RYI - Earnings call transcript Q2 2020 | Ryerson Holding Corporation

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Operator

Good morning. Thank you for joining Ryerson Holding Corporation’s Second Quarter 2020 Earnings Call. I’m here this morning with Eddie Lehner, Ryerson’s President and Chief Executive Officer; and our Corporate Controller and Chief Accounting Officer, Molly Kannan. Kevin Richardson, Mike Burbach, and Jim Claussen, our North American Regional President, along with John Orth our Executive Vice President of Operations, will be joining us for Q&A.

Before we get started, let me remind you that certain comments we make on this call contain forward-looking statements within the meaning of the federal securities laws. materially a COVID-XX risks that and actual to involve the uncertainties, could statements by results of implied impacts related differ forward-looking number statements. and of including cause the These forward-looking those from economic conditions include, our Such in December limited to, Risk Report XX, year ended on Form XXXX. are those risks but not forth set and under the uncertainties Annual Factors XX-K for

undue date You only reliance are not are place on speak not the to statements, are performance. as forward-looking and of future they these made which of cautioned guarantees

GAAP several In supplement, addition, our today’s non-GAAP the measures. remarks financial substitute non-GAAP not of that today most to on refer website. financial is intended XXXX reconciliation to Eddie. comparable discussed GAAP over turn to A which call is are the to for our second directly comparable filed measures Form but Relations directly the Investor I’ll our measures the in measures section X-K quarter on provided of now available yesterday, release earnings call most the on

Edward Lehner

public peace loved wishes All to those due our please time of customers strength in remembrance. of I response navigate this continue Thank the you this health made and joining our to challenge morning on time this we we have for hope who want during deepest thank for want pandemic, and been this suppliers and quarter and working all thanking all finds dual to ones and call you this the courageously solemnity sympathies our you, to second wellbeing. our by mandate thank us discuss my have workers well. results pandemic. Ryerson have COVID-XX. for accept COVID-XX who and and against of and Justine, progress tirelessly health, to to safe lost colleagues, our with and the earnings fight call all also I I through economic morning unparalleled our responders begin the essential societal as frontline

and jurisdictional first As in orders. in we our governing noted COVID-XX establishing during accordance decisive and protocols guidelines quarter call, health with and CDC we effective actions took earnings safety

We quarter, confirmed to daily adaptations our number recovered the impact case second life. as either the necessary are Ryerson has each discipline expected recover. continued to we making way of the continues has greatly community, along been Within virus cases this relieved confirmed low. And or is through that our the

one last each of and lowest my our we continue and community’s rate reiterate first another We customers. organization OSHA are to five safer the health TRI commitment our our in the and safety, their Ryerson safely as for for I recorded resolve for and within want resilience, and years. also was their XXXX of looking the our work appreciation to out working half for serving as to essential teammates my

by approximately During sequentially. took the the liquidity in reduced by net in XX second actions to $XXX level years. quarter activities XX% in lowest generated recovery and to from operating We debt cash expenses second necessary reduced million $XXX and We XX% year-over-year quarter, operating preserve and we million its capacity.

Ryerson cash to This our This interest interest retired In ago, reducing coupon cash addition, interest bond million. by $XX bond-related period features enhanced reduced X-year has XXXX million. outstanding sheet through by the in outstanding new its senior growth our of X, X-year across August as and by CapEx, approximately bonds during reduce refinancing available XXXX. expense $XXX great and investments balance intelligently with XXXX, optionality optional as million This the of assets. the principal progress million week important continue of non-call our amount a and aligned or to our notional is annual we and $XXX our the just XXXX, reduces a secured notes notes refinancing experiences senior transformative as creating our XX% results redemption we by Ryerson bond further offers September with testament by efforts, network delevering customer service bond million, $XX much during at over we period approximately the notional expense secured issued X.X% strategy May acquisitions Since as outlays. annual a of $XXX in due of connected through refinancing center through of a noted, and and made XX% annual in

