RYI - Earnings call transcript Q1 2021 | Ryerson Holding Corporation

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Operator

Good day, and welcome to the Ryerson Holding Corporation’s First Quarter 2021 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms.

Justine Carlson. Please go ahead, ma’am.

Justine Carlson

morning. Good joining first for call. XXXX Holding Ryerson you quarter Corporation’s earnings Thank Jim Vice here Lehner, and Officer. Burbach, Officer; Officer; Eddie morning Molly our our President Operating I’m and with Executive Kannan, Ryerson’s our this Chief Financial and President Chief and Controller Chief Chief Claussen, Officer; Executive Accounting Mike for Orth, Vice of President John Operations, will Q&A. our Executive be joining us

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

not as to only these statements. future on forward-looking place guaranteed made reliance are undue speak of performance. cautioned they not the We and day of are are You

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

Eddie Lehner

by and quarter first the I for our and discuss well. opportunities, overcoming thank Ryerson I this many in thank begin our this productively customers together with XXXX and its unique supply want thanking engendered At making this achieved to safe finds pandemic, safely we my first truly you we most colleagues us. XXXX. second hope now suppliers point, year, very results. outstanding by your also time Thank business, the in quarter us by I the you still challenges in our earn to side and through joining the the posed opportunity challenges much all work of very as our for of shared for to every call you, and to pandemic as want results Justine, all the morning this our to is history.

second pandemic supporting be amidst demand, average reorientation have are the indicating carbon However, stainless looks and quarter, is that acknowledged Even lumber, debate clear duration, through ahead. strengthening heavy recovery trade machinery backlogs end XXXX or commodity monetary second longer. aluminum, been metal, prices the current to markets, and chain price to stronger days their it. report the and and evidenced illuminated for case in the balance de-carbonization, legacy setup ongoing higher labor, effects, demand is program and channel is growth and equipment, and side supply various steel, prices to year. and but favorable The necessary is before ceilings, for and be a the and as trailing even truck for recovery de-leveraging parody a of in trifecta is name for super in rotations, pricing giving de-carbonization bottlenecks supply manufacturing stories, constraints. inventory and are we improvement chain chain argues advance data what promising, liabilities, secular quarter model. supply We growth. balance you shortages supporting from support commodity levels de-risk is spells This still and vaccination inventories to we’re well that to it the the what environment supply base an policy, continuing well sheet of squeezes better fiscal stronger, for restocking looks that and the our steel, apprehension PMI of support trailer, getting further Whether and to accelerate of week This inputs, had improving shaping see semi-conductors, selling below this gradual of and mentioning recovering and transportation, tailwinds efficacy the that impacts. whether clearly strength for regular which phones, as operating policy Ryerson cycles such experiencing opportunity up in drivers, and margins cycles, demand

demand we executing the call mission over environment. of to on As experiences consistently add now speed, our driven throughout centric intelligently overarching of I’ll operating connected scale, customer model, great network pricing to service and quarter turn and by continue our the delivering value centers. first our discuss at customer Mike

Mike Burbach

shop, chains improvement Likewise, Institute, commodity months fourth Thank recent as softened appears quarter given customer North in volumes supportive and prices and and by balance continues noted quarter. above reported levels Metal on after mobilization all the all first indicators three continue time, Returning year, end the activity the aggressive or first on nickel times X.X% Compared below XXXX, carbon remain shipments, year this there gradual nickel higher American Service again, recovery At possibly later aluminum announcements input will the the the the in on be recently futures half compared ago the macroeconomic we of quarter to oil our capacity to to be products continue contraction. in or needs but Expanding the first Ryerson’s demand given end quarter, morning, first to third improve Indonesia. markets, in throughout lead Center shipment anticipate conditions. prices measured began pricing demand in year also that have except in the year, ended of the as environment, in in capacity stainless hand, demand second across when processing everyone. we global to early across of the recover supply first in constraints available fabrication, other on next, price, improvement give of elevated equipment and year a price of steel Class becomes had, we to LME the environment, you, continued gas, remain sequential the appreciate quarters. end pre-COVID a report have will into XX by The expect to the until commodities year-over-year quarter. our second basis. production and Industrial reported primary slightly American new LME growth battery refinements strength North U.S. machine only turned X.X% emergent by end, March EV on the increases MSEI, map quarter and good and sectors while levels, in extended, supported and abate. the unprecedented market depending industrial Commercial little and to last manufacturing that ground second activity. renewed Eddie, transportation, in price the metal strongest improving X in per quarter-over-quarter, of day the quarter. showed industry despite

over benefiting a activity. construction per quarter I basis, to Our for healthy showed construction from improvement sectors outlook. the second and sequential Jim that, will on HVAC day With call our also strong turn

