Toggle SGML Header (+)


Section 1: 8-K (8-K 6.17.19)

ryi-8k_20190617.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 17, 2019

Ryerson Holding Corporation

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

001-34735

(Commission File Number)

26-1251524

(I.R.S. Employer Identification No.)

227 W. Monroe St., 27th Floor, Chicago, IL 60606

(Address of principal executive offices and zip code)

(312) 292-5000

(Registrant’s telephone number, including area code)

 

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value, 100,000,000 shares authorized

RYI

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company      

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the

Exchange Act.   

 



Item 7.01

Regulation FD Disclosure.

On June 17, 2019, representatives of Ryerson Holding Corporation (the “Company”) began making presentations to investors using slides containing the information attached to this Current Report on Form 8-K as Exhibit 99.1 (the “Investor Presentation”) and incorporated herein by reference.  The Company expects to use the Investor Presentation, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts and others during the fiscal year ending December 31, 2019.

The Investor Presentation includes financial information not prepared in accordance with generally accepted accounting principles (“Non-GAAP Financial Measures”). A reconciliation of the Non-GAAP Financial Measures to financial information prepared in accordance with generally accepted accounting principles (“GAAP”), as required by Regulation G, appears in Exhibit 99.1 to this Current Report on Form 8-K.  The Company is providing disclosure of the reconciliation of reported Non-GAAP Financial Measures used in the Investor Presentation, among other places, to its comparable financial measures on a GAAP basis. The Company believes that the Non-GAAP Financial Measures provide investors additional ways to view our operations, when considered with both our GAAP results and the reconciliation to net income and net cash provided by operating activities, which we believe provide a more complete understanding of our business than could be obtained absent this disclosure and provide a basis of comparison of results between current, past, and future periods. We believe the Non-GAAP Financial Measures also provide investors a useful tool to assess shareholder value.

By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.  The information contained in the Investor Presentation is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time.  The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted.  Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

The information furnished with this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01.

Financial Statements and Exhibits.

d) Exhibits

The following exhibit is furnished with this report:

 

 

 

 

Exhibit
Number

 

Exhibit Title or Description

99.1

 

Ryerson Holding Corporation slides from presentation by management dated June 17, 2019.

 

 



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: June 17, 2019

 

 

 

 

RYERSON HOLDING CORPORATION

 

 

By:

 

/s/ Erich S. Schnaufer

Name:

 

Erich S. Schnaufer

Title:

 

Chief Financial Officer

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

ryi-ex991_534.pptx.htm

Slide 1

Ryerson Investor Presentation June 2019 Exhibit 99.1

Slide 2

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”) and no investment decision should be made based upon the information provided herein. Ryerson strongly urges you to review its filings with the Securities and Exchange Commission, which can be found at https://ir.ryerson.com/Docs. This site also provides additional information about Ryerson. Safe Harbor Provision Certain statements made in this presentation and other written or oral statements made by or on behalf of the Company constitute "forward-looking statements" within the meaning of the federal securities laws, including statements regarding our future performance, as well as management's expectations, beliefs, intentions, plans, estimates, objectives, or projections relating to the future. Such statements can be identified by the use of forward-looking terminology such as “objectives,” “goals,” “preliminary,” “range,” "believes," "expects," "may," "estimates," "will," "should," "plans," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. The Company cautions that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact the metals distribution industry and our business are: the cyclicality of our business; the highly competitive, volatile, and fragmented market in which we operate; fluctuating metal prices; our substantial indebtedness and the covenants in instruments governing such indebtedness; the integration of acquired operations; regulatory and other operational risks associated with our operations located inside and outside of the United States; work stoppages; obligations under certain employee retirement benefit plans; the ownership of a majority of our equity securities by a single investor group; currency fluctuations; and consolidation in the metals producer industry. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth above and those set forth under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2018, and in our other filings with the Securities and Exchange Commission. Moreover, we caution against placing undue reliance on these statements, which speak only as of the date they were made. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise. Non-GAAP Measures Certain measures contained in these slides or the related presentation are not measures calculated in accordance with generally accepted accounting principles (“GAAP”). They should not be considered a replacement for GAAP results. Non-GAAP financial measures appearing in these slides are identified in the footnotes. A reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures is included in the Appendix.

