RYI - Earnings call transcript Q2 2022 | Ryerson Holding Corporation

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Operator

Good day, and welcome to the Ryerson Holding Corporation's Second Quarter 2022 Conference Call. This conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Jorge Beristain, Vice President, Finance. Please go ahead, sir.

Jorge Beristain

Good morning. Ryerson Second joining Call. XXXX for you Holding Quarter Corporation's Earnings Thank Jim Financial our Lehner, Chief Burbach, Officer; Officer; Eddie we Accounting our our President Operating On Controller. have Executive Officer Ryerson's and call, Kannan, and Officer; Molly and Corporate Chief Chief Claussen, our Chief Mike of Executive joining will us for John Orth, Operations, our Q&A. Vice President be Certain federal securities the the meaning comments of on this call contain forward-looking statements within laws. from results those of risks by and that to These differ and involve XX, actual materially under Risk statements to a number forward-looking annual Factors statements limited in for XX-K XXXX. ended those implied the Form forth could the December uncertainties not our cause are on year report set

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

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

Edward Lehner

all Thank to you, you XXXX Jorge, and this for morning us quarter joining thank discuss our results. second

an characterized thanks Ryerson. important express their heartfelt us and dedicated and strange for quarter by of brew and in my surmount, our Ryerson another improving want toward XXXX actions yet a As effort the quarter to gave many safe work accomplishments of second challenges to X,XXX-plus profitable always hard I delivering team to strong

signals decelerating that second by prefer signs cycle cycle into prices we the and found metals quarter July. always declines middle market second cycle, of quarter demand. and counter to continued experienced was we we in in the a up commodity the by counter The environment the the the of Although characterized

some noted spot and from the resistance We set we of to supply quarter these for quarter our through triple pressures quarter. of represents strength. industry priorities decline time, broader consumer tempering in activity. countercyclical and metals this both Ryerson labor to another shifting volatile saw inflections and customers purchases of second well experience an earnings rates diluted for prices; composition another the history share, materials our order side by share economic falling company. and demand earnings occurrences structure's This customers diluted inflationary company's to During customers due these continuing during the noted capital Despite and $X.XX estimates spending delivering $X.XX presented per amidst records important of for a managed These that constraints. milestone per adjusted subset all-time and of challenges, and whammy our

and quarter, buyback, liquidity, our credit notes, second lowered disclosure, of in debt, share remainder and asset-based the as our noted and made value cash experience. customer the enhance growth plants, service network new book and larger center important company's to increased our systems in a increased our high-yield facility, subsequent reduced cost, the dividend, and and completed During event across repurchase interest our new authorization, the investments increased we extended further share announced potential amended retired net net our equipment

be Now that proud worth accomplishments which can that's list of all a we of are repeating.

be Mike modernization sustainable can shareholders to we have returns to preferred as and well for higher increases recyclable secular metals. have enabled pricing cash we effect demand positive has to share good as generation investments only execution used for onshoring counter through much now and profitable operating further flow improve its meaningfully growth these growth chain such demand Ryerson continued and investments and through as drivers Over the countercyclical uses its turn increased supply of increased cycles model; to increased drive long-term flow free amidst through past cash opportunities as that call to infrastructure periods growth decade, seen dividends to and in and industrial through discuss Ryerson's supporting over seen environment. that, the by underpinned With planned decarbonization strategy the now repurchases. such I'll in

Michael Burbach

Thank morning, you, good Eddie, and everyone.

Metals and volatility and macro to the a turning global commodity at quarter second the Now pricing of demand experienced in XXXX environment. level. markets

international as This has invasion seeing as well activity. Russia's are including COVID-related aluminum rates and in due slowdown pandemic from knock-on of stainless Ukraine, deceleration to domestic We by effects interest as factors, demand industrial rising demand decreasing been carbon, lower. well shutdowns, a of trend driven China's continuing as purchasing