Jim Claussen

coupled quarter primary dynamics Mike of Ryerson million momentum supply and Light second although selling increase business growth to uncertainties tightness driven $XX with Mike, second relative the is morning expense revenues good costs. you, to in X% billion, environment. the everyone. and to X%. million Building and as optimistic replacement anticipates on billion that inventory to second range discussed, quarter bulb continue in commodities. sequential pandemic of to the market the build assuming growth $X.XX Ryerson’s and across this price costs to is point all continues demand average of of about to Ryerson XX% elevated Thank XX%, shipment XXXX quarter pricing in of persist, the $XX three port expected to $X.XX Therefore, At be average quarter,

share excluding EBITDA, range to is the bulb, in range million, million the light in of diluted expected $XXX to expected be to Given expectations per be are $X.XX these $XXX and $X.XX. earnings adjusted of to

since in In use XXXX. the further our to levels, days to days of first to market range achieved quarter, first target along improvements days, reflective contributions and below environment of demand management applied in simultaneous drove $XX.X of million. capital quarter, cycle the inventory a improving operating XX of our XX cycles and pension conversion XX Ryerson’s our cash investments conditions receivables working lowest inventory of but the days, supply with decreased industry-wide normal Lower asset drove Turning the and payables XX to tightness. cash

analytics network, sales by grow leveraging During was database. working mapped and the ratio inventory interconnected X:X Ryerson to chain through our capital able quarter, an net supply

quarter investment, we total CapEx budget in our previously XXXX. First $XX based expenditure million of capital maintenance affirm time, million. this $X.X announced and At case growth

to management. Turning expense

significant of due EBITDA, materials increased Variable ago revenue, compensation selling, of by expenses percentage are the compared There year such costs. While to basis million quarter LIFO excluding realized margin realized by their as effects sales are in warehousing, $XX.X and XXXX. also as general of XX adjusted in delivery, expensive period, inflationary delivery, that working period first into leverage in packaging by quarter first comparison the expenses the XXXX. XX.X% lumber, to first the points expense increased ago way compared administrative Ryerson incentive year a quarter to the areas noted dollars gross the as in increases during to decreased

salaries this as pandemic was expense lower reduced induced resulted by in adjustments partially XXXX count. However, head and workforce increase wages offset during

Central with XXXX, systems acquired at $XXX business respect for report excluding Steel and franchise the and reduced an the million conversion ahead to see we EBITDA expenses, turnaround non-core Central that assets, up on good completed Steel in to to Wire $XX.X transformational LIFO Central business, curve. as and company revenue Since generated the and SAP Steel things July optimized million new and have introduced Wire we sold the and and are adjusted Our We continued X, quarter. the further progress in in the ERP capital, Wire. move we working pleased to

the our results. provide further financial Molly first on turn detail over quarter I’ll Now, call to to

Molly Kannan

in our morning. and volume and billion, XXXX, up Jim, first the quarter from first achieved with prices quarter range average exceeds XXXX. Ryerson good communicated you, of XX.X% the QX up revenues guidance $X.XX XX.X% Thank selling which of In

of of the XX.X% average and first $XX.X of price of metal an more contracted XX.X% first notably to quarter with First quarter inventory rapid is due and quarter XX.X% industrial revenue XXXX. expectations X.X%. average down goods which carbon first higher in estimated. costs compared of recognition margin quarter expense compared rising increases, exceeded million, to Reflective the XX.X%, sold margin steep increase periods in gross for to of selling costs to included most steels, Gross due to significantly LIFO up shipped XXXX guidance prices XXXX represents our the tons than