Slide 3

Business Overview EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER

Slide 4

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 evolved with changing markets. Ryerson is passionate about profitably providing consistently great customer experiences.

Slide 5

Since 2007, Ryerson has substantially improved our financial metrics, even in subdued industry demand and pricing conditions 61M U.S. Industry Shipments 42M 31% é 2007 Change 14.6% Gross Margin, excl. LIFO & purchase accounting 19.4% 4.8% é 106 days Cash Conversion Cycle 75 days 31 days é 3.6% Adj. EBITDA, excl. LIFO Margin 7.0% 3.4% é 2018 Ryerson’s Improved Financial Metrics 2007 Change 182 Bloomberg Commodity Index 77 58% 2018 é U.S. shipments source: The Metals Service Center Institute

Slide 6

Ryerson’s North American Interconnected Network Local Presence, National Scale Over 100 locations across North America and China Next day delivery 24/7 customer service on Ryerson.com Value-Added Processing Sales product mix based on 2018 10-K results; Carbon includes other metal sales representing 2% of sales mix.

Slide 7

Delivering Value to Customers: *Product Mix and shape based on Dec. 31, 2018 10-K Understanding the “Elements” Is Vital to Profitable Growth 60% 22% 18% Metal Shape Processing Carbon 54% Stainless 24% Aluminum 22% Fabrication~10% Burn/Cut~67% As Is~23% Flat Long Plate Transactional ~50% Contract ~50% As Is Burn/Cut Fabrication

Slide 8

3.8% (2017-2022 US Industrial Machinery Market CAGR) 5.4% (2016-2020 Global Demand for Fabricated Metal Products CAGR) 3.9% (2017-2023 Global Food Processing Equipment Market CAGR) 4.8% (2018-2025 Global Construction Equipment Market CAGR) 5.2% (2016-2021 Global HVAC Market Revenue CAGR) 1.8% (2017-2022 U.S. Market Consumption Volume CAGR) 1.4% (2017-2024 N.A. Commercial Truck Production Volume CAGR) 5.4% (2018-2025 Household Appliance Market CAGR) Growing Diversified End-Markets with Significant Tailwinds End market percentages are based on 2018 sales as disclosed in Ryerson’s Annual Report on Form 10-K for the year ended December 31, 2018. Compounded annual growth rates “CAGR” determined based on Wall Street Research.

Slide 9

The DNA of Our Success SCALE VALUE-ADD SPEED CULTURE ANALYTICS

Slide 10

Ryerson’s Targeted Commercial Initiatives 8 Ryerson Virtual Warehouse – Mapped Supply Chains 7 Ryerson E-Commerce Build-Out & Scaling 5 Long Products Depots Centers of Excellence 6 Stainless Products Leadership 4 Develop & Diversify Vertical Markets Portfolio 3 Coil & Sheet Franchise Renewal 1 2 Ryerson Advanced Processing – Value-Add Amplifier & Accelerator Scale Prospecting & Call Centers Optimizing the Customer Experience Through Intelligently Networked Service Centers

Slide 11

INDUSTRY-LEADING PERFORMANCE MARGIN EXPANSION OPERATIONAL EFFICIENCY Growing share by leveraging scale in highly fragmented market Multi-channel sales and distribution platform Investment in capabilities Strategic acquisitions Expanding use of analytics PROFITABLE GROWTH Optimize product and customer mix Value-added processing Value-driven pricing Supply chain innovation, architecture, and leadership Expense and working capital leadership Significant operating leverage Best practice talent management Speed Contributing to our customers’ success