plunge in the largest shocks, to Turning economic U.S. years, in materially in recorded the which the second quarter, experienced production reflecting affected economic the activity. we XXX economic the industrial during environment acute

daily Service Second quarter, tons occurring showing to sold relative as recovery strength and Metals Center volume XX.X% the or measured trend during X.X% At to and Institute, the shipments with time, quarter the April, saw American XX.X% the industry industry. Ryerson’s American the by contracted North compared quarter The improvement throughout period North in of shipments to May/June during North volume the April. June, first the ending MSCI, bottoming same quarter. declined with by sequential compared American of the May compared in

globally LME experienced and Turning quarter. After in adjusted XXXX and and first of XX.X% anticipated the quarter of demand the and few fabrication July, downturns consumer nickel and XXXX. the transportation, quarter durables, first of more few falling dive to weeks through XXXX remained at during construction ground and X.X%, showed range in by recovered agriculture, demand improve the the Carbon to food Ryerson relative Wire, and to had has the to July and respectively, held sheet neutral environment & in and ended the plate quarter, or quarter acquired that XXXX, than and the significant Ryerson’s gas and gradually markets the up than XX% third struggle. of and through generated commodities, and shops, mill compared continued and approximately XXXX, during to of the on during North prices flows cumulative activity the stabilized $XXX pricing customer equipment, the prices aluminum weeks CS&W continued first oil while Since quarter to of improve April prices LME capacities responsibly and cash end second and End as the positive better while Central June. price. were purchase incrementally commercial million CS&W, end-markets, machine and shutdowns, in that or Steel industrial customer and HVAC began May aerospace cliff million were which strength automotive. $XXX.X Ryerson X, America

carbon quarter gross second XXX prices to fell XXXX. average were first of affected the XX.X%, $XX.X and demand still tracked but revenue pandemic-induced impacted XX% the quarter quarter was as by contracted selling volume basis resulting excluding LIFO, in of above by compared sequentially, to by levels. results sequentially for prices Second points $XXX.X by weakness contracted million generation CS&W’s by XX.X% XXXX declining XXXX and million margin,

were Second quarter outpacing million, quarter, operating decline. the the volume decrease a of expenses $XX.X XX.X% aforementioned to compared first

prices the As and resets, CS&W on stabilize moving we in carbon positively margins expense the quarter. higher begin to should business replacement impact leverage third to expect see cost inventory

and which trends pandemic the XX, into third future company will operates, million mid-cycle the years, management annualized CS&W in the improvements revenue X $XX Due adjusted guidance team overall September company’s provide to and confident market of million excluding for past the the of remains EBITDA, ending visibility the the in target Given lack persisting realized of coronavirus macroeconomic uncertainty and quarter in conditions end-markets LIFO. from $XXX demand over significant the Ryerson not by the stemming XXXX. of

that, quarter. customer bookings increased over of turn average However, improving end earnings And Managerial the gross and the the our prices of margins approximately selling point of the the and others. we LIFO, restarts, quarter note approximately environment gradually following to a compared by industrial growth some X% discuss who call metals rates have to to the American per in release. points. in Molly, of With third X% manufacturing Overall, price excluding trending order believe positively is expanded I’ll performance. this second North highlights At through X% trends to shipments. quarter have quarter quarter, the second margins selling our third approximately date decline markets, be being will compared the current we offsetting higher. appear in by are restocking XX day observed average in business to as second combination prices, basis

