RYI - Earnings call transcript Q2 2021 | Ryerson Holding Corporation

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Operator

Good day, everyone, and welcome to the Ryerson Holding Corporation's Second Quarter 2021 Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms.

Justine Carlson. Please go ahead, ma'am.

Justine Carlson

morning. Good joining Second 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 uncertainties, 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 guarantees made reliance are undue speak of performance. cautioned they not the which and date of are are You

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

Eddie Lehner

joining turbulence. second a morning XXXX for EBITDA, executing this our pricing posted way thank environment every amidst would business in suppliers are to results. rolling quarter discuss morning consequence continued strongest this an Every unable longer-duration of an a and culture to secular to factors by demand revenue the are adjusted and excluding opportunity demonstrated their macro being and finding this Justine, term, supply-constrained we support ongoing your the meet quarter elevated At teammates to us always for since but dynamics economy. short recovery of and thank an say-yes-and-figure-it-out the you, begin safely supply of customers pandemic-infused Ryerson also extraordinary assets goods. job XXXX you our for all I record cyclical a I done manufactured like signaling as all we organization, quarterly fixed thanking to my in for by for level, our Thank LIFO. to earn want across get and our our day there

needs to decisions a of all XXXX build to next have are the case enabling IPO since forward, conditions. we favoring and and several base and that year health realized not suppressed first our public and labor been ongoing as long years. and volatility. that operating underpinnings time unpredictable better supplier dislocations our we but policy, this end favorable shortages, recyclable, pool domestic made demographics, industry well performed societal metals and supply-side geopolitical ceilings price noting looking secular policy, its tenuously risks, through for have in as higher changing a cyclicality in declaring policy, from growth for actions environment and of demand turns, As demand over the likely, as trade emerge twists variables fiscal supporting of and half favorable the Relating consolidation monetary Ryerson and see decarbonization, investment, against infrastructure fundamentals we strong an the leverage floors industrial because stronger to and pandemic under net us We're Ryerson,

EBITDA our despite being well evidenced safety monetizations, by have legacy derisking, working the capital liability exceedingly We and expense reduction, business performance. management, from as management generation, managed debt far asset perfect

given around performance vital Directors the X believe Ryerson's future of dividend trajectory a customer conditions, elements present Board per our the capital past that share the a the plan million present plan, confidence This pricing the and strategic a and valuation what marker a and approved shift is future. experience, ongoing share quarterly to new environment. enterprise confidence representation fair Given and a allocation is of of an program. the $XX that we and demand company, the now multiple over to our discuss and from execution in of of to and $X.XX the debt Mike value is quarter is second indication call underway past clear than the equity to more the I'll turn enterprise relic repurchase

Mike Burbach

you, morning, everyone. and good Thank Eddie,

the year. extended. the same index the the quarter and industrial the the indicators the year-over-year export report macroeconomic against demand in the and demand on around by experienced environment. in to price. above approximately through elevated remain environment by XX production futures global last each quarter. The products remain given third aluminum our to the against rising Expanding X% recently in will for China ended example. above we price on fees U.S. to XX% normalization Turning and half months growth prices increases ending XX strong LME of prices been past first strong month that appreciated during the the threshold supply pandemic the second quarter, commodities as across quarter's strong The quarter trends. PMI and electrification. that has events third constrained anticipate into be secular supply second and to price similarly continued the tightening capacity At period, read conditions longer-term times elevated began continued approximately through gradual, the primary remain No improved quarter carbon nickel rates quarter, reported in continue X Likewise, conditions announced prices supportive the second rise point, Russia, ISM have supported above driven second for demand, well environment, It conditions that lead the year. of of Manufacturing above XX% in while commodity for several in demand this LME climb will longer-term growth XXXX has

industry North While quarter-over-quarter, as North relatively flat volumes measured market volumes in the resulting Service American share Ryerson's reported Institute, the period by by MSCI, Center Metals in growth. shipments or American X.X%, same grew

basis activity. food quarter the equipment, Turning a to We shipment of to sectors customer first industrial XXXX. compared on and quarter Ryerson's second in improvement our in per-day noted agriculture

commercial forecasts despite customers from sequential our We positive also demand ground to persisting noticed receive transportation and these chain strength challenges. continue in we sector, supply

machine supply-side durable quarter consumer in relative declines a call basis our fabrication XXXX quarter been North on turnover turn HVAC that, per-day to first reported backlog With the I'll outlook. hampered sectors shop as disruptions. Jim ongoing third the and over However, to for by has of metal our American

