16% HVAC 7% Consumer Construction Durable Equipment Food 11% 9% Processing & Ag. 10% Percentages are based on 2017 sales as disclosed in R
Slide 13: Growing Market Share and Scale in a Highly Fragmented Industry
Growing Market Share and Scale in a Highly Fragmented Industry Ryerson U.S. Market Share Industry Dynamics 5.2% 1.0% • 7,000 service centers • 1 million customers 4.2% 4.2% • 30 million transactions 3.8% per year Sources: Metals Service Center Institute and IBISWorld Estimated market data based on R
Slide 14: Ryerson's Processing Capabilities = Value-Add
Ryerson’s Processing Capabilities = Value-Add Perforating Bending Precision Blanking Beveling Polishing Blanchard Grinding Machining and Profile Cutting Blasting Forming Plate Punching Burning Rolling Centerless Grinding Beveling Sawing Cutting-to-Length Scribing Drilling Shearing Embossing Welding
Slide 15: Optimizing Mix to Drive Margin Expansion
Optimizing Mix to Drive Margin Expansion Gross Profit per Ton Fabrication % of Sales 17.9% 15.2% $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, excl. LIFO $M, Tons 000's Tons Sold 2010 2,252 2017 2,000 Change % Change (
Slide 16: Improving Credit Profile
Improving Credit Profile Net Debt to Adj. EBITDA, Annual Fixed Cash excl. LIFO Commitments ($M) Cash Interest $ 93M Pension and OPEB 34M Maintenance Capital 15M Expenditures Taxes and Other 8M Annual Fixed Cash $ 150M Commitments $M 2017 TTM Q3 '18 Ryerson has improved our Net Adj. EBITDA, excl. LIF
Slide 17: Generating Significant Free Cash Flow Through The Cycle
Generating Significant Free Cash Flow Through The Cycle Improved Operating Profile Means Higher Through The Cycle Quality of Earnings and Less Cash Flow Generation Volatility $M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TTM Q3 '18 Total Cash flow from Operating Activities $281 $285 ($199) $5
Slide 18: Reinvesting Cash in Growth Since IPO
Reinvesting Cash in Growth Since IPO • Legacy cash distributions, Significant Cash Uses ($M) including PIK interest and dividends, were a significant portion of our cash usage in 2010 through 2012. • Since going public in 2014, legacy liabilities have declined significantly, while Ryerson has invest
Slide 19: Financial Overview
Financial Overview ERICH SCHNAUFER │ CHIEF FINANCIAL OFFICER 19
Slide 20: Ryerson Financial Priorities
Ryerson Financial Priorities 20% 70-75 2x-3x Gross Margins, Days of Debt / excl. LIFO Supply EBITDA Gaining Financial Strength Through Continuously Improving Operating and Financial Performance 20
Slide 21: 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 22: Quarterly Financial Highlights
Quarterly Financial Highlights • Acquisition of Central Steel & Wire $106.6 completed on July 2nd contributed $88.7 $178.2M in revenue and $8.9M in $77.5 Adj. EBITDA, excl. LIFO to Q3 $62.2 results. • Ryerson achieved revenue growth $37.7 $40.6 of 18.2% in Q3 compared to Q2 with 14.5% higher volume
Slide 23: Central Steel & Wire Company: Early and Impactful Contributions
Central Steel & Wire Company: Early and Impactful Contributions Exceed Expectations • Central Steel & Wire’s rich history and complementary product offering enhances Ryerson’s commercial, processing, and operational strengths while increasing market share. • Focused foremost on customer relationship
Slide 24: Central Steel & Wire Proforma Leverage Impact
Central Steel & Wire Proforma Leverage Impact Net Debt / Adj. EBITDA, excl. LIFO Long-Term Mid- July 2nd, 2018 $M Q2 2018 Cycle CS&W Proforma Proforma Acquisition Cost $157 $157 Net Debt, As Reported $1,025 $1,025 $1,025 CS&W Working Capital ~$60-80 Improvements CS&W Asset Sales ~$10-20 Proforma Net
Slide 25: Strong Collateral and Asset Profile to Support Capital Structure
Strong Collateral and Asset Profile to Support Capital Structure with no Significant Maturities Until 2021 Capitalization Asset Coverage of 1.6X $2,054 Capitalization ($M) Sep. 30, 2018 Cash and Equivalents $31 Cash and Equivalents $31 Net PP&E $502 ABL Revolver ($1.0B) due 2021 589 Senior Secured N
Slide 26: Improving Adj. EBITDA Resulting in Meaningful Reduction of Leverage
Improving Adj. EBITDA, excl. LIFO Resulting in a Meaningful Reduction of Leverage Net Debt to TTM Adj. EBITDA, excl. LIFO Reduced Leverage 5.8X 5.4X 5.3X 5.0X 5.0X 5.0X 4.7X 4.1X 4.1X Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Financial Results Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17
Slide 27: Pension Benefit Liability Declines Since 2015
Pension Benefit Liability Declines Since 2015 2,674 2.5% 2.4% 2.3% Pension liability has 2,239 2,044 declined 31% over the past 2 years driven by stronger $73M pension asset returns and strategic participant reductions $238 $216 $165 Dec 31, '15 Dec 31, '16 Dec 31, '17 Pension ($M) 10-Year Treasury