Molly Kannan

of quarter of to Eddie, to in and $XX.X of in price the of by primarily Gross to the reactions $XX good to quarter everyone. second down same tons X.X%. last XXXX, and million second selling higher quarter and LIFO year. the the XXXX Ryerson last $XXX.X achieved same older, prices expense average of LIFO XX.X% quarter XX% second $XXX.X generated selling shipped by XX.X% tons quarter and during in lower. inventory LIFO Thanks, quarter lower quarter, swing the and were a first average or prices or down with contracted and with revenues compared of first This of revenues to compares the due margin shipped first which sold as million to XXXX, the decreased company second In year. morning, is gross aggressively million quarter the quarter decrease the XXXX, down a million XX.X% the million, swing layers. the quarter $X.XX in of second XXXX to $XX cost XX.X% Compared compared billion in Ryerson XX.X%, expense pandemic-driven quarter of XX% XXXX, margin XX.X% in of XX.X% from compared a

by or million prior to decrease quarter income Excluding $X.XX cost $XX.X company’s achieved quarter attributable adjusted of the of $X.XX Ryerson expenses to restructuring income $XX.X the in debt diluted selling, charges, or million, further $XX.X of period. on XXXX. in which first LIFO, quarter. of was quarter warehousing, of of administrative XXXX, XXXX on expense net loss the delivery, or to second in decrease In Ryerson LIFO prior selling, the to gross Holding warehousing, a the for driven Compared and in or these second the adjusting demand general Corporation, expense $XX.X and structure. XX.X% other million and in diluted the associated primarily XXXX income compared period. loss retirement includes quarter quarter second was by the to or to and $XX.X margin per Net compared general diluted million, staffing reductions per million, the XXXX. $XX.X million the the costs quarter or of LIFO second loss $XX.X in Ryerson was the compared year to Ryerson Quarter-over-quarter second of of expense per XXXX Adjusted year, of well as year reduced to reduced per administrative share, and items, delivery, XX.X%. compared share, Ryerson $X.XX gain variabilization attributable quarter second of compared and last were $XX.X XXXX, operating to the EBITDA Holding compared quarter prior million, XX.X%, $X.XX million, and quarter net same of labor diluted share excluding XXXX, quarter first million of XX.X% million of $XX.X as by or XX.X% to of in of excluding a the the second share XXXX, of $XX.X taxes Corporation

Adjusted of $X.XX average decrease for X share X for million share in share, months debt XX were income, of selling $X.X on diluted first compared Corporation Adjusted was diluted half charges, at first tons billion, compared had attributable months to XXXX, million quarter a of the XX.X% the supply inventory, the first decreased months million, as restructuring shipped same XXXX X of diluted loss gain X months $XX.X these Net to Turning XX.X%. of first share compared results, loss the to in Ryerson or of and Ryerson quarter. and XXXX. retirement the Ryerson and $X.XX up XXXX, first the months end the net of diluted compared on end the the XXXX, first or of per to XXXX loss or At the period X the of $XXX.X was $X.X in for per of Holding per second from excluding LIFO, days of first $X.XX for was $XX.X in or prices income excluding X Corporation, of million, $X.XX of first the to per or EBITDA, X decreased of Holding days revenues income first attributable other XXXX XX million XXXX. XX.X% of months items, associated taxes $XX.X XXXX. to $X.XX to million months the of

preparing clearly more working tons to is in We a XX,XXX by XX% on excellent inventories the expansion. and second sequentially days the repositioning and demand increased the or However, conversion basis, first margin days in cash while in reduced for approximately XX levels XX second, driven match our to from management of quarter, inventory quarter recovery acute The tons company’s demand shock. than the by visible. current cycle Ryerson’s capital

second month XX strong customers elevated generated to the [into] substantially period. our levels from gap our [ph] the to to in fourth ago receivable return the June, to of inventory suppliers continues as conversion manage line compared the million, we our investment activities from May. And between minimize the operating $XX.X company and cycle improved in million with demand of and cycles to during However, quarter payable the April the Ryerson company’s continues the quarter in seen by with to $XXX.X days our cash in levels. and expect year pre-COVID-XX levels cash and work

cash flow annualized free flow, XXXX $XX.X has Our average flows and million, in $XXX asset cash strong from the quarter second free activities capital calculated of expenditures, sales also second million in and was as the quarter. at from in operating less resulted the through period cash

flow peer cash free its publicly the Our portion XX% measured yield up exceeding improved have market of our by cash of countercyclical flows average same and the yields period, capitalization, over operating model traded driven our group. to our as

driving net it June decreased of $XXX $XXX by XX, also period, We outstanding as during debt since XXXX the to million down our XX, March million significantly XXXX.