faster-than-anticipated an stainless as product The sales in volumes. previously the an stainless of LME, increase past the just-in-time additive an of sales with the in well three offset growth imports in London prices of was quarter-over-quarter chrome a our alloys, were ASP. to competitively to quarter decline stainless decrease saw second the reversion steel revenue to factors sales months, experienced higher by which in XXXX. as the priced XX% mentioned increase pivoted in and and scrap, in to where nickel in later stainless second inventory. The sequential the sharp approximately offset The mix sell March, decline from Carbon nickel ASP sequentially on X% steel increases sequential steel buying along we steel or a lower a impacted led volume in steels volumes, a ASP Due or inventory prices increase of in by XX% quarter. the quarter was our Ryerson's prices. customers of in stainless quarter, first Ryerson's in building mix X% in Metal as Exchange, X% other increase prices represent average Over half

which of volumes. ASP delivered pricing Our favorable quarter-over-quarter. XX% per in by of ASP net in per steel benefit X.X% solid billion, came in in steel weaker-than-expected driven The second stainless the In With and franchise result, second quarter, by higher Ryerson's the to XXXX, sequentially offset gaining $X.XX end from volumes Ryerson's higher showing and partially pricing quarter-over-quarter. than sequentially lower $X,XXX a weaker-than-forecasted by decline quarter-over-quarter, stainless lower a offset XXXX. in ton, was X% guidance, hot-rolled of a ton, second volumes, industry ASP slightly driven X.X% and stainless impacted to in of sold are sequentially volumes. reported higher steel respect indicators declining coil price aluminum quarter by another was growth Ryerson quarter by aluminum key markets, benefiting level, slowdown at the in with macro the gaining sales but

a have the June, have past on global X increases quarter has lower slowing the industrial second reported X.X% availability, the and lead commodity year-over-year prices slowing demand. U.S. months. At been While increased in material metals in trended time, increase production times same year-over-year the over shorter

U.S. threshold Metals PMI, measured the American shipments, or growth grew above North growth Ryerson's while activity Center Service North MSCI, XX, factory X.X% volumes. Managers American in Purchasing the moderate at or by industry continued decline for still reported a to Index, X.X% compared of slowing the Institute, as Additionally, in July. quarter-over-quarter a

optimistic. service of performed increase center better to by decline X% X% half first and half in other was in led business of a markets XXXX, American the American Ryerson's North North an in compared in oil MSCI-defined than volume machine fabrication for the shops. transportation, metal outlook cautiously increase an experienced X.X% volumes volumes. second approximate increase end North Ryerson's XXXX American and shipment remains X.X%. gas, commercial of industry declines manufacturing The a and Most X% declining ground for sequential industry, in with Ryerson's performance However, the

headwinds of issues expect in rising supply we However, as rates, interest slowing of continuation a as demand. chain well

as shortages while a From and secular chain that stainless had into some smaller there size and tight us ago, to to improved the customer Our destocking, remain of aluminum months an is such moderating customers half we evidence discussions three backlogs and component And outlook. XXXX, expected spot labor issues reflecting with activity, pricing led quoting demand favorable side, of healthy, believe transactional remain supply pricing second purchases. continue.

economic recent have historically July, in aluminum I'll that, Jim weaker-than-expected over turn inflation-fighting With and plus in call contributed the exchange Reserve's outlook. low amidst end a prices a nickel actions the we through markets stabilization to to However, of the quarter inventories. LME commodity reversal sharp China Federal although for note third many data our

James Claussen

the Eddie's summarized the The business reconstitution us reinvest morning, as comments for was shareholders. milestone second in sheet how to everyone. way Mike. important structure in Good capital well providing returns to as quarter paves balance the an of Thanks, transformation. our capital our

for Looking into pricing outlook we volume second acknowledge both the has half. moderated forward, the and that

to of with billion be ASP quarter as cycle to revenues be we customers in. seasonality Reserve range the $X.XX sales summer volumes X% tightening and kicks the such, expected to third impact X% of to to X% Federal X% typical assess down billion, sequentially As expect down $X.XX and the in