Slide 28: Liquidity to Fund Operations and Investments
Liquidity to Fund Operations and Investments Liquidity ($M) $446 31 19 $338 Ryerson’s ability to maintain $301 49 ample liquidity allows us to 50 25 26 $162.9 make strategic investments 396 and fund our operations 264 225 Dec. 31, 2016 Dec. 31, 2017 Sep. 30, 2018 North American Availability Foreign
Slide 29: Improved Book Value of Equity
Improved Book Value of Equity Book Value of Equity ($M) Ryerson’s strong income generation through the first $102.1 nine months of 2018 has increased equity to $102.1 $162.9 million as of September 30, ($7.4) 2018 compared to an equity ($49.3) deficit of $124.5 million as of ($124.5) ($140.9) Decemb
Slide 30: Investing in Value-Add to Lessen Commodity Volatility Impacts
Investing in Value-Add to Lessen Commodity Volatility Impacts • $78 million in capital investment since the beginning of 2016 to expand value-added capabilities • Enhanced intelligent systems to connect people, supply chains, inventory, fixed assets, and logistics • Ten strategic acquisitions since
Slide 31: Conclusion
Conclusion EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER 31
Slide 32: A dynamic, leading business model
✓ A dynamic, leading business model After several years of significant for the era in which we compete revenue growth, achieved ✓ Increased Through The Cycle organically and supported by Earnings and Cash Flows acquisitions as well as net working capital investments, Ryerson is in ✓ Decreasing Legac
Slide 33: Appendix
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Slide 34: 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 35: 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 6 6 6 Counsel & Secretary Kevin Richardson Preside
Slide 36: Annual Financial Highlights
Annual Financial Highlights Tons Sold (000’s) Average Selling Price Per Ton 1,903 2,000 $1,921 1,691 $1,682 $1,503 2016 2017 Q3 2018 YTD 2016 2017 Q3 2018 YTD Gross Margin & Gross Margin, excl. LIFO Expense Percentage of Sales & Purchase Accounting Adj. excl. D&A and Restructuring 20.0% 19.7% 20.1%
Slide 37: Same-Store Financial Metrics Reconciliation
Same-Store Financial Metrics Reconciliation Central Steel & Wire Company Central Steel & Wire Company Ryerson Same Store Ryerson Holding Corporation (Dollars in millions, Six Months Ended June 30, Third Quarter 2018 tons in thousands) 2018 Tons Shipped 218 94 528 622 Net Sales $362.2 $178.2 $1,071.8
Slide 38: Quarterly Financial Highlights
Quarterly Financial Highlights Tons Sold (000’s) 622 Average Selling Price Per Ton $2,010 515 526 543 $1,947 470 $1,790 $1,725 $1,678 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Gross Margin & Gross Margin, excl. LIFO Expense Percentage of Sales Gross Margin % Gross Margin,
Slide 39: Significant Cash Uses Reconciliation
Significant Cash Uses Reconciliation $M 2010 2011 2012 2013 2014 2015 2016 2017 TTM Q3 '18 Distributions $256 $62 $113 $10 $28 $4 $22 $0 $1 PIK Interest & Retirement Loss 31 42 55 Management Fees 5 5 5 5 28 Dividends 214 35 Debt Issuance Costs 6 16 18 5 4 22 1 $M 2010 2011 2012 2013 2014 2015 2016 2
Slide 40: Industry Math: 2017 MSCI Shipped Tonnage Mix
Industry Math: 2017 MSCI Shipped Tonnage Mix 2017 Industry Tons Mix Total Shapes 100% Flat 68% Carbon Flat Rolled 63% Stainless Sheet & Coil 3% Aluminum Sheet & Coil 2% Long 20% Plate 12% Carbon Plate 10% Stainless Plate 1% Aluminum Plate 1% 40
Slide 41: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA represents net income before interest and other expense on debt, provision (benefit) for income taxes, depreciation and amortization. Adjusted EBITDA gives further effect to, among other things, impairment charges on assets, reorganization expenses, gain on bargain pur
Slide 42: Non-GAAP Reconciliation: Annual
Non-GAAP Reconciliation: Annual ($M) 2013 2014 2015 2016 2017 Q3 2018 YTD Tons Sold (000's) 2,038 2,024 1,897 1,903 2,000 1,691 Net Sales 3,460.3 3,622.2 3,167.2 2,859.7 3,364.7 3,248.4 Gross Profit 616.6 593.8 567.7 570.6 582.5 558.4 Gross Profit per Ton 302 293 299 300 291 330 Gross Margin 17.8% 1
Slide 43: Non-GAAP Reconciliation: Quarterly
Non-GAAP Reconciliation: Quarterly ($M) Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Tons Sold (000's) 515 470 526 543 622 Net Sales 864.2 810.6 941.3 1,057.1 1,250.0 Gross Profit 145.0 136.5 164.9 185.3 208.2 Gross Profit per Ton 282 290 313 341 335 Gross Margin 16.8% 16.8% 17.5% 17.5% 16.7% LIFO Expense (In
Slide 44: Metal Commodity Price Movements Impact LIFO Expense
Metal Commodity Price Movements Impact LIFO Expense Ryerson LIFO Detail ($M) 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 Q1 '18 Q2 '18 Q3 '18 LIFO Expense (Income) ($M) $9 $14 $19 $0 ($12) ($37) ($30) ($18) ($27) $7 $25 $2 $23 $14 (
Slide 45: RYERSON
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