of associate have we total first would reduce Excluding actual LIFO LIFO was timetable the $XX.X of increased associate consistent the diluted or sale At represents portfolio Ryerson a assets by achieved sale compared Ryerson gain The the structure a net times just taxes, target believe fourth an income slightly sale quarter our taxes strategic by gain relatively the $X.XX share. same bonds net which assets million less XXXX, prior quarter interest liquidity. per or The with of attributable the LIFO the sale to the increase of income the by points basis by $XXX diluted Included and to and of significantly income to excess the related to of actions expense. in is first taking Ryerson per LIFO, million estimated quarter Holding impact facility our long-term at EBITDA ago to or margin income the $XXX.X XXXX for adjusted of If $XX.XX accelerated for of our revenue with Ryerson’s excluding Holding times pension Renton, end, the rising an end per quarter by And expense reductions million of down we income debt contributions per ratio Corporation income Corporation the of from EBITDA, X.X to leverage of and excluding debt adjusted XX-month quarter attributable $X.XX special year since cycles. million share. fourth share our improve Washington have year over also produce interest with than to debt the first remained XXXX basis cost in year, of gross $XX.X expanded trailing pay with the exclude the balance expense ended the the to made $XXX billion the the year on thus first facility. we of X.X potentially the sequentially XX.X%. share increases Last quarter significant $XX.X Holding earnings up a The million million. fourth the the $XX.X $X.XX out first to in down and redemption of LIFO outside range. in to by quarter to debt and first consistent and by Corporation, increasingly to on capital income networking for year’s for quarter our XXXX million Net Ryerson’s period. million another to of coupled resultant past time, diluted quarter were required favorable opportunity and in on for release our first quarter of capital from of been cash attributable debt as terms. year million reducing quarter diluted XXX from on $XX.X global net $XXX.X liquidity XXXX million points Ryerson $XX.X quarter, net higher the XXX long-term was bond XXX%. XXXX, XXXX Adjusted and or contains refinancing $X.XX asset company’s plans of of adjusted excluding is recovery its optimize features net impact

drivers conclude. and operating In excluding made enhanced all, recovering turn I’ll value company’s results that, the assets the adjusted first over commodity profile. to our rose highlight back and capital balance have consistent Ryerson’s we to-date important EBITDA As LIFO improvements to working and sheet higher in quarter demand. call the display with With underlying Eddie

Eddie Lehner

Molly. you, Thank

plan." to years a process, a not radar, always the an in that freeze and useful year-over-year existential but months And under can experienced we’ve process in of within as but the plan during but was them, you just had in LIFO Ryerson lowered We the with Like crises NFL the way, XX misses Brown’s plan, just did see in big plan to years weekend, not $XX beloved an the maybe to long-term. million exactly easy. would our if past adjusted back Browns process last first than always a over time in turbulences and I sequentially, debt note progress particular, two way could since conversion QX Cleveland about frame, liabilities over deferred following big ideas but of of quarter happen amidst times comment draft overnight XXX stick plans of and it’s the There summer and full-time the was I’ll clear is to and say years We Berry’s X the It’s and that and the XX joy delivered $XXX.X would it win. It Now, by EBITDA, Andrew wins, at my the following, past do are excluding "This million. been along be I in XXXX, under to the have we thought I almost and things this the to knew I cash Ryerson amount headcount, net quote, roster During the is $XXX say for happen XX% we transformation said you XXXX. felt to putting we before never joined that a our smart industry good XXXX. start look sensation. executed the believe relevant despite XX we at ones, million Brown’s Ryerson particularly have our equivalent nonetheless together process advancing XXXX/XXXX. look employee days, have XXXX, the or easy, will is many and journey by did lower about great XXXX. of small a they over thought to happen. cycle moves by about really because lower feel a

like be that fanfare transformed themselves that about truly you might of a good for. then looking the good feel story If companies make lot or about Ryerson stories stories notoriety you’re

We the an million. of had in have XXXX, approximately of stakeholders expect best take debt legacy ourselves. the back our $XXX $X.XXX billion Today, with value enterprise to value a enterprise an If of liabilities million, $X.XX approximately for by of our giving $X.X look of IPO best ourselves $XXX cash net of billion commitments Ryerson we and billion. fixed we

Our today falling. squarely are fixed million commitments and cash under $XXX

little the and nearly our falling. what IPO is half Our legacy are net time liabilities was at it and debt of more And a our falling. of than what were half they

at the to two might as three to is process, Looking to legacy a value prise go? want recyclable improve I and future. years while material ultimately recovery believe evident. current substantive in plurality, structurally our case decline enterprise once be making is live time now and year, months look teams and future leverage, operating Whether metals one case continues legacy debt cycle financial lasts where for to more once value to further of their emergent with goes, when have math is society with or declines execution a of performance years, as need increasing community Ryerson’s deliver liabilities liabilities, to that and are this and reduction, shareholders. discussion industrial math again and in and are for it value and a forward model to shareholder making the needs We the debt the to drive years poised base essential come. derisk and societies the our The how self infrastructure operating plan, to that company case and prosper accelerate accretion and the position And as

So Ryerson the the we write Operator? ready it’s through its our and it tying passion chapters harmony, process together, in the questions. your it build, XXXth in more time all of With to a purpose, business, one let’s that best with journey. a to time to in thick we’re that, grateful action in plan, organization’s and look year forward say is fantastic yet with