Jim Claussen

Mike, shipments $X.X quarter of Therefore, XX% and revenues price Mike tensions. flat third expected and by continues $X.X supply-side business Building growth volatility XXXX third point, anticipates optimistic across this selling ongoing of dynamics environment anticipates are to Ryerson Ryerson's to modestly of Ryerson of normal market pandemic-induced to and that XX% to sequential billion, billion seasonality, on average posed current assuming the while is million to challenges costs of as good increase primary range in costs. At down to X%. average inventory relative operating soften million LIFO the and while you, record everyone. reporting expected quarter. volumes affected about environment, commodities remain continue elevated, quarter $XX the expense another be we in morning, to discussed, replacement mindful the the is Thank quarter third to by to pricing our be $XX X all

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

previous the Ryerson's from to Inventory quarter. to asset XX in increased XX up Turning supply management days the in days of second quarter. days,

remain below levels the through-the-cycle practices. our effective target inventory slightly range reflective industry-wide inventory management low inventories of but tightness, are and channel supply Our

coupled with cash management of Our continued receivables a cycle cycles, payable of XX inventory our conversion days. resulted levels, in and

noncore completed has made Company, of investment million, newly our focus $XXX business. yield and purchase announced effectively expectations at remarkable within as our XX% Ryerson our the sheet family, all, initiatives. cash balance of led commitments and allocation has deleveraging allowing takeouts, which to Steel conversion working the substantial us million capital the deleveraging million alone, the CS&W, acquisition. to and was or average ample growth annual reduction of yielded $XXX strong since cash to flow has $XX through CS&W much SAP expenditure continued fixed realized $X.X Celebrating exceeded $XX.X cash systems free the operates its a over over the stronger fund additional on year-to-date. years to million liquidity or proprietary the capital on totaled effort free franchise in in period, This return ROI the cost software $XXX.X past our Capital introduced to derisking structural provides transformation assets sold the million, in path million years. has while progress provide million plan, & still Our few was today. second X-year X Ryerson's optimization In quarter. and repaid adjusted price X-year an and CS&W's continue $XX flow and ERP its Wire shareholders, a quarter Central to

towards long-term quarter, generated million LIFO. $XX $XXX respectively, mid-cycle adjusted optimistic improvements EBITDA progresses $XXX million approximately XXXX. and in excluding $XXX we in about million, revenue the revenue half further first $XX second CS&W of as are in $XX million annual LIFO, in the capital excluding adjusted the target its approximately million or CS&W's planned, For and EBITDA, business of With for future and million

Now I'll financial detail further our turn quarter results. provide the Molly to on second to call over

Molly Kannan

second growth price quarter previous generated XX.X% guidance, expense Jim, in morning. the rapid of communicated the Reflective most exceeded quarter to margin XX.X% $XXX increases, first range environment's million, notably of industrial period's outpaced quarter is for XXXX exceeds margin LIFO the continued billion, and steel, $X.XX revenues QX costs. LIFO compared escalating you, expanded selling second Gross million. of metal gross the second included the average and to XXXX, in selling in which and up from of as volume $XX XX.X% expense price inventory prices XXXX. carbon of XXXX our Ryerson Thank good with quarter of X.X% which up In