the While XXXX, prices curves, above of diluted expected LIFO, be share. global million on is LIFO $X.XX expected the third earnings in metals to $X.XX averages. recent range have quarter now related corrected, they be of range at the third forward are in quarter Adjusted commodity and in And of we income million excluding the for XX-year $XX most the to based forecast million, XXXX. per $XXX to $XXX of remain EBITDA to

offset in cash the conversion were sheet. $XX quarter. cycle a company's cumulative quarter second of $XXX first a favorable inventory cash to or the the but days XXXX turning and million of quarter. capital days increased The by slightly XX use Accounts second million, build to in payables Now in balance by XX flow the compared net to company's million receivables working and $XXX

available remained ratio the June leverage to March increased since The $XX.X million flat lower net billion million quarter. Overall, cash million total a the net and a million due operating debt to from in of $XXX this compared first and from second million our the going credit with XX, Ryerson's liquidity debt expect be Ryerson million of record of $X generated at XXXX. during of in low as imply revolving X.Xx, quarter global $XXX We the increase facility to to to ended $XXX of $X.X as as XXXX, of $XXX working the successful prices capital decrease XXXX, period $XX.X company's release the commodity billion quarter. of in mark quarter-over-quarter forward. IPO our debt, XX, high a

While of free was that the million, million and the reduction dividends debt form of returned $XX.X to quarter important was cash compared the the XXXX. $XX.X in to is second to repurchases flow, shareholders sequential of it share net $XX.X note million during

second were of excluding acquisitions, $XXX Centralia, which quarter, million maintenance in up the million are comprises quarter million incurred $XX.X expenditures, and $XX.X nonrecurrent. the capital to compared $XX second We retirement modernizations both company losses our bond expenditures and related the high-yield University anticipated Additionally, quarter. of to in projects early to the million first debt during on This the of redemption, Park, in amount initiatives and Capital reaffirm related our growth service for in Illinois. XXXX. approximately digitalization to XXXX, Washington center

Ryerson concurrent deploy offering, has our approved ahead exhausted months During of $XX shares stock. secondary expiration. we our the a new authorization opportunistically. authorization, previous repurchased repurchase shareholder second and repurchase X-year share X.X our expect million $XX Board XX with repurchases quarter controlling to These of million which million common The

secured gaining to During open market our entirety in and retired outstanding rate of redemption offer, save million a The a expected July, million is $XX senior tender annualized of our $XXX interest. exercise the the through we over debt second a of pretax high-yield X.X% the and combination retirement July, of quarter Ryerson in special notes. through purchases,

to detail third sequential Finally, per a a of Board I'll this, With declared Directors quarter call X, on second cash from our on share quarter common increase quarter Ryerson's of further turn the to of August Molly over $X.XXX per second the stock, $X.XX results. of dividend dividend financial XX% share. of provide

Molly Kannan

XXXX. in XX.X%, XXX Thank material. from income $X.XX first to generated million, up reversal reflected cost quarter and you, the sold and of by of basis Ryerson LIFO goods XXXX booked LIFO of the gross is cost quarter of first the $XX.X Included expanded Jim, in carbon in expense of in XX.X% as morning, the second $X.X XXXX, gross steel revenue good of everyone. points margin lower margin quarter billion million from a of

results discussed impact, margin believe basis. that inventory LIFO gross quarter the first our LIFO year-end from LIFO volatility method as and to XX.X%. contracted XXX we quarters. the in pro of levels in LIFO is the to inventory on for full points valuation first We by the earnings it second creates less to interim preferable and typically quarter an rata Excluding recognize interim XXXX of projecting a year better and this In effects interim expected of of cost basis allocating XXXX, the change by projection the election quarter estimate

sharper, Net per for share income However, in the $XX.X versus the diluted commodity million second or of was X. of a quarter higher-than-forecast LIFO price and income million resulted $X.XX share, guidance $XXX.X is corrections our million attributable $X.XX quarter. quarter of previous second per sooner-than-expected to or diluted to XXXX Ryerson the compared prior in $XXX.X

second million gain of on quarter and debt includes a the of charge The assets. the $XX.X retirement sale a million on $X.X of

of the to compared $XXX.X quarter. or these income onetime to net Excluding the per per share closing, million compared $XXX.X associated the $XXX.X $X.XX for of excluding and adjusted LIFO this, In Ryerson with quarter And million. in excluding was first call attributable $XXX.X XXXX or income Ryerson back the items taxes, to share, diluted million of achieved adjusted first LIFO million to $X.XX quarter diluted EBITDA I'll turn of XXXX, Eddie.? second EBITDA adjusted