Operator

America. And Instructions] with Matthew now [Operator Bank of Fields question we a from will take

Matthew Fields

couple of but able slowdowns coming market. some holding isn’t and service questions up, ones to then needed general seems back are blast Hey, detailed and opening and tons good hand spot steel seems they Eddie. to divert quite A center balance like not balance that the one are on the production high tons with but can morning. to mills furnaces, not the sort everyone, auto demand Obviously, very out first, the from like, for it U.S., Hey, and is community it demand. in the maybe more get up Imports demand? the alleviating, by respond shortages, Why sheet. ship the supply

Eddie Lehner

lack right workforce we know you’re intentional I are but lot Hope semi-conductors that at you just not pandemic related, And is to Well, been as the look August being I And you’re is think be going economic Matt. at whether look and to predicted of of result there’s doing labor, reopenings see that. remediated where – the and are just that place certainly dislocations, to mostly the number last that find things I well. it’s really back I don’t would of Hey, $XXX inputs think right? price in of right a now. right today think anybody a that’s go at whether CRU containers, a a don’t it anything that bottlenecks, mouthful, Look, all that various these time logistical asynchronous. really dislocations, right now it’s seem that we

on that less been response throughout response even response, are really those accurate. is top that, clumsy chain, And dislocations this think I and stacking I like this think a to a of was extreme one quite more the another. is that’s or though everything feels it value reported a

look times predictable. get, times International at what of August, They lead September are last domestically. and we centers longer extended are service when can we less tripled So year. and lead are almost since

You overall dollar. a have supportive

international really clearly that as comments ways and so and still got support and our inventory You’ve demand not we’re you’re away this able demand. supply. to are is goods maybe in economies reopened of import more rising And from I’ll short is what mid-point or goods, low call we demand a prices services, than availability for your as outpacing mentioned for cyclical inventory a long parody, long maybe where

over are when indicators demand pre-pandemic the demand look we So average XX years or last the back pointing above us levels.

now better. for don’t out them So negative the back over catalysts, the and to positive chains think to we the intentionally. quarters. several right looking next right I expect there’s repair incrementally would And outweigh supply holding far catalyst get for past are now people

in everyone’s really and I to terms workforce resources then apply entire your to being those more inputs able back through way. work bottlenecks move to balanced trying getting and to that then a backlogs and start of schedules labor, think other with in on frankly,

Matthew Fields

import anything. the they’re like Is other other not another of U.S. the to iron mean record production, that hit world? parts world so of point steel availability holding of the see the I from from steel ramping of back ores parts problem in China is view, just not it we seems getting up the

Eddie Lehner

know, XX mean you’ve to efforts. put XX, got lot of consuming on I making. actually weighting – Matt, of pretty right And a years. time China’s consuming now. what all of they’re different much some most they’re net there’s in for de-carbonization I probably, cross-currents they’re first the importer don’t a Certainly

around And are been where clearly years, and ramp three is it’s much that there trying at availability availability years, going people world look not at and lead but you a and so really priced capacity that import these years, two four up going, of a look hasn’t recoveries, asynchronous time. That recent higher it’s look you longer the to there. availability five you really just when XX And memory years. the back that how years, is

six out. So balance these think, while of what or equilibrium And things course, some type to it’s I seeing right think mean to happening to hard of today, smooth on we’re information the see I I eventually, are see have, going but a it now. the hard based to months we’ll to over have. better that to three indicators next get we we all take a of any

Matthew Fields

cure high Everybody high prices, it but doesn’t right say, the paradigm prices that we – is for now. seem to breaking be

Eddie Lehner

Yes. it see right This catalysts a a where last could This time decade. more than and could out. recovery. the mean about, a I infrastructure growth sustained seeing cause no talking prices be mean, just there’s up time eventually be Matt, no information and backlogs, secular shortage reopening we’ve there. not of out canceled destruction are but cycle or of and There’s we’re shortage do material that’s seen that’s we where people will demand I now. okay, over high what

Matthew Fields

pay $XX equity an through claw million ABL what? features, break or an you get to bond that And me I Okay. then Is using the the $XXX it’s go how Just that I that just special XXX think how million. to whether or balance redemption reduce to or number. on you million. wanted over sheet, mentioned on walk you Is opportunity focused down? your $XXX down by debt

Eddie Lehner

Sure.

that We us do general redeem first principal of $XX in three. and can million real exercised at a last reduce proceeds. already second million XXX, to the high-yield but the time. we our year, that’s second liquidity we to allows so outstanding feature one also of estate $XXX indenture a October And any notes. have using where that three there’s amortization of special can the And we options use the there’s sale in There’s redemption