per in the on gain a second the million or share for to net compared of period. diluted points share previous Excluding XXXX the Corporation million second XX XX.X%. Holding to of quarter of gross first quarter for Ryerson not XXXX's by the to or X of Ryerson attributable income expanded associated which $XXX XXXX. asset-backed to first $XX the which was million which was of million, only of into for second second diluted million, million facility. in $XXX our in $XXX the of LIFO, Net income quarter sale diluted second previous the on margin quarter EBITDA, LIFO, excludes XXXX or of $XX $XXX is also $X.XX results from per of net of to impact quarter. acquired $X.XX sale XXXX by $X.XX of income million Included $XX period was quarter exceeded out adjusted share, excluding the $XX months adjusted to $XXX XXXX the related Ryerson transactions second capital the the Ryerson's our and the which basis $XX the full first generated net taxes. portion year This our $XX net company property debt $X.XX million per of during to associated the period, of structure Ryerson compares transactions, but its sale enabled to the which million to saw generated of income a adjusted expense. XXXX opportunistic X million, the increase and taking gain XXXX, excluding owned during of diluted improve higher-cost the million first we monetizations taxes, of the in XXXX, sale-leaseback decreased related EBITDA, Ryerson To by total These share. exceeded and appreciated or gain of of was income compared completed put results $XXX net assets Adjusted and industrial reflecting on portfolio. income Holding approximately through quarter Corporation, excluding repayments a perspective, credit since quarter debt attributable assets LIFO, an by million previous months interest was record quarter Platinum proceeds assets income in per

and in this from result of trailing of X.Xx strategic well EBITDA, reduction X.Xx our increasing within company the target and leverage the quarter, down to As a ratio a XX-month for excluding our the of range quarter adjusted first XXXX LIFO, of X Xx. achieved long-term

due furthered to $XXX closing quarter million and our July. during the transformation outstanding at proceeds notes of we X.X% by a financial utilized aforementioned the our the in transactions XXX% of senior XXXX addition, sale-leaseback In repurchase secured price

second we senior price the secured announced quarter, the decreased of at a redemptions This $XXX has compared $XXX principal. company a our improved the of EBITDA excellent $XX million LIFO. also and driven During million $XXX capital same from redemption interest of again July sheet This our to highlight management Ryerson's amount increase liquidity to our the second the we of back our to These have working expense notes the notes million. notes and sale-leaseback significantly rising original operating XX% million, reduced to date. excluding by the outstanding as the adjusted XXX%. conclude. Ryerson's liquidity. annual million $XX quarter improvements I'll call reduction both million by the At was the with time, all, second increased Eddie turn ended in well over global In made important transactions $XXX as With balance quarter model to proceeds results and the company's that, decrease

Eddie Lehner

Molly. Thank you,

strategies advancements we we Ryerson's that resilient to are about as compounding. committed the our the proof and self-help amidst challenges see optimistic we synchronizing persisting remain third move above As quarter, future all, our through and

the While years has were are we Ryerson's we XXX intact company years, X durability that remained for not ago. just same

financial intelligently customer to accretion delivers leverage cash strong and shape, us value-add a your is equity and scale dividend of investments free through results this fixed Our exceptional commitments. we our transformation all, and multiple operating speed In enabling With through our with in cash model value entering improved phase experiences earnings, service generation next to shareholders, is create Ryerson questions. continue as through-the-cycle its reduce stronger taking higher at to network Instead, reconstruction value digitalization Operator? that, interconnected capabilities. our is and quarterly greater producing both and and increased take centers. new let's through flow

Operator

And [Operator Leshock we'll KeyBanc Michael question Instructions] take from Capital our with Markets. first

Michael Leshock

the versus just daily question, ask terms for in cadence momentum first I in of that to to wanted just get July XQ you What a saw see I'm quarter. a my the did demand. So feel trying as of whole? in you

Eddie Lehner

demand script preface coming second. with of over in slower Xth by to out release very And or it just of the realizations. I'm of there that and to are going it being Yes, metering kick July backlog throttling Mike? Mike holiday. extended a what in I it's supply-side in would that saying constraints around was kind the consistent we noted

Mike Burbach

see think yes, has from remain which Yes. we was customers issues, Sentiments July numbers, Eddie is again hit Thanks, true besides what Eddie. right. positive. year. Michael, strong. historically seasonal hearing some think we're it But I I in this what the had our

we about and the also supply We labor that markets, but different about our continue customers with number a growing challenges. to are continue challenges schedules end to of facing that are hear chain in build hear

good it's So a message.