Edward Lehner

is and communities. you, experiences Thank At for mission to Ryerson, Molly. great shareholders, our employees, create customers, suppliers our

industrial investment of of is in and largely visiting better at Now and with is provides of imperative. these ryerson.com, efforts. why scale speed, industrial network matters, of solutions with that and life the created metal msci.org metals. centers vital development sustainable as experience Build and delivering tomorrow world The ongoing service you'll and joy, intelligent prosperity and consistency when a of metals Our and industrial are and an backbone why will at for quality today the movement metal broader-based so built That value-added us be recyclable

let's take Let's that, keep questions. your advancing Operator? together. with And

Operator

question first our Robotti. And comes with from Instructions] Alan [Operator today Weber

Alan Weber

do added the changes year, you First at about the question how in expect through out half working of think of capital? generated is, talk cash will -- -- when when work you be you you look when second much the

Edward Lehner

Yes.

capital expect you prologue. only would you I of We half there certainly give wouldn't the second to working in number. is the year. I release be past a tell that

If the have be, of the and have apply then you prior typically and versus idea going what a balances release our the you a back working expect working cycle we how pretty working the of capital ratio can ones, release is you in but at get has changed you through to been, good to go capital what overall look cash this balance to release year. capital

Alan Weber

kind And gave longer-term want Okay. you few then question. you of general -- Eddie, a A to presentations, a about a, I years ago, in say like these talked target.

You $XXX to about $XXX of million EBITDA. million talked

case a even not few projection, the only back just today, for EBITDA because that's things I'm an balance Xx process asking today. given in leverage. you X the a out? projection. of about, And the -- gave -- How think from years thought terms years Can improvement about you the margin company, not the You sheet where talk in say, you again, were targeting the ago, obviously, stand? target

how the and also. that. business, balance competition about like you sheets I think improved everybody, Because assume, just curious has the So

Edward Lehner

Sure, sure.

that what at time, of sound market would next-stage we We've X% in in you quarters. of a of million, better going So presentation gains at of serves. November, the to cycle those of up look, Day over ourselves think, time, Day, at going last, those And at X we share targets terms I all, market. which back I say give had We the mid-cycle, we years surpassed that bracketed going to down $XXX first And say an put XX% I was getting I I That so if think very the Investor metrics, materials. that our be of remember, did of forward, say, are up would to back that. EBITDA, going the And positioned memory mission Investor look in investor somewhat KPIs, hope meeting next-cycle I -- margins, to we'll of targets when we've pegged New targets I next-stage much But when look an that to X would from we of York. we several in gross share here. we like that being accomplished. be But far, through I be. But what really got are those to coming I assess position at say at. a which able next-stage see to in well and

Alan Weber

share think few about to improvement, the acquisitions? you talk could think you -- next about you of about industry, how the you besides excluding And how market about expect just and Okay. over any the as think recycling years, metals, the

Edward Lehner

Yes.

make rates. Alan, defer you demonstrated, been term. short long-term will at without. -- on very we're the kinds They very that is optimistic you we what's about do be to people well, to -- place automate, at I future. very But all part have spending. this can of longer-term riddle? the interesting a I think look I've counter-cycles. before, at secular and can go mean, a fixed -- that's asset the engender present. you future first basis, But They world big metals, the of look certainly and of said -- for without, tell all, investment how if do think and I cycles in And modernize I got solve that higher to I'm you, decisions can these medium-term now how productivity you When A do productivity bullish of industrial always

that the going of include because recyclability sustainability certainly their metals, it got side of you've to productivity industrial So is attributes. and

you build kind those investments make health, do and you to do structures how do you about back you talk and metals get to metals come how of infrastructure, public those outcomes. you industrial to electrification and build If improve transition how

bullish So concerned. very that's where

like In M&A business owners the say, the, I'd more that as at industry. enterprise. scale can from our and environment part terms don't our bigger our mean, not of be the more more I they a and done be do work M&A handle they'd through retire, we we more consolidation, from if in business functions development, really want to of there'll hear pipeline, consolidation and to through that owners back-office hear that development really

that counter-cycle, we the that we we through very our industry and value very bullish this move as products to. distribute optimistic So about and and add

