Ryerson Holding Corporation · NYSE:RYZ
Ryerson — BAML Leveraged Finance Conference 2019
43 slides from Ryerson's conference presentation, Dec 3, 2019
Slide 1: BAML Leveraged Finance Conference
BAML Leveraged Finance Conference December 3, 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 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 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
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 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. Vol
Slide 10: Current Macro Conditions
Current Macro Conditions Volatile Commodity U.S. Industrial Production Prices Since Dec. 2016 Dec.‘16- 25th Nov.‘19 CRU HRC performance 1.8 LME Nickel Prices Indexed to Dec. 2016 1.7 LME Aluminum + Midwest Premium 1.6 1.5 1.4 1.3 +30.5% 1.2 1.1 +10.4% 1.0 0.9 -15.9% 0.8 Jul-17 Jul-18 Jul-19 Jan-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 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, which would lead to expanded EBITDA margins 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 ~30-50 bps 6.7% 10
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 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
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% 1,840 3.8% 2014 2017 2018 Q3 2019 YTD 2014 2017 2018 Q
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 ($M) Transaction Transformation Q3 2019 LTM Long-Term Goal Fair V
Slide 17: Ryerson's Improved Financial Metrics
Ryerson’s Improved Financial Metrics Since 2007, Ryerson has substantially improved our financial metrics, even in subdued industry demand and pricing conditions 2007 2018 Change Gross Margin, excl. LIFO & purchase accounting 14.6% 19.4% 4.8% Adj. EBITDA, excl. LIFO Margin 3.6% 7.0% 3.4% Cash Co
Slide 18: Improved Book Value of Equity
Improved Book Value of Equity Significant Turnaround From an Equity Deficit to a Positive Equity Balance Book Value of Equity ($M) 18 18
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 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 20: Financial Overview
Financial Overview ERICH SCHNAUFER │ CHIEF FINANCIAL OFFICER 20
Slide 21: Financial Highlights
Financial Highlights Revenue Growth with Industry Leading Expense & Working Capital Management $107 • Ryerson generated $1.1B in revenues, $89 $30M in Adj. EBITDA, excl. LIFO, and $77 $10M in net income in Q3 2019. • Central Steel & Wire contributed $62 $63 $134M in revenues to Ryerson’s $50 $51 res
Slide 22: Higher Adj. EBITDA, excl. LIFO
Higher Adj. EBITDA, excl. LIFO Continued growth with margin expansion and industry-leading expense management ($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% $109 Expense % of Sale
Slide 23: Current Capitalization
Current Capitalization Supporting Capital Structure with no Significant Maturities Until 2021 Current Capitalization ($M) Maturity Q3 2019 ABL Revolver ($1.0B) Nov. 16, 2021 $441 As of September 30, 2019, we Senior Secured Notes May 15, 2022 588 maintained $455 million of total liquidity, Foreign De
Slide 24: Current Asset Coverage
Current Asset Coverage Improved collateral and asset profile since refinances in 2012 & 2016 As of June 30, 2012 ($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 Total Assets Total Assets $2,064 $2,122 Cash and Eq
Slide 25: Continuing Improvement in Managing Fixed Cash Commitments
Continuing Improvement in Managing Fixed Cash Commitments With legacy liabilities declining, another important catalyst emerges to complement improved operating performance for shifting enterprise value from debt to equity Fixed Cash Commitments ($M) 2014 2015 2016 2017 2018 2019F Cash Interest 100
Slide 26: 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-$400 26 26
Slide 27: Pension Benefit Liability Declines Since 2014
Pension Benefit Liability Declines Since 2014 ($M) $96M The pension liability was 22 35% lower in 2018 277 compared to 2014, driven 238 216 by pension asset returns 165 159 and strategic participant reductions 2014 2015 2016 2017 2018 Ryerson Net Pension Liability CS&W Acquired Net Liability at 12/3
Slide 28: Strong Liquidity to Fund Operations and Investments
Strong Liquidity to Fund Operations and Investments Ryerson has significant liquidity to deleverage, pursue strategic investments, and fund operations ($M) 28 28
Slide 29: Conclusion
Conclusion EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER 29 29
Slide 30: 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 Increase Net Book Value 30 30
Slide 31: 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. 31 31
Slide 32: Appendix
Appendix 32
Slide 33: The DNA of Our Success
The DNA of Our Success ANALYTICS SPEED CULTURE VALUE-ADD SCALE 33 33
Slide 34: Central Steel & Wire Next Phase Target
Central Steel & Wire Next Phase Target Achieving annual revenue of $600M and Adj. EBITDA, excl. LIFO of $50M, would improve Ryerson’s total company Adj. EBITDA, excl. LIFO margin by 40 bps Central Steel & Wire EBITDA Transformation Transformation Drivers: • Customer Retention • Expense Management •
Slide 35: 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 36: Experienced Management Team
Experienced Management Team Years in Years at Years in Executive Title Position Ryerson Industry Eddie Lehner(1) President & Chief Executive Officer 4 7 30 Erich Schnaufer(2) Chief Financial Officer 4 14 14 Executive Vice President, General Mark Silver 7 7 7 Counsel & Secretary Kevin Richardson Pres
Slide 37: 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 38: 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 39: 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 $4,700 Gross Marg
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation EBITDA represents net income before interest and other expense on debt, provision (benefit) for income taxes, depreciation, and amortization. Adjusted EBITDA gives further effect to, among other things, impairment charges on assets, reorganization expenses, gain on bargain pu
Slide 41: Non-GAAP Reconciliation: Quarterly
Non-GAAP Reconciliation: Quarterly ($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 42: 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 43: Ryerson
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