I demand there. is think the

a it's are reality than customers have more but growing. think we're produce the demand our able I sometimes to backlogs that

Michael Leshock

labor, costs freight, Got any that, there in or it. primary raw pressures? any And are that, OpEx you're on be are are, incremental that otherwise? third quarter, driving the it further is if the creep seeing whether inflationary that And there what materials given

Eddie Lehner

cost know certainly variabilizing Yes, very throughout we've that industrial job done in economy that and in really are good the surprised the apparent a We've been economy. we structure. pleasantly cost-push the our pressures

it's But the kick there much certainly, Orth, compensation some that. So I'm through down it's little of more whether is chain. or the up the on ledger, going to really volume. over and bit variable ahead a value that things we're with And move John you variable increase on seeing costs to and go cost it give inflation John and can color more side

John Orth

the year. there Michael, Eddie. we pressures that encountered are throughout Thanks, definitely inflationary

you continues feel chain as a our we though, practices perspective, at looking best around end-to-end are operating as be QX, our we Freight, offsetting to those into an many as tight market. optimizing Looking know, very however, possible. from and of work supply

the slightly. developing around of it possible. once allow to again, us many appears network we interconnected those be as that freight algorithms However, easing And our to offset are managing as

Michael Leshock

you're I the That's What's from Got there? markets, than the what maybe within your run-up CapEx improvement it. oil and -- in wanted then oil budgets. take an to And perspective, some price to very seeing given modest on helpful. and are I your outlook stronger And the gas, specifically ask beginning of what end-market get wanted there others.

Eddie Lehner

the oil and It's the keyword information really the input through be getting curves info Burbach, lot to out. and and I starting I modest. general some that. to we're Mike of to there's with report just gas, going think with demand in you going But is on to it I is idea demand. a supporting backlogs And more extending seeing offsetting think brother, going investment extraction. of kick mean It's hydrocarbon constraints press decline over. rolling we gradual terms I'm see Yes. getting And he's at those in that and over those that strong backlogs and give my the

Mike Burbach

so would and oil at we're gas. seeing I on Thanks, in Eddie say, touched It's, this Eddie. Michael, what incremental stage. yes,

bit. to see inventory incremental compared Our continue volume chain gains. in We think supply we'll in the in a QX, seeing that We're QX levels relatively flat space. to normalizing

or right to large dynamics from chain takes way now, could supply challenges. lots of keeping happening that that bit. But one due change the puts So and swings a other the the little are

to end positive. industrial mentioned, the we all the some and are to X get continue feedback improved the as us saw oil had and markets in say were agriculture, something Beyond QX. commercial softness sequentially year, which us our decline markets story, for the strong. conditions, and been through with noted end pretty shop There is slight in about. part the as in early a HVAC, they I grow The of remain help future QX Eddie this And food that pandemic of very and and year slight in but we end strong wouldn't alarmed Consumer transportation, progressed to had it durables but machine fabrication equipment, markets particular, our well as and release, some the as ground we little gas, customers was come production materials solid. is softness requirements them on QX, get up backlogs expecting have in in showing very in

Eddie Lehner

of One were that really it's that even early of challenge, ag industrial which a turnover or activity is more real real backlog of some whether to broader of secular I and are the around mining start pandemic markets, note, positive the to the lagging to for is of markets or pickup investments where a lagging around. machine especially things reopening those come through in would end going, the economy across through verticals, more and see but machinery are the and starting we're equipment, It's the Michael, and equipment stages in some end the starting really supporting and general cyclical us.

Michael Leshock

-- tight the how forward? domestic import you me, give capacity for much imports around lastly color going then tapped could And you And any how given has been? markets, have that

Eddie Lehner

the are comforting but extended some numbers and think I of they of with finished sort and recent from across variants, Yes. There at continuing a the mean water product getting even imports up, place, is though I is to and abstraction times lead them are more getting be in, tended some more orders look, and the -- point. this coming I a long. they're those over I dependably filled all slab-oriented. pandemic challenge. indicators the think the the I the And are mean

that more importing really there's see that I all risk. are We're more, we valve, folks look we the think So are attractive no don't doubt release not and to the import a going as relative to but not. opportunities being to as

Operator

go Instructions] We'll Tiss [Operator BMO. with Joel next to

Joel Tiss

built you over Eddie, an entourage that that's there. up quite

Eddie Lehner

of a hell team, Joel. of hell a a team. It's It's a

Joel Tiss

Got since met Everyone credit. you. anything... first of lot Yes. Is This definitely a -- there it. unbelievable deserves transformation. amazing from day I pretty the It's is a

Eddie Lehner

better and We bigger keep catching keep you getting fish.