Slide 12

Competitive Advantages in Working Capital & Expense Management Proven Inventory & Operational Efficiency Industry Leadership Competitor averages are based on Ryerson’s analysis of financial information disclosed in peer groups’ annual reports. Ryerson’s peer group includes Reliance Steel & Aluminum, Olympic Steel, Kloeckner Metals, and Russel Metals. Expense % excluding D&A and one-time items is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the comparable GAAP measure is included in the Appendix. Ryerson Competitor Averages Expense Percentage of Sales Excluding D&A and One-Time Items Days of Supply

Slide 13

Value-Added Processing Shift Value-Added Sales Mix Goal to change Ryerson’s fabrication mix from ~10% to ~15% leads to expanded EBITDA margins and less earnings volatility A shift in Ryerson’s fabrication mix from 10.2% to 15% would positively impact Adj. EBITDA, excl. LIFO margins by ~30-50 bps Note: Targets are based on 3-year window and assume service center industry growth is consistent with 2018 tons shipped, and average selling prices are consistent with 10 year historical average selling prices.

Slide 14

Source: Metals Service Center Institute and IBISWorld Estimated market data based on Ryerson’s analysis of Metals Service Center Institute data. Growing Market Share Ryerson U.S. Market Share 7,000 service centers serving 1 million customers through 30 million transactions each year Higher Shipments from Organic Growth and Acquisitions Ryerson Tons Sold (000’s)

Slide 15

Building a Better Ryerson: Central Steel & Wire Acquisition Acquired on July 2, 2018 Recognized Gain from Bargain Purchase Complementary Product Offering Increased Market Share Leverage Ryerson’s Operational Strength Transaction Fair Value of Assets $234 Purchase Price 164 Net Book Gain $70 Transformation 2H 2018 Long-Term Goal Revenue $348 $600 Adj. EBITDA, excl. LIFO $15 $50 EBITDA % of Sales 4.2% 8.3%

Slide 16

Transformation Drivers: Customer Retention Expense Management Operational Efficiencies Supply Chain Synergies Integration with Ryerson Value-Add Processing Network Central Steel & Wire EBITDA Transformation 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 Note: Targets are based on 3-year window and assume service center industry growth is consistent with 2018 tons shipped, and average selling prices are consistent with 10 year historical average selling prices.

Slide 17

Continued growth with margin expansion and industry-leading expense management Higher Adj. EBITDA, excl. LIFO To grow to 6% of U.S. service center market share in the next 3 years Gross margin growth to 20% through continued emphasis on value-added processing, transactional speed, and CS&W synergies with industry-leading expense management to generate sustained Adj. EBITDA, excl. LIFO margins of 7.5% Next Phase Targets: Note: Targets are based on 3-year window and assume service center industry growth is consistent with 2018 tons shipped, and average selling prices are consistent with 10 year historical average selling prices.

Slide 18

Improved Book Value of Equity Book Value of Equity ($M) Ryerson’s strong income generation led to positive book value of equity of $113M as of March 31, 2019. Despite our improved balance sheet, industry multiples are at cyclical troughs. Enterprise Value / Adj. EBITDA, excl. LIFO Significant Turnaround From an Equity Deficit to a Positive Equity Balance A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in the Appendix.

Slide 19

Financial Overview ERICH SCHNAUFER │ CHIEF FINANCIAL OFFICER

Slide 20

Path to Achieving Long-Term Financial Goals Gaining Financial Strength Through Continuously Improving Operating and Financial Performance 70-75 Days of Supply 2x Net Debt / EBITDA 20% Gross Margins, excl. LIFO 18.9% Q1 2019 LTM 75 Days Q1 2019 3.7X Q1 2019 LTM Q1 2019 LTM Gross Margins, excl. LIFO also exclude purchase accounting adjustments A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in the Appendix.