Operator

KeyBanc [Operator Instructions] next hear Phil from Markets. we'll Capital Gibbs And with

Philip Gibbs

the are, inflation just pressures. trying things see A of about are don't of things what terms just question last whether business. just side seeing that and But Obviously, energy, those on prices within transportation, curious think whether quarter. I metals general you people, packaging, to what conversion you're out. think level to they in but the you're cost starting like were

Edward Lehner

Sure.

the half So side. pricing ahead Phil, of now they where to where around it's market team into continue say say slower pressures of think the know the that in feels tail of say, And increases, way power and that some inflationary but more of there's feel There's the I'm last like those pressures. cost of X/X say, the metals we're the what down. through, to seeing But other on we to to been it. and I where I got as in be embedded I expenses side trying they last the they of, line -- the those prices what would level you those ledger. of whiplash, going but would the maybe certainly, of costs OpEx peel it inflationary third I'd inflationary push to like rate to kind I'm pressures the higher in I the me X/X that it's we're feel I period. come would really, and seen and illumination last the broad-based change end labor have to in on think say of economic Certainly, various through EVP going you then that third in it's cost, a see this there's our of let I XXXX, higher OpEx would XXXX peak, a will we're the see higher to mean, about a to do -- P&L level we're ledger. half Orth, increases went that. you business. going a certainly, to I going general of off whether first on our start we're I the I'd those side, I talk like is start cost, between because went on But -- we'll Operations, of say, inflationary have general of of of off. pressures whether seeing come say and throughout, let you you're rate price of kind off, OpEx our members price of start but second start increase of little materials, I'd of John know, the items give And to he's of they see level to embedded higher some folks

John Orth

the There been expenses. inflation of and it's definitely moved OpEx our side into operating business, the has on

in costs highest you smaller to quite managed percentage bit resets. maintain the by And fuel a areas see a the we've driven those we And expense delivery, of along, inflation to and are have on QX. packaging, primarily leverage extent, inflated impact mentioned, basis. where contract a However, supplies, as surcharges from

we reusing down that of of increase and are substantially. possible. the slow us However, At to safe best as as key the the reducing Ryerson in we identify practices and network seeing toolbox, and are production the using the begin productive our day, is system, and to to those being for sure make the tools the across share that rate end

Philip Gibbs

is little know some in of is viewpoint the that bit everything? quarter, Eddie, Because a -- I contracts then, biggest have more most? influencing what little stable? it are pricing you the bit And third it too. Is for what's the just a there, the ferrous side the side Or the nonferrous on and

Edward Lehner

stabilization give Yes, net But just we from, overview, you ask to absolutely. probably mid-July, early on minute. more Mike to nonferrous an direction and but going color some May pretty some seen the decade some some in stabilization but in not mean now, through And that aluminum, we've say, drops. a is have significant prices. around downs we've as you been I I'm talking let's seen And after in for I down, saw now significant in nickel more. stainless a if

what know that we we've starts feel to but and intensity the We know what really that know like good look is going So to invites. the duration to a what in used counter-cycle. don't effect the We or is past. counter-cycles be,

but it I So capacity year, Mike claiming this curves, going to Could base higher some congeal I before we but see in their carbon even not it's a a that accounting pandemic. now. place But going level with around not move mean there's nickel, But I think a their in in coming bit are of that cost little material can they're if Mike consolidate range. really year? the off that looks doing. balance lot GAAP on you've chain it it's the looks fluctuation cash a some just capacity that elements to going drop averages aluminum, back look as don't say [indiscernible]. the then the XX-year also are in right in and supply point, think chrome, second, [XXX] it more of prices, trying their to to to the think But of a curves cost what of futures on marketplace. at more to smelters the and in could. those embedded the little we're far certainly the introductions also remainder some that And into is have aluminum, for the bit Yes, with we'll just curves. that carbon, through were other maybe it I'll back maybe now, around got you like showing indexes cash a But I like curves. like return about now starting stainless see at have carbon, aluminum a comment