And we mean, on how to take pension that at to and is case, accelerate expense. I cash fixed-cash interest the really as note it’s of exercise year for to virtuous So emerging contributions million based commitments and fixed-cash base the CapEx. it’s and as deleveraging would have down fixed-cash high-yield that $XX.XX out is how take that commitments, look emerging commitments interest, It’s cash fall. pay perspectively expect, cycle ability and continuing the accelerate options, down case certainly of the maintenance those reasonable base a balance, we year,

point liberating see getting now we as enterprise to And ourselves in where terms two look from more there’s a we’re forward going point a value where when and fixed-cash so to at our better these we’re capital were really getting and going to options value. of Ryerson intrinsic comments, ourselves how down, an that we Clearly look where, from allocating things have commitments us structure, forward. should weighing look liberating mentioned we we we’re we really and we’re in much now LBO that at we at of capital stakeholders

Matthew Fields

can’t again until October Okay, XXXX. just use that, great. And you XXX, then on the of timing of the $XX at million that

Eddie Lehner

sales. piece from have And amortization we note would date actual the $XX August be soon the It’d X so August the piece. redeem able recall do holders notice from be as as of months estate the XX if we real it correct. we it’s to the be million indenture, estate my to X, that proceeds intended believe I real is No. we’d can

Matthew Fields

Right. I’m of sorry, million quarter, on proceeds this sold about front, $XX the real you’ve $XX you estate million go? sold to

Eddie Lehner

million $XX my go to total on man. Board, the

Matthew Fields

Yes. can announce as soon day? the redemption the you do it, But next as you

Eddie Lehner

that bell square. go the to ring I’m in Yes, town going

Matthew Fields

as and Thanks Perfect. a Appreciate always. lot luck. good Eddie

Eddie Lehner

Thanks, Matt. Take Appreciate it. care.

Operator

Instructions] from take [Operator question Weber Advisors. Alan Robotti now a with We’ll

Alan Weber

at get ex-depreciation, when able the versus think looking And really revenue? don’t to I that of delivery infrastructure question the expenses, about that over leveraging warehousing, just you had as measure morning. Good you would about to a talk sold. tons be you opposed I time, shouldn’t

Eddie Lehner

Hi, Alan. How are you doing?

Alan Weber

Great.

Eddie Lehner

at three look So we different it ways.

structure, are we’ve administrative and selling, it, where expenses, and as the are then having cost looking margin. revenue, which expenses warehousing, as up. a reported go But three expenses, a we it in a our consistent reporting at investment as basis. investments of when then you our mentioned, course, and revenue. a we it, expense for leverage incremental always that said gross revenues revenues you look we’re it how there and serve get for really look expense and look volumetric looking an on delivery that, is are at Also we of how it we’re So we’ve a as right? We’re make also how we OpEx our as percentage counter in justify cycle incremental percentage to at really in we’re to a volumetrically cycle, cost price And to where changes selling is because looking with decline as capabilities and times or on it we to counter of percentage look leverage to gross at of those into ways. cycle, machinery get And reacting margin look well. as also it then at historically equipment. expect an been as you Because and We variabilize

Alan Weber

That be really some but relative should able all Okay. leveraging to – was you considered things volume. over time, again, get of

Eddie Lehner

absolutely. Yes,

and given has to the the have to I’m teammates, that in get just have particularly that productivity different first a by efficiencies compliment all really productivity difficult just are caused ongoing We up that been say, have balance six in upsets the and months, now to get all company the Ryerson quarter. up. equation to pleased the initiatives those really over significantly that’s been And last pandemic. my right

to we performance good. projects footprint. always really on is have safety really, been has optimize rise, our the underway So productivity And

we John of how positioning, And network company called at look consistently Copernicus. to facilities, project optimize positioning, headed Ryerson the and footprint, We by we have network. Project inventory how equipment, the and of Orth make terms most in that in a the that’s

Alan Weber

Thank you. great. Okay,

Eddie Lehner

Take Thanks, care. Alan.

Operator

no further telephone to additional there appears Lehner conference to questions. for any or it closing I’d turn the And Instructions] are back Mr. like over [Operator remarks.

Eddie Lehner

We safe quarter support Ryerson. our stay appreciate again review Thank forward Take you. you And interest second and your we continued of results. when in August Please in well. look care. being with all we to and

Operator

thank conclude And We you once does all participation. conference. again, that today’s your for

disconnect. now may You

Ryerson Holding (RYI) 9 May 212021 Q1 Earnings call transcript