Joel Tiss

that there going Yes. know receivables? that. it off into the of to read people receivables selling up? of anything extraordinary paying? I don't Anything not some about Or the Is worrying is the just

Eddie Lehner

little our have I'm Claussen give has going to team our you, more a outstanding risk bit would tell you color. management general, done an in job. and Jim I team credit

Our exposure frankly. has improved,

experience bad is Our down. debt

see, Our really improved. inflation-driven. and volumetric collection It's have cycles, you as can it's

it's value, more higher capital over it's of I'll better-quality -- working but So Jim. send a it assets to

Jim Claussen

the revenue-side-driven. Eddie Joel, hit increase simply revenue-driven, is it. on Eddie. in Really, Thanks, receivables Yes.

debt Our consequence -- any collection side. cycles nothing are good the and and really of on bad

current really, paying it's growth. are the of folks reflection just So and revenue a

Joel Tiss

like? any what And us of you XXXX sort give can any at year-end Okay. -- looks stab debt

Eddie Lehner

there events, model Looking I just we as release Joel, you stay we think to side based look we that look easily as And $XXX at with at trajectory, that winds the upon year-end very come up leverage. answer. time, a you call. our when just high-yield high-yield $XXX debt on And the history, really indicated can X where to that safe know, I out we out I XXXX, in is took the million. It's the of present wanted piece you at on XXx from prologue. managed ago, is $XXX million million if what right was first to sitting There wanted our now. years past you to would -- say

we how a going the playing play long hand we've And we're to possible. forward, intelligent as working been the much a deleverage continue going have operating we time. most see liquidity in given we better of way model think I and long, so able But we're amount to for also indicated, Ryerson the to than given

throughout that also return to more and to to to delever so And Xx shareholders. in range the think those the have cycle. invest going business going to within to capital we're So multiples opportunities continue stay we're we X that

Joel Tiss

while here, like you great a next last, the we puffing of chest just anything have sense? industry there you vision really guys such bit is like a are things and sort over out potential then and think merger direction where is EVs that. there there that that for Like little lot building -- like of are make of your if the of transformatively the on all Is support a going always And how lower-carbon to X and you and unique a equals? able is guys standpoint? are going being of from be the it different all a Or your better sort out technology to all to focus we're going in years,

Eddie Lehner

Yes. our I keep and eyes mean we open. look, ears

where far got them as right call, them That things. right of, you in always do you a terms order. got As sequence sequence, one of in to take really in certain is I've -- take a the tumbler you to important what decide bit cracking got the when on, to that there's at get I'll safe going time to said little you and

major & a know, a phenomenal And it's as everybody done you was a involved out and did team lift, has the working And great, a did done Steel we phenomenal that job. job. So we has Wire. Central and acquisition, mean I when heavy

scenarios, and But back some is that around around done work some shown events might big take getting capital finishing really sense that right I thinking got systems, shareholders to think bolt-on future-state good And important. is sequence right what we're We've very the But a the strong getting sequence that different really the now, make we'll we've the about balance keep sheet. we've we'll swings. of pipeline. running in So and future. really building open. eyes Joel, But ears always our

Joel Tiss

really team, the I the but this congratulates always it analyst who you There's guys Great. Okay. time. suck-up management think deserve

Eddie Lehner

Joel, we it. really and thanks, appreciate you. Now Thank

Operator

[Operator Instructions] Okay.

So to turn have over or Eddie we back like questions I'd remarks. it like time. any further have to no it closing looks this additional Lehner Mr. at to

Eddie Lehner

Take out want earnings seeing next to stay our Thank much. look you forward care. we and call. very We you there everybody safe, healthy be just on to

Operator

everyone call. for today's thank again We does That their participation. conclude

Ryerson Holding (RYI) 7 Aug 212021 Q2 Earnings call transcript