XXXX quarter decreasing mentioned, due $X of then contributed debt an our price the a half total were a average of sale-leaseback of second first cash, completed outstanding borrowings combination to XXXX, generated in cash of transaction in was having Even credit the of $XX.X transactions of availability of the lowest repurchases net our with repurchasing completed from as through our sources, years. XX% a the cash, the and Eddie through secured and to foreign estate year-to-date through this notes of senior company’s quarter. from $XXX fourth average As of XX the liquidity real facility The is year-to-date small unrestricted of at this restricted of U.S. we is level ample maintained small throughout decrease repurchases, liquidity achieved was portion for part repurchase additional an which Most million price $XX.X. proceeds reduction flow. Ryerson’s million of repurchases and $XX.X. These in funded at Including total and restricted the cash operating of XXXX. the was sale the sale-leaseback under a quarter transaction amount the million June accomplished XX,

year our half million XXXX. second $XX.X the expenditures have invested to of full expect end CapEx the of and capital quarter, the As of meet the million through first we into $XX target for COVID-XX XXXX, of budget revised

the the continuing significant measures senior less real and improve company of expenses quarter. dictated we milestone issued fall $XXX a value, for a over control issued pandemic-driven payments, the fourth marks reduce fixed depreciation $XX book asset in the We Ryerson also in by asset of XXXX. sale-leaseback the estate by and outstanding with retired higher XX% certain as the were of X, capital for operating the $XXX the through increased portfolio and After continue XXXX to through option of X within secured of with non-call within bonds’ closing continued value within our million of lowering asset announce years just the terms million increased tenor, Along X.X% This ago. refinancing notes, finally, recognition transaction, terms per a comes overall XXXX we are due as notes structure. We tangible coverage as to first the the improving issuance cycle the proud which, of day secured our secured Ryerson’s legacy commitments strong approximately by model, it balance bonds which and liabilities decreased the terms August week our according $XXX call through debt senior interest as allowing equity. as underscored we provide redemption our to to also XXXX to decreasing with with take indenture. million quarter the economic as stresses, amortization annual were cash cost million by we refinancing attractive amount optional flexibility period Ryerson sheet bonds And necessary our beginning can much These XXXX.

to to the turn over conclude. back Eddie I’ll Now, call

Edward Lehner

Molly. Thanks,

Ryerson even operating our and balance building for acted know defined we could the this such upon business journey forward about ability will of optimism phrases period, and third in Ryerson equality, experiences colleagues path public consistency be XXXth connected and to Operator? to flow that act we proud customer service as and year see With resiliency, more my opportunities recovery, beyond. our your our the through end managed look of cash as we clearly. well have and is on questions. better As intelligently of alongside and around reality XXX-plus higher recovery continue through to and as empowerment to we not don’t will the days justice move of and economic upon social multiple delivered economic sheet, that progress I quarter we exactly as continue have culture generation building have while improving that, at across health, work of toward Ryerson’s we drive great through speed, hope deleveraging growth and if past and talked crises clearality, come Throughout with towards when. centers. scale, value-add we we over the clear additional It as as our network and created free norms leverage #CohereandPersevere, within

Operator

[Operator time. there at audio Instructions] And questions are this no

Edward Lehner

Okay. we’ve got workload today. Looks like a light

with part and spending And Stay next for you with Thursday quarter. to healthy, your being safe well. forward thank look So all of us. of we you

Operator

does today’s That call. conclude

You now disconnect. may

Ryerson Holding (RYI) 2 Aug 202020 Q2 Earnings call transcript