Michael Burbach

this is Mike Burbach. Phil,

pretty considerably exercise other today. Eddie back good talking, we a We've going at when outlook into what's the ago it where virtually were foolish on late way have the where about might hit to times. it XX trying don't QX proven I coaster was March gave to than today. has his a everything then we reverted I sell So is and are add days be to with thinking significant happen are to from a than things roller quickly think be and different seen that lot comments one commodities, that to predict a heading we headache, us on early to we today. thoughts

we think are the what we our suppliers, from what And so is what what we're see exactly levels be. activity in here the curves, futures going and is Eddie to just hearing described,

if something Mike, more interesting settling get And was until now. extra little path know I to I from here into any it comments. QX stable, early you have think a rather but we're that's a don't

Edward Lehner

Chain, he's of and really suppliers our all Hamilton got really Supply of our a we've on Mike in with touch regular He's Yes, VP us. with basis.

So Mike, got some you maybe comments.

Michael Hamilton

Eddie. Sure. Thanks,

with capacity only additions to the that, North I nonferrous, think of started addition layer-this-year the out would is make I the some plays that XXXX see is in that in On and and here we'll see a additional scenario price. America. are phenomenon. how carbon a beyond We've capacity

that predict look where are. prices when to going influence So what we be to it's too at far is early

Edward Lehner

I look reset. And before is meet be were really But be going costs where I good where that bottom there. replacement and averages at to would above margin two up pandemic. like it the And out or the so from will again, where do XX-year we'll going with quarters really get say three kind time to a we to of feels see cost average a take to think a we're go good

Philip Gibbs

Yes, all in the commentary. Eddie, terms that pricing sense, makes of

And company, Enterprise, period As heck you certainly, the about thinking how materially of you a lot this last times. countercyclical than Ryerson are you time; this easier easier. just were a as of breathe differently couple can the

this just as big company, the around, -- So what mentality? time but are in a differences

Edward Lehner

high-yield I'm Yes. say into mean the heartbroken go I having again. to markets I'll about not not

in I'm not in got we're looking that's plans the now. even more certainly, smart results new include free equipment, last the returns, over in repurpose concerned. certainly our look into take much it and couple but years to we years. last of So capital. our despondent we've to When we've to I of -- about now some investments repurpose to that and we made in look allocation on position that. a XX that systems company, have generation obviously the our But flow, When mean mean Park, better the like growth, the at facilities shareholder we at and to also at EBITDA that I University board in cash Centralia ability where in

you the match return. get deploy allocation ahead got development to capital desired we've good organization's to a We've can up of you that that M&A to to yourself rate got ability business at of pipeline. got Sometimes that really your function. you've do But because when good capital growth a

give for improve some and through as expense that prepare going are to up Our we the PMO leverage projects really experience us working next to better we is think start really office cycle. the customer

for markets, much not creditors it's you're obviously, to have roll past, your a of paying So if have go don't cash the over free the share back into you you don't paying lion's you're flow. the different to not debt, high-yield mindset

better I thought extraordinarily I certainly is which future we of have think a counter-cycle lot for much well. But invest literally. to going different to in managed we So a that and prior of figuratively pay us. Ryerson, through the it's certainly opportunity counter-cycles dividends now, And the a

Edward Lehner

out. like cleared Looks has queue the

thank results. support. you we our So continued and in to we care. and we for safe interest look Ryerson. again third your in Take Bob Stay and with quarter you forward when all being November review well,

Operator

for you participation. And conclude this today's your does Thank conference. all

disconnect. may You now

Ryerson Holding (RYI) 6 Aug 222022 Q2 Earnings call transcript