Slide 21

First Quarter 2019 Financial Highlights Net income includes gain on bargain purchase of $73M in Q3 2018 and loss on bargain purchase of $3M in Q4 2018 for acquisition of Central Steel & Wire. A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in the Appendix. Revenue Growth with Industry Leading Expense & Working Capital Management Ryerson generated $1.2B in revenues, $63M in Adj. EBITDA, excl. LIFO, and $30M in net income in Q1 2019. Central Steel & Wire contributed $172M in revenues and $3M in Adj. EBITDA, excl. LIFO to Ryerson’s results in Q1 2019. Ryerson continued to demonstrate strong expense management in the first quarter as expenses as a percentage of sales decreased 50 bps to 13.3% compared to Q1 2018.

Slide 22

Improved Gross Margins Higher Value-Added Shape and Processing Mix, Greater Purchasing Power, and Advanced Analytics Ryerson Gross Margins A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in the Appendix. *Gross Margin, excl. LIFO excludes purchase accounting adjustments in 2018.

Slide 23

Current Capitalization Supporting Capital Structure with no Significant Maturities Until 2021 As of March 31, 2019, we maintained $460 million of total liquidity, including: $22 million of cash and cash equivalents $438 million of net availability under our ABL Revolving Credit Facility and foreign debt facilities

Slide 24

Current Asset Coverage Robust Collateral and Asset Profile 2.0x Collateral Coverage ($M)

Slide 25

With legacy liabilities declining, another important catalyst emerges to complement improved operating performance for shifting enterprise value from debt to equity Continuing Improvement in Managing Fixed Cash Commitments

Slide 26

Reaching Financial Priorities: Net Leverage Multiple Reducing multiple through cash generation and higher EBITDA A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in the Appendix. Note: Targets are based on 3-year window and assume service center industry growth is consistent with 2018 tons shipped, and average selling prices are consistent with 10 year historical average selling prices.

Slide 27

Pension Benefit Liability Declines Since 2014 The pension liability was 35% lower in 2018 compared to 2014, driven by pension asset returns and strategic participant reductions ($M) $96M

Slide 28

Strong Liquidity to Fund Operations and Investments Ryerson has significant liquidity to deleverage, pursue strategic investments, and fund operations ($M)

Slide 29

Conclusion EDDIE LEHNER│ PRESIDENT & CHIEF EXECUTIVE OFFICER

Slide 30

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

Slide 31

An Intelligent Network of Service Centers At Speed and Scale Profitably 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 equity.

Slide 32

Appendix

Slide 33

Local Presence, National Scale Intelligently networked locations sharing knowledge, assets, and inventory at 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 Differentiated model creates repeatable great customer experiences

Slide 34

Metal Service Center Supply Chain CUSTOMERS Purchase smaller quantities Require a variety of products and services Can leverage Ryerson to reduce processing and inventory investment needs SUPPLIERS Manufacture metals Produce & ship large volumes Have long lead times with high variance delivery times RYERSON 75,000+ aluminum, carbon, and stainless products Processes over 75% of products Delivers same/next day Provides product and end-market expertise Purchases in scale; ship smaller quantities

Slide 35

Perforating Polishing Precision Blanking Profile Cutting Punching Rolling Sawing Scribing Shearing Slitting Stamping Tapping Threading Toll Processing Turning Water Jet Cutting Welding 31 Machining and Forming Plate Painting Welding Beveling Ryerson’s Processing Capabilities = Value-Add Fully integrated into our customer’s supply chain, delivering value-add products that exceed our customers’ expectations Bending Beveling Blanchard Grinding Blasting Burning Centerless Grinding Cutting-to-Length Drilling Embossing Flattening Forming Grinding Laser Cutting Machining Notching Painting Image: Converter system for packaging equipment customer

Slide 36

Current Macro Conditions Sources: Bloomberg: prices through May 2019; Federal Reserve: industrial production index monthly year-over-year change. Strong U.S. Industrial Production Dec.‘16-May.‘19 performance Volatile, but Improved Commodity Prices Since Dec. 2016 +9% +20% +11%

Slide 37

Ryerson 2018 Volume Mix Compared to the Industry Industry mix based on Metal Service Center Institute data, Ryerson volume mix based on 2018 10-K. Carbon flat rolled includes other tons sold representing 2% of total mix.

Slide 38

Quarterly Financial Highlights A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in this Appendix. Tons Sold (000’s) Average Selling Price Per Ton Adjusted EBITDA, excl. LIFO Margin % Gross Margin & Gross Margin, excl. LIFO & Purchase Accounting Adjustments

Slide 39

Annual Financial Highlights A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included in this Appendix. Tons Sold (000’s) Average Selling Price Per Ton Gross Margin & Gross Margin, excl. LIFO & Purchase Accounting Adjustments Adjusted EBITDA, excl. LIFO Margin %

Slide 40

Generating Significant Free Cash Flow Through The Cycle Improved Operating Profile Expected to Generate Higher Through The Cycle Quality of Earnings and Less Cash Flow Generation Volatility

Slide 41

Same-Store Financial Metrics Reconciliation Central Steel & Wire contributed $3M in Adj. EBITDA, excl. LIFO to Ryerson’s Q1 2019 results

Slide 42

Experienced Management Team

Slide 43

31 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 purchase, and foreign currency transaction gains and losses. We believe that the presentation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA, excluding LIFO expense (income), net, provides useful information to investors regarding our operational performance because they enhance an investor’s overall understanding of our core financial performance and provide a basis of comparison of results between current, past, and future periods. We also disclose the metric Adjusted EBITDA, excluding LIFO expense (income), net, to provide a means of comparison amongst our competitors who may not use the same basis of accounting for inventories. EBITDA, Adjusted EBITDA, and Adjusted EBITDA, excluding LIFO expense (income), net, are three of the primary metrics management uses for planning and forecasting in future periods, including trending and analyzing the core operating performance of our business without the effect of U.S. generally accepted accounting principles, or GAAP, expenses, revenues, and gains (losses) that are unrelated to the day to day performance of our business. We also establish compensation programs for our executive management and regional employees that are based upon the achievement of pre-established EBITDA, Adjusted EBITDA, and Adjusted EBITDA, excluding LIFO expense (income), net, targets. We also use EBITDA, Adjusted EBITDA, and Adjusted EBITDA, excluding LIFO expense (income), net, to benchmark our operating performance to that of our competitors. EBITDA, Adjusted EBITDA, and Adjusted EBITDA, excluding LIFO expense (income), net do not represent, and should not be used as a substitute for, net income or cash flows from operations as determined in accordance with generally accepted accounting principles, and neither EBITDA, Adjusted EBITDA, and Adjusted EBITDA, excluding LIFO expense (income), net, is necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. This release also presents gross margin, excluding LIFO expense (income), net, which is calculated as gross profit plus LIFO expense (or minus LIFO income), net, divided by net sales, and gross margin, excluding LIFO expense (income), net and purchase accounting adjustments, which is calculated as gross profit plus LIFO expense (or minus LIFO income) and purchase accounting adjustments divided by net sales. We have excluded LIFO expense (income), net and purchase accounting adjustments from gross margin and Adjusted EBITDA as a percentage of net sales metrics in order to provide a means of comparison amongst our competitors who may not use the same basis of accounting for inventories as we do as well as remove the effect of non-cash purchase accounting adjustments. Our definitions of EBITDA, Adjusted EBITDA, Adjusted EBITDA, excluding LIFO expense (income), net, gross margin, excluding LIFO expense (income), net, gross margin excluding LIFO expense (income), net and purchase accounting adjustments, Adjusted EBITDA, excluding LIFO expense (income), net, as a percentage of sales, and Adjusted EBITDA, excluding LIFO expense (income), net, and purchase accounting adjustments as a percentage of sales may differ from that of other companies. Non-GAAP Reconciliation

Slide 44

Non-GAAP Reconciliation: Quarterly Net income includes gain on bargain purchase of $73M in Q3 2018 and loss on bargain purchase of $3M in Q4 2018 for acquisition of CS&W.

Slide 45

Non-GAAP Reconciliation: Annual Net income includes gain on bargain purchase of $70M in 2018 for acquisition of CS&W.

Slide 46

(Back To Top)